NATUS MEDICAL INCORPORATED Overview
The following Management Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") supplements the MD&A in our Annual Report on Form
10-K for the year ended December 31, 2020 . MD&A should be read in conjunction
with our condensed consolidated financial statements and accompanying footnotes,
the risk factors referred to in Part II, Item 1A of this report, our Annual
Report filed on Form 10-K for the year ended December 31, 2020 and the
cautionary information regarding forward-looking statements at the end of this
section.
Our Business
We are a leading provider of medical device solutions focused on the diagnosis
and treatment of central nervous and sensory system disorders for patients of
all ages.
End Markets
Our products address the below end markets:
•Neuro - Includes products and services that provide diagnostic, therapeutic and
surgical solutions in neurodiagnostics, neurocritical care and neurosurgery.
Neuro's comprehensive neurodiagnostic solutions include electroencephalography
and long-term monitoring, Intensive Care Unit monitoring, electromyography,
sleep analysis or polysomnography, and intraoperative monitoring. These
solutions enhance the diagnosis of neurological conditions such as epilepsy,
sleep disorders and neuromuscular diseases. Our neurocritical care solutions
include management of traumatic brain injury by continuous
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monitoring of intracranial pressure and cerebrospinal fluid drainage, as well as
cranial access kits for entry into the cranium. Our neurosurgical solutions
include items such as valves, shunts and related treatment solutions for
procedures involving hydrocephalus.
•Newborn Care - Includes products and services for newborn care including
hearing screening, brain monitoring, eye imaging, jaundice management, and
various disposable newborn care supplies.
•Hearing & Balance - The Hearing portfolio includes products for hearing
assessment and diagnostics, and hearing aid fitting, including computer-based
audiological, otoneurologic and vestibular instrumentation for hearing care
professionals. Our Balance portfolio provides diagnosis and assessment of
vestibular and balance disorders. These solutions have a complete product and
brand portfolio known for its sophisticated design technology in the hearing and
balance assessment markets.
Segment and Geographic Information
We operate as one operating segment and one reportable segment, which provides
healthcare products, and services focused on the diagnosis and treatment of
central nervous and sensory system disorders for patients of all ages. Financial
information is reviewed on a consolidated basis for purposes of making operating
decisions and assessing financial performance. Consolidated financial
information is accompanied by disaggregated information about revenues by end
market and geographic region. We do not asses the performance of our end markets
or geographic regions on measures of profit or loss, or asset-based metrics. We
have disclosed the revenues for each of our end markets and geographic regions
to provide the reader of the financial statements transparency into our
operations.
Information regarding our revenues and long-lived assets in the U.S. and in
countries outside the U.S. is contained in Note 15 - Segment, Customer and
Geographic Information of our condensed consolidated financial statements
included in this report and is incorporated in this section by reference.
Revenue by Product Category
We generate our revenue from sales of Devices and Systems, which are generally
non-recurring, and from related Supplies and Services, which are generally
recurring. The products that are attributable to these categories are described
in our Annual Report on Form 10-K for the year ended December 31, 2020 . Revenue
from Devices and Systems, Supplies, and Services, as a percent of total revenue
for the three months ended March 31, 2021 and 2020, is as follows:
Three Months Ended
March 31,
2021 2020
Devices and Systems 75 % 72 %
Supplies 22 % 25 %
Services 3 % 3 %
Total 100 % 100 %
2021 First Quarter Overview
Our business and operating results are driven in part by worldwide economic
conditions. Our revenue is significantly dependent on both capital spending by
hospitals in the United States and healthcare spending by ministries of health
outside the United States .
We experienced an increase in demand, particularly in Asia Pacific and Europe ,
during the first quarter compared to the same period in the prior year as
recovery from the COVID-19 pandemic continues. Our consolidated revenue for the
first quarter ended March 31, 2021 was $114.9 million compared to $109.4 million
in the first quarter of the previous year, an increase of $5.5 million .
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Our net income was $2.4 million or $0.07 per diluted share in the three months
ended March 31, 2021 , compared with net loss of $3.6 million or $0.11 per share
in the same period in 2020. The increase in net income was the result of higher
revenue due to the recovery from impact of COVID-19, in particular in
international markets for Neuro products, and lower expenses compared to the
prior year, driven by the timing of engineering project spend and the benefit of
COVID-19 payroll relief received in Canada .
COVID-19 Update
Healthcare providers and patients continue to depend on our products and
services every day. Our team members and partners are continuing to maintain our
supply chain, manufacturing and delivery of our products and services. The
health and welfare of our employees, our customers and our partners remain our
top priority as we continue our business operations.
We have implemented safeguards in our facilities to protect team members,
including social distancing practices, work from home and other measures
consistent with specific regulatory requirements and guidance from health
authorities. As an essential supplier of healthcare products and services, all
of our manufacturing, engineering and customer support functions remain fully
operational and will continue to support customers with vital supplies, service
and equipment. We have taken actions to reduce costs, including reducing travel
and discretionary expenses. We will continue to prioritize spending to allow
continued investment in products and services that are key elements of our
stated strategy for profitable growth in the years ahead.
Impact to our supply chain
Many of our materials are single source and require lengthy qualification
periods. Disruptions in our supply chain could negatively impact our ability to
produce and supply our finished products. We have made strategic investments in
inventory to help mitigate potential supply chain disruptions. These investments
include increased inventory and firm purchase orders beyond our typical
timeframe in order to secure capacity at our key suppliers. To date, we have not
incurred any significant supply disruptions and we believe our suppliers are
positioned well to provide us with the materials we need to meet our demand.
Supply appears to be stable, which could allow for the reduction of inventory
levels in future quarters. The health and safety of our suppliers is also a
priority for us and we have transitioned collaboration with our suppliers to
online technology so that we can continue our business operations.
Liquidity
In the first quarter of 2020 we drew $60.0 million on our credit line as a
precaution to ensure we have the necessary capital to continue to reliably serve
our customers during an extended period of uncertainty of which $43.0 million
was repaid by December 31, 2020 . During the third quarter of 2020 we amended our
Credit Agreement which extended the maturity date of the original agreement from
September 23, 2021 to September 25, 2023 , reduced the aggregate revolving credit
facility from $225.0 million to $150.0 million , and amended certain covenants.
During the three months ended Mach 31, 2021, we repaid $20.0 million in debt,
reducing the amount outstanding under the Credit Agreement to $37.0 million , and
continued to maintain a strong cash position ending the period with $80.5
million in cash.
As a result of the COVID-19 pandemic, some hospitals and clinics delayed
payments for products and services and we have worked with our customers to
arrange mutually acceptable payment terms during this uncertain time. We have
seen revenues and margins improve since the onset of the pandemic. We continue
to see our customers adapting to the COVID environment, which we believe will
result in increased capital spending and continue to improve our business in
2021.
While we believe that we have sufficient liquidity to operate the Company for
the foreseeable future should negative economic conditions persist for an
extended period of time, we are evaluating additional measures we could take to
further enhance our liquidity position.
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Government Grants
Various government programs have been announced to provide financial relief for
businesses affected by COVID-19 including the CEWS under the COVID-19 Economic
Response Plan in Canada . We received $2.9 million for payroll subsidies under
CEWS during the three months ended March 31, 2021 . Our policy is to account for
these subsidies in the same manner as an offset to the expense they relate to in
the period in which we are reasonably assured to receive payment. For the three
months ended March 31, 2021 we recognized reductions of $0.4 million of cost of
sales, $1.3 million of marketing and selling expense, and $1.2 million of
research and development expense in the condensed consolidated statements of
operations for these subsidies. No payroll subsidies were received or recognized
under CEWS in prior periods. As of March 31, 2021 we have collected all amounts
recorded and continue to seek additional relief as applicable.
Impact to fair-value of intangible assets
We have reviewed the assets on our balance sheet, particularly goodwill and
significant intangible assets for indications of impairment related to COVID-19
and determined that there are no indicators of impairment at this time. The
values of these assets are particularly sensitive to our market cap and the
long-term value of their cash flows. If these conditions change significantly,
we may need to record an impairment to their value. However, any impairment
charges would not require the use of cash and are excluded from the calculation
of our debt covenants and, therefore, would not affect our ability to borrow
under our existing credit line.
Impact to our financial systems and internal controls
To date, the COVID-19 pandemic has not had a material impact to our ability to
operate our accounting and financial functions. We are staffed with
approximately 150 dedicated finance, accounting and IT professionals. Our
accounting and IT systems are maintained with third party support agreements and
we have documented disaster recovery plans in place. Our finance, accounting and
IT professionals are performing their normal functions while working from home
with little to no physical presence and with no changes to our internal
controls. We are confident that we can operate in this manner for an extended
period of time without disruption and without significant impact to our internal
controls.
Travel restrictions and use of online technology
The global Natus team is geographically diverse with multiple small locations
and hundreds of employees that typically work from home in normal circumstances.
We use the latest collaboration technology and have been able to transition to a
company-wide work from home model without major interruption. Our manufacturing,
distribution and field service operations require physical presence of certain
employees as their work requires them to handle our products. In these cases, we
have made adjustments to shift size and schedule and limited access to these
groups by non-related employees. Our field service technicians are following our
customers' requirements for distancing practices but continue to provide service
where needed.
Travel restrictions have forced most customer and external partner collaboration
to online technology. Using this technology has enabled us to continue
operations without incident. However, in-person customer engagement as well as
physical presence in laboratory settings is required for the long-term success
of our company and eventually, we will need to return to traditional forms of
interaction.
Application of Critical Accounting Policies
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America . In so doing, we must often
make estimates and use assumptions that can be subjective, and, consequently,
our actual results could differ from those estimates. For any given individual
estimate or assumption we make, there may also be other estimates or assumptions
that are reasonable.
We believe that the following critical accounting policies require the use of
significant estimates, assumptions, and judgments:
•Revenue recognition
•Inventory valuation
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•Income Taxes
The use of different estimates, assumptions, or judgments could have a material
effect on the reported amounts of assets, liabilities, revenue, expenses, and
related disclosures as of the date of the financial statements and during the
reporting period. These critical accounting policies are described in more
detail in our Annual Report on Form 10-K for the year ended December 31, 2020 ,
under Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
The following table sets forth selected consolidated statement of operations
data as a percentage of total revenue for the periods indicated:
Three Months Ended
March 31,
2021 2020
Revenue 100.0 % 100.0 %
Cost of revenue 40.6 % 41.1 %
Intangibles amortization 1.5 %
1.5 %
Gross profit 57.9 % 57.4 %
Operating expenses:
Marketing and selling 25.2 % 28.1 %
Research and development 12.2 % 16.1 %
General and administrative 12.9 %
12.1 %
Intangibles amortization 3.4 % 3.3 %
Restructuring 0.2 % 0.8 %
Total operating expenses 53.9 % 60.4 %
Income (loss) from operations 4.0 % (3.0) %
Other expense, net (1.4) % (1.4) %
Income (loss) before provision for income tax 2.6 % (4.4) %
Provision for (benefit from) income taxes 0.4 %
(1.0) %
Net income (loss) 2.2 % (3.4) %
-21--------------------------------------------------------------------------------- Table of Contents Revenues The following table shows revenue by products during the three months endedMarch 31, 2021 andMarch 31, 2020 (in thousands): Three Months Ended March 31, 2021 2020 Change Neuro Products Devices and Systems$ 53,341 $ 49,426 8 % Supplies 15,714 15,924 (1) % Total Neuro Revenue 69,055 65,350 6 % Newborn Care Products Devices and Systems 13,772 11,124 24 % Supplies 8,403 9,691 (13) % Services 3,764 3,417 10 % Total Newborn Care Revenue 25,939 24,232 7 % Hearing & Balance Products Devices and Systems 18,771 18,560 1 % Supplies 1,162 1,241 (6) % Total Hearing & Balance Revenue 19,933 19,801 1 % Total Revenue$ 114,927 $ 109,383 5 % For the three months endedMarch 31, 2021 , Neuro revenue increased by 6% compared to the same period last year driven by higher sales of Neuro devices in our international markets combined with strength in backlog from 2020. Revenue from Neuro supplies was down slightly from the same period last year due to lower shipments of Neurocritical Care products. For the three months endedMarch 31, 2021 , Newborn Care revenue increased by 6% compared to the same period last year due mainly to the sale of NICVIEW devices, which had been on ship hold during the same period last year, higher Hearing Screening device sales, and higher services revenue from our agreement with Pediatrix. These increases were partly offset by decreases in Hearing Screening supplies and Phototherapy devices due to lower births. For the three months endedMarch 31, 2021 , Hearing & Balance revenue remained flat compared to the same period last year with an increase in device sales partly offset by a slight decline in supplies revenue. Revenue from domestic sales decreased to$67.8 million for the three months endedMarch 31, 2021 compared to$68.3 million in the three months endedMarch 31, 2020 . The decrease in domestic revenue was mainly due to the impact of the COVID-19 pandemic on demand for supplies. Revenue from international sales increased to$47.2 million for the three months endedMarch 31, 2021 compared to$41.0 million for the three months endedMarch 31, 2020 . The increase was driven by recovery in demand, mainly for our Neuro products, following the impact of the COVID-19 pandemic in the same period last year. -22- -------------------------------------------------------------------------------- Table of Contents Cost of Revenue and Gross Profit Cost of revenue and gross profit consists of (in thousands): Three Months Ended March 31, 2021 2020 Revenue$ 114,927 $ 109,383 Cost of revenue 46,688 44,933 Intangibles amortization 1,751 1,668 Gross profit 66,488 62,782 Gross profit percentage 57.9 % 57.4 % For the three months endedMarch 31, 2021 , gross profit as a percentage of revenue increased 0.5% compared to the same period in the prior year. The increase was due to higher revenue and lower operations overhead spend partly offset by higher costs for freight and contract manufacturer fees. Operating Costs Operating costs consist of (in thousands): Three Months Ended March 31, 2021 2020 Marketing and selling$ 28,971 $ 30,730 Percentage of revenue 25.2 % 28.1 % Research and development$ 14,040 $ 17,569 Percentage of revenue 12.2 % 16.1 % General and administrative$ 14,855 $ 13,182 Percentage of revenue 12.9 % 12.1 % Intangibles amortization$ 3,897 $ 3,661 Percentage of revenue 3.4 % 3.3 % Restructuring$ 205 $ 871 Percentage of revenue 0.2 % 0.8 % Marketing and Selling Marketing and selling expenses decreased for the three months endedMarch 31, 2021 . The reduction was primarily driven by lower travel and tradeshow expenses due to the impact of COVID-19 restrictions partly offset by an increase in commissions expense related to higher revenue in the current quarter. Research and Development Research and development expenses decreased during the three months endedMarch 31, 2021 compared to the same period in 2020. The decrease is the result of activities in 2020 which did not recur in 2021 related to remediation and projects to comply with theEuropean Union's adoption of the Medical Device Regulation which imposes stricter requirements for the marketing and sale of medical devices, including new quality system and post-market surveillance requirements. General and Administrative General and administrative expense during the three months endedMarch 31, 2021 increased when compared to the same period in the prior year. This increase was due to higher stock compensation and incentive compensation, partly offset by a reduction in outside service expenses. Intangibles Amortization -23- -------------------------------------------------------------------------------- Table of Contents Intangibles amortization remained flat during the three months endedMarch 31, 2021 as compared to the same period in 2020. Restructuring Restructuring expenses decreased during the three months endedMarch 31, 2021 compared to the same period in 2020. The decrease in the three months endedMarch 31, 2021 was primarily driven by lower severance costs and costs incurred as the result of exiting the Peloton business in 2020, which did not recur in 2021. Other Expense, net Other expense, net consists of investment income, interest expense, net currency exchange gains and losses, and other miscellaneous income and expense. For the three months endedMarch 31, 2021 we reported$1.7 million of other expense compared to$1.5 million of other expense for the same period in 2020. The increase in expense was driven by an equity method investment adjustment. Provision for (Benefit from) Income Tax Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete events arising in each respective quarter. During each interim period, we update the estimated annual effective tax rate which is subject to significant volatility due to several factors, including our ability to accurately predict the income (loss) before provision for income taxes in multiple jurisdictions, the effects of acquisitions, the integration of those acquisitions, and changes in tax law. In circumstances where we are unable to predict income (loss) in multiple jurisdictions, the actual year to date effective tax rate may be the best estimate of the annual effective tax rate for purposes of determining the interim provision for income tax. We recorded an expense from income tax of$0.5 million and a benefit for income tax of$1.1 million for the three months endedMarch 31, 2021 andMarch 31, 2020 , respectively. The effective tax rate was 16.4% and 23.9% for the three months endedMarch 31, 2021 andMarch 31, 2020 , respectively. The decrease in the effective tax rate for the three months endedMarch 31, 2021 compared with the three months endedMarch 31, 2020 , is primarily attributable to changes in mix of income among jurisdictions with varying tax rates and discrete items. Other significant factors impacting the current period effective tax rate included Federal andCalifornia research and development credits and non-deductible executive compensation expenses. We recorded no changes related to unrecognized tax benefits for the three months endedMarch 31, 2021 . Within the next twelve months, it is possible that the uncertain tax positions may change with a range of approximately zero to$0.2 million . Our tax returns remain open to examination as follows:U.S Federal, 2017 through 2020,U.S. states, 2016 through 2020, and significant foreign jurisdictions, generally 2016 through 2020. Liquidity and Capital Resources Liquidity and capital resources consist of (in thousands): March 31, 2021 December 31, 2020 Cash and cash equivalents$ 80,549 $ 82,082 Working capital 129,343 125,950 Three Months Ended March 31, 2021 2020 Net cash provided by operating activities$ 24,703 $
17,362
Net cash used in investing activities (731)
(3,575)
Net cash provided by (used in) financing activities (21,275) 32,489
We believe that our current cash and cash equivalents and any cash generated
from operations will be sufficient to meet our ongoing operating requirements
for the foreseeable future.
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As of March 31, 2021 , we had cash and cash equivalents outside the U.S. in
certain of our international subsidiaries of $50.2 million , primarily in Canada
and Ireland . We intend to permanently reinvest the cash held by our
international subsidiaries except for Excel Tech Corporation and Natus
Manufacturing Limited , which we intend to repatriate. A net deferred tax
liability has been recorded for the potential future repatriation. If, however,
a portion of permanently reinvested funds were needed for and distributed to our
operations in the United States , we would be subject to additional U.S. income
taxes and foreign withholding taxes depending on facts and circumstances at the
time of distribution. The amount of taxes due would depend on the amount and
manner of repatriation, as well as the country from which the funds were
repatriated.
We have a Credit Agreement with JP Morgan, Citibank, and Wells Fargo. During the
third quarter of 2020 we amended the terms of the Credit Agreement to extend the
maturity of the original agreement, reduce the aggregate value of the revolving
credit facility, and amend certain covenants. The amended Credit Agreement
provides for an aggregate $150.0 million of secured revolving credit facility.
The Credit Agreement contains covenants, including covenants relating to
maintenance of books and records, financial reporting and notification,
compliance with laws, maintenance of properties and insurance, and limitations
on guaranties, investments, issuance of debt, lease obligations and capital
expenditures, and is secured by virtually all of our assets. The Credit
Agreement provides for events of default, including failure to pay any principal
or interest when due, failure to perform or observe covenants, bankruptcy or
insolvency events and the occurrence of the event has a material adverse effect.
The Credit Agreement matures on September 25, 2023 , at which time all principal
amounts outstanding under the Credit Agreement will be due and payable. We have
no other significant credit facilities. During the first quarter of 2020 we drew
an additional $60.0 million on our credit line as a precaution to ensure we have
the necessary capital to continue to reliably serve our customers during an
extended period of uncertainty. As of March 31, 2021 , we had $37.0 million
outstanding under the Credit Facility.
During the three months ended March 31, 2021 cash provided by operating
activities of $24.7 million was the result of $2.4 million of net income,
non-cash adjustments to net income of $11.0 million which was primarily driven
by an adjustment for depreciation and amortization of $7.3 million , and net cash
inflows of $11.3 million from changes in operating assets and liabilities
primarily driven by reductions in accounts receivable and inventory. Cash used
in investing activities during the period was $0.7 million to acquire other
property and equipment. Cash used in financing activities during the three
months ended March 31, 2021 was $21.3 million and consisted of repayment on
borrowing of $20.0 million , $1.2 million for taxes paid related to net share
settlement of equity awards, and $0.1 million for principal payments of
financing lease liability.
During the three months ended March 31, 2020 cash provided by operating
activities of $17.4 million was the result of $3.6 million of net loss, non-cash
adjustments to net loss of $10.8 million , and net cash inflows of $10.1
million from changes in operating assets and liabilities. The non-cash
adjustment to net loss was primarily driven by depreciation and amortization of
$7.0 million . Cash used in investing activities during the period was $3.6
million to acquire other property and equipment. Cash provided by financing
activities during the three months ended March 31, 2020 was $32.5 million and
consisted of proceeds from borrowing of $60.0 million offset by repayment on
borrowing of $15.0 million , $10.5 million for repurchases of common stock under
our share repurchase program, $1.9 million for taxes paid related to net share
settlement of equity awards, and $0.1 million for principal payments of
financing lease liability.
Our future liquidity and capital requirements will depend on numerous factors,
including the:
•Extent to which we make acquisitions;
•Amount and timing of revenue;
•Length and severity of business disruptions caused by COVID-19;
•Extent to which our existing and new products gain market acceptance;
•Cost and timing of product development efforts and the success of these
development efforts;
•Cost and timing of marketing and selling activities; and
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Table of Contents •Availability of borrowings under line of credit arrangements and the availability of other means of financing.
Commitments and Contingencies In the normal course of business, we enter into obligations and commitments that require future contractual payments. The commitments result primarily from firm, non-cancellable purchase orders placed with contract vendors that manufacture some of the components used in our medical devices and related disposable supply products, as well as commitments for leased office space, and bank debt. The following table summarizes our contractual obligations and commercial commitments as ofMarch 31, 2021 (in thousands):
Payments Due by Period
Less than More than
Total 1 Year 1-3 Years 3-5 Years 5 Years
Unconditional purchase obligations $ 48,682 $ 46,418 $ 2,264 $ - $ -
Bank debt 37,000 - 37,000 - -
Interest payments 2,137 1,224 913 -
Repatriation tax 6,552 311 2,111 4,130 -
Total $ 94,371 $ 47,953 $ 42,288 $ 4,130 $ -
Purchase obligations are defined as agreements to purchase goods or services
that are enforceable and legally binding. Included in the purchase obligations
category above are obligations related to purchase orders for inventory
purchases under our standard terms and conditions and under negotiated
agreements with vendors. We expect to receive consideration (products or
services) for these purchase obligations. The purchase obligation amounts do not
represent all anticipated purchases in the future but represent only those items
for which we are contractually obligated. The table above does not include
obligations under employment agreements for services rendered in the ordinary
course of business.
Our Credit Agreement with JP Morgan, Citibank, and Wells Fargo matures in 2023.
We have recorded this obligation in the payments due in one to three years
category in the table above based on the maturity date of the Agreement. As of
March 31, 2021 , we have classified the full outstanding debt balance of $37.0
million as short-term on our balance sheet due to our intent to repay this
portion over the next twelve months.
The interest payments noted above are an estimate of expected interest payments
but could vary materially based on the timing of future loan draws and payments.
See Note 13 to the unaudited Condensed Consolidated Financial Statements for
additional discussion on our debt and credit arrangements.
We are not able to reasonably estimate the timing of any potential payments for
uncertain tax positions under ASC 740, Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement 109. As a result, the preceding table
excludes any potential future payments related to our ASC 740 liability for
uncertain tax positions. See Note 18 in our Annual Report filed on Form 10-K for
the year ended December 31, 2020 for further discussion on income taxes and
repatriation tax.
Recently Issued Accounting Pronouncements
None.
Cautionary Information Regarding Forward Looking Statements
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 about Natus Medical Incorporated . Forward-looking
statements can be identified by the words "expects," "anticipates," "believes,"
"intends," "estimates," "plans," "will," "outlook" and other similar
expressions. Forward-looking statements are based on management's current
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Table of Contents plans, estimates, assumptions and projections, and speak only as of the date they are made. These forward-looking statements within Item 2 include, without limitation, statements regarding the impact of COVID-19 pandemic on our business, the sufficiency of our current cash, cash equivalents and short-term investment balances, any cash generated from operations to meet our ongoing operating and capital requirements for the foreseeable future, outcomes of new product development, improved operations performance and profitability as the result of restructuring activities, and our intent to acquire additional technologies, products or businesses. Forward-looking statements are not guarantees of future performance and are subject to substantial risks and uncertainties that could cause the actual results predicted in the forward-looking statements as well as our future financial condition and results of operations to differ materially from our historical results or currently anticipated results. Investors should carefully review the information contained under the caption "Risk Factors" referred to in Part II, Item 1A of this report for a description of risks and uncertainties. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update forward-looking statements.
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