SOLTA MEDICAL INC

CIK:0001171298|SEC Filings

Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Calculation of Basic and Diluted Loss Per Share

The dilutive effect of potential common shares is reflected in diluted net income (loss) per share by application of the treasury stock method, which includes consideration of stock-based compensation.


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013		2012			2013		2012
Historical net income (loss) per share:
Numerator:
Net income (loss)	$	644	$	(2,878	)	$	1,872	$	(37,963	)

Denominator:
Weighted-average common shares outstanding used in calculating net income (loss) per share:
Basic		79,791,789		65,947,361			77,171,829		63,017,220

Diluted		81,025,627		65,947,361			78,337,342		63,017,220

Net income (loss) per share:
Basic	$	0.01	$	(0.04	)	$	0.02	$	(0.60	)

Diluted	$	0.01	$	(0.04	)	$	0.02	$	(0.60	)

Antidilutive Securities Excluded from Computation of Earnings Per Share

The following outstanding options, warrants, common stock issuable under the Employee Stock Purchase Plan and restricted stock units were excluded from the computation of diluted net income (loss) per common share for the periods presented because including them would have had an antidilutive effect:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Options to purchase common stock		2,156,599		5,495,218		2,266,521		5,495,218
Common stock warrants		312,423		4,587,644		312,423		4,587,644
Restricted and market-based stock units		—		2,738,971		79,285		2,738,971
Common stock issuable under Employee Stock Purchase Plan		13,038		146,335		17,800		146,335

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities
Net income (loss)	$ 1,872	$ (37,963)
Adjustments to reconcile net loss to net cash provided (used) in operating activities:
Depreciation and amortization	9,755	8,012
Loss on disposal of property, plant and equipment		33
Stock-based compensation	3,034	3,553
Contingent consideration fair value adjustment	(21,300)	32,600
Tax benefit from stock option exercises		2
Loan warrant discount amortization	322	104
Final payment accrual on debt financings	782	399
Provision for doubtful accounts	451	520
Write-down of excess and obsolete inventory	405	591
Change in assets and liabilities:
Accounts receivable	2,117	(3,903)
Inventories	(3,351)	(845)
Prepaid expenses and other current assets	1,310	770
Other assets	73	(25)
Accounts payable	(1,318)	450
Accrued and other liabilities	(816)	(588)
Contingent consideration liability payment	(9,367)
Deferred revenue	(80)	(823)
Customer deposits	430	239
Deferred rent	16	(77)
Net cash provided by (used in) operating activities	(15,665)	3,049
Cash flows from investing activities
Acquisition of property and equipment	(1,451)	(2,115)
Payments for acquisitions, net of cash acquired	(4,243)
Net cash used in investing activities	(5,694)	(2,115)
Cash flows from financing activities
Repayment of loan agreements	(35,082)	(9,555)
Contingent consideration liability payment	(6,294)
Cash settlement of vested restricted stock units	(937)	(469)
Proceeds from equity financing		16,279
Payment of equity financing costs		(171)
Payment of debt financing fees	(2,440)
Proceeds from exercise of stock options	373	273
Proceeds from employee stock purchase plan	316	339
Proceeds from loan agreement borrowings	35,000	13,500
Net cash provided by (used in) financing activities	(9,064)	20,196
Net increase (decrease) in cash and cash equivalents	(30,423)	21,130
Cash and cash equivalents at beginning of period	38,097	17,417
Cash and cash equivalents at end of period	7,674	38,547
Supplemental disclosure of cash flow information
Cash paid for interest	1,061	576
Cash paid for taxes	157	51
Accounts payable and accrued liabilities related to property and equipment purchases	366	126
Issuance of common stock for vested restricted stock units	3,040	1,860
Issuance of warrants in connection with debt financing		$ 700

Balance Sheet Detail (Tables)

9 Months Ended

Sep. 30, 2013

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Inventories

Inventories, Net

Inventories, net consist of the following:


	September 30,		December 31,
	2013		2012
Raw materials	$	8,402	$	7,564
Work-in-process		481		418
Finished goods		13,531		8,629

	$	22,414	$	16,611

Carrying Amount and Accumulated Amortization Expense of Acquired Intangible Assets

The carrying amount and accumulated amortization expense of the acquired intangible assets at September 30, 2013 and December 31, 2012 were as follows:


	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
September 30, 2013
Intangible assets amortized to cost of revenue:
Core technology	6 -12 years	$	21,320	($	8,974	)	$	12,346
Product technology	7 - 9 years		31,970		(10,147	)		21,823
Future royalties contract	10 years		3,890		(778	)		3,112

			57,180		(19,899	)		37,281
Intangible assets amortized to operating expenses:
Trade Names	6 - 10 years		6,580		(2,385	)		4,195
Customer relationships	4 - 12 years		19,210		(4,642	)		14,568

			25,790		(7,027	)		18,763

Total intangible assets		$	82,970	($	26,926	)	$	56,044


	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
December 31, 2012
Intangible assets amortized to cost of revenue:
Core technology	6 -12 years	$	21,320	($	7,460	)	$	13,860
Product technology	7 - 9 years		25,170		(7,388	)		17,782
Future royalties contract	10 years		3,890		(486	)		3,404

			50,380		(15,334	)		35,046
Intangible assets amortized to operating expenses:
Product development contract	1.9 yars		620		(620	)		—
Non-compete agreement	2 years		500		(500	)		—
Trade name	6 - 10 years		5,080		(1,832	)		3,248
Customer relationships	4 - 12 years		6,710		(2,576	)		4,134

			12,910		(5,528	)		7,382

Total intangible assets		$	63,290	($	20,862	)	$	42,428

Future Amortization Related to Intangible Assets

As of September 30, 2013, the total expected future amortization related to the Company’s existing intangible assets, is as follows:


	Amortization included in Cost of Revenue		Amortization included in Operating Expense		Total Amortization Expense
2013	$	1,562	$	1,072	$	2,634
2014		6,254		4,135		10,389
2015		6,225		3,862		10,087
2016		4,610		3,690		8,300
2017 and thereafter		18,630		6,004		24,634

	$	37,281	$	18,763	$	56,044

Carrying Amount of Goodwill

The changes in the carrying amount of goodwill are as follows:


	September 30,		December 31,
	2013		2012
Balance at beginning of period	$	96,620	$	96,620
Addition from acquisition		7,361		—

Balance at end of period	$	103,981	$	96,620

Accrued Liabilities

Accrued liabilities consist of the following:


	September 30,		December 31,
	2013		2012
Payroll and related expenses	$	5,993	$	6,723
Accrued claims and settlements		204		3,189
Standard warranty		1,397		1,724
Professional fees		709		662
Other		5,353		5,045

	$	13,656	$	17,343

Contingent Consideration Liability at Fair Value within Level 3

The unobservable inputs at September 30, 2013 are as follows:


Level 3 Fair Value Measurement	Fair Value at September 30, 2013		Valuation Technique	Unobservable Input	Input %
Contingent consideration liability:
Liposonix	$	29,339	Discounted cash flow	Weighted average cost of capital		21.0	%
				Long term discount rate		21.0	%
Sound Surgical		—	Probability Weighted Earnout	Discount for lack of marketability		5.0	%

	$	29,339

The unobservable inputs at December 31, 2012 are as follows:

Level 3 Fair Value Measurement

Fair Value at
December 31, 2012

Valuation Technique

Unobservable Input

Input %

Contingent consideration liability:

Liposonix

59,900

Discounted cash flow

Weighted average cost of capital

25.2

Long term discount rate

25.0

Changes in Value of Contingent Consideration Liability

The change in the value of the contingent consideration liability is summarized below:


Fair value at December 31, 2012	$	59,900
Additional contingent consideration liability resulting from the Sound Surgical acquisition		6,400
Change in fair value of the contingent consideration liability		(21,300	)
Contingent consideration liability payment		(15,661	)

Fair value at September 30, 2013	$	29,339