Monday, VNUS Medical Technologies, Inc. (VNUS), a manufacturer of medical devices, announced corrections to its second quarter results, lowering its earnings reported earlier in July6. The company revealed adjustments to cost of revenues, operating expenses, and certain balance sheet accounts that were necessary to include additional stock-based compensation expenses, not appropriately recorded in the previous periods since the adoption of the Statement of Financial Accounting Standard in January 2006. The company has also revised its third-quarter and full year 2008 guidance, lowering its earnings forecast.
The San Jose, California-based company indicated the adjustment to a correction pertaining to mis-application of forfeiture rates to vested grants by a commercial stock plan administration software application package used by the company.
Adjustments to stock-based compensation related to the period January 1, 2006 through April 1, 2008, resulted in $0.28 million of additional pre-tax expenses for the second quarter as well as the six-month period. The adjustments reduced earnings by $0.02 per share for the three and six-month period.
For the second quarter ended 2008, the company adjusted its stock-based compensation with a $0.18 million increase in pre-tax expenses that reduced reported earnings by $0.01 per share for the quarter.
Cumulatively, the out of period adjustment and the effect of the correction, earnings were reduced by three cents, from $0.56 per share to $0.53 per share.
Looking forward, the company now estimates third-quarter net income in the range of $0.9 million - $1.8 million or $0.06 per share to $0.11 per share, compared to the previous forecast of $1.0 million - $2.0 million, or $0.06 per share - $0.12 per share.
Analysts currently expect the company to report earnings of $0.04 per share for the quarter.
VNUS now expects its full-year 2008 net income in the range of $12.4 million - $13.4 million or $0.73 per share - $0.80 per share, compared to the previous estimate of $11.5 million - $12.4 million, or $0.68 per share - $0.74 per share.
The Street currently anticipates earnings of $0.82 per share for the full year.
Due to changes in stock-based compensation expense, VNUS currently expects full year stock based pre-tax compensation expense to increase by $0.8 million or four-and-a-half cents per share per share and range from $4.2 million to $4.6 million.
VNUS is currently 1.20% down, at $23.14 in the after hours trading on the Nasdaq.
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