OSI Systems (NASDAQ:OSIS)
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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-
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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)
-------- -------- -------- --------
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