MDCC Molecular Devices (MM)

SUNNYVALE, Calif., Oct. 26 /PRNewswire-FirstCall/ -- Molecular Devices Corporation (NASDAQ:MDCC) today announced revenues and earnings for the quarter ended September 30, 2006. Revenues for the quarter were $45.5 million, or an increase of 1% compared to the same period last year. On a GAAP basis, operating income was $4.6 million in the third quarter of 2006. GAAP operating income for the third quarter of 2006 included non-cash stock compensation expense of $1.2 million associated with the Company's adoption of Statement of Financial Accounting Standards No. 123R. On a non- GAAP basis, excluding the effect of the non-cash stock compensation expense, operating income for the third quarter of 2006 was $5.8 million, or a decrease of 9% compared to the same period last year. On a GAAP basis, fully diluted earnings per share for the third quarter of 2006 were $0.17. On a non-GAAP basis, excluding the non-cash stock compensation expense, fully diluted earnings per share were $0.22 in the third quarter of 2006 as compared to $0.27 in the same period last year. A table reconciling operating income and fully diluted earnings per share on a GAAP and non-GAAP basis is provided immediately following the Condensed Consolidated Balance Sheets. "While we were disappointed in our overall results this quarter, we continue to believe that we are well-positioned based on the quality of our existing product portfolio and the strength of our expected new product introductions over the next year," stated Joseph D. Keegan, Ph.D., Molecular Devices' President and Chief Executive Officer. "Softer than expected demand from pharmaceutical companies during the quarter impacted both our Drug Discovery and Life Sciences product families. Drug Discovery Imaging exceeded our expectations and was our fastest growing product line this quarter. We continue to believe in the long-term growth prospects in Drug Discovery and Life Sciences Research, but we will remain cautious in the near-term." The Company established guidance for the fourth quarter of 2006 and updated guidance for the full year 2006. For the fourth quarter of 2006, the Company anticipates revenues of $47 to $52 million, GAAP fully diluted earnings per share of $0.20 to $0.25 and non-GAAP fully diluted earnings per share of $0.25 to $0.30 excluding $0.05 of non-cash stock compensation expense. For the full year 2006, the Company anticipates revenues of $180 to $185 million, GAAP fully diluted earnings per share of $0.50 to $0.55 and non- GAAP fully diluted earnings per share of $0.90 to $0.95 excluding $0.21 per share of non-cash stock compensation expense, $0.06 per share gain on the sale of an equity investment and $0.25 per share write-off of acquired in-process research and development. Conference Call Information A conference call to discuss our third quarter results, 2006 guidance and other matters related to our business is scheduled for Thursday, October 26, 2006 at 1:30 p.m. Pacific (4:30 p.m. Eastern). Interested parties can participate in the call by dialing 800-289-0494 (domestic) or 913-981-5520 (international). Replay dial-in numbers are 888-203-1112 (domestic) and 719- 457-0820 (international), and the access code for the replay is 2640646. Investors can also access a live web-cast of the call through a link posted on the investor page on Molecular Devices' website (http://www.moleculardevices.com/). A replay of the web-cast will be available at this location from October 26, 2006 to such time as the Company reports its financial results for the fourth quarter of 2006. About Molecular Devices Corporation Molecular Devices Corporation is a leading supplier of high-performance bioanalytical measurement systems that accelerate and improve drug discovery and other life sciences research. The Company's systems and consumables enable pharmaceutical and biotechnology companies to leverage advances in genomics, proteomics and parallel chemistry to facilitate the high-throughput and cost-effective identification and evaluation of drug candidates. The Company's solutions are based on its advanced core technologies that integrate its expertise in engineering, molecular and cell biology and chemistry. Molecular Devices enables its customers to improve research productivity and effectiveness, which ultimately accelerates the complex process of discovering and developing new drugs. This press release contains "forward-looking" statements, including statements related to the markets for our products, new product introductions and future revenues and earnings. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "will," and similar expressions are intended to identify forward- looking statements. There are a number of important factors that could cause the results of Molecular Devices Corporation to differ materially from those indicated by these forward-looking statements, including, among others, risks related to variations in the amount of time that it takes for the Company to sell its products and collect accounts receivable, the timing of customer orders and the Company's dependence on orders that are shipped in the same quarter, which gives the Company limited visibility of future product shipments, risks related to increased competition, risks associated with the Company's need to develop new and enhanced products and market acceptance of such products, and other risks detailed from time to time in the Company's SEC reports, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. Molecular Devices Corporation does not undertake any obligation to update forward-looking statements. MOLECULAR DEVICES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 ----------------- ------------------ (unaudited) (unaudited) REVENUES $45,512 $45,156 $132,892 $128,758 COST OF REVENUES * 16,834 17,393 49,920 50,040 ------- ------- -------- -------- GROSS PROFIT 28,678 27,763 82,972 78,718 ------- ------- -------- -------- OPERATING EXPENSES: Research and development * 5,688 6,421 17,034 18,956 Write-off of acquired in-process research and development -- -- 4,272 -- Selling, general and administrative * 18,440 14,947 52,279 43,854 ------- ------- -------- -------- Total operating expenses 24,128 21,368 73,585 62,810 ------- ------- -------- -------- INCOME FROM OPERATIONS 4,550 6,395 9,387 15,908 Gain on sale of equity securities -- -- 1,669 -- Interest and other income (expense), net (4) 19 340 (583) ------- ------- -------- -------- INCOME BEFORE TAXES 4,546 6,414 11,396 15,325 Income tax provision * (1,764) (1,783) (6,227) (5,185) ------- ------- -------- -------- NET INCOME $2,782 $4,631 $5,169 $10,140 ======= ======= ======== ======== BASIC NET INCOME PER SHARE $0.17 $0.28 $0.31 $0.60 ======= ======= ======== ======== DILUTED NET INCOME PER SHARE $0.17 $0.27 $0.30 $0.59 ======= ======= ======== ======== SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 16,578 16,567 16,740 16,841 ======= ======= ======== ======== SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE 16,852 16,890 17,164 17,158 ======= ======= ======== ======== * Includes the following amounts related to stock-based compensation expense recorded under FAS 123R: Cost of revenues $100 $-- $314 $-- Research and development 278 -- 827 -- Selling, general and administrative 866 -- 2,680 -- Income tax benefit (299) -- (1,041) -- ------- ------- -------- -------- Effect on net income $945 $-- $2,780 $-- ======= ======= ======== ======== Adjustments have been made to amounts previously reported for interest and other income (expense) net, income before taxes, income tax provision, net income, basic net income per share, and diluted net income per share for 2005. We recognized $27,000 and $0.6 million of additional pre-tax expense associated with foreign currency transaction losses on short-term intercompany receivables and payables in the third quarter and first nine months of 2005, respectively. These amounts had previously been recorded as a component of stockholders' equity. In the first nine months of 2005, these adjustments decreased basic net income per share by $0.03. Basic net income per share was not affected in the third quarter of 2005. In the third quarter and first nine months of 2005, these adjustments decreased diluted net income per share by $0.01 and $0.02, respectively. MOLECULAR DEVICES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2006 2005 ------------------------------ ASSETS (unaudited) Current assets: Cash and cash equivalents $13,280 $28,908 Accounts receivable, net 39,582 41,197 Inventories, net 29,820 23,197 Deferred tax assets 5,917 5,873 Prepaids and other current assets 2,241 2,353 -------- -------- Total current assets 90,840 101,528 Equipment and leasehold improvements, net 10,712 9,902 Other assets 151,151 145,986 -------- -------- $252,703 $257,416 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,487 $7,676 Accrued liabilities 26,637 31,188 -------- -------- Total current liabilities 35,124 38,864 Long-term liabilities: Other long-term liabilities 968 993 Deferred tax liabilities 4,486 4,486 -------- -------- Total long-term liabilities 5,454 5,479 Stockholders' equity 212,125 213,073 -------- -------- $252,703 $257,416 ======== ======== HISTORICAL NON-GAAP RECONCILIATION (unaudited) (in thousands, except per share amounts) Three Months Ended September 30, 2006 ------------------------------ Non-GAAP Adjustment ------------------- GAAP FAS 123R Non-GAAP ------------------------------ REVENUES $45,512 $- $45,512 COST OF REVENUES 16,834 (100) 16,734 ------------------------------ GROSS PROFIT 28,678 100 28,778 ------------------------------ OPERATING EXPENSES: Research and development 5,688 (278) 5,410 Selling, general and administrative 18,440 (866) 17,574 ------------------------------ Total operating expenses 24,128 (1,144) 22,984 ------------------------------ INCOME FROM OPERATIONS 4,550 1,244 5,794 Interest and other income, net (4) - (4) ------------------------------ INCOME BEFORE TAXES 4,546 1,244 5,790 Income tax provision (1,764) (299) (2,063) ------------------------------ NET INCOME $2,782 $945 $3,727 ============================== BASIC NET INCOME PER SHARE $0.17 $0.06 $0.22 ============================== DILUTED NET INCOME PER SHARE $0.17 $0.06 $0.22 ============================== SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 16,578 16,578 16,578 ============================== SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE * 16,852 16,852 16,852 ============================== HISTORICAL NON-GAAP RECONCILIATION (unaudited) (in thousands, except per share amounts) Nine Months Ended September 30, 2006 ------------------------------------ Non-GAAP Adjustments -------------------- Other FAS reconciling GAAP 123R items Non-GAAP ------------------------------------ REVENUES $132,892 $-- $-- $132,892 COST OF REVENUES 49,920 (314) -- 49,606 ------------------------------------ GROSS PROFIT 82,972 314 -- 83,286 ------------------------------------ OPERATING EXPENSES: Research and development 17,034 (827) -- 16,207 Write-off of acquired in-process research and development 4,272 -- (4,272) -- Selling, general and administrative 52,279 (2,680) -- 49,599 ------------------------------------ Total operating expenses 73,585 (3,507) (4,272) 65,806 ------------------------------------ INCOME FROM OPERATIONS 9,387 3,821 4,272 17,480 Gain on sale of equity securities 1,669 -- (1,669) -- Interest and other income, net 340 -- -- 340 ------------------------------------ INCOME BEFORE TAXES 11,396 3,821 2,603 17,820 Income tax provision (6,227) (1,041) 634 (6,634) ------------------------------------ NET INCOME $5,169 $2,780 $3,237 $11,186 ==================================== BASIC NET INCOME PER SHARE $0.31 $0.17 $0.19 $0.67 ==================================== DILUTED NET INCOME PER SHARE $0.30 $0.16 $0.19 $0.65 ==================================== SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 16,740 16,740 16,740 16,740 ==================================== SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE * 17,164 17,164 17,164 17,164 ==================================== * For the three and nine months ended September 30, 2006, the Company did not adjust the shares used in computing non-GAAP diluted net income per share to conform to what the diluted shares would have been had it applied prior accounting standards. The difference between the shares calculated by applying FAS 123R and calculated under prior accounting standards for the three and nine months ended September 30, 2006 was approximately 0.1 million shares and is immaterial. NON-GAAP MEASURES Each non-GAAP financial measure presented in this press release is included because Molecular Devices Corporation's management uses this information for internal planning and forecasting purposes as well as to monitor and evaluate on-going operating results and trends excluding the impact of FAS 123R and the unusual items related to the gain on the sale of an equity investment and the write-off of acquired in-process research and development. Molecular Devices' management believes that such non-GAAP financial measures are also useful for investors because the gain on the sale of an equity investment and the write-off of acquired in-process research and development are the results of transactions that are unusual due to their nature, size and frequency. In addition, excluding the impact of FAS 123R permits a more direct comparison to results in 2005, at which time FAS 123R had not yet been adopted. Consequently, excluding the impact of FAS 123R, the gain on the sale of an equity investment and the write-off of acquired in- process research and development from Molecular Devices' operating results provides investors an important insight into Molecular Devices' operating results and related trends of its core business. In addition, excluding the impact of FAS 123R, the gain on the sale of an equity investment and the write-off of acquired in-process research and development from Molecular Devices' financial guidance provides meaningful supplementary information to both management and investors that is indicative of Molecular Devices' core operating results and enhances an overall understanding of Molecular Devices' prospects for the future. Finally, Molecular Devices has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its annual reporting. DATASOURCE: Molecular Devices Corporation CONTACT: Tim Harkness of Molecular Devices Corporation, +1-408-747-3533 Web site: http://www.moleculardevices.com/

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