SONO » Topics » Company Outlook

These excerpts taken from the SONO 10-K filed Mar 12, 2009.

Fiscal Year 2009 Outlook

Given the turmoil in the global economy, we are unable to predict whether our revenues will increase in 2009 compared to 2008. We expect to introduce new products and features, to develop the U.S. physicians’ office market, and to expand our international operations. The expansion of our international markets, as well as the development of the U.S. hospital and physician office markets, considering current economic conditions, may not be as successful as anticipated and we may encounter regulatory and other issues in selling our products. Our revenue may also be impacted by fluctuations in foreign exchange rates in the countries in which we sell our products. Increased competition may also impact our anticipated growth in revenue. We currently face competition from larger companies that manufacture cart-based and portable ultrasound systems and have greater financial and other resources.

Fiscal Year 2009 Outlook

Increased competition from existing and new competitors as well as pricing pressure due to economic conditions could result in lower average realized prices and could lower our gross margin. Our gross margin can be expected to fluctuate in future periods based on the mix of business between direct, government and distributor sales; mix of U.S. and international sales; and our product and accessories sales mixes. Changes in our cost of inventory also may impact our gross margin. Adjustments to reduce carrying costs are recorded for obsolete material, earlier generation products and used or refurbished products held either as saleable inventory or as demonstration product. If market conditions change or the introduction of new products by us impacts the market for our previously released products, we may be required to further write down the carrying value of our inventory, resulting in a negative impact on gross margins. We rely on our sales forecasts by product to determine production volume. To the extent our sales forecasts or product mix estimates are inaccurate, we may produce excess inventory or experience inventory shortages, which may result in an increase in our costs of revenue, a decrease in our gross margin or lost sales. Our gross margin may also be impacted by fluctuations in foreign exchange rates.

Fiscal Year 2009 Outlook

We anticipate that operating expenses will decrease in 2009 compared to 2008 through effective cost management.

Fiscal Year 2009 Outlook

We anticipate that other income will decrease in 2009 as we do not expect to repurchase the same amount of convertible senior notes and will incur additional interest expense as a result of the adoption of FSP No. APB 14-1. See Recent Accounting Pronouncements for additional discussion on the adoption of FSP No. APB 14-1.

 

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Fiscal Year 2009 Outlook

We anticipate that our effective tax rate in 2009 will remain comparable to fiscal year 2008.

Fiscal Year 2009 Outlook

We believe that our existing cash and cash generated from operations will be sufficient to fund our operations and planned capital expenditures in 2009. Nevertheless, we may experience an increased need for additional cash in order to complete future acquisitions. Our ability to provide cash from operations will depend on our ability to successfully sell our products, collect our receivables, control our inventories and manage our expenses.

Fiscal Year 2009 Outlook

FACE="Times New Roman" SIZE="2">Increased competition from existing and new competitors as well as pricing pressure due to economic conditions could result in lower average realized prices and could lower our gross margin. Our gross margin can be
expected to fluctuate in future periods based on the mix of business between direct, government and distributor sales; mix of U.S. and international sales; and our product and accessories sales mixes. Changes in our cost of inventory also may impact
our gross margin. Adjustments to reduce carrying costs are recorded for obsolete material, earlier generation products and used or refurbished products held either as saleable inventory or as demonstration product. If market conditions change or the
introduction of new products by us impacts the market for our previously released products, we may be required to further write down the carrying value of our inventory, resulting in a negative impact on gross margins. We rely on our sales forecasts
by product to determine production volume. To the extent our sales forecasts or product mix estimates are inaccurate, we may produce excess inventory or experience inventory shortages, which may result in an increase in our costs of revenue, a
decrease in our gross margin or lost sales. Our gross margin may also be impacted by fluctuations in foreign exchange rates.

Operating expenses

Research and development expenses increased to $28.7 million in 2008 compared to $25.9 million in 2007 and $20.2 million in 2006. The
increase in 2008 compared to 2007 was due to development of future new products and features, and further development related to the M-Turbo system and S Series ultrasound tools. The increase in 2007 compared to 2006 was due to increased headcount
for development of the M-Turbo system and S Series ultrasound tools, which were released in 2007, and for future new products and features.

SIZE="2">Sales, general and administrative expenses increased to $118.7 million in 2008 compared to $112.2 million in 2007 and $97.4 million in 2006. The increase in 2008 compared to 2007 was attributable to increased headcount to support business
growth, increased incentive compensation related to improved financial performance, increased stock-based compensation, increased legal costs related to our patent litigation, increased severance and acquisition costs, and the elimination of
overhead within the company’s marketing, general and administrative structure. The increase in 2007 compared to 2006 was attributable to the expansion of international sales operations, continued growth in the office by our sales channel
partner, increased efforts in education and training, and increased legal costs related to our patent litigation.

Fiscal Year 2009 Outlook

We anticipate that operating expenses will decrease in 2009 compared to 2008 through effective cost management.

STYLE="margin-top:18px;margin-bottom:0px">Other income, net

Total other income was $11.7
million in 2008, compared to $6.6 million in 2007 and $4.0 million in 2006. The increase in 2008 compared to 2007 was primarily attributable to the gain recognized on the partial repurchase of our convertible senior notes during the fourth quarter;
partially offset by a decrease in interest income, resulting from lower interest rates; higher interest expense, resulting from the first full year of outstanding convertible debt; and foreign currency losses. The increase in 2007 compared to 2006
was due to increased interest income, resulting from higher cash and investment balances, and higher foreign currency gains, offset by interest expense from our convertible senior notes.

FACE="Times New Roman" SIZE="2">Fiscal Year 2009 Outlook

We anticipate that other income will decrease in 2009 as we do not expect
to repurchase the same amount of convertible senior notes and will incur additional interest expense as a result of the adoption of FSP No. APB 14-1. See Recent Accounting Pronouncements for additional discussion on the adoption of FSP No.
APB 14-1.

 


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This excerpt taken from the SONO 8-K filed Apr 28, 2008.

Company Outlook

SonoSite management updated its 2008 financial objectives. Management's "base plan" is to achieve revenue growth of at least 15%, gross margins of approximately 70% and operating margins of 9 - 10%. Due to lower market interest rates, the company expects interest income to be offset by interest expense in 2008. The company expects to have a tax rate of approximately 39% for the year, virtually all of which is a non-cash item. Income taxes are largely a non-cash expense due to unused net operating loss carryforwards.The company reiterated its target to achieve a 15% operating margin in 2009.

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