In the news release, "Mindray Issues Statement and to Host a
Conference Call to Discuss Recent Stock Volatility" issued on
Friday, Dec 13, 2013 by Mindray
Medical International Limited (NYSE: MR) over PR Newswire, the
passcode for the conference call replay should be "25353773"
instead of "Mindray". The rest of the press release content remains
the same and the complete and corrected release is below.
Mindray Issues Statement and to Host a Conference Call to Discuss
Recent Stock Volatility Mindray Stands by Its SEC Filings and
Reserves the Right to Take Legal Action
SHENZHEN, China, Dec 13, 2013 /PRNewswire/ -- Mindray Medical
International Limited ("Mindray," NYSE: MR), a leading developer,
manufacturer and marketer of medical devices worldwide, today
issued a statement to address investors' concerns regarding the
recent volatility of the company's stock price. Management also
hosted a conference call to answer investor questions.
Mindray stands by the integrity of its historical annual reports
and press releases. The company believes that the allegations and
accusations set forth in the research report released on
December 12th lack merit and contain
numerous errors of facts, misleading speculations and malicious
interpretations of events. Further, the allegations fail to take
into account various factors necessary to understand the matters
addressed.
Mindray's Statement
The Company does not intend to enter into an item-by-item
refutation of the false statements and errors of facts contained in
the December 12th research report,
but will show the types of erroneous allegations that are contained
in such report to demonstrate the lack of rigor and authenticity
contained in such materials
1. Earnings
Mindray fully stands by the integrity of its financial
statements which have been audited by its independent accountants,
PricewaterhouseCoopers (PwC), who have acted as Mindray's auditor
since fiscal year 2008.
Mindray's 2012 annual report on Form 20-F was recently reviewed
by the U.S. Securities and Exchange Commission (SEC). These
reviews are customary and mandated to occur at least every 3 years
for U.S. listed companies. As is the SEC's practice following
the completion of its review process, the SEC made publicly
available the related communications on its website at
sec.gov.
The research report in a number of incidents has taken
information provided to the SEC in response to discrete questions
out of context in an effort to discredit the Company's financial
numbers. For example, in response to a tax footnote related
question, Mindray indicated that in 2012 on a stand-alone basis
(excluding China sales) it
recognized a loss in connection with its international
sales. However, international sales are, and are expected to
remain, an important and profitable activity for
Mindray. The disclosure reflects the manner in which
Mindray sells and distributes its products internationally. In
reaching its international customers, Mindray's manufacturing
subsidiary(ies) in the PRC sell its products either through its
internal sales team in the PRC directly to the international
markets or through its overseas subsidiaries. Profits on products
manufactured in China for sale
internationally by our PRC subsidiaries tend to be higher because
our PRC subsidiaries do not bear the additional fixed (overhead)
and variable costs of marketing and distributing products outside
of China that would be incurred by
our overseas subsidiaries.
2. Existence of Assets
- Cash and Short-term Investments
Mindray has over US$1 billion in
cash, cash equivalents and short-term investments as of
September 30, 2013. As consistently
disclosed previously, a substantial majority of Mindray's cash is
in accounts located in China. Due to China's strict capital outflow regulations and
a less favorable interest rate environment outside of China in the past few years, Mindray has
determined that it was more cost efficient to use third party
borrowings to fund its offshore cash needs, including funds
required for international acquisitions. Mindray believes
that this funding strategy has been a prudent allocation of
resources and will continue to monitor the ongoing financing market
environment and will adjust its strategy as appropriate.
- Manufacturing and R&D Facilities
The research report suggests that Mindray has not made claimed
facilities investments. In particular, the research
report contains photos purportedly taken at Mindray's Nanjing and Zhongguancuan
facilities. By our initial
investigation, we have confirmed one photo is of our
completed Changping, Beijing
facility (not our Zhonguancuan facility) and the other is not our
Nanjing Facility. As long term Mindray investors know, since
Mindray's IPO, the company has frequently hosted investor visits to
its headquarters and other major facilities. The same applies to
the Nanjing facility. For
newer investors and others desiring to know the truth, the company
will seek to accommodate investor requests for site visits.
Alternatively, the addresses of our facilities are No.666,
Zhengfangzhong Road, Jiangning Technology Development Zone,
Nanjing, Jiangsu Province, China and Building #5, Shangdi Qunying Science
Park, Haidian, Beijing,China . Investors are welcomed to
drive to such locations to prove it for themselves.
In 2008, Mindray acquired its Datascope patient monitoring
business in an asset purchase from a U.S. listed company in
exchange for cash consideration of $209 million. In seeking to discredit
Mindray's accounting, the research report, among other things,
question whether the Datascope acquisition was properly accounted
for and whether there were related intangible writeoffs in
2009. The acquired Datascope acquisition was properly
accounted for, the business continues to serve as the major
infrastructure for Mindray's penetration into the North America medical equipment business and
there was no write off of acquired intangible assets in
2009.
The research report erroneously asserts that there was a
$208.2 million Datascope related
write-off in 2008 and that $656
million disappeared from Mindray's balance sheet in
2008. The research report seeks to substantiate the Datascope
related write-off in 2008 by comparing long-lived asset balances in
the U.S. as of December 31, 2008 of
$238 million as reflected in the 2008
financial statements to the long-lived asset balance in the U.S. of
$29.8 million as reflected in the
2009 financial statements. What the research report fails to
properly consider is that both presentations were correct.
In 2008 long-lived assets included the total amount of the
Datascope assets acquired. In 2009, Mindray changed its basis
of presentation with long-lived assets only including the total
Datascope long-lived assets actually acquired (derived by deducting
from total Datascope assets acquired asset balances the amount of
acquired Datascope current assets, other assets, non-current
accounts receivable, net, advances for purchase of plant and
equipment, intangible assets, net and goodwill). Those
deducted amounts were migrated, as appropriate, to other line items
in Mindray's consolidated financials. Similarly, in asserting
that $656 million in long-lived
assets "simply vanished" from Mindray's balance sheet, the research
report compared the total long-lived balance of $785.8 million as of December 31, 2008 as reflected in the 2008
financial statements to the long-lived asset balance of
$129.1 million balance as reflected
in the 2009 financial statements--failing to account for similar
changes in presentation. Both the 2008 and 2009
financial statements reflect total assets as of December 31, 2008 of $785.8 million.
In struggling to manufacture inconsistencies in Mindray's
financials, the research report in many instances (i) wrongly
compares stand-alone account balances for Mindray Medical
International Limited (MMIL), our registrant holding company, to
consolidated group financial results or (ii) suggests improper
accounting treatment or disclosure because standalone MMIL
financials were not filed after 2009. Standalone MMIL
financial statements were required in 2009 and prior based on
specific SEC rules requiring registrant only financial statements
if the consolidated group's restricted net assets exceeded 25% of
the group's total net asset. As the consolidated group's
restricted net assets did not exceed such threshold in 2010 and
after, these standalone financials were not presented in the
subsequent 20Fs
3. Company Structure and Corporate
Governance
Significant efforts were made to improperly discredit Mindray or
raise unfounded concerns based on, among other things, Mindray's
change in auditors, purported increased complexity of
Mindray's corporate structure and inordinate management turnover
and recent stock sales by company insiders.
- Previous Change of Auditor
Mindray publicly disclosed in 2008 that it changed its
independent accounting firm to PwC from Deloitte and that no
disagreement existed with Deloitte at the time of that
change. Mindray has not changed its auditor
since.
- Organizational Structure and Management Turnover
Mindray's organizational structure has evolved and grown along
with its business. This information is also consistently laid out
in the company's public filings. The company's board of directors
and management have also remained largely stable. Xu Hang remains chairman of the board after
stepping down as co-CEO. Ex-CFOs Joyce Hsu and Ronnie Ede also remain as Mindray directors and
Jie Liu continues to serve as the
COO. Alex Lung has also been with
the company for several years and has served as the CFO since
2011.
Recent management ADS sales were primarily done through 10b5-1
plans.
The company is dedicated to protecting its reputation and the
interests of its investors. Accordingly, Mindray reserves all
rights in this matter, including legal action against the authors
involved in the research report. Mindray will pursue any and all
means available to protect its brand, reputation, and value in the
stock market.
Share Buyback Program
In light of the adverse impact of the research report on the
trading price for Mindray's ADSs, Mindray expects to recommence
repurchases under its previously announced buyback
program.
Conference Call Information
Mindray's management held a conference call at 8:00 AM on December 13,
2013 U.S. Eastern Time (9:00
PM on December 13, 2013
Beijing/Hong Kong Time).
The replay information will be available until December 21, 2013.Dial-in information is as
follows:
International Toll
Free:
|
United
States:
|
+1-855-452-5696
|
Hong Kong:
|
800-963-117
|
China
Landline:
|
800-870-0205
|
|
|
Local dial-in
numbers:
|
United
States:
|
+1-646-254-3697
|
Hong Kong:
|
+852-3051-2780
|
China
Mobile:
|
400-602-2065
|
Passcode for all
regions:
|
25353773
|
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 made and the views
expressed here, which are not historical facts, are forward looking
statements. You should be cautioned that forward-looking statements
are only predictions and may involve inherent risks and
uncertainties. As such, our actual results may be materially
different from the statements and the views expressed here today
due to a variety of factors.
A number of such risks and uncertainties and factors are
outlined in our public filings with the SEC. In particular please
refer to risk factors beginning on page 5 of our Annual Report on
Form 20-F. Any projections made here today are based only on
limited information currently available to us and are subject to
change. Mindray does not undertake any obligations to update any
forward-looking statements except as required under applicable
law.
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
SOURCE Mindray Medical International Limited