PLEASANTON, Calif.,
Jan. 27, 2011 /PRNewswire/ --
Thoratec Corporation (Nasdaq: THOR), a world leader in device-based
mechanical circulatory support therapies to save, support and
restore failing hearts, said today that revenues from continuing
operations in fiscal 2010 increased 37 percent over those in fiscal
2009.
Results from continuing operations for both the full year and
fourth quarter of fiscal 2010 and 2009 exclude contributions from
the company’s International Technidyne Corporation (ITC) Division.
Thoratec completed the divestiture of ITC in November 2010.
For the year ended January 1,
2011, revenues were $383.0
million versus $280.0 million
in the prior year. Revenues for the fourth quarter of fiscal 2010
were $97.6 million, an increase of 20
percent over revenues of $81.0
million in the fourth quarter of fiscal 2009.
Net income on a GAAP basis in fiscal 2010 was $59.0 million, or $0.99 per diluted share, versus GAAP net income
of $28.9 million, or $0.50 per diluted share, in fiscal 2009. Non-GAAP
net income, which is described later in this press release, was
$79.8 million, or $1.23 per diluted share, in fiscal 2010, versus
non-GAAP net income of $53.8 million,
or $0.86 per diluted share, in fiscal
2009.
“This past year was marked by many successes, including FDA
approval and launch of the HeartMate II® LVAS (Left Ventricular
Assist System) for the Destination Therapy (DT) indication,
continued improvements in clinical data in both the
Bridge-to-Transplantation (BTT) and DT patient populations, and an
impressive financial performance. We have also implemented a
broad range of initiatives designed to further develop the market
and advance our leadership position,” said Gary F. Burbach, president and chief executive
officer.
“Our financial performance for the year was driven by strong
continued adoption of the HeartMate II for DT and BTT in both
North America and Europe, and we realized solid operating
leverage as evidenced by our earnings growth,” he noted.
The company indicated that it ended 2010 with 254 HeartMate II
centers globally, an increase of 43 centers during the year, with
211 centers worldwide now utilizing its new HeartMate peripherals,
which are providing important quality of life benefits to patients
and generating incremental revenue growth. In addition, there are
now 90 centers with CMS (Centers for Medicare and Medicaid
Services) certification for reimbursement for DT.
“As we begin 2011, we have a solid foundation upon which to
build our business, and with our market development initiatives to
drive referrals from cardiologists, facilitate center expansion,
increase our international presence and realize continued
improvements in patient outcomes, we are optimistic about our
ability to achieve significant long-term growth,” Burbach
commented.
“Additionally,” Burbach continued, “we have an active product
pipeline that includes the continued evolution of the HeartMate II,
the development of our next-generation pumps—HeartMate III,
HeartMate X and PHP (Percutaneous Heart Pump)—and the introduction
of cross-platform breakthrough technologies designed to enhance the
HeartMate II, as well as future pump platforms. We believe these
market-leading innovations will drive broader adoption of our
offerings and enable us to serve an expanded patient population,
while resulting in improved patient outcomes and quality of life,
less invasive procedures and reduced cost of care,” he said.
FINANCIAL HIGHLIGHTS
Thoratec reported revenues of $383.0
million in 2010 versus revenues of $280.0 million in 2009. The HeartMate product
line accounted for $333.1 million in
revenues, a 45 percent increase over sales of $229.8 million a year ago. The Thoratec® product
line, which includes the PVAD and IVAD, accounted for sales of
$29.5 million, a 15 percent decline
versus revenues of $34.8 million a
year ago. CentriMag® Blood Pump sales in 2010 were $17.7 million, an increase of 41 percent compared
to sales of $12.6 million in 2009.
The balance of the company’s revenues reflects contribution from
its graft business. In 2010, pump sales accounted for $264.3 million, an increase of 29 percent over
revenues of $204.6 million a year
ago, while non-pump sales accounted for $116.0 million, an increase of 60 percent versus
revenue of $72.6 million a year ago.
Revenues in North America were
$324.3 million, an increase of 38
percent over revenues of $234.2
million a year ago. International revenues in 2010 were
$58.7 million, an increase of 28
percent compared to sales of $45.8
million in 2009. Foreign exchange rate fluctuations in 2010
had a $1.4 million unfavorable impact
on revenues compared to 2009.
GAAP gross margin in 2010 was 67.7 percent versus 65.9 percent a
year ago. Non-GAAP gross margin, which is described later in this
press release, was 68.0 percent versus 66.2 percent in 2009. The
year-over-year increase in gross margin was due to increased volume
and the roll-out of our external peripherals, as well as lower
inventory reserves driven by the $6.9
million of HeartMate XVE reserves recorded in 2009.
These benefits were in part offset by increased warranty
costs and pump to non-pump mix.
Operating expenses on a GAAP basis in 2010 were $157.8 million versus $134.6 million a year ago. On a non-GAAP basis,
operating expenses in 2010 were $136.7
million versus $103.3 million
in 2009. Operating expenses on a non-GAAP basis are described later
in this press release. The year-over-year increase in operating
expenses was due primarily to spending on product and market
development initiatives, including sales force expansion and the
addition of research and development personnel, as well as the PHP
acquisition, which occurred in the first quarter of 2010.
On a GAAP basis, other expense was $8.9
million in 2010 versus other expense of $7.2 million in 2009. On a non-GAAP basis, other
expense totaled $672,000 versus other
income of $442,000 a year ago. Other
income and expense on a non-GAAP basis is described later in this
press release.
The company’s GAAP effective tax rate in 2010 was 36.2 percent
versus 32.1 percent in 2009. The non-GAAP tax rate, which is
described later in this press release, was 35.2 percent in 2010
compared with 34.9 percent in 2009. The increase in the GAAP and
non-GAAP effective tax rates was due to higher pre-tax income and
return to provision adjustments.
Cash and investments at the end of 2010 were $469.5 million versus $331.6 million at the end of 2009. The cash
balance at the end of fiscal 2010 includes proceeds of $55.0 million from the sale of ITC.
GUIDANCE FOR FISCAL 2011
The following statements are based on current expectations.
These statements are forward-looking and actual results may differ
materially. For a more detailed discussion of forward-looking
statements, please see additional information below.
The company expects revenues will be in the range of
$410-$425 million, driven by revenue
growth of 10-15 percent for the HeartMate product line. Revenues
for other product categories, including the Thoratec line,
CentriMag and grafts, are in aggregate expected to decline by
approximately 10 percent versus 2010 to approximately $45 million.
Gross margins on a GAAP basis are expected to be approximately
67.5 percent and on a non-GAAP basis gross margins are expected to
be approximately 68 percent.
GAAP operating expenses are expected to increase approximately
11 to 12 percent over 2010, while non-GAAP operating expenses are
expected to increase approximately 10 percent versus 2010. The
projected growth in operating expenses is due primarily to
investments in our technology platforms and market expansion
activities.
GAAP net income per diluted share is expected to be in the range
of $1.02 to $1.12 and non-GAAP net
income per diluted share in 2011 is expected to be in the range of
$1.35 to $1.45.
CONFERENCE CALL/WEBCAST INFORMATION
Thoratec will hold a conference call to discuss its financial
results and operating activities for all interested parties at
1:30 p.m., Pacific Standard Time,
(4:30 p.m., Eastern Standard Time)
today. The teleconference can be accessed by calling (719)
457-2728, passcode 5849363. Please dial in 10-15 minutes prior to
the beginning of the call. The webcast will be available via the
Internet at http://www.thoratec.com. A replay of the conference
call will be available through Thursday,
February 3, via http://www.thoratec.com or by telephone at
(719) 457-0820, passcode 5849363.
GAAP TO NON-GAAP RECONCILIATION
Thoratec management evaluates and makes operating decisions
using various measures. These measures are generally based on
revenues generated by its products and certain costs of producing
those revenues, such as costs of product sales, research and
development and selling, general and administrative expenses. We
use the following measures, which are not calculated in accordance
with Generally Accepted Accounting Principles (“GAAP”): non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating expenses,
non-GAAP other income and expense, non-GAAP tax rate,
non-GAAP net income, non-GAAP net income per diluted share and
non-GAAP shares used to compute diluted net income per share. These
are non-GAAP financial measures under Section 101 of Regulation G
under the Securities Exchange Act of 1934, as amended. These
non-GAAP financial measures are calculated by excluding certain
GAAP financial items that we believe have less significance to the
day-to-day operation of our business. The company has
outlined below the type and scope of these exclusions and the
limitations on the use of the non-GAAP financial measures as a
result of these exclusions.
Management uses these non-GAAP financial measures for financial
and operational decision making, including in the determination of
employee annual cash incentive compensation, as a means to evaluate
period-to-period comparisons, as well as comparisons to our
competitors’ operating results. Management also uses this
information internally for forecasting and budgeting, as it
believes that the measures are indicative of Thoratec core
operating results. Management also believes that non-GAAP
financial measures provide useful supplemental information to
management and investors regarding the performance of the company’s
business operations, provide a greater transparency with respect to
key metrics used by management in its decision making, facilitate
comparisons of results for current periods and guidance for future
periods with our historical operating results, and assist in
analyzing future trends.
Non-GAAP net income consists of GAAP net income,
excluding, as applicable, the tax effected impact of share-based
compensation expense, amortization of purchased intangibles,
expenses associated with the retrospective adoption of the
accounting for convertible debt instruments that may be settled in
cash upon conversion, including partial settlements in accordance
with Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Codification (“ASC”) 470-20, Debt,
HeartWare transaction costs and unrealized losses on the equity
conversion option included in the HeartWare loan agreement.
Non-GAAP net income per diluted share is defined as
non-GAAP net income divided by the weighted average number of
shares on a fully-diluted basis.
Non-GAAP shares used to compute diluted net income per
share consists of GAAP shares used to compute diluted net
income per share adjusted for any inclusions made in conjunction
with dilutive impact of Thoratec’s convertible debt instruments and
any exclusions made in conjunction with the application of the
two-class method for calculating net income per share.
Non-GAAP gross profit and gross margin consist of GAAP
gross profit and gross margin excluding share-based compensation
expense.
Non-GAAP operating expenses consist of GAAP operating
expenses excluding share-based compensation expense, amortization
of purchased intangibles, and HeartWare transaction costs.
Non-GAAP other income and expense consists of GAAP other
income and expenses excluding expenses related to the accounting
for convertible debt instruments that may be settled in cash upon
conversion, including partial settlements, in accordance with ASC
470-20, Debt and unrealized gains on the equity conversion
option included in the HeartWare loan agreement.
Non-GAAP tax expense consists of the GAAP tax expense
adjusted for the tax effect of the adjustments from GAAP net income
to non-GAAP net income.
Management believes that it is useful in measuring Thoratec’s
operations to exclude amortization of intangibles. These
costs are primarily fixed at the time of an acquisition and, unlike
other fixed costs that result from ordinary operations, are the
result of infrequent and irregular events.
Because of varying valuation methodologies, subjective
assumptions and the variety of award types that companies can use,
Thoratec management believes that providing non-GAAP financial
measures that exclude share-based compensation allows investors to
compare Thoratec’s recurring core business operating results to
those of other companies and over multiple periods. The
exclusion also enhances investors’ ability to review Thoratec’s
business from the same perspective as Thoratec management, which
believes that share-based compensation expense is not directly
attributable to the underlying performance of the company’s
business operations.
Due to the subjective assumptions used to develop non-cash
interest expense related to the accounting for convertible debt
instruments that may be settled in cash upon conversion, including
partial settlements, in accordance with ASC 470-20, Debt,
Thoratec management believes that providing non-GAAP financial
measures that exclude such expense allows investors to compare
Thoratec’s recurring core business operating results to those of
other companies and over multiple periods. The exclusion also
enhances investors’ ability to review Thoratec’s business from the
same perspective as Thoratec management.
To enable investors to compare Thoratec’s recurring core
business operating results to those of other companies and over
multiple periods, Thoratec has excluded the HeartWare transaction
costs as they are non-recurring in nature.
There are a number of limitations related to the use of non-GAAP
financial measures. First, non-GAAP financial measures
exclude some costs, namely share-based compensation, that are
recurring expenses. Second, share-based compensation is part
of an employee’s compensation package and as such may be useful for
investors to consider. Third, the components of costs that we
exclude in our non-GAAP financial measures calculations may differ
from components that our peer companies exclude when they report
their results from operations.
Non-GAAP financial measures should not be considered as a
substitute for measures of financial performance in accordance with
GAAP. However, these measures may provide additional insight into
Thoratec’s financial results. Investors and potential investors are
strongly encouraged to review the reconciliation of non-GAAP
financial measures contained within this press release with their
most directly comparable GAAP financial results and not to rely on
any single financial measure to evaluate our business.
The reconciliations of the forward looking non-GAAP financial
measures to the most directly comparable GAAP financial measures in
the tables below include all information reasonably available to
Thoratec at the date of this press release. These tables
include adjustments that we can reasonably predict. Events
that could cause the reconciliation to change include acquisitions
and divestitures of business, goodwill and other asset impairments
and sales of marketable equity securities.
The following table includes the GAAP income statement for
continuing operations for the three and twelve month periods ending
2010 and 2009:
THORATEC
CORPORATION
|
|
Condensed
Consolidated Statements of Continuing Operations
|
|
(Unaudited)
|
|
(in
thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
January 1,
2011
|
|
January 2,
2010
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
|
|
|
|
|
Product sales
|
|
$
97,607
|
|
$
81,003
|
|
$
382,973
|
|
$
279,968
|
|
Cost of product sales
|
|
32,938
|
|
28,528
|
|
123,709
|
|
95,555
|
|
Gross profit
|
|
64,669
|
|
52,475
|
|
259,264
|
|
184,413
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
25,212
|
|
19,454
|
|
89,222
|
|
82,079
|
|
Research and
development
|
|
14,696
|
|
11,038
|
|
58,831
|
|
42,743
|
|
Amortization of purchased
intangible assets
|
|
2,446
|
|
2,393
|
|
9,772
|
|
9,834
|
|
Total operating
expenses
|
|
42,354
|
|
32,885
|
|
157,825
|
|
134,656
|
|
Income from
operations
|
|
22,315
|
|
19,590
|
|
101,439
|
|
49,757
|
|
Other income and
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(3,047)
|
|
(3,140)
|
|
(12,327)
|
|
(12,307)
|
|
Interest income and
other
|
|
1,174
|
|
(4,158)
|
|
5,435
|
|
5,146
|
|
Impairment on strategic
investment
|
|
57
|
|
-
|
|
(2,000)
|
|
-
|
|
Income before income
taxes
|
|
20,499
|
|
12,292
|
|
92,547
|
|
42,596
|
|
Income tax
expense
|
|
(7,875)
|
|
(4,219)
|
|
(33,542)
|
|
(13,691)
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing
operations
|
|
$
12,624
|
|
$
8,073
|
|
$
59,005
|
|
$
28,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share from
continuing operations
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.22
|
|
$
0.14
|
|
$
1.02
|
|
$
0.51
|
|
Diluted
|
|
$
0.21
|
|
$
0.14
|
|
$
0.99
|
|
$
0.50
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute net
income per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
58,257
|
|
56,300
|
|
57,670
|
|
55,910
|
|
Diluted
|
|
59,298
|
|
57,750
|
|
59,071
|
|
57,322
|
|
|
|
|
|
|
|
|
|
|
The following table presents our quarterly and full year
revenues from continuing operations by source for fiscal 2010 and
fiscal 2009:
THORATEC
CORPORATION
|
|
Quarterly
Revenue Analysis from Continuing Operations
|
|
(Unaudited)
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
April 3,
2010
|
|
July 3,
2010
|
|
October 2,
2010
|
|
January 1,
2011
|
|
January 1,
2011
|
|
|
|
|
|
|
Revenue by Product
Line
|
|
|
|
|
|
|
|
|
|
|
HeartMate
|
$
86.1
|
|
$
82.5
|
|
$
80.6
|
|
$
83.9
|
|
$
333.1
|
|
PVAD & IVAD
|
8.8
|
|
7.3
|
|
6.2
|
|
7.2
|
|
29.5
|
|
CentriMag
|
3.7
|
|
4.6
|
|
3.7
|
|
5.7
|
|
17.7
|
|
Other
|
0.7
|
|
0.7
|
|
0.5
|
|
0.8
|
|
2.7
|
|
Total
|
$
99.3
|
|
$
95.1
|
|
$
91.0
|
|
$
97.6
|
|
$
383.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Category
|
|
|
|
|
|
|
|
|
|
|
Pump
|
$
69.5
|
|
$
64.4
|
|
$
62.6
|
|
$
67.8
|
|
$
264.3
|
|
Non-Pump
|
29.1
|
|
30.0
|
|
27.9
|
|
29.0
|
|
116.0
|
|
Other
|
0.7
|
|
0.7
|
|
0.5
|
|
0.8
|
|
2.7
|
|
Total
|
$
99.3
|
|
$
95.1
|
|
$
91.0
|
|
$
97.6
|
|
$
383.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
North America
|
$
84.0
|
|
$
81.9
|
|
$
78.5
|
|
$
79.9
|
|
$
324.3
|
|
International
|
15.3
|
|
13.2
|
|
12.5
|
|
17.7
|
|
58.7
|
|
Total
|
$
99.3
|
|
$
95.1
|
|
$
91.0
|
|
$
97.6
|
|
$
383.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
April 4,
2009
|
|
July 4,
2009
|
|
October 3,
2009
|
|
January 2,
2010
|
|
January 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Product
Line
|
|
|
|
|
|
|
|
|
|
|
HeartMate
|
$
51.8
|
|
$
57.1
|
|
$
54.1
|
|
$
66.8
|
|
$
229.8
|
|
PVAD & IVAD
|
9.5
|
|
8.4
|
|
7.9
|
|
9.0
|
|
34.8
|
|
CentriMag
|
2.6
|
|
3.1
|
|
2.5
|
|
4.4
|
|
12.6
|
|
Other
|
0.7
|
|
0.6
|
|
0.7
|
|
0.8
|
|
2.8
|
|
Total
|
$
64.6
|
|
$
69.2
|
|
$
65.2
|
|
$
81.0
|
|
$
280.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Category
|
|
|
|
|
|
|
|
|
|
|
Pump
|
$
50.4
|
|
$
53.8
|
|
$
47.6
|
|
$
52.8
|
|
$
204.6
|
|
Non-Pump
|
13.5
|
|
14.8
|
|
16.9
|
|
27.4
|
|
72.6
|
|
Other
|
0.7
|
|
0.6
|
|
0.7
|
|
0.8
|
|
2.8
|
|
Total
|
$
64.6
|
|
$
69.2
|
|
$
65.2
|
|
$
81.0
|
|
$
280.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
North America
|
$
53.9
|
|
$
58.3
|
|
$
54.4
|
|
$
67.6
|
|
$
234.2
|
|
International
|
10.7
|
|
10.9
|
|
10.8
|
|
13.4
|
|
45.8
|
|
Total
|
$
64.6
|
|
$
69.2
|
|
$
65.2
|
|
$
81.0
|
|
$
280.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the specific items excluded from
GAAP net income from continuing operations in the calculation of
non-GAAP net income from continuing operations and diluted net
income per share from continuing operations for the periods shown
below:
THORATEC
CORPORATION
|
|
|
Reconciliation of GAAP to
Non-GAAP Net Income from Continuing Operations
|
|
|
(Unaudited)
|
|
|
(in
thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
Net income
reconciliation
|
|
January 1,
2011
|
|
January 2,
2010
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing
operations on a GAAP basis
|
|
$
12,624
|
|
$
8,073
|
|
$
59,005
|
|
$
28,905
|
|
|
Share-based compensation
expense:
|
|
|
|
|
|
|
|
|
|
|
- Cost of product
sales
|
|
314
|
|
256
|
|
1,262
|
|
1,045
|
|
|
- Selling, general and
administrative
|
|
1,990
|
|
1,516
|
|
8,064
|
|
6,670
|
|
|
- Research and
development
|
|
726
|
|
583
|
|
3,328
|
|
2,574
|
|
|
Amortization of purchased
intangibles
|
|
2,446
|
|
2,394
|
|
9,772
|
|
9,833
|
|
|
HeartWare transaction
costs
|
|
-
|
|
1
|
|
-
|
|
12,314
|
|
|
Impact of ASC
470-20
|
|
2,053
|
|
1,944
|
|
8,220
|
|
7,603
|
|
|
Unrealized loss on
embedded derivative instrument on HeartWare loan
|
|
-
|
|
5,240
|
|
-
|
|
-
|
|
|
Income tax effect of
non-GAAP income before tax
|
|
839
|
|
(460)
|
|
1,255
|
|
(2,274)
|
|
|
Income tax effect of
non-GAAP adjustments
|
|
(2,892)
|
|
(4,097)
|
|
(11,108)
|
|
(12,869)
|
|
|
Net income from continuing
operations on a non-GAAP basis
|
|
$
18,100
|
|
$
15,450
|
|
$
79,798
|
|
$
53,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
Diluted net income from
continuing operations per share reconciliation
|
|
January 1,
2011
|
|
January 2,
2010
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income from
continuing operations per share on a GAAP basis
|
|
$
0.21
|
|
$
0.14
|
|
$
0.99
|
|
$
0.50
|
|
|
Share-based compensation
expense:
|
|
|
|
|
|
|
|
|
|
|
- Cost of product
sales
|
|
0.01
|
|
-
|
|
0.02
|
|
0.02
|
|
|
- Selling, general and
administrative
|
|
0.04
|
|
0.02
|
|
0.14
|
|
0.12
|
|
|
- Research and
development
|
|
0.01
|
|
0.01
|
|
0.06
|
|
0.04
|
|
|
Amortization of purchased
intangibles
|
|
0.04
|
|
0.04
|
|
0.17
|
|
0.17
|
|
|
HeartWare transaction
costs
|
|
-
|
|
-
|
|
-
|
|
0.21
|
|
|
Impact of ASC
470-20
|
|
0.04
|
|
0.03
|
|
0.14
|
|
0.13
|
|
|
Unrealized loss on
embedded derivative instrument on HeartWare loan
|
|
-
|
|
0.09
|
|
-
|
|
-
|
|
|
Income tax effect of
non-GAAP income before tax
|
|
0.01
|
|
-
|
|
0.02
|
|
(0.04)
|
|
|
Income tax effect of
non-GAAP adjustments
|
|
(0.05)
|
|
(0.07)
|
|
(0.19)
|
|
(0.21)
|
|
|
Convertible debt dilution
and two-class method impact
|
|
(0.03)
|
|
(0.02)
|
(1)
|
(0.12)
|
|
(0.08)
|
(1)
|
|
Diluted net income from
continuing operations per share on a non-GAAP basis
|
|
$
0.28
|
|
$
0.24
|
|
$
1.23
|
|
$
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
|
January 1,
2011
|
|
January 2,
2010
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
Shares used to compute diluted net income from continuing operations per
share reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in calculation of
diluted net income per share --GAAP
|
|
59,298
|
|
57,750
|
|
59,071
|
|
57,322
|
|
|
Convertible debt dilution
impact (1)
|
|
7,171
|
|
7,290
|
|
7,194
|
|
7,290
|
|
|
Weighted average unvested
restricted stock awards (2)
|
|
268
|
|
624
|
|
357
|
|
705
|
|
|
Shares used in calculation of
diluted net income from continuing operations per share --
non-GAAP
|
|
66,737
|
|
65,664
|
|
66,622
|
|
65,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The company's total diluted
share count on a non-GAAP basis for the three and twelve months
ended January 1, 2011 included approximately 7.2 million
shares
|
|
underlying
its convertible notes as they were dilutive for the respective
periods. The company's total diluted share count on a non-GAAP
basis for the three and
|
|
|
twelve
months ended January 2, 2010 included approximately 7.3 million
shares underlying its convertible notes as they were dilutive for
the respective periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) The company adopted the
two-class method in calculating net income per share on a GAAP
basis, which excludes the weighted average unvested restricted
stock
|
|
awards outstanding
of 267,578 and 624,268 for the three months ended January 1, 2011
and January 2, 2010, respectively, and 356,966 and 704,673 for the
twelve
|
|
months ended
January 1, 2011 and January 2, 2010, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the specific items excluded from
GAAP gross profit and gross margin from continuing operations in
the calculation of non-GAAP gross profit and gross margin from
continuing operations for the periods shown below:
THORATEC
CORPORATION
|
|
Reconciliation of GAAP to
Non-GAAP Gross Profit from Continuing Operations
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve
Months Ended
|
|
|
|
January 1, 2011
|
|
January 2, 2010
|
|
|
January 1, 2011
|
|
January 2, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit from continuing operations on a
GAAP basis
|
$
64,669
|
66.3%
|
$
52,475
|
64.8%
|
|
$
259,264
|
67.7%
|
$
184,413
|
65.9%
|
|
Share-based compensation
expense
|
314
|
|
256
|
|
|
1,262
|
|
1,045
|
|
|
Gross profit from continuing operations on a non-GAAP basis
|
$
64,983
|
66.6%
|
$
52,731
|
65.1%
|
|
$
260,526
|
68.0%
|
$
185,458
|
66.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the specific items excluded from
GAAP operating expenses from continuing operations in the
calculation of non-GAAP operating expenses from continuing
operations for the periods shown below:
THORATEC
CORPORATION
|
|
Reconciliation of GAAP to
Non-GAAP Operating Expenses from Continuing
Operations
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
January 1,
2011
|
|
January 2,
2010
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
|
|
|
|
|
|
|
|
Operating expenses from
continuing operations on a GAAP basis
|
$
42,354
|
|
$
32,885
|
|
$
157,825
|
|
$
134,656
|
|
Share-based compensation
expense:
|
|
|
|
|
|
|
|
|
- Selling, general and
administrative
|
(1,990)
|
|
(1,516)
|
|
(8,064)
|
|
(6,670)
|
|
- Research and
development
|
(726)
|
|
(583)
|
|
(3,328)
|
|
(2,574)
|
|
Amortization of purchased
intangibles
|
(2,446)
|
|
(2,394)
|
|
(9,772)
|
|
(9,833)
|
|
HeartWare transaction
costs
|
-
|
|
(1)
|
|
-
|
|
(12,314)
|
|
Operating expenses from continuing operations on a non-GAAP basis
|
$
37,192
|
|
$
28,391
|
|
$
136,661
|
|
$
103,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the specific items excluded from
GAAP other income and expense from continuing operations in the
calculation of non-GAAP other income and expense from continuing
operations for the periods shown below:
|
|
|
|
|
|
|
|
|
|
THORATEC
CORPORATION
|
|
Reconciliation of GAAP to
Non-GAAP Other Income and Expense from Continuing
Operations
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
January 1, 2011
|
|
January 2, 2010
|
|
January 1, 2011
|
|
January 2, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) from
continuing operations on a GAAP basis
|
|
$
(1,816)
|
|
$
(7,298)
|
|
$
(8,892)
|
|
$
(7,161)
|
|
Impact of ASC
470-20
|
|
2,053
|
|
1,944
|
|
8,220
|
|
7,603
|
|
Unrealized loss on embedded derivative instrument on HeartWare loan
|
|
-
|
|
5,240
|
|
-
|
|
-
|
|
Other income (expense) from
continuing operations on a non-GAAP basis
|
|
$
237
|
|
$
(114)
|
|
$
(672)
|
|
$
442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the GAAP tax expense adjusted for
the tax effect of the adjustments from GAAP net income from
continuing operations to non-GAAP net income from continuing
operations:
THORATEC
CORPORATION
|
|
|
Reconciliation of GAAP to
Non-GAAP Tax Expense from Continuing Operations
|
|
|
(Unaudited)
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve
Months Ended
|
|
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
January 1,
2011
|
|
January 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense from continuing
operations on a GAAP basis
|
$
(7,875)
|
38.4%
|
$
(4,219)
|
34.3%
|
|
$
(33,542)
|
36.2%
|
$
(13,691)
|
32.1%
|
|
Share-based compensation
expense and other
|
(1,328)
|
|
(1,347)
|
|
|
(5,342)
|
|
(3,892)
|
|
|
Amortization of purchased
intangibles
|
(978)
|
|
(958)
|
|
|
(3,909)
|
|
(3,934)
|
|
|
HeartWare transaction
costs
|
-
|
|
-
|
|
|
-
|
|
(4,926)
|
|
|
Impact of adoption of ASC
470-20
|
(821)
|
|
(806)
|
|
|
(3,288)
|
|
(3,041)
|
|
|
Unrealized loss on embedded derivative instrument on HeartWare loan
|
-
|
|
(2,096)
|
|
|
-
|
|
-
|
|
|
Excess compensation
limitations
|
1,074
|
|
649
|
|
|
2,684
|
|
649
|
|
|
Tax expense from continuing
operations on a non-GAAP basis
|
$
(9,928)
|
35.4%
|
$
(8,777)
|
36.2%
|
|
$
(43,397)
|
35.2%
|
$
(28,835)
|
34.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the guidance on a GAAP and
non-GAAP basis from continuing operations for the periods shown
below:
THORATEC
CORPORATION
|
|
Reconciliation of GAAP to
Non-GAAP Forward-Looking Guidance
|
|
(Unaudited)
|
|
(in
thousands, except for per share data)
|
|
|
|
|
|
|
|
Gross margin
|
For the
Fiscal Year Ended 2011
|
|
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
Gross margin on a GAAP
basis
|
67.50%
|
|
67.50%
|
|
|
Share-based compensation
expense
|
0.50%
|
|
0.50%
|
|
|
Gross margin on a non-GAAP
basis
|
68.00%
|
|
68.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
growth
|
For the
Fiscal Year Ended 2011
|
|
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
Increase in operating expense on
a GAAP basis
|
11.00%
|
|
12.00%
|
|
|
Share-based compensation
expense
|
-1.00%
|
|
-2.00%
|
|
|
Increase in operating expense on
a non-GAAP basis
|
10.00%
|
|
10.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share
reconciliation
|
For the
Fiscal Year Ended 2011
|
|
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
Net income per diluted share on
a GAAP basis
|
$
1.02
|
|
$
1.12
|
|
|
Share-based compensation
expense
|
0.19
|
|
0.19
|
|
|
Amortization of purchased
intangibles
|
0.09
|
|
0.09
|
|
|
Impact of adoption of ASC
470-20
|
0.03
|
|
0.03
|
|
|
Income tax effect of
non-GAAP income before tax
|
0.02
|
|
0.02
|
|
|
Net income per diluted share on
a non-GAAP basis
|
$
1.35
|
|
$
1.45
|
|
|
|
|
|
|
|
|
Shares used in calculation of net income per diluted share --GAAP and non-GAAP
|
63,000
|
|
63,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thoratec is a world leader in therapies to address
advanced-stage heart failure. The company’s products include the
HeartMate LVAS and Thoratec® VAD (Ventricular Assist Device) with
more than 15,000 devices implanted in patients suffering from heart
failure. Thoratec is headquartered in Pleasanton, California. For more information,
visit the company’s web site at http://www.thoratec.com.
Thoratec, the Thoratec logo, HeartMate and HeartMate II are
registered trademarks of Thoratec Corporation and IVAD is a
trademark of Thoratec Corporation. CentriMag is a registered
trademark of Levitronix LLC.
SOURCE Thoratec Corporation