ATL Announces Profits in Fourth Quarter; Spins-Off Handheld Division as Tax-Free Dividend

ATL Ultrasound announced financial results for the fourth quarter and year ended December 31, 1997. ATL also announced board approval of a decision to spin-off its Handheld Systems Business Division as a tax-free stock dividend to ATL shareholders on a one for three ATL shares basis. The new company will continue to develop and will market highly portable, handheld diagnostic ultrasound devices for use as first stage medical examination tools.

For the fourth quarter of 1997, revenues grew nine percent to a record quarterly level of $137.3 million compared with $125.5 million in the fourth quarter of 1996 and reflected early success of the HDI 5000 system which commenced shipping to customers in November, 1997.

Gross margin also achieved a record 52.4 percent compared with 50.1 percent in the year ago quarter and benefited from the growing contribution of the all-digital HDI product line which includes the HDI 5000, 3000 and 1000 ultrasound systems. Net income in the quarter rose 60 percent over the prior year to $18.5 million or $1.23 per share compared with $11.6 million or $0.78 per share in the fourth quarter of 1996.

For the year, revenues rose to a record $431.2 million compared with $419.2 million in 1996. Net income in 1997 was $21.2 million or $1.41 per share. In 1996 ATL reported a net loss of $828,000 or $0.06 per share which included a non-recurring charge of $29.6 million for damages accrued by the ATL for patent litigation. Excluding this non-recurring charge, net income was $21.8 million or $1.47 per share in 1996. In 1997, gross margin increased to 49.6 percent compared to 48.9 percent in 1996. Operating expenses in 1997 grew 6 percent over 1996 levels, excluding its non-recurring charge, to $188.6 million and reflected the increased investment required by the worldwide introductions of two new HDI systems during the year, the HDI 5000 and the HDI 1000 systems.

Handheld Systems Business Division

ATL also announced board approval of a decision to spin-off its Handheld Systems Business Division as an independent, public company as a tax free stock dividend to ATL shareholders. The spin-off will be effected by the distribution of one share of the new company for every three shares of ATL. ATL plans to file the Form 10 related to the spin-off with the Securities and Exchange Commission (SEC) within the next week. Pending SEC review, ATL anticipates the stock distribution will occur in April 1998. ATL will take a one-time charge of less than $1.5 million in the first quarter for distribution-related expenses.

The first handheld device is being designed for the women's health care market. Other models will be developed for internal and emergency medical applications. The first prototype is expected within the next few months, and commercial launch is anticipated in 1999. The new company plans to submit a form 510(k) with the U.S. Food and Drug Administration within the next month.

Additionally, the group is developing a prototype for military use on the battlefield or in other natural or man-made disaster situations to diagnose victims of severe trauma. The U.S. Advanced Research Projects Agency selected an ATL-led consortium of the University of Washington, VLSI Technology and Harris Semiconductor in February 1996 to receive a two-year matching grant of $6.3 million for the handheld development project.

Headquartered near Seattle,WA, ATL's operations focus on diagnostic medical ultrasound