SonoSite, Inc. (Nasdaq:SONO), the world leader and
specialist in hand-carried and point-of-care ultrasound, today
announced financial results for the fourth quarter and full year
ended December 31, 2008.
Fourth quarter 2008 worldwide revenue grew to $70.2 million, an
increase of 8% over the fourth quarter of 2007. Full year 2008
revenue grew to $243.5 million, up 19% over 2007. Changes in
foreign currency rates decreased worldwide revenue in the fourth
quarter by 4.2% and had a favorable impact of 0.6% on the year.
The company reported a net income increase of 184% for the
fourth quarter of 2008 to $12.1 million or $0.69 per diluted share,
compared to $4.3 million or $0.25 per diluted share in 2007. For
the full year net income grew 199% to $20.6 million, or $1.18 per
diluted share, compared to $6.9 million, or $0.40 per diluted share
in 2007.
Net income in the fourth quarter and full year 2008 included a
non-recurring, pre-tax charge of $3.0 million from terminated
acquisition talks and severance payments, as well as a $15.7
million pre-tax gain from the repurchase of $80.3 million of senior
convertible notes.
During the fourth quarter of 2008, US revenue grew 3% to $33.7
million and was impacted by a slowdown in capital spending at US
hospitals. International business grew 14% to $36.5 million in the
fourth quarter and continued to deliver broad-based double digit
growth, but was negatively impacted by 8.5% from foreign exchange
rate changes. For the full year, US revenue grew approximately 12%
to $116.7 million and international revenue grew 26% to $126.8
million.
Total operating expenses in the fourth quarter increased 8% to
$42.7 million, and increased 7% for the full year to $147.4
million. Including the previously mentioned $3.0 million non-
recurring charge, SG&A expenses grew 4% in the fourth quarter
and 6% for the full year. R&D expenses increased 30% in the
fourth quarter and 11% for the full year. Stock-based compensation
increased by $1.9 million in the fourth quarter, primarily as the
result of a change in the future forfeiture rate assumptions.
As of December 31, 2008, the company held $279.7 million in cash
and investments and long-term debt of $144.7 million, for net
liquidity of $135.0 million.
�2008 marked a year of excellent progress for the company. We
exceeded our original full year guided targets of 15% revenue
growth with 7-8% operating margins,� said Kevin M. Goodwin,
SonoSite President and CEO. �The drivers of our performance
included the new M-Turbo� and S Series� product lines alongside
excellent execution throughout the company. We delivered a 5-fold
increase in operating income with more than a quadrupling of
operating margins. We began to demonstrate operating leverage from
our business model that we have always believed possible. Further,
our net liquidity improved by $50 million during the year.�
�Our international business delivered another strong quarter and
year with double digit gains across all major geographic regions,�
Mr. Goodwin said. �Our US business performed well throughout the
year, although it was significantly hampered by customers deferring
orders which had an estimated negative impact of 10% on worldwide
revenue for the quarter. During the year, we delivered several new
products and upgrades to our S Series and M-Turbo product lines
which extended their footprint into new clinical markets. In 2009,
we plan to continue entering new clinical markets while delivering
more new products that will continue our tradition of innovation
that helps make healthcare faster and less expensive while
improving patient safety.�
Company Updates Outlook for 2009
�We expect that the worldwide economy will continue to be
challenging and difficult to predict and now do not expect there to
be any meaningful recovery until 2010,� Mr. Goodwin said. �Our
primary financial objective in 2009 is to maintain and build upon
our long-term earnings power and growth capacity. Our goal is to
increase operating income at least 10% in 2009. To position
ourselves for improved profitability in this difficult economic
environment we are targeting a 5% reduction in our operating
expenses from 2008 levels to approximately $140 million. Assuming
current exchange rates, foreign currency will have a negative
impact of 3-4% on revenue growth. Given the continued deterioration
of the global economic markets and the slowdown in US hospital
capital spending, we are not providing revenue or other financial
guidance at this time.�
�While the current economic environment is uncertain, we are in
the strongest position in our history as a company in terms of
market share, innovation and growth opportunities,� Mr. Goodwin
said. �Our products are becoming essential tools for patient safety
and clinical productivity. We expect to continue building our
financial strength, growth and earnings power going forward.�
Conference Call Information
SonoSite will hold a conference call on February 12th at 1:30
p.m. PT/4:30 p.m. ET. The call will be broadcast live and can be
accessed via the �Investors� Section of SonoSite�s website at
www.sonosite.com. A replay of the audio webcast will be available
beginning February 12, 2009, at 4:30 p.m. (PT) until�February 26,
2009, at 10:00 p.m. (PT) by dialing (719) 457-0820 or toll-free
(888) 203-1112. The confirmation code 7024347 is required to access
the replay.
About SonoSite
SonoSite, Inc. (www.sonosite.com) is the innovator and world
leader in hand-carried ultrasound. Headquartered near Seattle, the
company is represented by ten subsidiaries and a global
distribution network in over 100 countries. SonoSite�s small,
lightweight systems are expanding the use of ultrasound across the
clinical spectrum by cost-effectively bringing high performance
ultrasound to the point of patient care. The company employs over
600 people worldwide.
Forward-looking Information
and the Private Litigation Reform Act of 1995
Certain statements in this press release relating to the market
acceptance of our products, possible future sales relating to
expected orders, and our future financial position and operating
results are �forward-looking statements� for the purposes of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on the
opinions and estimates of our management at the time the statements
are made and are subject to risks and uncertainties that could
cause actual results to differ materially from those expected or
implied by the forward-looking statements. These statements are not
guaranties of future performance and are subject to known and
unknown risks and uncertainties and are based on potentially
inaccurate assumptions. Factors that could affect the rate and
extent of market acceptance of our products, the receipt of
expected orders, and our financial performance include our ability
to successfully manufacture, market and sell our ultrasound
systems, our ability to accurately forecast customer demand for our
products, our customers� ability to finance the purchase of our
systems, including the effect of reduced spending by hospitals, our
ability to manufacture and ship our systems in a timely manner to
meet customer demand, variability in quarterly results caused by
the timing of large project orders from governmental or
international entities and the seasonality of hospital purchasing
patterns, timely receipts of regulatory approvals to market and
sell our products, regulatory and reimbursement changes in various
national health care markets, constraints in government and public
health spending, the ability of our distribution partners and other
sales channels to market and sell our products and any changes to
such channels, the impact of patent litigation, our ability to
execute our acquisition strategy, the effect of transactions and
activities associated with our issuance of senior convertible debt
in July 2007, including a repurchase of a portion of the debt, on
the market price of our common stock, and as well as other factors
contained in the Item 1A. �Risk Factors� section of our most recent
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. We caution readers not to place undue reliance upon
these forward-looking statements that speak only as to the date of
this release. We undertake no obligation to publicly revise any
forward-looking statements to reflect new information, events or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events.
�
SonoSite, Inc.
Selected Financial
Information
�
Condensed Consolidated Statements of Income (in thousands
except per share data) (unaudited) � � Three Months Ended � Twelve
Months Ended December 31, December 31,
2008
�
2007
2008
�
2007
� � � � Revenue $ � 70,162 $ � 64,835 $ � 243,524 $ � 205,068 Cost
of revenue � � 22,753 � � � 19,687 � � � 73,715 � � � 62,505 � �
Gross margin 47,409 45,148 169,809 142,563 Gross margin percentage
67.6 % 69.6 % 69.7 % 69.5 % � Operating expenses: Research and
development 8,124 6,234 28,698 25,872 Sales, general and
administrative � � 34,610 � � � 33,345 � � � 118,679 � � � 112,240
� � Total operating expenses 42,734 39,579 147,377 138,112 �
Operating income 4,675 5,569 22,432 4,451 � Other income, net � �
14,460 � � � 1,522 � � � � 11,651 � � � 6,565 � � Income before
income taxes 19,135 7,091 34,083 11,016 � Income tax provision � �
7,044 � � � 2,838 � � � 13,497 � � � 4,132 � � � Net income $ �
12,091 � $ � 4,253 � $ � 20,586 � $ � 6,884 � � Net income per
share: Basic $ � 0.71 � $ � 0.25 � $ � 1.22 � $ � 0.41 � � Diluted
$ � 0.69 � $ � 0.25 � $ � 1.18 � $ � 0.40 � � Weighted average
common and potential common shares outstanding: Basic � � 17,028 �
� �
16,723
� � � 16,892 � � � 16,621 � � Diluted � � 17,511 � � � 17,350 � � �
17,486 � � � 17,168 � � � � � �
Condensed Consolidated Balance
Sheets (in thousands) (unaudited)
�
�
December 31,
December 31,
� �
2008
� � �
2007
� � Cash and cash equivalents $ 209,258 $ 188,701 Short-term
investment securities 69,882 119,873 Accounts receivable, net
66,094 60,954 Inventories 29,115 29,740 Deferred income taxes,
current 9,355 13,023 Prepaid expenses and other current assets � �
6,623 � � � 7,759 � � Total current assets 390,327 420,050 �
Property and equipment, net 8,955 10,133 Investment securities 578
1,257 Deferred income taxes 6,134 8,431 Intangible assets, net
16,829 16,346 Other assets � � 6,464 � � � 9,521 � � Total assets $
� 429,287 � $ � 465,738 � � � Accounts payable $ 6,189 $ 8,868
Accrued expenses 31,921 24,431 Deferred revenue � � 2,755 � � �
3,502 � � Total current liabilities 40,865 36,801 � Long-term debt
144,745 225,000 Other non-current liabilities � � 13,750 � � �
11,075 � � Total liabilities 199,360 272,876 � Shareholders'
equity: Common stock and additional paid-in capital 253,066 236,325
Accumulated deficit (24,307 ) (44,893 ) Accumulated other
comprehensive income � � 1,168 � � � 1,430 � � Total shareholders'
equity � � 229,927 � � � 192,862 � � Total liabilities and
shareholders' equity $ � 429,287 � $ � 465,738 � � � � � �
Condensed Consolidated Statements of Cash Flow (in
thousands) (unaudited) Twelve Months Ended December 31,
2008
2007
� � Operating activities: Net income $ 20,586 $ 6,884 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 4,125 4,290 Stock-based
compensation 8,709 6,809 Deferred income tax provision 8,929 1,933
Gain on convertible debt repurchase (15,684 ) - Other adjustments
831 (653 ) Changes in working capital � � 1,675 � � � (3,037 ) �
Net cash provided by operating activities 29,171 16,226 � Investing
activities: Investment securities, net 50,390 (78,611 ) Purchases
of property and equipment (2,841 ) (3,341 ) Acquisition of LumenVu
- (3,498 ) Earn-out consideration associated with SonoMetric
acquisition � � (921 ) � � (654 ) � Net cash provided by (used in)
investing activities 46,628 (86,104 ) � Financing activities:
Excess tax benefit from exercise of stock based compensation 1,025
630 Purchase of treasury stock - (133 ) Proceeds from (repurchase
of) convertible debt and related hedge transactions (61,923 )
208,540 Proceeds from exercise of stock options & employee
stock purchase plan � � 4,551 � � � 5,597 � � Net cash (used in)
provided by financing activities (56,347 ) 214,634 � Effect of
exchange rate changes on cash and cash equivalents � � 1,105 � � �
(1,728 ) � Net change in cash and cash equivalents 20,557 143,028
Cash and cash equivalents at beginning of period � � 188,701 � � �
45,673 � � Cash and cash equivalents at end of period $ � 209,258 �
$ � 188,701 �
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