YOKNEAM, Israel, Feb. 21 /PRNewswire-FirstCall/ -- Lumenis Ltd. (LUME.PK), a global developer, manufacturer and seller of laser and light-based devices for medical, aesthetic, ophthalmic, dental and veterinary applications, today announced preliminary and unaudited financial results for the fourth quarter and full year ended December 31, 2005.
The results reported herein and in the attached financial statements do not reflect any adjustments relating to the results of the Audit Committee investigation which were previously reported, as well as certain additional items that are currently under review by the Company or which may come under review prior to completion of the audit. In addition, the financial statements for the years ended December 31, 2003, December 31, 2004 and December 31, 2005, the quarterly periods ended September 30, 2003, December 31, 2003, the quarterly periods ending in 2004 and the quarterly periods ending in 2005 have not been reviewed or audited by independent external auditors and, as such, these results, as well as Lumenis’ historical statements, are subject to change to reflect the results of any such review or audit. There can be no assurance that any such changes and adjustments will not be material
Fourth Quarter and Full Year 2005 Results
Revenues in the fourth quarter were $74.2 million compared with $72.8 million in the same quarter last year. 2005 revenues rose to $283.3 million, an increase of 4% from $272.7 million in 2004.
Gross profit in the fourth quarter was $35.3 million, or 47.5% of revenues, compared with $33.5 million, or 46.0% of revenues, in the fourth quarter of 2004. Gross profit for the year was $127.3 million, or 44.9% of revenues, compared with $132.2 million, or 48.5% of revenues, in 2004.
Operating income in the fourth quarter of 2005 was $1.9 million, including $1.4 million of expenditures related to the ongoing audits of prior years and $0.1 million to restructuring, compared with an operating loss of $3.6 million, including a $2.5 million charge related to the agreement with former distributor Eclipse Medical, Ltd. and $0.5 million of restructuring expenses, in the same quarter of 2004. For the year 2005, the Company reported an operating profit of $5.8 million compared with $5.0 million in 2004.
Net loss in the fourth quarter was $3.9 million, or $0.11 per share, compared with a net loss of $6.3 million, or $0.17 per share, in the fourth quarter of 2004. Net loss for the year 2005 was $14.7 million, or $0.39 per share, compared with a net loss of $12.0 million, or $0.32 per share, in 2004.
Net cash flow from operating activities was $1.3 million in the fourth quarter of 2005 compared with $9.1 million in the fourth quarter of 2004. For the year 2005, net cash flow from operating activities was a negative $3.5 million compared with a net positive cash flow from operations of $21.8 million in 2004. At December 31, 2005, the Company had $14.0 million of cash and cash equivalents and unused borrowing capacity under its committed lines of credit of an additional $19.1 million. Total bank debt at year-end was $190.0 million compared with $188.1 million at December 31, 2004. Based on the preliminary and unaudited results for the year 2005, the Company is in compliance with its covenants under its bank agreements.
Commenting on the results, Avner Raz, Lumenis’ President and Chief Executive Officer said, “Q4 results demonstrate the continuing, sequential improvement that we are making in revenue growth and gross margins. We still have work ahead of us to drive greater efficiencies into our activities, but I am satisfied with the overall progress made this past year.”
“I believe that what we achieved in 2005 provides a solid platform for delivering better performance in 2006. Our principal goal for 2006 is improved profitability. To achieve this, our plans call for accelerating the pace of revenue growth through the impact of the new products we have recently announced and achieving market share gains in key regions. We are also aiming to bring to market additional new and exciting products during the year. We will remain focused on improving our gross margin on product sales through greater operating efficiencies as well as through increasing the level of gross profit on our service business by providing a more effective and robust service offering to our customers. While these are not easy goals to achieve, I am confident that our dedicated and committed employees who have delivered such solid progress in 2005 will do so again in 2006", he added.
Revenue Breakdown
Fourth quarter and full year 2005 sales by geographic region were as follows ($ in millions): Q4/05 Q4/04 2005 2004 Americas $37.4 $35.9 $141.5 $128.4 Europe $15.3 $15.7 $59.4 $58.1* Asia and Japan $21.5 $21.2 $82.4 $81.9 Fourth quarter and full year sales by product line were as follows ($ in millions): Q4/05 Q4/04 2005 2004 Aesthetic $26.5 $25.2 $98.9 $89.6 Surgical $15.9 $13.9 $59.1 $51.2 Ophthalmic $15.6 $15.9 $58.2 $57.3* Dental $2.3 $2.0 $6.5 $7.3 Service/Other $13.9 $15.8 $60.6 $63.0 * for comparison purposes, excludes $4.2 million of sales of Wavelight products sold in Europe as the distribution agreement was terminated in Q2/04.
As reported in the first quarter earnings release, upon review of the Company’s prior practices concerning the recognition of royalty income, it was determined that the income statement classification of royalty and certain other income should more appropriately be as components of operating income or loss, rather than other income. The financial statements for the quarterly and twelve month periods ended December 31, 2005 and December 31, 2004 contained in this release reflect this classification. Additionally, as previously reported, with respect to royalty income, the review indicated that certain royalty income previously reflected in the results for the quarter ended March 31, 2004 which was paid at the time of the settlement of certain claims should, more appropriately, be recognized over a longer period of time.
As previously reported, a report prepared for the Audit Committee with respect to the Company’s internal investigation had concluded, with respect to certain identified transactions in 2001, 2002 and 2003, that the Company’s revenue recognition actions were inappropriate. The aggregate effect of the Company’s accounting for the transactions identified in the report, as set forth in the Company’s press release of May 3, 2004, was to cause revenues in 2001 and 2002 to be overstated, and revenues in 2003 to be understated. As indicated earlier, the financial statements contained in this release do not reflect any adjustments relating to the results of the Audit Committee investigation which were previously reported.
In addition, as previously reported, the Audit Committee anticipates that a restatement of previously reported financial results may be appropriate, but intends to defer making a final decision pending completion of the audit by the Company’s independent accountants, BDO Ziv Haft. A restatement, which reflects the results of the investigation as well as any other adjustments identified during the restatement, audit or review processes, may affect the information reported in this release.
Investors: Lauri Hanover 1-866-232-6803 972-4-959-9122 About Lumenis
Lumenis is a global developer, manufacturer and seller of laser and light- based devices for medical, aesthetic, ophthalmic, dental and veterinary applications. The Company offers a wide range of products along with extensive product support systems including training, education and service. Lumenis invests heavily in research and development to maintain and enhance its leading industry position. The Company holds numerous patents worldwide on its technologies. For more information about Lumenis and its products, log onto http://www.lumenis.com
The statements in this press release that are not historical facts are forward-looking statements which are subject to risks and uncertainties. The Company’s actual results could differ materially from those anticipated in the forward looking statements based on a variety of factors, including, among others: uncertainties with respect to market acceptance of the Company’s products, the implementation and outcome of our Turnaround Plan, obtaining regulatory approvals for new products or for the sale of existing products in new markets and enforcement of intellectual property rights; risks associated with competition and competitive pricing pressures, economic conditions generally, the Company’s international operations and the Company’s ability to integrate its operations with those of acquired businesses; the outcome of the Securities and Exchange Commission investigation (including the Wells Notice recently received in which the staff indicated its intention to recommend that a civil proceeding be brought seeking, among other things, injunctive relief and civil monetary penalties) and several securities class action lawsuits to which the Company is subject and the outcome of the investigation conducted by the Audit Committee; uncertainties relating to the Company’s continuing liquidity; uncertainties relating to the Company’s lack of audited financial statements and other risks detailed from time to time in the reports filed by Lumenis with the SEC.
LUMENIS LTD. CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2005 2004 Unaudited Unaudited CURRENT ASSETS Cash and cash equivalents $14,024 $18,064 Marketable securities 87 - Trade receivables, net 55,586 59,030 Prepaid expenses and other receivables 14,993 13,620 Inventories 44,482 49,034 129,172 139,748 FINISHED GOODS USED IN OPERATIONS 4,532 5,755 LONG-TERM INVESTMENTS Investments in equity securities - 285 Long term trade receivables 64 278 FIXED ASSETS, NET 11,047 12,541 GOODWILL, NET 87,911 88,039 OTHER PURCHASED INTANGIBLE ASSETS, NET 6,017 9,618 OTHER ASSETS, NET 14,470 17,850 Total assets $253,213 $274,114 CURRENT LIABILITIES Short-term bank debt $29,942 $29,092 Current maturities of long term debt 15,000 - Trade payables 32,703 33,166 Other accounts payables and accrued expenses 66,438 76,680 144,083 138,938 LONG-TERM LIABILITIES Long term debt 145,042 159,043 Accrued severance pay, net 1,735 1,934 Other long-term liabilities 2,754 1,306 149,531 162,283 Total liabilities 293,614 301,221 SHAREHOLDERS’ EQUITY Ordinary shares 806 806 Additional paid-in capital 355,868 354,495 Accumulated deficit (396,972) (382,305) Treasury stock (103) (103) Total shareholders’ equity (40,401) (27,107) Total liabilities and shareholders’ equity $253,213 $274,114 * Prior period presentation has been adjusted to conform to current presentation. LUMENIS LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the three months ended For the year ended December 31, December 31, December 31, December 31, 2005 2004 2005 2004 Unaudited Unaudited NET REVENUES $74,223 $72,809 $283,329 $272,698 COST OF REVENUES 38,968 39,284 156,066 140,473 Gross profit 35,255 33,525 127,263 132,225 OPERATING EXPENSES Research and development, net 4,005 4,198 15,357 14,623 Selling, marketing expenses 19,543 19,084 71,306 67,336 General, administrative expenses 8,309 10,787 32,941 42,412 Restructuring and other expenses 1,475 543 1,787 2,198 Asset purchase consideration and gain on termination of distribution agreement - 2,464 101 671 Total operating expenses 33,332 37,076 121,492 127,240 Operating income (loss) 1,923 (3,551) 5,771 4,985 Other income, net 321 289 367 289 Financing expenses 5,806 3,029 18,968 13,852 Loss before income taxes (3,562) (6,291) (12,830) (8,578) Income tax expense 368 1,836 3,426 NET LOSS ($3,930) ($6,291) ($14,666) ($12,004) BASIC LOSS PER SHARE Net loss per share ($0.11) ($0.17) ($0.39) ($0.32) WEIGHTED AVERAGE NUMBER OF SHARES Basic 37,326 37,283 37,323 37,282 LUMENIS LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the three months ended For the year ended December 31, December 31, December 31, December 31, 2005 2004 2005 2004 Unaudited Unaudited CASH FLOWS - OPERATING ACTIVITIES Net loss for the period ($3,930) ($6,291) ($14,666) ($12,004) Income and expenses not affecting operating cash- flows: Depreciation and amortization 2,436 2,971 10,498 12,393 Amortization of stock-based compensation 328 336 1,368 1,111 Gain from sale of fixed assets (337) - (337) - Amortization of other long-term assets 985 1,039 3,929 4,196 Loss on impairment of equity securities 269 269 Decrease of equity securities 12 - 12 - Gain from sale of equity security - (558) (45) (558) Other 165 (76) 242 (868) Gain from termination of distribution agreement - - - (1,793) Changes in operating assets and liabilities: Decrease (Increase) in trade receivables (206) 1,114 3,658 17,275 Increase in prepaid expenses and other receivables (2,621) (153) (1,373) (5,000) Decrease (increase) in inventories 3,607 1,819 2,369 (1,060) Increase (decrease) in accounts payable, accrued expenses and other long-term liabilities 881 8,587 (9,129) 7,813 Net-cash - operating activities 1,320 9,057 (3,474) 21,774 CASH FLOWS - INVESTING ACTIVITIES Purchase of fixed assets, net (1,021) (956) (3,177) (2,094) Proceeds from sale of distribution rights - - - 1,745 Proceeds from sale of fixed assets 1,528 - 1,527 - Proceeds from sale of an investment in Equity security - 1,043 231 1,043 Net-cash - investing activities 507 87 (1,419) 694 CASH FLOWS - FINANCING ACTIVITIES Proceeds from exercise of options - 60 3 66 Decrease in long-term loans, net - - - (51,604) Increase (decrease) in short term bank debt (2,180) (10,190) 850 28,933 Net-cash - financing activities (2,180) (10,130) 853 (22,605) DECREASE IN CASH AND CASH EQUIVALENTS (353) (986) (4,040) (137) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 14,377 19,050 18,064 18,201 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $14,024 $18,064 $14,024 $18,064
Lumenis Ltd.
CONTACT: Lauri Hanover, +1-866-232-6803, +972-4-959-9122, for Lumenis Ltd.
Web site: http://www.lumenis.com/
