Candela Announces First Fiscal Quarter Earnings

Candela Corporation (NASDAQ: CLZR) announced today that revenues for its first fiscal quarter grew 19% for the same quarter a year earlier.

The Company also reported after tax earnings per share of $0.18 compared to $0.13 a year earlier. Included in the earnings per share was a charge for stock option expense of $855,000, Palomar related litigation expense of $500,000, and a gain on the sale of a minority interest in SOLX, Inc. of $3,540,000. When adjusting for these three items, earnings per share were $0.13.

Gerard E. Puorro, Candela’s President and Chief Executive Officer, said: “We are pleased with the quarter. We have set our goals for the full year at 15% – 18% top line growth, and operating profits at 15% – 18% exclusive of extraordinary litigation expenses. We are where we expected to be following our first quarter.”

About CANDELA: Candela Corporation manufactures, and distributes innovative clinical solutions that enable physicians, surgeons, and personal care practitioners to treat selected cosmetic and medical conditions using lasers, aesthetic laser systems, and other advanced technologies. Founded near Boston in 1970, the company markets and services its products in over 70 countries from offices and distributors in the United States, Europe, Japan, China and other Asian locations. Candela established the aesthetic laser market 18 years ago, and currently has an installed base of 10,000 lasers worldwide. Candela is an Equal Opportunity and Affirmative Action Employer (Male/Female/Handicapped/Veteran). Visit Candela on the Web at http://www.candelalaser.com.

Safe Harbor Statement: Except for the historical information contained herein, this news release contains forward-looking statements that constitute Candela’s current intentions, hopes, beliefs, expectations or predictions of the future, which are therefore inherently subject to risks and uncertainties. Such statements may relate to, among other things, our future revenue, gross margin, expense levels and earnings, our growth prospects, market acceptance of our products, the strength of our distribution channels, our ability to add new products, our ability to expand regulatory approvals and the liquidity of our common stock. The risks and uncertainties that may affect forward-looking statements include, among others: the cancellation or deferral of customer orders, the risk of an adverse judgment in the patent litigation with Palomar Medical Technologies, Inc., (PMTI), dependence on a small number of strategic distribution relationships, difficulties in the timely development and market acceptance of new products, unanticipated increases in expenses, market developments that vary from the current public expectations concerning the growth of the laser industry, increased competitive pressures, changes in economic conditions, or difficulties in obtaining timely regulatory approvals. Further information on factors that could affect Candela’s performance is included in Candela’s periodic reports filed with the SEC, including but not limited to, Candela’s Annual Report on Form 10-K for the year ended July 1, 2006. Candela cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Candela expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Candela’s expectations or any change in events, conditions or circumstances on which any such statement is based.

CANDELA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

 

September 30, 2006

July 1, 2006

(Unaudited)

 

Assets

 

Current assets:

Cash and cash equivalents

$

28,813 

$

40,360 

Marketable securities

24,643 

27,332 

Accounts receivable, net

31,759 

34,273 

Notes receivable

803 

1,611 

Inventories

16,742 

16,666 

Other current assets

 

3,387 

 

1,756 

 

Total current assets

106,147 

121,998 

 

Property and equipment, net

3,215 

3,302 

 

Long-term investments

14,519 

11,953 

Other assets

 

13,108 

 

11,923 

 

Total assets

$

136,989 

$

149,176 

 

 

Liabilities and Stockholders’ Equity

 

Current liabilities:

Accounts payable

$

7,944 

$

15,968 

Accrued payroll and related expenses

3,538 

5,728 

Accrued warranty

5,828 

5,868 

Income taxes payable

2,319 

933 

Other accrued liabilities

5,381 

5,290 

Current liabilities of discontinued operations

1,287 

1,287 

Deferred income

 

8,140 

 

8,342 

Total current liabilities

34,437 

43,416 

 

Other long-term liabilities

5,628 

5,748 

 

Stockholders’ equity

Common stock

259 

259 

Less: Treasury stock

(21,265)

(12,997)

Additional paid-in capital

65,122 

64,234 

Accumulated earnings

52,699 

48,280 

Cumulative translation adjustment

 

109 

 

236 

Total stockholders’ equity

 

96,924 

 

100,012 

 

Total liabilities and stockholders’ equity

$

136,989 

$

149,176 

CANDELA CORPORATION (Nasdaq: CLZR)

Condensed Consolidated Statements of Income (unaudited)

(amounts in thousands, except per share amounts)

 

 

For the three months ended:

September 30,

October 1,

 

2006 

 

2005 

 

Revenue

$

33,474 

$

28,087 

Cost of sales

 

16,048 

 

13,535 

 

Gross profit

17,426 

14,552 

 

Operating expenses:

Research and development

3,600 

1,642 

Selling, general and administrative

 

11,080 

 

8,717 

 

Total operating expenses

 

14,680 

 

10,359 

 

Income from operations

2,746 

4,193 

 

Other income:

Interest income

763 

248 

Other income

 

3,506 

 

62 

 

Total other income

 

4,269 

 

310 

 

Income before income taxes

7,015 

4,503 

 

Provision for income taxes

 

2,596 

 

1,486 

 

Net income

$

4,419 

$

3,017 

 

Net income per share of common stock:

Basic:

$

0.19 

$

0.13 

Diluted:

$

0.18 

$

0.13 

 

Weighted average shares outstanding

 

23,530 

 

22,515 

 

Diluted weighted average shares outstanding

 

24,044 

 

23,229