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Haemonetics(R) Reports Strong Results for Third Quarter Fiscal 2008 with Continued Double Digit Growth in Sales
Date:1/31/2008

- Raises Annual Revenue Growth Guidance -

BRAINTREE, Mass., Jan. 31 /PRNewswire-FirstCall/ -- Haemonetics Corporation (NYSE: HAE) today reported third quarter fiscal 2008 GAAP net revenues of $135 million, up 18.6%; net income of $14 million, down 15.1%; and net earnings per share of $0.54, down 12.1%.

Third quarter fiscal 2008 adjusted net income, excluding charges in both fiscal 2007 and 2008 and certain tax benefits in 2007, was $15 million, up 12.5%, and adjusted earnings per share were $0.57, up 16.4%.(1) Haemonetics also reported year-to-date net revenues of $378 million, up 13.5%; adjusted net income of $41 million, up 11.2%; and adjusted net earnings per share of $1.53, up 15.3%.(2)

Brad Nutter, Haemonetics' Chairman and CEO, said, "Q3 performance was strong, and we are especially pleased to report our third consecutive quarter of double digit revenue growth. Our 19% growth comes from strength across multiple product lines and geographies. The outlook for these markets continues to be positive. As such, we are adjusting our annual revenue guidance from 10-12% growth to 11-13% growth."

"We are making good strides on our strategic vision to be the global leader in blood management solutions for our customers. Haemonetics is providing customers with a value proposition that includes an extensive depth and breadth of products, services, and software across the blood bank and hospital markets," Mr. Nutter added.

The Company has attached a reconciliation of GAAP to adjusted results at the end of this release. A copy of the reconciliation is also posted on the web at http://www.haemonetics.com/investors.

FINANCIALS

< 82,017

Long-term debt 6,202 6,675

Other long-term liabilities 5,248 4,395

Stockholders' equity 473,700 479,648

Total liabilities & equity $565,532 $572,735

THIRD QUARTER FYE08

CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN

ITEMS

12/29/07

Restructuring

12/29/07 As Costs 12/29/07 As

Reported (3) Adjusted (4)

NET REVENUES $134,587 $0 $134,587

Gross profit 66,558 0 66,558

R&D 5,529 0 5,529

S,G&A 41,432 1,225 40,207

Operating expenses 46,961 1,225 45,736

Operating income 19,597 (1,225) 20,822

Interest income, net 1,070 0 1,070

Other income/(expense), net 225 0 225

Income before taxes 20,892 (1,225) 22,117

Tax expense 6,538 (386) 6,924

NET INCOME $14,354 ($839) $15,193

Net income per common share

assuming dilution $0.54 ($0.03) $0.57

Weighted average number of shares

Basic 25,500 25,500 25,500

Diluted 26,437 26,437 26,437

Profit Margins:

Gross profit 49.5% 49.5%

R&D 4.1% 4.1%

S,G&A 30.8% 29.9%

Operating income 14.6% 15.5%

Income before taxes 15.5% 16.4%

Net income 10.7% 11.3%

12/30/06

Resolution

of Tax Restruc- 12/30/06 Adjusted

12/30/06 Contin- turing As %

As gencies Costs adjusted Inc/(Dec)

Reported (5) (3) (7) '08 vs '07

NET REVENUES $113,527 $0 $0 $113,527 18.6%

Gross profit 56,419 0 0 56,419 18.0

R&D 5,804 0 0 5,804 (4.7)

S,G&A 33,610 0 265 33,345 20.6

Operating expenses 39,414 0 265 39,149 16.8

Operating income 17,005 0 (265) 17,270 20.6

Interest income, net 1,583 0 0 1,583 (32.4)

Other income/(expense),

net 816 0 0 816 (72.4)

Income before taxes 19,404 0 (265) 19,669 12.4

Tax expense 2,503 (3,568) (88) 6,159 12.4

NET INCOME $16,901 $3,568 ($177) $13,510 12.5

Net income per common share

assuming dilution $0.62 $0.13 ($0.01) $0.49 16.4%

Weighted average number of

shares

Basic 26,527 26,527 26,527 26,527

Diluted 27,367 27,367 27,367 27,367

Profit Margins: Inc/(Dec)

vs prior

year

profit

margin %

Gross profit 49.7% 49.7% (0.2%)

R&D 5.1% 5.1% (1.0%)

S,G&A 29.6% 29.4% 0.5%

Operating income 15.0% 15.2% 0.3%

Income before taxes 17.1% 17.3% (0.9%)

Net income 14.9% 11.9% (0.6%)

FYE08 YEAR TO DATE

CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS

12/29/07

Restructuring

12/29/07 As Costs 12/29/07 As

Reported (3) Adjusted (4)

NET REVENUES $377,701 $0 $377,701

Gross profit 187,940 0 187,940

R&D 18,532 0 18,532

S,G&A 119,418 4,009 115,409

In-Process R&D 0 0 0

Operating expenses 137,950 4,009 133,941

Operating income 49,990 (4,009) 53,999

Interest income, net 4,037 0 4,037

Other income/(expense), net 1,905 0 1,905

Income before taxes 55,932 (4,009) 59,941

Tax expense 17,733 (1,341) 19,074

NET INCOME 38,199 (2,668) $40,867

Net income per common share

assuming dilution $1.43 ($0.10) $1.53

Weighted average number of shares

Basic 25,881 25,881 25,881

Diluted 26,776 26,776 26,776

Profit Margins:

Gross profit 49.8% 49.8%

R&D 4.9% 4.9%

S,G&A 31.6% 30.6%

Operating income 13.2% 14.3%

Income before taxes 14.8% 15.9%

Net income 10.1% 10.8%

12/30/06

Resolution Restruc- 12/30/06

12/30/06 of Tax turing As

As Contingen- Arryx Costs Adjusted

Reported cies (5) IPRD (6) (3) (7)

NET REVENUES $332,688 $0 $0 $0 $332,688

Gross profit 168,953 0 0 0 168,953

R&D 17,570 0 0 0 17,570

S,G&A 105,258 0 0 2,932 102,326

In-Process R&D 9,073 0 9,073 0 0

Operating expenses 131,901 0 9,073 2,932 119,896

Operating income 37,052 0 (9,073) (2,932) 49,057

Interest income, net 4,715 0 0 0 4,715

Other income/(expense),

net 2,153 0 0 0 2,153

Income before taxes 43,920 0 (9,073) (2,932) 55,925

Tax expense 14,595 (3,568) 0 (1,004) 19,167

NET INCOME $29,325($3,568) ($9,073) (1,928) $36,758

Net income per common share

assuming dilution $1.06 ($0.13) ($0.33) ($0.07) $1.32

Weighted average number of

shares

Basic 26,838 25,881 26,838 26,838 26,838

Diluted 27,754 26,776 27,754 27,754 27,754

Profit Margins:

Gross profit 50.8% 50.8%

R&D 5.3% 5.3%

S,G&A 31.6% 30.8%

Operating income 11.1% 14.7%

Income before taxes 13.2% 16.8%

Net income 8.8% 11.0%

Adjusted % Inc/(Dec)

'08 vs. '07

NET REVENUES 13.5%

Gross profit 11.2

R&D 5.5

S,G&A 12.8

In-Process R&D ---

Operating expenses 11.7

Operating income 10.1

Interest income, net (14.4)

Other income/(expense), net (11.5)

Income before taxes 7.2

Tax expense (0.5)

NET INCOME 11.2

Net income per common share

assuming dilution 15.3%

Weighted average number of shares

Basic

Diluted

Profit Margins: Inc/(Dec) vs. prior

year profit

margin %

Gross profit (1.0%)

R&D (0.4%)

S,G&A (0.2%)

Operating income (0.4%)

Income before taxes (0.9%)

Net income (0.2%)

FREE CASH FLOW RECONCILIATION

Three Months Ended Nine Months Ended

12-29-07 12-30-06 12-29-07 12-30-06

GAAP CASH FLOW FROM OPERATIONS $24,876 $25,968 $45,754 $59,467

Capital expenditures ($15,242) ($9,695) ($42,497) ($26,985)

Proceeds from sale of property,

plant and equipment $1,187 $834 $3,149 $2,588

Net investment in property, plant

and equipment ($14,055) ($8,861) ($39,348) ($24,397)

Free Cash Flow $10,821 $17,107 $6,406 $35,070

(1) Haemonetics' Q3FY08 adjusted financial results exclude restructuring

costs in connection with changes to the Company's international

operations resulting in (pre-tax) charges of $1.2 million, or $0.03

per share. Q3FY07 adjusted financial results to which the Company is

comparing also exclude restructuring charges of $0.3 million (pre-

tax), or $0.01 per share and a favorable resolution of tax

contingencies resulting in a $3.6 million tax credit ($0.13 per share

impact).

(2) FY08 year-to-date adjusted financial results exclude restructuring

costs resulting in (pre-tax) charges of $4.0 million, or $0.10 per

share. FY07 year-to-date financial results to which the Company is

comparing exclude restructuring charges of $2.9 million (pre-tax), or

$0.07 per share, an in-process R&D charge related to the acquisition

of Arryx of $9 million (pre-tax), or $0.33 per share, and the

favorable resolution of the tax contingencies resulting in a $3.6

million tax credit ($0.13 per share impact).

(3) Restructuring costs primarily include severance and related costs

associated with eliminating or reorganizing certain positions in our

international business operations.

(4) "As Adjusted" for FY 08 is comprised of "As Reported" less the

"Restructuring Costs".

(5) Income tax expense was reduced during the quarter due to the

finalization of an audit of prior year income tax returns.

(6) IPRD impact of Arryx acquisition.

(7) "As Adjusted" for FY 07 is comprised of "As Reported" less the

"Restructuring Costs," "In-process R&D," and the "Resolution of the

Tax Contingency".

p>In addition to revenues and earnings per share, Haemonetics reported third quarter gross profit of $67 million, up 18.0%, and gross margin of 49.5%, down 20 basis points. Gross margin was impacted by product mix as lower gross margin contributors, plasma and equipment, had very strong sales growth. Year-to-date gross profit is $188 million, up 11.2%, and gross margin is 49.8%, down 100 basis points.

Adjusted (1,2) operating expenses for the quarter were $46 million, up 16.8%, with nearly half of the increase coming from three areas: 1) planned enterprise resource planning ("ERP") spending; 2) the acquisition of IDM, Infonale, and Haemoscope, whose expenses were not included in Q3FY07 financial results; and 3) continued investment in Arryx R&D. Year-to-date adjusted operating expenses are $134 million, up 11.7%.

Haemonetics' tax rate was 31.0% in the quarter and 31.7% year-to-date. In the quarter, Haemonetics benefited from resolution of certain tax contingencies.

Haemonetics ended the quarter with a cash balance of $117 million, and $12 million of debt. During the quarter, the Company generated $25 million of cash flow from operations and invested $15 million in capital expenditures.

EXPANDING THE BUSINESS

Haemonetics continues to make progress expanding the business. The Company reported the following highlights:

-- Ongoing restructuring of the European business, which reported 26.5%

revenue growth

-- Acquisition of the TEG(R) Thrombelastograph(R) Hemostasis Analyzer

business which is expected to add approximately $16 million in annual

revenues

-- Launch of a module for the Symphony software suite that allows blood

bank customers to automate applications in their manufacturing and

distribution operations

-- OrthoPAT(R) orthopedic perioperative autotransfusion system disposable

unit growth of nearly 20%

QUARTERLY PRODUCT LINE GROWTH

Brian Concannon, Haemonetics' Chief Operating Officer, said, "A diverse product portfolio drove the Company to nearly 19% revenue growth. Our product line growth drivers continue to do well. I am also pleased to announce that our geographic growth was strong. In the quarter, Asia, a $32 million business, grew 21.2% and Europe, a $135 million business, grew 26.5%. Our reorganization of these businesses is paying off."

Among the product line growth drivers, plasma disposables revenue was $41 million for the quarter, up 27.5%. Year-to-date plasma disposables revenue is $115 million, up 19.3%. Plasma disposable sales benefited from continued growth in U.S. and European plasma collections. Haemonetics expects that growth in the plasma market will continue to drive strong plasma sales for the next several years.

Blood bank disposables revenue was $33 million for the quarter, up 7.3%. Year-to-date blood bank disposables revenue is $100 million, up 6.8%. Blood bank growth was driven by strong sales in Europe and Asia as the Company sees early benefits from last year's reorganization initiatives.

Red cell disposables revenue was $12 million for the quarter, up 12.1%. Year-to-date red cell disposables revenue is $34 million, up 6.7%. Strong equipment sales of the newest generation Cymbal(R) automated blood collection system and the MCS(R)+ mobile collection system in the first half of the year are driving stronger disposable sales in the second half of the year. Including equipment sales, total revenues for the red cell product line grew 15.0% in the quarter and 12.7% year-to-date.

Software and services revenue grew to $11 million for the quarter, up 18.0%. Year-to-date software and services revenue is $30 million, up 26.4%. In the quarter, Haemonetics Software Solutions completed the integration of the Surround software suite into the operations of Hema Quebec. With that software installation, all Canadian blood testing is now being processed through Haemonetics' Surround software.

OrthoPAT disposables revenue was $9 million for the quarter, up 21.3%. Year-to-date OrthoPAT disposables revenue is $25 million, up 13.5%. The Company has placed more than 130 OrthoPAT devices in the field this fiscal year. Equipment placements are expected to continue to drive disposables growth into fiscal 2009.

Equipment revenue was $8 million for the quarter, up 63.4%, and $22 million year-to-date, up 46.6%. Equipment sales growth was driven by sales of plasma devices in the growing European and Asian markets and by sales of platelet equipment in Europe.

FY08 GUIDANCE

Haemonetics raised its FY08 revenue growth guidance from 10-12% growth to 11-13% growth, narrowed its expected gross profit to a range of $250-$253 million, and affirmed adjusted operating income growth of approximately 10%. The Company also affirmed the range for its adjusted earnings per share of $2.07-$2.12.

Adjusted FY08 guidance excludes approximately $4-5 million, or approximately $0.11 per share, of costs to restructure Haemonetics' European business.

FY08 GAAP earnings per share guidance is $1.96-$2.01.

For the full year, the Company expects to generate $20-$25 million of free cash flow.

Haemonetics has posted potential income scenarios reflecting guidance ranges on its website at http://www.haemonetics.com.

CONFERENCE CALL

Haemonetics will hold a conference call on Thursday, January 31st at 10:00 am Eastern to discuss these results. Interested parties can participate in the conference call by dialing 888-802-8577 (U.S. only) or (973) 935-8754 (International) with conference ID 30405896. The call will be replayed through February 15, 2008 at (800) 642-1687 (U.S. only) or (706) 645-9291 (International) using PIN 30405896.

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, IT products, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.

As part of this release, Haemonetics has presented supplemental non-GAAP financial results which exclude restructuring costs and an in-process research and development charge. 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) 320-2401

fallon@haemonetics.com

HAEMONETICS CORPORATION FINANCIAL SUMMARY

(UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THIRD QUARTER FYE08

% Inc/(Dec)

12/29/07 As 12/30/06 As vs Prior

Reported Reported Year

NET REVENUES $134,587 $113,527 18.6%

Gross profit 66,558 56,419 18.0

R&D 5,529 5,804 (4.7)

S,G&A 41,432 33,610 23.3

Operating expenses 46,961 39,414 19.1

Operating income 19,597 17,005 15.2

Interest income, net 1,070 1,583 (32.8)

Other income/(expense), net 225 816 (72.4)

Income before taxes 20,892 19,404 7.7

Tax expense 6,538 2,503 161.2

NET INCOME $14,354 $16,902 (15.1%)

Net income per common share

assuming dilution $0.54 $0.62 (12.1%)

Weighted average number of shares

Basic 25,500 26,527

Diluted 26,437 27,367

Inc/(Dec) vs

prior year

profit

Profit Margins: margin %

Gross profit 49.5% 49.7% (0.2%)

R&D 4.1% 5.1% (1.0%)

S,G&A 30.8% 29.6% 1.2%

Operating income 14.6% 15.0% (0.4%)

Income before taxes 15.5% 17.1% (1.6%)

Net income 10.7% 14.9% (4.2%)

CONSOLIDATED STATEMENTS OF INCOME FOR FYE08 YEAR TO DATE

% Inc/(Dec)

12/29/07 As 12/30/06 As vs Prior

Reported Reported Year

NET REVENUES $377,701 $332,688 13.5%

Gross profit 187,940 168,953 11.2

R&D 18,532 17,570 5.5

S,G&A 119,418 105,258 13.5

In-Process R&D 0 9,073 (100.0)

Operating expenses 137,950 131,901 4.6

Operating income 49,990 37,052 34.9

Interest income, net 4,037 4,715 (14.4)

Other income/(expense), net 1,905 2,153 (11.5)

Income before taxes 55,932 43,920 27.3

Tax expense 17,733 14,595 21.5

NET INCOME 38,199 29,324 30.3%

Net income per common share

assuming dilution $1.43 $1.06 35.0%

Weighted average number of shares

Basic 25,881 26,838

Diluted 26,776 27,754

Inc/(Dec) vs

prior year

profit

Profit Margins: margin %

Gross profit 49.8% 50.8% (1.0%)

R&D 4.9% 5.3% (0.4%)

S,G&A 31.6% 31.6% 0.0%

Operating income 13.2% 11.1% 2.1%

Income before taxes 14.8% 13.2% 1.6%

Net income 10.1% 8.8% 1.3%

REVENUE ANALYSIS

Third Quarter Nine Months Ended

12/29/07 12/30/06 12/29/07 12/30/06

As As % Inc/ As As % Inc/

Reported Reported (Dec) Reported Reported (Dec)

Revenues by

Geography

United States $61,481 $49,819 23.4% $170,085 $143,050 18.9%

International 73,106 63,708 14.8 207,616 189,638 9.5

Net Revenues $134,587 $113,527 18.6 $377,701 $332,688 13.5%

Donor

Plasma $41,253 $32,362 27.5% $114,789 $96,253 19.3%

Blood Bank 33,207 30,954 7.3 100,399 93,998 6.8

Red Cell 12,478 11,132 12.1 34,257 32,105 6.7

$86,938 $74,448 16.8 $249,445 $222,356 12.2

Patient

Surgical 18,981 16,989 11.7 50,907 49,298 3.3

OrthoPAT 9,086 7,491 21.3 25,122 22,132 13.5

$28,067 $24,480 14.7 $76,029 $71,430 6.4

Subtotal $115,005 $98,928 16.3 $325,474 $293,786 10.8

Equipment $8,485 $5,194 63.4 $22,286 $15,207 46.6

Software & Services 11,097 9,405 18.0 29,941 23,695 26.4

Net Revenues $134,587 $113,527 18.6% $377,701 $332,688 13.5%

CONSOLIDATED BALANCE SHEETS

Period ending

12/29/07 03/31/07

Assets

Cash & cash equivalents $116,857 $229,227

Accounts receivable, net $108,811 $91,832

Inventories, net $63,847 $61,797

Other current assets $37,741 $20,815

Total current assets $327,256 $403,671

Net PP&E $110,439 $90,775

Other assets $127,837 $78,289

Total assets $565,532 $572,735

Period ending

12/29/07 03/31/07

Liabilities & Stockholders' Equity

S/T debt & current maturities $6,206 $22,201

Other current liabilities 74,176 $59,816

Total current liabilities 80,382
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SOURCE Haemonetics Corporation
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