Exhibit 99.1
Mindray Announces 2014 Fourth Quarter and Full Year Results
SHENZHEN, China, March 9, 2015 -- Mindray Medical International Limited (“Mindray”, NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide, announced today its selected unaudited financial results for the fourth quarter and full year ended December 31, 2014.
Highlights for Fourth Quarter and Full Year 2014
| - | Full year net revenues increased 9.0% year-over-year to $1.3billion. |
| ° | China net revenues rose 10.1% to $606.7 million for the full year. International sales reached $716.1 million, representing an 8.0% increase from a year ago. |
| ° | In the fourth quarter, China net revenues increased 13.9% year-over-year to $182.7 million, while Western Europe sales achieved double-digit net revenue growth from a year ago. |
| ° | Reagent net revenues continued to climb in the fourth quarter, contributing 48.2% to the IVD segment, up from 41.4% in the same period last year and 44.2% in the previous quarter. |
| - | Net operating cash inflow for the full year grew 7.3% to $330.5 million. |
| - | Introduced eight new products along with several reagents in 2014, including the first cellular analysis line in hematology and a new portable color ultrasound system. |
| - | Declared dividend of $0.40 per share. |
"In 2014, Mindray continued to focus on innovation and strengthening its core competencies in the face of a tough operating environment across major markets. Western Europe remained a bright spot and its growth reflected the success of our investments over the last few years. The IVD segment performed well, largely driven by reagents sales increase. Longer term, we remain upbeat about our IVD business, based on the ramp up of our higher-end products and our ability to offer total solutions to customers," commented Mr. Cheng Minghe, Mindray's Co-Chief Executive Officer and Chief Strategic Officer. "We invested more in R&D and introduced eight new products to the market during the year. The continued dividend payout demonstrated our commitment to returning capital to our shareholders despite the challenges we faced."
SUMMARY – Fourth Quarter and Year Ended December 31, 2014
| | Three Months Ended | | | Year Ended | |
| (in $ millions, except per-share data, unaudited) | | December 31 | | | December 31 | |
| | | 2014 | | | 2013 | | | % chg | | | 2014 | | | 2013 | | | % chg | |
| Net Revenues | | | 399.0 | | | | 368.4 | | | | 8.3 | % | | | 1,322.8 | | | | 1,214.0 | | | | 9.0 | % |
| Net Revenues Generated in China | | | 182.7 | | | | 160.4 | | | | 13.9 | % | | | 606.7 | | | | 551.2 | | | | 10.1 | % |
| Net Revenues Generated in International Markets | | | 216.2 | | | | 208.0 | | | | 3.9 | % | | | 716.1 | | | | 662.8 | | | | 8.0 | % |
| Gross Profit | | | 220.4 | | | | 205.9 | | | | 7.1 | % | | | 738.5 | | | | 686.6 | | | | 7.6 | % |
| Non-GAAP Gross Profit | | | 222.4 | | | | 208.0 | | | | 6.9 | % | | | 747.1 | | | | 694.7 | | | | 7.5 | % |
| Operating Income | | | 53.4 | | | | 54.0 | | | | -1.0 | % | | | 192.5 | | | | 210.2 | | | | -8.4 | % |
| Non-GAAP Operating Income | | | 61.9 | | | | 75.8 | | | | -18.3 | % | | | 230.3 | | | | 252.7 | | | | -8.9 | % |
| EBITDA | | | 74.4 | | | | 69.5 | | | | 7.1 | % | | | 254.9 | | | | 262.9 | | | | -3.1 | % |
| Net Income1 | | | 52.0 | | | | 75.2 | | | | -30.9 | % | | | 193.3 | | | | 224.8 | | | | -14.0 | % |
| Non-GAAP Net Income1 | | | 59.7 | | | | 73.9 | | | | -19.1 | % | | | 228.2 | | | | 264.1 | | | | -13.6 | % |
Non-GAAP Net Income2(ex tax benefit) | | | 58.4 | | | | 65.7 | | | | -11.1 | % | | | 222.1 | | | | 236.6 | | | | -6.1 | % |
| Diluted EPS | | | 0.44 | | | | 0.63 | | | | -29.9 | % | | | 1.63 | | | | 1.87 | | | | -12.8 | % |
| Non-GAAP Diluted EPS | | | 0.50 | | | | 0.62 | | | | -18.0 | % | | | 1.93 | | | | 2.20 | | | | -12.4 | % |
1 For this press release, net income and non-GAAP net income refer to GAAP net income attributable to the Company and Non-GAAP net income attributable to the Company as stated in exhibit below, respectively.
2The non-GAAP net income (ex tax benefit) excludes the tax benefits of $7.4 million and $26.8 million recognized respectively in the fourth quarter and full year of 2013 in relation to the nationwide key software enterprise status for the calendar years 2011, 2012 and 2013; and $1.3 million and $5.9 million recognized respectively in the fourth quarter and full year of 2014 in relation to the nationwide key software enterprise status for the calendar year 2014; and the non-GAAP tax benefits of $0.7 million recognized both in the fourth quarter and full year of 2013 in relation to dispute charges; and $0.1 million and $0.2 million recognized respectively in the fourth quarter and full year of 2014 in relation to dispute related legal fees.
Fourth Quarter 2014 Results
Net Revenues
Mindray reported net revenues of $399.0 million for the fourth quarter of 2014, an 8.3% increase from the fourth quarter of 2013.
| - | Net revenues generated in China increased 13.9% year-over-year to $182.7 million. |
| - | Net revenues generated in the international markets increased 3.9% year-over-year to $216.2 million. |
Performance by Segment
Patient Monitoring and Life Support Products: Net revenues in this segment increased 5.0% year-over-year to $149.8 million, contributing 37.6% to total net revenues in this quarter.
In-Vitro Diagnostic Products: Net revenues in this segment increased 7.7% year-over-year to $103.4 million, contributing 25.9% to total net revenues in this quarter. Reagents sales represented 48.2% of this segment’s net revenues.
Medical Imaging Systems: Net revenues in this segment increased 11.9% from a year ago to $108.6 million, contributing 27.2% to total net revenues in this quarter.
Others: Other net revenues increased 13.5% year-over-year to $37.2 million, contributing 9.3% to total net revenues in this quarter. Other net revenues mainly include sales from the orthopedics business, service revenues from extended warranties, sales of accessories and repair-service revenues for the post-warranty period.
Gross Profit
Fourth quarter 2014 gross profit was $220.4 million, a 7.1% increase year-over-year. Gross margin was 55.3% in the fourth quarter of 2014 compared to 55.9% in the fourth quarter of 2013 and 56.3% in the third quarter of 2014. Fourth quarter 2014 non-GAAP gross profit was $222.4 million, a 6.9% increase from the fourth quarter of 2013. Non-GAAP gross margin was 55.8% in the fourth quarter of 2014 compared to 56.5% in the fourth quarter of 2013 and 57.0% in the third quarter of 2014.
Operating Expenses
Selling expenses for the fourth quarter of 2014 were $77.9 million, or 19.5% of total net revenues, compared to 16.7% in the fourth quarter of 2013 and 20.3% in the third quarter of 2014. Non-GAAP selling expenses for the fourth quarter of 2014 were $75.0 million, or 18.8% of total net revenues, compared to 16.1% in the fourth quarter of 2013 and 18.9% in the third quarter of 2014.
General and administrative expenses for the fourth quarter of 2014 were $40.3 million, or 10.1% of total net revenues, compared to 13.5% in the fourth quarter of 2013 and 12.1% in the third quarter of 2014. Non-GAAP general and administrative expenses for the fourth quarter of 2014 were $37.8 million, or 9.5% of total net revenues, compared to 9.1% in the fourth quarter of 2013 and 11.1% in the third quarter of 2014.
Research and development expenses for the fourth quarter of 2014 were $48.8 million, or 12.2% of total net revenues, compared to 11.1% in the fourth quarter of 2013 and 10.6% in the third quarter of 2014. Non-GAAP research and development expenses for the fourth quarter of 2014 were $47.7 million, or 12.0% of total net revenues, compared to 10.7% in the fourth quarter of 2013 and 10.2% in the third quarter of 2014.
Total share-based compensation expenses for the fourth quarter of 2014, which were allocated to cost of revenues and related operating expenses, were $3.6 million, compared to $3.8 million in the fourth quarter of 2013 and $4.9 million in the third quarter of 2014.
Operating Income
Operating income for the fourth quarter of 2014 was $53.4 million, a 1.0% decrease from the fourth quarter of 2013. Operating margin was 13.4% in the fourth quarter of 2014, compared to 14.6% in the fourth quarter of 2013 and unchanged from the third quarter of 2014. Non-GAAP operating income for the fourth quarter of 2014 was $61.9 million, an 18.3% decrease from the fourth quarter of 2013. Non-GAAP operating margin was 15.5% in the fourth quarter of 2014, compared to 20.6% in the fourth quarter of 2013 and 16.8% in the third quarter of 2014.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
Fourth quarter 2014 EBITDA increased 7.1% year-over-year to $74.4 million.
Net Income
Fourth quarter 2014 net income decreased 30.9% from a year ago to $52.0 million. Net margin was 13.0% in the fourth quarter of 2014, compared to 20.4% in the fourth quarter of 2013 and 14.2% in the third quarter of 2014. Fourth quarter 2014 non-GAAP net income decreased 19.1% year-over-year to $59.7 million. Non-GAAP net margin was 15.0% in the fourth quarter of 2014, compared to 20.0% in the fourth quarter of 2013 and 17.3% in the third quarter of 2014. Fourth quarter 2014 income tax expense was $16.8 million, representing an effective tax rate of 23.9%.
Excluding the tax benefits related to the nationwide key software enterprise status, fourth quarter 2014 non-GAAP net income decreased 11.1% year-over-year to $58.4 million and non-GAAP net margin in the fourth quarter of 2014 was 14.6%, compared to 17.8% in the fourth quarter of 2013 and 16.9% in the third quarter of 2014.
Fourth quarter 2014 basic and diluted earnings per share were both $0.44, compared to $0.64 and $0.63 respectively in the fourth quarter of 2013. Fourth quarter 2014 basic and diluted non-GAAP earnings per share were $0.51 and $0.50, compared to $0.62 for both in the fourth quarter of 2013. Excluding the tax benefits, diluted non-GAAP earnings per share was $0.49 in the fourth quarter of 2014, compared to $0.55 in the fourth quarter of 2013. Shares used in the computation of diluted earnings per share for the fourth quarter of 2014 were approximately 118.4 million.
Other Selected Data
Accounts receivable turnover days were 48 days in the fourth quarter of 2014, improved from 50 days in the fourth quarter of 2013 and 55 days in the third quarter of 2014. Inventory turnover days were 82 days in the fourth quarter of 2014, compared to 79 days in the fourth quarter of 2013 and 106 days in the third quarter of 2014. Accounts payable turnover days were 54 days in the fourth quarter of 2014, unchanged from the fourth quarter of 2013 and compared to 67 days in the third quarter of 2014. Mindray calculates the above working capital days using the average of beginning and ending net balances of the quarter.
As of December 31, 2014, the company had a total of $1.1 billion in cash and cash equivalents, and short-term investments as compared to $1.2 billion as of December 31, 2013 and $1.0 billion as of September 30, 2014. Net cash generated by operating activities and net cash outflow for capital expenditures for the fourth quarter of 2014 were $140.7 million and $28.0 million, respectively.
As of December 31, 2014, the company had more than 8,200 employees, including those from acquired businesses.
Full Year 2014 Results
Mindray reported net revenues of $1.3 billion for the full year 2014, a 9.0% increase from the full year 2013.
| - | Net revenues generated in China for the full year 2014 increased 10.1% year-over-year to $606.7 million. |
| - | Net revenues generated in the international markets for the full year 2014 increased 8.0% from a year ago to $716.1 million. |
Full year 2014 EBITDA decreased 3.1% to $254.9 million from full year 2013.
Full year 2014 net income decreased 14.0% to $193.3 million from a year ago. Net margin for full year 2014 was 14.6% compared to 18.5% in 2013. Full year 2014 non-GAAP net income decreased 13.6% to $228.2 million from 2013. Non-GAAP net margin for full year 2014 was 17.2% compared to 21.8% in 2013. Full year 2014 income tax expense was $35.5 million, representing an effective tax rate of 15.1%.
Excluding tax benefits, full year 2014 non-GAAP net income decreased 6.1% year-over-year to $222.1 million and non-GAAP net margin was 16.8% in 2014 compared to 19.5% in 2013. Full year 2014 diluted earnings per share decreased 12.8% to $1.63 from $1.87 in 2013. Full year 2014 non-GAAP diluted earnings per share decreased 12.4% to $1.93 from $2.20 in 2013. Excluding the tax benefits, full year 2014 diluted non-GAAP earnings per share was $1.88, down 4.8% compared to $1.97 in 2013.
Dividend Declaration
Mindray’s board of directors has declared a cash dividend on its ordinary shares of $0.40 per share, based on the company’s net income for the full year 2014. The cash dividend will be payable on or around March 31, 2015 to shareholders of record as of March 19, 2015. The company has approximately 118 million outstanding ordinary shares as of February 27, 2015.
Business Outlook for Full Year 2015
The company anticipates its full year 2015 net revenues to grow by a mid-single digit percentage over its full year 2014 net revenues. The company also expects its full year 2015 non-GAAP net income to decrease by a high-single digit percentage over its full year 2014 non-GAAP net income. This guidance excludes the tax benefits related to the nationwide key software enterprise status and assumes a corporate income tax rate of 15% applicable to the Shenzhen subsidiary.
The company expects its capital expenditure for 2015 to be around $150 million.
The company’s practice is to provide guidance on a full year basis only. This forecast reflects Mindray’s current and preliminary views, which are subject to change.
Board of Directors Change
Separately, the company announced that the Board of Directors has appointed Mr. Li Xiting as Executive Chairman of the Board. Mr. Li is President, Co-Chief Executive Officer and Director of the Board. Mr. Xu Hang will continue to serve as Chairman of the Board.
“As we continue to grow in today’s volatile market environment, the Board and I decided that it is best for Mr. Li to lead the Board as Executive Chairman,” said Mr. Xu, “As a significant shareholder, I am fully confident in Mr. Li’s ability to fulfill his new role and steer the company to the next level. I look forward to working closely with Mr. Li to ensure the future success of our company.”
“I am honored to accept this new appointment,” said Mr. Li. “As I continue to lead the company, I am fully aware of our near-term challenges as management expects headwinds to persist in our key markets. Nevertheless, we will continue to drive our long-term growth by investing in our core capabilities, strengthening our competitive position, improving our operational efficiency, and searching for M&A and other growth opportunities. We believe these long-term corporate strategies will lay a strong foundation for the company for years to come.”
Conference Call Information
Mindray's management will hold an earnings conference call at 8:00 AM on Mar 10, 2015 U.S. Eastern Time (8:00 PM on Mar 10, 2015 Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
International Toll Free:
| United States: | 866-519-4004 |
| United Kingdom: | 080-8234-6646 |
| Hong Kong: | 800-906-601 |
| China: | 800-819-0121 |
| | |
| Local dial-in numbers: | |
| United States: | +1-845-675-0437 |
| United Kingdom: | +44-20-3059-8139 |
| Hong Kong: | +852-3018-6771 |
| China: | 400-620-8038 |
| Passcode for all regions: | Mindray |
A replay of the conference call may be accessed by phone at the following numbers until Mar 25, 2015.
| U.S. Toll Free: | +1-855-452-5696 |
| International: | +1-646-254-3697 |
| Passcode: | 79496488 |
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of Mindray’s website at: http://ir.mindray.com/
Use of Non-GAAP Financial Measures
Mindray's full year 2014 results reported in this release are unaudited and remain subject to the finalization of the company's year-end closing, reporting and audit processes.
Mindray provides gross profit, selling expenses, general and administrative expenses, R&D expenses, operating income, net income and earnings per share on a non-GAAP basis that excludes share-based compensation expense, acquired intangible assets amortization expense, dispute charges, dispute related legal fees and withholding tax for intra-group fund transfer, all net of related tax impact, as well as EBITDA to enable investors to better assess the company’s operating performance. The non-GAAP measures described by the company are reconciled to the corresponding GAAP measure in the exhibit below titled “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures”.
The company has reported operation results for the fourth quarter and full year 2014 and its comparative periods on a non-GAAP basis. Each of the terms as used by the company is defined as follows:
| – | Non-GAAP gross profit represents gross profit reported in accordance with GAAP, adjusted for the effects of share-based compensation and amortization of acquired intangible assets. |
| – | Non-GAAP operating income represents operating income reported in accordance with GAAP, adjusted for the effects of share-based compensation, amortization of acquired intangible assets, dispute charges, and dispute related legal fees. |
| – | Non-GAAP selling expenses represent selling expenses reported in accordance with GAAP, adjusted for the effects of share-based compensation and amortization of acquired intangible assets. |
| – | Non-GAAP general and administrative expenses represent general and administrative expenses reported in accordance with GAAP, adjusted for the effects of share-based compensation, dispute charges, and dispute related legal fees. |
| – | Non-GAAP research and development expenses represent research and development expenses reported in accordance with GAAP, adjusted for the effects of share-based compensation. |
| – | Non-GAAP net income represents net income reported in accordance with GAAP, adjusted for the effects of share-based compensation, amortization of acquired intangible assets, dispute charges, dispute related legal fees, and withholding tax for intra-group fund transfer, all net of related tax impact. |
| – | Non-GAAP earnings per share represents non-GAAP net income divided by the number of shares used in computing basic and diluted earnings per share in accordance with GAAP, and excludes the impact of the declared dividends for the basic calculation. |
| – | EBITDA represents net income reported in accordance with GAAP, adjusted for the effect of interest income and expenses, income tax provision/benefits, depreciation and amortization. |
The company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The company notes that these measures may not be calculated on the same basis of similar measures used by other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the three months and years ended December 31, 2013 and 2014, respectively, in the attached financial information.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including, without limitation, statements about Mindray's anticipated net revenues, non-GAAP net income and capital expenditure for 2015, our assumption of a corporate income tax rate of 15% applicable to the Shenzhen subsidiary, statement about our near term challenges, management’s expectation of headwinds to persist in our key markets, statements that longer term, we remain upbeat about our IVD business, based on the ramp up of our higher-end products and our ability to offer total solutions to customers, that we will continue to drive our long-term growth by investing in our core capabilities, strengthening our competitive position, improving our operational efficiency, and searching for M&A and other growth opportunities, that we believe our long-term corporate strategies will lay a strong foundation for the company for years to come and other statements under “Business Outlook for Full Year 2015” are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors,including, without limitation,the growth and expected growth of the medical device market in China and internationally; applicable government policies and regulations; our ability to satisfy the requirements imposed by relevant regulatory bodies; market acceptance of our products; our expectations regarding demand for our products; our ability to expand our production, our sales and distribution network and other aspects of our operations; our ability to stay abreast of market trends and technological advances; our ability to effectively protect our intellectual property rights and not infringe on the intellectual property rights of others; our ability to settle disputes with our customers and suppliers; competition in the medical device industry in China and internationally; and general economic and business conditions in the countries in which we operate. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 5 of our annual report on Form 20-F which was filed on April 28, 2014. Our results of operations for the fourth quarter of 2014 and the full year ended December 31, 2014 are not necessarily indicative of our operating results for any future periods. The company has not completed its audit of 2014 financial statements and the selected unaudited financial results for the fourth quarter and full year ended December 31, 2014 announced today are subject to adjustments. The anticipated results for the fourth quarter and full year ended December 31, 2014 remain subject to the finalization of the company’s year-end closing, reporting and audit processes, particularly as related to accrued expenses, income taxes, share-based compensation expenses, and expenses and/or amortization of intangible assets. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
All references to "shares" are to our ordinary shares, which are divided into two classes, Class A and Class B. Each of our American Depositary Shares, which trade on the New York Stock Exchange, represents one Class A ordinary share.
About Mindray
We are a leading developer, manufacturer and marketer of medical devices worldwide. We maintain our global headquarters in Shenzhen, China, U.S. headquarters in Mahwah, New Jersey and multiple sales offices in major international markets. From our main manufacturing and engineering base in China, we supply through our worldwide distribution network a broad range of products across three primary business segments, namely patient monitoring and life support, in-vitro diagnostic, and medical imaging systems. For more information, please visit http://ir.mindray.com.
For investor and media inquiries, please contact:
In China:
Cathy Gao
Mindray Medical International Limited
Tel: +86-755-8188-8023
Email: cathy.gao@mindray.com
In the U.S:
Hoki Luk
Western Bridge, LLC
Tel: +1-646-808-9150
Email: hoki.luk@westernbridgegroup.com
# # #
Exhibit 1
MINDRAY MEDICAL INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
| | As of December 31, 2013 | | | As of December 31, 2014 | |
| | US$ | | | US$ | |
| | (Note 1) | | | (unaudited) | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents (Note 2) | | | 385,224 | | | | 276,598 | |
| Restricted cash (Note 3) | | | 759 | | | | 7,422 | |
| Short-term investments (Note 2) | | | 847,041 | | | | 816,394 | |
| Accounts receivable, net | | | 220,228 | | | | 222,522 | |
| Inventories | | | 138,808 | | | | 150,642 | |
| Value added tax receivables | | | 10,225 | | | | 3,432 | |
| Other receivables | | | 21,512 | | | | 23,316 | |
| Prepayments and deposits | | | 14,310 | | | | 16,481 | |
| Deferred tax assets,net | | | 9,585 | | | | 14,802 | |
| Total current assets | | | 1,647,692 | | | | 1,531,609 | |
| | | | | | | | | |
| Restricted cash, non-current (Note 3) | | | 17,453 | | | | 5,061 | |
| Other assets | | | 10,755 | | | | 9,666 | |
| Accounts receivables, net, non-current | | | 1,389 | | | | 3,350 | |
| Advances for purchase of property, plant and equipment | | | 18,919 | | | | 21,840 | |
| Property, plant and equipment, net | | | 324,710 | | | | 412,733 | |
| Land use rights, net | | | 59,463 | | | | 59,057 | |
| Intangible assets, net | | | 181,077 | | | | 175,451 | |
| Goodwill | | | 242,476 | | | | 254,435 | |
| Total assets | | | 2,503,934 | | | | 2,473,202 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Short-term bank loans | | | 260,000 | | | | 59,625 | |
| Notes payable | | | 10,945 | | | | 9,234 | |
| Accounts payable | | | 93,673 | | | | 93,523 | |
| Advances from customers | | | 28,240 | | | | 31,396 | |
| Salaries payable | | | 91,220 | | | | 114,583 | |
| Other payables and current liabilities | | | 118,951 | | | | 168,139 | |
| Purchase consideration payable | | | 20,457 | | | | 17,173 | |
| Income taxes payable | | | 20,721 | | | | 20,415 | |
| Other taxes payable | | | 12,832 | | | | 10,342 | |
| Total current liabilities | | | 657,039 | | | | 524,430 | |
| | | | | | | | | |
| Long-term bank loans | | | 215,703 | | | | 197,585 | |
| Other long-term liabilities | | | 7,222 | | | | 10,670 | |
| Deferred tax liabilities, net | | | 45,812 | | | | 69,233 | |
| Total liabilities | | | 925,776 | | | | 801,918 | |
| | | | | | | | | |
| Shareholders' equity: | | | | | | | | |
| Ordinary shares | | | 15 | | | | 15 | |
| Additional paid-in capital | | | 521,617 | | | | 453,564 | |
| Retained earnings | | | 865,676 | | | | 1,000,257 | |
| Accumulated other comprehensive income | | | 150,432 | | | | 144,120 | |
| Treasury stock at cost | | | (18,792 | ) | | | - | |
| Total shareholders' equity | | | 1,518,948 | | | | 1,597,956 | |
| | | | | | | | | |
| Non-controlling interests | | | 59,210 | | | | 73,328 | |
| Total equity | | | 1,578,158 | | | | 1,671,284 | |
| Total liabilities and equity | | | 2,503,934 | | | | 2,473,202 | |
| (1) | Financial information is extracted from the audited financial statements included in the Company’s 2013 annual report on Form 20-F. |
| (2) | In respect of cash and cash equivalents and short-term investments, there is an aggregate compensating balance arrangement of $241,500 and $189,000 as of December 31, 2013 and December 31, 2014, respectively in relation to the drawings of certain bank loans. |
| (3) | Restricted cash are mainly those purchase consideration in connection with our acquisitions being held on escrow accounts. |
Exhibit 2
MINDRAY MEDICAL INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except share and per share amounts)
| | | Three months ended December 31, | | | Year ended December 31, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | US$ | | | US$ | | | US$ | | | US$ | |
| | | | (unaudited) | | | | (unaudited) | | | | (Note 1) | | | | (unaudited) | |
| Net revenues | | | | | | | �� | | | | | | | | | |
| - China | | | 160,401 | | | | 182,749 | | | | 551,155 | | | | 606,745 | |
| - International | | | 208,014 | | | | 216,206 | | | | 662,832 | | | | 716,069 | |
| Net revenues | | | 368,415 | | | | 398,955 | | | | 1,213,987 | | | | 1,322,814 | |
| Cost of revenues | | | (162,516 | ) | | | (178,523 | ) | | | (527,402 | ) | | | (584,310 | ) |
| Gross profit | | | 205,899 | | | | 220,432 | | | | 686,585 | | | | 738,504 | |
| | | | | | | | | | | | | | | | | |
| Selling expenses | | | (61,374 | ) | | | (77,898 | ) | | | (220,589 | ) | | | (261,965 | ) |
| General and administrative expenses | | | (49,565 | ) | | | (40,332 | ) | | | (128,308 | ) | | | (137,016 | ) |
| Research and development expenses | | | (40,990 | ) | | | (48,784 | ) | | | (127,464 | ) | | | (146,997 | ) |
| Income from operations | | | 53,970 | | | | 53,418 | | | | 210,224 | | | | 192,526 | |
| | | | | | | | | | | | | | | | | |
| Other income, net | | | 3,049 | | | | 7,138 | | | | 3,881 | | | | 9,363 | |
| Interest income | | | 10,786 | | | | 10,998 | | | | 37,047 | | | | 38,985 | |
| Interest expense | | | (2,160 | ) | | | (1,252 | ) | | | (6,345 | ) | | | (6,400 | ) |
| Income before income taxes and non-controlling interests | | | 65,645 | | | | 70,302 | | | | 244,807 | | | | 234,474 | |
| Income tax benefits (provision) | | | 11,484 | | | | (16,808 | ) | | | (14,260 | ) | | | (35,485 | ) |
| Net income | | | 77,129 | | | | 53,494 | | | | 230,547 | | | | 198,989 | |
| Less: Net income attributable to non-controlling interests | | | (1,913 | ) | | | (1,501 | ) | | | (5,793 | ) | | | (5,697 | ) |
| Net income attributable to the Company | | | 75,216 | | | | 51,993 | | | | 224,754 | | | | 193,292 | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | | 0.64 | | | | 0.44 | | | | 1.91 | | | | 1.65 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | | 0.63 | | | | 0.44 | | | | 1.87 | | | | 1.63 | |
| | | | | | | | | | | | | | | | | |
| Shares used in the computation of: | | | | | | | | | | | | | | | | |
| Basic earnings per share | | | 118,300,560 | | | | 117,288,346 | | | | 117,705,414 | | | | 117,057,116 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | | 120,006,267 | | | | 118,360,611 | | | | 120,051,635 | | | | 118,412,460 | |
| (1) Financial information is extracted from the audited financial statements included in the Company’s 2013 annual report on Form 20-F. |
Exhibit 3
MINDRAY MEDICAL INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
| | | Three months ended December 31, | | | Year ended December 31, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | US$ | | | US$ | | | US$ | | | US$ | |
| | | (unaudited) | | | (unaudited) | | | (Note 1) | | | (unaudited) | |
| Cash flow from operating activities: | | | | | | | | | | | | | | | | |
| Net income | | | 77,129 | | | | 53,494 | | | | 230,547 | | | | 198,989 | |
| Adjustments to reconcile net income to net cash provided by operating activities | | | 21,189 | | | | 27,414 | | | | 72,293 | | | | 99,080 | |
| Changes in assets and liabilities, net of effects of acquisitions | | | 23,878 | | | | 59,757 | | | | 5,078 | | | | 32,385 | |
| Net cash provided by operating activities | | | 122,196 | | | | 140,665 | | | | 307,918 | | | | 330,454 | |
| | | | | | | | | | | | | | | | | |
| Cash flow from investing activities: | | | | | | | | | | | | | | | | |
| Acquisition cost of subsidiaries, net of cash received | | | (4,358 | ) | | | (2,697 | ) | | | (109,376 | ) | | | (11,764 | ) |
| Capital expenditures | | | (41,901 | ) | | | (28,016 | ) | | | (109,080 | ) | | | (107,124 | ) |
| Decrease in restricted cash and restricted investment | | | 356 | | | | 5,160 | | | | 3,316 | | | | 4,370 | |
| Proceeds from sale of short-term investments | | | 61,088 | | | | 25,077 | | | | 652,896 | | | | 825,839 | |
| Increase in short-term investments and changes in other investing activities | | | (68,152 | ) | | | (54,510 | ) | | | (862,297 | ) | | | (804,159 | ) |
| Net cash used in investing activities | | | (52,967 | ) | | | (54,986 | ) | | | (424,541 | ) | | | (92,838 | ) |
| | | | | | | | | | | | | | | | | |
| Cash flow from financing activities: | | | | | | | | | | | | | | | | |
| Repayment of bank loans | | | - | | | | (4,375 | ) | | | (35,000 | ) | | | (214,375 | ) |
| Proceeds from bank loans | | | 156,715 | | | | - | | | | 371,715 | | | | - | |
| Dividend paid | | | - | | | | - | | | | (59,070 | ) | | | (58,711 | ) |
| Proceeds from exercise of options | | | 491 | | | | 579 | | | | 16,091 | | | | 3,324 | |
| Repurchase of ordinary American depositary shares | | | (42,369 | ) | | | - | | | | (42,369 | ) | | | (68,080 | ) |
| Cash paid to acquire a non-controlling interest | | | - | | | | (1,079 | ) | | | - | | | | (5,810 | ) |
| Cash contribution from a non-controlling interest | | | - | | | | - | | | | - | | | | 655 | |
| Net cash provided by (used in) financing activities | | | 114,837 | | | | (4,875 | ) | | | 251,367 | | | | (342,997 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 184,066 | | | | 80,804 | | | | 134,744 | | | | (105,381 | ) |
| Cash and cash equivalents, beginning of period | | | 200,018 | | | | 197,384 | | | | 247,859 | | | | 385,224 | |
| Effect of exchange rate changes on cash and cash equivalents | | | 1,140 | | | | (1,590 | ) | | | 2,621 | | | | (3,245 | ) |
| Cash and cash equivalents, end of period | | | 385,224 | | | | 276,598 | | | | 385,224 | | | | 276,598 | |
(1) Financial information is extracted from the audited financial statements included in the Company’s 2013 annual report on Form 20-F.
Exhibit 4
MINDRAY MEDICAL INTERNATIONAL LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
(In thousands of US dollars, except share and per share amounts)
| | | Three months ended December 31, | | | Year ended December 31, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
| | | | US$ | | | | US$ | | | | US$ | | | | US$ | |
| Non-GAAP net income attributable to the Company | | | 73,853 | | | | 59,725 | | | | 264,073 | | | | 228,155 | |
| Non-GAAP net margin | | | 20.0 | % | | | 15.0 | % | | | 21.8 | % | | | 17.2 | % |
| Amortization of acquired intangible assets | | | (3,272 | ) | | | (3,389 | ) | | | (13,024 | ) | | | (13,773 | ) |
| Withholding tax for intra-group fund transfer | | | 20,804 | | | | - | | | | - | | | | - | |
| Deferred tax impact related to acquired intangible assets | | | 895 | | | | 619 | | | | 1,663 | | | | 2,500 | |
| Dispute related legal fees, net of related tax impact | | | - | | | | (1,380 | ) | | | - | | | | (3,720 | ) |
| Dispute charges, net of related tax impact | | | (13,275 | ) | | | - | | | | (13,275 | ) | | | - | |
| Share-based compensation | | | (3,789 | ) | | | (3,582 | ) | | | (14,683 | ) | | | (19,870 | ) |
| GAAP net income attributable to the Company | | | 75,216 | | | | 51,993 | | | | 224,754 | | | | 193,292 | |
| GAAP net margin | | | 20.4 | % | | | 13.0 | % | | | 18.5 | % | | | 14.6 | % |
| | | | | | | | | | | | | | | | | |
| Non-GAAP basic earnings per share | | | 0.62 | | | | 0.51 | | | | 2.24 | | | | 1.95 | |
| Non-GAAP diluted earnings per share | | | 0.62 | | | | 0.50 | | | | 2.20 | | | | 1.93 | |
| | | | | | | | | | | | | | | | | |
| GAAP basic earnings per share | | | 0.64 | | | | 0.44 | | | | 1.91 | | | | 1.65 | |
| GAAP diluted earnings per share | | | 0.63 | | | | 0.44 | | | | 1.87 | | | | 1.63 | |
| | | | | | | | | | | | | | | | | |
| Shares used in computation of: | | | | | | | | | | | | | | | | |
| Basic earnings per share | | | 118,300,560 | | | | 117,288,346 | | | | 117,705,414 | | | | 117,057,116 | |
| Diluted earnings per share | | | 120,006,267 | | | | 118,360,611 | | | | 120,051,635 | | | | 118,412,460 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP operating income | | | 75,781 | | | | 61,889 | | | | 252,681 | | | | 230,269 | |
| Non-GAAP operating margin | | | 20.6 | % | | | 15.5 | % | | | 20.8 | % | | | 17.4 | % |
| Amortization of acquired intangible assets | | | (3,272 | ) | | | (3,389 | ) | | | (13,024 | ) | | | (13,773 | ) |
| Dispute related legal fees | | | - | | | | (1,500 | ) | | | - | | | | (4,100 | ) |
| Dispute charges | | | (14,750 | ) | | | - | | | | (14,750 | ) | | | - | |
| Share-based compensation | | | (3,789 | ) | | | (3,582 | ) | | | (14,683 | ) | | | (19,870 | ) |
| GAAP operating income | | | 53,970 | | | | 53,418 | | | | 210,224 | | | | 192,526 | |
| GAAP operating margin | | | 14.6 | % | | | 13.4 | % | | | 17.3 | % | | | 14.6 | % |
| | | | | | | | | | | | | | | | | |
| Non-GAAP gross profit | | | 208,048 | | | | 222,445 | | | | 694,689 | | | | 747,102 | |
| Non-GAAP gross margin | | | 56.5 | % | | | 55.8 | % | | | 57.2 | % | | | 56.5 | % |
| Amortization of acquired intangible assets | | | (1,937 | ) | | | (1,802 | ) | | | (7,352 | ) | | | (7,478 | ) |
| Share-based compensation | | | (212 | ) | | | (211 | ) | | | (752 | ) | | | (1,120 | ) |
| GAAP gross profit | | | 205,899 | | | | 220,432 | | | | 686,585 | | | | 738,504 | |
| GAAP gross margin | | | 55.9 | % | | | 55.3 | % | | | 56.6 | % | | | 55.8 | % |
| | | | | | | | | | | | | | | | | |
| Non-GAAP selling expenses | | | (59,293 | ) | | | (75,005 | ) | | | (210,572 | ) | | | (249,250 | ) |
| Non-GAAP as % of total net revenues | | | 16.1 | % | | | 18.8 | % | | | 17.3 | % | | | 18.8 | % |
| Amortization of acquired intangible assets | | | (1,335 | ) | | | (1,587 | ) | | | (5,672 | ) | | | (6,295 | ) |
| Share-based compensation | | | (746 | ) | | | (1,306 | ) | | | (4,345 | ) | | | (6,420 | ) |
| GAAP selling expenses | | | (61,374 | ) | | | (77,898 | ) | | | (220,589 | ) | | | (261,965 | ) |
| GAAP as % of total net revenues | | | 16.7 | % | | | 19.5 | % | | | 18.2 | % | | | 19.8 | % |
| | | | | | | | | | | | | | | | | |
| Non-GAAP general and administrative expenses | | | (33,551 | ) | | | (37,833 | ) | | | (108,739 | ) | | | (125,300 | ) |
| Non-GAAP as % of total net revenues | | | 9.1 | % | | | 9.5 | % | | | 9.0 | % | | | 9.5 | % |
| Dispute related legal fees | | | - | | | | (1,500 | ) | | | - | | | | (4,100 | ) |
| Dispute charges | | | (14,750 | ) | | | - | | | | (14,750 | ) | | | - | |
| Share-based compensation | | | (1,264 | ) | | | (999 | ) | | | (4,819 | ) | | | (7,616 | ) |
| GAAP general and administrative expenses | | | (49,565 | ) | | | (40,332 | ) | | | (128,308 | ) | | | (137,016 | ) |
| GAAP as % of total net revenues | | | 13.5 | % | | | 10.1 | % | | | 10.6 | % | | | 10.4 | % |
| | | | | | | | | | | | | | | | | |
| Non-GAAP research and development expenses | | | (39,423 | ) | | | (47,718 | ) | | | (122,697 | ) | | | (142,283 | ) |
| Non-GAAP as % of total net revenues | | | 10.7 | % | | | 12.0 | % | | | 10.1 | % | | | 10.8 | % |
| Share-based compensation | | | (1,567 | ) | | | (1,066 | ) | | | (4,767 | ) | | | (4,714 | ) |
| GAAP research and development expenses | | | (40,990 | ) | | | (48,784 | ) | | | (127,464 | ) | | | (146,997 | ) |
| GAAP as % of total net revenues | | | 11.1 | % | | | 12.2 | % | | | 10.5 | % | | | 11.1 | % |
Exhibit 5
MINDRAY MEDICAL INTERNATIONAL LIMITED
RECONCILIATION OF GAAP NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(In thousands of US dollars)
| | | Three months ended December 31, | | | Year ended December 31, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | | US$ | | | | US$ | | | | US$ | | | | US$ | |
| | | | (unaudited) | | | | (unaudited) | | | | (unaudited) | | | | (unaudited) | |
| GAAP net income attributable to the Company | | | 75,216 | | | | 51,993 | | | | 224,754 | | | | 193,292 | |
| Interest income | | | (10,786 | ) | | | (10,998 | ) | | | (37,047 | ) | | | (38,985 | ) |
| Interest expense | | | 2,160 | | | | 1,252 | | | | 6,345 | | | | 6,400 | |
| Income tax (benefits) provision | | | (11,484 | ) | | | 16,808 | | | | 14,260 | | | | 35,485 | |
| | | | | | | | | | | | | | | | | |
| Earnings before interest and taxes ("EBIT") | | | 55,106 | | | | 59,055 | | | | 208,312 | | | | 196,192 | |
| Depreciation | | | 8,985 | | | | 9,615 | | | | 33,499 | | | | 36,017 | |
| Amortization | | | 5,430 | | | | 5,758 | | | | 21,079 | | | | 22,647 | |
| | | | | | | | | | | | | | | | | |
| Earnings before interest, taxes, depreciation, and amortization ("EBITDA") | | | 69,521 | | | | 74,428 | | | | 262,890 | | | | 254,856 | |
