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OSI Systems Announces Record Annual Revenue, Income from Operations, and Earnings per Share For Fiscal 2003.

Business Editors

HAWTHORNE, Calif.--(BUSINESS WIRE)--Aug. 20, 2003

OSI Systems, Inc. (Nasdaq:OSIS):

-- Q4 Revenues of $50.9 Million and EPS of $0.35

-- Company Exceeds Previously Provided Fiscal Year Revenue

Guidance of $175 Million and Maintains Q1 Revenue Guidance for

Fiscal 2004

OSI Systems, Inc. (Nasdaq:OSIS), today announced its revenues and earnings for the fourth quarter and fiscal year ended June 30, 2003.

The Company reported revenues of $50.9 million for the fourth quarter of fiscal 2003, an increase of 43% from $35.6 million reported for the fourth quarter of fiscal 2002. Income from operations for the fourth quarter of fiscal 2003 grew 45% to $5.9 million from $4.1 million for the fourth quarter of 2002. Net income for the fourth quarter of fiscal 2003 grew 78% to $5.2 million compared to $2.9 million for the year ago fourth quarter. Diluted earnings per share for the fourth quarter of fiscal 2003 were $0.35 compared to $0.22 for the fourth quarter of fiscal 2002, an increase of 59%. Included in the diluted earnings per share for the fourth quarter of 2003 was a pre-tax gain of $1.8 million or $0.08 per share (after-tax) on the sale of marketable securities and a pre-tax charge of $407,000 or $0.02 per share (after-tax) for the impairment of an equity investment.

Revenues for the year ended June 30, 2003 were $182.6 million, compared to revenues of $124.2 million for fiscal 2002, an increase of 47%. Income from operations for fiscal 2003 grew 123% to $22 million compared to $9.8 million last year. Net income for fiscal 2003 grew 128% to $15.8 million from $6.9 million in fiscal 2002. Diluted earnings per share for fiscal 2003 were $1.09 compared to $0.60 for fiscal 2002, an increase of 82%. Included in the diluted earnings per share for fiscal 2003 was a pre-tax gain of $1.8 million or $0.09 per share (after-tax) on the sale of marketable securities, a pre-tax charge of $1.4 million or $0.07 per share (after-tax) for the impairment of an equity investment and a pre-tax charge for the write off of deferred acquisition costs of $608,000 or $0.03 per share (after-tax).

Deepak Chopra, Chairman and CEO of OSI Systems, Inc., stated, "2003 was a very successful year for OSI Systems in a challenging environment. We were able to maintain the strong growth momentum in our core x-ray systems business and to meet our ambitious targets for this year. This was the result of the strong performance of our security group as well as our success in penetrating new geographic markets while expanding our customer base in the United States. At the same time we entered the large cargo inspection market as a leading player, among a field of global competitors.

"We remain focused on executing our business plan this year and continue to take steps to streamline our operations as we set the stage for future growth," continued Chopra. "Our optoelectronics and medical businesses have been affected by the general economic slowdown. However we feel that they stand to benefit as soon as capital spending trends upwards. The flexible nature of our manufacturing and engineering capabilities allows us to rapidly deploy resources to where the business opportunities are."

Ajay Mehra, President of OSI Systems Security Group, said, "Of great significance to our business going forward, is the fact that we successfully delivered a variety of large cargo systems to customers all over the world. In the U.S. we rapidly developed a family of gamma ray imaging systems. One of these has been ordered by a Federal agency and represents our entry into the U.S. market place. Recently, we announced the completion of a $10 million x-ray large cargo inspection site in Hong Kong. This is the world's most modern, high throughput inspection facility. To Malaysia we delivered several mobile x-ray systems and for South Korea we delivered multiple 9 MeV relocatable systems. Also, in the U.S., we are working under contract to the federal government, to deliver the world's first PFNA large cargo scanning system to be deployed at the U.S./Mexico border in El Paso. We are now the only security company to possess x-ray, gamma, and neutron analysis based technologies for security and defense systems."

Previously, the Company had provided guidance for the six month period comprising fourth quarter fiscal 2003 and first quarter fiscal 2004 revenues at $91 million to $93 million in revenues. Based upon fourth quarter of fiscal 2003 results, the Company holds guidance for 2004 fiscal first quarter ending September 30, 2003 revenues at $40 million to $42 million. Additionally, the Company has provided fiscal 2004 revenue guidance of $180 million to $185 million.

OSI Systems, Inc. will webcast the live earnings call over the Internet at 2:30 p.m. PT, today. To listen, please log on 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

A telephonic replay of the call will also be available from 4:30 p.m. Pacific Time on August 20 until 4:30 p.m. Pacific Time on August 22. The replay may be accessed by calling 800-633-8284 and entering the conference call identification number 21158049.

About OSI Systems Inc.

OSI Systems Inc. is a diversified global developer, manufacturer and seller of optoelectronic-based components and systems. The company has more than 30 years of optoelectronics experience, and through its family of subsidiaries, competes in four specific growth areas: OEM Manufacturing, Security, Medical and Fiber Optics. For more information on OSI Systems Inc. or any of its subsidiary companies, visit

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: The statements contained in this release that are not historical facts are forward-looking statements that are subject to risks and uncertainties including those risks detailed in the company's Securities and Exchange Commission filings that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. In addition to the factors discussed in the filings with the Securities and Exchange Commission, among the other factors that could cause actual results to differ materially are the following: adverse changes in the business conditions and the general economy; competitive factors, such as rival companies' pricing and marketing efforts; availability of third-party material products at reasonable prices; the financial condition of the customer; risks of obsolescence due to shifts in market demand; and litigation involving product liabilities and consumer issues; and a change in the demand for security systems based upon the ever changing domestic and international political climate.

 OSI Systems Inc., and Subsidiaries
 Consolidated Statements of Operations
 (in thousands, except share and per share amounts)

 Three months ended Year ended
 June 30, June 30,
 2003 2002 2003 2002

Revenues $50,924 $35,597 $182,644 $124,230
Cost of goods sold 34,502 23,566 122,661 85,908

Gross profit 16,422 12,031 59,983 38,322
Operating expenses:
 Selling, general and
 administrative 8,096 6,262 29,160 21,647
 Research and
 development 2,403 1,572 8,865 6,434
 Goodwill amortization 99 402

 Total operating
 expenses 10,499 7,933 38,025 28,483

Income from operations 5,923 4,098 21,958 9,839
Interest income, net (202) (212) (786) (161)
Impairment of equity
 investment 407 1,433
Write-off of deferred
 acquisition costs 608
Gain on sale of marketable
 securities (1,767) (1,767)

Income before provision
 for income taxes and
 minority interest 7,485 4,310 22,470 10,000
Provision for income taxes 2,189 1,365 6,521 3,000

Income before minority
 interest in net income of
 subsidiary 5,296 2,945 15,949 7,000

Minority interest 71 14 156 79

Net income $5,225 $2,931 $15,793 $6,921

Net income available to
 common shareholders $5,225 $2,931 $15,793 $6,921

Diluted earnings per share 0.35 0.22 1.09 0.60

Weighted average shares
 outstanding assuming
 dilution 14,921,328 13,442,906 14,525,679 11,478,371

 Condensed Consolidated Balance Sheets
 (in thousands)

 June 30, June 30,
 2003 2002

Cash and cash equivalents $94,246 $67,604
Investments 3,973 539
Accounts receivable, net of allowance
 for doubtful accounts 36,901 38,812

Inventory 42,415 36,512
Other current assets 9,477 6,662

 Total current
 assets 187,012 150,129

Non current assets 42,526 25,229

 Total $229,538 $175,358

Current portion of long-
 term debt $2,625 $2,625
Other current liabilities 42,471 31,873

 Total current
 liabilities 45,096 34,498
Long-term debt 1,798 4,463
Other long term
 liabilities 2,010 584
Minority interest 235 79
Shareholders' equity 180,399 135,734

 Total $229,538 $175,358
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Publication:Business Wire
Geographic Code:1USA
Date:Aug 20, 2003
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