<SUBMISSION>
<ACCESSION-NUMBER>0000950134-03-007303
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20030424
<ITEMS>9
<FILING-DATE>20030507
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ADVANCED NEUROMODULATION SYSTEMS INC
<CIK>0000351721
<ASSIGNED-SIC>3841
<IRS-NUMBER>751646002
<STATE-OF-INCORPORATION>TX
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-10521
<FILM-NUMBER>03686869
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6501 WINDCREST DRIVE SUITE 100
<CITY>PLANO
<STATE>TX
<ZIP>75024
<PHONE>9723098000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6501 WINDCREST DRIVE SUITE 100
<CITY>PLANO
<STATE>TX
<ZIP>75024
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>QUEST MEDICAL INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d05528e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
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<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="4"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B></FONT>

<DIV align="center"><FONT size="3"><B>Washington, DC 20549</B></FONT></DIV>

<P align="center"><FONT size="5"><B>FORM 8-K</B></FONT>

<P align="center"><FONT size="3"><B>CURRENT REPORT<BR>
PURSUANT TO SECTION 13 or 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>
</FONT>
<P align="center"><FONT size="3">Date of report (Date of earliest event reported):<BR>
May&nbsp;7, 2003 (April&nbsp;24, 2003)
</FONT>
<P align="center"><FONT size="6"><U><B>Advanced Neuromodulation
Systems, Inc.</B></U></FONT>

<DIV align="center"><FONT size="2"><B>(Exact name of registrant as specified in charter)</B></FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">Texas</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
0-10521
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">75-1646002</FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
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</TR>
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    <TD align="center" valign="top"><FONT size="2"><B>(State or Other<BR>
Jurisdiction of<BR>
Incorporation)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>(Commission File<BR>
Number)</B>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>(IRS Employer<BR>
Identification No.)</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="3">6501 Windcrest Drive, Suite&nbsp;100<BR>
<U>Plano, Texas 75024</U><BR>
<B>(Address of principal executive offices) (Zip code)</B>
</FONT>
<P align="center"><FONT size="3">Registrant&#146;s telephone number, including area code:<BR>
(972)&nbsp;309-8000
</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<!-- link2 "Item&nbsp;9. Regulation FD Disclosure (The information below is being provided under Item 12. Results of Operations and
Financial Condition.)" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;9. Regulation FD
Disclosure. (The information below is being provided under Item 12. "Results of Operations and
Financial Condition.")</B>
</FONT>

<P><FONT size="2">We are providing the following information under this Form 8-K:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a press release issued on April&nbsp;24, 2003 disclosing information
regarding our results of operations and financial condition for the
first quarter of 2003, our financial outlook for 2003, and the
completion of our acquisition of Sun Medical&#146;s pain management
business, a copy of which is attached hereto as Exhibit&nbsp;99.1, and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the transcript of a conference call held on April&nbsp;24, 2003
discussing our results of operations and financial condition for the
first quarter of 2003, and our financial outlook for 2003, a copy of
which is attached hereto as Exhibit&nbsp;99.2.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">2</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>



<!-- link1 "SIGNATURES" -->
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
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    <TD width="10%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="top"><FONT size="2">Dated:&nbsp;&nbsp;May&nbsp;7, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5" align="left" valign="top"><FONT size="2">ADVANCED NEUROMODULATION SYSTEMS, INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top"><FONT size="2">/s/ F. Robert Merrill III<BR></FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top"><HR size="1" noshade></TD>
</TR>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:<BR>Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">F. Robert Merrill III<BR>
Executive Vice President, Finance,<BR>
Chief Financial Officer and Treasurer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">3</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<!-- link1 "INDEX TO EXHIBITS" -->
<P align="center"><FONT size="2"><B>INDEX TO EXHIBITS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
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    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Press Release dated April&nbsp;24, 2003.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">99.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Transcript from conference call on April&nbsp;24, 2003.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">4</FONT>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>d05528exv99w1.txt
<DESCRIPTION>EX-99.1 PRESS RELEASE
<TEXT>
<PAGE>



                                                                    EXHIBIT 99.1

(ANS LOGO)                                                 FOR IMMEDIATE RELEASE

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

                   Advanced Neuromodulation Systems Announces
            Record First Quarter Net Income of $0.20 Per Share Versus
                   $0.08 Per Share As Neuro Sales Increase 85%

                     Management Increases Guidance for 2003


         DALLAS, TEXAS, April 24, 2003 -- ADVANCED NEUROMODULATION SYSTEMS, INC.
(ANS) (NASDAQ:ANSI) today announced record revenue and earnings for the first
quarter of 2003.

         For the three months ended March 31, 2003, revenue increased 71% to
$19,671,000 from $11,473,000, as sales of ANS' neuromodulation systems for the
treatment of chronic pain increased 85% to $16,627,000 from $8,988,000 a year
earlier. Net income more than tripled to $2,620,000, or $0.20 per diluted share,
from $837,000, or $0.08 per diluted share, for the first quarter of 2002.

         Gross margin rose to 65% for this year's first quarter compared to 61%
for the same period of 2002. Pre-tax margin increased to 21% for the first
quarter as compared to 11% for the same period last year. Net margin improved to
13% for the 2003 first quarter from 7% a year earlier.

         At March 31, 2003, cash and equivalents and marketable securities
totaled $90,830,000. ANS has no debt.

         President and Chief Executive Officer Chris Chavez attributed ANS'
record first quarter performance to continued strong sales of the company's
Genesis(R) and Genesis XP(TM) Totally Implantable Pulse Generator (IPG) Spinal
Cord Stimulators and its Renew(R) radio frequency (RF) neurostimulation system.

         "The spinal cord stimulation market, which includes both the RF and IPG
segments, has already reached approximately $300 million and is estimated to be
growing 20% annually. The broader neuromodulation market is expected to grow
from approximately $700 million in 2002 to $1.1 billion by 2005. With the solid
market position ANS has established, we have the opportunity to deliver
sustained long-term growth. We are continuing to build our high-performance
operating platform and expand our product development pipeline to take full
advantage of this opportunity," Chavez said.

MANAGEMENT INCREASES GUIDANCE FOR 2003

         ANS currently expects revenue for 2003 in the range of $77,000,000 to
$80,000,000 and net income in the range of $0.81 to $0.86 per diluted share.


                                                                          (more)
<PAGE>


Advanced Neuromodulation Systems Announces First Quarter Results
April 24, 2003
Page Two




SUN MEDICAL ACQUISITION

         During the first quarter, ANS completed the acquisition of the pain
management business of its largest distributor, Sun Medical, Inc. Sun Medical is
a specialty medical device distributor based in Arlington, Texas and has served
as ANS' exclusive distributor in key territories throughout the Southwest and
Upper Midwest. Substantially all of Sun's pain management sales representatives
have joined ANS' direct sales force. In 2002, Sun purchased $6.3 million of ANS
products, accounting for approximately 14% of net revenue derived from
neuromodulation products.

CONFERENCE CALL

         ANS has scheduled a conference call for today, Thursday, April 24, 2003
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 #21141308, after 1:00 PM ET.

ABOUT ADVANCED NEUROMODULATION SYSTEMS

         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. 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(R) 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(R) IPG and Genesis XP(TM) IPG; competition from
Medtronic, Inc. and future competitors; continued market acceptance of our
Renew(R) system following the launches of the Genesis IPG and Genesis XP 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; reliance on key
distributors; 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.

                                (tables attached)

                                                                          (more)
<PAGE>


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

<Table>
<Caption>
                                                       Three Months Ended
                                                           March 31,
                                                -------------------------------
                                                    2003               2002
                                                ------------       ------------
<S>                                             <C>                <C>
Net revenue                                     $ 19,670,591       $ 11,472,646
Cost of revenue                                    6,881,691          4,514,160
                                                ------------       ------------
Gross profit                                      12,788,900          6,958,486
                                                ------------       ------------

Operating expenses:
Research and development                           1,692,431          1,292,703
Sales and marketing                                5,159,908          2,895,890
Amortization of other intangibles                    354,934            227,796
General and administrative                         1,765,918          1,302,872
                                                ------------       ------------
                                                   8,973,191          5,719,261
                                                ------------       ------------

Income from operations                             3,815,709          1,239,225
                                                ------------       ------------

Other income (expenses):
Interest expense                                          --             (4,306)
Interest and other income                            281,655             73,506
                                                ------------       ------------
                                                     281,655             69,200
                                                ------------       ------------

Income before income taxes                         4,097,364          1,308,425
Income taxes                                       1,477,550            471,449
                                                ------------       ------------

Net income                                      $  2,619,814       $    836,976
                                                ============       ============

Basic income per share:
Net income                                      $        .21       $        .09
                                                ============       ============
Number of basic shares                            12,412,607          9,107,985
                                                ============       ============

Diluted income per share:
Net income                                      $        .20       $        .08
                                                ============       ============
Number of diluted shares                          13,328,098         10,292,947
                                                ============       ============
</Table>

                                                                          (more)
<PAGE>

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


<Table>
<Caption>
                                                                    March 31,      December 31,
                                                                      2003             2002
                                                                  ------------     ------------
<S>                                                               <C>              <C>
ASSETS

Current assets:
Cash, certificates of deposit and short-term investments          $ 90,830,175     $ 96,769,918
Receivable, trade net                                               13,007,224       10,847,237
Receivable, other                                                      163,839          189,017
Inventories                                                         15,973,859       13,722,946
Deferred income taxes                                                1,972,009        1,122,617
Prepaid expenses and other current assets                            1,140,679        1,032,883
                                                                  ------------     ------------
Total current assets                                               123,087,785      123,684,618

Net property, plant and equipment                                   10,773,855       10,607,991
Patents, trademarks, purchased technology & other assets, net       29,813,836       24,051,518
                                                                  ------------     ------------
Total assets                                                      $163,675,476     $158,344,127
                                                                  ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable                                                  $  3,643,888     $  2,392,579
Accrued salary and employee benefit costs                            1,155,140        3,077,603
Accrued tax abatement liability                                        969,204          969,204
Income taxes payable                                                        --          822,228
Commissions payable                                                    867,729          794,521
Deferred revenue                                                       661,314          646,577
Warranty reserve                                                       378,144          402,259
Other accrued expenses                                                 402,481          299,905
                                                                  ------------     ------------
Total current liabilities                                            8,077,900        9,404,876

Deferred income taxes                                                3,698,647        3,731,939
Non-current deferred revenue                                            87,595          162,504

Total stockholders' equity                                         151,811,334      145,044,808
                                                                  ------------     ------------

Total liabilities and stockholders' equity                        $163,675,476     $158,344,127
                                                                  ============     ============
</Table>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>d05528exv99w2.txt
<DESCRIPTION>EX-99.2 TRANSCRIPT FROM CONFERENCE CALL
<TEXT>
<PAGE>


                                                                    EXHIBIT 99.2


CCBN STREETEVENTS

CCBN STREETEVENTS CONFERENCE CALL TRANSCRIPT (AS EDITED AND CORRECTED BY ANS)
ANSI - Q1 2003 Advanced Neuromodulation Systems Earnings Conference Call

Event Date/Time: Apr. 24, 2003 / 11:00AM ET
Event Duration: N/A


CORPORATE PARTICIPANTS

CHRISTOPHER G. CHAVEZ
Advanced Neuromodulation Systems Incorporated - President and CEO

SCOTT F. DREES
Advanced Neuromodulation Systems Incorporated - EVP

ROBERT MERRILL
Advanced Neuromodulation Systems Incorporated - CFO

KENNETH G. HAWARI
Advanced Neuromodulation Systems Incorporated - EVP

DREW JOHNSON
Advanced Neuromodulation Systems Incorporated - VP, Regulatory Affairs

CONFERENCE CALL PARTICIPANTS
MARK LANDY
Analyst

WILLIAM PLOVANIC
First Albany - Analyst

THOMAS GUNDERSON
Piper Jaffray - Analyst


<PAGE>


PRESENTATION

--------------------------------------------------------------------------------
OPERATOR

Ladies and gentlemen, thank you for standing by. And welcome to the Advanced
Neuromodulation Systems Incorporated First Quarter Conference Call. During the
presentation, all participants will be in a listen-only mode. Afterwards, we
will conduct a question and answer session. At that time, if you have a
question, please press the "1" followed by the "4" on your telephone. As a
reminder, this conference is being recorded, Thursday, April 24th 2003. I would
now like to turn the conference over to Christopher Chavez, President and CEO of
Advanced Neuromodulation Systems Incorporated. Please go ahead, sir.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Amy. Good morning. We appreciate your interest today in ANS and the
opportunity to review first quarter results with you. With me, this morning, are
Scott Drees, our Executive Vice President of Sales and Marketing; Bob Merrill,
our CFO; and Ken Hawari, our Executive Vice President. I will open, Bob will
summarize financial performance for the first quarter, and then we'll address
questions. Please keep in mind that we may use forward-looking comments in our
opening statements and in our answers to your questions.

 The first quarter was another period of outstanding accomplishments for ANS. We
continue to make strong progress on the top line, bottom-line and pipeline
objectives. Revenues increased 71% to a new record of $19.7 million. The
increase follows record performances in the last five quarters. Net income for
the first quarter increased 213% to $2.6 million or 20 cents per diluted share.
ANS' first quarter growth reflected an 85% increase in sales of our Spinal Cord
Stimulation Systems for the treatment of chronic pain. This was powered by
strong growth in our Genesis IPG and our first full quarter of Genesis XP sales.
Genesis XP is an IPG that offers the advantages of Genesis with more than double
the battery capacity.

 New products and new indications remain key to sustained and accelerated growth
into the future years For this reason, ANS will continue to invest in products
that improve our product offering in the spinal cord stimulation market. We will
also develop new products by leveraging our platform technology and market
position to enable ANS to pursue other significant commercial opportunities
including deep brain stimulation and implantable and refillable drug pumps. We
are making good progress in absorbing technology acquired from Micronet, and we
are still on target to launch Micronet's spinal cord stimulation leads later in
the third quarter. We also recently completed all 109 implants in support of our
pump clinical study, and we hope to file a PMA with the FDA later this year.
With these developments, we believe we have the products and the pipeline to
support growth through the decade. Although the interventional neuromodulation
market already approaches $800 million in worldwide revenues, we continue to
believe that the market is still very early in its development, is significantly
under-penetrated and offers significant growth potential. We estimate that
currently ANS has 8% market share of the broader neuromodulation market.
However, we have the people, products, programs, resources and capabilities
within our strategic planning horizon to increase our market share to 15 to 20%
of this large and growing neuromodulation market.

<PAGE>

We recently completed the acquisition of Sun Medical's pain management business
in March and have fully absorbed the nine new sales people and the three
clinical support specialists who came over in the deal. We are delighted to have
each of them as part of the ANS team.

The rationale for the deal was pure and simply to obtain total control of the
sales geography and to position ANS to make additional investments in this
geography, as we grow. The transaction will improve future margins in this
geography by approximately 10%. Our distribution capability continues to grow
and strengthen. As of today, we have 119 people, which include managers, sales
reps, and clinical specialists representing the ANS products in the US market.

First quarter results continue to demonstrate the strength of our organization
and operating platform and validate our business strategy. We remain focused in
executing this strategy, as ANS gain strength, confidence and momentum. The ANS
team continues to respond to the challenge of delivering strong back-to-back
performances. I am very proud of the entire ANS team, our employees in Plano,
our employees in New Jersey including our distributors and our agents. And I
might add our selling organization in other parts of the world. We also
appreciate the support and encouragement of our customers. We know they have a
choice. This concludes my opening comments. Bob Merrill, our CFO, will now
present financial highlights, and then we will invite questions. Bob.

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

Thanks Chris, and good morning everyone. We were pleased with the outstanding
first quarter results powered by growth in our IPG systems, both Genesis and
Genesis XP. The results continue to illustrate the leverage we built into our
business, as we continue to grow the top line.

First quarter revenue increased 71% to a record $19.7 million from $11.5 million
in the same period last year. Neuro products sales increased to $16.6 million,
up 85% from the prior year level of $9 million. Revenue from our Renew RF system
grew at a rate of 12% compared to last year's first quarter. Revenue from our
HDI subsidiary increased to $3 million in 2003 from $2.5 million during the
first quarter of 2002.

Gross profit for the first quarter increased 70% to $12.8 million from $7
million in 2002. Gross margin increased 430 basis points to 65% in the 2003
period from 60.7% in 2002. I expect continued improvement in gross margin
throughout the remainder of 2003 due to a higher overall mix of neuro product
sales, our recent acquisition of Sun Medical, and manufacturing leverage from
increased volumes. I expect gross margins to approach 68% by yearend 2003.

Operating expenses in terms of absolute dollars increased to $9 million, up 57%
from last year's $5.7 million. As a percentage of net revenue however, operating
expenses decreased to 45.6% from 49.9% a year ago due to the leveraging of R&D
expenses and general and administrative expense. As planned, we are continuing
to invest in our sales and marketing capabilities, which were 26.2% of net
revenue compared to the prior year level of 25.2%.

Operating income increased 208% to $3.8 million during the first quarter from
$1.2 million during the first quarter of 2002. Operating margin increased to
19.4%, up from 10.8% a year ago and up on a sequential basis from the fourth
quarter level of 18.7%.

Net income increased to $2.6 million or 20 cents per diluted share from $837,000
or 8 cents per diluted share in 2002. The company's tax rate was 36% in the
first quarter, the same as in first quarter of 2002.

Turning to the balance sheet, our cash and marketable securities at March 31st
were $90.8 million, down approximately $6 million from the December 31 level of
$96.8 million; principally

<PAGE>

due to $3.8 million used in the Sun Medical transaction at closing, $1 million
to purchase common stock in Innovative Spine Technologies, Inc., and $3.3
million for payment of income taxes and the reduction of other current
liabilities.

Our trade receivables increased 20% to $13 million, up nearly $2.2 million from
year-end 2002, due to our sales growth and an increase in DSOs to 59 days from
55 days in the fourth quarter. We experienced slower payments from insurance
companies and hospitals during the first quarter.

As we previously reported in our last conference call, the current lease on our
50,000 square foot corporate headquarters expires in August 2004. We plan to
break ground on a new facility today and expect to relocate our operations
before our lease expires in 2004. The facility will be approximately 145,000
square feet with an estimated construction cost between $16 million and $17
million. While we have not yet determined the method by which we will finance
the facility, our cash position and overall balance sheet continues to provide
us with various financing alternatives, including using our current cash,
financing through a debt vehicle such as a mortgage or other form of note, or a
sale-leaseback transaction. We also believe that on a per square foot basis, if
we finance the facility through a mortgage or a sale and leaseback, the net
effect of the cost to the company of building the new facility will not be
materially different from the cost of leasing suitable existing space.

We increased our investment in inventory from year-end 2002 by $2.3 million. Of
this increase, $1 million of this was related to the purchase of Sun Medical
which we value the inventory purchased from Sun at their cost. The remainder of
the increase was primarily related to additional inventory of Genesis and
Genesis XP to support our continued anticipation of growth in the next several
quarters.

We spent $795,000 during the first quarter on capex for additional furniture,
fixtures, manufacture tooling and equipment. Excluding the new facility
discussed earlier, we have budgeted $3.3 million for CAPEX during 2003.

Due to our strong first quarter performance, we're raising our guidance for the
remainder of 2003. We expect net revenue in the range of $77 million to $80
million compared to our earlier guidance in January 2003 of $71 million to $75
million. This increase results from continued momentum in the neuro business
including our recent acquisition of Sun Medical. In terms of net income per
share, we expect a range of 81 cents to 86 cents, again up from the 78 to 83
cents in our prior guidance. I'll now turn the call over to the conference
moderator for Q&A


<PAGE>


Q AND A

--------------------------------------------------------------------------------
OPERATOR

Thank you. Ladies and gentlemen, if you would like to register a question,
please press the "1" followed by the "4" on your telephones. You will hear a
three-tone prompt to acknowledge your request. If your question has been
answered, and you would like to withdraw your request, please press the "1"
followed by the "3." If you're using a speakerphone, please lift your handset
before entering the request. One moment please for the first question. Our first
question comes from the line of Mark Landy with Leerink Swann. Please proceed
with your question.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Gentlemen, all I can say is wow.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Mark.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

I had a couple of questions. Hi-tronics was, I think, ahead of expectations.
Should we think of that as the run rate going forward or is there something
there that was a one-time gain?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Mark, we had a strong quarter obviously at HDI, but we don't want to send a
message yet that there is growth there. As I've repeatedly in the past, we're
managing the resources of HDI, while we are redirecting those resources both in
development and manufacturing to support our core business at ANS. So it's
possible that we may have upside there, but we certainly don't want to predict
it at this point in time.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Well, then, just to be safe. It's probably best to keep it in the kind of 26,
27, around 2.6 million, 2.7 million rather than close it to 3, Bob.

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

I think that's right. I would still continue to look for somewhere around $11
million for the year.


<PAGE>



--------------------------------------------------------------------------------
MARK LANDY ANALYST

Okay. The mix towards Genesis XP -- could you maybe discuss that in terms of
where it stands in the sales mix?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

In the January or I should say that in our first - in our last conference call,
we speculated that XP could be as much as 50% of our total IPG volumes. I think
after having gone through this first quarter, I think, we can assert positively
that that's probably going to be how it's going to play out. We had a very
strong uptick on Genesis XP. Physicians like it -- they were very anxious to try
it, and I don't really want to talk about what our exact mix was for Q1. But I
can tell you that there was a strong uptick for Genesis XP. And we believe that
it is very possible that XP could be as much as half of our total IPG volume in
2003.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Okay. Then, just in terms of the RF business, could you maybe discuss the
dynamics in that business?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Yes. We had some growth actually year-over-year for -- actually, let me just go
back here. We experienced growth last year. I think we were all uncertain how
the RF business would do in light of the exciting launch of our IPG. Moving into
this first quarter, we experienced modest growth year-over-year for our RF
business. Mark, as I have stated a lot of times, we believe, that when you put
the patient first and you truly consider what is good for patients that
approximately 20% of the time for those patients who have complex multi-focal
pain, we believe that the Renew system is the right thing to do for our
patients. So as this business grows and as things unfold and once we go beyond
the marketing and the excitement of what an IPG brings to the table, we think
that for all the right reasons the RF business should grow.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Okay.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

But again, in the spirit of being conservative, for this year the message we're
conveying is that the RF business should be -- should show some modest growth
year-over-year. And as we get a better handle on things and as we gain momentum
in the market, we'll signal that when the time is appropriate.


<PAGE>

--------------------------------------------------------------------------------
MARK LANDY ANALYST

But, Chris, in Q102, we had it slightly falling off. So the growth rate shorter
-- probably would be higher in Q1 than it would going forward, because we did
get a rebound in the business as it went on, right?

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

I think that's right. I mean if you look at what I stated earlier, the RF
business was up 12% year-over-year. I think, as Chris said, we still believe
that to expect modest single-digit growth during this year, I think, that's the
stance that we want to take at this point. And as Chris said, I think, we'll
continue to update that as we go forward during the year.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Okay. Last question, guys. I'm taking up too much time. In terms of the days
receivables, Bob should we see that trending down? Is that kind of a new
standard as there is more demand for the product and hospitals take a little
longer to pay?

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

Well, as you are aware, I mean, insurance companies and hospitals are delaying
us as far as they can. So we historically had a range of -- in this range 55 to
59. You know, were trending down last year. I think as we put on the Sun
business, Sun historically would pay us within their terms, which is much
quicker than hospitals. I think it's probably going to end up in these upper
50s. We are going to do everything humanly possible to bring it down into the
mid 50s; but I would figure somewhere around this range, if I were you, Mark.

--------------------------------------------------------------------------------
MARK LANDY ANALYST

Great. Thanks very much, gentlemen.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Mark.

--------------------------------------------------------------------------------
OPERATOR

Our next question comes from the line of Bill Plovanic with First Albany. Please
proceed with your questions.


<PAGE>



--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Great. Thank you. And I hate to say it, but excellent quarter.

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

Thank you, Bill.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Bill.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

 I hate that because I just get to jump on a band wagon. The bells have got to
be ringing like mad down there these days.

--------------------------------------------------------------------------------
CHRISTOPHER G CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - PRESIDENT
AND CEO

Ooh, my ears are hurting.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

A couple of questions actually in regards to the -- first of all, to kind of
piggyback on Mark's question on the reimbursement from the insurance companies,.
what about from workers' comp? Has there been any rumblings there with budgets
being cut about your product in the pricing?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

You know, at this point in the time, Bill, we haven't experienced any problems
that are out of the normal in either workers' comp, Medicare or private pay. I
think it's going to be an interesting issue to watch in the coming months, as
the economy continues to muddle along; and there are pressures on a lot of
different parts of the economy. But at this point in time, the reimbursement
seems to be well under control.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Okay. And then for, Bob, on the interest and other income line -- it was a
little couple of thousand lighter than what we're looking for. Was there any
non-recurring type items that hit in there that we should be aware of?

<PAGE>

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

Well, the interest income truly reflects market rates at this point. As you'll
recall, we're invested in very short-term tax-free instruments; and the rates on
those very short-term instruments and when I say short, 35 days or less, are
around 1.0 to 1.1 right now on a tax-free basis. So it's just purely a function
of where the market is at this point.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Okay. And then, two more questions, if I may, on the distribution for you,
Chris? Could you give us an idea of what the breakdown of the distribution was
relative you have 119 people, how many are direct, how many are independent, and
how many are stocking? And then, how does your revenue mix lay on top of that?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Of the 119 field people -- again, this includes managers, reps, and clinical
specialists. Approximately, 15% of those are distributors, 41% are agents; and
for the first time now, our direct representation now is the largest part of our
distribution mix. That's approximately 44%. And I think those percentages would
be a good proxy for how our business splits up.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Great. So it's all tracking that way. And then the last question was as we look
out into the future at new products, here you're talking about DBS, you also
talked about the constant flow drug pumps; but what about other indications
inside the spinal cord? What kind of -- what could we expect on the near 6 to 18
months there? Is there anything in the works?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Specifically, in the area of spinal cord stimulation, I think, it's no secret
that spinal cord stimulation works very well for treating angina and for
treating ischemic pain associated with peripheral vascular disease. In fact,
those are the two leading indications for spinal cord stimulation in Europe.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Right.


<PAGE>

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

ANS will be initiating an IDE study in Europe, Northern Europe, where we're
actually going to do one in the Northeast. We also know that Medtronic has
announced that they're going to be pursuing an angina pivotal. So I think it's
inevitable that this modality will flow into that area, but it hasn't been our
top priority given everything else on our plate. So I think that's going to be
one area. I think the whole area of stimulation of the occipital nerves and
other nerves basically on the skull, offer a lot of very interesting and very
promising opportunities; so we will be pursuing that. We're still very
interested in moving into the sacral area to pursue sacral nerve stimulation for
both pelvic pain, and we're also considering in pursuing an indication for urge
continence. As you know, Bill, we don't have a call point on the urologist or
the urogynecologist. So a decision to go in that direction would basically imply
that we either create a marketing capability with the urologist, which is not
our intent and/or we find a powerful marketing company that's willing to take on
an exciting new line for an exciting new application. So those are some of them.
There are other applications in spinal code stimulation. There is a lot of talk
about the sexual dysfunction, and we haven't gone close to that one. And there
are others that I'm not at liberty to speak to. But our policy at ANS is to keep
things close to the vest both in our pipeline as well as in indications. So what
I can say definitively and what you can expect is that we will pursue
aggressively a system in deep brain stimulation to pursue Parkinson's and
Tremor; and we're considering other applications. And clearly, we're going to
pursue drug deliveries on constant rate pumps for pain; and I think, it's no
secret that we're working on a programmable pump and in other iterations to both
our pump technology and spinal cord stimulation technology.

--------------------------------------------------------------------------------
WILLIAM PLOVANIC  - FIRST ALBANY - ANALYST

Great. Thank you.

--------------------------------------------------------------------------------
OPERATOR

Our next question...

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Bill.

--------------------------------------------------------------------------------
OPERATOR

Our next question comes from the line of Tom Gunderson with Piper Jaffray.
Please proceed with your questions.

--------------------------------------------------------------------------------
THOMAS GUNDERSON  - PIPER JAFFRAY - ANALYST

Hi. Good morning. Just a follow up maybe on the closer end. You mentioned a 109
implants on follow up. Could you help me out a little bit on the timing for the
PMA? What's the follow up for

<PAGE>

that? And what kind of -- is it just pretty much the standard one to two months
to gather the data after the follow up before the submission?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO


--------------------------------------------------------------------------------


Hi, Tom. By the way, welcome. It's good to have you on this conference call
representing Piper Jaffray. I'm going to ask Drew Johnson, our Vice President of
Regulatory Affairs to take that question. Drew.

--------------------------------------------------------------------------------
DREW JOHNSON - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - VP, REGULATORY
AFFAIRS

Hi, Tom.

--------------------------------------------------------------------------------
THOMAS GUNDERSON  - PIPER JAFFRAY - ANALYST

Hi.

--------------------------------------------------------------------------------
DREW JOHNSON - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - VP, REGULATORY
AFFAIRS

As the protocol is written, we plan to submit the data to the agency on patients
who have completed six months of implantation of the device. As you mentioned,
it will take a couple of months or so to analyze the data and get the PMA ready
for submission.

--------------------------------------------------------------------------------
THOMAS GUNDERSON  - PIPER JAFFRAY - ANALYST

Okay. Thanks. Then, sort of a general question, but your success -- it has been
due to your new products and execution of your plan, a growing market and
somewhat taking out of the hide of your bigger competitor. Have you seen any
competitive response to you growth at this point? And if so, how are you
countering that?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Tom, that's an excellent question. Let me start by saying that what is very
exciting about the ANS opportunity is this whole idea of -- this new concept of
the digital drug, digital pharmaceutical, it has profound applications in areas
that go well beyond pain management. Clearly, there are going to be applications
in a lot of other clinical areas. So we truly are in the -- what I call the
infancy of developing a new modality for what could potentially be a lot of
applications. Our success at ANS, I think, is a function of the quality of our
technology, the outstanding abilities of our sales representation, and the
dedication of the ANS employees -- people work hard, and they are fully focused
on execution. I should say that I don't like to position this thing as an ANS
versus Medtronic, because clearly they're doing very well in this market. They
are continuing to show strong growth and we fully expect that they will. We
think

<PAGE>

that the real challenge remains not to beat each other up in the market although
we compete very aggressively against each other. And we have done so since I
have been here for the last five years. But the real opportunity is to continue
to develop the market, to create visibility for it, to continue to work the
reimbursement angles, to strengthen the technology, to train physicians and
ultimately to do all those things that need to be done to develop the market. So
I think there is a lot of downstream opportunity and I really credit the success
for what ANS has done to the superb efforts of all of ANS employees. I hope that
answers your question.

--------------------------------------------------------------------------------
THOMAS GUNDERSON  - PIPER JAFFRAY - ANALYST

Thanks for that response Chris. And then a detailed kind of financial question.
Could you help me out a little bit on what you did. You mentioned this a little
bit, I am not sure I caught it all on the inventory with Sun Medical. Was that
all inventory that you had sold to them or was that consignment. How did that
move over. You said you took at the cost, but can you give me a little bit more
color on that please?

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Sure Tom, I will let Bob take on that one. Bob.

--------------------------------------------------------------------------------
ROBERT MERRILL  - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED - CFO

Yes. Under the asset purchase agreement we agreed to acquire inventories that we
had previously sold to Sun. Under the accounting rules we are required to bring
those inventories back at what Sun Medical paid us. So there is approximately at
their cost about $950,000 that will come out in the April timeframe through our
P&L at that cost. So the initial margins on those first $950,000 of sales will
be lower than those going forward during the May and June timeframes. So
net-net, I don't think it will have a major impact on Q2 margins and as you know
Sun was given a discount off list of 25 percent, which will now flow back up
into the revenue lines going forward. So as I said earlier we believe after this
initial inventory comes out, Sun Medical will truly help our margins.

--------------------------------------------------------------------------------
THOMAS GUNDERSON  - PIPER JAFFRAY - ANALYST

You get to sell it at retail. Thanks for the answers to those questions. And,
Chris, glad to be here.

--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Thank you, Tom.

--------------------------------------------------------------------------------
OPERATOR

Ladies and gentlemen, as a reminder to register for question, please press the
"1" followed by the "4" on you telephone. And I am showing no further questions
at this time. Please continue with your presentation or any closing remarks.


<PAGE>



--------------------------------------------------------------------------------
CHRISTOPHER G. CHAVEZ - ADVANCED NEUROMODULATION SYSTEMS INCORPORATED -
PRESIDENT AND CEO

Just want to close by, thanking you for your continued interest in ANS. ANS
continues to be very strong and confident on our prospects for the future. We
look forward to updating you on second quarter results. Have a great day. Thank
you.

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