Thoratec® Reports First Quarter 2014 Results

                 Thoratec® Reports First Quarter 2014 Results

-Revenue of $125.7 million for the first quarter of 2014

-GAAP net income per diluted share of $0.32, and non-GAAP income per net
diluted share of $0.41

-Company reiterates 2014 guidance for revenue of $520 million to $535 million
and net income per diluted share of $1.28-1.38 on a GAAP basis and $1.72-1.82
on a non-GAAP basis

PR Newswire

PLEASANTON, Calif., May 6, 2014

PLEASANTON, Calif., May 6, 2014 /PRNewswire/ --Thoratec Corporation (NASDAQ:
THOR), a world leader in device-based mechanical circulatory support (MCS)
therapies to save, support and restore failing hearts, today reported its
financial results for the first quarter of 2014.

"Our operational and financial progress in the first quarter provides a solid
foundation for a successful 2014," said Gary F. Burbach, President and Chief
Executive Officer. "Performance in the quarter was driven by continued growth
in HeartMate II, along with exceptional results in our CentriMag acute product
line," he added.

For the quarter ended March 29, 2014, Thoratec reported revenues of $125.7
million, a seven percent increase versus revenues of $117.7 million in the
same period a year ago. Net income on a GAAP basis was $18.2 million, or
$0.32 per diluted share, compared to GAAP net income of $18.2 million, or
$0.31 per diluted share, in the same period last year. Non-GAAP net income,
which is described later in this press release, was $23.7 million, or $0.41
per diluted share in the first quarter of 2014, compared to non-GAAP net
income of $24.0 million, or $0.41 per diluted share, in the first quarter of
2013.

"We remain excited about upcoming pipeline opportunities with HeartMate III
and HeartMate PHP, both of which we anticipate will begin clinical trials in
the near future," Burbach commented. "We continue to expect that our
attractive end market opportunity combined with technological innovation will
drive strong future growth."

First Quarter of 2014 Financial Results

Thoratec reported revenues of $125.7 million in the first quarter of 2014. The
HeartMate product line contributed $110.0 million, an increase of seven
percent, driven by expansion of our international business, while the
CentriMag product line contributed $13.0 million.

GAAP gross margin in the first quarter of 2014 was 68.2 percent compared to
70.2 percent in the same quarter last year. Non-GAAP gross margin, described
later in this press release, was 69.5 percent compared to 72.1 percent in the
same quarter last year. The decrease in GAAP and non-GAAP gross margin was due
primarily to inventory-related charges and manufacturing variances, in part
offset by favorable product mix. In addition, GAAP gross margin was positively
affected by lower intangible assets amortization expense.

GAAP operating expenses in the first quarter of 2014 were $58.8 million
compared to $59.3 million in the same quarter last year. Non-GAAP operating
expenses, described later in this press release, were $52.3 million compared
to $52.8 million in the same quarter last year. The decrease in both GAAP and
non-GAAP operating expenses was primarily due to timing of project-related and
other administrative expenses offset by higher personnel costs. 

The company's GAAP effective tax rate in the first quarter of 2014 was 32.6
percent versus 25.9 percent a year ago. The non-GAAP tax rate, which is
described later in this press release, was 32.8 percent versus 27.9 percent in
the same period last year. The increase in both the GAAP and non-GAAP
effective tax rates was primarily due to the lack of federal R&D credits in
the absence of enacted legislation.

Cash and investments were $299.4 million as of March 29, 2014, compared to
$310.0 million as of December 28, 2013. The company repurchased $13.5 million
of stock during the first quarter of 2014.

GUIDANCE

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 the additional
information below.

The company reiterates fiscal 2014 guidance for revenues in a range of $520
million to $535 million and net income per diluted share of $1.28 to $1.38 on
a GAAP basis and $1.72 to $1.82 on a non-GAAP basis. Gross margin is expected
to be approximately 70 percent on a GAAP basis and 71 percent on a non-GAAP
basis. We expect the effective tax rate to be approximately 32 percent on both
a GAAP and non-GAAP basis.

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 Daylight
Time (4:30 p.m., Eastern Daylight Time), today. The teleconference can be
accessed by calling (719) 325-4824, passcode 6338556. 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 Tuesday, May 13, via http://www.thoratec.com or by
telephone at (719) 457-0820, passcode 6338556.

GAAP TO NON-GAAP RECONCILIATION

Thoratec management evaluates and makes operating decisions using various
measures. These measures are generally based on revenues generated by the
company's 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 tax rate, non-GAAP net income, and non-GAAP net income per
diluted 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's 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, the amortization of
purchased intangible assets, and acquisition-related contingent consideration
adjustments.

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 gross profit and gross margin consist of GAAP gross profit and gross
margin excluding share-based compensation expense and the amortization of
purchased intangible assets.

Non-GAAP operating expenses consist of GAAP operating expenses excluding
share-based compensation expense, the amortization of purchased intangible
assets, and acquisition-related contingent consideration adjustments.

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 the amortization of purchased intangible assets. 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.

Thoratec management has excluded acquisition-related contingent consideration
adjustments from GAAP results to allow investors to compare Thoratec's
recurring core business operating results to those of other companies and over
multiple periods.

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 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 condensed consolidated balance sheets as
of March 29, 2014 and December 28, 2013:

THORATEC CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
                                             March 29, 2014  December 28, 2013
ASSETS
Current assets:
Cash and cash equivalents                   $           $       
                                             108,653        139,099
Short-term available-for-sale investments   186,535         166,691
Receivables, net of allowances of $2,396 in  77,220          71,418
2014 and $2,163 in 2013
Inventories                                 59,345          60,293
Deferred tax assets                         15,161          15,161
Income tax receivable                       9,781           5,733
Prepaid expenses and other assets           8,196           7,272
Total current assets                        464,891         465,667
Property, plant and equipment, net          55,084          55,163
Goodwill                                    207,026         205,764
Purchased intangible assets, net            34,593          36,403
Long-term available-for-sale investments    4,247           4,234
Other long-term assets                      23,301          24,476
Total Assets                                $           $       
                                             789,142        791,707
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                            $          $        
                                             15,923         17,599
Accrued compensation                        17,942          22,759
Contingent liabilities, current portion     9,189           6,962
Other accrued liabilities                   29,989          27,001
Total current liabilities                   73,043          74,321
Long-term deferred tax liability            1,876           2,224
Other long-term liabilities                 12,317          12,105
Contingent liabilities, non-current portion  26,728          36,384
Total Liabilities                           113,964         125,034
Shareholders' equity:
Common shares: no par, authorized 100,000;
issued and outstanding 56,885 in 2014 and    -               -
56,904 in 2013
Additional paid-in-capital                  625,085         621,589
Retained earnings                           62,548          57,587
 Accumulated other comprehensive loss     (12,455)        (12,503)
Total Shareholders' Equity                  675,178         666,673
Total Liabilities and Shareholders' Equity  $           $       
                                             789,142        791,707

The following table includes the GAAP income statement for the three months
ended March 29, 2014 and March 30, 2013:

THORATEC CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except for per share data)
                                      Three Months Ended
                                      March 29, 2014       March 30, 2013
Product sales                         $     125,697   $     117,725
Cost of product sales                 40,026               35,073
Gross profit                          85,671               82,652
Operating expenses:
Selling, general and administrative   35,501               34,745
Research and development              23,339               24,513
Total operating expenses              58,840               59,258
Income from operations                26,831               23,394
Other income and (expense):
Interest expense                      (0)                  (4)
Interest income and other             247                  1,117
Income before income taxes            27,078               24,507
Income tax expense                   (8,839)              (6,337)
Net income                            $      18,239  $      18,170
Net income per share- Basic:          $             $       
                                      0.32                0.32
Net income per share- Diluted:        $             $       
                                      0.32                0.31
Shares used to compute net income per
share:
Basic                                 56,840               57,486
Diluted                               57,666               58,507

The following table presents our quarterly revenues by source for the first
quarter of 2014 and the full year 2013:

THORATEC CORPORATION
Quarterly Revenue Analysis
(Unaudited)
(in millions)
                    Three Months Ended
                    March 29,  December 28,  September    June 29,   March 30,
                                             28,
                    2014       2013                       2013       2013
                                             2013
Revenue by Product
Line
HeartMate           $      $        $       $      $    
                    110.0        113.0     112.8        115.7     102.9
CentriMag (1)       13.0       11.0          10.4         11.5       10.4
PVAD & IVAD         2.3        3.4           2.6          2.7        3.8
Other               0.4        0.8           0.6          0.6        0.6
Total               $      $        $       $      $    
                    125.7        128.2     126.4         130.5    117.7
Revenue by Category
Pump                $      $        $       $      $    
                     89.3        90.4     87.1         93.5    84.3
Non-Pump            36.0       37.0          38.7         36.4       32.8
Other               0.4        0.8           0.6          0.6        0.6
Total               $      $        $       $      $    
                    125.7        128.2     126.4         130.5    117.7
Revenue by
Geography
United States       $      $        $       $      $    
                     95.6        99.8     99.6         98.8    92.3
International       30.1       28.4          26.8         31.7       25.4
Total               $      $        $       $      $    
                    125.7        128.2     126.4         130.5    117.7
(1) CentriMag includes PediMag/PediVAS® sales

The following table presents our quarterly HeartMate II pump units by
geography for the first quarter of 2014 and the full year 2013:

THORATEC CORPORATION
Quarterly Heartmate II Pump Units (1)
(Unaudited)
                    Three Months Ended
Units by Geography  March 29,  December 28,  September 28,  June 29,  March
                    2014       2013          2013           2013      30, 2013
United States       701        733           713            748       689
International       263        240           241            277       205
Total               964        973           954            1,025     894
(1) Excludes CentriMag, PediMag/PediVAS and PVAD/IVAD units



The following table reconciles the specific items excluded from GAAP net
income in the calculation of non-GAAP net income and diluted net income per
share for the periods shown below:

THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Net Income
(Unaudited)
(in thousands, except for per share data)
                                              Three Months Ended
Net income reconciliation                     March 29, 2014   March 30, 2013
Net income on a GAAP basis                    $           $     
                                              18,239          18,170
Share-based compensation expense:
- Cost of product sales                       621              571
- Selling, general and administrative         4,025            3,683
- Research and development                    2,136            1,913
Amortization of purchased intangibles:
- Cost of product sales                       1,013            1,714
- Selling, general and administrative         760              751
- Research and development                    132              82
Acquisition-related contingent consideration
adjustments:
- Selling, general and administrative         1,088            -
- Research and development                    (1,555)          -
Income tax effect of non-GAAP adjustments     (2,747)          (2,929)
Net income on a non-GAAP basis                $           $     
                                              23,712          23,955
                                              Three Months Ended
Diluted net income per share reconciliation   March 29, 2014   March 30, 2013
Diluted net income per share on a GAAP basis  $         $       
                                              0.32            0.31
Share-based compensation expense:
- Cost of product sales                       0.01             0.01
- Selling, general and administrative         0.07             0.07
- Research and development                    0.04             0.03
Amortization of purchased intangibles:
- Cost of product sales                       0.02             0.03
- Selling, general and administrative         0.01             0.01
- Research and development                    0.00             0.00
Acquisition-related contingent consideration
adjustments:
- Selling, general and administrative         0.02
- Research and development                    (0.03)
Income tax effect of non-GAAP adjustments     (0.05)           (0.05)
Diluted net income per share on a non-GAAP    $         $       
basis                                         0.41            0.41
                                              Three Months Ended
                                              March 29, 2014   March 30, 2013
Shares used to compute diluted net income per
share reconciliation
Shares used in calculation of diluted net
income per share --                           57,666           58,507
GAAP and non-GAAP

The following table reconciles the specific items excluded from GAAP gross
profit and gross margin in the calculation of non-GAAP gross profit and gross
margin for the periods shown below:

THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Gross Profit
(Unaudited)
(in thousands)
                                     Three Months Ended
                                     March 29, 2014       March 30, 2013
Gross profit on a GAAP basis         $         68.2% $         70.2%
                                     85,671              82,652
Share-based compensation expense     621                  571
Amortization of purchased            1,013                1,714
intangibles
Gross profit on a non-GAAP basis     $         69.5% $         72.1%
                                     87,305              84,937

The following table reconciles the specific items excluded from GAAP operating
expenses in the calculation of non-GAAP operating expenses for the periods
shown below:

THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Operating Expenses
(Unaudited)
(in thousands)
                                      Three Months Ended
                                      March 29, 2014       March 30, 2013
Operating expenses on a GAAP basis  $      58,840  $      59,258
Share-based compensation expense:
- Selling, general and administrative (4,025)              (3,683)
- Research and development            (2,136)              (1,913)
Amortization of purchased
intangibles:
- Selling, general and administrative (760)                (751)
- Research and development            (132)                (82)
Acquisition-related contingent consideration adjustments:
- Selling, general and administrative (1,088)              -
- Research and development            1,555                -
Operating expenses on a non-GAAP     $      52,254  $      52,829
basis

The following table reconciles the GAAP tax expense for the adjustments from
GAAP net income to non-GAAP net income:

THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Tax Expense
(Unaudited)
(in thousands)
                                     Three Months Ended
                                     March 29, 2014       March 30, 2013
Tax expense on a GAAP basis          $        32.6% $        25.9%
                                     8,839               6,337
Share-based compensation expense     2,279                2,034
Amortization of purchased            648                  895
intangibles
Acquisition-related contingent       (180)                -
consideration adjustments
Tax expense on a non-GAAP basis      $         32.8% $        27.9%
                                     11,586              9,266

The following table reconciles guidance for gross margin and tax-effectednet
income per diluted share on a GAAP and non-GAAP basis 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 2014
Gross margin on a GAAP basis                                  70.0%
Amortization of purchased intangibles                         0.7%
Share-based compensation expense                              0.3%
Gross margin on a non-GAAP basis                              71.0%
Net income per diluted share reconciliation        For the Fiscal Year 2014
                                                   From              To
Net income per diluted share on a GAAP basis       $  1.28          $  1.38
Acquisition-related contingent consideration       0.01              0.01
adjustments
Share-based compensation expense                   0.33              0.33
Amortization of purchased intangibles              0.09              0.09
Tax rate effect on non-GAAP earnings               0.01              0.01
Net income per diluted share on a non-GAAP basis   $  1.72          $  1.82
Shares used in calculation of net income per       57,800            57,800
diluted share - GAAP and Non-GAAP

About Thoratec

Thoratec is the world leader in mechanical circulatory support with the
broadest product portfolio to treat the full range of clinical needs for
patients suffering from advanced heart failure. The company's products include
the HeartMate LVAS and Thoratec VAD, with more than 20,000 devices implanted
in patients suffering from heart failure. Thoratec also manufactures and
markets the CentriMag and PediMag / PediVAS product lines. Thoratec is
headquartered in Pleasanton, California. For more information, visit
www.thoratec.com.

Thoratec, the Thoratec logo, HeartMate and HeartMate II are registered
trademarks of Thoratec Corporation and HeartMate III, HeartMate PHP, PVAD,
IVAD and Pocket Controller are trademarks of Thoratec Corporation. CentriMag
and PediMag are registered trademarks of Thoratec LLC, and PediVAS is a
registered trademark of Thoratec Switzerland GmbH.

DuraHeart is a registered trademark of Terumo Corporation.

Many of the preceding paragraphs, particularly but not exclusively those
addressing guidance for fiscal 2014 financial results or future performance
contain forward-looking statements within the meaning of Sections 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements can be identified by the words, "believes," "views,"
"expects," "plans," "projects," "should," "hopes," "could," "will,"
"estimates," and other similar words. Actual results, events or performance
could differ materially from these forward-looking statements based on a
variety of factors, many of which are beyond Thoratec's control. Therefore,
readers are cautioned not to put undue reliance on these statements. Investors
are cautioned that all such statements involve risks and uncertainties,
including risks related to regulatory approvals, the development of new
products, including development and clinical trial timing, and new markets
including Destination Therapy, the growth of existing markets for our
products, customer and physician acceptance of Thoratec products, changes in
the mix of existing markets for our products and related gross margin for such
product sales, the ability to improve financial performance, the effects of
FDA regulatory requirements, our ability to address quality issues adequately
and on a timely basis without a resulting recall of products or interruption
of manufacturing or shipment of products, the effects of healthcare
reimbursement and coverage policies, the effects of seasonality on Thoratec
product sales, the effects of competition and the effects of any merger,
acquisition and divestiture related activities. Forward-looking statements
contained in this press release should be considered in light these factors
and those factors discussed from time to time in Thoratec's public reports
filed with the Securities and Exchange Commission, such as those discussed
under the heading, "Risk Factors," in Thoratec's most recent annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
other SEC filings. These forward-looking statements speak only as of the date
hereof. Thoratec undertakes no obligation to publicly release the results of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof, or to reflect the occurrence of
unanticipated events.

SOURCE Thoratec Corporation

Website: http://www.thoratec.com
Contact: Neil Meyer, Director of Investor Relations, Thoratec Corporation,
(925) 738-0029
 
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