[January 21, 2016] |
|
Cardiovascular Systems Reports Fiscal 2016 Second-Quarter Financial Results
Cardiovascular Systems, Inc. (CSI (News - Alert)) (NASDAQ: CSII), a medical device
company developing and commercializing innovative interventional
treatment systems for peripheral and coronary artery disease, today
reported financial results for its fiscal second quarter ended December
31, 2015.
The company's second quarter revenues of fiscal 2016 were $41.4 million,
a 4% decrease from the second quarter of fiscal 2015, excluding revenue
from Asahi guide wires in the prior-year period. Coronary revenues
increased 33% to $8.6 million. Customer reorder revenues remained strong
at 97% of total revenue, an increase from 95% in the comparable period
last year.
Scott Ward, CSI's Chairman and Interim President and Chief Executive
Officer, said, "CSI's sales force expansion and implementation of a dual
franchise model, selling both coronary and peripheral applications, has
been challenging and is affecting our near term sales performance. We
have gained meaningful insights during the transition and we are
encouraged by recent progress. The sales organization continues to gain
valuable experience and we have begun to adjust our sales model at the
local level, adopting a more flexible approach where warranted. We
remain confident that our sales strategy will lead to sustainable
revenue growth and a pathway to profitability in the future."
CSI's fiscal 2016 second-quarter gross profit margin increased to 80.5%
from 79.1%, reflecting unit cost reductions over the prior-year period.
Net loss was $(15.2) million, or $(0.47) per common share, compared to a
net loss of $(5.3) million, or $(0.17) per common share, in the fiscal
2015 second quarter. Adjusted EBITDA loss was $(11.1) million versus
$(1.3) million a year earlier. Overall, expense levels were lower than
anticipated, primarily due to cost controls, refinements to the sales
model, and timing of projects and studies.
"Managing our cash position is a top priority for CSI. We are setting
the company on a balanced course to achieve revenue growth and reduce
losses, establishing a pathway to profitability. With ongoing cost
management, our cash position, debt capacity, and the potential to
finance our $25 million Minnesota facility, should provide sufficient
capital to bridge us to profitability and positive cash flow," said Ward.
LIBERTY 360° Enrollment Nears Completion, Demographic Data to be
Featured in Late-Breaking Presentation at ISET On February 9,
2016, key demographic data from the LIBERTY 360° study will be featured
in a late-breaking presentation at the 28th International
Symposium of Endovascular Therapy (ISET) in Hollywood, Fla.
The study's principal investigators - Dr. Jihad Mustapha of Metro Health
Hospital in Wyoming, Mich.; Dr. George L. Adams, Rex Healthcare, Raleigh
N.C.; Dr. William Gray, Columbia University Medical Center, New York;
Dr. Gary Ansel, Riverside Methodist Hospital, Columbus, Ohio; and Dr.
Michael Jaff, Massachusetts General Hospital, Boston, Mass., are
expected to highlight the unique aspects of the first 600 patients
enrolled in LIBERTY 360°.
LIBERTY 360° is a prospective, observational, multi-center clinical
study evaluating acute and long-term clinical, quality-of-life and
economic outcomes of endovascular device intervention in patients with
distal outflow peripheral arterial disease (PAD).
Enrollment of all 1,200 patients is nearly complete. The company plans
to present 30-day data from this study in fall 2016.
COAST 30-day Data to be Highlighted in a Late-Breaking Presentation
at CRT 2016 In February 2016, Dr. Richard Shlofmitz of Saint
Francis Hospital in Roslyn, N.Y., will present 30-day data from the
Coronary Orbital Atherectomy System Trial (COAST) study in a
late-breaking presentation at the Cardiovascular Research Technologies
(CRT) conference in Washington, D.C.
COAST is built on CSI's ORBIT II study, which was the first trial
designed to enroll severely calcified coronary lesions that are
typically excluded from major clinical trials, but commonly seen in
real-world cases. COAST is a prospective, single-arm, multi-center,
global, investigational study designed to evaluate the safety and
efficacy, as well as economic outcomes, of CSI's new Diamondback 360®
Coronary Orbital Atherectomy System (OAS) Micro Crown.
"Our first international coronary study is designed to support the
approval of our next-generation system in the United States and Japan,"
said Ward. "COAST aligns with our ORBIT II clinical protocol and study
design. We believe that data from this study will highlight the
potential benefits of our new Micro Crown and ultimately help secure
commercial approval in Japan, the world's second largest coronary
market."
The Micro Crown is CSI's second-generation system designed to facilitate
stent delivery in subjects with severely calcified coronary lesions who
are acceptable candidates for percutaneous transluminal coronary angioplasty
(PTCA), or stenting. The Micro Crown is designed to immediately
engage tight lesions with distal sanding while allowing continuous flow
during operation.
Fiscal 2016 Third-Quarter Outlook Ward said, "Implementation
of our dual franchise sales strategy, including the development and
maturation of our sales representatives, is progressing; however, it
will take more time for that progress to be reflected in revenue growth.
We believe that many of the transition challenges will be behind us
toward the end of the third quarter, with sales productivity improving
in the fourth quarter of this fiscal year."
For the fiscal 2016 third quarter ending March 31, 2016, CSI anticipates:
-
Revenue in a range of $40.5 million to $42 million;
-
Gross profit as a percentage of revenues of about 80 percent;
-
Operating expenses approximately 3% lower than the second quarter of
fiscal 2016; and
-
Net loss in the range of $(13.7) million to $(14.6) million, or loss
per common share ranging from $(0.42) to $(0.45), assuming 32.8
million average shares outstanding.
Conference Call Today at 3:45 p.m. CT (4:45 p.m. ET) Cardiovascular
Systems, Inc. will host a live conference call and webcast of its fiscal
second-quarter results today, January 21, 2016, at 3:45 p.m. CT (4:45
p.m. ET). To access the call, dial (877) 201-0168 and enter the access
number 21694741. Please dial in at least 10 minutes prior to the call.
To listen to the live webcast, go to the investor section of the
company's website, www.csi360.com,
and click on the webcast icon.
For an audio replay of the conference call, dial (855) 859-2056 and
enter 21694741. The audio replay will be available beginning at 6:45
p.m. CT on Thursday, January 21, 2016, through 10:59 p.m. CT on
Thursday, January 28, 2016.
Use of Non-GAAP Financial Measures To supplement CSI's
consolidated condensed financial statements prepared in accordance with
U.S. generally accepted accounting principles (GAAP), CSI uses certain
non-GAAP financial measures in this release. Reconciliations of the
non-GAAP financial measures used in this release to the most comparable
U.S. GAAP measures for the respective periods can be found in tables
later in this release immediately following the consolidated statements
of operations. Non-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation or as a
substitute for CSI's financial results prepared in accordance with GAAP.
About Peripheral Artery Disease (PAD) As many as 18 million
Americans, most over age 65, suffer from PAD, which is caused by the
accumulation of plaque in peripheral arteries (commonly the pelvis or
leg) reducing blood flow. Symptoms include leg pain when walking or at
rest. Left untreated, PAD can lead to severe pain, immobility,
non-healing wounds and eventually limb amputation. With risk factors
such as diabetes and obesity on the rise, the prevalence of PAD is
growing at double-digit rates.
Millions of patients with PAD may benefit from treatment with orbital
atherectomy utilizing the Stealth 360 and Diamondback 360
Peripheral Orbital Atherectomy Systems, minimally invasive catheter
systems developed and manufactured by CSI. These systems use a
diamond-coated crown, attached to an orbiting shaft, which sands away
plaque while preserving healthy vessel tissue - a critical factor in
preventing reoccurrences. Balloon angioplasty and stents have
significant shortcomings in treating hard, calcified lesions. Stents are
prone to fractures and high recurrence rates, and treatment of hard,
calcified lesions often leads to vessel damage and suboptimal results.
About Coronary Artery Disease (CAD) CAD is a
life-threatening condition and a leading cause of death in men and women
in the United States. CAD occurs when a fatty material called plaque
builds up on the walls of arteries that supply blood to the heart. The
plaque buildup causes the arteries to harden and narrow
(atherosclerosis), reducing blood flow. The risk of CAD increases if a
person has one or more of the following: high blood pressure, abnormal
cholesterol levels, diabetes, or family history of early heart disease.
According to the American Heart Association, 16.3 million people in the
United States have been diagnosed with CAD, the most common form of
heart disease. Heart disease claims more than 600,000 lives in the
United States each year. According to estimates, significant arterial
calcium is present in nearly 40% of patients undergoing a percutaneous
coronary intervention (PCI (News - Alert)). Significant calcium contributes to poor
outcomes and higher treatment costs in coronary interventions when
traditional therapies are used, including a significantly higher
occurrence of death and major adverse cardiac events (MACE).
About Cardiovascular Systems, Inc. Cardiovascular Systems,
Inc., based in St. Paul, Minn., is a medical device company focused on
developing and commercializing innovative solutions for treating
vascular and coronary disease. The company's Orbital Atherectomy Systems
treat calcified and fibrotic plaque in arterial vessels throughout the
leg and heart in a few minutes of treatment time, and address many of
the limitations associated with existing surgical, catheter and
pharmacological treatment alternatives. The U.S. FDA granted 510(k)
clearance for the use of the Diamondback Orbital Atherectomy System in
peripheral arteries in August 2007. In October 2013, the company
received FDA approval for the use of the Diamondback Orbital Atherectomy
System in coronary arteries. The Stealth 360® Peripheral Orbital
Atherectomy System (OAS) received CE Mark in October 2014. To date,
nearly 235,000 of CSI's devices have been sold to leading institutions
across the United States. For more information, visit the company's
website at www.csi360.com.
Safe Harbor Certain statements in this news release are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and are provided under the protection of
the safe harbor for forward-looking statements provided by that Act. For
example, statements in this press release regarding (i) our confidence
that our sales strategy will lead to sustainable revenue growth and a
pathway to profitability in the future; (ii) our belief that ongoing
cost management, our cash position, debt capacity and the potential to
finance our $25 million Minnesota facility should provide sufficient
capital to bridge us to profitability and positive cash flow; (iii) the
LIBERTY 360° study, including the number of patients expected to be
enrolled, the timing of enrollment, the results of the study, and the
timing of the release of data from the study; (iv) the COAST trial,
including the results of the trial and the timing of the release of data
from the trial; (v) the approval of our next-generation system in the
United States and Japan; (vi) the progress being made in our sales force
strategy and our belief that it will take more time for that progress to
be reflected in revenue growth; (vii) our belief that many of the
transition challenges will be behind us toward the end of the third
quarter, with sales productivity improving in the fourth quarter of this
fiscal year; and (viii) anticipated revenue, gross profit, operating
expenses, and net loss. These statements involve risks and uncertainties
that could cause results to differ materially from those projected,
including, but not limited to, regulatory developments in the U.S. and
foreign countries; FDA and similar foreign clearances and approvals;
approval of our products for distribution in foreign countries; approval
of products for reimbursement and the level of reimbursement; dependence
on market growth; the experience of physicians regarding the
effectiveness and reliability of CSI's products; the reluctance of
physicians, hospitals and other organizations to accept new products;
the potential for unanticipated delays in enrolling medical centers and
patients for clinical trials; actual clinical trial and study results;
the impact of competitive products and pricing; unanticipated
developments affecting our estimates regarding expenses, future revenues
and capital requirements; the difficulty to successfully manage
operating costs; our inability to sustain growth in our sales and
marketing organization; our ability to manage employee turnover, growth
and training; our ability to manage our sales force expansion and dual
franchise strategy; our actual research and development efforts and
needs; fluctuations in results and expenses based on new product
introductions, sales mix, unanticipated warranty claims, and the timing
of project expenditures; our ability to secure financing; our ability to
manage costs; general economic conditions; and other factors detailed
from time to time in CSI's SEC (News - Alert) reports, including its most recent annual
report on Form 10-K and subsequent quarterly reports on Form 10-Q. CSI
encourages you to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements contained
in this release. As a result of these matters, changes in facts,
assumptions not being realized or other circumstances, CSI's actual
results may differ materially from the expected results discussed in the
forward-looking statements contained in this release. The
forward-looking statements made in this release are made only as of the
date of this release, and CSI undertakes no obligation to update them to
reflect subsequent events or circumstances.
Product Disclosures:
Peripheral Products The Stealth 360® PAD System
and Diamondback 360® PAD System are percutaneous orbital
atherectomy systems indicated for use as therapy in patients with
occlusive atherosclerotic disease in peripheral arteries and stenotic
material from artificial arteriovenous dialysis fistulae. The systems
are contraindicated for use in coronary arteries, bypass grafts, stents
or where thrombus or dissections are present. Although the incidence of
adverse events is rare, potential events that can occur with atherectomy
include: pain, hypotension, CVA/TIA (News - Alert), death, dissection, perforation,
distal embolization, thrombus formation, hematuria, abrupt or acute
vessel closure, or arterial spasm.
Coronary Product Indications: The Diamondback 360®
Coronary Orbital Atherectomy System (OAS) is a percutaneous orbital
atherectomy system indicated to facilitate stent delivery in patients
with coronary artery disease (CAD) who are acceptable candidates for
PTCA or stenting due to de novo, severely calcified coronary
artery lesions.
Contraindications: The OAS is contraindicated when the ViperWire
guide wire cannot pass across the coronary lesion or the target lesion
is within a bypass graft or stent. The OAS is contraindicated when the
patient is not an appropriate candidate for bypass surgery, angioplasty,
or atherectomy therapy, or has angiographic evidence of thrombus, or has
only one open vessel, or has angiographic evidence of significant
dissection at the treatment site and for women who are pregnant or
children.
Warnings/Precautions: Performing treatment in excessively
tortuous vessels or bifurcations may result in vessel damage; The OAS
was only evaluated in severely calcified lesions, A temporary pacing
lead may be necessary when treating lesions in the right coronary and
circumflex arteries; On-site surgical back-up should be included as a
clinical consideration; Use in patients with an ejection fraction (EF)
of less than 25% has not been evaluated. See the instructions for use
before performing Diamondback 360 Coronary OAS procedures for
detailed information regarding the procedure, indications,
contraindications, warnings, precautions, and potential adverse events.
For further information call CSI at 1-877-274-0901 and/or consult CSI's
website at www.csi360.com.
Caution: Federal law (USA) restricts this device to sale by or on
the order of a physician.
Micro Crown OAS CSI has commenced its COAST Investigational
Device Exemption clinical trial to evaluate the safety and effectiveness
of its new micro crown orbital technology in treating coronary arteries. This
new system is limited by federal law to investigational use and is
currently not commercially available in the United States or Japan.
Cardiovascular Systems, Inc.
|
Consolidated Statements of Operations
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
41,392
|
|
|
$
|
44,732
|
|
|
$
|
85,263
|
|
|
$
|
86,086
|
|
Cost of goods sold
|
|
|
8,071
|
|
|
|
9,346
|
|
|
|
16,842
|
|
|
|
18,231
|
|
Gross profit
|
|
|
33,321
|
|
|
|
35,386
|
|
|
|
68,421
|
|
|
|
67,855
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
41,258
|
|
|
|
32,553
|
|
|
|
82,653
|
|
|
|
66,060
|
|
Research and development
|
|
|
7,206
|
|
|
|
8,085
|
|
|
|
14,147
|
|
|
|
15,237
|
|
Total expenses
|
|
|
48,464
|
|
|
|
40,638
|
|
|
|
96,800
|
|
|
|
81,297
|
|
Loss from operations
|
|
|
(15,143
|
)
|
|
|
(5,252
|
)
|
|
|
(28,379
|
)
|
|
|
(13,442
|
)
|
Interest and other, net
|
|
|
(20
|
)
|
|
|
(21
|
)
|
|
|
(45
|
)
|
|
|
(55
|
)
|
Net loss
|
|
$
|
(15,163
|
)
|
|
$
|
(5,273
|
)
|
|
$
|
(28,424
|
)
|
|
$
|
(13,497
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share:
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.47
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.88
|
)
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used in computation:
|
Basic and diluted
|
|
|
32,553,991
|
|
|
|
31,487,358
|
|
|
|
32,382,433
|
|
|
|
31,399,234
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
Consolidated Balance Sheets
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
June 30,
|
|
|
|
2015
|
|
2015
|
ASSETS
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
65,329
|
|
$
|
83,842
|
|
Accounts receivable, net
|
|
|
25,752
|
|
|
30,830
|
|
Inventories
|
|
|
18,237
|
|
|
13,966
|
|
Marketable securities
|
|
|
1,871
|
|
|
1,876
|
|
Prepaid expenses and other current assets
|
|
|
1,577
|
|
|
3,380
|
|
Total current assets
|
|
|
112,766
|
|
|
133,894
|
|
Property and equipment, net
|
|
|
33,564
|
|
|
32,883
|
|
Patents, net
|
|
|
4,759
|
|
|
4,511
|
|
Other assets
|
|
|
136
|
|
|
40
|
|
Total assets
|
|
$
|
151,225
|
|
$
|
171,328
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
8,313
|
|
$
|
9,763
|
|
Accrued expenses
|
|
|
19,651
|
|
|
20,125
|
|
Total current liabilities
|
|
|
27,964
|
|
|
29,888
|
Long-term liabilities
|
|
|
|
|
|
Other liabilities
|
|
|
1,986
|
|
|
2,005
|
|
Total liabilities
|
|
|
29,950
|
|
|
31,893
|
Commitments and contingencies
|
|
|
|
|
|
Total stockholders' equity
|
|
|
121,275
|
|
|
139,435
|
|
Total liabilities and stockholders' equity
|
|
$
|
151,225
|
|
$
|
171,328
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
Supplemental Sales Information
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Device revenue
|
|
$
|
38,088
|
|
|
$
|
39,966
|
|
|
$
|
78,663
|
|
|
$
|
76,475
|
|
Other product revenue(2)
|
|
|
3,304
|
|
|
|
4,766
|
|
|
|
6,600
|
|
|
|
9,611
|
|
Total revenue
|
|
$
|
41,392
|
|
|
$
|
44,732
|
|
|
$
|
85,263
|
|
|
$
|
86,086
|
|
|
|
|
|
|
|
|
|
|
PAD revenue(2)
|
|
$
|
32,811
|
|
|
$
|
38,272
|
|
|
$
|
67,991
|
|
|
$
|
74,561
|
|
CAD revenue
|
|
|
8,581
|
|
|
|
6,460
|
|
|
|
17,272
|
|
|
|
11,525
|
|
Total revenue
|
|
$
|
41,392
|
|
|
$
|
44,732
|
|
|
$
|
85,263
|
|
|
$
|
86,086
|
|
|
|
|
|
|
|
|
|
|
New customers(1):
|
|
|
|
|
|
|
|
|
PAD
|
|
|
46
|
|
|
|
57
|
|
|
|
96
|
|
|
|
120
|
|
CAD
|
|
|
60
|
|
|
|
48
|
|
|
|
107
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
Reorder revenue %
|
|
|
97
|
%
|
|
|
95
|
%
|
|
|
97
|
%
|
|
|
96
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes accounts in the early stage of product introduction and
training.
|
|
(2)
|
|
Revenue amounts for the three and six months ended December 31, 2014
include $1,796 and $3,669 from sale of Asahi guidewires under a
distribution agreement that terminated on June 30, 2015.
|
|
|
|
|
Non-GAAP Financial Measures To supplement CSI's consolidated
condensed financial statements prepared in accordance with GAAP, CSI
uses a non-GAAP financial measure referred to as "Adjusted EBITDA" in
this release.
Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP
measure for the respective periods can be found in the table on the next
page. In addition, an explanation of the manner in which CSI's
management uses Adjusted EBITDA to conduct and evaluate its business,
the economic substance behind management's decision to use Adjusted
EBITDA, the substantive reasons why management believes that Adjusted
EBITDA provides useful information to investors, the material
limitations associated with the use of Adjusted EBITDA and the manner in
which management compensates for those limitations is included following
the reconciliation table.
Cardiovascular Systems, Inc.
|
Adjusted EBITDA
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
$
|
(15,143
|
)
|
|
$
|
(5,252
|
)
|
|
$
|
(28,379
|
)
|
|
$
|
(13,442
|
)
|
Add: Stock-based compensation
|
|
|
3,112
|
|
|
|
3,510
|
|
|
|
7,219
|
|
|
|
7,083
|
|
Add: Depreciation and amortization
|
|
|
981
|
|
|
|
426
|
|
|
|
1,921
|
|
|
|
833
|
|
Adjusted EBITDA
|
|
$
|
(11,050
|
)
|
|
$
|
(1,316
|
)
|
|
$
|
(19,239
|
)
|
|
$
|
(5,526
|
)
|
|
|
|
|
|
|
|
|
|
Use and Economic Substance of Non-GAAP Financial Measures Used by CSI
and Usefulness of Such Non-GAAP Financial Measures to Investors CSI
uses Adjusted EBITDA as a supplemental measure of performance and
believes this measure facilitates operating performance comparisons from
period to period and company to company by factoring out potential
differences caused by depreciation and amortization expense and non-cash
charges such as stock based compensation. CSI's management uses Adjusted
EBITDA to analyze the underlying trends in CSI's business, assess the
performance of CSI's core operations, establish operational goals and
forecasts that are used to allocate resources and evaluate CSI's
performance period over period and in relation to its competitors'
operating results. Additionally, CSI's management is evaluated on the
basis of Adjusted EBITDA when determining achievement of their incentive
compensation performance targets.
CSI believes that presenting Adjusted EBITDA provides investors greater
transparency to the information used by CSI's management for its
financial and operational decision-making and allows investors to see
CSI's results "through the eyes" of management. CSI also believes that
providing this information better enables CSI's investors to understand
CSI's operating performance and evaluate the methodology used by CSI's
management to evaluate and measure such performance. Cardiovascular
Systems, Inc.
The following is an explanation of each of the items that management
excluded from Adjusted EBITDA and the reasons for excluding each of
these individual items:
-- Stock-based compensation. CSI excludes stock-based compensation
expense from its non-GAAP financial measures primarily because such
expense, while constituting an ongoing and recurring expense, is not an
expense that requires cash settlement. CSI's management also believes
that excluding this item from CSI's non-GAAP results is useful to
investors to understand the application of stock-based compensation
guidance and its impact on CSI's operational performance, liquidity and
its ability to make additional investments in the company, and it allows
for greater transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes depreciation and
amortization expense from its non-GAAP financial measures primarily
because such expenses, while constituting ongoing and recurring
expenses, are not expenses that require cash settlement and are not used
by CSI's management to assess the core profitability of CSI's business
operations. CSI's management also believes that excluding these items
from CSI's non-GAAP results is useful to investors to understand CSI's
operational performance, liquidity and its ability to make additional
investments in the company.
Material Limitations Associated with the Use of Non-GAAP Financial
Measures and Manner in which CSI Compensates for these Limitations Non-GAAP
financial measures have limitations as analytical tools and should not
be considered in isolation or as a substitute for CSI's financial
results prepared in accordance with GAAP. Some of the limitations
associated with CSI's use of these non-GAAP financial measures are:
-- Items such as stock-based compensation do not directly affect CSI's
cash flow position; however, such items reflect economic costs to CSI
and are not reflected in CSI's "Adjusted EBITDA" and therefore these
non-GAAP measures do not reflect the full economic effect of these items.
-- Non-GAAP financial measures are not based on any comprehensive set of
accounting rules or principles and therefore other companies may
calculate similarly titled non-GAAP financial measures differently than
CSI, limiting the usefulness of those measures for comparative purposes.
-- CSI's management exercises judgment in determining which types of
charges or other items should be excluded from the non-GAAP financial
measures CSI uses. CSI compensates for these limitations by relying
primarily upon its GAAP results and using non-GAAP financial measures
only supplementally. CSI provides full disclosure of each non-GAAP
financial measure
-- CSI uses and detailed reconciliations of each non-GAAP measure to its
most directly comparable GAAP measure. CSI encourages investors to
review these reconciliations. CSI qualifies its use of non-GAAP
financial measures with cautionary statements as set forth above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160121006389/en/
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