MDCC Molecular Devices (MM)

SUNNYVALE, Calif., April 27 /PRNewswire-FirstCall/ -- Molecular Devices Corporation (NASDAQ:MDCC) today announced record revenues and earnings for the quarter ended March 31, 2006. Revenues for the quarter were a record $40.0 million, or an increase of 2% compared to the same period last year. Eliminating the effects of foreign currency translation, revenues for the quarter grew 5% over the prior year. On a GAAP basis, operating income was $2.8 million in the first quarter of 2006. GAAP operating income for the first quarter included non-cash stock compensation expense of $1.3 million associated with the Company's adoption of Statement of Financial Accounting Standards No. 123R. On a non-GAAP basis, excluding the effect of non-cash stock compensation expense, operating income for the first quarter of 2006 was $4.1 million, or an increase of 18% compared to the same period last year. During the first quarter of 2006, the Company also recorded a non-operating pre-tax gain of $1.7 million arising out of the sale of a company in which Molecular Devices had an equity investment. On a GAAP basis, fully diluted earnings per share for the first quarter of 2006 were $0.16. On a non-GAAP basis, excluding the effect of non-cash stock compensation expense and the gain from the sale of the equity investment, fully diluted earnings per share increased 45% to $0.16 in the first quarter of 2006 from $0.11 in the same period last year. A table reconciling operating income and fully diluted earnings per share on a GAAP and non-GAAP basis is provided immediately following the Condensed Consolidated Balance Sheets. "We saw excellent growth within our SpectraMax(R), FLIPR(R), and High- content Imaging product lines during the quarter," stated Joseph D. Keegan, Ph.D., Molecular Devices' President and Chief Executive Officer. "Unfortunately, this growth was somewhat offset by a weaker than expected quarter in Europe. We remain confident, however, that our worldwide life sciences and drug discovery markets will remain stable in the near-term, and we do not expect this weakness to continue. We are also very excited about the acquisition of the Arcturus Laser Capture Microdissection (LCM) business that we completed earlier this month. This strategic acquisition broadens our life sciences product portfolio and allows us to present our customers with a complete microgenomics platform. As a result of the acquisition, we are increasing both our revenue and EPS guidance for 2006." The Company established guidance for the second quarter of 2006 and increased guidance for the full year 2006. For the second quarter of 2006, the Company anticipates revenues of $49 to $51 million and non-GAAP fully diluted earnings per share of $0.27 to $0.29 excluding the effects of non-cash stock compensation expense and the anticipated write-off of acquired in- process research and development related to the Arcturus acquisition. For the full year 2006, the Company anticipates revenues of $198 to $206 million and non-GAAP fully diluted earnings per share of $1.15 to $1.23 excluding the effects of non-cash stock compensation expense, the gain on the sale of the equity investment and the write-off of acquired in-process research and development. The Company expects to incur pre-tax non-cash stock compensation expense of approximately $1.3 million, or $0.05 per fully diluted share, in each of the remaining quarters of 2006. Information with respect to the exclusion of the impact of the anticipated write-off of acquired in-process research and development related to the Arcturus acquisition is provided immediately following the Historical Non-GAAP Reconciliation. Conference Call Information A conference call to discuss our first quarter results, 2006 guidance and other matters related to our business is scheduled for Friday, April 28, 2006 at 8:00 a.m. Pacific (11:00 a.m. Eastern). Interested parties can participate in the call by dialing 800-817-4887 (domestic) or 913-981-4913 (international). Replay dial-in numbers are 888-203-1112 (domestic) and 719-457-0820 (international), and the access code for the replay is 1032804. Investors can also access a live web-cast of the call through a link posted on the investor page on Molecular Devices' website (http://www.moleculardevices.com/). A replay of the web-cast will be available at this location from April 28, 2006 to such time as the Company reports its financial results for the second quarter of 2006. About Molecular Devices Corporation Molecular Devices Corporation is a leading supplier of high-performance bioanalytical measurement systems that accelerate and improve drug discovery and other life sciences research. The Company's systems and consumables enable pharmaceutical and biotechnology companies to leverage advances in genomics, proteomics and parallel chemistry to facilitate the high-throughput and cost-effective identification and evaluation of drug candidates. The Company's solutions are based on its advanced core technologies that integrate its expertise in engineering, molecular and cell biology and chemistry. Molecular Devices enables its customers to improve research productivity and effectiveness, which ultimately accelerates the complex process of discovering and developing new drugs. This press release contains "forward-looking" statements, including statements related to the markets for our products and future revenues and earnings. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "will," and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the results of Molecular Devices Corporation to differ materially from those indicated by these forward-looking statements, including, among others, risks related to variations in the amount of time that it takes for the Company to sell its products and collect accounts receivable, the timing of customer orders and the Company's dependence on orders that are shipped in the same quarter, which gives the Company limited visibility of future product shipments, risks related to increased competition, risks associated with the Company's need to develop new and enhanced products and other risks detailed from time to time in the Company's SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 2005. Molecular Devices Corporation does not undertake any obligation to update forward-looking statements. MOLECULAR DEVICES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Three Months Ended March 31, 2006 2005 (unaudited) REVENUES $39,996 $39,064 COST OF REVENUES * 15,461 15,046 GROSS PROFIT 24,535 24,018 OPERATING EXPENSES: Research and development * 5,465 6,226 Selling, general and administrative * 16,246 14,313 Total operating expenses 21,711 20,539 INCOME FROM OPERATIONS 2,824 3,479 Gain on sale of equity securities 1,669 -- Interest and other income (expense), net 252 (479) INCOME BEFORE TAXES 4,745 3,000 Income tax provision * (1,899) (1,156) NET INCOME $2,846 $1,844 BASIC NET INCOME PER SHARE $0.17 $0.11 DILUTED NET INCOME PER SHARE $0.16 $0.11 SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 16,823 17,041 SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE 17,374 17,361 * Includes the following amounts related to stock-based compensation expense recorded under FAS 123R: Cost of revenues $105 $-- Research and development 284 -- Selling, general and administrative 894 -- Income tax benefit (391) -- Effect on net income $892 $-- Adjustments have been made to amounts previously reported for interest and other income (expense) net, income before taxes, income tax provision, net income, basic net income per share, and diluted net income per share for 2005. We recognized $0.5 million of additional pre-tax expense associated with foreign currency transaction losses on short-term intercompany receivables and payables in the first quarter of 2005. This loss had previously been recorded as a component of stockholders' equity. In the first quarter of 2005, this adjustment decreased basic and diluted net income per share by $0.02. MOLECULAR DEVICES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 2006 2005 ASSETS (unaudited) Current assets: Cash and cash equivalents $33,181 $28,908 Accounts receivable, net 32,492 41,197 Inventories, net 23,923 23,197 Deferred tax assets 5,867 5,873 Prepaids and other current assets 2,092 2,353 Total current assets 97,555 101,528 Equipment and leasehold improvements, net 9,543 9,902 Other assets 146,773 145,986 $253,871 $257,416 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $7,939 $7,676 Accrued liabilities 19,723 31,188 Total current liabilities 27,662 38,864 Long-term liabilities: Other long-term liabilities 928 993 Deferred tax liabilities 4,486 4,486 Total long-term liabilities 5,414 5,479 Stockholders' equity 220,795 213,073 $253,871 $257,416 HISTORICAL NON-GAAP RECONCILIATION (unaudited) (in thousands, except per share amounts) Three Months Ended March 31, 2006 Non-GAAP Adjustments Gain on sale of equity GAAP FAS 123R investment Non-GAAP REVENUES $39,996 $-- $-- $39,996 COST OF REVENUES 15,461 (105) -- 15,356 GROSS PROFIT 24,535 105 -- 24,640 OPERATING EXPENSES: Research and development 5,465 (284) -- 5,181 Selling, general and administrative 16,246 (894) -- 15,352 Total operating expenses 21,711 (1,178) -- 20,533 INCOME FROM OPERATIONS 2,824 1,283 -- 4,107 Gain on sale of equity securities 1,669 -- (1,669) -- Interest and other income, net 252 -- -- 252 INCOME BEFORE TAXES 4,745 1,283 (1,669) 4,359 Income tax provision (1,899) (391) 634 (1,656) NET INCOME $2,846 $892 $(1,035) $2,703 BASIC NET INCOME PER SHARE $0.17 $0.05 $(0.06) $0.16 DILUTED NET INCOME PER SHARE $0.16 $0.05 $(0.06) $0.16 SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 16,823 16,823 16,823 16,823 SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE * 17,374 17,374 17,374 17,374 * For the three months ended March 31, 2006, the Company did not adjust the shares used in computing non-GAAP diluted net income per share to conform to what the diluted shares would had been had it applied prior accounting standards. The difference between the shares calculated by applying FAS 123R and calculated under prior accounting standards was approximately 0.1 million shares and is immaterial. NON-GAAP GUIDANCE Molecular Devices Corporation's non-GAAP guidance for the second quarter and full year 2006 with respect to fully diluted earnings per share excludes the impact of the anticipated write-off of acquired in-process research and development related to the Arcturus acquisition. Molecular Devices expects that the write-off will be material but cannot predict the actual impact of the anticipated write-off because it will depend on the results of a valuation of the acquired assets, which is not yet complete, and the resulting allocation of the purchase price. Accordingly, Molecular Devices cannot estimate GAAP fully diluted earnings per share for the second quarter and full year 2006 at this time with any degree of certainty. NON-GAAP MEASURES Each non-GAAP financial measure presented in this press release is included because Molecular Devices Corporation's management uses this information for internal planning and forecasting purposes as well as to monitor and evaluate on-going operating results and trends excluding the impact of FAS 123R and the unusual items related to the gain on the sale of an equity investment and the Arcturus acquisition. Molecular Devices' management believes that such non-GAAP financial measures are also useful for investors because the gain on the sale of an equity investment and the anticipated write-off of acquired in-process research and development are the results of transactions that are unusual due to their nature, size and frequency. In addition, excluding the impact of FAS 123R permits a more direct comparison to results in 2005, at which time FAS123R had not yet been adopted. Consequently, excluding the impact of FAS 123R and the gain on the sale of an equity investment from Molecular Devices' operating results provides investors an important insight into Molecular Devices' operating results and related trends of its core business. In addition, excluding the impact of FAS 123R, the gain on the sale of an equity investment and the anticipated write-off of acquired in-process research and development related to the Arcturus acquisition from Molecular Devices' financial guidance provides meaningful supplementary information to both management and investors that is indicative of Molecular Devices' core operating results and enhances an overall understanding of Molecular Devices' prospects for the future. DATASOURCE: Molecular Devices Corporation CONTACT: Tim Harkness of Molecular Devices Corporation, +1-408-747-3533 Web site: http://www.moleculardevices.com/

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