x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
o
|
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 o
|
Accelerated filer x
|
Non-accelerated filer o
|
Smaller reporting company o
|
(Do not check if a smaller reporting company) |
Page
|
||
PART I. FINANCIAL INFORMATION
|
|
|
Item 1.
|
|
|
3
|
||
4
|
||
5
|
||
6
|
||
Item 2.
|
16
|
|
Item 3.
|
32
|
|
Item 4.
|
33
|
|
Item 4T.
|
33
|
|
PART II. OTHER INFORMATION
|
|
|
Item 1.
|
34
|
|
Item 1A.
|
34
|
|
Item 2.
|
43
|
|
Item 3.
|
44
|
|
Item 4.
|
44
|
|
Item 5.
|
44
|
|
Item 6.
|
44
|
|
45
|
Item 1.
|
Condensed Consolidated Financial Statements (Unaudited)
|
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues
|
$ | 40,025 | $ | 35,277 | $ | 76,028 | $ | 70,230 | ||||||||
Cost of revenues
|
18,004 | 15,527 | 34,784 | 30,696 | ||||||||||||
Gross profit
|
22,021 | 19,750 | 41,244 | 39,534 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
3,008 | 3,296 | 6,462 | 6,374 | ||||||||||||
Sales and marketing
|
9,335 | 8,408 | 18,487 | 17,041 | ||||||||||||
General and administrative
|
4,495 | 2,652 | 7,914 | 4,776 | ||||||||||||
Total operating expenses
|
16,838 | 14,356 | 32,863 | 28,191 | ||||||||||||
Income from operations
|
5,183 | 5,394 | 8,381 | 11,343 | ||||||||||||
Interest and other income (expense), net
|
56 | 757 | 350 | 652 | ||||||||||||
Income before income tax provision
|
5,239 | 6,151 | 8,731 | 11,995 | ||||||||||||
Income tax provision
|
1,918 | 2,402 | 3,196 | 4,666 | ||||||||||||
Net income
|
$ | 3,321 | $ | 3,749 | $ | 5,535 | $ | 7,329 | ||||||||
Net income per share:
|
||||||||||||||||
Basic net income per share
|
$ | 0.15 | $ | 0.17 | $ | 0.25 | $ | 0.33 | ||||||||
Diluted net income per share
|
$ | 0.15 | $ | 0.17 | $ | 0.24 | $ | 0.32 | ||||||||
Shares used in the calculation of net income per share:
|
||||||||||||||||
Weighted average common shares outstanding - basic
|
22,290,000 | 22,317,000 | 22,484,000 | 22,264,000 | ||||||||||||
Weighted average common shares outstanding - diluted
|
22,564,000 | 22,691,000 | 22,850,000 | 22,736,000 |
September 30,
2011 |
March 31,
2011 |
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 37,994 | $ | 43,471 | ||||
Short-term investments
|
17,649 | 25,981 | ||||||
Receivables (net of allowances of $259 at September 30, 2011 and $320 at March 31, 2011)
|
27,490 | 27,880 | ||||||
Inventories
|
19,109 | 19,814 | ||||||
Prepaid expenses and other current assets
|
5,068 | 3,496 | ||||||
Net deferred tax assets, current
|
3,048 | 3,422 | ||||||
Total current assets
|
110,358 | 124,064 | ||||||
Long-term investments
|
29,099 | 36,237 | ||||||
Investment in unconsolidated affiliate
|
2,697 | 2,769 | ||||||
Property and equipment, net
|
22,913 | 19,637 | ||||||
Intangible assets, net
|
3,919 | 4,216 | ||||||
Net deferred tax assets, non-current
|
1,203 | 1,203 | ||||||
Other assets
|
111 | 134 | ||||||
Total assets
|
$ | 170,300 | $ | 188,260 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 6,996 | $ | 6,173 | ||||
Accrued payroll and related expenses
|
6,873 | 6,129 | ||||||
Accrued taxes
|
232 | 559 | ||||||
Other accrued liabilities
|
1,788 | 1,677 | ||||||
Deferred revenue
|
1,103 | 953 | ||||||
Warranty reserve
|
1,123 | 1,031 | ||||||
Total current liabilities
|
18,115 | 16,522 | ||||||
Non-current liabilities:
|
||||||||
Deferred rent
|
530 | 416 | ||||||
Deferred revenue
|
2,105 | 1,737 | ||||||
Warranty reserve
|
313 | 191 | ||||||
Notes payable, less current portion
|
834 | 746 | ||||||
Total non-current liabilities
|
3,782 | 3,090 | ||||||
Total liabilities
|
21,897 | 19,612 | ||||||
Commitments and contingencies (Note 9)
|
||||||||
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; 21,653,000 and 22,587,000 shares issued and outstanding at September 30, 2011 and at March 31, 2011, respectively
|
106,262 | 132,042 | ||||||
Retained earnings
|
42,141 | 36,606 | ||||||
Total shareholders' equity
|
148,403 | 168,648 | ||||||
Total liabilities and shareholders' equity
|
$ | 170,300 | $ | 188,260 |
Six Months Ended
September 30, |
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 5,535 | $ | 7,329 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,435 | 2,196 | ||||||
Investment premium amortization, net
|
503 | 191 | ||||||
Net loss on disposals of property and equipment
|
8 | 5 | ||||||
Net loss (gain) on foreign exchange translation
|
141 | (233 | ) | |||||
Share-based compensation expense
|
2,682 | 2,249 | ||||||
Excess tax benefits from share-based awards
|
(486 | ) | (489 | ) | ||||
Provision for deferred income taxes
|
374 | 476 | ||||||
Equity in net loss of unconsolidated affiliate
|
72 | - | ||||||
Changes in assets and liabilities:
|
||||||||
Receivables, net
|
288 | (1,016 | ) | |||||
Inventories
|
41 | 716 | ||||||
Prepaid expenses and other current assets
|
(1,144 | ) | (719 | ) | ||||
Other assets
|
20 | (27 | ) | |||||
Accounts payable
|
839 | (3,925 | ) | |||||
Accrued payroll and related expenses
|
744 | 139 | ||||||
Accrued taxes
|
(316 | ) | 302 | |||||
Other accrued liabilities
|
96 | (39 | ) | |||||
Deferred rent
|
114 | 165 | ||||||
Deferred revenue
|
518 | 133 | ||||||
Warranty reserve
|
214 | (492 | ) | |||||
Net cash provided by operating activities
|
12,678 | 6,961 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of held-to-maturity investments
|
(18,174 | ) | (35,438 | ) | ||||
Proceeds from maturities and redemptions of held-to-maturity investments
|
33,141 | 43,933 | ||||||
Purchases of property and equipment
|
(4,777 | ) | (1,725 | ) | ||||
Net cash provided by investing activities
|
10,190 | 6,770 | ||||||
Cash flows from financing activities:
|
||||||||
Proceeds from notes payable from municipal agency
|
147 | - | ||||||
Proceeds from the exercise of stock options
|
430 | 449 | ||||||
Tax withholdings related to net share settlements of restricted stock units
|
(2,019 | ) | (1,969 | ) | ||||
Repurchases of common stock
|
(27,328 | ) | - | |||||
Excess tax benefits from share-based awards
|
486 | 489 | ||||||
Net cash used in financing activities
|
(28,284 | ) | (1,031 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(61 | ) | 93 | |||||
Net (decrease) increase in cash and cash equivalents
|
(5,477 | ) | 12,793 | |||||
Cash and cash equivalents at beginning of period
|
43,471 | 27,857 | ||||||
Cash and cash equivalents at end of period
|
$ | 37,994 | $ | 40,650 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for income taxes, net of refunds
|
$ | 2,796 | $ | 3,759 | ||||
Supplemental disclosure of non-cash flow information:
|
||||||||
Transfers of equipment between inventory and property and equipment, net
|
$ | 645 | $ | 417 | ||||
Net change in capitalized share-based compensation
|
$ | (19 | ) | $ | 16 | |||
Common stock withheld for employee taxes in connection with share-based compensation
|
$ | 2,019 | $ | 1,969 | ||||
Repayment of notes payable by credits from municipal agency
|
$ | 44 | $ | - |
·
|
provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how the consideration should be allocated;
|
·
|
require an entity to allocate revenue in an arrangement using estimated selling price (“ESP”) of deliverables if a vendor does not first have vendor-specific objective evidence (“VSOE”) of selling price or secondly does not have third-party evidence (“TPE”) of selling price; and
|
·
|
eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method.
|
September 30, 2011
Amortized Cost |
March 31, 2011
Amortized Cost |
|||||||
Short-term investments
|
||||||||
Held-to-maturity:
|
||||||||
Certificates of deposits
|
$ | 3,537 | $ | 11,834 | ||||
Commercial paper
|
- | 1,997 | ||||||
Corporate bonds
|
7,140 | 6,132 | ||||||
Municipal bonds
|
6,972 | 6,018 | ||||||
Total short-term investments in held-to-maturity
|
$ | 17,649 | $ | 25,981 | ||||
Long-term investments
|
||||||||
Held-to-maturity:
|
||||||||
Certificates of deposits
|
$ | 250 | $ | 250 | ||||
Corporate bonds
|
19,272 | 17,402 | ||||||
Municipal bonds
|
6,577 | 5,585 | ||||||
U.S. agency securities
|
3,000 | 13,000 | ||||||
Total long-term investments in held-to-maturity
|
$ | 29,099 | $ | 36,237 |
September 30, 2011 | March 31, 2011 | |||||||
Investments
|
Amortized Cost
|
Amortized Cost
|
||||||
Due in less than one year
|
$ | 17,649 | $ | 25,981 | ||||
Due in 1 to 4 years
|
29,099 | 36,237 | ||||||
Total investments
|
$ | 46,748 | $ | 62,218 |
As of September 30, 2011
|
||||||||||||||||
Quoted Prices in
|
Significant
|
|||||||||||||||
Active Markets for
|
Significant Other
|
Unobservable
|
||||||||||||||
Identical Assets |
Observable Inputs
|
Inputs
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$ | 352 | $ | - | $ | - | $ | 352 | ||||||||
Total assets at fair value
|
$ | 352 | $ | - | $ | - | $ | 352 | ||||||||
As of March 31, 2011
|
||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$ | 2,415 | $ | - | $ | - | $ | 2,415 | ||||||||
Total assets at fair value
|
$ | 2,415 | $ | - | $ | - | $ | 2,415 |
September 30,
2011 |
March 31,
2011 |
|||||||
Raw materials
|
$ | 9,095 | $ | 9,950 | ||||
Work-in-process
|
2,282 | 2,323 | ||||||
Finished goods
|
7,732 | 7,541 | ||||||
Inventories
|
$ | 19,109 | $ | 19,814 |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance at beginning of period
|
$ | 1,470 | $ | 1,014 | $ | 1,222 | $ | 1,343 | ||||||||
Provision for warranty expense
|
270 | 285 | 613 | 410 | ||||||||||||
Warranty costs incurred
|
(304 | ) | (191 | ) | (656 | ) | (338 | ) | ||||||||
Adjustment to pre-existing warranties
|
- | (257 | ) | 257 | (564 | ) | ||||||||||
Balance at end of period
|
1,436 | 851 | 1,436 | 851 | ||||||||||||
Non-current portion of warranty reserve
|
313 | 53 | 313 | 53 | ||||||||||||
Current portion of warranty reserve
|
$ | 1,123 | $ | 798 | $ | 1,123 | $ | 798 |
Three Months Ended
|
Six Months Ended
|
|||||||
September 30, 2011
|
September 30, 2011
|
|||||||
Number of shares repurchased
|
1,168,000 | 1,168,000 | ||||||
Total cost
|
$ | 27,328 | $ | 27,328 | ||||
Average per share cost including commissions
|
$ | 23.41 | $ | 23.41 |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cost of revenues
|
$ | 316 | $ | 162 | $ | 511 | $ | 307 | ||||||||
Research and development
|
203 | 150 | 415 | 489 | ||||||||||||
Sales and marketing
|
429 | 280 | 927 | 774 | ||||||||||||
General and administrative
|
614 | 523 | 829 | 679 | ||||||||||||
Share-based compensation expense before income taxes
|
1,562 | 1,115 | 2,682 | 2,249 | ||||||||||||
Income tax benefit
|
(544 | ) | (419 | ) | (933 | ) | (851 | ) | ||||||||
Total share-based compensation expense after income taxes
|
$ | 1,018 | $ | 696 | $ | 1,749 | $ | 1,398 | ||||||||
Net impact of share-based compensation on:
|
||||||||||||||||
Basic net income per share
|
$ | 0.05 | $ | 0.03 | $ | 0.08 | $ | 0.06 | ||||||||
Diluted net income per share
|
$ | 0.05 | $ | 0.03 | $ | 0.08 | $ | 0.06 |
Number of
Shares |
Weighted
Average |
Weighted
Average |
Aggregate
Intrinsic |
|||||||||||||
Outstanding at March 31, 2011
|
406,000 | $ | 12.10 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
(94,000 | ) | 4.57 | |||||||||||||
Canceled or forfeited
|
(2,000 | ) | 5.31 | |||||||||||||
Outstanding at September 30, 2011
|
310,000 | $ | 14.43 | 2.23 | $ | 2,626 | ||||||||||
Vested and expected to vest at September 30, 2011
|
310,000 | $ | 14.43 | 2.23 | $ | 2,626 | ||||||||||
Exercisable at September 30, 2011
|
310,000 | $ | 14.43 | 2.23 | $ | 2,626 |
·
|
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.
|
Number of
Shares |
Weighted
Average |
|||||||
Unvested at March 31, 2011
|
940,000 | $ | 22.09 | |||||
Granted
|
376,000 | 27.07 | ||||||
Vested(2)
|
(212,000 | ) | 21.47 | |||||
Canceled or forfeited
|
(12,000 | ) | 24.43 | |||||
Unvested at September 30, 2011
|
1,092,000 | $ | 23.90 |
(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
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$ | 3,321 | $ | 3,749 | $ | 5,535 | $ | 7,329 | ||||||||
Denominator:
|
||||||||||||||||
Weighted average common shares outstanding - basic
|
22,290,000 | 22,317,000 | 22,484,000 | 22,264,000 | ||||||||||||
Weighted average effect of dilutive securities:
|
||||||||||||||||
Stock options
|
123,000 | 293,000 | 156,000 | 318,000 | ||||||||||||
Restricted stock units
|
142,000 | 81,000 | 201,000 | 154,000 | ||||||||||||
Warrants
|
9,000 | - | 9,000 | - | ||||||||||||
Weighted average common shares outstanding - diluted
|
22,564,000 | 22,691,000 | 22,850,000 | 22,736,000 | ||||||||||||
Net income per share:
|
||||||||||||||||
Basic net income per share
|
$ | 0.15 | $ | 0.17 | $ | 0.25 | $ | 0.33 | ||||||||
Diluted net income per share
|
$ | 0.15 | $ | 0.17 | $ | 0.24 | $ | 0.32 |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Weighted average number of shares underlying antidilutive stock options
|
- | 159,000 | - | - | ||||||||||||
Weighted average exercise price per share underlying antidilutive stock options
|
N/A | $ | 21.65 | N/A | N/A |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Weighted average number of shares underlying antidilutive restricted stock units
|
264,000 | 536,000 | 219,000 | 275,000 |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Medical Market
|
$ | 7,333 | $ | 6,857 | $ | 14,489 | $ | 13,295 | ||||||||
Veterinary Market
|
31,548 | 26,649 | 59,217 | 53,467 | ||||||||||||
Other(1)
|
1,144 | 1,771 | 2,322 | 3,468 | ||||||||||||
Total revenues
|
40,025 | 35,277 | 76,028 | 70,230 | ||||||||||||
Cost of revenues:
|
||||||||||||||||
Medical Market
|
3,323 | 3,237 | 6,666 | 6,206 | ||||||||||||
Veterinary Market
|
13,017 | 11,143 | 25,421 | 22,056 | ||||||||||||
Other(1)
|
1,664 | 1,147 | 2,697 | 2,434 | ||||||||||||
Total cost of revenues
|
18,004 | 15,527 | 34,784 | 30,696 | ||||||||||||
Gross profit:
|
||||||||||||||||
Medical Market
|
4,010 | 3,620 | 7,823 | 7,089 | ||||||||||||
Veterinary Market
|
18,531 | 15,506 | 33,796 | 31,411 | ||||||||||||
Other(1)
|
(520 | ) | 624 | (375 | ) | 1,034 | ||||||||||
Gross profit
|
$ | 22,021 | $ | 19,750 | $ | 41,244 | $ | 39,534 |
(1)
|
Represents unallocated items, not specifically identified to any particular business segment.
|
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
Revenues by Product Category
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Instruments(1)
|
$ | 8,756 | $ | 7,642 | $ | 16,285 | $ | 14,967 | ||||||||
Consumables(2)
|
29,504 | 25,309 | 56,211 | 50,627 | ||||||||||||
Other products
|
1,718 | 1,936 | 3,447 | 3,805 | ||||||||||||
Product sales, net
|
39,978 | 34,887 | 75,943 | 69,399 | ||||||||||||
Development and licensing revenue
|
47 | 390 | 85 | 831 | ||||||||||||
Total revenues
|
$ | 40,025 | $ | 35,277 | $ | 76,028 | $ | 70,230 |
(1)
|
Instruments include chemistry analyzers, hematology instruments, VSpro coagulation and specialty analyzers and i-STAT analyzers.
|
(2)
|
Consumables include reagent discs, hematology reagent kits, VSpro coagulation and specialty cartridges, i-STAT cartridges and rapid tests.
|
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
Revenues by Geographic Region
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
North America
|
$ | 31,985 | $ | 29,528 | $ | 61,693 | $ | 57,317 | ||||||||
Europe
|
6,628 | 4,703 | 11,810 | 10,330 | ||||||||||||
Asia Pacific and rest of the world
|
1,412 | 1,046 | 2,525 | 2,583 | ||||||||||||
Total revenues
|
$ | 40,025 | $ | 35,277 | $ | 76,028 | $ | 70,230 |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
Distributor
|
Geographical
Location |
2011
|
2010
|
2011
|
2010
|
|||||||||||
Walco International, Inc., d/b/a DVM Resources
|
United States
|
10 | % | 10 | % | 10 | % |
<10%
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
·
|
Medical Market: We currently market the blood analysis system in the medical market under the name Piccolo® Xpress. Through October 2006, we marketed the blood analysis system in the medical market as the Piccolo, now referred to as the Piccolo Classic. We continue to support and service our current population of Piccolo Xpress and Piccolo Classic chemistry analyzers.
|
·
|
Veterinary Market: We currently market the blood analysis system in the veterinary market under the name VetScan VS2. Through March 2006, we marketed the blood analysis system in the veterinary market as the VetScan, now referred to as the VetScan Classic. We continue to support and service our current population of VetScan VS2 and VetScan Classic chemistry analyzers.
|
·
|
Canine Heartworm Rapid Test: In January 2009, we introduced the VetScan Canine Heartworm Rapid Test, a highly sensitive and specific test for the detection of Dirofilaria immitis in canine whole blood, serum or plasma. The lateral flow immunoassay technology in the canine heartworm rapid tests provides immediate results.
|
·
|
Canine Parvovirus Rapid Test: In March 2011, we introduced the VetScan Canine Parvovirus Rapid Test Kit, a qualitative test for the detection of canine parvovirus antigen in feces. The VetScan Canine Parvovirus Rapid Test Kit uses a unique combination of monoclonal antibodies that provides the detection of parvovirus antigen, allowing the veterinarian to screen for and diagnose the infection.
|
·
|
VetScan Giardia Rapid Test: In May 2011, we introduced the VetScan Giardia Rapid Test, which detects giardiasis, a gastrointestinal infection caused by the protozoan parasite Giardia. Symptoms of Giardia infection include diarrhea and weight loss and infection is also more common in younger pets.
|
Three Months Ended
September 30,
|
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
Revenues by Geographic Region
|
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
||||||||||||||||||||||||
North America
|
$ | 31,985 | $ | 29,528 | $ | 2,457 | 8 | % | $ | 61,693 | $ | 57,317 | $ | 4,376 | 8 | % | ||||||||||||||||
Percentage of total revenues
|
80 | % | 84 | % | 81 | % | 82 | % | ||||||||||||||||||||||||
Europe
|
6,628 | 4,703 | 1,925 | 41 | % | 11,810 | 10,330 | 1,480 | 14 | % | ||||||||||||||||||||||
Percentage of total revenues
|
17 | % | 13 | % | 16 | % | 15 | % | ||||||||||||||||||||||||
Asia Pacific and rest of the world
|
1,412 | 1,046 | 366 | 35 | % | 2,525 | 2,583 | (58 | ) | (2 | )% | |||||||||||||||||||||
Percentage of total revenues
|
3 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||||||||
Total revenues
|
$ | 40,025 | $ | 35,277 | $ | 4,748 | 13 | % | $ | 76,028 | $ | 70,230 | $ | 5,798 | 8 | % | ||||||||||||||||
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
Increase/
|
Percent
|
Increase/
|
Percent
|
|||||||||||||||||||||||||||||
Revenues by Product Category
|
2011 | 2010 |
(Decrease)
|
Change
|
2011 | 2010 |
(Decrease)
|
Change
|
||||||||||||||||||||||||
Instruments(1)
|
$ | 8,756 | $ | 7,642 | $ | 1,114 | 15 | % | $ | 16,285 | $ | 14,967 | $ | 1,318 | 9 | % | ||||||||||||||||
Percentage of total revenues
|
22 | % | 22 | % | 21 | % | 21 | % | ||||||||||||||||||||||||
Consumables(2)
|
29,504 | 25,309 | 4,195 | 17 | % | 56,211 | 50,627 | 5,584 | 11 | % | ||||||||||||||||||||||
Percentage of total revenues
|
74 | % | 72 | % | 74 | % | 72 | % | ||||||||||||||||||||||||
Other products
|
1,718 | 1,936 | (218 | ) | (11 | )% | 3,447 | 3,805 | (358 | ) | (9 | )% | ||||||||||||||||||||
Percentage of total revenues
|
4 | % | 5 | % | 5 | % | 6 | % | ||||||||||||||||||||||||
Product sales, net
|
39,978 | 34,887 | 5,091 | 15 | % | 75,943 | 69,399 | 6,544 | 9 | % | ||||||||||||||||||||||
Percentage of total revenues
|
100 | % | 99 | % | 100 | % | 99 | % | ||||||||||||||||||||||||
Development and licensing revenue
|
47 | 390 | (343 | ) | (88 | )% | 85 | 831 | (746 | ) | (90 | )% | ||||||||||||||||||||
Percentage of total revenues
|
<1%
|
1 | % |
<1%
|
1 | % | ||||||||||||||||||||||||||
Total revenues
|
$ | 40,025 | $ | 35,277 | $ | 4,748 | 13 | % | $ | 76,028 | $ | 70,230 | $ | 5,798 | 8 | % |
(1)
|
Instruments include chemistry analyzers, hematology instruments, VSpro coagulation and specialty analyzers and i-STAT analyzers.
|
(2)
|
Consumables include reagent discs, hematology reagent kits, VSpro coagulation and specialty cartridges, i-STAT cartridges and rapid tests.
|
·
|
Total sales of our Piccolo chemistry analyzers and medical reagent discs in North America (excluding sales to the U.S. government) increased by 8%, or $365,000, primarily due to an increase in the sales volume of medical reagent discs to two distributors resulting from higher sales to end users, partially offset by a decrease in the sales volume of Piccolo chemistry analyzers to distributors resulting from lower sales to end users.
|
·
|
Total sales of our VetScan chemistry analyzers and veterinary reagent discs sales in North America increased by 9%, or $1.3 million, primarily due to (a) an increase in the sales volume of VetScan chemistry analyzers due in part to additional sales personnel and (b) an increase in the sales volume of veterinary reagent discs resulting from an expanded installed base of our VetScan chemistry analyzers.
|
·
|
Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 12%, or $385,000, primarily due to an increase in the sales volume of hematology reagent kits resulting from an expanded installed base of our VetScan hematology instruments.
|
·
|
Total sales from our VSpro coagulation and specialty analyzers and related consumables, i-STAT analyzers and related consumables and rapid tests in North America increased by 17%, or $824,000, primarily due to (a) an increase in the sales volume of i-STAT analyzers due in part to additional sales personnel and (b) an increase in the sales volume of rapid tests, which includes our Canine Heartworm Rapid Test, introduced in January 2009, Canine Parvovirus Rapid Test, introduced in March 2011 and VetScan Giardia Rapid Test, introduced in May 2011.
|
·
|
Total revenues from development and licensing in North America decreased by 88%, or $343,000, primarily based on a licensees’ discontinuation of license royalty payments. On June 28, 2010, we notified Cepheid that Cepheid breached its license agreement with us due to Cepheid’s discontinuation of license royalty payments. On October 1, 2010, we informed Cepheid that the breach had not been cured, and we terminated the entire license, as to all or any Cepheid products. For further information, see Note 9 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
|
·
|
Total sales of our Piccolo chemistry analyzers and medical reagent discs in North America (excluding sales to the U.S. government) increased by 11%, or $915,000, primarily due to an increase in the sales volume of medical reagent discs to two distributors resulting from higher sales to end users.
|
·
|
Total sales of our Piccolo chemistry analyzers and medical reagent discs to the U.S. government increased by 33%, or $505,000, primarily due to an increase in the sales volume of medical reagent discs based on an increase in the needs for our products, which were not predictable.
|
·
|
Total sales of our VetScan chemistry analyzers and veterinary reagent discs sales in North America increased by 6%, or $1.8 million, primarily due to (a) an increase in the sales volume of VetScan chemistry analyzers due in part to additional sales personnel and (b) an increase in the sales volume of veterinary reagent discs resulting from an expanded installed base of our VetScan chemistry analyzers and higher average selling prices.
|
·
|
Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 17%, or $993,000, primarily due to (a) an increase in the sales volume of VetScan hematology instruments due in part to additional sales personnel and (b) an increase in the sales volume of hematology reagent kits resulting from an expanded installed base of our VetScan hematology instruments.
|
·
|
Total sales from our VSpro coagulation and specialty analyzers and related consumables, i-STAT analyzers and related consumables and rapid tests in North America increased by 14%, or $1.2 million, primarily due to (a) an increase in the sales volume of i-STAT analyzers due in part to additional sales personnel and (b) an increase in the sales volume of rapid tests, which includes our Canine Heartworm Rapid Test, introduced in January 2009, Canine Parvovirus Rapid Test, introduced in March 2011 and VetScan Giardia Rapid Test, introduced in May 2011.
|
·
|
Total revenues from development and licensing in North America decreased by 90%, or $746,000, primarily based on a licensees’ discontinuation of license royalty payments. On June 28, 2010, we notified Cepheid that Cepheid breached its license agreement with us due to Cepheid’s discontinuation of license royalty payments. On October 1, 2010, we informed Cepheid that the breach had not been cured, and we terminated the entire license, as to all or any Cepheid products. For further information, see Note 9 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
|
Three Months Ended
September 30, |
Change | |||||||||||||||||||||||
2011
|
Percent of
Revenues(1) |
2010
|
Percent of
Revenues(1) |
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$ | 7,333 | 100 | % | $ | 6,857 | 100 | % | $ | 476 | 7 | % | ||||||||||||
Percentage of total revenues
|
18 | % | 19 | % | ||||||||||||||||||||
Veterinary Market
|
31,548 | 100 | % | 26,649 | 100 | % | 4,899 | 18 | % | |||||||||||||||
Percentage of total revenues
|
79 | % | 76 | % | ||||||||||||||||||||
Other(2)
|
1,144 | 1,771 | (627 | ) | (35 | )% | ||||||||||||||||||
Percentage of total revenues
|
3 | % | 5 | % | ||||||||||||||||||||
Total revenues
|
40,025 | 35,277 | 4,748 | 13 | % | |||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
3,323 | 45 | % | 3,237 | 47 | % | 86 | 3 | % | |||||||||||||||
Veterinary Market
|
13,017 | 41 | % | 11,143 | 42 | % | 1,874 | 17 | % | |||||||||||||||
Other(2)
|
1,664 | 1,147 | 517 | 45 | % | |||||||||||||||||||
Total cost of revenues
|
18,004 | 15,527 | 2,477 | 16 | % | |||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
4,010 | 55 | % | 3,620 | 53 | % | 390 | 11 | % | |||||||||||||||
Veterinary Market
|
18,531 | 59 | % | 15,506 | 58 | % | 3,025 | 20 | % | |||||||||||||||
Other(2)
|
(520 | ) | 624 | (1,144 | ) | (183 | )% | |||||||||||||||||
Gross profit
|
$ | 22,021 | $ | 19,750 | $ | 2,271 | 11 | % |
(1)
|
The percentages reported are based on our revenues by operating segment.
|
(2)
|
Represents unallocated items, not specifically identified to any particular business segment.
|
Six Months Ended
September 30, |
Change | |||||||||||||||||||||||
2011
|
Percent of
Revenues(1) |
2010
|
Percent of
Revenues(1) |
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$ | 14,489 | 100 | % | $ | 13,295 | 100 | % | $ | 1,194 | 9 | % | ||||||||||||
Percentage of total revenues
|
19 | % | 19 | % | ||||||||||||||||||||
Veterinary Market
|
59,217 | 100 | % | 53,467 | 100 | % | 5,750 | 11 | % | |||||||||||||||
Percentage of total revenues
|
78 | % | 76 | % | ||||||||||||||||||||
Other(2)
|
2,322 | 3,468 | (1,146 | ) | (33 | )% | ||||||||||||||||||
Percentage of total revenues
|
3 | % | 5 | % | ||||||||||||||||||||
Total revenues
|
76,028 | 70,230 | 5,798 | 8 | % | |||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
6,666 | 46 | % | 6,206 | 47 | % | 460 | 7 | % | |||||||||||||||
Veterinary Market
|
25,421 | 43 | % | 22,056 | 41 | % | 3,365 | 15 | % | |||||||||||||||
Other(2)
|
2,697 | 2,434 | 263 | 11 | % | |||||||||||||||||||
Total cost of revenues
|
34,784 | 30,696 | 4,088 | 13 | % | |||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
7,823 | 54 | % | 7,089 | 53 | % | 734 | 10 | % | |||||||||||||||
Veterinary Market
|
33,796 | 57 | % | 31,411 | 59 | % | 2,385 | 8 | % | |||||||||||||||
Other(2)
|
(375 | ) | 1,034 | (1,409 | ) | (136 | )% | |||||||||||||||||
Gross profit
|
$ | 41,244 | $ | 39,534 | $ | 1,710 | 4 | % |
(1)
|
The percentages reported are based on our revenues by operating segment.
|
(2)
|
Represents unallocated items, not specifically identified to any particular business segment.
|
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||||||||
Cost of revenues
|
$ | 18,004 | $ | 15,527 | $ | 2,477 | 16 | % | $ | 34,784 | $ | 30,696 | $ | 4,088 | 13 | % | ||||||||||||||||
Percentage of total revenues
|
45 | % | 44 | % | 46 | % | 44 | % |
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||||||||
Total gross profit
|
$ | 22,021 | $ | 19,750 | $ | 2,271 | 11 | % | $ | 41,244 | $ | 39,534 | $ | 1,710 | 4 | % | ||||||||||||||||
Total gross margin
|
55 | % | 56 | % | 54 | % | 56 | % |
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||||||||
Research and development expenses
|
$ | 3,008 | $ | 3,296 | $ | (288 | ) | (9 | )% | $ | 6,462 | $ | 6,374 | $ | 88 | 1 | % | |||||||||||||||
Percentage of total revenues
|
8 | % | 9 | % | 8 | % | 9 | % |
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||||||||
Sales and marketing expenses
|
$ | 9,335 | $ | 8,408 | $ | 927 | 11 | % | $ | 18,487 | $ | 17,041 | $ | 1,446 | 8 | % | ||||||||||||||||
Percentage of total revenues
|
23 | % | 24 | % | 24 | % | 24 | % |
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
2011
|
2010
|
Increase/
(Decrease) |
Percent
Change |
|||||||||||||||||||||||||
General and administrative expenses
|
$ | 4,495 | $ | 2,652 | $ | 1,843 | 69 | % | $ | 7,914 | $ | 4,776 | $ | 3,138 | 66 | % | ||||||||||||||||
Percentage of total revenues
|
11 | % | 8 | % | 10 | % | 7 | % |
Three Months Ended
September 30, |
Change
|
Six Months Ended
September 30, |
Change
|
|||||||||||||||||||||
2011
|
2010
|
Increase/
(Decrease) |
2011
|
2010
|
Increase/
(Decrease) |
|||||||||||||||||||
Interest and other income (expense), net
|
$ | 56 | $ | 757 | $ | (701 | ) | $ | 350 | $ | 652 | $ | (302 | ) |
Three Months Ended
September 30, |
Six Months Ended
September 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Income tax provision
|
$ | 1,918 | $ | 2,402 | $ | 3,196 | $ | 4,666 | ||||||||
Effective tax rate
|
37 | % | 39 | % | 37 | % | 39 | % |
September 30,
2011 |
March 31,
2011 |
|||||||
Cash and cash equivalents
|
$ | 37,994 | $ | 43,471 | ||||
Short-term investments
|
17,649 | 25,981 | ||||||
Long-term investments
|
29,099 | 36,237 | ||||||
Total cash, cash equivalents and investments
|
$ | 84,742 | $ | 105,689 | ||||
Percentage of total assets
|
50 | % | 56 | % |
Six Months Ended
September 30, |
||||||||
2011
|
2010
|
|||||||
Net cash provided by operating activities
|
$ | 12,678 | $ | 6,961 | ||||
Net cash provided by investing activities
|
10,190 | 6,770 | ||||||
Net cash used in financing activities
|
(28,284 | ) | (1,031 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(61 | ) | 93 | |||||
Net (decrease) increase in cash and cash equivalents
|
$ | (5,477 | ) | $ | 12,793 |
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 4T.
|
Controls and Procedures
|
Item1.
|
Legal Proceedings
|
Item1A.
|
Risk Factors
|
·
|
new product announcements made by us or our competitors;
|
·
|
changes in our pricing structures or the pricing structures of our competitors;
|
·
|
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 product sales between our instruments and our consumable products;
|
·
|
the amount we spend on research and development; and
|
·
|
changes in our strategy.
|
·
|
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 single source suppliers, Hamamatsu Corporation and UDT Sensors (a division of OSI Optoelectronics). Our analyzers also use a printer that is primarily made by Seiko North America Corporation. 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. and Nypro, Inc., 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 dry reagent chemistry beads that are either inserted in our reagent discs or sold as stand-alone products: Amano Enzyme USA Co., Ltd., Sekisui Diagnostics (formerly Genzyme Diagnostics), 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., 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, currently, we have qualified two suppliers to produce the reagent kits for our hematology instruments: Clinical Diagnostic Solutions, Inc. and Diatron.
|
·
|
Coagulation and Specialty Analyzers and Cartridges: Our VetScan VSpro coagulation and specialty analyzers and cartridges are manufactured by Scandinavian MicroBiodevices APS 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 Point of Care Inc. in North America and are purchased by us as completed products.
|
·
|
continue to improve our existing products and develop new and innovative products;
|
·
|
increase our sales and marketing activities;
|
·
|
effectively manage our manufacturing activities; and
|
·
|
effectively compete against current and future competitors.
|
·
|
we will be able to maintain consistent growth through our key distributors in the human diagnostic market;
|
·
|
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.
|
·
|
we may not be able to control the amount and timing of resources that our collaborators may devote to products from which we derive royalties;
|
·
|
disputes may arise with respect to the ownership of rights to technology developed with our partners;
|
·
|
disagreements with our partners could cause delays in, or termination of, the research, development or commercialization of products or result in litigation or arbitration;
|
·
|
contracts with our partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform;
|
·
|
should a partner fail to develop or commercialize products based on technologies we may license, we may not receive any future payments or any royalties for the technologies or products;
|
·
|
collaborative arrangements are often terminated or allowed to expire, such as our former license with Cepheid, which would adversely impact our royalty revenues; and
|
·
|
our corporate partners may be unable to pay us, particularly in light of current economic conditions.
|
·
|
commercial clinical laboratories;
|
·
|
hospitals’ clinical laboratories; and
|
·
|
manufacturers of bench top multi-test blood analyzers and other testing systems that health care providers can use “on-site” (a listing of our competitors is listed below).
|
·
|
range of tests offered;
|
·
|
immediacy of results;
|
·
|
cost effectiveness;
|
·
|
ease of use; and
|
·
|
reliability of results.
|
·
|
waived;
|
·
|
moderately complex; and
|
·
|
highly complex.
|
·
|
United States Food and Drug Administration (“FDA”): In December 2010, August 2008, September 2005 and March 2003, the FDA conducted a facility inspection and verified our compliance with the 21 CFR 820 Regulation.
|
·
|
United States Department of Agriculture: In October 2009, we received a United States Veterinary Biologics Establishment License from the United States Department of Agriculture.
|
·
|
State of California Food and Drug Branch (“FDB”): In April 2001, the FDB granted our manufacturing facility “in compliance” status, based on the regulations for Good Manufacturing Practices for medical devices. In May 2001, the FDB granted licensing for our manufacturing facility in Union City, California. In December 2010, the FDB conducted a routine facility inspection and verified our compliance with Good Manufacturing Practices for medical devices.
|
·
|
International Organization for Standardization (“ISO”): In May 2002, we received our ISO 9001 certification, expanding our compliance with international quality standards. In December 2003, we received ISO 13485 Quality System certification as required by the 2003 European In Vitro Device Directive. This certified our quality system specifically to medical devices. In April 2005, we received the Canadian Medical Device Conformity Assessment System stamp on our ISO 13485 certificate to signify compliance with Health Canada regulations. In October 2009, we received our recertification to the ISO 13485:2003 Quality System Standard for medical devices. In May 2010 and May 2011, we were recommended for continued certification to ISO 13485:2003 by our current ISO registrar.
|
·
|
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.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Total Number of Shares Purchased
|
Average Price Paid Per Share Including Commissions
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or approximate dollar amount) of Shares that May Yet be Purchased Under the Plans or Programs
|
|||||||||||||
Month #1 (July 1, 2011 to July 31, 2011)
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Month #2 (August 1, 2011 to August 31, 2011)
|
915,739
|
$
|
23.08
|
915,739
|
$
|
18,862,000
|
||||||||||
Month #3 (September 1, 2011 to September 30, 2011)
|
251,784
|
$
|
24.59
|
251,784
|
$
|
12,672,000
|
||||||||||
Total
|
1,167,523
|
$
|
23.41
|
1,167,523
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Removed and Reserved
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit No.
|
Description of Document
|
3.1
|
Restated Articles of Incorporation (Filed with the Securities and Exchange Commission as an exhibit with our Annual Report on Form 10-K for the fiscal year ended March 31, 1993 and incorporated herein by reference.)
|
3.2
|
Certificate of Amendment of Amended and Restated Articles of Incorporation (Filed with the Securities and Exchange Commission as an exhibit with our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 1996 and incorporated herein by reference.)
|
3.3
|
By-laws (Filed with the Securities and Exchange Commission in our Registration Statement No. 33-44326 on December 11, 1991 and incorporated herein by reference.)
|
3.4
|
Amendment to the By-laws (Filed with the Securities and Exchange Commission as an exhibit with our Current Report on Form 8-K on July 30, 2007 and incorporated herein by reference.)
|
4.1
|
Registration Rights Agreement, dated as of March 29, 2002 (Filed with the Securities and Exchange Commission as an exhibit with our Current Report on Form 8-K on May 13, 2002 and incorporated herein by reference.)
|
4.2
|
Reference is made to Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4.
|
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#
|
The following materials from Abaxis’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) unaudited Condensed Consolidated Statements of Income for the three and six months ended September 30, 2011 and 2010, (ii) unaudited Condensed Consolidated Balance Sheets as of September 30, 2011 and March 31, 2011, (iii) unaudited Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2011 and 2010, and (iv) Notes to Condensed Consolidated Financial Statements.
|
#
|
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: November 9, 2011 | |||
By:
|
/s/ Clinton H. Severson | ||
Clinton H. Severson | |||
President, Chief Executive Officer and Director | |||
(Principal Executive Officer) |
Date: November 9, 2011 | |||
By:
|
/s/ Alberto R. Santa Ines | ||
Alberto R. Santa Ines | |||
Chief Financial Officer and Vice President of Finance | |||
(Principal Financial and Accounting 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 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:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer 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):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 9, 2011
|
By:
|
/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 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:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer 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):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 9, 2011
|
By:
|
/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.
|
Dated: November 9, 2011
|
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.
|
Dated: November 9, 2011
|
By:
|
/s/ Alberto R. Santa Ines | |
Alberto R. Santa Ines
|
|||
Chief Financial Officer and Vice President of Finance
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Current assets: | ||
Receivables, allowances | $ 259 | $ 320 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 35,000,000 | 35,000,000 |
Common stock, shares issued (in shares) | 21,653,000 | 22,587,000 |
Common stock, shares outstanding (in shares) | 21,653,000 | 22,587,000 |
Document And Entity Information | 6 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 04, 2011 | |
Entity Registrant Name | ABAXIS INC | |
Entity Central Index Key | 0000881890 | |
Current Fiscal Year End Date | --03-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,677,000 | |
Document Fiscal Year Focus | 2012 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
WARRANTY RESERVES | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY RESERVES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY RESERVES | NOTE 7. WARRANTY RESERVES We provide for the estimated future costs to be incurred under our standard warranty obligation on our instruments and reagent discs. Instruments. Our standard warranty obligation on instruments ranges from one to three years. The estimated contractual warranty obligation is recorded when the related revenue is recognized and any additional amount is recorded when such cost is probable and can be reasonably estimated. Cost of revenues reflects estimated warranty expense for instruments sold in the current period and any adjustments in estimated warranty expense for the installed base under our standard warranty obligation based on our quarterly evaluation of service experience. The estimated accrual for warranty exposure is based on historical experience as to product failures, estimated product failure rates, estimated repair costs, material usage and freight incurred in repairing the instrument after failure and known design changes under the warranty plan. During the six months ended September 30, 2011, we recorded an additional accrual to pre-existing warranties of $257,000, which increased our warranty reserves and our cost of revenues, based on both historical and projected product performance rates. Management continually 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. Reagent Discs. We record a provision for defective reagent discs when the related sale is recognized and any additional amount is recorded when such cost is probable and can be reasonably estimated. The warranty cost includes the replacement costs and freight of a defective reagent disc. During the three and six months ended September 30, 2011, the provision for warranty expense related to replacement of defective reagent discs was $103,000 and $194,000, respectively. The balance of accrued warranty reserve related to replacement of defective reagent discs at September 30, 2011 and 2010 was $539,000 and $329,000, respectively, which was classified as a current liability on the condensed consolidated balance sheets. We evaluate our estimates for warranty reserves on an ongoing basis and believe we have the ability to reasonably estimate warranty costs. However, unforeseeable changes in factors may impact the estimate for warranty and such changes could cause a material change in our warranty reserve accrual in the period in which the change was identified. The change in our accrued warranty reserve during the three and six months ended September 30, 2011 and 2010 is summarized as follows (in thousands):
|
:+=("Z%3HNSJV%MSL.;_?,.QC6;C=;
M[6:W[08!I\>50S1TJL>
M`"^J/H]G-6CAFXH!XLZ;5`_`-Q4#^)#?I0/P%ZEWO7!*7[8&W9;];AUM`RUE
M["=4C_>:!/]*C!BIRWMO()L&$(#]%
M-@..I^$KU^G3CT'\P9>W/X[C#_9'Q@,Y5A]W?D]T+$>+':;C12`^[OA2SP*^
M>,^&./,'-N716*IF($;Q>]::Q1\80FI*A7L1]HG])I+CB7VTXR"-`+/2U%(%
M4HD/#%\VY\(,&X:!;Q]I^:=XS]HT-ST8\:D,8."-G`(/+\2<7853K@R8B\N;
M4S;8_9%/9Q_^"Q3E0_;3\>7Y^=G-^>G%S34[NCAAQY<7-V<7OYQ>')^=7B-Z
M>SB]PW7O^3F4X5P/'R?^=LNSV5H\8,EIW-
NET INCOME PER SHARE | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | NOTE 12. NET INCOME PER SHARE Basic net income per share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common shares for all potential dilutive common shares outstanding using the treasury stock method. Dilutive potential common shares outstanding include outstanding stock options, restricted stock units and warrants. The following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net income per share (in thousands, except share and per share data):
We excluded the following stock options from the computation of diluted weighted average shares outstanding because the exercise price of the stock options is greater than the average market price of our common stock during the period and, therefore, the inclusion of these stock options would be antidilutive to net income per share:
We excluded the following restricted stock units from the computation of diluted weighted average shares outstanding because the inclusion of these awards would be antidilutive to net income per share:
|
INVESTMENTS | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | NOTE 3. INVESTMENTS The following table summarizes short-term and long-term investments by major security type (in thousands):
For our short-term and long-term investments classified as held-to-maturity as of September 30, 2011, we had total gross unrecognized holding gains of $187,000 and total gross unrecognized losses of $354,000. The amortized cost of our investments approximates their fair value. As of September 30, 2011 and March 31, 2011, we did not have other-than-temporary impairment in the fair value of any individual security classified as held-to-maturity and we had no unrealized gain (loss) on investments. Redemptions in accordance with the callable provisions of the U.S. agency securities during the three months ended September 30, 2011 and 2010, were $13.0 million and $18.1 million, respectively, and during the six months ended September 30, 2011 and 2010, were $13.0 million and $30.6 million, respectively. The contractual maturities of short-term and long-term investments as of September 30, 2011 and March 31, 2011, are as follows (in thousands):
|
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9. COMMITMENTS AND CONTINGENCIES Purchase Commitments. In October 2008, we entered into an original equipment manufacturing (“OEM”) agreement with SMB of Denmark to purchase coagulation and specialty analyzers and related cartridges. Effective January 2011, we amended and restated our OEM agreement, including the terms of our minimum purchase commitments. Under the amended agreement, we committed to purchase a minimum number of coagulation and specialty analyzers and related cartridges on an annual basis during each calendar year 2011 through 2015. Our purchase obligations in the future may be adjusted if our minimum purchase commitments are not met during a calendar year period. At September 30, 2011, our total remaining outstanding commitment due is approximately $12.2 million. In July 2010, we entered into a development and supply equipment agreement with Diatron MI PLC (“Diatron”) of Hungary to purchase Diatron hematology instruments. Under the agreement, we committed to purchase a minimum number of hematology instruments on an annual basis during the calendar years 2010 and 2011. During the first quarter of fiscal 2012 and as of September 30, 2011, we have completed the outstanding purchase commitment in our agreement with Diatron. Patent Licensing Agreement. Effective January 2009, we entered into a license agreement with Inverness Medical Switzerland GmbH, now known as Alere Switzerland GmbH (“Alere”). Under our license agreement, we licensed co-exclusively certain worldwide patent rights related to lateral flow immunoassay technology in the field of animal health diagnostics in the professional marketplace. The license agreement provides that Alere shall not grant any future rights to any third parties under its current lateral flow patent rights in the animal health diagnostics field in the professional marketplace. The license agreement enables us to develop and market products under rights from Alere to address animal health and laboratory animal research markets. In exchange for the license rights, we (i) paid an up-front license fee of $5.0 million to Alere in January 2009, (ii) agreed to pay royalties during the term of the agreement, based solely on sales of products in a jurisdiction country covered by valid and unexpired claims in that jurisdiction under the licensed Alere patent rights, and (iii) agreed to pay a yearly minimum license fee of between $500,000 to $1.0 million per year, which fee will be creditable against any royalties due during such calendar year. The royalties, if any, are payable through the date of the expiration of the last valid patent licensed under the agreement that includes at least one claim in a jurisdiction covering products we sell in that jurisdiction. The yearly minimum fees became payable starting in fiscal 2011 for so long as we desire to maintain exclusivity under the agreement. Litigation. On June 28, 2010, we filed a patent infringement lawsuit against Cepheid with respect to Cepheid's Methicillin-resistant Staphylococcus aureus (MRSA) product, on which Cepheid has ceased paying license royalties. On December 17, 2010, Cepheid filed its amended answer and certain counterclaims seeking findings of no breach of contract, non-infringement, unenforceability and invalidity of the asserted patents, and a declaration regarding the patent term of one of the patents. We believe the counterclaims raised by Cepheid are without merit and intend to contest them vigorously. Because of the cost involved in pursuing patent infringement cases, we believe the cost of this litigation could have a material adverse effect on Abaxis, our consolidated financial position and results of operations. As of September 30, 2011, we had not recorded future litigation and related expenses to pursuing the patent infringement case and an estimate of such costs cannot be made at this time. A claims construction hearing was held in June 2011 and the court has issued its claims construction order. The case is ongoing. A trial date has been set for September 24, 2012. We are involved from time to time in various litigation matters in the normal course of business. Other than as described above, we believe that the ultimate resolution of these matters will not have a material effect on our consolidated financial position or results of operations. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows. |
SEGMENT REPORTING INFORMATION | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING INFORMATION | NOTE 14. SEGMENT REPORTING INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by our chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Abaxis develops, manufactures, markets and sells portable blood analysis systems for use in the human or veterinary patient-care setting to provide clinicians with rapid blood constituent measurements. We identify our reportable segments as those customer groups that represent more than 10% of our combined revenue or gross profit or loss of all reported operating segments. We manage our business on the basis of the following two reportable segments: (i) the medical market and (ii) the veterinary market, which are based on the products sold by market and customer group. Each reportable segment has similar manufacturing processes, technology and shared infrastructures. The accounting policies for segment reporting are the same as for the Company as a whole. We do not segregate assets by segments since our chief operating decision maker, or decision making group, does not use assets as a basis to evaluate a segment's performance. Medical Market In the medical market reportable segment, we serve a worldwide customer group consisting of military installations (ships, field hospitals and mobile care units), physicians' office practices across all specialties, urgent care, outpatient and walk-in clinics (free-standing or hospital-connected), health screening operations, home care providers (national, regional or local), nursing homes, ambulance companies, oncology treatment clinics, dialysis centers, pharmacies and hospital labs. The products manufactured and sold in this segment primarily consist of Piccolo chemistry analyzers and medical reagent discs. Veterinary Market In the veterinary market reportable segment, we serve a worldwide customer group consisting of companion animal hospitals, animal clinics with mixed practices of small animals, birds and reptiles, equine and bovine practitioners, veterinary emergency clinics, veterinary referral hospitals, universities, government, pharmaceutical companies, biotechnology companies and private research laboratories. The products manufactured and sold in this segment primarily consist of VetScan chemistry analyzers and veterinary reagent discs. We also sell OEM supplied products in this segment consisting of VetScan hematology instruments and related reagent kits, VetScan VSpro coagulation and specialty analyzers and related consumables, VetScan i-STAT analyzers and related VetScan i-STAT consumables and rapid tests. The table below summarizes revenues, cost of revenues and gross profit from our two operating segments and from certain unallocated items for the three and six months ended September 30, 2011 and 2010 (in thousands):
____________________________________________________________________
|
SHARE REPURCHASES | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
SHARE REPURCHASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
SHARE REPURCHASES | NOTE 10. SHARE REPURCHASES Share repurchase activity is as follows (in thousands, except share and average per share cost data):
In August 2011, the Board of Directors authorized $40.0 million for share repurchases. As of September 30, 2011, $12.7 million of share repurchases remain to be purchased. The repurchases are made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. Repurchased shares are retired. |
BORROWINGS | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
BORROWINGS [Abstract] | |
BORROWINGS | NOTE 8. BORROWINGS Notes Payable. Effective January 2011, we have a ten year loan agreement with the Community Redevelopment Agency of the City of Union City (“the Agency”) whereby the Agency provides us with an unsecured loan of up to $1.0 million, primarily to purchase capital equipment. The loan bears interest at 5.0% and is payable quarterly. As of September 30, 2011, our short-term and long-term notes payable balances were $100,000 and $834,000, respectively, and we recorded the short-term balance in other accrued liabilities on the condensed consolidated balance sheets. The entire outstanding balance of the note shall be payable in full on the earlier of: (i) December 2020, or (ii) the date Abaxis ceases operations in Union City, California. The Agency also has the right to accelerate the maturity date and declare all balances immediately due and payable upon the event of default as defined in the loan agreement. We evaluate covenants in our loan agreement on a quarterly basis, and we were in compliance with such covenants as of September 30, 2011. In accordance with the terms of the loan agreement, the Agency will provide Abaxis with an annual credit that can be applied against the accrued interest and outstanding principal balance on a quarterly basis. The Agency determines the annual credit based on certain taxes paid by Abaxis to the City of Union City, California for a specified period, as defined in the loan agreement. We anticipate that our annual credits from the Agency will be used to fully repay our notes payable due to the Agency. We may carry forward unused quarterly credits to apply against our outstanding balance in a future period. Credits applied to repay our notes payable and accrued interest are recorded in “Interest and other income (expense), net” on the condensed consolidated statements of income. |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business. Abaxis, Inc. (“Abaxis,” the “Company” or “we”), incorporated in California in 1989, develops, manufactures, markets and sells portable blood analysis systems for use in the human or veterinary patient-care setting to provide clinicians with rapid blood constituent measurements. Abaxis Europe GmbH, our wholly-owned subsidiary in Darmstadt, Germany since July 2008, markets, promotes and distributes diagnostic systems for medical and veterinary uses in the European market. Principles of Consolidation. The accompanying unaudited condensed consolidated financial statements as of and for the three and six month periods ended September 30, 2011 include the accounts of Abaxis and our wholly-owned subsidiary, Abaxis Europe GmbH. Intercompany transactions and balances have been eliminated in consolidation. Basis of Presentation. We have prepared the unaudited condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim periods. The unaudited condensed consolidated financial statements included herein reflect all normal recurring adjustments, which are, in the opinion of our management, necessary to state fairly the results of operations and financial position for the periods presented. The results for the three and six month periods ended September 30, 2011 are not necessarily indicative of the results to be expected for the entire fiscal year ending March 31, 2012 or for any interim or future period. These unaudited condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011. Reclassifications. Certain reclassifications have been made to prior periods' financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net income, total assets or shareholders' equity. Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such management estimates include allowance for doubtful accounts, sales and other allowances, estimated selling price of our products, fair value of investments, valuation of inventory, fair value of intangible assets, useful lives of intangible assets, income taxes, valuation allowance for deferred tax assets, share-based compensation and warranty reserves. Our management bases their estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Our actual results may differ materially from these estimates. Significant Accounting Policies. The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in our Annual Report on Form 10-K for the year ended March 31, 2011 filed with the SEC on June 13, 2011, and have not changed significantly as of September 30, 2011, except for the accounting standard on revenue recognition explained below. Revenue Recognition: In October 2009, the Financial Accounting Standards Board (the “FASB”) amended the accounting standards for certain multiple deliverable revenue arrangements to:
Our multiple-element arrangement includes the sale of one or more tangible product offerings with one or more associated services offerings, each of which are individually considered separate units of accounting. The determination of our units of accounting did not change with the adoption of the new revenue recognition guidance and as such we allocate revenue to each element in a multiple-element arrangement based upon the relative selling price of each deliverable. When applying the relative selling price method, we determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when all revenue recognition criteria are met for each element. These amendments are effective for the Company beginning on April 1, 2011 and we elected to apply the amendment prospectively to new or materially modified revenue arrangements after its effective date. The adoption of this amendment did not have a material impact on our consolidated financial position, results of operations and cash flows for the three and six months ended September 30, 2011. |
FAIR VALUE MEASUREMENTS | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 4. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (“exit price”) in an orderly transaction between market participants at the measurement date. FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3: Unobservable inputs that are supported by little or no market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions. The following table summarizes financial assets, measured at fair value on a recurring basis, by level within the fair value hierarchy as of September 30, 2011 and March 31, 2011 (in thousands):
Our Level 1 financial assets are cash equivalents, comprised of money market mutual funds, which are highly liquid instruments with original or remaining maturities of three months or less at the time of purchase that are readily convertible into cash. The fair value of our Level 1 financial assets is based on quoted market prices of the underlying security. As of September 30, 2011 and March 31, 2011, we did not have any Level 2 or Level 3 financial assets or liabilities measured at fair value on a recurring basis. During the three and six months ended September 30, 2011 and 2010, we did not have any Level 3 financial assets or liabilities on a recurring basis. |
INVENTORIES | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | NOTE 5. INVENTORIES Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or market. Components of inventories were as follows (in thousands):
|
INCOME TAXES | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 13. INCOME TAXES During the three months ended September 30, 2011 and 2010, our income tax provision was $1.9 million, based on an effective tax rate of 37%, and $2.4 million, based on an effective tax rate of 39%, respectively. During the six months ended September 30, 2011 and 2010, our income tax provision was $3.2 million, based on an effective tax rate of 37%, and $4.7 million, based on an effective tax rate of 39%, respectively. The decrease in the effective tax rate during the three and six months ended September 30, 2011, as compared to the three and six months ended September 30, 2010, was primarily due to lower state tax expenses resulting from the change in California to a single factor apportionment and an increase in federal research and development tax credits during the three and six months ended September 30, 2011. The increase in the federal research and development tax credit is due to the extension of the federal credit which occurred after September 30, 2010. We did not have any unrecognized tax benefits as of September 30, 2011 or September 30, 2010. During the three and six months ended September 30, 2011 and 2010, we did not recognize any interest or penalties related to unrecognized tax benefits. |
INVESTMENT IN UNCONSOLIDATED AFFILIATE | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
INVESTMENT IN UNCONSOLIDATED AFFILIATE [Abstract] | |
INVESTMENT IN UNCONSOLIDATED AFFILIATE | NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATE Our investment in an unconsolidated affiliate consists of an investment in equity securities of Scandinavian Micro Biodevices APS (“SMB”). In February 2011, we purchased a 15% equity ownership interest in SMB, for $2.8 million in cash. SMB is a privately-held developer and manufacturer of point-of-care diagnostic products for veterinary use. SMB, based in Farum, Denmark, has been the original equipment manufacturer of the Abaxis VetScan VSpro point-of-care coagulation and specialty analyzer since 2008. Abaxis has had exclusive distribution rights for the analyzer and associated cartridges in North America since 2008. Starting January 2011, Abaxis has non-exclusive rights in other areas of the world. We accounted for our investment in SMB using the equity method due to our significant influence over SMB's operations. During the three and six months ended September 30, 2011, we recorded our allocated portion of SMB's net loss of $34,000 and $72,000, respectively. |
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS Disclosure of Supplementary Pro Forma Information for Business Combinations: In December 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations,” (Topic 805) - Business Combinations (ASU 2010-29), to improve consistency in how the pro forma disclosures are calculated. The amendment enhances the disclosure requirements and requires description of the nature and amount of any material, nonrecurring pro forma adjustments directly attributable to a business combination. The amendment became effective for the Company beginning on April 1, 2011 and is applied prospectively to business combinations for which the acquisition date is after the effective date. The Company will assess the impact of the amendment if and when future business combinations occur. Presentation of Comprehensive Income: In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” (Topic 220) - Comprehensive Income (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the currently available option to present the components of other comprehensive income as part of the statement of shareholders' equity. The amendment does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendment is effective for the Company beginning on April 1, 2012. As this guidance relates to presentation only, the adoption of this guidance will not have any other effect on the Company's financial statements. Testing Goodwill for Impairment: In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment,” (Topic 350) - Intangibles - Goodwill and Other (ASU 2011-08), to allow entities to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. The amendment is effective for the Company beginning in fiscal 2013 and earlier adoption is permitted. We are currently evaluating the impact of adopting the amendment on our consolidated financial position, results of operations or cash flows. |
SHARE-BASED COMPENSATION | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | NOTE 11. SHARE-BASED COMPENSATION In accordance with ASC 718, “Compensation-Stock Compensation,” we recognize share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award to employees and directors. The following table summarizes total share-based compensation expense, net of tax, related to restricted stock units during the three and six months ended September 30, 2011 and 2010, which is included in our condensed consolidated statements of income (in thousands, except per share data):
Share-based compensation has been classified in the condensed consolidated statements of income or capitalized on the condensed consolidated balance sheets in the same manner as cash compensation paid to employees. Capitalized share-based compensation costs at September 30, 2011 and March 31, 2011 were $88,000 and $107,000, respectively, which were included in inventories on our condensed consolidated balance sheets. Cash Flow Impact The accounting standard with respect to share-based payment requires cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised stock options and vested restricted stock units in excess of the deferred tax asset attributable to share-based compensation expense for such share-based awards. Excess tax benefits are considered realized when the tax deductions reduce taxes that otherwise would be payable. Excess tax benefits classified as a financing cash inflow for the three months ended September 30, 2011 and 2010 were $51,000 and $80,000, respectively, and for the six months ended September 30, 2011 and 2010 were $486,000 and $489,000, respectively. Equity Compensation Plans Our share-based compensation plans are described below. 2005 Equity Incentive Plan. Our 2005 Equity Incentive Plan (the “Equity Incentive Plan”) restated and amended our 1998 Stock Option Plan. The Equity Incentive Plan allows for the awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance cash awards, performance shares, performance units, deferred compensation awards or other share-based awards to employees, directors and consultants. On October 27, 2010, our shareholders approved an amendment to the Equity Incentive Plan to (i) increase the aggregate number of shares of common stock reserved for issuance under the Equity Incentive Plan by 500,000 shares, (ii) clarify that we may continue to grant performance cash awards under the Equity Incentive Plan and (iii) reapprove the Internal Revenue Code Section 162(m) performance criteria and award limits of the Equity Incentive Plan to permit us to continue to grant awards to key officers that qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. As of September 30, 2011, the Equity Incentive Plan provides for the issuance of a maximum of 5,886,000 shares, of which 346,000 shares of common stock were then available for future issuance. Shares that are canceled or forfeited from an award and shares withheld in satisfaction of tax withholding obligations are again available for issue under the Equity Incentive Plan. Options granted to employees and directors generally expire ten years from the grant date. Options granted to employees generally become exercisable over a period of four years based on cliff-vesting terms and continuous employment. Options granted to non-employee directors generally become exercisable over a period of one year based on monthly vesting terms and continuous service. See the “Stock Options” section in this Note for additional information. Restricted stock units awarded to employees generally vest over a period of four years and the awards may also be subject to accelerated vesting upon achieving certain performance-based milestones and continuous employment during the vesting period. Restricted stock units awarded to non-employee directors generally vest in full one year after the grant date based on continuous service. See the “Restricted Stock Units” section in this Note for additional information. 1992 Outside Directors' Stock Option Plan. Under our 1992 Outside Directors' Stock Option Plan (the “Directors Plan”), options to purchase shares of common stock were automatically granted, annually, to non-employee directors. Options under the Directors Plan were nonqualified stock options and were granted at the fair market value on the date of grant and expired ten years from the date of grant. Options granted to non-employee directors generally become exercisable over a period of one year based on monthly vesting terms and continuous service. The Directors Plan provided for the issuance of a maximum of 250,000 shares. As of September 30, 2011, all outstanding options under the Directors Plan were fully vested and fully exercisable and no shares of common stock were available for future issuance because the time period for granting options expired in June 2002 in accordance with the terms of the Directors Plan. Our current practice is to issue new shares of common stock from our authorized shares for share-based awards upon the exercise of stock options or vesting of restricted stock units. Stock Options Prior to April 1, 2006, we granted stock options to employees, with an exercise price equal to the closing market price of our common stock on the date of grant and with cliff-vesting terms over four years, conditional on continuous employment with the Company. In addition, prior to April 1, 2006, we granted stock options to non-employee directors with an exercise price equal to the closing market price of our common stock on the date of grant and became exercisable over a period of one year based on monthly vesting terms, conditional on continuous service to the Company. There were no stock options granted since the beginning of fiscal 2007 and we did not grant stock options during the six months ended September 30, 2011. We have recognized compensation expense during the requisite service period of the stock option. As of September 30, 2011, we had no unrecognized compensation expense related to stock options granted. Stock Option Activity The following table summarizes information regarding options outstanding and options exercisable at September 30, 2011 and the changes during the six-month period then ended:
The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on our closing stock price as of September 30, 2011, that would have been received by the option holders had all option holders exercised their stock options as of that date. Total intrinsic value of stock options exercised during the three months ended September 30, 2011 and 2010 was $994,000 and $241,000, respectively, and during the six months ended September 30, 2011 and 2010 was $1.9 million and $1.2 million, respectively. Cash proceeds from stock options exercised during the three months ended September 30, 2011 and 2010 were $202,000 and $125,000, respectively, and during the six months ended September 30, 2011 and 2010 were $430,000 and $449,000, respectively. Restricted Stock Units We grant restricted stock unit awards to employees and directors as part of our share-based compensation program which began in fiscal 2007. The restricted stock unit awards entitle holders to receive shares of common stock at the end of a specified period of time. Vesting for restricted stock unit awards is based on continuous employment or service of the holder. Upon vesting, the equivalent number of common shares are typically issued net of tax withholdings. If the vesting conditions are not met, unvested restricted stock unit awards will be forfeited. Generally, the restricted stock unit awards vest according to one of the following time-based vesting schedules:
Certain restricted stock unit awards granted to employees in fiscal 2007 were subject to accelerated vesting upon achieving certain performance-based milestones. To date, none of the performance-based milestones required for acceleration, related to the fiscal 2007 grants, has been achieved and the related restricted stock unit grants have been fully vested based on time-based vesting. Additionally, the Compensation Committee of our Board of Directors (the “Compensation Committee”), in its discretion, may provide in the event of a change in control for the acceleration of vesting and/or settlement of the restricted stock unit held by a participant upon such conditions and to such extent as determined by the Compensation Committee. Our Board of Directors has adopted an executive change in control severance plan, which it may terminate or amend at any time, that provides that awards granted to executive officers will accelerate fully on a change of control. The vesting of non-employee director awards granted under the Equity Incentive Plan automatically will also accelerate in full upon a change in control. The fair value of restricted stock unit awards used in our expense recognition method is measured based on the number of shares granted and the closing market price of our common stock on the date of grant. Such value is recognized as an expense over the corresponding requisite service period. The share-based compensation expense is reduced for an estimate of the restricted stock unit awards that are expected to be forfeited. The forfeiture estimate is based on historical data and other factors, and compensation expense is adjusted for actual results. As of September 30, 2011, the total unrecognized compensation expense related to restricted stock unit awards granted amounted to $20.8 million, which is expected to be recognized over a weighted average service period of 2.41 years. Restricted Stock Unit Activity The following table summarizes restricted stock unit activity for the six months ended September 30, 2011:
____________________________________________________________________
Total intrinsic value of restricted stock units vested during the three months ended September 30, 2011 and 2010 was $533,000 and $1.1 million, respectively, and during the six months ended September 30, 2011 and 2010 was $5.9 million and $5.8 million, respectively. The total grant date fair value of restricted stock units vested during the three months ended September 30, 2011 and 2010 was $506,000 and $1.3 million, respectively, and during the six months ended September 30, 2011 and 2010 was $4.5 million and $5.6 million, respectively. |
REVENUES BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT CONCENTRATIONS | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT CONCENTRATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT CONCENTRATIONS | NOTE 15. REVENUES BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT CONCENTRATIONS Revenue Information The following is a summary of our revenues by product category (in thousands):
____________________________________________________________________
The following is a summary of revenues by geographic region based on customer location (in thousands):
Significant Concentrations Revenues from significant customers as a percentage of total revenues were as follows:
At September 30, 2011, one distributor in the United States accounted for 14% of our total receivables balance. At September 30, 2010, one distributor in the United States accounted for 12% of our total receivables balance. |