Bio-logic Reports Fourth Quarter and Fiscal 2005 Results.MUNDELEIN, Ill. -- Bio-logic Systems Corp. (Nasdaq:BLSC BLSc Bachelor of Library Science BLSC Black Lion Swimming Club (UK) BLSC Boulders, Silt and Clay (lithological term) BLSC Bond Lake Skating Club (Oak Ridges, Ontario, Canada) ), a designer and marketer of computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. medical electro-diagnostic equipment and disposables, today reported financial results for the fourth quarter and fiscal year ended February 28, 2005. For the year, the company achieved record sales of $30.5 million, a 9 percent increase over the prior year, led by a surge in sleep systems sales and continued solid growth in hearing diagnostic systems and supplies. Highlights of Fourth Quarter and Fiscal 2005 and Subsequent Events --Operating profit for the year increased 32 percent, overcoming the impact of a fourth quarter charge of $870,000 for costs of an unsuccessful neurology neurology (n  rŏl`əjē, ny–), study of the morphology, physiology, and pathology of the human nervous system. acquisition bid.--Fiscal 2005 tax rate increased to 25 percent from 3 percent in fiscal 2004, which included prior years' research tax credits. --Diluted earnings per share of $0.27, compared to prior year's $0.28. --Licensing agreements signed with Northwestern University Northwestern University, mainly at Evanston, Ill.; coeducational; chartered 1851, opened 1855 by Methodists. In 1873 it absorbed Evanston College for Ladies. , House Ear Institute for new hearing products. --Agreement with Novation The substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement. A novation ordinarily arises when a new individual assumes an obligation to pay that was incurred by the original party signed in March 2005 to supply audiology audiology /au·di·ol·o·gy/ (aw?de-ol´ah-je) the study of impaired hearing that cannot be improved by medication or surgical therapy. au·di·ol·o·gy n. equipment and infant hearing screening systems and supplies. --Agreement to sell excess land for $2,825,000 signed in April 2005. Fourth Quarter Results Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter ended February 28, 2005 increased 5.0 percent to $8.3 million, compared with $7.9 million for the same quarter of the prior fiscal year. 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 to 67.2 percent from 65.5 percent for the same period of the prior fiscal year, primarily due to lower inventory provisions, partially offset by higher research & development (R&D) amortization expense. Total selling, general and administrative expense (SG&A) for the quarter increased $761,000 to $4.1 million, compared to $3.3 million for the fourth quarter of fiscal 2004, due primarily to $870,000 of expenses related to pursuing a potential acquisition that was not completed. R&D decreased $554,000 to $932,000, compared to $1.5 million for the same period of the prior fiscal year, primarily due to higher capitalized research and development costs. 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. for the quarter was $558,000, compared to $359,000 for the same quarter last fiscal year. Net income for the quarter was $392,000, or $0.05 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $626,000, or $0.09 per diluted share, in the fourth quarter of fiscal 2004. Income tax expense was $219,000 in the fourth quarter of fiscal 2005 compared to a tax benefit of $212,000 in the same period of fiscal 2004, negatively impacting earnings by $.06 per diluted share, due primarily to the recording of adjustments for historical tax refunds Tax refund Money back from the government when too much tax has been paid or withheld from a salary. for research and experimentation expense for prior years in the fourth quarter of fiscal 2004. Full Year Results For the fiscal year ended February 28, 2005, net sales increased 8.7 percent to $30.5 million, compared with $28.1 million for the prior fiscal year. Gross profit margin was 66.4 percent in fiscal 2005, compared to 66.3 percent in fiscal 2004. SG&A for fiscal 2005 increased $1.4 million to $13.6 million, compared to $12.2 million in fiscal 2004, primarily due to the $870,000 of expenses related to pursuing an acquisition that was not completed and expenses associated with the higher level of sales. R&D decreased $318,000 to $4.3 million, compared to $4.6 million in the prior fiscal year, primarily due to higher capitalized research and development costs. For fiscal 2005, the company had operating income of $2.4 million, an increase of 31.6 percent compared to $1.8 million in fiscal 2004. Net income for the year was $1.9 million, or $0.27 per diluted share, compared to $1.9 million, or $0.28 per diluted share, for the prior year. Earnings per share for fiscal 2005 were lower due to failed deal costs, increased tax rates and an increase in the number of diluted shares outstanding. During fiscal 2004, the company's tax provision was reduced by the recording of $432,000 of historical nonrecurring tax credits, which increased net income by $.06 per diluted share, and an additional $100,000 of similar credits related to fiscal 2004. The company had $14.9 million in cash and cash equivalents at February 28, 2005, an increase of $2.1 million from the February 29, 2004 prior fiscal year end. Commenting on the year's results, Roderick G. Johnson, president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , stated, "We achieved record sales in fiscal 2005, exceeding $30 million for the first time in company history, a fitting accomplishment as Bio-logic concluded its 25th year. Our nine percent sales increase was led by a surge in demand for sleep systems, which is being fueled by heightened interest in sleep apnea sleep apnea, episodes of interrupted breathing during sleep. Obstructive sleep apnea is a common disorder in which relaxation of muscles in the throat repeatedly close off the airway during sleep; the person wakes just enough to take a gasping breath. monitoring due to our aging and overweight Overweight Refers to an investment position that is larger than the generally accepted benchmark. Notes: For example, if a company normally holds a portfolio whose weighting of cash is 10%, and then increases cash holdings to 15%, the portfolio would have an overweight population, and studies linking hypertension hypertension or high blood pressure, elevated blood pressure resulting from an increase in the amount of blood pumped by the heart or from increased resistance to the flow of blood through the small arterial blood vessels (arterioles). to sleep apnea. We also recorded solid gains in hearing system sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. , in both the diagnostic and screening areas. Our Navigator See Netscape Navigator, Netscape and Norton Navigator. Navigator - Netscape Navigator (R) Pro diagnostics line continues to be a market leader and products featuring our M-A-S-T-E-R(TM) software experienced low double-digit growth. Though sales of our screening products have declined in recent years due to saturation saturation, of an organic compound saturation, of an organic compound, condition occurring when its molecules contain no double or triple bonds and thus cannot undergo addition reactions. of the traditional markets, we were able to generate strong gains for our AuDX(R) hand-held screener during the year through opportunities in alternative markets. "Our hearing supplies business also continued to experience significant growth, matching last year's 15 percent sales increase. Non-system revenues, which include primarily supplies and service, represented 28 percent of our total business, consistent with the fiscal 2004 level. Our international business, which is primarily hearing related, reached record levels in fiscal 2005, but increased by two percent after consecutive years of percentage growth in the upper teens. "We have accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. a substantial cash balance in recent years and this year we sought to put some of that cash to work via an acquisition. We initiated discussions with a well-known international company that we were confident could have increased shareholder value if acquired at a reasonable price. However, after investing considerable time and incurring approximately $870,000 in due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. and legal costs, we ended our pursuit of the candidate when another buyer offered a price substantially above what we could justify based on our analysis. Though disappointed, we remain committed to pursuing acquisitions of medical technology businesses and assets, at fair valuations, that can either complement our own or that provide entry to larger market segments," Johnson concluded. Looking Forward "Since the founding of our company in 1979, Bio-logic has been built on a foundation of innovative technologies and a tradition of leadership in the markets we serve," Gabriel Raviv, chairman and chief executive officer stated. "That heritage is continuing today, through both internal development of products as well as collaborations with other industry technology leaders. Earlier this year we announced the signing of exclusive licensing agreements with House Ear Institute and Northwestern University to develop and commercialize two new technologies. HINT, or Hearing In Noise Test, is a proprietary technology developed by House Ear scientists to evaluate the functional hearing capabilities of individuals in hearing-critical jobs, as well as hearing aid cochlear implant cochlear implant n. An electronic device that stimulates auditory nerve fibers in the inner ear in individuals with severe or profound bilateral hearing loss, allowing them to recognize some sounds, especially speech sounds. users, and children. The other new technology is BioMAP, or Biological Marker of Auditory auditory /au·di·to·ry/ (aw´di-tor?e) 1. aural or otic; pertaining to the ear. 2. pertaining to hearing. au·di·to·ry adj. Processing, a proprietary technology developed by Auditory Neuroscience neu·ro·sci·ence n. Any of the sciences, such as neuroanatomy and neurobiology, that deal with the nervous system. neuroscience the embryology, anatomy, physiology, biochemistry and pharmacology of the nervous system. Laboratory scientists at Northwestern University, which is used to quickly and objectively identify disordered auditory processing of sound that has been associated with learning impairments in children, who have a high likelihood of benefiting from remediation strategies involving auditory training. These new technologies are expected to enhance the quality of everyday life for large segments of our population and we are excited to be a part of bringing them to market. "We are also building on our history of developing new products of our own and anticipate the launch of two systems during fiscal 2006. Our new Netlink ICU ICU intensive care unit. ICU abbr. intensive care unit ICU see intensive care unit. ICU system, expected to be launched in the second quarter, is designed to meet the need for continuous monitoring of EEG EEG: see electroencephalography. in the intensive care unit to improve the detection of nonconvulsive seizures In counterdrug operations, includes drugs and conveyances seized by law enforcement authorities and drug-related assets (monetary instruments, etc.) confiscated based on evidence that they have been derived from or used in illegal narcotics activities. associated with certain brain injuries such as trauma, stroke or brain hemorrhage hemorrhage (hĕm`ərĭj), escape of blood from the circulation (arteries, veins, capillaries) to the internal or external tissues. The term is usually applied to a loss of blood that is copious enough to threaten health or life. . We also expect to begin shipment of our new ambulatory Movable; revocable; subject to change; capable of alteration. An ambulatory court was the former name of the Court of King's Bench in England. It would convene wherever the king who presided over it could be found, moving its location as the king moved. Netlink Traveler(R) by the third quarter of fiscal 2006. Used for both EEG and sleep diagnostics, this feature-rich amplifier product weighs just 13 ounces and can fit in the palm of a hand, and should have significant advantages over existing ambulatory units," concluded Raviv. Johnson added, "We have had good success in our effort to target the market for the Natus(R) ALGO ALGO Algorithm (R) Flexicoupler(TM) disposable ear coupler Refers to a myriad of different types of sockets for plugging in electric or electronic cables or devices. See network coupler. with our HALO Ear Muffin(TM), which is reflected in the steady growth of our hearing supplies revenue. We hope to make further inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ into this sizeable market and plan to continue to actively pursue this business. Our A-C-E program, or Audiological Centers for Excellence, a partnership with leading academic institutions to educate audiologists in the latest hearing technologies, which was announced last year, is moving forward and we have already established affiliations with several universities." About Bio-logic Bio-logic Systems Corp., headquartered in Mundelein, IL, designs, develops, assembles and markets computer-based electro-diagnostic systems and related disposables for use by hospitals, clinics, school districts, universities and physicians. The systems conduct tests that are typically used by medical practitioners to aid in the diagnosis of certain neurological disorders This is a list of major and frequently observed neurological disorders (e.g. Alzheimer's disease), symptoms (e.g.back pain), signs (e.g. aphasia) and syndromes (e.g. Aicardi syndrome). , brain disorders and tumors and sensory disorders, including audiological and hearing screening and diagnosis. Cautionary Note Regarding 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. This release contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934), including statements regarding the Company's intention to pursue acquisitions and statements under the caption "Looking Forward," that reflect management's current expectations about Bio-logic's future results, performance, prospects and opportunities. Management has attempted to identify these forward-looking statements by using words such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "could," "should" or similar expressions, but these words are not the exclusive way of identifying these statements. These forward-looking statements are based on information currently available to management and are subject to a number of risks, uncertainties and other factors that could cause Bio-logic's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include general economic and business conditions, turnover in Bio-logic's sales force, lack of acceptance of new technology by clinicians and other healthcare professionals, the results of research and development efforts, Bio-logic's ability to successfully identify, complete and integrate acquisitions and other risks and expenses related to an acquisition strategy, technological changes, competition, potential changes in regulation by the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. , costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc manufacturing of products, the timing of customer orders, the ability of certain suppliers to meet requirements, Internal Revenue Service determinations and other facts affecting the realization of the anticipated tax credits and other factors detailed from time to time in Bio-logic's filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, Bio-logic undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release. Financial Table Follows...
Bio-logic Systems Corp. and Subsidiaries
Consolidated Statement of Operations
In Thousands, Except for Per Share Data
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
February 28, February 29, February 28, February 29,
2005 2004 2005 2004
------------- ------------ ------------- ------------
NET SALES $8,291 $7,893 $30,549 $28,101
COST OF SALES 2,718 2,726 10,261 9,479
------------- ------------ ------------- ------------
Gross Profit 5,573 5,167 20,288 18,622
------------- ------------ ------------- ------------
OPERATING
EXPENSES:
Selling,
general &
administra-
tive 4,083 3,322 13,601 12,189
Research &
development 932 1,486 4,304 4,622
------------- ------------ ------------- ------------
Total
operating
expenses 5,015 4,808 17,905 16,811
------------- ------------ ------------- ------------
OPERATING INCOME 558 359 2,383 1,811
OTHER INCOME
(EXPENSE):
Interest
income 58 46 152 123
Interest
expense (9) 7 (14) 6
Miscellaneous 4 2 (6) 4
------------- ------------ ------------- ------------
Total other
income 53 55 132 133
------------- ------------ ------------- ------------
INCOME BEFORE
INCOME TAXES 611 414 2,515 1,944
PROVISION FOR
INCOME TAXES 219 (212) 633 62
------------- ------------ ------------- ------------
NET INCOME $392 $626 $1,882 $1,882
============= ============ ============= ============
RETAINED
EARNINGS,
BEGINNING OF
PERIOD 16,934 14,818 15,444 13,562
------------- ------------ ------------- ------------
RETAINED
EARNINGS, END
OF PERIOD $17,326 $15,444 $17,326 $15,444
============= ============ ============= ============
EARNINGS PER
SHARE:
Basic $0.06 $0.10 $0.29 $0.30
============= ============ ============= ============
Diluted $0.05 $0.09 $0.27 $0.28
============= ============ ============= ============
BASIC SHARES
OUTSTANDING 6,533,711 6,331,280 6,440,035 6,309,545
DILUTED SHARES
OUTSTANDING 7,491,321 6,816,714 7,066,390 6,670,095
SELECTED BALANCE SHEET DATA
As of As of
February 28, February 29,
2005 2004
------------- ------------
Cash and cash
equivalents $14,866 $12,750
Current assets 25,410 22,955
Total assets 30,207 27,194
Current
liabilities 6,536 6,243
Shareholders'
equity 22,761 20,279
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