Exhibit 99.1
KENSEY NASH REPORTS THIRD QUARTER FISCAL YEAR 2006 RESULTS
AT HIGH END OF PREVIOUSLY ANNOUNCED ESTIMATES
EXTON, Pa., April 24 /PRNewswire-FirstCall/ -- Kensey Nash Corporation
(Nasdaq: KNSY) today reported results for its third quarter of fiscal year 2006,
which were at the high end of previously announced estimates.
Third Quarter Results. Third quarter pro forma diluted earnings of $0.21 per
share, excluding facility transition charges and equity compensation expense
(see below), were at the high end of previously announced expectations of $0.19
to $0.21 per share and represented 75% sequential growth over pro forma earnings
per share for the December 2005 quarter. Reported diluted earnings per share for
the quarter was $0.15. Total revenues increased 6% to $15.7 million, for the
third fiscal quarter, exceeding the Company's guidance range of $14.8 to $15.5
million, compared to $14.8 million in the comparable quarter of the prior fiscal
year. Total net sales were stronger than expected and increased 6% year over
year and 25% sequentially to $10.0 million compared to $9.4 million in the prior
year period and $8.0 million in the December 2005 quarter. Royalty income
increased 5%, to $5.7 million from $5.4 million in the prior year comparable
period. Royalty income included $4.9 million in Angio-Seal(TM) royalties, up 2%
from the comparable quarter of the prior fiscal year, and $777,000 in royalties
from Orthovita (Nasdaq: VITA), up 36% from the prior year period.
During the quarter, the Company recognized both accelerated depreciation
charges of $454,000 and moving costs of $59,000 related to its transition to a
new facility. In addition, equity compensation expense of $649,000 was recorded,
as is now required by the applicable accounting rules. On a pro forma basis,
excluding these charges, earnings per share of $0.21 compared to $0.26 as
reported in the prior year comparable period.
The following chart summarizes the results for the Company for the three
months ended March 31, 2006 compared to the prior year period, the three months
ended March 31, 2005, as well as the sequential period, the three months ended
December 31, 2005. See attached schedules for the detailed reconciliation
between the non-GAAP and reported GAAP results.
Three months ended Year over Three months
March 31, ---------- ended
--------------------------- Year % December 31, Sequential
($ millions, except per share data) 2006 2005 Change 2005 % Change
- ------------------------------------ ------------ ------------ ------------ ------------ ------------
Net Sales $ 10.0 $ 9.4 6% $ 8.0 25%
Royalty Income $ 5.7 $ 5.4 5% $ 5.7 1%
Total
Revenues $ 15.7 $ 14.8 6% $ 13.6 15%
Income (Loss) from Operations,
As Reported $ 2.2 $ 4.2 (48)% $ (0.9) n/a
Adjust for:
Facility Transition Charges $ 0.5 - n/a $ 1.9 n/a
Equity
Compensation Expense $ 0.6 - n/a $ 0.6 n/a
Income from Operations, Pro forma $ 3.4 $ 4.2 (20)% $ 1.7 95%
Earnings (Loss) Per Share,
As Reported $ 0.15 $ 0.26 (44)% $ (0.05) n/a
Earnings Per Share, Pro forma $ 0.21 $ 0.26 (19)% $ 0.12 75%
Biomaterials Update. Net sales of orthopaedic products, which were $5.6
million in the third quarter of fiscal 2006, increased 13% over the prior year
third quarter and 46% sequentially, which the Company believes signals the
anticipated return to growth in this business. Orthopaedic sales included $3.1
million of sales to Arthrex, Inc., representing a 9% increase over the December
quarter but a 7% decrease over the prior year comparable quarter. Sales of
Vitoss(R) Foam(TM) products to Orthovita, Inc. were $1.2 million, an increase
over the December quarter sales of 86%, or $575,000, but an 11% decrease
compared to $1.4 million in the prior year period. As anticipated and previously
reported by the Company, this decrease from prior year sales to Orthovita was
related to Orthovita Vitoss Foam(TM) product launches for which a large volume
of products was shipped to Orthovita and, for some products, continues to flow
through the distribution channels. As evidenced by the third quarter sales, the
Company is beginning to see a return to growth in its quarterly shipments to
Orthovita. Meanwhile, Orthovita's end-user sales of the Vitoss(R) Foam(TM)
products increased 44% over the prior year comparable quarter, indicating the
increased acceptance of the products in the marketplace. The primary
year-over-year growth driver for the quarter was sales to new customers, which
accounted for sales of $1.1 million. The Company believes that the launch of new
products in the current quarter and continued growth with both existing and new
customers during the remainder of fiscal 2006 and into fiscal 2007 will continue
to diversify the Company's revenue base in the orthopaedic sector.
Net sales of cardiology products during the quarter were $3.3 million, a 19%
decline from the prior year and a 6% decrease sequentially over the second
quarter of fiscal 2006. These decreases related strictly to the timing of
shipments of the Angio-Seal collagen plug and anchor components to St. Jude
Medical. Sales of the collagen component for the Angio-Seal, under the exclusive
supply agreement with St. Jude Medical, decreased 12% from the prior year and
13% sequentially. Sales of the anchor component decreased 29% from prior year
due to exceptionally large orders during the third fiscal quarter of 2005,
however increased 26% sequentially over the December quarter.
Endovascular Update. Net sales of endovascular products were $204,000 during
the quarter, and included $130,000 of U.S. sales through the Company's
endovascular direct sales force selling the TriActiv(R) Embolic Protection
System and the recently FDA approved QuickCat(TM) Extraction Catheter. The
Company's QuickCat(TM) Extraction Catheter, launched in mid-March, has been well
received in the marketplace.
The QuickCat(TM) device is one product in the Company's plan for product
line expansion, which also includes a second-generation embolic protection
device, the TriActiv FX(R) system, which not only has best-in-class clinical
data but also enhances ease of use. In addition, a new thrombectomy product, the
ThromCat(TM) Thrombectomy Catheter System, a fully disposable, easy to use
mechanical device designed to remove moderate to heavy burdens of clot from the
vasculature should be commercially available soon. Both U.S. FDA clearance and
European CE Mark approval are anticipated during the fourth quarter of fiscal
2006.
The Company is also making progress on the expansion of indications of its
TriActiv(R) Embolic Protection System. The Company is nearing enrollment
completion in a U.S. pilot study of its TriActiv(R) ProGuard(TM) System in the
carotid anatomy. The TriActiv(R) ProGuard(TM) System incorporates a Local Flush
and eXtraction (LFX) technology designed for use in branched arteries, such as
those of the carotid blood vessels. The Company anticipates enrollment
completion in this study as well as in a European CE Mark study of the
ProGuard(TM) system in the very near term. Approval in Europe is anticipated by
December 2006. The carotid market represents an important annual market
opportunity of over 500,000 people who suffer from carotid artery disease.
CEO Comments on Results. "We are very pleased by the acceleration in the
biomaterials business that we are experiencing with both Arthrex and Orthovita,
combined with the addition of new customers utilizing our biomaterials
capabilities," commented Joseph W. Kaufmann, President and CEO of Kensey Nash
Corporation. "This return to growth in the biomaterials business in conjunction
with recent and upcoming launches of internally developed products in our
endovascular business are all indicators for future significant growth for
Kensey Nash."
Year-to-Date Results. Total revenues for the nine months ended March 31,
2006 were $42.0 million compared to $45.1 million in the prior year period. Net
sales were $25.4 million down 14% from $29.7 million in the comparable nine
months of the prior fiscal year. Royalty income increased 9% to $16.6 million
from $15.2 million. Royalty income included $14.5 million in Angio- Seal(TM)
royalties, up 7% from the comparable period of the prior fiscal year, and $2.1
million in royalties from Orthovita, up 29% from the prior year period.
As described above, the Company recognized accelerated depreciation charges
of $3.8 million and moving costs of $329,000 as well as equity compensation
expense of $1.7 million during the nine months ended March 31, 2006. On a pro
forma basis, excluding these charges, diluted earnings per share were $0.42
compared to $0.79 as reported in the prior year comparable period. The reported
diluted earnings per share for the nine-month period of fiscal 2006 was $0.09.
The following chart summarizes the results for the Company for the nine
months ended March 31, 2006 compared to the nine months ended March 31, 2005.
See attached schedules for the detailed reconciliation between the non-GAAP and
reported GAAP results.
Nine months ended Year
March 31, over
------------------- --------
($ millions, except Year %
per share data) 2006 2005 Change
- ------------------------- -------- -------- --------
Net Sales $ 25.4 $ 30.0 (14)%
Royalty Income $ 16.6 $ 15.2 9%
Total Revenues $ 42.0 $ 45.1 (7)%
Income from Operations,
As Reported $ 0.5 $ 12.8 (96)%
Adjust for:
Facility Transition
Charges $ 4.1 - n/a
Equity Compensation
Expense $ 1.7 - n/a
Income from Operations,
Pro forma $ 6.3 $ 12.8 (50)%
Earnings Per Share,
As Reported $ 0.09 $ 0.79 (89)%
Earnings Per Share,
Pro forma $ 0.42 $ 0.79 (47)%
Cash and investments on Kensey Nash's balance sheet as of March 31, 2006
were $27.7 million, total assets were $117.5 million, stockholders' equity was
$107.6 million and no debt was reported.
Facility Transition Plan. In conjunction with its move to a new 198,000-
square-foot facility, the Company is recording an acceleration of depreciation
charge related to the abandonment of leasehold improvement assets at its four
leased facilities, which has been phased throughout fiscal year 2006. The total
value of assets to be abandoned was $4.9 million at April 30, 2005 of which a
charge of $813,000 was recorded in the prior fiscal year. During the three and
nine months ended March 31, 2006, the Company recorded a pre-tax $454,000 and
$3.8 million, or $0.03 and $0.22 per share tax effected, charge for the
acceleration of depreciation, respectively. The Company will record the
remaining acceleration of depreciation charge of $324,000, during the next
fiscal quarter. In addition, moving charges associated with the transition to
the new facility of approximately $330,000, or $0.02 per share tax-effected were
incurred during the Company's second and third fiscal quarter. It is anticipated
that moving costs to transition the remaining employees, furniture and equipment
to the new facility during the fourth quarter of fiscal 2006 will cost
approximately $140,000 to $190,000. The Company successfully completed the
transition of the entire manufacturing operation to the new facility during the
second quarter of fiscal 2006.
Equity Compensation Expense. Since the quarter ended September 30, 2005, the
Company has been accounting for equity compensation under the provisions of
Statement of Financial Accounting Standards No. 123(R), which requires the cost
of share-based payment transactions to be recognized in the financial
statements. The Company recorded a charge of $649,000 and $1.7 million, or $0.04
and $0.10 per share tax effected, for equity compensation for the three and
nine-month periods ended March 31, 2006, respectively. The Company estimates a
total fiscal year 2006 equity compensation charge of $2.4 million (or $0.13 per
share tax effected).
Fourth Quarter Fiscal 2006 Forecast. The Company's expectations for the
fourth fiscal quarter are net sales in a range of $11.0 to $11.5 million,
royalties in a range of $5.8 to $6.1 million and earnings per share on a pro
forma basis to be in a range of $0.24 to $0.26. As reported earnings per share
is forecasted at $0.20 to $0.22, including estimated facility transition costs
and equity compensation expenses of $499,000 and $645,000, respectively. Due to
the recent U.S. launch of the QuickCat(TM) device, uncertainties related to the
timing of approvals related to outstanding submissions for U.S. FDA 510(k) and
European CE Mark clearance for new endovascular products, and the success of
approved products in the marketplace, the Company will not be providing detailed
guidance beyond the fourth quarter at this time.
Conference Call and Webcast. A live webcast of the third quarter fiscal year
2006 conference call will be broadcast April 24, 2006 at 9:00 AM Eastern
Daylight Time. Please visit the financial information page at
http://www.kenseynash.com for the link. To participate in the conference call,
interested parties may call 1-612-332-0107. The teleconference call will also be
available for replay starting Monday, April 24, 2006 at 12:30 p.m. Eastern
Daylight Time through Monday, May 1, 2006 at 11:59 p.m. Eastern Daylight Time by
dialing 1-800-475-6701 with an access code of 825913.
About Kensey Nash Corporation. Kensey Nash Corporation is a leading medical
technology company providing innovative solutions and technologies for a wide
range of medical procedures. The Company provides an extensive range of products
into multiple medical markets, primarily in the endovascular, sports medicine
and spine markets. Many of the products are based on the Company's significant
expertise in the design, development, manufacturing and processing of absorbable
biomaterials, which has led to partnerships to commercialize technologies.
Recently, the Company has created an endovascular division to launch its novel
TriActiv(R) Embolic Protection System, a device designed to prevent debris from
traveling downstream from the treatment site during stenting procedures. Kensey
Nash is bringing several versions of the device to market, including the
TriActiv FX(R) and TriActiv(R) ProGuard(TM) Systems, and has also launched the
QuickCat(TM) Extraction Catheter as a new endovascular product. The ThromCat(TM)
Thrombectomy System clearance is pending at the FDA. Kensey Nash is also known
as a pioneer in the field of arterial puncture closure, as the inventor and
developer of the Angio-Seal(TM) Vascular Closure Device, which is licensed to
St. Jude Medical, Inc.
Cautionary Note for Forward-Looking Statements. This press release contains
forward-looking statements that reflect the Company's current expectations about
its prospects and opportunities including the Company's guidance regarding
operating results for the fourth quarter of fiscal 2006. The Company has tried
to identify these forward looking statements by using words such as "expect,"
"anticipate," "estimate," "plan," "will," "forecast," "believe," "guidance,"
"projection" or similar expressions, but these words are not the exclusive means
for identifying such statements. The Company cautions that a number of risks,
uncertainties, and other important factors could cause the Company's actual
results to differ materially from those in the forward-looking statements
including, without limitation, the ability of the Company and its customers to
obtain necessary regulatory approvals (including future regulatory approvals for
the TriActiv(R) and thrombectomy product pipelines) and the timing thereof, the
Company's dependence on three major customers: St. Jude Medical, Arthrex and
Orthovita, St. Jude Medical's success in marketing the Angio-Seal(TM) device,
Orthovita's success in selling co-developed products, demand for and the
Company's ability to develop and manufacture biomaterial products, including
Angio-Seal(TM) components, sales and marketing success of the TriActiv(R)
System, and competition from other technologies in the marketplace. For a more
detailed discussion of these and other factors, please see the Company's SEC
filings, including the disclosure under "Risk Factors" in those filings. Except
as expressly required by the federal securities laws, the Company undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information, changed circumstances or future events or for any
other reason.
- FINANCIAL INFORMATION TO FOLLOW -
KENSEY NASH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended March 31, Nine Months Ended March 31,
----------------------------- ------------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Revenues:
Net sales $ 9,963,727 $ 9,365,150 $ 25,424,448 $ 29,664,812
Research and
development - - - 253,292
Royalty income 5,711,798 5,425,668 16,604,214 15,170,825
Total revenues 15,675,525 14,790,818 42,028,662 45,088,929
Operating costs and
expenses:
Cost of products
sold 4,545,175 3,856,404 14,586,672 12,206,764
Research and
development 4,635,501 3,636,957 14,499,053 11,755,406
Selling, general and
administrative 4,301,450 3,101,907 12,445,351 8,365,363
Total operating
costs and
expenses 13,482,126 10,595,268 41,531,076 32,327,533
Income from operations 2,193,399 4,195,550 497,586 12,761,396
Interest and other
income, net 244,055 353,073 863,929 994,833
Pre-tax income 2,437,454 4,548,623 1,361,515 13,756,229
Income tax expense 649,820 1,364,587 312,492 4,126,869
Net income $ 1,787,634 $ 3,184,036 $ 1,049,023 $ 9,629,360
Basic earnings per share $ 0.16 $ 0.28 $ 0.09 $ 0.84
Diluted earnings per
share $ 0.15 $ 0.26 $ 0.09 $ 0.79
Weighted average common
shares outstanding 11,477,601 11,377,587 11,470,282 11,421,073
Diluted weighted average
common shares
outstanding 12,263,183 12,199,697 12,287,701 12,218,812
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
2006 2005
------------- -------------
Assets
Current assets:
Cash, cash equivalents and
investments $ 27,665,575 $ 44,889,435
Trade receivables 5,953,734 7,863,940
Other receivables 6,859,705 6,594,240
Inventory 7,614,648 5,657,791
Prepaids and other assets 1,481,869 3,568,141
Deferred tax asset, current 1,739,696 656,047
Total current assets 51,315,227 69,229,594
Property, plant and equipment, net 58,916,394 38,607,641
Acquired patents and proprietary
rights, net 3,940,032 4,515,583
Deferred tax asset, non-current - 37,347
Goodwill 3,284,303 3,284,303
Total assets $ 117,455,956 $ 115,674,468
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
expenses $ 8,354,090 $ 10,811,430
Deferred revenue 195,827 271,681
Total current liabilities 8,549,917 11,083,111
Long term portion of deferred
revenue 653,098 738,719
Deferred tax liability, non-current 695,862 -
Total stockholders' equity 107,557,079 103,852,638
Total liabilities and stockholders'
equity $ 117,455,956 $ 115,674,468
Non-GAAP Financial Measures and Reconciliations
We use various numerical measures in conference calls, investor meetings and
other forums which are or may be considered "Non-GAAP financial
measures" under Regulation G. We have provided below for your reference
supplemental financial disclosure for these measures, including the most
directly comparable GAAP measure and an associated reconciliation.
KENSEY NASH CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED INCOME AND EARNINGS PER SHARE RECONCILIATION
Non-GAAP Adjustments
---------------------------------------------------------------
Acceleration
As Reported of Pro forma
Three Months Depreciation Equity Three Months
Ended and Moving Compensation Ended
March 31, Costs Expense March 31,
2006 2006 2006 2006
------------- ------------- ------------- -------------
Revenues:
Net sales $ 9,963,727 $ - $ - $ 9,963,727
Research and
development - - - -
Royalty income 5,711,798 - - 5,711,798
Total revenues 15,675,525 - - 15,675,525
Operating costs and
expenses:
Cost of products sold 4,545,175 (268,014) (46,409) 4,230,752
Research and
development 4,635,501 (169,998) (241,134) 4,224,369
Selling, general and
administrative 4,301,450 (74,335) (361,776) 3,865,339
Total operating
costs and
expenses 13,482,126 (512,347) (649,319) 12,320,460
Income from operations 2,193,399 512,347 649,319 3,355,065
Interest and other income,
net 244,055 - - 244,055
Pre-tax income 2,437,454 512,347 649,319 3,599,120
Income tax expense 649,820 158,483 200,852 1,009,155
Net income $ 1,787,634 $ 353,864 $ 448,467 $ 2,589,965
Basic earnings per share $ 0.16 $ 0.03 $ 0.04 $ 0.23
Diluted earnings per share $ 0.15 $ 0.03 $ 0.04 $ 0.21
Weighted average common
shares outstanding 11,477,601 11,477,601 11,477,601 11,477,601
Diluted weighted average
common shares outstanding 12,263,183 12,263,183 12,263,183 12,263,183
Note: To supplement our consolidated financial statements presented in
accordance with GAAP, Kensey Nash Corporation uses non-GAAP measures of pro
forma net income and earnings per share, which are adjusted from our GAAP
results to exclude certain expenses. These non-GAAP adjustments are provided to
enhance the user's overall understanding of our historical and current financial
performance and our prospects for the future. We believe the non-GAAP results
provide useful information to both management and investors by excluding certain
expenses that we believe are not indicative of our core operating results.
We have adjusted our GAAP results for equity compensation expense and an
acceleration of depreciation charge. The Company has excluded the impact of
equity compensation related to adopting Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment, which became effective for the
Company July 1, 2005 and the impact of the acceleration of depreciation charge
related to the Company's move to a new facility expected in June 2006. For the
period ending March 31, 2006 equity compensation has been and will continue to
be included in the Company's consolidated results of operations. The
acceleration of depreciation charge began in May 2005 and will be complete by
June 2006. Both of these non-GAAP measures are non-cash charges and will have no
impact on the cash flows of the Company.
These non-GAAP measures will provide investors and management with an
alternative method for assessing Kensey Nash's operating results in a manner
consistent with the presentation prior to the adoption of FAS 123(R) and the
acceleration of depreciation charge related to the transition to the new
facility. Further, these non-GAAP results are one of the primary indicators
management uses for planning and forecasting in future periods. The presentation
of this additional information should not be considered in isolation or as a
substitute for results prepared in accordance with accounting principles
generally accepted in the United States.
Non-GAAP Financial Measures and Reconciliations
We use various numerical measures in conference calls, investor meetings
and other forums which are or may be considered "Non-GAAP financial
measures" under Regulation G. We have provided below for your reference
supplemental financial disclosure for these measures, including the most
directly comparable GAAP measure and an associated reconciliation.
KENSEY NASH CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED INCOME AND EARNINGS PER SHARE RECONCILIATION
Non-GAAP Adjustments
---------------------------------------------------------------
Acceleration
As Reported of Pro forma
Nine Months Depreciation Equity Nine Months
Ended and Moving Compensation Ended
March 31, Costs Expense March 31,
2006 2006 2006 2006
------------- ------------- ------------- -------------
Revenues:
Net sales $ 25,424,448 $ - $ - $ 25,424,448
Research and
development - - - -
Royalty income 16,604,214 - - 16,604,214
Total revenues 42,028,662 - - 42,028,662
Operating costs and
expenses:
Cost of products
sold 14,586,672 (2,220,881) (125,882) 12,239,909
Research and
development 14,499,053 (1,318,369) (618,872) 12,561,812
Selling, general and
administrative 12,445,351 (589,335) (972,104) 10,883,912
Total operating
costs and
expenses 41,531,076 (4,128,585) (1,716,858) 35,685,633
Income from operations 497,586 4,128,585 1,716,858 6,343,029
Interest and other
income, net 863,929 - - 863,929
Pre-tax income 1,361,515 4,128,585 1,716,858 7,206,958
Income tax expense 312,492 1,193,665 496,381 2,002,538
Net income $ 1,049,023 $ 2,934,920 $ 1,220,477 $ 5,204,420
Basic earnings per share $ 0.09 $ 0.26 $ 0.11 $ 0.45
Diluted earnings per
share $ 0.09 $ 0.24 $ 0.10 $ 0.42
Weighted average common
shares outstanding 11,470,282 11,470,282 11,470,282 11,470,282
Diluted weighted average
common shares
outstanding 12,287,701 12,287,701 12,287,701 12,287,701
Note: To supplement our consolidated financial statements presented in
accordance with GAAP, Kensey Nash Corporation uses non-GAAP measures of pro
forma net income and earnings per share, which are adjusted from our GAAP
results to exclude certain expenses. These non-GAAP adjustments are provided to
enhance the user's overall understanding of our historical and current financial
performance and our prospects for the future. We believe the non-GAAP results
provide useful information to both management and investors by excluding certain
expenses that we believe are not indicative of our core operating results.
We have adjusted our GAAP results for equity compensation expense and an
acceleration of depreciation charge. The Company has excluded the impact of
equity compensation related to adopting Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment, which became effective for the
Company July 1, 2005 and the impact of the acceleration of depreciation charge
related to the Company's move to a new facility expected in June 2006. For the
period ending March 31, 2006 equity compensation has been and will continue to
be included in the Company's consolidated results of operations. The
acceleration of depreciation charge began in May 2005 and will be complete by
June 2006. Both of these non-GAAP measures are non-cash charges and will have no
impact on the cash flows of the Company.
These non-GAAP measures will provide investors and management with an
alternative method for assessing Kensey Nash's operating results in a manner
consistent with the presentation prior to the adoption of FAS 123(R) and the
acceleration of depreciation charge related to the transition to the new
facility. Further, these non-GAAP results are one of the primary indicators
management uses for planning and forecasting in future periods. The presentation
of this additional information should not be considered in isolation or as a
substitute for results prepared in accordance with accounting principles
generally accepted in the United States.
Non-GAAP Financial Measures and Reconciliations
We use various numerical measures in conference calls, investor meetings and
other forums which are or may be considered "Non-GAAP financial
measures" under Regulation G. We have provided below for your reference
supplemental financial disclosure for these measures, including the most
directly comparable GAAP measure and an associated reconciliation.
KENSEY NASH CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED (LOSS)/INCOME AND EARNINGS PER SHARE RECONCILIATION
Non-GAAP Adjustments
---------------------------------------------------------------
Acceleration
As Reported of Pro forma
Three Months Depreciation Equity Three Months
Ended and Moving Compensation Ended
December 31, Costs Expense December 31,
2005 2005 2005 2005
------------- ------------- ------------- -------------
Revenues:
Net sales $ 7,962,264 $ - $ - $ 7,962,264
Research and
development - - - -
Royalty income 5,664,701 - - 5,664,701
Total revenues 13,626,965 - - 13,626,965
Operating costs and
expenses:
Cost of products sold 5,247,868 (1,071,470) (53,870) 4,122,528
Research and
development 4,913,131 (597,514) (241,597) 4,074,020
Selling, general and
administrative 4,331,881 (274,128) (351,326) 3,706,427
Total operating
costs and
expenses 14,492,880 (1,943,112) (646,793) 11,902,975
(Loss)/income from
operations (865,915) 1,943,112 646,793 1,723,990
Interest and other
income, net 310,055 - - 310,055
Pre-tax (loss)/income (555,860) 1,943,112 646,793 2,034,045
Income tax
(benefit)/expense - 464,258 154,535 618,793
Net (loss)/income $ (555,860) $ 1,478,854 $ 492,258 $ 1,415,252
Basic (loss)/
earnings per share $ (0.05) $ 0.13 $ 0.04 $ 0.12
Diluted (loss)/earnings
per share $ (0.05) $ 0.12 $ 0.04 $ 0.12
Weighted average common
shares outstanding 11,476,546 11,476,546 11,476,546 11,476,546
Diluted weighted average
common shares
outstanding 11,476,546 12,245,612 12,245,612 12,245,612
Note: To supplement our consolidated financial statements presented in
accordance with GAAP, Kensey Nash Corporation uses non-GAAP measures of pro
forma net income and earnings per share, which are adjusted from our GAAP
results to exclude certain expenses. These non-GAAP adjustments are provided to
enhance the user's overall understanding of our historical and current financial
performance and our prospects for the future. We believe the non-GAAP results
provide useful information to both management and investors by excluding certain
expenses that we believe are not indicative of our core operating results.
We have adjusted our GAAP results for equity compensation expense and an
acceleration of depreciation charge. The Company has excluded the impact of
equity compensation related to adopting Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment, which became effective for the
Company July 1, 2005 and the impact of the acceleration of depreciation charge
related to the Company's move to a new facility expected in June 2006. For the
period ending December 31, 2005 equity compensation has been and will continue
to be included in the Company's consolidated results of operations. The
acceleration of depreciation charge began in May 2005 and will be complete by
June 2006. Both of these non-GAAP measures are non-cash charges and will have no
impact on the cash flows of the Company.
These non-GAAP measures will provide investors and management with an
alternative method for assessing Kensey Nash's operating results in a manner
consistent with the presentation prior to the adoption of FAS 123(R) and the
acceleration of depreciation charge related to the transition to the new
facility. Further, these non-GAAP results are one of the primary indicators
management uses for planning and forecasting in future periods. The presentation
of this additional information should not be considered in isolation or as a
substitute for results prepared in accordance with accounting principles
generally accepted in the United States.
SOURCE Kensey Nash Corporation
-0- 04/24/2006
/CONTACT: Joseph W. Kaufmann, President and Chief Executive Officer of
Kensey Nash Corporation, +1-484-713-2100/
/Web site: http://www.kenseynash.com /
(KNSY VITA)