Syneron Reports Third Quarter 2013 Results

                  Syneron Reports Third Quarter 2013 Results

Total Revenue of $62.7 Million; Non-GAAP EPS of $0.04

PR Newswire

YOKNEAM, Israel, Nov. 13, 2013

YOKNEAM, Israel, Nov. 13, 2013 /PRNewswire/ --Syneron Medical Ltd. (NASDAQ:
ELOS), the leading global aesthetic device company, today announced financial
results for the three month and nine month periods ended September 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120528/535447)

Third Quarter 2013 and Recent Highlights Include:

  oTotal revenue of $62.7 million, up 4% y/y 
  oPAD^1 segment revenue of $54.6 million, up 3% y/y
  oEBU^2 segment revenue of $8.1 million, up 17% y/y
  oNon-GAAP gross margin of 53.1%, down from 55.3% in 3Q12 and up from 50.7%
    in 2Q13
  oPAD ^ segment non-GAAP operating margin of 6.7%, down from 9.1% in 3Q12
  oCompleted UltraShape clinical trial and submitted 510(k) application to
    FDA
  oSigned global joint venture with Unilever for home beauty devices

Dr. Shimon Eckhouse, Chief Executive Officer of Syneron, commented, "During
the third quarter we continued to execute on our strategy to drive growth of
our higher margin products in North America, with a particular focus on the
non-core segment of the market. We are successfully expanding our sales team
under new management and are off to a good start, including double-digit
growth from the Syneron product line in North America. We achieved this
progress during the first full quarter of operations that included the
reduction in work force that we executed during the second quarter. As a
result, operating expenses were lower compared to the prior year despite our
investments in the sales force and revenue growth.

"We are excited by two positive recent developments for our body shaping
product portfolio. In September, we received FDA clearance and CE Mark for
VelaShape III, our new non-invasive body shaping platform. The market has
reacted positively to its new features and increased power, which allow it to
achieve robust results after a single treatment. We expect to begin ramping
sales of VelaShape III during the fourth quarter. In the past month, we
announced the successful completion of our UltraShape clinical trial, which
exceeded the endpoints agreed on with the FDA, and subsequently submitted our
application to the FDA for potential clearance in the first half of 2014. If
cleared by the FDA, we expect UltraShape will be a significant addition to our
body shaping product offering."

Dr. Eckhouse concluded, "Last week, our Syneron Beauty subsidiary agreed to
enter a transformational joint venture with Unilever in the home beauty device
market. The combined company is well positioned to leverage Syneron's
expertise in aesthetic device technology and Unilever's global product and
consumer experience to become a leader in this growing market. We are very
pleased with this transaction as it allows us to benefit from the growth
potential of joint venture in the robust home beauty market, while eliminating
the financial demands of building a consumer business. As a result, we will
now focus on driving growth of our professional aesthetic device business,
building the elure business in Asia, and improving our overall profitability."

Revenue: Third quarter 2013 revenue was $62.7 million, up 4% compared to $60.1
million in the third quarter 2012. The increase was the result of higher PAD
segment revenue in North America, Asia-Pacific, China and Latin America, along
with growth in the EBU segment, partially offset by lower PAD segment revenue
in Europe and Japan. Third quarter 2013 revenue was negatively impacted by
$1.1 million due to the devaluation of the Japanese Yen against the U.S.
dollar compared to the third quarter 2012.

PAD segment revenue was $54.6 million, up 3% compared to $53.2 million in the
third quarter 2012. EBU segment revenue was $8.1 million, up 17% compared to
$6.9 million in the third quarter 2012.

Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2013:

Gross Margin for the third quarter 2013 was 53.1%, compared to 55.3% in third
quarter 2012,primarily due to product and sales channel mix in the PAD
segment, along with product mix and higher production costs in the EBU
segment. Gross margin for the third quarter 2013 increased sequentially from
50.7% in the second quarter 2013.

Operating Income for the third quarter 2013 was $2.1 million, up 22% compared
to $1.7 million in third quarter 2012, representing an operating margin of
3.3% of revenue in the third quarter 2013, compared to 2.8% in the third
quarter 2012.

Net Income and Earnings Per Share in the third quarter 2013 was $1.5 million,
or $0.04 per share, compared to net income of $1.0 million, or $0.03 per
share, in the third quarter 2012.

Net income and earnings per share for the third quarter 2013 are adjusted to
exclude the following items, which are detailed in the Company's financial
tables:

  oAmortization of acquired intangible assets of $1.7 million
  oStock-based compensation of $1.0 million
  oOther non-recurring costs of $0.5 million
  oIncome tax adjustment of $0.4 million

GAAP Financial Highlights for the Third Quarter Ended September 30, 2013:

Gross Margin for the third quarter 2013 was 50.9%, compared to 53.2% in third
quarter 2012, primarily due to product and sales channel mix in the PAD
segment, along with product mix and higher production costs in the EBU
segment. Gross margin for the third quarter 2013 increased sequentially from
48.3% in the second quarter 2013.

Operating Loss for the third quarter 2013 was $1.1 million, compared to $2.1
million in third quarter 2012.

Net Loss for the third quarter 2013 was $1.3 million, compared to $2.3 million
in third quarter 2012.

Loss Per Share for the third quarter 2013 was $0.04, compared to $0.06 in the
third quarter 2012.

Cash Position: As of September 30, 2013, the Company's cash and investments
portfolio was $110.3 million.

Hugo Goldman, Chief Financial Officer of Syneron, said, "Our third quarter
results reflect cost reduction and efficiency initiatives that we implemented
in the second quarter. These initiatives contributed to a year-over-year and
sequential decline in operating expenses even though we continued to invest in
expanding our sales force in North America. We ended the quarter with $110.3
million in cash and investments, and with the anticipated closing of our joint
venture with Unilever, we expect our professional business going forward to be
cash flow positive from operations. After the close of the third quarter we
reached a settlement with the Israeli tax authorities which resulted in the
conclusion of our Israeli tax audits for the years 2007-2011. As part of this
settlement, we agreed to pay approximately $4 million which will allow us to
free up "trapped profits". The positive effect of this settlementon the
fourth quarter will be reflected in our 2013 year-end financial statements."

Unaudited Non-GAAP segments results for the three months ended September 30,
2013 and 2012 (in thousands):

                 For the three-months ended
                 September 30,       % of     September 30, % of     % of
                 2013                Revenues 2012          Revenues Change
Revenues
PAD         $      54,582 87.1%     $        88.5%     2.6%
                                               53,223
EBU         8,082               12.9%     6,909         11.5%     17.0%
Total revenues   $      62,664 100.0%    $        100.0%    4.2%
                                               60,132
Operating income
(loss)
PAD         $             6.7%      $       9.1%      (24.4%)
                 3,681                        4,866
EBU         (1,617)             (20.0%)   (3,169)       (45.9%)   49.0%
Total operating  $             3.3%      $       2.8%      21.6%
income           2,064                        1,697



Unaudited GAAP segments results for the three months ended September 30, 2013
and 2012 (in thousands):

                 For the three-months ended
                 September 30,       % of     September 30, % of     % of
                 2013                Revenues 2012          Revenues Change
Revenues
PAD         $      54,582 87.1%     $        88.5%     2.6%
                                               53,223
EBU         8,082               12.9%     6,909         11.5%     17.0%
Total revenues   $      62,664 100.0%    $        100.0%    4.2%
                                               60,132
Operating income
(loss)
PAD         $             2.2%      $       2.7%      (15.4%)
                 1,204                        1,424
EBU         (2,330)             (28.8%)   (3,568)       (51.6%)   34.7%
Total operating  $             (1.8%)    $       (3.6%)    47.5%
loss             (1,126)                       (2,144)



Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
                     For the three-months ended
                     September 30, 2013           September 30, 2012
                     EBU        PAD      Total    EBU        PAD      Total
GAAP operating       $      $     $     $      $     $   
income (loss)                                           
                     (2,330)    1,204   (1,126)  (3,568)    1,424   (2,144)
 Stock-based         103        876      979      115        779      894
 compensation
 Amortization of     398        1,274    1,672    312        1,674    1,986
 intangible assets
 Other non-recurring 212        327      539      (28)       989      961
 items
Non-GAAP operating   $      $     $     $      $     $   
income (loss)                                            
                     (1,617)    3,681   2,064   (3,169)    4,866   1,697
Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
                     For the nine-months ended
                     September 30, 2013           September 30, 2012
                     EBU        PAD      Total    EBU        PAD      Total
GAAP operating       $      $     $     $      $     $   
income (loss)                                            
                     (9,285)      923  (8,362)  (13,018)   6,947   (6,071)
 Stock-based         293        3,012    3,305    220        3,145    3,365
 compensation
 Amortization of     1,168      4,201    5,369    1,016      4,854    5,870
 intangible assets
 Other non-recurring 1,035      2,699    3,734    839        1,496    2,335
 items
Non-GAAP operating   $      $     $     $      $     $   
income (loss)                                               
                     (6,789)    10,835  4,046   (10,943)   16,442  5,499



Use of Non-GAAP Measures
This press release provides financial measures for gross margin, operating
margin, operating income (loss), net income (loss), earnings (loss) per share,
which exclude expenses related to stock-based compensation, amortization of
intangible assets, one-time severance, other non-recurring items such as costs
associated with the voluntary field action regarding the LiteTouch Dental
Laser Product in Europe, and income tax adjustment, 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
ongoing operational results, operating margin, operating income (loss), net
income (loss) and earnings (loss) per 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 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 third quarter 2013 earnings conference call
today at 8:30 a.m. ET. Syneron will be broadcasting live via the Investor
Relations section of its website, www.investors.syneron.com. To access the
call, enter the Syneron Investor Relations website, then click on the webcast
link "Q3 2013 Results Webcast."

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: 78126203.

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 U.S. The Company markets, services and supports its products in 90
countries. It has offices in North America, France, Germany, Italy, Portugal,
Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide.

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. Forward-looking statements in
this press release include the anticipated timetable for completion of
clinical trials for UltraShape and elure™;the success of our cost reduction
initiatives to be reflected in our second half results and the expectation
that EBU losses will narrow and that we will reach breakeven operating results
by the end of 2013. 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 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.

^1 PAD: Professional Aesthetic Device segment, which includes the results of
the Syneron and Candela device businesses.

^2 EBU: Emerging Business Units. Products in the EBU include me home-use hair
removal system, elure Advanced Skin Brightening products, Tanda LED systems,
Light Instruments' dental laser devices along with pipeline products that
include Fluorinex teeth whitening and fluorination.





Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
                         For the three-months ended  For the nine-months ended
                         September 30,  September    September     September
                                        30,          30,           30,
                         2013           2012         2013          2012
Revenues                 $         $       $        $     
                         62,664        60,132      192,633       190,862
Cost of revenues        30,751         28,151       95,122        90,468
Gross profit             31,913         31,981       97,511        100,394
Operating expenses:
 Sales and marketing    19,260         18,768       61,439        59,111
 General and             6,445          8,235        20,608        25,487
 administrative
 Research and            7,007          7,206        22,956        21,630
 development
 Other expenses (income) 327            (84)         870           237
Total operating expenses 33,039         34,125       105,873       106,465
Operating loss           (1,126)        (2,144)      (8,362)       (6,071)
 Financial Income        77             378          (298)         976
 (expenses), net
Loss before taxes on     (1,049)        (1,766)      (8,660)       (5,095)
income (tax benefit)
Taxes on income (tax     227            526          (493)         2,197
benefit)
Loss before              (1,276)        (2,292)      (8,167)       (7,292)
non-controlling interest
Net loss attributable to -              -            100           776
non-controlling interest
Loss attributable to     $        $       $        $     
Syneron shareholders     (1,276)         (2,292)     (8,067)      (6,516)
Loss per share:
Basic and Diluted
 Loss before             $        $       $        $     
 non-controlling          (0.04)         (0.06)     (0.23)      (0.20)
 interest
 Net loss attributable
 to non-controlling      -              -            -             0.02
 interest
 Net loss attributable   $        $       $        $     
 to Syneron shareholders  (0.04)         (0.06)     (0.23)      (0.18)
Weighted average shares
outstanding:
 Basic and Diluted       36,064         35,508       35,826        35,437







Syneron Medical Ltd.
Condensed Consolidated Balance Sheets
(in thousands)
                                           September 30,         December 31,
                                           2013                  2012 (*)
                                           (Unaudited)
Assets
Current assets:
     Cash and cash equivalents             $               $      
                                           30,743               66,359
     Short-term bank deposits              15,010                20,520
     Available-for-sale marketable         35,298                41,136
     securities
     Trade receivable, net                 56,826                50,023
     Other accounts receivables and        13,353                12,563
     prepaid expenses
     Inventories                           46,116                36,862
Total current assets                       197,346               227,463
Long-term assets:
     Severance pay fund                    617                   600
     Long-term deposits and others        2,006                 1,879
     Long-term available-for-sale          29,288                7,966
     marketable securities
     Investment in affiliated company      1,000                 1,000
     Property and equipment, net           7,182                 6,148
     Intangible assets, net               25,072                30,433
     Goodwill                              25,219                25,219
     Deferred taxes                        17,697                18,390
Total long-term assets                     108,081               91,635
Total assets                               $      305,427  $     
                                                                 319,098
Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable                      $               $      
                                           21,126               19,926
     Deferred revenues                     12,594                11,986
     Other accounts payable and accrued    38,158                49,889
     expenses
Total current liabilities                  71,878                81,801
Long-term liabilities:
     Contingent consideration liability    7,557                 6,750
     Deferred revenues                     3,428                 3,924
     Warranty accruals                     705                   708
     Accrued severance pay                 699                   691
     Deferred taxes                        2,486                 3,095
Total long-term liabilities                14,875                15,168
Stockholders' equity:                      218,674               222,129
Total liabilities and stockholders' equity $      305,427  $     
                                                                 319,098
(*) Derived from audited financial
     statements





Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
                                                 For the nine-months ended
                                                  September 30,    September
                                                                   30,
                                                  2013             2012
Cash flows from operating activities:
 Net loss before non-controlling interest         $          $     
                                                  (8,167)          (7,292)
  Adjustments to reconcile net loss to net cash
  used by operating activities:
  Non-cash items reported in discontinued
  operations
  Share-based compensation                       3,305            3,365
  Depreciation and amortization                   7,882            7,937
  Impairments of intangible assets                -                780
  Realized loss, changes in accrued interest
  and amortization                                812              (337)
  of premium (discount) on marketable
  securities
  Revaluation of contingent liability             807              (580)
  Changes in operating assets and liabilities
      Trade receivable, net                       (7,068)          (5,349)
      Inventories                                 (10,078)         (11,940)
      Other accounts receivables                  (875)            262
      Deferred taxes                              83               1,430
      Accounts payable                            1,333            (2,466)
      Deferred revenue                            344              160
      Accrued warranty accruals                   (131)            19
      Other accrued liabilities                   (6,464)          (5,797)
Net cash used in operating activities             (18,217)         (19,790)
Cash flows from investing activities:
  Purchases of property and equipment             (2,930)          (1,125)
  Proceeds from the sale or maturity of           34,178           49,869
  marketable securities
  Purchase of marketable securities               (50,510)         (25,549)
  Proceeds from short-term bank deposits, net     5,513            2,906
  Investments in affiliated company               -                (1,000)
  Net cash paid in acquisition of subsidiaries    -                (15,050)
  Other investing activities                      (118)            (112)
Net cash provided by (used in) investing          (13,867)         9,939
activities
Cash flows from financing activities:
  Short term bank credit, net                     -                (1,082)
  Acquisition of shares held by                   (5,156)          (7,200)
  non-controllingshareholders ofa subsidiary
  Proceeds from exercise of stock options         3,121            1,366
Net cash used in financing activities             (2,035)          (6,916)
Effect of exchange rates on cash and cash         (1,497)          (91)
equivalents
Net decrease in cash and cash equivalents         (35,616)         (16,858)
Cash and cash equivalents at beginning of         66,359           62,319
period
Cash and cash equivalents at end of period        $           $     
                                                  30,743          45,461





Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
                         For the three-months ended  For the nine-months ended
                         September 30,  September    September     September
                                        30,          30,           30,
                         2013           2012         2013          2012
GAAP operating loss      $        $       $        $     
                         (1,126)         (2,144)     (8,362)      (6,071)
   Stock-based           979            894          3,305         3,365
   compensation
   Amortization of       1,672          1,986        5,369         5,870
   intangible assets
   Other non-recurring   539            961          3,734         2,335
   items
Non-GAAP operating       $        $       $        $     
income                   2,064          1,697      4,046       5,499
GAAP net Loss            $        $       $        $     
attributable to Syneron  (1,276)         (2,292)     (8,067)      (6,516)
shareholders
   Stock-based           979            894          3,305         3,365
   compensation
   Amortization of       1,672          1,986        5,369         5,870
   intangible assets
   Other non-recurring   539            961          3,734         2,335
   items
   Income tax            (393)          (538)        (1,498)       (1,636)
   adjustments
Non-GAAP net Income
attributable to Syneron  $        $       $        $     
shareholders             1,521          1,011      2,843       3,418

Income (Loss) per share:
Basic
GAAP net Loss per share
attributable to Syneron  $        $       $        $     
shareholders             (0.04)         (0.06)     (0.23)      (0.18)

   Stock-based           0.03           0.03         0.09          0.09
   compensation
   Amortization of       0.05           0.06         0.15          0.17
   intangible assets
   Other non-recurring   0.01           0.03         0.10          0.07
   items
   Income tax            (0.01)         (0.02)       (0.04)        (0.05)
   adjustments
Non-GAAP net Income per
share attributable to    $        $       $        $     
Syneron shareholders     0.04          0.03      0.08       0.10

Diluted
GAAP net Loss
attributable to Syneron  $        $       $        $     
shareholders             (0.04)         (0.06)     (0.22)      (0.18)

   Stock-based           0.03           0.02         0.09          0.09
   compensation
   Amortization of       0.05           0.06         0.15          0.16
   intangible assets
   Other non-recurring   0.01           0.03         0.10          0.07
   items
   Income tax            (0.01)         (0.01)       (0.04)        (0.05)
   adjustments
Non-GAAP net Income per
share attributable to    $        $       $        $     
Syneron shareholders     0.04          0.03      0.08       0.10

Weighted average shares
outstanding:
   Basic                 36,064         35,508       35,826        35,437
   Diluted               36,196         35,875       36,058        35,866







SOURCE Syneron Medical Ltd.

Website: http://www.syneron-candela.com
Contact: Hugo Goldman, Chief Financial Officer, Syneron Medical, Email:
hugo.goldman@syneron.com; or Zack Kubow, The Ruth Group, 646-536-7020, Email:
zkubow@theruthgroup.com
 
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