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