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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) October 25, 2006
ALIGN TECHNOLOGY, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-32259 94-3267295
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(Commission File Number) (IRS Employer Identification No.)
881 Martin Avenue, Santa Clara, California 95050
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(Address of Principal Executive Offices) (Zip Code)
(408) 470-1000
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(Registrant's Telephone Number, Including Area Code)
Not applicable
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(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))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
On October 25, 2006, Align Technology, Inc. ("Align") is issuing a press
release and holding a conference call regarding its financial results for its
third quarter ended September 30, 2006. The full text of the press release is
furnished as Exhibit 99.1 to this Form 8-K.
This information shall not be deemed "filed" for purposes of Section 18
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
Align is making reference to non-GAAP financial information in both the
press release and the conference call. A reconciliation of non-GAAP financial
measures contained in the attached press release to the comparable GAAP
financial measures is contained in the attached press release and a
reconciliation of these and certain other non-GAAP financial information
provided on the conference call (to the extent not reconciled on such call) is
contained on the Investor Relations section of our website at
investor.aligntech.com.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------
99.1 Press Release of Align Technology, Inc. dated October 25, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 25, 2006 ALIGN TECHNOLOGY, INC.
By: /s/ Eldon M. Bullington
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Eldon M. Bullington
Vice President, Finance and
Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------
99.1 Press Release of Align Technology, Inc. dated October 25, 2006
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact: Press Contact:
- --------------------------- --------------
Barbara Domingo Shannon Henderson
Align Technology, Inc. Ethos Communications, Inc.
(408) 470-1000 (678) 540-9222
investorinfo@aligntech.com align@ethoscommunication.com
ALIGN TECHNOLOGY, INC. REPORTS Q3 2006 REVENUES OF $49.0 MILLION
Santa Clara, Calif. - October 25, 2006 - Align Technology, Inc. (Nasdaq: ALGN),
the inventor of Invisalign(R), a proprietary method of straightening teeth
without wires and brackets, today reported financial results for the third
quarter of 2006. Total revenues for the third quarter of 2006 were $49.0
million, compared to $50.9 million in the third quarter of 2005, a decrease of
3.6 percent.
"The third quarter was a busy one for Align," stated Thomas M. Prescott, Align
Technology's President and CEO. "Over 1,100 doctors used Invisalign for the
first time and we trained almost 1,000 new doctors. Additionally, at the end of
the quarter, we announced our intent to sign a definitive agreement with
OrthoClear - which we did earlier this month - ending all pending litigation
matters with them. With the litigation now behind us and our base of doctors
growing, we can focus entirely on growing the top line. We will generate that
growth through increased adoption of Invisalign by dentists and orthodontists as
the Invisalign product evolves to better meet their specific needs. Our goal is
to return to profitability and increase value for our shareholders, customers,
and employees."
The net loss for the third quarter of 2006, as reported on a GAAP basis, was
$10.3 million, or loss per share of $0.16. This compares to GAAP net loss of
$1.5 million for the third quarter of 2005, or loss per share of $0.02.
Align Technology Inc. 881 Martin Avenue Santa Clara, CA 95050
Tel: (408) 470-1000 Fax: (408) 470-1201
The non-GAAP net loss for the third quarter of 2006 was $8.0 million, or
non-GAAP loss per share of $0.13. The reconciliation of the GAAP to non-GAAP
measurements for net loss for the third quarter of 2006 is set forth below
within Align Technology's financial statements.
As of September 30, 2006, Align had $86.1 million in cash, cash equivalents,
marketable securities, and restricted cash, compared to $74.4 million as of
December 31, 2005. Align borrowed $15 million from its credit facility during
the third quarter. Additionally, on October 13, 2006, Align signed the
definitive agreement with OrthoClear and subsequently disbursed $20 million to
them.
Align Webcast and Conference Call
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Align Technology will host a webcast and conference call today, October 25, 2006
at 8:45 a.m. EDT, 5:45 a.m. PDT, to review the third quarter of 2006 results and
discuss future operating trends and guidance. To access the webcast, click on
"Webcasts & Presentations" on Align Technology's Investor Relations web site at
http://investor.aligntech.com. To access the conference call, please dial (201)
689-8341 approximately fifteen minutes prior to the start of the call. If you
are unable to listen to the call, an archived web cast will be available
beginning approximately one hour after the call's conclusion and will remain
available through 5:30 p.m. EDT on July 25, 2007. Additionally, a telephonic
replay of the call can be accessed by dialing (877) 660-6853 with account number
292 followed by # and conference number 199387 followed by #. The replay may be
accessed from international locations by dialing (201) 612-7415 and using the
same account and conference numbers referenced above. The telephonic replay will
be available through 5:30 p.m. EDT on November 8, 2006.
About Align Technology, Inc.
Align Technology designs, manufactures and markets Invisalign, a proprietary
method for treating malocclusion, or the misalignment of teeth. Invisalign
corrects malocclusion using a series of clear, nearly invisible, removable
appliances that gently move teeth to a desired final position. Because it does
not rely on the use of metal or ceramic brackets and wires, Invisalign
significantly reduces the aesthetic and other limitations associated with
braces. Invisalign is appropriate for treating adults and older teens. Align
Technology was founded in April 1997 and received FDA clearance to market
Invisalign in 1998.
To learn more about Invisalign or to find a certified Invisalign doctor in your
area, please visit www.invisalign.com or call 1-800-INVISIBLE.
Forward-Looking Statement
This news release contains forward-looking statements, including statements
regarding Align's expectation that it will generate revenue growth through
increased adoption of Invisalign by dentists and orthodontists by evolving the
Invisalign system to better meet their specific needs. Forward-looking
statements contained in this news release relating to expectations about future
events or results are based upon information available to Align as of the date
hereof. Readers are cautioned that these forward-looking statements are only
predictions and are subject to risks, uncertainties and assumptions that are
difficult to predict. As a result, actual results may differ materially and
adversely from those expressed in any forward-looking statement. Factors that
might cause such a difference include, but are not limited to, risks relating to
Align's ability to sustain or increase profitability or revenue growth in future
periods while controlling expenses, including expenses related to the OrthoClear
settlement, customer demand for Invisalign, acceptance of Invisalign by
consumers and dental professionals, Align's third party manufacturing processes
and personnel, foreign operational, political and other risks relating to
Align's international manufacturing operations, Align's ability to protect its
intellectual property rights, competition from manufacturers of traditional
braces and new competitors, Align's ability to develop and successfully
introduce new products and product enhancements, and the loss of key personnel,
including members of its direct sales force. These and other risks are detailed
from time to time in Align's periodic reports filed with the Securities and
Exchange Commission, including, but not limited to, its Annual Report on Form
10-K for the fiscal year ended December 31, 2005, which was filed with the
Securities and Exchange Commission on March 1, 2006, and its Quarterly Reports
on Form 10-Q. Align undertakes no obligation to revise or update publicly any
forward-looking statements for any reason.
# # #
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
(in thousands, except per share data) 2006 2005 2006 2005
- ---------------------------------------------------- ------------- ------------- ------------- -------------
Revenues $ 49,034 $ 50,866 $ 151,163 $ 155,961
Cost of revenues 16,789 14,975 47,578 47,073
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Gross profit 32,245 35,891 103,585 108,888
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Operating expenses:
Sales and marketing 19,165 21,315 59,872 61,498
General and administrative 19,238 11,715 49,656 30,949
Research and development 4,807 4,400 13,526 14,658
------------- ------------- ------------- -------------
Total operating expenses 43,210 37,430 123,054 107,105
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Profit (Loss) from operations (10,965) (1,539) (19,469) 1,783
Interest and other income, net 854 326 2,393 28
Provision for income taxes (209) (303) (618) (926)
------------- ------------- ------------- -------------
Net profit (loss) $ (10,320) $ (1,516) $ (17,694) $ 885
============= ============= ============= =============
Net profit (loss) per share
- basic $ (0.16) $ (0.02) $ (0.28) $ 0.01
============= ============= ============= =============
- diluted $ (0.16) $ (0.02) $ (0.28) $ 0.01
============= ============= ============= =============
Shares used in computing net profit (loss) per share
- basic 63,230 61,788 62,907 61,509
============= ============= ============= =============
- diluted 63,230 61,788 62,907 63,129
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
(in thousands) 2006 2005
- ---------------------------------------------------- ------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 74,034 $ 74,219
Restricted cash 161 150
Marketable securities, short-term 11,898 -
Accounts receivable, net 32,607 29,305
Inventories, net 2,665 2,930
Other current assets 5,299 4,982
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Total current assets 126,664 111,586
Property and equipment, net 27,336 26,427
Other long-term assets 2,891 4,097
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Total assets $ 156,891 $ 142,110
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 15,000 $ -
Accounts payable 7,137 2,489
Accrued liabilities 31,891 29,372
Deferred revenue 12,143 16,747
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Total current liabilities 66,171 48,608
Other long term liabilities 296 64
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Total liabilities 66,467 48,672
Total stockholders' equity 90,424 93,438
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Total liabilities and stockholders' equity $ 156,891 $ 142,110
============= =============
ALIGN TECHNOLOGY, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement our condensed consolidated financial statements presented on a
GAAP basis, we use non-GAAP measures of gross profit, profit (loss) from
operations, net profit (loss) and certain expenses (including sales and
marketing, general and administrative and research and development), which
exclude stock-based compensation to allow for a better comparison of results in
the current period to those in prior periods that did not include FAS 123(R)
stock-based compensation. We believe the non-GAAP measures that exclude
stock-based compensation enhance the comparability of results against prior
periods. In addition, we use these non-GAAP financial measures for internal
management purposes, when publicly providing our business outlook and as a means
to evaluate period-to-period comparisons. These non-GAAP financial measures
should be considered as a supplement to, and not as a substitute for, or
superior to, financial measures prepared in accordance with GAAP.
Three Months Ended September 30, 2006 Three Months Ended September 30, 2005
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(in thousands, except per share data) Reported Adjustments (a) Non GAAP Reported Adjustments (a) Non GAAP
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Revenues $ 49,034 $ - $ 49,034 $ 50,866 $ - $ 50,866
Cost of revenues
16,789 (186) 16,603 14,975 - 14,975
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 32,245 186 32,431 35,891 - 35,891
------------ ------------ ------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 19,165 (714) 18,451 21,315 - 21,315
General and administrative 19,238 (1,015) 18,223 11,715 - 11,715
Research and development 4,807 (362) 4,445 4,400 - 4,400
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 43,210 (2,091) 41,119 37,430 - 37,430
------------ ------------ ------------ ------------ ------------ ------------
Profit (Loss) from operations (10,965) 2,277 (8,688) (1,539) - (1,539)
Interest and other income, net 854 - 854 326 - 326
Provision for income taxes (209) - (209) (303) - (303)
------------ ------------ ------------ ------------ ------------ ------------
Net profit (loss) $ (10,320) $ 2,277 $ (8,043) $ (1,516) $ - $ (1,516)
============ ============ ============ ============ ============ ============
Net profit (loss) per share
- basic $ (0.16) $ (0.13) $ (0.02) $ (0.02)
============ ============ ============ ============
- diluted $ (0.16) $ (0.13) $ (0.02) $ (0.02)
============ ============ ============ ============
Shares used in computing net
profit (loss) per share
- basic 63,230 63,230 61,788 61,788
============ ============ ============ ============
- diluted 63,230 63,230 61,788 61,788
============ ============ ============ ============
(a) Non cash stock-based compensation included in cost of sales and operating
expenses.
ALIGN TECHNOLOGY, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement our condensed consolidated financial statements presented on a
GAAP basis, we use non-GAAP measures of gross profit, profit (loss) from
operations, net profit (loss) and certain expenses (including sales and
marketing, general and administrative and research and development), which
exclude stock-based compensation to allow for a better comparison of results in
the current period to those in prior periods that did not include FAS 123(R)
stock-based compensation. We believe the non-GAAP measures that exclude
stock-based compensation enhance the comparability of results against prior
periods. In addition, we use these non-GAAP financial measures for internal
management purposes, when publicly providing our business outlook and as a means
to evaluate period-to-period comparisons. These non-GAAP financial measures
should be considered as a supplement to, and not as a substitute for, or
superior to, financial measures prepared in accordance with GAAP.
Nine Months Ended September 30, 2006 Nine Months Ended September 30, 2005
------------------------------------------ ------------------------------------------
(in thousands, except per share data) Reported Adjustments (a) Non GAAP Reported Adjustments (a) Non GAAP
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Revenues $ 151,163 $ - $ 151,163 $ 155,961 $ - $ 155,961
Cost of revenues 47,578 (515) 47,063 47,073 - 47,073
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 103,585 515 104,100 108,888 - 108,888
------------ ------------ ------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 59,872 (2,125) 57,747 61,498 (6) 61,492
General and administrative 49,656 (3,132) 46,524 30,949 (6) 30,943
Research and development 13,526 (976) 12,550 14,658 - 14,658
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 123,054 (6,233) 116,821 107,105 (12) 107,093
------------ ------------ ------------ ------------ ------------ ------------
Profit (Loss) from operations (19,469) 6,748 (12,721) 1,783 12 1,795
Interest and other income, net 2,393 - 2,393 28 - 28
Provision for income taxes (618) - (618) (926) - (926)
------------ ------------ ------------ ------------ ------------ ------------
Net profit (loss) $ (17,694) $ 6,748 $ (10,946) $ 885 $ 12 $ 897
============ ============ ============ ============ ============ ============
Net profit (loss) per share
- basic $ (0.28) $ (0.17) $ 0.01 $ 0.01
============ ============ ============ ============
- diluted $ (0.28) $ (0.17) $ 0.01 $ 0.01
============ ============ ============ ============
Shares used in computing net
profit(loss) per share
- basic 62,907 62,907 61,509 61,509
============ ============ ============ ============
- diluted 62,907 62,907 63,129 63,129
============ ============ ============ ============
(a) Non cash stock-based compensation included in cost of sales and operating
expenses
ALIGN TECHNOLOGY, INC.
FACT SHEET
The following information highlights business metrics for Align's third quarter
of 2006. For prior quarter information, please refer to the Investor Relations
website at http://investor.aligntech.com.
(rounded to the nearest hundred, except in utilization)
Cases Delivered 3Q 2006
- -------------------------------------------------------
U.S. Orthodontists - Full 9,600
U.S. Orthodontists - Invisalign Express 3,400
U.S. GP dentists - Full 12,500
U.S. GP dentists - Invisalign Express 5,800
International - Full 4,300
International - Invisalign Express 100
- -------------------------------------------------------
Total Cases Delivered 35,700
Cumulative
Doctors Trained 3Q 2006 Total
- ----------------------------------------------------------------------
U.S. Orthodontists - 7,900
U.S. GP dentists 750 20,700
International 200 10,400
- ----------------------------------------------------------------------
Total Doctors Trained 950 39,000
Total Submitting Doctors 3Q 2006
- -------------------------------------------------------
U.S. Orthodontists 2,700
U.S. GP dentists 7,700
International 1,700
- -------------------------------------------------------
Total Submitting Doctors 12,100
Doctor Utilization* 3Q 2006
- -------------------------------------------------------
U.S. Orthodontists 4.71
U.S. GP dentists 2.49
International 2.72
* Doctor Utilization = # of cases / # of doctors cases are shipped to