BURLINGTON, Mass., Oct. 25 /PRNewswire-FirstCall/ -- Palomar Medical
Technologies, Inc. (Nasdaq: PMTI), a leading researcher and developer of
light-based systems for cosmetic treatments, today announced financial
results for the third quarter ended September 30, 2007. Revenues for the
quarter ended September 30, 2007 were $31.4 million, of which $23.1 million
were product revenues. Royalty revenues were $5.8 million, of which $3.1
million related to the recognition of a portion of the back-owed royalties
associated with a settlement agreement with Alma Lasers, Inc. Funded
development revenues were $1.6 million. Other revenues of $894,000 related
to the recognition of a portion of the trade dress infringement associated
with the settlement agreement with Alma. Third quarter gross margin from
product revenues increased to 66% from 64% in the second quarter of 2007.
Income before taxes for the third quarter ended September 30, 2007 was $8.6
million. The Company strengthened its balance sheet since the third quarter
of last year, including increasing its cash and investments from $81
million to $120 million.
The Company had a cash tax rate of 6% and an effective book tax rate of
38% for financial statement purposes for the third quarter of 2007 versus a
cash tax rate of 3% and an effective book tax rate of 5% for the prior
year's third quarter. The Company reported net income of $5.3 million, or
$0.28 per diluted share for the third quarter of this year. Non-GAAP net
income for the third quarter of 2007, which includes adjustments for
back-owed royalties and other revenues, cost of royalty revenues, legal
expense reimbursement, interest on back-owed royalties and fees, and
non-cash taxes, resulted in $5.2 million, or $0.27 per diluted share.
Please refer to the financial statements included in this news release for
a reconciliation of GAAP results to non-GAAP results for the three and nine
months ended September 30, 2007 and 2006.
Chief Executive Officer Joseph P. Caruso commented, "We are pleased
that measures put in place during the quarter resulted in an increase of
200 basis points in product gross margins as compared to last quarter as
well as our European sales growing at a rate faster than anticipated. The
productivity of our domestic sales group was less than expected and we will
focus our efforts in this area. We also continue to move our core
technology forward as we rapidly approach the next decision point for
Gillette in January 2008."
Use of Non-GAAP Financial Measures
To supplement Palomar's consolidated financial statements presented in
accordance with GAAP, this news release uses the following measures defined
as non-GAAP financial measures by the SEC: non-GAAP income before taxes,
non-GAAP provision for income taxes, 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 news release may
be different from, and therefore not comparable to, similar measures used
by other companies. For more information on these non-GAAP financial
measures, please see the non-GAAP data included below. 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. Palomar's management believes that these non-GAAP
financial measures provide meaningful supplemental information regarding
our performance by excluding certain items that may not be indicative of
our core business operating results. Palomar believes that both management
and investors benefit from referring to these non-GAAP financial measures
in assessing Palomar's performance and when planning, forecasting and
analyzing future periods. These non-GAAP financial measures also facilitate
management's internal comparisons to Palomar's historical performance and
our competitors' operating results. Palomar 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: As previously announced, Palomar will conduct a
conference call and webcast today at 11:30 AM Eastern Time. Management will
discuss financial results and strategic matters. If you would like to
participate, please call (800) 573-4842 or listen to the webcast in the
Investor Relations section of the Company's website at
http://www.palomarmedical.com. The telephone replay will be available one hour
after the call at (888) 286-8010 passcode 92336806 and will be available
for fourteen days. A webcast replay will also be available.
About Palomar Medical Technologies Inc: Palomar is a leading researcher
and developer of light-based systems for cosmetic treatments. Palomar
pioneered the optical hair removal field, when, in 1997, it introduced the
first high-powered laser hair removal system. Since then, many of the major
advances in light-based hair removal have been based on Palomar technology.
In December 2006, Palomar became the first company to receive a 510(k)
over-the-counter (OTC) clearance from the United States Food and Drug
Administration (FDA) for a new, patented, home use, light-based hair
removal device. OTC clearance allows the product to be marketed and sold
directly to consumers without a prescription. There are now millions of
light-based cosmetic procedures performed around the world every year in
physician offices, clinics, spas and salons. Palomar is testing many new
and exciting applications to further advance the hair removal market and
other cosmetic applications. Palomar is focused on developing proprietary
light-based technology for introduction to the mass markets. Palomar has an
agreement with The Gillette Company to develop and potentially
commercialize a patented home-use, light-based hair removal device for
women. Palomar also has an agreement with Johnson & Johnson Consumer
Companies to develop and potentially commercialize home-use, light-based
devices for reducing or reshaping body fat including cellulite, reducing
the appearance of skin aging, and reducing or preventing acne.
For more information on Palomar and its products, visit Palomar's
website at http://www.palomarmedical.com. To continue receiving the most
up-to-date information and latest news on Palomar as it happens, sign up to
receive automatic e-mail alerts by going to the Investor Relations' section
of the website.
With the exception of the historical information contained in this
release, the matters described herein contain forward-looking statements,
including but not limited to statements relating to new markets, future
royalty amounts due from third parties, development and introduction of new
products, and financial and operating projections (including future tax
benefit from the Company's NOLs and future effective tax rates). These
forward-looking statements are neither promises nor guarantees, but involve
risk and uncertainties that may individually or mutually impact the matters
herein, and cause actual results, events and performance to differ
materially from such forward-looking statements. These risk factors
include, but are not limited to, results of future operations,
technological difficulties in developing or introducing new products, the
results of future research, lack of product demand and market acceptance
for current and future products, the effect of economic conditions,
challenges in managing joint ventures and research with third parties and
government contracts, the impact of competitive products and pricing,
governmental regulations with respect to medical devices, including whether
FDA clearance will be obtained for future products and additional
applications, the results of litigation, difficulties in collecting
royalties, potential infringement of third-party intellectual property
rights, factors affecting the Company's future income and resulting ability
to utilize its NOLs, and/or other factors, which are detailed from time to
time in the Company's SEC reports, including the report on Form 10-K for
the year ended December 31, 2006 and the Company's quarterly reports on
Form 10-Q. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
Palomar Financial Summary:
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues:
Product revenues $23,073,461 $23,671,555 $78,752,659 $65,678,399
Royalty revenues 5,826,091 3,642,413 10,584,266 18,439,355
Funded product
development revenues 1,585,202 707,814 5,434,500 3,015,171
Other revenues 894,189 - 894,189 -
Total revenues 31,378,943 28,021,782 95,665,614 87,132,925
Costs and expenses:
Cost of product
revenues 7,869,200 7,036,514 26,796,166 18,689,965
Cost of royalty
revenues 2,330,436 1,456,969 4,233,706 7,375,742
Research and
development 4,187,559 3,303,014 12,242,994 10,468,961
Selling and marketing 5,971,960 5,527,793 18,606,577 16,608,183
General and
administrative 4,360,561 2,890,409 11,655,562 4,033,324
Total costs and
expenses 24,719,716 20,214,699 73,535,005 57,176,175
Income from
operations 6,659,227 7,807,083 22,130,609 29,956,750
Interest income 1,926,745 1,031,530 4,826,121 3,476,494
Other income - - 500,000 -
Income before
income taxes 8,585,972 8,838,613 27,456,730 33,433,244
Provision for income
taxes - cash 515,158 255,966 1,647,404 968,227
Provision for income
taxes - non-cash 2,747,511 214,982 8,786,153 486,506
Net income $5,323,303 $8,367,665 $17,023,173 $31,978,511
Net income per share:
Basic $0.29 $0.47 $0.93 $1.83
Diluted $0.28 $0.41 $0.88 $1.59
Weighted average number
of shares outstanding:
Basic 18,348,424 17,642,215 18,271,116 17,438,247
Diluted 19,325,562 20,244,414 19,383,122 20,109,935
Non-GAAP data:
Income before income
taxes $8,585,972 $8,838,613 $27,456,730 $33,433,244
Royalty revenues:
Back-owed royalty (3,105,710) (2,159,000) (3,105,710) (15,779,571)
Other revenues:
Back-owed trade dress (894,189) - (894,189) -
Cost of product
revenues: Royalty
adjustment - - - (762,000)
Cost of product
revenues: Inventory
write-down - - - 145,000
Cost of royalty
revenues: Back-owed
royalty 1,242,284 863,600 1,242,284 6,311,828
Selling and marketing:
Demo inventory
write-off - - - 230,000
General and administrative:
Additional legal
expense related to trial
preparation - - - 750,000
General and administrative:
Royalty settlement legal
expense reimbursement (227,355) - (227,355) (3,760,000)
FAS 123R stock-based
compensation 180,213 94,448 166,240 436,211
Interest income: Interest
on back-owed royalty (259,166) - (259,166) (1,164,212)
Other income: Expiration
of standstill agreement - - (500,000) -
Non-GAAP Income before
income taxes 5,522,049 7,637,661 23,878,834 19,840,500
Provision for income
taxes 3,262,669 470,948 10,433,557 1,454,733
Provision for income
taxes - non-cash (2,747,511) (214,982) (8,786,153) (486,506)
Tax effect related to
one-time events (183,835) (34,780) (214,674) (393,647)
Non-GAAP Provision for
income taxes 331,323 221,186 1,432,730 574,580
Non-GAAP Net income $5,190,726 $7,416,475 $22,446,104 $19,265,920
Non-GAAP Diluted net
income per share $0.27 $0.37 $1.16 $0.96
Diluted weighted average
number of shares
outstanding 19,325,562 20,244,414 19,383,122 20,109,935
Consolidated Balance Sheets (Unaudited)
September 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $65,040,540 $36,817,257
Available-for-sale investments,
at market value 55,000,000 67,351,822
Accounts receivable, net 21,708,037 15,443,053
Inventories 14,919,432 11,011,710
Deferred tax asset 3,744,559 7,595,000
Other current assets 1,188,111 1,702,263
Total current assets 161,600,679 139,921,105
Property and equipment, net 1,334,168 1,129,985
Other assets 111,074 111,074
Total assets $163,045,921 $141,162,164
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,631,254 $2,263,029
Accrued liabilities 13,972,012 15,798,076
Deferred revenue 6,259,555 5,969,397
Total current liabilities 22,862,821 24,030,502
Stockholders' equity:
Preferred stock, $.01 par value-
Authorized - 1,500,000 shares
Issued - none - -
Common stock, $.01 par value-
Authorized - 45,000,000 shares
Issued - 18,295,706 and 18,063,103 shares,
respectively 184,007 180,631
Additional paid-in capital 198,979,176 189,937,701
Accumulated deficit (55,963,497) (72,986,670)
Treasury stock, at cost - 105,000 shares (3,016,586) -
Total stockholders' equity 140,183,100 117,131,662
Total liabilities and stockholders' equity $163,045,921 $141,162,164
Contact: Kayla Castle
Investor Relations Manager
Palomar Medical Technologies, Inc.
781-993-2411
ir@palomarmedical.com
SOURCE Palomar Medical Technologies, Inc.
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Related links:
http://www.palomarmedical.com
http://www.prnewswire.com/comp/107555.html /
CONTACT:
Kayla Castle, Investor Relations Manager of
Palomar Medical Technologies, Inc., +1-781-993-2411,
ir@palomarmedical.com
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