SOURCE: Syneron Medical Ltd.

Syneron Medical Ltd.

February 11, 2010 07:45 ET

Syneron Reports Fourth Quarter and Full Year 2009 Results

Closed Acquisition of Candela Corporation in January 2010

YOKNEAM, ISRAEL--(Marketwire - February 11, 2010) - Syneron Medical Ltd. (NASDAQ: ELOS)

Syneron: Fourth Quarter 2009 Highlights:
-- Revenue of $14.4 million, up 1.6% from the fourth quarter 2008
-- Gross margin of 70.6%, up from 54.7% in the fourth quarter 2008 and
   67.0% in the third quarter 2009
-- Achieved break-even cash flow from operating activities
-- Year-over-year average days sales outstanding reduced by 154 days to
   97 days as of December 31, 2009

Candela: Fiscal Second Quarter 2010 Highlights:
-- Revenue of $32.3 million, up 12.2% from 2009
-- Gross margin of 40.4% up from 35.3% in 2009
-- Achieved break-even from operating activities excluding transaction
   expenses and stock based compensation expenses

Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced financial results for the fourth quarter and full year ended December 31, 2009. The fourth quarter 2009 financial results are for Syneron Medical solely. The combined financial results with Candela Corporation which was acquired on January 5, 2010 are included in the pro-forma financial results section of the press release assuming the merger with Candela Corporation had occurred on October 1, 2009.

Syneron Fourth Quarter 2009 Financial Results

Revenue for the fourth quarter 2009 was $14.4 million, up 1.6% compared to $14.2 million in the fourth quarter 2008 and $14.3 million in the third quarter 2009.

Gross margin for the fourth quarter 2009 was 70.6 % compared to 54.7% in the same period last year and 67.0% in the third quarter 2009. Gross margin increased for the fourth consecutive quarter, driven by stable selling prices and increased sales from the Company's new higher margin consumable products.

Operating expenses for the fourth quarter 2009 were $15.6 million, down 33.6% from $23.4 million during the fourth quarter of 2008. The year-over-year decrease primarily reflected a planned reduction in general and administrative and sales and marketing expenses. The Company continues to invest in research and development in order to drive new product innovation that supports its customers. Research and development expense was $4.3 million for the fourth quarter of 2009, up from $3.2 million in the fourth quarter 2008. The increase reflected the acquisition and consolidation of financial results for Primaeva, RBT and Fluorinex and the development of an innovative RF aesthetic device for skin tightening.

GAAP net loss for the fourth quarter 2009 was $4.3 million, or $0.16 per basic and diluted share, compared to a net loss of $15.9 million, or $0.58 per basic and diluted share, in the fourth quarter of 2008. The fourth quarter 2009 net loss includes $0.8 million in stock based compensation and a $0.7 million expense related to the merger with Candela Corporation, completed on January 5, 2010. Merger-related expenses are included in the GAAP results in accordance with ASC 805 (originally issued as SFAS 141®) "Business Combinations" which is effective for business combinations occurring after January 1, 2009.

On a non-GAAP basis, excluding stock-based compensation, net loss for the fourth quarter 2009 was $3.5 million, or $0.13 per basic and diluted share, compared to a net loss of $13.7 million, or $0.50 per basic and diluted share, during the fourth quarter 2008.

Cash and cash equivalents, including short-term and long-term bank deposits, were $206.4 million at December 31, 2009. The Company achieved break-even cash flow from operating activities for the fourth quarter of 2009. Trade receivables as of December 31, 2009 were $13.8 million, a decrease of 57.8% compared to $32.6 million as of December 31, 2008. During the fourth quarter 2009, inventories decreased for the fourth consecutive quarter to $8.6 million, representing a 32.1% decrease from the fourth quarter 2008. On December 31, 2009, average days sales outstanding (calculated on a quarterly basis) were 97 compared to 251 in the fourth quarter of 2008 and 115 in the third quarter 2009. Equity at the end of fourth quarter 2009 was $227.3 million.

Lou Scafuri, Chief Executive Officer of Syneron, commented, "Fourth quarter 2009 results from both Syneron and Candela demonstrate our ability to achieve revenue growth in what has been a challenging global economic environment. With two strong franchises, a global distribution and a complementary customer base, we are in excellent position to benefit from an improvement in the aesthetic space and overall economic environment."

Mr. Scafuri continued, "We are particularly pleased with the high demand for Syneron's eMatrix™ product, featuring Sublative Rejuvenation. Fourth quarter 2009 revenues do not fully reflect the sales potential for eMatrix™ as demand for the tip outpaced our manufacturing capacity. We have now reached full capacity in supplying systems featuring the new Sublative rejuvenation tips as momentum in demand and product awareness continue to build. The robust improvement in gross margins and positive cash flow from operations reflects our successful corporate restructuring and cost control initiatives. In addition, our balance sheet continues to strengthen with lower inventory and our fourth consecutive quarter of significant reductions in average days of sales outstanding."

Syneron Fourth Quarter 2009 Pro Forma Financial Results

For the combined companies, the following financials assume the merger with Candela Corporation had occurred on October 1, 2009.

Pro forma revenue for the fourth quarter 2009 was $46.7 million and gross margin was 48.5%.

Pro-forma operating expenses were $31.5 million in the fourth quarter 2009.

Pro forma net loss for the fourth quarter 2009 was $7.7 million, or $0.22 per basic and diluted share on a GAAP basis, and $4.6 million, or $0.13 per basic and diluted share, on a non-GAAP basis excluding stock based compensation expenses and $1.8 million in non-recurring transaction expenses related to the merger with Candela.

Mr. Scafuri concluded, "The acquisition of Candela represents a major aggressive step to advantageously position Syneron in an industry of change. We enter 2010 as the global aesthetic device market leader in terms of size, breadth and depth of offering, with a balanced revenue mix across market segments and geographies and significant recurring revenues. We will continue to prioritize customer support and product innovation that brings the most attractive and comprehensive product portfolio to all of our customers. With the largest and most comprehensive worldwide distribution and sales network, best in class products and solid financial profile, we believe there is tremendous opportunity to drive growth and clear market leadership over the next several years."

Conference call

Syneron management will host its fourth quarter and full year 2009 earnings conference call today at 8:30am ET. Syneron will be broadcasting live via the Investor Relations section of its website, www.syneron.com. To access the call, enter the Syneron website, then click on the Investors Relations Overview and select "Q4 2009 Results Conference Call." Participants are encouraged to log on at least 15 minutes prior to the conference call in order to download the applicable audio software. The call can be heard live or with an on-line replay which will follow. Those interested in participating in the call and the question and answer session should dial 888-300-2335 in the U.S., and 719-325-2109 from overseas. The conference passcode is: 8041636

Use of Non-GAAP Measures

This press release provides financial measures for net loss, net loss per basic and diluted share, which exclude an expense charge related to stock-based compensation and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our operational results and enhances management's and investors' ability to evaluate the Company's net loss and net loss per basic and diluted share. The presentation of this non-GAAP 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. Management uses both GAAP and non-GAAP measures when evaluating the business internally and, therefore, felt it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

About Syneron Medical Ltd.

Syneron Medical Ltd. (NASDAQ: ELOS) is the leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, rejuvenation of the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The Company sells its products under two distinct brands, Syneron and Candela. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. are located in Israel. Syneron also has R&D and manufacturing operations in the US. The company markets and services and supports its products in 86 countries. It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide. Additional information can be found at www.syneron.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Any statements contained in this document regarding future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Further, any statements that are not statements of historical fact (including statements containing "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the risk that the businesses of Syneron and Candela may not be integrated successfully; the risk that the merger transaction with Candela may involve unexpected costs or unexpected liabilities; the risk that synergies from the merger transaction may not be fully realized or may take longer to realize than expected; the risk that disruptions from the merger transaction make it more difficult to maintain relationships with customers, employees, or suppliers; as well as the risks set forth in Syneron Medical Ltd.'s most recent Registration Statement on Form F-4, and the other factors described in the filings that Syneron Medical Ltd. makes with the SEC from time to time. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Syneron Medical Ltd.'s actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this document reflect the expectations and beliefs of Syneron Medical Ltd. as of the date of this document. Syneron Medical Ltd. anticipates that subsequent events and developments will cause its expectations and beliefs to change. However, while Syneron Medical Ltd. may elect to update these forward-looking statements publicly in the future, it specifically disclaims any obligation to do so. The forward-looking statements of Syneron Medical Ltd. do not reflect the potential impact of any future dispositions or strategic transactions that may be undertaken. These forward-looking statements should not be relied upon as representing Syneron Medical Ltd.'s views as of any date after the date of this document.

Syneron, the Syneron logo, eMatrix and elos are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. The elos (Electro-Optical Synergy) technology is a proprietary technology of Syneron Medical Ltd. All other names are the property of their respective owners.

                           Syneron Medical Ltd.
                    CONSOLIDATED STATEMENTS OF INCOME
             U.S. dollars in thousands, except per share data

                           Three Months ended       Twelve Months ended
                              December 31,              December 31,
                            2009         2008         2009         2008
                        (unaudited)  (unaudited)  (unaudited)   (audited)
                        -----------  -----------  -----------  -----------
Revenues                     14,403       14,174       54,726      114,979
Cost of Revenues              4,239        6,418       18,903       29,670
                        -----------  -----------  -----------  -----------
Gross Profit                 10,164        7,756       35,823       85,309

Operating expenses:
Research and development      4,271        3,150       13,220       13,783
Selling and marketing         7,869       12,516       34,156       54,064
General and
 administrative               3,419        7,782       16,478       17,706
Legal settelement, net
 of legal cost                    -            -       (3,975)           -
                        -----------  -----------  -----------  -----------
Total operating
 expenses                    15,559       23,448       59,879       85,553

                        -----------  -----------  -----------  -----------
Operating Loss               (5,395)     (15,692)     (24,056)        (244)
Financial Income, net           436          636        2,097        3,862
Other Income                    562            -          562            -
                        -----------  -----------  -----------  -----------
Income (Loss) before
 taxes on income             (4,397)     (15,056)     (21,397)       3,618
Taxes on income                 785          816        3,240       (2,009)
                        -----------  -----------  -----------  -----------
Income (Loss) before
 non controlling
 interest                    (5,182)     (15,872)     (24,637)       5,627
Net loss attributable
 to non controlling
 interest                       837            -        1,050            -
                        -----------  -----------  -----------  -----------
Net (Loss) income
 attributable to
 Syneron shareholders        (4,345)     (15,872)     (23,587)       5,627

Basic net (Loss) Income
 per share                    (0.16)       (0.58)       (0.86)        0.21
Diluted net (Loss)
 Income per share             (0.16)       (0.58)       (0.86)        0.20
                        ===========  ===========  ===========  ===========

Weighted average number
 of shares used in per
 share calculation
 (in thousands):
Basic                        27,591       27,460       27,526       27,410
Diluted                      27,591       27,460       27,526       27,521
                        ===========  ===========  ===========  ===========




                           Syneron Medical Ltd.
                       CONSOLIDATED BALANCE SHEETS
                        U.S. dollars in thousands

                                                 December 31, December 31,
                                                     2009         2008
                                                 (unaudited)   (audited)
                                                 ------------ ------------
CURRENT ASSETS
Cash and cash equivalents (*)                          24,372       72,366
Short term bank deposit (*)                             1,000            -
Available-for-sale marketable securities (*)          165,919      117,342
Trade receivables, net                                 13,758       32,637
Other accounts receivables and
 prepaid expenses                                       2,753        4,249
Inventories                                             8,592       12,660
                                                 ------------ ------------
Total Current Assets                                  216,394      239,254

LONG-TERM ASSETS
Severance pay fund                                        246          107
Long-term deposits and others (*)                         221          180
Long-term available-for-sale
 marketable securities (*)                             14,839       27,214
Investments in affiliated companies                     1,050        4,225
Property and equipment, net                             2,885        3,656
Goodwill and Intangible assets, net                    34,632        6,650
                                                 ------------ ------------
Total Long-Term Assets                                 53,873       42,032

                                                 ------------ ------------
Total Assets                                          270,267      281,286
                                                 ============ ============

CURRENT LIABILITIES
Trade Payables                                          3,735        8,675
Other accounts payable and accrued expenses            37,484       25,587
                                                 ------------ ------------
Total Current Liabilities                              41,219       34,262

LONG-TERM LIABILITIES
Deferred Revenues                                         902        3,140
Warranty Accruals                                         558        1,117
Accrued severance pay                                     330          171
                                                 ------------ ------------
Total Long-Term Liabilities                             1,790        4,428

EQUITY                                                227,258      242,596
                                                 ------------ ------------
Total Liabilities and Equity                          270,267      281,286
                                                 ============ ============

(*) Total Cash and Liquid Investments                 206,351      217,102




                           Syneron Medical Ltd.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                        U.S. dollars in thousands

                             Three Months ended       Twelve Months ended
                                December 31,             December 31,
                              2009         2008         2009       2008
                          (unaudited)  (unaudited)  (unaudited)  (audited)
                          -----------  -----------  -----------  ---------
CASH FLOWS FROM OPERATING
 ACTIVITIES
Net (loss) income before
 non controlling interest      (5,182)     (15,872)     (24,637)     5,627
Adjustments to reconcile
 net (loss) income to net
 cash provided by (used in)
 operating activities:
Depreciation and
 amortization                     418          887        1,927      2,137
Deferred taxes, net               184            -        1,550     (1,812)
Increase (decrease) in
 accrued severance pay, net       (22)           2           (9)        41
Decrease in trade
 receivables                    3,001       12,132       18,879      8,104
Decrease (increase) in
 other accounts
 receivables and prepaid
 expenses                        (767)      (1,611)          64      2,048
Decrease (increase) in
 inventories                    1,159       (1,032)       4,320     (3,691)
Increase (decrease) in
 trade payables                   121        1,920       (5,039)       941
Increase (decrease) in
 other account payables
 and accrued expenses           1,009          665          167       (552)
Impairments of
 available-for-sale
 marketable securities            (47)         760          126      1,553
Realized loss, changes in
 accrued interest and
 amortization of premium
 on marketable securities         266          (57)       1,617       (192)
Gain on revaluation of
 investments in
 affiliated companies            (562)           -         (562)         -
Equity based compensation         837        2,192        4,264      7,592
Decrease in deferred
 revenues and warranty
 accruals                        (451)        (885)      (3,612)    (1,379)
                          -----------  -----------  -----------  ---------

Net cash provided by
 (used in) operating
 activities                       (36)        (899)        (945)    20,417
                          -----------  -----------  -----------  ---------

CASH FLOWS FROM INVESTING
 ACTIVITIES

Purchase of short-term
 deposit                            -            -       (1,000)         -
Purchase of
 available-for-sale
 marketable securities        (45,059)      (2,664)    (294,345)  (183,103)
Proceeds from sale and
 redemption of
 available-for-sale
 marketable securities         45,169       56,132      256,735    196,988
Payments for investments
 in Affiliated Companies            -         (350)        (750)    (1,653)
Net cash paid in conjunction
 with acquisition of a
 subsidiary                    (7,235)        (500)      (7,276)      (500)
Acquisition of minority
 shares in a subsidiary           (13)        (516)        (453)      (775)
Investment in long-term
 deposits and others                -            -          (22)       950
Purchase of property and
 equipment                        (91)        (417)        (487)    (1,247)
                          -----------  -----------  -----------  ---------

Net cash provided by
 (used in) investing
 activities                    (7,229)      51,685      (47,598)    10,660
                          -----------  -----------  -----------  ---------

CASH FLOWS FROM FINANCING
 ACTIVITIES

Repurchase of ordinary
 shares from shareholders
 at cost                            -            -            -     (1,927)
Reimbursement of share
 issuance expenses                  -          588            -        588
Issuance of shares as a
 result of exercise of
 options and RSU's                355            -          549          4
                          -----------  -----------  -----------  ---------

Net cash provided by
 (used in) financing
 activities                       355          588          549     (1,335)
                          -----------  -----------  -----------  ---------

Increase (decrease) in
 cash and cash
 equivalents                   (6,910)      51,374      (47,994)    29,742
Cash and cash equivalents
 at the beginning of the
 period                        31,282       20,992       72,366     42,624
                          -----------  -----------  -----------  ---------

Cash and cash equivalents
 at the end of the period      24,372       72,366       24,372     72,366
                          ===========  ===========  ===========  =========




                           Syneron Medical Ltd.
 Reconciliation Between GAAP To Non-GAAP Consolidated Statement Of Income
             U.S. dollars in thousands, except per share data

                           Three Months ended       Twelve Months ended
                              December 31,              December 31,
                            2009         2008         2009         2008
                        (unaudited)  (unaudited)  (unaudited)  (unaudited)
                        -----------  -----------  -----------  -----------
Operating Loss (GAAP)        (5,395)     (15,692)     (24,056)        (244)
  Non-GAAP adjustment:
    Stock based
     compensation               837        2,192        4,264        7,592

                        -----------  -----------  -----------  -----------
  Non-GAAP operating
   (Loss) Income             (4,558)     (13,500)     (19,792)       7,348

Net (Loss) Income
 (GAAP) attributable to
 Syneron shareholders        (4,345)     (15,872)     (23,587)       5,627
  Non-GAAP adjustment:
    Stock based
     compensation               837        2,192        4,264        7,592

                        -----------  -----------  -----------  -----------

Non-GAAP Net (Loss)
 Income attributable to
 Syneron shareholders        (3,508)     (13,680)     (19,323)      13,219

  Non-GAAP net (Loss)
   Income per share:
Basic net (Loss) Income
 per share                    (0.13)       (0.50)       (0.70)        0.48
Diluted net (Loss) Income
 per share                    (0.13)       (0.50)       (0.70)        0.48

Weighted average number
 of shares used in per
 share calculation (in
 thousands):
Basic                        27,591       27,460       27,526       27,410
Diluted                      27,591       27,460       27,526       27,521
                        ===========  ===========  ===========  ===========




                           Syneron Medical Ltd.
                PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
             U.S. dollars in thousands, except per share data

                                 Three Months ended December 31, 2009
                                              (unaudited)
                            ----------------------------------------------
                               Syneron               Pro Forma   Pro Forma
                               Medical    Candela   Adjustments  Combined
                              ---------  ---------  -----------  ---------
Revenues                         14,403     32,272                  46,675
Cost of Revenues                  4,239     19,227          575     24,041
                              ---------  ---------  -----------  ---------
Gross Profit                     10,164     13,045         (575)    22,634

Operating expenses:
Research and development          4,271      2,547                   6,818
Selling and marketing             7,869      8,245          976     17,090
General and administrative        3,419      4,027          118      7,564
                              ---------  ---------  -----------  ---------
Total operating expenses         15,559     14,819        1,094     31,472

                              ---------  ---------  -----------  ---------
Operating Loss                   (5,395)    (1,774)      (1,669)    (8,838)
Financial Income, net               436         33            -        469
Other Income, net                   562        534            -      1,096
                              ---------  ---------  -----------  ---------
Loss before taxes on income      (4,397)    (1,207)      (1,669)    (7,273)
Taxes on income                     785     (1,118)       1,602      1,269
                              ---------  ---------  -----------  ---------
Net Loss from continuing
 operations                      (5,182)       (89)      (3,271)    (8,542)
Net loss attributable to
 non controlling interest           837          -            -        837
                              ---------  ---------  -----------  ---------
Net Loss attributable to
 Syneron and Candela
 shareholders                    (4,345)       (89)      (3,271)    (7,705)

Basic net Loss per share          (0.16)         -                   (0.22)
Diluted net Loss per share        (0.16)         -                   (0.22)
                              =========  =========               =========
Weighted average number of
 shares used in per share
 calculation (in thousands):
Basic                            27,591     22,757                  34,267
Diluted                          27,591     22,757                  34,267
                              =========  =========               =========




                           Syneron Medical Ltd.
                  PRO FORMA CONSOLIDATED BALANCE SHEETS
                        U.S. dollars in thousands

                                           December 31, 2009
                                              (unaudited)
                            ----------------------------------------------
                               Syneron               Pro Forma   Pro Forma
                               Medical    Candela   Adjustments  Combined
                              ---------  ---------  -----------  ---------
CURRENT ASSETS
Cash and cash
 equivalents (*)                 24,372     25,787            -     50,159
Short term bank deposit (*)       1,000          -            -      1,000
Available-for-sale marketable
 securities (*)                 165,919        653            -    166,572
Trade receivables, net           13,758     34,322            -     48,080
Other accounts receivables
 and prepaid expenses             2,753        553         (600)     2,706
Inventories                       8,592     25,400        1,324     35,316
Other current assets                  -      7,053        2,270      9,323
                              ---------  ---------  -----------  ---------
Total Current Assets            216,394     93,768        2,994    313,156

LONG-TERM ASSETS
Severance pay fund                  246          -            -        246
Long-term deposits and
 others (*)                         221          -            -        221
Long-term available-for-sale
 marketable securities (*)       14,839          -            -     14,839
Deferred tax assets                   -     23,466            -     23,466
Investment in affiliated
 company                          1,050          -            -      1,050
Property and equipment, net       2,885      3,116            -      6,001
Goodwill and Intangible
 assets, net                     34,632        172       23,822     58,626
Other assets                          -      1,342            -      1,342
                              ---------  ---------  -----------  ---------
Total Long-Term Assets           53,873     28,096       23,822    105,791

                              ---------  ---------  -----------  ---------
Total Assets                    270,267    121,864       26,816    418,947
                              =========  =========  ===========  =========

CURRENT LIABILITIES
Trade Payables                    3,735      9,851            -     13,586
Other accounts payable
 and accrued expenses            37,484     30,809        6,204     74,497
Deferred gain                         -          -       13,553     13,553
Current liabilities of
 discontinued operations              -        451            -        451
                              ---------  ---------  -----------  ---------
Total Current Liabilities        41,219     41,111       19,757    102,087

LONG-TERM LIABILITIES
Deferred Revenues                   902      4,640            -      5,542
Warranty Accruals                   558        382            -        940
Accrued severance pay               330          -            -        330
Deferred tax liability                -          -        9,529      9,529
                              ---------  ---------  -----------  ---------
Total Long-Term Liabilities       1,790      5,022        9,529     16,341

EQUITY
Ordinary shares                      65        262         (244)        83
Additional paid-in capital      102,937     77,075       (3,832)   176,180
Treasury shares                  (9,587)   (24,855)      24,855     (9,587)
Accumulated other
 comprehensive income (loss)         (9)     3,659       (3,659)        (9)
Retained earnings               130,751     19,590      (19,590)   130,751
                              ---------  ---------  -----------  ---------
Total Shareholders' Equity      224,157     75,731       (2,470)   297,418

Noncontrolling interest           3,101          -            -      3,101
                              ---------  ---------  -----------  ---------
Total equity                    227,258     75,731       (2,470)   300,519
                              ---------  ---------  -----------  ---------
Total Liabilities and Equity    270,267    121,864       26,816    418,947
                              =========  =========  ===========  =========

(*) Total Cash and Liquid
    Investments                 206,351     26,440                 232,791

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