OSI Systems, Inc. (NASDAQ:OSIS) today announced financial results
for its fourth quarter and fiscal year ended June 30, 2006. The
Company reported revenues of $125.6 million for the fourth quarter
of fiscal 2006, an increase of 25% from the $100.7 million reported
for the fourth quarter of fiscal 2005. Net income for the fourth
quarter of fiscal 2006 was $0.7 million, or $0.04 per diluted
share, compared to a net loss of $3.2 million, or ($0.20) per
diluted share, for the fourth quarter of fiscal 2005. The fourth
quarter of fiscal 2006 results included stock-based compensation
expenses of $1.3 million, or $0.06 per diluted share, due to the
adoption of FAS 123R on July 1, 2005. Results for the fourth
quarter of fiscal 2005 did not include stock-based compensation
expenses. For the fiscal year ended June 30, 2006, revenues
increased by $67.6 million, or 18%, to $452.7 million, from $385.0
million for fiscal 2005. For fiscal 2006, the Company reported a
net loss of $2.4 million, or $(0.17) per diluted share, including
stock-based compensation expenses of $5.4 million, or $0.25 per
diluted share. In fiscal 2005 the net loss was $2.4 million, or
$(0.15) per share, which did not include stock-based compensation
expenses. Deepak Chopra, Chairman and CEO, stated, "We are pleased
with the results for the fourth quarter, a period in which
operating income improved by $13 million, excluding stock-based
compensation expenses, when compared to the fourth quarter of
fiscal 2005. We expect to continue this momentum for fiscal 2007
while continuing to work diligently on improving our profitability.
At year end, the Company's backlog is at an all time high of
approximately $147 million, led by the strong bookings in the
Security division." Mr. Chopra continued, "Each of our three
business divisions grew in fiscal 2006. The Security division
continued to make positive strides in its development programs,
while simultaneously growing revenues by 10% and operating income
by $4.8 million over the prior year. We expect that the Security
division will see continued growth in fiscal 2007, led by the
improvement in the cargo and vehicle inspection market and the
introduction of its first product in the international Hold Baggage
Screening market. Our Healthcare division's fiscal 2006 revenues
increased 13% and operating income increased by 75% from the prior
year. The Healthcare division is poised for continued success in
fiscal 2007, strengthened by the recent acquisition of Del Mar
Reynolds. The Optoelectronics and Manufacturing division had an
outstanding year, increasing external revenues by 47% and operating
income by 102% from the prior year and is well positioned for
continued strong results in fiscal 2007." Segment Information
Security Division The Security division recorded revenues of $41.3
million for the fourth quarter of fiscal 2006, an increase of 28%
from $32.2 million reported for the fourth quarter of fiscal 2005.
Income from operations for the fourth quarter of fiscal 2006 was
$2.0 million, compared to a loss from operations of $2.4 million
for the fourth quarter of fiscal 2005. The fiscal 2006 fourth
quarter results included stock-based compensation expenses of $0.2
million, whereas no such expense was included in the fourth quarter
of fiscal 2005. For the fiscal year ended June 30, 2006, revenues
increased by $11.9 million, or 10%, to $135.1 million, from $123.2
million for fiscal 2005. For fiscal 2006, the Security division
reported a loss from operations of $0.6 million, compared to a loss
from operations of $5.4 million for fiscal 2005. Fiscal 2006
results include stock-based compensation expenses of $0.9 million,
whereas no such expense was included in fiscal 2005. Healthcare
Division The Healthcare division reported revenues of $58.8 million
for the fourth quarter of fiscal 2006, an increase of 15% from
$51.1 million reported for the fourth quarter of fiscal 2005.
Income from operations for the fourth quarter of fiscal 2006 was
$6.5 million, compared to $2.4 million for the fourth quarter of
fiscal 2005. The fourth quarter results included stock-based
compensation expenses of $0.5 million, whereas no such expense was
included in the fourth quarter of fiscal 2005. For the fiscal year
ended June 30, 2006, revenues increased by $24.9 million, or 13%,
to $220.6 million, from $195.7 million for fiscal 2005. For fiscal
2006, income from operations increased by $6.3 million, or 75%, to
$14.7 million, from $8.4 million for fiscal 2005. Fiscal 2006
results include stock-based compensation expenses of $1.6 million,
whereas no such expense was included in fiscal 2005.
Optoelectronics and Manufacturing Division The Optoelectronics and
Manufacturing division generated external revenues of $25.4 million
for the fourth quarter of fiscal 2006, an increase of 46% from
$17.4 million reported for the fourth quarter of fiscal 2005.
Income from operations for the fourth quarter of fiscal 2006 was
$5.1 million, compared to $0.5 million for the fourth quarter of
fiscal 2005. The fourth quarter results included stock-based
compensation expenses of $0.1 million, whereas no such expense was
included in the fourth quarter of fiscal 2005. For the fiscal year
ended June 30, 2006, external revenues increased by $30.9 million,
or 47%, to $97.0 million from $66.1 million for fiscal 2005. For
fiscal 2006, income from operations increased by $6.3 million, to
$12.5 million, from $6.2 million for fiscal 2005. Fiscal 2006
results include stock-based compensation expenses of $0.5 million,
whereas no such expense was included in fiscal 2005. Higher
intercompany sales to the Security and Healthcare divisions in
fiscal 2006 compared to fiscal 2005 positively impacted operating
income for the Optoelectronics and Manufacturing division. However,
these sales are eliminated in consolidation. Forward-Looking
Guidance for the Year Ending June 30, 2007 The Company has not
previously issued guidance for fiscal 2007. The Company provides
the following guidance for fiscal 2007: Fiscal 2007 -- Net sales of
$535-$545 million, or year-over-year growth of 18-20%. The Company
expects to report earnings per share of $0.35 to $0.45 for fiscal
2007 as compared to a loss per share of $(0.14) in fiscal 2006.
Fiscal 2007 -- First Quarter -- Net sales of $112-$116 million, or
year-over-year growth of 10-14%. The Company expects the loss per
share to be reduced from the ($0.26) per share loss reported in the
first quarter of 2005. The first quarter, historically the softest
quarter in the Company's fiscal year, is impacted primarily by the
seasonality factors within the Healthcare division. The Company has
not yet established the final allocation of the purchase price
associated with the Del Mar Reynolds acquisition, including the
allocation of in-process research and development and intangibles,
which could affect the above results guidance. Conference Call
Information OSI Systems, Inc. will host a conference call and
simultaneous webcast today over the Internet beginning at 9:00 am
PT (12:00 pm ET) to discuss these results. To listen, please log on
www.fulldisclosure.com or www.osi-systems.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 1:00 pm PT on September 13th until September 26th.
The replay may be accessed by calling 888-286-8010 and entering the
conference call identification number "35075047" when prompted for
the replay code. About OSI Systems, Inc. OSI Systems, Inc. is a
Hawthorne-based diversified global developer, manufacturer and
seller of security and inspection systems, medical monitoring and
anesthesia 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 within the meaning of Section 27A of the
Securities Act of 1933, as amended, 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 predictions
about upcoming improvements in the market for products that screen
cargo, the introduction by the Company's Security division of its
first product that screens hold (checked) baggage, the effect of
the Healthcare division's recent acquisition of Del Mar Reynolds,
future results of the Optoelectronics and Manufacturing division,
and the Company's guidance fiscal year 2007. The actual results may
differ materially from those described in or implied by any
forward-looking statement. In particular, there can be no assurance
that expected improvements in markets, introductions of new
products, effects of acquisitions or other expectations, such as
those concerning future revenues and operating income, will
ultimately materialize. 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. -0- *T 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, -------------------------
------------------------- 2006 2005 2006 2005 -----------
----------- ----------- ----------- Revenues $ 125,586 $ 100,713 $
452,686 $ 385,041 Cost of goods sold 74,090 62,507 276,025 243,415
----------- ----------- ----------- ----------- Gross profit 51,496
38,206 176,661 141,626 ----------- ----------- -----------
----------- Operating expenses: Selling, general and administrative
37,693 35,692 138,428 116,245 Research and development 9,557 9,495
35,839 30,537 Restructuring charges - 800 - Management retention
bonus - 438 623 1,824 ----------- ----------- -----------
----------- Total operating expenses 47,250 45,625 175,690 148,606
----------- ----------- ----------- ----------- Income (loss) from
operations 4,246 (7,419) 971 (6,980) Interest income 87 38 267 196
Interest expense (372) (561) (1,558) (807) Impairment of equity
investments - - - (182) Gain on sale of marketable securities - -
349 - Other income 475 - 475 - ----------- ----------- -----------
----------- Income (loss) before provision for income taxes and
minority interest 4,436 (7,942) 504 (7,773) Provision (benefit) for
income taxes 2,905 (4,707) 1,090 (5,309) Minority interest (796) -
(1,772) 69 ----------- ----------- ----------- ----------- Net
income (loss) $ 735 $ (3,235) $ (2,358) $ (2,395) ===========
=========== =========== =========== Diluted earnings (loss) per
share $ 0.04 $ (0.20) $ (0.17) $ (0.15) =========== ===========
=========== =========== Weighted average shares outstanding --
diluted 16,736,545 16,245,131 16,516,652 16,222,998 ===========
=========== =========== =========== Condensed Consolidated Balance
Sheets (in thousands) June 30, 2006 2005 ---------------
-------------- ASSETS Cash and cash equivalents $ 13,799 $ 14,623
Accounts receivable, net 119,419 89,227 Inventories 120,604 107,441
Other current assets 29,902 26,382 --------------- --------------
Total current assets 283,724 237,673 Non-current assets 119,774
109,447 --------------- -------------- Total $ 403,498 $ 347,120
=============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY
Bank lines of credit $ 10,857 $ 15,752 Current portion of long-term
debt 1,251 499 Accounts payable and accrued expenses 68,526 54,504
Other current liabilities 40,934 36,543 ---------------
-------------- Total current liabilities 121,568 107,298 Long-term
debt 5,483 4,852 Other long-term liabilities 17,769 11,343
--------------- -------------- Total liabilities 144,820 123,493
Minority interest 9,731 - Shareholders' equity 248,947 223,627
--------------- -------------- Total $ 403,498 $ 347,120
=============== ============== Segment Information (in thousands)
Three months ended Twelve months ended June 30, June 30,
------------------- ------------------ 2006 2005 2006 2005 --------
-------- -------- -------- Revenues - by Segment Group: Security
Group $ 41,302 $ 32,180 $135,089 $123,197 Healthcare Group 58,825
51,101 220,624 195,698 Optoelectronics and Manufacturing Group,
including intersegment revenues 37,277 20,885 125,870 84,558
Intersegment revenues elimination (11,818) (3,453) (28,897)
(18,412) -------- -------- -------- -------- Total $125,586
$100,713 $452,686 $385,041 -------- -------- -------- --------
Operating income (loss) -- by segment group: Security Group $ 1,974
$ (2,405) $ (640) $ (5,438) Healthcare Group 6,501 2,423 14,660
8,394 Optoelectronics and Manufacturing Group 5,114 515 12,505
6,159 Corporate (8,784) (7,735) (24,786) (15,420) Eliminations
(559) (217) (768) (675) -------- -------- -------- -------- Total $
4,246 $ (7,419) $ 971 $ (6,980) -------- -------- -------- --------
*T
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