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Masimo Reports Second Quarter 2011 Financial Results

08/09/2011

IRVINE, Calif., Aug. 9, 2011 /PRNewswire via COMTEX/ -- Q2 2011 Highlights (compared to Q2 2010):

  • Total revenue, including royalties, rose 9% to $109.6 million
  • Product revenue rose 17% to $102.6 million
  • Masimo SET® and Masimo rainbow® SET unit shipments rose 2% to 37,300
  • Masimo rainbow revenue rose 26% to $9.1 million
  • GAAP EPS was $0.28 versus $0.24 in the prior period, which included $0.01 in one-time expenses. Excluding the prior period one-time items, GAAP EPS rose 12% from an adjusted $0.25 in Q2 2010

Masimo (NASDAQ: MASI) today announced its financial results for the second quarter ended July 2, 2011.

Masimo's total revenue, including royalties, for the second quarter rose 9% to $109.6 million, compared to $100.1 million for the second quarter of 2010. Masimo's second quarter product revenue rose 17% to $102.6 million, compared to $88.0 million for the second quarter of 2010. Revenue from Masimo rainbow products rose 26% to $9.1 million in the second quarter, compared to $7.2 million for the second quarter of 2010.

Net income for the second quarter was $17.0 million, or $0.28 per diluted share, compared to reported net income of $14.3 million, or $0.24 per diluted share, in the second quarter of 2010, which included $0.01 per diluted share in one-time marketing-related expenses. Excluding these one-time expenses, diluted earnings per share rose 12% in the second quarter of 2011 from the year-ago period.

During the second quarter, the company shipped approximately 37,300 Masimo SET pulse oximetry and Masimo rainbow SET Pulse CO-Oximetry units, excluding handheld units, up 2% compared to approximately 36,700 in the same prior year period. Masimo estimates its worldwide installed base as of July 2, 2011 to be 922,000 units, up 17% from 789,000 units as of July 3, 2010.

As of July 2, 2011, cash and cash equivalents was $125.7 million, compared to $88.3 million as of January 1, 2011.

Conference Call

Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to discuss the results. The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706) 758-3929 for international callers. The reservation code for both dial-in numbers is 78780959. After the live webcast, the call will be available on Masimo's website through September 9, 2011. In addition, a telephonic replay of the call will be available through August 16, 2011. The replay dial-in numbers are (800) 642-1687 for domestic callers and +1 (706) 645-9291 for international callers. Please use reservation code 78780959.

About Masimo

Masimo (NASDAQ: MASI) is the global leader in innovative noninvasive monitoring technologies that significantly improve patient care -- helping solve "unsolvable" problems. In 1995, the company debuted Measure-Through Motion and Low Perfusion pulse oximetry, known as Masimo SET®, which virtually eliminated false alarms and increased pulse oximetry's ability to detect life-threatening events. More than 100 independent and objective studies demonstrate Masimo SET provides the most reliable SpO2 and pulse rate measurements even under the most challenging clinical conditions, including patient motion and low peripheral perfusion. In 2005, Masimo introduced rainbow® SET Pulse CO-Oximetry(TM) technology, allowing noninvasive and continuous monitoring of blood constituents that previously required invasive procedures, including total hemoglobin (SpHb®), oxygen content (SpOC(TM)), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), and Pleth Variability Index (PVI®), in addition to SpO2, pulse rate, and perfusion index (PI). In 2008, Masimo introduced Patient SafetyNet(TM), a remote monitoring and wireless clinician notification system designed to help hospitals avoid preventable deaths and injuries associated with failure to rescue events. In 2009, Masimo introduced rainbow Acoustic Monitoring(TM), the first-ever noninvasive and continuous monitoring of acoustic respiration rate (RRa(TM)). Masimo's rainbow SET technology platform offers a breakthrough in patient safety by helping clinicians detect life-threatening conditions and helping guide treatment options. In 2010, Masimo acquired SEDLine®, a pioneer in the development of innovative brain function monitoring technology and devices. Masimo SET and Masimo rainbow SET technologies can also be found in over 100 multiparameter patient monitors from over 50 medical device manufacturers around the world. Founded in 1989, Masimo has the mission of "Improving Patient Outcomes and Reducing Cost of Care ... by Taking Noninvasive Monitoring to New Sites and Applications®." Additional information about Masimo and its products may be found at http://www.masimo.com/.

Forward-Looking Statements

All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about: our financial condition, results of operations and business generally; expectations regarding our ability to design and deliver innovative new noninvasive technologies; and global demand for our technologies. These forward-looking statements are based on management's current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to: our dependence on Masimo SET and Masimo rainbow SET products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors' assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; any failure to continue developing innovative products and technologies; the lack of acceptance of any of our current or future products and technologies; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce anticipated operational and financial benefits, including a continued lower effective tax rate; the loss of our customers; the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the impact of the decline in the worldwide credit markets on us and our customers; the amount and type of equity awards that we may grant to employees and service providers in the future; and other factors discussed in the "Risk Factors" section of our most recent periodic reports filed with the Securities and Exchange Commission ("SEC"), which you may obtain for free on the SEC's website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Investor Contact: Sheree Aronson


Media Contact: Dana Banks

Vice President, Investor Relations, Masimo Corporation


Director, Corporate Communications, Masimo Corporation

(949) 297-7043


(949) 297-7348

saronson@masimo.com


dbanks@masimo.com

Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and Reducing Cost of Care... by Taking Noninvasive Monitoring to New Sites and Applications, Rainbow, SpHb, SpOC, SpCO, SpMet, PVI, Rainbow Acoustic Monitoring, RRa, Radical-7, Rad-87, Rad-57, Rad-8, Rad-5,Pulse CO-Oximetry, Pulse CO-Oximeter, and SEDLine are trademarks or registered trademarks of Masimo Corporation.

MASIMO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)














July 2,


January 1,


2011


2011

ASSETS






Current assets






Cash and cash equivalents

$

125,694


$

88,305

Accounts receivable, net of allowance for doubtful accounts


52,036



49,694

Royalties receivable


7,252



12,000

Inventories


44,954



45,028

Prepaid expenses


9,976



7,887

Deferred tax assets


12,561



12,555

Other current assets


1,806



2,136

Total current assets


254,279



217,605

Deferred cost of goods sold


52,380



47,184

Property and equipment, net


15,132



15,951

Intangible assets, net


10,472



10,497

Deferred tax assets


12,579



12,560

Other assets


6,900



6,438

Total assets

$

351,742


$

310,235







LIABILITIES AND EQUITY






Current liabilities






Accounts payable

$

20,127


$

22,150

Accrued compensation


15,087



21,074

Accrued liabilities


10,426



9,832

Income taxes payable


1,327



722

Deferred revenue


15,268



16,369

Current portion of capital lease obligations


47



50

Total current liabilities


62,282



70,197

Deferred revenue


1,262



1,554

Capital lease obligations, less current portion


99



122

Other liabilities


9,003



8,323

Total liabilities


72,646



80,196







Equity






Masimo Corporation stockholders' equity:






Common stock


60



59

Treasury stock


(1,209)



(1,209)

Additional paid-in capital


235,992



222,206

Accumulated other comprehensive income


1,092



925

Retained earnings


40,715



5,664

Total Masimo Corporation stockholders' equity


276,650



227,645

Noncontrolling interest


2,446



2,394

Total equity


279,096



230,039

Total liabilities and equity

$

351,742


$

310,235

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)





























Three Months Ended


Six Months Ended



July 2,


July 3,


July 2,


July 3,



2011


2010


2011


2010














Revenue:













Product


$

102,555


$

87,958


$

204,132


$

173,824

Royalty



7,010



12,122



18,475



25,021

Total revenue



109,565



100,080



222,607



198,845

Cost of goods sold



34,314



29,775



70,524



59,003

Gross profit



75,251



70,305



152,083



139,842

Operating expenses:













Selling, general and administrative



43,673



41,004



85,141



90,315

Research and development



9,446



9,051



19,421



18,461

Antitrust litigation proceeds



--



(760)



--



(30,728)

Total operating expenses



53,119



49,295



104,562



78,048

Operating income



22,132



21,010



47,521



61,794

Non-operating income (expense)



528



309



722



(38)

Income before provision for income taxes



22,660



21,319



48,243



61,756

Provision for income taxes



5,751



7,403



13,180



21,676

Net income including noncontrolling interests



16,909



13,916



35,063



40,080

Net (income) loss attributable to the noncontrolling interests



129



371



(12)



917

Net income attributable to Masimo Corporation


$

17,038


$

14,287


$

35,051


$

40,997














Net income per share attributable to Masimo Corporation stockholders:













Basic


$

0.28


$

0.24


$

0.59


$

0.70

Diluted


$

0.28


$

0.24


$

0.57


$

0.68














Weighted average shares used in per share calculations:













Basic



59,842



58,798



59,720



58,532

Diluted



61,232



60,510



61,096



60,496














Cash dividend declared per share


$

--


$

--


$

--


$

2.00



























The following table presents details of the share-based compensation expense that is included in each functional line item in the condensed consolidated statements of income above (in thousands):
















Three Months Ended


Six Months Ended



July 2,


July 3,


July 2,


July 3,



2011


2010


2011


2010














Cost of goods sold


$

135


$

118


$

281


$

211

Selling, general and administrative



3,132



2,659



5,647



4,736

Research and development



874



723



1,646



1,371

Total


$

4,141


$

3,500


$

7,574


$

6,318

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)
















Six Months Ended


July 2,


July 3,


2011


2010

Cash flows from operating activities:






Net income including noncontrolling interests

$

35,063


$

40,080

Adjustments to reconcile net income including noncontrolling interests






to net cash provided by operating activities:






Depreciation and amortization


3,840



3,151

Share-based compensation


7,574



6,318

Provision for doubtful accounts


92



154

Provision for obsolete inventory


850



359

Provision for warranty costs


1,334



1,150

Provision for deferred income taxes


--



133

Income tax benefit from exercise of stock options granted prior to






January 1, 2006


1,058



1,631

Excess tax benefit from share-based payment arrangements


(89)



(537)

Changes in operating assets and liabilities:






Increase in accounts receivable


(2,433)



(10,338)

Decrease in royalties receivable


4,748



--

Increase in inventories


(776)



(5,910)

Increase in deferred cost of goods sold


(5,135)



(4,499)

(Increase) decrease in prepaid expenses


(2,043)



1,243

Increase in other assets


(101)



(1,963)

Increase (decrease) in accounts payable


(2,045)



5,084

Decrease in accrued compensation


(6,257)



(1,752)

Decrease in accrued liabilities


(831)



(1,291)

Increase in income taxes payable


676



1,073

Increase (decrease) in deferred revenue


(1,394)



2,703

Increase in other liabilities


654



1,064

Net cash provided by operating activities


34,785



37,853







Cash flows from investing activities:






Purchase of short-term investments


--



(75,986)

Proceeds from sale and maturities of short-term investments


--



132,975

Purchases of property and equipment


(2,123)



(3,930)

Increase in intangible assets


(848)



(911)

Net cash provided by (used in) investing activities


(2,971)



52,148







Cash flows from financing activities:






Repayments of capital lease obligations


(27)



(28)

Proceeds from issuance of common stock


5,127



5,662

Excess tax benefit from share-based payment arrangements


89



537

Dividends paid


--



(117,506)

Net cash provided by (used in) financing activities


5,189



(111,335)

Effect of foreign currency exchange rates on cash


386



251

Net increase (decrease) in cash and cash equivalents


37,389



(21,083)

Cash and cash equivalents at beginning of period


88,305



132,054

Cash and cash equivalents at end of period

$

125,694


$

110,971

SOURCE Masimo Corporation

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