News


Hologic Announces Third Quarter Fiscal 2006 Operating Results
Revenues, Earnings and Backlog Increase to Record Highs
PRNewswire-FirstCall
BEDFORD, Mass.

BEDFORD, Mass., Jul. 25, 2006 /PRNewswire-FirstCall/ -- Hologic, Inc. (NASDAQ: HOLX), a leading provider of state-of-the-art diagnostic and digital imaging systems directed towards women's health, today announced its results for the quarter ended June 24, 2006.

Third quarter fiscal 2006 revenues totaled $119,685,000, a 62% increase when compared to revenues of $74,053,000 in the third quarter of fiscal 2005. For the third quarter of fiscal 2006, Hologic reported net income of $12,017,000, or $0.25 per diluted share, compared with net income of $8,158,000, or $0.18 per diluted share, in the third quarter of fiscal 2005. Included in the current quarter's results are the operations of AEG Elektrofotografie ("AEG"), acquired on May 2, 2006 from the date of acquisition through quarter-end. The improvement in quarterly earnings is primarily the result of the significant increase in product sales of Selenia digital mammography systems in the current quarter as compared to the third quarter of fiscal 2005. Earnings per share information for 2005 has been restated to reflect the Company's 2-for-1 stock split effected on November 30, 2005.

Third quarter fiscal 2006 revenues of Hologic's historical businesses (which excludes revenue from AEG) totaled $112,077,000, representing a 51% increase when compared to Hologic's revenues in the third quarter of fiscal 2005, and third quarter fiscal 2006 net income of those businesses were $13,754,000, or $0.29 per diluted share. Hologic's third quarter fiscal 2006 revenues, net income and net income per share of its historical businesses are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the Company's GAAP basis revenues, net income and net income per share is set forth in the supplemental disclosure attached to this press release.

  Highlights of the quarter include:
  * Record revenues of $119.7 million (including revenues of $7.6 million
    from AEG).

  * Record earnings of $12.0 million (including a net loss of $1.7 million
    from AEG).

  * Record backlog of $165.7 million (including backlog of $4.1 million at
    AEG).

  * Record 154 Selenia full field digital mammography systems installed and
    recognized as revenue.

AEG contributed approximately $7.6 million in revenues and incurred a pre-tax loss of approximately $2.3 million, or a $1.7 million net loss after the benefit for income taxes. The pre-tax loss at AEG includes (i) a $600,000 charge to research and development for in-process R&D, and (ii) a $854,000 write-up of acquired inventory to fair value for purchase accounting purposes which, upon fale post-merger, depressed the margins earned on sales recorded this quarter. AEG's lost also reflects a decrease in overall sales volume due in part to uncertainty in the marketplace related to the completion of the acquisition. Hologic continues to expect AEG will be accretive to earnings in fiscal 2007. AEG is a leading manufacturer of photoconductor materials, and is Hologic's sole supplier of amorphous selenium photoconductor coatings employed in its Selenia full-field digital mammography detectors.

In addition to the recently acquired AEG operations, included in our financial results for the third quarter of fiscal 2006, are the following expenses that were not incurred in the third quarter of fiscal 2005:

  * a $629,000 charge to operating expenses to amortize the intangible
    assets acquired from Fischer Imaging in the first quarter of fiscal 2006
    over their useful life; and

  * a $1,034,000 charge for stock-based compensation expense under FASB
    Statement 123R.

In the current quarter, Hologic's effective tax rate increased to 37.5% of pre-tax earnings. This rate is higher than the effective tax rate of 20% in the third quarter of fiscal 2005 and 19% for the full 2005 fiscal year due to the realization of the Company's previously unbenefited deferred tax assets.

For the nine months ended June 24, 2006, revenues increased 47%, to $308,625,000 compared to revenues of $209,466,000 in the nine months ended June 25, 2005. For the nine months ended June 24, 2006, Hologic recognized net income of $28,897,000, or $0.61 per diluted share, compared with net income of $18,780,000, or $0.42 per diluted share, for the comparable nine-month period in fiscal 2005.

During the third quarter, Hologic recognized as revenue, the sale of 154 Selenia full-field digital mammography systems. At June 24, 2006, the Company's backlog for orders of Selenia was 342 systems, and total backlog for all products increased to over $165 million, the highest quarterly backlog in the Company's history and a 8% increase over the backlog at March 25, 2006.

"I am pleased to report another strong quarter as we continued to focus on top line growth and the overall strength of our operations. Our results reflect the strong fundamentals of our business, including our competitive position in the marketplace, the momentum of our product offerings and our ability to execute," said Jack Cumming, Chairman and CEO. "For the future, we expect to leverage our technological advantages, expand our product pipeline and take advantage of the opportunities for organic growth presented by our current business. We are looking forward to continued success in the final quarter of this fiscal year and into next year."

Beginning in fiscal 2006, the Company combined its previously reported mammography and digital detector operating segments to better reflect how the Company views its operations and manages its business. In fiscal 2006, the primary function of the digital detector business is to support the Company's mammography product line. The Company now has three reporting segments: Mammography, Osteoporosis Assessment and All Other. The recently acquired AEG operation is included in All Other. Segment information for 2005 has been restated to conform to the 2006 presentation.

  Third quarter financial overview by segment:

  * Mammography revenues increased 75% to $85,837,000 for the third quarter
    of fiscal 2006 from $49,046,000 for the same period in fiscal 2005.
    This increase was primarily due to continued increasing sales of
    Selenia and to a lesser extent, an increase in sales of MultiCare
    breast biopsy tables.  Operating income for this business segment in
    the third quarter of fiscal 2006 increased to $19,536,000 compared to
    operating income of $5,038,000 in the third quarter of fiscal 2005.
    This increase in operating income in the current quarter was primarily
    due to the significant increase in revenues, reduced unit costs and the
    resulting higher gross margins on increasing product sales of Selenia.
    Mammography costs and expenses in 2006 included $710,000 of stock-based
    compensation under FASB Statement 123R.

  * Osteoporosis assessment revenues increased slightly to $19,548,000 for
    the third quarter of fiscal 2006 from $19,183,000 for the same period
    in fiscal 2005.  This increase was primarily due to a slight increase
    in the number of bone densitometry systems sold.  Operating income for
    this business segment in the third quarter of fiscal 2006 was
    $2,241,000 compared to operating income of $3,116,000 in the third
    quarter of fiscal 2005. Osteoporosis assessment costs and expenses in
    2006 included $279,000 of stock-based compensation under FASB Statement
    123R.

  * All other revenues, which includes the Company's mini C-arm, extremity
    MRI, AEG, conventional general radiography service and digital general
    radiography systems businesses increased 146% to $14,300,000 for the
    third quarter of fiscal 2006 from $5,824,000 for the same period in
    fiscal 2005.  The increase in revenues was primarily due to the
    $7,608,000 of revenues from the AEG businesses acquired on May 2, 2006,
    and to a much lesser extent from the initial sales of the new line of
    extremity MRI systems of $1,205,000.  The operating loss for this
    business segment in the third quarter of fiscal 2006 was $3,195,000
    compared to operating income of $1,297,000 in the third quarter of
    fiscal 2005.  This decrease in operating income in the current quarter
    was primarily due to an operating loss of $1,943,000 from the AEG
    business due to acquisition related charges and to a lesser extent a
    slowdown in sales as described above. In addition, in the current
    quarter we incurred certain sales and marketing expenses for the
    extremity MRI product line launched in the current fiscal year,
    incurred higher product costs on a new mini C-arm product resulting in
    lower gross margins and had a decrease in revenue from the conventional
    general radiography service business.  Costs and expenses for this
    business segment in 2006 include $45,000 of stock-based compensation
    under FASB Statement 123R.

Hologic's management will host a conference call today at 10:00 a.m. (Eastern) to discuss third quarter fiscal 2006 operating results. Interested participants may listen to the call by dialing 800-289-0494 or 913-981-5520 for international callers and referencing code 9101452 approximately 15 minutes prior to the call. For those unable to participate in the live broadcast, a replay will be available one hour after the call ends through July 28, 2006 at 888-203-1112 or 719-457-0820 for international callers, access code 9101452. The Company will also provide a live webcast of the call on the investor relations page of the Company's website at http://www.hologic.com/investor. A replay of the call will also be available on the investor relations page of the Company's website http://www.hologic.com/investor shortly after the completion of the live broadcast.

About Hologic, Inc.

Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostic and medical imaging systems dedicated to serving the healthcare needs of women, and a leading developer of innovative imaging technology for digital radiography and breast imaging. Hologic's core business units are focused on mammography and breast biopsy, osteoporosis assessment, and mini C-arm and extremity MRI imaging for orthopedic applications. For more information visit http://www.hologic.com/.

Forward Looking Disclaimer

This News Release contains forward-looking information that involves risks and uncertainties, including statements regarding the Company's plans, objectives, expectations and intentions. Such statements include, without limitation, statements regarding: the Company's backlog and any implication that the Company's backlog may be indicative of future sales; the Company's expectations regarding future growth and its anticipation of continued success into next year; the anticipated contributions of the Company acquisition of AEG including the expectation that AEG will be accretive to earnings in fiscal 2007. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.

The Company's backlog consists of purchase orders for which delivery is scheduled within the next twelve months, as specified by the customer. In certain circumstances, orders included in backlog may be canceled or rescheduled by customers without significant penalty. Therefore, backlog as of any particular date should not be relied upon as indicative of the Company's net revenues for any future period.

Hologic has recently acquired AEG Elektrofotografie and R2 Technologies and has entered into an agreement to acquire Suros Surgical Systems. Risks and uncertainties relating to the acquisitions and the proposed acquisition that could cause actual results to materially differ from those contemplated by the forward-looking statements include, without limitation: the ability of Hologic to successfully integrate acquired businesses, which may result in the combined companies not operating as effectively and efficiently as expected; the ability and time it may take to achieve the expected synergies from its acquisitions; the risk that the Company may incur unexpected costs or unexpected liabilities in connection with an acquisition; the risk that the combined companies may be adversely affected by future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors; risks associated with international operations, particularly in respect of the acquisition of AEG, which has headquarters in Germany and operates a manufacturing facility in China; risks relating to dilution in connection with the issuance of shares of the Company's common stock in connection with the Company's acquisitions; financing risks associated with the acquisitions, including risks relating to the Company's obligation to meet financial covenants and payment obligations under bank or other financing obtained to fund these acquisitions.

Other risks and uncertainties that could adversely affect the Company's business and prospects include without limitation: manufacturing risks that may limit the Company's ability to increase commercial production of the Selenia and other of the Company's digital products, including the Company's reliance on a single source of supply for some key components of its products as well as the need to comply with especially high standards for those components and in the manufacture of digital X-ray products in general; uncertainties inherent in the development of new products and the enhancement of existing products, including technical and regulatory risks, cost overruns and delays; the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; the ability of the Company's sales force to successfully service its product offerings; the Company's ability to successfully manage current or future acquisitions, alliances or joint ventures; the Company's ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for digital mammography products; expenses and uncertainties relating to litigation and governmental investigations, including the risk that the FTC may not approve the recently proposed settlement agreement with FTC's relating to the FTC's investigation of the Company's acquisition of certain intellectual property assets from Fischer Imaging; risks relating to compliance with financial covenants under the Company's leases; technical innovations that could render products marketed or under development by the Company obsolete; competition; and reimbursement policies for the use of the Company's products and products under development.

Other factors that could adversely affect the Company's business and prospects are described in the Company's filings with the Securities and Exchange Commission. Hologic expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.

                      HOLOGIC, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Unaudited)
                              (In thousands)

                                  ASSETS

                                                   June 24,    September 24,
                                                     2006          2005
  CURRENT ASSETS:
   Cash and cash equivalents                      $110,140       $113,994
   Accounts receivable, net                         86,884         57,742
   Inventories                                      85,744         44,520
   Prepaid expenses and other current assets        10,206         12,119
    Total current assets                           292,974        228,375

  Property and equipment, net                       56,784         33,329
  Intangible assets, net                            34,316          5,162
  Goodwill, net                                      8,689          6,285
  Other assets, net                                  8,389          6,688
                                                  $401,152       $279,839

                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   June 24,    September 24,
                                                     2006          2005
  CURRENT LIABILITIES:
   Accounts payable                               $ 31,622       $ 14,163
   Accrued expenses                                 47,049         25,237
   Short term loan                                   2,800              -
   Deferred revenue                                 19,880         16,360
    Total current liabilities                      101,351         55,760

  Note payable net of current portion                7,923              -
  Deferred service obligations -- long term          6,302          4,774
  Other long term liabilities.                       3,131          1,471
    Total long term liabilities                     17,356          6,245


  STOCKHOLDERS' EQUITY:
   Common stock, $.01 par value --
    Authorized -- 90,000 shares
    Issued -- 45,748 and 44,295 shares,
     respectively                                      457            443
   Capital in excess of par value                  208,057        172,642
   Retained earnings                                75,349         46,452
   Cumulative translation adjustment                  (954)        (1,239)
   Treasury stock, 90 shares at cost                  (464)          (464)
    Total stockholders' equity                     282,445        217,834
                                                  $401,152       $279,839



                      HOLOGIC, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME
                               (Unaudited)
                  (In thousands, except per share data)


                                 Three Months Ended      Nine Months Ended

                                June 24,    June 25,    June 24,   June 25,
                                  2006        2005        2006       2005

  REVENUES                      $119,685     $74,053    $308,625   $209,466

  COSTS AND EXPENSES (1):
   Cost of revenues               69,296      43,963     178,133    128,395
   Research and development        7,561       5,100      24,518     14,292
   Selling and marketing          13,141       8,748      35,356     25,294
   General and administrative     11,107      67,911      27,839     20,263
                                 101,105      65,602     265,846    188,244

     Income from operations       18,580       9,451      42,779     21,222

  Interest income                  1,181         640       3,454      1,362

  Interest expense/other income
   (expense)                        (544)         67        (536)        (4)

    Income before provision
     for income taxes             19,217      10,158      45,697     22,580

  Provision for income taxes       7,200       2,000      16,800      3,800

    Net income                   $12,017      $8,158     $28,897    $18,780

  Net income per common and
   common equivalent share:
    Basic                          $0.26      $ 0.19       $0.64     $ 0.44
    Diluted                        $0.25      $ 0.18       $0.61     $ 0.42

  Weighted average number of
   common shares outstanding:
    Basic                         45,576      43,678      45,039     42,409
    Diluted                       47,516      45,775      47,221     44,726


  (1) Stock-based Compensation
   included in Costs and Expenses:

  Cost of revenues                  $128          $-        $311         $-
  Research and development           114           -         307          -
  Selling and marketing               83           -         231          -
  General and administrative         709           -       1,590          -
                                  $1,034          $-      $2,439         $-



  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  (In thousands (including footnote), except per share data)

                              Three months ended         Nine months ended
                            June 24,      June 25,     June 24,     June 25,
                              2006          2005         2006         2005
  Revenues                 $119,685       $74,053     $308,625     $209,466
  AEG revenues*               7,608             -        7,608            -
  Revenues
   (as adjusted)           $112,077       $74,053     $301,017     $209,466


  Net income                $12,017        $8,158      $28,897      $18,780
  AEG net (loss)*            (1,737)            -       (1,737)           -
  Net income (as adjusted)  $13,754        $8,158      $30,634      $18,780
  Net income per share        $0.25         $0.18        $0.61        $0.42
  Net (loss) per share
   attributable to AEG*       (0.04)            -        (0.04)           -
  Net income per share
   (as adjusted)              $0.29         $0.18        $0.65        $0.42


  * From and after Hologic's acquisition of AEG Elektrofotografie ("AEG") on
    May 2, 2006. AEG's revenues exclude $1,033 in intercompany sales which
    have been eliminated in consolidation. AEG's net loss includes the
    benefit of the tax-effected intercompany profit of $225 eliminated in
    consolidation.

    Hologic's revenues, net income and net income per share of its
    historical businesses set forth above as revenues (as adjusted) net
    income (as adjusted) and net income per share (as adjusted) are non-
    GAAP financial measures.  These measures exclude the consolidated
    revenues and net income of AEG that is otherwise included in Hologic's
    consolidated revenues and net income in accordance with GAAP following
    Hologic's acquisition of AEG on May 2, 2006.  The Company believes that
    these measures are useful to investors evaluating the internal growth
    of its businesses and are used by management for that purpose.  When
    analyzing the Company's operating performance, investors should not
    consider these non-GAAP measures as a substitute for revenues, net
    income or net income per share prepared in accordance with GAAP.


  Contact: Glenn P. Muir                      Frances Crecco
           Executive Vice President & CFO     Director, Investor Relations
           Hologic, Inc.                      Hologic, Inc.
           (781) 999-7300                     (781) 999-7377

SOURCE: Hologic, Inc.

CONTACT: Glenn P. Muir, Executive Vice President & CFO, +1-781-999-7300,
or Frances Crecco, Director, Investor Relations, +1-781-999-7377, both of
Hologic, Inc.

Web site: http://www.hologic.com/