8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 16, 2003

SurModics, Inc.

(Exact name of Registrant as Specified in its Charter)

Minnesota
(State or Other Jurisdiction of Incorporation)

0-23837	41-1356149
(Commission File Number)	(IRS Employer
	Identification No.)

9924 West 74^th Street
Eden Prairie, Minnesota 55344
(Address of Principal Executive Offices and Zip Code)

(952) 829-2700
(Registrant’s telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	Item 7. Financial Statements and Exhibits
	Item 12. Disclosure of Results of Operations and Financial Condition
SIGNATURES
EX-99.1 Press Release

Item 7. Financial Statements and Exhibits

     (C)  Exhibits.

Exhibit number	Description
99.1	Press release issued April 16, 2003

Item 12. Disclosure of Results of Operations and Financial Condition

     On April 16, 2003, SurModics, Inc. issued the press release, attached to this Form 8-K as Exhibit 99.1, relating to the results of operations and financial condition of the company as of and for the quarter ended March 31, 2003.

SIGNATURES

     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 hereunto duly authorized.

	SURMODICS, INC.
	By	/s/ Dale R. Olseth
Date: April 18, 2003	Name:	Dale R. Olseth
	Title:	Chairman and CEO

EX-99.1 3 c76310exv99w1.htm EX-99.1 PRESS RELEASE

Exhibit 99.1

FOR IMMEDIATE RELEASE

SurModics, Inc. Reports Second Quarter Results
Record Revenue and Earnings

EDEN PRAIRIE, Minnesota — April 16, 2003 — SurModics, Inc. (Nasdaq: SRDX), a leading provider of surface modification solutions to medical device manufacturers, today reported financial results for the second quarter ended March 31, 2003.

     Revenue for the second quarter of fiscal 2003 increased 37% to $9.7 million from $7.1 million in the comparable period of fiscal 2002. Operating income rose 67% to $4.0 million, and net income increased 56% to $2.8 million, or $.15 per diluted share, from net income of $1.8 million, or $.10 per diluted share, reported in the same period last year.

     For the first six months of fiscal 2003, revenue increased 35% to $17.8 million from $13.2 million in fiscal 2002, and operating income rose 63% to $6.8 million. Net income increased 55% to $4.9 million, or $.28 per diluted share, from $3.2 million, or $.18 per diluted share, in the first half of fiscal 2002.

     “SurModics delivered another strong quarter, generating record revenue and profits,” said Dale Olseth, Chairman and CEO. Growth in the second quarter was the result of a 50% increase in coatings revenue, primarily due to royalties on the sale of coated products and reagent sales to Johnson & Johnson’s Cordis division. The results include royalties earned under the new Cordis contract, which became effective January 1, 2003, in addition to the royalties due under the previous agreement. Olseth added, “These numbers do not include the impact of U.S. Food and Drug Administration (FDA) approval of the Cordis CYPHER™ Stent, which the industry expects soon.”

     Total operating expenses increased 22% from the second quarter of last year as the Company continues to invest for future growth. The increases are primarily occurring in the areas of depreciation on building improvements and labor costs. “We completed a portion of the remodeling at our Bloomington facility toward the end of last quarter and now we’re able to accommodate more drug coating opportunities. Work also continues on our new manufacturing addition at the Bloomington site that will give us additional capacity. We are on plan for completion in the fall,” said Olseth.

     According to Olseth, “SurModics is in excellent financial condition.” As of March 31, SurModics’ cash and investments totaled $46.6 million, assets totaled $84.6 million, and stockholders’ equity totaled $75.7 million with no debt.

Outlook

     Prospects for the full year 2003 continue to show strong growth. However, specific earnings guidance for the remaining quarters of fiscal 2003 cannot be provided because the market impact of the CYPHER Stent is a significant factor in our guidance. As the Company has said previously, commercial development revenue is expected to decrease as demand for coating work on the Cordis’ CYPHER Stent trials declines in anticipation of FDA approval. This decrease, combined with the current quarter impact of the previous Cordis agreement, lead management to expect fiscal 2003 third quarter revenues and earnings to be lower than the fiscal 2003 second quarter results. The Company believes that the comparative strength of third and fourth quarter results will depend importantly on when drug-eluting stent sales may begin in the U.S. The size of these royalties is subject to several variables including market acceptance, product pricing, reimbursement, competition and other factors, which could significantly impact CYPHER Stent sales.

     Olseth said, “Regardless of the precise date of approval, the outlook for meaningful increases in SurModics’ revenue and earnings in the future is excellent.”

     SurModics will host a Webcast at 5:00 p.m. ET (4:00 p.m. CT) today to discuss the quarterly results. To access the Webcast, go to the investor relations’ portion of the Company’s Web site, www.surmodics.com, and click on the second quarter Webcast icon. If you do not have access to the Internet and want to listen to an audio replay of the second quarter conference call, dial 800-405-2236 and enter conference call ID # 533085. The audio replay will be available beginning at 6:00 p.m. CT on Wednesday, April 16, until 5:00 p.m. CT on Wednesday, April 23.

About SurModics, Inc.

     SurModics, Inc., a leading provider of surface modification solutions, licenses its patented coating process to medical device manufacturers around the world. A significant portion of SurModics’ revenue is generated through royalties on the sale of coated products. SurModics’ Internet address is www.surmodics.com.

Forward-Looking Statements

     Certain statements contained in this press release are considered “forward-looking statements,” which provide current expectations or forecasts of future events, including SurModics’ expectations regarding the growth in licenses, royalties, revenues and earnings and the impact of the J&J-Cordis agreement. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Such statements involve a variety of risks and uncertainties, known and unknown. Important factors that could cause actual results to differ from expected or historic results include, among others, the success of Cordis and other existing licensees in timely introducing and selling products incorporating SurModics’ technology, factors influencing Cordis’ product sales such as FDA approval, market acceptance and competition, SurModics’ ability to attract new licensees and to enter into agreements for additional applications with existing licensees, the willingness of potential customers to sign license agreements under the terms offered by the Company, the success of ongoing development projects and outcome of human clinical studies being conducted by our licensees, strategies of customers, market demand, and general economic factors, such as consumer confidence and inflation. Investors are advised to consult any further disclosures by SurModics on this subject in its filings with the Securities and Exchange Commission.

SurModics, Inc.
Income Statements
(In thousands, except per share data)

			Three Months Ended						Six Months Ended
			March 31,						March 31,
			2003			2002			2003			2002
			(Unaudited)						(Unaudited)
Revenue			$	9,742		$	7,109		$	17,790		$	13,168
Operating expenses:
	Product			783			689			1,371			1,254
	Research & development			2,926			2,262			5,586			4,692
	Sales & marketing			534			368			1,071			719
	General & administrative			1,507			1,405			2,915			2,299
		Total operating expenses		5,750			4,724			10,943			8,964
Income from operations				3,992			2,385			6,847			4,204
Investment income				414			414			1,037			837
Net income before income taxes				4,406			2,799			7,884			5,041
Income tax provision				(1,656	)		(1,041	)		(2,963	)		(1,873	)
Net income			$	2,750		$	1,758		$	4,921		$	3,168
Basic net income per share			$	0.16		$	0.10		$	0.28		$	0.19
Diluted net income per share			$	0.15		$	0.10		$	0.28		$	0.18
Weighted average shares outstanding
	Basic			17,326			16,926			17,305			16,852
	Diluted			17,803			17,849			17,813			17,842

SurModics, Inc.
Revenue Summary
(In thousands)

			Three Months Ended							Six Months Ended
			March 31,							March 31,
			2003		2002		% Change			2003		2002		% Change
			(Unaudited)							(Unaudited)
Coatings revenue:
	Royalties		$	4,168	$	2,180		91	%	$	6,655	$	4,401		51	%
	License fees			125		380		(67	)%		655		459		43	%
	Reagent sales			1,990		1,005		98	%		4,499		2,172		107	%
	Commercial development			1,833		1,841		(—	)%		2,859		3,281		(13	)%
		Total coatings revenue		8,116		5,406		50	%		14,668		10,313		42	%
Other revenue:
	Diagnostic royalties			606		668		(9	)%		1,469		1,182		24	%
	Stabilization & slide sales			903		928		(3	)%		1,433		1,381		4	%
	Government research			117		107		9	%		220		292		(25	)%
		Total revenue	$	9,742	$	7,109		37	%	$	17,790	$	13,168		35	%

SurModics, Inc.
Condensed Balance Sheets
(in thousands)

			March 31,		September 30,
			2003		2002
			(Unaudited)
Assets
Current assets:
	Cash & investments		$	8,548	$	13,149
	Accounts receivable			5,138		5,506
	Inventories			728		746
	Other current assets			1,378		1,475
		Total current assets		15,792		20,876
Property & equipment, net				23,933		18,836
Long-term investments				38,023		30,726
Other assets				6,865		6,810
	Total assets		$	84,613	$	77,248
Liabilities & Stockholders’ Equity
Total current liabilities			$	7,167	$	5,057
Deferred revenue				1,793		2,196
Total stockholders’ equity				75,653		69,995
	Total liabilities & stockholders’ equity		$	84,613	$	77,248

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EX-99.1

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