Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Management Estimates | Management Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures at the date of the financial statements and during the reporting period. Components particularly subject to estimation include the allowance for doubtful accounts, inventory reserves, intangible assets, impairment analysis of goodwill and intangibles, deferred tax assets, liabilities and valuation allowances, fair value of stock options and investments and accrued warranties. On an ongoing basis, management evaluates its estimates. Actual results could differ from these estimates. |
Principles of Consolidation | Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of Cynosure, Inc. and its wholly owned subsidiaries: Cynosure Securities Corporation, Palomar Medical Products, LLC, Cynosure Mexico, Cynosure Langen GmbH, Cynosure Hamburg GmbH, S.A.R.L. Cynosure France, Cynosure Maroc SARL, Cynosure UK LTD, Cynosure Spain S.L., Cynosure B.V., Cynosure K.K., Suzhou Cynosure Medical Devices Company Ltd., Cynosure Korea Limited, Cynosure Pty Ltd., and Palomar Japan K.K. All intercompany balances and transactions have been eliminated. |
Reclassification | Reclassification |
Certain amounts in prior years’ financial statements have been reclassified to conform to the current year’s presentation within the consolidated statements of operations. |
Cash, Cash Equivalents, Short and Long-Term Marketable Securities | Cash, Cash Equivalents, Short and Long-Term Marketable Securities |
Cynosure considers all short-term, highly liquid investments with original maturities at the time of purchase of 90 days or less to be cash equivalents. Cynosure accounts for short and long-term marketable securities as available-for-sale in accordance with Accounting Standards Codification (“ASC”) 320, Investments—Debt and Equity Securities Topic. Under ASC 320, securities purchased to be held for indefinite periods of time and not intended at the time of purchase to be held until maturity are classified as available-for-sale securities. ASC 320 requires Cynosure to recognize all marketable securities on the consolidated balance sheets at fair value. Cynosure’s marketable securities are stated at fair value based on quoted market prices. Adjustments to the fair value of marketable securities that are classified as available-for-sale are recorded as increases or decreases, net of income taxes, within accumulated other comprehensive loss in shareholders’ equity. The amortized cost of marketable debt securities is adjusted for amortization of premiums and discounts to maturity computed under the effective interest method. The cost of securities sold is determined by the specific identification method. Cynosure continually evaluates whether any marketable securities have been impaired and, if so, whether such impairment is temporary or other than temporary. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
Cynosure’s financial instruments consist of cash, cash equivalents, short and long-term marketable securities, accounts receivable and capital leases. Cynosure’s estimate of fair value for financial instruments, other than marketable securities, which are carried at fair value, approximates their carrying value at December 31, 2014 and 2013. |
ASC 820, Fair Value Measurement Topic, applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis, establishes a framework for measuring fair value of assets and liabilities and expands disclosures about fair value measurements. |
Concentration of Credit Risk | Concentration of Credit Risk |
Financial instruments that subject Cynosure to credit risk consist primarily of cash and cash equivalents, short and long-term marketable securities and accounts receivable. Cynosure places cash and cash equivalents and short and long-term marketable securities in established financial institutions. Cynosure has no significant off-balance-sheet risk or concentration of credit risk, such as foreign exchange contracts, options contracts, or other foreign hedging arrangements. Cynosure’s accounts receivable balance, net of allowance for doubtful accounts, was $42.5 million as of December 31, 2014, compared with $36.6 million as of December 31, 2013. The allowance for doubtful accounts as of December 31, 2014 and 2013 was $2.9 million and $1.8 million, respectively. Cynosure maintains an allowance for doubtful accounts based upon the aging of its receivable balances, known collectibility issues and Cynosure’s historical experience with losses. Cynosure works to mitigate bad debt exposure through its credit evaluation policies, reasonably short payment terms and geographical dispersion of sales. Losses from bad debt have historically been within management’s estimates. Cynosure’s revenue includes export sales to foreign companies located principally in Europe, the Asia/Pacific region and the Middle East. Cynosure obtains letters of credit for foreign sales that the Company considers to be at risk. |
No customer accounted for 10% or greater of revenue during 2014, 2013 or 2012. No customer accounted for 10% or greater of accounts receivable as of December 31, 2014 or 2013. Accounts receivable allowance activity consisted of the following for the years ended December 31: |
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| | 2014 | | | 2013 | | | 2012 | |
| | (In thousands) | |
Balance at beginning of year | | $ | 1,803 | | | $ | 2,043 | | | $ | 1,872 | |
Additions | | | 2,373 | | | | 1,058 | | | | 591 | |
Deductions | | | (1,227 | ) | | | (1,298 | ) | | | (420 | ) |
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Balance at end of year | | $ | 2,949 | | | $ | 1,803 | | | $ | 2,043 | |
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Inventory | Inventory |
Cynosure states all inventories at the lower of cost or market, determined on a first-in, first-out method. Inventory includes material, labor and overhead and consists of the following: |
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| | December 31, | | | | | |
| | 2014 | | | 2013 (recast) | | | | | |
| | (In thousands) | | | | | |
Raw materials | | $ | 16,875 | | | $ | 16,900 | | | | | |
Work in process | | | 3,526 | | | | 2,316 | | | | | |
Finished goods | | | 38,917 | | | | 31,035 | | | | | |
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| | $ | 59,318 | | | $ | 50,251 | | | | | |
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Included in finished goods are lasers used for demonstration purposes. Cynosure’s policy is to include demonstration lasers as inventory for a period of up to one year after being used by the sales force at which time the demonstration lasers are either sold or transferred to fixed assets at the lower of cost or market and depreciated over their estimated useful life of three years. Similar to any other finished goods in inventory, Cynosure accounts for such demonstration inventory in accordance with the policy for excess and obsolescence review of Cynosure’s entire inventory. |
Cynosure’s excess and obsolescence reserve policy is to establish inventory reserves when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for products and market conditions. Cynosure regularly evaluates the ability to realize the value of inventory based on a combination of factors including the following: historical usage rates, forecasted sales or usage, product end of life dates, estimated current and future market values and new product introductions. |
Cynosure purchases raw material components as well as certain finished goods from sole source suppliers. A delay in the production capabilities of these vendors could cause a delay in Cynosure’s manufacturing, and a possible loss of revenues, which would adversely affect operating results. |
Property and Equipment | Property and Equipment |
Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Assets under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the respective lease term. Included in property and equipment are certain lasers that are used for demonstration purposes. Maintenance and repairs are charged to expense as incurred. Cynosure continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. Cynosure evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, Cynosure believes that, as of each of the balance sheet dates presented, none of Cynosure’s long-lived assets were impaired. |
Intangible Assets | Intangible Assets |
Cynosure capitalizes and includes in intangible assets the costs of developed technology and patents, customer relationships, trade names and business licenses. Intangible assets are recorded at fair value and stated net of accumulated amortization and impairments. Cynosure amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from five to 23 years. Cynosure evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, Cynosure estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, Cynosure uses market participant assumptions pursuant to ASC 820, Fair Value Measurements. If the estimate of an intangible asset’s remaining useful life is changed, Cynosure will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life. |
Goodwill | Goodwill |
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. Cynosure does not amortize its goodwill, but instead tests for impairment at least annually and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying value of the asset. Cynosure’s annual test for impairment occurs on the first day of its fourth quarter. |
Cynosure has adopted Accounting Standards Update (“ASU”) 2011-08 Intangibles—Goodwill and Other, an amendment to ASC 350, which updates how an entity will evaluate its goodwill for impairment. The guidance provides entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. If further testing is required, the test for impairment continues with the two step process. The first step compares the carrying amount of the reporting unit to its estimated fair value (Step 1). To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the extent that the carrying value exceeds the implied fair value, impairment exists and must be recognized. |
Cynosure has one reporting unit for goodwill impairment testing and has performed a qualitative assessment on that reporting unit. As a result of this assessment, the Company determined that goodwill is not impaired as of December 31, 2014 and 2013. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue |
Cynosure generates revenue from the sale of non-invasive and minimally invasive light-based aesthetic treatment applications, as well as radiofrequency energy based surgical and aesthetic applications. Cynosure offers service and warranty contracts in connection with these sales. |
Cynosure recognizes revenue from sales of aesthetic treatment systems and parts and accessories in accordance with the Revenue Recognition Topic ASC 605-10-S99. Cynosure recognizes revenue from sales of its treatment systems and parts and accessories upon delivery, provided there are no uncertainties regarding customer acceptance, there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collectibility of the related receivable is reasonably assured. Revenues from the sales of service and warranty contracts are deferred and recognized on a straight-line basis over the contract period as services are provided. Payments received by Cynosure in advance of product delivery or performance of services are deferred until earned. |
Cynosure recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. As such, Cynosure recognizes royalty revenues in the quarter reported to the Company by its licensees, or one quarter following the quarter in which sales by Cynosure’s licensees occurred. Royalty revenues also include amounts due from settlements with licensees for back-owed royalties from prior periods. These settlement amounts are considered revenue, when collectability is reasonably assured, because they constitute Cynosure’s ongoing major or central operations. |
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In December 2013, Cynosure completed a comprehensive settlement agreement with Tria Beauty, Inc. (“Tria”) which ended the patent infringement litigation between Tria and Palomar Medical Technologies, Inc. (“Palomar”). Under the agreement, Cynosure is entitled to receive $10.0 million plus future royalty payments. Cynosure will pay approximately $2.0 million of this revenue to Massachusetts General Hospital (“MGH”) under an exclusive license agreement between Palomar and MGH, which will be recorded as cost of revenues within Cynosure’s consolidated statement of operations. Cynosure recognized $3.0 million and $4.0 million of this revenue in the years ended December 31, 2014 and 2013, respectively which is recorded as royalty revenues within Cynosure’s consolidated statement of operations. Cynosure recognized $0.8 million and $1.0 million in cost of revenues in the years ended December 31, 2014 and 2013, respectively, related to this revenue. |
Multiple-element arrangements are evaluated in accordance with the principles of ASU 2009-13, Revenue Recognition Topic—Multiple Element Arrangements and Cynosure allocates revenue among the elements based upon each element’s relative fair value. |
In accordance with the provisions of ASC 605-45, Revenue Recognitions Topic—Principal Agent Considerations, Cynosure records shipping and handling costs billed to its customers as a component of revenue, and the underlying expense as a component of cost of revenue. Shipping and handling costs included as a component of revenue totaled approximately $1.0 million, $0.6 million, and $0.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Shipping and handling costs included as a component of cost of revenue totaled $1.1 million, $0.6 million and $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Cynosure collects sales tax from its customers on product sales for which the customer is not tax exempt and remits such taxes to the appropriate governmental authorities. Cynosure presents its sales taxes on a net basis; therefore, these taxes are excluded from revenues. Cynosure records medical device costs billed to its customers as a component of revenue and the underlying expense as a component of cost of revenue. |
Cost of Revenues | Cost of Revenues |
Cynosure’s cost of revenues consist primarily of material, labor and manufacturing overhead expenses and includes the cost of components and subassemblies supplied by third party suppliers. Cost of revenues also includes royalties incurred on certain products sold by Cynosure and its licensees, costs incurred in connection with Cynosure’s efforts to litigate or settle additional third-party license agreements, amortization expense related to developed technology and patents intangible assets, service and warranty expenses, as well as salaries and personnel-related expenses, including stock-based compensation, for Cynosure’s operations management team, purchasing and quality control. |
Product Warranty Costs | Product Warranty Costs |
Cynosure typically provides a one-year parts and labor warranty on end-user sales of lasers. Distributor sales generally include a one-year warranty on parts only. Estimated future costs for initial product warranties are provided for at the time of revenue recognition. The following table sets forth activity in the accrued warranty account, which is a component of accrued expenses in the consolidated balance sheets: |
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| | Years Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
| | (In thousands) | |
Balance at beginning of year | | $ | 6,651 | | | $ | 3,415 | | | $ | 3,171 | |
Warranty provision related to new sales | | | 15,104 | | | | 9,114 | | | | 4,641 | |
Warranty provision assumed from acquisitions | | | — | | | | 1,422 | | | | — | |
Costs incurred | | | (13,637 | ) | | | (7,300 | ) | | | (4,397 | ) |
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Balance at end of year | | $ | 8,118 | | | $ | 6,651 | | | $ | 3,415 | |
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Research and Development | Research and Development |
Research and development costs consist of salaries and other personnel-related expenses, including stock-based compensation, of employees primarily engaged in research, development and engineering activities and materials used and other overhead expenses incurred in connection with the design and development of Cynosure’s products and from time to time expenses associated with collaborative research agreements that the Company may enter into. These costs are expensed as incurred. |
Advertising Costs | Advertising Costs |
Cynosure expenses advertising costs as incurred. Advertising costs totaled $1.2 million, $1.1 million and $0.6 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Foreign Currency Translation | Foreign Currency Translation |
The financial statements of Cynosure’s foreign subsidiaries are translated from local currency into U.S. dollars using the current exchange rate at the balance sheet date for assets and liabilities, and the average exchange rate prevailing during the period for revenue and expenses. The functional currency for Cynosure’s foreign subsidiaries is considered to be the local currency for each entity and, accordingly, translation adjustments for these subsidiaries are included in accumulated other comprehensive loss within stockholders’ equity. Certain intercompany and third party foreign currency-denominated transactions generated foreign currency remeasurement (losses) gains of approximately $(1.6 million), $0.3 million and $0.4 million during 2014, 2013 and 2012, respectively, which are included in other (expense) income, net, in the consolidated statements of operations. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss |
Changes to accumulated other comprehensive loss during the year ended December 31, 2014 were as follows (in thousands): |
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| | Unrealized | | | Translation | | | Accumulated | |
Loss on | Adjustment | Other |
Marketable | | Comprehensive |
Securities, net | | Loss |
of taxes | | |
Balance—December 31, 2013 | | $ | 36 | | | $ | (1,535 | ) | | $ | (1,499 | ) |
Current period other comprehensive loss | | | (46 | ) | | | (2,318 | ) | | | (2,364 | ) |
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Balance—December 31, 2014 | | $ | (10 | ) | | $ | (3,853 | ) | | $ | (3,863 | ) |
Stock-Based Compensation | Stock-Based Compensation |
Cynosure follows the fair value recognition provisions of ASC 718, Stock Compensation Topic. This guidance requires share-based payments to employees, including grants of employee stock options and restricted stock units (“RSUs”), to be recognized in the statement of operations based on their fair values at the date of grant. Cynosure expenses the fair value of share-based payments over the service period. ASC 718 requires companies to utilize an estimated forfeiture rate when calculating the expense for the period. Accordingly, Cynosure reviews its actual forfeiture rates and periodically aligns its stock compensation expense with the share-based payments that are vesting. Cynosure recorded stock-based compensation expense of $7.1 million, $3.7 million and $2.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of both December 31, 2014 and 2013, Cynosure had $23,000 of stock-based compensation expense capitalized as a part of inventory. |
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Total stock-based compensation expense was recorded to cost of revenues and operating expenses based upon the functional responsibilities of the individual holding the respective share-based payments, as follows: |
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| | Years Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
| | (In thousands) | |
Cost of revenues | | $ | 292 | | | $ | 174 | | | $ | 127 | |
Sales and marketing | | | 1,934 | | | | 1,090 | | | | 857 | |
Research and development | | | 1,007 | | | | 594 | | | | 495 | |
General and administrative | | | 3,880 | | | | 1,830 | | | | 1,431 | |
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Total stock-based compensation expense | | $ | 7,113 | | | $ | 3,688 | | | $ | 2,910 | |
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As of December 31, 2014, there was $10.1 million of unrecognized compensation expense related to non-vested share awards that is expected to be recognized on a straight-line basis over a weighted average period of 1.6 years. Cash received from option exercises was $8.2 million, $2.7 million and $7.2 million during the years ended December 31, 2014, 2013 and 2012, respectively. |
Cynosure granted 854,180, 617,510 and 405,790 stock options during the years ended December 31, 2014, 2013 and 2012, respectively. Cynosure uses the Black-Scholes option pricing model to determine the weighted average fair value of options. The weighted average fair value of the options granted during the years ended December 31, 2014, 2013 and 2012 was $10.50, $10.25 and $9.23, respectively, using the following assumptions: |
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| | Years Ended December 31, | | | | | | |
| | 2014 | | 2013 | | 2012 | | | | | | |
Risk-free interest rate | | 1.41% - 1.80% | | 0.33% - 1.49% | | 0.61% - 0.86% | | | | | | |
Expected dividend yield | | — | | — | | — | | | | | | |
Expected term | | 4.6 years | | 2 years - 4.8 years | | 5.8 years | | | | | | |
Expected volatility | | 43% - 44% | | 44% - 56% | | 56% - 57% | | | | | | |
Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. Cynosure’s estimated expected stock price volatility is based on its own historical volatility for the 2014, 2013 and 2012 periods. Cynosure’s expected term of options granted during the years ended December 31, 2014 and 2013 represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and Cynosure’s historical exercise patterns. Cynosure’s expected term of options granted during the year ended December 31, 2012 was derived from the simplified method described in ASC 718-10-S99. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield of zero is based on the fact that Cynosure has never paid cash dividends and has no present intention to pay cash dividends. |
Cynosure granted 44,840 RSUs during the year ended December 31, 2014 to employees at a fair market value of its common stock on the date of grant and which vest annually over a three-year period. Cynosure is recognizing related compensation expense on a straight-line basis over the three-year period. |
Cynosure granted 43,500 RSUs during the year ended December 31, 2014 to non-employee directors at a fair market value of its common stock on the date of grant and which vest quarterly over a one-year period. Cynosure is recognizing related compensation expense on a straight-line basis over the one-year period. |
Interest (Expense) Income, Net | Interest (Expense) Income, net |
Interest (expense) income consists primarily of interest charges on capital lease obligations, and interest earned on Cynosure’s short and long-term marketable securities consisting of state and municipal bonds, U.S. government agencies and treasuries, corporate obligations and commercial paper. Cynosure expects interest expense to remain consistent in 2015 as compared to 2014. |
Income Taxes | Income Taxes |
Cynosure provides for income taxes in accordance with ASC 740, Accounting for Income Taxes. ASC 740 recognizes tax assets and liabilities for the cumulative effect of all temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities, and are measured using the enacted tax rates that will be in effect when these differences are expected to reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Cynosure considers several sources of taxable income in making its valuation allowance assessments including taxable income in carryback years, future reversals of existing taxable temporary differences, tax planning strategies and forecasted future income. |
Cynosure accounts for uncertain tax positions following the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Net Income (Loss) per Share | Net Income (Loss) per Share |
Basic net income (loss) per share is determined by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted net income (loss) per share is determined by dividing net income (loss) by the diluted weighted average shares outstanding during the period. Diluted weighted average shares reflect the dilutive effect, if any, of common stock options and RSUs based on the treasury stock method. For the years ended December 31, 2014, 2013 and 2012, there were no outstanding Class B shares, and Cynosure may not issue Class B shares in the future. |
The reconciliation of basic and diluted weighted average shares outstanding for the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands, except per share data): |
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| | Years Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Net income (loss) | | $ | 31,338 | | | $ | (1,647 | ) | | $ | 10,961 | |
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Basic weighted average common shares outstanding | | | 21,824 | | | | 19,325 | | | | 13,189 | |
Weighted average common stock equivalents | | | 371 | | | | — | | | | 603 | |
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Diluted weighted average common shares outstanding | | | 22,195 | | | | 19,325 | | | | 13,792 | |
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Basic net income (loss) per share | | $ | 1.44 | | | $ | (0.09 | ) | | $ | 0.83 | |
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Diluted net income (loss) per share | | $ | 1.41 | | | $ | (0.09 | ) | | $ | 0.79 | |
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For the year ended December 31, 2014, approximately 0.5 million shares of Cynosure’s Class A common stock issuable pursuant to options and RSUs were excluded from the calculation of diluted weighted average common shares outstanding as their effect was antidilutive. |
For the year ended December 31, 2013, the number of basic and diluted weighted average shares outstanding was the same because any increase in the number of shares of common stock equivalents for that period would be antidilutive based on the net loss for the period. During the year ended December 31, 2013, outstanding options to purchase 1.3 million shares were excluded from the computation of diluted earnings per share because their inclusion would have been antidilutive. |
For the year ended December 31, 2012, options to purchase approximately 0.7 million shares of Cynosure’s Class A common stock were excluded from the calculation of diluted weighted average common shares outstanding as their effect was antidilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board issued guidance codified in ASC 606, Revenue Recognition—Revenue from Contracts with Customers, which amends the guidance in ASC 605, Revenue Recognition. This new revenue standard creates a single source of revenue guidance for all companies in all industries and is more principles-based than the current revenue guidance. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. ASC 606 is effective for interim and annual periods beginning after December 15, 2016. Cynosure is currently evaluating the impact of the provisions of ASC 606. |
Contingencies | Contingencies |
Cynosure continually assessed litigation to determine if an unfavorable outcome would lead to a probable loss or reasonably possible loss, which could be estimated. In accordance with the FASB’s guidance on accounting for contingencies, Cynosure accrues for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. If the estimate of a probable loss is a range and no amount within the range is more likely, Cynosure accrues the minimum amount of the range. In cases where Cynosure believes that a reasonably possible loss exists, Cynosure discloses the facts and circumstances of the litigation, including an estimable range, if possible. In management’s opinion, Cynosure is not currently involved in any legal proceedings, which, individually or in the aggregate, could have a material effect on Cynosure’s financial statements. Cynosure believes that contingent losses associated with any current litigation were remote as of December 31, 2014 and at the time of the filing, and as such, Cynosure has not recorded or disclosed any material loss contingencies. |