OSI Systems Inc. Reports Revenues of $24.8 Million
3 February 1999
OSI Systems Inc. Reports Revenues of $24.8 Million, Net Income from Operations of $0.20 Per Share Before Acquisition-Related Charges
LOS ANGELES--Feb. 3, 1999--OSI Systems Inc. Wednesday announced revenues and earnings for the second quarter of its fiscal year 1999, which ended Dec. 31, 1998.
Revenues for the second quarter of fiscal 1999 were $24.8 million, compared to $24.3 million for the second quarter of last year. Pro forma net income for the current quarter, which excludes the acquisition-related charges discussed below, was $2.0 million, or diluted earnings per share of $0.20, compared with net income of $2.4 million, or diluted earnings per share of $0.24, for the second quarter of last year.
During the first and second quarters of fiscal 1999, OSI Systems completed its acquisitions of Osteometer MediTech/AS, Metorex Security Products Oy and Silicon Microstructures Inc. In connection with these acquisitions, OSI is taking a one-time estimated in-process research and development charge of approximately $2.6 million or $0.26 per share. OSI is currently finalizing the amount of its in-process R&D charge, which may change depending on final valuation reports.
The Company expects these valuations to be completed shortly.
Taking into account the charge related to all three above-mentioned acquisitions, the Company reported a net loss of $603,000 or diluted earnings per share of ($0.06) for the current second quarter as compared to net income of $2.4 million, or $0.24 per share for the second quarter of last year.
Revenues for the six months ending Dec. 31, 1998 were $46.3 million, resulting in net income, before in-process R&D charge, of $3.6 million or diluted earnings per share of $0.37. Factoring in the one-time charge, the Company reported net income of $1.1 million and diluted earnings per share of $0.11. This compares with fiscal 1998 six-month revenues of $47.2 million, net income of $3.8 million and diluted earnings per share of $0.46.
"The last three months of calendar 1998, our fiscal second quarter, were spent completing the successive acquisitions of Metorex Security Products and Silicon Microstructures. This was in addition to beginning the integration of our Osteometer acquisition completed only months before in September 1998," said Deepak Chopra, OSI's Chairman and Chief Executive Officer. "Our near-term focus is on integrating these acquisitions and instilling in those companies a sense of OSI Systems' corporate culture.
"Metorex Security Products provides us with a world-class metal detection system to complement the existing channels of distribution in our security business, while the Silicon Microstructures acquisition adds silicon pressure-sensor capabilities to our technology platform and entrance into the automotive market. Osteometer gives us an entry into the life science applications and medical systems arena," continued Chopra. "Through these acquisitions we have strengthened our company and created the opportunity to further leverage our excellent manufacturing capabilities and tremendous geographic reach."
Regarding OSI's successes during the quarter, Chopra said, "Of significance was our ability to complete the approximately $3 million shipment of a previously delayed order for cargo scanning machines for an overseas customer. We also received a milestone technical support contract from the People's Republic of China for a large truck-scanning installation, putting us in a position to bid on large, multi-million dollar X-ray systems projects. Having this world-class reference site will enable us to demonstrate our capabilities at the high-end of the security products arena."
Addressing the recent appointment of a Vice President of Communications to manage the complexities associated with building a corporate identity for a company of OSI Systems' diverse operating units, Chopra said, "We are pleased that Dereck Andrade has joined the OSI Systems team. We are looking forward to utilizing his communications expertise to increase the visibility of our products and services, as well as increasing investor awareness for OSI Systems' unique business model."
OSI Systems, with headquarters in Hawthorne, Calif., manufactures and sells optical and pressure-sensitive electronics subsystems worldwide through its global network of sales and manufacturing facilities in Singapore, Malaysia, Denmark, Norway, Finland, the United Kingdom and the United States. OSI customers include many of the leading Fortune 1000 companies. Its products are used in a wide range of applications including security, medical, aerospace, oil exploration and automotive. For security and inspection customers worldwide, OSI manufactures and sells X-ray inspection and metal detection systems under the trade names Rapiscan(tm) and Metor(tm). OSI manufactures and sells electromechanical pressure-sensing subsystems under the Silicon Microstructures trade name. OSI also sells complete systems for life science applications, including X-ray and ultrasound systems for detecting osteoporosis under the trade names UltraSure(tm) and DexaCare(tm) through its wholly owned subsidiary, Osteometer MediTech. The Company, which employs approximately 800 people worldwide, had revenues of $94 million in its 1998 fiscal year, which ended June 30, 1998.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements contained in this release which 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.
OSI Systems Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three months ended Six months ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
Revenues $24,847 $24,285 $46,251 $47,246
Cost of goods sold 17,424 17,183 32,412 33,832
Gross profit 7,423 7,102 13,839 13,414
Operating expenses:
Selling, general and
administrative 3,548 3,293 6,937 6,392
Research and development 1,559 973 2,583 1,800
In-process research and
development 2,579 2,579
Total operating expenses 7,686 4,266 12,099 8,192
Income/(loss) from
operations (1) (263) 2,836 1,740 5,222
Interest (income)/expense (83) (369) (250) 42
Income/(loss) before provision
for income taxes (180) 3,205 1,990 5,180
Provision for income taxes 423 835 933 1,369
Net income/(loss) (1) ($603) $2,370 $1,057 $3,811
Diluted earnings
per share (1) ($0.06) $0.24 $0.11 $0.46
Weighted average shares
outstanding 9,849,753 9,905,059 9,853,031 8,206,561
(1) The following table represents the proforma results of the
ongoing business of OSI Systems Inc. and subsidiaries that excludes
nonrecurring charges related to the acquisitions of Osteometer
MediTech/AS, Metorex Security Products Oy and Silicon Microstructures
Inc.
Income from operations $2,316 $2,836 $4,319 $5,222
Net income $1,976 $2,370 $3,636 $3,811
Diluted earnings per share $0.20 $0.24 $0.37 $0.46
Weighted average shares
outstanding 9,849,753 9,905,059 9,853,031 8,206,561
Condensed Consolidated Balance Sheets
( in thousands)
Dec. 31, 1998 June 30, 1998
(Unaudited)
Cash and cash equivalents $11,902 $22,447
Accounts receivables, net of
allowance for doubtful accounts 27,857 24,254
Inventory 26,381 21,705
Other current assets 5,658 4,212
Total current assets 71,798 72,618
Non current assets 27,151 14,204
Total $98,949 $86,822
Bank lines of credit $11,811 $198
Current portion of long-term debt 739 633
Other current liabilities 18,536 19,370
Total current liabilities 31,086 20,201
Long-term debt 130 412
Other long term liabilities 297 294
Shareholders' equity 67,436 65,915
Total $98,949 $86,822