NUVA » Topics » Operating Expenses

This excerpt taken from the NUVA 10-Q filed May 12, 2005.

Operating Expenses

        Research and Development.    Research and development expenses increased $597,000, or 38%, from $1.6 million in the first three months of 2004 to $2.2 million in the first three months of 2005. Research and development expenses consist primarily of the cost of product research, product development, regulatory and clinical functions, and employee related expenses for personnel. The increase in research and development costs was largely due to an increase in employee related expenses of $320,000 as a result of additional personnel hired to support development of our product pipeline, including the SpheRx Pedicle Screw product and Total Disc Replacement development and $305,000 in materials to support current product development, offset by other cost decreases of $28,000. Research and development expense as a percentage of revenue decreased from 21% in the first three months of 2004 to 17% in the first three months of 2005.

        Sales and Marketing.    Sales and marketing expenses increased $3.7 million, or 100%, from $3.7 million in the first three months of 2004 to $7.5 million in the first three months of 2005. Sales and marketing expenses consist primarily of employee related expenses and commissions for personnel engaged in sales, marketing and customer support functions, along with advertising, tradeshow, and surgeon training expenses. The increase in sales and marketing expenses resulted from increased commissions, additional employee related costs of $2.5 million reflecting both increases in sales and number of sales representatives and an increase in shipping cost of $194,000. Additionally, the sales and marketing focus to market our MAS platform resulted in increased media expenses of $239,000 and increased expenses related to surgeon training of $469,000. Sales and marketing expense as a percentage of revenue increased from 49% in the first three months of 2004 to 57% in the first three months of 2005.

        General and Administrative.    General and administrative expenses increased $1.7 million, or 78%, from $2.1 million in first three months of 2004 to $3.8 million in the first three months of 2005. General and administrative expenses consist of employee related expenses for our administrative functions, third party professional service fees, facilities and insurance expenses. The increase in general and administrative expenses was due largely to the following increases: insurance expense of $191,000 for product liability and Director's and Officer's premiums, legal expense of $277,000, facilities rent and related expenses of $473,000, audit and tax services expenses of $84,000 and employee related expenses of $258,000 to support anticipated expansion. General and administrative expense as a percentage of total revenue increased from 28% in the first three months of 2004 to 29% in the first three months of 2005.

This excerpt taken from the NUVA 10-K filed Mar 31, 2005.

Operating Expenses

 

Research and Development   Research and development expenses totaled $6.1 million in 2002 and $6.3 million in 2003. Research and development expenses consist of costs of product research, product development, regulatory and clinical functions and personnel.  The increase in research and development expenses in 2003 over 2002 of $203,000 was due primarily to increased headcount cost of $948,000, lab and office costs of $77,000, patent and legal costs of $73,000 and travel costs totaling approximately $78,000. The increases for all of the above categories were attributable to supporting a ramp in our revenues. These costs were offset by a decrease in consulting fees of $973,000 as we transitioned from consultants to employees who were hired to support our released products. We expect research and development expenses to increase as we continue to develop new products to expand our product offerings.

 

Sales and Marketing    Sales and marketing expenses totaled $10.0 million in 2002 and $12.6 million in 2003. The increase in expenses in 2003 over 2002 was primarily due to larger commissions paid to sales representatives of $2.3 million, increased marketing costs of $267,000, and increased travel costs of $387,000. These increases were offset by a decrease of $293,000 related to our German subsidiary in 2003. We expect sales and marketing expenses to continue to increase in the future as a result of continued growth in our sales infrastructure to support growth in our product sales.

 

General and Administrative   General and administrative expenses totaled  $5.6 million in 2002 and $6.2 million in 2003.  The increase in expenses in 2003 over 2002 of $617,000 was primarily due to increased facility and office costs of $123,000 related to the space requirements to accommodate an expanding inventory, increased product liability insurance premiums of $304,000 related to higher revenues, and additional headcount of $257,000 to support a growing customer base.

 

EXCERPTS ON THIS PAGE:

10-Q
May 12, 2005
10-K
Mar 31, 2005
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