ADAC Announces Record Fourth Quarter and Fiscal Year Results; 26 Percent Increase in Fiscal Q4 Earnings Per Share, Excluding One-Time Charge.MILPITAS Milpitas (mĭl'pē`təs), city (1990 pop. 50,686), Santa Clara co., W Calif., a suburb of San Jose, southeast of San Francisco; inc. 1954. Manufactures include computers and paint. , Calif.--(BW HealthWire)--Nov. 5, 1998--ADAC Laboratories (Nasdaq:ADAC ADAC Allgemeiner Deutscher Automobil Club (German automobile club) ADAC Aboriginal Drug and Alcohol Council ADAC Art Directors and Artists Club (Sacramento, California) ADAC Alcohol and Drug Abuse Council ), the world market share leader in nuclear medicine and radiation therapy planning, today announced record results for its fourth fiscal quarter of 1998 ended Sept. 27, 1998. The Company reported that earnings per share increased 26 percent from 31 cents in the fourth quarter of fiscal 1997 to 39 cents in the fourth quarter of fiscal 1998, excluding the effect of the previously announced one-time charge described below. The Company generated record revenues of $86.9 million in the fourth quarter of fiscal 1998, a 20% increase over the $72.5 million reported for the same period in fiscal 1997. This increase was attributed to a 22 percent increase in product revenue and a 14 percent increase in service revenue. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased from 41.6 percent in the previous year's fourth quarter to 43.6 percent with product gross margins up 4.8 percentage points over that time period. Much of the product margin increase was due to continued profitability growth in the Company's two software businesses, Healthcare Information Systems (HCIS HCIS Health Care Information System (British Library) HCIS Hwa Chong International School (Singapore) HCIS Homenet Computers Internet Services (Australia) ) and Radiation Therapy Products (RTP (1) (Rapid Transport Protocol) The protocol used in IBM's High Performance Routing (HPR) system. (2) (Realtime Transport Protocol) An IP protocol that supports real time transmission of voice and video. ). Excluding the effect of the one-time charge, ADAC achieved net income of $8.2 million for the fourth fiscal quarter of 1998, a 35 percent increase over the $6.0 million reported in the fourth fiscal quarter of 1997. Including the charge, the Company's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , net income and earnings per share were $7.2 million, $3.7 million and $0.18, respectively. For the fiscal year ended Sept. 27, 1998, ADAC reported revenues of $323.4 million, a 15 percent increase over the $282.3 million reported for the previous fiscal year. Excluding the effect of one-time charges, ADAC achieved net income of $29 million, or $1.42 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , reflecting a 23 percent earnings per share increase over the $1.15 cents per share recorded for fiscal 1997. Including one-time charges, net income and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for fiscal 1998 were $14.5 million and $0.71 respectively. As previously disclosed, during the fourth fiscal quarter of 1998, the Company concluded a comprehensive review of its operations and decided, among other things, to restructure its international organizations and discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its physician network services business. As a result, the Company took a one-time charge in the fiscal fourth quarter of 1998 of $7.3 million. The Company believes these actions will position the Company well to expand its international profitability and focus on its core businesses. In announcing the results, R. Andrew Eckert, ADAC's Chief Executive Officer, stated, "We are pleased to report another record quarter for our Company. Our revenue and profit growth were very strong in the fourth quarter as all of our major businesses performed quite well. Each of our three major markets are healthy and ADAC's product differentiation Product Differentiation A source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. across our product lines is being well received. "In particular, our software businesses posted outstanding quarters. HCIS revenues increased to $10.6 million in the fourth quarter, an increase of 52 percent from the same period a year ago. A number of major customer contracts were completed in the quarter for our leading radiology information system A Radiology Information System (RIS) is used by radiology departments to store, manipulate and distribute patient radiological data and imagery. The system generally consists of patient tracking and scheduling, result reporting and image tracking capabilities. , QuadRIS(tm), most notably the recently announced contract with the two largest healthcare authorities in Alberta, Canada. "We believe these contracts will help us capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. several additional QuadRIS opportunities in Canada over the coming year. In addition, the first sites went live on QuadRIS Version 6.0. This product release is a milestone for our HCIS business in that it contains a great deal of valuable functionality for our growing user base and reinforces our competitive advantage in the marketplace. "In RTP, revenues increased over 100 percent from the fourth quarter of fiscal 1997. The Pinnacle pinnacle (pĭn`ĭkəl), minor architectural motif of vertical tapering shape, usually crowning a pier, buttress, or gable. Although sometimes it appears in Renaissance design, as in the Certosa di Pavia, it is almost exclusively a medieval 3(tm) treatment planning In radiotherapy, Treatment Planning is the process in which a team consisting of radiation oncologists, medical radiation physicists and dosimetrists plan the appropriate external beam radiotherapy treatment technique for a patient with cancer. Typically, medical imaging (i.e. system is now the dominant product in the worldwide radiation treatment planning marketplace. Our momentum is quite strong, as we continue to establish important new customer relationships. "For example, we were quite pleased that Health Services health services Managed care The benefits covered under a health contract Corporation of America (HSCA HSCA House Select Committee on Assassinations HSCA Harvard-Smithsonian Center for Astrophysics HSCA Hawaii State Chiropractic Association HSCA Hazardous Substances Control Act HSCA High School Culinary Arts ), a national organization that represents nearly 2,000 healthcare facilities, has made ADAC a preferred supplier of RTP systems for its membership." Eckert continued, "In our nuclear medicine business, we had several significant accomplishments in the fourth quarter. ADAC placed the first Molecular Coincidence Coincidence is the noteworthy alignment of two or more events or circumstances without obvious causal connection. The word is derived from the Latin co- ("in", "with", "together") and incidere ("to fall on"). Detection (MCD MCD Minor Civil Division MCD McDonalds (restaurant) Mcd Macedonian (linguistics) MCD Municipal Corporation of Delhi MCD Magnetic Circular Dichroism MCD Mad Cow Disease (tm)) system in China at the Beijing Medical University Affiliated Hospital, one of the country's leading healthcare institutions. "In the U.S., American Diagnostic Medicine, Inc., a leading provider of fixed-site and mobile imaging services, selected ADAC as its nuclear medicine provider. In addition, ADAC was honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. as the recipient of the 1998 Frost & Sullivan Market Engineering Product Line and Customer Focus Strategy Award in the Reconditioned/Refurbished Diagnostic Imaging Device Market. "We also continued to build on our leadership position in the growing positron positron: see antiparticle. positron Subatomic particle having the same mass as an electron but with an electric charge of +1 (an electron has a charge of −1). It constitutes the antiparticle (see antimatter) of an electron. imaging marketplace. We shipped 18 MCD units and two C-PET(tm) units in the quarter compared to 13 MCD units and one C-PET in the prior quarter. Positron imaging is an exciting emerging segment of diagnostic imaging and ADAC is well-positioned for success." ADAC Laboratories is the world market share leader in nuclear medicine and radiation therapy planning systems See spreadsheet and financial planning system. and a leading supplier of radiology radiology, branch of medicine specializing in the use of X rays, gamma rays, radioactive isotopes, and other forms of radiation in the diagnosis and treatment of disease. and cardiology cardiology Medical specialty dealing with heart diseases and disorders. It began with the 1749 publication by Jean Baptiste de Sénac of contemporary knowledge of the heart. Diagnostic methods improved in the 19th century, and in 1905 the electrocardiograph was invented. information systems in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . In 1996, ADAC became the first healthcare manufacturer to receive a Malcolm Baldrige National Quality Award The Malcolm Baldrige National Quality Award is given by the United States National Institute of Standards and Technology. Through the actions of the National Productivity Advisory Committee chaired by Jack Grayson, it was established by the Malcolm Baldrige National Quality . ADAC is headquartered in Milpitas, with its HealthCare Information Systems division in Houston. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements concerning the future revenue and earnings potential of certain segments of the Company's business. Factors that could cause actual results to differ materially from those contained in such forward-looking statements include the factors described under "Competition", "Dependence on New Products and Product Enhancements" and "Future Operating Results" in the "Business Considerations" section of the Company's most recent Form 10-Q Form 10-Q See 10-Q. for the third fiscal quarter ended June 28, 1998. All forward-looking statements are based on information available to the Company on the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company assumes no obligation to update such statements. -0-
ADAC LABORATORIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Twelve Months
Ended Ended
Sept. Sept. Sept. Sept.
1998 1997 1998 1997
Revenues, net:
Product $65,493 $53,648 $240,451 $ 211,831
Service 21,448 18,832 82,912 70,500
------- ------- -------- ---------
86,941 72,480 323,363 282,331
Cost of revenues:
Product 34,291 30,705 129,599 121,766
Service 14,733 11,650 54,749 44,256
Discontinued product -- -- 3,500 --
------- ------- -------- ---------
49,024 42,355 187,848 166,022
------- ------- -------- ---------
Gross profit 37,917 30,125 135,515 116,309
Operating expenses:
Marketing and sales 14,302 10,611 50,123 42,445
Research and development 3,873 4,878 15,727 15,693
General and administrative 4,855 3,748 19,425 16,932
Goodwill amortization 423 198 1,697 792
In-process R&D and acquisition
expenses -- -- -- 5,862
Discontinued product/Impaired
assets 1,300 -- 14,200 --
Restructuring Charge 6,000 -- 6,000 --
-------- ------- -------- ---------
30,753 19,435 107,172 81,724
Operating income
Normalized (1) 14,464 10,690 52,043 40,447
Reported (2) 7,164 10,690 28,343 34,585
Other expense, net 1,098 1,184 4,563 4,940
Income before provision for income taxes
Normalized (1) 13,366 9,506 47,480 35,507
Reported (2) 6,066 9,506 23,780 29,645
Provision for income taxes
Normalized (1) 5,213 3,479 18,517 12,992
Reported (2) 2,366 3,479 9,274 12,867
Net income
Normalized (1) $ 8,153 $ 6,027 $ 28,963 $ 22,515
Reported (2) $ 3,700 $ 6,027 $ 14,506 $ 16,778
Net income per share
Basic
Normalized (1) $ 0.40 $ 0.32 $ 1.48 $ 1.22
Reported (2) $ 0.18 $ 0.32 $ 0.74 $ 0.91
Diluted
Normalized (1) $ 0.39 $ 0.31 $ 1.42 $ 1.15
Reported (2) $ 0.18 $ 0.31 $ 0.71 $ 0.86
Number of shares used in per share calculations
Basic 20,159 18,796 19,506 18,413
Diluted 21,061 19,740 20,392 19,528
(1) Normalized excludes one-time pre-tax charges of $5.9 million in
fiscal 1997 and $23.7 million in fiscal 1998
(2) Reported includes one-time pre-tax charges
ADAC LABORATORIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Sept. 27, Sept. 28,
1998 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 4,869 $ 5,088
Trade receivables, net 125,722 98,035
Other receivables 1,868 1,460
Inventories 49,312 27,534
Prepaid expenses and other current assets 7,357 10,155
Total current assets 189,128 142,272
Service parts, net 18,988 17,278
Fixed assets, net 11,769 11,555
Capitalized software, net 13,925 14,007
Goodwill, net 18,664 10,110
Deferred income taxes 9,470 8,249
Other assets, net 3,113 3,524
Total assets $265,057 $206,995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 23,396 $ 22,217
Accounts payable 21,922 10,543
Deferred revenues 9,281 11,561
Customer deposits and advance billings 2,345 2,841
Accrued compensation 8,090 7,522
Other accrued liabilities 23,644 11,115
Total current liabilities 88,678 65,799
Deferred income taxes 10,793 11,103
Liabilities and deferred credits 2,472 3,596
Total liabilities 101,943 80,498
Shareholders' equity
Preferred stock, no par value:
Authorized: 5,000 shares;
Issued and outstanding: none
Common stock, no par value:
Authorized: 50,000 shares
Issued and outstanding: 20,338 shares
at Sept. 27, 1998 and 18,812 shares
at Sept. 28, 1997, respectively 145,333 123,269
Accumulated deficit 20,049 5,593
Translation adjustment (2,268) (2,365)
Total shareholders' equity 163,114 126,497
Total liabilities and
shareholders' equity $265,057 $206,995
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