SHENZHEN, China, Feb. 28, 2011 /PRNewswire-Asia-FirstCall/ -- Mindray Medical International Limited (NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide, announced today its selected unaudited financial results for the fourth quarter and full year ended December 31, 2010.
Highlights for Fourth Quarter and Full Year 2010
The company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The company notes that these measures may not be calculated on the same basis of similar measures used by other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the three months and years ended December 31, 2009 and 2010, respectively, in the attached financial information.
Cautionary Note Regarding Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Mindray's anticipated net revenues and non-GAAP net income for 2010, the applicable China corporate income tax rate for 2011, our ability to restore growth in non-tender sales, projected growth of our market share in 2011, projected growth of net revenues in 2011, our ability to grow profits and market share, new market penetration, expansion of our presence in emerging markets, improving our developed market sales capabilities and improving the effectiveness of our working capital utilization are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors. The anticipated results for 2010 remain subject to the finalization of Mindray's year-end closing, reporting, and audit processes, particularly as related to accrued expenses, income taxes, share- based compensation expenses, and expense and/or amortization of intangible assets. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 7 of our annual report on Form 20-F, filed on May 7, 2010. Our results of operations for the fourth quarter of 2010 and for fiscal year 2010 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
About MindrayWe are a leading developer, manufacturer and marketer of medical devices worldwide. We maintain global headquarters in Shenzhen, China, U.S. headquarters in Mahwah, New Jersey and multiple sales offices in major international markets. From our main manufacturing and engineering base in China and through our worldwide distribution network, we are able to supply internationally a broad range of products across three primary business segments, comprised of patient monitoring and life support products, in-vitro diagnostic products and medical imaging systems. For more information, please visit http://ir.mindray.com.
For investor and media inquiries please contact:In the U.S:Hoki LukWestern Bridge, LLCTel: +1-646-808-9150Email: firstname.lastname@example.orgIn China: May LiMindray Medical International LimitedTel: + 86 755 2658 2518Email: email@example.comExhibit 1MINDRAY MEDICAL INTERNATIONAL LIMITEDCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands)As of December 31, 2009 As of December 31, 2010 US$ US$ (Note 2) (unaudited) ASSETSCurrent assets:Cash and cash equivalents
204,228137,502Restricted cash and restricted investments (Note 1)
-296,003Accounts receivable, net
64,51879,185Value added tax receivables
8,9999,953Prepayments and deposits
7,4667,596Deferred tax assets
2,3382,481Total current assets
511,665694,600Restricted investment (Note 1)
1,5854,552Advances for purchase of plant and equipment
28,39515,775Property, plant and equipment, net
153,726207,636Land use rights, net
25,77646,079Intangible assets, net
966,2651,150,561LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Short-term bank loans (Note 1)
35,75244,322Advances from customers
56,59268,774Income taxes payable
16,19913,582Deferred tax liabilities
1,499-Other taxes payable
5,8634,286Total current liabilities
254,638174,557Bank loans- long term (Note 1)
66,000-Other long-term payables
1,3421,133Deferred tax liabilities, net
3,7348,26871,0769,401Shareholders' equity:Ordinary shares
1415Additional paid-in capital
301,476434,143Accumulated other comprehensive income
40,65165,830Total shareholders' equity
640,549966,601Non- controlling interest
640,551966,603Total liabilities and shareholders' equity
966,2651,150,561(1) Restricted as the security package required for the bank loans as of December 31, 2009. Use of such funds are permitted provided that the proportionate amount of debt must be retired concurrently. As of December 31, 2010, the bank loans were fully repaid. (2) Financial Information is extracted from the audited financial statements included in the Company fiscal 2009 20F.Exhibit 2MINDRAY MEDICAL INTERNATIONAL LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except for share and per share data)Three months ended December
31,Year ended December
31,2009201020092010US$ US$ US$ US$ (unaudited) (unaudited) (Note 2)(unaudited)Net revenues-PRC87,48489,829292,607293,435- International 101,346121,146341,576410,874Net revenues188,830210,975634,183704,309Cost of revenues (note 3)(86,783)(95,674)(280,319)(303,334)Gross profit102,047115,301353,864400,975Selling expenses (note 3)(33,138)(41,894)(106,142)(122,960)General and administrative expenses (note 3)(15,988)(18,329)(47,512)(61,193)Research and development expenses (note 3)(14,747)(16,763)(58,383)(60,316)Realignment costs — post acquisition(185)(919)(1,215)(919)Operating income37,98937,396140,612155,587Other income, net6,4548,69825,5258,835Interest income1,8572,9056,57411,575Interest expense(878)(437)(4,759)(2,900)Income before income taxes and non-controlling interests45,42248,562167,952173,097Provision for income taxes(8,011)(7,513)(28,764)(17,631)Net Income37,41141,049139,188155,466Less: Net income attributable to non-controlling interests----Net Income attributable to the Company37,41141,049139,188155,466Basic earnings per share0.340.361.281.37Diluted earnings per share0.330.351.231.32Shares used in the computation of:Basic earnings per share109,251,426114,627,335108,567,305113,638,024Diluted earnings per share113,673,043117,957,675113,025,775117,581,196(3) Share-based compensation charges incurred during the period related to:Cost of revenues9474467320Selling expenses5487093,4062,569General and administrative expenses7443353,3181,591Research and development expenses6035803,0472,800Exhibit 3MINDRAY MEDICAL INTERNATIONAL LIMITEDRECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEARESTCOMPARABLE GAAP MEASURES(Dollars in thousands, except for share and per share data)Three months ended
December 31,Year ended
(unaudited)Non-GAAP net income41,662
170,944Non-GAAP net margin
24.3%Amortization of acquired intangible assets
(7,487)Deferred tax impact related to acquired intangible assets
208Realignment costs — post acquisition
(919)Income from early termination contract
(7,280)GAAP net income
155,466GAAP net margin
22.1%Non-GAAP income per share - basic
1.50Non-GAAP income per share - diluted
1.45GAAP income per share - basic
1.37GAAP income per share - diluted
1.32 Shares used in computation of: Basic earnings per share
113,638,024 Diluted earnings per share
117,581,196Non-GAAP operating income42,300
171,273Non-GAAP operating margin
24.3%Amortization of acquired intangible assets
(7,487)Realignment costs — post acquisition
(7,280)GAAP operating income
155,587GAAP operating margin
22.1%Non-GAAP gross profit103,664
406,302Non-GAAP gross margin
57.7%Amortization of acquired intangible assets
(320)GAAP gross profit
400,975GAAP gross margin
56.9%Exhibit 4MINDRAY MEDICAL INTERNATIONAL LIMITEDRECONCILIATION OF GAAP NET INCOME TO EARNINGS BEFORE INTEREST, TAXES,DEPRECIATION AND AMORTIZATION(Dollars in thousands)Three months ended
December 31,Year ended
(unaudited)GAAP net income37,411
2,900Provision for income taxes8,011
17,631Earnings before interest and taxes ("EBIT")44,443
8,886Earnings before interest, taxes, depreciation and amortization ("EBITDA")
192,083 ion pump manufacturer in China.
"In spite of the continued uncertainties caused by the stagnant global economy and various proposals for healthcare reform in 2010, we maintained our focus and executed our strategy successfully, resulting in solid growth and margins for the year. We are very proud to have achieved such strong operational results while enhancing our competitive position," commented Xu Hang, Mindray's Chairman and Co-Chief Executive Officer. "As we closed the year, we continued to see robust sales growth in our key international markets and gradual improvement in our non-tender business in China, allowing us to deliver full year double digit top-line and earnings growth, as well as strong cash flow."
SUMMARY --FourthQuarter and Year Ended December 31, 2010(in $ millions, except per-share data)
Three Months Ended
Year EndedDecember 31
% chgNet Revenues
11.1%Revenues generated outside China
20.3%Revenues generated in China
13.3%Non-GAAP Gross Profit
10.6%Non-GAAP Operating Income
11.7%Non-GAAP Net Income
7.4%Non-GAAP Diluted EPS
11.5%RevenuesMindray reported net revenues of $211.0 million for the fourth quarter 2010, an 11.7% increase from $188.8 million in the fourth quarter 2009.
Net revenues generated in international markets in the fourth quarter 2010 increased 19.5% to $121.1 million from $101.3 million in the fourth quarter 2009. Net revenues generated in China in the fourth quarter 2010 increased 2.7% to $89.8 million from $87.5 million in the fourth quarter 2009.
Performance by SegmentPatient Monitoring & Life Support Products: Patient monitoring & life support products segment revenues increased 19.9% to $99.1 million from $82.7 million in the fourth quarter 2009. The patient monitoring & life support products segment contributed 47.0% to the total net segment revenues in the fourth quarter 2010.
In-Vitro Diagnostic Products: In-vitro diagnostic products segment revenues increased 11.4% to $51.1 million from $45.8 million in the fourth quarter 2009. The in-vitro diagnostic products segment contributed 24.2% to the total net segment revenues in the fourth quarter 2010.
Medical Imaging Systems: Medical imaging systems segment revenues increased 4.3% to $50.6 million from $48.5 million in the fourth quarter 2009. The medical imaging systems segment contributed 24.0% to the total net segment revenues in the fourth quarter 2010.
Others: The other revenues, which are primarily comprised of service fees charged for post warranty period repair services, decreased 13.6% to $10.2 million from $11.8 million in the fourth quarter 2009. The other revenues contributed 4.8% to the total net segment revenues in the fourth quarter 2010.
The segment revenue amounts discussed above include shipping and handling fees charged to customers.
Gross MarginsFourth quarter 2010 gross profit was $115.3 million, a 13.0% increase from $102.0 million in the fourth quarter 2009. Non-GAAP gross profit in the fourth quarter was $116.5 million, a 12.4% increase from $103.7 million in the fourth quarter 2009. The consolidated gross margin for the fourth quarter 2010 was 54.7% compared to 54.0% in the fourth quarter 2009 and 58.8% in the third quarter 2010. Non-GAAP gross margin was 55.2% in the fourth quarter 2010 compared to 54.9% in the fourth quarter 2009 and 59.5% in the third quarter 2010.
Operating ExpensesSelling expenses for the fourth quarter 2010 were $41.9 million, or 19.9% of the total net revenues, compared to 17.5% in the fourth quarter 2009 and 18.0% in the third quarter 2010. Non-GAAP selling expenses for the fourth quarter 2010 were $40.6 million, or 19.2% of the total net revenues, compared to 16.9% in the fourth quarter 2009 and 17.2% in the third quarter 2010.
General and administrative expenses for the fourth quarter 2010 were $18.3 million, or 8.7% of the total net revenues, compared to 8.5% in the fourth quarter 2009 and 9.0% in the third quarter 2010. Non-GAAP general and administrative expenses for the fourth quarter 2010 were $18.0 million, or 8.5% of the total net revenues, compared to 8.1% in the fourth quarter 2009 and 8.8% in the third quarter 2010.
Research and development expenses for the fourth quarter 2010 were $16.8 million, or 7.9% of the total net revenues compared to 7.8% in the fourth quarter 2009 and 8.8% in the third quarter 2010. Non-GAAP research and development expenses for the fourth quarter 2010 were $16.2 million, or 7.7% of the total net revenues compared to 7.5% in the fourth quarter 2009 and 8.3% in the third quarter 2010.
Total share-based compensation expenses, which were allocated to cost of goods sold and related operating expenses, were $1.7 million in the fourth quarter 2010 compared to $2.0 million in the fourth quarter 2009 and $1.9 million in the third quarter 2010.
Operating income in the fourth quarter 2010 was $37.4 million, a 1.6% decrease from $38.0 million in the fourth quarter 2009. Non-GAAP operating income in the fourth quarter 2010 was $41.8 million, a 1.3% decrease from $42.3 million in the fourth quarter 2009. Operating margin was 17.7% in the fourth quarter 2010 compared to 20.1% in the fourth quarter 2009 and 23.0% in the third quarter 2010. Non-GAAP operating margin was 19.8% in the fourth quarter 2010 compared to 22.4% in the fourth quarter 2009 and 25.2% in the third quarter 2010.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")Fourth quarter 2010 EBITDA increased 3.1% year-over-year to $53.3 million from $51.7 million in the fourth quarter 2009.
Net IncomeFourth quarter 2010 net income was $41.0 million compared to $37.4 million in the fourth quarter 2009. Fourth quarter 2010 non-GAAP net income increased 8.9% year-over-year to $45.4 million from $41.7 million in the fourth quarter 2009. Net margin in the fourth quarter was 19.5% compared to 19.8% in the fourth quarter 2009 and 21.4% in the third quarter 2010. Non-GAAP net margin was 21.5% in the fourth quarter 2010 compared to 22.1% in the fourth quarter 2009 and 23.5% in the third quarter 2010. Fourth quarter 2010 income tax expense was $7.5 million, representing an effective tax rate of 15.5% compared to a 17.6% effective tax rate in the fourth quarter 2009.
Fourth quarter 2010 basic and diluted earnings per share were $0.36 and $0.35, respectively, compared to $0.34 and $0.33 in the fourth quarter 2009. Fourth quarter 2010 basic and fully diluted non-GAAP earnings per share were $0.40 and $0.38, respectively, compared to $0.38 and $0.37 in the fourth quarter 2009. Shares used in the computation of diluted earnings per share for the fourth quarter 2010 were 118 million.
Other Select DataAverage accounts receivable days outstanding were 59 days in the fourth quarter 2010 compared to 68 days in the third quarter 2010. Average inventory days outstanding were 82 days in the fourth quarter 2010 compared to 116 days in the third quarter 2010. Average accounts payable days outstanding were 45 days in the fourth quarter 2010 compared to 66 days in the third quarter 2010. Mindray calculates the above working capital days using the average of beginning and ending balances of the quarter.
As of December 31, 2010, the company had total $433.5 million in cash and cash equivalents, and short-term investments as compared to $381.9 million as of September 30, 2010. Net cash generated from operating activities and net cash outflow for capital expenditures for the quarter were $67.3 million and $21.9 million, respectively.
As of December 31, 2010 the company had approximately 6,782 employees compared to about 5,874 employees as of December 31, 2009.
Full Year 2010 ResultsMindray reported net revenues of $704.3 million for the full year 2010, an 11.1% increase from $634.2 million for the full year 2009.
Full year 2010 EBITDA decreased 1.0% year-over-year to $192.1 million from $194.0 million in the full year 2009.
Full year 2010 net income was $155.5 million compared to $139.2 million in 2009. Full year 2010 non-GAAP net income increased 16.0% year-over-year to $170.9 million from $147.4 million in 2009. Net margin was 22.1% in the full year 2010 compared to 21.9% in 2009. Non-GAAP net margin was 24.3% in the full year 2010 compared to 23.2% in 2009. Full year 2010 income tax expense was $17.6 million, representing an effective tax rate of 10.2% compared to 17.1% in the full year 2009.
Full year 2010 diluted earnings per share increased 7.4% year-over-year to $1.32 from $1.23 in the full year 2009. Full year 2010 non-GAAP diluted earnings per share increased 11.5% to $1.45 from $1.30 in the full year 2009.
In February 2011, we obtained a nationwide key software enterprise status, which allows us to enjoy 10% corporate income tax rate for our Shenzhen subsidiary for calendar year 2010. The related tax saving as a result of this change in 2010 corporate income tax rate for the Shenzhen subsidiary was estimated to be $7.8 million. U.S. GAAP requires the company to recognize the related financial impact as a result of the change in enacted tax rate when substantive approval is received. As a result, the related adjustment to our corporate income tax provision will be recorded in the first quarter of 2011 and the applicable corporate income tax rate for our Shenzhen subsidiary as reported in the 2010 financial statements remains at 15%. The granting of the nationwide key software enterprise status is subject to approval each year. There is no reliable indication that Mindray will be granted this status in 2011 or in any future years.
Dividend DeclarationMindray's board of directors has declared a cash dividend on its ordinary shares of $0.30 per share, based on the company's net income for the full year 2010. The cash dividend will be payable on or around June 1, 2011, to shareholders of record as of April 26, 2011. The company has approximately 115.1 million ordinary shares outstanding as of February 28, 2011.
Business Outlook for Full Year 2011Mindray expects that the Shenke acquisition agreement will have minimal impact to its financial results in 2011. The company continues to expect its full year 2011 net revenues to be more than 16% higher than its full year 2010 net revenues.
The company also expects its full year 2011 non-GAAP net income to grow more than 10% over its non-GAAP net income for full year 2010. This guidance excludes the tax benefits related to the key software enterprise status ($8.6 million recognized in the first quarter of 2010 and approximately $7.8 million to be recorded in the first quarter of 2011) and assumes a corporate income tax rate of 15% applicable to the Shenzhen subsidiary.
The company expects its capital expenditure for 2011 to be in the range of $70 million to $80 million.
The company's practice is to provide guidance on a full year basis only. This forecast reflects Mindray's current and preliminary views, which are subject to change.
"Looking ahead to 2011, the overall market environment continues to improve," commented Li Xiting, Mindray's President and Co-Chief Executive Officer. "There are still lingering uncertainties in some markets, such as the political instability in the Middle East and Africa. Nonetheless, we are optimistic about the growth prospects of our key international territories, particularly in emerging markets, as well as the recovery of the US business and the continued robust investment and spending in the Chinese healthcare sector. We will strive to achieve another year of operational excellence through continually investing in our international sales and marketing infrastructure, both in key emerging markets and developed markets. In China, although tender business will continue to be unpredictable, we are encouraged about our non-tender sales based on the government's renewed focus on county level hospitals as well as the progress of our strategic initiatives. Last but not least, R&D investment remains Mindray's top priority."
Conference Call InformationMindray's management will hold an earnings conference call at 8:00 AM on March 1, 2011 U.S. Eastern Time (9:00 PM on March 1, 2011 Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:Hong Kong:
+852-3002-1672U.S. Toll Free:
+1-857-350-1676Passcode for all regions:
MindrayA replay of the conference call may be accessed by phone at the following numbers until March 15, 2011.U.S. Toll Free:
6529 4305Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of Mindray's website at http://www.mindray.com.
Use of Non-GAAP Financial MeasuresMindray provides gross profit, R&D expenses, selling expenses, general and administrative expenses, operating income, net income and earnings per share on a non-GAAP basis that excludes share-based compensation expense, acquired intangible assets amortization expense, realignment costs – post acquisition, and other income from onetime early termination of contract, all net of related tax impact, as well as EBITDA to enable investors to better assess the company's operating performance. The non-GAAP measures described by the company are reconciled to the corresponding GAAP measure in the exhibit below titled "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures".
The company has reported for the fourth quarter of 2010 and provided guidance for full year 2011 earnings on a non-GAAP basis. Each of the terms as used by the company is defined as follows:
|SOURCE Mindray Medical International Limited|
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