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February 14, 2012 at 16:00 PM EST
Masimo Reports Fourth Quarter and Full Year 2011 Financial Results; Provides 2012 Financial Guidance
Q4 2011 Highlights (compared to Q4 2010):

IRVINE, Calif., Feb. 14, 2012 /PRNewswire/ -- Masimo (NASDAQ: MASI) today announced its financial results for the fourth quarter and year ended December 31, 2011.

Masimo's total fourth quarter revenue, including royalties, rose 6% to $112.3 million, compared to $105.6 million for the fourth quarter of 2010.  Fourth quarter 2011 product revenue rose 12% to $104.7 million, compared to $93.8 million for the fourth quarter of 2010.  For the fourth quarter of 2011, the company's worldwide end-user business grew 17% and represented 86% of product revenue.  OEM sales, which represented the remaining 14% of product revenue, declined 12% in the fourth quarter of 2011, compared to the same period in 2010.  Revenue from Masimo rainbow product sales rose 16% to $9.8 million in the fourth quarter, compared to $8.4 million for the fourth quarter of 2010.  

Net income for the fourth quarter was $13.8 million, or $0.23 per diluted share, compared to reported net income of $16.1 million, or $0.26 per diluted share, in the fourth quarter of 2010.  Excluding one-time expenses in the year-ago period, Masimo's adjusted net income and adjusted earnings per share for the fourth quarter of 2010 were $17.5 million and $0.29, respectively.    

For 2011, Masimo's total revenue rose 8% to $439.0 million, compared to $405.4 million in 2010.  The company's product revenue rose 14% to $406.5 million, compared to $356.4 million in 2010.  Revenue from Masimo rainbow products rose 4% to $34.1 million, compared to $32.9 million in 2010.  Excluding the $4.0 million U.S. military order in 2010 that did not repeat in 2011, rainbow revenue grew by 18%.  Royalty revenue declined from $49.0 million in 2010 to $32.5 million in 2011.

Masimo's net income for 2011 was $63.7 million, or $1.05 per diluted share, compared to 2010 net income of $73.5 million, or $1.21 per diluted share, which included $0.18 from the net of a one-time gain related to $30.8 million in antitrust proceeds from Covidien and offset by $14.7 million in one-time expenses.  Excluding one-time items in 2010, Masimo's 2010 adjusted net income and adjusted earnings per share were $62.5 million and $1.03, respectively.  

During the fourth quarter, the company shipped approximately 34,400 Masimo SET pulse oximetry and Masimo rainbow SET Pulse CO-Oximetry units, excluding handheld units, down 18% compared to approximately 41,800 in the same prior-year period.  For 2011, Masimo shipped approximately 148,200 Masimo SET pulse oximetry and Masimo rainbow SET Pulse CO-Oximetry units, excluding handheld units, down 2% compared to approximately 153,200 in 2010.  Masimo estimates its worldwide installed base as of December 31, 2011 to be 979,000 units, up 15% from 855,000 units as of January 1, 2011.      

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, "Masimo finished 2011 with a 12% rise in fourth quarter product revenue, including 17% growth in our direct business.  Strong double-digit sales growth in our U.S. acute care channel and international business, as well as a 16% increase in rainbow revenue, drove our product revenue performance in the quarter.  We also grew our worldwide installed base by 15%, expanding our global reach and demonstrating the continuing demand for our superior Masimo SET pulse oximetry and rainbow SET Pulse CO-Oximetry technology."          

As of December 31, 2011, cash and cash equivalents were $129.9 million, compared to $88.3 million as of January 1, 2011.  During the fourth quarter, the company used approximately $36 million in cash to purchase approximately 1.8 million shares of its common stock under a stock repurchase program authorized by the Board of Directors in mid-2011.  

2012 Financial Guidance
Masimo expects fiscal 2012 total revenue to be approximately $483 million, including product revenue of $455 million and royalty revenue of $28 million.  Included within the 2012 product revenue guidance is a rainbow revenue expectation of $45 million.  The company expects fiscal 2012 GAAP earnings per share to be $1.20.  Each of the components of Masimo's guidance set forth above is an estimate only and actual performance could differ.

Conference Call
Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to discuss the results.  A live webcast of the conference call will be available online from the investor relations page of the company's corporate website at www.masimo.com.  The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706) 758-3929 for international callers.  The reservation code for both dial-in numbers is 42982286.  After the live webcast, the call will be available on Masimo's website through March 14, 2012.  In addition, a telephonic replay of the call will be available through February 28, 2012.  The replay dial-in numbers are (800) 585-8367 for domestic callers and +1 (855) 859-2056 for international callers. Please use reservation code 42982286

About Masimo
Masimo (NASDAQ: MASI) is the global leader in innovative noninvasive monitoring technologies that significantly improve patient care—helping solve "unsolvable" problems.  In 1995, the company debuted Measure-Through Motion and Low Perfusion pulse oximetry, known as Masimo SET®, which virtually eliminated false alarms and increased pulse oximetry's ability to detect life-threatening events.  More than 100 independent and objective studies demonstrate Masimo SET provides the most reliable SpO2 and pulse rate measurements even under the most challenging clinical conditions, including patient motion and low peripheral perfusion.  In 2005, Masimo introduced rainbow® SET Pulse CO-Oximetry™ technology, allowing noninvasive and continuous monitoring of blood constituents that previously required invasive procedures, including total hemoglobin (SpHb®), oxygen content (SpOC™), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), and Pleth Variability Index (PVI®), in addition to SpO2, pulse rate, and perfusion index (PI).  In 2008, Masimo introduced Patient SafetyNet™, a remote monitoring and wireless clinician notification system designed to help hospitals avoid preventable deaths and injuries associated with failure to rescue events.  In 2009, Masimo introduced rainbow Acoustic Monitoring™, the first-ever noninvasive and continuous monitoring of acoustic respiration rate (RRa™).  Masimo's rainbow SET technology platform offers a breakthrough in patient safety by helping clinicians detect life-threatening conditions and helping guide treatment options.  In 2010, Masimo acquired SEDLine®, a pioneer in the development of innovative brain function monitoring technology and devices.  Masimo SET and Masimo rainbow SET technologies can also be found in over 100 multiparameter patient monitors from over 50 medical device manufacturers around the world.  Founded in 1989, Masimo has the mission of "Improving Patient Outcomes and Reducing Cost of Care ... by Taking Noninvasive Monitoring to New Sites and Applications®."  Additional information about Masimo and its products may be found at www.masimo.com.

Forward-Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our financial condition, results of operations and business generally; expectations regarding our ability to design and deliver innovative new noninvasive technologies; demand for our technologies; and expectations for total revenue, royalty revenue and product revenue, including rainbow revenue, and GAAP earnings per share, for the full fiscal year  2012.  These forward-looking statements are based on management's current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements.  These risks include, but are not limited to, those related to: our dependence on Masimo SET and Masimo rainbow SET products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors' assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; any failure to continue developing innovative products and technologies; the lack of acceptance of any of our current or future products and technologies; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce anticipated operational and financial benefits, including a continued lower effective tax rate; the loss of our customers; the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the impact of the decline in the worldwide credit markets on us and our customers; the amount and type of equity awards that we may grant to employees and service providers in the future; and other factors discussed in the "Risk Factors" section of our most recent periodic reports filed with the Securities and Exchange Commission ("SEC"), including our most recent Form 10-K and Form 10-Q, all of which you may obtain for free on the SEC's website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise.  We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.


Investor Contact: Sheree Aronson


Media Contact: Dana Banks

Vice President, Investor Relations, Masimo Corporation


Manager, Public Relations, Masimo Corporation

(949) 297-7043


(949) 297-7348

saronson@masimo.com


dbanks@masimo.com




Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and Reducing Cost of Care… by Taking Noninvasive Monitoring to New Sites and Applications, Rainbow, SpHb, SpOC, SpCO, SpMet, PVI, Rainbow Acoustic Monitoring, RRa, Radical-7, Rad-87, Rad-57,Rad-8, Rad-5,Pulse CO-Oximetry, Pulse CO-Oximeter, and SEDLine  are trademarks or registered trademarks of Masimo Corporation.

MASIMO CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)














December 31,


January 1,


2011


2011

ASSETS






Current assets






Cash and cash equivalents

$

129,882


$

88,305

Accounts receivable, net of allowance for doubtful accounts


57,013



49,694

Royalties receivable


7,102



12,000

Inventories


45,944



45,028

Prepaid expenses


6,424



4,535

Prepaid income taxes


2,986



3,352

Deferred tax assets


11,576



12,555

Other current assets


2,008



2,136

Total current assets


262,935



217,605

Deferred cost of goods sold


51,679



47,184

Property and equipment, net


15,239



15,951

Intangible assets, net


11,393



10,497

Goodwill


448



448

Deferred tax assets


16,766



12,560

Other assets


7,644



5,990

Total assets

$

366,104


$

310,235







LIABILITIES AND EQUITY






Current liabilities






Accounts payable

$

27,302


$

22,150

Accrued compensation


19,717



21,074

Accrued liabilities


12,297



9,832

Income taxes payable


570



722

Deferred revenue


16,019



16,369

Current portion of capital lease obligation


48



50

Total current liabilities


75,953



70,197

Deferred revenue


984



1,554

Capital lease obligation, less current portion


74



122

Other liabilities


9,427



8,323

Total liabilities


86,438



80,196







Equity






Masimo Corporation stockholders’ equity:






Common stock


58



59

Treasury stock


(37,396)



(1,209)

Additional paid-in capital


243,528



222,206

Accumulated other comprehensive income


1,274



925

Retained earnings


69,364



5,664

Total Masimo Corporation stockholders’ equity


276,828



227,645

Noncontrolling interest


2,838



2,394

Total equity


279,666



230,039

Total liabilities and equity

$

366,104


$

310,235



MASIMO CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)





























Three Months Ended


Twelve Months Ended



December 31,


January 1,


December 31,


January 1,


2011


2011


2011


2011













Revenue:













Product


$

104,716


$

93,775


$

406,487


$

356,422

Royalty



7,625



11,799



32,501



48,985

Total revenue



112,341



105,574



438,988



405,407

Cost of goods sold



38,729



31,446



144,854



119,825

Gross profit



73,612



74,128



294,134



285,582

Operating expenses:













Selling, general and administrative



43,930



44,227



169,205



174,089

Research and development



9,619



8,312



38,412



36,000

Antitrust litigation proceeds









(30,728)

Total operating expenses



53,549



52,539



207,617



179,361

Operating income



20,063



21,589



86,517



106,221

Non-operating income (expense)



(468)



154



14



1,348

Income before provision for income taxes



19,595



21,743



86,531



107,569

Provision for income taxes



5,429



5,112



22,478



34,164

Net income including noncontrolling interests



14,166



16,631



64,053



73,405

Net (income) loss attributable to the noncontrolling interests



(346)



(517)



(353)



125

Net income attributable to Masimo Corporation


$

13,820


$

16,114


$

63,700


$

73,530














Net income per share attributable to Masimo Corporation stockholders:













Basic


$

0.23


$

0.27


$

1.07


$

1.25

Diluted


$

0.23


$

0.26


$

1.05


$

1.21














Weighted average shares used in per share calculations:













Basic



59,223



59,145



59,659



58,769

Diluted



60,180



60,839



60,845



60,609














Cash dividend declared per share


$


$

0.75


$


$

2.75



























The following table presents details of the share-based compensation expense (benefit) that is included in each functional line item in the consolidated

statements of income above (in thousands):
















Three Months Ended


Twelve Months Ended



December 31,


January 1,


December 31,


January 1,



2011


2011


2011


2011














Cost of goods sold


$

(36)


$

132


$

383


$

483

Selling, general and administrative



2,709



2,519



10,268



9,033

Research and development



836



765



3,025



2,787

Total


$

3,509


$

3,416


$

13,676


$

12,303



 MASIMO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

















Year ended


Year ended



December 31,


January 1,



2011


2011

Cash flows from operating activities:







Net income including noncontrolling interests


$

64,053


$

73,405

Adjustments to reconcile net income including noncontrolling interests







to net cash provided by operating activities:







Depreciation and amortization



7,342



6,584

Share-based compensation



13,676



12,303

Provision for doubtful accounts



231



108

Provision for obsolete inventory



2,130



619

Provision for warranty costs



2,592



2,355

Provision for deferred income taxes



(3,217)



(2,231)

Income tax benefit from exercise of stock options granted prior to







January 1, 2006



1,650



4,851

Excess tax benefit from share-based payment arrangements



(67)



(707)

Changes in operating assets and liabilities:







Increase in accounts receivable



(7,549)



(10,905)

(Increase) decrease in royalties receivable



4,898



(500)

Increase in inventories



(3,046)



(14,088)

Increase in deferred cost of goods sold



(4,526)



(19,080)

Increase in prepaid expenses



(1,874)



(743)

(Increase) decrease in prepaid income taxes



366



(1,648)

Increase in other assets



(1,502)



(1,396)

Increase in accounts payable



5,159



5,474

Increase (decrease) in accrued compensation



(1,333)



3,219

Decrease in accrued liabilities



(77)



(2,281)

Increase (decrease) in income taxes payable



(89)



940

Increase (decrease) in deferred revenue



(921)



3,012

Increase in other liabilities



1,061



1,729

Net cash provided by operating activities



78,957



61,020








Cash flows from investing activities:







Purchase of short-term investments





(75,986)

Proceeds from sale and maturities of short-term investments





132,975

Purchases of property and equipment



(5,057)



(9,561)

Increase in intangible assets



(2,451)



(1,937)

Net cash provided by (used in) investing activities



(7,508)



45,491








Cash flows from financing activities:







Repayments on long-term debt



(50)



(60)

Proceeds from issuance of common stock



5,943



10,239

Excess tax benefit from share-based payment arrangements



67



707

Dividends paid





(161,978)

Repurchases of common stock



(36,187)



Short swing profit recovery



73



Net cash used in financing activities



(30,154)



(151,092)

Effect of foreign currency exchange rates on cash



282



832

Net increase (decrease) in cash and cash equivalents



41,577



(43,749)

Cash and cash equivalents at beginning of period



88,305



132,054

Cash and cash equivalents at end of period


$

129,882


$

88,305



SOURCE Masimo Corporation

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