Synovis Life Technologies, Inc. (Nasdaq: SYNO), today reported
its financial results for the fourth quarter and fiscal year ended
October 31, 2011.
Yesterday, Synovis and Baxter International Inc., (NYSE:BAX)
announced a definitive agreement for Baxter to acquire Synovis. The
Synovis board of directors has unanimously approved the transaction
and recommends that shareholders approve the agreement at an offer
price of $28 per share, which equates to $325 million of equity
value or approximately $260 million net of acquired cash, cash
equivalents and investments. The offer price represents a 53
percent premium above Synovis’ average stock price of the four
weeks prior to announcement. The transaction is expected to close
in the first calendar quarter of 2012, subject to approval by
Synovis’ shareholders, customary closing conditions and expiration
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act.
For the fiscal fourth quarter, net revenue rose to a record
$22.1 million, a 22 percent increase over $18.1 million in the
year-ago period. Operating income totaled $4.2 million, an 86
percent gain over operating income of $2.2 million in the year-ago
period. Net income for the fiscal 2011 fourth quarter was $2.7
million, or $0.24 per diluted share, compared to net income of $1.5
million, or $0.13 per diluted share, in the fiscal 2010 fourth
quarter.
For the full fiscal year, net revenue rose to $82.4 million, up
20 percent from $68.6 million in fiscal 2010. Operating income for
fiscal 2011 was $12.4 million, up 69 percent from operating income
of $7.3 million last fiscal year. Net income was $8.5 million in
fiscal 2011, or $0.73 per diluted share, compared to $4.9 million,
or $0.43 per diluted share, in the previous fiscal year.
Conference Call CanceledGiven the acquisition
announcement, Synovis Life Technologies has canceled its fourth
quarter conference call which was scheduled for 10 a.m. CT
today.
About Synovis Life TechnologiesSynovis Life Technologies,
Inc., a diversified medical device company based in St. Paul,
Minn., develops, manufactures and markets biological and mechanical
products used by several surgical specialties to facilitate the
repair and reconstruction of soft tissue damaged or destroyed by
disease or injury. The company’s products include implantable
biomaterials for soft tissue repair, devices for microsurgery and
surgical tools – all designed to reduce risks and/or facilitate
critical surgeries, improve patient outcomes and reduce healthcare
costs. For additional information on Synovis Life Technologies and
its products, visit the company’s website at
www.synovislife.com.
Forward-looking statements contained in this press release are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The statements can be
identified by words such as “should”, “could”, “may”, “will”,
“expect”, “believe”, “anticipate”, “estimate”, “continue”, or other
similar expressions. Certain important factors that could cause
results to differ materially from those anticipated by the
forward-looking statements made herein include whether and when the
proposed acquisition by Baxter International, Inc. will be
consummated, the timing of product introductions, the ability of
the sales force to grow and sustain revenues, the impact of
increased competition in various markets Synovis serves, the
ability to grow Orthopedic and Wound revenue and achieve
profitability, outcomes of clinical and marketing studies as well
as regulatory submissions, the number of certain surgical
procedures performed, the ability to identify, acquire and
successfully integrate suitable acquisition candidates, any
operational or financial impact from the current global economic
environment, the impact of healthcare reform legislation, as well
as other factors found in the Company’s filings with the Securities
and Exchange Commission, such as the “Risk Factors” section in Part
I, Item 1A of our Annual Report on Form 10-K for the fiscal year
ended October 31, 2010.
SYNOVIS LIFE TECHNOLOGIES, INC.
Consolidated Statements of Income
(unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended October 31, October
31,
2011
2010
2011
2010
Net revenue $ 22,053 $ 18,116 $ 82,363 $ 68,565 Cost of
revenue 5,874 5,026 22,343 19,025 Gross margin 16,179 13,090 60,020
49,540 Gross margin percentage 73% 72% 73% 72% Selling,
general and administrative expenses 10,955 9,554 42,949 37,812
Research and development expenses 1,065 1,296 4,709 4,393
Operating expenses 12,020 10,850 47,658 42,205
Operating income
4,159
2,240
12,362
7,335
Interest income 83 73 311 284 Income before provision
for income taxes 4,242 2,313 12,673 7,619 Provision for
income taxes 1,527 833 4,212 2,743 Net income $ 2,715 $
1,480 $ 8,461 $ 4,876 Basic earnings per share $ 0.24 $ 0.13
$ 0.74 $ 0.43 Diluted earnings per share $ 0.24 $ 0.13 $
0.73 $ 0.43
Weighted average
shares outstanding - basic
11,344
11,284
11,381
11,262
Weighted average
shares outstanding - diluted
11,486
11,449
11,571
11,441
SYNOVIS LIFE TECHNOLOGIES, INC.
Consolidated Revenues (unaudited)
(In thousands)
Three Months Ended Twelve Months Ended October 31, October
31,
2011
2010
2011
2010
Peri-Strips $ 6,614 $ 5,153 $ 23,675 $ 19,414 Tissue-Guard
4,970 4,221 18,407 16,550 Veritas 3,956 3,661 15,829 14,368
Microsurgery 4,326 3,123 15,190 11,020
Orthopedic and Wound
752 685 3,514 1,878 Surgical tools and other 1,435
1,273 5,748 5,335 Total Revenue $ 22,053 $ 18,116 $
82,363 $ 68,565
Domestic
$
18,675
$
15,247
$
70,130
$
57,700
International
3,378 2,869
12,233 10,865 Total Revenue
$ 22,053 $
18,116 $ 82,363
$ 68,565 SYNOVIS LIFE
TECHNOLOGIES, INC. Consolidated Balance Sheets
As of October 31, 2011 (unaudited) and October 31, 2010 (In
thousands, except share and per share data) October 31,
October 31,
2011
2010
ASSETS Current assets: Cash and cash equivalents $ 18,013 $ 12,951
Short-term investments 41,203 41,119 Accounts receivable, net
11,262 8,701 Inventories 9,998 9,433 Deferred income tax asset, net
447 367 Other current assets
1,973
1,715 Total current assets 82,896 74,286
Investments, net 7,335 7,854 Property, plant and equipment, net
4,154 3,401 Goodwill 3,620 3,620 Other intangible assets, net 5,764
6,182 Deferred income tax asset, net
2,166
2,139 Total assets
$
105,935 $ 97,482
LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 2,235 $ 1,644 Accrued expenses
7,780
6,371 Total current liabilities 10,015
8,015 Total liabilities 10,015
8,015 Shareholders’ equity:
Preferred stock: authorized 5,000,000
shares of $.01 par value; none issued or outstanding at
both dates
---
---
Common stock: authorized 20,000,000 shares
of $.01 par value; issued and outstanding 11,167,690
and 11,228,654 at October 31, 2011 and October
31, 2010, respectively
112 112 Additional paid-in capital 59,832 61,780 Accumulated other
comprehensive (loss) income
(34
)
26 Retained earnings
36,010
27,549 Total shareholders’ equity
95,920 89,467 Total liabilities
and shareholders’ equity
$ 105,935
$ 97,482 SYNOVIS LIFE
TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) For the fiscal years ended October 31,
2011 2010 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 8,461 $ 4,876 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization of property, plant
and equipment 1,154 1,228 Amortization of intangible assets 734 782
Amortization of investment premium, net 1,263 1,626 Provision for
uncollectible accounts 250 204 Stock-based compensation 1,231 1,455
Tax benefit from stock option exercises (522 ) (296 ) Loss on sale
or disposal of property, plant and equipment 25 192 Deferred income
taxes (107 ) (117 ) Changes in operating assets and
liabilities: Accounts receivable (2,811 ) (1,980 ) Inventories (565
) (1,709 ) Other current assets (258 ) 40 Accounts payable 591 (318
) Accrued expenses 1,931 920 Net cash
provided by operating activities 11,377 6,903
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of
property, plant and equipment (1,932 ) (1,102 ) Investments in
identifiable intangible assets (316 ) (125 ) Purchases of
investments (51,116 ) (79,397 ) Redemptions of investments
50,228 73,618 Net cash used in investing
activities (3,136 ) (7,006 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Net proceeds related to stock-based
compensation plans 3,879 1,996 Repurchase of the Company's common
stock (7,580 ) (5,101 ) Excess tax benefit of stock option
exercises 522 296 Net cash used in
financing activities (3,179 ) (2,809 ) Net
change in cash and cash equivalents 5,062 (2,912 ) Cash and cash
equivalents at beginning of year 12,951 15,863
Cash and cash equivalents at end of year $ 18,013 $
12,951
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