8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

November 3, 2008

Date of Report (Date of earliest event reported)

CARDIAC SCIENCE CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	000-51512	94-3300396
(State or Other Jurisdiction	(Commission File No.)	(IRS Employer
of Incorporation)		Identification No.)

3303 Monte Villa Parkway, Bothell, Washington	98021
(Address of Principal Executive Offices)	(Zip Code)

(425) 402-2000

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On November 3, 2008, Cardiac Science Corporation issued its earnings release announcing its financial results for the three and nine month periods ended September 30, 2008. A copy of the earnings release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

     The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

     99.1       Earnings release of Cardiac Science Corporation dated November 3, 2008.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

CARDIAC SCIENCE CORPORATION
By:	/s/ Michael K. Matysik
	Michael K. Matysik
	Senior Vice President and Chief Financial Officer

Dated: November 4, 2008

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Earnings release of Cardiac Science Corporation dated November 3, 2008.

EX-99.1

CARDIAC SCIENCE REPORTS RECORD REVENUE

Third quarter revenue up 20% to $54 million;
International product sales nearly double;
EPS of $0.11; Operating cash flow of $6.4 million

Bothell, WA — November 3, 2008 — Cardiac Science Corporation [NASDAQ: CSCX], a global leader in advanced cardiac diagnosis, resuscitation, rehabilitation, and informatics products, announced revenue for the quarter ended September 30, 2008 of $54.0 million, an increase of 20% over the prior year period.

Revenue growth resulted from increases in defibrillation sales of 34% and service revenue of 16%, offset by a small decrease in cardiac monitoring sales of 3%. Total international product sales nearly doubled, increasing 96% over the prior year’s third quarter, driven primarily by strong automated external defibrillator (AED) sales and continued expansion in the sales of hospital defibrillators.

The Company reported net income of $2.5 million, or $0.11 per diluted share in the third quarter, compared to net income of $1.8 million, or $0.08 per diluted share in the third quarter of 2007, an increase of 41%.

“Our strong third quarter revenue growth reflects the continued expansion of AED sales globally, as well as the increasing acceptance of our new hospital defibrillator,” said John Hinson, president and chief executive officer. “We are also quite pleased with the continued improvement in our operating profit and cash flow,” he concluded.

Third Quarter Financial Results

Third quarter revenue of $54.0 million represented an increase of 20% over the $45.1 million in revenue reported in the third quarter of 2007.

The increase in defibrillation revenue was driven primarily by strong global AED sales. International AED sales were up 106%, with increases in most areas, particularly Europe and Japan. International hospital defibrillator sales also contributed to this growth as the Company completed a second quarter of full shipments. Domestic AED sales declined by approximately 16% compared with the very strong results of the prior year’s quarter. However, domestic AED sales continued to increase sequentially, with third quarter sales increasing approximately 4% compared with the second quarter of 2008.

The Company believes general economic concerns are continuing to influence buying activity in the cardiac monitoring portion of the business, particularly in U.S. hospitals. Total cardiac monitoring sales declined 3% during the quarter, however, total year to date cardiac monitoring sales were relatively flat, with less than a 1% decline when compared with the same period last year.

The increase in service revenue of 16% reflected growth in both global AED program management and cardiac monitoring contract sales, resulting from an increased emphasis on promoting these offerings.

Third quarter gross margin was 48.4%, a decrease over the year-ago gross margin of 49.0%. This slight decrease was primarily due to the accrual of costs of $0.8 million for the voluntary field action the Company announced on October 13, 2008.

Operating expenses in the third quarter of 2008 were $22.1 million, or 41.0% of revenue. This compares to operating expenses of $19.9 million for the third quarter of 2007, or 44.0% of revenue. The increase reflects growth in the pace of research and development activities related to future product releases, higher sales commissions and other costs associated with the overall growth in revenue.

Operating income in the third quarter was $4.0 million compared with $2.3 million in the third quarter of the prior year, an improvement of 74.4%. Operating margin increased from 5.1% to 7.4%.

Net income for the third quarter was $2.5 million, or $0.11 per diluted share, a 40.9% increase over net income of $1.8 million or $0.08 per diluted share last year.

The Company generated $6.4 million in cash from operating activities during the quarter and had $33.4 million in cash and short-term investments as of September 30, 2008.

Outlook

The Company previously raised guidance for full year 2008 to ranges between $205 and $210 million for revenue, $8.75 and $9.5 million for net income, and $0.38 and $0.41 for earnings per share. The Company still expects to finish the full year within this earlier guidance, although it is now more comfortable with the lower ends of these ranges.

Non-GAAP and Pro Forma Financial Information

This news release contains a discussion of EBITDA, Adjusted EBITDA, Pro Forma Operating Income, and Pro Forma Net Income, which are non-GAAP financial measures provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The term “EBITDA” refers to a financial measure defined as earnings before net interest, income taxes, depreciation, and amortization. “Adjusted EBITDA” refers to EBITDA before stock-based compensation and litigation expense. Pro Forma Operating Income refers to Operating Income before litigation expense. Pro Forma Net Income refers to Net Income before litigation expenses and the related tax effect of these expenses. None of these measures are a substitute for measures determined in accordance with GAAP, and may not be comparable to the same measures as reported by other companies. EBITDA, Adjusted EBITDA, Pro Forma Operating Income, and Pro Forma Net Income are an integral part of the internal management reporting and planning process and are the primary measures used by management to evaluate the operating performance of the Company. The components of these measures include the key revenue and expense items for which operating managers are responsible and upon which their performance is evaluated. The Company also uses Adjusted EBITDA for planning purposes and in presentations to its board of directors. Reconciliations of net income, the most comparable

GAAP measure, to EBITDA, Adjusted EBITDA, Pro Forma Operating Income, and Pro Forma Net Income are contained in this press release.

Conference Call Information

Cardiac Science will conduct a conference call at 4:30 p.m. Eastern Time today to discuss the Company’s financial results for the third quarter. The call will be hosted by John Hinson, chief executive officer, and Mike Matysik, senior vice president and chief financial officer.

To access the conference call, please dial 800.257.3401. International participants can call 303.262.2125. The call will also be web cast live at www.cardiacscience.com. An audio replay of the call will be available for 7 days following the call at (800) 405-2236 for U.S. callers or 303.590.3000 for those calling outside the U.S. The password required to access the replay is 11121157#. An audio archive will be available at www.cardiacscience.com for 90 days following the call.

For more information,

Company Contact:	Investor Contact:	Media Contact:
Mike Matysik	Jenifer Kirtland	Christopher Gale
Cardiac Science Corporation	EVC Group, Inc.	EVC Group, Inc.
Sr. Vice President and CFO	415.896.6820	201.646.5431
425.402.2009		203.570.4681
		cgale@evcgroup.com

About Cardiac Science Corporation

Cardiac Science develops, manufactures, and markets a family of advanced diagnostic and therapeutic cardiology devices and systems, including automated external defibrillators (AEDs), electrocardiograph devices (ECGs), cardiac stress systems and treadmills, Holter monitoring systems, hospital defibrillators, cardiac rehabilitation telemetry systems, and cardiology data management systems (informatics) that connect with hospital information (HIS), electronic medical record (EMR), and other information systems. The Company sells a variety of related products and consumables, and provides a portfolio of training, maintenance, and support services. Cardiac Science, the successor to the cardiac businesses that established the trusted Burdick^®, HeartCentrix^®, Powerheart^®, and Quinton^® brands, is headquartered in Bothell, Washington. With customers in more than 100 countries worldwide, the company has operations in North America, Europe, and Asia. For information, call 425.402.2000 or visit www.cardiacscience.com.

Forward Looking Statements

This press release contains forward-looking statements. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Forward looking statements in this press release include, but are not limited to, those relating to Cardiac Science Corporation’s future revenue, earnings, earnings per share, cash flow, gross margins, Adjusted EBITDA, its ability to expand its distribution partnerships and revenue derived from them, product releases and revenue derived from them and possible acquisitions. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause or contribute to such varying results and other risks are more fully

described in the Annual Report on Form 10-K filed by Cardiac Science Corporation for the year ended December 31, 2007. Cardiac Science Corporation undertakes no duty or obligation to update the information provided herein.

LOGO: http://www.cardiacscience.com/images/main_logo.gif
CSCX-F

(Tables to Follow)

Cardiac Science Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)

	Three Months Ended September 30,
	2008						2007
	$			%			$			%
Revenues:
Cardiac monitoring products	$	15,316			28.4	%	$	15,715			34.8	%
Defibrillation products		34,071			63.1	%		25,430			56.3	%
Total product revenues		49,387			91.4	%		41,145			91.1	%
Service		4,619			8.6	%		3,999			8.9	%
Total revenues		54,006			100.0	%		45,144			100.0	%
Cost of Revenues:
Products		24,799			50.2	%		19,749			48.0	%
Service		3,088			66.9	%		3,252			81.3	%
Total cost of revenues		27,887			51.6	%		23,001			51.0	%
Gross Profit:
Products		24,588			49.8	%		21,396			52.0	%
Service		1,531			33.1	%		747			18.7	%
Gross profit		26,119			48.4	%		22,143			49.0	%
Operating Expenses:
Research and development		4,103			7.6	%		3,391			7.5	%
Sales and marketing		12,934			23.9	%		11,913			26.4	%
General and administrative		5,096			9.4	%		4,462			9.9	%
Litigation and related expenses		—			0.0	%		91			0.2	%
Total operating expenses		22,133			41.0	%		19,857			44.0	%
Operating income		3,986			7.4	%		2,286			5.1	%
Other Income:
Interest income, net		156			0.3	%		103			0.2	%
Other income, net		20			0.0	%		406			0.9	%
Total other income		176			0.3	%		509			1.1	%
Income before income tax expense and minority interests		4,162			7.7	%		2,795			6.2	%
Income tax expense		(1,598	)		-3.0	%		(1,023	)		-2.3	%
Income before minority interests		2,564			4.7	%		1,772			3.9	%
Minority interests		(86	)		-0.2	%		(13	)		0.0	%
Net income	$	2,478			4.6	%	$	1,759			3.9	%
Net income per share — basic	$	0.11					$	0.08
Net income per share — diluted	$	0.11					$	0.08
Weighted average shares outstanding — basic		22,892,161						22,726,066
Weighted average shares outstanding — diluted		23,413,042						23,290,558

Cardiac Science Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)

	Nine Months Ended September 30,
	2008						2007
	$			%			$			%
Revenues:
Cardiac monitoring products	$	48,613			31.3	%	$	49,070			37.3	%
Defibrillation products		92,371			59.6	%		70,553			53.6	%
Total product revenues		140,984			90.9	%		119,623			90.8	%
Service		14,113			9.1	%		12,080			9.2	%
Total revenues		155,097			100.0	%		131,703			100.0	%
Cost of Revenues:
Products		69,260			49.1	%		58,535			48.9	%
Service		9,557			67.7	%		9,379			77.6	%
Total cost of revenues		78,817			50.8	%		67,914			51.6	%
Gross Profit:
Products		71,724			50.9	%		61,088			51.1	%
Service		4,556			32.3	%		2,701			22.4	%
Gross profit		76,280			49.2	%		63,789			48.4	%
Operating Expenses:
Research and development		11,762			7.6	%		9,463			7.2	%
Sales and marketing		38,170			24.6	%		34,466			26.2	%
General and administrative		15,568			10.0	%		13,907			10.6	%
Litigation and related expenses		—			0.0	%		3,808			2.9	%
Licensing income and litigation settlement		—			0.0	%		(6,000	)		-4.6	%
Total operating expenses		65,500			42.2	%		55,644			42.2	%
Operating income		10,780			7.0	%		8,145			6.2	%
Other Income:
Interest income, net		434			0.3	%		199			0.2	%
Other income, net		106			0.1	%		858			0.7	%
Total other income		540			0.3	%		1,057			0.8	%
Income before income tax expense and minority interests		11,320			7.3	%		9,202			7.0	%
Income tax expense		(4,245	)		-2.7	%		(3,103	)		-2.4	%
Income before minority interests		7,075			4.6	%		6,099			4.6	%
Minority interests		(257	)		-0.2	%		24			0.0	%
Net income	$	6,818			4.4	%	$	6,123			4.6	%
Net income per share — basic	$	0.30					$	0.27
Net income per share — diluted	$	0.29					$	0.26
Weighted average shares outstanding — basic		22,840,524						22,676,332
Weighted average shares outstanding — diluted		23,402,011						23,248,930

Cardiac Science Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)

	September 30, 2008		December 31, 2007
ASSETS
Current Assets:
Cash and cash equivalents	$	32,595	$	20,159
Short-term investments		845		350
Accounts receivable, net		30,278		29,439
Inventories		23,493		21,794
Deferred income taxes		9,556		9,558
Prepaid expenses and other current assets		2,901		2,509
Total current assets		99,668		83,809
Other assets		400		125
Machinery and equipment, net of accumulated depreciation		5,677		5,056
Deferred income taxes		26,333		30,288
Intangible assets, net of accumulated amortization		32,272		35,053
Investments in unconsolidated entities		725		727
Goodwill		107,613		107,613
Total assets	$	272,688	$	262,671
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	12,031	$	12,792
Accrued liabilities		11,392		11,075
Warranty liability		4,374		3,211
Deferred revenue		8,206		8,141
Total current liabilities		36,003		35,219
Other liabilities		—		54
Total liabilities		36,003		35,273
Minority interests		384		127
Shareholders’ Equity		236,301		227,271
Total liabilities and shareholders’ equity	$	272,688	$	262,671

Cardiac Science Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

	Three Months Ended
	September 30,
	2008			2007
Operating Activities:
Net income	$	2,478		$	1,759
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		469			574
Depreciation and amortization		1,544			1,762
Deferred income taxes		1,493			912
Minority interests		86			62
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable, net		(526	)		243
Inventories		(929	)		(259	)
Prepaid expenses and other assets		(151	)		617
Accounts payable		(591	)		(1,881	)
Accrued liabilities		1,113			(385	)
Warranty liability		825			264
Deferred revenue		555			33
Net cash provided by operating activities		6,366			3,701
Investing Activities:
Purchases of short-term investments		(845	)		(346	)
Maturities of short-term investments		—			395
Purchases of machinery and equipment		(983	)		(866	)
Proceeds from repayment of note		38			—
Cash paid for acquisitions		(156	)		(215	)
Net cash used in investing activities		(1,946	)		(1,032	)
Financing Activities:
Proceeds from exercise of stock options and issuance of shares under employee purchase plan		541			147
Minimum tax withholding on restricted stock awards		(87	)		(76	)
Net cash provided by financing activities		454			71
Net change in cash and cash equivalents		4,874			2,740
Cash and cash equivalents, beginning of period		27,721			13,821
Cash and cash equivalents, end of period	$	32,595		$	16,561

Cardiac Science Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

	Nine Months Ended
	September 30,
	2008			2007
Operating Activities:
Net income	$	6,818		$	6,123
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		1,515			1,749
Depreciation and amortization		4,777			5,074
Licensing income and litigation settlement		—			(6,000	)
Deferred income taxes		3,955			2,864
Minority interests		257			24
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable, net		(1,169	)		(117	)
Inventories		(1,678	)		(2,800	)
Prepaid expenses and other assets		(445	)		(395	)
Accounts payable		(827	)		666
Accrued liabilities		729			889
Warranty liability		1,163			637
Deferred revenue		65			628
Net cash provided by operating activities		15,160			9,342
Investing Activities:
Purchases of short-term investments		(845	)		(890	)
Maturities of short-term investments		350			1,091
Purchase of patents as part of litigation settlement		—			(1,000	)
Purchases of machinery and equipment		(2,425	)		(1,688	)
Proceeds from repayment of note		38			—
Cash paid for acquisitions		(580	)		(777	)
Net cash used in investing activities		(3,462	)		(3,264	)
Financing Activities:
Proceeds from exercise of stock options and issuance of shares under employee purchase plan		887			748
Minimum tax withholding on restricted stock awards		(149	)		(84	)
Net cash provided by financing activities		738			664
Net change in cash and cash equivalents		12,436			6,742
Cash and cash equivalents, beginning of period		20,159			9,819
Cash and cash equivalents, end of period	$	32,595		$	16,561

Cardiac Science Corporation and Subsidiaries
Reconciliation of GAAP Results to Non-GAAP Results (unaudited)
(in thousands, except share and per share amounts)

	Reconciliation of Net Income to Adjusted EBITDA
	Three Months Ended						Three Months Ended
	September 30, 2008						September 30, 2007
				% of revenue						% of revenue
Net income	$	2,478			4.6	%	$	1,759			3.9	%
Depreciation and amortization		1,544			2.9	%		1,762			3.9	%
Interest income		(156	)		-0.3	%		(103	)		-0.2	%
Income tax expense		1,598			3.0	%		1,023			2.3	%
EBITDA		5,464			10.1	%		4,441			9.8	%
Stock-based compensation		469			0.9	%		574			1.3	%
Litigation and related expenses		—			0.0	%		91			0.2	%
Adjusted EBITDA	$	5,933			11.0	%	$	5,106			11.3	%

	Reconciliation of Net Income to Adjusted EBITDA
	Nine Months Ended						Nine Months Ended
	September 30, 2008						September 30, 2007
				% of revenue						% of revenue
Net income	$	6,818			4.4	%	$	6,123			4.6	%
Depreciation and amortization		4,777			3.1	%		5,074			3.9	%
Interest income		(434	)		-0.3	%		(199	)		-0.2	%
Income tax expense		4,245			2.7	%		3,103			2.4	%
EBITDA		15,406			9.9	%		14,101			10.7	%
Stock-based compensation		1,515			1.0	%		1,749			1.3	%
Litigation and related expenses		—			0.0	%		3,808			2.9	%
Licensing income and litigation settlement		—			0.0	%		(6,000	)		-4.6	%
Adjusted EBITDA	$	16,921			10.9	%	$	13,658			10.4	%

	Reconciliation of Operating Income to Pro Forma Operating Income
	Three Months Ended					Three Months Ended
	September 30, 2008					September 30, 2007
			% of revenue					% of revenue
Operating income	$	3,986		7.4	%	$	2,286		5.1	%
Litigation and related expenses		—		0.0	%		91		0.2	%
Pro forma operating income	$	3,986		7.4	%	$	2,377		5.3	%

	Reconciliation of Operating Income to Pro Forma Operating Income
	Nine Months Ended					Nine Months Ended
	September 30, 2008					September 30, 2007
			% of revenue						% of revenue
Operating income	$	10,780		7.0	%	$	8,145			6.2	%
Litigation and related expenses		—		0.0	%		3,808			2.9	%
Licensing income and litigation settlement		—		0.0	%		(6,000	)		-4.6	%
Pro forma operating income	$	10,780		7.0	%	$	5,953			4.5	%

	Reconciliation of Net Income to Pro Forma Net Income
	Three Months Ended					Three Months Ended
	September 30, 2008					September 30, 2007
			% of revenue						% of revenue
Net income	$	2,478		4.6	%	$	1,759			3.9	%
Litigation and related expenses		—		0.0	%		91			0.2	%
Tax effect		—		0.0	%		(34	)		-0.1	%
Pro forma net income	$	2,478		4.6	%	$	1,816			4.0	%
Weighted average shares outstanding — diluted		23,413,042					23,290,558
Net income per share — diluted	$	0.11				$	0.08

	Reconciliation of Net Income to Pro Forma Net Income
	Nine Months Ended					Nine Months Ended
	September 30, 2008					September 30, 2007
			% of revenue						% of revenue
Net income	$	6,818		4.4	%	$	6,123			4.6	%
Litigation and related expenses		—		0.0	%		3,808			2.9	%
Licensing income and litigation settlement		—		0.0	%		(6,000	)		-4.6	%
Tax effect		—		0.0	%		804			0.6	%
Pro forma net income	$	6,818		4.4	%	$	4,735			3.6	%
Weighted average shares outstanding — diluted		23,402,011					23,248,930
Net income per share — diluted	$	0.29				$	0.20