SOURCE: Syneron Medical Ltd.

Syneron Medical Ltd.

February 16, 2011 07:00 ET

Syneron Reports Fourth Quarter 2010 Results

Revenue of $53.5 Million, With Net Profitability on Both GAAP and Non-GAAP Basis

YOKNEAM, ISRAEL--(Marketwire - February 16, 2011) - Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced fourth quarter 2010 financial results for the three month period ended December 31, 2010. Fourth quarter 2010 financial results are for Syneron and Candela as a combined company. The fourth quarter 2009 year-over-year comparative financial results referred to below are pro-forma financial results assuming the merger with Candela Corporation had occurred on January 1, 2009.

Fourth Quarter 2010 Highlights Include:

--  Revenue of $53.5 million, up 14.7% year-over-year
--  International revenue of $35.3 million, up 20% year-over-year
--  North America revenue of $18.2 million, up 5.7% year-over-year
--  Non-GAAP gross margin of 54.4%, up from 50.0% in the prior year and
    52.3% in Q3 2010
--  Non-GAAP net income from continuing operations before non-controlling
    interest of $3.4 million, or 6.3% of revenue compared to a net loss of
    $4.1 million in the prior year and $1.5 million in Q3 2010
--  Non-GAAP earnings per share (basic and diluted) of $0.10, compared to a
    loss per share of $0.12 in the prior year and $0.04 in Q3 2010
--  Net cash and investments portfolio of $215.2 million at
    December 31, 2010
--  Global launch of CO2RE and elure

Lou Scafuri, Chief Executive Officer of Syneron, commented, "The strength of our fourth quarter results clearly demonstrates the benefits of the Syneron and Candela merger. The combined businesses have an unmatched product portfolio and global sales network, which are supported by strong clinical data and customer relationships. We have successfully executed on the integration plan and leveraged these factors to drive continued revenue growth while also focusing on driving operational efficiencies and investing in new growth opportunities.

"We made significant progress on the new product front during the quarter, including global launches of our CO2RE Fractional CO2 Resurfacing System and elure Advanced Skin Lightening Technology. In addition, we are on schedule to launch the ePrime Energy-Based Dermal Remodeling during the first quarter, followed by several additional anticipated new product launches throughout the year. We have received positive feedback on all of the recently launched products, including at the American Academy of Dermatology annual meeting earlier this month.

"As part of our growth strategy, during the quarter we acquired the Tända line of LED home-use products, giving us an immediate presence in the important aesthetic home-use market. Tända represents a synergistic growth opportunity with our other direct to consumer initiatives and we expect this to become an increasingly important part of our business as we launch these new products."

Revenue: Fourth quarter 2010 revenue was $53.5 million, an increase of 14.7% compared to $46.6 million in the fourth quarter 2009. International revenue was $35.3 million, an increase of 20% compared to $29.5 million in the fourth quarter 2009. Fourth quarter 2010 revenue in North America was $18.2 million, an increase of 5.7% compared to $17.2 million in the fourth quarter 2009.

Non-GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2010:

Gross Margin: Fourth quarter 2010 gross margin was 54.4%, compared to 50.0% in the fourth quarter 2009 and 52.3% in the third quarter 2010.

Operating Income (loss): Fourth quarter 2010 operating income was $4.0 million, compared to an operating loss of $5.8 million in the fourth quarter 2009 and an operating loss of $0.5 million in the third quarter 2010. Fourth quarter 2010 operating income represented 7.5% of revenue in the quarter, compared to an operating loss of 12.4% of revenue in the fourth quarter 2009 and 1.1% of revenue in the third quarter 2010.

Net Income (loss): Fourth quarter 2010 income from continuing operations before non-controlling interest was $3.4 million, compared to a loss of $4.1 million in the fourth quarter 2009 and a loss of $1.5 million in the third quarter 2010.

Fourth quarter non-GAAP operating income and net income excludes one-time income and expenses as detailed in the Company's financial tables, with the main item being a one-time income of $8.5 million related to the recognition of a deferred gain related to the Company's merger with Candela Corporation.

Earnings Per Share: Fourth quarter 2010 earnings per share (basic and diluted) was $0.10, compared to a loss per share of $0.12 in the fourth quarter 2009 and a loss per share of $0.04 in the third quarter 2010.

GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2010:

Gross Margin: Fourth quarter 2010 gross margin was 52.5%, compared to 49.0% in the fourth quarter 2009 and 50.8% in the third quarter 2010.

Operating Income (loss): Fourth quarter 2010 operating income was $8.0 million, compared to an operating loss of $8.6 million in the fourth quarter 2009 and an operating loss of $5.0 million in the third quarter 2010.

Net Income (loss) from continuing operations before non-controlling interest: Fourth quarter 2010 net income was $8.1 million, compared to a net loss of $6.2 million in the fourth quarter of 2009 and a loss of $5.3 million in the third quarter 2010.

Earnings Per Share: Fourth quarter 2010 earnings per share basic was $0.25 and diluted was $0.24, compared to a loss per share of $0.18 in the fourth quarter 2009 and a loss per share of $0.15 in the third quarter 2010.

Cash Position: As of December 31, 2010, net cash and cash equivalents, including short-term bank deposits and investments in marketable securities, were $215.2 million.

Asaf Alperovitz, Chief Financial Officer of Syneron, commented, "Beginning this quarter, we are breaking out our financial results between Professional Aesthetic Devices and Emerging Business Units in order to provide increased transparency into our results. We believe this segment reporting will allow investors to better gauge the growth and significant investments we are making as part of our overall growth strategy in our emerging technologies that are primarily targeted at the home-use consumer market. Products in the Emerging Business Units segment include eLure skin whitening, Tända LED systems, MEmyelos hair removal system, Light Instruments' dental laser devices along with pipeline products that include our strategic home-use device partnership with Procter & Gamble and Fluorinex teeth whitening and fluorination. Segment reporting will also provide a view of the operating results for the traditional Syneron and Candela business, which we have labeled as Professional Aesthetic Devices, or PAD."

Mr. Alperovitz added, "Our fourth quarter 2010 results in the PAD segment demonstrate a significant improvement in margins that we believe is indicative of the potential leverage we can drive from the combined Syneron and Candela business. Additionally, for the full year 2010 the PAD segment was operationally profitable on a non-GAAP basis. In 2011, we expect further margin improvements for our PAD segment as our mix shifts in favor of higher gross margin products and consumables and we execute on our cross selling opportunities and additional efficiency initiatives that we see in the business."

Unaudited Non-GAAP segment results for the three months ended December 31, 2010 and 2009 (in thousands):

                          For the three-months ended
                ----------------------------------------------
                 December                December
                    31,        % of         31,        % of        % of
                   2010      Revenues      2009      Revenues     Change
                ----------  ----------  ----------  ----------  ----------

Revenues

  Professional
   Aesthetic
   Devices      $   52,170        97.4% $   46,615        99.9%       11.9%
  Emerging
   Business
   Units             1,373         2.6%         60         0.1%     2188.3%
                ----------              ----------

Total revenues  $   53,543       100.0% $   46,675       100.0%       14.7%
                ==========              ==========




  Professional
   Aesthetic
   Devices      $    5,948        11.4% $   (3,692)       -7.9%     -261.1%
  Emerging
   Business
   Units            (1,926)     -140.3%     (2,097)    -3495.0%       -8.2%
                ----------              ----------

Total operating
 income (loss)  $    4,022         7.5% $   (5,789)      -12.4%     -169.5%
                ==========              ==========

Unaudited Non-GAAP segment results for the twelve months ended December 31, 2010 and 2009 (in thousands):

                          For the twelve-months ended
                ----------------------------------------------
                 December                December
                    31,        % of         31,        % of        % of
                   2010      Revenues      2009      Revenues     Change
                ----------  ----------  ----------  ----------  ----------

Revenues

  Professional
   Aesthetic
   Devices      $  185,951        97.9% $  171,473        98.3%        8.4%
  Emerging
   Business
   Units             3,927         2.1%      2,908         1.7%       35.0%
                ----------              ----------

Total revenues  $  189,878       100.0% $  174,381       100.0%        8.9%
                ==========              ==========


Operating
 income (loss)

  Professional
   Aesthetic
   Devices      $      302         0.2% $  (22,453)      -13.1%     -101.3%
  Emerging
   Business
   Units            (6,117)     -155.8%     (3,211)     -110.4%       90.5%
                ----------              ----------

Total operating
 loss           $   (5,815)       -3.1% $  (25,664)      -14.7%      -77.3%
                ==========              ==========

Unaudited GAAP segment results for the three months ended December 31, 2010 and 2009 (in thousands):

                          For the three-months ended
                ----------------------------------------------
                 December                December
                    31,        % of         31,        % of        % of
                   2010      Revenues      2009      Revenues     Change
                ----------  ----------  ----------  ----------  ----------


Revenues

 Professional
  Aesthetic
  Devices       $   52,083        97.4% $   46,528        99.9%       11.9%
 Emerging
  Business
  Units              1,373         2.6%         60         0.1%     2188.3%
                ----------              ----------

Total revenues  $   53,456       100.0% $   46,588       100.0%       14.7%
                ==========              ==========


Operating
 income (loss)

  Professional
   Aesthetic
   Devices      $    9,963        19.1% $   (6,502)      -14.0%     -253.2%
  Emerging
   Business
   Units            (1,926)     -140.3%     (2,097)    -3495.0%       -8.2%
                ----------              ----------

Total operating
 income (loss)  $    8,037        15.0% $   (8,599)      -18.5%     -193.5%
                ==========              ==========

Unaudited GAAP segment results for the twelve months ended December 31, 2010 and 2009 (in thousands):

                          For the twelve-months ended
                ----------------------------------------------
                 December                December
                    31,        % of         31,        % of        % of
                   2010      Revenues      2009      Revenues     Change
                ----------  ----------  ----------  ----------  ----------

Revenues

  Professional
   Aesthetic
   Devices      $  185,601        97.9% $  171,124        98.3%        8.5%
  Emerging
   Business
   Units             3,927         2.1%      2,908         1.7%       35.0%
                ----------              ----------

Total revenues  $  189,528       100.0% $  174,032       100.0%        8.9%
                ==========              ==========


Operating
 income (loss)

  Professional
   Aesthetic
   Devices      $  (27,285)      -14.7% $  (35,318)      -20.6%      -22.7%
  Emerging
   Business
   Units            (6,117)     -155.8%     (3,211)     -110.4%       90.5%
                ----------              ----------

Total operating
 loss           $  (33,402)      -17.6% $  (38,529)      -22.1%      -13.3%
                ==========              ==========

Use of Non-GAAP Measures

This press release provides financial measures for gross margin, net income (loss), net income ( loss) per basic and diluted share, which exclude one-time expenses relating to the mergers with Candela Corporation and Primeva Medical Inc, one-time income due to reversal of a deferred gain related to the merger with Candela Corporation, and an expense charge related to stock-based compensation and amortization 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 gross margin, 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.

Conference call

Syneron management will host its fourth quarter 2010 earnings conference call today at 8:30 a.m. 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 2010 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 877-844-6886 in the U.S., and 970-315-0315 from overseas. The conference pass code is: 31269957.

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 Annual Report on Form 20-F, 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.
       Unaudited Condensed Consolidated Statements of Income (Loss)
                  (in thousands, except per share data)

                                      For the               For the
                                three-months ended    twelve-months ended
                                -------------------   -------------------
                                December   December   December   December
                                   31,        31,        31,        31,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------


Revenue                         $  53,456  $  14,403  $ 189,528  $  54,726
Cost of sales                      25,395      4,239    101,099     18,903
                                ---------  ---------  ---------  ---------
Gross profit                       28,061     10,164     88,429     35,823
Operating expenses:
  Sales and marketing              14,310      7,869     63,429     34,156
  General and administrative        6,612      3,419     36,103     16,478
  Research and development          6,414      4,271     26,837     13,220
  Other income, net                (7,312)         -     (4,538)         -
  Legal settlement, net                 -          -          -     (3,975)
                                ---------  ---------  ---------  ---------
Total operating expenses           20,024     15,559    121,831     59,879
                                ---------  ---------  ---------  ---------
Income (loss) from operations       8,037     (5,395)   (33,402)   (24,056)
Other income:
  Financial Income, net               419        436        717      2,097
  Other income                        110        562         44        562
                                ---------  ---------  ---------  ---------
  Total other income                  529        998        761      2,659
                                ---------  ---------  ---------  ---------
Income (loss) from continuing
 operations before income taxes     8,566     (4,397)   (32,641)   (21,397)
(Benefit) expense from income
 taxes                                427        785     (5,110)     3,240
                                ---------  ---------  ---------  ---------
Income (loss) from continuing
 operations before
 non-controlling interest           8,139     (5,182)   (27,531)   (24,637)
Net loss attributable to
 non-controlling interest             244        837      1,799      1,050
Income from discontinued
 operations, net of income
 taxes                                  -          -        196          -
                                ---------  ---------  ---------  ---------
Net income (loss) attributable
 to Syneron shareholders        $   8,383  $  (4,345) $ (25,536) $ (23,587)
                                =========  =========  =========  =========

Income (loss) per share:

Basic
  Income (loss) from continuing
   operations before
   non-controlling interest     $    0.24  $   (0.19) $   (0.80) $   (0.90)
  Net loss attributable to
   non-controlling interest          0.01       0.03       0.05       0.04
  Income from discontinued
   operations                           -          -       0.01          -
                                ---------  ---------  ---------  ---------
  Net Income (loss)
   attributable to Syneron
   shareholders                 $    0.25  $   (0.16) $   (0.74) $   (0.86)
                                ---------  ---------  ---------  ---------
Diluted
  Income (loss) from continuing
   operations before
   non-controlling interest     $    0.23  $   (0.19) $   (0.80) $   (0.90)
  Net loss attributable to
   non-controlling interest           0.01       0.03       0.05       0.04
  Income from discontinued
   operations                           -          -       0.01          -
                                ---------  ---------  ---------  ---------
  Net Income (loss)
   attributable to Syneron
   shareholders                 $    0.24  $   (0.16) $   (0.74) $   (0.86)
                                ---------  ---------  ---------  ---------

Weighted average shares
 outstanding:
  Basic                            34,533     27,591     34,369     27,526
                                ---------  ---------  ---------  ---------
  Diluted                          34,998     27,591     34,369     27,526
                                ---------  ---------  ---------  ---------




                           Syneron Medical Ltd.
                  Condensed Consolidated Balance Sheets
                              (in thousands)

                                                     December    December
                                                        31,         31,
                                                       2010        2009
                                                    ----------- -----------
                                                    (unaudited)  (audited)
Assets

Current assets:
  Cash and cash equivalents                         $    63,821 $    24,372
  Short-term bank deposits                                1,590       1,000
  Available-for-sale marketable securities              114,799     169,309
  Accounts receivable, net                               42,440      13,758
  Other current assets                                   13,868       2,753
  Inventories, net                                       22,720       8,592
                                                    ----------- -----------

Total current assets                                    259,238     219,784
                                                    ----------- -----------

Non-current assets:
  Severance pay fund                                        334         246
  Long-term deposits and others                           2,346         221
  Long-term available-for-sale marketable
   securities                                            37,721      11,449
  Investments in affiliated companies                     9,369       1,050
  Property and equipment, net                             4,029       2,885
  Goodwill and Intangible assets, net                    56,818      34,632
  Deferred taxes                                          6,854           -
                                                    ----------- -----------

Total non-current assets                                117,471      50,483
                                                    ----------- -----------

Total assets                                        $   376,709 $   270,267
                                                    =========== ===========


Liabilities and Stockholders' Equity

Current liabilities:
  Bank indebtedness                                 $     2,737 $         -
  Accounts payable                                       16,644       3,735
  Other accounts payable and accrued expenses            55,056      30,153
                                                    ----------- -----------

Total current liabilities                                74,437      33,888
                                                    ----------- -----------

Non-current liabilities:
  Contingent consideration                               11,365       7,331
  Deferred Revenues                                       4,528         902
  Warranty Accruals                                       1,074         558
  Accrued severance pay                                     554         330
  Deferred taxes                                          6,215           -
                                                    ----------- -----------

Total non-current liabilities                            23,736       9,121
                                                    ----------- -----------

Stockholders' equity:                                   278,536     227,258
                                                    ----------- -----------

Total liabilities and stockholders' equity          $   376,709 $   270,267
                                                    =========== ===========




                           Syneron Medical Ltd.
        Unaudited Condensed Consolidated Statements of Cash Flows
                              (in thousands)

                                                           For the
                                                     twelve months ended:
                                                    ----------------------
                                                     December    December
                                                        31,         31,
                                                       2010        2009
                                                    ----------  ----------
Cash flows from operating activities:
  Net loss before non-controlling interest          $  (27,335) $  (24,637)
    Adjustments to reconcile net loss to net cash
     used by operating activities:
    Share-based compensation expense                     3,196       4,264
    Depreciation and amortization                        9,186       1,927
    Impairments of available-for-sale marketable
     securities and other intangible assets              1,378         173
    Impairment of investment in an affiliated
     company                                               850           -
    Realized loss, changes in accrued interest, and
     amortization of premium on marketable
     securities                                            970       1,578
    Deferred gain related to acquisition of
     Subsidiary and revaluation of contingent
     liability                                          (6,900)          -
    Gain on  investments in affiliated companies as
     a result of a business combination                      -        (562)
    Changes in operating assets and liabilities
      Accounts receivable                                  450      18,879
      Inventories                                       13,180       4,320
      Other current assets                              (4,506)         64
      Deferred taxes                                     7,105       1,549
      Accrued severance pay, net                           136          (9)
      Accounts payable                                   4,201      (5,039)
      Deferred revenue                                  (3,885)     (3,608)
      Accrued warranty costs                               315          (4)
      Other accrued liabilities                         (4,732)        160
                                                    ----------  ----------

Net cash used by operating activities                   (6,391)       (945)
                                                    ----------  ----------

Cash flows from investing activities:
    Purchases of property and equipment                   (887)       (487)
    Maturities of held-to-maturity marketable
     securities                                            460           -
    Proceeds from the sale of available-for-sale
     marketable securities                             210,228     256,735
    Purchase of available-for-sale marketable
     securities                                       (182,961)   (294,345)
    Cash paid for investments in affiliated
     companies                                          (5,000)       (750)
    Net cash (paid in) received from acquisition of
     subsidiary                                         21,602      (7,729)
    Other investing activities                            (360)     (1,022)
                                                    ----------  ----------

Net cash provided by (used by) investing activities     43,082     (47,598)
                                                    ----------  ----------

Cash flows from financing activities:
    Proceeds from exercise of stock options              1,932         549
                                                    ----------  ----------

Net cash provided by financing activities                1,932         549
                                                    ----------  ----------

Effect of exchange rates on cash and cash
 equivalents                                               826           -
                                                    ----------  ----------

Net increase (decrease) in cash and cash
 equivalents                                            39,449     (47,994)

Cash and cash equivalents at beginning of period        24,372      72,366
                                                    ----------  ----------

Cash and cash equivalents at end of period          $   63,821  $   24,372
                                                    ==========  ==========




                           Syneron Medical Ltd.
         Unaudited Non-GAAP Financial Measures and Reconciliation
                  (in thousands, except per share data)

                                     For the               For the
                                three-months ended    twelve-months ended
                                --------------------  --------------------
                                December   December   December   December
                                   31,        31,        31,        31,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

GAAP operating income (loss)    $   8,037  $  (5,395) $ (33,402) $ (24,056)

  Stock-based compensation            692        837      3,196      4,264
  Amortization of acquired
   intangible assets                2,019         68      6,668        272
  Merger, restructuring and
   other non-recurring items,
   net                             (6,726)         -     17,723          -
                                ---------  ---------  ---------  ---------

Non-GAAP operating income
 (loss)                         $   4,022  $  (4,490) $  (5,815) $ (19,520)
                                =========  =========  =========  =========

GAAP income (loss) from
 continuing operations
 before non-controlling
 interest                       $   8,139  $  (5,182) $ (27,531) $ (24,637)

  Stock-based compensation            692        837      3,196      4,264
  Amortization of acquired
   intangible assets                2,019         68      6,668        272
  Merger, restructuring and
   other non-recurring items,
   net                             (6,726)         -     17,723          -
  Income tax adjustments             (760)         -     (8,983)         -
                                ---------  ---------  ---------  ---------

Non-GAAP income (loss) from
 continuing operations
 before non-controlling
 interest                       $   3,364  $  (4,277) $  (8,927) $ (20,101)
                                =========  =========  =========  =========

Loss per share:

Basic
GAAP income (loss) per share
 from continuing operations     $    0.24  $   (0.19) $   (0.80) $   (0.89)

  Stock-based compensation           0.02       0.03       0.09       0.15
  Amortization of acquired
   intangible assets                 0.06          -       0.19       0.01
  Merger, restructuring and
   other non-recurring costs        (0.20)         -       0.52          -
  Income tax adjustments            (0.02)         -      (0.26)         -
                                ---------  ---------  ---------  ---------

Non-GAAP (income) loss per
 share from continuing
 operations before
 non-controlling interest       $    0.10  $   (0.16) $   (0.26) $   (0.73)
                                =========  =========  =========  =========
Diluted
GAAP income (loss) per share
 from continuing operations     $    0.23  $   (0.19) $   (0.80) $   (0.89)

  Stock-based compensation           0.02       0.03       0.09       0.15
  Amortization of acquired
   intangible assets                 0.06          -       0.19       0.01
  Merger, restructuring and
   other non-recurring costs        (0.19)         -       0.52          -
  Income tax adjustments            (0.02)         -      (0.26)         -
                                ---------  ---------  ---------  ---------

Non-GAAP income (loss) per
 share from continuing
 operations before
 non-controlling interest       $    0.10  $   (0.16) $   (0.26) $   (0.73)
                                =========  =========  =========  =========

Weighted average shares
 outstanding:

  Basic                            34,533     27,591     34,369     27,526
                                ---------  ---------  ---------  ---------
  Diluted                          35,279     27,591     34,369     27,526
                                ---------  ---------  ---------  ---------




                           Syneron Medical Ltd.
  Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
                  (in thousands, except per share data)

                         For the three months ended December 31, 2009
                    ------------------------------------------------------
                      Syneron       Candela       Pro Forma     Pro Forma
                      Medical     Corporation   Adjustments     Combined
                    ------------  ------------  ------------  ------------

Revenue             $     14,403  $     32,272  $        (87) $     46,588
Cost of sales              4,239        19,227           275        23,741
                    ------------  ------------  ------------  ------------
Gross profit              10,164        13,045          (362)       22,847
Operating expenses:
  Sales and
   marketing               7,869         8,245           968        17,082
  General and
   administrative          3,419         4,027           100         7,546
  Research and
   development             4,271         2,547             -         6,818
                    ------------  ------------  ------------  ------------
Total operating
 expenses                 15,559        14,819         1,068        31,446
                    ------------  ------------  ------------  ------------
Loss from
 operations               (5,395)       (1,774)       (1,430)       (8,599)
Other income:
  Financial Income,
   net                       436            33             -           469
  Other income               562           534             -         1,096
                    ------------  ------------  ------------  ------------
  Total other
   income                    998           567             -         1,565
                    ------------  ------------  ------------  ------------
Loss from
 continuing
 operations before
 income taxes             (4,397)       (1,207)       (1,430)       (7,034)
Expense (benefit)
 from income taxes           785        (1,118)         (520)         (853)
                    ------------  ------------  ------------  ------------
Loss from
 continuing
 operations
 before
 non-controlling
 interest                 (5,182)          (89)         (910)       (6,181)
                    ============  ============  ============  ============

Loss per share:
Basic and diluted
  Loss from
   continuing
   operations
   before
   non-controlling
   interest                                                   $      (0.18)
                                                              ============

Weighted average
 shares
 outstanding:
  Basic and diluted                                                 34,261
                                                              ------------




                           Syneron Medical Ltd.
  Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
                  (in thousands, except per share data)

                        For the twelve months ended December 31, 2009
                    ------------------------------------------------------
                      Syneron       Candela       Pro Forma     Pro Forma
                      Medical     Corporation   Adjustments     Combined
                    ------------  ------------  ------------  ------------

Revenue             $     54,726  $    119,655  $       (349) $    174,032
Cost of sales             18,903        73,631         1,370        93,904
                    ------------  ------------  ------------  ------------
Gross profit              35,823        46,024        (1,719)       80,128
Operating expenses:
  Sales and
   marketing              34,156        30,202         3,872        68,230
  General and
   administrative         16,478        15,334           400        32,212
  Research and
   development            13,220         8,970             -        22,190
  Legal settlement,
   net                    (3,975)            -             -        (3,975)
                    ------------  ------------  ------------  ------------
Total operating
 expenses                 59,879        54,506         4,272       118,657
                    ------------  ------------  ------------  ------------
Loss from
 operations              (24,056)       (8,482)       (5,991)      (38,529)
Other income:
  Financial Income,
   net                     2,097           598             -         2,695
  Other income               562           543             -         1,105
                    ------------  ------------  ------------  ------------
  Total other
   income                  2,659         1,141             -         3,800
                    ------------  ------------  ------------  ------------
Loss from
 continuing
 operations before
 income taxes            (21,397)       (7,341)       (5,991)      (34,729)
Expense (benefit)
 from income taxes         3,240        (3,153)       (2,179)       (2,092)
                    ------------  ------------  ------------  ------------
Loss from
 continuing
 operations
 before
 non-controlling
 interest                (24,637)       (4,188)       (3,812)      (32,637)
                    ============  ============  ============  ============

Loss per share:
Basic and diluted
  Loss from
   continuing
   operations
   before
   non-controlling
   interest                                                   $      (0.95)
                                                              ============

Weighted average
 shares
 outstanding:
  Basic and diluted                                                 34,196
                                                              ------------




                           Syneron Medical Ltd.
    Unaudited Pro Forma Non-GAAP Financial Measures and Reconciliation
                  (in thousands, except per share data)

                                          For the three months ended
                                                December 31, 2009
                                     -------------------------------------
                                       Syneron      Candela     Pro Forma
                                       Medical    Corporation    Combined
                                     -----------  -----------  -----------


GAAP operating loss                  $    (5,395) $    (3,204) $    (8,599)

 Stock-based compensation                    837          475        1,312
 Amortization of acquired intangible
  assets                                      68        1,320        1,388
 Merger, restructuring and other
  non-recurring costs                          -          110          110
                                     -----------  -----------  -----------

Non-GAAP operating loss              $    (4,490) $    (1,299) $    (5,789)
                                     ===========  ===========  ===========


GAAP loss from continuing operations $    (5,182) $      (999) $    (6,181)

  Stock-based compensation                   837          475        1,312
  Amortization of acquired intangible
   assets                                     68        1,320        1,388
  Merger, restructuring and other
   non-recurring costs                         -          110          110
  Income tax adjustments                       -         (693)        (693)
                                     -----------  -----------  -----------

Non-GAAP loss from continuing
 operations                          $    (4,277) $       213  $    (4,064)
                                     ===========  ===========  ===========


GAAP loss per share from continuing
 operations                                                    $     (0.18)

  Stock-based compensation                                            0.04
  Amortization of acquired intangible
   assets                                                             0.04
  Merger, restructuring and other
   non-recurring costs                                                   -
  Income tax adjustments                                             (0.02)
                                                               -----------

Non-GAAP loss per share from
 continuing operations                                         $     (0.12)
                                                               ===========


Weighted average shares outstanding:

  Basic and diluted                                                 34,261
                                                               -----------




                           Syneron Medical Ltd.
    Unaudited Pro Forma Non-GAAP Financial Measures and Reconciliation
                  (in thousands, except per share data)

                                         For the twelve months ended
                                                December 31, 2009
                                     -------------------------------------
                                       Syneron      Candela     Pro Forma
                                       Medical    Corporation    Combined
                                     -----------  -----------  -----------


GAAP operating loss                  $   (24,056) $   (14,473) $   (38,529)

  Stock-based compensation                 4,264        2,338        6,602
  Amortization of acquired intangible
   assets                                    272        5,279        5,551
  Merger, restructuring and other
   non-recurring costs                         -          712          712
                                     -----------  -----------  -----------

Non-GAAP operating loss              $   (19,520) $    (6,144) $   (25,664)
                                     ===========  ===========  ===========


GAAP loss from continuing operations $   (24,637) $    (8,000) $   (32,637)

  Stock-based compensation                 4,264        2,338        6,602
  Amortization of acquired intangible
   assets                                    272        5,279        5,551
  Merger, restructuring and other
   non-recurring costs                         -          712          712
  Income tax adjustments                       -       (3,029)      (3,029)
                                     -----------  -----------  -----------

Non-GAAP loss from continuing
 operations                          $   (20,101) $    (2,700) $   (22,801)
                                     ===========  ===========  ===========


GAAP loss per share from continuing
 operations                                                    $     (0.95)

  Stock-based compensation                                            0.19
  Amortization of acquired intangible
   assets                                                             0.16
  Merger, restructuring and other
   non-recurring costs                                                0.02
  Income tax adjustments                                             (0.09)
                                                               -----------

Non-GAAP loss per share from
 continuing operations                                         $     (0.67)
                                                               ===========


Weighted average shares outstanding:

  Basic and diluted                                                 34,196
                                                               -----------

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