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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
99.1 Press Release of Ventana Medical Systems, Inc. dated July 28, 2006
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.
By: /s/ Nicholas Malden TUCSON, AZ -- 07/28/2006 -- Ventana Medical Systems, Inc. (NASDAQ: VMSI)
today reported sales of $59.1 million for the quarter ending June 30, 2006,
representing a 20% increase over second quarter 2005. Net income for the
second quarter was $7.2 million, compared with $6.7 million for the same
period in 2005 and diluted earnings per share were $0.20, versus $0.18 in
the second quarter of 2005. Current period results include net expenses of
$0.9 million, or $0.02 per share for share-based compensation as a result
of the adoption of SFAS 123R on January 1, 2006.
Reagents and other revenues grew 21% versus the second quarter of 2005,
while instrument revenue increased by 15% in the quarter versus the
comparable period in 2005. Gross margin was 76.5% in the quarter, versus
75.6% in the second quarter of last year. R&D investment was $8.5 million,
up 27% from the second quarter of 2005.
"The second quarter was satisfactory across a number of fronts," stated
Christopher Gleeson, President and CEO. "We had a successful commercial
launch of the Symphony, our new system for the primary staining market and
continue to experience momentum in our core advanced staining business.
YEAR-TO-DATE 2006
Net sales for the six months ended June 30, 2006, increased to $113.1
million from $94.1 million for the same period in 2005. Gross margins
improved to 76.0% from 74.9% in 2005, and R&D spending increased by 23%
versus the same period last year. Year-to-date net income of $12.2 million
was 8% better than last year's $11.4 million and net income per share was
$0.34 per diluted share versus $0.31 for the first six months of 2005.
Current year results include net expenses of $1.8 million, or $0.05 per
share for share-based compensation as a result of the adoption of SFAS 123R
on January 1, 2006.
CALENDAR YEAR 2006 OUTLOOK
The Company's outlook for 2006 remains unchanged with 2006 revenues
expected to grow approximately 20% versus last year to between $236.0
million and $238.0 million and non-GAAP diluted earnings per share to be
approximately $0.95, or $0.86 inclusive of share-based compensation
expense.
INVESTOR CONFERENCE CALL
Ventana will hold a conference call to discuss second quarter results at
10:00 a.m. Eastern on Friday, July 28, 2006. The call can be accessed live
and will be available for replay over the Internet via
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=79080&eventID=1355807.
ABOUT VENTANA MEDICAL SYSTEMS, INC.
Ventana develops, manufactures, and markets instrument/reagent systems that
automate tissue preparation and slide staining in clinical histology and
drug discovery laboratories worldwide. The Company's clinical systems are
important tools used in the diagnosis and treatment of cancer and
infectious diseases. Ventana's drug discovery systems are used to
accelerate the discovery of new drug targets and evaluate the safety of new
drug compounds.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the meaning
of the Federal Securities laws. These forward-looking statements include
our expected revenue growth and profitability for 2006. These
forward-looking statements are subject to numerous risks and uncertainties,
and actual results may vary materially. We may not achieve anticipated
future operating results, and product development activities may not be as
successful as we expect in terms of the timing of product availability to
the market or customer rates of adoption. Other risks and uncertainties
include risks associated with the development, manufacturing, marketing,
and sale of medical products, competitive factors, general economic
conditions, legal disputes, and government actions, and those other risks
and uncertainties contained in our most recent Annual Report filed with the
Securities and Exchange Commission (SEC) on Form 10-K, and all subsequent
SEC filings. Copies of filings made with the SEC are available through the
SEC's electronic data gathering analysis retrieval system (EDGAR) at
www.sec.gov. We undertake no obligation following the date of this release
to update or revise our forward-looking statements or to update the reasons
actual results could differ materially from those anticipated in
forward-looking statements. We caution you not to place undue reliance
upon any such forward-looking statements, which speak only as of the date
such statements are made. Past performance is not indicative of future
results. We cannot guarantee any future operating results, activity,
performance, or achievement.
Visit the Ventana Medical Systems, Inc. website at www.ventanamed.com.
FINANCIAL TABLES FOLLOW:
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934.
Date of Report: July 28, 2006
(Date of earliest event reported)
Ventana Medical Systems, Inc.
(Exact name of registrant as specified in its charter)
AZ
(State or other jurisdiction
of incorporation)
000-20931
(Commission File Number)
94-2976937
(IRS Employer
Identification Number)
1910 E. Innovation Park Drive, Tucson
(Address of principal executive offices)
85755
(Zip Code)
520-887-2155
(Registrant's telephone number, including area code)
Not Applicable
(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:
Item 9.01. Financial Statements and Exhibits
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
Press Release of Ventana Medical Systems, Inc. dated July 28, 2006
Dated: July 28, 2006
VENTANA MEDICAL SYSTEMS, INC.
Nicholas Malden
Senior Vice President, Chief Financial Officer and Secretary
Exhibit No.
Description
99.1
Press Release of Ventana Medical Systems, Inc. dated July 28, 2006
VENTANA MEDICAL SYSTEMS, INC.
GAAP CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
December
June 30, 31,
2006 2005
--------- ---------
(Unaudit-
ed)
ASSETS
Current assets:
Cash and cash equivalents $ 17,596 $ 17,519
Short-term investments 35,115 27,892
Trade accounts receivable, net of allowance for
doubtful accounts of $1,919 and $1,536,
respectively 43,563 38,170
Inventories, net 14,701 12,888
Deferred tax assets 7,806 7,969
Prepaids and other current assets 3,138 2,412
--------- ---------
Total current assets 121,919 106,850
Property and equipment, net 58,396 54,195
Deferred tax assets, net of current portion 18,673 13,056
Long-term investments 4,923 6,209
Goodwill 2,804 2,804
Intangible assets, net 7,317 8,779
Capitalized software development costs, net 3,043 2,741
Other assets 1,833 1,898
--------- ---------
Total assets $ 218,908 $ 196,532
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,747 $ 10,660
Other current liabilities 30,627 30,954
--------- ---------
Total current liabilities 45,374 41,614
Long-term debt 1,961 1,996
Other long-term liabilites 672 618
Commitments and Contingencies
Stockholders' equity
Common stock $.001 par value; 100,000 shares
authorized, 36,923 and 36,226 shares issued and
outstanding at June 30, 2006 and December 31,
2005 respectively 36 36
Additional paid-in-capital 219,329 199,580
Deferred share-based compensation - (382)
Accumulated income 23,873 11,628
Accumulated other comprehensive loss (702) (783)
Treasury stock 2,516 and 2,140 shares, at cost,
at June 30, 2006 and December 31, 2005,
respectively (71,635) (57,775)
--------- ---------
Total stockholders' equity 170,901 152,304
--------- ---------
Total liabilities and stockholders'
equity $ 218,908 $ 196,532
========= =========
See Notes to Consolidated Financial Statements.
Ventana Medical Systems, Inc.
GAAP Condensed Consolidated Statements of Operations
(in thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Sales:
Reagents and other $ 51,815 $ 42,797 $ 98,989 $ 81,706
Instruments 7,241 6,322 14,154 12,435
---------- ---------- ---------- ----------
Total net sales 59,056 49,119 113,143 94,141
Cost of goods sold (1) 13,864 11,987 27,168 23,587
---------- ---------- ---------- ----------
Gross margin 45,192 37,132 85,975 70,554
Operating expenses:
Research and development (2) 8,463 6,690 15,822 12,825
Selling, general and
administrative (3) 25,960 19,893 50,942 39,693
Amortization of intangible
assets 611 479 1,242 955
---------- ---------- ---------- ----------
Income from operations 10,158 10,070 17,969 17,081
Interest and other income 1,131 296 1,557 397
---------- ---------- ---------- ----------
Income before taxes 11,289 10,366 19,526 17,478
Provision for income taxes 4,067 3,628 7,281 6,124
---------- ---------- ---------- ----------
Net income $ 7,222 $ 6,738 $ 12,245 $ 11,354
========== ========== ========== ==========
Net income per common share:
Basic $ 0.21 $ 0.19 $ 0.36 $ 0.33
========== ========== ========== ==========
Diluted $ 0.20 $ 0.18 $ 0.34 $ 0.31
========== ========== ========== ==========
Shares used in computing net
income per common share:
Basic 34,209 34,689 34,091 34,429
========== ========== ========== ==========
Diluted 36,184 37,153 36,026 36,896
========== ========== ========== ==========
(1) amounts include share-based
compensation expense $ 48 $ - $ 83 $ -
(2) amounts include share-based
compensation expense $ 259 $ 34 $ 541 $ 48
(3) amounts include share-based
compensation expense $ 886 $ - $ 1,933 $ -
Ventana Medical Systems, Inc. Reconciliation of Pro Forma Non-GAAP Adjustments (in thousands except per share data) (Unaudited) The following represents a reconciliation (unaudited) of GAAP net income to pro forma non-GAAP net income. Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------- -------- -------- -------- GAAP net income $ 7,222 $ 6,738 $ 12,245 $ 11,354 Share-based compensation: Stock options and restricted stock 1,193 34 2,557 48 Income tax effects (323) (12) (800) (17) -------- -------- -------- -------- $ 8,092 $ 6,760 $ 14,002 $ 11,385 ======== ======== ======== ========
Pro Forma Non-GAAP Adjustments
The above pro forma non-GAAP adjustments are based upon our unaudited condensed consolidated statements of operations for the periods shown. The pro-forma non-GAAP financial information, which excludes the effects of SFAS 123R, Share-Based Payment, is not in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that this non-GAAP financial measure provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. This non-GAAP measure should not be viewed in isolation to or as a substitute for the Company's financial results or guidance in accordance with GAAP. Assumptions regarding the valuation of share-based compensation and the timing of events, such as the issuance of new share-based compensation awards and the realization of tax benefits, may differ from actual results.
Ventana Medical Systems, Inc. Pro Forma Non-GAAP Condensed Consolidated Statements of Operations (in thousands except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------- ------- 2006 2005 2006 2005 -------- -------- -------- -------- Sales: Reagents and other $ 51,815 $ 42,797 $ 98,989 $ 81,706 Instruments 7,241 6,322 14,154 12,435 -------- -------- -------- -------- Total net sales 59,056 49,119 113,143 94,141 Cost of goods sold 13,816 11,987 27,085 23,587 -------- -------- -------- -------- Gross margin 45,240 37,132 86,058 70,554 Operating expenses: Research and development 8,204 6,690 15,281 12,825 Selling, general and administrative 25,074 19,859 49,009 39,645 Amortization of intangible assets 611 479 1,242 955 -------- -------- -------- -------- Income from operations 11,351 10,104 20,526 17,129 Interest and other income 1,131 296 1,557 397 -------- -------- -------- -------- Income before taxes 12,482 10,400 22,083 17,526 Provision for income taxes 4,390 3,640 8,081 6,141 -------- -------- -------- -------- Net income $ 8,092 $ 6,760 $ 14,002 $ 11,385 ======== ======== ======== ======== Net income per common share: Basic $ 0.24 $ 0.19 $ 0.41 $ 0.33 ======== ======== ======== ======== Diluted $ 0.22 $ 0.18 $ 0.39 $ 0.31 ======== ======== ======== ======== Shares used in computing net income per common share: Basic 34,209 34,689 34,091 34,429 ======== ======== ======== ======== Diluted 36,184 37,153 36,026 36,896 ======== ======== ======== ========Pro Forma Non-GAAP Statements
The above pro forma non-GAAP statements are based upon our unaudited consolidated statements of operations for the periods shown, giving effect to the adjustments shown in the attached reconciliation. The presentation is not in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that pro forma non-GAAP reporting provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The pro forma non-GAAP financial information presented herein should not be viewed in isolation to or as a substitute for the Company's financial results or guidance in accordance with GAAP.
Ventana Medical Systems, Inc. GAAP Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited) Six Months Ended June 30, ------- 2006 2005 -------- -------- Net income $ 12,245 $ 11,354 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 8,112 4,652 Share-based compensation expense related to employee stock options and employee stock purchases 2,557 - Deferred income taxes (5,454) - Tax benefit from employee stock option plans 7,545 4,381 Excess tax benefits from share-based compensation (7,002) - Change in operating assets and liabilities: Accounts receivable (5,393) (179) Inventory (1,813) (1,379) Other assets (80) (548) Accounts payable 4,085 1,156 Other liabilities (230) 152 -------- -------- Net cash provided by operating activities 14,572 19,589 Cash flows from investing activities: Purchase of property and equipment (11,072) (7,394) Purchase of intangible assets (659) (1,813) Purchases of short-term investments (82,840) (33,930) Proceeds from sale of short-term investments 76,903 8,930 -------- -------- Net cash used in investing activities (17,668) (34,207) Cash flows from financing activities: Issuance of common stock 9,518 10,294 Purchases of common stock for treasury (13,394) (4,709) Excess tax benefits from share-based compensation 7,002 - Repayments of debt (232) (110) -------- -------- Net cash provided by financing activities 2,894 5,475 Effect of exchange rate change on cash and cash equivalents 279 (1,620) -------- -------- Net increase (decrease) in cash and cash equivalents 77 (10,763) Cash and cash equivalents, beginning of period 17,519 33,354 -------- -------- Cash and cash equivalents, end of period $ 17,596 $ 22,591 ======== ======== Supplemental cash flow information: Income taxes paid $ 5,699 $ 250 Interest paid $ 52 $ 35 Non-cash investing and financing activities: Tendered common stock for stock option exercises $ 467 $ 338 Unpaid common stock repurchases for treasury $ - $ 4,719
Contact: Christopher M. Gleeson President and CEO (520) 229-3787 Nick Malden Chief Financial Officer (520) 229-3857 VENTANA MEDICAL SYSTEMS, INC. 1910 E. Innovation Park Drive Tucson, Arizona 85755 (520) 887-2155-----END PRIVACY-ENHANCED MESSAGE-----