BRAINTREE, Mass., Oct. 31 /PRNewswire-FirstCall/ -- Haemonetics Corporation reported second quarter fiscal 2007 GAAP net revenue of $108 million, up 8.0% over prior year, and year-to-date GAAP net revenue of $219 million, up 7.6% over the first half of 2006.

Brad Nutter, Haemonetics' President and CEO, said, "The growth drivers of our business, namely plasma, red cells, and the OrthoPAT(R) system, continued to perform well in the quarter. In fact, total disposables sales, which make up nearly 90% of total revenues, grew 11% in the quarter. We're pleased with this growth, particularly when we consider that equipment sales declined 33.5%, $2 million, as we compared to a very strong quarter last year."

Diluted GAAP net earnings per share were $0.05 for the quarter, down 88.5% from 2Q:06 and $0.44 year-to-date, down 48.4%. As previously announced, Haemonetics' financial results were impacted by three items: FAS 123R required stock option expense, restructuring costs in connection with changes to the Company's international operations, and an in-process R&D charge arising from the second quarter acquisition of Arryx. Thus, GAAP financials results were impacted as follows: FAS 123R (pre-tax) charges of $2 million, or $0.06 per share, for the quarter, and $5 million, or $0.13 per share, year-to-date; restructuring (pre-tax) charges of $1 million, or $0.03 per share, for the quarter, and $3 million, or $0.06 per share, year-to date; and, an in-process R&D (pre and after tax) charge of $9 million, or $0.33 per share, for the quarter and year-to-date.

Excluding the charges noted above, Haemonetics' pro forma diluted net earnings per share were $0.46 for the quarter, up 15.0%, and $0.97 year-to- date, up 11.0%.

FINANCIAL RESULTS Other pro forma results versus FY06 are as follows: * Revenue of $108 million for Q2:07, up 8.0%, and $219 million year-to-date, up 7.6% * Gross profit of $55 million for Q2:07, up 6.7%, and $113 million year-to-date, up 6.0% * Operating expense of $38 million for Q2;07, up 3.2%, and $75 million year-to-date, up 4.0% * Operating income of $18 million for Q2:07, up 14.9%, and $37 million year-to-date, up 10.1% * Earnings per share $0.46 for Q2:07, up 15.0%, and $0.97 year-to-date, up 11.0% * Gross margin of 50.9% for Q2:07, down 60 basis points, and 51.4% year-to-date, down 80 basis points * Operating margin of 16.3% for Q2:07, up 100 basis points, and 17.0% year-to-date, up 40 basis points * Tax rate of 34.6% in Q2:07 versus 33.3% in Q2:06, and 34.8% year-to-date, level with prior year Haemonetics also reported the following GAAP results versus FY06: * Revenue of $108 million for Q2:07, up 8.0%, and $219 million year-to-date, up 7.6% * Gross profit of $55 million for Q2:07, up 6.6%, and $113 million year-to-date, up 5.9% * Operating expense of $50 million for Q2;07, up 36.7%, and $92 million year-to-date, up 27.1% * Operating income of $5 million for Q2:07, down 66.1%, and $20 million year-to-date, down 40.2% * Earnings per share of $0.05 for Q2:07, down 88.5%, and $0.44 year-to-date, down 48.4% * Gross margin of 50.8% for Q2:07, down 70 basis points, and 51.3% year-to-date, down 90 basis points * Operating margin of 4.8% for Q2:07, down 1030 basis points, and 9.1% year-to-date, down 740 basis points BALANCE SHEET

Haemonetics' cash and short term investments declined $8.5 million, for a cash balance of $242 million. In Q2 Haemonetics initiated a share repurchase program and spent $14 million to repurchase 305,000 shares of its common stock. The Company has $26 million remaining under the $40 million Board authorization. The Company generated $16 million in cash flow from operating activities for the quarter and $33.5 million year-to-date.

DONOR PRODUCT LINE

For the quarter, plasma disposable sales benefited from continued growth in U.S. and European plasma collections and from several new customer contracts. Worldwide plasma disposables revenue was $32 million for the quarter, up 23.6% over Q2:06, and $64 million year-to-date, up 20.0%.

Stephen Swenson, General Manager of the Global Plasma Business, said, "We're ahead of our schedule to place 800 plasma devices in the year, having placed 600 devices year-to-date. Recent statistics show that demand for intravenous immunoglobulin, a key driver of plasma collections, is growing at greater than 10% per year."

Worldwide blood bank disposables revenue was $32 million for the quarter, down 1.6% from Q2:06, and $63 million year-to-date, down 2.8%. Platelet disposables comprise the majority of blood bank sales. The platelet market is mature with collections remaining level as collection efficiencies offset an increased demand for platelets.

Red cell disposables revenue continues to benefit from a favorable shift in product mix as well as from unit growth in the U.S. U.S. revenue grew 20%. Worldwide red cell disposables revenue was $10 million for the quarter, up 16.5% over Q2:06, and $21 million year-to-date, up 20.8%. As announced earlier in the quarter, Haemonetics signed a multi-year agreement with the American Red Cross to continue the use of Haemonetics' red cell collection technology at twenty-one Red Cross regions across the U.S.

PATIENT PRODUCT LINE

The Company reported strong progress in its transition to direct U.S. sales of the OrthoPAT system. U.S. OrthoPAT disposables revenue grew 86.8%. Worldwide OrthoPAT disposables revenue was $7 million, up 56.2% over Q2:06, and $15 million year-to-date, up 44.6%. OrthoPAT revenue growth was driven by price improvement and new customers.

Surgical disposables revenue, principally sales of the Cell Saver(R) systems, was $15 million in the quarter, down 1.9% from Q2:06, and $32 million year-to-date, down 0.6%. As previously stated, Haemonetics is maintaining its market share, but demand for Cell Saver 5+ continues to decline as surgical advances allow for lower blood loss surgeries. The Cell Saver system is principally used in high blood loss surgeries. New product sales are expected to positively impact Surgical disposable sales in the second half of the year.

In the quarter, Haemonetics announced the U.S. market launch of the SmartSuction(R) Solo(TM) auto-regulating surgical suction device. The SmartSuction Solo system is Haemonetics' first product to expand its reach beyond blood salvage into blood management. The system addresses a $230 million market.

OTHER PRODUCTS

Equipment sales in the quarter were $4 million, down 33.5% from 2Q:06, and $10 million year-to-date, down 21.4%. Equipment sales are not recurring and can be opportunistic. Equipment sales comparisons were against Q2:06 when sales were up 157% due to the introduction of the Cell Saver 5+ system and sales of ACP(R) 215 systems.

Services and Software sales grew to $8 million in the quarter, up 12.5% over 2Q:06, and $14 million year-to-date, up 11.4%. Services/software sales growth has been strong over the past 18 months, and its revenue is now of the size where growth is having a meaningful impact on the Company's total revenue. Sales growth has been driven largely by software sales in our 5D(TM) Information Management division.

FY07 GUIDANCE

The Company affirmed its pro forma FY07 guidance measures, with the exception of gross margin. As noted previously, the product growth mix shift to plasma products will affect Haemonetics' gross margins for the year. As such, Haemonetics updated its gross margin guidance from approximately 52% to approximately 51%. FY07 pro forma guidance will be measured against pro forma FY06 results. Annual FY07 pro forma guidance is:

* Revenue growth of 10-14% * Gross margin of approximately 51% * Operating income growing approximately 17% * Operating margins improving to approximately 18% * Earnings per share in the range of $2.05-$2.17

Haemonetics has posted potential income and revenue scenarios reflecting the high and low ranges of guidance on its website at http://www.haemonetics.com/.

For comparison purposes, the FY06 pro forma results exclude the benefit of an arbitration award received in the third quarter which added $26.4 million to operating income and $0.62 to earnings per share.

The FY07 guidance is based on anticipated annual pro forma results that exclude three items: 1) the impact from stock compensation expense (FAS 123R), expected to be approximately $10 million (pre-tax), or $0.25 per share with costs spread throughout the year; 2) a restructuring charge of $3-4 million (pre-tax), or $0.07 to $0.09 per share, with costs spread throughout the year; and 3) an in-process R&D charge of $9 million (pre and after tax), or $0.33 per share, related to the Company's acquisition of Arryx, taken in the second quarter.

As the Company's in-process R&D charge is lower than expected, Haemonetics is raising its FY07 GAAP earnings per share to a range of $1.38 to $1.52 (from a range of $1.15 to $1.29).

In FY07, the Company expects to generate $35-$40 million of operating cash flow, Haemonetics' internal cash flow measurement.

CONFERENCE CALL

Haemonetics will hold a conference call on Tuesday, October 31st at 10:00 am Eastern. The call will discuss the second quarter results. Interested parties can participate in the conference call by dialing (888) 868-9083 (U.S. only) or (973) 935-8512 with conference ID 7929614. The call will be replayed through November 14th at (877) 519-4471 (U.S. only) or (973) 341-3080 using PIN 7929614.

Haemonetics is a global company engaged in the design, manufacture and worldwide marketing of automated blood processing systems. These systems address important medical markets: surgical blood salvage, blood component collection, plasma collection, and blood component safety. To learn more about Haemonetics' products and markets, visit its web site at http://www.haemonetics.com/.

Haemonetics has presented supplemental non-GAAP financial results as part of this release which exlcude stock compensation expense, restructuring costs and an in-process research and development charge and other unusual items associated with the acquisition of Arryx. Haemonetics believes that these non-GAAP results are useful to investors because it allows for an evaluation of the Company with a focus on the results of our core business.

This release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.

CONTACT: Julie Fallon Tel. (781) 356-9517 Alternate Tel. (617) 320-2401fallon@haemonetics.comHAEMONETICS CORPORATION FINANCIAL SUMMARY (UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENTS OF INCOME FOR THE SECOND QUARTER FYE07 9/30/06 10/01/05 % Inc/(Dec) vs As Reported As Reported (1) Prior Year NET REVENUES $108,487 $100,488 8.0% Gross profit 55,162 51,765 6.6 R&D 6,119 6,283 (2.6) S,G&A 34,741 30,103 15.4 In-Process R&D 9,073 0 --- Cost to Equity 73 187 (61.0) Operating expenses 50,006 36,573 36.7 Operating income 5,156 15,192 (66.1) Interest expense (421) (522) (19.3) Interest income 1,951 1,083 80.1 Other income/(expense), net 425 481 (11.6) Income before taxes 7,111 16,234 (56.2) Tax expense 5,845 5,476 6.7 NET INCOME $1,266 $10,758 (88.2) Net income per common share assuming dilution $0.05 $0.39 (88.5%) Weighted average number of shares Basic 27,087 26,395 Diluted 27,969 27,354 Inc/(Dec) vs prior year profit margin Profit Margins: % Gross profit 50.8% 51.5% (0.7%) R&D 5.6% 6.3% (0.7%) S,G&A 32.0% 30.0% 2.0% Operating income 4.8% 15.1% (10.3%) Income before taxes 6.6% 16.2% (9.6%) Net income 1.2% 10.7% (9.5%) CONSOLIDATED STATEMENTS OF INCOME FOR FYE07 YEAR TO DATE 9/30/06 10/01/05 % Inc/(Dec) vs As Reported As Reported (1) Prior Year NET REVENUES $219,161 $203,661 7.6% Gross profit 112,535 106,289 5.9 R&D 11,541 11,824 (2.4) S,G&A 71,649 60,591 18.3 In-Process R&D 9,073 0 --- Cost to Equity 225 362 (37.8) Operating expenses 92,488 72,777 27.1 Operating income 20,047 33,512 (40.2) Interest expense (846) (1,063) (20.4) Interest income 3,977 2,396 66.0 Other income/(expense), net 1,337 1,345 (0.6) Income before taxes 24,515 36,190 (32.3) Tax expense 12,093 12,723 (5.0) NET INCOME $12,422 $23,467 (47.1) Net income per common share assuming dilution $0.44 $0.86 (48.4%) Weighted average number of shares Basic 26,993 26,338 Diluted 27,948 27,279 Inc/(Dec) vs prior year profit margin Profit Margins: % Gross profit 51.3% 52.2% (0.9%) R&D 5.3% 5.8% (0.5%) S,G&A 32.7% 29.8% 2.9% Operating income 9.1% 16.5% (7.4%) Income before taxes 11.2% 17.8% (6.6%) Net income 5.7% 11.5% (5.8%) REVENUE ANALYSIS FOR THE SECOND QUARTER FYE07 9/30/06 10/01/05 As Reported As Reported % Inc/(Dec) Revenues by Geography United States $46,811 $37,930 23.4% International 61,676 62,558 (1.4) Net Revenues $108,487 $100,488 8.0% Disposable Revenues by Product Family Donor: Plasma $32,072 $25,938 23.6% Blood Bank 31,678 32,193 (1.6) Red Cell 10,373 8,903 16.5 $74,123 $67,034 10.6 Patient: Surgical 15,108 15,394 (1.9) OrthoPAT 7,085 4,536 56.2 $22,193 $19,930 11.4 Subtotal $96,316 $86,964 10.8 Equipment $4,405 $6,623 (33.5) Misc & Service 7,766 6,901 12.5 Net Revenues $108,487 $100,488 8.0% REVENUE ANALYSIS FOR FYE07 YEAR TO DATE 9/30/06 10/01/05 As Reported As Reported % Inc/(Dec) Revenues by Geography United States $93,231 $76,153 22.4% International 125,930 127,508 (1.2) Net Revenues $219,161 $203,661 7.6% Disposable Revenues by Product Family Donor: Plasma $63,891 $53,241 20.0% Blood Bank 63,044 64,883 (2.8) Red Cell 20,973 17,358 20.8 $147,908 $135,482 9.2 Patient: Surgical 32,309 32,490 (0.6) OrthoPAT 14,641 10,125 44.6 $46,950 $42,615 10.2 Subtotal $194,858 $178,097 9.4 Equipment $10,013 $12,734 (21.4) Misc & Service 14,290 12,830 11.4 Net Revenues $219,161 $203,661 7.6% CONSOLIDATED BALANCE SHEETS Period ending 09/30/06 4/1/06(1) Assets Cash & cash equivalents $242,200 $250,667 Short-term investments -- -- Accounts receivable, net 84,001 86,901 Inventories, net 58,925 54,571 Other current assets 28,679 26,265 Total current assets 413,805 418,404 Net PP&E 80,757 75,266 Other assets 66,870 51,787 Total assets $561,432 $545,457 Period ending 09/30/06 4/1/06(1) Liabilities & Stockholders' Equity S/T debt & current maturities $21,922 $26,176 Other current liabilities 66,193 61,940 Total current liabilities 88,115 88,116 Long-term debt 12,690 12,977 Other long-term liabilities 3,637 3,800 Stockholders' equity 456,990 440,564 Total liabilities & equity $561,432 $545,457 SECOND QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES 09/30/06 Effect of Arryx IPRD Stock-Based 9/30/06 and Other Compensation Restructuring 9/30/06 As As Reported Unusual(2) Expense(3) Costs(4) Adjusted(5) Net Revenue $108,487 $0 $0 $0 $108,487 Gross profit 55,162 0 (48) 0 55,210 R&D 6,119 0 74 0 6,045 S,G&A 34,741 0 2,145 1,106 31,490 In-Process R&D 9,073 9,073 0 0 0 Cost to Equity 73 73 0 0 0 Operating expenses 50,006 9,146 2,219 1,106 37,535 Operating income 5,156 (9,146) (2,267) (1,106) 17,675 Interest expense (421) 0 0 0 (421) Interest income 1,951 0 0 0 1,951 Other income/ (expense), net 425 0 0 0 425 Income before taxes 7,111 (9,146) (2,267) (1,106) 19,630 Tax expense 5,845 0 (575) (381) 6,801 NET INCOME $1,266 ($9,146) ($1,692) ($725) $12,829 Net income per common share assuming dilution $0.05 ($0.33) ($0.06) ($0.03) $0.46 Weighted average number of shares Basic 27,087 27,087 27,087 27,087 27,087 Diluted 27,969 27,969 27,969 27,969 27,969 SECOND QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Adjusted % 9/30/06 10/1/05 Inc/(Dec) vs As Adjusted(5) As Adjusted(6) Prior Year NET REVENUES $108,487 $100,488 8.0% Gross profit 55,210 51,765 6.7 R&D 6,045 6,283 (3.8) S,G&A 31,490 30,103 4.6 In-Process R&D 0 0 --- Cost to Equity 0 0 --- Operating expenses 37,535 36,386 3.2 Operating income 17,675 15,379 14.9 Interest expense (421) (522) (19.3) Interest income 1,951 1,083 80.1 Other income/ (expense), net 425 481 (11.6) Income before taxes 19,630 16,421 19.5 Tax expense 6,801 5,476 24.2 NET INCOME $12,829 $10,945 17.2 Net income per common share assuming dilution $0.46 $0.40 15.0% Weighted average number of shares Basic 27,087 26,395 Diluted 27,969 27,354 Inc/(Dec) vs 9/30/06 9/30/06 10/01/05 As prior year As Reported As Adjusted(5) Adjusted(6) profit margin Profit Margins: % Gross profit 50.8% 50.9% 51.5% (0.6%) R&D 5.6% 5.6% 6.3% (0.7%) S,G&A 32.0% 29.0% 30.0% (1.0%) Operating income 4.8% 16.3% 15.3% 1.0% Income before taxes 6.6% 18.1% 16.3% 1.8% Net income 1.2% 11.8% 10.9% 0.9% FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES 09/30/06 Effect of Arryx IPRD Stock-Based 9/30/06 and Other Compensation Restructuring 9/30/06 As Reported Unusual(2) Expense(3) Costs(4) Adjusted(5) NET REVENUES $219,161 $0 $0 $0 $219,161 Gross profit 112,535 0 (112) 0 112,647 R&D 11,541 0 174 0 11,367 S,G&A 71,649 0 5,008 2,667 63,974 In-Process R&D 9,073 9,073 0 0 0 Cost to Equity 225 225 0 0 0 Operating expenses 92,488 9,298 5,182 2,667 75,341 Operating income 20,047 (9,298) (5,294) (2,667) 37,306 Interest expense (846) 0 0 0 (846) Interest income 3,977 0 0 0 3,977 Other income/ (expense), net 1,337 0 0 0 1,337 Income before taxes 24,515 (9,298) (5,294) (2,667) 41,774 Tax expense 12,093 0 (1,531) (927) 14,551 NET INCOME $12,422 ($9,298) ($3,763) ($1,740) $27,223 Net income per common share assuming dilution $0.44 ($0.33) ($0.13) ($0.06) $0.97 Weighted average number of shares Basic 26,993 26,993 26,993 26,993 26,993 Diluted 27,948 27,948 27,948 27,948 27,948 FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Adjusted % 9/30/06 10/1/05 As Inc/(Dec) vs. As Adjusted(5) Adjusted(6) Prior Year NET REVENUES $219,161 $203,661 7.6% Gross profit 112,647 106,289 6.0 R&D 11,367 11,824 (3.9) S,G&A 63,974 60,591 5.6 In-Process R&D 0 0 --- Cost to Equity 0 0 --- Operating expenses 75,341 72,415 4.0 Operating income 37,306 33,874 10.1 Interest expense (846) (1,063) (20.4) Interest income 3,977 2,396 66.0 Other income/ (expense), net 1,337 1,345 (0.6) Income before taxes 41,774 36,552 14.3 Tax expense 14,551 12,723 14.4 NET INCOME $27,223 $23,829 14.2 Net income per common share assuming dilution $.97 $0.87 11.5% Weighted average number of shares Basic 26,993 26,338 Diluted 27,948 27,279 Inc/(Dec) vs 9/30/06 9/30/06 10/01/05 As prior year As Reported As Adjusted(5) Adjusted(6) profit margin Profit Margins: % Gross profit 51.3% 51.4% 52.2% (0.8%) R&D 5.3% 5.2% 5.8% (0.6%) S,G&A 32.7% 29.2% 29.8% (0.6%) Operating income 9.1 17.0% 16.6% 0.4% Income before taxes 11.2 19.1% 17.9% 1.2% Net income 5.7% 12.4% 11.7% 0.7% (1) Reflects the adjustment to convert our investment in Arryx, Inc. to the equity method for periods prior to the acquisition. (2) IPRD and Cost to Equity impact of Arryx acquisition (3) Stock based compensation expense related to the adoption of FAS 123R. (4) Restructuring costs primarily include severance and related costs associated with eliminating or reorganizing certain positions in our international business operations. (5) "As Adjusted" for FY07 is comprised of "As Reported" less the "Effect of Stock Based Compensation", "Restructuring Costs" & "Arryx IPRD and Other Unusual Charges." (6) "As Adjusted" for FY 06 excludes the restatement of our financial results to reflect our investment in Arryx on the equity method.