☒
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
California
|
77-0213001
|
|
(State of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
☒
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller reporting company
☐
|
(Do not check if a smaller reporting company)
|
Page
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
3
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2.
|
21
|
|
Item 3.
|
41
|
|
Item 4.
|
42
|
|
PART II. OTHER INFORMATION
|
|
|
Item 1.
|
42
|
|
Item 1A.
|
43
|
|
Item 2.
|
53
|
|
Item 3.
|
53
|
|
Item 4.
|
53
|
|
Item 5.
|
53
|
|
Item 6.
|
54
|
|
55
|
December 31,
2014
|
March 31,
2014
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
89,770
|
$
|
73,589
|
||||
Short-term investments
|
19,508
|
29,102
|
||||||
Receivables (net of allowances of $210 at December 31, 2014 and $182 at March 31, 2014)
|
31,361
|
29,227
|
||||||
Inventories
|
33,742
|
26,978
|
||||||
Prepaid expenses and other current assets
|
5,149
|
2,452
|
||||||
Net deferred tax assets, current
|
7,241
|
4,464
|
||||||
Total current assets
|
186,771
|
165,812
|
||||||
Long-term investments
|
23,834
|
18,491
|
||||||
Investment in unconsolidated affiliate
|
2,720
|
2,646
|
||||||
Property and equipment, net
|
29,602
|
27,176
|
||||||
Intangible assets, net
|
2,031
|
1,624
|
||||||
Net deferred tax assets, non-current
|
1,293
|
1,557
|
||||||
Other assets
|
248
|
74
|
||||||
Total assets
|
$
|
246,499
|
$
|
217,380
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
8,556
|
$
|
6,111
|
||||
Accrued payroll and related expenses
|
8,047
|
4,654
|
||||||
Accrued taxes
|
996
|
1,144
|
||||||
Other accrued liabilities
|
10,213
|
3,095
|
||||||
Deferred revenue
|
1,273
|
1,208
|
||||||
Warranty reserve
|
1,410
|
1,047
|
||||||
Total current liabilities
|
30,495
|
17,259
|
||||||
Non-current liabilities:
|
||||||||
Deferred revenue
|
3,411
|
4,035
|
||||||
Warranty reserve
|
1,497
|
821
|
||||||
Net deferred tax liabilities
|
311
|
-
|
||||||
Notes payable, less current portion
|
505
|
581
|
||||||
Other non-current liabilities
|
1,923
|
768
|
||||||
Total non-current liabilities
|
7,647
|
6,205
|
||||||
Total liabilities
|
38,142
|
23,464
|
||||||
Commitments and contingencies (Note 11)
|
||||||||
Shareholders' equity:
|
||||||||
Preferred stock, no par value: 5,000,000 shares authorized; no shares issued and outstanding
|
-
|
-
|
||||||
Common stock, no par value: 35,000,000 shares authorized; 22,536,000 and 22,308,000 shares issued and outstanding at December 31, 2014 and at March 31, 2014, respectively
|
129,813
|
124,603
|
||||||
Retained earnings
|
78,566
|
69,318
|
||||||
Accumulated other comprehensive loss
|
(22
|
)
|
(5
|
)
|
||||
Total shareholders' equity
|
208,357
|
193,916
|
||||||
Total liabilities and shareholders' equity
|
$
|
246,499
|
$
|
217,380
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues
|
$
|
59,502
|
$
|
40,810
|
$
|
160,922
|
$
|
129,830
|
||||||||
Cost of revenues
|
30,335
|
21,477
|
79,451
|
67,733
|
||||||||||||
Gross profit
|
29,167
|
19,333
|
81,471
|
62,097
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
3,585
|
3,596
|
11,764
|
10,187
|
||||||||||||
Sales and marketing
|
11,656
|
8,706
|
32,710
|
28,636
|
||||||||||||
General and administrative
|
4,770
|
2,408
|
11,475
|
8,316
|
||||||||||||
Total operating expenses
|
20,011
|
14,710
|
55,949
|
47,139
|
||||||||||||
Income from operations
|
9,156
|
4,623
|
25,522
|
14,958
|
||||||||||||
Interest and other income (expense), net
|
(197
|
)
|
235
|
(595
|
)
|
1,146
|
||||||||||
Income before income tax provision
|
8,959
|
4,858
|
24,927
|
16,104
|
||||||||||||
Income tax provision
|
3,074
|
1,636
|
8,927
|
5,657
|
||||||||||||
Net income
|
$
|
5,885
|
$
|
3,222
|
$
|
16,000
|
$
|
10,447
|
||||||||
Net income per share:
|
||||||||||||||||
Basic net income per share
|
$
|
0.26
|
$
|
0.14
|
$
|
0.71
|
$
|
0.47
|
||||||||
Diluted net income per share
|
$
|
0.26
|
$
|
0.14
|
$
|
0.70
|
$
|
0.46
|
||||||||
Shares used in the calculation of net income per share:
|
||||||||||||||||
Weighted average common shares outstanding - basic
|
22,533,000
|
22,271,000
|
22,483,000
|
22,269,000
|
||||||||||||
Weighted average common shares outstanding - diluted
|
22,756,000
|
22,500,000
|
22,717,000
|
22,572,000
|
||||||||||||
Cash dividends declared per share
|
$
|
0.10
|
$
|
-
|
$
|
0.30
|
$
|
-
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Net income
|
$
|
5,885
|
$
|
3,222
|
$
|
16,000
|
$
|
10,447
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Net change in unrealized gain (loss) on investments
|
(8
|
)
|
(10
|
)
|
(28
|
)
|
(24
|
)
|
||||||||
Tax provision (benefit) on other comprehensive income (loss)
|
(4
|
)
|
(3
|
)
|
(11
|
)
|
(9
|
)
|
||||||||
Other comprehensive income (loss), net of tax
|
(4
|
)
|
(7
|
)
|
(17
|
)
|
(15
|
)
|
||||||||
Comprehensive income
|
$
|
5,881
|
$
|
3,215
|
$
|
15,983
|
$
|
10,432
|
Nine Months Ended
December 31,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
16,000
|
$
|
10,447
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
6,387
|
5,495
|
||||||
Investment premium amortization, net
|
478
|
424
|
||||||
Net (gain) loss on disposals of property and equipment
|
(16
|
)
|
(5
|
)
|
||||
Foreign exchange (gain) loss
|
938
|
(481
|
)
|
|||||
Share-based compensation expense
|
7,220
|
5,729
|
||||||
Excess tax benefits from share-based awards
|
(952
|
)
|
(1,785
|
)
|
||||
Deferred income taxes
|
(3,071
|
)
|
(585
|
)
|
||||
Equity in net (income) loss of unconsolidated affiliate
|
(74
|
)
|
(66
|
)
|
||||
Changes in assets and liabilities:
|
||||||||
Receivables, net
|
(1,537
|
)
|
11,634
|
|||||
Inventories
|
(6,660
|
)
|
(3,370
|
)
|
||||
Prepaid expenses and other current assets
|
(1,378
|
)
|
967
|
|||||
Other assets
|
(76
|
)
|
14
|
|||||
Accounts payable
|
920
|
(1,518
|
)
|
|||||
Accrued payroll and related expenses
|
3,393
|
(339
|
)
|
|||||
Accrued taxes
|
24
|
81
|
||||||
Other liabilities
|
5,760
|
(367
|
)
|
|||||
Deferred revenue
|
(559
|
)
|
384
|
|||||
Warranty reserve
|
1,039
|
494
|
||||||
Net cash provided by operating activities
|
27,836
|
27,153
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of held-to-maturity investments
|
(23,478
|
)
|
(8,036
|
)
|
||||
Proceeds from maturities and redemptions of available-for-sale investments
|
6,498
|
1,023
|
||||||
Proceeds from maturities and redemptions of held-to-maturity investments
|
20,725
|
18,813
|
||||||
Purchases of property and equipment
|
(4,964
|
)
|
(4,317
|
)
|
||||
Proceeds from disposals of property and equipment
|
25
|
44
|
||||||
Acquisitions, net of cash acquired
|
(721
|
)
|
-
|
|||||
Net cash (used in) provided by investing activities
|
(1,915
|
)
|
7,527
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from the exercise of stock options
|
24
|
113
|
||||||
Tax withholdings related to net share settlements of restricted stock units
|
(3,013
|
)
|
(4,672
|
)
|
||||
Excess tax benefits from share-based awards
|
952
|
1,785
|
||||||
Repurchases of common stock
|
-
|
(2,981
|
)
|
|||||
Proceeds from the exercise of warrants
|
72
|
-
|
||||||
Dividends paid
|
(6,752
|
)
|
-
|
|||||
Net cash used in financing activities
|
(8,717
|
)
|
(5,755
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,023
|
)
|
434
|
|||||
Net increase in cash and cash equivalents
|
16,181
|
29,359
|
||||||
Cash and cash equivalents at beginning of period
|
73,589
|
54,910
|
||||||
Cash and cash equivalents at end of period
|
$
|
89,770
|
$
|
84,269
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for income taxes, net of refunds
|
$
|
11,136
|
$
|
4,620
|
||||
Supplemental disclosure of non-cash flow information:
|
||||||||
Change in unrealized gain (loss) on investments, net of tax
|
$
|
(17
|
)
|
$
|
(15
|
)
|
||
Transfers of equipment between inventory and property and equipment, net
|
$
|
1,552
|
$
|
798
|
||||
Net change in capitalized share-based compensation
|
$
|
(30
|
)
|
$
|
14
|
|||
Common stock withheld for employee taxes in connection with share-based compensation
|
$
|
3,013
|
$
|
4,672
|
||||
Repayment of notes payable by credits from municipal agency
|
$
|
76
|
$
|
76
|
||||
Settlement of preexisting business relationship in connection with acquisition
|
$
|
931
|
$
|
-
|
||||
Installment payment obligation related to acquisition
|
$
|
2,336
|
$
|
-
|
Cash
|
$
|
3,196
|
||
Installment payment obligations
|
2,336
|
|||
Settlement of preexisting business relationship at fair value
|
931
|
|||
Total
|
$
|
6,463
|
Fair Value
|
||||
Net tangible assets acquired
|
$
|
5,145
|
||
Intangible assets
|
||||
Customer relationships
|
1,535
|
|||
Tradename
|
16
|
|||
Deferred tax liabilities
|
(336
|
)
|
||
Goodwill
|
103
|
|||
Total
|
$
|
6,463
|
Available-for-Sale Investments
|
||||||||||||||||
December 31, 2014
|
Amortized
Cost
|
Gross
Unrealized
|
Gross
Unrealized
|
Fair
Value
|
||||||||||||
Corporate bonds
|
$
|
4,355
|
$
|
-
|
$
|
(37
|
)
|
$
|
4,318
|
|||||||
Total available-for-sale investments
|
$
|
4,355
|
$
|
-
|
$
|
(37
|
)
|
$
|
4,318
|
Held-to-Maturity Investments
|
||||||||||||||||
December 31, 2014
|
Amortized
Cost
|
Gross
Unrecognized
|
Gross
Unrecognized
|
Fair
Value
|
||||||||||||
Certificates of deposit
|
$
|
6,716
|
$
|
-
|
$
|
(8
|
)
|
$
|
6,708
|
|||||||
Commercial paper
|
7,488
|
-
|
(2
|
)
|
7,486
|
|||||||||||
Corporate bonds
|
21,812
|
19
|
(100
|
)
|
21,731
|
|||||||||||
Municipal bonds
|
3,008
|
16
|
(2
|
)
|
3,022
|
|||||||||||
Total held-to-maturity investments
|
$
|
39,024
|
$
|
35
|
$
|
(112
|
)
|
$
|
38,947
|
Available-for-Sale Investments
|
||||||||||||||||
March 31, 2014
|
Amortized
Cost
|
Gross
Unrealized
|
Gross
Unrealized
|
Fair
Value
|
||||||||||||
Certificates of deposit
|
$
|
498
|
$
|
1
|
$
|
-
|
$
|
499
|
||||||||
Corporate bonds
|
10,392
|
32
|
(42
|
)
|
10,382
|
|||||||||||
Total available-for-sale investments
|
$
|
10,890
|
$
|
33
|
$
|
(42
|
)
|
$
|
10,881
|
Held-to-Maturity Investments
|
||||||||||||||||
March 31, 2014
|
Amortized
Cost
|
Gross
Unrecognized
|
Gross
Unrecognized
|
Fair
Value
|
||||||||||||
Certificates of deposit
|
$
|
5,722
|
$
|
-
|
$
|
(8
|
)
|
$
|
5,714
|
|||||||
Commercial paper
|
12,991
|
-
|
(1
|
)
|
12,990
|
|||||||||||
Corporate bonds
|
14,920
|
65
|
(33
|
)
|
14,952
|
|||||||||||
Municipal bonds
|
3,079
|
20
|
(29
|
)
|
3,070
|
|||||||||||
Total held-to-maturity investments
|
$
|
36,712
|
$
|
85
|
$
|
(71
|
)
|
$
|
36,726
|
December 31, 2014
|
December 31, 2014
|
|||||||||||||||
Available-for-Sale Investments
|
Held-to-Maturity Investments
|
|||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in less than one year
|
$
|
-
|
$
|
-
|
$
|
19,508
|
$
|
19,499
|
||||||||
Due in 1 to 4 years
|
4,355
|
4,318
|
19,516
|
19,448
|
||||||||||||
Total investments
|
$
|
4,355
|
$
|
4,318
|
$
|
39,024
|
$
|
38,947
|
March 31, 2014
|
March 31, 2014
|
|||||||||||||||
Available-for-Sale Investments
|
Held-to-Maturity Investments
|
|||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in less than one year
|
$
|
6,509
|
$
|
6,542
|
$
|
22,560
|
$
|
22,571
|
||||||||
Due in 1 to 4 years
|
4,381
|
4,339
|
14,152
|
14,155
|
||||||||||||
Total investments
|
$
|
10,890
|
$
|
10,881
|
$
|
36,712
|
$
|
36,726
|
As of December 31, 2014
|
||||||||||||||||
Quoted Prices
in Active
|
Significant
Other
|
Significant
Unobservable
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
9,483
|
$
|
-
|
$
|
-
|
$
|
9,483
|
||||||||
Available-for-sale investments:
|
||||||||||||||||
Corporate bonds
|
-
|
4,318
|
-
|
4,318
|
||||||||||||
Total assets at fair value
|
$
|
9,483
|
$
|
4,318
|
$
|
-
|
$
|
13,801
|
As of March 31, 2014
|
||||||||||||||||
Quoted Prices
in Active
|
Significant
Other
|
Significant
Unobservable
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
5,035
|
$
|
-
|
$
|
-
|
$
|
5,035
|
||||||||
Available-for-sale investments:
|
||||||||||||||||
Certificates of deposit
|
-
|
499
|
-
|
499
|
||||||||||||
Corporate bonds
|
-
|
10,382
|
-
|
10,382
|
||||||||||||
Total assets at fair value
|
$
|
5,035
|
$
|
10,881
|
$
|
-
|
$
|
15,916
|
December 31,
2014
|
March 31,
2014
|
|||||||
Raw materials
|
$
|
15,268
|
$
|
14,348
|
||||
Work-in-process
|
2,915
|
3,463
|
||||||
Finished goods
|
15,559
|
9,167
|
||||||
Inventories
|
$
|
33,742
|
$
|
26,978
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Balance at beginning of period
|
$
|
2,185
|
$
|
1,613
|
$
|
1,868
|
$
|
1,384
|
||||||||
Provision for warranty expense
|
1,028
|
650
|
2,076
|
1,649
|
||||||||||||
Warranty costs incurred
|
(306
|
)
|
(385
|
)
|
(1,037
|
)
|
(1,155
|
)
|
||||||||
Balance at end of period
|
2,907
|
1,878
|
2,907
|
1,878
|
||||||||||||
Non-current portion of warranty reserve
|
1,497
|
777
|
1,497
|
777
|
||||||||||||
Current portion of warranty reserve
|
$
|
1,410
|
$
|
1,101
|
$
|
1,410
|
$
|
1,101
|
December 31,
2014
|
March 31,
2014
|
|||||||
Accrued liabilities for customer sales incentive programs
|
$
|
5,238
|
$
|
601
|
||||
Installment payment obligation related to acquisition
|
1,173
|
-
|
||||||
Other current accrued liabilities
|
3,802
|
2,494
|
||||||
Total other current accrued liabilities
|
$
|
10,213
|
$
|
3,095
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Cost of revenues
|
$
|
347
|
$
|
267
|
$
|
1,102
|
$
|
819
|
||||||||
Research and development
|
380
|
277
|
1,199
|
859
|
||||||||||||
Sales and marketing
|
819
|
433
|
2,346
|
1,734
|
||||||||||||
General and administrative
|
1,147
|
650
|
2,573
|
2,317
|
||||||||||||
Share-based compensation expense before income taxes
|
2,693
|
1,627
|
7,220
|
5,729
|
||||||||||||
Income tax benefit
|
(907
|
)
|
(555
|
)
|
(2,431
|
)
|
(1,956
|
)
|
||||||||
Total share-based compensation expense after income taxes
|
$
|
1,786
|
$
|
1,072
|
$
|
4,789
|
$
|
3,773
|
||||||||
Net impact of share-based compensation on:
|
||||||||||||||||
Basic net income per share
|
$
|
0.08
|
$
|
0.05
|
$
|
0.21
|
$
|
0.17
|
||||||||
Diluted net income per share
|
$
|
0.08
|
$
|
0.05
|
$
|
0.21
|
$
|
0.17
|
Number of
Shares
|
Weighted
Average
|
Weighted
Average
|
Aggregate
Intrinsic
|
|||||||||||||
Outstanding at March 31, 2014
|
2,000
|
$
|
13.24
|
|||||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
(1,400
|
)
|
13.51
|
|||||||||||||
Canceled or forfeited
|
-
|
-
|
||||||||||||||
Outstanding at December 31, 2014
|
600
|
$
|
12.40
|
0.14
|
$
|
24
|
||||||||||
Vested and expected to vest at December 31, 2014
|
600
|
$
|
12.40
|
0.14
|
$
|
24
|
||||||||||
Exercisable at December 31, 2014
|
600
|
$
|
12.40
|
0.14
|
$
|
24
|
·
|
Restricted stock unit awards to employees: Four-year time-based vesting as follows: five percent vesting after the first year; additional ten percent after the second year; additional 15 percent after the third year; and the remaining 70 percent after the fourth year of continuous employment with the Company.
|
·
|
Restricted stock unit awards to non-employee directors: 100 percent vesting after one year of continuous service to the Company.
|
·
|
25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2016;
|
·
|
25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2017;
|
·
|
25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2016; and
|
·
|
25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2017.
|
·
|
25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2017;
|
·
|
25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2018;
|
·
|
25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2017; and
|
·
|
25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2018.
|
Time-Based
Restricted Stock Units
|
Performance-Based
Restricted Stock Units
|
|||||||||||||||
Number of
Shares
|
Weighted
Average
|
Number of
Shares
|
Weighted
Average
|
|||||||||||||
Nonvested at March 31, 2014
|
774,000
|
$
|
30.98
|
113,000
|
$
|
42.43
|
||||||||||
Granted
|
189,000
|
43.85
|
172,000
|
40.82
|
||||||||||||
Vested(2)
|
(271,000
|
)
|
27.20
|
-
|
-
|
|||||||||||
Canceled and forfeited
|
(5,000
|
)
|
32.85
|
(137,000
|
)
|
42.15
|
||||||||||
Nonvested at December 31, 2014
|
687,000
|
$
|
36.01
|
148,000
|
$
|
40.82
|
(1) | The weighted average grant date fair value of restricted stock units is based on the number of shares and the closing market price of our common stock on the date of grant. |
(2) | The number of restricted stock units vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements. |
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$
|
5,885
|
$
|
3,222
|
$
|
16,000
|
$
|
10,447
|
||||||||
Denominator:
|
||||||||||||||||
Weighted average common shares outstanding - basic
|
22,533,000
|
22,271,000
|
22,483,000
|
22,269,000
|
||||||||||||
Weighted average effect of dilutive securities:
|
||||||||||||||||
Stock options
|
1,000
|
18,000
|
1,000
|
23,000
|
||||||||||||
Restricted stock units
|
216,000
|
183,000
|
219,000
|
252,000
|
||||||||||||
Warrants
|
6,000
|
28,000
|
14,000
|
28,000
|
||||||||||||
Weighted average common shares outstanding - diluted
|
22,756,000
|
22,500,000
|
22,717,000
|
22,572,000
|
||||||||||||
Net income per share:
|
||||||||||||||||
Basic net income per share
|
$
|
0.26
|
$
|
0.14
|
$
|
0.71
|
$
|
0.47
|
||||||||
Diluted net income per share
|
$
|
0.26
|
$
|
0.14
|
$
|
0.70
|
$
|
0.46
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
Medical Market
|
$
|
11,846
|
$
|
7,850
|
$
|
26,707
|
$
|
21,065
|
||||||||
Veterinary Market
|
46,865
|
32,207
|
131,800
|
106,493
|
||||||||||||
Other(1)
|
791
|
753
|
2,415
|
2,272
|
||||||||||||
Total revenues
|
59,502
|
40,810
|
160,922
|
129,830
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Medical Market
|
6,138
|
4,500
|
14,035
|
11,793
|
||||||||||||
Veterinary Market
|
24,166
|
16,950
|
65,317
|
55,859
|
||||||||||||
Other(1)
|
31
|
27
|
99
|
81
|
||||||||||||
Total cost of revenues
|
30,335
|
21,477
|
79,451
|
67,733
|
||||||||||||
Gross profit:
|
||||||||||||||||
Medical Market
|
5,708
|
3,350
|
12,672
|
9,272
|
||||||||||||
Veterinary Market
|
22,699
|
15,257
|
66,483
|
50,634
|
||||||||||||
Other(1)
|
760
|
726
|
2,316
|
2,191
|
||||||||||||
Gross profit
|
$
|
29,167
|
$
|
19,333
|
$
|
81,471
|
$
|
62,097
|
(1) | Represents unallocated items, not specifically identified to any particular business segment. |
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
Revenues by Product and Service Category
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Instruments(1)
|
$
|
19,242
|
$
|
8,161
|
$
|
36,941
|
$
|
30,373
|
||||||||
Consumables(2)
|
34,232
|
28,096
|
106,656
|
87,394
|
||||||||||||
Other products and services(3)
|
5,990
|
4,515
|
17,213
|
11,950
|
||||||||||||
Product and service revenues, net
|
59,464
|
40,772
|
160,810
|
129,717
|
||||||||||||
Development and licensing revenue
|
38
|
38
|
112
|
113
|
||||||||||||
Total revenues
|
$
|
59,502
|
$
|
40,810
|
$
|
160,922
|
$
|
129,830
|
(1) | Instruments include chemistry analyzers, hematology instruments, VS pro specialty analyzers and i-STAT analyzers. |
(2) | Consumables include reagent discs, hematology reagent kits, VS pro specialty cartridges, i-STAT cartridges and rapid tests. |
(3) | Other products and services include veterinary reference laboratory diagnostic and consulting services. |
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
Revenues by Geographic Region
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
North America
|
$
|
49,027
|
$
|
31,801
|
$
|
131,878
|
$
|
103,773
|
||||||||
Europe
|
8,154
|
7,173
|
22,682
|
20,171
|
||||||||||||
Asia Pacific and rest of the world
|
2,321
|
1,836
|
6,362
|
5,886
|
||||||||||||
Total revenues
|
$
|
59,502
|
$
|
40,810
|
$
|
160,922
|
$
|
129,830
|
· | Volume-based Incentives . Volume-based incentives, in the form of rebates, are offered from time to time to distributors and group purchasing organizations upon meeting the sales volume requirements during a qualifying period and are recorded as a reduction to gross revenues during a qualifying period. The pricing rebate program is primarily offered to distributors and group purchasing organizations in the North America veterinary market, upon meeting the sales volume requirements of veterinary products during the qualifying period. Factors used in the rebate calculations include the identification of products sold subject to a rebate during the qualifying period and which rebate percentage applies. Based on these factors and using historical trends, adjusted for current changes, we estimate the amount of the rebate that will be paid and record the liability as a reduction to gross revenues when we record the sale of the product. Settlement of the rebate accruals from the date of sale ranges from one to nine months after sale. Changes in the rebate accrual at the end of each period are based upon distributors and group purchasing organizations meeting the purchase requirements during the quarter. |
· | Distributor Rebate Incentives. During the three and nine months ended December 31, 2014, we offered a customer sales incentive program, whereby distributors were offered a rebate upon meeting certain requirements. We recognize the rebate obligation as a reduction of revenue at the later of the date on which we sell the product or the date the program is offered. These customer sales incentive programs require management to estimate the rebate amounts to distributors who will qualify for the incentive during the promotional period. We record the estimated liability in other current accrued liabilities on our condensed consolidated balance sheet. Management’s estimates are based on historical experience and the specific terms and conditions of the incentive programs. |
· | End-User Rebates and Discounts . From time to time, cash rebates are offered to end-users who purchase certain products or instruments during a promotional period and are recorded as a reduction to gross revenues. Additionally, we periodically offer sales incentives to end-users, in the form of sales discounts, to purchase consumables for a specified promotional period, typically over five years from the sale of our instrument, and we reimburse resellers for the value of the sales discount provided to the end-user. We estimate the amount of the incentive earned by end-users during a quarter and record a liability to the reseller as a reduction to gross revenues. Factors used in the liability calculation of incentives earned by end-users include the identification of qualified end-users under the sales program during the period and using historical trends. Settlement of the liability to the reseller ranges from one to twelve months from the date an end-user earns the incentive. |
· | 25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2016; |
· | 25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2017; |
· | 25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2016; and |
· | 25% shares issuable upon settlement of FY2014 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ended March 31, 2014 and time-based vesting on April 29, 2017. |
· | 25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2017; |
· | 25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 90% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2018; |
· | 25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2017; and |
· | 25% shares issuable upon settlement of FY2015 Performance RSUs upon satisfying 100% of target of consolidated income from operations for the year ending March 31, 2015 and time-based vesting on April 28, 2018. |
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
Revenues by Geographic Region
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
||||||||||||||||||||||||
North America
|
$
|
49,027
|
$
|
31,801
|
$
|
17,226
|
54
|
%
|
$
|
131,878
|
$
|
103,773
|
$
|
28,105
|
27
|
%
|
||||||||||||||||
Percentage of total revenues
|
82
|
%
|
78
|
%
|
82
|
%
|
80
|
%
|
||||||||||||||||||||||||
Europe
|
8,154
|
7,173
|
981
|
14
|
%
|
22,682
|
20,171
|
2,511
|
12
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
14
|
%
|
18
|
%
|
14
|
%
|
16
|
%
|
||||||||||||||||||||||||
Asia Pacific and rest of the world
|
2,321
|
1,836
|
485
|
26
|
%
|
6,362
|
5,886
|
476
|
8
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
4
|
%
|
4
|
%
|
4
|
%
|
4
|
%
|
||||||||||||||||||||||||
Total revenues
|
$
|
59,502
|
$
|
40,810
|
$
|
18,692
|
46
|
%
|
$
|
160,922
|
$
|
129,830
|
$
|
31,092
|
24
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
Revenues by Product and Service Category
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
||||||||||||||||||||||||
Instruments(1)
|
$
|
19,242
|
$
|
8,161
|
$
|
11,081
|
136
|
%
|
$
|
36,941
|
$
|
30,373
|
$
|
6,568
|
22
|
%
|
||||||||||||||||
Percentage of total revenues
|
32
|
%
|
20
|
%
|
23
|
%
|
24
|
%
|
||||||||||||||||||||||||
Consumables(2)
|
34,232
|
28,096
|
6,136
|
22
|
%
|
106,656
|
87,394
|
19,262
|
22
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
58
|
%
|
69
|
%
|
66
|
%
|
67
|
%
|
||||||||||||||||||||||||
Other products and services(3)
|
5,990
|
4,515
|
1,475
|
33
|
%
|
17,213
|
11,950
|
5,263
|
44
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
10
|
%
|
11
|
%
|
11
|
%
|
9
|
%
|
||||||||||||||||||||||||
Product and service revenues, net
|
59,464
|
40,772
|
18,692
|
46
|
%
|
160,810
|
129,717
|
31,093
|
24
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||||||||||||||||||||
Development and licensing revenue
|
38
|
38
|
-
|
-
|
%
|
112
|
113
|
(1
|
)
|
(1
|
)%
|
|||||||||||||||||||||
Percentage of total revenues
|
<1%
|
<1%
|
<1%
|
<1%
|
||||||||||||||||||||||||||||
Total revenues
|
$
|
59,502
|
$
|
40,810
|
$
|
18,692
|
46
|
%
|
$
|
160,922
|
$
|
129,830
|
$
|
31,092
|
24
|
%
|
(1) | Instruments include chemistry analyzers, hematology instruments, VS pro specialty analyzers and i-STAT analyzers. |
(2) | Consumables include reagent discs, hematology reagent kits, VS pro specialty cartridges, i-STAT cartridges and rapid tests. |
(3) | Other products and services include veterinary reference laboratory diagnostic and consulting services. |
· | Total revenues from our Piccolo chemistry analyzers and medical reagent discs in North America increased by 55%, or $2.9 million, primarily attributable to an increase in the sales volume of Piccolo chemistry analyzers sold to Abbott. |
· | Total sales of our VetScan chemistry analyzers and veterinary reagent discs in North America increased by 56%, or $7.8 million, primarily attributable to (a) an increase in the sales volume of VetScan chemistry analyzers to MWI, (b) sales of VetScan chemistry analyzers to VCA’s Animal Hospitals resulting from a product supply agreement that we entered into in May 2014, (c) sales of VetScan chemistry analyzers as initial stocking orders to two new distributors, Henry Schein Animal Health and Patterson Veterinary Supply, starting in October 2014 and (d) an increase in the sales volume of veterinary reagent discs due to an expanded installed base. |
· | Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 115%, or $4.1 million, primarily attributable to (a) an increase in the sales volume of VetScan hematology instruments to MWI, (b) sales of VetScan hematology instruments as initial stocking orders to Henry Schein Animal Health and Patterson Veterinary Supply and (c) an increase in the sales volume of hematology reagent kits due to an expanded installed base. |
· | Total sales of our VetScan VS pro specialty analyzers and related consumables, VetScan i‑STAT analyzers and related consumables and VetScan rapid tests in North America increased by 26%, or $1.2 million, primarily attributable to (a) an increase in the sales volume of VetScan rapid tests to MWI and (b) sales of VetScan rapid tests as initial stocking orders to Henry Schein Animal Health and Patterson Veterinary Supply. |
· | Other product and service revenues in North America increased by 28%, or $1.2 million, primarily attributable to an increase in service revenues from veterinary reference laboratory diagnostic and consulting services provided by AVRL due to an expanded customer base. |
· | Total revenues from our Piccolo chemistry analyzers and medical reagent discs in North America increased by 29%, or $4.1 million, primarily attributable to an increase in the sales volume of Piccolo chemistry analyzers and medical reagent discs sold to Abbott. |
· | Total sales of our VetScan chemistry analyzers and veterinary reagent discs in North America increased by 38%, or $17.7 million, primarily attributable to (a) an increase in the sales volume of VetScan chemistry analyzers to MWI, (b) sales of VetScan chemistry analyzers to VCA’s Animal Hospitals resulting from a product supply agreement that we entered into in May 2014, (c) sales of VetScan chemistry analyzers as initial stocking orders to two new distributors, Henry Schein Animal Health and Patterson Veterinary Supply, starting in October 2014 and (d) an increase in the sales volume of veterinary reagent discs due to an expanded installed base. |
· | Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 12%, or $1.8 million, primarily attributable to (a) sales of VetScan hematology instruments as initial stocking orders to Henry Schein Animal Health and Patterson Veterinary Supply during the third quarter of fiscal 2015 and (b) an increase in the sales volume of hematology reagent kits due to an expanded installed base. These increases were partially offset by lower sales of VetScan hematology instruments in the first half of fiscal 2015 to balance the inventory level in the distribution channel. |
· | Total sales of our VetScan VS pro specialty analyzers and related consumables, VetScan i‑STAT analyzers and related consumables and VetScan rapid tests in North America decreased by 3%, or $472,000, primarily attributable to lower sales of VetScan i‑STAT analyzers to balance the inventory level in the distribution channel, partially offset by an increase in the sales volume of VetScan rapid tests to MWI. |
· | Other product and service revenues in North America increased by 44%, or $5.0 million, primarily attributable to an increase in service revenues from veterinary reference laboratory diagnostic and consulting services provided by AVRL due to an expanded customer base. |
Three Months Ended December 31,
|
Change
|
|||||||||||||||||||||||
2014
|
Percent of
Revenues(1)
|
2013
|
Percent of
Revenues(1)
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$
|
11,846
|
100
|
%
|
$
|
7,850
|
100
|
%
|
$
|
3,996
|
51
|
%
|
||||||||||||
Percentage of total revenues
|
20
|
%
|
19
|
%
|
||||||||||||||||||||
Veterinary Market
|
46,865
|
100
|
%
|
32,207
|
100
|
%
|
14,658
|
46
|
%
|
|||||||||||||||
Percentage of total revenues
|
79
|
%
|
79
|
%
|
||||||||||||||||||||
Other(2)
|
791
|
753
|
38
|
5
|
%
|
|||||||||||||||||||
Percentage of total revenues
|
1
|
%
|
2
|
%
|
||||||||||||||||||||
Total revenues
|
59,502
|
40,810
|
18,692
|
46
|
%
|
|||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
6,138
|
52
|
%
|
4,500
|
57
|
%
|
1,638
|
36
|
%
|
|||||||||||||||
Veterinary Market
|
24,166
|
52
|
%
|
16,950
|
53
|
%
|
7,216
|
43
|
%
|
|||||||||||||||
Other(2)
|
31
|
27
|
4
|
15
|
%
|
|||||||||||||||||||
Total cost of revenues
|
30,335
|
21,477
|
8,858
|
41
|
%
|
|||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
5,708
|
48
|
%
|
3,350
|
43
|
%
|
2,358
|
70
|
%
|
|||||||||||||||
Veterinary Market
|
22,699
|
48
|
%
|
15,257
|
47
|
%
|
7,442
|
49
|
%
|
|||||||||||||||
Other(2)
|
760
|
726
|
34
|
5
|
%
|
|||||||||||||||||||
Gross profit
|
$
|
29,167
|
$
|
19,333
|
$
|
9,834
|
51
|
%
|
(1) | The percentage reported is based on revenues by operating segment. |
(2) | Represents unallocated items, not specifically identified to any particular business segment. |
· | Total revenues from Piccolo chemistry analyzers increased by 189%, or $3.6 million, during the three months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an increase in the sales volume of Piccolo chemistry analyzers sold to Abbott in North America, various distributors in Europe and a distributor in Asia Pacific and rest of the world. |
· | Total revenues from medical reagent discs increased by 3%, or $176,000, during the three months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an expanded installed base of Piccolo chemistry analyzers in North America. |
· | Total revenues from veterinary instruments increased by 120%, or $7.5 million, during the three months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to (a) an increase in the sales volume of VetScan chemistry analyzers and VetScan hematology instruments in North America to MWI, (b) sales of VetScan chemistry analyzers to VCA’s Animal Hospitals resulting from a product supply agreement that we entered into in May 2014, (c) sales of VetScan chemistry analyzers and VetScan hematology instruments in North America as initial stocking orders to two new distributors in North America, Henry Schein Animal Health and Patterson Veterinary Supply, starting in October 2014. These increases were partially offset by a decrease in the sales volume of VetScan chemistry analyzers to various distributors in Europe. |
· | Total revenues from consumables in the veterinary market increased by 26%, or $6.0 million, during the three months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to (a) an increase in the sales volume of veterinary reagent discs due to an expanded installed base in North America and Europe, (b) an increase in the sales volume of hematology reagent kits in North America due to an expanded installed base, (c) an increase in the sales volume of VetScan rapid tests to MWI and (d) sales of VetScan rapid tests as initial stocking orders to Henry Schein Animal Health and Patterson Veterinary Supply. These increases were partially offset by the impact of a lower exchange rate between the Euro and U.S. dollar during the three months ended December 31, 2014 resulting in a decrease in the dollar value of the Euro sales of veterinary reagent discs compared to the rate effect in the same period last year. |
· | Total revenues from other products and services in the veterinary market increased by 37%, or $1.2 million, during the three months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an increase in service revenues from veterinary reference laboratory diagnostic and consulting services provided by AVRL in North America due to an expanded customer base. |
Nine Months Ended December 31,
|
Change
|
|||||||||||||||||||||||
2014
|
Percent of
Revenues(1)
|
2013
|
Percent of
Revenues(1)
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$
|
26,707
|
100
|
%
|
$
|
21,065
|
100
|
%
|
$
|
5,642
|
27
|
%
|
||||||||||||
Percentage of total revenues
|
17
|
%
|
16
|
%
|
||||||||||||||||||||
Veterinary Market
|
131,800
|
100
|
%
|
106,493
|
100
|
%
|
25,307
|
24
|
%
|
|||||||||||||||
Percentage of total revenues
|
82
|
%
|
82
|
%
|
||||||||||||||||||||
Other(2)
|
2,415
|
2,272
|
143
|
6
|
%
|
|||||||||||||||||||
Percentage of total revenues
|
1
|
%
|
2
|
%
|
||||||||||||||||||||
Total revenues
|
160,922
|
129,830
|
31,092
|
24
|
%
|
|||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
14,035
|
53
|
%
|
11,793
|
56
|
%
|
2,242
|
19
|
%
|
|||||||||||||||
Veterinary Market
|
65,317
|
50
|
%
|
55,859
|
52
|
%
|
9,458
|
17
|
%
|
|||||||||||||||
Other(2)
|
99
|
81
|
18
|
22
|
%
|
|||||||||||||||||||
Total cost of revenues
|
79,451
|
67,733
|
11,718
|
17
|
%
|
|||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
12,672
|
47
|
%
|
9,272
|
44
|
%
|
3,400
|
37
|
%
|
|||||||||||||||
Veterinary Market
|
66,483
|
50
|
%
|
50,634
|
48
|
%
|
15,849
|
31
|
%
|
|||||||||||||||
Other(2)
|
2,316
|
2,191
|
125
|
6
|
%
|
|||||||||||||||||||
Gross profit
|
$
|
81,471
|
$
|
62,097
|
$
|
19,374
|
31
|
%
|
(1) | The percentage reported is based on revenues by operating segment. |
(2) | Represents unallocated items, not specifically identified to any particular business segment. |
· | Total revenues from Piccolo chemistry analyzers increased by 73%, or $3.6 million, during the nine months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an increase in the sales volume of Piccolo chemistry analyzers sold to Abbott in North America during the nine months ended December 31, 2014 and various distributors in Europe and a distributor in Asia Pacific and rest of the world, both during the third quarter of fiscal 2015. |
· | Total revenues from medical reagent discs increased by 12%, or $1.8 million, during the nine months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an increase in the sales volume of medical reagent discs sold in North America to Abbott as a result of an expanded installed base of Piccolo chemistry analyzers. |
· | Total revenues from veterinary instruments increased by 12%, or $3.0 million, during the nine months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to (a) an increase in the sales volume of VetScan chemistry analyzers in North America to MWI, (b) sales of VetScan chemistry analyzers to VCA’s Animal Hospitals, (c) sales of VetScan chemistry analyzers and VetScan hematology instruments in North America as initial stocking orders to Henry Schein Animal Health and Patterson Veterinary Supply during the third quarter of fiscal 2015. These increases were partially offset by (a) lower unit sales of VetScan hematology instruments in the first half of fiscal 2015 and lower unit sales of VetScan i-STAT analyzers in the nine months ended December 31, 2014 to balance the inventory level in the distribution channel in North America and (c) lower average selling prices of VetScan chemistry analyzers sold in Europe. |
· | Total revenues from consumables in the veterinary market increased by 24%, or $17.4 million, during the nine months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to (a) an increase in the sales volume of veterinary reagent discs due to an expanded installed base in North America and Europe, (b) an increase in the sales volume of hematology reagent kits in North America due to an expanded installed base and (c) an increase in the sales volume of VetScan rapid tests in North America to MWI. |
· | Total revenues from other products and services in the veterinary market increased by 58%, or $4.9 million, during the nine months ended December 31, 2014, as compared to the same period in fiscal 2014, primarily attributable to an increase in service revenues from veterinary reference laboratory diagnostic and consulting services provided by AVRL in North America due to an expanded customer base. |
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Cost of revenues
|
$
|
30,335
|
$
|
21,477
|
$
|
8,858
|
41
|
%
|
$
|
79,451
|
$
|
67,733
|
$
|
11,718
|
17
|
%
|
||||||||||||||||
Percentage of total revenues
|
51
|
%
|
53
|
%
|
49
|
%
|
52
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Total gross profit
|
$
|
29,167
|
$
|
19,333
|
$
|
9,834
|
51
|
%
|
$
|
81,471
|
$
|
62,097
|
$
|
19,374
|
31
|
%
|
||||||||||||||||
Total gross profit percentage
|
49
|
%
|
47
|
%
|
51
|
%
|
48
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Research and development expenses
|
$
|
3,585
|
$
|
3,596
|
$
|
(11
|
)
|
<(1
|
)% |
$
|
11,764
|
$
|
10,187
|
$
|
1,577
|
15
|
%
|
|||||||||||||||
Percentage of total revenues
|
6
|
%
|
9
|
%
|
7
|
%
|
8
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Sales and marketing expenses
|
$
|
11,656
|
$
|
8,706
|
$
|
2,950
|
34
|
%
|
$
|
32,710
|
$
|
28,636
|
$
|
4,074
|
14
|
%
|
||||||||||||||||
Percentage of total revenues
|
20
|
%
|
21
|
%
|
20
|
%
|
22
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
2014
|
2013
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
General and administrative expenses
|
$
|
4,770
|
$
|
2,408
|
$
|
2,362
|
98
|
%
|
$
|
11,475
|
$
|
8,316
|
$
|
3,159
|
38
|
%
|
||||||||||||||||
Percentage of total revenues
|
8
|
%
|
6
|
%
|
7
|
%
|
6
|
%
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||||||||||
2014
|
2013
|
Dollar
Change
|
2014
|
2013
|
Dollar
Change
|
|||||||||||||||||||
Interest and other income (expense), net
|
$
|
(197
|
)
|
$
|
235
|
$
|
(432
|
)
|
$
|
(595
|
)
|
$
|
1,146
|
$
|
(1,741
|
)
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Income tax provision
|
$
|
3,074
|
$
|
1,636
|
$
|
8,927
|
$
|
5,657
|
||||||||
Effective tax rate
|
34
|
%
|
34
|
%
|
36
|
%
|
35
|
%
|
December 31,
2014
|
March 31,
2014
|
|||||||
Cash and cash equivalents
|
$
|
89,770
|
$
|
73,589
|
||||
Short-term investments
|
19,508
|
29,102
|
||||||
Long-term investments
|
23,834
|
18,491
|
||||||
Total cash, cash equivalents and investments
|
$
|
133,112
|
$
|
121,182
|
||||
Percentage of total assets
|
54
|
%
|
56
|
%
|
Nine Months Ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Net cash provided by operating activities
|
$
|
27,836
|
$
|
27,153
|
||||
Net cash (used in) provided by investing activities
|
(1,915
|
)
|
7,527
|
|||||
Net cash used in financing activities
|
(8,717
|
)
|
(5,755
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,023
|
)
|
434
|
|||||
Net increase in cash and cash equivalents
|
$
|
16,181
|
$
|
29,359
|
· | Receivables, net increased by $2.1 million, from $29.2 million at March 31, 2014 to $31.4 million as of December 31, 2014, primarily attributable to higher sales during the third quarter of fiscal 2015, partially offset by the timing of sales and collections activity during the third quarter of fiscal 2015. |
· | Inventories increased by $6.8 million, from $27.0 million at March 31, 2014 to $33.7 million as of December 31, 2014, primarily based on our projected sales plan. |
· | Prepaid expenses and other current assets increased by $2.7 million, from $2.5 million at March 31, 2014 to $5.1 million as of December 31, 2014, primarily attributable to an increase in our prepayment to Diatron MI PLC due to the timing of purchases of hematology instruments and reagents. |
· | Net current deferred tax assets increased by $2.8 million, from $4.5 million at March 31, 2014 to $7.2 million as of December 31, 2014, primarily as a result of the timing for the deduction of share-based compensation, reserves, accruals, depreciation and amortization. |
· | Accounts payable increased by $2.4 million, from $6.1 million at March 31, 2014 to $8.6 million as of December 31, 2014, primarily attributable to the timing and payment of services and inventory purchases. |
· | Accrued payroll and related expenses increased by $3.4 million, from $4.7 million at March 31, 2014 to $8.0 million as of December 31, 2014, primarily attributable to an increase in accrued bonus at December 31, 2014 because qualifiers for bonus payments were met in the third quarter of fiscal 2015. |
· | Other accrued liabilities, current, increased by $7.1 million, from $3.1 million at March 31, 2014 to $10.2 million as of December 31, 2014 and other liabilities, non-current, increased by $1.2 million, from $768,000 at March 31, 2014 to $1.9 million as of December 31, 2014. The net current and non-current other liabilities increased primarily attributable to (a) an increase in liabilities related to customer sales incentive programs and the timing of these obligation payments and (b) installment payment obligations related to the acquisition of QCR and Trio in November 2014. |
· | As of December 31, 2014 and March 31, 2014, the current portion of deferred revenue was $1.3 million and $1.2 million, respectively, and the non-current portion of deferred revenue was $3.4 million and $4.0 million, respectively. Net current and non-current deferred revenue decreased by $559,000 from March 31, 2014 to December 31, 2014, primarily attributable to deferred revenue recognized ratably over the life of extended maintenance contracts offered to customers in the form of free services in connection with the sale of our instruments. In October 2013, we prospectively changed the standard warranty obligations on certain instruments sold from three to five years, which resulted in a decrease in maintenance contracts offered to customers in the form of free services in connection with the sale of our instruments. |
· | As of December 31, 2014 and March 31, 2014, the current portion of warranty reserve was $1.4 million and $1.0 million, respectively, and the non-current portion of warranty reserve was $1.5 million and $821,000, respectively. The increase in current and non-current warranty reserve from March 31, 2014 to December 31, 2014 was primarily due to an increase in the number of instruments in standard warranty during the nine months ended December 31, 2014. Warranty reserve is primarily based on (a) the number of instruments in standard warranty, estimated product failure rates and estimated repair costs and (b) an estimate of defective reagent discs and replacement costs of reagent discs. In October 2013, we prospectively changed the standard warranty obligations on certain instruments from three to five years. The increase in the standard warranty obligation did not result in a material impact on our warranty reserves or cost of revenues during the period. Management periodically evaluates the sufficiency of the warranty provisions and makes adjustments when necessary. If an unusual performance rate related to warranty claims is noted, an additional warranty accrual may be assessed and recorded when a failure event is probable and the cost can be reasonably estimated. |
· | Cash used to purchase investments in certificates of deposit, commercial paper and corporate bonds totaled $23.5 million during the nine months ended December 31, 2014. Cash provided by proceeds from maturities and redemptions of investments in certificates of deposit, commercial paper and corporate bonds totaled $27.2 million during the nine months ended December 31, 2014. |
· | Our capital expenditures totaled $5.0 million during the nine months ended December 31, 2014, primarily to increase our manufacturing capacity and support our growth in our medical and veterinary business in North America. We expect to continue to make significant capital expenditures as necessary in the normal course of our business. |
· | Cash used in our acquisition of QCR and Trio, net of cash acquired, was $721,000 during the nine months ended December 31, 2014. |
· | new product or service announcements made by us or our competitors; |
· | changes in our pricing structures or the pricing structures of our competitors; |
· | the sales performance of our independent distributors; |
· | excess inventory levels and inventory imbalances at our independent distributors; |
· | our ability to develop, introduce and market new products or services on a timely basis, or at all; |
· | our manufacturing capacities and our ability to increase the scale of these capacities; |
· | the mix of sales among our instruments, consumable products and services; |
· | the amount of our research and development and sales, general and administrative expenses; and |
· | changes in our strategies. |
· | Blood Chemistry Analyzer Components: Our blood analyzer products use several technologically-advanced components that we currently purchase from a limited number of suppliers, including certain components from our single source supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems. The loss of the supply of any of these components could force us to redesign our blood chemistry analyzers. |
· | Reagent Discs: Two injection-molding manufacturers, C. Brewer Co., a division of Balda AG, and Nypro, Inc., a subsidiary of Jabil Circuit, currently make the molded plastic discs that, when loaded with reagents and welded together, form our reagent disc products. We believe that only a few manufacturers are capable of producing these discs to the narrow tolerances that we require. To date, we have only qualified these two manufacturers to manufacture the molded plastic discs. |
· | Reagent Chemicals: We currently depend on the following single source vendors for some of the chemicals that we use to produce the reagents and dry reagent chemistry beads that are either inserted in our reagent discs, lateral flow rapid tests or sold as stand-alone products: Amano Enzyme USA Co., Ltd., Kikkoman Corporation Biochemical Division, Microgenics Corporation, a division of Thermo Fisher Scientific, Roche Molecular Biochemicals of Roche Diagnostics Corporation, a division of F. Hoffmann-La Roche, Ltd., SA Scientific Co., Sekisui Diagnostics, Sigma Aldrich Inc. and Toyobo Specialties. |
· | Hematology Instruments and Reagent Kits: Our VetScan hematology instruments are manufactured by Diatron in Hungary and are purchased by us as a completed instrument. In addition, we currently have qualified two suppliers to produce the reagent kits for our hematology instruments: Clinical Diagnostic Solutions, Inc. and Diatron. |
· | VSpro Specialty Analyzers and Cartridges: Our VetScan VS pro specialty analyzers and cartridges are manufactured by SMB in Denmark and are purchased by us as completed products. |
· | i-STAT Analyzers and Cartridges: Our VetScan i-STAT 1 analyzers and cartridges are manufactured by Abbott and are purchased by us as completed products. |
· | Rapid Tests : Substantially all of our VetScan Rapid Tests are manufactured by a single source supplier. |
· | the sales performance of our independent distributors; |
· | our ability to improve our existing products and develop new and innovative products; |
· | our ability to increase our sales and marketing activities; |
· | our ability to effectively manage our manufacturing activities; and |
· | our ability to effectively compete against current and future competitors. |
· | we will be able to maintain consistent growth through our independent distributors; |
· | the costs associated with sales, marketing and distributing our products will not be excessive; or |
· | government regulations or private insurer policies will not adversely affect our ability to be successful. |
· | fluctuation in our operating results; |
· | announcements of technological innovations or new commercial products by us or our competitors; |
· | changes in governmental regulation in the United States and internationally; |
· | prospects and proposals for health care reform; |
· | governmental or third-party payors’ controls on prices that our customers may pay for our products; |
· | developments or disputes concerning our patents or our other proprietary rights; |
· | product liability claims and public concern as to the safety of our devices or similar devices developed by our competitors; and |
· | general market conditions. |
Exhibit No.
|
Description of Document
|
3.1
|
Amended and Restated Articles of Incorporation, as amended (filed with the Securities and Exchange Commission on May 30, 2014 as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (SEC File No. 000-19720) and incorporated herein by reference).
|
3.2
|
By-laws, as amended (filed with the Securities and Exchange Commission on May 30, 2014 as Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (SEC File No. 000-19720) and incorporated herein by reference).
|
10.1*
|
Abaxis, Inc. 2014 Equity Incentive Plan (filed with the Securities and Exchange Commission on October 22, 2014 as Exhibit 99.2 to our Registration Statement on Form S-8 (File No. 333-199518) and incorporated herein by reference).
|
10.2*
|
Forms of Restricted Stock Unit (time vesting) Grant Notice and Award Agreements under the Abaxis, Inc. 2014 Equity Incentive Plan.
|
10.3*
|
Forms of Restricted Stock Unit (performance vesting) Grant Notice and Award Agreements under the Abaxis, Inc. 2014 Equity Incentive Plan.
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1#
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2#
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* | Management contract or compensatory plan or arrangement. |
# | These exhibits are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Abaxis, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q and irrespective of any general incorporation language contained in any such filing. |
ABAXIS, INC.
|
|||
(Registrant)
|
|||
Date: February 9, 2015
|
BY:
|
/s/ Clinton H. Severson
|
|
Clinton H. Severson
|
|||
President, Chief Executive Officer and Director
|
|||
(Principal Executive Officer)
|
|||
Date: February 9, 2015
|
BY:
|
/s/ Alberto R. Santa Ines
|
|
Alberto R. Santa Ines
|
|||
Chief Financial Officer
and Vice President
of Finance
|
|||
(Principal Financial and Accounting Officer)
|
Exhibit No.
|
Description of Document
|
3.1
|
Amended and Restated Articles of Incorporation, as amended (filed with the Securities and Exchange Commission on May 30, 2014 as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (SEC File No. 000-19720) and incorporated herein by reference).
|
3.2
|
By-laws, as amended (filed with the Securities and Exchange Commission on May 30, 2014 as Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (SEC File No. 000-19720) and incorporated herein by reference).
|
10.1*
|
Abaxis, Inc. 2014 Equity Incentive Plan (filed with the Securities and Exchange Commission on October 22, 2014 as Exhibit 99.2 to our Registration Statement on Form S-8 (File No. 333-199518) and incorporated herein by reference).
|
Forms of Restricted Stock Unit (time vesting) Grant Notice and Award Agreements under the Abaxis, Inc. 2014 Equity Incentive Plan.
|
|
Forms of Restricted Stock Unit (performance vesting) Grant Notice and Award Agreements under the Abaxis, Inc. 2014 Equity Incentive Plan.
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* | Management contract or compensatory plan or arrangement. |
# | These exhibits are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Abaxis, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q and irrespective of any general incorporation language contained in any such filing. |
Vesting Date
|
No. of Restricted Stock Units Vesting
|
|||
(as a % of total Restricted Stock Units subject to Award)
|
||||
ABAXIS, INC.
|
PARTICIPANT
|
||
By:
|
|||
Signature
|
|||
Its:
|
|||
Date
|
|||
Address:
|
3240 Whipple Road
|
||
Union City, CA 94587
|
Address
|
||
Number of Restricted Stock Units that Vest
|
Performance Period and Performance-Related Goals
|
Vesting Date
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
[______]
|
ABAXIS, INC.
|
PARTICIPANT
|
|||
By:
|
||||
Signature
|
||||
Its:
|
||||
Date
|
||||
Address:
|
3240 Whipple Road
|
|||
Union City, CA 94587
|
Address
|
|||
1. | I have reviewed this quarterly report on Form 10-Q of Abaxis, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: February 9, 2015
|
/s/ Clinton H. Severson
|
|
Clinton H. Severson
|
||
President and Chief Executive Officer
|
1. | I have reviewed this quarterly report on Form 10-Q of Abaxis, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date:
February 9, 2015
|
/s/ Alberto R. Santa Ines
|
|
Alberto R. Santa Ines
|
||
Chief Financial Officer and Vice President of Finance
|
(1) | the Quarterly Report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Exchange Act; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant for the periods covered by the Report. |
By:
|
/s/ Clinton H. Severson
|
||
Clinton H. Severson
|
|||
President and Chief Executive Officer
|
(1) | the Quarterly Report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Exchange Act; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant for the periods covered by the Report. |
By:
|
/s/ Alberto R. Santa Ines
|
||
Alberto R. Santa Ines
|
|||
Chief Financial Officer and Vice President of Finance
|