SOURCE: Syneron Medical

May 14, 2007 06:30 ET

Syneron Reports 36% Increase in First Quarter 2007 Results to $32.3 Million

Continued Growth in Medical Aesthetics Market Contributes to Robust Syneron Sales

YOKNEAM, ISRAEL -- (MARKET WIRE) -- May 14, 2007 -- Syneron Medical Ltd. (NASDAQ: ELOS), an innovator in the development, marketing and sales of elos™ combined-energy medical aesthetic devices, today reported financial results for the first quarter of 2007, and, in a separate announcement, changes to the management structure to support the long-term growth strategy of the Company.

Revenues for the first quarter of 2007 grew 36% over the same period in 2006 to $32.3 million. Revenues grew strongly across all geographical regions, with North America accounting for 56% of total revenues of first quarter of 2007 and with international sales accounting for the balance.

Net income for the first quarter of 2007 on a US GAAP basis ("GAAP") was $8.5 million, or $0.31 per diluted share, which includes stock-based compensation expense of $2.6 million, or $0.09 per diluted share. On a pro forma basis, exclusive of stock-based compensation, net income for the first quarter of 2007 was $11.1 million, or $0.40 per diluted share.

Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore believes that the non-GAAP figures more effectively describe the company' business and, hence, is making the non-GAAP adjustments available to investors. (Refer to the "Use of Non-GAAP Measures" section and accompanying financial table for reconciliation of GAAP financial information to Non-GAAP.)

Commenting on the quarterly financial results, CEO David Schlachet said, "We are very pleased with the strong revenue growth Syneron continues to achieve. Our success in growing first quarter revenues was the direct result of last year's investments in marketing and sales and the introduction of an innovative and focused customer care program, as well as the continued strength this year in the market for medical aesthetic equipment worldwide. Our investments in marketing and sales, which peaked in the fourth quarter of 2006, have been reduced by approximately 7% (on a Non-GAAP basis) compared to the prior quarter and are in line with our strategy to improve our cost structure."

Mr. Schlachet continued, "The highlight of the first quarter was the signing of the collaborative agreement with Procter & Gamble for the commercialization of Syneron's elos™ based, home-use devices. Progress continues on the development of the product, and we recently completed our internal second phase clinical trial which demonstrated excellent clinical results and high satisfaction levels. We are confident that the P&G partnership will not only position Syneron as a leader in the energy-based home use market, but also will allow us to achieve deeper penetration of our broad product offering."

Syneron's financial position remains strong. Syneron's cash position at the quarter's end (including long-term deposits) rose to $179.4 million at the end of the quarter and shareholders' equity totaled $208.7 million.

Guidance

The following statements are forward-looking, and actual results may differ materially. The Company reaffirms its previously announced guidance and expects revenues for the full year 2007 to grow approximately 20%.

Conference call

Syneron Management will host a conference call to discuss the results at 8:30am ET today, April 14th, 2007. Investors and other interested parties may access a live web cast through Syneron's website at www.syneron.com. Please login at least 10 minutes prior to the conference call in order to download the applicable audio software. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's website.

Use of Non-GAAP Measures

This press release provides financial measures for net income and basic and diluted earnings per share that exclude stock-based compensation expense 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 that enhances management's and investors' ability to evaluate the Company's net income and earnings per share and to compare it with historical net income and earnings per share prior to the adoption of FAS 123R.

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

Syneron Medical Ltd. (NASDAQ: ELOS) manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented elos combined-energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative elos technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including hair removal, wrinkle reduction, rejuvenating the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. is located in Israel. Syneron has offices and distributors throughout the world, including North American Headquarters in Canada, North American Logistics Support Center in Irvine, CA, European Headquarters in Germany, and Asia-Pacific Headquarters in Hong Kong, which provide sales, service and support. Additional information can be found at www.syneron.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, including statements with respect to our expectations regarding, but not limited to, financial forecast for 2007, maintaining a leadership position in core markets, cross selling opportunities and the launch of a home use product. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements, including, but not limited to, the risk associated with our ability to commercialize new products and identify new markets for our technology; ability to manage our growth; competition an pricing pressure and risks related to our intellectual property. These risks and other factors are summarized under the heading "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2005, filed with the Securities and Exchange Commission on June 30, 2006. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking information contained in this press release.

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


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


                                                   Three Months ended
                                                        March 31,
                                                   2007           2006
                                               (unaudited)    (unaudited)
                                               ------------   ------------

Revenues                                             32,331         23,739
Cost of Revenues                                      5,590          3,490
                                               ------------   ------------
Gross Profit                                         26,741         20,249

Operating expenses
Research and development                              2,741          1,729
Selling and marketing                                14,258          8,908
General and administrative                            2,554          1,724
Other expenses
                                               ------------   ------------
Total operating expenses                             19,553         12,361

                                               ------------   ------------
Operating Income                                      7,188          7,888
Financial income, net                                 1,728          1,110
                                               ------------   ------------
Income before taxes                                   8,916          8,998
Taxes on income                                        (400)          (200)
                                               ------------   ------------
Net Income                                            8,516          8,798

Basic net earning per share                            0.31           0.33
Diluted net earnings per share                         0.31           0.32
                                               ============   ============
Weighted average number of shares used in
 per share calculation (in thousand):
Basic                                                27,593         26,868
Diluted                                              27,891         27,660
                                               ============   ============



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

                                                 31 March     31 December
                                                   2007           2006
                                               (unaudited)      (audited)
                                               ------------   ------------
CURRENT ASSETS
Cash and cash equivalents (1)                        14,002         16,036
Short term deposits (1)                               5,030          5,000
Marketable securities (1)                           108,066         81,493
Trade receivables                                    37,350         35,195
Other receivables and prepaid expenses                7,730          8,173
Inventories                                           8,896          7,084
                                               ------------   ------------
Total current assets                                181,074        152,981

LONG-TERM ASSETS
Severance pay fund                                      242            368
Long-term deposits and other cash equivalent (1)     52,284         69,252

Property and equipment, net                           1,672          1,513
                                               ------------   ------------
Long-Term Assets                                     54,198         71,133

OTHER ASSETS                                          1,041          1,127

                                               ------------   ------------
Total Assets                                        236,313        225,241
                                               ============   ============

CURRENT LIABILITIES
Trade Payables                                        4,585          6,452
Other current liabilities                            18,405         19,270
                                               ------------   ------------
Total current liabilities                            22,990         25,722

LONG-TERM LIABILITIES
Deferred Revenue and Warranty                         4,321          4,717
Accrued severance pay                                   294            405
                                               ------------   ------------
Total long-term liabilities                           4,615          5,122

SHAREHOLDERS' EQUITY:                               208,708        194,397
                                               ------------   ------------
Total liabilities and shareholders' equity          236,313        225,241
                                               ============   ============

(1) Total Short and Long-Term Cash and
 Equivalent                                         179,382        171,781



                              Syneron Medical Ltd.
                      CONSOLIDATED STATEMENT OF CASH FLOW
                            U.S. dollars in thousand


                                                   Three Months ended
                                                        March 31,
                                                   2007           2006
                                               (unaudited)    (unaudited)
                                               ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                            8,516          8,798
Adjustments to reconcile net income to net
 cash provided by
operating activities:
Depreciation and amortization                           218            168
Accrued severance pay, net                               15             40
Increase in short-term and long-term trade
 receivables                                         (2,155)        (6,699)
Decrease (increase) in other accounts
 receivables and prepaid expenses                       443           (528)
Increase in inventories                              (1,812)            91
Increase in trade payables                           (1,866)           553
Decrease in other current liabilities                (1,391)          (204)
Gain (loss) on available for sale securities            660            631
Stock-based compensation                              2,593          1,582
Increase (decrease) in deferred revenues                129            632
Loss on sales of property and equipment                   -              -
                                               ------------   ------------

Net cash provided by operating activities             5,350          5,064
                                               ------------   ------------

CASH FLOWS FROM INVESTMENT ACTIVITIES

Investment in short-term deposits, net                  (30)             -
Purchase of available-for-sale securities           (28,013)          (207)
Proceeds from sale of available-for-sale
 securities                                          18,350          1,191
Payments for acquisition of long-term loans
 and others                                             (30)             -
Proceeds from long term loans and other                   -             43
Purchase of property and equipment                     (291)          (243)
                                               ------------   ------------

Net cash used in investing activities               (10,014)           784
                                               ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES

Exercise of options                                   2,630            122
                                               ------------   ------------

Net cash provided by financing activities             2,630            122
                                               ------------   ------------

Increase in cash and cash equivalents                (2,034)         5,970
Cash and cash equivalents at the beginning of
 the period                                          16,036         16,570
                                               ------------   ------------

Cash and cash equivalents at the end of
 the period                                          14,002         22,540
                                               ============   ============



                           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          Three Months ended
                           31 March 2007               31 March 2006
                                FAS                         FAS
                       GAAP    123R   Non-GAAP     GAAP    123R   Non-GAAP
                     (unaudi-  Adjus- (unaudi-   (unaudi-  Adjus- (unaudi-
                       ted)    tment    ted)       ted)    tment    ted)
                     --------  ------ --------   --------  ------ --------

Revenues               32,331           32,331     23,739           23,739
Cost of Revenues        5,590      82    5,508      3,490      63    3,427
                     --------  ------ --------   --------  ------ --------
Gross Profit           26,741      82   26,823     20,249      63   20,312

Operating expenses
Research and
 development            2,741     237    2,504      1,729     137    1,592
Selling and
 marketing             14,258   1,657   12,601      8,908     852    8,056
General and
 administrative         2,554     589    1,965      1,724     493    1,231
                     --------  ------ --------   --------  ------ --------
Total operating
 expenses              19,553   2,483   17,070     12,361   1,482   10,879

                     --------  ------ --------   --------  ------ --------
Operating Income        7,188   2,565    9,753      7,888   1,545    9,433
Financial income,
 net                    1,728            1,728      1,110            1,110
                     --------  ------ --------   --------  ------ --------
Income before taxes     8,916   2,565   11,481      8,998   1,545   10,543
Taxes on income          (400)            (400)      (200)            (200)
                     --------  ------ --------   --------  ------ --------
Net Income              8,516   2,565   11,081      8,798   1,545   10,343

Basic net earning
 per share               0.31    0.09     0.40       0.33    0.05     0.38
Diluted net earnings
 per share               0.31    0.09     0.40       0.32    0.05     0.37
                     ========  ====== ========   ========  ====== ========

Weighted average
 number of shares
 used in per share
 calculation (in
 thousands:
Basic                  27,593           27,593     26,868           26,868
Diluted                27,891           27,891     27,660           27,660
                     ========  ====== ========   ========  ====== ========

Contact Information

  • For more information, please contact:

    Fabian Tenenbaum
    CFO
    +866 259 6661
    email: fabiant@syneron.com

    Judith Kleinman
    VP Investor Relations
    +972-4-909-6282
    email: ir@syneron.com