| - Company Records GAAP EPS of $0.26 - - Total Revenues Increase 17%, to $85.2 Million; Product Sales Rise 20%, to $77.8 Million - - Company Increases Full-Year EPS Guidance to $1.06 - $1.12, Total Revenue Guidance to $345 - $350 Million - SAN DIEGO, July 31, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the second quarter
and six months ended June 30, 2006, and raised its full-year guidance for
earnings per share (EPS) and total revenues.
On a GAAP basis, net income for the second quarter of 2006 was
$13.6 million ($0.26 per share), compared to net income of $13.5 million
($0.26 per share) in the prior year period. GAAP earnings in the second
quarter of 2006 include expenses related to share-based compensation under
SFAS No. 123(R), which reduced after-tax earnings by $3.3 million ($0.06 per
share). On a non-GAAP basis, net income for the second quarter of 2006 was
$16.9 million ($0.32 per share), an increase of 23% per share compared to the
prior year period.
Throughout this press release, all per share amounts are calculated on a
fully diluted basis, and no adjustments have been made to GAAP results except
those related to implementing SFAS No. 123(R). Gen-Probe believes these
non-GAAP financial measures help investors compare current results to those in
prior periods. See the section below entitled "About Non-GAAP Financial
Measures."
Total revenues for the second quarter of 2006 were $85.2 million, compared
to $72.9 million in the prior year period, an increase of 17%. Product sales
for the second quarter of 2006 were $77.8 million, compared to $65.1 million
in the prior year period, an increase of 20%.
On a GAAP basis, net income for the first half of 2006 was $28.2 million
($0.53 per share), compared to net income of $26.9 million ($0.51 per share),
in the prior year period. GAAP earnings in the first half of 2006 include
expenses related to share-based compensation under SFAS No. 123(R), which
reduced after-tax earnings by $6.3 million ($0.12 per share). On a non-GAAP
basis, net income for the first half of 2006 was $34.5 million ($0.65 per
share), an increase of 27% per share compared to the prior year period.
Total revenues in the first half of 2006 were $171.5 million, compared to
$141.7 million in the prior year period, an increase of 21%. Product sales in
the first half of 2006 were $156.3 million, compared to $124.7 million in the
prior year period, an increase of 25%.
"Gen-Probe once again posted strong financial results in the second
quarter of 2006, as both clinical diagnostics and blood screening sales grew
solidly," said Henry L. Nordhoff, the Company's chairman, president and chief
executive officer.
Detailed Results
Gen-Probe's clinical diagnostics sales in the second quarter of 2006 were
led by the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT) for
simultaneously detecting Chlamydia trachomatis (CT) and Neisseria gonorrhoeae
(GC). Sales of this assay continued to grow strongly, driven by market share
gains on both the semi-automated instrument platform and on the
high-throughput, fully automated TIGRIS(R) system. Revenue from the PACE(R)
product line, the Company's non-amplified tests for the same microorganisms,
declined in the second quarter compared to the prior year period, in line with
Gen-Probe's expectations.
In blood screening, product sales benefited from continued international
expansion, and from early sales of the PROCLEIX(R) West Nile virus (WNV) assay
in the United States. Gen-Probe's blood screening products are marketed
worldwide by Chiron, a business unit of Novartis Vaccines and Diagnostics.
Sales of TIGRIS instruments and spare parts to Chiron totaled $4.0 million in
the second quarter, compared to $5.2 million in the prior year period, a
decrease that was in line with Gen-Probe's expectations.
Product sales were, in millions:
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 Increase 2006 2005 Increase
Clinical diagnostics $42.3 $34.0 24% $82.5 $68.3 21%
Blood screening $35.5 $31.1 14% $73.9 $56.4 31%
Total product sales $77.8 $65.1 20% $156.3 $124.7 25%
Collaborative research revenues for the second quarter of 2006 were
$6.4 million, compared to $6.7 million in the prior year period. For the
first half of 2006, collaborative research revenues were $13.3 million,
compared to $13.0 million in the prior year period. In both the first quarter
and first half of 2006, collaborative research revenues benefited from
reimbursement from Millipore for certain development expenses related to the
companies' industrial collaboration. This benefit was offset by decreased
funding from Chiron for shared development expenses related to the companies'
blood screening collaboration.
Royalty and license revenues for the second quarter of 2006 were
$1.0 million, compared to $1.1 million in the prior year period. For the
first half of 2006, royalty and license revenues were $1.9 million, compared
to $4.0 million in the prior year period. This decrease resulted primarily
because Gen-Probe recognized $1.9 million of revenue in the first quarter of
2005 associated with bioMerieux exercising an option to develop diagnostic
products for certain disease targets using Gen-Probe's patented ribosomal RNA
technologies.
On a GAAP basis, gross margin on product sales was 68% in the second
quarter of 2006, compared to 69% in the prior year period. The gross margin
percentage was negatively affected by $1.6 million of additional scrap expense
compared to the prior year period, which resulted in large part from the date
expiration of certain oligonucleotide raw materials. The implementation of
SFAS No. 123(R) also added $0.5 million to cost of goods sold. The amount of
share-based compensation expense allocated to cost of goods sold is expected
to increase for the rest of 2006 as the related inventory is sold. On a non-
GAAP basis, gross margin on product sales was 69% in the second quarter of
2006.
On a GAAP basis, gross margin on product sales was 67% for the first half
of 2006, compared to 71% in the prior year period. This decrease resulted
primarily from the factors described above, including the implementation of
SFAS No. 123(R), which added $0.6 million to cost of goods sold, and from
sales of TIGRIS instruments and spare parts for blood screening to Chiron.
Under Gen-Probe's contract with Chiron, these sales are made approximately at
cost. On a non-GAAP basis, gross margin on product sales was 68% in the first
half of 2006.
On a GAAP basis, research and development (R&D) expenses were
$20.3 million in the second quarter of 2006, compared to $17.4 million in the
prior year period, an increase of 17% that resulted primarily from the
implementation of SFAS No. 123(R), which added $1.8 million to R&D expenses.
As previously disclosed, R&D expenses are expected to increase significantly
in the third quarter of 2006 based primarily on the timing of the Company's
development program for human papillomavirus (HPV). On a non-GAAP basis, R&D
expenses were $18.5 million in the second quarter of 2006.
On a GAAP basis, R&D expenses for the first half of 2006 were
$39.7 million, compared to $36.1 million in the prior year period, an increase
of 10%. This increase resulted primarily from the implementation of SFAS
No. 123(R), which added $3.7 million to R&D expenses. On a non-GAAP basis,
R&D expenses were $36.0 million in the first half of 2006.
On a GAAP basis, marketing and sales expenses were $9.1 million in the
second quarter of 2006, compared to $7.4 million in the prior year period, an
increase of 23%. This increase resulted primarily from the implementation of
SFAS No. 123(R), which added $0.7 million to marketing and sales expenses,
from higher commissions associated with increased sales, and from increased
headcount. On a non-GAAP basis, marketing and sales expenses were
$8.5 million in the second quarter of 2006, an increase of 15% compared to the
prior year period that resulted primarily from higher commissions and
headcount.
On a GAAP basis, marketing and sales expenses were $18.0 million for the
first half of 2006, compared to $14.8 million in the prior year period, an
increase of 22%. This increase resulted primarily from the implementation of
SFAS No. 123(R), which added $1.5 million to marketing and sales expenses, and
from the factors described above. On a non-GAAP basis, marketing and sales
expenses were $16.5 million in the first half of 2006, an increase of
11% compared to the prior year period.
On a GAAP basis, general and administrative (G&A) expenses were
$10.7 million in the second quarter of 2006, compared to $7.8 million in the
prior year period, an increase of 37% that resulted primarily from the
implementation of SFAS No. 123(R), which added $2.2 million to G&A expenses.
On a non-GAAP basis, G&A expenses were $8.5 million in the second quarter of
2006, an increase of 9% that resulted primarily from higher legal costs
associated with the Company's patent infringement lawsuits against Bayer,
which the companies agreed to settle in late June.
On a GAAP basis, G&A expenses for the first half of 2006 were
$21.4 million, compared to $15.0 million in the prior year period, an increase
of 43%. This increase resulted primarily from the implementation of SFAS
No. 123(R), which added $4.0 million to G&A expenses. On a non-GAAP basis,
G&A expenses were $17.4 million in the first half of 2006, an increase of
16% that resulted primarily from higher legal expenses.
Gen-Probe continues to have a strong balance sheet. As of June 30, 2006,
the Company had $238.7 million of cash, cash equivalents and short-term
investments, and no debt. Gen-Probe's cash balance declined slightly in the
second quarter primarily due to $15.1 million in capital spending to complete
the expansion of the Company's headquarters campus, and to a $7 million equity
investment in Qualigen. In the first half of 2006, Gen-Probe generated net
cash of $38.2 million from its operating activities.
Updated 2006 Financial Guidance
"Based on our strong performance in the second quarter, and on the
settlement of our patent infringement dispute with Bayer, we are increasing
our full-year 2006 guidance for EPS and total revenues," said Herm Rosenman,
the Company's vice president of finance and chief financial officer. In the
third quarter of 2006, Gen-Probe expects to record $5.0 million of incremental
royalty and license revenue, representing the first of Bayer's three
settlement payments. However, this revenue will be partially offset by
approximately $1.9 million of incremental G&A expenses, representing
Gen-Probe's payment to its outside litigation counsel.
Gen-Probe's non-GAAP 2006 guidance for gross margins, R&D expenses,
marketing and sales expenses, G&A expenses, effective income tax rate and EPS
is computed without the effect of adopting SFAS No. 123(R) and is reconciled
to the corresponding GAAP measure in the bullets and table below and discussed
in the section titled "About Non-GAAP Financial Measures."
The following table describes Gen-Probe's updated guidance for the full
year 2006, on both a GAAP and a non-GAAP basis. The percentages shown are of
total revenues.
GAAP Estimated Non-GAAP
Guidance Effects of Guidance
SFAS No. 123(R)(a)
Total
Revenues $345 - $350 million None $345 - $350 million
Product
Gross
Margin 68% to 69% Approx. 1% 69% to 70%
R&D Expenses 24% to 25% Approx. 2% 22% to 23%
Marketing
and Sales
Expenses 10% to 11% Approx. 1% 9% to 10%
G&A Expenses 12% to 13% Approx. 2% 10% to 11%
Effective
Income Tax
Rate Approx. 37% Less than 1% Approx. 37%
Diluted EPS $1.06 to $1.12 $0.27 to $0.29 $1.35 to $1.39
(a) These estimated effects reconcile the Company's 2006 GAAP financial
guidance ranges to the Company's non-GAAP financial guidance ranges.
The reconciling item represents the estimated impact of SFAS No.
123(R), which includes non-cash stock compensation awards, including
stock options and employee stock purchase plan shares.
About Non-GAAP Financial Measures
To supplement Gen-Probe's financial results for the second quarter and
first six months of 2006 and its 2006 financial guidance, in each case
presented in accordance with GAAP, Gen-Probe uses the following financial
measures defined as non-GAAP by the SEC: non-GAAP net income, non-GAAP product
gross margin, non-GAAP R&D expenses, non-GAAP marketing and sales expenses,
non-GAAP G&A expenses, non-GAAP effective income tax rate, and non-GAAP
diluted EPS. Gen-Probe's management does not itself, nor does it suggest that
investors should, consider such non-GAAP financial measures in isolation from,
or as a substitute for, financial information prepared and presented in
accordance with GAAP. Gen-Probe's management believes that these non-GAAP
financial measures provide meaningful supplemental information regarding the
Company's performance by excluding certain expenses that may not be indicative
of core business results. Gen-Probe believes that both management and
investors benefit from referring to these non-GAAP financial measures in
assessing Gen-Probe's performance and when planning, forecasting and analyzing
future periods. These non-GAAP financial measures also facilitate
management's internal comparisons to Gen-Probe's historical performance and
our competitors' operating results. Gen-Probe believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by management in
its financial and operational decision making.
Recent Events
* TIGRIS / WNV Regulatory Update. Last week, Gen-Probe announced that
the U.S. Food and Drug Administration (FDA) had asked the Company
additional questions related to the regulatory application to run the
previously approved PROCLEIX WNV assay on the investigational, fully
automated TIGRIS system. The FDA's questions were included in a
"complete review letter" on the Biologics License Application
supplement Gen-Probe filed in April. The Company expects to respond to
the FDA's questions within 90 days.
* Bayer Settlement. In June, Gen-Probe and Bayer HealthCare LLC agreed
to end a series of disputes involving multiple patent litigations and
contract arbitrations. Under the binding terms of the agreement, Bayer
will pay Gen-Probe certain lump sum royalties over the next 18 months.
The parties are obligated to finalize additional written settlement
documentation during the third quarter, at which point Gen-Probe
expects to record $5 million of additional royalty and license income,
and $1.9 million of additional G&A expense for payments to its outside
litigation counsel.
* Prostate Cancer Program. In May, Gen-Probe and DiagnoCure Inc.
provided three updates on the companies' collaboration and development
programs around the innovative, highly specific PCA3 prostate cancer
marker. The companies announced that they had amended and expanded the
terms of their license and collaboration agreement, that four posters
related to PCA3 were presented at the annual meeting of the American
Urological Association (AUA) in Atlanta, and that two laboratories in
the United States had independently validated Gen-Probe's analyte
specific reagents (ASRs) for PCA3 and announced the commercial
availability of tests for the marker.
Webcast Conference Call
A live webcast of Gen-Probe's second quarter 2006 conference call for
investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m.
Eastern Time today. The webcast will be archived for at least 90 days. A
telephone replay of the call also will be available for approximately
24 hours. The replay number is (866) 393-1022 for domestic callers and
(203) 369-0448 for international callers.
About Gen-Probe
Gen-Probe Incorporated is a global leader in the development, manufacture
and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs)
that are used primarily to diagnose human diseases and screen donated human
blood. Gen-Probe has more than 20 years of NAT expertise, and received the
2004 National Medal of Technology, America's highest honor for technological
innovation, for developing NAT assays for blood screening. Gen-Probe is
headquartered in San Diego and employs approximately 900 people. For more
information, go to www.gen-probe.com.
Trademarks
TIGRIS, APTIMA, APTIMA COMBO 2 and PACE are trademarks of Gen-Probe
Incorporated. ULTRIO and PROCLEIX are trademarks of Chiron. All other
trademarks are the property of their owners.
Caution Regarding Forward-Looking Statements
Any statements in this press release about our expectations, beliefs,
plans, objectives, assumptions or future events or performance, including
those under the heading "Updated 2006 Financial Guidance," are not historical
facts and are forward-looking statements. These statements are often, but not
always, made through the use of words or phrases such as believe, will,
expect, anticipate, estimate, intend, plan and would. For example, statements
concerning Gen-Probe's financial condition, possible or expected results of
operations, regulatory approvals, future milestone payments, growth
opportunities, and plans and objectives of management are all forward-looking
statements. Forward-looking statements are not guarantees of performance.
They involve known and unknown risks, uncertainties and assumptions that may
cause actual results, levels of activity, performance or achievements to
differ materially from those expressed or implied. Some of these risks,
uncertainties and assumptions include but are not limited to: (i) the risk
that we may not achieve our expected 2006 growth, revenue, earnings or other
financial targets, (ii) the risk that we may not earn or receive milestone
payments from our collaborators, including Chiron, (iii) the possibility that
the market for the sale of our new products, such as our TIGRIS system, APTIMA
Combo 2 assay and PROCLEIX ULTRIO assay, may not develop as expected, (iv) the
enhancement of existing products and the development of new products,
including products, if any, to be developed under our recent industrial
collaborations, may not proceed as planned, (v) the risk that products
including our PROCLEIX ULTRIO assay, TIGRIS instrument for blood screening, or
PROCLEIX WNV assay on the TIGRIS instrument may not be approved by regulatory
authorities or commercially available in the time frame we anticipate, or at
all, (vi) we may not be able to compete effectively, (vii) we may not be able
to maintain our current corporate collaborations and enter into new corporate
collaborations or customer contracts, (viii) we are dependent on Chiron, Bayer
and other third parties for the distribution of some of our products, (ix) we
are dependent on a small number of customers, contract manufacturers and
single source suppliers of raw materials, (x) changes in third-party
reimbursement policies regarding our products could adversely affect sales of
our products, (xi) changes in government regulation affecting our diagnostic
products could harm our sales and increase our development costs, (xii) the
risk that our intellectual property may be infringed by third parties or
invalidated, and (xiii) our involvement in patent and other intellectual
property and commercial litigation could be expensive and could divert
management's attention. The foregoing list sets forth some, but not all, of
the factors that could affect our ability to achieve results described in any
forward-looking statements. For additional information about risks and
uncertainties we face and a discussion of our financial statements and
footnotes, see documents we file with the SEC, including our most recent
annual report on Form 10-K and all subsequent periodic reports. We assume no
obligation and expressly disclaim any duty to update forward-looking
statements to reflect events or circumstances after the date of this news
release or to reflect the occurrence of subsequent events.
Contact:
Michael Watts
Sr. director, investor relations and
corporate communications
858-410-8673
Gen-Probe Incorporated
Consolidated Balance Sheets - GAAP
(In thousands, except share and per share data)
June 30, December 31,
2006 2005
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $29,125 $32,328
Short-term investments 209,529 187,960
Trade accounts receivable, net of
allowance for doubtful accounts of
$670 and $790 at June 30, 2006 and
December 31, 2005, respectively 28,674 31,930
Accounts receivable - other 1,787 1,924
Inventories 40,766 36,342
Deferred income taxes 10,750 10,389
Prepaid expenses 11,332 10,768
Other current assets 4,347 4,184
Total current assets 336,310 315,825
Property, plant and equipment, net 128,908 105,190
Capitalized software 19,695 20,952
Goodwill 18,621 18,621
License, manufacturing access fees
and other assets 56,834 49,648
Total assets $560,368 $510,236
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $13,606 $14,029
Accrued salaries and employee
benefits 13,654 14,910
Other accrued expenses 3,745 3,264
Income tax payable 6,697 13,192
Deferred revenue 3,923 7,771
Total current liabilities 41,625 53,166
Deferred income taxes 5,124 5,124
Deferred revenue 4,000 4,333
Deferred rent 182 240
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.0001 par value per
share; 20,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $.0001 par value per
share; 200,000,000 shares
authorized, 51,789,444 and
51,137,541 shares issued and
outstanding at June 30, 2006 and
December 31, 2005, respectively 5 5
Additional paid-in capital 309,301 281,907
Deferred compensation -- (5,951)
Accumulated other comprehensive loss (674) (1,231)
Retained earnings 200,805 172,643
Total stockholders' equity 509,437 447,373
Total liabilities and stockholders' equity $560,368 $510,236
Gen-Probe Incorporated
Consolidated Statements of Income - GAAP
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Product sales $77,813 $65,131 $156,341 $124,710
Collaborative research revenue 6,388 6,678 13,273 13,022
Royalty and license revenue 1,021 1,085 1,864 3,990
Total revenues 85,222 72,894 171,478 141,722
Operating expenses:
Cost of product sales 24,802 20,350 50,914 35,848
Research and development 20,329 17,408 39,655 36,091
Marketing and sales 9,145 7,384 18,007 14,810
General and administrative 10,698 7,780 21,356 14,971
Total operating expenses 64,974 52,922 129,932 101,720
Income from operations 20,248 19,972 41,546 40,002
Total other income, net 1,403 1,001 3,160 2,082
Income before income taxes 21,651 20,973 44,706 42,084
Income tax expense 8,021 7,517 16,544 15,167
Net income $13,630 $13,456 $28,162 $26,917
Net income per share:
Basic $0.26 $0.27 $0.55 $0.53
Diluted $0.26 $0.26 $0.53 $0.51
Weighted average shares outstanding:
Basic 51,563 50,550 51,403 50,414
Diluted 53,186 52,315 53,023 52,339
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
June 30, 2006 June 30, 2005
Non-GAAP Adjustments GAAP Non-GAAP Adjustments GAAP
Revenues:
Product sales $77,813 $-- $77,813 $65,131 $-- $65,131
Collaborative
research
revenue 6,388 -- 6,388 6,678 -- 6,678
Royalty and
license
revenue 1,021 -- 1,021 1,085 -- 1,085
Total revenues 85,222 -- 85,222 72,894 -- 72,894
Operating
expenses:
Cost of product
sales 24,312 490 a 24,802 20,350 -- 20,350
Research and
development 18,544 1,785 a 20,329 17,408 -- 17,408
Marketing and
sales 8,466 679 a 9,145 7,384 -- 7,384
General and
administrative 8,544 2,154 a 10,698 7,780 -- 7,780
Total operating
expenses 59,866 5,108 64,974 52,922 -- 52,922
Income from
operations 25,356 (5,108) 20,248 19,972 -- 19,972
Total other
income, net 1,403 -- 1,403 1,001 -- 1,001
Income before
income taxes 26,759 (5,108) 21,651 20,973 -- 20,973
Income tax
expense 9,821 (1,800) a 8,021 7,517 -- 7,517
Net income $16,938 $(3,308) $13,630 $13,456 $-- $13,456
Net income per
share:
Diluted earnings
per share:
Basic $0.33 $(0.06) $0.26 $0.27 $-- $0.27
Diluted $0.32 $(0.06) $0.26 $0.26 $-- $0.26
Weighted average
shares
outstanding:
Basic 51,563 -- 51,563 50,550 -- 50,550
Diluted 53,355 (169) b 53,186 52,315 -- 52,315
(a) Adjustments to exclude the impact of stock option and ESPP expense in
accordance with SFAS No.123(R). Net income for the three months
ended June 30, 2006 included stock-based compensation expense that
Gen-Probe recorded as a result of the adoption of SFAS No. 123(R) on
January 1, 2006. For the three months ended June 30, 2006, this
expense totaled $5,108,000 before income taxes (after deducting
$187,000 of net capitalization to inventory) and $3,308,000 net of
income taxes for the period. The Company did not record this
stock-based compensation expense for the three months ended June
30, 2005. As previously disclosed in the notes to the financial
statements for the three months ended June 30, 2005, net income
including pro forma stock-based compensation expense for this period
was $9,697,000.
(b) The shares adjustment for dilutive securities includes stock awards
outstanding calculated under the treasury stock method that are not
included in the GAAP diluted calculation as their effect would be
anti-dilutive.
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Six Months Ended Six Months Ended
June 30, 2006 June 30, 2005
Non-GAAP Adjustments GAAP Non-GAAP Adjustments GAAP
Revenues:
Product sales $156,341 $-- $156,341 $124,710 $-- $124,710
Collaborative
research
revenue 13,273 -- 13,273 13,022 -- 13,022
Royalty and
license
revenue 1,864 -- 1,864 3,990 -- 3,990
Total revenues 171,478 -- 171,478 141,722 -- 141,722
Operating
expenses:
Cost of product
sales 50,291 623 a 50,914 35,848 -- 35,848
Research and
development 35,981 3,674 a 39,655 36,091 -- 36,091
Marketing and
sales 16,535 1,472 a 18,007 14,810 -- 14,810
General and
administrative 17,350 4,006 a 21,356 14,971 -- 14,971
Total operating
expenses 120,157 9,775 129,932 101,720 -- 101,720
Income from
operations 51,321 (9,775) 41,546 40,002 -- 40,002
Total other
income, net 3,160 -- 3,160 2,082 -- 2,082
Income before
income taxes 54,481 (9,775) 44,706 42,084 -- 42,084
Income tax
expense 19,995 (3,451) a 16,544 15,167 -- 15,167
Net income $34,486 $(6,324) $28,162 $26,917 $-- $26,917
Net income per
share:
Diluted earnings
per share:
Basic $0.67 $(0.12) $0.55 $0.53 $-- $0.53
Diluted $0.65 $(0.12) $0.53 $0.51 $-- $0.51
Weighted average
shares
outstanding:
Basic 51,403 -- 51,403 50,414 -- 50,414
Diluted 53,226 (203) b 53,023 52,339 -- 52,339
(a) Adjustments to exclude the impact of stock option and ESPP expense in
accordance with SFAS No.123(R). Net income for the six months ended
June 30, 2006 included stock-based compensation expense that
Gen-Probe recorded as a result of the adoption of SFAS No. 123(R) on
January 1, 2006. For the six months ended June 30, 2006, this
expense totaled $9,775,000 before income taxes (after deducting
$872,000 that has been capitalized to inventory) and $6,324,000 net
of income taxes for the period. The Company did not record this
stock-based compensation expense for the six months ended June 30,
2005. As previously disclosed in the notes to the financial
statements for the six months ended June 30, 2005, net income
including pro forma stock-based compensation expense for this period
was $19,285,000.
(b) The shares adjustment for dilutive securities includes stock awards
outstanding calculated under the treasury stock method that are not
included in the GAAP diluted calculation as their effect would be
anti-dilutive.
Gen-Probe Incorporated
Consolidated Statements of Cash Flows - GAAP
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2006 2005
Operating activities
Net income $28,162 $26,917
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 12,507 11,038
Stock-based compensation charges
- restricted stock 958 266
Stock-based compensation charges
- all other 9,775 --
Stock option income tax benefits -- 6,451
Excess tax benefit from employee
stock options (6,918) --
(Gain)/loss on disposal of property
and equipment (23) 59
Changes in assets and liabilities:
Accounts receivable 3,538 (5,760)
Inventories (3,541) (4,549)
Prepaid expenses (564) (3,498)
Other assets (217) (213)
Accounts payable (441) 6,574
Accrued salaries and employee benefits (1,256) (1,171)
Other accrued expenses 423 (72)
Income tax payable 417 4,093
Deferred revenue (4,181) 2,681
Deferred income taxes (374) (275)
Deferred rent (58) (29)
Net cash provided by operating activities 38,207 42,512
Investing activities
Proceeds from sales and maturities of
short-term investments 40,528 51,532
Purchases of short-term investments (62,225) (53,647)
Cash paid for acquisition of minority
interest in Molecular Light
Technology Limited -- (1,539)
Purchases of property, plant and
equipment (32,836) (20,162)
Capitalization of intangible assets,
including license and manufacturing
access fees (2,074) (21,822)
Cash paid for investment in Qualigen (6,993) --
Other assets 42 (583)
Net cash used in investing activities (63,558) (46,221)
Financing activities
Excess tax benefit from employee
stock options 6,918 --
Proceeds from issuance of common
stock 14,822 10,956
Net cash provided by financing
activities 21,740 10,956
Effect of exchange rate changes on
cash and cash equivalents 408 (243)
Net (decrease) increase in cash and
cash equivalents (3,203) 7,004
Cash and cash equivalents at the
beginning of period 32,328 25,498
Cash and cash equivalents at the end
of period $29,125 $32,502
SOURCE Gen-Probe Incorporated
Michael Watts, Sr. director, investor relations and corporate communications of
Gen-Probe Incorporated, +1-858-410-8673
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