ARTHROCARE CORP

CIK:0001005010|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Product sales	$ 89,978	$ 87,478
Royalties, fees and other	6,078	4,870
Total revenues	96,056	92,348
Cost of product sales	28,438	28,328
Gross profit	67,618	64,020
Operating expenses:
Research and development	8,028	8,445
Sales and marketing	30,526	30,332
General and administrative	14,151	7,458
Amortization of intangible assets	524	423
Exit costs	0	0
Investigation and restatement related costs	5,187	3,893
Total operating expenses	58,416	50,551
Income from operations	9,202	13,469
Non-operating gains (losses)	(1,127)	522
Income before income taxes	8,075	13,991
Income tax provision	1,857	2,806
Net income	6,218	11,185
Accrued dividend and accretion charges on Series A 3% Redeemable Convertible Preferred Stock	(2,591)	(919)
Net income available to common stockholders	3,627	10,266
Other comprehensive income (loss)
Foreign currency translation adjustments	469	(1,099)
Total comprehensive income	$ 6,687	$ 10,086
Weighted average shares outstanding:
Basic (in shares)	31,837	28,055
Diluted (in shares)	32,654	28,785
Earnings per share applicable to common stockholders:
Basic (in dollars per share)	$ 0.11	$ 0.30
Diluted (in dollars per share)	$ 0.10	$ 0.30

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 6,218	$ 11,185
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	3,434	3,966
Provision for doubtful accounts receivable, product returns, and inventory valuation	341	496
Stock compensation expense	1,708	1,872
Deferred taxes	1,151	2,475
Other	461	32
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Change in operating assets	(1,542)	6,041
Change in operating liabilities	(32,354)	(6,611)
Net cash provided by (used in) operating activities	(20,583)	19,456
Cash flows from investing activities:
Purchases of property and equipment	(5,778)	(3,434)
Payments for intangible asset acquisitions	0	(7,000)
Net cash used in investing activities	(5,778)	(10,434)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of common stock	2,227	2,697
Net cash provided by financing activities	2,227	2,697
Effect of exchange rate changes on cash and cash equivalents	285	(508)
Net decrease in cash and cash equivalents	(23,849)	11,211
Cash and cash equivalents, beginning of period	214,853	218,787
Cash and cash equivalents, end of period	$ 191,004	$ 229,998

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 191,004	$ 214,853
Accounts receivable, net of allowances of $1,256 and $1,255 at March 31, 2014 and December 31, 2013, respectively	51,016	52,810
Inventories, net	48,707	46,288
Deferred tax assets	11,191	12,371
Prepaid expenses and other current assets	6,411	6,056
Total current assets	308,329	332,378
Property and equipment, net	54,012	51,244
Intangible assets, net	14,066	14,581
Goodwill	166,091	165,953
Deferred tax assets	24,737	25,842
Other assets	4,190	4,143
Total assets	571,425	594,141
Current liabilities:
Accounts payable	17,305	18,325
Accrued liabilities	33,881	64,948
Income tax payable	1,022	1,372
Other liabilities	275	353
Total current liabilities	52,483	84,998
Deferred tax liabilities	249	249
Other non-current liabilities	20,559	21,305
Total liabilities	73,291	106,552
Commitments and contingencies (Notes 6 and 7)
Series A 3% Redeemable Convertible Preferred Stock, par value $0.001; Authorized: 100 shares; Issued: 0 and 75 shares at March 31, 2014 and December 31, 2013, respectively; Outstanding: 0 and 75 shares at March 31, 2014 and December 31, 2013, respectively; Redemption value: $0 and $87,089 at March 31, 2014 and December 31, 2013, respectively	0	84,494
Stockholders’ equity:
Preferred stock, par value $0.001; Authorized: 4,900 shares; Issued and outstanding: none	0	0
Common stock, par value $0.001; Authorized: 75,000 shares; Issued: 38,408 and 32,385 shares Outstanding: 34,489 and 28,466 shares at March 31, 2014 and December 31, 2013, respectively	34	28
Treasury stock: 3,919 shares at March 31, 2014 and December 31, 2013	(105,798)	(105,798)
Additional paid-in capital	520,916	429,979
Accumulated other comprehensive income	5,590	5,121
Retained earnings	77,392	73,765
Total stockholders’ equity	498,134	403,095
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$ 571,425	$ 594,141