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8-K - FORM 8-K - SPECTRANETICS CORP | c96522e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - SPECTRANETICS CORP | c96522exv99w2.htm |
Exhibit 99.1
COMPANY CONTACTS:
|
INVESTOR CONTACTS: | |
Spectranetics Corporation
|
Lippert/Heilshorn & Associates, Inc. | |
Guy Childs, Chief Financial Officer
|
Don Markley or Bruce Voss | |
(719) 633-8333
|
(310) 691-7100 | |
dmarkley@lhai.com |
FOR IMMEDIATE RELEASE
SPECTRANETICS REPORTS RECORD FOURTH QUARTER REVENUE,
UP 11% TO $29.7 MILLION
UP 11% TO $29.7 MILLION
Full Year 2009 Revenue of $114.8 Million up 10% over 2008 Driven by
Lead Management and International Growth
Lead Management and International Growth
COLORADO SPRINGS, Colo. (February 18, 2010) Spectranetics Corporation (Nasdaq: SPNC) today
reported financial results for the quarter and full year ended December 31, 2009.
Revenue for the fourth quarter of 2009 was $29.7 million, up 11% compared with revenue of
$26.6 million for the fourth quarter of 2008.
The fourth quarter was highlighted by several important developments and achievements including
the resolution of the 16-month federal investigation with no charges filed against the Company,
reaching the highest quarterly revenue in our history and recording an adjusted pre-tax profit for
the second quarter in a row, said Emile J. Geisenheimer, Chairman, President and Chief Executive
Officer. We are positioned for further growth in 2010 and look forward to the introduction of the
Turbo-Tandem for above-the-knee treatments. In addition, we continue to work with the Food and
Drug Administration as they review our 510(k) application seeking clearance to market certain
products for the treatment of in-stent restenosis in the legs.
The pre-tax loss for the fourth quarter of 2009 was $5,514,000, compared with a pre-tax loss of
$1,135,000 for the fourth quarter of 2008. The pre-tax loss during the fourth quarter of 2009
includes $6,121,000 of special items, consisting of:
| a $5,000,000 federal settlement; |
| a $1,100,000 impairment of auction rate securities we continue to hold; |
| a $540,000 realized loss on the sale of auction rate securities; |
| $76,000 of costs associated with a previously announced litigation settlement; and |
| a $595,000 credit, due to an insurance reimbursement related to federal investigation
costs. |
The pre-tax loss during the fourth quarter of 2008 included $2,028,000 of costs associated with the
federal investigation. Excluding these special items in both periods, adjusted pre-tax income was
$607,000 in the fourth quarter of 2009, compared with adjusted pre-tax income of $893,000 in the
fourth quarter of 2008. A further description of these special items and a reconciliation of these
non-GAAP financial measures to the most directly comparable financial measure calculated in
accordance with GAAP is provided immediately following the financial tables under Reconciliation of
Non-GAAP Financial Measures.
Fourth Quarter Revenue Review
Vascular intervention revenue rose 5% to $15.2 million, lead management revenue increased 33% to
$10.0 million, laser equipment revenue declined 15% to $2.0 million, and service and other revenue
increased 5% to $2.5 million, all compared with the fourth quarter of 2008. Vascular intervention
sales include three product lines atherectomy, which decreased 5%, crossing solutions, which
increased 19%, and thrombectomy, which increased 24%, all compared with the fourth quarter of 2008.
On a geographic basis, revenue in the United States was $24.4 million in the fourth quarter of
2009, an increase of 7% from the prior year fourth quarter. International revenue totaled $5.3
million, an increase of 38% from the fourth quarter of 2008.
Reflecting the Companys emphasis on sales to existing accounts, laser placements to new customers
were anticipated to decline compared with prior year levels. During the quarter ended December 31,
2009, the Company placed 28 laser systems with new customers compared with 35 placements during the
fourth quarter of 2008. Of those new laser placements, 15 laser systems were transfers from the
existing installed base during the fourth quarter of 2009, compared with 10 transfers during the
fourth quarter of 2008. As of December 31, 2009 the worldwide installed base of laser systems
totaled 902 (699 in the United States).
2009 Full Year Financial Results
Revenue for year ended December 31, 2009 rose 10% to $114.8 million, from $104.0 million in 2008.
Vascular intervention revenue in 2009 was $61.9 million, up 8% compared with $57.4 million in 2008;
and lead management revenue was $36.8 million in 2009, up 27% compared with $28.9 million in 2008.
Laser equipment revenue declined 21% to $6.8 million, from $8.6 million in 2008. Service and other
revenue in 2009 was $9.3 million, up 3% compared with $9.0 million in 2008.
On a geographic basis, revenue in the United States was $96.9 million in 2009, an increase of 7%
over 2008. International revenue totaled $17.9 million, an increase of 30% from 2008.
The pre-tax loss for 2009 was $13,247,000, compared with a pre-tax loss of $4,661,000 in 2008. The
pre-tax loss during 2009 includes $11,779,000 of special items, consisting of:
| a $5,000,000 federal settlement; |
| $2,362,000 of costs associated with the federal investigation; |
| $1,166,000 of costs associated with a previously announced litigation settlement; |
| a $1,100,000 impairment of auction rate securities we continue to hold; |
| $1,075,000 relating to the discontinuation of the marketing and sales of the Safe-Cross®
product line; |
| a $540,000 realized loss on the sale of auction rate securities; and |
| $536,000 of employee termination and lease abandonment costs. |
The pre-tax loss during 2008 included $6,299,000 of special items, consisting of:
| $3,849,000 of in-process research and development costs and |
| $2,450,000 of costs associated with the federal investigation. |
Excluding these special items in both periods, adjusted pre-tax loss was $1,468,000 in 2009,
compared with adjusted pre-tax income of $1,638,000 in 2008. A further description of these special
items and a reconciliation of these non-GAAP financial measures to the most directly comparable
financial measure calculated in accordance with GAAP is provided immediately following the
financial tables under Reconciliation of Non-GAAP Financial Measures.
Cash, cash equivalents and current investment securities totaled $19.1 million at December 31,
2009, compared with $18.3 million at September 30, 2009 and $20.5 million at December 31, 2008.
2010 Outlook
The Company continues to expect revenue growth during 2010 in both the vascular intervention and
lead management business units and expects higher growth rates internationally than in the United
States.
Excluding any impact of the Turbo-Tandem product launch, the vascular intervention revenue growth
rate is anticipated to be in the low to mid-single digits during 2010 as compared with 2009.
Including the impact of the Turbo-Tandem product launch, the vascular intervention revenue growth
rate is anticipated to be in the high single digits to low-teens. The lead management revenue
growth rate in 2010 as compared with 2009 is anticipated to be in the mid-teens.
Laser equipment revenue and service and other revenue are expected to grow in the low to mid-single
digits during 2010 as compared with 2009.
Gross margin is expected to be in the range of 71% to 72% during 2010.
A pre-tax loss is anticipated for the three months ended March 31, 2010 and management expects a
pre-tax profit for the year ended December 31, 2010.
Conference Call
Management will host an investment-community conference call today beginning at 9:00 a.m. Mountain
time, 11:00 a.m. Eastern time, to discuss these results. Individuals interested in listening to
the conference call should dial (888) 803-8271 for domestic callers, or (706) 634-2467 for
international callers. The live conference call will also be available via the Internet on the
investor relations section of www.spectranetics.com. A slide presentation will accompany the
webcast.
A telephone replay will be available for 48 hours following the conclusion of the call by dialing
(800) 642-1687 for domestic callers, or (706) 645-9291 for international callers and entering
reservation code 54934938. The web site replay will be available for 14 days following the
completion of the call.
About Spectranetics
Spectranetics manufactures and markets the only Excimer Laser System approved in the United States,
Canada, Europe and Japan for use in minimally invasive interventional procedures within the
cardiovascular system. More than 900 Spectranetics laser systems are used in hospitals worldwide.
The Companys Vascular Intervention (VI) products include a range of peripheral and cardiac laser
catheters for ablation of occluded arteries above and below the knee and within coronary arteries.
The Company also markets aspiration catheters for the removal of thrombus and support catheters to
facilitate crossing of coronary and peripheral arterial blockages.
The Lead Management (LM) product line includes excimer laser sheaths and cardiac lead management
accessories for the removal of pacemaker and defibrillator cardiac leads.
For more information, visit www.spectranetics.com.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are
based on current assumptions that involve risks and uncertainties that could cause actual outcomes
and results to differ materially. These risks and uncertainties may include adverse results of the
securities litigation or the stockholder derivative litigation in which the Company or any of its
officers or directors is a party, insufficient insurance coverage or the denial of insurance
coverage related to legal costs or any settlement or judgment in connection with these proceedings,
adverse impact to our business of healthcare reform and related legislation, if enacted, continued
or worsening adverse conditions in the general domestic and global economic markets and continued
volatility and disruption of the credit markets, which, among other things, affects the ability of
hospitals and other health care systems to obtain credit and may impede our access to capital and
has rendered our investments in auction rate securities illiquid, market acceptance of excimer
laser atherectomy technology, increasing price and product competition, increased pressure on
expense levels resulting from expanded sales, marketing, product development and clinical
activities, uncertain success of the Companys strategic direction, dependence on new product
development, intellectual property claims of third parties, availability of inventory from
suppliers, adverse outcome of FDA inspections, the receipt of FDA approval to market new products
or applications and the timeliness of any approvals, market acceptance of new products or
applications, product defects, ability to manufacture sufficient volumes to fulfill customer
demand, availability of vendor-sourced components at reasonable prices, unexpected delays or costs
associated with the Companys relocation and consolidation of its manufacturing operations, and
price volatility due to the initiation or cessation of coverage, or changes in ratings, by
securities analysts. For a further list and description of such risks and uncertainties that could
cause the actual results, performance or achievements of the Company to be materially different
from any anticipated results, performance or achievements, please see the Companys previously
filed SEC reports. Spectranetics disclaims any intention or obligation to update or revise any
financial projections or forward-looking statements, whether as a result of new information, future
events or otherwise.
Use of Non-GAAP Financial Measures
To supplement the Companys consolidated financial statements prepared in accordance with U.S.
generally accepted accounting principles (GAAP), Spectranetics uses certain non-GAAP financial
measures in this release. Reconciliations of the non-GAAP financial measures used in this release
to the most directly comparable U.S. GAAP measures for the respective periods, and an explanation
of the Companys use of these non-GAAP measures, can be found in Reconciliation of Non-GAAP
Financial Measures immediately following the financial tables. Non-GAAP financial measures have
limitations as analytical tools and should not be considered in isolation or as a substitute for
the Companys financial results prepared in accordance with GAAP.
-Financial tables follow-
THE SPECTRANETICS CORPORATION
Condensed Consolidated Statements of Operations
(000s, except per share data and percentages)
(unaudited)
Condensed Consolidated Statements of Operations
(000s, except per share data and percentages)
(unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenue |
$ | 29,661 | $ | 26,645 | $ | 114,837 | $ | 104,010 | ||||||||
Cost of revenue |
8,643 | 7,569 | 33,140 | 29,389 | ||||||||||||
Gross profit |
21,018 | 19,076 | 81,697 | 74,621 | ||||||||||||
Gross margin % |
71 | % | 72 | % | 71 | % | 72 | % | ||||||||
Operating expenses: |
||||||||||||||||
Selling, general and administrative |
16,389 | 15,024 | 68,478 | 61,150 | ||||||||||||
Research, development and other
technology |
4,087 | 3,403 | 15,060 | 13,449 | ||||||||||||
In-process research & development |
| | | 3,849 | ||||||||||||
Federal investigation settlement |
5,000 | | 5,000 | | ||||||||||||
Federal investigation legal and
other costs |
(595 | ) | 2,028 | 2,362 | 2,450 | |||||||||||
Litigation settlement |
76 | | 1,166 | | ||||||||||||
Discontinuation costs
Safe-Cross product line |
| | 1,075 | | ||||||||||||
Employee termination and lease
abandonment costs |
| | 536 | | ||||||||||||
Total operating expenses |
24,957 | 20,455 | 93,677 | 80,898 | ||||||||||||
Operating loss |
(3,939 | ) | (1,379 | ) | (11,980 | ) | (6,277 | ) | ||||||||
Loss on sale of auction rate securities |
(540 | ) | | (540 | ) | | ||||||||||
Other-than-temporary impairment of
auction rate securities |
(1,100 | ) | | (1,100 | ) | | ||||||||||
Other income, net |
65 | 244 | 373 | 1,616 | ||||||||||||
Loss before taxes |
(5,514 | ) | (1,135 | ) | (13,247 | ) | (4,661 | ) | ||||||||
Income tax (expense) benefit |
(228 | ) | 43 | (126 | ) | 706 | ||||||||||
Net loss |
$ | (5,742 | ) | $ | (1,092 | ) | $ | (13,373 | ) | $ | (3,955 | ) | ||||
Loss per common and common equivalent
share |
||||||||||||||||
Basic and diluted |
$ | (0.17 | ) | $ | (0.03 | ) | $ | (0.41 | ) | $ | (0.12 | ) | ||||
Weighted average shares outstanding |
||||||||||||||||
Basic and diluted |
33,050 | 32,006 | 32,529 | 31,826 | ||||||||||||
THE SPECTRANETICS CORPORATION
Condensed Consolidated Balance Sheets
(000s)
Condensed Consolidated Balance Sheets
(000s)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets |
||||||||
Cash, cash equivalents and investment securities |
$ | 19,053 | $ | 20,478 | ||||
Restricted cash |
817 | 1,350 | ||||||
Accounts receivable, net |
16,328 | 15,555 | ||||||
Inventories |
8,462 | 8,053 | ||||||
Deferred tax asset, current |
1,406 | 888 | ||||||
Other current assets |
2,054 | 2,034 | ||||||
Total current assets |
48,120 | 48,358 | ||||||
Property, plant and equipment, net |
31,475 | 32,345 | ||||||
Investment securities, non-current |
9,800 | 15,570 | ||||||
Deferred tax asset, non-current |
5,079 | 5,597 | ||||||
Goodwill |
5,569 | 4,292 | ||||||
Other assets |
640 | 934 | ||||||
Total assets |
$ | 100,683 | $ | 107,096 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities |
$ | 15,162 | $ | 15,690 | ||||
Non-current liabilities |
593 | 422 | ||||||
Stockholders equity |
84,928 | 90,984 | ||||||
Total liabilities and stockholders equity |
$ | 100,683 | $ | 107,096 | ||||
THE SPECTRANETICS CORPORATION
Supplemental Financial Information
(Unaudited)
Supplemental Financial Information
(Unaudited)
Financial Summary | 2008 | 2009 | ||||||||||||||||||
(000s, except laser sales and installed base amounts) | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||||||||||||
Disposable products revenue: |
||||||||||||||||||||
Vascular intervention revenue |
$ | 14,421 | $ | 15,290 | $ | 16,017 | $ | 15,429 | $ | 15,204 | ||||||||||
Lead management revenue |
7,538 | 8,173 | 8,773 | 9,839 | 9,997 | |||||||||||||||
Total disposable products revenue |
21,959 | 23,463 | 24,790 | 25,268 | 25,201 | |||||||||||||||
Service and other revenue |
2,339 | 2,380 | 2,294 | 2,192 | 2,461 | |||||||||||||||
Laser revenue: |
||||||||||||||||||||
Equipment sales |
1,273 | 352 | 843 | 150 | 734 | |||||||||||||||
Rental fees |
1,074 | 1,108 | 1,105 | 1,231 | 1,265 | |||||||||||||||
Total laser revenue |
2,347 | 1,460 | 1,948 | 1,381 | 1,999 | |||||||||||||||
Total revenue |
26,645 | 27,303 | 29,032 | 28,841 | 29,661 | |||||||||||||||
Non-GAAP adjusted pre-tax income (loss)
excluding special items (1) |
893 | (1,526 | ) | (1,190 | ) | 641 | 607 | |||||||||||||
Pre-tax loss |
(1,135 | ) | (2,899 | ) | (2,342 | ) | (2,492 | ) | (5,514 | ) | ||||||||||
Cash flow (used in) generated by operating
activities |
(4,556 | ) | (1,997 | ) | (1,132 | ) | 2,219 | (4,481 | ) | |||||||||||
Total cash and current investment securities |
20,478 | 18,403 | 15,623 | 18,298 | 19,053 | |||||||||||||||
Laser sales summary: |
||||||||||||||||||||
Laser sales from inventory |
7 | 2 | 4 | 1 | 5 | |||||||||||||||
Laser sales from evaluation/rental units |
2 | 0 | 1 | 1 | 0 | |||||||||||||||
Total laser sales |
9 | 2 | 5 | 2 | 5 | |||||||||||||||
(1) Non-GAAP adjusted pre-tax income (loss) excluding special items is a non-GAAP financial measure.
Please refer to the non-GAAP reconciliation tables following this table. |
||||||||||||||||||||
Worldwide Installed Base Summary: |
||||||||||||||||||||
Laser sales from inventory |
7 | 2 | 4 | 1 | 5 | |||||||||||||||
Rental placements |
20 | 22 | 21 | 25 | 16 | |||||||||||||||
Evaluation placements |
8 | 10 | 5 | 4 | 7 | |||||||||||||||
Laser placements during quarter |
35 | 34 | 30 | 30 | 28 | |||||||||||||||
Buy-backs/returns during quarter |
(10 | ) | (17 | ) | (21 | ) | (17 | ) | (15 | ) | ||||||||||
Net laser placements during quarter |
25 | 17 | 9 | 13 | 13 | |||||||||||||||
Total lasers placed at end of quarter |
850 | 867 | 876 | 889 | 902 |
Reconciliation of Non-GAAP Financial Measures
To supplement the Companys condensed consolidated financial statements prepared in accordance with
GAAP, Spectranetics uses certain non-GAAP financial measures in this release. Reconciliations of
these non-GAAP financial measures to the most directly comparable GAAP measures for the respective
periods can be found in the tables below. An explanation of the manner in which the Companys
management uses these non-GAAP measures to conduct and evaluate its business and the reasons why
management believes that these non-GAAP measures provide useful information to investors is
provided following the reconciliation tables.
THE SPECTRANETICS CORPORATION
Reconciliation of Pre-Tax Loss to Non-GAAP Adjusted Pre-Tax Income (Loss)
(000s)
(unaudited)
Reconciliation of Pre-Tax Loss to Non-GAAP Adjusted Pre-Tax Income (Loss)
(000s)
(unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Pre-tax loss, as reported (1) |
$ | (5,514 | ) | $ | (1,135 | ) | $ | (13,247 | ) | $ | (4,661 | ) | ||||
Purchased in-process research and development (2) |
| | | 3,849 | ||||||||||||
Federal investigation settlement (3) |
5,000 | | 5,000 | | ||||||||||||
Federal investigation legal and other costs (4) |
(595 | ) | 2,028 | 2,362 | 2,450 | |||||||||||
Litigation settlement (5) |
76 | | 1,166 | | ||||||||||||
Discontinuation costsSafe-Cross product line (6) |
| | 1,075 | | ||||||||||||
Employee termination and lease abandonment costs (7) |
| | 536 | | ||||||||||||
Loss on sale of auction rate securities (8) |
540 | | 540 | | ||||||||||||
Other-than-temporary impairment of auction rate
securities (9) |
1,100 | | 1,100 | | ||||||||||||
Non-GAAP adjusted pre-tax income (loss) |
$ | 607 | $ | 893 | $ | (1,468 | ) | $ | 1,638 | |||||||
1) | Given the Companys significant historical net operating losses that are available to
offset future taxable income, any income tax expense or benefit is a non-cash item. As a
result, management believes that pre-tax income or loss is the most appropriate measure of
its operating performance. |
|
2) | In May 2008, Spectranetics acquired the endovascular product lines of Kensey Nash
Corporation. At the date of acquisition, the Company recorded a charge of $3.8 million to
expense, representing purchased IPR&D related to a development project that had not yet
reached technological feasibility and had, in managements opinion, no alternative future
use. |
|
3) | As previously disclosed in filings with the SEC, in December 2009, the Company entered
into a civil Settlement Agreement with the Department of Justice (DOJ) and the Office of
Inspector General, and a Non-Prosecution Agreement with the DOJ, related to the federal
investigation which commenced in September 2008 (see Note 4 below). Pursuant to these
agreements, the Company agreed to a forfeiture of $100,000 and a cash payment of $4.9
million, without any admission of wrongdoing by the Company. |
|
4) | As previously disclosed in filings with the SEC, on September 4, 2008, the Company was
jointly served by the FDA and U.S. Immigration and Customs Enforcement with a search
warrant issued by the United States District Court, District of Colorado. The Company
incurred significant legal and other expenses in this matter. These amounts represent
significant charges beginning in the third quarter of 2008. In the fourth quarter of 2009,
the Company received an insurance payment reimbursing certain legal expenses incurred
related to the federal investigation, resulting in a net credit to expense during the
period. |
|
5) | The amounts recorded represent royalties related to a license agreement with Dr.
Rentrop, which was executed and disclosed in filings with the SEC in December 2009. |
6) | In the third quarter of 2009, the Company discontinued the marketing and sales of the
Safe-Cross product line, which was acquired from Kensey Nash Corporation in May 2008. The
$1.1 million one-time charge includes a patent impairment charge, impairment of long-lived
assets, inventory write-offs and an amount in consideration of remaining contractual
obligations to Kensey Nash Corporation primarily related to inventory purchases. |
|
7) | In the second and third quarters of 2009, the Company eliminated certain positions in
order to streamline operations. As a result, the Company recorded severance obligations
totaling $240,000 and $410,000 for the three and nine months ended September 30, 2009,
respectively. In addition, the Company recorded a charge for remaining lease obligations
in the amount of $126,000 for a portion of a leased facility that is no longer being
utilized. |
|
8) | In the fourth quarter of 2009, the Company sold two of its auction rate securities at
90% and 92% of par, respectively. The amounts recorded represent the loss on the sale of
these securities. |
|
9) | In the fourth quarter of 2009, the Company determined that its remaining auction rate
securities were other-than-temporarily impaired, due to a change by management regarding
their intent to hold such investments until a full recovery of their par value. The
amounts recorded represent the impairment calculated by an independent consultant. |
THE SPECTRANETICS CORPORATION
Reconciliation of Net Loss to Non-GAAP Adjusted Net Income (Loss) and
Net Loss per Share to Non-GAAP Adjusted Net Income (Loss) per Share
(000s, except per share data)
(unaudited)
Reconciliation of Net Loss to Non-GAAP Adjusted Net Income (Loss) and
Net Loss per Share to Non-GAAP Adjusted Net Income (Loss) per Share
(000s, except per share data)
(unaudited)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||
Impact | Impact | Impact | Impact | |||||||||||||||||||||||||||||
Net | per | Net | per | per | per | |||||||||||||||||||||||||||
(loss) | diluted | (loss) | diluted | diluted | diluted | |||||||||||||||||||||||||||
income | share* | Income | share* | Net loss | share* | Net loss | share* | |||||||||||||||||||||||||
Net loss, as
reported |
$ | (5,742 | ) | $ | (0.17 | ) | $ | (1,092 | ) | $ | (0.03 | ) | $ | (13,373 | ) | $ | (0.41 | ) | $ | (3,955 | ) | $ | (0.12 | ) | ||||||||
Purchased in-process
research and
development,
net of tax |
| | | | | | 2,386 | 0.07 | ||||||||||||||||||||||||
Federal
investigation
settlement |
5,000 | 0.15 | | | 5,000 | 0.15 | | | ||||||||||||||||||||||||
Federal
investigation
legal and other
costs, net of tax |
(595 | ) | (0.02 | ) | 1,257 | 0.04 | 2,362 | 0.07 | 1,519 | 0.05 | ||||||||||||||||||||||
Litigation
settlement |
76 | 0.00 | | | 1,166 | 0.04 | | | ||||||||||||||||||||||||
Discontinuation
costs
Safe-Cross
product line |
| | | | 1,07 | 0.03 | | | ||||||||||||||||||||||||
Employee termination
and lease
abandonment costs |
| | | | 536 | 0.02 | | | ||||||||||||||||||||||||
Loss on sale of
auction rate
securities |
540 | 0.02 | 540 | 0.02 | ||||||||||||||||||||||||||||
Other-than-temporary
impairment of
auction rate
securities |
1,100 | 0.03 | | | 1,100 | 0.03 | | | ||||||||||||||||||||||||
Non-GAAP adjusted
net income (loss) |
$ | 379 | $ | 0.01 | $ | 165 | $ | 0.01 | $ | (1,594 | ) | $ | (0.05 | ) | $ | (50 | ) | $ | (0.00 | ) | ||||||||||||
* | Per share amounts may not add due to rounding. |
The following table shows associated income tax benefit on special items that were excluded from
net income to arrive at non-GAAP adjusted net income. In 2009, the Company did not record an
income tax benefit for any of these special items. For 2008, amounts are tax effected at the
Companys marginal tax rate of 38%.
Reconciliation of Net Loss to Non-GAAP Adjusted Net Income (Loss)
Tax effect of reconciling items
(000s) (unaudited)
Tax effect of reconciling items
(000s) (unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Purchased in-process research and development |
$ | | $ | | $ | | $ | 3,849 | ||||||||
Income tax benefit |
| | | (1,463 | ) | |||||||||||
Purchased in-process research and development,
net of tax |
| | | 2,386 | ||||||||||||
Federal investigation legal and other costs |
(595 | ) | 2,028 | 2,362 | 2,450 | |||||||||||
Income tax benefit |
| (771 | ) | | (931 | ) | ||||||||||
Federal investigation legal and other costs, net of tax |
$ | (595 | ) | $ | 1,257 | $ | 2,362 | $ | 1,519 | |||||||
Spectranetics uses the non-GAAP financial measures described above as supplemental measures of
performance and believes these measures facilitate operating performance comparisons from period to
period and company to company by factoring out potential differences caused by unusual or
infrequent charges not related to the Companys regular, ongoing business. The Companys management
uses the non-GAAP financial measures used in this release to analyze the underlying trends in the
Companys business, assess the performance of the Companys core operations, establish operational
goals and forecasts that are used in allocating resources and evaluate the Companys performance
period over period and in relation to its competitors operating results.
Spectranetics believes that presenting the non-GAAP financial measures used in this release
provides investors greater transparency to the information used by management for its financial and
operational decision-making and allows investors to see the Companys results through the eyes of
management. Spectranetics also believes that providing this information better enables the
Companys investors to understand the Companys operating performance and evaluate the methodology
used by management to evaluate and measure such performance. The Companys management believes that
non-GAAP financial measures are useful to investors to evaluate the Companys performance period
over period and in relation to its competitors operating results.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in
isolation or as a substitute for the Companys financial results prepared in accordance with GAAP.
Some of the limitations associated with the Companys use of these non-GAAP financial measures are:
| Items such as purchased IPR&D and the loss on the sale of auction rate securities
reflect economic costs to the Company which are not reflected in non-GAAP adjusted net
income and non-GAAP adjusted net income per share. |
| Items such as the federal investigation settlement, federal investigation legal and
other costs, litigation settlement, and employee termination and lease abandonment costs
that are
excluded from non-GAAP net income and non-GAAP net income per share can have a material
impact on cash flows and GAAP net income and net income per share. |
| Intangible asset impairment charges and inventory write-offs related to the Safe-Cross
discontinuation represent a reduction in value of intangible and tangible assets. The
other-than-temporary impairment of our auction rate securities also represents a reduction
in value of these assets. The expense associated with these reductions in value is not
included in the Companys non-GAAP net income or non-GAAP net income per share. |
| Non-GAAP financial measures are not based on any comprehensive set of accounting rules
or principles and therefore other companies may calculate similarly titled non-GAAP
financial measures differently than Spectranetics, limiting the usefulness of those
measures for comparative purposes. |
| The Companys management exercises judgment in determining which types of charges or
other items should be excluded from the non-GAAP financial measures Spectranetics uses. |
Spectranetics provides detailed reconciliations of each non-GAAP measure to its most directly
comparable GAAP measure. Spectranetics encourages investors to review these reconciliations.
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