Highlights of Q4 2008 against Q4 2007
Sensor revenue up 6% to $21.3 million
Worldwide installed base of BIS monitors and modules up 19% to more than 56,000 units
GAAP operating loss was $3.0 million in Q4 2008 against operating income of $0.1 million in Q4 2007
Non-GAAP operating loss was $1.2 million in Q4 2008 against operating income of $2.3 million in Q4 2007
Other income includes an $18.0 million gain from the company’s repurchase of its convertible notes
The company ended 2008 with total cash and investments of $83.5 million and debt of $65.0 million as against total cash and investments of $109.5 million and debt of $125.0 million at the end of 2007
GAAP net income was $8.4 million, or $0.40 per diluted share, in Q4 2008, against $0.4 million, or $0.02 per diluted share in Q4 2007
Non-GAAP net income (which is exclusive of stock-based compensation) was $10.2 million in Q4 2008, or $0.48 per diluted share, against $2.1 million, or $0.12 per diluted share, in Q4 2007
Highlights of Q4 2008 against Q4 2007
Sensor revenue up 6% to $21.3 million
Worldwide installed base of BIS monitors and modules up 19% to more than 56,000 units
GAAP operating loss was $3.0 million in Q4 2008 against operating income of $0.1 million in Q4 2007
Non-GAAP operating loss was $1.2 million in Q4 2008 against operating income of $2.3 million in Q4 2007
Other income includes an $18.0 million gain from the company’s repurchase of its convertible notes
The company ended 2008 with total cash and investments of $83.5 million and debt of $65.0 million as against total cash and investments of $109.5 million and debt of $125.0 million at the end of 2007
GAAP net income was $8.4 million, or $0.40 per diluted share, in Q4 2008, against $0.4 million, or $0.02 per diluted share in Q4 2007
Non-GAAP net income (which is exclusive of stock-based compensation) was $10.2 million in Q4 2008, or $0.48 per diluted share, against $2.1 million, or $0.12 per diluted share, in Q4 2007 Highlights of Q4 2008 Compared with Q4 2007
Gross margin and operating expenses
GAAP gross margin declined to 74.6% in Q4 2008 as against 75.2% in Q4 2007. Non-GAAP gross margin declined to 75.1% in Q4 2008 as against 75.8% in Q4 2007. The decline was principally the result of increased costs related to investment in the Equipment Placement Program and a one-time write off of inventory placed with an international distributor.
Total GAAP and non-GAAP operating expenses increased by 21% and 25%, respectively, in Q4 2008 against Q4 2007.
The increase in total GAAP and non-GAAP operating expenses was due primarily to increases in sales and marketing expenses as part of our domestic sales force expansion and retention plans as well as growth in international sales and marketing programs, increased costs associated with research collaborations and one time costs associated with personnel transitions.
Other Income
Interest income was $0.6 million in Q4 2008, a down of 63% against Q4 2007, due to a decline in the balances of cash, cash equivalents, and investments primarily the result of our repurchases of convertible notes and reduced investment returns. Interest expense was $0.7 million in Q4 2008, compared to $1.0 million in Q4 2007. The decrease was due to the reduction of outstanding convertible notes for the comparable periods. Other income includes an $18.0 million gain from the company’s repurchase of $35.0 million of convertible notes at a discount partially offset by realized losses of $0.7 million from the sale of investments.
Income Taxes
In Q4 2008, the company recognized income tax expense of approximately $5.8 million on a GAAP basis and $5.9 million on a non-GAAP basis. This translates to a Q4 effective tax rate of 41% for GAAP and 37% for non-GAAP. The full year 2008 effective tax rates are 46% on a GAAP basis and 39% on a non-GAAP basis. The Q4 2008 effective tax rates are lower than the full year effective tax rates due to the impact of the $18.0 million gain recognized in Q4 2008. The GAAP effective tax rates are higher than the non-GAAP effective tax rates because of the tax treatment of incentive stock options (or ISOs). The expense associated with these options is recorded as they vest, but a tax benefit is only recognized when they are exercised and sold under specific circumstances.
Liquidity and capital resources
At December 31, 2008, the company had cash, cash equivalents, restricted cash and investments of $83.5 million and $65.0 million in debt which consisted of 2.50% convertible senior notes due 2014. At December 31, 2007, the company had cash, cash equivalents, restricted cash, and investments of $109.5 million and debt which consisted of $125.0 million in convertible senior notes. The outstanding convertible notes decreased by $60.0 during 2008 due to the company’s repurchases during Q2 2008, Q3 2008, and Q4 2008 at an aggregate repurchase price of $30.0 million.
Guidance for the first quarter of 2009
The company’s guidance for the first quarter of 2009 is as follows:
Total revenue is projected to be within a range of $24.5 million to $25.5 million;
GAAP net loss per share is expected to be within a range of ($0.06) to ($0.08); and Non-GAAP net income per share is expected to be within a range of breakeven to $0.02 income per share
All non-GAAP amounts are exclusive of stock-based compensation. See below under the heading “Use of Non-GAAP Financial Measures” for a discussion of the Company’s use of such measures. See attached table for the reconciliation of GAAP to non-GAAP items for Q4 2008 and outlook for Q1 2009.
