MURRYSVILLE, Pa., Jan. 25 /PRNewswire-FirstCall/ -- RESPIRONICS,
INC. (NASDAQ:RESP) today announced record financial results for the
three months and six months ended December 31, 2006. FINANCIAL
RESULTS Three Months Ended December 31, 2006 Net sales for the
second quarter totaled $288.7 million, up 12 percent over the
$257.9 million achieved in the second quarter a year ago. Domestic
revenues increased from $176.9 million in the second quarter a year
ago to $193.2 million in the current year's second quarter, an
increase of 9%. The Company's domestic revenue gains were led by a
year-over-year increase of $13.3 million, or 13 percent, in
domestic sleep therapy products. This increase in sleep therapy
revenues was achieved during a quarter when the Company completed
its planned transition to the new M-Series platform of positive
airway pressure devices, while also working through a previously
announced limited, voluntary product recall of a heated humidifier
device used with its older legacy CPAP systems. The Company's
Alice(R) 5 Sleep Diagnostics System continues to gain market share
in sleep labs, posting $4.4 million of domestic revenues in the
second quarter which represents 22 percent year-over-year growth.
Additionally, the Company's Hospital Group was led by 21 percent
growth in hospital ventilation which increased from $19.3 million
last year to $23.2 million in the current year second quarter.
These revenue gains across key growth drivers were partially offset
by year-over-year declines in sales of home respiratory care
products, including oxygen concentrators, and infant monitors from
our Children's Medical Ventures business. International revenues
totaled $95.5 million for the second quarter, an 18 percent
increase over the $81.1 million reported a year ago, led by 26
percent growth in the sleep therapy market. The Company also
achieved 23 percent growth in its hospital products in the
international markets. International revenues represented 33
percent of total revenues during the current year's second quarter.
On a global basis, sleep therapy revenues grew by 16 percent during
the second quarter, from $137.5 million to $159.9 million. Global
hospital ventilation sales grew by 17 percent, from $32.8 million
to $38.4 million in the second quarter of fiscal year 2007. Net
income for the current quarter was $29.6 million, or $0.40 per
diluted share, including stock compensation expenses totaling $3.1
million on a pre- tax basis, or $0.03 per diluted share after tax.
This represents 22 percent earnings per share growth compared to
the $0.33 per diluted share reported in the prior year second
quarter. The prior year second quarter included $3.1 million of
stock compensation expenses on a pre-tax basis, or $0.03 per
diluted share after tax. Excluding the impact of stock compensation
expense in the current year second quarter, net income was $31.6
million, or $0.43 per diluted share. This represents a 20 percent
increase over the $0.36 per diluted share reported a year ago,
excluding stock compensation expenses. During the current year
second quarter the Company incurred $1.2 million of restructuring
and acquisition-related expenses, primarily associated with the
restructuring of operations at certain manufacturing facilities and
the integration of acquired companies. These expenses are included
in both the Company's GAAP-basis $0.40 per diluted share and the
non-GAAP $0.43 per diluted share excluding stock compensation
expenses reported above. The Company's increase in earnings per
share in the current year is primarily the result of sales growth
and operating margin increases versus the prior year. With the
financial information included in this press release, the Company
provides a tabular reconciliation of GAAP net income with net
income excluding the impact of stock compensation expenses. Six
Months Ended December 31, 2006 For the six months ended December
31, 2006, net sales increased to $555.3 million, an 11 percent
increase compared to $498.1 million from the last year's comparable
six-month period. Net income for the six months ended December 31,
2006 was $51.7 million, or $0.70 per diluted share, including stock
compensation expenses totaling $6.1 million on a pre-tax basis, or
approximately $0.05 per diluted share after tax. Excluding the
impact of stock compensation expenses in the current year, net
income was $55.8 million, or $0.75 per diluted share. This
represents an 18 percent increase over $0.64 per diluted share
reported a year ago, excluding the impact of stock compensation
expenses. COMMENTS FROM MANAGEMENT Quarterly Results John Miclot,
President and Chief Executive Officer, commented on the Company's
results, "We are pleased to be reporting another quarter of record
revenues and profits in line with our guidance, including
approximately 20 percent year-over-year earnings per share growth.
We completed the planned transition to our new family of sleep
therapy products during our second quarter, and our M-series of
devices is now fully launched. The new family includes a full range
of CPAP devices from our advanced auto titrating unit to our basic
REMstar(R) CPAP device. The M-series also includes bi-level devices
for those patients requiring the enhanced breathing modalities of
these more sophisticated units. During the quarter our global sleep
therapy revenues increased by approximately 16 percent
year-over-year while we completed the transition to the M-Series.
Our sleep diagnostic business also posted strong growth with
year-over-year revenues increasing by 22 percent domestically," he
stated. "We have continued to increase our investment in research
and development in the sleep therapy area, and we recently released
our OptiLife(TM) mask, our newest patient interface offering. This
new pillows-based mask seals easily and effectively, is very
lightweight, and enhances patient comfort. We look forward to the
full roll-out of this mask to both providers and sleep labs over
the next several quarters. Additionally, we are pleased to report
that we have filed our 510(k) application for our BiPAP(R)
autoSV(TM) unit for the treatment of complex apnea," he added. "Our
hospital ventilation business, as well as our cardio-respiratory
monitoring products, performed very well during the quarter," Mr.
Miclot commented. "Domestically, these critical care products
increased by 22 percent; and in the international markets, our
hospital ventilators and monitors increased by 16 percent." Mr.
Miclot commented on the Company's progress in the international
marketplace, "We continue to be pleased with our market share gains
in the sleep therapy segment in the international markets. This
quarter we posted 26 percent growth in international sleep therapy
led by our results in the European and Asia-Pacific regions. We
have now received the necessary product registrations and approvals
required for the sale of our M-Series of CPAP devices into all our
major international markets, and, we continued with our
international expansion strategy with the recently completed
acquisition of the homecare business of our Australian customer,
Mayo Healthcare Group Pty Ltd. The focus of this acquisition will
be to increase and optimize our presence in that country," he
noted. Financial Position The Company continues to maintain a
strong balance sheet position, with $277.3 million of cash and
short-term investments as of December 31, 2006, representing an
increase of $1.6 million compared to September 30, 2006 after
making $12.4 million of strategic investments and
acquisition-related payments during the quarter. During the
quarter, the Company's accounts receivable days sales outstanding
were reduced to 62 days from 64 days as of September 30, 2006. The
Company's long-term debt balance was $25.6 million as of December
31, 2006, compared to $26.3 million as of September 30, 2006.
Respironics' strong balance sheet positions the Company to execute
its strategy which calls for optimizing the Company's core growth
drivers while investing in new areas of the sleep and respiratory
markets. Outlook For fiscal year 2007, the Company is comfortable
with earnings per share estimates (exclusive of stock compensation
expense) of approximately $1.74 to $1.77. Revenue expectations for
the year are approximately $1,175 million to $1,190 million.
Earnings per share estimates for the quarter ending March 31, 2007
are in the range of $0.48 to $0.49. This earnings per share outlook
does not include the impact of FASB No. 123(R), "Share-Based
Payment." During the 2007 fiscal year, the Company expects to incur
approximately $13.0 million to $14.0 million of stock compensation
expense on a pre-tax basis, or $0.12 to $0.13 per share after tax.
The Company expects to incur $3.5 million to $4.0 million of stock
compensation expense on a pre-tax basis, or $0.03 to $0.04 per
share after tax during the third quarter of the 2007 fiscal year.
The actual expenses recorded during the 2007 fiscal year may
fluctuate based on factors such as the actual number of equity
awards granted to employees and changes in the Company's stock
price and interest rates. Respironics is a leading developer,
manufacturer and distributor of innovative products and programs
that serve the global sleep and respiratory markets. Focusing on
emerging market needs, the Company is committed to providing valued
solutions to help improve outcomes for patients, clinicians and
health care providers. Respironics markets its products in 131
countries and employs more than 4,800 associates worldwide. Further
information can be found on the Company's Web site:
http://www.respironics.com/. The Company will host a conference
call at 8:30 a.m. Eastern Time today to discuss these quarterly
results, market trends and future outlook. The conference call will
be broadcast live over the Internet and can be accessed by all
interested parties from the Company's web site at
http://www.respironics.com/ or at http://www.companyboardroom.com/.
Please allow extra time prior to the call to visit the site and
download the streaming media software required to listen to the
Internet broadcast. A replay of the web cast will be available
following the call. FORWARD-LOOKING STATEMENT This document
contains forward-looking statements, including statements relating
to, among other things, developments in the healthcare industry;
the success of the Company's marketing, sales, and promotion
programs; future sales, acceptance, and quality of the Company's
products and programs; the timing and success of new product
introductions; new product development; anticipated cost savings;
FDA and other regulatory requirements, enforcement actions, product
recalls or related field actions; future results from acquisitions
and strategic investments; growth rates in foreign markets;
regulations and other factors affecting operations and sales
outside the United States; foreign currency fluctuations; the
effects of a natural disaster, cyber-attack or other catastrophic
event that results in the destruction or disruption of any critical
business or information technology systems; customer consolidation
and concentration; increasing price competition and other
competitive factors in the manufacture, distribution, and sale of
products; interest rate fluctuations; expiration of intellectual
property rights; intellectual property and related litigation;
other litigation; future levels of earnings and revenues; the
number of equity awards granted to employees and changes in the
Company's stock price; and third party reimbursement; all of which
are subject to change. Actual results may differ materially from
those described in any forward-looking statements. Additional
information on potential factors that could affect the Company's
financial results are included in the reports filed with the SEC,
including the reports on Form 10-K, 10-Q and 8-K. RESPIRONICS, INC.
AND SUBSIDIARIES Condensed Statement of Operations &
Reconciliation of Non-GAAP Financial Measures (Unaudited) (In
thousands, except per share amounts) In managing its business,
Respironics makes use of certain non-GAAP financial measures in
evaluating the Company's results of operations from core
operations. The measure, "net income, excluding the impact of stock
compensation expenses," is reconciled with GAAP net income in the
tables below. For the three and six months ended December 31, 2006:
GAAP Non-GAAP 3 months 3 months Ended FAS 123(R) Ended Fiscal Year
2007 12/31/06 Impact 12/31/06 Sales $288,664 $288,664 Cost of goods
sold 134,145 (167) 133,978 Gross profit 154,519 167 154,686 General
& administrative expense 38,425 (2,051) 36,374 Sales,
marketing, & commission expense 54,864 (654) 54,210 Research
& development expense 15,739 (186) 15,553 Contribution to
foundation 0 0 Restructuring & acquisition- related expense
1,201 1,201 Other income (2,855) (2,855) Net Income before income
tax $47,145 $3,058 $50,203 Income tax 17,546 1,029 18,575 Net
Income $29,599 $2,029 $31,628 Basic earnings per share 0.41 0.43
Basic shares outstanding 73,024 73,024 Diluted earnings per share
0.40 0.43 Diluted shares outstanding 73,844 467 74,311 GAAP
Non-GAAP 6 months 6 months Ended FAS 123(R) Ended 12/31/06 Impact
12/31/06 Fiscal Year 2006 Sales $555,287 $555,287 Cost of goods
sold 258,783 (337) 258,446 Gross profit 296,504 337 296,841 General
& administrative expense 73,310 (4,066) 69,244 Sales,
marketing, & commission expense 112,429 (1,315) 111,114
Research & development expense 30,252 (374) 29,878 Contribution
to foundation 0 0 Restructuring & acquisition-related expense
2,887 2,887 Other income (4,840) (4,840) Net Income before income
tax $82,466 $6,092 $88,558 Income tax 30,798 1,968 32,766 Net
Income $51,668 $4,124 $55,792 Basic earnings per share 0.71 0.77
Basic shares outstanding 72,929 72,929 Diluted earnings per share
0.70 0.75 Diluted shares outstanding 73,777 443 74,220 For the
three and six months ended December 31, 2005: GAAP FAS 123 (R)
Non-GAAP 3 months Impact 3 months Ended Ended 12/31/05 12/31/05
Fiscal Year 2006 Sales $257,901 $257,901 Cost of goods sold
$115,169 (178) $114,991 Gross profit 142,732 178 142,910 General
& administrative expense 40,309 (2,006) 38,303 Sales,
marketing, & commission expense 50,686 (735) 49,951 Research
& development expense 12,962 (186) 12,776 Contribution to
foundation 0 0 Restructuring & acquisition -related expense 224
224 Other income (76) (76) Net Income before income tax $38,627
$3,105 $41,732 Income tax 14,574 897 15,471 Net Income $24,053
$2,208 $26,261 Basic earnings per share 0.33 0.36 Basic shares
outstanding 72,160 72,160 Diluted earnings per share 0.33 0.36
Diluted shares outstanding 73,540 296 73,836 GAAP FAS 123 (R)
Non-GAAP 6 months Impact 6 months Ended Ended 12/31/05 12/31/05
Fiscal Year 2006 Sales $498,124 $498,124 Cost of goods sold
$222,712 (372) 222,340 Gross profit 275,412 372 275,784 General
& administrative expense Sales, marketing, & 81,861 (3,710)
78,151 commission expense 101,193 (1,441) 99,752 Research &
development expense 27,032 (356) 26,676 Contribution to foundation
1,500 1,500 Restructuring & acquisition-related expense 1,313
1,313 Other income (6,014) (6,014) Net Income before income tax
$68,527 $5,879 $74,406 Income tax 25,898 1,662 27,560 Net Income
$42,629 $4,217 $46,846 Basic earnings per share 0.59 0.65 Basic
shares outstanding 72,014 72,014 Diluted earnings per share 0.58
0.64 Diluted shares outstanding 73,453 315 73,768 Respironics
believes that presenting diluted earnings per share, excluding the
impact of stock compensation expenses, is an additional measure of
performance that investors can use to compare operating results
between reporting periods. Management of the Company uses this
information in evaluating the Company's results of operations and
believes that this information may also provide investors better
insight in evaluating the Company's earnings performance from core
operations in comparison to the prior year. Product Sales Summary
(Unaudited) (Dollars in thousands) Three months Six months ended
ended 12/31/06 12/31/05 12/31/06 12/31/05 Domestic Sleep and Home
$138,552 $127,65 $276,810 $251,257 Domestic Hospital Group 54,610
49,237 97,947 91,641 International Group 95,502 81,011 180,530
155,226 Total $288,664 $257,901 $555,287 $498,124 Condensed Balance
Sheet (Unaudited) (Dollars in thousands) At At 12/31/06 6/30/06
Cash and cash equivalents $249,292 $259,513 Short-term investments
27,983 5,838 Trade accounts receivable 198,289 187,502 Inventories
144,676 124,149 Other current assets 71,453 65,090 Total current
assets 691,693 642,092 Property, plant and equipment (net) 143,430
137,943 Other assets, including goodwill 249,750 237,343 Total
assets $1,084,873 $1,017,378 Current liabilities $203,487 $211,042
Long-term obligations 25,578 26,756 Other non-current liabilities
20,756 15,132 Shareholders' equity 835,052 764,448 Total
liabilities and shareholders' equity $1,084,873 $1,017,378
DATASOURCE: Respironics, Inc. CONTACT: Dan Bevevino, Vice President
& CFO of Respironics, Inc., +1-724-387-5235; or Joe Calabrese,
General Contact, +1-212-827-3772, or Julie Tu, Analyst Information,
+1-212-827-3776, both of Financial Relations Board or Respironics
Web site: http://www.respironics.com/
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