ADAC Announces Record Fourth Quarter and Fiscal Year Results; Sixty-Nine Percent Increase in Q4 Net Income; Announces Acquisition of Geometrics for Product Development for Radiation Therapy Planning Division.

MILPITAS, Calif.--(BUSINESS WIRE)--Nov. 4, 1996--ADAC Laboratories (NASDAQ:ADAC), the world market share leader in nuclear medicine, today announced record results for its fourth quarter and fiscal year ended Sept. 29,1996.

ADAC today also announced that the Board of Directors has decided to discontinue payment of its quarterly cash dividend in order to reinvest the funds in the company to further its growth strategy and enhance shareholder value. Separately, ADAC announced it had entered into an agreement to acquire Geometrics, a developer of software and ADAC's long-term partner in radiation therapy planning.

For the fourth quarter ended Sept. 29, 1996, ADAC reported its ninth consecutive quarter of increased revenues. The company generated a record $64.9 million of revenues in the fourth quarter, a 29 percent increase over the $50.2 million reported for the fourth quarter of fiscal 1995. This increase was attributed to a nine percent increase in service revenue and a 38 percent increase in product revenue.

Gross profit margin increased to 39.4 percent in the fourth quarter of fiscal 1996 from 38.7 percent in the third quarter, with product gross margins up 2 percent to 40.9 percent over that time period. Operating income rose to $8.5 million, a 67 percent increase over the $5.1 million reported for the fourth quarter of fiscal 1995. ADAC achieved net income of $4.8 million, or 26 cents per share, a 69 percent increase over the $2.8 million, or 16 cents per share, reported in the fourth quarter of fiscal 1995. ADAC also reported record bookings of $74 million in the fourth quarter, adding an additional $9 million of backlog.

For the fiscal year ended Sept. 29, 1996, ADAC reported revenues of $240.8 million, a 30 percent increase over the $184.8 million reported for the previous fiscal year. For fiscal 1996, ADAC achieved net income of $16.6 million, or 90 cents per share, reflecting a slight increase in total calculated shares. Earnings per share increased approximately 38 percent from fiscal 1995, when the company achieved net income of $11.1 million, or 65 cents per share.

In making this announcement, David L. Lowe, Chief Executive Officer, stated, "We are very pleased with our strong results in fiscal 1996. In addition, we are delighted to have won the Malcolm Baldrige National Quality Award this past October."

Commenting on the elimination of the company's quarterly dividend of 12 cents per share, Lowe said, "There are a number of growth opportunities internally as well as through acquisitions in our core businesses of nuclear medicine and health care information systems. As a consequence, the Board decided that shareholder value could be enhanced, both in the short-run and the long-term, by reinvesting our corporate funds in the business as opposed to continuing to pay quarterly dividends."

In addition, ADAC Laboratories today announced separately that it will acquire its long-term partner Geometrics Corporation, in a transaction valued at approximately $3.9 million. Geometrics is a developer of specialized medical software used in planning radiation therapy treatments for cancer, and developed the core software for ADAC's highly successful Pinnacle3(TM) three-dimensional radiation oncology planning system. Geometrics will operate as the product development unit of the company's rapidly growing Radiation Therapy Planning division.

ADAC also reported strong demand for its Molecular Coincidence Detection (MCD) technology and new laboratory and radiology information systems in fiscal 1996. MCD is designed to provide significant improvements in clinical imaging of the most frequently diagnosed cancers by enabling both single photon emission computed tomography (SPECT) and coincidence imaging using the same nuclear gamma camera.

"MCD bookings increased from 5 units in the third quarter to 22 units in the fourth quarter," said Lowe. "Additionally," stated Lowe, "the continued momentum of ADAC's radiology information system, QuadRIS/RS(R), and the recent introduction of our laboratory information system, LabStat, are opening new markets and providing new sources of revenue for the company."

ADAC Laboratories is the world market share leader in nuclear medicine and a leading supplier of radiology and laboratory information systems in North America. In 1996, ADAC became the first healthcare manufacturer ever to receive a Malcolm Baldrige National Quality Award. ADAC is headquartered in Milpitas, with its HealthCare Information Systems division in Houston. -0-

                         ADAC LABORATORIES
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (Amounts in thousands, except per share data)

                             Three Months Ended      Year Ended
                             Sept. 29,  Oct. 1,  Sept. 29,   Oct. 1,
                               1996      1995      1996       1995

Revenues, net:
 Product                     $48,519   $35,221   $177,613   $136,715
 Service                      16,406    15,004     63,172     48,094
                             -------   -------   --------   --------
                             $64,925   $50,225   $240,785   $184,809

Cost of revenues:
 Product                      28,679    22,691    108,091     85,914
 Service                      10,640     8,607     39,542     31,406
                             -------   -------   --------   --------
                             $39,319   $31,298   $147,633   $117,320

Gross profit                  25,606    18,927     93,152     67,489

Operating expenses:
 Marketing and sales           9,925     8,031     36,275     29,928
 Research and development      3,367     2,820     12,516     10,081
 General and administrative    3,665     2,851     14,250      9,081
 Goodwill amortization           198       174        792        174
                             -------   -------   --------   --------
                             $17,155   $13,876   $ 63,833   $ 49,264

Operating income               8,451     5,051     29,319     18,225

Interest and other, net         (943)     (656)    (3,407)    (1,222)

Income before provision
  for income taxes             7,508     4,395     25,912     17,003

Provision for income taxes    (2,703)   (1,560)    (9,275)    (5,930)

Net income                   $ 4,805   $ 2,835   $ 16,637   $ 11,073

Net income per share         $  0.26   $  0.16   $   0.90   $   0.65

Number of shares used in
 per share calculation        18,839    17,544     18,507     17,079

Dividends per share          $  0.12   $  0.12   $   0.48   $   0.48


                             ADAC LABORATORIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                          (Amounts in thousands)
                                               Sept. 29,   Oct. 1,
                                                  1996      1995
ASSETS
Current Assets:
  Cash and cash equivalents                    $  3,081   $  7,551
  Accounts receivable, net of allowance
    for returns and doubtful accounts            80,654     55,047
  Inventories                                    31,975     28,217
  Deferred income taxes                           8,095     11,481
  Prepaid expenses and other current assets      11,027      5,515
     Total current assets                       134,832    107,811

Service parts, net                               15,482     13,571
Fixed assets, net                                 8,393      8,368
Capitalized software, net                        11,656     10,280
Goodwill, net                                    10,901     11,692
Other assets, net                                 5,364      7,375

     Total assets                              $186,628   $159,097

LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
  Notes payable to banks                       $ 27,226   $ 18,298
  Accounts payable                               13,923     13,147
  Dividends payable                               2,137      2,027
  Deferred revenues                              13,302     13,506
  Customer deposits and advance billings          2,302      4,201
  Accrued compensation                            7,825      6,335
  Other accrued liabilities                      13,797     13,812
     Total current liabilities                   80,512     71,326

Non-current deferred income taxes                 2,275        749
Non-current liabilities and deferred credits      4,370      4,254

     Total liabilities                           87,157     76,329

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 17,781 shares
   and 16,919 shares as of Sept. 29, 1996
   and Oct. 1, 1995 respectively                110,661    101,072
  Accumulated deficit                           (10,172)   (18,986)
  Translation adjustment                         (1,018)       682
     Total shareholders' equity                  99,471     82,768

Total liabilities and shareholders' equity     $186,628   $159,097

CONTACT: ADAC Laboratories (Investor Contact)

Andre Simone, 408/321-9100

or

Ketchum Public Relations (Media Contact)

Jeff Tarmy, 415/984-6220

Chris K. Joseph, 415/984-6280