UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) February 10, 2004
ALIGN TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-32259 | 94-3267295 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| 881 Martin Avenue, Santa Clara, California | 95050 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (408) 470-1000
Not applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On February 10, 2004, Align Technology, Inc. (Align) announced the conclusion of legal arbitration proceedings initiated by Discus Dental Impressions (Discus). Under the final arbitration award, Discus is entitled to a judgment in the amount of $1.00 and reasonable attorney fees and costs in the amount of $2.1 million. In reaching their decision, the arbitrators found that Align’s termination of its marketing agreement with Discus in April of 2002 was wrongful. Because the final decision of the arbitrators has been issued prior to the filing of the Align’s Form 10-K for fiscal 2003, Align will include a charge relating to the final arbitration award in its 2003 financial statements in accordance with GAAP. The updated 2003 financial statements for Align’s fourth quarter and full fiscal year ended December 31, 2003 are attached hereto as Exhibit 99.1.
Exhibit 99.1 shall be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall be deemed incorporated by reference in filings under the Securities Act of 1933, as amended, or the Exchange Act.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
| Exhibit No. |
Description | |
| 99.1 | Updated financial results for Align Technology, Inc. for its fourth quarter and full fiscal year ended December 31, 2003 reflecting the results of the Discus arbitration. | |
| 99.2 | Press Release, dated February 10, 2004, for Align Technology, Inc. announcing the conclusion of the Discus arbitration and including Align’s updated financial results for its fourth quarter and full fiscal year ended December 31, 2003 (furnished and not filed herewith solely pursuant to Item 12). | |
ITEM 12. Results of Operations and Financial Condition
On February 10, 2004, Align Technology, Inc. (Align) announced the conclusion of legal arbitration proceedings initiated by Discus Dental Impressions (Discus). Under the final arbitration award, Discus is entitled to a judgment in the amount of $1.00 and reasonable attorney fees and costs in the amount of $2.1 million. In reaching their decision, the arbitrators found that Align’s termination of its marketing agreement with Discus in April of 2002 was wrongful. Because the final decision of the arbitrators has been issued prior to the filing of the Align’s Form 10-K for fiscal 2003, Align will include a charge relating to the final arbitration award in its 2003 financial statements in accordance with GAAP and has attached to the press release updated 2003 financial statements for Align’s fourth quarter and full fiscal year ended December 31, 2003.
A copy of the press release is furnished as Exhibit 99.2 to this Form 8-K. Align has made reference to non-GAAP financial information in the press release. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
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The information contained in this Item 12 and in Exhibit 99.2 shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed be incorporated by reference into any filing of Align, whether made before of after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.
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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: February 11, 2004 |
ALIGN TECHNOLOGY, INC. | |||
| By: |
/s/ Eldon M. Bullington | |||
| Eldon M. Bullington | ||||
| Vice President of Finance and Chief Financial Officer | ||||
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INDEX TO EXHIBITS
| Exhibit No. |
Description | |
| 99.1 | Updated financial results for Align Technology, Inc. for its fourth quarter and full fiscal year ended December 31, 2003 reflecting the results of the Discus arbitration. | |
| 99.2 | Press Release, dated February 10, 2004, for Align Technology, Inc. announcing the conclusion of the Discus arbitration and including Align’s updated financial results for its fourth quarter and full fiscal year ended December 31, 2003 (furnished and not filed herewith solely pursuant to Item 12). | |
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Exhibit 99.1
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(unaudited)
| Three Months Ended |
Year Ended |
|||||||||||||||
| (in thousands, except per share data)
|
December 31, 2003 |
December 31, 2002 (as restated) |
December 31, 2003 |
December 31, 2002 (as restated) |
||||||||||||
| Revenues |
$ | 36,502 | $ | 20,751 | $ | 122,725 | $ | 69,698 | ||||||||
| Cost of revenues |
12,926 | 11,639 | 51,565 | 44,991 | ||||||||||||
| Gross profit |
23,576 | 9,112 | 71,160 | 24,707 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
11,138 | 11,533 | 43,689 | 45,313 | ||||||||||||
| General and administrative |
8,666 | 9,538 | 34,296 | 39,265 | ||||||||||||
| Research and development |
3,302 | 3,235 | 13,112 | 13,064 | ||||||||||||
| Total operating expenses |
23,106 | 24,306 | 91,097 | 97,642 | ||||||||||||
| Profit (loss) from operations |
470 | (15,194 | ) | (19,937 | ) | (72,935 | ) | |||||||||
| Interest and other income (expense), net |
(18 | ) | (202 | ) | (185 | ) | 116 | |||||||||
| Net profit (loss) |
$ | 452 | $ | (15,396 | ) | $ | (20,122 | ) | $ | (72,819 | ) | |||||
| Net profit (loss) per share - basic |
$ | 0.01 | $ | (0.30 | ) | $ | (0.35 | ) | $ | (1.52 | ) | |||||
| Weighted-average shares used in computing basic net profit (loss) per share |
58,398 | 51,796 | 57,759 | 47,878 | ||||||||||||
| Net profit (loss) per share - diluted |
$ | 0.01 | $ | (0.30 | ) | $ | (0.35 | ) | $ | (1.52 | ) | |||||
| Weighted-average shares used in computing diluted net profit (loss) per share |
63,704 | 51,796 | 57,759 | 47,878 | ||||||||||||
| (1) | Certain reclassifications of prior period amounts have been made to conform with current year presentation. |
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (1)
(unaudited)
| (in thousands)
|
December 31, 2003 |
December 31, 2002 | ||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 44,939 | $ | 35,552 | ||
| Restricted cash |
439 | 3,261 | ||||
| Marketable securities, short-term |
2,292 | 2,693 | ||||
| Accounts receivable, net |
21,265 | 16,766 | ||||
| Inventories, net |
1,395 | 1,533 | ||||
| Deferred costs |
939 | 1,139 | ||||
| Other current assets |
5,845 | 4,888 | ||||
| Total current assets |
77,114 | 65,832 | ||||
| Property and equipment, net |
23,121 | 25,078 | ||||
| Other long-term assets |
1,967 | 1,946 | ||||
| Total assets |
$ | 102,202 | $ | 92,856 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 3,095 | $ | 3,403 | ||
| Accrued liabilities |
19,180 | 9,683 | ||||
| Deferred revenue |
13,113 | 9,403 | ||||
| Debt obligations, current portion |
1,989 | 2,183 | ||||
| Total current liabilities |
37,377 | 24,672 | ||||
| Debt obligations, long-term portion |
1,667 | 3,333 | ||||
| Capital lease obligations, net of current portion |
182 | 504 | ||||
| Total liabilities |
39,226 | 28,509 | ||||
| Total stockholders’ equity |
62,976 | 64,347 | ||||
| Total liabilities and stockholders’ equity |
$ | 102,202 | $ | 92,856 | ||
| (1) | Certain prior period amounts have been adjusted to conform with current year presentation. |
Exhibit 99.2
 |
 |
| Investor Relations Contact: |
Press Contact: | |
| Barbara Domingo |
Shannon Henderson | |
| Align Technology, Inc. |
Ethos Communications, Inc. | |
| (408) 470-1204 |
(678) 417-1767 | |
| bdomingo@aligntech.com |
shannon@ethoscommunication.com |
Align Technology Announces Final Decision of Arbitrators in Discus Dental
Impressions Arbitration
Santa Clara, Calif. – February 10, 2004 – Align Technology, Inc. (Nasdaq: ALGN), the inventor of Invisalign®, a proprietary method of straightening teeth without wires and brackets, announced today the conclusion of legal arbitration proceedings initiated by Discus Dental Impressions (Discus). Under the final arbitration award, Discus is entitled to a judgment in the amount of $1.00 and reasonable attorney fees and costs in the amount of $2.1 million. In reaching their decision, the arbitrators found that Align’s termination of its marketing agreement with Discus in April of 2002 was wrongful. As previously disclosed, because the final decision of the arbitrators has been issued prior to the filing of the Company’s Form 10-K for fiscal 2003, the Company will include a charge relating to the final arbitration award in its 2003 financial statements in accordance with GAAP. The updated 2003 condensed consolidated financial statements are attached.
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 March 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.
###
Align Technology Inc. 881 Martin Avenue Santa Clara, CA 95050 Tel: (408) 470-1000 Fax: (408) 470-1256
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(unaudited)
| Three Months Ended |
Year Ended |
|||||||||||||||
| (in thousands, except per share data)
|
December 31, 2003 |
December 31, 2002 (as restated) |
December 31, 2003 |
December 31, 2002 (as restated) |
||||||||||||
| Revenues |
$ | 36,502 | $ | 20,751 | $ | 122,725 | $ | 69,698 | ||||||||
| Cost of revenues |
12,926 | 11,639 | 51,565 | 44,991 | ||||||||||||
| Gross profit |
23,576 | 9,112 | 71,160 | 24,707 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
11,138 | 11,533 | 43,689 | 45,313 | ||||||||||||
| General and administrative |
8,666 | 9,538 | 34,296 | 39,265 | ||||||||||||
| Research and development |
3,302 | 3,235 | 13,112 | 13,064 | ||||||||||||
| Total operating expenses |
23,106 | 24,306 | 91,097 | 97,642 | ||||||||||||
| Profit (loss) from operations |
470 | (15,194 | ) | (19,937 | ) | (72,935 | ) | |||||||||
| Interest and other income (expense), net |
(18 | ) | (202 | ) | (185 | ) | 116 | |||||||||
| Net profit (loss) |
$ | 452 | $ | (15,396 | ) | $ | (20,122 | ) | $ | (72,819 | ) | |||||
| Net profit (loss) per share - basic |
$ | 0.01 | $ | (0.30 | ) | $ | (0.35 | ) | $ | (1.52 | ) | |||||
| Weighted-average shares used in computing basic net profit (loss) per share |
58,398 | 51,796 | 57,759 | 47,878 | ||||||||||||
| Net profit (loss) per share - diluted |
$ | 0.01 | $ | (0.30 | ) | $ | (0.35 | ) | $ | (1.52 | ) | |||||
| Weighted-average shares used in computing diluted net profit (loss) per share |
63,704 | 51,796 | 57,759 | 47,878 | ||||||||||||
| (1) | Certain reclassifications of prior period amounts have been made to conform with current year presentation. |
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (1)
(unaudited)
| (in thousands) | December 31, 2003 |
December 31, 2002 | ||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 44,939 | $ | 35,552 | ||
| Restricted cash |
439 | 3,261 | ||||
| Marketable securities, short-term |
2,292 | 2,693 | ||||
| Accounts receivable, net |
21,265 | 16,766 | ||||
| Inventories, net |
1,395 | 1,533 | ||||
| Deferred costs |
939 | 1,139 | ||||
| Other current assets |
5,845 | 4,888 | ||||
| Total current assets |
77,114 | 65,832 | ||||
| Property and equipment, net |
23,121 | 25,078 | ||||
| Other long-term assets |
1,967 | 1,946 | ||||
| Total assets |
$ | 102,202 | $ | 92,856 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 3,095 | $ | 3,403 | ||
| Accrued liabilities |
19,180 | 9,683 | ||||
| Deferred revenue |
13,113 | 9,403 | ||||
| Debt obligations, current portion |
1,989 | 2,183 | ||||
| Total current liabilities |
37,377 | 24,672 | ||||
| Debt obligations, long-term portion |
1,667 | 3,333 | ||||
| Capital lease obligations, net of current portion |
182 | 504 | ||||
| Total liabilities |
39,226 | 28,509 | ||||
| Total stockholders’ equity |
62,976 | 64,347 | ||||
| Total liabilities and stockholders’ equity |
$ | 102,202 | $ | 92,856 | ||
| (1) | Certain prior period amounts have been adjusted to conform with current year presentation. |
ALIGN TECHNOLOGY, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (2)
(unaudited)
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial statements presented on a GAAP basis, Align uses a non-GAAP measure of net profit (loss), which is adjusted to exclude certain costs and expenses and any associated tax effects of such adjustments. We believe that our non-GAAP net profit (loss) gives an indication of our baseline performance before other charges that are considered by management to be outside of our core operating results. In addition, our non-GAAP net profit (loss) is among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information should not be considered in isolation or as a substitute for net loss prepared in accordance with generally accepted accounting principles in the United States of America.
| Three Months Ended |
Year Ended |
|||||||||||||||
| (in thousands, except per share data)
|
December 31, 2003 |
December 31, 2002 (as adjusted) |
December 31, 2003 |
December 31, 2002 (as adjusted) |
||||||||||||
| Revenues |
$ | 36,502 | $ | 20,751 | $ | 122,725 | $ | 69,698 | ||||||||
| Cost of revenues |
12,405 | 10,894 | 49,024 | 41,033 | ||||||||||||
| Gross profit |
24,097 | 9,857 | 73,701 | 28,665 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
10,704 | 10,102 | 41,502 | 41,161 | ||||||||||||
| General and administrative |
7,252 | 5,204 | 26,691 | 25,198 | ||||||||||||
| Research and development |
2,634 | 2,490 | 9,898 | 9,762 | ||||||||||||
| Total operating expenses |
20,590 | 17,796 | 78,091 | 76,121 | ||||||||||||
| Profit (loss) from operations |
3,507 | (7,939 | ) | (4,390 | ) | (47,456 | ) | |||||||||
| Interest and other income (expense), net |
(18 | ) | (202 | ) | (185 | ) | 116 | |||||||||
| Net profit (loss) |
$ | 3,489 | $ | (8,141 | ) | $ | (4,575 | ) | $ | (47,340 | ) | |||||
| Net profit (loss) per share - basic |
$ | 0.06 | $ | (0.16 | ) | $ | (0.08 | ) | $ | (0.99 | ) | |||||
| Weighted-average shares used in computing basic net profit (loss) per share |
58,398 | 51,796 | 57,759 | 47,878 | ||||||||||||
| Net profit (loss) per share - diluted |
$ | 0.05 | $ | (0.16 | ) | $ | (0.08 | ) | $ | (0.99 | ) | |||||
| Weighted-average shares used in computing diluted net profit (loss) per share |
63,704 | 51,796 | 57,759 | 47,878 | ||||||||||||
| (1) | Certain reclassifications of prior period amounts have been made to conform with current year presentation. |
See Reconciliation of GAAP Net Profit (Loss) to non-GAAP Net Profit (Loss) on Next Page
ALIGN TECHNOLOGY, INC.
RECONCILIATION OF GAAP NET PROFIT (LOSS) TO ADJUSTED NON-GAAP NET PROFIT (LOSS)
(unaudited)
| Three Months Ended |
Year Ended |
||||||||||||||
| (in thousands)
|
December 31, 2003 |
December 31, 2002 (as adjusted) |
December 31, 2003 |
December 31, 2002 (as adjusted) |
|||||||||||
| Calculation of non-GAAP net profit (loss) excluding special items: |
|||||||||||||||
| Net profit (loss) |
$ | 452 | $ | (15,396 | ) | $ | (20,122 | ) | $ | (72,819 | ) | ||||
| Items: |
|||||||||||||||
| Stock-based compensation expense included in: (1) |
|||||||||||||||
| - cost of revenues |
521 | 745 | 2,541 | 3,399 | |||||||||||
| - sales and marketing |
434 | 927 | 2,187 | 3,002 | |||||||||||
| - general and administrative |
1,414 | 1,402 | 7,098 | 10,663 | |||||||||||
| - research and development |
668 | 745 | 3,214 | 3,221 | |||||||||||
| Restructuring costs included in: (2) |
|||||||||||||||
| - cost of revenues |
— | — | — | 559 | |||||||||||
| - sales and marketing |
— | 504 | — | 1,150 | |||||||||||
| - general and administrative |
— | 2,932 | 507 | 3,404 | |||||||||||
| - research and development |
— | — | — | 81 | |||||||||||
| Non-GAAP net profit (loss) excluding special items |
$ | 3,489 | $ | (8,141 | ) | $ | (4,575 | ) | $ | (47,340 | ) | ||||
| (1) | Stock-based compensation expense represents the amortization of deferred stock-based compensation recorded in connection with the granting of stock options to employees and non-employees. Stock-based compensation expense also includes the accelerated vesting of options to several employees in connection with severance packages. |
| (2) | Restructuring costs represent restructuring charges for severance, facility closures, and losses on disposal and impairment of fixed assets incurred as part of our July 2002 plan to streamline worldwide operations during 2002, and the remainder of our indirect operational activities related to the transition of operations from the United Arab Emirates and Pakistan to Costa Rica during the first quarter of 2003. |