-- Company Posts Non-GAAP EPS of $0.47(1), Excluding $0.03 of
Transaction-Related Expenses, and GAAP EPS of $0.44 -- -- Record
STD Sales and Tepnel Acquisition Help Company Establish New
Quarterly Highs for Product Sales and Total Revenues -- --
Operating Activities Generate $31.9 Million of Cash in Quarter --
SAN DIEGO, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Gen-Probe
Incorporated (NASDAQ:GPRO) today reported financial results for the
third quarter of 2009, with record product sales and total revenues
driving non-GAAP earnings per share (EPS) of $0.47. "Gen-Probe
posted very good financial results in the third quarter of 2009,
driven by strong growth in our base STD testing business and
revenue from our recent Tepnel acquisition," said Carl Hull, the
Company's president and chief executive officer. "We also advanced
several strategic priorities by acquiring the infectious disease
company Prodesse, spinning off our industrial testing business, and
initiating two pivotal clinical studies in oncology and women's
health." Comparisons to the third quarter of 2008 were negatively
affected by a one-time, $10.0 million milestone payment in the
prior year period, as described below. In the third quarter of
2009, product sales were $119.0 million, compared to $108.3 million
in the prior year period, an increase of 10%. Compared to the third
quarter of 2008, the stronger US dollar reduced product sales
growth by an estimated $2.5 million, or 2%(2). Total revenues for
the third quarter of 2009 were $122.7 million, compared to $121.2
million in the prior year period, an increase of 1%. Net income was
$23.8 million ($0.47 per share) on a non-GAAP basis in the third
quarter of 2009, compared to $29.1 million ($0.52 per share) in the
prior year period, a decrease of 18% (10% per share). Including
$1.6 million of after-tax expenses ($0.03 per share) related to the
Company's acquisitions of Tepnel and Prodesse and the industrial
spin-off, net income in the third quarter of 2009 was $22.2 million
($0.44 per share) on a GAAP basis. For the first nine months of
2009, product sales were $348.3 million, compared to $323.5 million
in the prior year period, an increase of 8%. Compared to the first
nine months of 2008, the stronger US dollar reduced product sales
growth by an estimated $11.1 million, or 3%. Total revenues for the
first nine months of 2009 were $359.4 million, compared to $363.6
million in the prior year period, a decrease of 1%. Net income was
$74.0 million ($1.43 per share) on a non-GAAP basis in the first
nine months of 2009, compared to $85.8 million ($1.55 per share) in
the prior year period, a decrease of 14% (8% per share). Including
$6.3 million of after-tax expenses ($0.12 per share) related to the
Company's acquisitions of Tepnel and Prodesse and the industrial
spin-off, net income in the first nine months of 2009 was $67.8
million ($1.31 per share) on a GAAP basis. As previously disclosed,
Gen-Probe's total revenues, net income and EPS in the first nine
months of 2008 benefited from a number of non-recurring items. The
two most significant benefits were: -- $16.4 million of royalty and
license revenue ($0.20 of EPS), which was recorded in the first
quarter of 2008 based on the settlement of patent infringement
litigation against Bayer (now Siemens Healthcare Diagnostics). --
$10.0 million of collaborative research revenue ($0.12 of EPS),
which was recorded from the Company's commercial partner, Novartis
Diagnostics, in the third quarter of 2008 based on the full
approval by the US Food and Drug Administration (FDA) of the
PROCLEIX® ULTRIO® assay on the TIGRIS® system. By comparison, the
Company's product sales, total revenues, net income and EPS in the
first nine months of 2009 benefited from $8.2 million of one-time
revenue ($0.10 of EPS) recorded in the first quarter associated
with the previously announced renegotiation of the Company's
collaboration agreement with Novartis Diagnostics. Detailed Results
Gen-Probe's clinical diagnostics sales of $69.6 million in the
third quarter of 2009 benefited from revenue associated with
Tepnel's transplant diagnostics and genetic testing products, and
continued strong growth of the APTIMA Combo 2® assay, an amplified
nucleic acid test (NAT) for simultaneously detecting Chlamydia
trachomatis and Neisseria gonorrhoeae. Clinical diagnostics sales
were negatively affected by the stronger US dollar, which reduced
growth by an estimated $0.8 million, or more than 1%, compared to
the prior year period. In blood screening, product sales of $45.4
million in the third quarter of 2009 were negatively affected by
$7.9 million of lower product shipments to Novartis. This
reduction, which was expected, resulted primarily from: lower US
shipments of the PROCLEIX HIV-1/HCV assay as customers began to
adopt the PROCLEIX ULTRIO assay; lower US shipments of the PROCLEIX
ULTRIO assay due to the post-marketing study in the prior year
period; and lower West Nile virus assay shipments due to previously
discussed ordering patterns. Blood screening sales growth also was
negatively affected by the stronger US dollar, which reduced growth
by an estimated $1.7 million, or 3%. "As we forecast three months
ago, blood screening sales in the third quarter continued to be
affected by negative ordering patterns that outweighed a 1%
increase in underlying donations tested," Mr. Hull said. Sales of
research products and services in the third quarter of 2009 were
$3.9 million. These sales, resulting from the Tepnel acquisition,
were not included in Gen-Probe's prior year results. Third quarter
product sales were, in millions: Three Months Ended Sept. 30,
Change --------------- -------------------- As Constant 2009 2008
Reported Currency ---- ---- -------- -------- Clinical Diagnostics
$69.6 $55.5 25% 27% Blood Screening $45.4 $52.7 -14% -11% Research
Products and Services $3.9 N/A N/A N/A ---- --- --- --- Total
Product Sales $119.0 $108.3 10% 12% Product sales in the first nine
months of 2009 were, in millions: Nine Months Ended Sept. 30,
Change --------------- -------------------- As Constant 2009 2008
Reported Currency ---- ---- -------- -------- Clinical Diagnostics
$196.6 $165.2 19% 21% Blood Screening $144.1 $158.2 -9% -4%
Research Products and Services $7.6 N/A N/A N/A ---- --- --- ---
Total Product Sales $348.3 $323.5 8% 11% Collaborative research
revenues in the third quarter of 2009 were $2.0 million, compared
to $11.3 million in the prior year period. As discussed above, this
significant decrease resulted primarily from a $10.0 million
milestone the Company earned from Novartis in the prior year period
based on the full FDA approval of the PROCLEIX ULTRIO assay on the
TIGRIS system. For the first nine months of 2009, collaborative
research revenues were $5.9 million, compared to $18.5 million in
the prior year period. Royalty and license revenues for the third
quarter of 2009 were $1.8 million, compared to $1.6 million in the
prior year period, an increase of 13%. For the first nine months of
2009, royalty and license revenues were $5.3 million, compared to
$21.6 million in the prior year period. As discussed above, this
significant decrease resulted primarily from $16.4 million of
revenue that was recorded in the first quarter of 2008 associated
with the settlement of Gen-Probe's patent infringement litigation
against Bayer. Gross margin on product sales in the third quarter
of 2009 was 69.5% on a non-GAAP basis that excludes $0.1 million of
acquisition-related depreciation expense, compared to 71.7% in the
prior year period. This decrease resulted primarily from the
stronger US dollar, the addition of Tepnel's generally lower-margin
revenues, and lower sales of blood screening products. For the
first nine months of 2009, gross margin on product sales was 69.1%
on a non-GAAP basis that excludes $0.2 million of
acquisition-related depreciation expense, compared to 70.4% in the
prior year period. On a GAAP basis, gross margin on product sales
was 69.4% in the third quarter of 2009, and 69.0% for the first
nine months of the year. Acquisition-related intangible
amortization expenses were $1.1 million in the third quarter of
2009 and $2.3 million in the first nine months of the year,
compared to $0 in the comparable prior year periods. Research and
development (R&D) expenses in the third quarter of 2009 were
$27.5 million, compared to $24.5 million in the prior year period,
an increase of 12% that resulted primarily from expenses associated
with clinical trials of the Company's HPV, PCA3 and trichomonas
assays, and from the addition of Tepnel's R&D activities. For
the first nine months of 2009, R&D expenses were $78.5 million,
compared to $76.9 million in the prior year period, an increase of
2%. Marketing and sales expenses in the third quarter of 2009 were
$13.5 million, compared to $10.7 million in the prior year period,
an increase of 26% that resulted primarily from the addition of
Tepnel's cost structure, and European sales force expansion and
market development efforts. For the first nine months of 2009,
marketing and sales expenses were $38.5 million, compared to $34.1
million in the prior year period, an increase of 13%. General and
administrative (G&A) expenses in the third quarter of 2009 were
$14.2 million on a non-GAAP basis that excludes $1.1 million of
transaction-related expense, compared to $12.9 million in the prior
year period. This increase of 10% resulted primarily from the
addition of Tepnel's cost structure. For the first nine months of
2009, G&A expenses were $41.0 million on a non-GAAP basis that
excludes $5.9 million of transaction-related expense, compared to
$38.5 million in the prior year period, an increase of 6%. On a
GAAP basis, G&A expenses were $15.2 million in the third
quarter of 2009, up 18% compared to the prior year period, and
$46.9 million for the first nine months of the year, up 22%
compared to the prior year period. Total other income in the third
quarter of 2009 was $4.3 million, compared to $2.2 million in the
prior year period, an increase of 95% that resulted primarily from
a $1.6 million impairment charge in the prior year period
associated with the Company's equity investment in Qualigen, Inc.
For the first nine months of 2009, total other income was $17.4
million, compared to $11.6 million in the prior year period, an
increase of 50% that resulted primarily from investment gains
realized from selling portions of the Company's municipal bond
portfolio. In the third quarter of 2009, Gen-Probe generated net
cash of $31.9 million from its operating activities, substantially
higher than GAAP net income of $22.2 million. The Company spent
$7.6 million on property, plant and equipment in the quarter. In
the third quarter of 2009, the Company repurchased approximately
1.8 million shares of its stock for $69.3 million, completing the
share repurchase program announced in August of 2008. Throughout
the program, the Company repurchased approximately 6.0 million
shares of its common stock for $249.8 million. Gen-Probe continues
to have a strong balance sheet. As of September 30, 2009, the
Company had $517.9 million of cash, cash equivalents and short-term
investments, and $240.8 million of short-term debt. The Company
currently pays interest on substantially all of this debt at a rate
0.6 percent above the one-month London Interbank Offered Rate
(LIBOR), which was recently below 0.3 percent. In October,
Gen-Probe paid approximately $60.0 million to complete its
acquisition of Prodesse. Updated 2009 Financial Guidance In the
table below, Gen-Probe's non-GAAP guidance excludes certain
expenses related to the Tepnel and Prodesse acquisitions, and the
spin-off of the Company's industrial testing business. Current
Previous Current Previous Guidance Guidance Guidance Guidance
(non-GAAP) (non-GAAP) (GAAP) (GAAP) Total revenues $493 to $500
$490 to $503 $493 to $500 $490 to $503 million million million
million Product gross margins ~ 69% 68% to 69% ~ 69% 68% to 69%
Acquisition- related intangibles amortization N/A N/A $3-4 million
$3-4 million R&D expenses ~ 22% ~ 22% ~ 22% ~ 22% Marketing and
sales expenses ~ 11% 10% to 11% ~ 11% 10% to 11% G&A expenses ~
11% 10% to 11% 12% to 13% 11% to 12% Tax rate ~ 34% ~ 34% ~ 34% ~
34% Diluted shares ~ 51.5 million ~ 52 million ~ 51.5 million ~ 52
million EPS $1.90 to $1.93 $1.85 to $1.95 $1.77 to $1.79 $1.73 to
$1.85 Recent Events -- Prodesse Acquisition. On October 22, the
Company announced that it had completed its acquisition of
Prodesse, Inc., a leader in molecular testing for influenza and
other infectious diseases, for approximately $60.0 million in cash.
Gen-Probe's purchase price could increase to up to $85.0 million if
Prodesse achieves certain financial and regulatory milestones in
2010 and 2011. -- EUA for ProFlu-ST(TM). Earlier today, Gen-Probe
announced that the FDA had granted an EUA (emergency use
authorization) for Prodesse's test, ProFlu-ST(TM), to be used in
CLIA high complexity laboratories for the diagnosis of 2009 H1N1
influenza virus infection, aided by an algorithm that relies on
seasonal influenza A/H1 virus and seasonal influenza A/H3 virus
results, from a single sample in individuals who are diagnosed with
influenza A by currently available FDA-cleared or authorized
devices. -- Industrial Spin-Off. On September 14, Gen-Probe
announced that it was spinning off its industrial testing assets
into a new, independent company focused on developing rapid, highly
accurate molecular assays for biopharmaceutical production, water
and food safety testing, and other applications. Gen-Probe owns
19.9% of the new company, Roka Bioscience, Inc. -- Prostate Cancer
Clinical Trial. On August 27, the Company announced that it had
begun a clinical trial intended to secure US regulatory approval of
its PROGENSA® PCA3 assay, a new molecular test that may help
determine the need for a repeat prostate biopsy. -- Trichomonas
Clinical Trial. On August 17, Gen-Probe announced that it had begun
a clinical trial intended to secure US regulatory approval of its
APTIMA® assay for Trichomonas vaginalis on the fully automated
TIGRIS® system. Trichomonas is a common, sexually transmitted
parasite. -- Qiagen Arbitration. In April, Gen-Probe announced that
the Company and Roche had prevailed in the arbitration with Digene
(now Qiagen) concerning the Company's supply and purchase agreement
with Roche for HPV products. In August, the arbitrators issued
their final award, which granted Gen-Probe's motion to recover
attorneys' fees and costs in the amount of $3.0 million from
Digene. Gen-Probe has filed a petition to confirm the arbitration
award in the US District Court for the Southern District of New
York, and Digene has filed a petition to vacate or modify the
award. A hearing on the petitions is set for December. -- Patent
Litigation. On October 21, Gen-Probe disclosed that it had filed a
complaint for patent infringement against Becton, Dickinson and
Company in the US District Court for the Southern District of
California. The complaint alleges that Becton Dickinson's Viper(TM)
XTR(TM) testing system and associated consumables infringe eight of
the Company's US patents. The complaint seeks monetary damages and
injunctive relief. -- R&D Re-Organization. In October, the
Company re-organized its R&D organization into several
cross-functional project teams to increase alignment with corporate
strategy, better integrate research activities into product
development, accommodate new areas of therapeutic focus, and
ultimately increase development efficiency and speed to market.
Webcast Conference Call A live webcast of Gen-Probe's third quarter
2009 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 866-360-7718 for
domestic callers and 203-369-0170 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 NATs used primarily to diagnose human diseases and
screen donated human blood. Gen-Probe has more than 25 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 1,200 people.
For more information, go to http://www.gen-probe.com/. About
Non-GAAP Financial Measures To supplement Gen-Probe's financial
results for the third quarter of 2009 and its updated 2009
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, gross margin, G&A expenses,
income tax rate, and EPS. Gen-Probe's management does not, 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.
Trademarks APTIMA, APTIMA COMBO 2 and TIGRIS are trademarks of
Gen-Probe. PROCLEIX and ULTRIO are trademarks of Novartis. All
other trademarks are the property of their owners. Caution
Regarding Forward-Looking Statements Any statements in this news
release about our expectations, beliefs, plans, objectives,
assumptions or future events or performance, including those under
the heading "Updated 2009 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 milestones, growth opportunities, and plans 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 2009
financial targets, (ii) the risk that we may not integrate
acquisitions, such as Tepnel and Prodesse, successfully, (iii) the
possibility that the market for the sale of our new products, such
as our PROGENSA PCA3 and APTIMA HPV assays, may not develop as
expected, (iv) the enhancement of existing products and the
development of new products may not proceed as planned, (v) the
risk that products, including the investigational PROGENSA PCA3 and
APTIMA HPV and trichomonas assays in US clinical trials, may not be
approved by regulatory authorities or become commercially available
in the time frame we anticipate, or at all, (vi) the risk that we
may not be able to compete effectively, (vii) the risk that we may
not be able to maintain our current corporate collaborations and
enter into new corporate collaborations or customer contracts,
(viii) our dependence on Novartis, Siemens (as assignee of Bayer)
and other third parties for the distribution of some of our
products, (ix) our dependence 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, (xi) changes
in government regulation or tax policy affecting our diagnostic
products could harm our sales, increase our development costs or
increase our taxes, (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. This list includes 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. ----------------
(1) In this press release, all per share amounts are calculated on
a fully diluted basis. Non-GAAP EPS for the third quarter of 2009
excludes $1.6 million of after-tax expenses ($0.03 per share)
related to the Company's acquisitions of Tepnel and Prodesse, and
the spin-off of industrial testing assets to Roka BioScience. Some
totals may not foot due to rounding. (2) In this press release, all
estimates of "constant currency" growth exclude foreign currency
fluctuations associated with acquired Tepnel revenues, since Tepnel
was not part of Gen-Probe in the prior year period. Contact:
Michael Watts Vice president, investor relations and corporate
communications 858-410-8673 Gen-Probe Incorporated Consolidated
Balance Sheets - GAAP (In thousands, except share and per share
data) September 30, December 31, 2009 2008 ---- ---- (unaudited)
Assets Current assets: Cash and cash equivalents, including
restricted cash of $18 and $0 at September 30, 2009 and December
31, 2008, respectively $156,739 $60,122 Marketable securities
361,203 371,276 Trade accounts receivable, net of allowance for
doubtful accounts of $740 and $700 at September 30, 2009 and
December 31, 2008, respectively 44,629 33,397 Accounts receivable -
other 3,185 2,900 Inventories 58,432 54,406 Deferred income tax
8,827 7,269 Prepaid income tax 8,809 2,306 Prepaid expenses 17,956
15,094 Other current assets 4,443 6,135 ----- ----- Total current
assets 664,223 552,905 Marketable securities, net of current
portion 6,677 73,780 Property, plant and equipment, net 153,594
141,922 Capitalized software, net 12,496 13,409 Goodwill 91,114
18,621 Deferred income tax, net of current portion 12,193 12,286
Purchased intangibles, net 56,097 298 Licenses, manufacturing
access fees and other assets, net 63,255 56,310 ------ ------ Total
assets $1,059,649 $869,531 ========== ======== Liabilities and
stockholders' equity Current liabilities: Accounts payable $18,035
$16,050 Accrued salaries and employee benefits 27,815 25,093 Other
accrued expenses 11,194 4,027 Income tax payable 853 - Short-term
borrowings 240,841 - Deferred income tax 1,355 - Deferred revenue
2,238 1,278 ----- ----- Total current liabilities 302,331 46,448
Non-current income tax payable 5,401 4,773 Deferred income tax, net
of current portion 14,387 55 Deferred revenue, net of current
portion 2,249 2,333 Other long-term liabilities 3,357 2,162
Commitments and contingencies Stockholders' equity: Preferred
stock, $0.0001 par value per share, 20,000,000 shares authorized,
none issued and outstanding - - Common stock, $0.0001 par value per
share; 200,000,000 shares authorized, 48,925,449 and 52,920,971
shares issued and outstanding at September 30, 2009 and December
31, 2008, respectively 5 5 Additional paid-in capital 231,838
382,544 Accumulated other comprehensive income 4,167 3,055 Retained
earnings 495,914 428,156 ------- ------- Total stockholders' equity
731,924 813,760 ------- ------- Total liabilities and stockholders'
equity $1,059,649 $869,531 ========== ======== Gen-Probe
Incorporated Consolidated Statements of Income - GAAP (In
thousands, except per share data) (Unaudited) Three Months Ended
Nine Months Ended September 30, September 30, ------------------
------------------ 2009 2008 2009 2008 ---- ---- ---- ----
Revenues: Product sales $118,951 $108,253 $348,289 $323,461
Collaborative research revenue 2,000 11,343 5,862 18,453 Royalty
and license revenue 1,753 1,581 5,281 21,640 ----- ----- -----
------ Total revenues 122,704 121,177 359,432 363,554 Operating
expenses: Cost of product sales (excluding acquisition-related
intangibles amortization) 36,345 30,681 107,939 95,827
Acquisition-related intangibles amortization 1,136 - 2,250 -
Research and development 27,475 24,507 78,542 76,941 Marketing and
sales 13,477 10,709 38,547 34,070 General and administrative 15,234
12,908 46,903 38,516 ------ ------ ------ ------ Total operating
expenses 93,667 78,805 274,181 245,354 ------ ------ -------
------- Income from operations 29,037 42,372 85,251 118,200
Investment and interest income 4,676 4,167 19,680 12,274 Interest
expense (588) (1) (1,465) (3) Other income/(expense) 210 (1,929)
(827) (647) --- ------ ---- ---- Total other income, net 4,298
2,237 17,388 11,624 ----- ----- ------ ------ Income before income
tax 33,335 44,609 102,639 129,824 Income tax expense 11,139 15,531
34,881 44,010 ------ ------ ------ ------ Net income $22,196
$29,078 $67,758 $85,814 ======= ======= ======= ======= Net income
per share: Basic $0.45 $0.53 $1.33 $1.58 ===== ===== ===== =====
Diluted $0.44 $0.52 $1.31 $1.55 ===== ===== ===== ===== Weighted
average shares outstanding: Basic 49,614 54,363 51,133 54,174
====== ====== ====== ====== Diluted 50,136 55,552 51,767 55,357
====== ====== ====== ====== Gen-Probe Incorporated Consolidated
Statements of Income - Non-GAAP (In thousands, except per share
data) (Unaudited) Three Months Ended September 30, 2009
---------------------------- Non-GAAP Adjustments GAAP --------
----------- ---- Revenues: Product sales $118,951 $- $118,951
Collaborative research revenue 2,000 - 2,000 Royalty and license
revenue 1,753 - 1,753 ----- --- ----- Total revenues 122,704 -
122,704 Operating expenses: Cost of product sales (excluding
acquisition-related intangibles amortization) 36,252 93 36,345
Acquisition-related intangibles amortization - 1,136 1,136 Research
and development 27,475 - 27,475 Marketing and sales 13,477 - 13,477
General and administrative 14,155 1,079 15,234 ------ ----- ------
Total operating expenses 91,359 2,308 93,667 ------ ----- ------
Income from operations 31,345 (2,308) 29,037 Investment and
interest income 4,676 - 4,676 Interest expense (588) - (588) Other
income/(expense) 210 - 210 --- --- --- Total other income, net
4,298 - 4,298 ----- --- ----- Income before income tax 35,643
(2,308) 33,335 Income tax expense 11,864 (725) 11,139 ------ ----
------ Net income $23,779 $(1,583) $22,196 ======= ======= =======
Net income per share: Basic $0.48 $(0.03) $0.45 ===== ====== =====
Diluted $0.47 $(0.03) $0.44 ===== ====== ===== Weighted average
shares outstanding: Basic 49,614 - 49,614 ====== === ====== Diluted
50,136 - 50,136 ====== === ====== Gen-Probe Incorporated
Consolidated Statements of Income - Non-GAAP (In thousands, except
per share data) (Unaudited) Nine Months Ended September 30, 2009
---------------------------- Non-GAAP Adjustments GAAP --------
----------- ---- Revenues: Product sales $348,289 $- $348,289
Collaborative research revenue 5,862 - 5,862 Royalty and license
revenue 5,281 - 5,281 ----- --- ----- Total revenues 359,432 -
359,432 Operating expenses: Cost of product sales (excluding
acquisition-related intangibles amortization) 107,756 183 107,939
Acquisition-related intangibles amortization - 2,250 2,250 Research
and development 78,542 - 78,542 Marketing and sales 38,547 - 38,547
General and administrative 41,018 5,885 46,903 ------ ----- ------
Total operating expenses 265,863 8,318 274,181 ------- -----
------- Income from operations 93,569 (8,318) 85,251 Investment and
interest income 19,680 - 19,680 Interest expense (1,465) - (1,465)
Other income/(expense) (827) - (827) ---- --- ---- Total other
income, net 17,388 - 17,388 ------ --- ------ Income before income
tax 110,957 (8,318) 102,639 Income tax expense 36,934 (2,053)
34,881 ------ ------ ------ Net income $74,023 $(6,265) $67,758
======= ======= ======= Net income per share: Basic $1.45 $(0.12)
$1.33 ===== ====== ===== Diluted $1.43 $(0.12) $1.31 ===== ======
===== Weighted average shares outstanding: Basic 51,133 - 51,133
====== === ====== Diluted 51,767 - 51,767 ====== === ======
Gen-Probe Incorporated Consolidated Statements of Cash Flows - GAAP
(In thousands) (Unaudited) Nine Months Ended September 30,
------------------ 2009 2008 ---- ---- Operating activities: Net
income $67,758 $85,814 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 29,468 26,217 Amortization of premiums on investments,
net of accretion of discounts 4,050 5,118 Stock-based compensation
17,743 15,012 Stock-based compensation income tax benefits 1,937
3,025 Excess tax benefit from stock-based compensation (1,186)
(2,510) Deferred revenue (249) (3,399) Deferred income tax (1,318)
(961) Gain on sale of investment in MPI - (1,600) Impairment of
intangible assets - 5,086 Loss on disposal of property and
equipment 82 38 Changes in assets and liabilities: Trade and other
accounts receivable (4,379) 11,403 Inventories 2,325 (4,270)
Prepaid expenses (1,675) 7,060 Other current assets 2,156 (2,255)
Goodwill 856 - Other long-term assets (3,608) (510) Accounts
payable (2,985) 7,381 Accrued salaries and employee benefits 1
4,922 Other accrued expenses 1,672 96 Income tax payable (6,655)
2,926 Other long-term liabilities 733 426 --- --- Net cash provided
by operating activities 106,726 159,019 ------- ------- Investing
activities: Proceeds from sales and maturities of marketable
securities 410,700 94,103 Purchases of marketable securities
(338,976) (225,290) Purchases of property, plant and equipment
(22,284) (30,530) Capitalization of software development costs
(576) - Purchases of intangible assets, including licenses and
manufacturing access fees (918) (1,868) Net cash paid for business
combinations (123,713) - Cash paid for investment in DiagnoCure and
related license fees (5,500) - Proceeds from sale of investment in
MPI - 4,100 Cash paid for Roche manufacturing access fees -
(10,000) Other assets (175) 10 ---- --- Net cash used in investing
activities (81,442) (169,475) ------- -------- Financing
activities: Excess tax benefit from stock-based compensation 1,186
2,510 Repurchase and retirement of restricted stock for payment of
taxes (923) (1,309) Repurchase and retirement of common stock
(174,847) (9,992) Proceeds from issuance of common stock 5,961
17,848 Short-term borrowings, net 238,450 - ------- --- Net cash
provided by financing activities 69,827 9,057 ------ ----- Effect
of exchange rate changes on cash and cash equivalents 1,506 (198)
----- ---- Net increase (decrease) in cash and cash equivalents
96,617 (1,597) Cash and cash equivalents at the beginning of period
60,122 75,963 ------ ------ Cash and cash equivalents at the end of
period $156,739 $74,366 ======== ======= DATASOURCE: Gen-Probe
Incorporated CONTACT: Michael Watts, Vice president, investor
relations and corporate communications of Gen-Probe Incorporated,
+1-858-410-8673 Web Site: http://www.gen-probe.com/
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