Oct 30, 2008

OSI Systems Reports First Quarter Fiscal 2009 Financial Results

HAWTHORNE, Calif., Oct 30, 2008 (BUSINESS WIRE) -- --Record Operating Cash Flow of $15 million

--Backlog Increase of $19 million to $231 million

--Security Bookings of $94 million

OSI Systems, Inc. (NASDAQ:OSIS), a vertically integrated provider of specialized electronics products for critical applications in the Security and Healthcare industries, today announced its financial results for its first quarter ended September 30, 2008.

The Company reported revenues of $148.2 million for the first quarter of fiscal 2009, an increase of 13% from the $131.0 million reported for the first quarter of fiscal 2008. Net income for the first quarter of fiscal 2009 was $0.1 million, or $0.01 per diluted share, compared to a net loss of $(2.1) million, or $(0.12) per diluted share for the first quarter of fiscal 2008.

The results for the first quarter ended September 30, 2008 and the prior comparable period of fiscal 2008 included non-recurring restructuring charges of $0.8 million compared to $0.1 million for the comparable period of fiscal 2008.

Excluding the impact of the aforementioned non-recurring charges, net income for the first quarter of fiscal 2009 would have been approximately $0.7 million or $0.04 per diluted share compared to a net loss of $(2.0) million or $(0.12) per diluted share for the first quarter of fiscal 2008. These non-GAAP figures are provided to allow for the comparison of underlying earnings, net of non-recurring charges, providing insight into the on-going operations of the Company.

The Company's backlog as of September 30, 2008, was approximately $231 million, compared to $212 million as of June 30, 2008. For the comparable period, the backlog for the Company's Security division increased by $26 million to $141 million. For the first quarter of fiscal 2009, the Company generated cash flow from operations of $14.7 million and capital expenditures were $2.2 million, as compared to cash flow from operations using $3.6 million and capital expenditures of $2.6 million during the first quarter of fiscal 2008.

Deepak Chopra, OSI Systems' Chairman and CEO, stated, "Revenue growth for the first quarter was driven primarily by strong performances in our Security and Optoelectronics divisions which grew 20% and 23% respectively. For the quarter our Security division achieved record bookings of approximately $94 million improving our backlog to near record levels.

Mr. Chopra continued, "For the quarter, sales in our Healthcare division declined 3% when compared to the first quarter of the prior fiscal year. The decline was a direct result of the tightening credit markets within North America causing customers to delay planned orders. Internationally, however, our Healthcare division sales remain strong. We continue to be diligent in monitoring the market conditions within North America as it relates to our Healthcare division and have begun to implement proactive measures to address our overall cost structure.

Mr. Chopra concluded, "Within our Security division we have made significant announcements of late. Firstly, we were awarded a $3 million contract for air cargo inspection systems. This was the first contract award we have received related to the U.S. government mandate for 100% inspection of all air cargo by August 2010. Additionally, today we announced receipt of an approximate $6 million development and delivery contract from the TSA for our next generation high-speed CT system for checked baggage screening."

Company Outlook -- Guidance for Fiscal 2009

Due to significant levels of economic uncertainty within the credit markets in North America, the Company is unable to provide guidance for fiscal 2009 and as such has withdrawn its previously published guidance for fiscal 2009.

Alan Edrick, Executive Vice President and CFO, stated, "We remain confident in our long run business fundamentals. While our healthcare division has been impacted by economic conditions in the Unites States and the challenging credit markets, we are moving quickly to address our overall cost structure. Overall ourliquidity positionremains strong and in the first quarter we generated $12.5 million of free cash flow, a record for the Company."

Conference Call Information

OSI Systems, Inc. will host a conference call and simultaneous webcast over the Internet beginning at 9:00 a.m. PT (12:00 p.m. ET) today to discuss its financial and business results for the first quarter of fiscal 2009. The conference call will contain forward looking information. To listen, please log on to www.fulldisclosure.com or the investor relations section of the OSI Systems website (http://investors.osi-systems.com/index.cfm). A replay of the webcast will be available shortly after the conclusion of the conference call until November 13, 2008. The replay can either be accessed through the Company's website or via telephonic replay by calling 1-888-286-8010 and entering the conference call identification number '40344917' 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 applicationsinthe homeland security, healthcare, defense and aerospace industries. We combinemore than 30 years ofelectronics engineering and manufacturing experience withoffices and production facilities in more than a dozen countries toimplement a strategy of expansion into selective end product markets.For more information on OSI Systems Inc. or any of its subsidiary companies, visit www.osi-systems.com. News Filter: OSIS-G

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding the Company's expectations, goals or intentions about the future, including the Company's predictions about the effects of steps being taken to improve profitability as well as the Company's guidance regarding future revenues and future earnings. The actual results may differ materially from those described in or implied by any forward-looking statement. In particular, there can be no assurance that the Company will achieve profitability or that future revenue or earnings predictions will ultimately prove accurate. Other important factors are set forth in our Securities and Exchange Commission filings. All forward-looking statements speak only as of the date made, and we undertake no obligation to update these forward-looking statements.

OSI SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
                                                                             Three Months Ended September 30,
                                                                                   2007                       2008
Revenue                                                                      $     131,013              $     148,161
Cost of goods sold                                                                 86,903                     98,526
Gross profit                                                                       44,110                     49,635
Operating expenses:
Selling, general and administrative                                                36,211                     37,571
Research and development                                                           9,729                      10,213
Impairment, restructuring, and other charges                                       85                         801
Total operating expenses                                                           46,025                     48,585
Income (loss) from operations                                                      (1,915   )                 1,050
Interest expense, net                                                              (1,089   )                 (895     )
Income (loss) before provision for income taxes and minority interest              (3,004   )                 155
Provision (benefit) for income taxes                                               (1,055   )                 53
Minority interest of net earnings (losses) of consolidated                         (118     )                 30
subsidiaries
Net income (loss)                                                                  (2,067   )                 132
Diluted income (loss) per share                                              $     (0.12    )           $     0.01
Weighted average shares outstanding --                                             17,171                     18,166
diluted
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                   June 30,            September 30,
                                                         2008                  2008
Assets
Cash and cash equivalents                          $     18,232        $       21,048
Accounts receivable, net                                 156,781               137,116
Inventories                                              144,807               148,599
Other current assets                                     36,635                42,030
Total current assets                                     356,455               348,793
Non-current assets                                       151,186               149,455
Total                                              $     507,641       $       498,248
Liabilities and Stockholders' Equity
Bank lines of credit                               $     18,657        $       9,000
Current portion of long-term debt                        6,593                 7,094
Accounts payable and accrued expenses                    89,594                82,373
Other current liabilities                                46,653                58,156
Total current liabilities                                161,497               156,623
Long-term debt                                           49,091                46,541
Other long-term liabilities                              17,804                19,095
Total liabilities                                        228,392               222,259
Minority interest                                        1,228                 1,198
Shareholders' equity                                     278,021               274,791
Total liabilities and stockholders' equity         $     507,641       $       498,248
SEGMENT INFORMATION
(in thousands)
(unaudited)
                                                                    Three Months Ended September 30,
                                                                          2007                       2008
Revenues -- by Segment Group:
Security Group                                                      $     48,805               $     58,685
Healthcare Group                                                          56,598                     54,827
Optoelectronics and Manufacturing Group including intersegment            36,372                     44,882
revenues
Intersegment revenues elimination                                         (10,762  )                 (10,233  )
Total                                                                     131,013                    148,161
                                                                          -                          -
Operating income (loss) -- by Segment
Group:
Security Group                                                      $     (696     )           $     3,048
Healthcare Group                                                          1,051                      (1,824   )
Optoelectronics and Manufacturing Group                                   1,339                      3,863
Corporate                                                                 (3,479   )                 (4,215   )
Eliminations                                                              (130     )                 178
Total                                                               $     (1,915   )           $     1,050

SOURCE: OSI Systems, Inc.

OSI Systems, Inc. 
Jeremy Norton 
Vice President, Investor Relations & Business Development 
310-349-2372 
jnorton@osi-systems.com

Copyright Business Wire 2008

News Provided by COMTEX