Serologicals Corporation Reports Third Quarter Results; Revenues Increase 45% for the Quarter and 48% for First Nine Months.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Serologicals Corporation (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 :SERO SERO Southeast Regional Office SERO Sekundaerrohstoffe (recycling, former GDR) SERO Syringe Exchange Resources Online SERO System Engineering/Engineer Release Order SERO Site Emergency Response Organisation (nuclear) ) today announced financial results for the third quarter ended October October: see month. 2, 2005. Revenues for the third quarter increased 44.7%, to $67.0 million, compared to $46.3 million in the same period last year, while revenues for the first nine months of 2005 increased 48.2%, to $187.8 million, compared to $126.8 million in the same period last year. 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 were $0.20 and $0.41 per share for the third quarter and first nine months of 2005, respectively, compared to $0.19 and $0.48 per share for the same periods in the prior year. As the result of our numerous acquisitions over the past three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Company provides pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma results that exclude acquisition amortization, other similar acquisition related costs and other one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs. The Company provides pro forma information as an addition to, and not as a substitute for, financial measures presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The Company believes that the pro forma presentation is a beneficial supplemental disclosure to investors in analyzing and assessing its past and future performance. Third quarter 2005 pro forma net income was $10.5 million, or $0.27 per share on a fully 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. basis, compared with $6.2 million, or $0.20 per share on a fully diluted basis, in the third quarter of 2004. Pro forma net income for the third quarter increased by 70.1% and fully diluted pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share increased by 30.6%. Pro forma net income for the first nine months of 2005 was $22.1 million, or $0.58 per share on a fully diluted basis, compared with $15.5 million, or $0.52 per share on a fully diluted basis, for the same period in 2004. Pro forma net income for the first nine months of 2005 increased by 42.1% and fully diluted pro forma earnings per share increased by 12.3% for the first nine months of 2005 compared to the same period in 2004. Reconciliations between GAAP results and pro forma results are presented in the attached tables and on the Company's web site (www.serologicals.com) under the Investor Relations Investor relations The process by which the corporation communicates with its investors. tab. President & 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. Perspectives "As expected, we saw a significant increase in revenue and earnings during the third quarter consistent with our comments in July July: see month. ," said David A. Dodd, President and CEO. "We saw strong results from our Celliance unit where continued market strength resulted in strong revenue growth particularly in our cell culture products. Increased product demand, coupled with improved manufacturing performance, enabled us to achieve a significant increase in gross margins in Celliance which positively impacted both 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. and net income." Commenting further, Mr. Dodd added, "Revenue from our Research products and services also increased during the quarter as we continued to strengthen our commercial organization, particularly in the Asia/Pacific region, and further expanded our product portfolio. We are continuing to proceed with the accelerated integration program for our Upstate operations and expect to transfer all Lake Placid Lake Placid, village (1990 pop. 2,485), Essex co., NE N.Y.; settled 1850, inc. 1900. In the Adirondack Mts. at an altitude of 1,800 ft (549 m), the village surrounds Mirror Lake. It is a famous resort and sports center. , N.Y. operations and research activities to Temecula, CA. by the second quarter of 2006. This is expected to have a positive impact on both gross margins and operating income for the Research segment in 2006. Revenue growth for the Research segment continued at a level approximately twice the growth rate of our markets and major competitors, although realized growth was lower than expected for both the third quarter and the nine months of 2005. The major reasons for the slower than anticipated growth in Research revenue were related to essentially flat growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in government research funding Research funding is a term generally covering any funding for scientific research, in the areas of both "hard" science and technology and social science. The term often connotes funding obtained through a competitive process, in which potential research projects are evaluated and , as well as lower than anticipated growth in pharmaceutical/biotech preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. spending. During the quarter, we hired a new Sales Vice-President vice president or vice-pres·i·dent n. Abbr. VP 1. An officer ranking next below a president, usually empowered to assume the president's duties under conditions such as absence, illness, or death. 2. for our Research unit who has an extensive background in our business area and we have now completed the conversion to direct sales representation for the Research segment in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . We anticipate that our Research
segment will continue to achieve revenue growth in excess of our markets
and major competitors.Our continuing emphasis on productivity improvements and cost control enabled the Company to achieve strong overall growth in both revenue and earnings during the third quarter, much higher than overall market growth rates of 5%-6%. However, in light of our results from our Research unit during the third quarter, we have decided to update the Company's full year guidance to be $265.0 to $270.0 million in revenue and $.92 to $.95 in pro forma earnings per share for the full year. This compares to our earlier guidance of $275.0 to $285.0 million in revenue and $0.95 to $1.00 in pro forma earnings per share for the full year. We expect continued strength in the fourth quarter for both business segments and continue to invest in our businesses to enable us to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. in our marketplace. This will remain our primary focus as we increase the value delivered to our customers, employees and shareowners," Mr. Dodd added. Significant accomplishments during the third quarter included: --Our research business units, Chemicon and Upstate, introduced 520 new products during the third quarter and have introduced over 1,500 products for the first nine months of 2005. This includes new Chemicon assays and reagents focused in the areas of 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. and stem cell stem cell In living organisms, an undifferentiated cell that can produce other cells that eventually make up specialized tissues and organs. There are two major types of stem cells, embryonic and adult. research and a range of new Upstate kinases and multiplex See multiplexing. Beadlyte(R) assays. Upstate is expanding its industry leading position by providing over 250 kinases with an aggressive plan to further increase its kinase kinase /ki·nase/ (ki´nas) 1. a subclass of the transferases, comprising the enzymes that catalyze the transfer of a high-energy group from a donor (usually ATP) to an acceptor. 2. panel by the end of 2005, continuing into 2006. --During the quarter, Upstate continued to further expand its product and service portfolio with continued emphasis on new products to support drug discovery activities with particular emphasis on cell biology-based products. This included the launch of a new, more cost efficient Western blotting blotting /blot·ting/ (blot´ing) soaking up with or transferring to absorbent material. blotting a technique used for the detection of DNA, RNA or protein. See northern blot, southern blot, western blot. Called also blot analysis. detection kit and the expansion of its KinEASE(TM) FP production line to include each of the 80 individual kinases that have been validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. in the assay ASSAY. A chemical examination of metals, by which the quantity of valuable or precious metal contained in any mineral or metallic mixture is ascertained. 2. By the acts of Congress of March 3, 1823, 3 Story's L. U. S. 1924; of June 25, 1834, 4 Shars. cont. Story's L. U. S. . Revenues for drug discovery activities increased 76% during the quarter and grew 82% during the first nine months of 2005. Upstate continues its commitment to support drug discovery research by continuing to develop and introduce new products and services using cell signaling Cell signaling is part of a complex system of communication that governs basic cellular activities and coordinates cell actions. The ability of cells to perceive and correctly respond to their microenvironment is the basis of development, tissue repair, and immunity as well as technologies. --Chemicon also continues to expand its product portfolio and added a number of co-development opportunities. This includes the introduction of an innovative infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. detection product utilizing Chemicon's patented fluorescent fluorescent having the quality of fluorescence. fluorescent antibody see fluorescence microscopy. fluorescent antibody test see fluorescence microscopy. detection technology, Amplifluor(R). Chemicon also entered into an exclusive manufacturing and marketing agreement with Stem Cell Sciences that will transfer patented technology and expertise to Chemicon to allow it to manufacture a fully formulated for·mu·late tr.v. for·mu·lat·ed, for·mu·lat·ing, for·mu·lates 1. a. To state as or reduce to a formula. b. To express in systematic terms or concepts. c. , serum-free embryonic stem cell Embryonic stem cells (ES cells) are stem cells derived from the inner cell mass of an early stage embryo known as a blastocyst. Human embryos reach the blastocyst stage 4-5 days post fertilization, at which time they consist of 50-150 cells. ES cells are pluripotent. media for the research market. In addition, Chemicon and Axordia, Ltd. have signed an exclusive agreement to co-develop new antibody markers from Axordia's proprietary human embryonic stem cell lines further demonstrating the commitment by Chemicon to maintain its leadership position in the support of stem cell research. --Our Celliance business unit also expanded its product portfolio during the third quarter by introducing a new line of peptones under the brand name of LucraTone(TM). The initial launch includes eight animal-free products that are critical components in cell culture and fermentation fermentation, process by which the living cell is able to obtain energy through the breakdown of glucose and other simple sugar molecules without requiring oxygen. Fermentation is achieved by somewhat different chemical sequences in different species of organisms. . In addition, Celliance acquired the UCOE (ubiquitous Found in large quantities everywhere. This English word means "all over the place." chromatin chromatin: see chromosome. opening element) gene expression technology from Innovata plc that improves the yield, consistency and stability of protein production in cultured mammalian mammalian emanating from or pertaining to mammals. cells. --The Company continues to strengthen its commercial organization with two important additions to its senior management staff during the third quarter. Mike Monko joined the Company as Vice President, Sales for the Research segment. Mr. Monko will direct all sales activities world wide for the Company's Research products and services. Prior to joining the Company he worked for nearly 20 years for Invitrogen Invitrogen Corporation (NASDAQ: IVGN) is a life science research company, providing products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. Corporation. In addition, Wylie Chenn recently joined the Company as Regional Director, Asia/Pacific and will assess strategic options available for expanded business development and growth, while directing all sales activities within this region. Mr. Chenn has over 20 years of direct experience working within the region. --We announced earlier this year the implementation of an accelerated integration program for our research segment. This program includes the consolidation of several core functions, including Business Segment Management, R&D/Business Development, Marketing, Technical Support, Scientific Sourcing, Intellectual Property/Licensing and Finance and Accounting. Serologicals expects to achieve operating efficiencies that should result in annual savings of $3.0 million to $3.5 million. The savings will be phased in over the balance of 2005. The Company incurred one time costs of approximately $1.9 million in connection with this program as the result of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, retention payments and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs recorded in the third quarter ended October 2, 2005. The majority of these costs, $1.3 million, were treated as adjustments to the acquisition purchase price in connection with the purchase of the Upstate Group. The Company has also made a decision to move the manufacturing and distribution operation, as well as development operations, currently located in Lake Placid, N.Y. to its facility in Temecula, CA. during the second quarter of 2006. --In June June: see month. , the Company announced that its Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to 2.0 million shares of the Company's common stock over the next three years ending in June 2008. The program is intended to be implemented through purchases made from time to time in the open market or through private transactions in accordance with applicable securities laws. The timing, pricing and size of purchases will depend on market conditions, prevailing stock prices and other considerations. As of today, the Company has completed the repurchase of approximately 125,000 shares of common stock. Funds for the repurchase of shares are expected to come primarily from cash generated from operations or funds on hand. --In late July, Serologicals settled a contractual claim Contractual Claim An amount that by legal agreement must be paid periodically to the buyer of a security; contractual claim may also specify the time at which the principal must be repaid and other details. against a customer of the Company's former therapeutic plasma business. The settlement of approximately $3.2 million in cash, which the Company received during October, will be reported, net of income taxes and collection expenses totaling approximately $1.3 million, as Income from Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. during the fourth quarter of 2005. In addition, during the third quarter Life Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. the $6.8 million note
it issued to Serologicals in connection with its acquisition of the
Company's former therapeutic plasma business in 2004. Under terms
of the transaction, the debt was discounted to $6.0 million in exchange
for early payment and for a royalty-bearing, non-exclusive commercial
license to a purification purification, in religion, the ceremonial removal of what the religion deems unclean. The usual agents of purification are water (as in baptism), bodily alteration (as in circumcision), and fire. technology. The amount of the discount, less
unamortized imputed interest Imputed InterestA term used to describe interest considered to be paid, even through no interest payment has been made. Notes: Imputed interest is calculated based upon actual payments that are to be paid, but have not yet been paid. income, was reported as a $0.5 million charge to Other Expense during the quarter. Third Quarter Results Summary The Research segment, which is focused on the research products and services business, consists of products and services offered under the brand names of Chemicon(R) and Upstate(R). The Bioprocessing segment, Celliance, includes cell-culture-supplement products along with diagnostic related products. Overall, revenues for the third quarter of 2005 grew 44.7% when compared to the third quarter of 2004, primarily due to the acquisition of the Upstate Group in October, 2004. Revenues for the first nine months of 2005 totaled $187.8 million, compared to $126.8 million for the same period of 2004, an increase of 48.2%. After adding actual Upstate revenues to 2004 results, our company-wide revenues in the third quarter grew 12.1% compared to the prior year, fueled by the strong growth performance in our Research segment. During the quarter, Chemicon revenues increased 15.4% compared to last year while Upstate revenues increased 18.6% when compared to the prior year. Celliance revenues were $33.4 million and $86.6 million for the quarter and first nine months of 2005 versus $31.0 million and $81.0 million for the same periods in 2004. This represents a 7.7% and 6.8% increase in revenues for the quarter and first nine months of 2005 compared to the same period in 2004. Celliance achieved an increase of 16.4% on a consecutive quarter basis, driven by the strong growth in cell culture products which increased 19.7% from the second quarter of 2005. The following table shows a breakdown of the revenue contribution by segment for the third quarter and the first nine months of 2005 and 2004:
---------------------------- ------------------------------
$ in Thousands Quarter Ended Nine Months Ended
---------------------------- ------------------------------
Oct. 2, 2005 Sept. 26, 2004 Oct. 2, 2005 Sept. 26, 2004
------------- -------------- ------------- ---------------
% % % %
Actual Total Actual Total Actual Total Actual Total
-------- ----- ------- ----- ------- ------ ------- ------
Revenue:
Research $33,543 50.1% $15,246 32.9% $101,216 53.9% $45,713 36.1%
Bio-
processing 33,426 49.9% 31,048 67.1% 86,596 46.1% 81,048 63.9%
------- ----- ------- ----- ------- ----- ------- -----
$66,969 100% $46,294 100% $187,812 100% $126,761 100%
======= ===== ======= ===== ======= ===== ======= =====
The comments in this paragraph regarding gross margins refer to pro forma gross margins, excluding acquisition and one time reorganization related costs that impacted gross margins. Consolidated pro forma gross margins continue to improve; for the third quarter of 2005 consolidated pro forma gross margins reached 57.9% compared to 54.0% for the same period in 2004. Pro forma Research gross margins for the third quarter of 2005 decreased by 1.8 percentage points when compared to the pro forma gross margins for the third quarter of 2004. Pro forma Research gross margins for the first nine months of 2005 decreased by 0.9 of a percentage point when compared to the pro forma gross margins for the same period in 2004. Pro forma gross margins in 2005 for the Research segment were lower than 2004 due to product mix shifts from the prior year; in addition Research segment pro forma gross margins for the nine months in 2004 were higher as a result of a second quarter 2004 one-time benefit related to the settlement of a dispute over a licensing arrangement. This settlement increased Research gross margins in 2004 by two percentage points on a year to date basis. Pro forma Bioprocessing margins for the third quarter of 2005 and for the nine months ended 2005 increased by approximately 4.6 and 0.2 percentage points, respectively, compared to the same periods in 2004 primarily as the result of higher EX-CYTE(R) volumes, slightly higher Incelligent(TM) sales and higher manufacturing productivity which resulted in lower unit production costs. The following table shows a breakdown of the gross margin contribution by segment on a pro forma basis for the third quarter and the first nine months of 2005 and 2004:
$ in
Thousands Quarter Ended Nine Months Ended
----------------------------- ------------------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2005 2004 2005 2004
-------------- -------------- --------------- --------------
Pro Pro Pro Pro
Forma GM % Forma GM % Forma GM % Forma GM %
------- ----- ------- ----- ------- ----- ------- -----
Gross
Profit:
Research $20,875 62.2% $9,758 64.0% $64,316 63.5% $29,425 64.4%
Bio-
processing 17,917 53.6% 15,222 49.0% 42,875 49.5% 39,956 49.3%
-------- -------- --------- --------
$38,792 57.9% $24,980 54.0% $107,191 57.1% $69,381 54.7%
======== ======== ========= ========
Selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. ("SG&A") for the third quarter of 2005 were $19.3 million compared to $13.0 million for the third quarter of 2004. On a pro forma basis SG&A costs for the quarter were $18.4 compared to $13.0 million in 2004. The majority of this increase was due to the acquisition of the Upstate Group in 2004. Operating income for the third quarter of 2005 was $12.6 million, or 18.9% of revenue, compared to $9.4 million, or 20.3% of revenue, in the third quarter of 2004. Pro forma operating income for the third quarter of 2005 before acquisition related amortization and other similar acquisition and reorganization related costs was $16.2 million, or 24.1% of revenue, in 2005 compared to $10.1 million, or 21.7% of revenue, in 2004. Operating income for the first nine months of 2005 was $25.0 million, or 13.3% of revenue, compared to $23.2 million, or 18.3% of revenue, for the same period in 2004. Pro forma operating income for the first nine months of 2005 before acquisition related amortization and other similar acquisition and reorganization related costs was $35.3 million, or 18.8% of revenue, compared to $25.2 million, or 19.9% of revenue, for the same period in 2004. Cash flows from operating activities were $5.5 million and $10.4 million in the third quarter and first nine months of 2005. This compares to cash flows from operating activities of $7.1 million and $21.3 million in the third quarter and first nine months of 2004. Cash flows from operating activities are lower in the first nine months of 2005 compared to 2004 due primarily to increases in working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in 2005 as our business has been expanding. Performance Highlights: Research Products and Services Research revenue in the third quarter and first nine months of 2005 increased approximately $18.3 million and $55.5 million, respectively, or 120.0% and 121.4%, respectively, over the prior year quarter and prior year to date. While much of the increased revenue was the result of the Upstate acquisition, Chemicon achieved revenue of $17.6 million which represents a growth of 15.4% for the quarter and revenue of $51.9 million for the nine month period which represents an increase of 13.6% over the prior year. The Chemicon growth in the third quarter was driven primarily by contributions in the areas of neuroscience, stem cells stem cells, unspecialized human or animal cells that can produce mature specialized body cells and at the same time replicate themselves. Embryonic stem cells are derived from a blastocyst (the blastula typical of placental mammals; see embryo), which is very young , bulk reagents and diagnostic products. Upstate revenue, while not included in the 2004 operating results for the Company, was $16.0 million in the third quarter of 2005 which represents an increase of 18.6% compared to the third quarter of 2004. For the nine month period, Upstate achieved $49.3 million in revenue compared to $40.8 million in 2004, an increase of 20.8%. Upstate growth for the third quarter was driven primarily by strong growth in drug discovery services See service discovery. as well as product sales in the areas of nuclear function and multiplex Beadlyte(R) assays. Geographically, Research revenues increased 36% in Asia, 20% in Europe and 13% 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 the third quarter of 2005. Performance Highlights: Bioprocessing Products and Services Bioprocessing revenue was $33.4 million during the third quarter of 2005 compared to $31.0 million for 2004, an increase of 7.7%. Bioprocessing revenue increased $5.5 million, to $86.6 million over the first nine months of 2004, an increase of 6.8%. EX-CYTE(R) sales in the third quarter and first nine months of 2005 were $9.4 million and $21.4 million, respectively, compared to $7.5 million and $20.9 million, respectively, for the same periods of 2004. Sales of Celliance's proprietary bovine bovine /bo·vine/ (bo´vin) pertaining to, characteristic of, or derived from cattle. bovine pertaining to, characteristic of, or derived from the ox or cattle, members of the family Bovidae. See also cattle. serum albumin serum albumin n. See seralbumin. (Probumin(TM) BSA 1. BSA - Business Software Alliance. 2. BSA - Bidouilleurs Sans Argent. ) in the third quarter and first nine months of 2005 were $5.5 million and $15.1 million, respectively, compared to $4.2 million and $12.9 million, respectively, for the same periods of 2004. Sales of recombinant human insulin Noun 1. recombinant human insulin - a form of insulin (trade name Humulin) made from recombinant DNA that is identical to human insulin; used to treat diabetics who are allergic to preparations made from beef or pork insulin Humulin (Incelligent(TM)) were $8.2 million and $19.3 million for the third quarter and the first nine months of 2005, respectively, compared with $8.0 million and $15.5 million, respectively, for the same periods of 2004. Sales of monoclonal antibodies This is a list of monoclonal antibodies, antibodies which are clones of a single parent cell. When used as medications, the generic names end in -mab (see "Nomenclature of monoclonal antibodies"). from Celliance's Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. facility decreased slightly from $6.8 million in the third quarter of 2004 to $6.4 million in the third quarter of 2005. Sales from this facility for the first nine months of 2005 and 2004 were essentially unchanged at $19.0 million in 2005 compared to $19.2 million in 2004. Other Q3 2005 Financial Information --Available cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments at October 2, 2005 were $ 64.9 million, compared with $62.1 million at the end of 2004. --Accounts receivable totaled approximately $43.4 million at the end of the third quarter of 2005, compared with $46.9 million at the end of 2004. Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). improved to 58 days compared to 61 days at the end of 2004. --Capital expenditures for the third quarter of 2005 were $2.8 million compared to $4.0 million for the third quarter of 2004. Capital expenditures for the nine months ended 2005 were $7.9 million compared to $14.8 million for the same nine months ended in 2004. --Recognized losses on foreign exchange transactions were negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . in the third quarter of 2005 and 2004 and $0.3 million and $0.1 million for the first nine months of 2005 and 2004, respectively. In the Research and Bioprocessing segments currency rate fluctuations had a negligible affect on gross margins in both the third quarter and for the first nine months of 2005. In the Research segment currency rate fluctuations had less than a 1.0 percentage point reduction in gross margins in both the third quarter and for the first nine months of 2004. Gross margins in the Bioprocessing segment were adversely affected by 1.0 percentage point in the third quarter and were negligible for the first nine months of 2004, respectively. Q3 2005 Earnings Conference Call We will hold our third quarter earnings conference call at 11:00 a.m. (Eastern Time) on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , October 28, 2005. The conference call dial in number is (888) 396-2384 (domestic) and (617) 847-8711 (international), confirmation code 13958054. The live broadcast will also be available online at our website at www.serologicals.com and at www.StreetEvents.com. If you are unable to participate in the call, a 14-day playback Playback could mean:
About Serologicals Serologicals Corporation (NASDAQ: SERO), headquartered in Atlanta, GA., is a global leader in developing and commercializing consumable A material that is used up and needs continuous replenishment, such as paper and toner. "The low-tech end of the high-tech field!" biological products, enabling technologies and services in support of biological research, drug discovery, and the bioprocessing of life-enhancing products. Serologicals' customers include researchers at major life science companies and leading research institutions involved in key disciplines, such as neurology neurology (n rŏl`əjē, ny–), study of the morphology, physiology, and pathology of the human nervous system. , oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , hematology hematology Branch of medicine concerned with the nature, function, and diseases of the blood. It covers the cellular and serum composition of blood, the coagulation process, blood-cell formation, hemoglobin synthesis, and disorders of all these. , immunology immunology, branch of medicine that studies the response of organisms to foreign substances, e.g., viruses, bacteria, and bacterial toxins (see immunity). Immunologists study the tissues and organs of the immune system (bone marrow, spleen, tonsils, thymus, lymphatic , 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. , proteomics pro·te·o·mics n. The analysis of the expression, localization, functions, and interactions of the proteins produced by the genes of an organism. , infectious diseases infectious diseases: see communicable diseases. , cell signaling and stem cell research. In addition, Serologicals is the world's leading provider of monoclonal antibodies for the blood typing blood typing Classification of blood by inherited antigens associated with erythrocytes (red blood cells). The ABO blood-group system and Rh blood-group system are among those most commonly considered. industry. Serologicals employs a total of approximately 1,000 people worldwide in three Serologicals' companies: Chemicon International, headquartered in Temecula, CA., Upstate Group, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , headquartered in Charlottesville Charlottesville (shär`lətsvĭl), city (1990 pop. 40,341), seat of Albemarle co., central Va., on the Rivanna River, in a Piedmont farm region known for its apples; founded 1762, chartered as a city 1888. , VA. and Celliance Corporation, headquartered in Atlanta, GA. For more information, please visit our website: www.serologicals.com. Statement Regarding Use of Non-GAAP Measures The financial results that Serologicals reports on the basis of GAAP include substantial cash and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and tax benefits related to acquisitions and to the integration of acquired businesses with existing businesses. Serologicals presents pro forma financial information in this press release because it believes that the information is a beneficial supplemental disclosure to investors in analyzing and assessing its past and future performance. Serologicals believes that the pro forma financial information is useful because, among other things, by eliminating the effect of one-time acquisition and integration costs and the related tax benefits, it provides an indication of the profitability and cash flows of the acquired businesses. The pro forma financial information, excluding acquisition related amortization and other similar costs, is limited because it does not reflect the entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. of Serologicals' business costs. Therefore, Serologicals encourages investors to consider carefully its results under GAAP, as well as its pro forma disclosures and the reconciliation between these presentations to more fully understand Serologicals' business. Reconciliations between GAAP results and the pro forma information are presented in the attached tables and also on Serologicals' web site (www.serologicals.com) under the Investor Relations tab. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This release contains certain "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 the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 about Serologicals and its subsidiaries. The forward-looking statements are subject to risks and uncertainties, including, without limitation, statements regarding the transfer of Upstate operations from Lake Placid, N.Y. to Temecula, CA and the impact that the transfer will have on gross margins and operating income of the Research segment in 2006; our expectations that the Research segment will continue to achieve revenue growth in excess of its markets and major competitors; the revenue and earnings outlook for the balance of fiscal 2005; and our ability to achieve operating efficiencies from the accelerated integration program for our Research segment. Additional information concerning these and other risks and uncertainties is outlined in our filings with the Securities and Exchange Commission, including our Annual Report on 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 Securities and Exchange Commission on March 18, 2005. This report is available online at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Forward-looking statements are only predictions and are not guarantees of performance. Forward-looking statements are based on current expectations of future events and are based on the Company's current views and assumptions regarding future events and operating performance. You should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made, and the Company undertakes no obligation to publicly update these statements based on events that may occur after the date of this press release. Serologicals(R) and EX-CYTE(R) are registered trademarks of Serologicals Royalty Company.
SEROLOGICALS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
Third Quarter and Nine Months Ended October 2, 2005 and
September 26, 2004
(in thousands, except per share amounts)
(Unaudited)
Quarter Ended Nine Months Ended
----------------- -------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2005 2004 2005 2004
------- ------- -------- --------
Net revenues $66,969 $46,294 $187,812 $126,761
Cost of revenues 28,743 21,313 82,034 57,379
------- ------- -------- --------
Gross profit 38,226 24,981 105,778 69,382
Operating expenses:
Selling, general and
administrative expenses 19,346 12,997 62,212 38,029
Research and development 4,429 1,930 13,241 6,112
Amortization of intangibles 1,823 655 5,329 2,064
------- ------- -------- --------
Operating income 12,629 9,399 24,995 23,177
Other (income) expense, net 500 25 573 (231)
Interest expense 1,824 1,281 5,545 3,527
Interest income (477) (225) (1,412) (582)
------- ------- -------- --------
Income from operations, before
income taxes 10,782 8,318 20,289 20,463
Provision for income taxes 3,127 2,579 5,884 6,343
------- ------- -------- --------
Net income 7,655 5,739 14,405 14,120
Add-back interest expense on
convertible debt, net of tax 1,219 807 3,698 2,303
------- ------- -------- --------
Numerator for diluted earnings
per share $ 8,874 $ 6,546 $ 18,103 $ 16,423
======= ======= ======== ========
Earnings per common share:
Basic $ 0.22 $ 0.23 $ 0.41 $ 0.57
======= ======= ======== ========
Diluted $ 0.20 $ 0.19 $ 0.41 $ 0.48
======= ======= ======== ========
Weighted average shares used
in per share calculations:
Basic 34,926 25,034 34,760 24,943
======= ======= ======== ========
Diluted 44,259 34,428 44,163 34,306
======= ======= ======== ========
SEROLOGICALS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
Oct. 2, Jan. 2,
2005 2005
-------- --------
Assets
Current assets:
Cash and short-term investments $ 64,950 $ 62,054
Trade accounts receivable, net 43,358 46,899
Inventories 56,576 49,846
Other current assets 15,056 15,226
--------- ---------
Total current assets 179,941 174,025
Property and equipment, net 97,672 96,887
Goodwill 246,824 241,038
Other intangible assets, net 119,261 121,647
Other assets 3,779 6,210
--------- ---------
Total assets $647,477 $639,807
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,081 $ 11,827
Current maturities of capital lease
obligations 1,655 2,419
Accrued liabilities and other 27,186 37,336
--------- ---------
Total current liabilities 35,922 51,582
4.75% Convertible debentures 129,896 130,395
Capital lease obligations 648 2,194
Deferred income taxes 41,311 38,012
Other liabilities 1,014 1,093
Stockholders' equity 438,686 416,531
--------- ---------
Total liabilities and stockholders'
equity $647,477 $639,807
========= =========
SEROLOGICALS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended October 2, 2005 and September 26, 2004
(Unaudited)
(In thousands)
Oct. 2, Sept. 26,
2005 2004
--------- ----------
Operating Activities:
Net income $ 14,405 $ 14,120
Non-cash and working capital changes, net (3,980) 7,135
--------- ---------
Net cash provided by operating activities 10,425 21,255
--------- ---------
Investing Activities:
Purchase of property and equipment and
intangibles (9,516) (14,767)
Purchase of business, net of cash acquired (6,752) (12,440)
Disposition of business - 3,500
Purchases of short-term investments, net (5,290) (164)
Collection of note receivable and other 7,297 -
--------- ---------
Net cash used in investing activities (14,261) (23,871)
--------- ---------
Financing Activities:
Net cash provided by financing activities 2,646 6,422
--------- ---------
Net cash used in discontinued operations - (1,538)
Effect of foreign exchange on cash (1,203) (475)
--------- ---------
Net increase (decrease) in cash and cash
equivalents (2,392) 1,793
Cash and cash equivalents, beginning of period 33,024 48,564
--------- ---------
Cash and cash equivalents, end of period $ 30,632 $ 50,357
========= =========
-0-
*T SEROLOGICALS CORPORATION AND SUBSIDIARIES RECONCILIATION FROM GAAP TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share data) For the Three MonthsFor the Nine Months Ended October 2, 2005Ended October 2, 2005 --------------------------- ---------------------------- Adjust-ProAdjust-Pro GAAPmentsFormaGAAPmentsForma ----------------------- ------------------------ Net revenues$66,969 $-66,969187,812 $-187,812 Cost of revenues28,743(566)(1) 28,17782,034(1,414)(2)80,620 ------- -------------- -------- --------------- Gross profit 38,22656638,792105,7781,414107,191 Margin %57.1%57.9%56.3%57.1% Selling, general and administra- tive19,346(940)(3) 18,40662,212(3,345)(3)58,868 Research and development4,429(206)(3)4,22313,241(206)(3)13,035 Amortization of intangibles1,823(1,823)(4)-5,329(5,329)(4)- ------- -------------- -------- --------------- Operating income12,6293,53516,16324,99510,29435,288 Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: %18.9%24.1%13.3%18.8% Other expense500(519)(5)(19)573(519)(5)54 Interest income(477)-(477)(1,412)-(1,412) Interest expense1,824-1,8245,545-5,545 ------- -------------- -------- --------------- Income from operations before income taxes10,7824,05414,83620,28910,81331,101 Provision for income taxes3,1271,176 (6)4,3025,8843,136 (6)9,019 ------- -------------- -------- --------------- Net income7,6552,87810,53414,4057,67722,082 Add back interest expense on convertible debt, net of taxes1,219-1,2193,698-3,698 ------- -------------- -------- --------------- Numerator numerator the upper part of a fraction. numerator relationship see additive genetic relationship. numerator Epidemiology The upper part of a fraction for diluted earnings per share$ 8,874 $ 2,878$11,753 $ 18,103 $ 7,677$ 25,780 ======= ============== ======== =============== Net income per share: Basic$0.22$0.30 $0.41$0.64 ============== ================ Diluted$0.20$0.27 $0.41$0.58 ============== ================ Weighted average shares used in per share calculation: Basic34,92634,92634,76034,760 Diluted44,25944,25944,16344,163 (1) Add back costs associated with reorganization in Bioprocessing segment (2) Add back YTD See Year-to-date. YTD See year to date (YTD). costs for purchase accounting inventory revaluations related to acquisition of Upstate in the first quarter of $500 and other one time charges for business integration and reorganization costs in both segments totaling $914 (3) Add back business integration and reorganization costs. (4) Add back purchased intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization. (5) Add back loss on collection and settlement of Note Receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. arising from sale of Therapeutic segment (6) The income tax effect at prevailing rate for period. *T
SEROLOGICALS CORPORATION AND SUBSIDIARIES
RECONCILIATION FROM GAAP TO PRO FORMA CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Three Months For the Nine Months
Ended September 26, 2004 Ended September 26, 2004
------------------------- ----------------------------
Adjust- Pro Adjust- Pro
GAAP ments Forma GAAP ments Forma
------- -------- -------- ------- ---------- ---------
Net revenues $46,294 $ - $46,294 $126,761 $ - $126,761
Cost of revenues 21,313 - 21,313 57,379 - $ 57,379
------- ----- ------- -------- ------- --------
Gross profit 24,981 - 24,981 69,382 - 69,382
Margin % 54.0% 54.0% 54.7% 54.7%
Selling, general
and
administrative 12,997 - 12,997 38,029 - 38,029
Research and
development 1,930 - 1,930 6,112 - 6,112
Amortization of
intangibles 655 (655)(1) - 2,064 (2,064)(1) -
------- ----- ------- -------- ------- --------
Operating
income 9,399 655 10,054 23,177 2,064 25,241
Operating
margin % 20.3% 21.7% 18.3% 19.9%
Other expense 25 - 25 (231) - (231)
Interest income (225) - (225) (582) - (582)
Interest expense 1,281 - 1,281 3,527 - 3,527
------- ----- ------- -------- ------- --------
Income from
operations
before income
taxes 8,318 655 8,973 20,463 2,064 22,527
Provision
for income
taxes 2,579 203 (2) 2,782 6,343 643 (2) 6,986
------- ----- ------- -------- ------- --------
Net income 5,739 452 6,191 14,120 1,421 15,541
Add back interest
expense on convertible
debt,
net of taxes 807 - 807 2,291 - 2,291
------- ----- ------- -------- ------- --------
Numerator for
diluted
earnings per
share $ 6,546 $ 452 $ 6,998 $ 16,411 $ 1,421 $ 17,832
======= ===== ======= ======== ======= ========
Net income per
share:
Basic $ 0.23 $ 0.25 $ 0.57 $ 0.62
======= ======= ======== ========
Diluted $ 0.19 $ 0.20 $ 0.48 $ 0.52
======= ======= ======== ========
Weighted average shares used
in per share calculation:
Basic 25,034 25,034 24,943 24,943
Diluted 34,428 34,428 34,306 34,306
(1) Add back purchased intangible asset amortization.
(2) The income tax effect at prevailing rate for period.
SEROLOGICALS CORPORATION AND SUBSIDIARIES
EBITDA and Adjusted EBITDA
(In thousands)
Three Months Ended Nine Months Ended
------------------ ------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2005 2004 2005 2004
--------- ------- ---------- -------
Net income under GAAP $ 7,655 $ 5,739 $14,405 $14,120
Provision for income taxes 3,127 2,579 5,884 6,344
Interest expense (income), net 1,347 1,056 4,133 2,945
Depreciation 2,033 1,661 6,172 5,157
Amortization of intangibles 1,823 655 5,329 2,064
------- ------- ------- -------
EBITDA 15,985 11,690 35,923 30,630
Other Adjustments:
Purchase accounting revaluations
and business integration costs 1,712 - 4,965 -
Loss on collection and
settlement of Note
Receivable arising from
sale of Therapeutic
segment 519 - 519 -
------- ------- ------- -------
Adjusted EBITDA $18,216 $11,690 $41,407 $30,630
======= ======= ======= =======
Note: Income from continuing operations before net interest expense,
including amortization of debt issuance costs, provision for
income taxes, depreciation, amortization and other adjustments
("Adjusted EBITDA") is not a measure of performance defined in
accordance with accounting principles generally accepted in the
United States of America. However, we believe that Adjusted EBITDA
is useful to investors in evaluating our performance because it is
a commonly used financial analysis tool for measuring and
comparing life science companies in areas of operating
performance. Adjusted EBITDA should not be considered as an
alternative to net income as an indicator of our performance or as
an alternative to net cash provided by operating activities as a
measure of liquidity and may not be comparable to similarly titled
measures used by other companies. In addition, the definition of
Adjusted EBITDA as presented herein differs from the definition of
Consolidated EBITDA used in the Company's revolving credit
facility.
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