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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 2006
HAEMONETICS CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 1-10730 04-2882273
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
400 Wood Road 02184
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 781-848-7100
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 31, 2006 Haemonetics Corporation (the "Company") issued a press
release announcing financial results for the third quarter and nine months ended
December 31, 2005. A copy of the release is furnished with this report as
exhibit 99.1.
The information in this current report on Form 8-K and the exhibit attached
hereto shall not be deemed "filed" for the purposes of Section 18 of the
Securities and Exchange Act of 1934 (the "Exchange Act") or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the Exchange Act,
regardless of any general incorporation language in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1: Press Release of Haemonetics Corporation dated January 31, 2006 announcing
financial results for the third quarter and nine months ended December 31, 2005.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HAEMONETICS CORPORATION
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(Registrant)
Date: January 31, 2006 /s/ RONALD J. RYAN
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Ronald J. Ryan, Vice President and
Chief Financial Officer
3
99.1 Press Release issued by Haemonetics Corporation on January 31, 2006.
4
Exhibit 99.1
HAEMONETICS REPORTS THIRD QUARTER FISCAL 2006 EARNINGS
BRAINTREE, Mass., Jan. 31 /PRNewswire-FirstCall/ -- Haemonetics Corporation
(NYSE: HAE) reported today third quarter fiscal year 2006 net revenue of $106
million, a 7.7% increase over the third quarter of fiscal year 2005 and
year-to-date revenue of $309 million, a 9.1% increase over FY05. Diluted net
earnings per share for the quarter were $1.02 and for year-to-date are $1.89.
The Company's net income includes two unusual items. First, the Company
recorded $28 million of pre-tax income following a successful arbitration award
which compensates Haemonetics for sales lost when a competitor bought one of
Haemonetics' largest customers and refused to honor a supply agreement. The
award positively affected earnings per share by $0.61. Second, the Company
recorded a $3.75 million impairment charge for an intangible asset related to
pathogen reduction. Haemonetics will continue its development work on platelet
collection technology for the pathogen reduction market. The impairment charge
negatively affected earnings per share by ($0.09). These unusual items combined
to impact the Company's diluted net earnings per share positively by $0.52.
To further assist investors in understanding the unusual items, a complete
description can be found on the Company's website at
http://www.haemonetics.com/site/content/km/presentations.asp.
FINANCIAL HIGHLIGHTS
Haemonetics reported the following additional financial results:
* Q3:06 gross profit of $56 million, up 7.5% from $52 million in Q3:05;
year-to-date gross profit of $162 million, up 12.1% from $144 million
in FY05
* Q3:06 gross margin of 52.7%, down 10 basis points from Q3:05; year-to-
date gross margin of 52.4%, up 150 basis points from FY05
* Q3:06 operating expenses of $41 million(1), up 11.6% from $36 million
in Q3:05; year-to-date operating expenses of $113 million, up 12.8%
from $100 million in FY05
* Q3:06 operating income of $15.0 million(1), down 2.2% from $15.3
million in Q3:05; year-to-date operating income of $49 million, up
10.5% from $44 million in FY05
* Q3:06 operating margin of 14.2%, down 140 basis points from Q3:05;
year- to-date operating margin of 15.8%, up 20 basis points from FY05
* Q3:06 earnings per share of $1.02(1),(2), up 142.9%; year-to-date
earnings per share of $1.89, up 64.3%
In the quarter, the Company's tax rate increased to 36.9% from 29.5% due to
the tax treatment of the arbitration award.
PATIENT PRODUCT LINE HIGHLIGHTS
Total disposables revenue for the Patient family of products was $22
million for the quarter, down 1.3% from Q3:05 and $65 million year-to-date, up
2.4% from FY05.
In Q2:06 Haemonetics shifted from a distribution relationship to direct
sales of its US OrthoPAT surgical blood salvage product. For the quarter,
OrthoPAT(R) brand disposables revenue was $6 million, level with Q3:05 and $16
million year-to-date, up 9.2%. U.S. OrthoPAT revenues increased sequentially
from Q2:06, and the Company reported excellent progress in its transition to
direct sales. Almost 90% of FY05 unit volume is now under long term supply
contracts with Haemonetics. The Company is well poised for U.S. OrthoPAT revenue
growth of greater than 20% in the fourth quarter and anticipates further
strengthening of sales into FY07.
Brian Concannon, President of the Patient Division, said, "We're very
pleased with our progress in going direct with the OrthoPAT system. This should
deliver exceptional sales momentum. Moreover, the margin improvement will be
significant. We remain confident that this strategic decision supports the long
term growth of the Company."
DONOR PRODUCT LINE HIGHLIGHTS
Blood bank disposables revenue was $34 million for the quarter, down 1.3%
from Q3:05 and $98 million year-to-date, level with FY05. While sales of
platelet collection disposables remained stable in both of Haemonetics' key
markets (Japan and Europe), the prior year's significant intravenous solutions
sales did not repeat.
Plasma disposables revenue was $27 million for the quarter, up 13.0% from
Q3:05 and $81 million year-to-date, up 9.0% from FY05. In the quarter, sales
benefited from disposables unit growth in the U.S. as the plasma collection
market rebounds and as Haemonetics executes its plan to convert a large, new
customer to its plasma collection systems.
Red cell disposables revenue was $9 million for the quarter, up 30.8% over
Q3:05 and $27 million year-to-date, up 31.8% from FY05. Quarterly revenue growth
came from the U.S. where sales increased 41.1% over Q3:05. Unit growth and a
favorable shift in product mix were key drivers of U.S. red cell disposables
revenue.
BALANCE SHEET AND GUIDANCE UPDATES
Haemonetics' cash and short term investments increased $19 million in the
quarter, for a third quarter end cash balance of $229 million. The Company also
generated $17 million in cash flow from operating activities for the quarter.
Haemonetics also reported that it revised its full year sales guidance to
8-10% growth. A primary reason for this change results from the strategic
decision to convert to direct U.S. OrthoPAT sales.
Brad Nutter, Haemonetics' President and CEO, said, "The loss of OrthoPAT
sales momentum during the third quarter was a temporary effect of the transition
to direct sales. This trend has already reversed, and OrthoPAT sales are now
growing faster than originally expected in our conversion plan."
Additionally, the Company raised its annual earnings per share estimate to
a range of $2.44 to $2.51, including the unusual items, and affirmed its other
annual guidance of gross and operating margin improvement, and operating income
growth of approximately 20%.
Haemonetics will post detailed information on the effects of currency on
the web at http://www.haemonetics.com/site/content/investor/Non_GAAP.asp.
CONFERENCE CALL
Haemonetics will hold a conference call on Tuesday, January 31st at 10:00
am Eastern to review in more detail the financial and operational performance of
the quarter.
Interested parties can participate by calling (800) 322-0079 (US only) or
(973) 935-2100 with conference ID 6898706. The call will be replayed through
February 15th at (877) 519-4471 (US only) or (973) 341-3080 using PIN 6898706.
(1) Including $3.75 million, or $0.09 loss in earnings per share, recorded
as R&D expenses for the impairment charge related to pathogen
reduction
(2) Including $28 million in pre-tax income, or $0.61 gain in earnings per
share, related to the arbitration award
Haemonetics (NYSE: HAE) is a global company engaged in the design,
manufacture and worldwide marketing of automated blood processing systems. These
systems address important medical markets: surgical blood salvage, blood
component collection, plasma collection, and blood component safety. To learn
more about Haemonetics' products and markets, visit its web site at
http://www.haemonetics.com.
This release contains forward looking statements that involve risks and
uncertainties, including technological advances in the medical field and
standards for transfusion medicine and our ability to successfully implement
products that incorporate such advances and standards, product demand, market
acceptance, regulatory uncertainties, the effect of economic and political
conditions, the impact of competitive products and pricing, blood product
reimbursement policies and practices, foreign currency exchange rates, changes
in customers' ordering patterns, the effect of industry consolidation as seen in
the plasma market, the effect of communicable diseases and the effect of
uncertainties in markets outside the U.S. (including Europe and Asia) in which
we operate and other risks detailed in the Company's filings with the Securities
and Exchange Commission. The foregoing list should not be construed as
exhaustive. The forward-looking statements are based on estimates and
assumptions made by management of the Company and are believed to be reasonable,
though are inherently uncertain and difficult to predict. Actual results and
experience could differ materially from the forward-looking statements.
CONTACT:
Julie Fallon
Tel. (781) 356-9517
Alternate Tel. (617) 320-2401
fallon@haemonetics.com
HAEMONETICS CORPORATION FINANCIAL SUMMARY
(UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF INCOME
THIRD QUARTER FYE06
% Inc/(Dec)
vs Prior
12/31/05 01/01/05 Year
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NET REVENUES $ 105,677 $ 98,098 7.7%
Gross profit 55,669 51,781 7.5
R&D 9,463 6,584 43.7
S,G&A 31,250 29,897 4.5
Operating expenses 40,713 36,481 11.6
OPERATING INCOME 14,956 15,300 (2.2)
Interest expense (435) (553) (21.3)
Interest income 2,875 598 380.8
Other income/(expense), net 27,092 262 10,240.5
Income before taxes 44,488 15,607 185.1
Tax expense 16,399 4,600 256.5
NET INCOME $ 28,089 $ 11,007 155.2
Net income per common share
assuming dilution $ 1.02 $ 0.42 142.9%
Weighted average number of shares
Basic 26,542 25,628
Diluted 27,646 26,314
Inc/(Dec)
vs prior
year profit
margin %
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Profit Margins:
Gross profit 52.7% 52.8% (0.1)
R&D 9.0% 6.7%
S,G&A 29.6% 30.5%
Operating income 14.2% 15.6% (1.4)
Income before taxes 42.1% 15.9% 26.2
Net income 26.6% 11.2%
YEAR-TO-DATE FOR FYE06
% Inc/(Dec)
vs Prior
12/31/05 01/01/05 Year
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NET REVENUES $ 309,338 $ 283,623 9.1%
Gross profit 161,958 144,430 12.1
R&D 21,287 14,891 43.0
S,G&A 91,841 85,366 7.6
Operating expenses 113,128 100,257 12.8
OPERATING INCOME 48,830 44,173 10.5
Interest expense (1,498) (1,850) (19.0)
Interest income 5,271 1,463 260.3
Other income/(expense), net 28,437 (39) (73,015.4)
Income before taxes 81,040 43,747 85.2
Tax expense 29,122 14,046 107.3
NET INCOME $ 51,918 $ 29,701 74.8
Net income per common share
assuming dilution $ 1.89 $ 1.15 64.3%
Weighted average number of shares
Basic 26,406 25,347
Diluted 27,413 25,886
Inc/(Dec)
vs prior
year profit
margin %
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Profit Margins:
Gross profit 52.4% 50.9% 1.5
R&D 6.9% 5.3%
S,G&A 29.7% 30.1%
Operating income 15.8% 15.6% 0.2
Income before taxes 26.2% 15.4% 10.8
Net income 16.8% 10.5%
REVENUE ANALYSIS
Third quarter
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12/31/05 01/01/05 %Inc/(Dec)
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Revenues by Geography
United States $ 40,077 $ 33,068 21.2%
International 65,600 65,030 0.9
Net Revenues $ 105,677 $ 98,098 7.7
Disposable Revenues by Product Family
Donor:
Plasma $ 27,461 $ 24,297 13.0
Blood Bank 33,588 34,031 (1.3)
Red Cell 9,304 7,111 30.8
$ 70,353 $ 65,439 7.5
Patient:
Surgical $ 22,433 $ 22,736 (1.3)
Subtotal $ 92,786 $ 88,175 5.2
Equipment $ 5,813 $ 4,714 23.3
Misc & Service 7,078 5,209 35.9
Net Revenues $ 105,677 $ 98,098 7.7
Nine Months Ended FYE06
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12/31/05 01/01/05 %Inc/(Dec)
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Revenues by Geography
United States $ 116,230 $ 96,374 20.6%
International 193,108 187,249 3.1
Net Revenues $ 309,338 $ 283,623 9.1
Disposable Revenues by Product Family
Donor:
Plasma $ 80,702 $ 74,021 9.0
Blood Bank 98,471 98,138 0.3
Red Cell 26,662 20,225 31.8
$ 205,835 $ 192,384 7.0
Patient:
Surgical $ 65,048 $ 63,554 2.4
Subtotal $ 270,883 $ 255,938 5.8
Equipment $ 18,547 $ 13,967 32.8
Misc & Service 19,908 13,718 45.1
Net Revenues $ 309,338 $ 283,623 9.1
CONSOLIDATED BALANCE SHEETS
Period ending
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12/31/05 04/02/05
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ASSETS
Cash & cash equivalents $ 229,351 $ 185,815
Short-term investments 0 0
Accounts receivable, net 86,262 80,719
Inventories, net 56,313 53,088
Other current assets 30,172 23,989
Total current assets 402,098 343,611
Net PP&E 70,294 69,337
Other assets 50,744 54,809
TOTAL ASSETS $ 523,136 $ 467,757
LIABILITIES & STOCKHOLDERS' EQUITY
S/T debt & current maturities $ 25,796 $ 26,612
Other current liabilities 60,274 61,310
Total current liabilities 86,070 87,922
Long-term debt 13,117 19,231
Other long-term liabilities 4,976 5,469
Stockholders' equity 418,973 355,135
TOTAL LIABILITIES & EQUITY $ 523,136 $ 467,757
SOURCE Haemonetics Corporation
-0- 01/31/2006
/CONTACT: Julie Fallon of Haemonetics Corporation, +1-781-356-9517,
+1-617-320-2401, fallon@haemonetics.com /
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.haemonetics.com/
(HAE)