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Accuray Announces Results for Fourth Quarter and Fiscal Year 2011

September 19, 2011

SUNNYVALE, Calif., Sept. 19, 2011 /PRNewswire/ — Accuray Incorporated (Nasdaq: ARAY), the premier radiation oncology company, announced today financial results for the fourth quarter and fiscal year ended June 30, 2011. It should be noted that the acquisition of TomoTherapy was completed on June 10, 2011. As a result, fourth quarter and fiscal 2011 financial data presented reflect the addition of TomoTherapy results from June 10, 2011 through June 30, 2011. Backlog, shipments and installations will be reflected for the full quarter for both Accuray and TomoTherapy.

For the fourth quarter of fiscal 2011, Accuray reported total revenue of $75.2 million, which included $64.1 million of CyberKnife related revenue and an $11.1 million contribution from TomoTherapy from the period June 10, 2011 through June 30, 2011. The CyberKnife-related Accuray revenue for the fourth quarter sets a company record and represents a four percent increase from total revenue of $61.8 million during the fourth quarter of fiscal 2010. For the fiscal year ended June 30, 2011, total revenue was $222.3 million, of which $211.2 million was associated with CyberKnife Systems and service, compared to $221.6 million in the previous year. Excluding revenue from previously deferred Platinum contracts and revenue from TomoTherapy, total revenue for fiscal 2011 was $205.9 million, a seven percent increase over the comparable period in fiscal 2010.

Consolidated net loss for the fourth quarter of fiscal 2011 was $25.0 million, or $0.40 per diluted share, compared to net income of $5.0 million, or $0.08 per diluted share, during the comparable period last year. The net loss was primarily attributable to approximately $18.7 million in acquisition and integration charges associated with the TomoTherapy acquisition. Consolidated net loss for fiscal year 2011 was $26.7 million or $0.44 per diluted share, compared to net income of $2.8 million or $0.05 per diluted share for fiscal year 2010.

During the fourth quarter of fiscal 2011, 19 CyberKnife® orders were added to backlog in accordance with Accuray backlog criteria with one cancellation for a total of 18 net orders to backlog, with a value of $56.7 million. In addition, 17 TomoTherapy® System orders were placed into backlog in accordance with TomoTherapy’s historical backlog criteria during the quarter with an added value of $38.0 million.

During the fourth quarter of fiscal 2011, 10 CyberKnife Systems were shipped and 14 were installed, increasing the worldwide CyberKnife installed base to 240 systems. There were 10 TomoTherapy Systems shipped and 9 installed in the fourth quarter of fiscal 2011, bringing the worldwide TomoTherapy installed base to 342.

“We are pleased with the record revenue in the fourth quarter, confirming growing acceptance of the CyberKnife as the brand name in radiosurgery. In addition, we are excited about the close of the TomoTherapy acquisition, which provides a strategically important increase in the scale and scope of Accuray,” said Euan Thomson, president and chief executive officer of Accuray Incorporated. “With state-of-the-art technologies for both radiosurgery and radiation therapy, Accuray is now positioned to provide advanced treatment to a broader group of cancer patients globally.”

Accuray’s cash, cash equivalents and restricted cash totaled $99.1 million as of June 30, 2011.

On August 27, 2011, Accuray issued $100 million of 3.75 percent convertible notes, with proceeds to be used for general corporate purposes, including strategic investing in expanding its business and new product development.

Outlook

The following statement is forward-looking and actual results may differ materially. During fiscal year 2012 Accuray expects that revenue will be in the range of $400 million to $415 million, which takes into account the financial impact of the TomoTherapy acquisition. During the first quarter of fiscal 2012, Accuray expects that revenue will be in the range of $80 million to $85 million.

Additional Information

Additional information regarding backlog segmentation, which will be discussed during the conference call, is available in the Investor Relations section of the company’s Web site at www.accuray.com.

Earnings Call Open to Investors

Accuray will hold a conference call for financial analysts and investors on Monday, September 19, 2011 at 2:00 p.m. PDT / 5:00 p.m. EDT. The conference call dial-in numbers are 1-800-291-9234 (USA) or 1-617-614-3923 (International), Conference ID: 46593035. A live webcast of the call will also be available from the Investor Relations section on the company’s Web site at www.accuray.com. In addition, a recording of the call will be available by calling 1-888-286-8010 (USA) or 1-617-801-6888 (International), Conference ID number: 36254727, beginning at 5:00 p.m. PT / 8:00 p.m. ET, September 19, 2011 and will be available through September 22 2011. A webcast replay will also be available from the Investor Relations section of the company’s Web site at www.accuray.com from approximately 5:00 p.m. PT / 8:00 p.m. ET today through Accuray’s release of its results for the first quarter of fiscal 2012, ending September 30, 2011.

About Accuray

Accuray Incorporated (Nasdaq: ARAY), based in Sunnyvale, Calif., is the premier radiation oncology company that develops, manufactures and sells personalized, innovative treatment solutions that set the standard of care with the aim of helping patients live longer, better lives. The Company’s leading-edge technologies – the CyberKnife and TomoTherapy Systems – are designed to deliver radiosurgery, stereotactic body radiation therapy, intensity modulated radiation therapy, image guided radiation therapy, and adaptive radiation therapy. To date, more than 200,000 patients worldwide have been treated using the company’s technologies and more than 575 systems have been installed in leading hospitals around the world. For more information, please visit www.accuray.com

Safe Harbor Statement

The foregoing may contain certain forward-looking statements that involve risks and uncertainties, including those concerning Accuray’s expectations about revenue for fiscal year 2012 and first quarter thereof, the portion of revenue attributable to product revenue, profitability, shipments and installations and backlog. Except for the historical information contained herein, the matters set forth in this press release, including Accuray’s expectations about revenue for fiscal year 2012 and first quarter thereof are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date the statements are made and are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. You should not put undue reliance on any forward-looking statements. Important factors that could cause actual performance and results to differ materially from the forward-looking statements we make include: range of treatment options, clinical applications, and market acceptance of products and other risks detailed from time to time under the heading “Risk Factors” in our form 10-Q filed on May 10, 2011, the Risk Factors set forth on TomoTherapy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as amended, and as updated in TomoTherapy’s Form 10-Q for the fiscal quarter ended March 31, 2011, and the Risk Factors set forth in Accuray’s Registration Statement on Form S-4, filed with the SEC on April 7, 2011 and as amended on May 5, 2011 and May 9, 2011, as well as our other filings with the Securities and Exchange Commission for a further list and description of additional business risks, uncertainties and other factors that may affect these statements. The Company’s actual results of operations may differ significantly from those contemplated by such forward-looking statements as a result of these and other factors. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

                        Accuray Incorporated
     Unaudited Condensed Consolidated Statements of Operations
               (in thousands, except per share data)
                                                       Three months ended
                                                       ------------------
                                                        June 30,   June 30,
                                                          2011       2010
                                                       ---------  ---------
    Net revenue:
      Products                                           $47,824    $41,951
      Services                                            25,657     19,617
      Other                                                1,742        220
      Total net revenue                                   75,223     61,788
    Cost of revenue:
      Cost of products                                    20,572     18,559
      Cost of services                                    20,886     12,015
      Cost of other                                        1,539        156
      Total cost of revenue                               42,997     30,730
                                                          ------     ------
      Gross profit                                        32,226     31,058
    Operating expenses:
      Selling and marketing                               13,307      8,296
      Research and development                            15,036      8,373
      General and administrative                          29,196      8,393
                                                          ------      -----
      Total operating expenses                            57,539     25,062
                                                          ------     ------
    Income (loss) from operations                        (25,313)     5,996
    Interest and other income (expense), net                 (26)      (683)
                                                             ---       ----
    Income (loss) before provision for (benefit from)
     income taxes                                        (25,339)     5,313
    Provision for (benefit from) income taxes                 70        293
                                                             ---        ---
    Net income (loss)                                    (25,409)     5,020
    Noncontrolling interest                                 (429)         -
                                                            ----        ---
    Net income (loss) attributable to stockholders      $(24,980)    $5,020
                                                        ========     ======

    Net income (loss) per common share, basic and
     diluted:
      Basic                                               $(0.40)     $0.09
      Diluted                                             $(0.40)     $0.08
    Weighted average common shares outstanding used in
     computing net income (loss) per share:
      Basic                                               62,451     58,205
      Diluted                                             62,451     60,564
    Cost of revenue, selling and marketing, research
     and development, and general and administrative
     expenses include stock-based compensation charges
     as follows:
      Cost of revenue                                       $426       $553
      Selling and marketing                                 $182        $54
      Research and development                            $1,130       $913
      General and administrative                          $5,230       $889


                                                           Years ended
                                                           -----------
                                                        June 30,   June 30,
                                                          2011       2010
                                                       ---------  ---------
    Net revenue:
      Products                                          $138,595   $143,187
      Services                                            80,490     77,504
      Other                                                3,199        934
      Total net revenue                                  222,284    221,625
    Cost of revenue:
      Cost of products                                    55,524     66,216
      Cost of services                                    56,218     50,732
      Cost of other                                        3,300        659
      Total cost of revenue                              115,042    117,607
                                                         -------    -------
      Gross profit                                       107,242    104,018
    Operating expenses:
      Selling and marketing                               37,181     34,187
      Research and development                            41,687     31,523
      General and administrative                          56,657     35,472
                                                          ------     ------
      Total operating expenses                           135,525    101,182
                                                         -------    -------
    Income (loss) from operations                        (28,283)     2,836
    Interest and other income (expense), net               2,288          1
                                                           -----        ---
    Income (loss) before provision for (benefit from)
     income taxes                                        (25,995)     2,837
    Provision for (benefit from) income taxes              1,116         (4)
                                                           -----        ---
    Net income (loss)                                    (27,111)     2,841
    Noncontrolling interest                                 (429)         -
                                                            ----        ---
    Net income (loss) attributable to stockholders      $(26,682)    $2,841
                                                        ========     ======

    Net income (loss) per common share, basic and
     diluted:
      Basic                                               $(0.44)     $0.05
      Diluted                                             $(0.44)     $0.05
    Weighted average common shares outstanding used in
     computing net income (loss) per share:
      Basic                                               60,085     57,560
      Diluted                                             60,085     60,191
    Cost of revenue, selling and marketing, research
     and development, and general and administrative
     expenses include stock-based compensation charges
     as follows:
      Cost of revenue                                     $1,312     $1,721
      Selling and marketing                                 $695     $1,433
      Research and development                            $2,922     $2,850
      General and administrative                          $8,436     $4,642

                         Accuray Incorporated
           Unaudited Condensed Consolidated Balance Sheets
                 (in thousands, except share amounts)
                                                        June      June
                                                         30,       30,
                                                          2011      2010
                                                          ----      ----
    Assets
    Current assets:
      Cash and cash equivalents                        $95,906   $45,434
      Restricted cash                                    3,172        22
      Short-term available-for-sale securities               -    99,881
      Accounts receivable, net of allowance for
       doubtful accounts of $324 and $115
        at June 30, 2011 and 2010, respectively         61,853    37,955
      Inventories                                       97,836    28,186
      Prepaid expenses and other current assets         21,115    19,356
      Deferred cost of revenue-current                   5,840     7,889
        Total current assets                           285,722   238,723
                                                       -------   -------

    Property and equipment, net                         44,823    14,684
    Goodwill                                            54,474     4,495
    Intangible assets, net                              66,039       388
    Deferred cost of revenue-noncurrent                  2,258     3,213
    Other assets                                         2,468     1,681
        Total assets                                  $455,784  $263,184
                                                      ========  ========
    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                                 $38,645   $10,317
      Accrued expenses                                  70,418    21,455
      Customer advances-current                         25,829    12,884
      Deferred revenue-current                          68,152    42,019
        Total current liabilities                      203,044    86,675
                                                       -------    ------
    Long-term liabilities:
      Long-term other liabilities                        6,321     1,059
      Deferred revenue-noncurrent                        6,092     5,374
        Total liabilities                              215,457    93,108
                                                       -------    ------

    Stockholders' equity
      Preferred stock, $0.001 par value;
       authorized: 5,000,000 shares; no shares
       issued
        and outstanding.                                     -         -
      Common stock, $0.001 par value; authorized:
       100,000,000 shares; issued:
        72,199,837 and 60,666,974 shares at June 30,
         2011 and 2010, respectively; outstanding:
         70,059,819 and 58,526,956 shares at June
         30, 2011 and 2010, respectively.                   70        59
      Additional paid-in capital                       373,963   287,764
      Accumulated other comprehensive income
       (loss)                                              127       (71)
      Accumulated deficit                             (144,385) (117,676)
        Total stockholders' equity                     229,775   170,076
        Noncontrolling interest                         10,552         -
                                                        ------       ---
        Total equity                                   240,327   170,076
                                                       -------   -------
           Total liabilities and stockholders' equity $455,784  $263,184
                                                      ========  ========

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission, with respect to the three months ended June 30, 2011. “GAAP” refers to generally accepted accounting principles in the United States.

Accuray closed the acquisition of TomoTherapy on June 10, 2011 and TomoTherapy’s operations since that date are included in Accuray’s consolidated results of operations. Accounting for the impact of this acquisition has resulted in changes to the value of assets and liabilities from the amounts reflected by TomoTherapy prior to the acquisition and the creation of incremental assets and liabilities including intangible assets for developed technology and backlog, and unfavorable lease obligations. These changes have impacted revenues and expenses recorded in Accuray’s consolidated statement of operations since the close of the acquisition. In addition, Accuray has incurred significant expenses as a result of the acquisition, some of which are one-time while others are expected to be incurred over fiscal 2012 for the integration of TomoTherapy.

To reflect the on-going core results of operations of the Company, including adjusting for the impact of the acquisition of TomoTherapy, the Company has presented its operating results on an adjusted non- GAAP basis as well as in accordance with GAAP for the three months ended June 30, 2011. We use the following measures, which are not calculated in accordance with GAAP: non-GAAP revenues, non-GAAP cost of revenues, non-GAAP operating expenses, non-GAAP net income (loss) attributable to stockholders, non-GAAP net income (loss) per basic share, and non-GAAP net income (loss) per diluted share. The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses these non-GAAP financial measures in connection with its own budgeting and financial planning, as well as evaluating management performance for compensation purposes. These non-GAAP financial measures are in addition to, not a substitute for, nor superior to, measures of financial performance prepared in conformity with GAAP. Further, our reconciliations of GAAP to non-GAAP operating results are presented solely to facilitate a reader’s understanding of the impact of the various adjustments to our GAAP operating results, individually and in the aggregate, and are not intended to place any undue prominence on our non-GAAP operating results.


    Revenues
    --------
                   GAAP      Adjustments   Non-GAAP

    Products       $47,824    $5,647 (A)     $53,471
                                  (2,770)
    Service         25,657           (B)      22,887
    Other            1,742                     1,742
    Total           75,223         2,877      78,100
    -----           ------         -----      ------


             As of the close of the acquisition,
             TomoTherapy's deferred product revenue related
             to products shipped but not yet installed was
             written down to the fair value of goods and
             services remaining to be delivered. As a
             result, from the close of the acquisition to
             June 30, 2011, product revenue recorded by
             Accuray for the sale of TomoTherapy products
             was $5.7 million lower than product revenue
             that would have been recorded by TomoTherapy if
    (A)      the acquisition had not occurred.

             As of the close of the acquisition,
             TomoTherapy's deferred service revenue was
             written up to fair value. As a result, deferred
             service revenue earned by Accuray from the
             close of the acquisition on June 10, 2011 to
             June 30, 2011 was $2.8 million higher than the
             amount that would have been recognized by
             TomoTherapy if the acquisition had not
    (B)      occurred.


    Cost of Revenues
    ----------------
                   GAAP      Adjustments   Non-GAAP

    Products        20,572     (81)  (C)      20,491
                                  (2,060)
    Service         20,886           (D)      18,826
    Other            1,539                     1,539
    Total           42,997        (2,141)     40,856
    -----           ------        ------      ------


             As of the close of the acquisition,
             TomoTherapy's deferred product cost of revenue
             related to products shipped but not yet
             installed was written down to the fair value of
             goods and services remaining to be delivered.
             As a result of this write down of deferred
             product cost of revenue, from the close of the
             acquisition to June 30, 2011 product cost of
             revenue recorded by Accuray for the sale of
             TomoTherapy products was reduced by $2.2
             million from the product cost of revenue that
             would have been recorded by TomoTherapy if the
             acquisition had not occurred. Offsetting this
             reduction in product cost of revenues, Accuray
             recorded charges to product cost of revenues
             arising from accounting for the acquisition of
             TomoTherapy. These included $0.8 million for
             amortization of intangible assets created by
             the acquisition and $1.5 million due to the
             write up of inventory on hand at the time of
    (C)      the acquisition from cost basis to fair value.

             Service cost of revenues included the following
             charges arising from the acquisition of
             TomoTherapy: $1.8 million due to the write up
             of service related inventory on hand at the
             time of the acquisition from cost basis to fair
             value, $0.2 million due to severance
    (D)      compensation for employees terminated.


    Operating Expenses
    ------------------
                        GAAP      Adjustments   Non-GAAP

    Selling
     and                                  (E)
     Marketing           13,307        (1,011)     11,696
    Research
     and                                  (F)
     Development         15,036        (2,074)     12,962
    General
     and                                  (G)
     Administrative      29,196       (17,211)     12,585
    Total                57,539       (20,296)     37,243
    -----                ------       -------      ------


             Includes $0.1 million for severance compensation
             and $0.9 million related to planning for the
    (E)      integration of product marketing.

             Includes $1.4 million for severance compensation
             and $0.7 million of stock based compensation
             charges for immediate vesting of restricted
             stock and stock options for employees that were
    (F)      terminated.

             Includes $9.0 million for severance compensation
             and $3.8 million of stock based compensation
             charges for immediate vesting of restricted
             stock and stock options for employees that were
             terminated. Also includes $2.4 million in fees
             to investment bankers, $1.2 million related to
             planning for the integration of work forces and
             operations, and $0.8 million for legal,
    (G)      accounting and other services.


    Net Income (Loss) Attributable to
     Stockholders
    ---------------------------------
                       GAAP      Adjustments  Non-GAAP

    Income (Loss)
     From                                (H)
     Operations        (25,313)       25,314          1
    Other Income
     (Expense)             (26)      34  (I)          8
    Provision For
     Income Taxes           70                       70
    Noncontrolling
     Interest             (429)                    (429)
    Net Income
     (Loss)
     Attributable
     to
     Stockholders     $(24,980)      $25,348       $368

    Net Income
     (Loss) Per
     Share - Basic      $(0.40)                   $0.01
    Net Income
     (Loss) Per
     Share -
     Diluted            $(0.40)                   $0.01

    Common Shares -
     Basic              62,451                   62,451
    Common Shares -
     Diluted            62,451                   64,970
    ---------------     ------                   ------

    Net Income (Loss) Attributable to
     Stockholders
    ---------------------------------
                       GAAP      Adjustments  Non-GAAP

    Income (Loss)
     From                                (H)
     Operations        (25,313)       25,314          1
    Other Income
     (Expense)             (26)      34  (I)          8
    Provision For
     Income Taxes           70                       70
    Noncontrolling
     Interest             (429)                    (429)
    Net Income
     (Loss)
     Attributable
     to
     Stockholders     $(24,980)      $25,348       $368

    Net Income
     (Loss) Per
     Share - Basic      $(0.40)                   $0.01
    Net Income
     (Loss) Per
     Share -
     Diluted            $(0.40)                   $0.01

    Common Shares -
     Basic              62,451                   62,451
    Common Shares -
     Diluted            62,451                   64,970
    ---------------     ------                   ------


              Represents impact of all adjustments (A)
    (H)       through (G) on Income (Loss) From Operations.

              Unrealized foreign currency losses on changes
    (I)       in liabilities.

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Euan Thomson, Ph.D.

https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=81869

SOURCE Accuray Incorporated


Source: PR Newswire