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CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):
October 23, 2003 (October 23, 2003)

6501 Windcrest Drive, Suite 100
Plano, Texas 75024
(Address of principal executive offices) (Zip code)

We are furnishing under this Form 8-K a press release issued on October 23, 2003 disclosing information regarding our results of operations and financial condition for the third quarter of 2003, and our financial outlook for 2003, a copy of which is attached hereto as Exhibit 99.1.

This press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Exhibit
Number		Description

99.1		Press Release dated October 23, 2003 (This press release shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.)

Advanced Neuromodulation Systems
Reports Record Third Quarter Net Income
As Neuro Product Sales Increase 78%

DALLAS, TEXAS, October 23, 2003 — Advanced Neuromodulation Systems, Inc. (ANS) (NASDAQ:ANSI) announced today that revenue for the three months ended September 30, 2003 increased 63% to a record $23,419,000 from $14,328,000 for the third quarter of 2002. Sales of ANS’ neuromodulation products for the treatment of chronic pain increased 78% to a record $20,612,000 from $11,604,000 a year earlier. Net income for this year’s third quarter increased 104% to a record $3,953,000, or $0.19 per diluted share, which included other income of $969,000 pre-tax, or $0.03 per diluted share after tax, from the reversal of an accrued tax abatement liability. This compares to net income of $1,942,000, or $0.10 per diluted share, for the third quarter of 2002.

For the nine months ended September 30, 2003, revenue increased 67% to a record $65,414,000 from $39,224,000 for the same period last year. Neuro product revenue increased 80% to $56,587,000 from $31,422,000. Net income increased 125% to a record $9,496,000, or $0.46 per diluted share, compared to $4,228,000, or $0.24 per diluted share, for the first nine months of 2002.

At September 30, 2003, cash and equivalents and marketable securities totaled approximately $96.6 million. ANS has no debt.

Gross margin rose to a record 72.7% for this year’s third quarter compared to 66.1% last year, reflecting the increase in sales volume and the positive impact of transitioning to a direct sales force in two former distributors’ territories. Operating margin increased to a record 22.1% from 17.7%, even after substantial increases in R&D and marketing expenses to support the planned expansion of ANS’ neuromodulation product portfolio and the continued enhancement of its market position.

“Our commitment to developing new products and building our operating platform has fueled ANS’ rapid growth in the past. We will continue making these investments to support further growth in the future. ANS’ success is a team effort, and our excellent third quarter results reflect outstanding performance by everyone at our company,” said Chief Executive Officer Chris Chavez.

“Sales of ANS’ Genesis® and GenesisXPTM Totally Implantable Pulse Generator (IPG) Spinal Cord Stimulators and Renew® radio frequency (RF) neurostimulation system all increased in the third quarter versus last year, demonstrating that our products are continuing to gain acceptance from a growing number of interventional pain physicians who place their trust in ANS by prescribing our products for their patients,” Chavez said. “We are dedicated to expanding our product offerings to address current and emerging neuromodulation applications. This is the right formula for ANS’ to achieve sustained long-term growth in the neuromodulation industry, a market that will soon approach $1 billion and is growing rapidly.”

ADVANCED NEUROMODULATION SYSTEMS, INC.
6501 WINDCREST DRIVE, SUITE 100 / PLANO, TEXAS 75024 / (972) 309-8000 / FAX: (972) 309-8150

Advanced Neuromodulation Systems Reports Record Third Quarter Net Income
As Neuro Product Sales Increase 78%
October 23, 2003
Page Two

ANS also announced that it has agreed to acquire the assets of its sole remaining U.S. distributor, State of the Art Medical Products of Clifton, New Jersey, relating to that distributor’s sale of ANS products. Six of State of the Art Medical’s direct sales people will join ANS’ direct sales force in the same roles. State of the Art Medical (SOTA) purchased $5.3 million of ANS products in 2002 and $6.1 million in the first nine months of 2003. Terms of the asset acquisition were not disclosed.

“SOTA did a great job as ANS’ exclusive distributor in New York, New Jersey, Delaware, and Eastern Pennsylvania. These are key territories and we welcome our newest team members to ANS as we expand our presence and our investment in these important states,” Chavez said.

ANS currently expects revenue for 2003 in the range of $88 million to $89.5 million and net income of between $0.63 and $0.64 per diluted share, including the $0.03 per share impact of the reversal of the accrued tax abatement liability.

ANS has scheduled a conference call today at 11:00 AM ET. The simultaneous webcast is available at www.ANS-medical.com/investors/index.html. A replay will be available after 1:00 PM ET at this same Internet address. For a telephone replay, dial (800) 633-8284, reservation #21162435, after 1:00 PM ET.

Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system. Forbes magazine recently recognized ANS as one of America’s 200 Best Small Companies and Fortune magazine recently recognized ANS as one of Fortune’s Top 100 Fastest-Growing Small Companies in the United States. Frost & Sullivan, an international strategic market research firm, also recently presented ANS with its Product Innovation Award, recognizing ANS as the technology innovation leader in the neurostimulation market and ANS’ Genesis® Implantable Pulse Generator system as the most advanced fully implantable spinal cord stimulator on the market. Additional information is available at www.ans-medical.com.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995:

Statements contained in this document that are not based on historical facts are “forward-looking statements.” Terms such as “plan,” “should,” “would,” “anticipate,” “believe,” “intend,” “estimate,” “expect,” “predict,” “scheduled,” “new market,” “potential market applications” and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: continued market acceptance of the Genesis® IPG and GenesisXPTM IPG; competition from Medtronic, Inc. and future competitors; continued market acceptance of our Renew® system following the launches of the Genesis IPG and GenesisXP IPG; patient or physician selection of less invasive or less expensive alternatives; adverse changes in coverage or reimbursement amounts by Medicare, Medicaid, private insurers, managed care organizations or workers’ comp programs; intellectual property protection and potential infringement issues; obtaining necessary government approvals for new products or applications and maintaining compliance with FDA product and manufacturing requirements; product liability; reliance on single suppliers for certain components; completion of research and development projects in an efficient and timely manner; the satisfactory completion of clinical trials and/or market tests prior to the introduction of new products; successful integration of acquired businesses, products and technologies; international trade risks; and other risks detailed from time to time in the Company’s SEC filings. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)


			Three Months Ended					Nine Months Ended
			September 30,					September 30,

			2003		2002			2003		2002

Net revenue			$	23,418,505	$	14,327,505		$	65,413,557	$	39,223,522
Cost of revenue				6,384,445		4,853,409			20,317,415		14,430,996

		Gross profit		17,034,060		9,474,096			45,096,142		24,792,526

Operating expenses:
	Research and development			2,552,951		1,518,610			6,597,850		4,186,833
	Sales and marketing			6,970,941		3,802,840			18,460,993		10,091,204
	Amortization of intangibles			472,821		229,464			1,278,093		686,094
	General and administrative			1,871,833		1,390,308			5,504,084		3,971,617

				11,868,546		6,941,222			31,841,020		18,935,748

		Income from operations		5,165,514		2,532,874			13,255,122		5,856,778

Other income (expenses):
	Interest expense			—		(2,514	)		—		(10,759	)
	Other income			969,204		—			969,204		—
	Interest income			200,243		374,991			776,370		595,685

				1,169,447		372,477			1,745,574		584,926

		Income before income taxes		6,334,961		2,905,351			15,000,696		6,441,704
Income taxes				2,382,109		963,048			5,504,915		2,213,984

		Net income	$	3,952,852	$	1,942,303		$	9,495,781	$	4,227,720

Basic income per share:
		Net income	$	0.20	$	0.11		$	0.50	$	0.27

Number of basic shares				19,382,991		18,140,091			19,040,105		15,682,565

Diluted income per share:
		Net income	$	0.19	$	0.10		$	0.46	$	0.24

Number of diluted shares				20,860,041		19,764,149			20,441,351		17,379,035

ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)


			September 30,		December 31,
			2003		2002

Assets
Current assets:
	Cash, certificates of deposit and short-term investments		$	96,609,356	$	96,769,918
	Receivable, trade net			15,424,550		10,847,237
	Receivable, other			146,758		189,017
	Inventories			19,844,840		13,722,946
	Deferred income taxes			2,919,571		1,122,617
	Income tax receivable			321,378		—
	Prepaid expenses and other current assets			1,142,111		1,032,883

		Total current assets		136,408,564		123,684,618
Net property, plant and equipment				15,419,187		10,607,991
Patents, trademarks, purchased technology & other assets, net				30,407,864		24,051,518

		Total assets	$	182,235,615	$	158,344,127

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable		$	2,175,187	$	2,392,579
	Accrued salary and employee benefit costs			2,843,650		3,077,603
	Deferred revenue			561,066		646,577
	Commissions payable			1,228,473		794,521
	Accrued tax abatement liability			—		969,204
	Income taxes payable			—		822,228
	Warranty reserve			354,029		402,259
	Other accrued expenses			520,264		299,905

		Total current liabilities		7,682,669		9,404,876
Deferred income taxes				4,502,743		3,731,939
Non-current deferred revenue				937,243		162,504
Total stockholders’ equity				169,112,960		145,044,808

		Total liabilities and stockholders’ equity	$	182,235,615	$	158,344,127

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Texas	0-10521	75-1646002
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


	Item 12. “Results of Operations and Financial Condition.”
SIGNATURES
INDEX TO EXHIBITS
EX-99.1 Press Release


		ADVANCED NEUROMODULATION SYSTEMS, INC

		By:		/s/ F. Robert Merrill III

				Name: F. Robert Merrill III
				Title: Executive Vice President, Finance, Chief Financial Officer and Treasurer


Agency Contact:		Company Contact:
Neil Berkman Associates		Chris Chavez, President & CEO
(310) 277-5162		(972) 309-8000
info@BerkmanAssociates.com		www.ANSmedical.com

Table of Contents

Table of Contents

Table of Contents

Table of Contents


		FOR IMMEDIATE RELEASE