October 17, 2012

Align Technology Announces Preliminary Third Quarter Fiscal Year 2012 Results


SAN JOSE, CA -- (Marketwire) -- 10/17/12 -- Align Technology, Inc. (NASDAQ: ALGN)

  • Q3 net revenues of $136.5 million increased 8.4% year-over-year
  • Q3 Invisalign clear aligner revenue of $126.7 million increased 10.9% year-over-year
  • Q3 Invisalign case shipments of 92.5 thousand increased 16.6% year-over-year
  • Q3 Invisalign teenager case shipments of 24.5 thousand increased 21.5% year-over-year
  • Q3 scanner and CAD/CAM services revenue of $9.8 million decreased 15.9% year-over-year
  • Preliminary Q3 diluted GAAP EPS was $0.29, non-GAAP was $0.28
  • Company Evaluating Possible Goodwill Impairment Charge

Align Technology, Inc. (NASDAQ: ALGN) today reported preliminary financial results for the third quarter of fiscal 2012 ended September 30, 2012. The preliminary results are subject to change based upon the conclusion of goodwill impairment testing being undertaken by the Company.

Total net revenues for the third quarter of fiscal 2012 (Q3 12) were $136.5 million. This is compared to $145.6 million reported in the second quarter of 2012 (Q2 12) and compared to $125.9 million reported in the third quarter of 2011 (Q3 11). Q3 12 Invisalign clear aligner revenue was $126.7 million, compared to $133.7 million in Q2 12 and $114.3 million in Q3 11. Q3 12 Invisalign clear aligner case shipments were 92.5 thousand, compared to 95.3 thousand in Q2 12 and 79.4 thousand in Q3 11, and included Align's 2 millionth case milestone. Q3 12 scanner and CAD/CAM services revenue was $9.8 million, compared to $11.9 million in Q2 12 and compared to $11.6 million in Q3 11.

The discontinuation of Align's distribution relationship with Straumann in Europe and North America, announced in a separate press release today, and the decline in results of operations of the Company's Scanner and CAD/CAM Services reporting unit triggers the risk of impairment of goodwill associated with the acquisition of Cadent. As a result, Align is in the process of conducting step one of a goodwill impairment test as prescribed by GAAP. This test is currently in progress and the Company has not concluded as to whether goodwill, which had a carrying value of $135.3 million as of September 30, 2012, is impaired and for this reason the Company's results are preliminary. Prior to filing its Form 10-Q for the third quarter of 2012, the Company expects to complete the step one impairment test. If the result of the step one analysis indicates an impairment, the Company will conduct a step two evaluation to determine the amount of the non-cash impairment charge, if any. If step two cannot be completed prior to filing of the Form 10-Q for the third quarter, the Company may estimate a range of potential impairment and may record an estimated non-cash charge in the third quarter of 2012 results. Any difference between an estimate and the final step two evaluation, would be recorded in the fourth quarter 2012. The Company's evaluation could result in a non-cash impairment charge for a substantial portion of the $135.3 million book value of goodwill which would negatively affect net income although revenue and cash flow from operations would not be impacted.

"Despite a strong summer season for Invisalign teenager cases, which increased 21% sequentially and year-over-year, our third quarter revenue was slightly lower than our outlook," said Thomas M. Prescott, Align president and CEO. "Q3 is historically a slower period for North American GP Dentists and International doctors due to summer vacations. This year summer seasonality was more pronounced in North America and as a result, we did not see the expected ramp in Invisalign cases for GP Dentists and Orthodontists. This softness has continued through October and is reflected in our Q4 guidance, which despite that slowdown, still projects a healthy annual growth rate for the company overall, with volume growth of at least 16%."

Preliminary net profit for Q3 12 was $24.3 million, or $0.29 per diluted share. This is compared to net profit of $28.5 million, or $0.34 per diluted share in Q2 12 and net profit of $19.3 million, or $0.24 per diluted share in Q3 11. Preliminary net profit for Q3 12 includes pre-tax acquisition and integration related costs of $0.2 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.1 million with a total income tax-related adjustment of $2.1 million. Net profit for Q2 12 includes pre-tax acquisition and integration related costs of $0.3 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.2 million with a total income tax-related adjustment of $1.5 million. Net profit for Q3 11 includes pre-tax acquisition and integration related costs of $1.5 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.2 million with a total income tax-related adjustment of $0.2 million.

To supplement our consolidated financial statements, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating margin, non-GAAP net profit, non-GAAP earnings per diluted share, EBITDA and adjusted EBITDA. Detailed reconciliations between GAAP and non-GAAP information are contained in the tables following the financial tables of this release.

Non-GAAP net profit for Q3 12 was $23.7 million, or $0.28 per diluted share. This is compared to non-GAAP net profit of $28.6 million, or $0.34 per diluted share in Q2 12 and non-GAAP net profit of $21.9 million, or $0.27 per diluted share in Q3 11.


Q3 12 Operating Results ($M)

---------------------------------------------------------------------------

                                          Preliminary

Key GAAP Operating Results                   Q3 12       Q2 12      Q3 11

                                          -----------  ---------  ---------

Revenue                                   $     136.5  $   145.6  $   125.9

- Clear Aligner                           $     126.7  $   133.7  $   114.3

- Scanner and CAD/CAM Services            $       9.8  $    11.9  $    11.6



Gross Margin                                     73.5%      74.7%      73.4%

- Clear Aligner                                  77.6%      79.0%      78.6%

- Scanner and CAD/CAM Services                   20.6%      26.6%      21.5%



Operating Expense                         $      71.2  $    72.8  $    66.1

Operating Margin                                 21.4%      24.7%      20.9%

Net Profit                                $      24.3  $    28.5  $    19.3

Earnings Per Diluted Share (EPS)          $      0.29  $    0.34  $    0.24



Key Non-GAAP Operating Results                Q3 12       Q2 12      Q3 11

                                          -----------  ---------  ---------

Non-GAAP Gross Margin                            73.7%      75.0%      73.9%

- Non-GAAP Clear Aligner                         77.6%      79.0%      78.6%

- Non-GAAP Scanner & CAD/CAM Services            23.8%      30.3%      27.1%



Non-GAAP Operating Expense                $      70.0  $    71.6  $    63.8

Non-GAAP Operating Margin                        22.4%      25.8%      23.2%

Non-GAAP Net Profit                       $      23.7  $    28.6  $    21.9

Non-GAAP Earnings Per Diluted Share (EPS) $      0.28  $    0.34  $    0.27

EBITDA                                    $      33.2  $    40.8  $    31.0

Adjusted EBITDA                           $      33.6  $    41.3  $    32.8



Total stock-based compensation expense included in Q3 12 was $5.4 million compared to $5.3 million in Q2 12 and $5.0 million in Q3 11. Stock based compensation expense included in GAAP gross margin in Q3 12, Q2 12 and Q3 11 was $0.5 million. Stock-based compensation expense included in GAAP operating expense in Q3 12 was $4.9 million compared to $4.8 million in Q2 12 and $4.5 million in Q3 11.

Liquidity and Capital Resources
As of September 30, 2012, Align Technology had $348.9 million in cash, cash equivalents, and marketable securities compared to $248.1 million as of December 31, 2011. During Q3 12, we purchased approximately 213,000 shares of our common stock at an average price of $34.15 per share for a total of approximately $7.3 million. There remains approximately $132.5 million available under the Company's existing stock repurchase authorization.

Q4 Fiscal 2012 Business Outlook
For the fourth quarter of fiscal 2012 (Q4 12), Align Technology expects net revenues to be in a range of $134.2 million to $137.8 million. Invisalign clear aligner case shipments for Q4 12 are expected to be in a range of 90.0 to 93.0 thousand cases, which reflect a year-over-year increase of 9.0% to 12.6%. GAAP earnings per diluted share for Q4 12 is expected to be in a range of $0.21 to $0.23, excluding any potential impairment charge. Non-GAAP earnings per diluted share for Q4 12 is expected to be in a range of $0.21 to $0.23. A more comprehensive business outlook is available following the financial tables of this release.

Align Announces SmartTrack™, Next Generation Invisalign Aligner Material
In a separate press release today, Align announced SmartTrack™, the next generation of Invisalign clear aligner material. SmartTrack is a proprietary, custom-engineered material that delivers gentle, more constant force considered ideal for orthodontic tooth movements. SmartTrack will become the standard Invisalign aligner material in the first quarter of 2013 for Invisalign clear aligner products in North America and Europe, as well as other international markets where regulatory approval has been obtained.

Align Web Cast and Conference Call
Align Technology will host a conference call today, October 17, 2012 at 4:30 p.m. ET, 1:30 p.m. PT, to review its preliminary third quarter fiscal 2012 results, discuss future operating trends and business outlook. The conference call will also be web cast live via the Internet. To access the web cast, go to the "Events & Presentations" section under Company Information on Align Technology's Investor Relations web site at http://investor.aligntech.com. To access the conference call, please dial 201-689-8261 approximately fifteen minutes prior to the start of the call. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 400990 followed by #. For international callers, please dial 201-612-7415 and use the same conference number referenced above. The telephonic replay will be available through 5:30 p.m. ET on October 25, 2012.

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 teens. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998. The Invisalign product family includes Invisalign, Invisalign Teen, Invisalign Assist, Invisalign Express 10, Invisalign Express 5, Invisalign Lite, and Vivera Retainers. To learn more about Invisalign or to find an Invisalign trained doctor in your area, please visit www.invisalign.com.

Cadent Holdings, Inc. is a subsidiary of Align Technology and is a leading provider of 3D digital scanning solutions for orthodontics and dentistry. The Cadent family of products includes iTero and iOC scanning systems, OrthoCAD iCast, OrthoCAD iQ and OrthoCAD iRecord. For additional information, please visit www.cadentinc.com.

About non-GAAP Financial Measures
To supplement our consolidated financial statements and our business outlook, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expenses, non-GAAP profit from operations, non-GAAP net profit and non-GAAP earnings per share, which exclude, as applicable, acquisition and integration related costs, amortization of acquired intangible assets, severance and benefit costs, and any related income tax-related adjustments, and EBITDA and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our "core operating performance". Management believes that "core operating performance" represents Align's performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from "core operating performance" certain expenditures and other items that may not be indicative of our operating performance including discrete cash and non-cash charges that are infrequent or one-time in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are provided to and used by our institutional investors and the analyst community to facilitate comparisons with prior and subsequent reporting periods. A reconciliation of the GAAP and non-GAAP financial measures for the quarter and year and a more detailed explanation of each non-GAAP financial measure and its uses are provided in the footnotes to the table captioned "Reconciliation of GAAP to non-GAAP Key Financial Metrics" and "Business Outlook Summary" included at the end of this release.

Forward-Looking Statement
This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the fourth quarter of 2012, including anticipated net revenue, gross margin, operating expense, operating income, earnings per share, case shipments and cash. Forward-looking statements contained in this news release and the tables below 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, difficulties predicting customer and consumer purchasing behavior, the willingness and ability of our customers to maintain and/or increase utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, our ability to successfully achieve the anticipated benefits from the acquisition of Cadent Holdings, Inc., continued customer demand for our existing and new products, changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages and consumer confidence, the timing of case submissions from our doctors within a quarter, acceptance of our products by consumers and dental professionals, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, Align's ability to develop and successfully introduce new products and product enhancements, and the loss of key personnel. 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, 2011, which was filed with the Securities and Exchange Commission on February 29, 2012. In addition to that information, the possibility of an impairment charge, which could result in a substantial reduction against goodwill and a commensurate charge against earnings, could have a material adverse impact on the preliminary results reported in this press release and on results during a subsequent period. While the Company expects to reflect the outcome of its impairment testing in its Form 10-Q and final reported results for the third quarter ended September 30, 2012, Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.




ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)



                      Three Months Ended             Nine Months Ended

                 ----------------------------  ----------------------------

                  Preliminary                   Preliminary

                 September 30,  September 30,  September 30,  September 30,

                      2012           2011           2012           2011

                 -------------  -------------  -------------  -------------



Net revenues     $     136,496        125,894  $     417,201        350,836



Cost of revenues        36,146         33,524        107,291         85,103

                 -------------  -------------  -------------  -------------



Gross profit           100,350         92,370        309,910        265,733

                 -------------  -------------  -------------  -------------



Operating

 expenses:

 Sales and

  marketing             36,468         34,655        114,272        106,062

 General and

  administrative        23,896         21,609         68,674         66,695

 Research and

  development            9,952          8,926         31,158         27,586

 Amortization of

  acquired

  intangible

  assets                   866            868          2,620          1,460

                 -------------  -------------  -------------  -------------

Total operating

 expenses               71,182         66,058        216,724        201,803

                 -------------  -------------  -------------  -------------



Profit from

 operations             29,168         26,312         93,186         63,930



Interest and

 other income

 (expense), net           (353)          (118)          (624)          (335)

                 -------------  -------------  -------------  -------------



Profit before

 income taxes           28,815         26,194         92,562         63,595



Provision for

 income taxes            4,494          6,930         18,765         17,328

                 -------------  -------------  -------------  -------------



Net profit       $      24,321  $      19,264  $      73,797  $      46,267

                 =============  =============  =============  =============



Net profit per

 share

 - basic         $        0.30  $        0.25  $        0.92  $        0.60

                 =============  =============  =============  =============

 - diluted       $        0.29  $        0.24  $        0.89  $        0.58

                 =============  =============  =============  =============



Shares used in

 computing net

 profit per

 share

 - basic                81,437         78,455         80,356         77,735

                 =============  =============  =============  =============

 - diluted              83,906         80,266         83,016         80,040

                 =============  =============  =============  =============







ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



                                                  Preliminary

                                                 September 30, December 31,

                                                      2012          2011



                                                 ------------- -------------

                     ASSETS



Current assets:

  Cash and cash equivalents                      $     304,907 $     240,675

  Restricted cash                                        1,564         4,026

  Marketable securities, short-term                     23,142         7,395

  Accounts receivable, net                             105,902        91,537

  Inventories                                           15,137         9,402

  Other current assets                                  33,594        31,781

                                                 ------------- -------------

    Total current assets                               484,246       384,816



Marketable securities, long-term                        20,802             -

Property and equipment, net                             75,248        53,965

Goodwill and intangible assets, net                    182,644       185,405

Deferred tax asset                                      27,189        22,337

Other long-term assets                                   2,700         2,741

                                                 ------------- -------------



      Total assets                               $     792,829 $     649,264

                                                 ============= =============



      LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:

  Accounts payable                               $      14,415 $      19,265

  Accrued liabilities                                   71,949        76,600

  Deferred revenue                                      65,324        52,252

                                                 ------------- -------------

    Total current liabilities                          151,688       148,117



Other long term liabilities                             14,311        10,366

                                                 ------------- -------------



      Total liabilities                                165,999       158,483



Total stockholders' equity                             626,830       490,781

                                                 ------------- -------------



    Total liabilities and stockholders' equity   $     792,829 $     649,264

                                                 ============= =============







ALIGN TECHNOLOGY, INC.

RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS







Reconciliation of GAAP to

 Non-GAAP Gross Profit

(in thousands)

                                          Three Months Ended

                          -------------------------------------------------

                           September 30,                     September 30,

                                2012        June 30, 2012         2011

                          ---------------  ---------------  ---------------



GAAP Gross profit         $       100,350  $       108,800  $        92,370

  Acquisition and

   integration costs

   related to cost of

   revenues (1)                        55               72              202

  Amortization of

   acquired intangible

   assets related to cost

   of revenues (2)                    213              232              267

  Severance and benefit

   costs related to cost

   of revenues(3)                      39              135              175

                          ---------------  ---------------  ---------------

Non-GAAP Gross profit     $       100,657  $       109,239  $        93,014

                          ===============  ===============  ===============



Reconciliation of GAAP to

 Non-GAAP Gross Profit

 Scanner and CAD/CAM

 Services

(in thousands)

                                          Three Months Ended

                          -------------------------------------------------

                            September 30,                     September 30,

                                2012         June 30, 2012        2011

                          ---------------  ---------------  ---------------



GAAP Scanner and CAD/CAM

 Services gross profit    $         2,016  $         3,183  $         2,500

  Acquisition and

   integration costs

   related to cost of

   revenues (1)                        55               72              202

  Amortization of

   acquired intangible

   assets related to cost

   of revenues (2)                    213              232              267

  Severance and benefit

   costs related to cost

   of revenues(3)                      39              135              175

                          ---------------  ---------------  ---------------

Non-GAAP Gross profit     $         2,323  $         3,622  $         3,144

                          ===============  ===============  ===============



Reconciliation of GAAP to

 Non-GAAP Operating

 Expenses

(in thousands)

                                          Three Months Ended

                          -------------------------------------------------

                            September 30,                     September 30,

                                2012         June 30, 2012        2011

                          ---------------  ---------------  ---------------



GAAP Operating expenses   $        71,182  $        72,788  $        66,058

  Acquisition and

   integration costs

   related to operating

   expenses (1)                      (179)            (261)          (1,296)

  Amortization of

   acquired intangible

   assets related to

   operating expenses (2)            (866)            (869)            (868)

  Severance and benefit

   costs related to

   operating expenses (3)            (105)             (49)             (72)

                          ---------------  ---------------  ---------------

Non-GAAP Operating

 expenses                 $        70,032  $        71,609  $        63,822

                          ===============  ===============  ===============



Reconciliation of GAAP to

 Non-GAAP Profit from

 Operations

(in thousands)

                                          Three Months Ended

                          -------------------------------------------------

                            September 30,                     September 30,

                                2012         June 30, 2012        2011

                          ---------------  ---------------  ---------------



GAAP Profit from

 operations               $        29,168  $        36,012  $        26,312

  Acquisition and

   integration costs (1)              234              333            1,498

  Amortization of

   acquired intangible

   assets (2)                       1,079            1,101            1,135

  Severance and benefit

   costs (3)                          144              184              247

                          ---------------  ---------------  ---------------

Non-GAAP Profit from

 operations               $        30,625  $        37,630  $        29,192

                          ===============  ===============  ===============



Reconciliation of GAAP to

 Non-GAAP Net Profit

(in thousands, except per

 share amounts)

                                          Three Months Ended

                          -------------------------------------------------

                            September 30,                     September 30,

                                2012         June 30, 2012        2011

                          ---------------  ---------------  ---------------



GAAP Net profit           $        24,321  $        28,492  $        19,264

  Acquisition and

   integration costs (1)              234              333            1,498

  Amortization of

   acquired intangible

   assets (2)                       1,079            1,101            1,135

  Severance and benefit

   costs (3)                          144              184              247

  Income tax-related

   adjustments (4)                 (2,078)          (1,512)            (203)

                          ---------------  ---------------  ---------------

Non-GAAP Net profit       $        23,700  $        28,598  $        21,941

                          ===============  ===============  ===============



Diluted Net profit per

 share:

  GAAP                    $          0.29  $          0.34  $          0.24

                          ===============  ===============  ===============

  Non-GAAP                $          0.28  $          0.34  $          0.27

                          ===============  ===============  ===============



Shares used in computing

 diluted GAAP Net profit

 per share                         83,906           82,954           80,266

                          ===============  ===============  ===============

Shares used in computing

 diluted Non-GAAP Net

 profit per share                  83,906           82,954           80,266

                          ===============  ===============  ===============



Reconciliation of GAAP

 Net Profit to EBITDA and

 Adjusted EBITDA

(in thousands)

                                          Three Months Ended

                          -------------------------------------------------

                            September 30,                     September 30,

                                2012         June 30, 2012        2011

                          ---------------  ---------------  ---------------



GAAP Net profit           $        24,321  $        28,492  $        19,264

Provision for income

 taxes                              4,494            8,061            6,930

Depreciation and

 amortization (5)                   4,374            4,267            4,823

                          ---------------  ---------------  ---------------

EBITDA (6)                         33,189           40,820           31,017

                          ---------------  ---------------  ---------------



Adjustments or charges:

  Acquisition and

   integration related

   costs (1)                          234              333            1,498

  Severance and benefit

   costs (3)                          144              184              247

                          ---------------  ---------------  ---------------

EBITDA after adjustments

 (6)                      $        33,567  $        41,337  $        32,762

                          ===============  ===============  ===============







References to GAAP in the third quarter tables above are preliminary GAAP results and do not include the impact of any potential impairment charge.

(1) Acquisition costs and integration related. We have incurred acquisition-related and other expenses which include legal, banker, accounting and other advisory fees of third parties, retention bonuses, integration and professional fees. We do not engage in acquisitions in the ordinary course of business. We believe that it is important to understand these charges; however, we do not believe that these charges are indicative of future operating results. We believe that eliminating these expenses from our non-GAAP measures is useful because we generally would not have otherwise incurred such expenses in the periods presented as part of our continuing operations.

(2) Amortization of acquired intangible assets. When conducting internal development of intangible assets (including developed technology, customer relationships, trademarks, etc.), GAAP accounting rules require that we expense the costs as incurred. In the case of acquired businesses, however, we are required to allocate a portion of the purchase price to the accounting value assigned to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangibles. The acquired company, in most cases, has itself previously expensed the costs incurred to develop the acquired intangible assets, and the purchase price allocated to these assets is not necessarily reflective of the cost we would incur in developing the intangible asset. We eliminate these amortization charges for our non-GAAP operating results to provide better comparability of pre and post-acquisition operating results and comparability to results of businesses utilizing internally developed intangible assets.

(3) Severance and benefits costs. These costs are related to the closure of our New Jersey operations and were realized through the first three quarters of 2012. We have engaged in various restructuring and exit activities in 2011 and 2009 that have resulted in costs associated with severance and benefits. Such activity has been a discrete event based on a unique set of business objectives or circumstances, and each has differed from the others in terms of its operational implementation, business impact and scope. We do not engage in restructuring and/or exit activities in the ordinary course of business. We believe that it is important to understand these charges and, we believe that investors benefit from excluding these charges from our operating results to facilitate a more meaningful evaluation of current operating performance and comparisons to past operating performance.

(4) Income tax-related adjustments. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for discrete tax items and items excluded from GAAP income in calculating the non-GAAP financial measures presented above. Our estimated tax rate on non-GAAP income is determined annually and may be re-calculated during the year to take into account events or trends that we believe materially impact the estimated annual rate.

(5) Includes the amortization of acquired intangible assets.

(6) EBITDA and adjusted EBITDA. We use EBITDA as a performance measure for benchmarking against our peers and competitors. We believe EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the medical technology industry. We also use adjusted EBITDA which excludes certain special or non-recurring expenses, net of certain special or non-recurring benefits, detailed in the reconciliation tables that accompany this release, as an internal measure of business operating performance. We believe such financial measures provide a meaningful perspective of the underlying operating performance to our current business. EBITDA and adjusted EBITDA are not recognized terms under GAAP. Because all companies do not calculate EBITDA and similarly titled financial measures in the same way, those measures as used by other companies may not be consistent with the way we calculate such measures and should not be considered as alternative measures of operating or net profit.




ALIGN TECHNOLOGY

Q3 2012 EARNINGS RELEASE ADDITIONAL DATA

REVENUE PERFORMANCE AND CLEAR ALIGNER METRICS

(in thousands except per share data)



                                 Q1          Q2          Q3          Q4

                                2011        2011        2011        2011

Invisalign Clear Aligner

 Revenues by Geography:

  North America              $   74,258  $   79,755  $   79,678  $   81,789

    North American

     Orthodontists               35,017      37,112      37,450      37,939

    North American GP

     Dentists                    39,241      42,643      42,228      43,850

  International                  25,179      27,898      28,346      30,054

  Non-case*                       5,419       5,994       6,254       7,089

                             ----------  ----------  ----------  ----------

    Total Clear Aligner

     Revenue                 $  104,856  $  113,647  $  114,278  $  118,932

                             ==========  ==========  ==========  ==========

      YoY% growth                  16.4%        5.0%       19.1%       28.0

      QoQ% growth                  12.9%        8.4%        0.6%        4.1

  *includes Invisalign

   training, ancillary

   products, and retainers

Invisalign Clear Aligner

 Revenues by Product:

  Invisalign Full            $   71,128  $   76,636  $   75,158  $   79,469

  Invisalign Express/Lite        10,051      11,095      10,498      10,865

  Invisalign Teen                11,876      12,817      15,393      14,443

  Invisalign Assist               6,382       7,105       6,974       7,066

  Non-case*                       5,419       5,994       6,255       7,089

                             ----------  ----------  ----------  ----------

    Total Clear Aligner

     Revenue                 $  104,856  $  113,647  $  114,278  $  118,932

                             ==========  ==========  ==========  ==========



Average Invisalign Selling

 Price (ASP), as billed:

  Total Worldwide Blended

   ASP                       $    1,395  $    1,410  $    1,385  $    1,360

  International ASP          $    1,555  $    1,660  $    1,560  $    1,530



Invisalign Clear Aligner

 Cases Shipped by Geography:

  North America                  55,180      59,230      61,190      62,990

    North American

     Orthodontists               26,890      28,520      30,070      29,890

    North American GP

     Dentists                    28,290      30,710      31,120      33,100

  International                  16,190      16,790      18,170      19,600

                             ----------  ----------  ----------  ----------

    Total Cases Shipped          71,370      76,020      79,360      82,590

                             ==========  ==========  ==========  ==========



Invisalign Clear Aligner

 Cases Shipped by Product:

  Invisalign Full                48,110      51,100      51,360      55,700

  Invisalign Express/Lite        10,500      11,310      11,020      11,385

  Invisalign Teen                 7,930       8,615      11,730       9,810

  Invisalign Assist               4,830       4,995       5,250       5,695

                             ----------  ----------  ----------  ----------

    Total Cases Shipped          71,370      76,020      79,360      82,590

                             ==========  ==========  ==========  ==========



Number of Invisalign Doctors

 Cases Shipped to:

  North American

   Orthodontists                  4,150       4,160       4,260       4,280

  North American GP Dentists     10,250      10,665      11,040      10,875

  International                   4,150       4,260       4,590       4,795

                             ----------  ----------  ----------  ----------

    Total Doctors Cases were

     Shipped to Worldwide        18,550      19,085      19,890      19,950

                             ==========  ==========  ==========  ==========



Invisalign Doctor

 Utilization Rates*:

  North American

   Orthodontists                    6.5         6.9         7.1         7.0

  North American GP Dentists        2.8         2.9         2.8         3.0

  International                     3.9         3.9         4.0         4.1

                             ----------  ----------  ----------  ----------

    Total Utilization Rates         3.9         4.0         4.0         4.1

                             ==========  ==========  ==========  ==========

  * # of cases shipped/# of

   doctors to whom cases

   were shipped

Number of Invisalign Doctors

 Trained:

  North American

   Orthodontists                     75          80         100         100

  North American GP Dentists        715         765         630         855

  International                     165         520         855         970

                             ----------  ----------  ----------  ----------

    Total Doctors Trained

     Worldwide                      955       1,365       1,585       1,925

                             ==========  ==========  ==========  ==========

    Total to Date Worldwide      64,780      66,145      67,730      69,655

                             ==========  ==========  ==========  ==========



Scanner and CAD/CAM Services

 Revenue:

  North America Scanner and

   CAD/CAM Services          $        -  $    5,241  $    9,098  $    9,611

  International Scanner and

   CAD/CAM Services                   -       1,198       2,518         362

                             ----------  ----------  ----------  ----------

    Total Scanner and

     CAD/CAM Revenue         $        -  $    6,439  $   11,616  $    9,973

                             ==========  ==========  ==========  ==========



  Scanner Revenue            $        -  $    2,735  $    5,420  $    5,228

  CAD/CAM Services Revenue            -       3,704       6,196       4,745

                             ----------  ----------  ----------  ----------

    Total Scanner and

     CAD/CAM Revenue         $        -  $    6,439  $   11,616  $    9,973

                             ==========  ==========  ==========  ==========



Total Revenue by Geography:

  Total North America

   Revenue                   $   74,258  $   84,996  $   88,776  $   91,400

  Total International

   Revenue                       25,179      29,096      30,864      30,416

  Total Non-case Revenue          5,419       5,994       6,254       7,089

                             ----------  ----------  ----------  ----------

    Total Worldwide Revenue  $  104,856  $  120,086  $  125,894  $  128,905

                             ==========  ==========  ==========  ==========

      YoY% growth                  16.4%       11.0%       31.2%       38.8

      QoQ% growth                  12.9%       14.5%        4.8%        2.4





                               FISCAL        Q1          Q2          Q3

                                2011        2012        2012        2012

Invisalign Clear Aligner

 Revenues by Geography:

  North America              $  315,480  $   86,871  $   92,997  $   89,568

    North American

     Orthodontists              147,518      41,688      43,942      43,090

    North American GP

     Dentists                   167,962      45,183      49,055      46,478

  International                 111,477      29,700      32,883      29,700

  Non-case*                      24,756       6,757       7,789       7,457

                             ----------  ----------  ----------  ----------

    Total Clear Aligner

     Revenue                 $  451,713  $  123,328  $  133,669  $  126,725

                             ==========  ==========  ==========  ==========

      YoY% growth           %      16.7%       17.6%       17.6%       10.9%

      QoQ% growth           %       3.7%        8.4%       -5.2%

  *includes Invisalign

   training, ancillary

   products, and retainers

Invisalign Clear Aligner

 Revenues by Product:

  Invisalign Full            $  302,391  $   82,424  $   88,617  $   80,294

  Invisalign Express/Lite        42,509      11,806      13,632      12,779

  Invisalign Teen                54,529      15,148      16,380      19,144

  Invisalign Assist              27,527       7,193       7,251       7,051

  Non-case*                      24,757       6,757       7,789       7,457

                             ----------  ----------  ----------  ----------

    Total Clear Aligner

     Revenue                 $  451,713  $  123,328  $  133,669  $  126,725

                             ==========  ==========  ==========  ==========



Average Invisalign Selling

 Price (ASP), as billed:

  Total Worldwide Blended

   ASP                       $    1,385  $    1,370  $    1,335  $    1,320

  International ASP          $    1,575  $    1,485  $    1,455  $    1,355



Invisalign Clear Aligner

 Cases Shipped by Geography:

  North America                 238,585      65,280      72,685      70,610

    North American

     Orthodontists              115,370      32,235      35,420      35,885

    North American GP

     Dentists                   123,215      33,045      37,265      34,725

  International                  70,750      19,985      22,595      21,905

                             ----------  ----------  ----------  ----------

    Total Cases Shipped         309,335      85,265      95,280      92,515

                             ==========  ==========  ==========  ==========



Invisalign Clear Aligner

 Cases Shipped by Product:

  Invisalign Full               206,270      57,145      62,510      57,400

  Invisalign Express/Lite        44,215      12,855      15,300      14,610

  Invisalign Teen                38,080       9,935      11,860      15,265

  Invisalign Assist              20,770       5,330       5,610       5,240

                             ----------  ----------  ----------  ----------

    Total Cases Shipped         309,335      85,265      95,280      92,515

                             ==========  ==========  ==========  ==========



Number of Invisalign Doctors

 Cases Shipped to:

  North American

   Orthodontists                  5,280       4,460       4,575       4,660

  North American GP Dentists     17,305      11,365      12,120      11,925

  International                   7,625       5,085       5,480       5,400

                             ----------  ----------  ----------  ----------

    Total Doctors Cases were

     Shipped to Worldwide        30,210      20,910      22,175      21,985

                             ==========  ==========  ==========  ==========



Invisalign Doctor

 Utilization Rates*:

  North American

   Orthodontists                   21.9         7.2         7.7         7.7

  North American GP Dentists        7.1         2.9         3.1         2.9

  International                     9.3         3.9         4.1         4.1

                             ----------  ----------  ----------  ----------

    Total Utilization Rates        10.2         4.1         4.3         4.2

                             ==========  ==========  ==========  ==========

  * # of cases shipped/# of

   doctors to whom cases

   were shipped

Number of Invisalign Doctors

 Trained:

  North American

   Orthodontists                    355          90          95         125

  North American GP Dentists      2,960         720         995         675

  International                   2,510         715         965         685

                             ----------  ----------  ----------  ----------

    Total Doctors Trained

     Worldwide                    5,825       1,525       2,055       1,485

                             ==========  ==========  ==========  ==========

    Total to Date Worldwide      69,655      71,180      73,235      74,720

                             ==========  ==========  ==========  ==========



Scanner and CAD/CAM Services

 Revenue:

  North America Scanner and

   CAD/CAM Services          $   23,950  $   11,120  $   11,752  $    9,439

  International Scanner and

   CAD/CAM Services               4,078         631         205         332

                             ----------  ----------  ----------  ----------

    Total Scanner and

     CAD/CAM Revenue         $   28,028  $   11,751  $   11,957  $    9,771

                             ==========  ==========  ==========  ==========



  Scanner Revenue            $   13,383  $    5,361  $    6,032  $    4,023

  CAD/CAM Services Revenue       14,645       6,390       5,925       5,748

                             ----------  ----------  ----------  ----------

    Total Scanner and

     CAD/CAM Revenue         $   28,028  $   11,751  $   11,957  $    9,771

                             ==========  ==========  ==========  ==========



Total Revenue by Geography:

  Total North America

   Revenue                   $  339,430  $   97,991  $  104,749  $   99,007

  Total International

   Revenue                      115,555      30,331      33,088      30,032

  Total Non-case Revenue         24,756       6,757       7,789       7,457

                             ----------  ----------  ----------  ----------

    Total Worldwide Revenue  $  479,741  $  135,079  $  145,626  $  136,496

                             ==========  ==========  ==========  ==========

      YoY% growth           %      23.9%       28.8%       21.3%        8.4%

      QoQ% growth           %                   4.8%        7.8%       -6.3%



Note: Historical public data

 may differ due to rounding.

 Additionally, rounding may

 effect totals.







ALIGN TECHNOLOGY, INC.

BUSINESS OUTLOOK SUMMARY

(unaudited)



The outlook figures provided below and elsewhere in this press release are

 approximate in nature since Align's business outlook is difficult to

 predict. Align's future performance involves numerous risks and

 uncertainties and the company's results could differ materially from the

 outlook provided. Some of the factors that could affect Align's future

 financial performance and business outlook are set forth under "Forward

 Looking Information" above in this press release.



Financials

(in millions, except per share amounts

 and percentages)



                                                Q4 2012

                          --------------------------------------------------



                               GAAP           Adjustment   (a)   Non-GAAP

                          --------------    --------------    --------------



Net Revenue               $134.2 - 137.8                      $134.2 - 137.8



Gross Profit               $96.2 - $99.3         $0.3          $96.5 - 99.6



Gross Margin               71.7% - 72.1%                       71.9% - 72.3%



Operating Expenses         $73.6 - $74.9 (b)     $1.0          $72.6 - $73.9



Operating Margin           16.9% - 17.7% (b)                   17.8% - 18.7%



Net Income per Diluted

 Share                     $0.21 - $0.23 (b)     $0.00         $0.21 - $0.23



Stock Based Compensation

 Expense:

Cost of Revenues               $0.5                                $0.5

Operating Expenses             $5.2                                $5.2

                          --------------                      --------------

Total Stock Based

 Compensation Expense          $5.7                                $5.7



(a) Includes scanner and CAD/CAM services amortization of acquired

 intangibles assets, and severance and benefit costs.

(b) Excludes the impact of any potential impairment charge.



Business Metrics:

                              Q4 2012

                          --------------

Case Shipments             90.0K - 93.0K

Cash, Cash Equivalents,

 and Marketable            $385M - $395M

 Securities                      *

Capex                        $11.0M -

                              $12.5M

Depreciation &

 Amortization              $3.7M - $4.1M

Diluted Shares

 Outstanding                  84.5M*



* Excludes any stock

 repurchases during the

 quarter







Source: Align Technology

News Provided by Acquire Media


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