WESTFORD, Mass., Feb. 10 /PRNewswire-FirstCall/ -- Cynosure, Inc.
(NASDAQ: CYNO), a leading developer and manufacturer of a broad
array of light-based aesthetic treatment systems, today announced
financial results for the three and 12 months ended December 31,
2008. Fourth-Quarter 2008 Financial Results Consistent with
Cynosure's January 15, 2009 announcement, revenues for the three
months ended December 31, 2008 were $25.5 million, reflecting the
effect of deteriorating global economic conditions and a weakening
credit environment in the aesthetic laser industry. Revenues for
the comparable period of 2007 were $36.6 million. Gross margin for
the fourth quarter of 2008 was 61.0% of total revenues, compared
with 65.9% for the same period in 2007. The decline in gross margin
was attributable to pricing pressure and a shift in the geographic
product mix in the fourth quarter of 2008, which saw a higher
percentage of laser revenue from the company's international
customers than in the comparable quarter of 2007. Net loss for the
fourth quarter of 2008 was $2.5 million, or $0.20 per basic share.
For the comparable period of 2007, Cynosure reported net income of
$5.3 million, or $0.41 per diluted share. Results for the fourth
quarter of 2008 included a bad debt charge of $2.7 million related
to uncollectible accounts from certain customers affected by the
overall economic environment and the tightening of credit markets,
which subsequently caused a number of practitioners to be unable to
meet their payment obligations to Cynosure. On a non-GAAP basis,
which excludes stock-based compensation expense and its related
income tax effects, the net loss was $1.9 million, or $0.15 per
basic share, for the fourth quarter of 2008, compared with non-GAAP
net income of $5.9 million, or $0.46 per diluted share, for the
fourth quarter of 2007. Please refer to the financial
reconciliations included in this news release for a reconciliation
of GAAP results to non-GAAP results for the three months ended
December 31, 2008 and 2007. "The global economic downturn has
created an extremely challenging environment for the aesthetic
industry," said Cynosure President and Chief Executive Officer
Michael Davin. "After achieving 13 consecutive quarters of
year-over-year, double-digit percentage revenue growth, our revenue
declined sharply in the fourth quarter as a number of prospective
customers faced tighter lending standards and some physicians opted
to delay planned capital equipment purchases." "As previously
announced, Cynosure has taken a number of steps to bring expenses
in line with current revenue levels," Davin said. "We have reduced
our worldwide headcount by 17%, decreased spending on multiple
programs and implemented other cost-control initiatives. Together,
we expect these actions to produce an annualized savings of
approximately $8 million to $10 million as we work toward managing
the business profitably in 2009." "Despite the economic headwinds,
we believe Cynosure concluded 2008 in a strong competitive
position," Davin said. "During 2008, we extended our track record
of innovation with the introduction of three new workstations,
including Smartlipo MPX(TM) for laser lipolysis, Accolade(TM) for
the removal of pigmented lesions, and Affirm CO2(TM) for advanced
ablative therapy. We also rolled out a series of technology
enhancements such as the SmartSense(TM) intelligent energy delivery
system and the Affirm Er wavelength for anti-aging applications.
For customers, these solutions raise the bar for efficacy and
safety in the aesthetic industry, and further differentiate the
Cynosure brand." Full-Year Results For the 12 months ended December
31, 2008, revenues increased approximately 12% to $139.7 million
from $124.3 million in 2007. Gross margin was 65.1% of total
revenues in 2008 compared with 64.2% in 2007. Net income for 2008
was $10.2 million, or $0.80 per diluted share, versus $14.5
million, or $1.15 per diluted share, for 2007. Non-GAAP net income,
which excludes stock-based compensation expense and its related
income tax effects, was $14.4 million, or $1.13 per diluted share,
for full-year 2008 compared with $18.3 million, or $1.44 per
diluted share, in 2007. Please refer to the financial
reconciliations included in this news release for a reconciliation
of GAAP results to non-GAAP results for the 12 months ended
December 31, 2008 and 2007. Business Outlook "Looking ahead, we are
committed to managing our business profitably and extending our
industry leadership in 2009," Davin said. "Among our goals for the
year, we plan to introduce a new flagship workstation at the
American Academy of Dermatology Annual Meeting in March; open new
direct sales offices in select international markets; and roll out
several new technology innovations designed to benefit both
aesthetic practitioners and patients." "Our emphasis on delivering
the most innovative and exciting products through the most
efficient distribution channels has served us well," Davin said.
"We plan to invest further in these areas as we navigate this
economic downturn, with the aim of emerging as an even stronger
competitor. With more than $95 million in cash, cash equivalents,
marketable securities and investments at year end, and no long-term
debt, we believe we have ample capital to execute our strategy."
Use of Non-GAAP Financial Measures To supplement Cynosure's
consolidated financial statements presented in accordance with
GAAP, this press release includes the following measures defined as
non-GAAP financial measures by the SEC: non-GAAP net income and
non-GAAP diluted earnings per share. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for the financial information prepared and
presented in accordance with GAAP. In addition, the non-GAAP
financial measures included in this press release may be different
from, and therefore not comparable to, similar measures used by
other companies. Although certain non-GAAP financial measures used
in this release exclude the accounting treatment of stock-based
compensation, these non-GAAP measures should not be relied upon
independently, as they ignore the contribution to our operating
results that is generated by the incentive and compensation effects
of the underlying stock-based compensation programs. For more
information on these non-GAAP financial measures, please see the
non-GAAP data included at the end of this release. This data has
more details of the GAAP financial measures that are most directly
comparable to non-GAAP financial measures and the related
reconciliations between these financial measures. Cynosure's
management believes that these non-GAAP financial measures provide
meaningful supplemental information regarding our performance by
excluding certain expenses and expenditures that may not be
indicative of our core business operating results. Cynosure
believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing Cynosure's
performance and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate
management's internal comparisons to Cynosure's historical
performance and our competitors' operating results. Cynosure
believes that these non-GAAP measures are useful to investors in
allowing for greater transparency with respect to supplemental
information used by management in its financial and operational
decision making. Conference Call Cynosure will host a conference
call for investors today at 9:00 a.m. ET. On the call, Michael
Davin and Timothy Baker, the company's Executive Vice President and
Chief Financial Officer, will discuss the fourth quarter and full
year 2008 financial results and provide a business outlook. Those
who wish to listen to the conference call webcast should visit the
"Investor Relations" section of the company's website at
http://www.cynosure.com/. The live call also can be accessed by
dialing (877) 407-5790 or (201) 689-8328. If you are unable to
listen to the live call, the webcast will be archived on the
company's website. About Cynosure, Inc. Cynosure, Inc. develops and
markets aesthetic treatment systems that are used by physicians and
other practitioners to perform non-invasive and minimally invasive
procedures to remove hair, treat vascular lesions, rejuvenate skin
through the treatment of shallow vascular and pigmented lesions,
liquefy and remove unwanted fat through laser lipolysis and
temporarily reduce the appearance of cellulite. Cynosure's products
include a broad range of laser and other light-based energy
sources, including Alexandrite, pulsed dye, Nd:YAG and diode
lasers, as well as intense pulsed light. Cynosure was founded in
1991. For corporate or product information, contact Cynosure at
800-886-2966, or visit http://www.cynosure.com/. Forward-Looking
Statements Any statements in this press release about future
expectations, plans and prospects for Cynosure, Inc., including
statements about the company's expectations and future financial
performance, as well as other statements containing the words
"believes," "anticipates," "plans," "expects," "will" and similar
expressions, constitute forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by such
forward-looking statements as a result of various important
factors, including Cynosure's history of operating losses, its
reliance on sole source suppliers, the inability to accurately
predict the timing or outcome of regulatory decisions, changes in
consumer preferences, competition in the aesthetic laser industry,
economic, market, technological and other factors discussed in
Cynosure's most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q, which are filed with the Securities and
Exchange Commission. In addition, the forward-looking statements
included in this press release represent Cynosure's views as of the
date of this press release. Cynosure anticipates that subsequent
events and developments will cause its views to change. However,
while Cynosure may elect to update these forward-looking statements
at some point in the future, it specifically disclaims any
obligation to do so. These forward-looking statements should not be
relied upon as representing Cynosure's views as of any date
subsequent to the date of this press release. Contact: Scott
Solomon Vice President Sharon Merrill Associates, Inc. 617-542-5300
Consolidated Statements of Income (Unaudited)
--------------------------------------------- (In thousands, except
per share data) Three Months Ended Year Ended December 31, December
31, 2008 2007 2008 2007 ---- ---- ---- ---- Revenues $25,495
$36,573 $139,662 $124,315 Cost of revenues 10,060 12,472 48,705
44,507 ------ ------ ------ ------ Gross profit 15,435 24,101
90,957 79,808 Operating expenses Selling and marketing 11,872
12,611 53,062 42,058 Research and development 1,891 1,869 7,497
6,827 General and administrative 6,729 2,975 17,837 11,346 -----
----- ------ ------ Total operating expenses 20,492 17,455 78,396
60,231 (Loss) income from operations (5,057) 6,646 12,561 19,577
Interest income, net 521 754 2,498 2,516 Other (expense) income,
net (98) 255 (89) 695 --- --- --- --- (Loss) income before income
taxes (4,634) 7,655 14,970 22,788 Income tax (benefit) provision
(2,141) 2,349 4,771 8,276 ------ ----- ----- ----- Net (loss)
income $(2,493) $5,306 $10,199 $14,512 ======= ====== =======
======= Diluted net (loss) income per share $(0.19) $0.41 $0.80
$1.15 ====== ===== ===== ===== Diluted weighted average shares
outstanding 12,807 12,806 12,806 12,654 ====== ====== ====== ======
Basic net (loss) income per share $(0.20) $0.43 $0.81 $1.21 ======
===== ===== ===== Basic weighted average shares outstanding 12,698
12,381 12,581 11,993 ====== ====== ====== ====== Condensed
Consolidated Balance Sheet (Unaudited)
------------------------------------ (In thousands) December 31,
2008 2007 ---- ---- Assets: Cash, cash equivalents and marketable
securities $74,369 $86,097 Accounts receivable, net 25,156 24,124
Amounts due from related parties 40 8 Inventories 30,248 22,442
Deferred tax asset, current portion 6,825 4,161 Prepaid expenses
and other current assets 4,331 4,425 ----- ----- Total current
assets 140,969 141,257 Property and equipment, net 8,422 7,146
Long-term investments and related financial instruments 21,082 -
Other noncurrent assets 2,649 1,441 ----- ----- Total assets
$173,122 $149,844 ======== ======== Liabilities and stockholders'
equity: Accounts payable and accrued expenses $20,697 $20,790
Amounts due to related parties 6,083 2,311 Deferred revenue 4,296
3,939 Capital lease obligations 398 485 --- --- Total current
liabilities 31,474 27,525 Capital lease obligations, net of current
portion 407 794 Deferred revenue, net of current portion 436 421
Other long-term liabilities 451 226 --- --- Total stockholders'
equity 140,354 120,878 ------- ------- Total liabilities and
stockholders' equity $173,122 $149,844 ======== ======== To
supplement our consolidated financial statements presented in
accordance with GAAP, Cynosure uses the following measures defined
as non-GAAP financial measures by the SEC: non-GAAP gross profit,
non-GAAP income from operations, non-GAAP net income and non-GAAP
diluted earnings per share. The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. In addition, the non-GAAP financial measures
included in this press release may be different from, and therefore
not comparable to, similar measures used by other companies.
Although certain non-GAAP financial measures used in this release
exclude the accounting treatment of stock-based compensation, these
non-GAAP measures should not be relied upon independently as they
ignore the contribution to our operating results that is generated
by the incentive and compensation effects of the underlying
stock-based compensation programs. Cynosure's management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding our performance by excluding
certain expenses and expenditures that may not be indicative of our
core business operating results. Cynosure believes that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing Cynosure's performance and when
planning, forecasting and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal
comparisons to Cynosure's historical performance and our
competitors' operating results. Cynosure believes that these
non-GAAP measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision making.
Reconciliation of GAAP Income Statement Measures to Non-GAAP Income
Statement Measures (Unaudited)
--------------------------------------------------------------------
(In thousands, except per share data) Three Months Ended Year Ended
December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ----
Gross profit $15,435 $24,101 $90,957 $79,808 ------- -------
------- ------- Non-GAAP adjustments to gross profit: Stock-based
compensation 127 104 537 373 --- --- --- --- Total non-GAAP
adjustments to gross profit 127 104 537 373 --- --- --- ---
Non-GAAP gross profit $15,562 $24,205 $91,494 $80,181 =======
======= ======= ======= Three Months Ended Year Ended December 31,
December 31, 2008 2007 2008 2007 ---- ---- ---- ---- (Loss) income
from operations $(5,057) $6,646 $12,561 $19,577 ------- ------
------- ------- Non-GAAP adjustments to (loss) income from
operations: Stock-based compensation 1,616 1,494 7,279 5,777 -----
----- ----- ----- Total non-GAAP adjustments to (loss) income from
operations 1,616 1,494 7,279 5,777 ----- ----- ----- ----- Non-GAAP
(loss) income from operations $(3,441) $8,140 $19,840 $25,354
======= ====== ======= ======= Three Months Ended Year Ended
December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ----
Net (loss) income $(2,493) $5,306 $10,199 $14,512 ------- ------
------- ------- Non-GAAP adjustments to net (loss) income:
Stock-based compensation 1,547 1,494 7,422 5,777 Income tax
provision from IRS Audit - - - 702 Income tax effect of non-GAAP
adjustments (941) (945) (3,201) (2,710) ---- ---- ------ ------
Total non-GAAP adjustments to net (loss) income 606 549 4,221 3,769
--- --- ----- ----- Non-GAAP net (loss) income $(1,887) $5,855
$14,420 $18,281 ======= ====== ======= ======= Three Months Ended
Year Ended December 31, December 31, 2008 2007 2008 2007 ---- ----
---- ---- Diluted net (loss) income per share $(0.19) $0.41 $0.80
$1.15 ------ ----- ----- ----- Stock-based compensation 0.12 0.12
0.58 0.46 Income tax provision from IRS Audit - - - 0.06 Income tax
effect of non-GAAP adjustments (0.08) (0.07) (0.25) (0.21) ------
----- ----- ----- Total non-GAAP adjustments to net (loss) income
0.04 0.04 0.33 0.30 ----- ---- ---- ---- Non-GAAP diluted net
(loss) income per share $(0.15) $0.46 $1.13 $1.44 ====== =====
===== ===== Weighted average shares used to compute diluted net
(loss) income per share 12,807 12,806 12,806 12,654 ====== ======
====== ====== Weighted average shares used to compute non-GAAP
diluted net (loss) income per share 12,807 12,806 12,806 12,654
====== ====== ====== ====== DATASOURCE: Cynosure, Inc. CONTACT:
Scott Solomon, Vice President of Sharon Merrill Associates, Inc.
for Cynosure, Inc., +1-617-542-5300, Web Site:
http://www.cynosure.com/
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