NELLCOR NEWS RELEASE
Contact: Michael Downey
510/463-4000
NELLCOR REPORTS RECORD FOURTH QUARTER
AND YEAR-END RESULTS
PLEASANTON, CA (JULY 27, 1995): Nellcor Incorporated (NASDAQ:NELL) today
reported record revenue of $264.0 million for the fiscal year ended July 2,
1995, a 12 percent increase over revenue of $235.0 million reported last year.
Net income for fiscal 1995 was $37.2 million, $2.20 per share, a 30 percent
increase over net income of $28.6 million, $1.70 per share, for the same period
a year ago, which excludes the effect of two fiscal 1994 litigation settlements.
Including the net after-tax effect of these settlements of $8.0 million, ($0.48)
per share, fiscal 1995 net income increased 81 percent over net income of $20.6
million, $1.22 per share, for fiscal 1994.
Revenue for the fourth quarter of fiscal 1995 was a record $73.3 million, a 13
percent increase over revenue of $65.1 million reported for the fourth quarter
of last year. Net income for the fourth quarter of fiscal 1995 was $11.8
million, $0.69 per share, a 36 percent increase over net income of $8.7 million,
$0.52 per share, reported for the same period last year, excluding the $9.2
million, ($0.55) per share, after-tax effect of a fourth quarter fiscal 1994
litigation settlement paid by Nellcor.
Fiscal 1995 revenue growth reflects strong performance across the company's
international and home care markets. International revenue grew 42 percent
during
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Nellcor Incorporated 4280 Hacienda Dr. Phone: (510) 453-4000
Pleasanton, CA 94588 Fax: (510) 463-4450
NELLCOR REPORTS RECORD FOURTH QUARTER AND YEAR-END RESULTS
PAGE TWO
fiscal 1995 to $59.9 million from $42.1 million for the same period last year as
a result of higher sales of oximetry sensors, OEM modules, and the first two
modules of the NELLCOR SYMPHONY-TRADEMARK- monitoring system. Favorable foreign
currency exchange rates accounted for 10 percentage points of the international
revenue growth for the year.
International unit sales of OEM oximetry modules increased over 65 percent from
the prior year. With the recent addition of four new OEM customers, Nellcor now
has OEM and licensing agreements with 40 medical systems and monitor
manufacturers worldwide. In addition, the first two modules of the NELLCOR
SYMPHONY monitoring system, the N-3000 pulse oximeter and N-3100 noninvasive
blood pressure monitor, have been well-received in the marketplace. Sales of the
NELLCOR SYMPHONY monitoring system began internationally in September 1994 and
in the U.S. in May 1995, following receipt of clearance from the U.S. Food and
Drug Administration (FDA).
Revenue from Nellcor's home health care business, EdenTec, increased over 55
percent during fiscal 1995. The increase was due primarily to higher sales of
diagnostic recording devices and apnea monitors. EdenTec's results also reflect
sales of Pierre Medical, a French manufacturer of respiratory products,
subsequent to its acquisition by EdenTec in May 1995.
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NELLCOR REPORTS RECORD FOURTH QUARTER AND YEAR-END RESULTS
PAGE THREE
The growth in fiscal 1995 net income over fiscal 1994 reflects higher revenue
and gross profit as well as continued control over operating expenses, which
declined 2 percentage points to 40 percent of revenue. Operating activities
provided positive cash flows of approximately $55.7 million during the year.
Including the effect of significant share repurchases made prior to March 1995,
and the acquisition of Pierre Medical, cash and marketable securities increased
$19.0 million to $140.7 million.
In other developments during the quarter, the company filed an application
for an Investigational Device Exemption (IDE) with the FDA for the N-400
fetal oximeter. Clinical trials, which will evaluate the N-400 as a tool to
reduce Cesarean sections, are expected to begin by the end of the calendar
year. The product has been sold under a limited marketing program in major
European countries since September 1994.
As reported earlier this month, the U.S. Federal District Court in Delaware
issued a decision in favor of Nellcor, affirming the validity of four key
oximeter and sensor technology patents. The ruling further stipulated that these
patents would be infringed if Ohmeda Inc., a subsidiary of BOC Health Care Inc.,
sold either its adult or neonatal OxyTip sensors for use with non-Ohmeda
monitors. BOC Health Care had filed the suit in December 1992, seeking a
declaratory judgment that Nellcor's patents were invalid and would not be
infringed.
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NELLCOR REPORTS RECORD FOURTH QUARTER AND YEAR-END RESULTS
PAGE FOUR
As announced earlier this week, Nellcor and Puritan-Bennett Corporation have
mailed their Joint Proxy Statement/Prospectus for their respective meetings of
stockholders scheduled for August 24, 1995 to approve the merger of the two
companies. The merger will create the world's premier respiratory products
company, providing a comprehensive line of products to monitor, diagnose and
treat patients with respiratory difficulties across the entire continuum of
care.
Nellcor Incorporated, founded in 1981, designs, manufactures, and markets high-
performance monitoring equipment, sensors and accessories for patient safety and
management throughout the hospital, in emergency care and in the home. Nellcor
is the leading producer of pulse oximeters used in hospitals for the continuous
measurement of patient oxygen status. Nellcor's line of oximetry sensors is the
broadest in the medical equipment industry, and includes both adhesive and
reusable sensors as well as a sensor recycling program.
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(TABLES TO FOLLOW)
PAGE FIVE
NELLCOR INCORPORATED
Summary Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
------------------------ ------------------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
--------- --------- --------- ---------
Net revenue $ 73,274 $ 65,065 $ 264,040 $ 234,972
Gross profit 46,172 39,701 160,859 141,266
Research and development 7,293 6,664 27,225 23,980
Selling, general and administrative 21,271 19,740 79,289 73,935
Restructuring charges 0 0 0 500
Income from operations 17,608 13,297 54,345 42,851
Other income, net 1,366 872 5,602 3,147
Litigation settlements 0 (15,000) 0 (13,000)
Income (Loss) before taxes 18,974 (831) 59,947 32,998
Provision for income taxes 7,209 (321) 22,782 12,441
Net Income (Loss) 11,765 (510) 37,165 20,557
--------- --------- --------- ---------
Net income per common and
common equivalent share before
effect of litigation settlements $ .69 $ .52 $ 2.20 $ 1.70
Effect of litigation settlements - (.55) - (.48)
--------- --------- --------- ---------
Net income per common and
common equivalent share $ .69 $ (.03) $ 2.20 $ 1.22
Common and common
equivalent shares used in
the calculation of income
per share 17,155 16,877 16,923 16,843
PAGE SIX
NELLCOR INCORPORATED
Summary Consolidated Balance Sheet
(In thousands)
(Unaudited)
July 2, July 3,
1995 1994
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ASSETS
Current assets:
Cash and marketable securities $140,681 $121,833
Accounts receivable 44,304 34,308
Inventories 31,446 27,238
Prepaids and other current assets 6,936 5,231
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Total current assets 223,367 188,410
Property and equipment, net of
accumulated depreciation 35,813 34,172
Other assets and goodwill,
net of accumulated amortization 35,289 15,566
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$294,469 $238,148
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,697 $ 14,229
Accrued liabilities 28,640 17,784
Income taxes payable 3,207 1,570
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Total current liabilities 52,544 33,583
Deferred income taxes 868 452
Long-term obligations 336 0
Stockholders' equity 240,721 204,113
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$294,469 $238,148
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