Serologicals Corporation (NASDAQ:SERO) today announced financial
results for the third quarter ended October 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 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 Company provides pro forma results that exclude
acquisition amortization, other similar acquisition related costs
and other one-time costs. The Company provides pro forma
information as an addition to, and not as a substitute for,
financial measures presented in accordance with 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
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 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 tab. President & CEO Perspectives "As expected, we
saw a significant increase in revenue and earnings during the third
quarter consistent with our comments in July," 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 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, 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
in government research funding, as well as lower than anticipated
growth in pharmaceutical/biotech preclinical spending. During the
quarter, we hired a new Sales Vice-President 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. 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 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 and stem
cell research and a range of new Upstate kinases and multiplex
Beadlyte(R) assays. Upstate is expanding its industry leading
position by providing over 250 kinases with an aggressive plan to
further increase its kinase 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 detection kit and
the expansion of its KinEASE(TM) FP production line to include each
of the 80 individual kinases that have been validated in the assay.
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 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 detection product utilizing Chemicon's patented
fluorescent 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, serum-free embryonic stem cell 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. In addition, Celliance acquired the UCOE (ubiquitous
chromatin opening element) gene expression technology from Innovata
plc that improves the yield, consistency and stability of protein
production in cultured mammalian 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 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
costs, retention payments and 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, the
Company announced that its Board of Directors authorized a stock
repurchase program to repurchase 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 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
during the fourth quarter of 2005. In addition, during the third
quarter Life Therapeutics prepaid 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 technology. The amount of the
discount, less unamortized imputed interest 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: -0- *T ----------------------------
------------------------------ $ 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%
======= ===== ======= ===== ======= ===== ======= ===== *T 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: -0- *T $
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% ======== ======== ========= ======== *T Selling,
general and administrative costs ("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 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, 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 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 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 serum albumin (Probumin(TM) BSA) 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 (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 from Celliance's Scotland 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 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
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 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, 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 will start on October
28, 2005 at 1:00 p.m. (Eastern Time). To listen to the playback,
please call (888) 286-8010 (domestic) or (617) 801-6888
(international) and enter access code 27440165 or access the
archived web cast on our website at www.serologicals.com. About
Serologicals Serologicals Corporation (NASDAQ: SERO), headquartered
in Atlanta, GA., is a global leader in developing and
commercializing consumable 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, oncology, hematology, immunology,
cardiology, proteomics, infectious diseases, cell signaling and
stem cell research. In addition, Serologicals is the world's
leading provider of monoclonal antibodies for the blood typing
industry. Serologicals employs a total of approximately 1,000
people worldwide in three Serologicals' companies: Chemicon
International, headquartered in Temecula, CA., Upstate Group, LLC,
headquartered in Charlottesville, 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
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 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 Statement This
release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act 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 filed with the Securities and Exchange Commission on
March 18, 2005. This report is available online at
http://www.sec.gov. 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. -0- *T 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 ======= ======= ========
======== *T -0- *T 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 ========= ========= *T -0-
*T 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 *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 October 2, 2005 Ended October 2,
2005 --------------------------- ----------------------------
Adjust- Pro Adjust- Pro GAAP ments Forma GAAP ments Forma -------
-------- -------- ------- -------- --------- Net revenues $66,969 $
- 66,969 187,812 $ - 187,812 Cost of revenues 28,743 (566)(1)
28,177 82,034 (1,414)(2) 80,620 ------- ------- ------- --------
------- -------- Gross profit 38,226 566 38,792 105,778 1,414
107,191 Margin % 57.1% 57.9% 56.3% 57.1% Selling, general and
administra- tive 19,346 (940)(3) 18,406 62,212 (3,345)(3) 58,868
Research and development 4,429 (206)(3) 4,223 13,241 (206)(3)
13,035 Amortization of intangibles 1,823 (1,823)(4) - 5,329
(5,329)(4) - ------- ------- ------- -------- ------- --------
Operating income 12,629 3,535 16,163 24,995 10,294 35,288 Operating
margin % 18.9% 24.1% 13.3% 18.8% Other expense 500 (519)(5) (19)
573 (519)(5) 54 Interest income (477) - (477) (1,412) - (1,412)
Interest expense 1,824 - 1,824 5,545 - 5,545 ------- -------
------- -------- ------- -------- Income from operations before
income taxes 10,782 4,054 14,836 20,289 10,813 31,101 Provision for
income taxes 3,127 1,176 (6) 4,302 5,884 3,136 (6) 9,019 -------
------- ------- -------- ------- -------- Net income 7,655 2,878
10,534 14,405 7,677 22,082 Add back interest expense on convertible
debt, net of taxes 1,219 - 1,219 3,698 - 3,698 ------- -------
------- -------- ------- -------- Numerator 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:
Basic 34,926 34,926 34,760 34,760 Diluted 44,259 44,259 44,163
44,163 (1) Add back costs associated with reorganization in
Bioprocessing segment (2) Add back 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 amortization. (5)
Add back loss on collection and settlement of Note Receivable
arising from sale of Therapeutic segment (6) The income tax effect
at prevailing rate for period. *T -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 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. *T -0- *T 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. *T
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