Medical and aesthetic laser treatment developer Lumenis (OTCBB:LUME) today announced financial results for the third quarter of 2005.
The loss in the third quarter was $1.8 million, or $0.05 per share, compared with a loss of $3.1 million, or $0.08 per share, in the second quarter of 2005, and a loss of $2.0 million, or $0.05 per share, in the third quarter of 2004.
Revenue in the third quarter was $72.8 million compared with $71.6 million in the prior quarter and $63.2 million in the third quarter last year.
Gross profit in the third quarter increased to $33.2 million, or 46% of revenue, compared with $32.0 million, or 45% of revenue, in the second quarter of 2005 and $31.0 million, or 49% of revenue, in the third quarter of 2004.
Operating expenses in the third quarter were $30.1 million, or 41% of revenue, compared with $29.4 million, or 41% of revenue, in the second quarter of 2005 and $28.5 million, or 45% of revenue, in the third quarter of 2004.
Operating income in the third quarter was $3.1 million compared with $2.6 million in the second quarter of 2005 and $2.5 million in the third quarter of 2004.
Net cash flow from operating activities was $681 thousand in the third quarter of 2005 compared with a negative $208 thousand in the second quarter of 2005 and a net positive cash flow from operating activities of $3.3 million in the third quarter of 2004.
At September 30, 2005, the company had $14.4 million of cash and cash equivalents and unused borrowing capacity under its committed lines of credit of an additional $17.9 million.
Total bank debt at quarter-end was $192 million compared with $190 million at June 30, 2005. Based on the preliminary and unaudited results for the period, the company is in compliance with its covenants under its bank agreements.
The loss for the first nine months of 2005 was $10.7 million, or $0.29 per share, compared with a loss of $5.7 million, or $0.15 per share, for the same period in 2004.
Revenue for the first nine months of 2005 was $209.1 million compared with $199.9 million in the same period last year.
Gross profit for the first nine months of 2005 was $92.0 million compared with $98.7 million for the first nine months of 2004.
Operating income for the first nine months of 2005 was $3.8 million compared with $8.5 million for the same period last year.
Net cash flow from operating activities for the first nine months of 2005 was negative $4.8 million compared with a positive net cash flow from operating activities of $12.7 million for the same period last year.
Sales to the Americas in the third quarter of 2005 were $34.8 million, compared with $30.7 million in the corresponding period of 2004; sales to Europe were $14.9 million, compared with $12.5 million; sales to Asia and Japan were $23.1 million, compared with $20.1 million.
During the third quarter of 2005, the company made $25.0 million in sales of aesthetic devices, compared with $19.2 million in the corresponding period of 2004; $16.1 million in surgical device sales, compared with $13.6 million; $16 million in ophthalmic device sales, compared with $13.2 million; $1.5 million in dental device sales, compared with $1.1 million; service and other sales were $14.2 million, compared with $16.1 million.
The financial statements for the quarterly and nine month periods ended September 30, 2005 and September 30, 2004 reflect a reclassification of royalty income. Under Lumenis's previous management, royalty and certain other income was classified as other income. Under the present management, 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.
Additionally, as previously reported, 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, an internal investigation concluded, with respect to certain identified transactions in 2001, 2002 and 2003, that the company’s revenue recognition actions were inappropriate. The aggregate effect was to cause revenues in 2001 and 2002 to be overstated, and revenues in 2003 to be understated. The company's 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 independent accountants, BDO Ziv Haft.
In addition, Lumenis received a notice from the Israel tax authority assessing income taxes for the years 2000 and 2001. The company stated that it has received indications the tax authority would agree to settle the matter for less than NIS 25 million. Lumenis believes the entire assessment to be in error and that no tax is due. The company stated that it will vigorously defend itself in the Israeli courts and under applicable tax treaties as necessary.
Lumenis was also served with a claim in the UK with regard to the purchase in 2003 by GSI, a UK company, of all of the assets of Spectron, a wholly owned UK subsidiary of Lumenis. GSI are claiming several million pounds in damages for breach of contract and misrepresentations and for indemnification of claims brought against GSI by third parties. Lumenis stated that it will vigorously defend against this claim.
Published by Globes [online], Israel business news - www.globes.co.il - on Tuesday, November 08, 2005