Immucor Announces Third Quarter Results; Implements $4 Million Cost Saving and Layoff Plan

Apr 12, 2001, 01:00 ET from Immucor, Inc.

    NORCROSS, Ga., April 12 /PRNewswire/ -- Immucor, Inc. (Nasdaq:   BLUD), the
 global leader in providing automated instrument-reagent systems to the blood
 transfusion industry, today announced results for the fiscal third quarter and
 nine months ended February 28, 2001.  Revenues for the nine months decreased
 $7.6 million to $50.8 million as compared to the previous year of
 $58.4 million.  Diluted earnings per share were $(0.89), $(0.25) before
 nonrecurring expenses, versus $0.40 in the prior year.  The Company also
 announced a cost saving and layoff plan designed to reduce costs by
 $4.0 million a year.
     Sales for the quarter were $16.9 million compared to $19.2 million in this
 previous period.  For the three months ended February 28, 2001, the Company
 operated at a loss of $0.95 million, or $(0.13) per diluted share before
 nonrecurring charges of $5.6 million, or $(0.77) per diluted share including
 the nonrecurring charges, compared to earnings of $0.10 per diluted share for
 the same period in fiscal 2000.
     Third quarter and year-to-date results were impacted adversely by ABS2000
 performance problems discovered in June 2000, which caused the company to
 issue a safety alert.  The items mentioned below including sales, cost of
 sales and other factors accounted for a loss of ($0.22) per diluted share for
 the quarter before costs associated with the implementation of the savings
 plan and write down of goodwill.
 
     Sales Factors
     Instrument sales of $0.8 million compared to $2.8 million recorded in the
 same quarter last year reflect delays in customers accepting instruments.
 During June 2000 isolated performance issues were experienced by certain
 ABS2000 customers.  The Company took a prudent approach and issued a safety
 notification requesting customers to confirm ABS2000 results until the cause
 of the difficulty was corrected.  On December 7, 2000, the Company removed the
 safety alert for the antibody screening and crossmatch assays performed on the
 ABS2000, however, the safety alert remains in place for blood grouping assays.
 The Company's corrective action plan for blood grouping was agreed to by the
 Food and Drug Administration and the Company has begun implementing this plan.
 These performance issues may result in further delays in customers accepting
 instruments, as mentioned above, which would further adversely impact sales
 and earnings.  During the quarter and for the nine-month period, the Company
 has issued credits reducing sales $0.2 million and $0.6 million, respectively.
 Also, the strength of the U.S. dollar versus the Euro had the effect of
 reducing reported European sales by approximately $0.9 million compared to the
 prior year's quarter.
 
     Cost of Sales Factors
     Cost of sales increased by $0.7 million dollars as compared to the prior
 year's quarter despite the decrease in sales, while gross margin decreased by
 10 percent.  Approximately $0.5 million of the increase was caused by higher
 production costs due to increased FDA regulatory requirements, coupled with
 expenditures incurred to resolve the ABS2000 issue which should decline in
 future periods.  Also, biological contamination and other isolated
 manufacturing problems with certain production lots resulted in additional
 manufacturing costs of approximately $0.2 million.  In addition, lower
 instrument sales caused under-absorption of fixed instrumentation support
 costs, which negatively impacted the gross margin.
 
     Other Factors
     Interest expense, for the third quarter, increased $0.5 million when
 compared to the same quarter in fiscal 2000 due to higher interest rates and
 increased borrowings for prior acquisitions, share buyback programs and new
 capital leases for equipment purchases.  Also, the positive impact of an
 interest rate swap, which offset expense in the prior year, did not occur this
 quarter.
 
     Impairment of Goodwill
     Due to continued operating losses and a reorganization at the Company's
 French and Belgian operations, an impairment in value of the goodwill related
 to these acquisitions caused a non-cash, nonrecurring impact on earnings of
 approximately $3.3 million or $0.45 per diluted share.
 
     Cost Savings Plan
     The Company is implementing a cost savings plan designed to reduce costs
 over $4.0 million a year through layoffs, the closure of operations in the
 Netherlands and curtailed spending.  Officers of the Company have agreed to a
 salary reduction, which approximates an average of 8 percent of their total
 base compensation.  Layoffs are projected to account for about $3.0 million
 while the remainder is expected to be achieved through a reduction in programs
 and closure of the Dutch operations.  As a result, for the third quarter the
 Company recorded approximately $1.3 million in nonrecurring expenses related
 to the implementation of the plan.  The bulk of these costs are included in
 general and administrative expenses and are primarily related to severance.
     Edward L. Gallup, Chairman and Chief Executive Officer stated: "We are
 disappointed with the Company's performance and have taken measures through a
 cost reduction plan which should result in a return to profitability in future
 quarters.  We were forced to take these measures as instrument sales have not
 increased as previously expected due to a delay in the completion of the
 corrective action plan for blood grouping on the ABS2000.  These measures are
 carefully designed not to impact the consistent supply of high quality
 products and service to our customers."
     Commenting further Mr. Gallup said, "On a positive note, we have recently
 received confirmation that our aggressive reagent pricing strategy is
 beginning to work.  We have renewed an important national account purchasing
 agreement at higher prices.  We also have added a new national account with a
 significant number of hospitals at prices that should also significantly
 improve sales and profits.  We expect to release details of these contracts
 next week."
     Founded in 1982, Immucor manufactures and sells a complete line of
 reagents and systems used by hospitals, reference laboratories and donor
 centers to detect and identify certain properties of the cell and serum
 components of blood prior to transfusion.  Immucor markets a complete family
 of automated instrumentation for all of our market segments.
     For more information on Immucor, please visit the Web site at
 www.immucor.com .
     This press release contains forward-looking statements as that term is
 defined in the Private Securities Reform Act of 1995, including, without
 limitation, statements concerning the Company's expectations, beliefs,
 intentions or strategies regarding the future.  All forward-looking statements
 included in this document are based on information available to the Company on
 the date hereof, and the Company assumes no obligation to update any such
 forward-looking statements.  Specifically, the statements regarding the
 Company's return to profitability, the effectiveness of the cost reduction
 plan, the contribution to sales and profits of the two customer accounts
 mentioned, and the regulatory costs related to the ABS2000 are forward looking
 statements.  A number of factors could adversely affect our ability to achieve
 these things, such as continued delays in completing the ABS2000 corrective
 action plan for blood grouping, the decision of customers to defer capital
 spending, increased competition in the sale of instruments and reagents,
 continued levels of adequate working capital considering recent Company
 performance, changes in interest rates and general economic conditions.  In
 addition, the continued strengthening of the dollar versus the Euro would
 further adversely impact reported European results.  Further risks are
 detailed in the Company's filings with the Securities and Exchange Commission,
 including those set forth in the Company's most recent Form 10-K and Quarterly
 Reports on Form 10-Q.
 
                             (Financials To Follow)
 
                                   IMMUCOR, INC.
                    Condensed Consolidated Statements of Income
                                    (Unaudited)
 
 
                              Three Months Ended         Nine Months Ended
                          February 28, February 29,  February 28,  February 29,
                              2001         2000         2001          2000
 
     Net sales             $16,861,462  $19,201,121  $50,755,968  $58,380,907
     Cost of sales           9,694,508    9,025,124   27,101,711   27,248,423
     Gross profit            7,166,954   10,175,997   23,654,257   31,132,484
 
     Research and
      development              498,361      553,079    1,499,715    1,283,336
     Selling and marketing   3,283,774    2,999,163    9,530,653    8,919,250
     Distribution            1,492,278    1,422,632    4,331,402    4,421,592
     General and
      administrative         3,493,170    2,732,826    7,994,995    7,972,114
     Loss on impairment of
      goodwill               3,308,119          ---    3,308,119          ---
     Amortization expense      455,309      453,352    1,383,062    1,353,600
     Total operating
      expenses              12,531,011    8,161,052   28,047,946   23,949,892
 
     (Loss) / income from
      operations            (5,364,057)   2,014,945   (4,393,689)   7,182,592
 
     Interest income                 0        3,967       11,159       14,582
     Interest expense       (1,191,940)    (707,131)  (2,861,815)  (2,146,657)
     Other                      56,698       30,760      183,644      180,847
     Total other            (1,135,242)    (672,404)  (2,667,012)  (1,951,228)
 
     (Loss) / income
      before income taxes   (6,499,299)   1,342,541   (7,060,701)   5,231,364
 
     Income taxes
      (benefit) / expense     (871,898)     504,645     (605,620)   1,734,277
 
     Net (loss) / income   $(5,627,401)    $837,896  $(6,455,081)  $3,497,087
 
 
     (Loss) / earnings per
      share:
 
          Basic                 $(0.77)       $0.11       $(0.89)       $0.45
 
          Diluted               $(0.77)       $0.10       $(0.89)       $0.40
 
     Weighted average
      shares outstanding:
 
          Basic              7,277,617    7,816,012    7,289,012    7,715,560
 
          Diluted            7,277,617    8,671,191    7,289,012    8,685,157
 
 
 
                                   IMMUCOR, INC.
                            Selected Balance Sheet Items
 
                                             February 28, 2001    May 31, 2000
 
     Total Current Assets                        $48,849,979       $45,021,469
     Total Assets                                101,681,616       102,774,879
     Total Current Liabilities                    25,988,484        23,153,508
     Long-Term Debt and Other Liabilities         43,158,732        38,702,573
     Shareholders' Equity                         32,534,400        40,918,798
 
 

SOURCE Immucor, Inc.
    NORCROSS, Ga., April 12 /PRNewswire/ -- Immucor, Inc. (Nasdaq:   BLUD), the
 global leader in providing automated instrument-reagent systems to the blood
 transfusion industry, today announced results for the fiscal third quarter and
 nine months ended February 28, 2001.  Revenues for the nine months decreased
 $7.6 million to $50.8 million as compared to the previous year of
 $58.4 million.  Diluted earnings per share were $(0.89), $(0.25) before
 nonrecurring expenses, versus $0.40 in the prior year.  The Company also
 announced a cost saving and layoff plan designed to reduce costs by
 $4.0 million a year.
     Sales for the quarter were $16.9 million compared to $19.2 million in this
 previous period.  For the three months ended February 28, 2001, the Company
 operated at a loss of $0.95 million, or $(0.13) per diluted share before
 nonrecurring charges of $5.6 million, or $(0.77) per diluted share including
 the nonrecurring charges, compared to earnings of $0.10 per diluted share for
 the same period in fiscal 2000.
     Third quarter and year-to-date results were impacted adversely by ABS2000
 performance problems discovered in June 2000, which caused the company to
 issue a safety alert.  The items mentioned below including sales, cost of
 sales and other factors accounted for a loss of ($0.22) per diluted share for
 the quarter before costs associated with the implementation of the savings
 plan and write down of goodwill.
 
     Sales Factors
     Instrument sales of $0.8 million compared to $2.8 million recorded in the
 same quarter last year reflect delays in customers accepting instruments.
 During June 2000 isolated performance issues were experienced by certain
 ABS2000 customers.  The Company took a prudent approach and issued a safety
 notification requesting customers to confirm ABS2000 results until the cause
 of the difficulty was corrected.  On December 7, 2000, the Company removed the
 safety alert for the antibody screening and crossmatch assays performed on the
 ABS2000, however, the safety alert remains in place for blood grouping assays.
 The Company's corrective action plan for blood grouping was agreed to by the
 Food and Drug Administration and the Company has begun implementing this plan.
 These performance issues may result in further delays in customers accepting
 instruments, as mentioned above, which would further adversely impact sales
 and earnings.  During the quarter and for the nine-month period, the Company
 has issued credits reducing sales $0.2 million and $0.6 million, respectively.
 Also, the strength of the U.S. dollar versus the Euro had the effect of
 reducing reported European sales by approximately $0.9 million compared to the
 prior year's quarter.
 
     Cost of Sales Factors
     Cost of sales increased by $0.7 million dollars as compared to the prior
 year's quarter despite the decrease in sales, while gross margin decreased by
 10 percent.  Approximately $0.5 million of the increase was caused by higher
 production costs due to increased FDA regulatory requirements, coupled with
 expenditures incurred to resolve the ABS2000 issue which should decline in
 future periods.  Also, biological contamination and other isolated
 manufacturing problems with certain production lots resulted in additional
 manufacturing costs of approximately $0.2 million.  In addition, lower
 instrument sales caused under-absorption of fixed instrumentation support
 costs, which negatively impacted the gross margin.
 
     Other Factors
     Interest expense, for the third quarter, increased $0.5 million when
 compared to the same quarter in fiscal 2000 due to higher interest rates and
 increased borrowings for prior acquisitions, share buyback programs and new
 capital leases for equipment purchases.  Also, the positive impact of an
 interest rate swap, which offset expense in the prior year, did not occur this
 quarter.
 
     Impairment of Goodwill
     Due to continued operating losses and a reorganization at the Company's
 French and Belgian operations, an impairment in value of the goodwill related
 to these acquisitions caused a non-cash, nonrecurring impact on earnings of
 approximately $3.3 million or $0.45 per diluted share.
 
     Cost Savings Plan
     The Company is implementing a cost savings plan designed to reduce costs
 over $4.0 million a year through layoffs, the closure of operations in the
 Netherlands and curtailed spending.  Officers of the Company have agreed to a
 salary reduction, which approximates an average of 8 percent of their total
 base compensation.  Layoffs are projected to account for about $3.0 million
 while the remainder is expected to be achieved through a reduction in programs
 and closure of the Dutch operations.  As a result, for the third quarter the
 Company recorded approximately $1.3 million in nonrecurring expenses related
 to the implementation of the plan.  The bulk of these costs are included in
 general and administrative expenses and are primarily related to severance.
     Edward L. Gallup, Chairman and Chief Executive Officer stated: "We are
 disappointed with the Company's performance and have taken measures through a
 cost reduction plan which should result in a return to profitability in future
 quarters.  We were forced to take these measures as instrument sales have not
 increased as previously expected due to a delay in the completion of the
 corrective action plan for blood grouping on the ABS2000.  These measures are
 carefully designed not to impact the consistent supply of high quality
 products and service to our customers."
     Commenting further Mr. Gallup said, "On a positive note, we have recently
 received confirmation that our aggressive reagent pricing strategy is
 beginning to work.  We have renewed an important national account purchasing
 agreement at higher prices.  We also have added a new national account with a
 significant number of hospitals at prices that should also significantly
 improve sales and profits.  We expect to release details of these contracts
 next week."
     Founded in 1982, Immucor manufactures and sells a complete line of
 reagents and systems used by hospitals, reference laboratories and donor
 centers to detect and identify certain properties of the cell and serum
 components of blood prior to transfusion.  Immucor markets a complete family
 of automated instrumentation for all of our market segments.
     For more information on Immucor, please visit the Web site at
 www.immucor.com .
     This press release contains forward-looking statements as that term is
 defined in the Private Securities Reform Act of 1995, including, without
 limitation, statements concerning the Company's expectations, beliefs,
 intentions or strategies regarding the future.  All forward-looking statements
 included in this document are based on information available to the Company on
 the date hereof, and the Company assumes no obligation to update any such
 forward-looking statements.  Specifically, the statements regarding the
 Company's return to profitability, the effectiveness of the cost reduction
 plan, the contribution to sales and profits of the two customer accounts
 mentioned, and the regulatory costs related to the ABS2000 are forward looking
 statements.  A number of factors could adversely affect our ability to achieve
 these things, such as continued delays in completing the ABS2000 corrective
 action plan for blood grouping, the decision of customers to defer capital
 spending, increased competition in the sale of instruments and reagents,
 continued levels of adequate working capital considering recent Company
 performance, changes in interest rates and general economic conditions.  In
 addition, the continued strengthening of the dollar versus the Euro would
 further adversely impact reported European results.  Further risks are
 detailed in the Company's filings with the Securities and Exchange Commission,
 including those set forth in the Company's most recent Form 10-K and Quarterly
 Reports on Form 10-Q.
 
                             (Financials To Follow)
 
                                   IMMUCOR, INC.
                    Condensed Consolidated Statements of Income
                                    (Unaudited)
 
 
                              Three Months Ended         Nine Months Ended
                          February 28, February 29,  February 28,  February 29,
                              2001         2000         2001          2000
 
     Net sales             $16,861,462  $19,201,121  $50,755,968  $58,380,907
     Cost of sales           9,694,508    9,025,124   27,101,711   27,248,423
     Gross profit            7,166,954   10,175,997   23,654,257   31,132,484
 
     Research and
      development              498,361      553,079    1,499,715    1,283,336
     Selling and marketing   3,283,774    2,999,163    9,530,653    8,919,250
     Distribution            1,492,278    1,422,632    4,331,402    4,421,592
     General and
      administrative         3,493,170    2,732,826    7,994,995    7,972,114
     Loss on impairment of
      goodwill               3,308,119          ---    3,308,119          ---
     Amortization expense      455,309      453,352    1,383,062    1,353,600
     Total operating
      expenses              12,531,011    8,161,052   28,047,946   23,949,892
 
     (Loss) / income from
      operations            (5,364,057)   2,014,945   (4,393,689)   7,182,592
 
     Interest income                 0        3,967       11,159       14,582
     Interest expense       (1,191,940)    (707,131)  (2,861,815)  (2,146,657)
     Other                      56,698       30,760      183,644      180,847
     Total other            (1,135,242)    (672,404)  (2,667,012)  (1,951,228)
 
     (Loss) / income
      before income taxes   (6,499,299)   1,342,541   (7,060,701)   5,231,364
 
     Income taxes
      (benefit) / expense     (871,898)     504,645     (605,620)   1,734,277
 
     Net (loss) / income   $(5,627,401)    $837,896  $(6,455,081)  $3,497,087
 
 
     (Loss) / earnings per
      share:
 
          Basic                 $(0.77)       $0.11       $(0.89)       $0.45
 
          Diluted               $(0.77)       $0.10       $(0.89)       $0.40
 
     Weighted average
      shares outstanding:
 
          Basic              7,277,617    7,816,012    7,289,012    7,715,560
 
          Diluted            7,277,617    8,671,191    7,289,012    8,685,157
 
 
 
                                   IMMUCOR, INC.
                            Selected Balance Sheet Items
 
                                             February 28, 2001    May 31, 2000
 
     Total Current Assets                        $48,849,979       $45,021,469
     Total Assets                                101,681,616       102,774,879
     Total Current Liabilities                    25,988,484        23,153,508
     Long-Term Debt and Other Liabilities         43,158,732        38,702,573
     Shareholders' Equity                         32,534,400        40,918,798
 
 SOURCE  Immucor, Inc.