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) April 29, 2015
HOLOGIC, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-36214 | 04-2902449 | |
(Commission File Number) | (I.R.S. Employer Identification No.) |
35 Crosby Drive, Bedford, MA | 01730 | |
(Address of Principal Executive Offices) | (Zip Code) |
(781) 999-7300
(Registrant’s Telephone Number, Including Area Code)
(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:
¨ | 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)) |
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2015, Hologic, Inc. issued a press release announcing its financial results for the second quarter ended March 28, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.
Limitation on Incorporation by Reference. The information furnished in this Item 2.02, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
Description | |
99.1 |
Press release dated April 29, 2015 of Hologic, Inc. announcing its financial results for the second quarter ended March 28, 2015. |
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.
Date: April 29, 2015 | HOLOGIC, INC. | |||
By: | /s/ Robert W. McMahon | |||
Robert W. McMahon | ||||
Chief Financial Officer |
EXHIBIT INDEX
Exhibit Number |
Description | |
99.1 |
Press release dated April 29, 2015 of Hologic, Inc. announcing its financial results for the second quarter ended March 28, 2015. |
Hologic Announces Financial Results for Second Quarter Fiscal 2015
BEDFORD, Mass., April 29, 2015 /PRNewswire/ -- Hologic, Inc. (NASDAQ: HOLX) announced today the Company's financial results for the second fiscal quarter ended March 28, 2015. Quarterly revenues of $655.5 million increased 4.9% on a reported basis, and 7.2% on a constant currency basis. Non-GAAP earnings per share (EPS) increased 10.8%, to $0.41.
"We posted strong organic revenue growth across the board for a second straight quarter, while profitability increased at an even faster rate," said Steve MacMillan, Hologic's President and Chief Executive Officer. "As a Company, we have come a long way in a short period of time. While we focus on continuing to improve our performance, we are increasingly confident in our people and products, and are therefore further raising our financial outlook for the year."
Key financial results for the second fiscal quarter are shown below. Throughout this press release, all dollar figures except EPS are in millions. Unless otherwise noted, all results are for the second quarter of fiscal 2015, are on a reported basis, and are compared to the prior year period.
| GAAP |
| Non-GAAP | ||||
| Q2'15 | Q2'14 | Change (Reported) |
| Q2'15 | Q2'14 | Change (Reported) |
Revenues | $655.5 | $625.0 | 4.9% |
| $655.5 | $625.0 | 4.9% |
Gross Margin | 51.3% | 45.1% | 620 bps |
| 63.4% | 62.5% | 90 bps |
Operating Expenses | $226.2 | $231.9 | (2.5%) |
| $195.9 | $187.9 | 4.3% |
Operating Margin | 16.8% | 8.0% | 880 bps |
| 33.5% | 32.4% | 110 bps |
Net Income (Loss) | $47.8 | ($16.8) | N/M |
| $118.9 | $103.1 | 15.3% |
Diluted EPS | $0.17 | ($0.06) | N/M |
| $0.41 | $0.37 | 10.8% |
Revenue Detail
Revenues grew in all four business segments in the second fiscal quarter, and increased 7.2% on a constant currency basis:
$s in millions | Q2'15 | Q2'14 | Change (Reported) | Change (Constant Currency) |
Diagnostics | $296.7 | $290.8 | 2.0% | 4.1% |
Breast Health | $255.5 | $238.7 | 7.0% | 9.4% |
GYN Surgical | $79.1 | $72.0 | 9.8% | 11.9% |
Skeletal Health | $24.2 | $23.5 | 3.3% | 8.1% |
Total | $655.5 | $625.0 | 4.9% | 7.2% |
Other revenue highlights from the second quarter of fiscal 2015 include:
Expense Detail
Gross margin was 51.3% on a GAAP basis, and 63.4% on a non-GAAP basis. On a non-GAAP basis, gross margin improved mainly due to strong sales growth in the U.S. market, and favorable product mix in the Breast Health division.
Operating expenses were $226.2 million on a GAAP basis, and $195.9 million on a non-GAAP basis. The 4.3% increase in non-GAAP operating expenses resulted mainly from higher research and development investment in the Diagnostics business, and increased marketing spending in the Breast Health division. These increases were offset by lower general and administrative expenses.
Adjusted non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) were $238.6 million in the second quarter, an increase of 7.3%.
Balance Sheet and Cash Flows
Hologic continues to focus on reducing its debt. Total debt outstanding at the end of the second fiscal quarter was $3,939.8 million, a $327.9 million decrease from the end of fiscal 2014. The Company ended the quarter with cash and equivalents of $675.1 million.
Operating cash flow was $157.8 million, while free cash flow, defined as operating cash flow less capital expenditures, was $139.2 million.
Updated Financial Guidance
Based on its strong performance in the second quarter of fiscal 2015, Hologic is raising its full year 2015 revenue and non-GAAP EPS guidance, as shown in the table below. The guidance for reported results is based on recent foreign exchange rates. Percentage changes from the prior year exclude the one-time benefit associated with amending the Roka license agreement, which added $20.1 million of revenue and $0.05 of EPS to the fourth quarter of fiscal 2014.
| New Guidance | Last Guidance From 1/28/15 | New Guidance vs.
| New Guidance vs.
(Constant Currency) |
Revenues | $2,600 to $2,620 million | $2,570 to $2,600 million | 3.6% to 4.4% | 5.8% to 6.6% |
Non-GAAP EPS | $1.57 to $1.59 | $1.54 to $1.57 | 7.5% to 8.9% | 11.6% to 13.0% |
Since Hologic last provided financial guidance on January 28, 2015, the US dollar has continued to strengthen. If the dollar were at the same level today as it was in January, the Company's new revenue guidance would have been approximately $9 million higher, and its new EPS guidance would have been about $0.01 higher.
For the third quarter of fiscal 2015, Hologic now expects:
| Guidance | Change vs. Prior Year
| Change vs. Prior Year
|
Revenues | $645 to $655 million | 2.0% to 3.5% | 4.7% to 6.3% |
Non-GAAP EPS | $0.38 to $0.39 | 2.7% to 5.4% | 8.1% to 10.8% |
Use of Non-GAAP Financial Measures
The Company has presented the following non-GAAP financial measures in this press release: constant currency revenues; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP net income; non-GAAP EPS; and adjusted EBITDA. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill and intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration, transaction costs, integration costs including retention, and credits and/or charges associated with the write-up of acquired inventory and fixed assets to fair value; (iii) non-cash interest expense related to amortization of the debt discount from the equity conversion option of the convertible notes; (iv) restructuring and divestiture charges; (v) debt extinguishment losses and related transaction costs; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on investments; (viii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (ix) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income.
The Company believes the use of non-GAAP financial measures is useful to investors by eliminating certain of the more significant effects of its acquisitions and related activities, non-cash charges resulting from the application of GAAP to convertible debt instruments with cash settlement features, charges related to debt extinguishment losses, investment impairments, litigation settlements, and restructuring and divestiture initiatives. These non-GAAP measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of the Company's non-GAAP net income and EPS, its adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. As with the items eliminated in its calculation of non-GAAP net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing the Company's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.
Future Non-GAAP Adjustments
Future GAAP EPS may be affected by changes in ongoing assumptions and judgments, and may also be affected by non-recurring, unusual or unanticipated charges, expenses or gains, which are excluded in the calculation of the Company's non-GAAP EPS guidance as described in this press release. It is therefore not practicable to reconcile non-GAAP EPS guidance to the most comparable GAAP measure.
Conference Call and Webcast
Hologic's management will host a conference call at 4:30 p.m. ET today to discuss its second quarter fiscal 2015 operating results. Approximately 10 minutes before the call, dial 877-675-4751 (US and Canada) or 719-325-4802 (international) and enter access code 1755131. A replay will be available starting two hours after the call ends through May 29, 2015, at 888-203-1112 or 719-457-0820 for international callers, access code 1755131. The Company will also provide a live webcast of the call at www.investors.hologic.com/investors-overview. A PowerPoint presentation related to the conference call will be posted to the same site.
About Hologic, Inc.
Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products. The Company's core business units focus on diagnostics, breast health, GYN surgical, and skeletal health. With a unified suite of technologies and a robust research and development program, Hologic is dedicated to The Science of Sure. For more information on Hologic, visit www.hologic.com.
Hologic, Genius 3D mammography, Aptima, ThinPrep, MyoSure, NovaSure, Panther, Tigris, The Science of Sure, and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.
Forward-Looking Statements
This News Release contains forward-looking information that involves risks and uncertainties, including statements about the Company's plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information included herein based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company's strategies, positioning, resources, capabilities, and expectations for future performance; and the Company's outlook and financial and other guidance. These forward-looking statements are based upon assumptions made by the Company as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.
Risks and uncertainties that could adversely affect the Company's business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and general worldwide economic conditions and related uncertainties; the Company's reliance on third-party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; uncertainties regarding healthcare reform legislation, including associated tax provisions, or budget reduction or other cost containment efforts; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company's products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company's ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, and the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company's international activities and businesses; manufacturing risks, including the Company's reliance on a single or limited source of supply for key components, and the need to comply with especially high standards for the manufacture of many of its products; the Company's ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company's products; the Company's leverage risks, including the Company's obligation to meet payment obligations and financial covenants associated with its debt; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.
The risks included above are not exhaustive. Other factors that could adversely affect the Company's business and prospects are described in the filings made by the Company with the SEC. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based.
Contact
Michael Watts
Vice President, Investor Relations and
Corporate Communications
(858) 410-8588
HOLOGIC, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
(In millions, except number of shares, which are reflected in thousands, and per share data) | |||||||||||||||
| |||||||||||||||
|
|
|
| ||||||||||||
| Three Months Ended |
| Six Months Ended | ||||||||||||
| March 28, 2015 |
| March 29, 2014 |
| March 28, 2015 |
| March 29, 2014 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Revenues: |
|
|
|
|
|
|
| ||||||||
Product | $ | 546.4 |
|
| $ | 521.1 |
|
| $ | 1,093.0 |
|
| $ | 1,033.5 |
|
Service and other | 109.1 |
|
| 103.9 |
|
| 215.3 |
|
| 203.9 |
| ||||
Total revenues | 655.5 |
|
| 625.0 |
|
| 1,308.3 |
|
| 1,237.4 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Cost of revenues: |
|
|
|
|
|
|
| ||||||||
Product | 186.7 |
|
| 185.7 |
|
| 373.4 |
|
| 362.6 |
| ||||
Amortization of intangible assets | 78.6 |
|
| 76.9 |
|
| 152.5 |
|
| 153.5 |
| ||||
Impairment of intangible assets | — |
|
| 26.6 |
|
| — |
|
| 26.6 |
| ||||
Service and other | 54.2 |
|
| 53.7 |
|
| 107.8 |
|
| 107.0 |
| ||||
Total cost of revenues | 319.5 |
|
| 342.9 |
|
| 633.7 |
|
| 649.7 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Gross profit | 336.0 |
|
| 282.1 |
|
| 674.6 |
|
| 587.7 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Research and development | 53.3 |
|
| 49.9 |
|
| 105.2 |
|
| 98.6 |
| ||||
Selling and marketing | 83.0 |
|
| 78.7 |
|
| 169.0 |
|
| 161.9 |
| ||||
General and administrative | 60.3 |
|
| 62.1 |
|
| 121.7 |
|
| 129.9 |
| ||||
Amortization of intangible assets | 27.6 |
|
| 29.1 |
|
| 55.4 |
|
| 55.3 |
| ||||
Impairment of intangible assets | — |
|
| 0.5 |
|
| — |
|
| 0.5 |
| ||||
Restructuring and divestiture charges | 2.0 |
|
| 11.6 |
|
| 10.0 |
|
| 30.0 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Total operating expenses | 226.2 |
|
| 231.9 |
|
| 461.3 |
|
| 476.2 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Income from operations | 109.8 |
|
| 50.2 |
|
| 213.3 |
|
| 111.5 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Other expense: |
|
|
|
|
|
|
| ||||||||
Interest expense | (49.4) |
|
| (54.4) |
|
| (101.9) |
|
| (115.7) |
| ||||
Other income (expense), net | 0.4 |
|
| (3.2) |
|
| 0.2 |
|
| (1.6) |
| ||||
Debt extinguishment loss | — |
|
| (4.4) |
|
| (6.7) |
|
| (7.4) |
| ||||
Total other expense | (49.0) |
|
| (62.0) |
|
| (108.4) |
|
| (124.7) |
| ||||
|
|
|
|
|
|
|
| ||||||||
Income (loss) before income taxes | 60.8 |
|
| (11.8) |
|
| 104.9 |
|
| (13.2) |
| ||||
Provision for income taxes | 13.0 |
|
| 5.0 |
|
| 27.9 |
|
| 8.9 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Net income (loss) | $ | 47.8 |
|
| $ | (16.8) |
|
| $ | 77.0 |
|
| $ | (22.1) |
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) per common share: |
|
|
|
|
|
|
| ||||||||
Basic | $ | 0.17 |
|
| $ | (0.06) |
|
| $ | 0.28 |
|
| $ | (0.08) |
|
Diluted | $ | 0.17 |
|
| $ | (0.06) |
|
| $ | 0.27 |
|
| $ | (0.08) |
|
|
|
|
|
|
|
|
| ||||||||
Weighted average number of shares outstanding: |
|
|
|
|
|
|
| ||||||||
Basic | 280,338 |
|
| 274,589 |
|
| 279,505 |
|
| 273,648 |
| ||||
Diluted | 287,580 |
|
| 274,589 |
|
| 285,378 |
|
| 273,648 |
|
HOLOGIC, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(In millions) | |||||||
|
|
|
| ||||
|
|
|
| ||||
| March 28, 2015 |
| September 27, 2014 | ||||
ASSETS |
|
|
| ||||
|
|
|
| ||||
Current assets: |
|
|
| ||||
Cash and cash equivalents | $ | 670.5 |
|
| $ | 736.1 |
|
Restricted cash | 4.6 |
|
| 5.5 |
| ||
Accounts receivable, net | 381.0 |
|
| 396.0 |
| ||
Inventories | 298.2 |
|
| 330.6 |
| ||
Deferred income taxes | — |
|
| 39.4 |
| ||
Other current assets | 62.0 |
|
| 58.2 |
| ||
Total current assets | 1,416.3 |
|
| 1,565.8 |
| ||
|
|
|
| ||||
Property, plant and equipment, net | 451.0 |
|
| 461.9 |
| ||
Goodwill and intangible assets | 6,034.9 |
|
| 6,244.4 |
| ||
Other assets | 129.6 |
|
| 142.6 |
| ||
Total assets | $ | 8,031.8 |
|
| $ | 8,414.7 |
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| ||||
|
|
|
| ||||
Current liabilities: |
|
|
| ||||
Current portion of long-term debt | $ | 581.7 |
|
| $ | 114.5 |
|
Accounts payable and accrued liabilities | 306.0 |
|
| 354.2 |
| ||
Deferred revenue | 156.5 |
|
| 150.9 |
| ||
Total current liabilities | 1,044.2 |
|
| 619.6 |
| ||
|
|
|
| ||||
Long-term debt, net of current portion | 3,358.1 |
|
| 4,153.2 |
| ||
Deferred income taxes | 1,243.5 |
|
| 1,375.4 |
| ||
Other long-term liabilities | 217.4 |
|
| 203.5 |
| ||
Total liabilities | 5,863.2 |
|
| 6,351.7 |
| ||
Total stockholders' equity | 2,168.6 |
|
| 2,063.0 |
| ||
Total liabilities and stockholders' equity | $ | 8,031.8 |
|
| $ | 8,414.7 |
|
HOLOGIC, INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
(In millions) | |||||||
|
| ||||||
|
| ||||||
| Six Months Ended | ||||||
| March 28, 2015 |
| March 29, 2014 | ||||
OPERATING ACTIVITIES |
|
|
| ||||
Net income (loss) | $ | 77.0 |
|
| $ | (22.1) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
| ||||
Depreciation | 40.7 |
|
| 49.0 |
| ||
Amortization | 207.9 |
|
| 208.9 |
| ||
Non-cash interest expense | 33.2 |
|
| 35.8 |
| ||
Stock-based compensation expense | 25.8 |
|
| 26.1 |
| ||
Excess tax benefit related to equity awards | (6.0) |
|
| (4.1) |
| ||
Deferred income taxes | (79.1) |
|
| (164.8) |
| ||
Asset impairment charges | — |
|
| 33.3 |
| ||
Debt extinguishment loss | 6.7 |
|
| 7.4 |
| ||
Loss on disposal of property and equipment | 3.2 |
|
| 3.4 |
| ||
Other | 0.7 |
|
| 2.9 |
| ||
Changes in operating assets and liabilities: |
|
|
| ||||
Accounts receivable | 3.3 |
|
| 21.5 |
| ||
Inventories | 29.0 |
|
| (23.8) |
| ||
Prepaid income taxes | 1.3 |
|
| 44.7 |
| ||
Prepaid expenses and other assets | (2.6) |
|
| 9.8 |
| ||
Accounts payable | (17.8) |
|
| (12.3) |
| ||
Accrued expenses and other liabilities | (19.3) |
|
| (6.5) |
| ||
Deferred revenue | 7.3 |
|
| 9.1 |
| ||
Net cash provided by operating activities | 311.3 |
|
| 218.3 |
| ||
INVESTING ACTIVITIES |
|
|
| ||||
Net proceeds from sale of business | — |
|
| 2.4 |
| ||
Purchase of property and equipment | (20.0) |
|
| (19.8) |
| ||
Increase in equipment under customer usage agreements | (19.7) |
|
| (18.0) |
| ||
Net (purchases) sales of insurance contracts | (6.4) |
|
| 13.8 |
| ||
Purchases of mutual funds | — |
|
| (29.7) |
| ||
Sales of mutual funds | 7.7 |
|
| 18.6 |
| ||
Increase in other assets | (0.6) |
|
| (1.9) |
| ||
Net cash used in investing activities | (39.0) |
|
| (34.6) |
| ||
FINANCING ACTIVITIES |
|
|
| ||||
Repayment of long-term debt | (357.5) |
|
| (562.5) |
| ||
Payment of debt issuance costs | — |
|
| (2.4) |
| ||
Purchase of interest rate caps | (6.1) |
|
| — |
| ||
Payment of deferred acquisition consideration | — |
|
| (5.0) |
| ||
Net proceeds from issuance of common stock pursuant to employee stock plans | 37.4 |
|
| 53.7 |
| ||
Excess tax benefit related to equity awards | 6.0 |
|
| 4.1 |
| ||
Payment of minimum tax withholdings on net share settlements of equity awards | (12.1) |
|
| (9.1) |
| ||
Net cash used in financing activities | (332.3) |
|
| (521.2) |
| ||
Effect of exchange rate changes on cash and cash equivalents | (5.6) |
|
| (0.5) |
| ||
Net decrease in cash and cash equivalents | (65.6) |
|
| (338.0) |
| ||
Cash and cash equivalents, beginning of period | 736.1 |
|
| 822.5 |
| ||
Cash and cash equivalents, end of period | $ | 670.5 |
|
| $ | 484.5 |
|
HOLOGIC, INC. | ||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP RESULTS | ||||||||||||||||||||
Unaudited) (In millions, except earnings per share) | ||||||||||||||||||||
| ||||||||||||||||||||
| Three Months Ended |
| Six Months Ended | |||||||||||||||||
| March 28, 2015 |
| March 29, 2014 |
| March 28, 2015 |
| March 29, 2014 | |||||||||||||
Gross Profit: |
|
|
|
|
|
|
| |||||||||||||
GAAP gross profit | $ | 336.0 |
|
| $ | 282.1 |
|
| $ | 674.6 |
|
| $ | 587.7 |
| |||||
Adjustments: |
|
|
|
|
|
|
| |||||||||||||
Amortization of intangible assets (1) | 78.6 |
|
| 76.9 |
|
| 152.5 |
|
| 153.5 |
| |||||||||
Fair value adjustment to depreciation expense (2) | 0.8 |
|
| 1.8 |
|
| 1.6 |
|
| 3.5 |
| |||||||||
Acquisition and integration-related costs (3) | 0.1 |
|
| 2.9 |
|
| 0.3 |
|
| 5.8 |
| |||||||||
Impairment charges (4) | — |
|
| 26.8 |
|
| — |
|
| 26.8 |
| |||||||||
Other (5) | — |
|
| — |
|
| — |
|
| 0.6 |
| |||||||||
Non-GAAP gross profit | $ | 415.5 |
|
| $ | 390.5 |
|
| $ | 829.0 |
|
| $ | 777.9 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Gross Margin Percentage: |
|
|
|
|
|
|
| |||||||||||||
GAAP gross margin percentage | 51.3 | % |
| 45.1 | % |
| 51.6 | % |
| 47.5 | % | |||||||||
Impact of adjustments above | 12.1 | % |
| 17.4 | % |
| 11.8 | % |
| 15.4 | % | |||||||||
Non-GAAP gross margin percentage | 63.4 | % |
| 62.5 | % |
| 63.4 | % |
| 62.9 | % | |||||||||
|
|
|
|
|
|
|
| |||||||||||||
Operating Expenses: |
|
|
|
|
|
|
| |||||||||||||
GAAP operating expenses | $ | 226.2 |
|
| $ | 231.9 |
|
| $ | 461.3 |
|
| $ | 476.2 |
| |||||
Adjustments: |
|
|
|
|
|
|
| |||||||||||||
Amortization of intangible assets (1) | (27.6) |
|
| (29.1) |
|
| (55.4) |
|
| (55.3) |
| |||||||||
Fair value adjustment to depreciation expense (2) | (0.7) |
|
| (1.3) |
|
| (1.3) |
|
| (2.7) |
| |||||||||
Acquisition and integration-related costs (3) | — |
|
| (1.1) |
|
| — |
|
| (3.3) |
| |||||||||
Restructuring and divestiture charges (3) | (2.0) |
|
| (11.6) |
|
| (10.0) |
|
| (30.0) |
| |||||||||
Impairment charges (4) | — |
|
| (1.8) |
|
| — |
|
| (1.8) |
| |||||||||
Other (5) | — |
|
| 0.9 |
|
| (0.1) |
|
| 0.9 |
| |||||||||
Non-GAAP operating expenses | $ | 195.9 |
|
| $ | 187.9 |
|
| $ | 394.5 |
|
| $ | 384.0 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Operating Margin |
|
|
|
|
|
|
| |||||||||||||
GAAP income from operations | $ | 109.8 |
|
| $ | 50.2 |
|
| $ | 213.3 |
|
| $ | 111.5 |
| |||||
Adjustments to gross profit as detailed above | 79.5 |
|
| 108.4 |
|
| 154.4 |
|
| 190.2 |
| |||||||||
Adjustments to operating expenses as detailed above | 30.3 |
|
|
| 44.0 |
|
| 66.8 |
|
| 92.2 |
| ||||||||
Non-GAAP income from operations | $ | 219.6 |
|
| $ | 202.6 |
|
| $ | 434.5 |
|
| $ | 393.9 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Operating Margin Percentage |
|
|
|
|
|
|
| |||||||||||||
GAAP operating margin percentage | 16.8 | % |
| 8.0 | % |
| 16.3 | % |
| 9.0 | % | |||||||||
Impact of adjustments above | 16.7 | % |
| 24.4 | % |
| 16.9 | % |
| 22.8 | % | |||||||||
Non-GAAP operating margin percentage | 33.5 | % |
| 32.4 | % |
| 33.2 | % |
| 31.8 | % | |||||||||
|
|
|
|
|
|
|
| |||||||||||||
Interest Expense: |
|
|
|
|
|
|
| |||||||||||||
GAAP interest expense | $ | 49.4 |
|
| $ | 54.4 |
|
| $ | 101.9 |
|
| $ | 115.7 |
| |||||
Adjustments: |
|
|
|
|
|
|
| |||||||||||||
Non-cash interest expense relating to convertible
| (9.0) |
|
| (8.3) |
|
| (17.8) |
|
| (19.8) |
| |||||||||
Debt transaction costs (7) | — |
|
| (1.0) |
|
| — |
|
| (1.0) |
| |||||||||
Non-GAAP interest expense | $ | 40.4 |
|
| $ | 45.1 |
|
| $ | 84.1 |
|
| $ | 94.9 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Pre-Tax Income (Loss): |
|
|
|
|
|
|
| |||||||||||||
GAAP pre-tax earnings (loss) | $ | 60.8 |
|
| $ | (11.8) |
|
| $ | 104.9 |
|
| $ | (13.2) |
| |||||
Adjustments to pre-tax earnings (loss) as detailed
| 118.7 |
|
| 161.8 |
|
| 239.1 |
|
| 303.2 |
| |||||||||
Debt transaction charges (7) | — |
|
| 4.4 |
|
| 6.7 |
|
| 7.4 |
| |||||||||
Other (5) | — |
|
| 3.0 |
|
| — |
|
| 3.7 |
| |||||||||
Non-GAAP pre-tax Income | $ | 179.5 |
|
| $ | 157.4 |
|
| $ | 350.7 |
|
| $ | 301.1 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss): |
|
|
|
|
|
|
| |||||||||||||
GAAP net income (loss) | $ | 47.8 |
|
| $ | (16.8) |
|
| $ | 77.0 |
|
| $ | (22.1) |
| |||||
Adjustments: |
|
|
|
|
|
|
| |||||||||||||
Amortization of intangible assets (1) | 106.2 |
|
| 106.0 |
|
| 207.9 |
|
| 208.8 |
| |||||||||
Non-cash interest expense relating to convertible
| 9.0 |
|
| 8.3 |
|
| 17.8 |
|
| 19.9 |
| |||||||||
Restructuring, divestiture and acquisition-related
| 2.1 |
|
| 15.6 |
|
| 10.4 |
|
| 39.0 |
| |||||||||
Fair value adjustments (2) | 1.4 |
|
| 3.1 |
|
| 2.9 |
|
| 6.2 |
| |||||||||
Debt transaction charges (7) | — |
|
| 5.4 |
|
| 6.7 |
|
| 8.4 |
| |||||||||
Asset impairment charges (4) | — |
|
| 28.6 |
|
| — |
|
| 28.6 |
| |||||||||
Other charges (5) | — |
|
| 2.2 |
|
| 0.1 |
|
| 3.4 |
| |||||||||
Income tax effect of reconciling items (8) | (47.6) |
|
| (49.3) |
|
| (92.2) |
|
| (94.9) |
| |||||||||
Non-GAAP net income | $ | 118.9 |
|
| $ | 103.1 |
|
| $ | 230.6 |
|
| $ | 197.3 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Earnings (loss) per share: |
|
|
|
|
|
|
| |||||||||||||
GAAP earnings (loss) per share - Diluted | $ | 0.17 |
|
| $ | (0.06) |
|
| $ | 0.27 |
|
| $ | (0.08) |
| |||||
Adjustment to net earnings (loss) (as detailed
| 0.24 |
|
| 0.43 |
|
| 0.54 |
|
| 0.79 |
| |||||||||
Non-GAAP earnings per share – diluted (9) | $ | 0.41 |
|
| $ | 0.37 |
|
| $ | 0.81 |
|
| $ | 0.71 |
| |||||
|
|
|
|
|
|
|
| |||||||||||||
Adjusted EBITDA: |
|
|
|
|
|
|
| |||||||||||||
Non-GAAP net income | $ | 118.9 |
|
| $ | 103.1 |
|
| $ | 230.6 |
|
| $ | 197.3 |
| |||||
Interest expense, net, not adjusted above | 40.2 |
|
| 45.0 |
|
| 83.4 |
|
| 94.3 |
| |||||||||
Provision for income taxes | 60.6 |
|
| 54.3 |
|
| 120.1 |
|
| 103.9 |
| |||||||||
Depreciation expense, not adjusted above | 18.9 |
|
| 20.0 |
|
| 37.6 |
|
| 40.4 |
| |||||||||
Adjusted EBITDA | $ | 238.6 |
|
| $ | 222.4 |
|
| $ | 471.7 |
|
| $ | 435.9 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory Notes to Reconciliations:
(1) To reflect a non-cash charge attributable to the amortization of intangible assets.
(2) To reflect non-cash fair value adjustments for additional depreciation expense related to the fair value write-up of fixed assets acquired in the Gen-Probe acquisition.
(3) To reflect restructuring and divestiture charges and certain costs associated with the Company's acquisition(s) and integration plans, which primarily include retention and transfer costs.
(4) To reflect a non-cash impairment charge on certain of the Company's intangible assets and property and equipment related to its MRI breast coils product line to record them at fair value in fiscal 2014.
(5) To reflect the net impact from miscellaneous transactions during the relevant period.
(6) To reflect certain non-cash interest expense related to the amortization of the debt discount from the equity conversion option of the Company's convertible notes.
(7) To reflect non-cash losses for partial extinguishment related to voluntary prepayments and refinancings under the Credit Agreement and related transaction costs.
(8) To reflect an estimated annual effective tax rate of 34.25% and 34.5% for fiscal 2015 and 2014, respectively.
(9) Non-GAAP earnings per share was calculated based on 287,580 and 276,546 weighted average diluted shares outstanding for the three months ended March 28, 2015 and March 29, 2014, respectively, and 285,378 and 276,008 weighted average diluted shares outstanding for the six months ended March 28, 2015 and March 29, 2014, respectively.