SurModics, Inc. (Nasdaq:SRDX), a leading provider of surface
modification and in vitro diagnostic technologies to the healthcare
industries, today announced results for its fiscal 2014 second quarter.
Commenting on the Company’s performance, SurModics’ President and Chief
Executive Officer Gary Maharaj said, “Our Medical Device business unit
delivered exceptional revenue growth and much-improved operating income.
Additionally, I am particularly pleased that our pro forma earnings per
share increased in the light of headwinds in our In Vitro Diagnostics
business unit and continued investment in our drug coated balloon
program.”
Second Quarter Revenue and Earnings Summary
GAAP revenue for the fiscal 2014 second quarter totaled $13.6 million,
compared with $13.7 million in the fiscal 2013 second quarter.
Diluted earnings per share from continuing operations in the second
quarter of fiscal 2014 totaled $0.18, compared with $0.23 in the
prior-year period. On a pro forma basis, earnings per share in the
fiscal 2014 second quarter were $0.22, excluding the previously
announced $0.04 per share one-time, non-cash charge related to
amendments to board of director equity compensation, compared with $0.20
on a pro forma basis in the prior-year period. The year-ago quarter
included a $0.03 per share benefit from one-time discrete income tax
items.
Medical Device Summary
The Medical Device business unit accounts for approximately
three-quarters of the Company’s total revenue. This unit, which includes
hydrophilic coatings and device drug delivery technologies, posted
revenue of $10.5 million in the second quarter of fiscal 2014,
increasing 8% from the year-ago period. Second quarter hydrophilic
coating royalty revenue increased 3% to $7.1 million from the
year-earlier period. Maharaj said, “Our team is actively engaged with
customers conducting feasibility trials with our next generation Serene
lubricity coating platform.”
Medical Device generated $5.3 million of operating income during the
second quarter, a 10% increase compared with the second quarter of
fiscal 2013, primarily reflecting increased revenue.
Additional highlights include:
-
Three medical device customers launched new products utilizing
SurModics hydrophilic coatings;
-
Second consecutive quarter of year over year coronary sector revenue
growth, up 3%; and
-
Development work continued on the Company’s high-priority drug coated
balloon program.
In Vitro Diagnostics Summary
The In Vitro Diagnostics (IVD) business unit accounts for approximately
one-quarter of the Company’s total revenue. Revenue for the second
quarter of fiscal 2014 totaled $3.1 million, down $0.8 million from the
year-ago period. The decline in current year revenue was primarily
driven by a shift in order patterns by a few key customers who initiated
inventory rebalancing programs related to SurModics’ stabilization and
antigen products, combined with lower sales of BioFx branded substrate
products and a slowdown in sales in Europe. The IVD business unit
generated $0.6 million of operating income in the second quarter of
fiscal 2014, compared with $1.3 million in the year ago period.
Maharaj said, “We expect improvement in the IVD business in the second
half of fiscal 2014.”
Balance Sheet and Cash Flow
As of March 31, 2014, the Company had $51.3 million of cash and
investments. SurModics generated cash from operating activities of $5.9
million in the first six months of 2014, compared with $6.8 million in
the same prior-year period. The Company repurchased 105,566 shares of
common stock for $2.6 million in the second quarter of fiscal 2014 under
the July 2013 $20.0 million repurchase authorization. This repurchase
authorization was fully utilized in January 2014.
Maharaj said, “We continue to focus on driving our core business,
developing our pipeline including the drug coated balloon platform and
seeking opportunities to leverage our balance sheet to further enhance
shareholder value.”
Fiscal 2014 Outlook
SurModics reaffirms its previously stated earnings per share outlook for
fiscal 2014. Including planned increase in research and development
spending primarily to support our drug coated balloon program and the
second quarter 2014 $0.04 per share one-time, non-cash charge related to
board of director equity compensation, the Company continues to estimate
diluted GAAP earnings to be in the range of $0.85 to $0.97 per share.
This range also assumes research and development expense will increase
in the range of 7% to 9% in fiscal 2014, down from a 20% increase
included in our previous guidance. The Company is adjusting its
full-year revenue guidance to be in the range of $56.0 million to
$58.5 million to reflect the change in customer order patterns in the
IVD business unit. The previous guidance was for revenue in the range of
$58.0 million to $62.0 million. The Company also affirmed for fiscal
2014 that cash flow from operating activities should range from $17.6
million to $18.6 million and capital expenditures are expected to range
from $2.2 million to $2.5 million.
Live Webcast
SurModics will host a webcast at 4 p.m. CT (5 p.m. ET) today to discuss
second quarter results. To access the webcast, go to the investor
relations portion of the Company’s website at www.surmodics.com
and click on the webcast icon. A replay of the second quarter conference
call will be available by dialing 800-406-7325 and entering conference
call ID passcode 4678793. The audio replay will be available beginning
at 7 p.m. CT on Thursday, May 1, 2014, until 7 p.m. CT on Thursday, May
8, 2014.
About SurModics, Inc.
SurModics’ mission is to exceed our customers’ expectations and enhance
the well-being of patients by providing the world’s foremost, innovative
surface modification technologies and in vitro diagnostic
chemical components. The Company partners with the world’s leading and
emerging medical device, diagnostic and life science companies to
develop and commercialize innovative products designed to improve
patient diagnosis and treatment. Core offerings include surface
modification coating technologies that impart lubricity, prohealing, and
biocompatibility capabilities; and components for in vitro
diagnostic test kits and microarrays. SurModics is headquartered in Eden
Prairie, Minnesota. For more information about the Company, visit www.surmodics.com.
The content of SurModics’ website is not part of this press release or
part of any filings that the Company makes with the SEC.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements. Statements that
are not historical or current facts, including statements about beliefs
and expectations regarding our expectations regarding the Company’s
performance in the near- and long-term, including our revenue, earnings
and cash flow expectations for fiscal 2014, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties, and important factors could cause actual results to
differ materially from those anticipated, including (1) our reliance on
third parties (including our customers and licensees) and their failure
to successfully develop, obtain regulatory approval for, market and sell
products incorporating our technologies; (2) our ability to realize the
full potential of our pipeline (including our drug-coated balloon
initiatives); (3) our ability to achieve our corporate goals; (4)
possible adverse market conditions and possible adverse impacts on our
cash flows, and (5) the factors identified under “Risk Factors” in Part
I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2013, and updated in our subsequent reports filed with the
SEC. These reports are available in the Investors section of our website
at www.surmodics.com
and at the SEC website at www.sec.gov.
Forward-looking statements speak only as of the date they are made, and
we undertake no obligation to update them in light of new information or
future events.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, SurModics is reporting non-GAAP
financial results including non-GAAP net income and non-GAAP diluted net
income per share. We believe that these non-GAAP measures provide
meaningful insight into our operating performance excluding certain
event-specific matters, and provide an alternative perspective of our
results of operations. We use non-GAAP measures, including those set
forth in this release, to assess our operating performance and to
determine payout under our executive compensation programs. We believe
that presentation of certain non-GAAP measures allows investors to
review our results of operations from the same perspective as management
and our board of directors and facilitates comparisons of our current
results of operations. The method we use to produce non-GAAP results is
not in accordance with GAAP and may differ from the methods used by
other companies. Non-GAAP results should not be regarded as a substitute
for corresponding GAAP measures but instead should be utilized as a
supplemental measure of operating performance in evaluating our
business. Non-GAAP measures do have limitations in that they do not
reflect certain items that may have a material impact upon our reported
financial results. As such, these non-GAAP measures presented should be
viewed in conjunction with both our financial statements prepared in
accordance with GAAP and the reconciliation of the supplemental non-GAAP
financial measures to the comparable GAAP results provided for the
specific periods presented, which are attached to this release.
SurModics, Inc. and Subsidiaries
|
Condensed Consolidated Statements of Income
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties and license fees
|
|
$
|
7,329
|
|
|
$
|
6,951
|
|
|
$
|
14,794
|
|
|
$
|
14,467
|
|
Product sales
|
|
|
5,165
|
|
|
|
5,758
|
|
|
|
10,565
|
|
|
|
11,111
|
|
Research and development
|
|
|
1,110
|
|
|
|
986
|
|
|
|
2,128
|
|
|
|
1,968
|
|
Total revenue
|
|
|
13,604
|
|
|
|
13,695
|
|
|
|
27,487
|
|
|
|
27,546
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
1,696
|
|
|
|
1,945
|
|
|
|
3,700
|
|
|
|
3,904
|
|
Research and development
|
|
|
4,134
|
|
|
|
3,774
|
|
|
|
7,833
|
|
|
|
7,136
|
|
Selling, general and administrative
|
|
|
4,294
|
|
|
|
3,847
|
|
|
|
8,145
|
|
|
|
7,500
|
|
Total operating costs and expenses
|
|
|
10,124
|
|
|
|
9,566
|
|
|
|
19,678
|
|
|
|
18,540
|
|
Operating income from continuing operations
|
|
|
3,480
|
|
|
|
4,129
|
|
|
|
7,809
|
|
|
|
9,006
|
|
Other income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income, net
|
|
|
66
|
|
|
|
56
|
|
|
|
152
|
|
|
|
127
|
|
Impairment loss on strategic investments
|
|
―
|
|
|
|
(129
|
)
|
|
―
|
|
|
|
(129
|
)
|
Other income, net
|
|
|
125
|
|
|
|
282
|
|
|
|
806
|
|
|
|
1,458
|
|
Other income, net
|
|
|
191
|
|
|
|
209
|
|
|
|
958
|
|
|
|
1,456
|
|
Income from continuing operations before income taxes
|
|
|
3,671
|
|
|
|
4,338
|
|
|
|
8,767
|
|
|
|
10,462
|
|
Income tax provision
|
|
|
(1,212
|
)
|
|
|
(918
|
)
|
|
|
(2,678
|
)
|
|
|
(2,794
|
)
|
Income from continuing operations
|
|
|
2,459
|
|
|
|
3,420
|
|
|
|
6,089
|
|
|
|
7,668
|
|
Income from discontinued operations, net of taxes
|
|
―
|
|
|
|
682
|
|
|
―
|
|
|
|
682
|
|
Net income
|
|
$
|
2,459
|
|
|
$
|
4,102
|
|
|
$
|
6,089
|
|
|
$
|
8,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.18
|
|
|
$
|
0.23
|
|
|
$
|
0.45
|
|
|
$
|
0.52
|
|
Discontinued operations
|
|
|
0.00
|
|
|
|
0.05
|
|
|
|
0.00
|
|
|
|
0.05
|
|
Net income
|
|
$
|
0.18
|
|
|
$
|
0.28
|
|
|
$
|
0.45
|
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.18
|
|
|
$
|
0.23
|
|
|
$
|
0.44
|
|
|
$
|
0.52
|
|
Discontinued operations
|
|
|
0.00
|
|
|
|
0.05
|
|
|
|
0.00
|
|
|
|
0.05
|
|
Net income
|
|
$
|
0.18
|
|
|
$
|
0.28
|
|
|
$
|
0.44
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,538
|
|
|
|
14,622
|
|
|
|
13,658
|
|
|
|
14,639
|
|
Diluted
|
|
|
13,824
|
|
|
|
14,914
|
|
|
|
13,925
|
|
|
|
14,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
(in thousands)
|
|
|
|
|
|
|
|
March 31,
|
|
September 30,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
Assets
|
|
|
|
|
Cash and short-term investments
|
|
$
|
33,843
|
|
$
|
25,707
|
Accounts receivable
|
|
|
5,610
|
|
|
5,332
|
Inventories
|
|
|
2,758
|
|
|
3,328
|
Other current assets
|
|
|
2,396
|
|
|
1,366
|
Current assets of discontinued operations
|
|
|
46
|
|
|
46
|
Total current assets
|
|
|
44,653
|
|
|
35,779
|
|
|
|
|
|
Property and equipment, net
|
|
|
12,689
|
|
|
12,845
|
Long-term investments
|
|
|
17,420
|
|
|
32,397
|
Other assets
|
|
|
20,920
|
|
|
20,902
|
Total assets
|
|
$
|
95,682
|
|
$
|
101,923
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
Current liabilities
|
|
$
|
3,118
|
|
$
|
5,837
|
Current liabilities of discontinued operations
|
|
|
126
|
|
|
139
|
Total current liabilities
|
|
|
3,244
|
|
|
5,976
|
|
|
|
|
|
Other liabilities
|
|
|
1,805
|
|
|
2,130
|
Total stockholders’ equity
|
|
|
90,633
|
|
|
93,817
|
Total liabilities and stockholders’ equity
|
|
$
|
95,682
|
|
$
|
101,923
|
|
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Condensed Consolidated Statements of Cash Flows
|
(in thousands)
|
|
|
|
|
|
Six Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
Operating Activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
6,089
|
|
|
$
|
8,350
|
|
Income from discontinued operations
|
|
―
|
|
|
|
(682
|
)
|
Depreciation and amortization
|
|
|
1,380
|
|
|
|
1,446
|
|
Stock-based compensation
|
|
|
2,462
|
|
|
|
1,238
|
|
Gain on sales of available-for-sale securities and strategic
investments
|
|
|
(806
|
)
|
|
|
(1,458
|
)
|
Net other operating activities
|
|
|
(822
|
)
|
|
|
492
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(279
|
)
|
|
|
158
|
|
Accounts payable and accrued liabilities
|
|
|
(1,770
|
)
|
|
|
(1,366
|
)
|
Income taxes
|
|
|
(559
|
)
|
|
|
(1,322
|
)
|
Net change in other operating assets and liabilities
|
|
|
241
|
|
|
|
(31
|
)
|
Net cash provided by operating activities from continuing operations
|
|
|
5,936
|
|
|
|
6,825
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(798
|
)
|
|
|
(1,239
|
)
|
Cash transferred to discontinued operations
|
|
|
(13
|
)
|
|
|
(86
|
)
|
Net other investing activities
|
|
|
495
|
|
|
|
2,175
|
|
Net cash (used in) provided by investing activities from continuing
operations
|
|
|
(316
|
)
|
|
|
850
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
(12,544
|
)
|
|
|
(2,681
|
)
|
Purchases of common stock to pay employee taxes
|
|
|
(1,114
|
)
|
|
|
(39
|
)
|
Net other financing activities
|
|
|
987
|
|
|
|
42
|
|
Net cash used in financing activities from continuing operations
|
|
|
(12,671
|
)
|
|
|
(2,678
|
)
|
Net cash (used in) provided by continuing operations
|
|
|
(7,051
|
)
|
|
|
4,997
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(13
|
)
|
|
|
(86
|
)
|
Net cash provided by financing activities
|
|
|
13
|
|
|
|
86
|
|
Net cash provided by discontinued operations
|
|
―
|
|
|
―
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(7,051
|
)
|
|
|
4,997
|
|
Cash and Cash Equivalents:
|
|
|
|
|
|
|
Beginning of period
|
|
|
15,495
|
|
|
|
15,540
|
|
End of period
|
|
$
|
8,444
|
|
|
$
|
20,537
|
|
|
|
|
|
|
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Supplemental Segment Information
|
(in thousands)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
Revenue
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
Medical Device
|
|
$
|
10,482
|
|
77.0
|
%
|
|
$
|
9,735
|
|
71.1
|
%
|
|
7.7
|
%
|
In Vitro Diagnostics
|
|
|
3,122
|
|
23.0
|
|
|
|
3,960
|
|
28.9
|
|
|
(21.2
|
)
|
Total revenue
|
|
$
|
13,604
|
|
100.0
|
%
|
|
$
|
13,695
|
|
100.0
|
%
|
|
(0.7
|
)%
|
|
|
|
|
|
|
|
Six Months Ended March 31,
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
Revenue
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
Medical Device
|
|
$
|
21,031
|
|
76.5
|
%
|
|
$
|
20,266
|
|
73.6
|
%
|
|
3.8
|
%
|
In Vitro Diagnostics
|
|
|
6,456
|
|
23.5
|
|
|
|
7,280
|
|
26.4
|
|
|
(11.3
|
)
|
Total revenue
|
|
$
|
27,487
|
|
100.0
|
%
|
|
$
|
27,546
|
|
100.0
|
%
|
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
Medical Device
|
|
$
|
5,282
|
|
|
$
|
4,785
|
|
|
$
|
10,610
|
|
|
$
|
10,625
|
|
In Vitro Diagnostics
|
|
|
633
|
|
|
|
1,267
|
|
|
|
1,303
|
|
|
|
2,018
|
|
Corporate
|
|
|
(2,435
|
)
|
|
|
(1,923
|
)
|
|
|
(4,104
|
)
|
|
|
(3,637
|
)
|
Total operating income
|
|
$
|
3,480
|
|
|
$
|
4,129
|
|
|
$
|
7,809
|
|
|
$
|
9,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Supplemental Non-GAAP Information
|
For the Three Months Ended March 31, 2014
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
|
Adjusted
|
|
|
GAAP(1)
|
|
Adjustments
|
|
|
|
Non-GAAP(2)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Royalties and license fees
|
|
$
|
7,329
|
|
|
|
|
|
$
|
7,329
|
Product sales
|
|
|
5,165
|
|
|
|
|
|
|
5,165
|
Research and development
|
|
|
1,110
|
|
|
|
|
|
|
1,110
|
Total revenue
|
|
$
|
13,604
|
|
|
|
|
|
$
|
13,604
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
3,480
|
|
$
|
914
|
|
(3)
|
|
$
|
4,394
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
2,459
|
|
$
|
580
|
|
(4)
|
|
$
|
3,039
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations(5)
|
|
$
|
0.18
|
|
|
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects operating results in accordance with U.S. generally
accepted accounting principles (GAAP).
|
(2)
|
|
Adjusted Non-GAAP amounts consider adjustments to reflect a $914
reduction to operating expenses associated with acceleration of
Board of Director stock-based compensation awards and related
adjustment to the income tax provision utilizing a 36.5% incremental
effective tax rate.
|
(3)
|
|
Reflects the pre-tax impact of the operating expense adjustment
noted in (2) above.
|
(4)
|
|
Adjusted to reflect the adjustments noted in (2) above.
|
(5)
|
|
Diluted earnings per share from continuing operations is calculated
using the diluted weighted average shares outstanding for the period
presented.
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Supplemental Non-GAAP Information
|
For the Three Months Ended March 31, 2013
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
|
Adjusted
|
|
|
GAAP(1)
|
|
Adjustments
|
|
|
|
Non-GAAP(2)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Royalties and license fees
|
|
$
|
6,951
|
|
|
|
|
|
$
|
6,951
|
Product sales
|
|
|
5,758
|
|
|
|
|
|
|
5,758
|
Research and development
|
|
|
986
|
|
|
|
|
|
|
986
|
Total revenue
|
|
$
|
13,695
|
|
|
|
|
|
$
|
13,695
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
4,129
|
|
|
|
|
|
$
|
4,129
|
|
|
|
|
|
10
|
|
|
(3)
|
|
|
Income from continuing operations
|
|
$
|
3,420
|
|
$
|
(412
|
)
|
|
(4)
|
|
$
|
3,018
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations(5)
|
|
$
|
0.23
|
|
|
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects operating results in accordance with U.S. generally
accepted accounting principles (GAAP).
|
(2)
|
|
Adjusted Non-GAAP amounts consider adjustments to reduce net
investment loss associated with an impairment loss on the Company’s
investment in ViaCyte substantially offset by the gain on the sale
of OctoPlus shares and increase the income tax provision to reverse
discrete income tax benefits recognized for the period presented as
noted in detail in note (4) below. The adjustment to net investment
loss did not generate a tax expense as there was an offsetting
reversal of a capital loss valuation allowance.
|
(3)
|
|
Reflects the pre-tax impact of the net investment loss adjustments
noted in (2) above. The adjustment to net investment loss did not
generate a tax expense as there was an offsetting reversal of a
capital loss valuation allowance.
|
(4)
|
|
Adjusted to remove discrete income tax benefits of $261 associated
with the realization of capital loss carrybacks and $151 from the
January 2013 signing of the American Taxpayer Relief Act of 2012
which retroactively reinstated federal R&D tax credits for calendar
2012.
|
(5)
|
|
Diluted earnings per share from continuing operations is calculated
using the diluted weighted average shares outstanding for the period
presented.
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Supplemental Non-GAAP Information
|
For the Six Months Ended March 31, 2014
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
|
Adjusted
|
|
|
GAAP(1)
|
|
Adjustments
|
|
|
|
Non-GAAP(2)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Royalties and license fees
|
|
$
|
14,794
|
|
|
|
|
|
$
|
14,794
|
Product sales
|
|
|
10,565
|
|
|
|
|
|
|
10,565
|
Research and development
|
|
|
2,128
|
|
|
|
|
|
|
2,128
|
Total revenue
|
|
$
|
27,487
|
|
|
|
|
|
$
|
27,487
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
7,809
|
|
$
|
914
|
|
|
(3)
|
|
$
|
8,723
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
6,089
|
|
$
|
(101
|
)
|
|
(4)
|
|
$
|
5,988
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations(5)
|
|
$
|
0.44
|
|
|
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects operating results in accordance with U.S. generally
accepted accounting principles (GAAP).
|
(2)
|
|
Adjusted Non-GAAP amounts consider adjustments to reduce operating
expenses by $914 associated with acceleration of Board of Director
stock-based compensation awards and a $681 reduction in net
investment income associated with a contingent milestone payment
related to the sale of Vessix Vascular shares which were sold in
fiscal 2013. The income tax provision includes an adjustment
associated with the stock-based compensation awards utilizing a
36.5% incremental effective tax rate. The adjustment to reduce net
investment income did not generate a tax benefit as there was an
offsetting establishment of a capital loss valuation reserve
allowance.
|
(3)
|
|
Reflects the pre-tax impact of the operating expense adjustment
noted in (2) above.
|
(4)
|
|
Adjusted to reflect the adjustments noted in (2) above.
|
(5)
|
|
Diluted earnings per share from continuing operations is calculated
using the diluted weighted average shares outstanding for the period
presented.
|
|
|
|
SurModics, Inc. and Subsidiaries
|
Supplemental Non-GAAP Information
|
For the Six Months Ended March 31, 2013
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
|
Adjusted
|
|
|
GAAP(1)
|
|
Adjustments
|
|
|
|
Non-GAAP(2)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Royalties and license fees
|
|
$
|
14,467
|
|
$
|
(570
|
)
|
|
(3)
|
|
$
|
13,897
|
Product sales
|
|
|
11,111
|
|
|
|
|
|
|
11,111
|
Research and development
|
|
|
1,968
|
|
|
|
|
|
|
1,968
|
Total revenue
|
|
$
|
27,546
|
|
$
|
(570
|
)
|
|
(3)
|
|
$
|
26,976
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
9,006
|
|
$
|
(570
|
)
|
|
(3)
|
|
$
|
8,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(362
|
)
|
|
(4)
|
|
|
|
|
|
|
$
|
(1,164
|
)
|
|
(5)
|
|
|
Income from continuing operations
|
|
$
|
7,668
|
|
$
|
(412
|
)
|
|
(6)
|
|
$
|
5,730
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations(7)
|
|
$
|
0.52
|
|
|
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects operating results in accordance with U.S. generally
accepted accounting principles (GAAP).
|
(2)
|
|
Adjusted Non-GAAP amounts consider adjustments to reduce royalty
revenue associated with a one-time $570 catch up payment received in
the first quarter of fiscal 2013, a reduction in net investment
income of $1,164 associated with the sale of Vessix Vascular and
OctoPlus shares offset by an impairment loss on the Company’s
investment in ViaCyte, a $412 increase in the income tax provision
to reverse discrete income tax benefits recognized as noted in
detail in note (6) below and adjustment to the income tax provision
for the one-time royalty revenue utilizing a 36.5% incremental
effective tax rate. The adjustment to reduce net investment income
did not generate a tax benefit as there was an offsetting
establishment of a capital loss valuation reserve allowance.
|
(3)
|
|
Reflects the pre-tax impact of the $570 one-time royalty catch up
payment noted in (2) above.
|
(4)
|
|
Reflects the after tax impact of the $570 one-time royalty catch up
payment noted in (2) above utilizing a 36.5% incremental effective
tax rate.
|
(5)
|
|
Reflects the pre-tax impact of the net investment income adjustments
noted in (2) above.
|
(6)
|
|
Adjusted to remove discrete income tax benefits of $261 associated
with the realization of capital loss carrybacks and $151 from the
January 2013 signing of the American Taxpayer Relief Act of 2012
which retroactively reinstated federal R&D tax credits for calendar
2012.
|
(7)
|
|
Diluted earnings per share from continuing operations is calculated
using the diluted weighted average shares outstanding for the period
presented.
|
|
|
|
Copyright Business Wire 2014