Serologicals (NASDAQ:SERO)
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Serologicals Corporation (NASDAQ: SERO) announced today
its financial results for the first quarter ended April 2, 2006.
Revenues decreased 2.8%, to $55.0 million, compared to $56.6 million
in the same period last year. Diluted earnings per share increased
52.8% to $0.08 per share compared to $0.05 per share in the same
period in the prior year. The decrease in revenues was primarily due
to the divestiture of certain Bioprocessing product lines previously
manufactured at our former facility in Milford, MA, which was sold in
January 2006. The decrease was partially offset by increased revenues
in the Research segment.
As the result of our numerous acquisitions and other strategic
corporate activities over the past five years, we provide pro forma
results that exclude acquisition amortization, other acquisition
related costs, expenses for stock-based compensation and other
one-time charges. We also provide pro forma information as an addition
to, and not as a substitute for, financial measures presented in
accordance with GAAP. We believe the pro forma presentation is a
beneficial supplemental disclosure to investors in analyzing and
assessing our past and future performance.
First quarter 2006 pro forma net income was $4.9 million, or $0.14
diluted per share, compared with $4.3 million, or $0.13 diluted per
share, in the first quarter of 2005. Pro forma net income and pro
forma earnings per share increased by 12.8% and 12.9%, respectively.
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.
Serologicals will not hold the previously announced earnings
conference call that was scheduled for Thursday, April 27, 2006
because of the recently announced transaction with Millipore
Corporation.
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 approximately 1,000 people worldwide
and reported revenues of $275 million in 2005. For additional
information on Serologicals Corporation, please visit our website:
www.serologicals.com.
Statement Regarding Use of Non-GAAP Measures
The financial results that we report on the basis of GAAP include
substantial cash and non-cash charges and tax benefits related to
acquisitions, to the integration of acquired businesses with existing
businesses, to expenses for stock-based compensation and to other
one-time events. We present pro forma financial information in this
press release because we believe that the information is a beneficial
supplemental disclosure to investors in analyzing and assessing our
past and future performance. We believe that the pro forma financial
information is useful because, among other things, by eliminating the
effect of one-time acquisition and integration costs and other
one-time events and the related tax benefits, it provides an
indication of the profitability and cash flows of the acquired
businesses and our on-going operations.
The pro forma financial information, excluding acquisition related
amortization and other one-time costs, is limited because it does not
reflect the entirety of our business costs. Therefore, we encourage
investors to consider carefully our results under GAAP, as well as our
pro forma disclosures and the reconciliation between these
presentations to more fully understand our business. Reconciliations
between GAAP results and the pro forma information are presented in
the attached tables and also on our 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 our subsidiaries and us. 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
17, 2006. 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 our 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 we
undertake no obligation to publicly update these statements based on
events that may occur after the date of this press release.
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
First Quarter Ended April 2, 2006 and April 3, 2005
(in thousands, except per share amounts)
(Unaudited)
Quarter Ended
-----------------
April 2, April 3,
2006 2005
------- -------
Net revenues $55,028 $56,635
Costs and expenses:
Cost of revenues 23,412 25,796
Selling, general and administrative expenses 19,888 20,293
Research and development 4,999 4,485
Amortization of intangibles 1,845 1,763
Gain on sale of long-lived assets (1,184) -
Impairment and exiting costs 845 -
------- -------
Operating income 5,223 4,298
Other (income) expense, net (223) 101
Interest expense 1,812 1,803
Interest income (312) (288)
------- -------
Income from operations, before income taxes 3,946 2,682
Provision for income taxes 1,105 778
------- -------
Net income 2,841 1,904
Add-back interest expense on convertible debt, net
of tax - -
------- --------
Numerator for diluted earnings per share $ 2,841 $ 1,904
======= =======
Earnings per common share:
Basic $ 0.08 $ 0.06
======= =======
Diluted $ 0.08 $ 0.05
======= =======
Weighted average shares used in per share
calculations:
Basic 34,129 34,581
======= =======
Diluted 34,437 35,270
======= =======
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
April 2, January 1,
2006 2006
---------- ----------
Assets
Current assets:
Cash and short-term investments $ 43,061 $ 38,452
Trade accounts receivable, net 36,048 64,172
Inventories 67,715 59,418
Assets Held for Sale 22,017 -
Other current assets 13,259 15,798
--------- ---------
Total current assets 182,101 177,840
Property and equipment, net 66,327 70,015
Goodwill 244,756 239,520
Other intangible assets, net 117,275 120,027
Other assets 3,290 16,217
--------- ---------
Total assets $ 613,749 $ 623,619
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 13,322 17,377
Accrued liabilities and other 29,734 41,757
Current maturities of capital lease
obligations 792 1,081
--------- ---------
Total current liabilities 43,847 60,215
4.75% Convertible debentures 129,914 129,905
Capital lease obligations 447 476
Deferred income taxes 25,736 25,736
Other liabilities 932 910
Stockholders' equity 412,873 406,377
--------- ---------
Total liabilities and stockholders'
equity $ 613,749 $ 623,619
========= =========
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 3, 2005 and March 28, 2004
(Unaudited)
(In thousands)
April 2, April 3,
2006 2005
--------- ---------
Operating Activities:
Net income $ 2,841 $ 1,904
Non-cash and working capital changes, net 8,927 (1,526)
-------- --------
Net cash provided by (used in) operating
activities 11,768 378
-------- --------
Investing Activities:
Purchase of property and equipment (3,869) (2,904)
Purchase of business, net of cash acquired (7,357) (6,964)
Disposition of business 3,312 -
Proceeds from (purchases of) short-term
investments, net 17,225 (5,100)
Other, net (9) 413
-------- --------
Net cash used in investing activities 9,302 (14,555)
-------- --------
Financing Activities:
Net cash provided by financing activities 981 1,193
-------- --------
Effect of foreign exchange on cash (217) (462)
-------- --------
Net increase (decrease) in cash and cash
equivalents 21,834 (13,446)
Cash and cash equivalents, beginning of period 21,227 33,024
-------- --------
Cash and cash equivalents, end of period $ 43,061 $ 19,578
======== ========
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
For the Three Months
Ended April 2, 2006
------------------------------
(in thousands, except per share data) Pro
GAAP Adjustments Forma
------- ----------- --------
Net revenues $55,028 - 55,028
Cost of revenues 23,412 (170)(1) 23,242
------- ------- -------
Gross profit 31,616 170 31,786
------- ------- -------
Margin % 57.5% 57.8%
Selling, general and administrative 19,888 (1,260)(2) 18,628
Research and development 4,999 (45)(1) 4,953
Amortization of intangibles 1,845 (1,845)(3) -
Gain on sale of long-lived assets (1,184) 1,184 (4) -
Impairment and exiting costs 845 (845)(5) -
------- ------- -------
Operating income 5,223 2,981 8,204
Operating margin % 9.5% 14.9%
Other income (223) - (223)
Interest income (312) - (312)
Interest expense 1,812 - 1,812
------- ------- -------
Income from operations before income
taxes 3,946 2,981 6,928
Provision for income taxes 1,105 835 (6) 1,940
------- ------- -------
Net income 2,841 2,147 4,988
Add back interest expense on convertible
debt, net of taxes - 1,229 (7) 1,229
------- ------- -------
Numerator for diluted earnings per share$ 2,841 $ 3,376 $ 6,217
======= ======= =======
Net income per share:
Basic $ 0.08 $ 0.15
======= =======
Diluted $ 0.08 $ 0.14
======= =======
Weighted average shares used in per
share calculation:
Basic 34,129 - 34,129
Diluted 34,437 8,790 43,227
(1) Add back business integration costs in research segment
(2) Add back business integration costs principally in research
segment of $316 and expenses associated with share- based payments
arrangements with employees of $944
(3) Add back purchased intangible asset amortization
(4) Gain on cash sale of bioprocessing assets in Milford, MA
(5) Cash charges incurred in connection with closing and exiting
bioprocessing facilities
(6) The income tax effect of pro forma adjustments at prevailing rate
for period
(7) Add back interest on convertible debt which has an anti-dilutive
effect on GAAP results and dilutive effect on pro forma results
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
For the Three Months
Ended April 3, 2005
-----------------------------
(in thousands, except per share data) Pro
GAAP Adjustments Forma
----- ------------- --------
Net revenues $56,635 - 56,635
Cost of revenues 25,796 (630)(1) 25,166
------- --------- -------
Gross profit 30,839 630 31,469
Margin % 54.5% 55.6%
Selling, general and administrative 20,293 (1,034)(2) 19,259
Research and development 4,485 - 4,485
Amortization of intangibles 1,763 (1,763)(3) -
------- --------- -------
Operating income 4,298 3,427 7,725
Operating margin % 7.6% 13.6%
Other expense 101 - 101
Interest income (288) - (288)
Interest expense 1,803 - 1,803
------- --------- -------
Income from operations before income
taxes 2,682 3,427 6,109
Provision for income taxes 778 994 (4) 1,771
------- --------- -------
Net income 1,904 2,433 4,337
Add back interest expense on convertible
debt, net of taxes - 1,190 (5) 1,190
------- --------- -------
Numerator for diluted earnings per share$ 1,904 $ 3,623 $ 5,527
======= ========= =======
Net income per share:
Basic $ 0.06 $ 0.13
======= =======
Diluted $ 0.05 $ 0.13
======= =======
Weighted average shares used in per
share calculation:
Basic 34,581 - 34,581
Diluted 35,270 8,790 44,060
(1) Add back costs for purchase accounting inventory revaluations
related to acquisition of Upstate, $500; other one time charges,
$130
(2) Add back business integration costs in research segment
(3) Add back purchased intangible asset amortization
(4) The income tax effect of pro forma adjustments at prevailing rate
for period
(5) Add back interest on convertible debt which have an anti-dilutive
effect on GAAP results and dilutive effect on pro forma results
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
EBITDA and Adjusted EBITDA
(In thousands)
Three Months Ended
-------------------
April 2, April 3,
2006 2005
--------- ---------
Net income under GAAP $ 2,841 $ 1,904
Provision for income taxes 1,105 778
Interest expense (income), net 1,500 1,515
Depreciation 1,969 2,167
Amortization of intangibles 1,845 1,763
--------- --------
EBITDA 9,260 8,127
Other Adjustments:
Impairment and exiting costs 845 -
Purchase accounting revaluations and
business integration costs 1,476 1,664
Gain on sale of long-lived assets (1,184)
------------------
Adjusted EBITDA $ 10,396 $ 9,791
========= ========
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.
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