Haemonetics Reports Second Quarter Fiscal Year 2006 Earnings and Raises Full Year Earnings Per Share Guidance Following Arbitration Award

Oct 27, 2005, 01:00 ET from Haemonetics Corporation

    BRAINTREE, Mass., Oct. 27 /PRNewswire-FirstCall/ -- Haemonetics
 Corporation (NYSE:   HAE) reported today second quarter fiscal year 2006 net
 revenue of $100.5 million, a 10.5% increase over the second quarter of fiscal
 year 2005 and year-to-date revenue of $204 million, a 9.8% increase over FY05.
 Diluted net earnings per share for the quarter were $0.40, up 17.6% over Q2:05
 and for year-to-date are $0.87, up 19.2% over FY05.
     Brad Nutter, Haemonetics' President and CEO, said, "I am pleased with the
 performance we posted in the quarter with results coming from strength in
 sales in plasma and red cell disposables, equipment, and information
 management.  Moreover, the quarter was also marked with a substantial
 investment in new products."
     The Company also reaffirmed its annual guidance of revenue growth of 11-
 13%, operating income growth of approximately 20%, and operating margin
 exceeding 16%, and announced it was raising its annual earnings per share
 guidance.  As a result of winning a previously disclosed arbitration
 proceeding, Haemonetics received $31 million in October.  The Company had
 previously guided that diluted net earnings per share for the year would be in
 the range of $1.73 to $1.83.  The receipt of the cash will add approximately
 $0.61 to Haemonetics' earnings per share for the year.  Therefore, the Company
 is raising its annual diluted GAAP net earnings per share estimates to a range
 of $2.34 to $2.44.
     The arbitration award will also result in approximately $28 million in
 pre-tax income in Q3:06.  The majority of the award will be recorded as other
 income, and Haemonetics anticipates a related tax expense of about $11
 million.  The award will increase Haemonetics' Q3:06 cash balance by
 approximately $20 million.
     Haemonetics reported the following additional financial results:
     * Q2:06 gross profit of $52 million, up 13.6% from $46 million in Q2:05;
       year-to-date gross profit of $106 million, up 14.7% from $93 million in
     * Q2:06 gross margin of 51.5%, up 140 basis points from Q2:05; year-to-
       date gross margin of 52.2%, up 230 basis points from FY05
     * Q2:06 operating expenses of $36 million, up 15.0% from $32 million in
       Q2:05; year-to-date operating expenses of $72 million, up 13.5% from $64
       million in FY05
     * Q2:06 operating income of $15 million, up 10.6% from $14 million in
       Q2:05; year-to-date operating income of $34 million, up 17.3% from $29
       million in FY05
     * Q2:06 operating margin of 15.3%, level with Q2:05; year-to-date
       operating margin of 16.6%, up 100 basis points from FY05
     In the quarter, net income was negatively affected by a $1.1 million
 reserve for equipment and components for an older product no longer expected
 to be marketed.  However, this was offset by favorable currency exchange,
 higher short-term interest rates, and a lower tax rate.  The lower tax rate
 (33.3% in Q2:06 versus 35.3% in Q2:05) is a result of a favorable
 determination of a tax deduction.
     Haemonetics achieved an increase in cash and short term investments on the
 balance sheet of $11.9 million over Q1:06 for a second quarter end cash
 balance of $210 million.  The Company also generated $14.3 million in cash
 flow from operating activities for the quarter.
     Haemonetics will post detailed information on the positive effects of
 currency and the Company's annual guidance on the web at
     Plasma disposables revenue was $26 million for the quarter, up 7.0% from
 Q2:05 and $53 million year-to-date, up 7.1% from FY05.  In the quarter, sales
 benefited from disposables unit growth in the U.S. as the plasma collection
 market rebounds and as Haemonetics gains new customers.
     Blood bank revenue was $32 million for the quarter, down 3.4% over Q2:05
 and $65 million year-to-date, up 1.2% from FY05.  In Q2 of last fiscal year,
 the Company had a large, opportunistic sale of an intravenous solution that
 did not recur in Q2 of this fiscal year.
     Red cell disposables revenue was $9 million for the quarter, up 33.8% over
 Q2:05 and $17 million year-to-date, up 32.4% from FY05.  The majority of the
 quarterly revenue growth came from the U.S. where sales increased 47% over
 Q2:05.  Unit growth and an increase in sales of Haemonetics' higher-priced
 filtered disposable set were key drivers of U.S. red cell disposables revenue.
     Disposables revenue for the Patient family of products was $20 million for
 the quarter, level with Q2:05 and $43 million year-to-date, up 4.4% from FY05.
 OrthoPAT(R) brand disposables revenue was $4.5 million for the quarter, up
 2.6% over Q2:05 and $10 million year-to-date, up 15.3% from FY05.  As
 expected, U.S. OrthoPAT sales declined sequentially from Q1:06 as the Company
 shifted U.S. sales from a distribution relationship to direct sales on August
 29, 2005.
     Particularly strong equipment and miscellaneous/service revenue growth in
 the second quarter contributed to the Company's overall revenue growth.  Q2:06
 equipment sales were $7 million, up 156.7% over Q2:05.  Equipment growth came
 from the sales of cell processing systems in the U.S., plasma systems in
 Europe and the newly introduced CS5+ devices worldwide.  Miscellaneous and
 service revenue grew to $7 million in Q2:06, up 69.6% over Q2:05.  Most of
 this revenue growth came from the 5D Information Management division as it
 made gains in penetrating the broader blood collection market for its
 information technology systems.
     Haemonetics announced today that it has amended its development agreement
 with Arryx, Inc. to expand the field of use for research and product
 development.  The new agreement gives Haemonetics exclusive rights to
 applications, using Arryx's nanotechnology, beyond blood to all of human
     The Company also said that it has received FDA 510(k) clearance of its
 SmartSuction(R) HARMONY(TM) surgical suction system.  The Company has begun
 customer acceptance trials of this device as part of its planned product
     Haemonetics will hold a conference call on Thursday, October 27th at 10:00
 am eastern to review the financial and operational performance of the quarter.
     Interested parties can participate by calling (800) 322-0079 (US only) or
 (973) 935-2100.  The call will be replayed through November 11th at (877) 519-
 4471 (US only) or (973) 341-3080 using PIN 6507162.
     Brad Nutter will be presenting at the Piper Jaffray Conference in Chicago
 on December 8, 2005.
     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
     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
      Julie Fallon
      Tel. (781) 356-9517
      Alternate Tel. (617) 320-2401
                              SECOND QUARTER FYE06
                                                                    % Inc/(Dec)
                                                                      vs prior
                                              10/01/05    10/02/04       year
     NET REVENUES                             $100,488     $90,923       10.5
     Gross profit                               51,765      45,549       13.6
           R&D                                   6,283       4,253       47.7
           S, G & A                             30,103      27,385        9.9
     Operating expenses                         36,386      31,638       15.0
     Operating income                           15,379      13,911       10.6
           Interest expense                       (522)       (636)     (17.9)
           Interest income                       1,083         502      115.7
           Other income/(expense), net             481         (69)    (797.1)
     Income before taxes                        16,421      13,708       19.8
     Tax expense                                 5,476       4,834       13.3
     NET INCOME                                $10,945      $8,874       23.3
     Net income per common share
      assuming dilution                          $0.40       $0.34       17.6
     Weighted average number of shares
           Basic                                26,395      25,258
           Diluted                              27,354      25,784
                                                                      vs prior
                                                                    year profit
                   PROFIT MARGINS                                      margin %
     Gross profit                                51.5%       50.1%        1.4
     R&D                                          6.3%        4.7%
     S, G & A                                    30.0%       30.1%
     Operating income                            15.3%       15.3%        0.0
     Income before taxes                         16.3%       15.1%        1.2
     Net income                                  10.9%        9.8%
                                                                   % Inc/(Dec)
                                                                     vs prior
                                             10/01/05    10/02/04       year
     NET REVENUES                            $203,661    $185,525       9.8
     Gross profit                             106,289      92,649      14.7
          R&D                                  11,824       8,307      42.3
          S, G & A                             60,591      55,469       9.2
     Operating expenses                        72,415      63,776      13.5
     Operating income                          33,874      28,873      17.3
          Interest expense                     (1,063)     (1,297)    (18.0)
          Interest income                       2,396         865     177.0
          Other income/(expense), net           1,345        (301)   (546.8)
     Income before taxes                       36,552      28,140      29.9
     Tax expense                               12,723       9,446      34.7
     NET INCOME                               $23,829     $18,694      27.5
     Net income per common share
      assuming dilution                         $0.87       $0.73      19.2
     Weighted average number of shares
          Basic                                26,338      25,207
          Diluted                              27,279      25,681
                                                                     vs prior
                                                                    year profit
                        PROFIT MARGINS                                margin %
     Gross profit                               52.2%       49.9%        2.3
     R&D                                         5.8%        4.5%
     S,G&A                                      29.8%       29.9%
     Operating  income                          16.6%       15.6%        1.0
     Income before taxes                        17.9%       15.2%        2.8
     Net income                                 11.7%       10.1%
                                REVENUE ANALYSIS
                                                    SECOND QUARTER
                                             10/01/05   10/02/04  % Inc/(Dec)
     Revenues by Geography
                United States                 $37,930    $30,403     24.8
                International                  62,558     60,520      3.4
                Net Revenues                 $100,488    $90,923     10.5
     Disposable Revenues by Product Family
                Plasma                        $25,938    $24,238      7.0
                Blood Bank                     32,193     33,338     (3.4)
                Red Cell                        8,903      6,653     33.8
                                              $67,034    $64,229      4.4
                Surgical                      $19,930    $20,045     (0.6)
                Subtotal                      $86,964    $84,274      3.2
     Equipment                                 $6,623     $2,580    156.7
     Misc & Service                             6,901      4,069     69.6
     Net Revenues                            $100,488    $90,923     10.5
                                                   SIX MONTHS ENDED
                                             10/01/05    10/02/04  % Inc/(Dec)
     Revenues by Geography
                United States                 $76,153     $63,310    20.3
                International                 127,508     122,215     4.3
                Net Revenues                 $203,661    $185,525     9.8
     Disposable Revenues by Product Family
                Plasma                        $53,241      49,724     7.1
                Blood Bank                     64,883      64,107     1.2
                Red Cell                       17,358      13,114    32.4
                                              135,482     126,945     6.7
                Surgical                      $42,615     $40,818     4.4
                Subtotal                     $178,097    $167,763     6.2
     Equipment                                 12,734       9,253    37.6
     Misc & Service                            12,830       8,509    50.8
     Net Revenues                            $203,661    $185,525     9.8
                          CONSOLIDATED BALANCE SHEETS
                                                        Period ending
                                              10/01/05                 4/02/05
     Cash & cash equivalents                  $209,981                $185,815
     Short-term investments                         --                      --
     Accounts receivable, net                   83,409                  80,719
     Inventories, net                           57,581                  53,088
     Other current assets                       28,089                  23,989
        Total current assets                   379,060                 343,611
     Net PP&E                                   67,075                  69,337
     Other assets                               53,088                  54,809
        Total assets                          $499,223                $467,757
                                                        Period ending
                                              10/01/05                 4/02/05
     S/T debt & current maturities             $27,643                 $26,612
      Other current liabilities                 60,256                  61,310
     Total current liabilities                  87,899                  87,922
     Deferred tax liability, net                     0                       0
     Long-term debt                             18,967                  19,231
     Other long-term liabilities                 5,107                   5,469
     Stockholders' equity                      387,250                 355,135
     Total liabilities & equity               $499,223                $467,757

SOURCE Haemonetics Corporation