OSI Systems Reports Second Quarter Fiscal 2013 Financial Results

  OSI Systems Reports Second Quarter Fiscal 2013 Financial Results

  *Record Non-GAAP Q2 Earnings Per Share

       *GAAP of $0.60
       *Non-GAAP of $0.70

  *Record Q2 Revenue of $194 million

Business Wire

HAWTHORNE, Calif. -- January 24, 2013

OSI Systems, Inc. (NASDAQ: OSIS) today announced financial results for the
second fiscal quarter ended December 31, 2012.

“We are pleased to announce our second quarter results. Once again we
generated record revenues and non-GAAP earnings per share,” said Deepak
Chopra, OSI Systems’ Chairman and CEO. “We are excited to report that our
initial scanning locations were certified as fully operational under our
multi-year turnkey screening services agreement with Mexico's tax and customs
authority. This rapid level of progress gives us great confidence that nearly
the entire program will become operational during calendar 2013.”

The Company reported revenues of $194 million for the second quarter of fiscal
2013, an increase of 3% as compared to the same period a year ago. Net income
for the second quarter of fiscal 2013 was $12.4 million, or $0.60 per diluted
share, compared to net income of $12.3 million, or $0.61 per diluted share,
for the second quarter of fiscal 2012. Excluding the impact of impairment,
restructuring and other charges, net income for the second quarter of fiscal
2013 would have been $14.4 million, or $0.70 per diluted share.

For the six months ended December 31, 2012, the Company reported revenues of
$376 million, an increase of 8% as compared to the same period a year ago. Net
income for the six months ended December 31, 2012 was $18.8 million, or $0.91
per diluted share, compared to net income of $17.1 million, or $0.85 per
diluted share, for the six months ended December 31, 2011. Excluding the
impact of impairment, restructuring and other charges, net income for the six
months ended December 31, 2012 would have been $20.7 million, or $1.01 per
diluted share.

As of December 31, 2012, the Company’s backlog was approximately $1.0 billion
compared to $0.4 billion as of December 31, 2011. During the three months
ended December 31, 2012, the Company generated cash flow from operations of
$20 million. Capital expenditures during that period totaled $55 million as
the Company continued to invest in building infrastructure and capital
equipment in Mexico.

Mr. Chopra continued, “During the second quarter, our Security Division
generated record profits as operating income, excluding impairment,
restructuring and other one-time charges, grew by 41% over the prior year. We
are very pleased with the strong start in our turnkey services program in
Mexico and look forward to continuing to grow this business model.”

Mr. Chopra added,“Our Optoelectronics and Manufacturing Division’s revenues
and operating income increased 12% and 23%, respectively, over the prior year.
Going forward, we are well positioned in this division as we continue to
expand our customer base and strengthen our global manufacturing
infrastructure with new capabilities.”

Mr. Chopra concluded, “This was a challenging quarter for our Healthcare
Division as revenues dipped 5%, yet the division still managed to deliver
double digit operating margins. Revenue growth in our largest market, the
U.S., was offset by softness in international markets. With this month’s
launch of our new anesthesia workstation, Arkon^TM, and several new sales
initiatives, we are optimistic about a return to growth."

Fiscal Year 2013 Outlook

Subject to the risk factors detailed in the Safe Harbor section of this press
release, the Company is reiterating its fiscal 2013 earnings guidance and
expects earnings per diluted share to increase at a rate of 21% - 31% to
between $2.77 to $3.00, excluding the impact of impairment, restructuring and
other non-recurring charges. The Company currently anticipates revenues to
between $850 million - $875 million, representing a 7% to 10% increase over
fiscal 2012 revenues.

Non-GAAP Figures

Discussion of adjustments to arrive at non-GAAP figures for the three months
and six months ended December 31, 2012 is provided to allow for the comparison
of underlying earnings, net of impairment, restructuring and other
non-recurring charges and their related tax benefit, thus providing additional
insight into the on-going operations of the Company. Non-GAAP financial
measures should not be considered a substitute for, or superior to, measures
of financial performance prepared in accordance with GAAP. We believe that
these non-GAAP financial measures provide meaningful supplemental information
regarding the Company’s results primarily because they exclude amounts that we
do not view as reflective of ongoing operating results when planning and
forecasting and when assessing the performance of our business. We believe
that our non-GAAP financial measures also facilitate the comparison of results
for current periods and guidance for future periods with results for past
periods. Please see the reconciliation of GAAP to non-GAAP net income and
earnings per share at the end of this release.

Conference Call Information

OSI Systems, Inc. will host a conference call and simultaneous webcast over
the Internet beginning at 9:00am PT (12:00pm ET), today to discuss its results
for the second quarter of fiscal 2013. To listen, please log on to the
Company’s website at www.osi-systems.com and follow the link in the Investor
Relations section. A replay of the webcast will be available shortly after the
conclusion of the conference call for approximately two weeks. The replay can
either be accessed through the Company’s website, www.osi-systems.com, or via
telephonic replay by calling 888-286-8010 and entering the conference call
identification number ‘61922913’ when prompted for the replay code.

About OSI Systems, Inc.

OSI Systems, Inc. is a vertically integrated designer and manufacturer of
specialized electronic systems and components for critical applications. The
Company sells its products in diversified markets, including homeland
security, healthcare, defense and aerospace. The Company has more than 35
years of experience in electronics engineering and manufacturing and maintains
offices and production facilities in more than a dozen countries. It
implements a strategy of expansion by leveraging its electronics and contract
manufacturing capabilities into selective end product markets through organic
growth and acquisitions. For more information on OSI Systems Inc. or any of
its subsidiary companies, visit www.osi-systems.com. News Filter: OSIS-E

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements relate to the Company’s
current expectations, beliefs, projections and similar expressions concerning
matters that are not historical facts and are not guarantees of future
performance. Forward-looking statements involve uncertainties, risks,
assumptions and contingencies, many of which are outside the Company’s control
and which may cause actual results to differ materially from those described
in or implied by any forward-looking statement. Such statements include, but
are not limited to, information provided regarding expected revenues and
earnings in fiscal 2013, sales of recently-introduced products and
expectations for the performance of the Company under its agreement with
Mexico’s tax and customs authority  Servicio de Administración Tributaria. All
forward-looking statements are based on currently available information and
speak only as of the date on which they are made. The Company assumes no
obligation to update any forward-looking statement made in this press release
that becomes untrue because of subsequent events, new information or
otherwise, except to the extent it is required to do so in connection with its
ongoing requirements under Federal securities laws. For a further discussion
of these and other factors that could cause the Company’s future results to
differ materially from any forward-looking statements, see the section
entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2012 and other risks described in documents
subsequently filed by the Company from time to time with the Securities and
Exchange Commission.

OSI SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)
                                                    
                       Three Months Ended                    Six Months Ended

                       December 31,                          December 31,
                        2011         2012              2011         2012    
Revenues               $ 187,993         $ 194,049           $ 349,310         $ 375,743
Cost of goods           122,169         123,961           230,629         244,300 
sold
Gross profit             65,824            70,088              118,681           131,443
                                                                               
Operating
expenses:
Selling,
general and              35,979            36,829              70,346            76,754
administrative
Research and             11,546            11,858              22,426            23,174
development
Impairment,
restructuring           -               2,723             -               2,723   
and other
charges
Total
operating               47,525          51,410            92,722          102,651 
expenses
Income from              18,299            18,678              25,909            28,792
operations
Interest
expense and             (721    )        (1,385  )          (1,520  )        (2,482  )
other, net
Income before            17,578            17,293              24,389            26,310
income taxes
Provision for           5,277           4,872             7,327           7,550   
income taxes
Net income             $ 12,301         $ 12,421           $ 17,062         $ 18,760  
                                                                               
Diluted
earnings per           $ 0.61           $ 0.60             $ 0.85           $ 0.91    
share
Weighted
average shares          20,237          20,609            20,161          20,589  
outstanding -
diluted
                                                                               

CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)
                                                    
                                       June 30, 2012         December 31, 2012
Assets
Cash and cash equivalents              $   91,452            $     46,850
Accounts receivable, net                   156,867                 140,023
Inventories                                195,178                 204,599
Other current assets                      39,616                 55,088
Total current assets                       483,113                 446,560
Non-current assets                        266,783                367,125
Total Assets                           $   749,896           $     813,685
                                                             
Liabilities and Stockholders'
Equity
Bank lines of credit                   $   --                $     15,000
Current portion of long-term               215                     1,808
debt
Accounts payable and accrued               75,252                  115,193
expenses
Other current liabilities                 85,182                 73,334
Total current liabilities                  160,649                 205,335
Long-term debt                             2,467                   11,700
Advances from customers                    100,000                 87,500
Other long-term liabilities               52,661                 54,074
Total liabilities                          315,777                 358,609
Total stockholders’ equity                434,119                455,076
Total Liabilities and Equity           $   749,896           $     813,685
                                                             

SEGMENT INFORMATION

(in thousands)

(unaudited)
                                                     
                        Three Months Ended                    Six Months Ended
                        December 31,                          December 31,
                         2011         2012              2011         2012    
Revenues – by
Segment Group:
Security Group          $ 88,977          $ 91,863            $ 161,574         $ 174,779
Healthcare                59,193            56,114              105,713           107,695
Group
Optoelectronics
and
Manufacturing             51,359            57,277              104,450           114,424
Group including
intersegment
revenues
Intersegment
revenues                 (11,536 )        (11,205 )          (22,427 )        (21,155 )
elimination
Total                   $ 187,993        $ 194,049          $ 349,310        $ 375,743 
                                                                                
Operating
income (loss) –
by Segment
Group:
Security Group          $ 8,001           $ 8,607             $ 11,846          $ 13,072
^(1)
Healthcare                8,325             6,915               10,723            10,796
Group
Optoelectronics
and                       4,451             5,457               9,389             10,290
Manufacturing
Group
Corporate                 (2,599  )         (2,438  )           (5,906  )         (5,687  )
Eliminations             121             137               (143    )        321     
Total                   $ 18,299         $ 18,678           $ 25,909         $ 28,792  

^(1) Includes restructuring, impairment and other non-recurring charges of
$2.7 million for the three and six months ended December 31, 2012.

Reconciliation of GAAP to Non-GAAP

(in thousands, except earnings per share data)

(Unaudited)
                                                                
                      Three Months Ended December 31,                   Six Months Ended December 31,
                      2011                  2012                      2011                  2012
                      Net        EPS        Net        EPS          Net        EPS        Net        EPS
                      income                  income                    income                  income
                                                                                                             
GAAP basis            $ 12,301     $ 0.61     $ 12,421     $ 0.60       $ 17,062     $ 0.85     $ 18,760     $ 0.91
                                                                                                             
Impairment,
restructuring
and other                                       1,956        0.10                                 1,956        0.10
charges, net
of tax
                                                                                                      
Non-GAAP              $ 12,301     $ 0.61     $ 14,377     $ 0.70       $ 17,062     $ 0.85     $ 20,716     $ 1.01
basis

Contact:

OSI Systems, Inc.
Ajay Vashishat
Vice President, Business Development
310-349-2237
avashishat@osi-systems.com
 
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