HOPKINTON, Mass., Nov. 10 Caliper Life Sciences,Inc. (Nasdaq: CALP) today reported third quarter financial results for 2008and the completion of two product line divestitures: the sale of itsAutoTrace(R) product line to Dionex Corporation for $5.0 million and the saleof its Pharmaceutical Development and Quality Analysis (PDQ) product line toSOTAX Corporation for $15.8 million. Revenues for the quarter were $34.0million, in line with the company's guidance, compared to $36.7 million in thethird quarter of 2007. Caliper's top-line performance reflected growth in theproduct and service lines comprising its core ongoing strategic businessareas, as well as an anticipated decrease in non-recurring collaboration-basedlicense and contract revenues which were lower by $4.8 million compared to thethird quarter of 2007. Net loss for the quarter was $5.4 million ($0.11 pershare), including restructuring charges of $2.7 million and severance chargesof $0.3 million, compared to a net loss of $2.4 million ($0.05 per share) inthe same quarter of 2007.
Total product and service revenues were $30.5 million during the quarter,an increase of 6% from the third quarter of 2007. This improvement was drivenpredominantly by continued growth of the company's optical molecular imagingproduct line, which grew 54% compared to the third quarter of 2007. Whileoverall gross margins declined 800 basis points, primarily due to thenon-recurring license and contract revenues discussed above, operatingexpenses for the quarter declined by $3.9 million, or 20%, compared to thethird quarter of 2007. This decline included, among other changes, thecumulative impact of cost saving initiatives implemented over the previoustwelve months, lower accrued compensation costs, and a recovery of previouslyincurred legal expenses as a result of a mediation settlement.
Adjusted earnings per share on a non-GAAP basis, as explained below underthe heading "Use of Non-GAAP Financial Measures," was $0.01 compared to $0.03for third quarter of 2007, reflecting the decrease of an estimated $4.5million of contribution margin related to the non-recurring contract andlicense revenues, which was partially offset by cost improvements.
"Caliper's strategic transformation to higher growth, higher profitproduct lines continues to progress. We have divested two product lines,sharpened our focus, consolidated operations, reduced costs, and strengthenedour balance sheet," said Kevin Hrusovsky, President and CEO of Caliper LifeSciences. "These advances, coupled with reconfiguring our resources into threestrategic business areas, should accelerate our crossover to profitability."
-- Non-core Product line Divestitures Strengthen Balance Sheet. Earliertoday Caliper completed the sale of two non-core product lines in transactionsnetting approximately $18.8 million in cash proceeds and the assumption by thepurchasers of such product lines of approximately $2.0 million of liabilities.
-- In a transaction both announced and completed today, Caliper soldits AutoTrace product line to Dionex Corporation for approximately $5.0million. The AutoTrace instrument is designed for water sample clean-up bysolid phase extraction prior to the analysis of the sample for contaminants,and is generally sold for automating water testing in the environmentalmarket.
-- The previously announced PDQ product line sale to SOTAX Corporationwas completed for $15.8 million, including cash proceeds of approximately$13.8 million. The parties also intend to enter into a long-term leaseagreement, pursuant to which Caliper will sublease approximately 10,000 squarefeet of manufacturing and office space to SOTAX on a market-rate basisstarting in 2009.
-- Caliper Completed a Restructuring into Three Strategic Business Unitsto Sharpen Focus on Core Product Lines. During the third quarter, Caliperreorganized its various products and services along three core business areas-- Discovery Research (Research), Optical Molecular Imaging (Imaging), andCaliper Discovery Alliances and Services (CDAS) -- with the goal of creating amore scalable infrastructure while putting increased focus on growth andprofitability.
-- Research is responsible for utilizing Caliper's core automation andmicrofluidic technologies to address an expanding array of opportunities indrug discovery and life science research, including molecular biology samplepreparation for genomics, proteomics, cellular screening and forensics.
-- Imaging is responsible for expanding Caliper's global leadershipposition in the high growth optical molecular imaging market through expansionof therapeutic area applications of Caliper's IVIS(R) imaging platform,addressing critical discovery workflows and facilitating additional imagingmodalities.
-- CDAS is responsible for expanding drug discovery collaborations andalliances, and increasing sales of drug discovery services. The focus of CDASis to capitalize on market "outsourcing" trends and to maximize the largecontract opportunity with the Environmental Protection Agency under itsToxCast screening program.
-- Reduced Operating Costs and Increased Productivity. The companybenefited from cost savings initiatives implemented over the previous twelvemonths, including actions taken in the third quarter.
-- Upon the closing of the PDQ sale, approximately 23 Caliper employeestransferred their employment positions to SOTAX. The total estimated annualcost associated with these employees is approximately $2.0 million.
-- In connection with the business realignment implemented in the thirdquarter, Caliper reduced its current workforce, including several seniormanagement positions, and eliminated other open positions. In addition toachieving future cost savings with this realignment, the company believes itsrevised management structure will result in increased customer focus. Thisinitiative is expected to achieve approximately $2.6 million of annualizedsavings and should begin to benefit operations in the fourth quarter of 2008.
-- The company completed the previously announced relocation of itsresearch and development operations previously conducted in Mountain View, CAto its west coast R&D headquarters in Alameda, CA. In completing this move,an idle facility charge of $2.7 million was recorded during the third quarter,in line with previously communicated estimates. The company believes that theconsolidation of these resources is improving R&D synergies in the formationof new technologies to address the company's I-I-H strategy vision.
-- As previously announced, the leases for two previously closedfacilities in Mountain View expired in June, 2008, resulting in annualizedcash savings of approximately $3.6 million.
2008 GAAP Guidance
Caliper reported that its revenue outlook for the fourth quarter of 2008is $34.0 million to $37.0 million, reflecting the company's recent productline divestitures and the expected impact from foreign currency exchange ratemovements compared to the US Dollar.
Use of Non-GAAP Financial Measures
Caliper supplements its GAAP financial reporting with certain non-GAAPfinancial measures. Caliper uses certain non-GAAP financial measures,including adjusted earnings per share, which exclude restructuring charges,including severance charges; amortization of acquired intangibles; assetimpairment charges; and amortization of stock compensation. Caliper believesthe presentation of non-GAAP financial measures provides useful information tomanagement and investors regarding various financial and business trendsrelating to our financial position and results of operations, and that whenthese non-GAAP measures are viewed in conjunction with GAAP financialmeasures, investors are provided with a more meaningful understanding of ourongoing operating performance. In addition, Caliper uses these non-GAAPmeasures to evaluate its performance, allocate resources, set incentivecompensation targets, and for planning and forecasting future periods.Non-GAAP measures are not intended to substitute for GAAP financial measures.To the extent that this release contains non-GAAP financial measures, Caliperhas provided a reconciliation of such measure to the corresponding GAAPfinancial measure, and provided the corresponding GAAP financial measures forcomparative purposes.
Caliper will discuss its third quarter results in a conference call to beheld today, November 10 at 5:00 p.m. EST. To participate in the call, pleasedial 888.679.8034 five to ten minutes prior to the call and use theparticipant passcode 71318859. International callers can access the call bydialing 617.213.4847 and entering the same passcode. You may alsopre-register for the call athttps://www.theconferencingservice.com/prereg/key.process?key=P6E3NNKEA.
A live webcast including presentation materials can be accessed athttp://www.fulldisclosure.com or on the Caliper website athttp://www.caliperLS.com in the Events section of the Investor Relations page.A webcast replay of the call will remain available until Caliper's earningscall for the fourth quarter of 2008.
Telephone replays of the conference call will be available approximatelytwo hours after the completion of the call. To access a telephone playback ofthe proceedings from November 10 through November 17, dial 888.286.8010 anduse the participant passcode of 97542638. International callers can access theplayback by dialing 617.801.6888 and using the same participant passcode.
About Caliper Life Sciences
Caliper Life Sciences is a premier provider of cutting-edge technologiesenabling researchers in the life sciences industry to create life-saving andenhancing medicines and diagnostic tests more quickly and efficiently.Caliper is aggressively innovating new technology to bridge the gap between invitro assays and in vivo results and then translating those results into curesfor human disease. Caliper's portfolio of offerings includes state-of-the-artmicrofluidics, lab automation & liquid handling, optical imaging technologies,and discovery & development outsourcing solutions. For more information pleasevisit http://www.caliperLS.com.
The statements in this press release regarding future events, includingstatements regarding Caliper's expected revenue outlook for the fourth quarterending December 31, 2008, Caliper's expectations regarding its ability toimprove top-line growth and margins to accelerate its crossover toprofitability, Caliper's belief that it will achieve annualized cost savingsof approximately $2.7 million from a recently implemented realignment ofmanagement, and Caliper's belief that its consolidation of R&D operations willimprove R&D synergies in the formation of new technologies, are"forward-looking statements" within the meaning of Section 21E of theSecurities Exchange Act of 1934, as amended. These statements are subject torisks and uncertainties that could cause actual results to differ materiallyfrom those contemplated by the forward-looking statements as a result of anumber of factors, including that Caliper's expectations regarding demand forits products and services may not materialize if capital spending by Caliper'scustomers declines, if competitors introduce new competitive products, or ifCaliper is unable to convince potential customers regarding the superiorperformance of its drug discovery and imaging systems and other products, andunanticipated difficulties may be encountered in Caliper's plannedimplementation of certain changes designed to reduce operating expenses,enhance gross margins and improve efficiencies within Caliper. Furtherinformation on risks faced by Caliper are detailed under the caption "RisksRelated To Our Business" in Caliper's Annual Report on Form 10-K for the yearended December 31, 2007. Our filings are available on a web site maintained bythe Securities and Exchange Commission at http://www.sec.gov. Caliper does notundertake any obligation to update forward-looking or other statements in thisrelease or the conference call.
We use the term "adjusted earnings per share" or "adjusted EPS" to referto GAAP earnings per share excluding share-based compensation, purchaseaccounting revenue and cost of sales fair value adjustments due to businesscombination accounting rules, amortization of intangible assets, andrestructuring and severance costs. Adjusted earnings per share is calculatedby subtracting the total per share effect of these adjustments from GAAP EPS.NOTE: AutoTrace, IVIS and Caliper are registered trademarks of CaliperLife Sciences, Inc. CALIPER LIFE SCIENCES, INC. SELECTED FINANCIAL INFORMATION (unaudited) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Revenue: Product revenue $19,965 $18,504 $59,655 $54,787 Service revenue 10,563 10,172 28,860 28,044 License fees and contract revenue 3,513 8,045 8,844 17,620 Total revenue 34,041 36,721 97,359 100,451 Costs and expenses: Cost of product revenue 11,983 11,278 36,321 33,800 Cost of service revenue 6,590 5,511 19,134 16,600 Cost of license revenue 588 971 1,154 2,238 Research and development 4,953 5,666 15,526 19,088 Selling, general and administrative 10,256 13,399 36,945 39,312 Amortization of intangible assets 1,742 2,522 6,721 7,593 Restructuring charges, net 2,686 22 2,666 30 Total costs and expenses 38,798 39,369 118,467 118,661 Operating loss (4,757) (2,648) (21,108) (18,210) Interest expense, net (227) (205) (584) (321) Other income (expense), net (411) 446 (92) 365 Provision for income taxes (1) (21) (229) (180) Net loss $(5,396) $(2,428) $(22,013) $(18,346) Net loss per share, basic and diluted $(0.11) $(0.05) $(0.46) $(0.39) Shares used in computing net loss per common share, basic and diluted 48,378 47,425 47,987 47,212 Reconciliation of GAAP to Non-GAAP Financial Measure Adjusted Basic Earnings per Share (see explanation of adjustments below) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 GAAP EPS - Basic $(0.11) $(0.05) $(0.46) $(0.39) Adjustments: Share-based compensation expense (1) 991 1,236 2,988 3,970 Purchase accounting adjustments to revenue, net of costs (2) - 26 23 879 Acquisition related intangible amortization (3) 1,742 2,522 6,721 7,593 Restructuring and severance costs (4) 2,997 22 3,667 689 Total Adjustments $5,730 $3,806 $13,399 $13,131 Per share effect of adjustments 0.12 0.08 0.28 0.28 Adjusted earnings per share - Basic $0.01 $0.03 $(0.18) $(0.11)
SOURCE Caliper Life Sciences, Inc.