OSI Systems Announces Update for Second Quarter of Fiscal 2007
January 24 2007 - 6:00AM
Business Wire
OSI Systems, Inc. (NASDAQ:OSIS), a vertically-integrated provider
of specialized electronic products for critical applications in the
Security and Healthcare industries, today announced an update for
the second quarter ended December 31, 2006. The Company expects to
report record revenues for the second quarter of fiscal 2007 of
approximately $137 million, an increase of 17% compared to the
second quarter of fiscal 2006 and a sequential increase of 19%
compared to the first quarter of fiscal 2007. The year-over-year
growth was led by an approximate 46% increase in revenues in the
second quarter for the security business. Revenues from the
Company�s healthcare business increased approximately 3% in the
second quarter of fiscal 2007 compared to the same period in 2006,
with the quarter benefiting from the acquisition of the Del Mar
Reynolds diagnostic cardiology business completed in July 2006.
This business contributed approximately $7.5 million of revenues in
the second quarter which mitigated the impact of the division�s
weak performance in the U.S. market. The Company has undertaken a
review of its global operations in order to integrate recent
acquisitions and rationalize the Company�s cost structure. The
review has resulted in plans to achieve approximately $15-$17
million of pre-tax annualized cost savings including a reduction of
approximately 8% of its global workforce along with the
consolidation of multiple facilities. These cost cutting measures
have commenced across all divisions, with the goal of fully
implementing these cost reductions by the end of the current fiscal
year. These measures are expected to positively impact the fourth
quarter of fiscal 2007 inclusive of anticipated severance and
restructuring charges with the full benefit being realized in
fiscal 2008. In addition, the Company anticipates recording a
non-cash pre-tax charge of approximately $31 - $34 million in the
second quarter primarily associated with the impairment of certain
fixed and intangible assets as well as the recording of additional
inventory reserves following a review of the Company�s product
portfolio. The amortization expense associated with these fixed and
intangible assets has been approximately $1.3 million annually.
Including these charges, the Company expects to report an operating
loss for the second quarter of fiscal 2007 of approximately $30 -
$33 million. Excluding these charges, the non-GAAP operating income
would be close to breakeven. The non-GAAP measure is provided in
order to assist investors in making a comparison of the business
activity occurring in the second quarter with the business
activities in prior periods. Due to the aforementioned items, the
Company has withdrawn its quarterly and full year earnings guidance
for fiscal 2007. The Company, however, reaffirms its full year
revenue guidance of $535 - $545 million with the fourth quarter
expected to be significantly stronger than the third quarter driven
by a record backlog of approximately $197 million as of December
31, 2006. The backlog for the Security division as of December 31,
2006 was approximately $115 million. OSI Systems Chief Financial
Officer Alan Edrick stated, �Our strong growth has created
significant opportunities for cost reductions. When fully
implemented, the cost reduction measures currently under way are
expected to have a significant positive impact on our bottom line,
generating increased cash flow, and better preparing the Company
for prospective future growth.� OSI Systems Chief Executive
Officer, Deepak Chopra, said, �The global cost structure review has
identified significant cost cutting measures which we intend to
aggressively implement over the remaining period of fiscal 2007.
Going forward we will continue to proactively pursue measures to
improve our operating performance and overall profitability.� About
OSI Systems, Inc. OSI Systems, Inc. and its subsidiaries is a
vertically integrated designer and manufacturer of specialized
electronic systems and components for critical applications. The
company sells its products in diversified markets, including
homeland security, healthcare, defense and aerospace. 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 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, but not limited to, the company�s predictions about
quarterly and full-year revenues, cost-cutting measures, a non-cash
pre-tax charge and operating income. The actual results may differ
materially from those described in or implied by any
forward-looking statement. In particular, the company has not yet
finalized the financial statements to be included in its quarterly
report on Form 10-Q for the second quarter of fiscal year 2007,
certain of the cost-cutting measures it has identified may not
ultimately be implemented or realizable by the company, and
expected full-year revenues may not be achieved. Other important
factors are set forth in the Securities and Exchange Commission
filings OSI Systems, Inc. All forward-looking statements speak only
as of the date made, and the company undertakes no obligation to
update these forward-looking statements.
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