OSI Systems Reports Third Quarter 2006 Financial Results.HAWTHORNE Hawthorne. 1 City (1990 pop. 71,349), Los Angeles co., S Calif., a suburb of Los Angeles; inc. 1922. Located in an oil- and gas-producing area, Hawthorne manufactures navigation systems, solar panels, electronic components, silicon instruments, and , Calif. -- OSI Systems OSI Systems, Inc. (NASDAQ: OSIS) is a worldwide company based in California that develops and markets security and inspection systems such as airport security X-ray machines and metal detectors, medical monitoring and anesthesia systems, and optoelectronic devices. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :OSIS OSIS Open Source Information System (now Intelink-U; US DOD) OSIS Ocean Surveillance Information System OSIS One-Stop Internet Shop (European Union) OSIS Open Scriptural Information Standard ): --Third Quarter Revenues Increase 15% to $108.1 Million --Record Revenues for the Security Group of $36.4 Million --Third Quarter 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 of $0.06 vs. Loss of $0.18 for Comparable Prior Year Period OSI Systems, Inc. (NASDAQ:OSIS) today announced results for the third quarter of fiscal 2006. The Company reported revenues of $108.1 million for the third quarter of fiscal 2006, an increase of 15% from the $94.2 million reported for the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 was $1.0 million, or $0.06 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 a net loss of $2.9 million, or $0.18 per share, for the third quarter of fiscal 2005. The third quarter results included stock based compensation expenses of $1.5 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , or $0.09 per diluted share due to the adoption of FAS 123(R) on July July: see month. 1, 2005. Results for the third quarter of fiscal 2005 did not include stock-based compensation expenses. For the first nine months of fiscal 2006, revenues increased by $42.8 million, or 15%, to $327.1 million, from $284.3 million for the comparable period of fiscal 2005. For the first nine months of fiscal 2006, the Company reported a net loss of $3.1 million or $0.20 per diluted share, compared to net income of $0.8 million or $0.05 per share for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, the Company incurred stock based compensation expenses of $4.1 million, or $0.25 per diluted share. Results for the first nine months of fiscal 2005 did not include stock-based compensation expenses. OSI (1) (Open System Interconnection) An ISO standard for worldwide communications that defines a framework for implementing protocols in seven layers. Control is passed from one layer to the next, starting at the application layer in one station, proceeding to the Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Mr. Deepak Chopra Deepak Chopra (Hindi: दीपक चोपड़ा; born October 22, 1946) is an Indian medical doctor and writer. He has written extensively on spirituality and diverse topics in mind-body medicine. stated, "We are very pleased with the Company's operating results for the third quarter of fiscal 2006. The Security business had record revenues of $36.4 million and achieved profitability. We have received increased Cargo orders bringing the total Cargo backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $43 million at the end of the third quarter. We also successfully launched our first product in the Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. Hold Baggage Screening market, the Rapiscan MVXR5000. We are committed to this market, as evidenced by the continuing development of our revolutionary solid state CT system that we call the RTT RTT - Round-Trip Time for 'Real Time Tomography'. In the third quarter we announced an order for the RTT from the Manchester Airport For City Airport Manchester, UK, see . For the United States airport, see . Manchester Airport (IATA: MAN, ICAO: EGCC) is a major airport in Manchester, UK. It opened to airline traffic in June 1938. Group for approximately $7 million with a customer option that if fully exercised, would bring the total contract value to approximately $40 million. We expect to see continued growth for the Security business into fiscal 2007 in all product lines; Conventional, Automated Hold Baggage Screening and Cargo." Mr. Chopra Chopra (Hindī: चोपड़ा, IAST: chopṛa) is a Punjabi Khatri family name. Etymology and Historical references According to the Dictionary of American Family Names, 'Chopra is a Hindu (Khatri) and Sikh name of unknown meaning. continued, "In our Healthcare business we continued to see strong performance in our core products, monitoring and anaesthesia anaesthesia anesthesia. . For the first nine months of fiscal 2006 monitoring orders were up 18% globally with the strongest performance coming from the U.S., our largest market. We continue to capture our replacement cycle business in addition to gaining market share from our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. . We expect to see continued organic growth for the business supplemented by acquisitions of complementary products and technologies. We remain on track to launch the anaesthesia product in the U.S. market in fiscal 2007." Mr. Chopra concluded, "Our Opto-Electronics business continues to show strong results, fueled by the strong economy and strength in growing Inter-Company sales to both to our Security and Healthcare businesses." Guidance for the Six Months Ended June June: see month. 30, 2006 The Company reiterates its previously published guidance for the second half of fiscal 2006 with revenue guidance of $231 million to $236 million compared to revenues of $219 million for the first half of fiscal 2006, and $194.9 million for the second half of fiscal 2005. The Company anticipates that revenues and 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. will be higher in the fourth quarter when compared to the third quarter of fiscal 2006. Segment Information Security Business The Security business reported revenues of $36.4 million for the third quarter of fiscal 2006, an increase of 26% from $29.0 million reported for the third quarter of fiscal 2005. Income from operations for the third quarter of fiscal 2006 was $1.2 million compared to a loss from operations of $4.1 million for the third quarter of fiscal 2005. The third quarter results included stock based compensation expenses of $0.2 million. Results for the third quarter of fiscal 2005 did not include stock-based compensation expenses. For the first nine months of fiscal 2006, revenues increased by $2.8 million, or 3%, to $93.8 million, from $91.0 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, the business reported a loss from operations of $2.6 million, compared to a loss from operations of $3.0 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, the Security business incurred stock based compensation expenses of $0.7 million. Results for the first nine months of fiscal 2005 did not include stock-based compensation expenses. Healthcare Business The Healthcare business reported revenues of $49.4 million for the third quarter of fiscal 2006, compared to $47.8 million reported for the third quarter of fiscal 2005. Income from operations for the third quarter of fiscal 2006 was $1.1 million compared to $0.9 million for the third quarter of fiscal 2005. The third quarter results included stock based compensation expenses of $0.6 million. Results for the third quarter of fiscal 2005 did not include stock-based compensation expenses. For the first nine months of fiscal 2006, revenues increased by $17.2 million to $161.8 million from $144.6 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, income from operations increased by $2.2 million, or 27%, to $8.2 million, from $6.0 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, the Healthcare business incurred stock based compensation expenses of $1.1 million. Results for the first nine months of fiscal 2005 did not include stock-based compensation expenses. Optoelectronics See optoelectronic. Business The Optoelectronics business reported external revenues of $22.2 million for the third quarter of fiscal 2006, an increase of 28% from $17.3 million reported for the third quarter of fiscal 2005. Income from operations for the third quarter of fiscal 2006 was $3.6 million, compared to $2.0 million for the third quarter of fiscal 2005. The third quarter results included stock based compensation expenses of $0.1 million. Results for the third quarter of fiscal 2005 did not include stock-based compensation expenses. For the first nine months of fiscal 2006, external revenues increased by $22.8 million, or 47%, to $71.5 million form $48.7 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, income from operations increased by $1.8 million, to $7.4 million from $5.6 million for the first nine months of fiscal 2005. For the first nine months of fiscal 2006, the Optoelectronics business incurred stock based compensation expenses of $0.4 million. Results for the first nine months of fiscal 2005 did not include stock-based compensation expenses. Operating income was positively impacted by the continuing increase of Inter-Company sales to both the Security and Healthcare businesses. These sales are eliminated in consolidation; however, it does not impact our segment disclosure. Conference Call Information OSI Systems, Inc. will host a conference call today over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the beginning at 2:30 pm PT (5:30 pm ET), today to discuss these results. To listen, please visit www.osi-systems.com or www.fulldisclosure.com and follow the link that will be posted on the front page. A replay of the webcast will be available shortly after the presentation and will be archived on www.osi-systems.com. A telephonic replay of the call will also be available from 5:30pm PT on May 15th until May 22nd. The replay may be accessed by calling 888-286-8010 and entering the conference call identification number 33339020. About OSI Systems, Inc. OSI Systems Inc. is a Hawthorne, California Hawthorne is a city located in southwestern Los Angeles County, California. As of the 2000 census, the city had a total population of 84,112. Although incorporated as a city in 1922, Hawthorne is a part of the immense sprawl that amounts to the greater Los Angeles area. based diversified diversified (di·verˑ·s global developer, manufacturer and seller of security and inspection systems, medical monitoring and anesthesia anesthesia (ănĭsthē`zhə) [Gr.,=insensibility], loss of sensation, especially that of pain, induced by drugs, especially as a means of facilitating safe surgical procedures. delivery products, and optoelectronic-based components, as well as a provider of engineering and manufacturing services. The Company has more than 30 years of experience in electronics engineering and manufacturing and maintains offices and production facilities located in more than a dozen countries. OSI Systems, Inc. implements a strategy of expansion by leveraging its electronics and contract manufacturing capabilities into selective end product markets through organic growth and acquisitions. For more information on OSI Systems Inc. or any of its subsidiary companies, visit www.osi-systems.com. 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. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding the Company's expectations, goals or intentions about the future, including, the Company's commitment to the Automated Hold Baggage Screening Market, the development of a solid state CT system and sale of such systems to the Manchester Airport Group, growth in the Security Group's product lines, organic growth in the Company's Healthcare businesses, acquisitions of complementary businesses, the launch of an anesthesia product line in the U.S. in fiscal 2007, and its guidance for the second half of its 2006 fiscal year, including predictions about future revenues and operating income. The actual results may differ materially from those described in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by any forward-looking statement. In particular, there can be no assurance that the Company will ultimately be successful in the Automated Hold Baggage Screening Market, that the Manchester Airport Group will exercise its option to purchase additional solid state CT systems,, that the Company's Healthcare operations will continue to experience organic growth, acquire related or complementary business, or successfully launch an anesthesia product line in the U.S. in fiscal 2007, or that future revenues and operating income will ultimately meet the Company's current expectations. Other important factors are set forth in our Securities and Exchange Commission filings. All forward-looking statements speak only as of the date made, and we undertake no obligation to update these forward-looking statements.
OSI SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three months ended Nine months ended
March 31, March 31,
---------------------- ----------------------
2006 2005 2006 2005
------------ --------- ----------- ----------
Revenues $108,092 $94,153 $327,100 $284,328
Cost of goods sold 65,019 60,975 201,932 180,908
------------ --------- ----------- ----------
Gross profit 43,073 33,178 125,168 103,420
Operating expenses:
Selling, general and
administrative 33,805 30,165 100,738 80,551
Research and
development 8,851 7,306 26,281 21,042
Restructuring charges - - 800 -
Management retention
bonus 51 288 624 1,386
------------ --------- ----------- ----------
Total operating
expenses 42,707 37,759 128,443 102,979
------------ --------- ----------- ----------
Income (loss) from
operations 366 (4,581) (3,275) 441
Other income (expense):
Interest income 91 27 180 217
Interest expense (236) (153) (1186) (306)
Impairment of Equity
investment - (182) - (182)
Gain on sale of
marketable securities - - 349 -
------------ --------- ----------- ----------
Income (loss) before
provision (benefit) for
income taxes and
minority interest 221 (4,889) (3,932) 170
Benefit for income taxes (820) (1,961) (1,816) (602)
------------ --------- ----------- ----------
Income (loss) before
minority interest 1,041 (2,928) (2,116) 772
Minority interest (30) - (976) 68
------------ --------------------------------
Net income (loss) $1,011 $(2,928) $(3,092) $840
============ ================================
Earnings (loss) per
share:
Basic $0.06 $(0.18) $(0.19) $0.05
============ ========= =========== ==========
Diluted $0.06 $(0.18) $(0.20) $0.05
============ ========= =========== ==========
Shares used in per share
calculation:
Basic 16,497,974 16,276,323 16,326,128 16,215,620
========== =========== ========== ===========
Diluted 16,825,508 16,276,323 16,326,128 16,589,734
========== =========== ========== ===========
Condensed Consolidated Balance Sheets
(in thousands)
March 31, June 30,
2006 2005
--------- ---------
Cash and cash equivalents $13,097 $14,623
Accounts receivable, net of allowance for doubtful
accounts 101,084 89,227
Inventory 116,619 107,441
Other current assets 32,451 26,382
--------- ---------
Total current assets 263,251 237,673
Non current assets 114,143 109,447
--------- ---------
Total $377,394 $347,120
========= =========
Bank line of credit $3,886 $15,752
Current portion of long term debt 1,040 499
Other current liabilities 98,038 91,047
--------- ---------
Total current liabilities 102,964 107,298
Long-term debt 5,414 4,852
Other long-term liabilities 17,844 11,343
Minority interest 8,748 -
Shareholders' equity 242,424 223,627
--------- ---------
Total $377,394 $347,120
========= =========
Segment Information
(in thousands)
Three months ended Nine months ended
March 31, March 31,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Revenues - by Segment Group:
Security Group $36,446 $29,037 $93,787 $91,017
Healthcare Group 49,429 47,793 161,799 144,597
Optoelectronics and
Manufacturing Group
including intersegment
revenues 29,689 22,365 88,593 63,673
Intersegment revenues
elimination (7,472) (5,042) (17,079) (14,959)
--------- -------- --------- ---------
Total $108,092 $94,153 $327,100 $284,328
--------- -------- --------- ---------
Operating income (loss) - by
segment group:
Security Group $1,230 $(4,109) $(2,614) $(3,033)
Healthcare Group 1,063 873 8,159 5,972
Optoelectronics and
Manufacturing Group 3,608 1,955 7,391 5,645
Corporate (5,293) (3,259) (16,002) (7,685)
Eliminations (242) (41) (209) (458)
--------- -------- --------- ---------
Total $366 $(4,581) $(3,275) $441
--------- -------- --------- ---------
SFAS 123R expenses included in segment operating income (loss) above
is as follows:
Three months ended March 31, 2006
Security Group $241
Healthcare Group 620
Optoelectronics and Manufacturing Group 129
Corporate 551
-------------
Total $1,541
-------------
Nine months ended March 31, 2006
Security Group $689
Healthcare Group 1,076
Optoelectronics and Manufacturing Group 407
Corporate 1,911
-------------
Total $4,083
-------------
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