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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Abaxis, Inc. (delisted) | NASDAQ:ABAX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 83.00 | 82.85 | 83.01 | 0 | 01:00:00 |
☒
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
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
☒
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller reporting company
☐
|
(Do not check if a smaller reporting company)
|
Page
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2.
|
25
|
|
Item 3.
|
46
|
|
Item 4.
|
47
|
|
PART II. OTHER INFORMATION
|
||
Item 1.
|
48
|
|
Item 1A.
|
48
|
|
Item 2.
|
60
|
|
Item 3.
|
60
|
|
Item 4.
|
60
|
|
Item 5.
|
60
|
|
Item 6.
|
61
|
|
62
|
ASSETS
|
September 30,
2016
|
March 31,
2016
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
90,393
|
$
|
88,323
|
||||
Short-term investments
|
55,120
|
41,474
|
||||||
Receivables (net of allowances of $498 at September 30, 2016 and $479 at March 31, 2016)
|
35,269
|
35,148
|
||||||
Inventories
|
36,233
|
35,131
|
||||||
Prepaid expenses and other current assets
|
4,795
|
6,351
|
||||||
Net deferred tax assets, current
|
4,811
|
4,810
|
||||||
Current assets of discontinued operations
|
48
|
961
|
||||||
Total current assets
|
226,669
|
212,198
|
||||||
Long-term investments
|
15,584
|
22,458
|
||||||
Investment in unconsolidated affiliates
|
3,000
|
2,705
|
||||||
Property and equipment, net
|
32,452
|
26,842
|
||||||
Intangible assets, net
|
1,248
|
1,324
|
||||||
Net deferred tax assets, non-current
|
4,508
|
3,903
|
||||||
Other assets
|
4,978
|
1,950
|
||||||
Total assets
|
$
|
288,439
|
$
|
271,380
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
7,270
|
$
|
7,292
|
||||
Accrued payroll and related expenses
|
9,238
|
8,349
|
||||||
Accrued taxes
|
31
|
1,145
|
||||||
Current liabilities of discontinued operations
|
76
|
112
|
||||||
Other accrued liabilities
|
9,629
|
9,393
|
||||||
Deferred revenue
|
1,634
|
1,600
|
||||||
Warranty reserve
|
1,539
|
1,281
|
||||||
Total current liabilities
|
29,417
|
29,172
|
||||||
Non-current liabilities:
|
||||||||
Deferred revenue
|
1,790
|
2,274
|
||||||
Warranty reserve
|
2,411
|
1,927
|
||||||
Net deferred tax liabilities
|
277
|
384
|
||||||
Notes payable, less current portion
|
328
|
379
|
||||||
Other non-current liabilities
|
1,089
|
932
|
||||||
Total non-current liabilities
|
5,895
|
5,896
|
||||||
Total liabilities
|
35,312
|
35,068
|
||||||
Commitments and contingencies (Note 12)
|
||||||||
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; 22,533,000 and 22,408,000 shares issued and outstanding at September 30, 2016 and March 31, 2016, respectively
|
130,906
|
127,016
|
||||||
Retained earnings
|
122,222
|
109,303
|
||||||
Accumulated other comprehensive loss
|
(1
|
)
|
(7
|
)
|
||||
Total shareholders' equity
|
253,127
|
236,312
|
||||||
Total liabilities and shareholders' equity
|
$
|
288,439
|
$
|
271,380
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
58,552
|
$
|
55,975
|
$
|
116,248
|
$
|
109,065
|
||||||||
Cost of revenues
|
26,294
|
24,013
|
51,989
|
47,711
|
||||||||||||
Gross profit
|
32,258
|
31,962
|
64,259
|
61,354
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
4,906
|
4,689
|
10,139
|
9,412
|
||||||||||||
Sales and marketing
|
11,254
|
10,785
|
23,078
|
21,371
|
||||||||||||
General and administrative
|
4,353
|
4,319
|
8,555
|
7,777
|
||||||||||||
Total operating expenses
|
20,513
|
19,793
|
41,772
|
38,560
|
||||||||||||
Income from operations
|
11,745
|
12,169
|
22,487
|
22,794
|
||||||||||||
Interest and other income (expense), net
|
6,279
|
126
|
6,249
|
485
|
||||||||||||
Income from continuing operations before income tax provision
|
18,024
|
12,295
|
28,736
|
23,279
|
||||||||||||
Income tax provision
|
6,537
|
4,472
|
10,359
|
8,461
|
||||||||||||
Income from continuing operations
|
11,487
|
7,823
|
18,377
|
14,818
|
||||||||||||
Discontinued operations (Note 4)
|
||||||||||||||||
Loss from discontinued operations, net of tax
|
(55
|
)
|
(7
|
)
|
(55
|
)
|
(7
|
)
|
||||||||
Net income
|
$
|
11,432
|
$
|
7,816
|
$
|
18,322
|
$
|
14,811
|
||||||||
Net income (loss) per share:
|
||||||||||||||||
Basic
|
||||||||||||||||
Continuing operations
|
$
|
0.51
|
$
|
0.34
|
$
|
0.82
|
$
|
0.65
|
||||||||
Discontinued operations
|
-
|
-
|
(0.01
|
)
|
-
|
|||||||||||
Basic net income per share
|
$
|
0.51
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
||||||||
Diluted
|
||||||||||||||||
Continuing operations
|
$
|
0.51
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
||||||||
Discontinued operations
|
(0.01
|
)
|
-
|
-
|
-
|
|||||||||||
Diluted net income per share
|
$
|
0.50
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
||||||||
Shares used in the calculation of net income per share:
|
||||||||||||||||
Weighted average common shares outstanding - basic
|
22,522,000
|
22,701,000
|
22,494,000
|
22,663,000
|
||||||||||||
Weighted average common shares outstanding - diluted
|
22,745,000
|
22,863,000
|
22,720,000
|
22,876,000
|
||||||||||||
Cash dividends declared per share
|
$
|
0.12
|
$
|
0.11
|
$
|
0.24
|
$
|
0.22
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net income
|
$
|
11,432
|
$
|
7,816
|
$
|
18,322
|
$
|
14,811
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Net change in unrealized gain (loss) on investments
|
(5
|
)
|
3
|
10
|
1
|
|||||||||||
Tax provision (benefit) on other comprehensive income (loss)
|
(2
|
)
|
1
|
4
|
-
|
|||||||||||
Other comprehensive income (loss), net of tax
|
(3
|
)
|
2
|
6
|
1
|
|||||||||||
Comprehensive income
|
$
|
11,429
|
$
|
7,818
|
$
|
18,328
|
$
|
14,812
|
Six Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
18,322
|
$
|
14,811
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
3,479
|
3,298
|
||||||
Investment premium amortization, net
|
278
|
546
|
||||||
Net loss on disposals of property and equipment
|
67
|
16
|
||||||
Impairment loss of intangible assets
|
-
|
13
|
||||||
Foreign exchange (gain) loss
|
223
|
(168
|
)
|
|||||
Share-based compensation expense
|
5,885
|
5,839
|
||||||
Excess tax benefits from share-based awards
|
(337
|
)
|
(1,444
|
)
|
||||
Deferred income taxes
|
(610
|
)
|
(269
|
)
|
||||
Equity in net (income) loss of unconsolidated affiliate
|
34
|
(31
|
)
|
|||||
Gain on sale of equity method investment
|
(6,053
|
)
|
-
|
|||||
Changes in assets and liabilities:
|
||||||||
Receivables, net
|
765
|
606
|
||||||
Inventories
|
(4,444
|
)
|
1,249
|
|||||
Prepaid expenses and other current assets
|
1,721
|
(1,391
|
)
|
|||||
Other assets
|
(3,028
|
)
|
(541
|
)
|
||||
Accounts payable
|
7
|
(23
|
)
|
|||||
Accrued payroll and related expenses
|
889
|
(2,168
|
)
|
|||||
Accrued taxes
|
(1,206
|
)
|
(4,455
|
)
|
||||
Other liabilities
|
439
|
(5,954
|
)
|
|||||
Deferred revenue
|
(450
|
)
|
(326
|
)
|
||||
Warranty reserve
|
742
|
(332
|
)
|
|||||
Net cash provided by operating activities
|
16,723
|
9,276
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of available-for-sale investments
|
(429
|
)
|
-
|
|||||
Purchases of held-to-maturity investments
|
(27,535
|
)
|
(36,316
|
)
|
||||
Proceeds from maturities and redemptions of held-to-maturity investments
|
20,924
|
14,465
|
||||||
Purchases of property and equipment
|
(5,649
|
)
|
(2,635
|
)
|
||||
Cash paid for investment in unconsolidated affiliate
|
(2,999
|
)
|
-
|
|||||
Proceeds from sale of equity method investment
|
8,526
|
-
|
||||||
Net cash used in investing activities
|
(7,162
|
)
|
(24,486
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Tax withholdings related to net share settlements of restricted stock units
|
(2,104
|
)
|
(4,851
|
)
|
||||
Excess tax benefits from share-based awards
|
337
|
1,444
|
||||||
Proceeds from the exercise of warrants
|
-
|
12
|
||||||
Dividends paid
|
(5,403
|
)
|
(4,993
|
)
|
||||
Net cash used in financing activities
|
(7,170
|
)
|
(8,388
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(321
|
)
|
216
|
|||||
Net increase (decrease) in cash and cash equivalents
|
2,070
|
(23,382
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
88,323
|
107,015
|
||||||
Cash and cash equivalents at end of period
|
$
|
90,393
|
$
|
83,633
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for income taxes, net of refunds
|
$
|
9,986
|
$
|
13,897
|
||||
Supplemental disclosure of non-cash flow information:
|
||||||||
Change in unrealized gain (loss) on investments, net of tax
|
$
|
6
|
$
|
1
|
||||
Transfers of equipment between inventory and property and equipment, net
|
$
|
3,431
|
$
|
546
|
||||
Net change in capitalized share-based compensation
|
$
|
(108
|
)
|
$
|
66
|
|||
Common stock withheld for employee taxes in connection with share-based compensation
|
$
|
2,104
|
$
|
4,851
|
||||
Repayment of notes payable by credits from municipal agency
|
$
|
51
|
$
|
50
|
NOTE 1. |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
|
NOTE 2. |
RECENT ACCOUNTING PRONOUNCEMENTS
|
NOTE 3 . |
ACQUISITIONS
|
Cash
|
$
|
3,196
|
||
Installment payment obligations (1)
|
2,336
|
|||
Settlement of preexisting business relationship at fair value
|
931
|
|||
Total
|
$
|
6,463
|
(1) |
The installment payment obligation is denominated in British pounds (“GBP”) and the amount in the table above is based on the GBP to U.S. dollar exchange rate at the acquisition date.
|
Fair Value
|
||||
Net tangible assets acquired
|
$
|
5,248
|
||
Intangible assets:
|
||||
Customer relationships
|
1,535
|
|||
Tradename
|
16
|
|||
Deferred tax liabilities
|
(336
|
)
|
||
Total
|
$
|
6,463
|
NOTE 4. |
DISCONTINUED OPERATIONS
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
Discontinued operations:
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Revenues
|
$
|
165
|
$
|
164
|
$
|
346
|
$
|
419
|
||||||||
Cost of revenues
|
165
|
174
|
346
|
645
|
||||||||||||
Gross loss
|
-
|
(10
|
)
|
-
|
(226
|
)
|
||||||||||
Sales and marketing expense
|
-
|
7
|
-
|
(91
|
)
|
|||||||||||
General and administration
|
87
|
-
|
87
|
-
|
||||||||||||
Other income
|
-
|
6
|
-
|
124
|
||||||||||||
Loss before income tax benefit
|
(87
|
)
|
(11
|
)
|
(87
|
)
|
(11
|
)
|
||||||||
Income tax benefit
|
(32
|
)
|
(4
|
)
|
(32
|
)
|
(4
|
)
|
||||||||
Net loss from discontinued operations
|
$
|
(55
|
)
|
$
|
(7
|
)
|
$
|
(55
|
)
|
$
|
(7
|
)
|
September 30,
2016
|
March 31,
2016
|
|||||||
Receivables, net
|
$
|
48
|
$
|
949
|
||||
Prepaid expenses and other current assets
|
-
|
12
|
||||||
Total current assets of discontinued operations
|
$
|
48
|
$
|
961
|
||||
Accounts payable
|
$
|
25
|
$
|
-
|
||||
Other current liabilities
|
51
|
112
|
||||||
Total current liabilities of discontinued operations
|
$
|
76
|
$
|
112
|
NOTE 5. |
INVESTMENTS
|
Available-for-Sale Investments
|
||||||||||||||||
September 30, 2016
|
Amortized
Cost
|
Gross
Unrealized
Gain
|
Gross
Unrealized
(Loss)
|
Fair
Value
|
||||||||||||
Corporate bonds
|
$
|
6,444
|
$
|
3
|
$
|
(5
|
)
|
$
|
6,442
|
|||||||
Total available-for-sale investments
|
$
|
6,444
|
$
|
3
|
$
|
(5
|
)
|
$
|
6,442
|
Held-to-Maturity Investments
|
||||||||||||||||
September 30, 2016
|
Amortized
Cost
|
Gross
Unrecognized
Gain
|
Gross
Unrecognized
(Loss)
|
Fair
Value
|
||||||||||||
Certificates of deposit
|
$
|
1,243
|
$
|
1
|
$
|
-
|
$
|
1,244
|
||||||||
Commercial paper
|
14,555
|
1
|
(11
|
)
|
14,545
|
|||||||||||
Corporate bonds
|
48,464
|
3
|
(117
|
)
|
48,350
|
|||||||||||
Total held-to-maturity investments
|
$
|
64,262
|
$
|
5
|
$
|
(128
|
)
|
$
|
64,139
|
Available-for-Sale Investments
|
||||||||||||||||
March 31, 2016
|
Amortized
Cost
|
Gross
Unrealized
Gain
|
Gross
Unrealized
(Loss)
|
Fair
Value
|
||||||||||||
Corporate bonds
|
$
|
7,037
|
$
|
-
|
$
|
(12
|
)
|
$
|
7,025
|
|||||||
Total available-for-sale investments
|
$
|
7,037
|
$
|
-
|
$
|
(12
|
)
|
$
|
7,025
|
Held-to-Maturity Investments
|
||||||||||||||||
March 31, 2016
|
Amortized
Cost
|
Gross
Unrecognized
Gain
|
Gross
Unrecognized
(Loss)
|
Fair
Value
|
||||||||||||
Certificates of deposit
|
$
|
2,737
|
$
|
3
|
$
|
-
|
$
|
2,740
|
||||||||
Commercial paper
|
12,455
|
-
|
(6
|
)
|
12,449
|
|||||||||||
Corporate bonds
|
41,715
|
-
|
(117
|
)
|
41,598
|
|||||||||||
Total held-to-maturity investments
|
$
|
56,907
|
$
|
3
|
$
|
(123
|
)
|
$
|
56,787
|
September 30, 2016
|
September 30, 2016
|
|||||||||||||||
Available-for-Sale Investments
|
Held-to-Maturity Investments
|
|||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in less than one year
|
$
|
5,014
|
$
|
5,012
|
$
|
50,108
|
$
|
50,051
|
||||||||
Due in 1 to 4 years
|
1,430
|
1,430
|
14,154
|
14,088
|
||||||||||||
Total investments
|
$
|
6,444
|
$
|
6,442
|
$
|
64,262
|
$
|
64,139
|
March 31, 2016
|
March 31, 2016
|
|||||||||||||||
Available-for-Sale Investments
|
Held-to-Maturity Investments
|
|||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in less than one year
|
$
|
4,314
|
$
|
4,311
|
$
|
37,163
|
$
|
37,128
|
||||||||
Due in 1 to 4 years
|
2,723
|
2,714
|
19,744
|
19,659
|
||||||||||||
Total investments
|
$
|
7,037
|
$
|
7,025
|
$
|
56,907
|
$
|
56,787
|
NOTE 6. |
FAIR VALUE MEASUREMENTS
|
As of September 30, 2016
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
3,449
|
$
|
-
|
$
|
-
|
$
|
3,449
|
||||||||
Available-for-sale investments:
|
||||||||||||||||
Corporate bonds
|
-
|
6,442
|
-
|
6,442
|
||||||||||||
Total assets at fair value
|
$
|
3,449
|
$
|
6,442
|
$
|
-
|
$
|
9,891
|
As of March 31, 2016
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
9,834
|
$
|
-
|
$
|
-
|
$
|
9,834
|
||||||||
Available-for-sale investments:
|
||||||||||||||||
Corporate bonds
|
-
|
7,025
|
-
|
7,025
|
||||||||||||
Total assets at fair value
|
$
|
9,834
|
$
|
7,025
|
$
|
-
|
$
|
16,859
|
NOTE 7. |
INVENTORIES
|
September 30,
2016
|
March 31,
2016
|
|||||||
Raw materials
|
$
|
16,432
|
$
|
15,737
|
||||
Work-in-process
|
4,899
|
6,039
|
||||||
Finished goods
|
14,902
|
13,355
|
||||||
Inventories
|
$
|
36,233
|
$
|
35,131
|
NOTE 8. |
INVESTMENT IN UNCONSOLIDATED AFFILIATES
|
NOTE 9. |
WARRANTY RESERVES
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Balance at beginning of period
|
$
|
3,576
|
$
|
2,869
|
$
|
3,208
|
$
|
3,156
|
||||||||
Provision for warranty expense
|
741
|
271
|
1,500
|
531
|
||||||||||||
Warranty costs incurred
|
(367
|
)
|
(316
|
)
|
(758
|
)
|
(640
|
)
|
||||||||
Adjustment to pre-existing warranties
|
-
|
-
|
-
|
(223
|
)
|
|||||||||||
Balance at end of period
|
3,950
|
2,824
|
3,950
|
2,824
|
||||||||||||
Non-current portion of warranty reserve
|
2,411
|
1,604
|
2,411
|
1,604
|
||||||||||||
Current portion of warranty reserve
|
$
|
1,539
|
$
|
1,220
|
$
|
1,539
|
$
|
1,220
|
NOTE 10. |
BORROWINGS
|
NOTE 11. |
OTHER CURRENT ACCRUED LIABILITIES
|
September 30,
2016
|
March 31,
2016
|
|||||||
Accrued liabilities for customer sales incentive programs
|
$
|
4,945
|
$
|
4,973
|
||||
Installment payment obligation accrued related to acquisition
|
972
|
1,077
|
||||||
Other current accrued liabilities
|
3,712
|
3,343
|
||||||
Total other current accrued liabilities
|
$
|
9,629
|
$
|
9,393
|
NOTE 12. |
COMMITMENTS AND CONTINGENCIES
|
NOTE 13. |
EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATION
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Cost of revenues (1)
|
$
|
487
|
$
|
311
|
$
|
966
|
$
|
694
|
||||||||
Research and development
|
684
|
532
|
1,278
|
1,107
|
||||||||||||
Sales and marketing (2)
|
717
|
830
|
1,421
|
2,002
|
||||||||||||
General and administrative
|
1,178
|
1,365
|
2,220
|
2,036
|
||||||||||||
Share-based compensation expense before income taxes
|
3,066
|
3,038
|
5,885
|
5,839
|
||||||||||||
Income tax benefit
|
(1,058
|
)
|
(1,071
|
)
|
(2,042
|
)
|
(2,059
|
)
|
||||||||
Total share-based compensation expense after income taxes
|
$
|
2,008
|
$
|
1,967
|
$
|
3,843
|
$
|
3,780
|
||||||||
Net impact of share-based compensation on:
|
||||||||||||||||
Basic net income per share
|
$
|
0.09
|
$
|
0.09
|
$
|
0.17
|
$
|
0.17
|
||||||||
Diluted net income per share
|
$
|
0.09
|
$
|
0.09
|
$
|
0.17
|
$
|
0.17
|
(1) |
Cost of revenues reported in the table include share-based compensation expense from continuing and discontinued operations. During the three months ended September 30, 2016 and 2015, share-based compensation expense included in cost of revenues from continuing operations was $0.5 million and $0.3 million, respectively, and from discontinued operations was $0 and $0, respectively. During the six months ended September 30, 2016 and 2015, share-based compensation expense included in cost of revenues from continuing operations was $1.0 million and $0.6 million, respectively, and from discontinued operations was $0 and $0.1 million, respectively.
|
(2) |
Sales and marketing expenses reported in the table include share-based compensation expense from continuing and discontinued operations. During the three months ended September 30, 2016 and 2015, share-based compensation expense included in sales and marketing expenses from continuing operations was $0.7 million and $0.8 million, respectively, and from discontinued operations was $0 and $0, respectively. During the six months ended September 30, 2016 and 2015, share-based compensation expense included in sales and marketing expenses from continuing operations was $1.4 million and $1.8 million, respectively, and from discontinued operations was $0 and $0.2 million, respectively.
|
• |
RSU 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.
|
• |
RSU awards to non-employee directors: 100 percent vesting after one year of continuous service to the Company.
|
• |
25% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant;
|
• |
25% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant;
|
• |
25% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant; and
|
• |
25% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant.
|
• |
approximately 18% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant;
|
• |
approximately 18% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant;
|
• |
approximately 32% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant; and
|
• |
approximately 32% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant.
|
Time-Based
Restricted Stock Units
|
Performance-Based
Restricted Stock Units
|
|||||||||||||||
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value (1)
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value (1)
|
|||||||||||||
Nonvested at March 31, 2016
|
524,000
|
$
|
45.37
|
311,000
|
$
|
48.29
|
||||||||||
Granted
|
199,000
|
45.94
|
152,000
|
44.54
|
||||||||||||
Vested (2)
|
(146,000
|
)
|
41.51
|
(24,000
|
)
|
40.82
|
||||||||||
Canceled and forfeited
|
(28,000
|
)
|
46.48
|
-
|
-
|
|||||||||||
Nonvested at September 30, 2016
|
549,000
|
$
|
46.55
|
439,000
|
$
|
47.40
|
(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.
|
NOTE 14. |
SHAREHOLDERS’ EQUITY
|
NOTE 15. |
NET INCOME PER SHARE
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Income from continuing operations
|
$
|
11,487
|
$
|
7,823
|
$
|
18,377
|
$
|
14,818
|
||||||||
Loss from discontinued operations, net of tax
|
(55
|
)
|
(7
|
)
|
(55
|
)
|
(7
|
)
|
||||||||
Net income
|
$
|
11,432
|
$
|
7,816
|
$
|
18,322
|
$
|
14,811
|
||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
22,522,000
|
22,701,000
|
22,494,000
|
22,663,000
|
||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Restricted stock units
|
223,000
|
162,000
|
226,000
|
212,000
|
||||||||||||
Warrants
|
-
|
-
|
-
|
1,000
|
||||||||||||
Diluted
|
22,745,000
|
22,863,000
|
22,720,000
|
22,876,000
|
||||||||||||
Net income (loss) per share:
|
||||||||||||||||
Basic
|
||||||||||||||||
Continuing operations
|
$
|
0.51
|
$
|
0.34
|
$
|
0.82
|
$
|
0.65
|
||||||||
Discontinued operations
|
-
|
-
|
(0.01
|
)
|
-
|
|||||||||||
Basic net income per share
|
$
|
0.51
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
||||||||
Diluted
|
||||||||||||||||
Continuing operations
|
$
|
0.51
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
||||||||
Discontinued operations
|
(0.01
|
)
|
-
|
-
|
-
|
|||||||||||
Diluted net income per share
|
$
|
0.50
|
$
|
0.34
|
$
|
0.81
|
$
|
0.65
|
NOTE 16. |
INCOME TAXES
|
NOTE 17. |
SEGMENT REPORTING INFORMATION
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues:
|
||||||||||||||||
Medical Market
|
$
|
9,381
|
$
|
8,631
|
$
|
18,478
|
$
|
17,315
|
||||||||
Veterinary Market
|
48,290
|
46,599
|
96,021
|
90,188
|
||||||||||||
Other (1)
|
881
|
745
|
1,749
|
1,562
|
||||||||||||
Total revenues
|
58,552
|
55,975
|
116,248
|
109,065
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Medical Market
|
5,033
|
4,568
|
9,789
|
9,046
|
||||||||||||
Veterinary Market
|
21,224
|
19,414
|
42,082
|
38,601
|
||||||||||||
Other (1)
|
37
|
31
|
118
|
64
|
||||||||||||
Total cost of revenues
|
26,294
|
24,013
|
51,989
|
47,711
|
||||||||||||
Gross profit:
|
||||||||||||||||
Medical Market
|
4,348
|
4,063
|
8,689
|
8,269
|
||||||||||||
Veterinary Market
|
27,066
|
27,185
|
53,939
|
51,587
|
||||||||||||
Other (1)
|
844
|
714
|
1,631
|
1,498
|
||||||||||||
Gross profit
|
$
|
32,258
|
$
|
31,962
|
$
|
64,259
|
$
|
61,354
|
(1) |
Represents unallocated items, not specifically identified to any particular business segment.
|
NOTE 18 . |
REVENUES BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT CONCENTRATIONS
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
Revenues by Product Category
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Instruments (1)
|
$
|
9,823
|
$
|
11,597
|
$
|
19,922
|
$
|
20,309
|
||||||||
Consumables (2)
|
45,512
|
41,675
|
90,201
|
83,472
|
||||||||||||
Other products (3)
|
3,217
|
2,703
|
6,125
|
5,247
|
||||||||||||
Product sales, net
|
58,552
|
55,975
|
116,248
|
109,028
|
||||||||||||
Development and licensing revenues
|
-
|
-
|
-
|
37
|
||||||||||||
Total revenues
|
$
|
58,552
|
$
|
55,975
|
$
|
116,248
|
$
|
109,065
|
(1) |
Instruments include chemistry analyzers, hematology instruments, VS
pro
specialty analyzers and i‑STAT analyzers.
|
(2) |
Consumables include reagent discs, hematology reagent kits, VS
pro
specialty cartridges, i‑STAT cartridges and rapid tests.
|
(3) |
Other products include products using the Orbos process and extended maintenance agreements.
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
Revenues by Geographic Region
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
North America
|
$
|
47,017
|
$
|
45,176
|
$
|
93,790
|
$
|
87,487
|
||||||||
Europe
|
8,033
|
8,262
|
16,391
|
15,985
|
||||||||||||
Asia Pacific and rest of the world
|
3,502
|
2,537
|
6,067
|
5,593
|
||||||||||||
Total revenues
|
$
|
58,552
|
$
|
55,975
|
$
|
116,248
|
$
|
109,065
|
NOTE 19. |
SUBSEQUENT EVENTS
|
· |
Volume-based Incentives
. Volume-based incentives, in the form of rebates, are offered from time to time to distributors and group purchasing organizations upon meeting the sales volume requirements during a qualifying period and are recorded as a reduction to gross revenues during a qualifying period. The pricing rebate program is primarily offered to distributors and group purchasing organizations in the North America veterinary market, upon meeting the sales volume requirements of veterinary products during the qualifying period. Factors used in the rebate calculations include the identification of products sold subject to a rebate during the qualifying period and which rebate percentage applies. Based on these factors and using historical trends, adjusted for current changes, we estimate the amount of the rebate and record the rebate as a deduction to gross revenues when we record the sale of the product. The rebate is recorded as a reserve to offset accounts receivable as settlements are made through offsets to outstanding customer invoices. Settlement of the rebate accruals from the date of sale ranges from one to nine months after sale. Changes in the rebate accrual at the end of each period are based upon distributors and group purchasing organizations meeting the purchase requirements during the quarter.
|
· |
Distributor Rebate Incentives.
From time to time, we offer a customer sales incentive program, whereby distributors were offered a rebate upon meeting certain requirements. We recognize the rebate obligation as a reduction of revenue at the later of the date on which we sell the product or the date the program is offered. These customer sales incentive programs require management to estimate the rebate amounts to distributors who will qualify for the incentive during the promotional period. We record the estimated liability in other current accrued liabilities on our condensed consolidated balance sheets. Management’s estimates are based on historical experience and the specific terms and conditions of the incentive programs.
|
· |
End-User Rebates and Discounts
. From time to time, cash rebates are offered to end-users who purchase certain products or instruments during a promotional period and are recorded as a reduction to gross revenues. Additionally, we periodically offer sales incentives to end-users, in the form of sales discounts, to purchase consumables for a specified promotional period, typically over five years from the sale of our instrument, and we reimburse resellers for the value of the sales discount provided to the end-user. We estimate the amount of the incentive earned by end-users during a quarter and record a liability to the reseller as a reduction to gross revenues. Factors used in the liability calculation of incentives earned by end-users include the identification of qualified end-users under the sales program during the period and using historical trends. Settlement of the liability to the reseller ranges from one to twelve months from the date an end-user earns the incentive.
|
• |
25% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant;
|
• |
25% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant;
|
• |
25% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant; and
|
• |
25% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant.
|
• |
approximately 18% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant;
|
• |
approximately 18% of the shares subject to an award vest in full upon achieving 90% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant;
|
• |
approximately 32% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the third anniversary of the date of grant; and
|
• |
approximately 32% of the shares subject to an award vest in full upon achieving 100% of the consolidated income from operations target described above and continuous service until the fourth anniversary of the date of grant.
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
Revenues by Product Category
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
||||||||||||||||||||||||
Instruments (1)
|
$
|
9,823
|
$
|
11,597
|
$
|
(1,774
|
)
|
(15
|
)%
|
$
|
19,922
|
$
|
20,309
|
$
|
(387
|
)
|
(2
|
)%
|
||||||||||||||
Percentage of total revenues
|
17
|
%
|
21
|
%
|
17
|
%
|
19
|
%
|
||||||||||||||||||||||||
Consumables (2)
|
45,512
|
41,675
|
3,837
|
9
|
%
|
90,201
|
83,472
|
6,729
|
8
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
78
|
%
|
74
|
%
|
78
|
%
|
77
|
%
|
||||||||||||||||||||||||
Other products (3)
|
3,217
|
2,703
|
514
|
19
|
%
|
6,125
|
5,247
|
878
|
17
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
5
|
%
|
5
|
%
|
5
|
%
|
5
|
%
|
||||||||||||||||||||||||
Product sales, net
|
58,552
|
55,975
|
2,577
|
5
|
%
|
116,248
|
109,028
|
7,220
|
7
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||||||||||||||||||||||
Development and licensing revenues
|
-
|
-
|
-
|
-
|
-
|
37
|
(37
|
)
|
(100
|
)%
|
||||||||||||||||||||||
Percentage of total revenues
|
-
|
%
|
-
|
%
|
-
|
%
|
<1%
|
|||||||||||||||||||||||||
Total revenues
|
$
|
58,552
|
$
|
55,975
|
$
|
2,577
|
5
|
%
|
$
|
116,248
|
$
|
109,065
|
$
|
7,183
|
7
|
%
|
(1) |
Instruments include chemistry analyzers, hematology instruments, VS
pro
specialty analyzers and i-STAT analyzers.
|
(2) |
Consumables include reagent discs, hematology reagent kits, VS
pro
specialty cartridges, i-STAT cartridges and rapid tests.
|
(3) |
Other products include products using the Orbos process and extended maintenance agreements.
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||||||||||||||||||
Revenues by Geographic Region
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
||||||||||||||||||||||||
North America
|
$
|
47,017
|
$
|
45,176
|
$
|
1,841
|
4
|
%
|
$
|
93,790
|
$
|
87,487
|
$
|
6,303
|
7
|
%
|
||||||||||||||||
Percentage of total revenues
|
80
|
%
|
81
|
%
|
81
|
%
|
80
|
%
|
||||||||||||||||||||||||
Europe
|
8,033
|
8,262
|
(229
|
)
|
(3
|
)%
|
16,391
|
15,985
|
406
|
3
|
%
|
|||||||||||||||||||||
Percentage of total revenues
|
14
|
%
|
15
|
%
|
14
|
%
|
15
|
%
|
||||||||||||||||||||||||
Asia Pacific and rest of the world
|
3,502
|
2,537
|
965
|
38
|
%
|
6,067
|
5,593
|
474
|
8
|
%
|
||||||||||||||||||||||
Percentage of total revenues
|
6
|
%
|
4
|
%
|
5
|
%
|
5
|
%
|
||||||||||||||||||||||||
Total revenues
|
$
|
58,552
|
$
|
55,975
|
$
|
2,577
|
5
|
%
|
$
|
116,248
|
$
|
109,065
|
$
|
7,183
|
7
|
%
|
• |
Total sales of our Piccolo chemistry analyzers and medical reagent discs in North America increased by 15%, or $0.9 million, primarily attributable to an increase in medical reagent discs sold to Abbott, resulting from an expanded installed base of Piccolo chemistry analyzers.
|
• |
Total sales of our VetScan chemistry analyzers and veterinary reagent discs in North America decreased by 3%, or $0.6 million, primarily attributable to a decrease in average selling prices of VetScan chemistry analyzers and a decrease in the unit sales of veterinary reagent discs sold due to lower average utilization per customer. These decreases were partially offset by an increase in the unit sales of VetScan chemistry analyzers resulting from an increase in sales-type lease agreements with our customers.
|
• |
Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 2%, or $0.2 million, primarily attributable to an increase in the unit sales of hematology reagent kits due to our supply agreement with Banfield Pet Hospitals starting in the first quarter of fiscal 2017. The increase was partially offset by a decrease in the unit sales of VetScan hematology instruments sold to various distributors.
|
• |
Total sales of our VetScan VS
pro
specialty analyzers and related consumables, VetScan i-STAT analyzers and related consumables and VetScan rapid tests in North America increased by 11%, or $0.8 million, primarily attributable to an increase in revenues from VetScan rapid tests, due to an increase in the unit sales of VetScan Canine Heartworm Rapid Test Kit and VetScan Feline FeLV/FIV Rapid Test and the release of the VetScan VUE in the first quarter of fiscal 2017, an app-based automated rapid assay test reader used with our VetScan rapid tests.
|
• |
Revenues from other products in North America increased by 32%, or $0.6 million, primarily attributable to an increase in other veterinary products sold.
|
• |
Total sales of our Piccolo chemistry analyzers and medical reagent discs in North America increased by 13%, or $1.5 million, primarily attributable to an increase in medical reagent discs sold to Abbott, resulting from an expanded installed base of Piccolo chemistry analyzers.
|
• |
Total sales of our VetScan chemistry analyzers and veterinary reagent discs in North America increased by 2%, or $1.1 million, primarily attributable to an increase in the unit sales of VetScan chemistry analyzers resulting from an increase in sales-type lease agreements with our customers.
|
• |
Total sales of our VetScan hematology instruments and hematology reagent kits in North America increased by 10%, or $1.2 million, primarily attributable to an increase in the unit sales of hematology reagent kits due to our supply agreement with Banfield Pet Hospitals starting in the first quarter of fiscal 2017. The increase was partially offset by a decrease in the unit sales of VetScan hematology instruments to various distributors.
|
• |
Total sales of our VetScan VS
pro
specialty analyzers and related consumables, VetScan i-STAT analyzers and related consumables and VetScan rapid tests in North America increased by 10%, or $1.6 million, primarily attributable to an increase in revenues from VetScan rapid tests, due to an increase in the unit sales of VetScan Canine Heartworm Rapid Test Kit and VetScan Feline FeLV/FIV Rapid Test and the release of the VetScan VUE in the first quarter of fiscal 2017, an app-based automated rapid assay test reader used with our VetScan rapid tests.
|
• |
Revenues from other products in North America increased by 24%, or $0.9 million, primarily attributable to an increase in other veterinary products sold.
|
Three Months Ended September 30,
|
Change
|
|||||||||||||||||||||||
2016
|
Percent of
Revenues (1)
|
2015
|
Percent of
Revenues (1)
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$
|
9,381
|
100
|
%
|
$
|
8,631
|
100
|
%
|
$
|
750
|
9
|
%
|
||||||||||||
Percentage of total revenues
|
16
|
%
|
16
|
%
|
||||||||||||||||||||
Veterinary Market
|
48,290
|
100
|
%
|
46,599
|
100
|
%
|
1,691
|
4
|
%
|
|||||||||||||||
Percentage of total revenues
|
82
|
%
|
83
|
%
|
||||||||||||||||||||
Other (2)
|
881
|
745
|
136
|
18
|
%
|
|||||||||||||||||||
Percentage of total revenues
|
2
|
%
|
1
|
%
|
||||||||||||||||||||
Total revenues
|
58,552
|
55,975
|
2,577
|
5
|
%
|
|||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
5,033
|
54
|
%
|
4,568
|
53
|
%
|
465
|
10
|
%
|
|||||||||||||||
Veterinary Market
|
21,224
|
44
|
%
|
19,414
|
42
|
%
|
1,810
|
9
|
%
|
|||||||||||||||
Other (2)
|
37
|
31
|
6
|
19
|
%
|
|||||||||||||||||||
Total cost of revenues
|
26,294
|
24,013
|
2,281
|
9
|
%
|
|||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
4,348
|
46
|
%
|
4,063
|
47
|
%
|
285
|
7
|
%
|
|||||||||||||||
Veterinary Market
|
27,066
|
56
|
%
|
27,185
|
58
|
%
|
(119
|
)
|
<(1)
|
% | ||||||||||||||
Other (2)
|
844
|
714
|
130
|
18
|
%
|
|||||||||||||||||||
Gross profit
|
$
|
32,258
|
$
|
31,962
|
$
|
296
|
1
|
%
|
(1) |
The percentage reported is based on revenues by operating segment.
|
(2) |
Represents unallocated items, not specifically identified to any particular business segment.
|
• |
Total revenues from Piccolo chemistry analyzers decreased by 22%, or $0.4 million, during the three months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to a decrease in the unit sales to various distributors in Europe.
|
• |
Total revenues from medical reagent discs increased by 19%, or $1.2 million, during the three months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in medical reagent discs sold to Abbott in North America, resulting from an expanded installed base of Piccolo chemistry analyzers.
|
• |
Total revenues from veterinary instruments decreased by 14%, or $1.4 million, during the three months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to a decrease in average selling prices of VetScan chemistry analyzers and a decrease in the unit sales of VetScan hematology instruments due to lower units sold to our distributors in North America. The decrease was partially offset by (a) an increase in the unit sales of VetScan chemistry analyzers in North America resulting from an increase in sales-type lease agreements with our customers, (b) an increase in revenues from VetScan chemistry analyzers and VetScan hematology instruments sold in the United Kingdom and (c) an increase in the unit sales of VetScan chemistry analyzers to a distributor in China.
|
• |
Total revenues from consumables in the veterinary market increased by 8%, or $2.7 million, during the three months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in the unit sales of hematology reagent kits in North America due to our supply agreement with Banfield Pet Hospitals starting in the first quarter of fiscal 2017 and an increase in revenues from VetScan rapid tests, primarily due to an increase in the unit sales of VetScan Canine Heartworm Rapid Test Kits and VetScan Feline FeLV/FIV Rapid Tests and the release of the VetScan VUE in the first quarter of fiscal 2017, an app-based automated rapid assay test reader used with our VetScan rapid tests. The increase was partially offset by a decrease in the unit sales of veterinary reagent discs sold due to lower average utilization per customer in North America and the impact of a lower exchange rate between the GBP and U.S. dollar, as compared to the same period last year.
|
• |
Total revenues from other products in the veterinary market increased by 25%, or $0.4 million, during the three months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in other veterinary products sold in North America.
|
Six Months Ended September 30,
|
Change
|
|||||||||||||||||||||||
2016
|
Percent of
Revenues (1)
|
2015
|
Percent of
Revenues (1)
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Medical Market
|
$
|
18,478
|
100
|
%
|
$
|
17,315
|
100
|
%
|
$
|
1,163
|
7
|
%
|
||||||||||||
Percentage of total revenues
|
16
|
%
|
16
|
%
|
||||||||||||||||||||
Veterinary Market
|
96,021
|
100
|
%
|
90,188
|
100
|
%
|
5,833
|
6
|
%
|
|||||||||||||||
Percentage of total revenues
|
83
|
%
|
83
|
%
|
||||||||||||||||||||
Other (2)
|
1,749
|
1,562
|
187
|
12
|
%
|
|||||||||||||||||||
Percentage of total revenues
|
1
|
%
|
1
|
%
|
||||||||||||||||||||
Total revenues
|
116,248
|
109,065
|
7,183
|
7
|
%
|
|||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||
Medical Market
|
9,789
|
53
|
%
|
9,046
|
52
|
%
|
743
|
8
|
%
|
|||||||||||||||
Veterinary Market
|
42,082
|
44
|
%
|
38,601
|
43
|
%
|
3,481
|
9
|
%
|
|||||||||||||||
Other (2)
|
118
|
64
|
54
|
84
|
%
|
|||||||||||||||||||
Total cost of revenues
|
51,989
|
47,711
|
4,278
|
9
|
%
|
|||||||||||||||||||
Gross profit:
|
||||||||||||||||||||||||
Medical Market
|
8,689
|
47
|
%
|
8,269
|
48
|
%
|
420
|
5
|
%
|
|||||||||||||||
Veterinary Market
|
53,939
|
56
|
%
|
51,587
|
57
|
%
|
2,352
|
5
|
%
|
|||||||||||||||
Other (2)
|
1,631
|
1,498
|
133
|
9
|
%
|
|||||||||||||||||||
Gross profit
|
$
|
64,259
|
$
|
61,354
|
$
|
2,905
|
5
|
%
|
(1) |
The percentage reported is based on revenues by operating segment.
|
(2) |
Represents unallocated items, not specifically identified to any particular business segment.
|
• |
Total revenues from Piccolo chemistry analyzers decreased by 20%, or $0.8 million, during the six months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to a decrease in revenues from Piccolo chemistry analyzers sold to various distributors in Europe and a decrease in the unit sales of Piccolo chemistry analyzers to a distributor in Asia Pacific and rest of the world.
|
• |
Total revenues from medical reagent discs increased by 15%, or $1.9 million, during the six months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in medical reagent discs sold to Abbott in North America, resulting from an expanded installed base of Piccolo chemistry analyzers.
|
• |
Total revenues from veterinary instruments increased by 3%, or $0.4 million, during the six months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to (a) an increase in the unit sales of VetScan chemistry analyzers in North America resulting from an increase in sales-type lease agreements with our customers, (b) an increase in revenues from VetScan chemistry analyzers and VetScan hematology instruments sold in the United Kingdom and (c) an increase in the unit sales of VetScan chemistry analyzers to a distributor in China in the second quarter of fiscal 2017. The increase was partially offset by a decrease in the unit sales of VetScan hematology instruments to various distributors in North America.
|
• |
Total revenues from consumables in the veterinary market increased by 7%, or $4.9 million, during the six months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in the unit sales of hematology reagent kits in North America due to our supply agreement with Banfield Pet Hospitals starting in the first quarter of fiscal 2017 and an increase in revenues from VetScan rapid tests, primarily due to an increase in the unit sales of VetScan Canine Heartworm Rapid Test Kits and VetScan Feline FeLV/FIV Rapid Tests and the release of the VetScan VUE in the first quarter of fiscal 2017, an app-based automated rapid assay test reader used with our VetScan rapid tests.
|
• |
Total revenues from other products in the veterinary market increased by 19%, or $0.5 million, during the six months ended September 30, 2016, as compared to the same period in fiscal 2016, primarily attributable to an increase in other veterinary products sold in North America.
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Cost of revenues
|
$
|
26,294
|
$
|
24,013
|
$
|
2,281
|
9
|
%
|
$
|
51,989
|
$
|
47,711
|
$
|
4,278
|
9
|
%
|
||||||||||||||||
Percentage of total revenues
|
45
|
%
|
43
|
%
|
45
|
%
|
44
|
%
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Total gross profit
|
$
|
32,258
|
$
|
31,962
|
$
|
296
|
1
|
%
|
$
|
64,259
|
$
|
61,354
|
$
|
2,905
|
5
|
%
|
||||||||||||||||
Total gross margin
|
55
|
%
|
57
|
%
|
55
|
%
|
56
|
%
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Research and development expenses
|
$
|
4,906
|
$
|
4,689
|
$
|
217
|
5
|
%
|
$
|
10,139
|
$
|
9,412
|
$
|
727
|
8
|
%
|
||||||||||||||||
Percentage of total revenues
|
8
|
%
|
8
|
%
|
9
|
%
|
9
|
%
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
Sales and marketing expenses
|
$
|
11,254
|
$
|
10,785
|
$
|
469
|
4
|
%
|
$
|
23,078
|
$
|
21,371
|
$
|
1,707
|
8
|
%
|
||||||||||||||||
Percentage of total revenues
|
19
|
%
|
19
|
%
|
20
|
%
|
20
|
%
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
2016
|
2015
|
Dollar
Change
|
Percent
Change
|
|||||||||||||||||||||||||
General and administrative expenses
|
$
|
4,353
|
$
|
4,319
|
$
|
34
|
1
|
%
|
$
|
8,555
|
$
|
7,777
|
$
|
778
|
10
|
%
|
||||||||||||||||
Percentage of total revenues
|
7
|
%
|
8
|
%
|
7
|
%
|
7
|
%
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
2016
|
2015
|
Dollar
Change
|
|||||||||||||||||||
Interest and other income (expense), net
|
$
|
6,279
|
$
|
126
|
$
|
6,153
|
$
|
6,249
|
$
|
485
|
$
|
5,764
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||||||||||
2016
|
2015
|
Dollar
Change
|
2016
|
2015
|
Dollar
Change
|
|||||||||||||||||||
Income tax provision
|
$
|
6,537
|
$
|
4,472
|
$
|
2,065
|
$
|
10,359
|
$
|
8,461
|
$
|
1,898
|
||||||||||||
Effective tax rate
|
36
|
%
|
36
|
%
|
36
|
%
|
36
|
%
|
September 30,
2016
|
March 31,
2016
|
|||||||
Cash and cash equivalents
|
$
|
90,393
|
$
|
88,323
|
||||
Short-term investments
|
55,120
|
41,474
|
||||||
Long-term investments
|
15,584
|
22,458
|
||||||
Total cash, cash equivalents and investments
|
$
|
161,097
|
$
|
152,255
|
||||
Percentage of total assets
|
56
|
%
|
56
|
%
|
Six Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Net cash provided by operating activities
|
$
|
16,723
|
$
|
9,276
|
||||
Net cash used in investing activities
|
(7,162
|
)
|
(24,486
|
)
|
||||
Net cash used in financing activities
|
(7,170
|
)
|
(8,388
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(321
|
)
|
216
|
|||||
Net increase (decrease) in cash and cash equivalents
|
$
|
2,070
|
$
|
(23,382
|
)
|
• |
Receivables, net increased by $0.1 million, from $35.1 million as of March 31, 2016 to $35.3 million as of September 30, 2016, primarily attributable to the timing of sales and collections activities during the second quarter of fiscal 2017.
|
• |
Inventories increased by $1.1 million from $35.1 million as of March 31, 2016 to $36.2 million as of September 30, 2016, primarily due to an increase in the inventory levels of our finished goods as of September 30, 2016.
|
• |
Prepaid expenses and other current assets decreased by $1.6 million, from $6.4 million as of March 31, 2016 to $4.8 million as of September 30, 2016, primarily attributable to the timing of estimated income taxes.
|
• |
Current assets of discontinued operations decreased by $0.9 million, from $1.0 million as of March 31, 2016 to $48,000 as of September 30, 2016, primarily attributable to a receivable relating to the sale of discontinued operations due upon meeting certain conditions by the first anniversary of the closing date in March 2016.
|
• |
Non-current net deferred tax assets increased by $0.6 million, from $3.9 million as of March 31, 2016 to $4.5 million as of September 30, 2016, primarily as a result of the timing for the deduction of share-based compensation expenses.
|
• |
Other assets increased by $3.0 million from $2.0 million as of March 31, 2016 to $5.0 million as of September 30, 2016, primarily attributable to long-term receivables due to extended payment terms by customers under certain of our sales programs.
|
• |
Accrued payroll and related expenses increased by $0.9 million, from $8.3 million as of March 31, 2016 to $9.2 million as of September 30, 2016, primarily attributable to the timing of payroll payments and accrued bonus.
|
• |
Accrued taxes decreased by $1.1 million, from $1.1 million as of March 31, 2016 to $31,000 as of September 30, 2016, primarily due to the timing of estimated income tax payments.
|
• |
As of September 30, 2016 and March 31, 2016, the current portion of deferred revenue was $1.6 million and $1.6 million, respectively, and the non-current portion of deferred revenue was $1.8 million and $2.3 million, respectively. Net current and non-current deferred revenue decreased by $0.5 million from March 31, 2016 to September 30, 2016, primarily attributable to deferred revenue recognized ratably over the life of extended maintenance contracts offered to customers in the form of free services in connection with the sale of our instruments.
|
• |
As of September 30, 2016 and March 31, 2016, the current portion of warranty reserve was $1.5 million and $1.3 million, respectively, and the non-current portion of warranty reserve was $2.4 million and $1.9 million, respectively. Net current and non‑current warranty reserve increased by $0.7 million. The change in current and non-current warranty reserve from March 31, 2016 to September 30, 2016 is primarily due to an increase in the number of instruments in standard warranty. Warranty reserve is primarily based on (a) the number of instruments in standard warranty, estimated product failure rates and estimated repair costs and (b) an estimate of defective reagent discs and replacement costs of reagent discs. Management periodically 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.
|
• |
Cash used in investing activities during the six months ended September 30, 2016 was primarily due to purchases of investments in commercial paper and corporate bonds totaling $28.0 million during the six months ended September 30, 2016. Cash provided by proceeds from maturities and redemptions of investments in commercial paper and corporate bonds of $20.9 million during the six months ended September 30, 2016.
|
• |
Cash proceeds from the sale of a 15% equity ownership interest in Scandinavian Micro Biodevices APS (“SMB”) of $8.5 million during the six months ended September 30, 2016. In connection with the sale, we recorded a pre-tax gain of $6.1 million ($3.8 million after tax).
|
• |
Our capital expenditures totaled $5.6 million during the six months ended September 30, 2016. Purchases of capital equipment primarily relate to increasing our manufacturing capacity, support our growth and transfers of equipment from inventory to property and equipment, primarily attributable to our instrument rental program. We expect to continue to make significant capital expenditures as necessary in the normal course of our business.
|
• |
Cash used in our investment in a privately-held company was $3.0 million during the six months ended September 30, 2016.
|
· |
new product or service announcements made by us or our competitors;
|
· |
changes in our pricing structures or the pricing structures of our competitors;
|
· |
the sales performance of our independent distributors;
|
· |
excess inventory levels and inventory imbalances at our independent distributors;
|
· |
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 sales among our instruments and consumable products;
|
· |
the amount of our research and development, sales and marketing and general and administrative expenses; and
|
· |
changes in our strategies.
|
· |
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 our single source supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems. 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., a division of Balda AG, and Nypro, Inc., a subsidiary of Jabil Circuit, 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 reagents and dry reagent chemistry beads that are either inserted in our reagent discs, lateral flow rapid tests or sold as stand-alone products: Amano Enzyme USA Co., Ltd., 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., Sekisui Diagnostics, 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, we currently have qualified two suppliers to produce the reagent kits for our hematology instruments: Clinical Diagnostic Solutions, Inc. and Diatron.
|
· |
VSpro Specialty Analyzers and Cartridges:
Our VetScan VS
pro
specialty analyzers and cartridges are manufactured by SMB in Denmark and are purchased by us as completed products.
|
· |
i-STAT Analyzers and Cartridges:
Our VetScan i-STAT analyzers and cartridges are manufactured by Abbott and are purchased by us as completed products.
|
· |
Rapid Tests
:
Substantially all of our VetScan Rapid Tests are manufactured by a single source supplier, SA Scientific Co., located in the United States.
|
· |
the sales performance of our independent distributors;
|
· |
our ability to improve our existing products and develop new and innovative products;
|
· |
our ability to increase our sales and marketing activities;
|
· |
our ability to effectively manage our manufacturing activities; and
|
· |
our ability to effectively compete against current and future competitors.
|
· |
we will be able to maintain consistent growth through Abbott and our other independent distributors;
|
· |
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.
|
· |
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;
|
· |
product liability claims and public concern as to the safety of our devices or similar devices developed by our competitors;
|
· |
developments or disputes concerning our patents or our other proprietary rights; and
|
· |
general market conditions.
|
· |
the increased complexity and costs inherent in managing international operations;
|
· |
diverse regulatory and compliance requirements, and changes in those requirements that could restrict our or our distributors’ ability to manufacture, market or sell our products;
|
· |
our limited knowledge of and relationships with distributors, contractors, suppliers or other parties in these areas;
|
· |
political and economic instability;
|
· |
diminished protection of intellectual property in some countries outside of the United States;
|
· |
trade protection measures and import or export licensing requirements;
|
· |
complexity and costs associated with staffing and managing international development and operations;
|
· |
differing labor regulations and business practices;
|
· |
potentially negative consequences from changes in or interpretations of tax laws;
|
· |
changes in international medical reimbursement policies and programs;
|
· |
financial risks such as longer payment cycles, difficulty collecting accounts receivable and exposure to fluctuations in foreign currency exchange rates;
|
· |
regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors
’
and service providers
’
activities that may fall within the purview of the Foreign Corrupt Practices Act (the FCPA); and
|
· |
regulations relating to data security and the unauthorized use of, or access to, commercial and personal information.
|
Exhibit
No.
|
Description of Document
|
3.1
|
Amended and Restated Articles of Incorporation, as amended (filed with the Securities and Exchange Commission on May 30, 2014 as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 and incorporated herein by reference).
|
3.2
|
Amended and Restated Bylaws (filed with the Securities and Exchange Commission on July 10, 2015 as Exhibit 3.2 to our Current Report on Form 8-K and incorporated herein by reference).
|
10.1
|
2014 Equity Incentive Plan, as amended (filed with the Securities and Exchange Commission on November 1, 2016 as Exhibit 10.1 to our Current Report on Form 8-K and incorporated herein by reference).
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1#
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2#
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
# |
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, 2016
|
BY:
|
/s/ Clinton H. Severson
|
|
Clinton H. Severson
|
|||
Chief Executive Officer and Director
|
|||
(Principal Executive Officer)
|
|||
Date: November 9, 2016
|
BY:
|
/s/ Ross Taylor
|
|
Ross Taylor
|
|||
Chief Financial Officer and Vice President
of Finance
|
|||
(Principal Financial and Accounting Officer)
|
# |
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.
|
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