OTTAWA, June 14 /PRNewswire-FirstCall/ - MDS Inc. (TSX:
MDS; NYSE: MDZ), a leading provider of products and services to the
global health sciences market, today reported financial results and
filed its unaudited interim consolidated financial statements and
related Management Discussion & Analysis for the three months
ended April 30, 2010.
Aligned with the strategic repositioning announced in
September 2009, MDS has completed the
sale of its Analytical Technologies and Pharma Services businesses.
As a result, the Company has reported the results for these
businesses as discontinued operations. While the Company's focus is
now solely on the MDS Nordion business, as well as Corporate and
Other functions, transactions associated with the strategic
repositioning continue to have a significant impact on continuing
operations.
MDS reported revenues from continuing operations of $56 million in the second quarter of 2010
compared with $65 million in the
second quarter of fiscal 2009. Loss from continuing operations was
$52 million in the second quarter of
2010 compared with a loss of $6
million in the second quarter of fiscal 2009. The increase
in loss reflected a $14 million
after-tax corporate restructuring charge and a $27 million non-cash foreign exchange revaluation
loss. The basic loss per share from continuing operations was
$0.51 in the second quarter of fiscal
2010 compared with a loss of $0.06
per share in the corresponding quarter in fiscal 2009.
Including discontinued operations, MDS reported a net loss of
$90 million in the second quarter of
fiscal 2010, compared with a net loss of $17
million in the same quarter last year.
Second Quarter Fiscal 2010 Highlights
- MDS reported revenues from continuing operations of $56 million for
the second quarter of 2010, down $9 million from revenues of
$65 million in the corresponding quarter in fiscal 2009. Excluding
the impact of foreign exchange, revenues decreased by 23%, primarily
driven by the isotope shortage.
- Operating income for MDS Nordion was $9 million in the second quarter
of fiscal 2010 compared with $20 million in the same quarter last
year, primarily driven by the isotope shortage.
- As of the end of the second quarter of fiscal 2010, MDS had a cash
balance of $134 million.
- On February 1, 2010, William D. Anderson became Chairman of the Board
of Directors for MDS Inc.
- On February 3, 2010, MDS repaid, in full, its remaining outstanding
senior unsecured notes for $223 million.
- On March 5, 2010, MDS completed the divestiture of MDS Pharma
Services Early Stage for $45 million, which included a $25 million
note, and a 15% minority interest in one of the acquiring entities.
- On March 11, 2010, at MDS's Annual and Special Meeting of
Shareholders, a special resolution changing the Company's name to
Nordion Inc. was approved.
- On March 29, 2010, MDS repurchased and cancelled 52,941,176 Common
shares at a purchase price of $8.50 per Common share for a total cost
of $450 million under the substantial issuer bid.
- MDS completed its strategic repositioning. MDS, however, continues to
provide transitional services to the businesses it has sold and will
continue to see the effects of the strategic repositioning in its
financial results into fiscal 2011.
"We remain focused on preparing Nordion to become a
well-positioned stand-alone business that will continue to deliver
solid financial results," said Mr. Steve
West, Chief Executive Officer, MDS Inc. "Completing the
transition remains a priority as we consolidate all corporate
functions at Nordion's Ottawa
headquarters by the end of 2010."
Continuing Operations
MDS Inc.
Second Quarter
-------------------------------------------------------------------------
(millions of U.S. dollars) Q2 2010 Q2 2009
-------------------------------------------------------------------------
Revenues $ 56 $ 65
-------------------------------------------------------------------------
Loss from continuing operations $ (52) $ (6)
-------------------------------------------------------------------------
Continuing operations consist of the MDS Nordion business and
Corporate and Other functions, which include finance, information
technology, human resources, and certain assets and liabilities
expected to be retained by MDS.
MDS Nordion
Second Quarter
-------------------------------------------------------------------------
(millions of U.S. dollars) Q2 2010 Q2 2009
-------------------------------------------------------------------------
Revenues $ 56 $ 65
-------------------------------------------------------------------------
Operating income $ 9 $ 20
-------------------------------------------------------------------------
Revenues in the second quarter of fiscal 2010 were $56 million, compared with $65 million in the same quarter last year. The
reduction in revenue was primarily driven by the continued shutdown
of the NRU reactor since May 2009. On
June 9, 2010, AECL announced that 98%
of the NRU reactor weld repairs had been completed and that the NRU
reactor is being targeted to return to service by the end of
July 2010. Further guidance on the
return-to-service date will be provided by AECL when more
information becomes available.
Revenue results recorded in the MDS Nordion reporting segment
were positively impacted by a foreign exchange gain, increased
cobalt volumes and strength in its radiotherapeutics operations,
largely driven by TheraSphere(R), a targeted liver cancer
treatment.
Operating income was $9 million in
the second quarter of fiscal 2010 compared with $20 million in the same quarter last year, as the
impact of lower revenues due to the NRU reactor shutdown and an
unfavourable change in the fair value of embedded derivatives were
partially offset by the growth in revenues for cobalt and certain
radiotherapeutic products.
Corporate and Other
Second Quarter
-------------------------------------------------------------------------
(millions of U.S. dollars) Q2 2010 Q2 2009
-------------------------------------------------------------------------
Operating loss $ (61) $ (12)
-------------------------------------------------------------------------
Corporate and Other recorded an operating loss of $61 million in the second quarter of fiscal 2010
compared with a loss of $12 million
in the same quarter last year. The decline reported in this segment
reflected a non-cash foreign exchange loss (described on page 4),
restructuring charges related to the strategic repositioning, and
higher selling, general and administration and depreciation and
amortization expenses. The operating loss was partially offset by
workforce reductions due to the wind down of the Toronto headquarters, income from transition
service agreements and cost-control initiatives.
In the second quarter of 2010, MDS recorded a $27 million non-cash foreign exchange loss as a
charge to earnings. The loss was primarily a result of the
revaluation of the $450 million of
proceeds from the sale of MDS Analytical Technologies that were
held in U.S. dollars to fund the substantial issuer bid, which was
paid out in U.S. dollars. While this did not create an exposure
from a U.S. dollar perspective, the cash proceeds from the sale
were held in a Canadian dollar functional currency entity. As the
Canadian dollar strengthened against the U.S. dollar during the
second quarter of fiscal 2010, a non-cash loss on foreign exchange
was recorded. Under U.S. generally accepted accounting principles,
the offset to this revaluation loss is reflected as a foreign
currency translation gain, which is recorded directly in
shareholder's equity.
Discontinued Operations
Second Quarter
-------------------------------------------------------------------------
(millions of U.S. dollars) Q2 2010 Q2 2009
-------------------------------------------------------------------------
Loss from discontinued operations, net of
income taxes $ (38) $ (11)
-------------------------------------------------------------------------
During the second quarter of fiscal 2010, MDS completed its
strategic repositioning initiatives with the sale of MDS Pharma
Services Early Stage.
In the second quarter of fiscal 2010, MDS recorded a loss of
$38 million from discontinued
operations, net of income taxes, which included operating results
from MDS Pharma Services Early Stage. The Company recorded an
$11 million after-tax loss on the
sale of the Pharma Services Early Stage business in the second
quarter of 2010, resulting in a total estimated after-tax loss of
$74 million related to the sale of
this business. In addition, MDS Pharma Services Early Stage
reported a $20 million operating loss
primarily as a result of operating performance. This included a
$4 million restructuring charge and a
$12 million foreign exchange loss
resulting from the settlement of an intercompany loan and
revaluation of certain assets and liabilities, partially offset by
a $7 million reversal in the U.S.
Food and Drug Administration provision from the revised estimate
for future costs. In the second quarter of fiscal 2009, an
$11 million loss was recorded from
Pharma Services and $nil from Analytical Technologies.
Conference Call
MDS will hold a conference call on Tuesday, June 15 at 9:30
a.m. EST to discuss second quarter 2010 results. This call
will be webcast live at www.mdsnordion.com, and will be available
after the call in archived format at
www.mdsnordion.com/news_events/webcasts_presentations.asp.
The full text of MDS Inc.'s second quarter release, including
Management's Discussion and Analysis (MD&A) and financial
statements, can be accessed on MDS's website at
http://www.mdsnordion.com/investors/financial_results.asp.
About MDS Inc.
MDS Inc. (TSX: MDS; NYSE: MDZ) is a global health science
company that provides market-leading products and services used for
the prevention, diagnosis and treatment of disease. We are a
leading provider of innovative technologies for use in medical
imaging and radiotherapeutics, and sterilization technologies
benefiting the lives of millions of people in more than 65
countries around the world. Our products and services are used
daily by pharmaceutical and biotechnology companies, medical-device
manufacturers, hospitals, clinics and research laboratories. MDS
has nearly 700 highly skilled people in five locations. Find out
more at www.mdsnordion.com.
Caution Concerning Forward-Looking Statements
From time to time, we make written or oral forward-looking
statements within the meaning of certain securities laws, including
under applicable Canadian securities laws and the "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995. This document contains forward-looking
statements including, the strategy of the continuing businesses,
the completion of activities associated with the sale of MDS
Analytical Technologies and MDS Pharma Services Early Stage (Early
Stage), as well as statements with respect to our beliefs, plans,
objectives, expectations, anticipations, estimates and intentions.
The words "may", "could", "should", "would", "outlook", "believe",
"plan", "anticipate", "estimate", "project", "expect", "intend",
"indicate", "forecast", "objective", "optimistic", and words and
expressions of similar import, are intended to identify
forward-looking statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, which
give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. We caution readers not to place undue reliance on these
statements as a number of important factors could cause our actual
results to differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates and intentions expressed in
such forward-looking statements. These factors include, but are not
limited to: management of operational risks; the strength of the
global economy, in particular the economies of Canada, the U.S., the European Union,
Asia, and the other countries in
which we conduct business; our ability to secure a reliable supply
of raw materials, particularly cobalt and critical medical
isotopes, including the return to service of the National Research
Universal reactor owned and operated by Atomic Energy of Canada
Limited; the stability of global equity markets; obligations
retained and projected adjustments thereto and their success as
ongoing businesses, or at all; the fact that our operations have
been substantially reduced as a result of the sale of MDS
Analytical Technologies and Early Stage; assets and liabilities
that we retained from the businesses sold; obligations retained and
projected adjustments thereto; successful implementation of
structural changes, including restructuring plans; our ability to
complete other strategic transactions and to execute them
successfully; our ability to negotiate future credit agreements,
which may or may not be on terms favourable to us; the impact of
the movement of the U.S. dollar relative to other currencies,
particularly the Canadian dollar and the Euro; changes in interest
rates in Canada, the U.S., and
elsewhere; the effects of competition in the markets in which we
operate; the timing and technological advancement of new products
introduced by us or by our competitors; our ability to manage our
research and development; the impact of changes in laws, trade
policies and regulations, and enforcement thereof; regulatory
actions; judicial judgments and legal proceedings, including legal
proceedings described in this document; our ability to maintain
adequate insurance; our ability to successfully realign our
organization, resources and processes; our ability to retain key
personnel; our ability to have continued and uninterrupted
performance of our information technology and financial systems;
our ability to compete effectively; the risk of environmental
liabilities; our ability to maintain effectiveness of our clinical
trials; new accounting standards that impact the policies we use to
report our financial condition and results of operations;
uncertainties associated with critical accounting assumptions and
estimates; the possible impact on our businesses from third-party
special interest groups; our ability to negotiate and maintain
collective-bargaining agreements for certain of our employees;
natural disasters; public-health emergencies and pandemics;
international conflicts and other developments including those
relating to terrorism; other risk factors described in section 3.10
of our 2009 AIF; and our success in anticipating and managing these
risks.
The foregoing list of factors that may affect future results is
not exhaustive. When relying on our forward-looking statements to
make decisions with respect to the Company, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. We do not undertake to update
any forward-looking statement, whether written or oral, that may be
made from time to time by us or on our behalf, except as required
by law.
SOURCE MDS Inc.