Natus Medical Announces Fourth Quarter And Full Year 2011 Results

More information about potential risk factors that could affect the business and financial results of Natus is included in Natus' annual report on Form 10-K for the year ended December 31, 2010, and its quarterly reports on Form 10-Q, and in other reports filed from time to time by Natus with the U.S. Securities and Exchange Commission.

NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
		Three Months Ended								Twelve Months Ended
		December				December				December				December
			2011				2010				2011				2010
Revenue		$	64,110			$	63,170			$	232,651			$	218,655
Cost of revenue			28,610				25,998				101,775				88,698
Gross profit			35,500				37,172				130,876				129,957
Operating expenses:
Marketing and selling			18,171				14,523				62,989				54,857
Research and development			6,984				6,095				25,562				21,283
General and administrative			8,053				9,111				32,880				35,986
Goodwill impairment charge			20,000				-				20,000				-
Total operating expenses			53,208				29,729				141,431				112,126
Income (loss) from operations			(17,708	)			7,443				(10,555	)			17,831
Other income/(expense):
Interest income			5				6				28				36
Interest expense			(108	)			(79	)			(268	)			(128	)
Other income, net			(100	)			(54	)			10				(26	)
Total other income/(expense)			(203	)			(127	)			(230	)			(118	)
Income (loss) before provision for income tax expense/(benefit)			(17,911	)			7,316				(10,785	)			17,713
Provision for income tax expense/(benefit)			(593	)			2,067				914				5,794
Net income (loss)		$	(17,318	)		$	5,249			$	(11,699	)		$	11,919
Earnings (loss) per share:
Basic		$	(0.60	)		$	0.19			$	(0.41	)		$	0.42
Diluted		$	(0.60	)		$	0.18			$	(0.41	)		$	0.41
Weighted-average shares used to compute
Basic earnings (loss) per share			28,826				28,303				28,565				28,092
Diluted earnings (loss) per share			28,826				29,297				28,565				29,217

NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED)
(in thousands, except per share amounts)
		Three Months Ended								Twelve Months Ended
		December				December				December				December
			2011				2010				2011				2010
GAAP based results:
Income (loss) before provision for income tax expense		$	(17,911	)		$	7,316			$	(10,785	)		$	17,713
Non-GAAP adjustments:
Goodwill impairment charge			20,000				-				20,000				-			(a)
Amortization expense associated with certain acquired intangible assets reported as a component of:																		(b)
Cost of revenue			571				525				2,163				2,056
Marketing and selling			420				345				1,638				1,334
Research and development			334				370				1,324				1,481
Impairment of tradenames reported as a component of marketing and selling			700				-				700				-			(c)
Restructuring charge reported as a component of G&A expense			630				842				2,786				3,949			(d)
Acquisition related
Embla direct costs (G&A)			25				118				315				297			(e)
Embla inventory FV adjustment (COGS)			77				-				77				-			(f)
Accelerate ERP system depreciation (G&A)			451				-				451				-			(g)
Costs associated with the discontinuance of the Sonamed Clarity hearing screener reported as a component of:																		(h)
Cost of revenue			-				-				-				1,081
Marketing and selling			-				-				-				300
Non-GAAP income before provision for income tax			5,297				9,516				18,669				28,211
Provision for income tax expense, as adjusted			1,240				2,541				4,690				9,214
Non-GAAP net income		$	4,057			$	6,975			$	13,979			$	18,997
Non-GAAP earnings per share:
Basic		$	0.14			$	0.25			$	0.49			$	0.68
Diluted		$	0.14			$	0.24			$	0.47			$	0.65
Weighted-average shares used to compute
Basic non-GAAP earnings per share			28,826				28,303				28,565				28,092
Diluted non-GAAP earnings per share			29,265				29,297				29,524				29,217
Memo, Gross profit percentage:
GAAP basis			55.4	%			58.8	%			56.3	%			59.4	%
non-GAAP basis			56.4	%			59.7	%			57.2	%			60.9	%
Note:
The Company has elected to provide non-GAAP financial results that exclude the items below as this presentation is common among companies that are active acquirors and whose results are, accordingly, affected by such charges, because this information is used by management to evaluate operating results and because it believes this information will assist investors in making period to period comparisons of the Company's operating results.
(a) Goodwill impairment charge relating to European reporting unit associated with annual goodwill impairment testing in accordance with ASC 350.
(b) Amortization expense associated with acquired intangible assets with definite lives.
(c) Impairment charge associated with intangible assets with indefinite lives, principally tradenames, in accordance with ASC 350.
(d) Restructuring charge including accruals for severance benefits and exit and disposal costs.
(e) Direct costs of acquisitions that are expensed pursuant to the requirement of ASC 805.
(f) Embla inventory fair value adjustment included as a component of cost of sales in accordance with ASC 805.
(g) Acceleration of depreciation of current ERP system associated with the implementation of a world-wide enterprise resource planning platform in 2012.
(h) Charge associated with discontinuance of the Sonamed Clarity newborn hearing screener. Costs include concessions given to customers purchasing a replacement hearing screener, write-down of inventory, and write-off of tradenames.

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