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Align Reports 2008 Results

Align Technology, Inc. (Align) has reported total net revenues of $304 million for the full year of 2008, compared with the total net revenues of $284 million in the previous year-end. It has also reported a net profit of $80 million, or $1.18 per diluted share, for the full year of 2008, compared with a net profit of $35.7 million, or $0.50 per diluted share, in the previous year-end.

Total net revenues for the fourth quarter of fiscal 2008 (Q4 08) were $74.1 million compared to $72.5 million reported in the fourth quarter of 2007 (Q4 07) and compared to $75.2 million reported in the third quarter of 2008 (Q3 08).

“Despite the challenges of fiscal 2008 we had many significant accomplishments,” said Thomas M. Prescott, president and chief executive officer of Align. “We successfully launched three new products including Invisalign Teen, grew annual revenues during the worst business environment in decades, and took action to reduce the Company’s cost structure. As we embark on a new year, the economy remains very difficult and our outlook is more uncertain. However, the market opportunity and value proposition for Invisalign is strong and we will continue to execute our strategy to drive adoption worldwide.”

Net profit for Q4 08 was $65.5 million, or $0.98 per diluted share. This includes a restructuring charge of $4.0 million and a favorable impact of approximately $64.6 million, or $0.97 per diluted share from the release of a tax valuation allowance on specific deferred tax assets. This is compared to net profit of $5.7 million, or $0.08 per diluted share in Q4 07, and net profit of $5.2 million, or $0.08 per diluted share in Q3 08. Stock-based compensation expense included in Q4 08 net profit was $3.9 million compared to $3.4 million in Q4 07, and $4.4 million in Q3 08.

Business Outlook

Commenting on Align’s business outlook, Kenneth Arola, vice president of finance and chief financial officer said, “The economic environment and its impact on consumer spending has created greater uncertainty for our business. As a result, we are only providing guidance for Q1 09. The greatest uncertainties beyond Q1 involve case volume and revenues. We believe it will be very difficult to grow in this environment and are expecting revenues to decline from 2008. We will continue to invest in our key strategic growth initiatives and manage overall expenses to drive operating profitability for fiscal 2009.”

For the first quarter of fiscal 2009 (Q1 09), Align Technology expects net revenues to be in a range of $65 million to $69 million. Operating margin for Q1 09 is expected to be in a range of -4% to 0%. GAAP earnings per diluted share for Q1 09 is expected to be in a range of a loss of $0.04 to breakeven. Non-GAAP earnings per diluted share for Q1 09 is expected to be in a range of a loss of $0.03 to a profit of $0.01. Stock-based stock compensation expense for Q1 09 is expected to be about $4.2 million.