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Press Release - Accuray Incorporated (ARAY-NASDAQ)

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“If you are a patient, you should remember that Accuray’s CyberKnife is an alternative to surgery. It’s a non-invasive, painless out-patient procedure. The Cyberknife can treat inoperable tumors, and even if operable, you don’t want to cut open the patient, crack open their rib cage, and deflate their lungs in order to treat a lung tumor or invasively treat a tumor that is wrapped around the spine. It may be inoperable in that case.  Our technology offers the means to deliver high doses of radiation...” - Robert E. McNamara (ARAY) (Interview published May 30, 2008)

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Accuray Announces Results for the Fourth Quarter and Fiscal Year End 2008

28 New Contracts Valued at $115.5 Million Signed in Fourth Quarter

SUNNYVALE, Calif., Aug. 19 /PRNewswire-FirstCall/ -- Accuray Incorporated (Nasdaq: ARAY), a global leader in the field of radiosurgery, announced today financial results for the fourth quarter and fiscal year ended June 28, 2008.

For the fourth quarter of fiscal 2008, Accuray reported total revenue of $50.9 million, a 16 percent increase over fourth quarter of fiscal 2007 total revenue of $44.0 million. For the fiscal year ended June 28, 2008, total revenue was $210.4 million, a 50 percent increase over the $140.5 million in total revenue for the fiscal year ended June 30, 2007.

Net income for the fourth quarter of fiscal 2008 was $191,000, or breakeven on a per diluted share basis, compared to net income of $502,000, or $0.01 per diluted share, in the fourth quarter of fiscal 2007. Net income for fiscal year 2008 was $5.4 million, or $0.09 per diluted share, compared to a net loss of $5.6 million, or $0.18 per diluted share, for the fiscal year 2007.

Non-cash, stock based compensation charges for the fourth quarter of fiscal 2008 were $4.1 million, or $0.07 per diluted share. For the full fiscal year 2008, non-cash stock-based compensation charges were $16.9 million, or $0.28 per diluted share.

During the fourth quarter of fiscal 2008, the company signed 28 new contracts with a value of $115.5 million which were entered into backlog. Of the 28 contracts, 17 came from international customers.

At June 28, 2008, backlog was approximately $647 million, with approximately $359 million associated with CyberKnife(R) Robotic Radiosurgery System contracts and approximately $288 million associated with services and other recurring revenue. Accuray's backlog is composed of signed contracts that the company believes have a substantially high probability of being recognized as revenue in future periods. Of the $647 million in backlog at fiscal year end, 71 percent consisted of non-contingent contracts, representing backlog for which contractual contingencies have been satisfied.

Accuray's cash and investment balances at the end of the quarter totaled $159.5 million, consisting of cash and cash equivalents of $36.9 million, short-term investments of $85.5 million and long-term investments of $37.0 million. At the end of the fourth quarter the company continued to have zero debt.

"We ended the fiscal year with strong momentum in new contracts and the quality of our sales pipeline, confirming the growing demand for our CyberKnife Robotic Radiosurgery System," said Euan S. Thomson, Ph.D., president and CEO of Accuray. "Cancer patients, physicians and hospitals worldwide are benefiting from the non-invasive, painless, outpatient treatment offered by our System."


The following statement is forward-looking and actual results may differ materially. Accuray expects revenue for fiscal 2009 to be in the range of $230 million to $250 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 corporate Web site at http://www.accuray.com.

Earnings Call Open to Investors

Accuray will hold a conference call for financial analysts and investors today, August 19, 2008 at 2:00 p.m. PT / 5:00 p.m. ET. The conference call dial-in numbers are (866) 575-6539 (USA) or (913) 981-5530 (International), Access Code: 9058024. A live webcast of the call will also be available from the Investor Relations section of the corporate Web site at http://www.accuray.com. In addition, a recording of the call will be available by calling (888) 203-1112 (USA) or (719) 457-0820 (International), Access Code: 9058024, beginning at 5:00 p.m. PT / 8:00 p.m. ET, August 19, 2008 and will be available through August 29, 2008. A webcast replay will also be available from the Investor Relations section of the corporate Web site at http://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 2009, ending September 27, 2008.

About the CyberKnife(R) Robotic Radiosurgery System

The CyberKnife Robotic Radiosurgery System is the world's only robotic radiosurgery system designed to treat tumors anywhere in the body non- invasively. Using continual image guidance technology and computer controlled robotic mobility, the CyberKnife System automatically tracks, detects and corrects for tumor and patient movement in real-time throughout the treatment. This enables the CyberKnife System to deliver high-dose radiation with pinpoint precision, which minimizes damage to surrounding healthy tissue and eliminates the need for invasive head or body stabilization frames.

About Accuray

Accuray Incorporated (Nasdaq: ARAY), based in Sunnyvale, Calif., is a global leader in the field of radiosurgery dedicated to providing an improved quality of life and a non-surgical treatment option for those diagnosed with cancer. Accuray develops and markets the CyberKnife Robotic Radiosurgery System, which extends the benefits of radiosurgery to include extracranial tumors, including those in the spine, lung, prostate, liver and pancreas. To date, the CyberKnife System has been used to treat more than 50,000 patients worldwide and currently 140 systems have been installed in leading hospitals in the Americas, Europe and Asia. For more information, please visit http://www.accuray.com.

Safe Harbor Statement

The foregoing may contain certain forward-looking statements that involve risks and uncertainties, including uncertainties associated with the medical device industry. Except for the historical information contained herein, the matters set forth in this press release, as to financial guidance including realization of backlog, procedure growth, market acceptance; clinical studies, regulatory review and approval, and commercialization of products 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: market acceptance of products; variability of installation and sales cycle including customer financing and construction delays; competing products, the combination of our products with complementary technology; and other risks detailed from time to time under the heading "Risk Factors" in our report on Form 10-K for the 2007 fiscal year, as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission including our Form 10-K for fiscal 2008 when filed. 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
                    (in thousands, except per share data)

                                     Three months ended       Years ended
                                     June 28,  June 30,  June 28,    June 30,
                                       2008      2007      2008        2007
    Net revenue:
      Products                       $35,553   $34,729   $152,374    $110,320
      Shared ownership programs        2,191     2,842     10,262      10,090
      Services                        11,842     5,651     38,808      16,860
      Other                            1,353       772      8,937       3,182
      Total net revenue               50,939    43,994    210,381     140,452
    Cost of revenue:
      Costs of products               14,851    13,100     67,183      43,363
      Costs of shared ownership
       programs                          290       672      2,517       2,637
      Costs of services                7,851     4,781     26,865      12,269
      Costs of other                   1,051       525      6,864       2,144
      Total cost of revenue           24,043    19,078    103,429      60,413
      Gross profit                    26,896    24,916    106,952      80,039
    Operating expenses:
      Selling and marketing           10,611    10,765     42,726      37,889
      Research and development         8,405     7,510     32,880      26,775
      General and administrative       8,460     7,060     32,280      23,915
      Total operating expenses        27,476    25,335    107,886      88,579
    Loss from operations                (580)     (419)      (934)     (8,540)
    Interest and other income, net     1,030     2,180      7,184       3,530
    Income (loss) before provision
     for income taxes and
     cumulative effect of change in
     accounting principle                450     1,761      6,250      (5,010)
    Provision for income taxes           259     1,259        867       1,444
    Income (loss) before cumulative
     effect of change in accounting
     principle                           191       502      5,383      (6,454)
    Cumulative effect of change in
     accounting principle, net           -         -          -           838
    of tax of $0
    Net income (loss)                   $191      $502     $5,383     $(5,616)

    Net income (loss) per common
     share, basic and diluted:
       Income (loss) before cumulative
       effect of change in
       accounting principle            $0.00     $0.01      $0.10      $(0.21)
      Cumulative effect of change in
       accounting principle              -         -          -          0.03
      Basic net income (loss) per
       share                           $0.00     $0.01      $0.10      $(0.18)

      Income (loss) before cumulative
       effect of change in
       accounting principle            $0.00     $0.01      $0.09      $(0.21)
      Cumulative effect of change in
       accounting principle              -         -          -          0.03
      Diluted net income (loss) per
       share                           $0.00     $0.01      $0.09      $(0.18)

    Weighted average common shares
     outstanding used in computing
     net income (loss) per share:
      Basic                           54,506    53,732     54,531      30,764
      Diluted                         58,854    62,553     60,434      30,764
    Stock-Based Compensation Charges:
    Cost of revenue, selling and marketing,
     research and development, and general
     and administrative expenses include
     stock-based compensation charges as follows:
      Cost of revenue                   $494      $357     $1,858      $1,205
      Selling and marketing             $970    $1,055     $4,197      $3,958
      Research and development          $781      $839     $3,059      $2,448
      General and administrative      $1,836    $1,604     $7,785      $5,016

                             Accuray Incorporated
               Unaudited Condensed Consolidated Balance Sheets
                     (in thousands, except share amounts)

                                                  June 28,          June 30,
                                                    2008              2007
    Current assets:
      Cash and cash equivalents                    $36,936          $204,830
      Restricted cash                                4,830                 -
      Short-term investments                        85,536                 -
      Accounts receivable, net of allowance
       for doubtful accounts of $27 and $20
       at June 30, 2008 and 2007,
       respectively                                 33,918            10,105
      Inventories                                   23,047            16,984
      Prepaid expenses and other current
       assets                                        6,431             7,937
      Deferred cost of revenue - current            31,667            30,709
        Total current assets                       222,365           270,565
    Long-term investments                           37,014                 -
    Property and equipment, net                     17,140            23,937
    Goodwill                                         4,495             4,495
    Intangible assets, net                             926             1,184
    Deferred cost of revenue - noncurrent           11,724            30,522
    Other assets                                     1,340             1,406
        Total assets                              $295,004          $332,109
    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                             $12,962           $14,147
      Accrued expenses                              11,873            17,240
      Customer advances - current                   22,331            12,634
      Deferred revenue - current                    87,455            78,022
        Total current liabilities                  134,621           122,043
    Long-term liabilities:
    Customer advances - noncurrent                   2,900             8,388
    Deferred revenue - noncurrent                   26,720            76,235
        Total liabilities                          164,241           206,666

    Stockholders' equity
    Preferred stock, $0.001 par value;
     Authorized: 5,000,000 shares at both
     June 30, 2008 and 2007; no shares
     issued or outstanding.                            -                 -

    Common stock, $0.001 par value
     at both June 30, 2008 and 2007,
     authorized: 100,000,000 shares at
     both June 30, 2008 and 2007; issued:
     56,719,864 and 53,798,643 shares at
     June 30, 2008 and 2007, respectively;
     outstanding:  54,579,846 and 53,798,643
     shares at June 30, 2008 and 2007,
     respectively.                                      55                53
    Additional paid-in capital                     252,901           251,637
    Accumulated other comprehensive
     income (loss)                                  (1,067)               10
    Accumulated deficit                           (121,126)         (126,257)
        Total stockholders' equity                 130,763           125,443
        Total liabilities and stockholders'
         equity                                   $295,004          $332,109

SOURCE Accuray Incorporated
CONTACT: Tom Rathjen, Vice President, Investor Relations,
+1-408-789-4458, trathjen@accuray.com, or Stephanie Tomei, Public Relations
Manager, +1-408-789-4234, stomei@accuray.com, both of Accuray Incorporated
Web site: http://www.accuray.com



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