Align Technology (ALGN) 8-K Condensed Consolidated Statements of Operations

EXHIBIT 99.1

ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended
(in thousands, except per share data)	March 31, 2004			March 31, 2003
Revenues	$	39,205		$	22,960
Cost of revenues		13,393			11,924
Gross profit		25,812			11,036
Operating expenses:
Sales and marketing		13,272			10,630
General and administrative		8,277			7,894
Research and development		3,346			2,985
Total operating expenses		24,895			21,509
Profit (loss) from operations		917			(10,473	)
Interest and other income (expense), net		(227	)		(197	)
Provision for income taxes		(133	)		(1	)
Net profit (loss)	$	557		$	(10,671	)
Net profit (loss) per share - basic	$	0.01		$	(0.19	)
Weighted-average shares used in computing basic net profit (loss) per share		59,091			57,189
Net profit (loss) per share - diluted	$	0.01		$	(0.19	)
Weighted-average shares used in computing diluted net profit (loss) per share		64,559			57,189

ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands)	March 31, 2004		December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	47,816	$	44,939
Restricted cash		352		439
Marketable securities, short-term		80		2,292
Accounts receivable, net		23,256		21,265
Inventories, net		1,272		1,395
Deferred costs		1,015		939
Other current assets		5,321		5,845
Total current assets		79,112		77,114
Property and equipment, net		22,586		23,121
Other long-term assets		2,006		1,967
Total assets	$	103,704	$	102,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,307	$	3,095
Accrued liabilities		16,216		19,180
Deferred revenue		13,067		13,113
Debt obligations, current portion		1,994		1,989
Total current liabilities		33,584		37,377
Debt obligations, long-term portion		1,250		1,667
Capital lease obligations, net of current portion		98		182
Total liabilities		34,932		39,226
Total stockholders’ equity		68,772		62,976
Total liabilities and stockholders’ equity	$	103,704	$	102,202

ALIGN TECHNOLOGY, INC.

NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(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 profit (loss) prepared in accordance with generally accepted accounting principles in the United States of America.

	Three Months Ended
(in thousands, except per share data)	March 31, 2004			March 31, 2003
Revenues	$	39,205		$	22,960
Cost of revenues		12,995			11,203
Gross profit		26,210			11,757
Operating expenses:
Sales and marketing		12,978			10,002
General and administrative		7,122			5,202
Research and development		2,976			2,252
Total operating expenses		23,076			17,456
Profit (loss) from operations		3,134			(5,699	)
Interest and other income (expense), net		(227	)		(197	)
Provision for income taxes		(133	)		(1	)
Net profit (loss)	$	2,774		$	(5,897	)
Net profit (loss) per share - basic	$	0.05		$	(0.10	)
Weighted-average shares used in computing basic net profit (loss) per share		59,091			57,189
Net profit (loss) per share - diluted	$	0.04		$	(0.10	)
Weighted-average shares used in computing diluted net profit (loss) per share		64,559			57,189

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
(in thousands)	March 31, 2004		March 31, 2003
Calculation of non-GAAP net profit (loss) excluding special items:
Net profit (loss)	$	557	$	(10,671	)
Items:
Stock-based compensation expense included in:(1)
- cost of revenues		398		721
- sales and marketing		294		628
- general and administrative		1,155		2,185
- research and development		370		733
Restructuring costs included in general and administrative:(2)		—		507
Non-GAAP net profit (loss) excluding special items	$	2,774	$	(5,897	)

⁽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 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.