8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): February 10, 2009

Cynosure, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-51623	04-3125110
(State or Other Jurisdiction of Incorporation	(Commission File Number)	(IRS Employer Identification No.)

5 Carlisle Road, Westford, MA	01886
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (978) 256-4200

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

Item 2.02. Results of Operations and Financial Condition

On February 10, 2009, Cynosure, Inc. (the “Company”) announced its financial results for the quarter and year ended December 31, 2008. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release issued by the Company on February 10, 2009.

SIGNATURE

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

	CYNOSURE, INC.
Date: February 10, 2009	By: /s/ Timothy W. Baker
	Timothy W. Baker
	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by the Company on February 10, 2009

EX-99.1

Exhibit 99.1

Contact:

Scott Solomon

Vice President

Sharon Merrill Associates, Inc.

617-542-5300

cyno@investorrelations.com

CYNOSURE REPORTS FINANCIAL RESULTS FOR THE

FOURTH QUARTER AND FULL YEAR 2008

Westford, Mass., February 10, 2009 – Cynosure, Inc. (NASDAQ: CYNO), a leading developer and manufacturer of a broad array of light-based aesthetic treatment systems, today announced financial results for the three and 12 months ended December 31, 2008.

Fourth-Quarter 2008 Financial Results

Consistent with Cynosure’s January 15, 2009 announcement, revenues for the three months ended December 31, 2008 were $25.5 million, reflecting the effect of deteriorating global economic conditions and a weakening credit environment in the aesthetic laser industry. Revenues for the comparable period of 2007 were $36.6 million. Gross margin for the fourth quarter of 2008 was 61.0% of total revenues, compared with 65.9% for the same period in 2007. The decline in gross margin was attributable to pricing pressure and a shift in the geographic product mix in the fourth quarter of 2008, which saw a higher percentage of laser revenue from the company’s international customers than in the comparable quarter of 2007.

Net loss for the fourth quarter of 2008 was $2.5 million, or $0.20 per basic share. For the comparable period of 2007, Cynosure reported net income of $5.3 million, or $0.41 per diluted share. Results for the fourth quarter of 2008 included a bad debt charge of $2.7 million related to uncollectible accounts from certain customers affected by the overall economic environment and the tightening of credit markets, which subsequently caused a number of practitioners to be unable to meet their payment obligations to Cynosure.

On a non-GAAP basis, which excludes stock-based compensation expense and its related income tax effects, the net loss was $1.9 million, or $0.15 per basic share, for the fourth quarter of 2008, compared with non-GAAP net income of $5.9 million, or $0.46 per diluted share, for the fourth quarter of 2007. Please refer to the financial reconciliations included in this news release for a reconciliation of GAAP results to non-GAAP results for the three months ended December 31, 2008 and 2007.

“The global economic downturn has created an extremely challenging environment for the aesthetic industry,” said Cynosure President and Chief Executive Officer Michael Davin. “After achieving 13 consecutive quarters of year-over-year, double-digit percentage revenue growth, our revenue declined sharply in the fourth quarter as a number of prospective customers faced tighter lending standards and some physicians opted to delay planned capital equipment purchases.”

“As previously announced, Cynosure has taken a number of steps to bring expenses in line with current revenue levels,” Davin said. “We have reduced our worldwide headcount by 17%, decreased spending on multiple programs and implemented other cost-control initiatives. Together, we expect these actions to produce an annualized savings of approximately $8 million to $10 million as we work toward managing the business profitably in 2009.”

“Despite the economic headwinds, we believe Cynosure concluded 2008 in a strong competitive position,” Davin said. “During 2008, we extended our track record of innovation with the introduction of three new workstations, including Smartlipo MPX™ for laser lipolysis, Accolade™ for the removal of pigmented lesions, and Affirm CO2™ for advanced ablative therapy. We also rolled out a series of technology enhancements such as the SmartSense™ intelligent energy delivery system and the Affirm Er wavelength for anti-aging applications. For customers, these solutions raise the bar for efficacy and safety in the aesthetic industry, and further differentiate the Cynosure brand.”

Full-Year Results

For the 12 months ended December 31, 2008, revenues increased approximately 12% to $139.7 million from $124.3 million in 2007. Gross margin was 65.1% of total revenues in 2008 compared with 64.2% in 2007. Net income for 2008 was $10.2 million, or $0.80 per diluted share, versus $14.5 million, or $1.15 per diluted share, for 2007.

Non-GAAP net income, which excludes stock-based compensation expense and its related income tax effects, was $14.4 million, or $1.13 per diluted share, for full-year 2008 compared with $18.3 million, or $1.44 per diluted share, in 2007. Please refer to the financial reconciliations included in this news release for a reconciliation of GAAP results to non-GAAP results for the 12 months ended December 31, 2008 and 2007.

Business Outlook

“Looking ahead, we are committed to managing our business profitably and extending our industry leadership in 2009,” Davin said. “Among our goals for the year, we plan to introduce a new flagship workstation at the American Academy of Dermatology Annual Meeting in March; open new direct sales offices in select international markets; and roll out several new technology innovations designed to benefit both aesthetic practitioners and patients.”

“Our emphasis on delivering the most innovative and exciting products through the most efficient distribution channels has served us well,” Davin said. “We plan to invest further in these areas as we navigate this economic downturn, with the aim of emerging as an even stronger competitor. With more than $95 million in cash, cash equivalents, marketable securities and investments at year end, and no long-term debt, we believe we have ample capital to execute our strategy.”

Use of Non-GAAP Financial Measures

To supplement Cynosure’s consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined as non-GAAP financial measures by the SEC: non-GAAP net income and non-GAAP diluted earnings per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore not comparable to, similar measures used by other companies. Although certain non-GAAP financial measures used in this release exclude the accounting treatment of stock-based compensation, these non-GAAP measures should not be relied upon independently, as they ignore the contribution to our operating results that is generated by the incentive and compensation effects of the underlying stock-based compensation programs. For more information on these non-GAAP financial measures, please see the non-GAAP data included at the end of this release. This data has more details of the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

Cynosure’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our core business operating results. Cynosure believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Cynosure’s performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Cynosure’s historical performance and our competitors’ operating results. Cynosure believes that these non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.

Conference Call

Cynosure will host a conference call for investors today at 9:00 a.m. ET. On the call, Michael Davin and Timothy Baker, the company’s Executive Vice President and Chief Financial Officer, will discuss the fourth quarter and full year 2008 financial results and provide a business outlook.

Those who wish to listen to the conference call webcast should visit the “Investor Relations” section of the company’s website at www.cynosure.com. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived on the company’s website.

About Cynosure, Inc.

Cynosure, Inc. develops and markets aesthetic treatment systems that are used by physicians and other practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular lesions, rejuvenate skin through the treatment of shallow vascular and pigmented lesions, liquefy and remove unwanted fat through laser lipolysis and temporarily reduce the appearance of cellulite. Cynosure’s products include a broad range of laser and other light-based energy sources, including Alexandrite, pulsed dye, Nd:YAG and diode lasers, as well as intense pulsed light. Cynosure was founded in 1991.

For corporate or product information, contact Cynosure at 800-886-2966, or visit www.cynosure.com.

Forward-Looking Statements

Any statements in this press release about future expectations, plans and prospects for Cynosure, Inc., including statements about the company’s expectations and future financial performance, as well as other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including Cynosure’s history of operating losses, its reliance on sole source suppliers, the inability to accurately predict the timing or outcome of regulatory decisions, changes in consumer preferences, competition in the aesthetic laser industry, economic, market, technological and other factors discussed in Cynosure’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which are filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent Cynosure’s views as of the date of this press release. Cynosure anticipates that subsequent events and developments will cause its views to change. However, while Cynosure may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Cynosure’s views as of any date subsequent to the date of this press release.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

	Three Months Ended December 31,					Year Ended December 31,
	2008			2007		2008			2007
Revenues	$	25,495		$	36,573	$	139,662		$	124,315
Cost of revenues		10,060			12,472		48,705			44,507
Gross profit		15,435			24,101		90,957			79,808
Operating expenses
Selling and marketing		11,872			12,611		53,062			42,058
Research and development		1,891			1,869		7,497			6,827
General and administrative		6,729			2,975		17,837			11,346
Total operating expenses		20,492			17,455		78,396			60,231
(Loss) income from operations		(5,057	)		6,646		12,561			19,577
Interest income, net		521			754		2,498			2,516
Other (expense) income, net		(98	)		255		(89	)		695
(Loss) income before income taxes		(4,634	)		7,655		14,970			22,788
Income tax (benefit) provision		(2,141	)		2,349		4,771			8,276
Net (loss) income	$	(2,493	)	$	5,306	$	10,199		$	14,512
Diluted net (loss) income per share	$	(0.19	)	$	0.41	$	0.80		$	1.15
Diluted weighted average shares outstanding		12,807			12,806		12,806			12,654
Basic net (loss) income per share	$	(0.20	)	$	0.43	$	0.81		$	1.21
Basic weighted average shares outstanding		12,698			12,381		12,581			11,993

Condensed Consolidated Balance Sheet (Unaudited)

(In thousands)

	December 31,
	2008		2007
Assets:
Cash, cash equivalents and marketable securities	$	74,369	$	86,097
Accounts receivable, net		25,156		24,124
Amounts due from related parties		40		8
Inventories		30,248		22,442
Deferred tax asset, current portion		6,825		4,161
Prepaid expenses and other current assets		4,331		4,425
Total current assets		140,969		141,257
Property and equipment, net		8,422		7,146
Long-term investments and related financial instruments		21,082		—
Other noncurrent assets		2,649		1,441
Total assets	$	173,122	$	149,844
Liabilities and stockholders’ equity:
Accounts payable and accrued expenses	$	20,697	$	20,790
Amounts due to related parties		6,083		2,311
Deferred revenue		4,296		3,939
Capital lease obligations		398		485
Total current liabilities		31,474		27,525
Capital lease obligations, net of current portion		407		794
Deferred revenue, net of current portion		436		421
Other long-term liabilities		451		226
Total stockholders’ equity		140,354		120,878
Total liabilities and stockholders’ equity	$	173,122	$	149,844

To supplement our consolidated financial statements presented in accordance with GAAP, Cynosure uses the following measures defined as non-GAAP financial measures by the SEC: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP diluted earnings per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore not comparable to, similar measures used by other companies. Although certain non-GAAP financial measures used in this release exclude the accounting treatment of stock-based compensation, these non-GAAP measures should not be relied upon independently as they ignore the contribution to our operating results that is generated by the incentive and compensation effects of the underlying stock-based compensation programs. Cynosure’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our core business operating results. Cynosure believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Cynosure’s performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Cynosure’s historical performance and our competitors’ operating results. Cynosure believes that these non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.

Reconciliation of GAAP Income Statement Measures to Non-GAAP Income Statement Measures (Unaudited)

(In thousands, except per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
Gross profit	$	15,435		$	24,101		$	90,957		$	79,808
Non-GAAP adjustments to gross profit:
Stock-based compensation		127			104			537			373
Total non-GAAP adjustments to gross profit		127			104			537			373
Non-GAAP gross profit	$	15,562		$	24,205		$	91,494		$	80,181
	Three Months Ended December 31						Year Ended December 31,
	2008			2007			2008			2007
(Loss) income from operations	$	(5,057	)	$	6,646		$	12,561		$	19,577
Non-GAAP adjustments to (loss) income from operations:
Stock-based compensation		1,616			1,494			7,279			5,777
Total non-GAAP adjustments to (loss) income from operations		1,616			1,494			7,279			5,777
Non-GAAP (loss) income from operations	$	(3,441	)	$	8,140		$	19,840		$	25,354
	Three Months Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
Net (loss) income	$	(2,493	)	$	5,306		$	10,199		$	14,512
Non-GAAP adjustments to net (loss) income:
Stock-based compensation		1,547			1,494			7,422			5,777
Income tax provision from IRS Audit		—			—			—			702
Income tax effect of non-GAAP adjustments		(941	)		(945	)		(3,201	)		(2,710	)
Total non-GAAP adjustments to net (loss) income		606			549			4,221			3,769
Non-GAAP net (loss) income	$	(1,887	)	$	5,855		$	14,420		$	18,281
	Three Months Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
Diluted net (loss) income per share	$	(0.19	)	$	0.41		$	0.80		$	1.15
Stock-based compensation		0.12			0.12			0.58			0.46
Income tax provision from IRS Audit		—			—			—			0.06
Income tax effect of non-GAAP adjustments		(0.08	)		(0.07	)		(0.25	)		(0.21	)
Total non-GAAP adjustments to net (loss) income		0.04			0.04			0.33			0.30
Non-GAAP diluted net (loss) income per share	$	(0.15	)	$	0.46		$	1.13		$	1.44
Weighted average shares used to compute diluted net (loss) income per share		12,807			12,806			12,806			12,654
Weighted average shares used to compute non-GAAP diluted net (loss) income per share		12,807			12,806			12,806			12,654