Masimo Reports Third Quarter 2012 Financial Results; Board Declares Special Cash Dividend of $1.00 per Share

 Masimo Reports Third Quarter 2012 Financial Results; Board Declares Special
                       Cash Dividend of $1.00 per Share

PR Newswire

IRVINE, Calif., Nov. 1, 2012

IRVINE, Calif., Nov. 1, 2012 /PRNewswire/ --

Q3 2012 Highlights (compared to Q3 2011):

  oProduct revenue rose 15% to $112.1 million
  oMasimo rainbow^® revenue rose 41% to $11.0 million, including 92% increase
    in SpHb^® revenue
  oShipped 33,100 Masimo SET^® and Masimo rainbow^® SET units
  oNet income was $13.8 million, with EPS of $0.24

Masimo (NASDAQ: MASI) today announced its financial results for the third
quarter ended September 29, 2012, and that its Board of Directors has declared
a special cash dividend of $1.00 per share, payable on December 11, 2012 to
stockholders of record as of the close of business on November 27, 2012.

Masimo's total third quarter revenue, including royalties, rose 14% to $119.1
million, compared to $104.0 million for the third quarter of 2011. Third
quarter 2012 product revenue rose 15% to $112.1 million, compared to $97.6
million for the third quarter of 2011. The company's worldwide end-user
revenue grew 15% in the third quarter of 2012 and represented 85% of product
revenue. OEM sales, which accounted for 15% of product revenue, rose 13%
compared to the same period in 2011. Excluding the impact of Masimo's 2012
acquisitions of PHASEIN AB and Spire Semiconductor, third quarter 2012 product
revenue rose 12%. Revenue from sales of Masimo rainbow products rose 41% to
$11.0 million in the third quarter, compared to $7.8 million for the third
quarter of 2011. Third quarter 2012 rainbow revenue included a 92% increase
in total hemoglobin (SpHb) sales compared to the third quarter of 2011. 

Net income for the third quarter of 2012 was $13.8 million, or $0.24 per
diluted share, compared to net income of $14.8 million, or $0.24 per diluted
share, in the third quarter of 2011. The third quarter 2012 operating results
included a $0.02 per share loss attributed to Masimo's 2012 acquisitions of
PHASEIN AB and Spire Semiconductor.

During the third quarter of 2012, the company shipped approximately 33,100
Masimo SET pulse oximetry and Masimo rainbow SET Pulse CO-Oximetry units,
excluding handheld units, essentially unchanged from the same prior-year
period. Masimo estimates its worldwide installed base as of September 29,
2012 to be 1,056,000 units, up 11% from 950,000 units as of October 1,
2011.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, "During the
third quarter, we continued to leverage Masimo's innovation leadership and
recurring-revenue business model to seize multiple growth opportunities across
a range of patient care settings. Our third quarter product revenue and
global installed base growth continued to outpace the industry, and third
quarter rainbow product sales were among the highest yet."

Mr. Kiani continued, "We are happy to announce the Board's decision to declare
a special cash dividend, which reflects not only the strength of our financial
position and confidence in our long-term outlook, but also demonstrates our
commitment to enhance stockholder value. In addition, by declaring the
dividend now, Masimo stockholders can take advantage of current dividend tax
rates, which may increase in 2013. Today's action marks the fourth instance
of a special dividend paid by Masimo in the past six years, and the third
since we became a public company in 2007. In fact, including the dividend
announced today, since becoming a public company, we have returned
approximately $220 million to stockholders in the form of special cash
dividends and another $62.5 million in the form of repurchases of our common
stock. This total of $282.5 million represents a return of approximately 88%
of the cash generated from operations between 2008 and September 2012."

As of September 29, 2012, Masimo's cash and cash equivalents were $113.0
million, compared to $129.9 million as of December 31, 2011. The change
reflects primarily net cash generated from operations, offset by $37.4 million
in cash used to acquire PHASEIN AB and Spire Semiconductor, and $26.3 million
in cash used to repurchase shares of Masimo common stock in the first half of
2012. The payout for the special $1.00 per share cash dividend announced
today is expected to be about $57.2 million, based on the current shares
outstanding, and will be reflected in the company's fourth quarter and full
year 2012 financial statements. The special dividend payout represents only a
portion of the company's cash reserves, which the Board believes is sufficient
to cover operational needs, and fund continued research and development
investments and strategic initiatives. 

While dividends are not routine for the company, Masimo has previously paid
special dividends to shareholders totaling $4.09 per share related to the 2006
intellectual property patent suit settlement agreement with a competitor,
$2.00 per share in March 2010 and $0.75 per share in December 2010. Although
there can be no guarantees of future dividends, the Board remains committed to
enhancing stockholder value based on its consideration of various factors,
including the company's operating results, financial condition and anticipated
capital requirements.

Conference Call

Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to
discuss the results. A live webcast of the conference call will be available
online from the investor relations page of the company's corporate website at
www.masimo.com. The dial-in numbers are (888) 520-7182 for domestic callers
and +1 (706) 758-3929 for international callers. The reservation code for
both dial-in numbers is 38439591. After the live webcast, the call will be
available on Masimo's website through December 1, 2012. In addition, a
telephonic replay of the call will be available through November 15, 2012.
The replay dial-in numbers are (800) 585-8367 for domestic callers and +1
(855) 859-2056 for international callers. Please use reservation code
38439591.

About Masimo

Masimo (NASDAQ: MASI) is the global leader in innovative noninvasive
monitoring technologies that significantly improve patient care—helping solve
"unsolvable" problems. In 1995, the company debuted Measure-Through Motion and
Low Perfusion pulse oximetry, known as Masimo SET^®, which virtually
eliminated false alarms and increased pulse oximetry's ability to detect
life-threatening events. More than 100 independent and objective studies have
shown that Masimo SET^® outperforms other pulse oximetry technologies, even
under the most challenging clinical conditions, including patient motion and
low peripheral perfusion. In 2005, Masimo introduced rainbow SET^® Pulse
CO-Oximetry technology, allowing noninvasive and continuous monitoring of
blood constituents that previously required invasive procedures, including
total hemoglobin (SpHb^®), oxygen content (SpOC^TM), carboxyhemoglobin
(SpCO^®), methemoglobin (SpMet^®), and Pleth Variability Index (PVI^®), in
addition to SpO[2], pulse rate, and perfusion index (PI). In 2008, Masimo
introduced Patient SafetyNet™, a remote monitoring and wireless clinician
notification system designed to help hospitals avoid preventable deaths and
injuries associated with failure to rescue events. In 2009, Masimo introduced
rainbow^® Acoustic Monitoring^TM, the first-ever noninvasive and continuous
monitoring of acoustic respiration rate (RRa™). Masimo's rainbow^® SET^®
technology platform offers a breakthrough in patient safety by helping
clinicians detect life-threatening conditions and helping guide treatment
options. In 2010, Masimo acquired SEDLine^®, a pioneer in the development of
innovative brain function monitoring technology and devices. And in 2012,
Masimo acquired the assets of Spire Semiconductor, LLC, a maker of advanced
light emitting diode (LED) and other advanced component-level technologies;
and PHASEIN AB, a developer and manufacturer of ultra-compact mainstream and
sidestream capnography, multigas analyzers, and handheld capnometry solutions.
Masimo SET^® and Masimo rainbow^® SET^® technologies also can be found in over
100 multiparameter patient monitors from over 50 medical device manufacturers
around the world. Founded in 1989, Masimo has the mission of "Improving
Patient Outcome and Reducing Cost of Care … by Taking Noninvasive Monitoring
to New Sites and Applications^®." Additional information about Masimo and its
products may be found at www.masimo.com.

Forward-Looking Statements

All statements other than statements of historical facts included in this
press release that address activities, events or developments that we expect,
believe or anticipate will or may occur in the future are forward-looking
statements including, in particular, the statements about our financial
condition, results of operations and business generally; expectations
regarding our ability to design and deliver innovative new noninvasive
technologies; and demand for our technologies. These forward-looking
statements are based on management's current expectations and beliefs and are
subject to uncertainties and factors, all of which are difficult to predict
and many of which are beyond our control and could cause actual results to
differ materially and adversely from those described in the forward-looking
statements. These risks include, but are not limited to, those related to:
our dependence on Masimo SET and Masimo rainbow SET products and technologies
for substantially all of our revenue; any failure in protecting our
intellectual property exposure to competitors' assertions of intellectual
property claims; the highly competitive nature of the markets in which we sell
our products and technologies; any failure to continue developing innovative
products and technologies; the lack of acceptance of any of our current or
future products and technologies; obtaining regulatory approval of our current
and future products and technologies; the risk that the implementation of our
international realignment will not continue to produce anticipated operational
and financial benefits, including a continued lower effective tax rate; the
loss of our customers; the failure to retain and recruit senior management;
product liability claims exposure; a failure to obtain expected returns from
the amount of intangible assets we have recorded; the maintenance of our
brand; the impact of the decline in the worldwide credit markets on us and our
customers; the integration of acquisitions; the amount and type of equity
awards that we may grant to employees and service providers in the future; and
other factors discussed in the "Risk Factors" section of our most recent
periodic reports filed with the Securities and Exchange Commission ("SEC"),
including our most recent Form 10-K and Form 10-Q, all of which you may obtain
for free on the SEC's website at www.sec.gov. Although we believe that the
expectations reflected in our forward-looking statements are reasonable, we do
not know whether our expectations will prove correct. You are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of the date hereof, even if subsequently made available by us on our
website or otherwise. We do not undertake any obligation to update, amend or
clarify these forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.

Investor Contact:   Media Contact:
Sheree Aronson      Mike Drummond
(949) 297-7043      (949) 297-7434
saronson@masimo.com mdrummond@masimo.com

Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and
Reducing Cost of Care… by Taking Noninvasive Monitoring to New Sites and
Applications, Rainbow, SpHb, SpOC, SpCO, SpMet, PVI, Rainbow Acoustic
Monitoring, RRa, Radical-7, Rad-87, Rad-57,Rad-8, Rad-5,Pulse CO-Oximetry,
Pulse CO-Oximeter, and SEDLine are trademarks or registered trademarks of
Masimo Corporation.

MASIMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
                                                   September 29,  December 31,
                                                   2012           2011
ASSETS
Current assets
Cash and cash equivalents                          $   112,988    $  129,882
Accounts receivable, net of allowance for doubtful     62,998        57,013
accounts
Royalties receivable                                   7,169         7,102
Inventories                                            48,981        45,944
Prepaid expenses                                       12,934        9,410
Deferred tax assets                                    11,574        11,576
Other current assets                                   3,554         2,008
Total current assets                                   260,198       262,935
Deferred cost of goods sold                            51,539        51,679
Property and equipment, net                            23,028        15,239
Intangible assets, net                                 27,288        11,393
Goodwill                                               22,745        448
Deferred tax assets                                    17,308        16,766
Other assets                                           7,511         7,644
Total assets                                       $   409,617    $  366,104
LIABILITIES AND EQUITY
Current liabilities
Accounts payable                                   $   26,024     $  27,302
Accrued compensation                                   22,559        19,717
Accrued liabilities                                    16,580        12,297
Income taxes payable                                   492           570
Deferred revenue                                       18,784        16,019
Current portion of capital lease obligations           55            48
Total current liabilities                              84,494        75,953
Deferred revenue                                       709           984
Capital lease obligations, less current portion        74            74
Other liabilities                                      10,070        9,427
Total liabilities                                      95,347        86,438
Equity
Masimo Corporation stockholders' equity:
Common stock                                           57            58
Treasury stock                                         (63,664)      (37,396)
Additional paid-in capital                             255,465       243,528
Accumulated other comprehensive income                 3,053         1,274
Retained earnings                                      116,629       69,364
Total Masimo Corporation stockholders' equity          311,540       276,828
Noncontrolling interest                                2,730         2,838
Total equity                                           314,270       279,666
Total liabilities and equity                       $   409,617    $  366,104





MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
                        Three Months Ended               NineMonths Ended
                        September 29,     October 1,     September  October 1,
                                                         29,
                        2012              2011           2012       2011
Revenue:
Product                 $    112,108      $   97,639     $ 339,644  $  301,771
Royalty                      6,961            6,401        21,428      24,876
Total revenue                119,069          104,040      361,072     326,647
Cost of goods sold           40,736           35,601       122,002     106,125
Gross profit                 78,333           68,439       239,070     220,522
Operating expenses:
Selling, general and         48,260           40,134       142,831     125,275
administrative
Research and                 12,121           9,372        33,736      28,793
development
Total operating              60,381           49,506       176,117     154,068
expenses
Operating income             17,952           18,933       62,953      66,454
Non-operating income         912              (240)        (132)       482
(expense)
Income before
provision for income         18,864           18,693       62,821      66,936
taxes
Provision for income         5,301            3,869        15,724      17,049
taxes
Net income including
noncontrolling               13,563           14,824       47,097      49,887
interest
Net (income) loss
attributable to the          231              5            168         (7)
noncontrolling
interest
Net income
attributable to         $    13,794       $   14,829     $ 47,265   $  49,880
Masimo Corporation
stockholders
Net income per share
attributable to
Masimo Corporation
stockholders:
Basic                   $    0.24         $   0.25       $ 0.82     $  0.83
Diluted                 $    0.24         $   0.24       $ 0.81     $  0.82
Weighted average
shares used in per
share calculations:
Basic                        57,201           59,971       57,507      59,084
Diluted                      58,145           61,086       58,454      61,082
The following table presents details of the share-based compensation expense
that is included in each functional line item in the condensed consolidated
statements of income above (in thousands):
                        Three Months Ended               Nine Months Ended
                        September 29,     October 1,     September  October 1,
                                                         29,
                        2012              2011           2012       2011
Cost of goods sold      $    155          $   138        $ 485      $  419
Selling, general and         2,405            1,912        8,461       7,559
administrative
Research and                 636              543          2,087       2,189
development
Total                   $    3,196        $   2,593      $ 11,033   $  10,167





MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
                                                 Nine Months Ended
                                                 September 29,  October 1,
                                                 2012             2011
Cash flows from operating activities:
Net income including noncontrolling interest     $    47,097      $   49,887
Adjustments to reconcile net income including
noncontrolling interestto net cash provided by
operating activities:
Depreciation and amortization                         6,509           5,608
Share-based compensation                              11,033          10,167
Provision (benefit) for doubtful accounts             (5)             184
Provision for obsolete inventory                      617             1,879
Provision for warranty costs                          1,866           1,919
Benefit from deferred income taxes                    (319)           —
Income tax benefit from exercise of stock             259             1,290
options granted prior to January1, 2006
Excess tax (deficit) benefit from share-based         340             (58)
payment arrangements
Realized foreign exchange loss on forward             45              —
contracts
Changes in operating assets and liabilities:
Increase in accounts receivable                       (4,982)         (4,016)
(Increase) decrease in royalties receivable           (67)            5,264
Increase in inventories                               (1,700)         (2,374)
(Increase) decrease in deferred cost of goods         160             (4,321)
sold
Increase in prepaid expenses                          (2,888)         (5,459)
Increase in other assets                              (1,316)         (436)
Decrease in accounts payable                          (2,730)         (2,146)
Increase (decrease) in accrued compensation           2,344           (2,744)
Increase (decrease) in accrued liabilities            820             (1,001)
Increase (decrease) in income taxes payable           (419)           1,249
Increase (decrease) in deferred revenue               2,490           (1,927)
Increase (decrease) in other liabilities              (2,196)         1,101
Net cash provided by operating activities             56,958          54,066
Cash flows from investing activities:
Purchases of property and equipment                   (7,812)         (3,508)
Increase in intangible assets                         (2,904)         (1,719)
Cash paid for acquisition                             (37,399)        —
Net cash used in investing activities                 (48,115)        (5,227)
Cash flows from financing activities:
Repayments of capital lease obligations               (12)            (37)
Proceeds from issuance of common stock                1,034           5,568
Excess tax deficit (benefit) from share-based         (340)           58
payment arrangements
Repurchases of common stock                           (26,268)        —
Net proceeds from settlement of forward               88              —
contracts
Net cash provided by (used in) financing              (25,498)        5,589
activities
Effect of foreign currency exchange rates on          (239)           459
cash
Net increase (decrease) in cash and cash              (16,894)        54,887
equivalents
Cash and cash equivalents at beginning of             129,882         88,305
period
Cash and cash equivalents at end of period       $    112,988     $   143,192





SOURCE Masimo

Website: http://www.masimo.com
 
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