Cytyc Reports Record Revenue and Earnings.Business/Technology Editors & Health/Medical Writers BOXBOROUGH, Mass.--(BW HealthWire)--April 24, 2002 Q1 Revenue Grows 43% Year Over Year to $68 Million First Quarter 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. Increases to $0.14 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 Cytyc Corporation (Nasdaq:CYTC) today reported revenues for the first quarter of 2002 of $68.0 million and net income of $17.6 million, increases of 43 and 58 percent, respectively, over first quarter 2001 pro-forma results. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the first quarter were $0.14, up 56 percent from pro-forma earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. per share for the same period in 2001. "I am pleased with our financial performance last quarter and the evolution of our overall business plan," said Patrick J. Sullivan, Cytyc's chief executive officer, vice chairman, and chairman-elect. "We took steps towards achieving a number of significant milestones in our effort to develop all sectors of our business, including breast cancer risk assessment, new product development, business development through an acquisition, and ThinPrep ThinPrep™ Cytology A proprietary system–Cytec, Inc, in which specimens are obtained with a special fluid collection system and the slides for cytologic examination are spread in one-cell-thick layers. See thin prep. (R) Pap Test Pap test, Pap smear, or Papanicolaou test (păp'ənē`kəlou), medical procedure used to detect cancer of the uterine cervix. (TM) market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" domestically and internationally." In January, Cytyc's specialty sales force began promoting to breast surgeons breast surgeon A general surgeon specialized in breast surgery and radiologists the use of FirstCyte(TM) Ductal Lavage ductal lavage Cytology The harvesting of cells from the mammary ducts in an attempt to identify CA at an early, possibly more treatable stage. See Breast cancer. , the Company's new proprietary technology to aid in breast cancer risk assessment. Two major health insurers, Empire Blue Cross and Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. and CareFirst BlueCross BlueShield, announced coverage of the procedure for their high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit breast cancer subscribers. Currently, health plans representing nearly 20 million members cover ductal lavage. In early January, Cytyc submitted a Premarket Approval premarket approval Medical devices A scientific and regulatory review by the FDA to ensure the safety and effectiveness of a Class III device, before its approval for marketing. See Advisory panel, Medical device. (PMA PMA (papillary-marginal-attached), n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation. PMA Progressive muscular atrophy ) Application to the U.S. Food and Drug Administration (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. ) for the ThinPrep(R) Imaging System(TM). The Company currently anticipates that European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. commercial shipments will begin in the second half of 2002. In March, the Scottish Executive announced that 2.75 million pounds ($4 million USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) would be invested in the Scottish Cervical cervical /cer·vi·cal/ (ser´vi-k'l) 1. pertaining to the neck. 2. pertaining to the neck or cervix of any organ or structure. cer·vi·cal adj. Screening Programme to implement liquid-based cytology cytology (sītŏl`əjē), in biology, the study of the structure of all normal and abnormal components of cells and the changes, movements, and transformations of such components. . The decision was based on the results of a multi-site pilot study conducted at four hospital screening centers in Scotland, to evaluate the feasibility and cost effectiveness of introducing liquid-based cytology. At each of the sites, Cytyc Corporation's ThinPrep Pap Test was the exclusive liquid-based method used. On February 19, 2002, Cytyc signed a definitive agreement to acquire Digene Corporation in a stock and cash exchange offer. As previously announced, Cytyc and Digene have each received a formal request for additional information and documentary material from the U.S. Federal Trade Commission with respect to Cytyc's proposed acquisition of Digene. The request for additional information was issued under the notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. of 1976 (the "HSR HSR homogeneously staining regions. Act"). Both companies are responding expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex to such request. Cytyc management will discuss results of the first quarter and future expectations during a conference call on April 24, at 5:00 p.m. (Eastern). A webcast and replay of the call may be accessed at Cytyc's web site, www.cytyc.com, where the event will be available for replay approximately two hours following the webcast until May 4, 2002. Those without web access may access the call by calling 800-374-0727 or 706-634-2339. A telephonic replay of the call will be available through May 4, 2002, by calling 800-642-1687 or 706-645-9291 (Access Code: 3854431). In connection with the adoption of the SEC rules on corporate disclosure, Cytyc is publishing its procedures for announcing its future expectations for the Company. Towards the end of each fiscal quarter, Cytyc will have a "Quiet Period" when it will not comment concerning its financial results or expectations other than in a public manner in compliance with Regulation FD. The Quiet Period will extend until Cytyc's next quarterly Earnings Release is published and the conference call takes place. For the second quarter of 2002, the Quiet Period will be June 16, 2002, through approximately July 31, 2002. Cytyc Corporation develops, manufactures and markets products for medical diagnostic applications primarily focused on women's health Women's Health Definition Women's health is the effect of gender on disease and health that encompasses a broad range of biological and psychosocial issues. . The ThinPrep(R) System consists of the ThinPrep(R) 2000 Processor, ThinPrep(R) 3000 Processor, and related reagents, filters, and other supplies. Cytyc is traded on The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol "CYTC" and is a part of the S&P Midcap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. 400 Index and The Nasdaq-100 Index. Cytyc(R) and ThinPrep(R) are registered trademarks and ThinPrep(R) Pap Test(TM) is a trademark of Cytyc Corporation. ThinPrep(R) Imaging System(TM) and FirstCyte(TM) are trademarks of Cytyc Corporation for which registration has been applied. 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. in this press release are made pursuant to the provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release which are not strictly historical statements, including, without limitation, statements regarding Cytyc's pending acquisition of Digene, management's plans and objectives for future operations, expectations regarding regulatory approvals and product commercialization, as well as statements regarding Cytyc company strategy, constitute forward-looking statements. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties which could cause actual outcomes and results to differ materially from those statements. Risks and uncertainties include, among others, risks associated with the regulatory approval process, and other risks associated with delays in obtaining regulatory approvals, dependence on key personnel and proprietary technology, management of growth, risks associated with the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. and integration of the Digene acquisition, uncertainty of product development efforts, risks associated with healthcare reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. policies, risks associated with competition and competitive pricing pressures, and other risks detailed in filings by Cytyc with the Securities and Exchange Commission, including under the heading "Certain Factors Which May Affect Future Results" in Cytyc's 2001 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Commission. Cytyc cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they were made. Cytyc disclaims any obligation to publicly update or revise any such statements to reflect any change in their expectations or events, conditions, or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. THIS NEWS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. Cytyc has filed a Registration Statement on Form S-4 and Schedule TO, and Digene has filed a Solicitation/Recommendation Statement on Schedule 14D-9, with the Securities and Exchange Commission in connection with the transaction. Cytyc and Digene have commenced the exchange offer and have mailed a Prospectus, which is part of the Registration Statement on Form S-4, the Schedule 14D-9 and related tender offer materials to the stockholders of Digene. These documents contain important information about the transaction, which should be considered by investors and security holders prior to making any investment decisions. Investors and security holders are urged to read these documents carefully. Investors and security holders can obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov. Free copies of these documents can also be obtained from the Information Agent, Innisfree M&A Incorporated, 501 Madison Avenue Madison Avenue, celebrated street of Manhattan, borough of New York City. It runs from Madison Square (23d St.) to the Madison Bridge over the Harlem River (138th St.). In the 1940s and 50s, some of the major U.S. , 20th Floor, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY 10022 or by calling toll free (888) 750-5834, or from Cytyc by directing a request to Cytyc Corporation, 85 Swanson Road, Boxborough, MA 01719, 978-263-8000, or Digene by directing a request to Digene Corporation, 1201 Clopper Road, Gaithersburg, MD 20878, 301-944-7000. In addition to the Registration Statement, Schedule TO, Prospectus and Schedule 14D-9, Cytyc and Digene also file annual, quarterly and special reports, proxy statements Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information filed by Cytyc or Digene at the Securities and Exchange Commission public reference rooms at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for further information on public reference rooms. Filings by Cytyc and Digene with the SEC are also available to the public from commercial document-retrieval services and at the web site maintained by the Securities and Exchange Commission at http://www.sec.gov.
Cytyc Corporation
Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2002 2001
Assets:
Current assets
Cash and short-term investments $ 178,344 $ 153,242
Accounts receivable, net 59,393 50,278
Inventories 9,913 10,698
Other current assets 5,623 1,583
Total current assets 253,273 215,801
Property and equipment, net 26,963 26,662
Other assets, net 138,966 144,297
Total Assets $ 419,202 $ 386,760
Liabilities and Stockholders' Equity:
Current liabilities $ 38,977 $ 35,615
Non-current liabilities 837 837
Stockholders' equity:
Capital stock 388,373 376,307
Accumulated other comprehensive
loss (2,113) (1,529)
Retained deficit (6,872) (24,470)
Total stockholders' equity 379,388 350,308
Total Liabilities and Stockholders' Equity $ 419,202 $ 386,760
Cytyc Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 31, March 31,
2002 2002
Proforma Adjusted As Reported
Net sales $ 68,035 $ -- $ 68,035
Cost of sales 12,610 -- 12,610
Gross profit 55,425 -- 55,425
Operating expenses:
Research and
development 4,190 -- 4,190
Sales and
marketing 17,084 -- 17,084
General and
administrative 6,715 -- 6,715
Total operating
expenses 27,989 -- 27,989
Income
from operations 27,436 -- 27,436
Other income, net:
Interest income 899 -- 899
Other income (expense) 49 -- 49
Litigation settlement -- -- --
Total other income, net 948 -- 948
Income before provision
for income taxes 28,384 -- 28,384
Provision for income taxes 10,786 -- 10,786
Net income $ 17,598 $ -- $ 17,598
Effective tax rate 38% 38%
Net income per common
and potential common share
Basic $ 0.14 $ 0.14
Diluted $ 0.14 $ 0.14
Weighted average common and
potential common shares
outstanding:
Basic 121,780 121,780
Diluted 126,017 126,017
Three Months Ended
March 31, March 31,
2001 2001
Proforma Adjusted As Reported
Net sales $ 47,467 $ -- $ 47,467
Cost of sales 8,841 -- 8,841
Gross profit 38,626 -- 38,626
Operating expenses:
Research and development 4,788 -- 4,788
Sales and marketing 13,871 -- 13,871
General and administrative 3,451 -- 3,451
Total operating expenses 22,110 -- 22,110
Income from operations 16,516 -- 16,516
Other income, net:
Interest income 1,414 -- 1,414
Other income (expense) (4) -- (4)
Litigation settlement -- 3,087 3,087(a)
Total other income, net 1,410 3,087 4,497
Income before
provision for income taxes 17,926 3,087 21,013
Provision for income taxes 6,812 (1,349) 5,463
Net income $ 11,114 $ 4,436 $ 15,550
Effective tax rate 38% 26%
Net income per common
and potential common share
Basic $ 0.10 $ 0.14
Diluted $ 0.09 $ 0.13
Weighted average common and
potential common shares
outstanding:
Basic 113,615 113,615
Diluted 119,207 119,207
(a) Gain from settlement of litigation
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