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Companies news of 2010-08-03 (page 1)

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    Harris Corporation Reports Strong Fourth Quarter Results; Significantly Higher Orders, Revenue and IncomeCompany Increases Fiscal 2011 Guidance

    MELBOURNE, Fla., Aug. 3 /PRNewswire-FirstCall/ -- Harris Corporation reported GAAP income from continuing operations for the fourth quarter of fiscal 2010 of $151 million, or $1.16 per diluted share, compared with a loss of $84 million, or $.63 per diluted share, in the prior-year quarter. Non-GAAP income from continuing operations in the fourth quarter of fiscal 2010 was $161 million, or $1.24 per diluted share, compared with $120 million, or $.90 per diluted share, in the prior-year quarter. Non-GAAP income excludes acquisition-related costs in both quarters as well as pre-tax charges of $256 million for a non-cash impairment of goodwill and intangible assets in the Broadcast Communications segment in the prior-year fourth quarter. Revenue for the fourth quarter of fiscal 2010 was $1.46 billion, compared with $1.29 billion for the fourth quarter of fiscal 2009. Orders in the fourth quarter were $1.72 billion, compared with $1.29 billion in the prior-year quarter. A reconciliation of GAAP to non-GAAP financial measures is provided in Tables 5 through 8, along with the accompanying notes.

    "Harris achieved another quarter of strong results with orders, revenue and income all significantly higher than in the prior year, driven primarily by continuing strong demand and excellent operating performance in RF Communications," said Howard L. Lance, chairman, president and chief executive officer. Harris fourth quarter orders were significantly higher than revenue, thus adding to an already strong backlog as we enter fiscal 2011. In Tactical Radio Communications, backlog increased to a record $1.24 billion driven by strength in both U.S. and international markets.

    "As previously announced, Harris completed the acquisition of CapRock Communications, a global provider of mission-critical managed satellite communications solutions for the government, energy and maritime markets. With this acquisition we further increased the breadth of our assured communications® capabilities, entered new vertical markets, and increased our international presence." The acquisition is expected to be slightly accretive to Harris earnings in fiscal 2011, excluding acquisition-related costs, and a more significant contributor to earnings in fiscal 2012.

    Results for Full Fiscal YearGAAP income from continuing operations in fiscal 2010 was $562 million, or $4.28 per diluted share, compared with the prior year of $312 million, or $2.33 per diluted share. Non-GAAP income from continuing operations in fiscal 2010 was $582 million, or $4.43 per diluted share, compared with the prior year of $516 million, or $3.85 per diluted share. Non-GAAP income excludes acquisition-related costs in both fiscal years as well as pre-tax charges of $256 million for a non-cash impairment of goodwill and intangible assets in the Broadcast Communications segment in the prior year. Revenue in fiscal 2010 was $5.21 billion compared with $5.01 billion in the prior year.

    The company generated strong cash flow from operations of $803 million in fiscal 2010, which was significantly higher compared with the prior year of $667 million.

    RF CommunicationsFourth quarter orders for the RF Communications segment totaled $890 million, including $711 million in Tactical Radio Communications and $179 million in Public Safety and Professional Communications. At the end of the fourth quarter, total backlog for the RF Communications segment was $1.76 billion, including $1.24 billion in Tactical Radio Communications and $527 million in Public Safety and Professional Communications.

    Revenue for RF Communications in the fourth quarter was $630 million, compared with $468 million in the prior-year quarter. Revenue included $486 million in Tactical Radio Communications and $144 million in Public Safety and Professional Communications. Organic growth for the segment was 22 percent.

    Operating income for RF Communications was $220 million in the fourth quarter, compared with $134 million in the prior-year quarter. Non-GAAP operating income, which excludes acquisition-related costs, was $227 million, compared with $144 million in the prior-year quarter. Non-GAAP operating margin was very strong at 36.0 percent due to favorable product mix and operational efficiencies.

    New orders for Tactical Radio Communications systems in the fourth quarter were driven by several factors, including continued customer adoption of next-generation Falcon III® radios, equipping the military's MRAP and M-ATVs (Mine Resistant Ambush Protected All-Terrain Vehicles) with Falcon II® and Falcon III radios, and strengthening international demand.

    Major Falcon III radio wins in the U.S. market included a $24 million order from the U.S. Air Force for Falcon III AN/PRC-152(C) multiband handheld radios; orders from the U.S. Department of Defense of $20 million and $11 million for Falcon III AN/PRC-117G multiband manpack radio systems and $17 million for Falcon III AN/PRC-152(C) handheld radios; an $11 million order from the U.S. Marine Corps to upgrade existing Falcon III AN/VRC-110 multiband, multimode vehicular tactical radio systems from 20-watt to 50-watt systems; and orders of $13 million and $27 million for Falcon III AN/PRC-152(C) multiband handheld radio systems in vehicular adapters to equip the military's MRAP vehicle program.

    Other significant U.S. orders in the fourth quarter included a $139 million order to provide additional Falcon II AN/VRC-104 high-frequency (HF) tactical radio systems for the MRAP vehicle program and also a $101 million order for Falcon II AN/PRC-117F multiband vehicular radios to equip the next phase of M-ATV purchases and to retrofit other existing MRAP vehicles.

    Growing demand in the international market was a key driver in the quarter of higher than expected orders and backlog for tactical radios. International wins in the quarter also included several Falcon III awards. Harris received orders totaling $99 million from a customer in Asia for the next phase of a comprehensive, multi-level C4I system of Falcon II HF radios and Falcon III radios, including RF-7800S secure personal radios, RF-7800M multiband networking radios, and RF-7800W high-capacity line-of-sight radios; a $30 million order from a customer in the Middle East for Falcon II HF radio systems; an $11 million order from a customer in Central Asia for Falcon II and Falcon III radios to support its role as a Partnership for Peace nation; and orders totaling $26 million from two NATO countries for Falcon III AN/PRC-152(C) handheld radios.

    In the Public Safety and Professional Communications business, Harris received a $30 million order to deploy a P25 trunked emergency radio communications system to support up to 25,000 public service and public safety users in Monroe County, New York. Other major orders included $23 million for an OpenSky® communications system from an energy company in the southwest U.S.; $9 million from Franklin County, North Carolina for a P25 radio communications system; and $5 million from the New York State Police for Unity(TM) XG-100P multiband radios.

    Government Communications SystemsFourth quarter revenue for the Government Communications Systems segment was $707 million, compared with $704 million in the prior-year quarter. Operating income was $74 million in the fourth quarter, compared with $77 million in the prior-year quarter. Non-GAAP operating income, which excludes acquisition-related costs, was $78 million in the fourth quarter, and was unchanged from the prior-year quarter. Non-GAAP operating margin was a strong 11.0 percent in the fourth quarter.

    Revenue increased for the Geostationary Operational Environmental Satellite - Series R Ground Segment (GOES-R GS) weather program for the National Oceanic and Atmospheric Administration (NOAA), the Modernization of Enterprise Terminals (MET) program for the U.S. Army, the Joint Strike Fighter program for the Department of Defense, and the IT services relocation program for the U.S. Southern Command (USSOUTHCOM). As expected, revenue from the Field Data Collection Automation (FDCA) program for the U.S. Census Bureau's 2010 census declined $50 million compared with the prior-year quarter as the program nears completion. Revenue also benefited from recent acquisitions related to new growth initiatives, primarily in Healthcare Solutions.

    In the fourth quarter, Harris was awarded a six-year, $97 million contract with the Federal Aviation Administration for the Weather and Radar Maintenance and Sustainment Services II program. The scope includes software maintenance releases, depot support, on-site field support, and engineering services at 22 operational FAA facilities in the U.S. Harris also was awarded in the quarter a 30-month, $25 million contract to modernize and support high-bandwidth network cabling at Air National Guard (ANG) sites nationwide; a $55 million contract for advanced satellite terminals under the U.S. Army's MET program; and a $25 million contract from a national intelligence customer.

    Following the close of the quarter, Harris was awarded a 10-year, $130 million contract to supply antennas and control systems for NOAA's Geostationary Operational Environmental Satellite Series-R (GOES-R) program. The antennas will provide communications links for command, telemetry and sensor data, as well as the communications link to direct data users. The new antennas will operate with next-generation GOES-R satellites and will be compatible with existing GOES-N through GOES-P satellites.

    Broadcast CommunicationsOrders in the Broadcast Communications segment were $111 million in the fourth quarter and were weaker compared with the prior-year quarter of $127 million. Revenue in the fourth quarter was $128 million compared with the prior-year quarter of $130 million.

    Operating loss in the fourth quarter was $21 million and included $7 million in charges related to cost-reduction actions and $6 million in inventory write-downs associated with weaker demand. Operating results reflected continuing market weakness in the traditional U.S. broadcast market as well as increased investment to address new media and international growth opportunities. Additional cost-reduction actions are planned for fiscal 2011 and are expected to result in additional charges of about $7 million.

    Orders in the fourth quarter included $9 million for turnkey, high-power AM radio transmitter systems for the Pakistan Broadcasting Corporation funded through USAID; $4 million for the Korean Broadcasting System for high-powered AM radio transmitters; $3 million for Viditec S.A. in Argentina to begin to deploy the country's first digital terrestrial transmission system; and $3 million for TCN Channel Nine PTY LTD. in Australia to continue to build out the company's playout and news centers.

    Earnings GuidanceDue to the acquisition of CapRock Communications, the company increased its guidance for non-GAAP income from continuing operations for fiscal 2011 to a range of $4.60 to $4.70 per diluted share ($4.55 to $4.65 per diluted share on a GAAP basis), representing a year-over-year increase of 4 to 6 percent. This compares with a previous range of $4.55 to $4.65 per diluted share ($4.55 to $4.65 per diluted share on a GAAP basis). Fiscal 2011 non-GAAP earnings guidance excludes acquisition-related costs.

    Fiscal 2011 revenue is now expected to be in a range of $5.9 to $6.0 billion, representing a year-over-year increase of 13 to 15 percent compared with the prior year. This compares with a previous range of $5.5 to $5.6 billion.

    Harris will host a conference call today, August 3, at 4:30 p.m. Eastern Time (ET) to discuss its fourth quarter fiscal 2010 financial results. The dial-in numbers for the teleconference are (800) 299-0148 (U.S.) and (617) 801-9711 (International), using participant code 93828851. Please allow at least 10 minutes prior to the scheduled start time to connect to the teleconference. Participants are encouraged to listen via webcast, which will be broadcast live at http://www.harris.com/conference-call. A replay of the teleconference will be available beginning at 7:30 p.m. ET on August 3, and will run until midnight ET on Tuesday, August 10. To access the replay, please call (888) 286-8010 (U.S.) or (617) 801-6888 (International), access code 90846456. A recording of the call also will be available on the Harris website beginning at 7 p.m. ET on August 3.

    About Harris CorporationHarris is an international communications and information technology company serving government and commercial markets in more than 150 countries. Headquartered in Melbourne, Florida, the company has approximately $5 billion of annual revenue and more than 15,000 employees -- including nearly 7,000 engineers and scientists. Harris is dedicated to developing best-in-class assured communications® products, systems, and services. Additional information about Harris Corporation is available at http://www.harris.com/.

    Non-GAAP Financial MeasuresThis press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC, including income from continuing operations and income from continuing operations per diluted share for the fourth quarter of fiscal 2010 and for fiscal 2010, in each case excluding charges for acquisition-related costs; income from continuing operations and income from continuing operations per diluted share for the fourth quarter of fiscal 2009 and for fiscal 2009, in each case excluding charges for acquisition-related costs and for impairment of goodwill and intangible assets in the Broadcast Communications segment; operating income and margins for the RF Communications and the Government Communications Systems segments, excluding acquisition-related costs; organic revenue growth for the RF Communications segment for the fourth quarter of fiscal 2010 compared with the fourth quarter of fiscal 2009, adjusting for the impact of the acquisition of the Tyco Electronics Wireless Systems business acquired during the fourth quarter of fiscal 2009; and fiscal 2011 guidance for income from continuing operations per diluted share and the percentage increase of fiscal 2011 guidance for income from continuing operations per diluted share over fiscal 2010 non-GAAP income from continuing operations per diluted share, in each case excluding acquisition-related costs. Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Management also believes that these non-GAAP financial measures enhance the ability of investors to analyze Harris business trends and to understand Harris performance. In addition, Harris may utilize non-GAAP financial measures as a guide in its forecasting, budgeting, and long-term planning process and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

    Forward-Looking StatementsStatements in this press release that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions, and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this release include but are not limited to: earnings and revenue guidance for fiscal 2011; the potential value of contract awards; and statements regarding outlook, including expected revenue and orders. The company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. The company's consolidated results and the forward-looking statements could be affected by many factors, including but not limited to: the loss of our relationship with the U.S. government or a shift in U.S. government funding; potential changes in U.S. government or customer priorities; risks inherent with large long-term fixed-price contracts, particularly the ability to contain cost overruns; financial and government and regulatory risks relating to international sales and operations; our ability to continue to develop new products that achieve market acceptance; the consequences of future geo-political events; strategic acquisitions and the risks and uncertainties related thereto, including our ability to manage and integrate acquired businesses; performance of our subcontractors and suppliers; potential claims that we are infringing the intellectual property rights of third parties; the successful resolution of patent infringement claims and the ultimate outcome of other contingencies, litigation and legal matters; customer credit risk; risks inherent in developing new technologies; changes in our effective tax rate; the potential impact of natural disasters or other disruptions on our operations; changes in future business conditions that could cause business investments and/or recorded goodwill to become impaired; and the recession in the United States and general downturn in the global economy. Further information relating to factors that may impact the company's results and forward-looking statements are disclosed in the company's filings with the SEC. The forward-looking statements contained in this release are made as of the date of this release, and the company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

    Table 1 HARRIS CORPORATION FY '10 Fourth Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) Quarter Ended ------------- July 2, July 3, 2010 2009 ---- ---- (In millions, except per share amounts) Revenue from product sales and services $1,455.9 $1,294.1 Cost of product sales and services (923.7) (889.7) Engineering, selling and administrative expenses (286.1) (221.5 Impairment of goodwill and other long-lived assets --- (255.5 Non-operating loss (0.9) (0.9) Interest income 0.4 0.6 Interest expense (17.6) (14.0) ----- ----- Income (loss) from continuing operations before income taxes 228.0 (86.9) Income taxes (76.6) 3.4 ----- --- Income (loss) from continuing operations 151.4 (83.5 Discontinued operations, net of income taxes --- (72.9) --- ----- Net income (loss) $151.4 $(156.4) ====== ======= Net income (loss) attributable to Harris Corporation common shareholders Basic * Continuing operations $1.17 $(.63) Discontinued operations --- (.55) --- ---- $1.17 $(1.18) ===== ====== Diluted * Continuing operations $1.16 $(.63) Discontinued operations --- (.55) --- ---- $1.16 $(1.18) ===== ====== Cash dividends paid per common share $.22 $.20 Basic weighted average shares outstanding 127.6 131.4 Diluted weighted average shares outstanding 128.7 131.4 Fiscal Year Ended ----------------- July 2, July 3, 2010 2009 ---- ---- (In millions, except per share amounts) Revenue from product sales and services $5,206.1 $5,005.0 Cost of product sales and services (3,334.4) (3,420.2) Engineering, selling and administrative expenses (958.9) (791.3) Impairment of goodwill and other long-lived assets --- (255.5) Non-operating loss (1.9) (3.1) Interest income 1.5 3.2 Interest expense (72.1) (52.8) ----- ----- Income (loss) from continuing operations before income taxes 840.3 485.3 Income taxes (278.7) (172.9) ------ ------ Income (loss) from continuing operations 561.6 312.4 Discontinued operations, net of income taxes --- (274.5) --- ------ Net income (loss) $561.6 $37.9 ====== ===== Net income (loss) attributable to Harris Corporation common shareholders Basic * Continuing operations $4.31 $2.35 Discontinued operations --- (2.07) --- ----- $4.31 $.28 ===== ==== Diluted * Continuing operations $4.28 $2.33 Discontinued operations --- (2.05) --- ----- $4.28 $.28 ===== ==== Cash dividends paid per common share $.88 $.80 Basic weighted average shares outstanding 129.0 132.3 Diluted weighted average shares outstanding 130.0 133.0 Table 2 HARRIS CORPORATION FY '10 Fourth Quarter Summary BUSINESS SEGMENT INFORMATION (Unaudited) Quarter Ended ------------- July July 2, 3, 2010 2009 ---- ---- (In millions) Revenue RF Communications $629.9 $468.1 Government Communications Systems 707.3 703.8 Broadcast Communications 127.7 130.2 Corporate eliminations (9.0) (8.0) ---- ---- $1,455.9 $1,294.1 ======== ======== Income (Loss) From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications $220.1 $134.0 Government Communications Systems 73.9 77.4 Broadcast Communications (21.1) (257.2) Unallocated corporate expense (23.4) (24.6) Corporate eliminations (3.4) (2.2) Non-operating loss (0.9) (0.9) Net interest expense (17.2) (13.4) ----- ----- $228.0 $(86.9) ====== ====== Fiscal Year Ended ----------------- July 2, July 3, 2010 2009 ---- ---- (In millions) Revenue RF Communications $2,067.2 $1,760.6 Government Communications Systems 2,688.0 2,709.6 Broadcast Communications 486.2 583.6 Corporate eliminations (35.3) (48.8) ----- ----- $5,206.1 $5,005.0 ======== ======== Income (Loss) From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications $707.4 $571.5 Government Communications Systems 337.0 302.8 Broadcast Communications (30.8) (238.0) Unallocated corporate expense (90.4) (81.4) Corporate eliminations (10.4) (16.9) Non-operating loss (1.9) (3.1) Net interest expense (70.6) (49.6) ----- ----- $840.3 $485.3 ====== ====== Table 3 HARRIS CORPORATION FY '10 Fourth Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Fiscal Year Ended ----------- July July 2, 3, 2010 2009 ---- ---- (In millions) Operating Activities Net income $561.6 $37.9 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 165.7 177.7 Purchased in-process research and development write-off --- 7.0 Share-based compensation 35.3 41.9 Non-current deferred income taxes (6.5) (47.2) Impairment of securities available- for-sale --- 7.6 Impairment of goodwill and other long-lived assets --- 556.5 Noncontrolling interest in discontinued operations, net of income taxes --- (162.5) Loss on disposition of discontinued operations --- 62.6 (Increase) decrease in: Accounts and notes receivable 40.0 32.7 Inventories (13.9) (68.3) Increase (decrease) in: Accounts payable and accrued expenses (51.8) 72.1 Advance payments and unearned income 53.0 (17.2) Income taxes 0.8 (41.3) Other 18.5 7.3 ---- --- Net cash provided by operating activities 802.7 666.8 ----- ----- Investing Activities Cash paid for acquired businesses (52.1) (745.3) Additions of property, plant and equipment (189.9) (108.9) Additions of capitalized software (8.1) (12.9) Cash paid for short-term investments available-for-sale --- (1.2) Proceeds from the sale of short- term investments available-for- sale --- 3.7 Net cash used in investing activities (250.1) (864.6) ------ ------ Financing Activities Proceeds from borrowings --- 531.8 Repayment of borrowings (76.8) (81.4) Proceeds from exercise of employee stock options 18.9 5.6 Repurchases of common stock (208.0) (132.3) Cash dividends (115.0) (106.6) Cash decrease related to spin-off of Harris Stratex Networks, Inc. --- (100.0) --- ------ Net cash provided by (used in) financing activities (380.9) 117.1 ------ ----- Effect of exchange rate changes on cash and cash equivalents 2.3 (8.1) --- ---- Net increase (decrease) in cash and cash equivalents 174.0 (88.8) Cash and cash equivalents, beginning of year 281.2 370.0 ----- ----- Cash and cash equivalents, end of year $455.2 $281.2 Supplemental disclosure of noncash investing and financing activities: Distribution of Harris Stratex Networks, Inc. common stock owned by Harris Corporation to Harris Corporation shareholders $ --- $173.1 === ====== Table 4 HARRIS CORPORATION FY '10 Fourth Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) July 2, July 3, 2010 2009 ---- ---- (In millions) Assets Cash and cash equivalents $455.2 $281.2 Receivables 736.0 770.8 Inventories 615.3 607.2 Income taxes receivable 6.4 21.0 Current deferred income taxes 145.3 117.2 Other current assets 37.5 62.0 Property, plant and equipment 609.7 543.2 Goodwill 1,576.2 1,507.1 Intangible assets 297.8 335.6 Non-current deferred income taxes 107.7 85.3 Other non-current assets 147.6 134.5 ----- ----- $4,734.7 $4,465.1 ======== ======== Liabilities and Equity Short-term debt $30.0 $105.7 Accounts payable 329.4 368.0 Compensation and benefits 239.7 224.9 Other accrued items 267.5 288.7 Advance payments and unearned income 175.6 121.7 Current portion of long-term debt 0.7 0.7 Long-term debt 1,176.6 1,177.3 Long-term contract liability 132.4 145.6 Other long-term liabilities 192.7 163.4 Equity 2,190.1 1,869.1 ------- ------- $4,734.7 $4,465.1 ======== ======== HARRIS CORPORATION FY '10 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional measures of segments' operating income (loss); cost of product sales and services; engineering, selling and administrative expenses; income (loss) from continuing operations before income taxes; income taxes; income (loss) from continuing operations; and income (loss) from continuing operations per diluted share adjusted to exclude certain costs, charges, expenses and losses. Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Harris management also believes that these non-GAAP financial measures enhance the ability of investors to analyze Harris' business trends and to understand Harris' performance. In addition, Harris may utilize non-GAAP financial measures as a guide in its forecasting, budgeting, and long-term planning process and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows: Table 5 HARRIS CORPORATION FY '10 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Condensed Consolidated Statement of Income (Unaudited) Quarter Ended July 2, 2010 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions, except per share amounts) Revenue from product sales and services $1,455.9 $ --- $1,455.9 Cost of product sales and services (A) (923.7) 0.7 (923.0) Engineering, selling and administrative expenses (B) (286.1) 9.4 (276.7) Impairment of goodwill and other long-lived assets (C) --- --- --- Non-operating loss (0.9) --- (0.9) Interest income 0.4 --- 0.4 Interest expense (17.6) --- (17.6) ----- --- ----- Income (loss) from continuing operations before income taxes 228.0 10.1 238.1 Income taxes (D) (76.6) (0.3) (76.9) ----- ---- ----- Income (loss) from continuing operations $151.4 $9.8 $161.2 Income (loss) from continuing operations per diluted common share * $1.16 $.08 $1.24 Quarter Ended July 3, 2009 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions, except per share amounts) Revenue from product sales and services $1,294.1 $ --- $1,294.1 Cost of product sales and services (A) (889.7) 1.2 (888.5) Engineering, selling and administrative expenses (B) (221.5) 8.9 (212.6) Impairment of goodwill and other long-lived assets (C) (255.5) 255.5 --- Non-operating loss (0.9) --- (0.9) Interest income 0.6 --- 0.6 Interest expense (14.0) --- (14.0) ----- --- ----- Income (loss) from continuing operations before income taxes (86.9) 265.6 178.7 Income taxes (D) 3.4 (62.5) (59.1) --- ----- ----- Income (loss) from continuing operations $(83.5) $203.1 $119.6 Income (loss) from continuing operations per diluted common share * $(.63) $1.53 $.90 Fiscal Year Ended July 2, 2010 ------------ As Reported Adjustment Non-GAAP ----------- ---------- -------- (In millions, except per share amounts) Revenue from product sales and services $5,206.1 $ --- $5,206.1 Cost of product sales and services (A) (3,334.4) 5.7 (3,328.7) Engineering, selling and administrative expenses (B) (958.9) 20.4 (938.5) Impairment of goodwill and other long- lived assets (C) --- --- --- Non- operating loss (1.9) --- (1.9) Interest income 1.5 --- 1.5 Interest expense (72.1) --- (72.1) ----- --- ----- Income from continuing operations before income taxes 840.3 26.1 866.4 Income taxes (D) (278.7) (6.2) (284.9) ---- ------ Income from continuing operations $561.6 $19.9 $581.5 ====== ===== ====== Income from continuing operations per diluted common share * $4.28 $.15 $4.43 Fiscal Year Ended July 3, 2009 ------------ As Reported Adjustment Non-GAAP ----------- ---------- -------- (In millions, except per share amounts) Revenue from product sales and services $5,005.0 $ --- $5,005.0 Cost of product sales and services (A) (3,420.2) 1.2 (3,419.0) Engineering, selling and administrative expenses (B) (791.3) 8.9 (782.4) Impairment of goodwill and other long- lived assets (C) (255.5) 255.5 --- Non-operating loss (3.1) --- (3.1) Interest income 3.2 --- 3.2 Interest expense (52.8) --- (52.8) ----- --- ----- Income from continuing operations before income taxes 485.3 265.6 750.9 Income taxes (D) (172.9) (62.5) (235.4) ------ ----- ------ Income from continuing operations $312.4 $203.1 $515.5 ====== ====== ====== Income from continuing operations per diluted common share * $2.33 $1.52 $3.85 Table 6 HARRIS CORPORATION FY '10 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Business Segment Information (Unaudited) Quarter Ended July 2, 2010 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions) Revenue RF Communications $629.9 $ --- $629.9 Government Communications Systems 707.3 --- 707.3 Broadcast Communications 127.7 --- 127.7 Corporate eliminations (9.0) --- (9.0) ---- --- ---- $1,455.9 $ --- $1,455.9 ======== === ======== Income (Loss) From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications (E) $220.1 $6.4 $226.5 Government Communications Systems (F) 73.9 3.7 77.6 Broadcast Communications (C) (21.1) --- (21.1) Unallocated corporate expense (23.4) --- (23.4) Corporate eliminations (3.4) --- (3.4) Non-operating loss (0.9) --- (0.9) Net interest expense (17.2) --- (17.2) ----- --- ----- $228.0 $10.1 $238.1 ====== ===== ====== Quarter Ended July 3, 2009 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions) Revenue RF Communications $468.1 $ --- $468.1 Government Communications Systems 703.8 --- 703.8 Broadcast Communications 130.2 --- 130.2 Corporate eliminations (8.0) --- (8.0) ---- --- ---- $1,294.1 $ --- $1,294.1 ======== === ======== Income (Loss) From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications (E) $134.0 $9.5 $143.5 Government Communications Systems (F) 77.4 0.6 78.0 Broadcast Communications (C) (257.2) 255.5 (1.7) Unallocated corporate expense (24.6) --- (24.6) Corporate eliminations (2.2) --- (2.2) Non-operating loss (0.9) --- (0.9) Net interest expense (13.4) --- (13.4) ----- --- ----- $(86.9) $265.6 $178.7 ====== ====== ====== Fiscal Year Ended July 2, 2010 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions) Revenue RF Communications $2,067.2 $ --- $2,067.2 Government Communications Systems 2,688.0 --- 2,688.0 Broadcast Communications 486.2 --- 486.2 Corporate eliminations (35.3) --- (35.3) ----- --- ----- $5,206.1 $ --- $5,206.1 ======== === ======== Income From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications (E) $707.4 $19.3 $726.7 Government Communications Systems (F) 337.0 6.8 343.8 Broadcast Communications (C) (30.8) --- (30.8) Unallocated corporate expense (90.4) --- (90.4) Corporate eliminations (10.4) --- (10.4) Non-operating loss (1.9) --- (1.9) Net interest expense (70.6) --- (70.6) ----- --- ----- $840.3 $26.1 $866.4 ====== ===== ====== Fiscal Year Ended July 3, 2009 ------------ As Reported Adjustment Non-GAAP --------- ---------- -------- (In millions) Revenue RF Communications $1,760.6 $ --- $1,760.6 Government Communications Systems 2,709.6) --- 2,709.6 Broadcast Communications 583.6 --- 583.6 Corporate eliminations (48.8) --- (48.8) ----- --- ----- $5,005.0 $ --- $5,005.0 ======== === ======== Income From Continuing Operations Before Income Taxes Segment Operating Income (Loss): RF Communications (E) $571.5 $9.5 $581.0 Government Communications Systems (F) 302.8 0.6 303.4 Broadcast Communications (C) (238.0) 255.5 17.5 Unallocated corporate expense (81.4) --- (81.4) Corporate eliminations (16.9) --- (16.9) Non-operating loss (3.1) --- (3.1) Net interest expense (49.6) --- (49.6) ----- --- ----- $485.3 $265.6 $750.9 ====== ====== ====== Table 7 HARRIS CORPORATION FY '10 Fourth Quarter Summary Reconciliation of FY '11 GAAP Income from Continuing Operations per Diluted Share Guidance to FY '10 GAAP Income from Continuing Operations per Diluted Share and FY '11 Non-GAAP Income from Continuing Operations per Diluted Share Guidance (Unaudited) Fiscal Year 2010 Fiscal Year 2011 Percent Change (Actual) (Guidance) -------------- -------- ---------- GAAP income from continuing operations per diluted share $4.28 $4.55 to $4.65 6% to 9% Charges associated with the acquisition of Tyco Electronics Wireless Systems (G) $0.11 $--- Charges associated with the acquisitions of Crucial Security, Inc., the ATC Business Unit of SolaCom Technologies Inc., Patriot Technologies, LLC and SignaCert, Inc. (H) $0.02 $--- Charges associated with the acquisition of CapRock Communications (I) $0.02 $0.05 ----- ----- Non-GAAP income from continuing operations per diluted share $4.43 $4.60 to $4.70 ===== ============== 4% to 6% Table 8 HARRIS CORPORATION FY '10 Fourth Quarter Summary RF Communications Segment Organic Revenue Growth Calculation Quarter Ended ------------- Percent July 2, 2010 July 3, 2009 Change ------------ ------------ -------- GAAP Revenue $629.9 $468.1 34.6% Impact of acquiring Tyco Electronics Wireless Systems (J) ------ 47.2 Organic Revenue $629.9 $515.3 22.2% ====== ====== HARRIS CORPORATION FY '10 Fourth Quarter Summary RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) Notes to tables 5 through 8: Note A - Adjustments to cost of product sales and services for the quarter ended July 2, 2010 are due to integration costs associated with our acquisition of the Tyco Electronics Wireless Systems business ("Wireless Systems") from Tyco Electronics Ltd. ($0.7 million). Adjustments to cost of product sales and services for the fiscal year ended July 2, 2010 are due to integration costs and the impact of a step up in inventory associated with our acquisition of Wireless Systems ($5.7 million). Adjustments to cost of product sales and services for the quarter and fiscal year ended July 3, 2009 are due to the impact of a step up in inventory associated with our acquisition of Wireless Systems ($1.2 million). Note B - Adjustments to engineering, selling and administrative expenses for the quarter ended July 2, 2010 are due to integration and other costs associated with our acquisitions of Wireless Systems ($5.7 million), Crucial Security, Inc. ("Crucial") ($0.1 million), the ATC Business Unit of SolaCom Technologies Inc. ("SolaCom ATC") ($0.1 million), Patriot Technologies, LLC ("Patriot") ($0.6 million), SignaCert, Inc. ("SignaCert") ($0.3 million) and CapRock Communications ("CapRock") ($2.6 million). Adjustments to engineering, selling and administrative expenses for the fiscal year ended July 2, 2010 are due to integration and other costs associated with our acquisitions of Wireless Systems ($13.6 million), Crucial ($1.5 million), SolaCom ATC ($0.9 million), Patriot ($1.5 million), SignaCert ($0.3 million) and CapRock ($2.6 million). Adjustments to engineering, selling and administrative expenses for the quarter and fiscal year ended July 3, 2009 are due to integration costs and a write-off of in-process research and development associated with our acquisition of Wireless Systems ($8.3 million) and integration costs associated with our acquisition of Crucial ($0.6 million). Note C - Adjustment for impairment of goodwill and other long-lived assets in our Broadcast Communications segment ($255.5 million). Note D - Adjustments to our income taxes are primarily based on the tax rate and characterization of tax treatment on the tax return in the jurisdiction to which the item applies. Note E - Adjustments to our RF Communications segment operating income for the quarter ended July 2, 2010 are due to integration costs associated with our acquisition of Wireless Systems ($6.4 million). Adjustments to our RF Communications segment operating income for the fiscal year ended July 2, 2010 are due to integration costs and the impact of a step up in inventory associated with our acquisition of Wireless Systems ($19.3 million). Adjustments to our RF Communications segment operating income for the quarter and fiscal year ended July 3, 2009 are due to the impact of a step up in inventory, integration costs and a write-off of in-process research and development associated with our acquisition of Wireless Systems ($9.5 million). Note F - Adjustments to our Government Communications Systems segment operating income for the quarter ended July 2, 2010 are due to integration and other costs associated with our acquisitions of Crucial ($0.1 million), SolaCom ATC ($0.1 million), Patriot ($0.6 million), SignaCert ($0.3 million) and CapRock ($2.6 million). Adjustments to our Government Communications Systems segment operating income for the fiscal year ended July 2, 2010 are due to integration and other costs associated with our acquisitions of Crucial ($1.5 million), SolaCom ATC ($0.9 million), Patriot ($1.5 million), SignaCert ($0.3 million) and CapRock ($2.6 million). Adjustments to our Government Communications Systems segment operating income for the quarter and fiscal year ended July 3, 2009 are due to integration costs associated with our acquisition of Crucial ($0.6 million). Note G - Adjustment for pre-tax charges of $19.3 million ($.11 per diluted share) for fiscal 2010 related to integration and other costs associated with our acquisition of Wireless Systems. Note H - Adjustment for pre-tax charges of $4.2 million ($.02 per diluted share) for fiscal 2010 related to integration and other costs associated with our acquisitions of Crucial, SolaCom ATC, Patriot and SignaCert. Note I - Adjustment for pre-tax charges of $2.6 million ($.02 per diluted share) for fiscal 2010 and estimated pre-tax charges of $10.0 million ($.05 per diluted share) for fiscal 2011 related to integration and other costs associated with our acquisition of CapRock. Note J - Adjustment related to the revenue of Wireless Systems for the quarter ended July 3, 2009. * Impact of Adopting Newly Issued Earnings per Share Accounting Standard We have retrospectively applied the provisions of a newly issued accounting standard requiring that unvested share-based payment awards that contain rights to receive nonforfeitable dividends or dividend equivalents (whether paid or unpaid) be treated as participating securities and that such awards be included in the calculations of income per basic and diluted share using the two- class method. The application of the two-class method decreased GAAP diluted earnings per share by $.01 and $.02 for the quarter ended July 2, 2010 and fiscal year ended July 2, 2010, respectively, and decreased non-GAAP diluted earnings per share by $.02 for the fiscal year ended July 2, 2010. There was no impact to non-GAAP diluted earnings per share for the fourth quarter of fiscal 2010. There was no impact to GAAP diluted earnings per share for the first and second quarters of fiscal 2010 and there was a $.01 decrease in GAAP diluted earnings per share for the third quarter of fiscal 2010 from the application of the two-class method. There was a decrease in non-GAAP diluted earnings per share by $.01 in each of the first three quarters of fiscal 2010 from the application of the two-class method.

    Harris Corporation

    CONTACT: Investor Relations, Pamela Padgett, +1-321-727-9383,
    pamela.padgett@harris.com, or Media inquiries, Jim Burke, +1-321-727-9131,
    jim.burke@harris.com, or For additional information, contact Harris
    Corporation at webmaster@harris.com

    Web Site: http://www.harris.com/




    CNO Reports 20% Increase in Second Quarter 2010 Net Income and Continued Sales Growth

    CARMEL, Ind., Aug. 3 /PRNewswire-FirstCall/ -- CNO Financial Group, Inc. today announced results for the second quarter of 2010. "Sales across all three of our segments continued to be strong during the second quarter," CEO Jim Prieur said. "Earnings for the quarter also were strong, with net operating income of 16 cents per diluted share ahead of our expectations."

    Second Quarter Results -- Net income of $33.1 million, up 20% over 2Q09 (including $11.8 million of net realized investment losses and loss on extinguishment of debt in 2Q10 vs. $13.2 million of net realized investment losses in 2Q09) -- Net income per diluted share of 12 cents, compared to 15 cents in 2Q09 (reflecting dilution of 5 cents per share related to the issuance of common stock and convertible debentures; and including 4 cents of net realized investment losses and loss on extinguishment of debt in 2Q10 vs. 7 cents of net realized investment losses in 2Q09) (1) -- $89.7 million of income before net realized investment losses, corporate interest and taxes ("EBIT") (2), up 3% compared to $86.7 million in 2Q09 -- Net operating income (3) of $44.9 million, up 10% compared to $40.8 million in 2Q09 -- Net operating income per diluted share: 16 cents, compared to 22 cents in 2Q09 (reflecting dilution of 7 cents per share related to the issuance of common stock and convertible debentures) (1) -- Total new annualized premium ("NAP") excluding Private-Fee-For-Service ("PFFS") and Prescription Drug Plan ("PDP") (4): $95.3 million, up 5% from 2Q09, with growth in all three segments Six-Month Results -- Net income of $67.0 million, up 29% compared to the first six months of 2009 (including $16.1 million of net realized investment losses and loss on extinguishment of debt in the first six months of 2010 vs. $26.2 million of net realized investment losses and loss on modification of debt in the first six months of 2009) -- Net income per diluted share of 25 cents, compared to 28 cents in the first six months of 2009 (including 5 cents of net realized investment losses and loss on extinguishment of debt in the first six months of 2010 vs. 14 cents of net realized investment losses and loss on modification of debt in the first six months of 2009) (1) -- $168.9 million of income before net realized investment losses, corporate interest and taxes ("EBIT") (2), up 6% compared to the first six months of 2009 -- Net operating income (3) of $83.1 million, up 6% compared to the first six months of 2009 -- Net operating income per diluted share: 30 cents, compared to 42 cents in the first six months of 2009 (1) -- NAP excluding PFFS and PDP (4): $182.6 million, up 4% from the first six months of 2009, with growth in all three segments Financial Strength at June 30, 2010 -- Including an 8 point decrease from the adoption of the new Mortgage Experience Adjustment Factors, the combined statutory risk-based capital ratio of our insurance subsidiaries decreased 1 percentage point to 318% in 2Q10 -- Debt-to-total capital ratio, excluding accumulated other comprehensive income (loss) (5), improved to 21.0% from 21.5% at December 31, 2009 -- Book value per common share, excluding accumulated other comprehensive income (loss) (5), increased to $15.39 from $15.14 at December 31, 2009 -- Accumulated other comprehensive income (loss) improved in 2Q10 by $421.8 million, to accumulated other comprehensive income of $318.8 million, reflecting the increase in estimated fair value of our actively managed fixed maturity investments Quarterly Segment Operating Results Three months ended June 30, -------- 2010 2009 ---- ---- ($ in millions, except per-share data) EBIT (2): Bankers Life $64.0 $63.3 Colonial Penn 7.6 11.0 Conseco Insurance Group 29.9 21.2 Corporate Operations, excluding corporate interest expense (11.8) (8.8) ----- ---- EBIT 89.7 86.7 Corporate interest expense (19.8) (23.9) ----- ----- Income before loss on extinguishment or modification of debt, net realized investment losses and taxes 69.9 62.8 Tax expense on operating income 25.0 22.0 ---- ---- Net operating income (3) 44.9 40.8 Loss on extinguishment or modification of debt, net of income taxes (.6) - Net realized investment losses (net of related amortization and taxes and the establishment of a valuation allowance for deferred tax assets related to such losses) (6) (11.2) (13.2) ----- ----- Net income applicable to common stock $33.1 $27.6 ===== ===== Per diluted share (1): Net operating income $.16 $.22 Net realized investment losses, net of related amortization and taxes (.04) (.07) ---- ---- Net income $.12 $.15 ==== ==== Segment Results

    Bankers Life: Pre-tax operating earnings were $64.0 million in 2Q10, essentially flat with earnings in 2Q09.

    Colonial Penn: Pre-tax operating earnings were $7.6 million in 2Q10 down 31% compared to 2Q09. Excluding the impact of a $3 million gain in 2Q09 related to the termination of a group insurance pool, Colonial Penn's results were essentially flat with prior-period earnings.

    Conseco Insurance Group: Pre-tax operating earnings were $29.9 million in 2Q10 up 41% compared to 2Q09. Results for the second quarter of 2010 were driven by higher investment spreads resulting from bond prepayment income, along with higher book yields on our investment portfolio, and improved annuity persistency.

    Corporate Operations (including our investment advisory subsidiary and corporate expenses): Results for 2Q10 compared to 2Q09 reflect increased expenses, including $2 million related to a terminated lease obligation and rebranding expenses.

    Results for 2Q10 included the recognition of a $0.6 million extinguishment loss, net of income taxes, related to the repurchase of $52.5 million aggregate principal amount of 3.5% convertible senior debentures.

    Investment Results

    Net realized investment losses in 2Q10 were $11.2 million (net of related amortization and taxes), including total other-than-temporary impairment losses of $29.3 million, of which $27.9 million was recorded in earnings and $1.4 million in accumulated other comprehensive income (loss). Net realized investment losses in 2Q09 of $13.2 million (net of related amortization and taxes and the establishment of a valuation allowance for deferred tax assets related to such losses), including: (i) total other-than-temporary impairment losses of $53.7 million, of which $36.6 million was recorded in earnings and $17.1 million in accumulated other comprehensive income (loss); and (ii) $4.6 million increase to the deferred tax valuation allowance.

    Sales Results

    At Bankers Life (career distribution), total NAP (excluding PFFS and PDP) in 2Q10 was $64.0 million, up 3% from 2Q09.

    At Colonial Penn (direct distribution), total NAP was $12.2 million, up 16% from 2Q09.

    At Conseco Insurance Group (independent distribution), total NAP was $19.1 million, up 6% from 2Q09.

    Accounting Matters

    Effective January 1, 2010, we adopted authoritative guidance requiring us to consolidate a variable interest entity. At that date, the cumulative effect of this accounting change was a decrease to shareholders' equity of $15.9 million, including $6.2 million included in accumulated other comprehensive income (loss).

    Conference Call

    The Company will host a conference call to discuss results on August 4, 2010 at 10:00 a.m. Eastern Daylight Time. The webcast can be accessed through the Investors section of the company's website: http://investor.cnoinc.com/. Participants should go to the website at least 15 minutes before the event to register and download any necessary audio software. During the call, we will be referring to a presentation that will be available this morning at the Investors section of the company's website.

    About CNO

    CNO is a holding company. Our insurance subsidiaries - principally Bankers Life and Casualty Company, Colonial Penn Life Insurance Company and Washington National Insurance Company - serve working American families and seniors by helping them protect against financial adversity and provide for a more secure retirement. For more information, visit CNO online at http://www.cnoinc.com/.

    1. Net income per diluted share and operating income per diluted share for 2Q2010 and the first six months of 2010 reflect the dilution from the issuance of 65.9 million shares of common stock and $293.0 million of convertible debentures. 2. Management believes that an analysis of earnings before net realized investment gains (losses), corporate interest expense, loss on extinguishment or modification of debt and taxes ("EBIT," a non-GAAP financial measure) provides a clearer comparison of the operating results of the company quarter-over-quarter because it excludes: (i) corporate interest expense; (ii) loss on extinguishment or modification of debt; and (iii) net realized investment gains (losses) that are unrelated to the company's underlying fundamentals. A reconciliation of EBIT to Net Income applicable to common stock is provided in the tables on pages 2 and 8. 3. Management believes that an analysis of Net income applicable to common stock before: (i) loss on extinguishment or modification of debt, net of income taxes; and (ii) net realized investment gains or losses, net of related amortization and income taxes ("Net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. Management uses this measure to evaluate performance because loss on extinguishment of debt and realized investment gains or losses can be affected by events that are unrelated to the company's underlying fundamentals. A reconciliation of Net operating income to Net income applicable to common stock is provided in the tables on pages 2 and 8. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO's website, http://www.cnoinc.com/. 4. Measured by new annualized premium, which includes 6% of annuity and 10% of single premium whole life deposits and 100% of all other premiums. PDP and PFFS sales are not comparable to other sales and are therefore excluded in all periods. Effective January 1, 2010, we no longer assume any of the risks of PFFS business through reinsurance. 5. The calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. The corresponding GAAP measures for debt-to-total capital and book value per common share were 19.7% and $16.66, respectively, at June 30, 2010, and 22.7% and $14.09, respectively, at December 31, 2009. 6. Amount in the second quarter of 2009 reflects a deferred tax valuation allowance of $4.6 million as it is more likely than not that tax benefits related to investment losses will not be utilized to offset future taxable income.

    Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in this press release relative to markets for CNO Financial's products and trends in CNO Financial's operations or financial results, as well as other statements, contain forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as "anticipate," "believe," "plan," "estimate," "expect," "project," "intend," "may," "will," "would," "contemplate," "possible," "attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these words carefully because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our results of operations, financial position, and our business outlook or they state other ''forward-looking'' information based on currently available information. Assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, among other things: (i) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (ii) general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iii) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (iv) our ability to obtain adequate and timely rate increases on our supplemental health products, including our long-term care business; (v) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (vi) mortality, morbidity, the increased cost and usage of health care services, persistency, the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products; (vii) changes in our assumptions related to the cost of policies produced or the value of policies in force at the effective date; (viii) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on its value; (ix) our assumption that the positions we take on our tax return filings, including our position that our 7.0% convertible senior debentures due 2016 will not be treated as stock for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, and will not trigger an ownership change, will not be successfully challenged by the Internal Revenue Service; (x) changes in accounting principles and the interpretation thereof; (xi) our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems, (xii) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xiii) our ability to identify products and markets in which we can compete effectively against competitors with greater market share, higher ratings, greater financial resources and stronger brand recognition; (xiv) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (xv) our ability to complete the remediation of the material weakness in internal controls over our actuarial reporting process and to maintain effective controls over financial reporting; (xvi) our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives; (xvii) our ability to achieve eventual upgrades of the financial strength ratings of CNO Financial and our insurance company subsidiaries as well as the impact of rating downgrades on our business and our ability to access capital; (xviii) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission; (xix) regulatory changes or actions, including those relating to regulation of the financial affairs of our insurance companies, such as the payment of dividends and surplus debenture interest to us, regulation of financial services affecting (among other things) bank sales and underwriting of insurance products, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; and (xx) changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products. Other factors and assumptions not identified above are also relevant to the forward-looking statements, and if they prove incorrect, could also cause actual results to differ materially from those projected. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Our forward-looking statements speak only as of the date made. We assume no obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements.

    - Tables Follow - CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in millions) December June 30, 31, 2010 2009 ---- ---- ASSETS (unaudited) Investments: Actively managed fixed maturities at fair value (amortized cost: $19,935.7 $18,528.4 June 30, 2010 -$19,280.3; December 31, 2009 -$18,998.0) Equity securities at fair value (cost: June 30, 2010 -$30.7; December 31, 2009 -$30.7) 31.0 31.0 Mortgage loans 1,948.1 1,965.5 Policy loans 292.9 295.2 Trading securities 360.7 293.3 Investments held by securitization entities (1) 478.4 - Securities lending collateral 77.6 180.0 Other invested assets 167.2 236.8 ----- ----- Total investments 23,291.6 21,530.2 Cash and cash equivalents - unrestricted 323.7 523.4 Cash and cash equivalents held by securitization entities (1) 13.5 3.4 Accrued investment income 323.1 309.0 Value of policies inforce at the Effective Date 1,077.3 1,175.9 Cost of policies produced 1,700.0 1,790.9 Reinsurance receivables 3,357.2 3,559.0 Income tax assets, net 769.0 1,124.0 Assets held in separate accounts 15.6 17.3 Other assets 349.8 310.7 ----- ----- Total assets $31,220.8 $30,343.8 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Liabilities for insurance products: Interest-sensitive products $13,177.8 $13,219.2 Traditional products 10,199.7 10,063.5 Claims payable and other policyholder funds 946.0 994.0 Liabilities related to separate accounts 15.6 17.3 Other liabilities 683.6 610.4 Investment borrowings 454.2 683.9 Borrowings related to securitization entities (1) 449.7 - Securities lending payable 82.0 185.7 Notes payable - direct corporate obligations 1,029.4 1,037.4 ------- ------- Total liabilities 27,038.0 26,811.4 -------- -------- Commitments and Contingencies Shareholders' equity: Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: June 30, 2010 - 251,044,745; December 31, 2009 -250,786,216) 2.5 2.5 Additional paid-in capital 4,418.8 4,408.8 Accumulated other comprehensive income (loss) 318.8 (264.3) Accumulated deficit (557.3) (614.6) ------ ------ Total shareholders' equity 4,182.8 3,532.4 ------- ------- Total liabilities and shareholders' equity $31,220.8 $30,343.8 ========= ========= (1) In the first quarter of 2010, the Company began reporting assets and liabilities related to securitization entities required to be consolidated under a new accounting standard effective January 1, 2010. CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in millions, except per share data) (unaudited) Three months ended June 30, -------- 2010 2009 ---- ---- Revenues: Insurance policy income $667.9 $791.3 Net investment income (loss): General account assets 321.1 308.5 Policyholder and reinsurer accounts and other special- purpose portfolios (22.7) 9.0 Realized investment gains (losses): Net realized investment gains, excluding impairment losses 11.2 20.3 Other-than-temporary impairment losses: Total other-than-temporary impairment losses (29.3) (53.7) Change in other-than- temporary impairment losses recognized in accumulated other comprehensive income (loss) 1.4 17.1 --- ---- Net impairment losses recognized (27.9) (36.6) ----- ----- Total realized gains (losses) (16.7) (16.3) ----- ----- Fee revenue and other income 3.6 3.1 --- --- Total revenues 953.2 1,095.6 ----- ------- Benefits and expenses: Insurance policy benefits 651.0 781.1 Interest expense 28.7 32.7 Amortization 96.6 101.8 Loss on extinguishment or modification of debt .9 - Other operating costs and expenses 124.2 130.4 ----- ----- Total benefits and expenses 901.4 1,046.0 ----- ------- Income before income taxes 51.8 49.6 Income tax expense: Tax expense on period income 18.7 17.4 Valuation allowance for deferred tax assets - 4.6 --- --- Net income $33.1 $27.6 ===== ===== Earnings per common share: Basic: Weighted average shares outstanding 250,994,000 184,820,000 =========== =========== Net income $.13 $.15 ==== ==== Diluted: Weighted average shares outstanding 302,648,000 185,229,000 =========== =========== Net income $.12 $.15 ==== ==== Six months ended June 30, -------- 2010 2009 ---- ---- Revenues: Insurance policy income $1,332.5 $1,574.1 Net investment income (loss): General account assets 636.3 617.3 Policyholder and reinsurer accounts and other special- purpose portfolios 1.3 (9.2) Realized investment gains (losses): Net realized investment gains, excluding impairment losses 26.6 105.4 Other-than-temporary impairment losses: Total other-than-temporary impairment losses (47.0) (161.8) Change in other-than- temporary impairment losses recognized in accumulated other comprehensive income (loss) (1.2) 33.2 ---- ---- Net impairment losses recognized (48.2) (128.6) ----- ------ Total realized gains (losses) (21.6) (23.2) ----- ----- Fee revenue and other income 7.1 6.1 --- --- Total revenues 1,955.6 2,165.1 ------- ------- Benefits and expenses: Insurance policy benefits 1,350.0 1,534.6 Interest expense 56.2 55.9 Amortization 199.2 222.6 Loss on extinguishment or modification of debt 2.7 9.5 Other operating costs and expenses 242.6 250.7 ----- ----- Total benefits and expenses 1,850.7 2,073.3 ------- ------- Income before income taxes 104.9 91.8 Income tax expense: Tax expense on period income 37.9 32.7 Valuation allowance for deferred tax assets - 7.0 --- --- Net income $67.0 $52.1 ===== ===== Earnings per common share: Basic: Weighted average shares outstanding 250,891,000 184,787,000 =========== =========== Net income $.27 $.28 ==== ==== Diluted: Weighted average shares outstanding 297,364,000 184,993,000 =========== =========== Net income $.25 $.28 ==== ==== CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES Operating Results (Dollars in millions, except per-share data) Six months ended June 30, -------- 2010 2009 ---- ---- EBIT (2): Bankers Life $117.2 $108.0 Colonial Penn 12.9 16.1 Conseco Insurance Group 55.6 52.4 Corporate Operations, excluding corporate interest expense (16.8) (17.5) ----- ----- EBIT 168.9 159.0 Corporate interest expense (39.3) (37.6) ----- ----- Income before loss on extinguishment or modification of debt, net realized investment losses and taxes 129.6 121.4 Tax expense on operating income 46.5 43.1 ---- ---- Net operating income (3) 83.1 78.3 Loss on extinguishment or modification of debt, net of income taxes (1.8) (6.1) Net realized investment losses (net of related amortization and taxes and the establishment of a valuation allowance for deferred tax assets related to such losses) (14.3) (20.1) ----- ----- Net income applicable to common stock $67.0 $52.1 ===== ===== Per diluted share (1): Net operating income $.30 $.42 Loss on extinguishment or modification of debt, net of income taxes - (.03) Net realized investment losses, net of related amortization and taxes (.05) (.11) ---- ---- Net income $.25 $.28 ==== ==== CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES COLLECTED PREMIUMS (Dollars in millions) Three months ended June 30, -------- 2010 2009 ---- ---- Bankers Life segment: Annuity $281.1 $275.4 Supplemental health 332.4 422.0 Life 52.1 55.3 ---- ---- Total collected premiums $665.6 $752.7 ====== ====== Colonial Penn segment: Life $46.7 $45.8 Supplemental health 1.7 2.1 --- --- Total collected premiums $48.4 $47.9 ===== ===== Conseco Insurance Group segment: Annuity $4.2 $22.3 Supplemental health 148.1 149.3 Life 50.7 62.4 ---- ---- Total collected premiums $203.0 $234.0 ====== ====== BENEFIT RATIOS ON MAJOR SUPPLEMENTAL HEALTH LINES OF BUSINESS Three months ended June 30, -------- 2010 2009 ---- ---- Bankers Life segment: Medicare Supplement: Earned premium $178 million $166 million Benefit ratio(a) 70.7% 68.6% PDP and PFFS: Earned premium $19 million $119 million Benefit ratio(a) 68.8% 94.3% Long-Term Care: Earned premium $145 million $152 million Benefit ratio(a) 113.0% 103.2% Interest-adjusted benefit ratio (a non-GAAP measure)(b) 71.9% 66.4% Conseco Insurance Group (CIG) segment: Medicare Supplement: Earned premium $40 million $46 million Benefit ratio(a) 65.8% 71.2% Specified Disease: Earned premium $99 million $95 million Benefit ratio(a) 83.2% 83.3% Interest-adjusted benefit ratio (a non-GAAP measure)(b) 52.0% 49.7% Long-Term Care: Earned premium $8 million $8 million Benefit ratio(a) 212.9% 182.2% Interest-adjusted benefit ratio (a non-GAAP measure)(b) 128.0% 103.1% (a) The benefit ratio is calculated by dividing the related product's insurance policy benefits by insurance policy income. (b) The interest-adjusted benefit ratio (a non-GAAP measure) is calculated by dividing the product's insurance policy benefits less interest income on the accumulated assets backing the insurance liabilities by insurance policy income. Interest income is an important factor in measuring the performance of longer duration health products. The net cash flows generally cause an accumulation of amounts in the early years of a policy (accounted for as reserve increases), which will be paid out as benefits in later policy years (accounted for as reserve decreases). Accordingly, as the policies age, the benefit ratio will typically increase, but the increase in the change in reserve will be partially offset by interest income earned on the accumulated assets. The interest-adjusted benefit ratio reflects the interest income offset. Since interest income is an important factor in measuring the performance of these products, management believes a benefit ratio, which includes the effect of interest income, is useful in analyzing product performance. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO Financial's website, http://www.cnoinc.com/.

    CNO Financial Group, Inc.

    CONTACT: News Media: Tony Zehnder, Corporate Communications
    +1-312-396-7086; Investors: Scott Galovic, Investor Relations,
    +1-317-817-3228

    Web Site: http://www.cnoinc.com/




    Stone Energy Corporation Announces Second Quarter 2010 Results

    LAFAYETTE, La. Aug. 3 /PRNewswire-FirstCall/ -- Stone Energy Corporation today announced net income of $29.1 million, or $0.60 per share, on operating revenue of $166.2 million for the second quarter of 2010 compared to net income of $27.2 million, or $0.65 per share, on operating revenue of $170.3 million in the second quarter of 2009. For the six months ended June 30, 2010, net income of $55.7 million, or $1.15 per share, on operating revenue of $331.2 million compared to a net loss of $198.7 million, or $4.92 per share, on operating revenue of $312.5 million during the comparable 2009 period. All per share amounts are on a diluted basis.

    Discretionary cash flow was $116.4 million during the second quarter of 2010 compared to $113.7 million generated during the second quarter of 2009 and $115.6 million during the first quarter of 2010. For the first six months of 2010, discretionary cash flow totaled $232.0 million compared to $182.1 million for the comparable 2009 period. Please see "Non-GAAP Financial Measure" and the accompanying financial statements for a reconciliation of discretionary cash flow, a non-GAAP financial measure, to net cash flow provided by operating activities.

    Net daily production volumes during the second quarter of 2010 averaged 217 million cubic feet of gas equivalent (MMcfe) per day, representing a 2% increase over average daily production of 213 MMcfe per day for the first quarter of 2010. For the six months ended June 30, 2010, net average daily production volumes were 215 MMcfe per day compared to 201 MMcfe per day for the six months ended June 30, 2009.

    CEO David Welch stated, "Despite the drilling and operational delays and interruptions caused by the Department of Interior moratorium, we were able to keep our second quarter production within guidance. We now have all the necessary permits and are moving forward with our program at Amberjack with drilling scheduled to resume within a week. We expect to drill another three or four wells using the current platform rig. In Appalachia, we have drilled four horizontal wells and are awaiting completion and testing. We have added a second horizontal rig and expect to drill the forecasted 14 horizontal wells before year-end. The development well at Pyrenees has been drilled and completed and initial production is expected by early 2012. Additionally, we are participating in a deep shelf well and several wells in the Alberta Bakken area. Finally, we are working with other GOM operators to address the regulatory and legislative hurdles which are challenging our industry."

    Prices realized during the second quarter of 2010 averaged $72.14 per barrel (Bbl) of oil and $5.46 per thousand cubic feet (Mcf) of natural gas, which represents a 7% decrease, on an Mcfe basis, over second quarter 2009 average realized prices of $69.93 per Bbl of oil and $6.41 per Mcf of natural gas. Average realized prices during the first six months of 2010 were $71.43 per Bbl of oil and $5.71 per Mcf of natural gas, representing a 1% decrease on a Mcfe basis compared to $63.01 per Bbl of oil and $6.73 per Mcf of natural gas realized during the first six months of 2009. All unit pricing amounts include the cash settlement of effective hedging contracts.

    In the second quarter of 2010, hedging increased the average realized price of natural gas by $0.95 per Mcf, compared to an increase in average realized prices of $2.62 per Mcf of natural gas during the second quarter of 2009. Hedging transactions in the second quarter of 2010 decreased the realized oil prices by $4.02 per Bbl, compared to an increase in realized oil prices of $12.57 per Bbl during the second quarter of 2009.

    Lease operating expenses (LOE) incurred during the second quarter of 2010 totaled $36.9 million compared to $41.1 million for the comparable quarter in 2009, and $38.7 million in the first quarter of 2010. For the six months ended June 30, 2010 and 2009, lease operating expenses were $75.5 million and $99.3 million, respectively.

    Depreciation, depletion and amortization (DD&A) on oil and gas properties for the second quarter of 2010 totaled $62.3 million compared to $55.6 million for the second quarter of 2009. DD&A expense on oil and gas properties for the six months ended June 30, 2010 totaled $121.4 million compared to $114.7 million during the comparable period of 2009.

    Salaries, general and administrative (SG&A) expenses for the second quarter of 2010 were $10.0 million compared to $9.9 million in the second quarter of 2009. For the six months ended June 30, 2010 and 2009, SG&A totaled $20.4 million and $21.6 million, respectively.

    As of June 30, 2010, the borrowings outstanding under our bank credit facility were $50 million, reduced from $100 million at March 31, 2010. In addition, Stone had letters of credit totaling $63.1 million, resulting in $281.9 million available for borrowing based on a borrowing base of $395 million. In May 2010, the borrowing base was reaffirmed at $395 million. The borrowing base is re-determined semi-annually based on the bank group's evaluation of our proved oil and gas reserves.

    Capital expenditures before capitalized SG&A and interest during the second quarter of 2010 were approximately $98.3 million. The capital expenditure amount includes $9.4 million of plugging and abandonment expenditures. Additionally, $4.1 million of SG&A expenses and $7.2 million of interest were capitalized during the quarter.

    Operational Update

    Mississippi Canyon Block 109 (Amberjack Field). Production from the Ibix well commenced early in the second quarter. However, drilling operations at Amberjack were halted by the Department of Interior's Deepwater Moratorium in May and the Vili well was temporarily abandoned in response. Stone recently received approval to resume operations, and expects to commence drilling activity in August. After the completion of Vili, two or three additional wells are scheduled for the current platform rig.

    Garden Banks 293 (Pyrenees - 15% W.I.). Drilling operations were completed on the development well at Pyrenees in June, and the well is expected to be completed in August. Initial production is currently expected by early 2012. Newfield is the operator of the field.

    Appalachian Basin (Marcellus Shale Play). As discussed previously, Stone has commenced its 14 well horizontal drilling program for 2010. Stone currently has two horizontal rigs and one vertical rig operating in the play. One of the horizontal rigs is working under a three year contract. To date, Stone has drilled four company-operated horizontal wells in West Virginia. These wells are scheduled to be fraced and completed during the third quarter, and production from the first of these wells is expected by the fourth quarter. The Company also spudded its first operated horizontal well in Pennsylvania in July. Additionally, Stone is participating in two non-operated horizontal wells in West Virginia. One of these wells has been drilled and is waiting on completion and the other is currently drilling. These wells are located on the same pad and will be fraced after drilling operations are finished. The Company is reviewing various infrastructure options for marketing the production from the operated vertical and horizontal wells.

    GOM/Gulf Coast Exploration (South Erath Prospect). Stone is participating in a deep shelf exploratory well in Vermilion Parish, Louisiana. The well is currently drilling at approximately 15,000 feet and is planned for a total depth of 21,000 feet. Stone holds a 16% working interest in the well.

    Rocky Mountain Region. Two wells in northern Montana (35% W.I. - Newfield operated) targeting the Bakken formation have been drilled and a third is currently drilling, with completion operations and results on all three wells expected in the fourth quarter.

    Updated 2010 Guidance

    The following guidance is subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements". Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.

    Capital Expenditure Budget. The 2010 capital expenditure budget is $400 million, which includes abandonment expenditures, but excludes material acquisitions and capitalized SG&A and interest. Stone expects to spend approximately 25% of the capital expenditure budget on Appalachian drilling and acreage acquisition; approximately 25% is planned for Gulf of Mexico (GOM) shelf exploitation and approximately 15% is for GOM workover/recompletion projects; approximately 15% is scheduled for GOM deep water and deep shelf expenditures; and the remaining budget is for facilities, abandonment projects, and miscellaneous exploration projects.

    Production. For the third quarter of 2010, Stone expects net daily production to average between 195 - 210 MMcfe, primarily depending on hurricane interruptions. Stone now expects full year 2010 average daily production to be in the range of 205 - 215 MMcfe per day versus the previous guidance of 205-225 mmcfe per day, primarily due to the interruption in drilling at Amberjack and the delays on various well work projects.

    Lease Operating Expenses. Stone expects lease operating costs, excluding production taxes, to range between $150 - $165 million for 2010 based upon current operating conditions and budgeted maintenance activities. The reduction from the previous $165 - $185 million guidance is due primarily to lower cost, adjustments and hurricane insurance credits.

    Depreciation, Depletion & Amortization. Stone expects its DD&A rate to range between $3.00 - $3.30 per Mcfe for 2010.

    Salaries, General & Administrative Expenses. Stone expects its SG&A expenses, excluding incentive compensation expense and net of capitalized SG&A, to range between $41 - $43 million for 2010, adjusted down from the previous range of $41 - $45 million.

    Corporate Tax Rate. For 2010, Stone expects its corporate tax rate to range between 35% - 37%.

    Hedge Position

    The following table illustrates our derivative positions for 2010, 2011 and 2012 as of August 3, 2010:

    Fixed-Price Swaps ----------------- Natural Gas Oil ----------- --- Daily Daily ----- ----- Volume Swap Volume Swap ------ ---- ------ ---- (MMBtus/d) Price (Bbls/d) Price ---------- ----- -------- ----- 2010 20,000 $6.97 2,000 $63.00 2010 30,000 6.50 1,000 64.05 2010 1,000 60.20 2010 1,000 75.00 2010 1,000 75.25 2010 2,000* 80.10 2010 1,000** 84.35 ---- ------- ----- 2011 10,000 6.83 1,000 70.05 2011 10,000 5.20 1,000 78.20 2011 1,000 83.00 2011 1,000 83.05 2011 1,000*** 85.20 2011 1,000 85.25 2012 1,000 90.45 2012 1,000 90.30 * April - December ** July - December *** January - June Other Information

    Stone Energy has planned a conference call for 10:00 a.m. Central Time on Wednesday, August 4, 2010 to discuss the operational and financial results for the second quarter of 2010. Anyone wishing to participate should visit our website at http://www.stoneenergy.com/ for a live web cast or dial 1-877-228-3598 and request the "Stone Energy Call." If you are unable to participate in the original conference call, a replay will be available immediately following the completion of the call on Stone Energy's website.

    Non-GAAP Financial Measures

    In this press release, we refer to a non-GAAP financial measure we call "discretionary cash flow." Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP. Please see the "Reconciliation of Non-GAAP Financial Measure" for a reconciliation of discretionary cash flow to cash flow provided by operating activities.

    Forward Looking Statements

    Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.

    Stone Energy is an independent oil and natural gas company headquartered in Lafayette, Louisiana, and is engaged in the acquisition, exploration, exploitation, development and operation of oil and gas properties located primarily in the Gulf of Mexico. Stone is also active in the Appalachia region. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.

    STONE ENERGY CORPORATION SUMMARY STATISTICS (In thousands, except per share/unit amounts) (Unaudited) Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, -------- -------- 2010 2009 2010 2009 ---- ---- ---- ---- FINANCIAL RESULTS Net income (loss) $29,079 $27,168 $55,703 ($198,698) Net income (loss) per share $0.60 $0.65 $1.15 ($4.92) PRODUCTION QUANTITIES Oil (MBbls) 1,430 1,544 2,852 2,838 Gas (MMcf) 11,146 9,723 21,744 19,382 Oil and gas (MMcfe) 19,726 18,987 38,856 36,410 AVERAGE DAILY PRODUCTION Oil (MBbls) 16 17 16 16 Gas (MMcf) 122 107 120 107 Oil and gas (MMcfe) 217 209 215 201 REVENUE DATA (1) Oil revenue $103,159 $107,972 $203,724 $178,826 Gas revenue 60,823 62,340 124,049 130,490 ------ ------ ------- ------- Total oil and gas revenue $163,982 $170,312 $327,773 $309,316 AVERAGE PRICES (1) Oil (per Bbl) $72.14 $69.93 $71.43 $63.01 Gas (per Mcf) 5.46 6.41 5.71 6.73 Per Mcfe 8.31 8.97 8.44 8.50 COST DATA Lease operating expenses $36,883 $41,122 $75,547 $99,276 Salaries, general and administrative expenses 9,963 9,922 20,448 21,583 DD&A expense on oil and gas properties 62,282 55,558 121,433 114,730 AVERAGE COSTS (per Mcfe) Lease operating expenses $1.87 $2.17 $1.94 $2.73 Salaries, general and administrative expenses 0.51 0.52 0.53 0.59 DD&A expense on oil and gas properties 3.16 2.93 3.13 3.15 AVERAGE SHARES OUTSTANDING - Diluted 47,678 41,270 47,657 40,365 (1) Includes the cash settlement of effective hedging contracts. STONE ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands) (Unaudited) Three Months Ended ------------------ June 30, -------- 2010 2009 ---- ---- Operating revenue: Oil production $103,159 $107,972 Gas production 60,823 62,340 Derivative income, net 2,225 - ----- --- Total operating revenue 166,207 170,312 ------- ------- Operating expenses: Lease operating expenses 36,883 41,122 Other operational expense 2,447 2,400 Production taxes 1,590 2,565 Depreciation, depletion and amortization 63,765 57,052 Write-down of oil and gas properties - - Accretion expense 6,606 8,376 Salaries, general and administrative expenses 9,963 9,922 Incentive compensation expense 421 1,197 Derivative expenses, net - 743 Impairment of inventory - 1,256 --- ----- Total operating expenses 121,675 124,633 ------- ------- Income (loss) from operations 44,532 45,679 ------ ------ Other (income) expenses: Interest expense 2,540 4,788 Interest income (1,002) (146) Other income (1,222) (851) Early debt retirement expense - - Total other (income) expenses 316 3,791 --- ----- Net income (loss) before income taxes 44,216 41,888 ------ ------ Provision (benefit) for income taxes: Current (1,392) - Deferred 16,529 14,720 Total income taxes 15,137 14,720 ------ ------ Net income (loss) 29,079 27,168 Less: Net income attributable to non- controlling interest - - Net income (loss) attributable to Stone Energy Corporation $29,079 $27,168 ======= ======= Six Months Ended ---------------- June 30, -------- 2010 2009 --- --- Operating revenue: Oil production $203,724 $178,826 Gas production 124,049 130,490 Derivative income, net 3,413 3,196 ----- ----- Total operating revenue 331,186 312,512 ------- ------- Operating expenses: Lease operating expenses 75,547 99,276 Other operational expense 2,447 2,400 Production taxes 3,244 3,840 Depreciation, depletion and amortization 124,418 117,670 Write-down of oil and gas properties - 340,083 Accretion expense 13,212 16,753 Salaries, general and administrative expenses 20,448 21,583 Incentive compensation expense 1,346 1,417 Derivative expenses, net - - Impairment of inventory - 7,179 --- ----- Total operating expenses 240,662 610,201 ------- ------- Income (loss) from operations 90,524 (297,689) ------ -------- Other (income) expenses: Interest expense 6,606 9,954 Interest income (1,059) (282) Other income (2,974) (1,825) Early debt retirement expense 1,820 - Total other (income) expenses 4,393 7,847 ----- ----- Net income (loss) before income taxes 86,131 (305,536) ------ -------- Provision (benefit) for income taxes: Current (5,264) 23 Deferred 35,692 (106,888) Total income taxes 30,428 (106,865) ------ -------- Net income (loss) 55,703 (198,671) Less: Net income attributable to non- controlling interest - (27) Net income (loss) attributable to Stone Energy Corporation $55,703 ($198,698) ======= ========= STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (In thousands) (Unaudited) Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, -------- -------- 2010 2009 2010 2009 ---- ---- ---- ---- Net income (loss) as reported $29,079 $27,168 $55,703 ($198,671) Reconciling items: Depreciation, depletion and amortization 63,765 57,052 124,418 117,670 Write-down of oil and gas properties - - - 340,083 Impairment of inventory - 1,256 - 7,179 Deferred income tax provision (benefit) 16,529 14,720 35,692 (106,888) Accretion expense 6,606 8,376 13,212 16,753 Stock based compensation expense 1,314 1,193 2,741 3,159 Non-cash early extinguishment of debt - - 1,820 - Other (879) 3,889 (1,593) 2,825 ---- ----- ------ ----- Discretionary cash flow 116,414 113,654 231,993 182,110 Changes in income taxes payable 4,687 3,027 (8,813) 30,435 Unwinding of derivative contracts - (41,160) - 71,662 Settlement of asset retirement obligations (9,420) (21,787) (19,798) (28,249) Other working capital changes 21,019 4,698 6,952 17,585 Net cash provided by operating activities $132,700 $58,432 $210,334 $273,543 ======== ======= ======== ======== STONE ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited) June 30, December 31, 2010 2009 ---- ---- Assets ------ Current assets: Cash and cash equivalents $77,265 $69,293 Accounts receivable 112,236 118,129 Fair value of hedging contracts 24,977 16,223 Deferred tax asset 1,245 14,571 Inventory 7,781 8,717 Other current assets 962 814 Total current assets 224,466 227,747 Oil and gas properties - United States Proved, net 820,130 856,467 Unevaluated 378,314 329,242 Building and land, net 5,713 5,723 Fair value of hedging contracts 10,117 1,771 Fixed assets, net 4,117 4,084 Other assets, net 21,453 29,208 Total assets $1,464,310 $1,454,242 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable to vendors $66,644 $66,863 Undistributed oil and gas proceeds 20,413 15,280 Fair value of hedging contracts 12,609 34,859 Asset retirement obligations 30,995 30,515 Current income taxes payable 2,297 11,110 Other current liabilities 16,381 42,983 Total current liabilities 149,339 201,610 Bank debt 50,000 175,000 8 1/4 % Senior Subordinated Notes due 2011 - 200,000 6 3/4% Senior Subordinated Notes due 2014 200,000 200,000 8 5/8% Senior Notes due 2017 275,000 - Deferred taxes 82,032 44,528 Asset retirement obligations 257,897 265,021 Fair value of hedging contracts 2,006 7,721 Other long-term liabilities 19,291 18,412 Total liabilities 1,035,565 1,112,292 --------- --------- Common stock 477 475 Treasury stock (860) (860) Additional paid-in capital 1,327,390 1,324,410 Accumulated deficit (910,992) (966,695) Accumulated other comprehensive income (loss) 12,730 (15,380) ------ ------- Total stockholders' equity 428,745 341,950 ------- ------- Total liabilities and stockholders' equity $1,464,310 $1,454,242 ========== ==========

    Stone Energy Corporation

    CONTACT: Kenneth H. Beer, Chief Financial Officer of Stone Energy
    Corporation, +1-337-521-2210, or Fax +1-337-521-9880, CFO@StoneEnergy.com

    Web Site: http://www.stoneenergy.com/




    Solta Medical Reports Second Quarter 2010 ResultsRevenue of $30.1 million up $2.7 million, or 10%, from Q2 2009 Company Generates Record $7.7 million in Cash Flow from Operations

    HAYWARD, Calif., Aug. 3 /PRNewswire-FirstCall/ -- Solta Medical, Inc. , a global leader in the medical aesthetics market, today announced results for the second quarter ended June 30, 2010. The results for the quarter were highlighted by year-over-over revenue growth of 10%, generation of $7.7 million in cash flow from operations, and complete integration of the Aesthera acquisition into Solta operations.

    Revenue for the second quarter was $30.1 million, an increase of approximately $2.7 million, or 10%, as compared to the second quarter 2009 revenue of $27.4 million. Results for the quarter were driven by year-over-year double-digit revenue growth in North America, Asia Pacific, and Latin America.

    Solta Medical's GAAP reported results for the second quarter of 2010 include non-cash amortization and other charges of $1.4 million related to the acquisitions of Reliant Technologies and Aesthera Corporation, non-cash stock based compensation charges of $0.6 million, and cash expenses of $0.2 million related to the acquisition of Aesthera Corporation. The Company provides additional non-GAAP financial measures that exclude these charges and expenses.

    The GAAP gross profit for the quarter was $18.7 million, or 62% of net revenue. Non-GAAP gross profit for the quarter was $19.9 million, or 66% of net revenue. GAAP net income for the quarter was $1.5 million, or $0.02 per share on a diluted basis, as compared to GAAP net income of $0.1 million, or breakeven earnings per share on a diluted basis, reported for the second quarter of 2009. Non-GAAP net income for the quarter was $3.8 million, or $0.06 per share on a diluted basis, as compared to non-GAAP net income of $2.3 million, or $0.05 per share on a diluted basis, reported for the second quarter of 2009. Non-GAAP EBITDA for the second quarter was $5.0 million compared to $3.1 million in the prior year period. Cash flow from operations for the quarter was a record $7.7 million compared to cash used in operating activities of $2.8 million in the second quarter of 2009. The results for the quarter also include the previously reported patent litigation settlement with Alma Lasers under which Solta received a one-time payment of $2.25 million.

    "We continue to be successful in expanding our customer base, as well as building relationships with our existing customers," said Stephen J. Fanning, Chairman, President & CEO. "Year-over-year we generated double digit revenue increases in new system sales for both Thermage® and Fraxel® brands. In addition, we are gaining traction in the marketplace with the Isolaz® brand through our recent acquisition of Aesthera. We also completed the integration of Aesthera into Solta's operations in the second quarter. Finally, our record cash flow generated from operations of $7.7 million reflects the operating benefits of having three premier brands in the aesthetic device industry, a strong IP position, and efficient management of inventories and accounts receivable."

    Financial Goals for 2010 The company provided the following financial goals for 2010 : -- Revenue for the full year 2010 of approximately $115 million which represents an increase of approximately $16 million, or 16%, from revenue for the full year 2009 of $98.8 million. -- Positive non-GAAP EBITDA for every quarter of 2010. -- Non-GAAP gross margin in the range of 66% to 69% for the full year 2010 excluding non-cash amortization charges and non-cash acquisition related adjustments. Non-GAAP Presentation

    To supplement the condensed consolidated financial information presented on a GAAP basis, management has provided non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP EBITDA, non-GAAP net income (loss) and non-GAAP earnings (loss) per share measures that exclude the impact of acquisition related adjustments, severance costs, acquisition related costs, and stock-based compensation expenses, all net of income taxes. The Company believes that these non-GAAP financial measures provide investors with insight into what is used by management to conduct a more meaningful and consistent comparison of the Company's ongoing operating results and trends, compared with historical results. This presentation is also consistent with management's internal use of the measures, which it uses to measure the performance of ongoing operating results, against prior periods and against our internally developed targets. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP and the reconciliation of non-GAAP financial measures attached to this release.

    Conference Call Information

    The Company will also host a conference call and webcast today, Tuesday, August 3, 2010, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific) to discuss the financial results and current corporate developments. The dial-in number for the conference call is 877-941-1465 for domestic participants and 480-629-9644 for international participants.

    A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion and will remain accessible for thirty days. This replay can be accessed by dialing 800-406-7325 for domestic callers and 303-590-3030 for international callers. Callers will need to use the Passcode 4331821#. To access the live webcast of the call, go to Solta Medical's website at http://www.solta.com/ and click on Investor Relations. An archived webcast will also be available at http://www.solta.com/.

    About Solta Medical, Inc.

    Solta Medical, Inc. is a global leader in the medical aesthetics market providing innovative, safe, and effective solutions for patients that enhance and expand the practice of medical aesthetics for physicians. The company offers products to address a range of skin issues under the industry's three premier brands: Thermage®, Fraxel® and Isolaz®. Thermage is an innovative, non-invasive radiofrequency procedure for tightening and contouring skin. As the leader in fractional laser technology, Fraxel delivers minimally invasive clinical solutions to resurface aging and sun damaged skin. Isolaz is the only laser or light based system indicated for the treatment of inflammatory acne, comedonal acne, pustular acne, and mild-to-moderate inflammatory acne. Since 2002, approximately one million Thermage, Fraxel and Isolaz procedures have been performed in over 100 countries. For more information about Solta Medical, call 1-877-782-2286 or log on to http://www.solta.com/.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding expanding distribution of Aesthera's Isolaz systems and our financial goals for 2010. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Solta Medical's actual results to differ materially from the statements contained herein. Factors that might cause such a difference include the risk that physician adoption of our systems does not grow, the risk that customers do not continue to purchase treatment tips, the possibility that the market for the sale of new products does not develop as expected, and the risks relating to Solta Medical's ability to achieve its stated financial goals as a result of, among other things, economic conditions and consumer and physician confidence causing changes in consumer and physician spending habits that affect demand for our products and treatments. Further information on potential risk factors that could affect Solta Medical's business and its financial results are detailed in its Form 10-K for the year ended December 31, 2009, and other reports as filed from time to time with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. Solta Medical undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

    Solta Medical, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars, except share and per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 ---- ---- ---- ---- Net revenue $30,080 $27,417 $56,015 $52,662 Cost of revenue 11,358 10,777 20,500 22,284 Gross margin 18,722 16,640 35,515 30,378 ------ ------ ------ ------ Operating expenses: Sales and marketing 11,429 9,038 21,317 19,513 Research and development 4,276 3,949 8,395 7,865 General and administrative 3,228 3,452 7,712 7,770 Legal settlement gain (2,241) - (2,213) - Total operating expenses 16,692 16,439 35,211 35,148 ------ ------ ------ ------ Income (loss) from operations 2,030 201 304 (4,770) Interest and other income 15 41 22 302 Interest and other expense (289) (104) (439) (151) Income (loss) before income taxes 1,756 138 (113) (4,619) Provision for income taxes 247 53 311 71 --- --- --- --- Net income (loss) $1,509 $85 ($424) ($4,690) ====== === ===== ======= Net income (loss) per share - basic $0.03 $0.00 ($0.01) ($0.10) ===== ===== ====== ====== Net income (loss) per share - diluted $0.02 $0.00 ($0.01) ($0.10) ===== ===== ====== ====== Weighted average shares outstanding used in calculating net income (loss) per share: Basic 59,437,038 47,806,228 58,229,078 47,782,656 ========== ========== ========== ========== Diluted 61,530,085 47,920,161 58,229,078 47,782,656 ========== ========== ========== ========== Solta Medical, Inc. NON-GAAP RECONCILIATION OF GROSS MARGIN, OPERATING INCOME (LOSS), EBITDA, NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE (in thousands, except share and per share data) (unaudited) Three Months Ended June 30, 2010 2009 ---- ---- GAAP Gross margin $18,722 $16,640 Non-GAAP adjustments to gross margin: Amortization and other non-cash acquisition related charges 1,142 1,048 Stock-based compensation 68 61 Non-GAAP gross margin $19,932 $17,749 ======= ======= Non-GAAP gross margin as % of sales 66% 65% === === GAAP income (loss) from operations $2,030 $201 Non-GAAP adjustments to net income (loss) from operations: Amortization and other non-cash acquisition related charges 1,430 1,383 Severance expenses 55 - Acquisition-related expenses 139 - Stock-based compensation 618 864 --- --- Non-GAAP income from operations $4,272 $2,448 Depreciation expenses 742 670 --- --- Non-GAAP EBITDA $5,014 $3,118 ====== ====== GAAP net income (loss) $1,509 $85 Non-GAAP adjustments to net income (loss): Amortization and other non-cash acquisition related charges 1,430 1,383 Severance expenses 55 - Acquisition-related expenses 139 - Stock-based compensation 618 864 --- --- Non-GAAP net income $3,751 $2,332 ====== ====== GAAP basic net income (loss) per share $0.03 $0.00 Non-GAAP adjustments to basic income (loss) per share: Amortization and other non-cash acquisition related charges $0.02 $0.03 Severance expenses $0.00 - Acquisition-related expenses $0.00 - Stock-based compensation $0.01 $0.02 Non-GAAP basic net income per share $0.06 $0.05 ===== ===== Non-GAAP diluted net income per share $0.06 $0.05 ===== ===== GAAP weighted average shares outstanding used in calculating basic net income (loss) per share 59,437,038 47,806,228 ========== ========== GAAP weighted average shares outstanding used in calculating diluted net income (loss) per share 61,530,085 47,920,161 Adjustments for dilutive potential common stock 888,109 447,282 Weighted average shares outstanding used in calculating non-GAAP diluted net income per share 62,418,194 48,367,443 ========== ========== Six Months Ended June 30, 2010 2009 ---- ---- GAAP Gross margin $35,515 $30,378 Non-GAAP adjustments to gross margin: Amortization and other non-cash acquisition related charges 2,002 4,024 Stock-based compensation 142 114 Non-GAAP gross margin $37,659 $34,516 ======= ======= Non-GAAP gross margin as % of sales 67% 66% === === GAAP income (loss) from operations $304 ($4,770) Non-GAAP adjustments to net income (loss) from operations: Amortization and other non-cash acquisition related charges 2,651 4,675 Severance expenses 55 118 Acquisition-related expenses 963 - Stock-based compensation 1,320 1,653 ----- ----- Non-GAAP income from operations $5,293 $1,676 Depreciation expenses 1,398 1,395 ----- ----- Non-GAAP EBITDA $6,691 $3,071 ====== ====== GAAP net income (loss) ($424) ($4,690) Non-GAAP adjustments to net income (loss): Amortization and other non-cash acquisition related charges 2,651 4,675 Severance expenses 55 118 Acquisition-related expenses 963 - Stock-based compensation 1,320 1,653 ----- ----- Non-GAAP net income $4,565 $1,756 ====== ====== GAAP basic net income (loss) per share ($0.01) ($0.10) Non-GAAP adjustments to basic income (loss) per share: Amortization and other non-cash acquisition related charges $0.05 $0.10 Severance expenses $0.00 $0.00 Acquisition-related expenses $0.02 - Stock-based compensation $0.02 $0.04 Non-GAAP basic net income per share $0.08 $0.04 ===== ===== Non-GAAP diluted net income per share $0.08 $0.04 ===== ===== GAAP weighted average shares outstanding used in calculating basic net income (loss) per share 58,229,078 47,782,656 ========== ========== GAAP weighted average shares outstanding used in calculating diluted net income (loss) per share 58,229,078 47,782,656 Adjustments for dilutive potential common stock 2,049,456 400,552 Weighted average shares outstanding used in calculating non-GAAP diluted net income per share 60,278,534 48,183,208 ========== ========== Solta Medical, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of dollars, except share and per share data) (unaudited) December June 30, 31, 2010 2009 ---- ---- ASSETS Current assets: Cash and cash equivalents $36,978 $14,744 Accounts receivable 10,971 12,381 Inventories 13,448 14,117 Prepaid expenses and other current assets 3,925 4,748 Total current assets 65,322 45,990 Property and equipment, net 5,973 5,613 Purchased intangible assets, net 38,180 36,799 Goodwill 48,710 47,289 Other assets 267 458 --- --- Total assets $158,452 $136,149 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable $6,596 $6,065 Accrued liabilities 12,191 10,968 Current portion of deferred revenue 3,788 4,534 Short-term borrowings 9,480 9,432 Customer deposits 514 529 Total current liabilities 32,569 31,528 Deferred revenue, net of current portion 662 612 Term loan, net of current portion 874 1,626 Non-current tax liabilities 1,901 1,862 Other liabilities 217 284 Total liabilities 36,223 35,912 ------ ------ Stockholders' equity: Common stock, $0.001 par value: 100,000,000 shares authorized 59,514,034 and 48,077,028 shares issued and outstanding at June 30, 2010 and December 31, 2009 60 48 Additional paid-in capital 191,687 169,283 Accumulated deficit (69,518) (69,094) Total stockholders' equity 122,229 100,237 ------- ------- Total liabilities and stockholders' equity $158,452 $136,149 ======== ========

    Solta Medical, Inc.

    CONTACT: Jack Glenn, Chief Financial Officer of Solta Medical, Inc.,
    +1-510-786-6890; or investors, Doug Sherk, dsherk@evcgroup.com, or Jenifer
    Kirtland, jkirtland@evcgroup.com, both of EVC Group, +1-415-896-6820, for
    Solta Medical, Inc.

    Web Site: http://www.solta.com/




    Extreme Networks Appoints Oscar Rodriguez as CEOIndustry Veteran Brings Long History of Technology Sales and Marketing Leadership

    SANTA CLARA, Calif., Aug. 3 /PRNewswire-FirstCall/ -- Extreme Networks, Inc. today announced that Oscar Rodriguez has been appointed President and Chief Executive Officer. Rodriguez will join Extreme Networks after more than 20 years in sales, marketing and leadership roles with some of the worlds' premier voice, video, data and related telecommunications companies. Rodriguez's appointment will become effective on August 23, 2010. Bob L. Corey, Chief Financial Officer and acting President & CEO, will continue in his role as CFO.

    "Oscar joins Extreme Networks with exactly the right technology marketing and leadership experience," said Gordon Stitt, Chairman of the Board of Directors. "We need someone with his background and relationships to help us explore new avenues to accelerate growth for Extreme Networks."

    Rodriguez is currently CEO of Movius Interactive Corporation, a privately held leader in messaging, collaboration and mobile media solutions for service providers worldwide. Rodriguez was appointed Movius CEO in 2007 to drive innovation, profitability, market share and revenue growth for its carrier and enterprise customers through new IP-based services. Before joining Movius, Rodriguez was Chief Marketing Officer for Alcatel-Lucent's Enterprise Business Group. He also served as CEO and President of Riverstone Networks, a public communications company delivering carrier MPLS/VPLS/Ethernet Solutions, before its successful sale to Lucent Technologies. Rodriguez also was Nortel Networks' President of both the Enterprise Solutions division and the Intelligent Internet division, delivering profitable high performance IP-based products to both carrier and enterprise customers.

    "In recent months, Extreme Networks has streamlined the organization and reignited the aggressive, competitive passion that made the Company a leader in its space," Rodriguez said. "The Company has a highly motivated executive team and its product line-up has never been stronger. I am eager to get to work and begin exploring new areas for growth."

    Rodriguez is a member of the board of EXAR Corporation, a semiconductor company in Silicon Valley. He also sits on the Dean's Board of Advisors for the College of Engineering at the University of Central Florida. He holds a B.S. in computer engineering from the University of Central Florida, and an MBA from the University of North Carolina at Chapel Hill.

    Extreme Networks, Inc.

    Extreme Networks provides converged Ethernet network infrastructure that support data, voice and video for enterprises and service providers. Extreme Networks' network solutions feature high performance, high availability and scalable switching solutions that enable organizations to address real-world communications challenges and opportunities. Operating in more than 50 countries, Extreme Networks provides wired and wireless secure LANs, data center infrastructure and Service Provider Ethernet transport solutions that are complemented by global, 24x7 service and support. For more information, visit: http://www.extremenetworks.com/.

    This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's future growth. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to adjustments based upon further review of the Company's financial results for its fiscal quarter ended June 27, 2010. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which are on file with the Securities and Exchange Commission.

    Extreme Networks is either a registered trademark or trademark of Extreme Networks, Inc. within the United States and other countries.

    Extreme Networks, Inc.

    CONTACT: Investor Relations, +1-408-579-3030,
    investor_relations@extremenetworks.com, or Public Relations, +1-408-579-3483,
    gcross@extremenetworks.com, both of Extreme Networks

    Web Site: http://www.extremenetworks.com/




    Graham Packaging Announces Results for Second Quarter 2010

    YORK, Pa., Aug. 3 /PRNewswire-FirstCall/ -- Graham Packaging Company Inc. today announced results for the quarter ended June 30, 2010.

    Highlights -- Net sales increased 11.5% to $652.8 million, compared with $585.7 million in the second quarter of 2009. -- Adjusted EBITDA(1) increased to $133.7 million, a $3.5 million increase over the second quarter of 2009. Last twelve months ("LTM") adjusted EBITDA was $473.9 million. -- Free cash flow(2) for the first half of 2010 was $62.0 million due to strong second quarter performance. -- Total debt, net of cash decreased to $2,104.7 million from $2,289.1 million at the beginning of 2010, a decrease of $184.4 million. -- On July 1, 2010, the Company completed its acquisition of China Roots Packaging PTE Ltd., a plastic container manufacturing company located in Guangzhou, China. -- The Company currently expects adjusted EBITDA for 2010 to be $478.0 million. Second Quarter 2010

    Net sales for the second quarter of 2010 increased by 11.5% to $652.8 million due to higher volumes along with higher resin costs, which are passed on to customers. Adjusted EBITDA for the quarter increased to $133.7 million, compared with $130.2 million in the second quarter of 2009. Operating income increased to $90.8 million from $76.5 million in the second quarter of 2009.

    "We are extremely pleased with our second quarter performance," said CEO Mark Burgess. "Unit volumes improved as a result of stronger end markets, and we continued to have success on international fronts with new sales wins. Our adjusted EBITDA showed a $3.5 million improvement over last year as a result of the volume improvements and our intense focus on productivity. LTM adjusted EBITDA is now $473.9 million. We generated strong free cash flow during the quarter, and have retired a significant amount of debt so far this year. Best of all, we successfully closed our acquisition of China Roots on July 1, 2010. This represents Graham's first foray into the vast Chinese market, and a terrific opportunity to serve our multinational customers."

    By segment, sales in North America increased $64.7 million, or 12.7%, due to higher volumes and the increase in resin costs. Sales in Europe were up $0.5 million, or 0.9%, as higher resin costs helped offset unfavorable exchange rates and slightly lower volumes. Sales in South America were up $1.9 million, or 8.4%, due to increased volume and price increases. During the second quarter of 2010, the Company continued to experience positive momentum in its drive to convert legacy packaging into Graham's technology-oriented performance packaging solutions. This area remains a driver of future growth for the Company.

    Interest expense, net for the quarter was $41.7 million, an increase of $4.7 million from the second quarter of last year, due to the increased interest rate on the term loans which were extended in May 2009.

    2010 Year to Date

    Net sales for the first half of 2010, increased by 7.9% to $1,238.4 million due to higher volumes along with higher resin costs, which are passed on to customers. Adjusted EBITDA for the first half of 2010 increased to $249.2 million, compared with $237.7 million in the first half of 2009. Operating income decreased to $123.1 million from $138.5 million in the first half of 2009 primarily due to a one-time fee of $35.0 million to terminate a monitoring agreement, and $4.4 million in IPO bonuses and other IPO-related expenses. Excluding these items, operating income increased by $24.1 million over the first half of 2009.

    Free cash flow for the first half of 2010 was $62.0 million.

    The Company retired $200 million of term loan debt during the first half of 2010. Approximately $129 million of the retirement was funded by the IPO and the remaining $71 million was funded by cash on hand.

    China Roots

    As previously announced, on July 1, 2010, the Company closed its acquisition of China Roots Packaging PTE Ltd., a plastic container manufacturing company located in Guangzhou, China. China Roots operates a world-class container manufacturing plant in the Guangzhou Economic and Technological Development District producing plastic containers and closures for food, health care and petrochemical products. Its customers include several global consumer product marketers, and its annual sales were approximately $16.3 million in 2009.

    2010 Outlook

    For fiscal year 2010, the Company currently expects adjusted EBITDA to be $478.0 million.

    Conference Call Information

    The Company will hold a conference call to discuss fiscal 2010 second quarter results at 5:00 p.m. EDT this afternoon. The call will be web cast live over the Internet from the company's web site at http://www.grahampackaging.com/ under "Investor Relations." Participants should follow the instructions provided on the Web site for downloading and installing the necessary audio applications. The conference call can be accessed by dialing 800-573-4754 (domestic) or 617-224-4325 (international) and entering passcode 83533033.

    Following the live conference call, a replay will be available one hour after the call. The replay also will be available on the company's Web site or by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering pass code 40851271. The telephonic replay will be available for thirty days.

    About Graham Packaging

    Graham Packaging is a leading U.S. supplier of plastic containers for hot-fill juice and juice drinks, sports drinks, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings, condiments and beers; the leading global supplier of plastic containers for yogurt drinks; a leading supplier of plastic containers for liquid fabric care products, dish care products and hard-surface cleaners; and the leading supplier in the U.S., Canada and Brazil of one-quart/liter plastic motor oil containers.

    To learn more about Graham Packaging, please visit the Company's Web site at http://www.grahampackaging.com/. Graham Packaging uses its Web site as a channel of distribution for material Company information. Financial and other material information regarding Graham Packaging is routinely posted on the Company's Web site and is readily accessible.

    Forward Looking Statements

    Information provided and statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this press release and Graham Packaging assumes no obligation to update the information included in this press release. Such forward-looking statements include information concerning Graham Packaging's possible or assumed future results of operations. These statements often include words such as "approximate," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Graham Packaging's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Graham Packaging's control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, without limitation, specific factors discussed herein and in other releases and public filings made by the Company (including the Company's filings with the Securities and Exchange Commission). Although Graham Packaging believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Unless otherwise required by law, Graham Packaging also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this press release.

    The Company believes that the presentation of adjusted EBITDA and free cash flow provides investors with useful analytical indicators of our performance. Additionally, the Company uses adjusted EBITDA and free cash flow as key internal metrics and two components, among several, of management incentive compensation.

    (1) Reconciliation of income (loss) from continuing operations to EBITDA Three Six Months Months Ended Ended June 30, June 30, -------- -------- 2010 2009 2010 2009 ---- ---- ---- ---- (In millions) Income (loss) from continuing operations $37.8 $34.6 $13.3 $51.7 Interest income (0.2) (0.3) (0.3) (0.5) Interest expense 41.9 37.2 87.3 76.9 Income tax provision 7.3 6.7 12.1 12.6 Depreciation and amortization 39.1 40.7 77.6 79.1 ---- ---- ---- ---- EBITDA $125.9 $118.9 $190.0 $219.8 ====== ====== ====== ====== Four Quarters Ended June 30, 2010 ---- (In millions) Income (loss) from continuing operations $(14.7) Interest income (0.90) Interest expense 187.2 Income tax provision 26.5 Depreciation and amortization 157.2 ----- EBITDA $355.3 ====== Reconciliation of EBITDA to adjusted EBITDA Three Six Months Months Ended Ended June June 30, 30, ----- ----- 2010 2009 2010 2009 ---- ---- ---- ---- (In millions) EBITDA $125.9 $118.9 $190.0 $219.8 Asset impairment charges 0.6 6.5 2.8 8.0 Increase in income tax receivable obligations (a) 3.6 - 4.9 - Other non-cash charges (b) 1.2 1.0 1.7 2.7 Fees related to monitoring agreements (c) 0.2 1.2 0.9 2.5 Net (gain) loss on debt extinguishment (d) - (0.8) 2.7 (0.8) Contract termination fee and IPO-related expenses (e) 0.4 - 39.4 - Venezuelan hyper- inflationary accounting (0.3) - 2.5 - Reorganization and other costs (f) 2.1 3.4 4.3 5.4 Other administrative expenses (g) - - - 0.1 --- --- --- --- Adjusted EBITDA $133.7 $130.2 $249.2 $237.7 ====== ====== ====== ====== Four Quarters Ended June 30, 2010 ---- (In millions) EBITDA $355.3 Asset impairment charges 36.6 Increase in income tax receivable obligations (a) 4.9 Other non-cash charges (b) 6.3 Fees related to monitoring agreements (c) 3.4 Net (gain) loss on debt extinguishment (d) 12.1 Contract termination fee and IPO-related expenses (e) 39.6 Venezuelan hyper- inflationary accounting 2.5 Reorganization and other costs (f) 13.2 Other administrative expenses (g) - --- Adjusted EBITDA $473.9 ====== The Company is party to income tax receivable agreements with its pre-IPO stockholders and through its subsidiary, Graham Packaging Company, L.P., to the Graham family, under which it will make payments to those entities as it utilizes its pre- (a) IPO deferred tax assets to offset future taxable income. Represents the net loss on disposal of fixed assets, stock- based compensation expense and equity income from (b) unconsolidated subsidiaries. Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Graham Packaging Holdings Company pursuant to the Fifth Amended and Restated Limited Partnership Agreement and the Amended and Restated Monitoring (c) Agreement. Represents a net gain recognized on the credit agreement extension in 2009, and write-offs of proportionate amounts of unamortized discount and deferred financing fees due to early (d) debt repayments in 2010. Represents costs related to the termination of the Amended and Restated Monitoring Agreement, IPO bonus payments and other (e) IPO-related costs. Represents costs related to plant closures, employee severance (f) and other costs defined in the Credit Agreement. Represents administrative expenses incurred by us and paid by (g) Blackstone on our behalf. (2) Reconciliation of cash flow from operations to free cash flow: Six Months Ended June 30, -------- 2010 2009 ---- ---- (In millions) Net cash provided by operating activities $99.2 $218.1 Cash paid for property, plant and equipment (75.9) (71.8) Debt issuance fees (0.7) (9.5) Contract termination fee and IPO- related expenses 39.4 - ---- --- Free cash flow $62.0 $136.8 ===== ====== GRAHAM PACKAGING COMPANY INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, -------- 2010 2009 ---- ---- (In thousands, except share and per share data) Net sales $652,832 $585,714 Cost of goods sold 532,234 473,021 ------- ------- Gross profit 120,598 112,693 Selling, general and administrative expenses 28,414 28,977 Asset impairment charges 554 6,459 Net loss on disposal of property, plant and equipment 826 803 --- --- Operating income 90,804 76,454 Interest expense 41,891 37,183 Interest income (178) (247) Net (gain) loss on debt extinguishment - (756) Increase in income tax receivable obligations 3,600 - Other expense (income), net 349 (977) --- ---- Income before income taxes 45,142 41,251 Income tax provision 7,342 6,681 ----- ----- Income from continuing operations 37,800 34,570 Loss from discontinued operations - (1,479) --- ------ Net income 37,800 33,091 Net income attributable to noncontrolling interests 4,264 5,262 ----- ----- Net income attributable to Graham Packaging Company Inc. stockholders $33,536 $27,829 ======= ======= Earnings per share: Income from continuing operations per share: Basic $0.54 $0.68 Diluted $0.53 $0.68 Loss from discontinued operations per share: Basic $ - $(0.03) Diluted $ - $(0.03) Net income attributable to Graham Packaging Company Inc. stockholders per share: Basic $0.54 $0.65 Diluted $0.53 $0.65 Weighted average shares outstanding: Basic 62,555,962 42,975,419 Diluted 62,555,962 42,975,419 Six Months Ended June 30, -------- 2010 2009 ---- ---- (In thousands, except share and per share data) Net sales $1,238,408 $1,147,565 Cost of goods sold 1,015,492 941,296 --------- ------- Gross profit 222,916 206,269 Selling, general and administrative expenses 95,941 57,472 Asset impairment charges 2,792 8,035 Net loss on disposal of property, plant and equipment 1,053 2,298 ----- ----- Operating income 123,130 138,464 Interest expense 87,275 76,881 Interest income (298) (471) Net (gain) loss on debt extinguishment 2,664 (756) Increase in income tax receivable obligations 4,900 - Other expense (income), net 3,212 (1,545) ----- ------ Income before income taxes 25,377 64,355 Income tax provision 12,088 12,615 ------ ------ Income from continuing operations 13,289 51,740 Loss from discontinued operations - (1,806) --- ------ Net income 13,289 49,934 Net income attributable to noncontrolling interests 1,974 8,088 ----- ----- Net income attributable to Graham Packaging Company Inc. stockholders $11,315 $41,846 ======= ======= Earnings per share: Income from continuing operations per share: Basic $0.20 $1.01 Diluted $0.19 $1.01 Loss from discontinued operations per share: Basic $ - $(0.04) Diluted $ - $(0.04) Net income attributable to Graham Packaging Company Inc. stockholders per share: Basic $0.20 $0.97 Diluted $0.19 $0.97 Weighted average shares outstanding: Basic 57,780,042 42,975,419 Diluted 57,780,042 42,975,419 GRAHAM PACKAGING COMPANY INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December June 30, 31, 2010 2009 ---- ---- (In thousands) ASSETS Current assets: Cash and cash equivalents $136,112 $147,808 Accounts receivable, net 234,210 191,685 Inventories 188,493 194,702 Deferred income taxes 3,573 3,446 Prepaid expenses and other current assets 34,087 58,297 ------ ------ Total current assets 596,475 595,938 Property, plant and equipment, net 992,189 1,017,778 Intangible assets, net 41,181 43,012 Goodwill 435,073 437,058 Other non-current assets 31,996 32,506 ------ ---- Total assets $2,096,914 $2,126,292 ========== ========== LIABILITIES AND EQUITY (DEFICIT) Current liabilities: Current portion of long- term debt $34,638 $100,657 Accounts payable 136,089 111,013 Accrued expenses and other current liabilities 172,514 186,806 Deferred revenue 24,883 30,245 ------ ---- Total current liabilities 368,124 428,721 Long-term debt 2,206,160 2,336,206 Deferred income taxes 31,725 24,625 Other non-current liabilities 103,138 99,854 Commitments and contingent liabilities Equity (deficit): Graham Packaging Company Inc. stockholders' equity (deficit): Preferred stock, $0.01 par value, 100,000,000 shares authorized, 0 shares - - issued and outstanding Common stock, $0.01 par value, 500,000,000 shares authorized, shares 626 430 issued and outstanding 62,555,962 and 42,998,786 Additional paid-in capital 454,580 297,470 Retained earnings (deficit) (1,020,715) (1,032,887) Notes and interest receivable for ownership interests (6,504) (6,353) Accumulated other comprehensive income (loss) (46,533) (31,123) ------- ------- Graham Packaging Company Inc. stockholders' equity (deficit) (618,546) (772,463) Noncontrolling interests 6,313 9,349 ----- ----- Equity (deficit) (612,233) (763,114) -------- -------- Total liabilities and equity (deficit) $2,096,914 $2,126,292 ========== ========== GRAHAM PACKAGING COMPANY INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, -------- 2010 2009 ---- ---- Operating activities: (In thousands) Net income $13,289 $49,934 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 77,645 80,012 Amortization of debt issuance fees 3,184 4,758 Accretion of senior unsecured notes 238 - Net loss (gain) on debt extinguishment 2,664 (756) Net loss on disposal of property, plant and equipment 1,053 2,298 Pension expense 1,577 2,520 Asset impairment charges 2,792 8,035 Unrealized loss on termination of cash flow hedge accounting 359 2,262 Stock compensation expense 656 407 Equity income from unconsolidated subsidiaries (40) - Deferred tax provision 7,263 5,257 Increase in income tax receivable obligations 4,900 - Foreign currency transaction loss 507 80 Interest receivable on loans to owners (151) (63) Changes in operating assets and liabilities: Accounts receivable (47,419) 8,789 Inventories 2,397 18,999 Prepaid expenses and other current assets 20,490 18,329 Other non-current assets (4,769) (3,270) Accounts payable and accrued expenses 15,015 35,152 Pension contributions (2,916) (14,326) Other non-current liabilities 468 (289) --- ---- Net cash provided by operating activities 99,202 218,128 ------ ------- Investing activities: Cash paid for property, plant and equipment (75,937) (71,800) Proceeds from sale of property, plant and equipment 255 580 --- --- Net cash used in investing activities (75,682) (71,220) ------- ------- Financing activities: Proceeds from issuance of long-term debt 42,518 22,508 Payment of long-term debt (240,478) (55,668) Debt issuance fees (648) (9,570) Proceeds from the issuance of common stock, net of underwriting discount of $11.3 million 171,055 - Payment of other expenses for the issuance of common stock (5,419) - Purchase of ownership interests - (89) --- --- Net cash used in financing activities (32,972) (42,819) ------- ------- Effect of exchange rate changes on cash and cash equivalents (2,244) 969 ------ --- (Decrease) increase in cash and cash equivalents (11,696) 105,058 Cash and cash equivalents at beginning of period 147,808 43,879 ------- ------ Cash and cash equivalents at end of period $136,112 $148,937 ======== ======== Supplemental disclosures: Cash paid for interest, net of amounts capitalized $74,401 $82,516 Cash paid for income taxes (net of refunds) 9,686 7,491 Non-cash investing and financing activities: Accruals for purchases of property, plant and equipment 6,051 19,035 Accruals for debt issuance fees 136 5,443 Accruals for fees related to the initial public offering 250 - . Contact: David Bullock Chief Financial Officer (717) 849-8500 Ian Lee (717) 771-3220 InvestorRelations@grahampackaging.com

    Graham Packaging Company Inc.

    CONTACT: David Bullock, Chief Financial Officer, +1-717-849-8500, or Ian
    Lee, +1-717-771-3220, InvestorRelations@grahampackaging.com, both of Graham
    Packaging Company Inc.

    Web Site: http://www.grahampackaging.com/




    Priceline.com Reports Financial Results for 2nd Quarter 2010

    NORWALK, Conn., Aug. 3 /PRNewswire-FirstCall/ -- Priceline.com Incorporated today reported its financial results for the 2nd quarter 2010. Gross travel bookings for the 2nd quarter, which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers, were $3.4 billion, an increase of 43.3% over a year ago.

    Priceline.com had revenues in the 2nd quarter of $767.4 million, a 27.1% increase over a year ago. The Company's international operations contributed revenues in the 2nd quarter of $322.6 million, a 63.3% increase versus a year ago (approximately 68% on a local currency basis). Priceline.com's gross profit for the 2nd quarter was $445.3 million, a 45.9% increase from the prior year. The Company's international operations contributed gross profit in the 2nd quarter of $321.8 million, a 63.6% increase versus a year ago (approximately 68% growth on a local currency basis). The Company's operating income in the 2nd quarter 2010 was $173.2 million, a 58.3% increase from the prior year. Priceline.com had GAAP net income for the 2nd quarter of $115.0 million or $2.26 per diluted share, which compares to $67.0 million or $1.38 per diluted share in the same period a year ago.

    Pro forma EBITDA for the 2nd quarter was $204.2 million, an increase of 61.8% over the prior year. Pro forma net income in the 2nd quarter was $158.2 million or $3.09 per diluted share, compared to $2.02 per share a year ago. First Call analyst consensus for the 2nd quarter 2010 was $2.65 per diluted share. The section below entitled "Non-GAAP Financial Measures" provides a definition and information about the use of pro forma financial measures in this press release and the attached financial and statistical supplement reconciles pro forma financial information with priceline.com's financial results under GAAP.

    "Second quarter performance by the Priceline group of companies was once again driven by strong growth in our global hotel reservations, where we believe we gained market share for another quarter," said Jeffery H. Boyd, Priceline's President and CEO. "The group achieved a combined 48% year-over-year growth in hotel room nights booked. International gross travel bookings increased by 59% compared to prior year, or 67% on a local currency basis, due to increasing travel demand and an improvement in room rates. Domestic gross travel bookings grew by 20% driven by strong growth in hotel reservations. Growth in airline tickets and domestic rental car days was modest as our Name Your Own Price® airline and rental car services were hampered by reductions in capacity by suppliers."

    "In May 2010, we acquired TravelJigsaw, a growing international car hire service, which has contributed $43.9 million of gross travel bookings in the 2nd quarter since acquisition. The TravelJigsaw business showed continued growth in the second quarter and we look forward to working with the team to build the business."

    Looking forward, Mr. Boyd said, "We are pleased with the hotel transaction growth we are seeing worldwide, which we believe is being driven by geographic expansion, solid execution in promoting improved conversion on our websites and benefits of group-wide cooperation on integration initiatives. These factors, combined with growing Internet commerce and travel in some of our newer markets, resulted in resilience in the face of economic volatility and periodic travel disruptions, and we believe provide a foundation for growth over the long-term."

    The Company also reiterated its expectation that gross travel bookings growth rates would progressively decline in the second half of 2010 as it compares to periods of relatively stronger business performance in the 2nd half of 2009.

    Priceline.com said it was targeting the following for 3rd quarter 2010: -- Year-over-year increase in total gross travel bookings of approximately 33% - 38%. -- Year-over-year increase in international gross travel bookings of approximately 46% - 51% (an increase of approximately 57.5% - 62.5% on a local currency basis). -- Year-over-year increase in domestic gross travel bookings of approximately 13%. -- Year-over-year increase in revenue of approximately 29% - 34%. -- Year-over-year increase in gross profit of approximately 43% - 48%. -- Pro forma EBITDA of approximately $327 million to $337 million. -- Pro forma net income of between $4.78 and $4.98 per diluted share. Pro forma guidance for the 3rd quarter 2010: -- excludes non-cash amortization expense of acquisition-related intangibles, -- excludes non-cash stock-based compensation expense, -- excludes non-cash interest expense and gains or losses on early debt extinguishment, if any, related to cash settled convertible debt, -- excludes the impact, if any, of charges or benefits associated with judgments, rulings and/or settlements related to hotel occupancy tax proceedings, -- excludes non-cash income tax expense and reflects the impact on income taxes of certain of the pro forma adjustments, -- includes the additional impact of the pro forma adjustments described above on net income and loss attributable to noncontrolling interests, -- includes the anti-dilutive impact of the "Conversion Spread Hedges" (see "Non-GAAP Financial Measures" below) on diluted common shares outstanding related to outstanding convertible notes, and -- includes the dilutive impact of additional shares of unvested restricted stock, restricted stock units and performance share units because pro forma net income has been adjusted to exclude stock-based compensation.

    In addition, pro forma EBITDA excludes depreciation and amortization expense, interest income, interest expense, equity in income and loss of investees, net income and loss attributable to noncontrolling interest, income taxes and includes the impact of foreign currency transactions and other expenses.

    When aggregated, the foregoing adjustments are expected to increase pro forma EBITDA over GAAP net income by approximately $121 million in the 3rd quarter 2010. In addition, the foregoing adjustments are expected to increase pro forma net income over GAAP net income by approximately $38 million in the 3rd quarter 2010. On a per share basis, the Company estimates GAAP net income of approximately $4.06 to $4.26 per diluted share for the 3rd quarter 2010.

    Information About Forward-Looking Statements

    This press release contains forward-looking statements. These forward-looking statements reflect the views of the Company's management regarding current expectations and projections about future events and are based on currently available information and current foreign currency exchange rates. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals and similar expressions including, without limitation, "may," "will," "should," "could," "expects," "does not currently expect," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," or "continue," reflecting something other than historical fact are intended to identify forward-looking statements.

    The following factors, among others, could cause the Company's actual results to differ materially from those described in the forward-looking statements:

    -- adverse changes in general market conditions for leisure and other travel services as a result of, among other things, decreased consumer spending, general economic downturn, terrorist attacks, natural disasters or adverse weather, the bankruptcy or insolvency of a major airline, or the outbreak of an epidemic or pandemic disease, such as the recent swine flu outbreak;

    -- adverse changes in the Company's relationships with airlines and other product and service providers and vendors which could include, without limitation, the withdrawal of suppliers from the priceline.com system (either priceline.com's "retail" or "opaque" services, or both) and/or the loss or reduction of global distribution fees;

    -- fluctuations in foreign exchange rates and other risks associated with doing business in multiple currencies;

    -- the effects of increased competition, including the potential impact of increased pricing competition initiated by other on-line travel agents in the form of reduced booking fees and/or the launch by competitors of an "opaque" travel offering;

    -- an adverse outcome in one or more of the hotel occupancy and other tax proceedings in which the Company is involved;

    -- a change by a major search engine to its search engine algorithms that negatively affects the search engine ranking of the company or its 3rd party distribution partners;

    -- our ability to expand successfully in international markets; -- the ability to attract and retain qualified personnel;

    -- difficulties integrating recent or future acquisitions, such as the 2nd quarter 2010 acquisition of TravelJigsaw, including ensuring the effectiveness of the design and operation of internal controls and disclosure controls of acquired businesses;

    -- the occurrence of an external or internal security breach of our systems or other Internet based systems involving personal customer information, credit card information or other sensitive data;

    -- systems-related failures and/or security breaches, including without limitation, "denial-of-service" type attacks on our system, any security breach that results in the theft, transfer or unauthorized disclosure of customer information, or the failure to comply with various state laws applicable to the company's obligations in the event of such a breach; and

    --legal and regulatory risks.

    For a detailed discussion of these and other factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements, please refer to the Company's most recent Form 10-Q, Form 10-K and Form 8-K filings with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

    Non-GAAP Financial Measures

    Pro forma EBITDA represents GAAP net income excluding depreciation and amortization expense, interest income, interest expense, equity in income and loss of investees, net income and loss attributable to noncontrolling interest, income taxes and the pro forma adjustments relating to stock-based compensation expense, gains and losses on early debt extinguishment and charges or benefits related to judgments, rulings, or settlements of hotel occupancy tax proceedings.

    Pro forma EBITDA, pro forma net income and pro forma net income per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. Priceline.com believes that pro forma EBITDA, pro forma net income and pro forma net income per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate priceline.com's future on-going performance because they enable a more meaningful comparison of priceline.com's projected cash earnings and performance with its historical results from prior periods. These pro forma metrics, in particular pro forma EBITDA and pro forma net income, are not intended to represent funds available for priceline.com's discretionary use and are not intended to represent or to be used as a substitute for operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these pro forma metrics, but included in the calculation of their closest GAAP equivalent, are significant components of consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance.

    Pro forma financial information is adjusted for the following items: -- Amortization expense of acquisition-related intangibles is excluded because it does not impact cash earnings. -- Charges or benefits related to judgments, rulings, or settlements of hotel occupancy tax proceedings are excluded because the amount and timing of these items are unpredictable, not driven by core operating results and render comparisons with prior periods less meaningful. -- Stock-based compensation expense is excluded because it does not impact cash earnings and is reflected in earnings per share through increased share count. -- Interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment related to convertible debt are excluded because they are non-cash in nature. -- Income tax expense is adjusted for the tax impact of certain of the pro forma adjustments described above and to exclude tax expense recorded where no actual tax payments are owed because of available net operating loss carry forwards. -- Net income and loss attributable to noncontrolling interests is adjusted for the impact of certain of the pro forma adjustments described above. -- For calculating pro forma net income per share: -- net income is adjusted for the impact of the pro forma adjustments described above. -- fully diluted share count is adjusted to include the anti-dilutive impact of "Conversion Spread Hedges" which increases the effective conversion price of the currently outstanding 0.50% convertible notes due 2011 and 0.75% convertible notes due 2013 from their stated $40.38 conversion price to an effective conversion price of $50.47 per share. Under GAAP, the anti-dilutive impact of the Conversion Spread Hedges is not reflected on the outstanding diluted share count until the end of the hedge in 2011 and 2013 if and when shares are delivered. -- all unvested shares of restricted common stock, restricted stock units and performance share units are included in the calculation of pro forma net income per share because pro forma net income has been adjusted to exclude stock-based compensation expense.

    The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States. The attached financial and statistical supplement reconciles pro forma financial information with priceline.com's financial results under GAAP.

    About The Priceline Group of Companies

    The Priceline Group of Companies is a leader in global online hotel reservations, with approximately 61 million room nights booked in 2009. The Group is composed of four primary brands - Booking.com, priceline.com, Agoda.com and TravelJigsaw. The Priceline Group provides online travel services in 38 languages in 98 countries in Europe, North America, Asia, the Middle East and Africa.

    Based in Amsterdam, Booking.com is a leading international online hotel reservation service operating in 87 countries in 36 languages. Booking.com offers its customers access to approximately 96,000 participating hotels worldwide.

    In the U.S., priceline.com gives leisure travelers multiple ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises. In addition to getting compelling published prices, travelers can take advantage of priceline.com's famous Name Your Own Price® service, which can deliver the lowest prices available. Priceline.com also operates the following travel websites: Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com.

    Bangkok-based Agoda.com is an Asian online hotel reservation service that offers hotel rooms around the world and is available in 30 languages. With headquarters in Manchester, UK, TravelJigsaw is a multinational car hire service, offering its reservation services in more than 4,000 locations in 80 countries. Customer support is provided in 20 languages.

    priceline.com Incorporated UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) June 30, December 31, ASSETS 2010 2009 ---- ---- Current assets: Cash and cash equivalents $356,035 $202,141 Restricted cash 1,302 1,319 Short-term investments 864,164 598,014 Accounts receivable, net of allowance for doubtful accounts of $4,588 and $5,023, respectively 208,056 118,659 Prepaid expenses and other current assets 70,521 36,828 Deferred income taxes 57,598 65,980 Total current assets 1,557,676 1,022,941 Property and equipment, net 34,988 30,489 Intangible assets, net 236,547 172,080 Goodwill 426,324 350,630 Deferred taxes 174,236 253,700 Other assets 15,968 4,384 ------ ----- Total assets $2,445,739 $1,834,224 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $119,138 $60,568 Accrued expenses and other current liabilities 163,046 127,561 Deferred merchant bookings 141,611 60,758 Convertible debt 41,981 159,878 Total current liabilities 465,776 408,765 Deferred income taxes 59,179 43,793 Other long-term liabilities 26,894 24,052 Convertible debt 465,987 - ------- --- Total liabilities 1,017,836 476,610 --------- ------- Convertible debt 8,064 35,985 ----- ------ Redeemable noncontrolling interests 35,355 - ------ --- Stockholders' equity: Common stock, $0.008 par value, authorized 1,000,000,000 shares, 55,796,906, and 52,446,173 shares issued, respectively 432 405 Treasury stock, 7,409,780 and 6,865,119 shares, respectively (636,393) (510,970) Additional paid-in capital 2,400,959 2,289,867 Accumulated deficit (285,841) (454,673) Accumulated other comprehensive loss (94,673) (3,000) Total stockholders' equity 1,384,484 1,321,629 --------- --------- Total liabilities and stockholders' equity $2,445,739 $1,834,224 ========== ========== priceline.com Incorporated UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended June 30, 2010 ------------- 2010 2009 ---- ---- Merchant revenues $446,669 $392,822 Agency revenues 317,512 204,485 Other revenues 3,258 6,434 ----- ----- Total revenues 767,439 603,741 Cost of revenues 322,184 298,503 ------- ------- Gross profit 445,255 305,238 ------- ------- Operating expenses: Advertising - Offline 10,123 11,053 Advertising - Online 132,518 90,107 Sales and marketing 28,490 20,691 Personnel, including stock-based compensation of $15,465, $11,264, $27,374 and $21,858, for the three and six months ended June 30, 2010 and 2009, respectively 62,850 44,864 General and administrative 22,462 14,728 Information technology 4,895 4,697 Depreciation and amortization 10,758 9,723 ------ ----- Total operating expenses 272,096 195,863 ------- ------- Operating income 173,159 109,375 ------- ------- Other income (expense): Interest income 940 483 Interest expense (9,267) (6,505) Foreign currency transactions and other 1,039 (3,880) ----- ------ Total other income (expense) (7,288) (9,902) ------ ------ Earnings before income taxes and equity in income of investees 165,871 99,473 Income tax expense (51,275) (32,495) Equity in income of investees - 33 --- --- Net income 114,596 67,011 Less: net loss attributable to noncontrolling interests (361) - ---- --- Net income applicable to common stockholders $114,957 $67,011 ======== ======= Net income applicable to common stockholders per basic common share $2.41 $1.61 ===== ===== Weighted average number of basic common shares outstanding 47,791 41,661 ====== ====== Net income applicable to common stockholders per diluted common share $2.26 $1.38 ===== ===== Weighted average number of diluted common shares outstanding 50,847 48,479 ====== ====== Six Months Ended June 30, 2010 ------------- 2010 2009 ---- ---- Merchant revenues $814,933 $729,856 Agency revenues 530,755 324,711 Other revenues 6,144 11,232 ----- ------ Total revenues 1,351,832 1,065,799 Cost of revenues 587,462 552,231 ------- ------- Gross profit 764,370 513,568 ------- ------- Operating expenses: Advertising - Offline 21,911 21,819 Advertising - Online 245,627 158,223 Sales and marketing 52,603 39,110 Personnel, including stock-based compensation of $15,465, $11,264, $27,374 and $21,858, for the three and six months ended June 30, 2010 and 2009, respectively 112,628 84,374 General and administrative 40,493 29,516 Information technology 9,503 9,225 Depreciation and amortization 20,537 19,084 ------ ------ Total operating expenses 503,302 361,351 ------- ------- Operating income 261,068 152,217 ------- ------- Other income (expense): Interest income 1,795 1,224 Interest expense (14,072) (13,310) Foreign currency transactions and other (2,092) (63) ------ --- Total other income (expense) (14,369) (12,149) ------- ------- Earnings before income taxes and equity in income of investees 246,699 140,068 Income tax expense (78,228) (48,036) Equity in income of investees - 2 --- --- Net income 168,471 92,034 Less: net loss attributable to noncontrolling interest (361) - ---- --- Net income applicable to common stockholders $168,832 $92,034 ======== ======= Net income applicable to common stockholders per basic common share $3.59 $2.23 ===== ===== Weighted average number of basic common shares outstanding 47,054 41,334 ====== ====== Net income applicable to common stockholders per diluted common share $3.31 $1.92 ===== ===== Weighted average number of diluted common shares outstanding 51,032 47,924 ====== ====== priceline.com Incorporated UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended June 30, -------- OPERATING ACTIVITIES: 2010 2009 ---- ---- Net income $168,471 $92,034 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,869 6,969 Amortization 13,597 12,115 Provision for uncollectible accounts, net 3,464 1,810 Deferred income taxes 24,043 18,549 Stock-based compensation expense 27,374 21,858 Amortization of debt issuance costs 1,893 1,002 Amortization of debt discount 9,466 10,236 Loss (gain) on early extinguishment of debt 8,108 (3,130) Equity in income of investees - (2) Changes in assets and liabilities: Accounts receivable (85,516) (55,322) Prepaid expenses and other current assets (9,636) (751) Accounts payable, accrued expenses and other current liabilities 123,843 59,668 Other (960) 3,185 ---- ----- Net cash provided by operating activities 292,016 168,221 ------- ------- INVESTING ACTIVITIES: Purchase of investments (796,728) (310,798) Maturity of investments 470,198 162,045 Additions to property and equipment (10,233) (8,114) Acquisitions and other equity investments, net of cash acquired (110,972) - Proceeds from foreign currency contracts 32,478 - Payments on foreign currency contracts (4,283) - Change in restricted cash (33) 1,248 --- ----- Net cash used in investing activities (419,573) (155,619) -------- -------- FINANCING ACTIVITIES: Proceeds from the issuance of convertible senior notes 575,000 - Payments related to conversion of convertible senior notes (173,375) (36,505) Repurchase of common stock (125,423) (13,238) Proceeds from the sale of subsidiary shares to noncontrolling interests 4,311 - Proceeds from exercise of stock options 23,449 6,498 Payment of debt issuance costs (13,334) - Excess tax benefit on stock-based compensation 2,335 1,342 ----- ----- Net cash provided by (used in) financing activities 292,963 (41,903) ------- ------- Effect of exchange rate changes on cash and cash equivalents (11,512) (1,800) ------- ------ Net increase (decrease) in cash and cash equivalents 153,894 (31,101) Cash and cash equivalents, beginning of period 202,141 364,550 Cash and cash equivalents, end of period $356,035 $333,449 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for income taxes $31,002 $29,372 ======= ======= Cash paid during the period for interest $776 $2,297 ==== ====== priceline.com Incorporated UNAUDITED RECONCILIATION OF GAAP TO PRO FORMA FINANCIAL INFORMATION (In thousands, except per share data) Three Months Ended June 30, ------------------------ RECONCILIATION OF GAAP NET INCOME TO PRO FORMA EBITDA 2010 2009 ---- ---- GAAP Net income applicable to common stockholders $114,957 $67,011 (a) Amortization of acquired intangible assets in Merchant revenues 929 - (b) Stock-based compensation 15,465 11,264 (c) Depreciation and amortization 10,758 9,723 (d) Interest income (940) (483) (d) Interest expense 9,267 6,505 (e) Loss (gain) on early extinguishment of debt 2,857 (260) (f) Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes 51,275 32,495 (g) Equity in income of investees - (33) (h) Net loss attributable to noncontrolling interests (361) - Pro Forma EBITDA $204,207 $126,222 ======== ======== Three Months Ended June 30, ------------------------ RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME 2010 2009 ---- ---- GAAP Net income applicable to common stockholders $114,957 $67,011 (a) Amortization of acquired intangible assets in Merchant revenues 929 - (b) Stock-based compensation 15,465 11,264 (d) Debt discount amortization related to convertible debt 6,192 5,039 (e) Loss (gain) on early extinguishment of debt 2,857 (260) (f) Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes 11,317 9,717 (a) Amortization of acquired intangible assets in Depreciation and amortization 6,845 6,210 (h) Impact on noncontrolling interests of other pro forma adjustments (409) - Pro Forma Net income applicable to common stockholders $158,153 $98,981 ======== ======= Three Months Ended June 30, ------------------------ RECONCILIATION OF GAAP TO PRO FORMA NET INCOME PER DILUTED COMMON SHARE 2010 2009 ---- ---- GAAP weighted average number of diluted common shares outstanding 50,847 48,479 (i) Adjustment for Conversion Spread Hedges (94) (677) (j) Adjustment for restricted stock, restricted stock units and performance units 506 1,196 Pro Forma weighted average number of diluted common shares outstanding 51,259 48,998 ====== ====== Net income applicable to common stockholders per diluted common share GAAP $2.26 $1.38 ===== ===== Pro Forma $3.09 $2.02 ===== ===== Six Months Ended June 30, ---------------------- RECONCILIATION OF GAAP NET INCOME TO PRO FORMA EBITDA 2010 2009 ---- ---- GAAP Net income applicable to common stockholders $168,832 $92,034 (a) Amortization of acquired intangible assets in Merchant revenues 929 - (b) Stock-based compensation 27,374 21,858 (c) Depreciation and amortization 20,537 19,084 (d) Interest income (1,795) (1,224) (d) Interest expense 14,072 13,310 (e) Loss (gain) on early extinguishment of debt 8,109 (3,130) (f) Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes 78,228 48,036 (g) Equity in income of investees - (2) (h) Net loss attributable to noncontrolling interests (361) - Pro Forma EBITDA $315,925 $189,966 ======== ======== Six Months Ended June 30, ---------------------- RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME 2010 2009 ---- ---- GAAP Net income applicable to common stockholders $168,832 $92,034 (a) Amortization of acquired intangible assets in Merchant revenues 929 - (b) Stock-based compensation 27,374 21,858 (d) Debt discount amortization related to convertible debt 9,466 10,236 (e) Loss (gain) on early extinguishment of debt 8,109 (3,130) (f) Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes 18,447 17,148 (a) Amortization of acquired intangible assets in Depreciation and amortization 12,641 12,115 (h) Impact on noncontrolling interests of other pro forma adjustments (409) - Pro Forma Net income applicable to common stockholders $245,389 $150,261 ======== ======== Six Months Ended June 30, ---------------------- RECONCILIATION OF GAAP TO PRO FORMA NET INCOME PER DILUTED COMMON SHARE 2010 2009 ---- ---- GAAP weighted average number of diluted common shares outstanding 51,032 47,924 (i) Adjustment for Conversion Spread Hedges (127) (797) (j) Adjustment for restricted stock, restricted stock units and performance units 432 1,117 Pro Forma weighted average number of diluted common shares outstanding 51,337 48,244 ====== ====== Net income applicable to common stockholders per diluted common share GAAP $3.31 $1.92 ===== ===== Pro Forma $4.78 $3.11 ===== ===== (a) Amortization of acquired intangible assets is recorded in Merchant revenues and Depreciation and amortization. (b) Stock-based compensation is recorded in Personnel expense. (c) Depreciation and amortization are excluded from Net income to calculate EBITDA. (d) Interest income and Interest expense are excluded from Net income to calculate EBITDA. (e) Non-cash interest expense related to the amortization of debt discount and loss (gain) on early debt extinguishment are recorded in Interest expense and Foreign currency transactions and other, respectively. (f) Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes and are recorded in Income tax expense. (g) Equity in income of investees is excluded from Net income to calculate EBITDA. (h) Impact of other pro forma adjustments on Net loss attributable to noncontrolling interests. (i) Reflects the impact of the Conversion Spread Hedges that increase the effective conversion price of the currently outstanding Convertible Senior Notes due September 30, 2011 and the Convertible Senior Notes due September 30, 2013 from their stated $40.38 conversion price to an effective conversion price of $50.47 per share. Under GAAP, the anti-dilutive impact of the Conversion Spread Hedges is not reflected on the outstanding diluted share count until the end of the hedge when shares are delivered. (j) All shares of restricted common stock, restricted stock units and performance share units are included in the calculation of pro forma net income per share because pro forma net income has been adjusted to exclude stock-based compensation expense. priceline.com Incorporated -------------------------- Statistical Data In thousands (Unaudited) Gross Bookings 1Q08 2Q08 3Q08 4Q08 -------------- ---- ---- ---- ---- Domestic $720,968 $872,284 $799,578 $688,923 International** 1,037,644 1,237,681 1,250,850 792,190 --------- --------- --------- ------- Total $1,758,612 $2,109,965 $2,050,427 $1,481,113 Agency $1,370,119 $1,656,775 $1,603,693 $1,108,024 Merchant** 388,493 453,190 446,734 373,089 ------- ------- ------- ------- Total $1,758,612 $2,109,965 $2,050,427 $1,481,113 Year/Year Growth ---------------- Domestic 50.6% 59.2% 32.8% 31.1% International 99.7% 80.1% 58.6% 16.5% excluding F/X impact 75.0% 55.8% 44.7% 27.6% Agency 92.8% 80.2% 53.8% 21.4% Merchant 34.9% 43.6% 28.3% 27.5% Total 76.1% 70.9% 47.4% 22.9% Units Sold 1Q08 2Q08 3Q08 4Q08 ---------- ---- ---- ---- ---- Hotel Room-Nights 9,375 10,879 11,434 9,126 Year/Year Growth 57.4% 50.2% 43.6% 38.0% Rental Car Days 2,612 2,815 2,333 2,224 Year/Year Growth 30.4% 23.6% -0.2% 11.1% Airline Tickets 1,169 1,362 1,186 1,135 Year/Year Growth 83.0% 98.2% 44.8% 43.7% 1Q08 2Q08 3Q08 4Q08 ---- ---- ---- ---- Revenue $403,180 $513,976 $561,609 $406,041 Year/Year Growth 33.8% 44.4% 34.6% 21.3% Gross Profit $181,103 $253,725 $316,078 $205,065 Year/Year Growth 51.3% 61.4% 56.2% 28.0% Gross Bookings 1Q09 2Q09 3Q09 4Q09 -------------- ---- ---- ---- ---- Domestic $851,157 $964,464 $998,715 $830,983 International** 1,092,427 1,414,714 1,724,131 $1,433,471 --------- --------- --------- Total $1,943,584 $2,379,178 $2,722,846 $2,264,454 Agency $1,469,956 $1,824,618 $2,130,571 $1,766,295 Merchant** 473,628 554,560 592,275 $498,159 ------- ------- ------- Total $1,943,584 $2,379,178 $2,722,846 $2,264,454 Year/Year Growth ---------------- Domestic 18.1% 10.6% 24.9% 20.6% International 5.3% 14.3% 37.8% 81.0% excluding F/X impact 23.5% 32.4% 48.5% 69.5% Agency 7.3% 10.1% 32.9% 59.4% Merchant 21.9% 22.4% 32.6% 33.5% Total 10.5% 12.8% 32.8% 52.9% Units Sold 1Q09 2Q09 3Q09 4Q09 ---------- ---- ---- ---- ---- Hotel Room-Nights 12,785 15,665 17,869 14,593 Year/Year Growth 36.4% 44.0% 56.3% 59.9% Rental Car Days 3,014 3,237 2,604 2,370 Year/Year Growth 15.4% 15.0% 11.6% 6.6% Airline Tickets 1,496 1,551 1,544 1,318 Year/Year Growth 28.0% 13.9% 30.2% 16.2% 1Q09 2Q09 3Q09 4Q09 ---- ---- ---- ---- Revenue $462,058 $603,741 $730,660 $541,753 Year/Year Growth 14.6% 17.5% 30.1% 33.4% Gross Profit $208,330 $305,238 $434,006 $313,189 Year/Year Growth 15.0% 20.3% 37.3% 52.7% Gross Bookings 1Q10 2Q10 -------------- ---- ---- Domestic $989,350 $1,153,879 International** $1,975,345 $2,256,301 Total $2,964,695 $3,410,179 Agency $2,373,565 $2,682,965 Merchant** $591,130 $727,215 Total $2,964,695 $3,410,179 Year/Year Growth ---------------- Domestic 16.2% 19.6% International 80.8% 59.5% excluding F/X impact 72.8% 67.1% Agency 61.5% 47.0% Merchant 24.8% 31.1% Total 52.5% 43.3% Units Sold 1Q10 2Q10 ---------- ---- ---- Hotel Room-Nights 20,042 23,210 Year/Year Growth 56.8% 48.2% Rental Car Days 2,986 4,272 Year/Year Growth -0.9% 32.0% Airline Tickets 1,538 1,614 Year/Year Growth 2.8% 4.1% 1Q10 2Q10 ---- ---- Revenue $584,394 $767,439 Year/Year Growth 26.5% 27.1% Gross Profit $319,116 $445,255 Year/Year Growth 53.2% 45.9% Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked by customers. ** Includes $43.9 million of Travel Jigsaw gross bookings in 2Q10 since acquisition on May 18, 2010. Includes $37.5 million, $32.4 million, $24.2 million and $24.6 million of Agoda gross bookings in 4Q08, 3Q08, 2Q08 and 1Q08, respectively.

    Priceline.com Incorporated

    CONTACT: For Press Information: Brian Ek, +1-203-299-8167,
    brian.ek@priceline.com, or For Investor Relations: Matthew Tynan,
    +1-203-299-8487, matt.tynan@priceline.com

    Web Site: http://www.priceline.com/




    XL Group plc Announces Second Quarter 2010 Results- P&C operations combined ratio of 92.2% - Book value per ordinary share of $27.74 at June 30, 2010, an increase of 5% in the quarter and 13% from December 31, 2009 - Net income attributable to ordinary shareholders of $191.8 million, or $0.56 per share - Operating income(1) attributable to ordinary shareholders of $242.6 million, or $0.71 per share

    HAMILTON, Bermuda, Aug. 3 /PRNewswire-FirstCall/ -- XL Group plc ("XL" or the "Company") today reported its results for the second quarter of 2010.

    Commenting on the Company's performance, Chief Executive Officer Mike McGavick said:

    "We are pleased to report another quarter of solid operating results. Our P&C operations delivered a healthy combined ratio of 92.2% which includes 6.8 points of favorable prior period development. The current accident year combined ratio for our P&C operations was 99.0% in the quarter and our top-line remains strong.

    "Our operating income was $242.6 million in the second quarter, compared to $291.4 million in the same quarter last year. Included in operating income was a net charge of $23.5 million for the previously announced termination of the EIB guarantees. This termination continues our progress in eliminating distractions from our core P&C focus.

    "We grew our book value per ordinary share for the fifth consecutive quarter, this time by 5%, driven by both investment portfolio gains and net income. Our tangible book value per ordinary share increased 6% during the quarter to $25.30. Total shareholders' equity was $10.5 billion at June 30, 2010, an increase of 5% in the quarter and 11% since the end of 2009.

    "Our investment portfolio's favorable mark to market of $349 million this quarter was driven by interest rate declines even as corporate credit spreads widened. Our repositioned P&C portfolio weathered the turmoil in the credit markets, as we had limited exposure to the impacted Euro governments.

    "Annualized operating return on ordinary shareholders' equity was 10.5%. Both our investment income and P&C operations contributed to these gains."

    Mr. McGavick concluded: "We believe these results demonstrate our continued commitment to disciplined underwriting and vigorous risk management despite anemic pricing conditions."

    (1) Defined as net income (loss) attributable to ordinary shareholders excluding net realized gains and losses on investments, goodwill impairment charges and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax, for the Company and its share of these items for the Company's insurance company affiliates for the periods presented, and the gains recognized on the repurchase of the Company's Series C preference ordinary shares, as well as foreign exchange gains or losses, net of tax. "Operating income" and "annualized return on ordinary shareholders equity" based on operating income are "non-GAAP financial measures." During the year, the Company amended its definition of operating income to exclude after-tax foreign exchange gains and losses. The results from prior periods have been represented to conform to the current quarter's presentation. See the schedule entitled "Reconciliation" at the end of this release for a reconciliation of "operating income" to net income (loss) attributable to ordinary shareholders and of "annualized return on ordinary shareholders' equity" based on operating income to average ordinary shareholders' equity.

    Three and six months ended June 30 (US dollars in thousands except per share amounts) Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ---- ---- ---- ---- Net income attributable to ordinary shareholders $191,811 $79,949 $319,807 $258,328 Per ordinary share (diluted) $0.56 $0.23 $0.93 $0.76 Operating income (1) $242,574 $291,375 $392,186 $482,238 Per ordinary share (diluted) $0.71 $0.85 $1.14 $1.42

    The Company realized net income attributable to ordinary shareholders for the second quarter of $191.8 million, or $0.56 per ordinary share, compared to $79.9 million, or $0.23 per ordinary share for the second quarter of 2009. Included in net income attributable to ordinary shareholders for the quarter ended June 30, 2010 were pre-tax foreign exchange gains of $32.3 million compared to pre-tax foreign exchange losses of $145.2 million for the quarter ended June 30, 2009.

    Operating income was $242.6 million, or $0.71 per ordinary share, compared to $291.4 million, or $0.85 per ordinary share in the second quarter of 2009. This decrease was primarily due to a reduction in net investment income for the quarter of $25.7 million and the previously announced charge of $23.5 million to fully extinguish and terminate all of the guarantees issued to European Investment Bank ("EIB") by the Company in connection with financial guarantee policies between Syncora and EIB.

    Net investment income for the quarter was $302.6 million compared to $328.3 million in the prior year quarter. Net investment income on the P&C and Corporate portfolio decreased approximately 7% from the prior year quarter to $227.2 million due to lower portfolio yields driven by lower US interest rates along with the actions taken over the last couple of years to reposition the portfolio.

    Pre-tax net realized investment losses for the quarter were $61.4 million compared to $80.4 million in the prior year quarter. Net realized investment losses in the second quarter of 2010 included other-than-temporary impairments of $57.4 million, evenly split between credit impairment on structured credit securities and change in the expected holding period of certain corporate securities.

    The annualized return on ordinary shareholders' equity, based on operating income, was 10.5% for the quarter as compared to 20.1% in the prior year quarter. The decrease in annualized operating return on equity was primarily due to the increase in total shareholders' equity of $3.0 billion, or 40.4%, since June 30, 2009 partially offset by an increase in operating income.

    With effect from January 1, 2010, the Company changed its definition of operating income to exclude after-tax foreign exchange gains and losses. The results from prior periods have been represented to conform to the current year's presentation.

    P&C operations Three and six months ended June 30 (US dollars in thousands) Three months ended June 30 2010 2009 ---- ---- Gross premiums written $1,507,080 $1,501,190 Net premiums written 1,114,604 1,078,278 Net premiums earned 1,216,313 1,281,749 Underwriting income 94,673 89,439 Loss ratio 61.4% 60.8% Underwriting expense ratio 30.8% 32.2% Combined ratio 92.2% 93.0% Six months ended June 30 2010 2009 ---- ---- Gross premiums written $3,429,393 $3,379,418 Net premiums written 2,711,129 2,583,589 Net premiums earned 2,479,914 2,603,436 Underwriting income 88,063 193,291 Loss ratio 66.1% 60.3% Underwriting expense ratio 30.3% 32.3% Combined ratio 96.4% 92.6% -- P&C gross written premiums increased 0.4% from the prior year quarter primarily due to new business growth, including the recapture of certain business lost in 2009 and return premiums. This was partially offset by planned reductions in long term agreements, the impact of our previous withdrawal from two programs as well as the impact of unfavorable foreign exchange. -- P&C net premiums written increased by 3.4% from the prior year quarter reflecting the change in gross written premiums as well as reductions in ceded premiums in the current quarter. -- P&C net premiums earned comprised $868.7 million from the Insurance segment and $347.6 million from the Reinsurance segment for the second quarter 2010. The decrease from the prior year quarter is a reflection of the overall reduction in net premiums written over the past 24 months. -- The loss ratio for the quarter was 61.4% compared to 60.8% for the second quarter of 2009. Included in the current quarter loss ratio was favorable prior year development of $82.3 million compared to $89.6 million in the second quarter of 2009. The current quarter loss ratio is also impacted by losses of $27.2 million relating to the Deepwater Horizon oil spill and natural catastrophes, net of reinsurance and reinstatement premiums, of $16.8 million compared to $nil in the prior year quarter. -- The current quarter underwriting expense ratio fell when compared to the prior year quarter from 32.2% to 30.8% primarily driven by a decrease in the acquisition ratio from 15.4% to 13.8%. This resulted from a change in business mix in the Reinsurance segment combined with return premium in both segments. -- The P&C combined ratio excluding prior year development and the impact of catastrophes for the quarter was 97.6% compared to 100.0% for the second quarter of 2009. The Insurance segment combined ratio on this basis was 99.6% for the quarter compared to 103.7% for the second quarter of 2009, while the Reinsurance segment combined ratio on this basis was 92.7% compared to 92.0% for the prior year quarter. The Insurance combined ratio on this basis has shown improvements in environmental, property and aerospace lines from the prior year quarter due to more favorable loss experience, while the prior year also included restructuring charges of $4.1 million that contributed 0.5% to the combined ratio. In addition, the combined ratio for both segments benefited from the mix of business changes relative to the prior year quarter. Capital Position

    Book value per ordinary share was $27.74 at June 30, 2010 as compared to $24.60 at December 31, 2009, an increase of 13%.

    Net unrealized losses on investments, net of tax, were $275.6 million at June 30, 2010 compared with net unrealized losses, net of tax, of $1.2 billion at December 31, 2009. The decreases in net unrealized losses were principally due to favorable mark-to-market movements driven by declining interest rates and widening corporate credit spreads.

    At June 30, 2010, 53% of our $33.8 billion fixed income portfolio remained in cash, government, government-related or government-supported securities.

    Further details of the results for the quarter and of the Company's fixed income investment portfolio may be found in the Company's Financial Supplement and Fixed Income Portfolio Data Supplement, respectively. These documents are both dated August 3, 2010 and are available from the Investor Relations section of the XL Group website.

    The Company will host a conference call to discuss its second quarter results on Tuesday, August 3, 2010 at 5:00 p.m. Eastern Time. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen to the conference call, please dial (866) 617-1526 or (210) 795-0624, passcode: 'xl global'. The webcast will be available at http://www.xlgroup.com/ and will be archived on XL's website from approximately 9:00 p.m. Eastern Time on August 3, 2010, through midnight Eastern Time on September 3, 2010. A telephone replay of the conference call will also be available beginning at 9:00 p.m. Eastern Time on August 3, 2010, until midnight Eastern Time on September 3, 2010, by dialing (888) 562-6153 or (402) 280-9982.

    This press release contains forward-looking statements. Statements that are not historical facts, including statements about XL's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations, all of which involve risk and uncertainty. Statements that include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will," "may" or similar statements of a future or forward-looking nature identify forward-looking statements. Actual results may differ materially from those included in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes (a) changes in ratings, rating agency policies or practices; (b) greater frequency or severity of claims and loss activity than XL's underwriting, reserving or investment practices anticipate based on historical experience or industry data; (c) changes in the projected amounts of reinsurance recoverables; (d) trends in rates for property and casualty insurance and reinsurance; (e) other changes in general economic conditions, including the effects of inflation and changes in interest rates, credit spreads, foreign currency exchange rates and other factors; (f) developments, including uncertainties related to the depth and duration of the current recession and to the financial condition of counterparties, reinsurers and other companies that are at risk of bankruptcy and affect XL's business, and future volatility in the world's credit, financial and capital markets that adversely affect the performance and valuation of XL's investments or access to such markets; (g) the potential for changes to methodologies, estimations and assumptions that underlie the valuation of the Company's financial instruments that could result in changes to investment valuations; (h) changes to the Company's assessment as to whether it is more likely than not that the Company will be required to sell, or has the intent to sell, available-for-sale debt securities before their anticipated recovery; (i) the potential effects of regulatory developments in the jurisdictions in which the Company operates, including those which could impact the financial markets or increase XL's business costs and required capital levels; (j) the ability of XL's subsidiaries to pay dividends to the Company; (k) changes in the size of XL's claims relating to natural catastrophe losses due to the preliminary nature of some reports and estimates of loss and damage to date; (l) changes in applicable tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof; (m) XL's ability to realize the expected benefits from the redomestication; (n) any unanticipated costs in connection with the redomestication; and (o) the other factors set forth in XL's reports on Form 10-K, Form 10-Q, and other documents on file with the Securities and Exchange Commission. XL undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future developments or otherwise.

    XL CAPITAL LTD SUMMARY CONSOLIDATED FINANCIAL DATA (U.S. dollars in thousands) Three months ended Income statement data: June 30 (Unaudited) 2010 2009 ---- ---- Revenues: Gross premiums written: -P&C operations $1,507,080 $1,501,190 -Life operations 92,838 150,711 Net premiums written: -P&C operations 1,114,604 1,078,278 -Life operations 86,094 140,674 Net premiums earned: -P&C operations 1,216,313 1,281,749 -Life operations 86,448 147,951 Net investment income 302,594 328,348 Net realized (losses) gains on investments (61,386) (80,430) Net realized and unrealized (losses) gains on derivative instruments (19,896) 969 Net income (loss) from investment affiliates 19,084 37,086 Fee income and other 9,535 9,824 ----- ----- Total revenues $1,552,692 $1,725,497 ---------- ---------- Expenses: Net losses and loss expenses incurred $747,165 $779,628 Claims and policy benefits 123,375 174,588 Acquisition costs 180,560 223,272 Operating expenses 244,867 264,247 Foreign exchange (gains) losses (32,276) 145,221 Interest expense 49,149 54,198 Loss on settlement of guarantee 23,500 - Amortization of intangible assets 464 464 --- --- Total expenses $1,336,804 $1,641,618 ---------- ---------- Net income (loss) before non- controlling interest, income tax and net income from operating affiliates $215,888 $83,879 Income tax 42,976 16,045 Net (income) loss from operating affiliates (21,013) (17,667) ------- ------- Net income (loss) $193,925 $85,501 Non-controlling interest in net loss of subsidiary (80) (40) --- --- Net income (loss) attributable to XL Capital Ltd $194,005 $85,541 Preference share dividends (2,194) (5,592) Gain on repurchase of Series C preference ordinary shares - - --- --- Net income (loss) attributable to ordinary shareholders $191,811 $79,949 -------- ------- Six months ended Income statement data: June 30 (Unaudited) 2010 2009 ---- ---- Revenues: Gross premiums written: -P&C operations $3,429,393 $3,379,418 -Life operations 205,739 285,823 Net premiums written: -P&C operations 2,711,129 2,583,589 -Life operations 190,760 262,259 Net premiums earned: -P&C operations 2,479,914 2,603,436 -Life operations 191,332 277,785 Net investment income 610,918 676,314 Net realized (losses) gains on investments (97,562) (332,367) Net realized and unrealized (losses) gains on derivative instruments (40,376) (438) Net income (loss) from investment affiliates 27,262 10,193 Fee income and other 17,953 21,982 ------ ------ Total revenues $3,189,441 $3,256,905 ---------- ---------- Expenses: Net losses and loss expenses incurred $1,639,365 $1,569,911 Claims and policy benefits 247,118 332,547 Acquisition costs 381,697 441,491 Operating expenses 473,975 532,634 Foreign exchange (gains) losses (53,359) 120,597 Interest expense 98,219 115,539 Loss on settlement of guarantee 23,500 - Amortization of intangible assets 929 929 --- --- Total expenses $2,811,444 $3,113,648 ---------- ---------- Net income (loss) before non- controlling interest, income tax and net income from operating affiliates $377,997 $143,257 Income tax 72,812 61,998 Net (income) loss from operating affiliates (32,619) (7,339) ------- ------ Net income (loss) $337,804 $88,598 Non-controlling interest in net loss of subsidiary (81) (40) --- --- Net income (loss) attributable to XL Capital Ltd $337,885 $88,638 Preference share dividends (34,694) (42,126) Gain on repurchase of Series C preference ordinary shares 16,616 211,816 ------ ------- Net income (loss) attributable to ordinary shareholders $319,807 $258,328 -------- -------- XL CAPITAL LTD SUMMARY CONSOLIDATED FINANCIAL DATA (U.S. dollars in thousands, except per share amounts) Selected balance sheet data: As at As at June 30, 2010 December 31, 2009 (Unaudited) (Note 1) ----------- -------- Total investments available for sale $29,254,115 $29,307,171 Total fixed maturities, held to maturity 468,738 546,067 Cash and cash equivalents 3,801,194 3,643,697 Investments in affiliates 1,080,570 1,185,604 Unpaid losses and loss expenses recoverable 3,454,004 3,584,028 Total assets 45,322,419 45,626,232 Unpaid losses and loss expenses 20,153,892 20,823,524 Deposit liabilities 2,252,124 2,208,699 Future policy benefit reserves 4,892,612 5,490,119 Unearned premiums 3,842,364 3,651,310 Notes payable and debt 2,467,392 2,451,417 Redeemable series C preference ordinary shares 71,900 182,673 Total shareholders' equity 10,507,232 9,432,417 Diluted book value per ordinary share $27.74 $24.60 Basic book value per ordinary share $27.79 $24.64 Note 1: Certain items have been reclassified to conform with the current period presentation. XL CAPITAL LTD RECONCILIATION The following is a reconciliation of the Company's (i) net income (loss) attributable to ordinary shareholders to operating income (loss) (Note 1) and (ii) annualized return on ordinary shareholders' equity (based on operating income (loss)) to average ordinary shareholders' equity for the three months ended June 30, 2010 and 2009. (U.S. dollars in thousands except per share amounts) Three months ended June 30 (Unaudited) 2010 2009 ---- ---- (Note 3) Net income (loss) attributable to ordinary shareholders $191,811 $79,949 Net realized losses on investments, net of tax 57,927 82,859 Net realized and unrealized losses (gains) on derivatives, net of tax 19,899 (28) Net realized and unrealized (gains) losses on investments and derivatives of the Company's insurance company affiliates 62 (132) Foreign exchange (gains) losses, net of tax (27,125) 128,727 Operating income (Note 1) $242,574 $291,375 -------- -------- Per ordinary share results: (Note 2) Net (loss) income attributable to ordinary shareholders $0.56 $0.23 Operating income (Note 1) $0.71 $0.85 Weighted average ordinary shares outstanding: Basic 342,056,331 342,153,533 Diluted 342,877,695 342,467,928 Return on ordinary shareholders' equity: Average ordinary shareholders' equity $9,272,131 $5,805,260 Operating income (Note 1) $242,574 $291,375 Annualized operating income (Note 1) $970,296 $1,165,500 Annualized return on ordinary shareholders' equity -operating income (Note 1) 10.5% 20.1% ---- ---- Note 1: Defined as net income (loss) attributable to ordinary shareholders excluding net realized gains and losses on investments, goodwill impairment charges and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax, for the Company and its share of these items for the Company's insurance company affiliates for the periods presented, and the gains recognized on the repurchase of the Company's Series C preference ordinary shares, as well as foreign exchange gains or losses, net of tax. "Operating income" and "annualized return on ordinary shareholders equity" based on operating income are "non-GAAP financial measures." During the year, the Company amended its definition of operating income to exclude after-tax foreign exchange gains and losses. The results from prior periods have been represented to conform to the current quarter's presentation. Note 2: Diluted weighted average number of ordinary shares outstanding are used to calculate per share data except where they are anti-dilutive to earnings per share or where there is a net loss. When they are anti-dilutive or when a net loss occurs, basic weighted average ordinary shares outstanding are utilized in the calculation of net loss per share and net operating loss per share. Note 3: Certain amounts have been reclassified to conform with the current period presentation. XL CAPITAL LTD RECONCILIATION The following is a reconciliation of the Company's (i) net income (loss) attributable to ordinary shareholders to operating income (loss) (Note 1) and (ii) annualized return on ordinary shareholders' equity (based on operating income (loss)) to average ordinary shareholders' equity for the six months ended June 30, 2010 and 2009. (U.S. dollars in thousands except per share amounts) Six months ended June 30 (Unaudited) 2010 2009 ---- ---- (Note 3) Net income (loss) attributable to ordinary shareholders $319,807 $258,328 Net realized losses on investments, net of tax 94,169 325,723 Net realized and unrealized losses (gains) on derivatives, net of tax 40,116 2,864 Net realized and unrealized (gains) on investments and (1,059) (9) derivatives of the Company's insurance company affiliates Foreign exchange (gains) losses, net of tax (44,231) 107,148 Gain on repurchase of Series C preference ordinary shares (16,616) (211,816) Operating income (Note 1) $392,186 $482,238 -------- -------- Per ordinary share results: (Note 2) Net income (loss) attributable to ordinary shareholders $0.93 $0.76 Operating income (Note 1) $1.14 $1.42 Weighted average ordinary shares outstanding: Basic 342,049,240 339,155,217 Diluted 342,780,550 339,262,340 Return on ordinary shareholders' equity: Average ordinary shareholders' equity $8,967,558 $5,793,039 Operating income (Note 1) $392,186 $482,238 Annualized operating income (Note 1) $784,372 $964,476 Annualized return on ordinary shareholders' equity -operating income (Note 1) 8.7% 16.6% --- ---- Note 1: Defined as net income (loss) attributable to ordinary shareholders excluding net realized gains and losses on investments, goodwill impairment charges and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax, for the Company and its share of these items for the Company's insurance company affiliates for the periods presented, and the gains recognized on the repurchase of the Company's Series C preference ordinary shares, as well as foreign exchange gains or losses, net of tax. "Operating income" and "annualized return on ordinary shareholders equity" based on operating income are "non-GAAP financial measures." During the year, the Company amended its definition of operating income to exclude after-tax foreign exchange gains and losses. The results from prior periods have been represented to conform to the current period's presentation. Note 2: Diluted weighted average number of ordinary shares outstanding are used to calculate per share data except where they are anti-dilutive to earnings per share or where there is a net loss. When they are anti-dilutive or when a net loss occurs, basic weighted average ordinary shares outstanding are utilized in the calculation of net loss per share and net operating loss per share. Note 3: Certain amounts have been reclassified to conform with the current period presentation. Comment on Regulation G

    XL presents its operations in the way it believes will be most meaningful and useful to investors, analysts, rating agencies and others who use XL's financial information in evaluating XL's performance. This press release contains the presentation of (i) operating income (loss), which is defined as net income (loss) attributable to ordinary shareholders excluding net realized gains and losses on investments, goodwill impairment charges and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax, for the Company and its share of these items for the Company's insurance company affiliates for the periods presented and the gains recognized on the repurchase of the Company's Series C preference ordinary shares, as well as foreign exchange gains or losses, net of tax and (ii) annualized return on ordinary shareholders' equity based on operating income (loss). These items are "non-GAAP financial measures" as defined in Regulation G. The reconciliation of such measures to the most directly comparable GAAP financial measures in accordance with Regulation G is included above.

    Although the investment of premiums to generate income (or loss) and realized capital gains (or losses) is an integral part of XL's operations and the Company's insurance company operating affiliates, the determination to realize capital gains (or losses) is independent of the underwriting process. In addition, under applicable GAAP accounting requirements, losses can be created as the result of other than temporary declines in value and from goodwill impairment charges without actual realization. In this regard, certain users of XL's financial information, including certain rating agencies, evaluate earnings before tax and capital gains to understand the profitability of the recurring sources of income without the effects of these two variables. Furthermore, these users believe that, for many companies, the timing of the realization of capital gains and the recognition of goodwill impairment charges are largely a function of economic and interest rate conditions.

    Investment derivatives include all derivatives entered into by XL other than weather and energy and credit derivatives. With respect to credit derivatives, because XL and its insurance company operating affiliates generally hold financial guaranty contracts written in credit default derivative form to maturity, the net effects of the changes in fair value of these credit derivatives are excluded (similar with other companies' treatment of such contracts) as the changes in fair value each quarter are not indicative of underlying business performance. Unlike these credit derivatives, XL's weather and energy derivatives are actively traded (i.e., they are not held to maturity) and are, therefore, not excluded from net income as any gains or losses from this business are considered by management when evaluating and managing the underlying business.

    The gains recognized on the repurchase of the Company's Series C preference ordinary shares, are excluded as these transactions were capital in nature and outside the scope of the Company's underlying business.

    Foreign exchange gains and losses in the income statement are only one element of the overall impact of foreign exchange fluctuations on the Company's financial position and are not representative of any economic gain or loss made by the Company. Accordingly, it is not a relevant indicator of financial performance and it is excluded.

    In summary, XL evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income (loss), XL believes that showing operating income (loss) enables investors and other users of XL's financial information to analyze XL's performance in a manner similar to how management of XL analyzes performance. In this regard, XL believes that providing only a GAAP presentation of net income (loss) makes it much more difficult for users of XL's financial information to evaluate XL's underlying business. Also, as stated above, XL believes that the equity analysts and certain rating agencies that follow XL (and the insurance industry as a whole) exclude these items from their analyses for the same reasons and they request that XL provide this non-GAAP financial information on a regular basis.

    Return on average ordinary shareholders' equity ("ROE") excluding net realized gains and losses on investments, goodwill impairment charges and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax, for the Company and its share of these items for the Company's insurance company operating affiliates for the periods presented and the gains recognized on the repurchase of the Company's Series C preference ordinary shares, as well as foreign exchange gains or losses, net of tax (the "Exclusions"), is a widely used measure of any company's profitability. Annualized return on average ordinary shareholders' equity (minus the Exclusions) is calculated by dividing annualized net income (loss) attributable to ordinary shareholders minus the Exclusions for any period by the average of the opening and closing ordinary shareholders' equity. The Company establishes target ROEs (minus the Exclusions) for its total operations, segments and lines of business. If the Company's ROE (minus the Exclusions) return targets are not met with respect to any line of business over time, the Company seeks to re-evaluate these lines.

    Contact: David R. Radulski Carol A. Parker Trott Investor Relations Media Relations (441) 294-7460 (441) 294-7290

    XL Group plc

    CONTACT: David R. Radulski, Investor Relations, +1-441-294-7460, or
    Carol A. Parker Trott, Media Relations, +1-441-294-7290, both of XL Group plc

    Web Site: http://www.xlgroup.com/




    Onyx Pharmaceuticals to Present at the Canaccord Genuity 30th Annual Growth Conference

    EMERYVILLE, Calif., Aug. 3 /PRNewswire-FirstCall/ -- Onyx Pharmaceuticals, Inc. today announced that it will present at the Canaccord Genuity 30th Annual Growth Conference on Tuesday, August 10, 2010 at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time).

    Interested parties may access a live webcast of the presentation on our website at: http://www.onyx-pharm.com/view.cfm/32/Event-Calendar

    It is recommended that listeners log on 15 minutes early in order to register and download any necessary software. For those unable to participate during the live webcast, a recorded replay of the presentation will be available within 24 hours of the completion of the presentation through August 24, 2010.

    About Onyx Pharmaceuticals, Inc.

    Onyx Pharmaceuticals, Inc. is a biopharmaceutical company committed to improving the lives of people with cancer. The company, in collaboration with Bayer HealthCare Pharmaceuticals, Inc., is developing and marketing Nexavar® (sorafenib) tablets, a small molecule drug that is currently approved for the treatment of liver cancer and advanced kidney cancer. Additionally, Nexavar is being investigated in several ongoing trials in a variety of tumor types. Beyond Nexavar, Onyx has established a development pipeline of anticancer compounds at various stages of clinical testing, including carfilzomib, a next-generation proteasome inhibitor, that is currently being evaluated in multiple clinical trials for the treatment of patients with relapsed or relapsed/refractory multiple myeloma and solid tumors. ONX 0801, a targeted alpha-folate inhibitor, and ONX 0912, an oral proteasome inhibitor, are currently in Phase 1 testing. For more information about Onyx, visit the company's website at http://www.onyx-pharm.com/.

    Onyx Pharmaceuticals, Inc.

    CONTACT: Alex Santos of Onyx Pharmaceuticals, Inc., +1-510-597-6504

    Web Site: http://www.onyx-pharm.com/




    ATS Corporation Announces Financial Results for the Second Quarter Ended June 30, 2010-- Revenue of $29.2 million for the quarter and $59.8 million year to date, up 4% over year to date 2009 -- Fully diluted EPS of $0.05 for the quarter and $0.10 year to date, up 43% over year to date 2009 -- EBITDA (1) of $2.8 million for the quarter and $6.0 million year to date, or a year to date EBITDA margin of 10% -- Backlog up 21%, to $202 million, from December 31, 2009 -- Total debt of $18.0 million as of June 30, 2010, down $3.2 million from $21.2 million as of December 31, 2009 -- DSO of 64 days as of June 30, 2010

    MCLEAN, Va., Aug. 3 /PRNewswire-FirstCall/ -- ATS Corporation ("ATSC" or the "Company") (NYSE AMEX: ATSC), a leading information technology company that delivers innovative technology solutions to government and commercial organizations, today announced operating results for the second quarter ended June 30, 2010.

    Second Quarter Results

    ATSC reported revenue of $29.2 million for the second quarter of 2010. Revenue for the quarter decreased by 3.4% from second quarter 2009 revenue of $30.3 million. Revenue from commercial contracts increased by $2.1 million to $8.2 million, or 34.4%. Revenue from civilian and defense contracts decreased by $3.2 million to $21.1 million, or 13.2%. ATSC's quarter over quarter revenue decline in its civilian and defense areas is primarily attributed to reduced equipment purchases in the second quarter of 2010 compared to the second quarter of 2009 and the impact of several recently recompeted and awarded contracts.

    Operating income for the quarter was $2.2 million and net income for the quarter was $1.1 million, or $0.05 per diluted share, compared to operating income of $2.7 million and net income of $1.2 million, or $0.05 per diluted share, for the second quarter of 2009. EBITDA (1) was $2.8 million for the quarter, resulting in an EBITDA margin of 9.7%, compared to $3.5 million, or an EBITDA margin of 11.5% for the second quarter of 2009. Quarter over quarter decreases in operating income and EBITDA were driven by the decline in revenue and further impacted by a drop in gross margin due to a shift in contract mix. Offsetting the change in gross margin, the Company's selling, general and administrative expenses declined by 6.6% and interest expense was down 55.0% due to a significant reduction in debt.

    Backlog as of June 30, 2010 was approximately $202.1 million, of which $54.1 million was funded, up 21% from $166.8 million as of December 31, 2009 and up 29% from $156.1 million as of June 30, 2009. Days sales outstanding ("DSO") were 64 at the end of the second quarter of fiscal year 2010, consistent with the DSO in the first quarter of 2010.

    As of June 30, 2010, ATSC's balance sheet included debt of $17.5 million on its revolving credit facility and approximately $458,000 in promissory notes related to the acquisition of Number Six Software, Inc. Additionally, the balance sheet included $52.8 million in stockholders' equity.

    Six-Month Results

    ATSC reported revenue of $59.8 million for the first six months of 2010. Revenue for the first six months increased by 4.1% over the first six months of 2009. Revenue from commercial contracts increased $4.2 million to $14.7 million, or 39.9%. Revenue from civilian and defense contracts decreased $1.8 million to $45.1 million, or 3.9%.

    Operating income for the first six months of 2010 was $4.3 million and net income for the first six months was $2.2 million, or $0.10 per diluted share, compared to operating income of $4.4 million and net income of $1.6 million, or $0.07 per diluted share, for the first six months of 2009. EBITDA (1) was $6.0 million for both the first six months of 2010 and 2009, resulting in an EBITDA margin of 10.0% and 10.4%, respectively.

    Second Quarter Highlights and Management Comments

    Second quarter new bookings totaled $30.1 million, representing a book to bill ratio of 1.0x. The largest competitive new award received during the quarter was a $13.7 million, five-year contract with the U.S. Department of Housing and Urban Development ("HUD"), to provide application systems support for HUD's Program Accounting System, Line of Credit Control System, and Bond Payment System. The balance of the new bookings was from add-ons or additional funding from HUD, the Defense Technology Security Administration, the Defense Logistics Agency, the U.S. Coast Guard, and Fannie Mae, as well as the addition of several new customers in our commercial consulting business areas.

    ATSC President and Chief Executive Officer Dr. Edward H. Bersoff stated, "We are pleased with our year to date results, delivering top-line growth, better than industry average EBITDA margins and DSO, continued repayment of debt, strong performance in our commercial business, and the completion of our amended and restated credit agreement in June for another three years under favorable terms. We did experience some quarter over quarter revenue decline in our government business in the second quarter related to a heavy recompete schedule this year where we have faced some pricing pressure to remain competitive. We do expect those recompeted awards to scale in size and scope over their multi-year period as is common in our sector. Furthermore, we were impacted by delays in several awards we expected to be announced this past quarter, but remain optimistic that a number of these potential new contracts will contribute to our revenue base in the second half of the year. This quarter we were also pleased to successfully complete our reappraisal at CMMI Maturity Level 3, a highly recognized standard in our industry to evaluate maturity in critical technical and managerial processes, which further affirms our commitment to the highest standards in the software development process."

    Conference Call

    ATSC will conduct a second quarter conference call on Tuesday, August 3, 2010 at 5:00 p.m. ET. The dial-in number for the live teleconference is (866) 837-9781, conference ID # 1472387. For international participants, please call into 011-800-4040-2020 and use the same conference ID #. A recorded replay of the teleconference will also be available on the Company website (http://www.atsc.com/) for one year from the conference call date.

    About ATS Corporation

    ATSC is a leading provider of software and systems development, systems integration, infrastructure management and outsourcing, information sharing, training and consulting to the Department of Defense, federal civilian agencies, public safety and national security customers, as well as commercial enterprises. Headquartered in McLean, Virginia, the Company has more than 600 employees at 10 locations across the country.

    Any statements in this press release about future expectations, plans, and prospects for ATSC, including statements about the estimated value of the contract and work to be performed, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our dependence on our contracts with federal government agencies for the majority of our revenue, our dependence on our GSA schedule contracts and our position as a prime contractor on government-wide acquisition contracts to grow our business, and other factors discussed in our latest annual report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2010. In addition, the forward-looking statements included in this press release represent our views as of August 3, 2010. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to August 3, 2010.

    Additional information about ATSC may be found at http://www.atsc.com/.

    (1) EBITDA is a non-GAAP measure that is defined as GAAP net income plus other expense, interest expense, income taxes, and depreciation and amortization. We have provided EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the bottom of the statement of operations in this release that reconciles GAAP net income to EBITDA.

    ATS Corporation Consolidated Statements of Operations (unaudited) Three Months ------------ Ended June 30, -------------- 2010 2009 ---- ---- (unaudited) (unaudited) ----------- ----------- Revenue $29,246,328 $30,266,809 Operating costs and expenses Direct costs 20,503,390 20,451,932 Selling, general and administrative expenses 5,908,910 6,326,616 Depreciation and amortization 636,332 767,616 ------- ------- Total operating costs and expenses 27,048,632 27,546,164 Operating income 2,197,696 2,720,645 Other (expense) income Interest, net (356,887) (792,604) Other income 3,892 - ----- --- Income before income taxes 1,844,701 1,928,041 Income tax expense 707,675 756,253 ------- ------- Net income $1,137,026 $1,171,788 ========== ========== Weighted average number of shares outstanding -basic 22,472,993 22,660,767 -diluted 22,590,473 22,660,767 Net income per share -basic $0.05 $0.05 -diluted $0.05 $0.05 Reconciliation of GAAP Net Income to EBITDA (1) Three Months ------------ Ended June 30, -------------- 2010 2009 ---- ---- (unaudited) (unaudited) ----------- ----------- Net Income $1,137,026 $1,171,788 Depreciation and amortization 636,332 767,616 Interest 356,887 792,604 Taxes 707,675 756,253 ------- ------- EBITDA (1) 2,837,920 3,488,261 Six Months ---------- Ended June 30, -------------- 2010 2009 ---- ---- (unaudited) (unaudited) ----------- ----------- Revenue $59,758,311 $57,423,323 Operating costs and expenses Direct costs 41,919,002 38,647,669 Selling, general and administrative expenses 12,312,131 12,819,131 Depreciation and amortization 1,277,169 1,551,743 ------- ------- Total operating costs and expenses 55,508,302 53,018,543 Operating income 4,250,009 4,404,780 Other (expense) income Interest, net (1,178,042) (1,566,684) Other income 503,892 - ------- --- Income before income taxes 3,575,859 2,838,096 Income tax expense 1,332,265 1,240,719 --------- --------- Net income $2,243,594 $1,597,377 ========== ========== Weighted average number of shares outstanding -basic 22,504,568 22,601,811 -diluted 22,617,016 22,601,811 Net income per share -basic $0.10 $0.07 -diluted $0.10 $0.07 Reconciliation of GAAP Net Income to EBITDA (1) Six Months ---------- Ended June 30, -------------- 2010 2009 ---- ---- (unaudited) (unaudited) ----------- ----------- Net Income $2,243,594 $1,597,377 Depreciation and amortization 1,277,169 1,551,743 Interest 1,178,042 1,566,684 Taxes 1,332,265 1,240,719 --------- --------- EBITDA (1) 6,031,070 5,956,523 ATS Corporation Consolidated Balance Sheets (unaudited and audited) June 30, December 31, 2010 2009 (unaudited) (audited) ----------- --------- ASSETS Current assets Cash $81,108 $178,225 Restricted cash 1,325,006 1,324,510 Accounts receivable, net 20,735,334 22,497,444 Prepaid expenses and other current assets 827,002 625,231 Income taxes receivable 146,657 205,339 Other current assets 27,035 46,057 Deferred income taxes, current 1,682,145 2,361,611 --------- --------- Total current assets 24,824,287 27,238,417 Property and equipment, net 2,738,205 3,011,621 Goodwill 55,370,011 55,370,011 Intangible assets, net 5,106,634 6,102,798 Other assets 146,567 146,567 Deferred income taxes 1,499,746 1,400,260 --------- --------- Total assets $89,685,450 $93,269,674 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $458,353 $21,191,135 Accounts payable 5,556,163 4,753,800 Other accrued expenses and current liabilities 3,842,175 6,356,896 Accrued salaries and related taxes 3,545,009 4,541,509 Accrued vacation 2,557,954 2,259,538 Deferred revenue 561,792 1,392,457 Deferred rent - current portion 320,498 320,498 ------- ------- Total current liabilities 16,841,944 40,815,833 Long-term debt - net of current portion 17,515,138 - Deferred rent - net of current portion 2,570,534 2,658,055 Other long-term liabilities 5,795 5,795 ----- ----- Total liabilities 36,933,411 43,479,683 Commitments and contingencies Stockholders' equity: Preferred stock $0.0001 par value, 1,000,000 shares authorized, and no shares issued - - and outstanding Common stock $0.0001 par value, 100,000,000 shares authorized, 31,430,639 and 3,143 3,124 31,235,696 shares issued, and 22,532,746 and 22,489,803 shares outstanding Additional paid-in capital 132,393,214 131,702,488 Treasury stock, at cost, 8,897,893 and 8,745,893 shares held (31,663,758) (31,209,118) Accumulated deficit (47,819,385) (50,062,979) Accumulated other comprehensive loss (net of tax benefit of $100,643 and $400,571) (161,175) (643,524) -------- -------- Total stockholders' equity 52,752,039 49,789,991 ---------- ---------- Total liabilities and stockholders' equity $89,685,450 $93,269,674 =========== =========== ATS Corporation Consolidated Statement of Cash Flows (unaudited) Six Months Ended ---------------- June 30, -------- 2010 2009 (unaudited) (unaudited) ----------- ----------- Cash flows from operating activities Net income $2,243,594 $1,597,377 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 1,277,169 1,551,743 Non-cash interest expense SWAP agreement 223,504 183,404 Stock-based compensation 411,762 292,330 Directors' fees paid in equity 103,094 88,988 Deferred income taxes 193,077 208,221 Deferred rent (87,520) (94,036) Gain on disposal of equipment (8,722) - Provision for bad debt 932,365 276,262 Changes in assets and liabilities, net of adjustments related to other comprehensive loss: Accounts receivable 829,745 4,491,003 Prepaid expenses and other current assets (201,771) (69,644) Restricted cash (496) (6,067) Other assets 19,229 66,803 Accounts payable 830,729 1,484,818 Other accrued expenses and accrued liabilities (1,869,085) (1,911,097) Accrued salaries and related taxes (996,500) 672,066 Accrued vacation 298,417 419,908 Accrued interest (28,367) 9,961 Income taxes payable and receivable, net 78,408 (1,321,947) Other current liabilities (830,666) 628,051 -------- ------- Net cash provided by operating activities 3,417,966 8,568,144 Cash flows from investing activities Purchase of property and equipment (9,074) (86,654) Proceeds from disposals of equipment 10,000 - ------ --- Net cash provided by (used in) investing activities 926 (86,654) Cash flows from financing activities Borrowings on line of credit 34,537,373 29,405,026 Payments on line of credit (36,205,470) (37,200,267) Payments on notes payable (1,549,547) (1,127,286) Payments on capital leases - (42,374) Proceeds from exercise of stock options 4,837 - Proceeds from stock issued pursuant to Employee Stock Purchase Plan 151,438 126,428 Payments to repurchase treasury stock (454,640) - -------- --- Net cash used in financing activities (3,516,009) (8,838,473) Net decrease in cash (97,117) (356,983) Cash, beginning of period 178,225 364,822 ------- ------- Cash, end of period $81,108 $7,839 ======= ====== ATS Corporation Consolidated Statement of Cash Flows (unaudited) (continued) Six Months Ended ---------------- June 30, -------- 2010 2009 Supplemental disclosures: (unaudited) (unaudited) ----------- ----------- Cash paid or received during the period for: Income taxes paid $1,061,200 $2,352,483 Income tax refunds 500 4,924 Interest paid 1,216,983 1,373,319 Interest received 10,078 46,406

    ATS Corporation

    CONTACT: Joann O'Connell, Vice President, Investor Relations,
    +1-571-766-2400, or Media: Penny Parker, Corporate Communications Manager,
    +1-571-766-2400, both of ATS Corporation

    Web Site: http://www.atsc.com/




    Magellan Appoints New Chief Financial Officer and Treasurer

    PORTLAND, Maine, Aug. 3 /PRNewswire-FirstCall/ -- Magellan Petroleum Corporation (the "Company" or "Magellan") announced the appointment of Antoine Lafargue as its new Chief Financial Officer (CFO) and Treasurer. Susan M. Filipos, who has been serving as the Company's Interim Chief Financial Officer since April 30, 2010, will continue in her duties as the Company's Controller.

    William H. Hastings, President and Chief Executive Officer, stated: "It is an important step having Antoine join us as our new Chief Financial Officer and Treasurer. Antoine's successful experience in our core oil and gas businesses and breadth of knowledge in all aspects of international corporate finance will help ensure a smooth transition of our financial leadership. I know he will bring considerable capital raising experience and management strength to our leadership team as we continue to pursue our key strategic objectives."

    Mr. Lafargue, age 35, has served in a number of senior financial management positions during a career in the United States and Europe. From July 2009 to July 2010, Mr. Lafargue served as the Chief Financial Officer of Falcon Gas Storage, a natural gas storage company based in Houston, TX. Prior to serving in that role, Mr. Lafargue served from 2006 to 2009 as a principal for Arcapita, a financial services firm based in London, focusing on investments in the energy and infrastructure sectors. From 2000 to 2006, Mr. Lafargue served in various financial and strategic advisory roles in the energy sector based in London working for Bank of America, Societe Generale, and Credit Suisse/Donaldson, Lufkin & Jenrette. Mr. Lafargue holds master's degrees in Finance from the Ecole Superieure de Commerce de Paris and in Social and Political Sciences from the Institut d'Etudes Politiques, both located in France.

    Mr. Lafargue's appointments are conditioned upon receipt of a H-1B work visa which the Company sponsored for Mr. Lafargue. He will be based initially out of the Brisbane, Australia office of Magellan Petroleum Australia Limited ("MPAL"), the Company's wholly-owned subsidiary, and will transfer to the Company's headquarters office on October 1, 2010.

    Forward- Looking Statements

    Statements in this press release which are not historical in nature are intended to be, and are hereby identified as, forward looking statements for purposes of the "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The Company cautions readers that forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward looking statements. Among these risks and uncertainties are pricing and production levels from the properties in which the Company has interests; the extent of the recoverable reserves at those properties; the accuracy of reserve estimates; the completion of the planned Evans Shoal transaction; the success or occurrence of potential development and operational plans and opportunities for the Evans Shoal field; and the profitable integration of acquired businesses, including Nautilus Poplar LLC, into the Company's operations. In addition, the Company has a large number of exploration permits and faces the risk that any wells drilled may fail to encounter hydrocarbons in commercially recoverable quantities. The Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

    Magellan Petroleum Corporation

    CONTACT: William H. Hastings, President and CEO, +1-207-619-8501,
    Antoine Lafargue, Chief Financial Officer and Treasurer, +1-207-619-8505




    WebMD Announces Second Quarter Financial ResultsWebMD Total Revenue Increased 24%; Advertising Revenue Increased 32% WebMD Adjusted EBITDA Increased 71% WebMD Increases 2010 Financial Guidance

    NEW YORK, Aug. 3 /PRNewswire-FirstCall/ -- WebMD Health Corp. , the leading source of health information, today announced financial results for the three months ended June 30, 2010.

    For the three months ended June 30, 2010: -- Revenue was $122.7 million, compared to $98.6 million in the prior year period, an increase of 24%. -- Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") was $34.3 million, compared to $20.0 million in the prior year period, an increase of 71%. -- Net income was $7.7 million or $0.13 per share, compared to a net loss of $(11.7) million or $(0.25) per share in the prior year period.

    "WebMD is steadily establishing itself as an essential marketing channel for the nation's largest biopharma and consumer products companies," said Wayne Gattinella, President and CEO. "With advertising revenue growth of 32% and expanding operating margins, our core online business continues to outpace the growth of the online advertising markets overall."

    Financial Summary

    Revenue for the second quarter was $122.7 million, compared to $98.6 million in the prior year period, an increase of 24%. Specifically:

    -- Public portal advertising and sponsorship revenue was $100.6 million for the second quarter, compared to $76.0 million in the prior year period, an increase of 32%. Traffic to the WebMD Health Network continued to grow, reaching an average of 80.7 million unique users per month and total traffic of 1.8 billion page views during the second quarter, increases of 35% and 22%, respectively, from a year ago. 1.5 million continuing medical education (CME) programs were completed on the WebMD Professional Network during the second quarter. -- Private portal services revenue was $22.1 million for the second quarter, a decrease of $500 thousand from the prior year period. The base of large employers and health plans using WebMD's private Health and Benefits portals during the second quarter was 129 as compared to 137 in the prior year period.

    Adjusted EBITDA for the second quarter was $34.3 million, compared to $20.0 million in the prior year period, an increase of 71%.

    Net income was $7.7 million or $0.13 per share, compared to a net loss of $(11.7) million or $(0.25) per share in the prior year period. Net income in the current period included the after tax impact of a gain on investments of $3.6 million and a loss on convertible notes of $(6.6) million. Net loss in the prior year period included the after tax impact of a gain on convertible notes of $2.2 million, a loss from discontinued operations of $(13.3) million and non-controlling interest of $(0.4) million. Net income would have been $10.7 million in the current period as compared to a net loss of $(0.2) million in the prior year period excluding these items.

    During the second quarter: -- WebMD received cash proceeds of $65.5 million from the sale of the Senior Secured Notes it received as consideration in the sale of HLTH's Porex business. -- WebMD received $286 million in cash from the sale of its auction rate securities investments and has retained the ability to receive the upside on the auction rate securities through April 2012. -- WebMD repurchased $32.4 million face amount and had conversions of $232.1 million face amount of the Company's 1.75% convertible notes. -- WebMD repurchased $12.9 million face amount and had conversions of $12.7 million face amount of the Company's 3 1/8% convertible notes. -- WebMD completed a tender offer to repurchase approximately 5.2 million shares for $242 million in cash.

    As of June 30, 2010, WebMD had $535 million in cash and investments and had approximately $121 million in aggregate principal amount of its 3 1/8% convertible notes outstanding.

    WebMD Mobile

    WebMD's penetration into the mobile health information market continued to expand this quarter:

    -- WebMD Mobile for iPhone/iTouch has generated nearly two million downloads since launch and the newest release introduces an improved user interface and new features including local health listings. -- WebMD Mobile for the iPad launched during the quarter with over 400,000 downloads to date. WebMD Mobile for the iPad allows users to check their symptoms, access drug and treatment information, get first aid essentials and check local health listings on the go. -- Medscape Mobile for physicians has attracted over 450,000 users since launch and, with availability on both the iPhone/iTouch and Blackberry, it is becoming the premier clinical reference tool at the point of care. Financial Guidance WebMD is increasing its financial guidance for 2010 today. -- The range for revenue guidance increases to $515 million to $535 million (from $510 million to $525 million). -- The range for Adjusted EBITDA guidance increases to $158 million to $168 million (from $150 million to $158 million).

    WebMD is providing a schedule (attached to this press release) to reflect these increases as well as updates for non-cash and other items primarily to reflect the impact of the sale of investments and convertible note conversions and repurchases completed by WebMD during the second quarter of 2010.

    For the third quarter of 2010, WebMD expects: -- Revenue to be in excess of $133 million, an increase in excess of 19% from last year. Public portal advertising and sponsorship revenue is expected to grow in excess of 24%. -- Adjusted EBITDA to be in excess of 32% of revenue. -- Net income to be in excess of 9% of revenue. Analyst and Investor Conference Call

    As previously announced, WebMD will hold a conference call with investors and analysts to discuss its second quarter results at 4:45 p.m. (Eastern) today. The call can be accessed at http://www.wbmd.com/ (in the Investor Relations section). A replay of the audio webcast will be available at the same web address.

    About WebMD

    WebMD Health Corp. is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through our public and private online portals and health-focused publications. Approximately 80 million unique visitors access the WebMD Health Network each month.

    The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList, theHeart.org and drugs.com.

    All statements contained in this press release and the related analyst and investor conference call, other than statements of historical fact, are forward-looking statements, including those regarding: guidance on our future financial results and other projections or measures of our future performance; market opportunities and our ability to capitalize on them; the benefits expected from new or updated products or services and from other potential sources of additional revenue; and expectations regarding the market for investments in auction rate securities (ARS). These statements speak only as of the date of this press release, are based on our current plans and expectations, and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of our products and services; our relationships with customers and strategic partners; changes in the markets for ARS; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet and information technology industries. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

    This press release, and the accompanying tables, include both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as certain non-GAAP financial measures. The tables attached to this press release include reconciliations of these non-GAAP financial measures to GAAP financial measures. In addition, an "Explanation of Non-GAAP Financial Measures" is attached to this press release as Annex A.

    WebMD®, Medscape®, eMedicine®, MedicineNet®, RxList®, Subimo®, Medsite®, Summex®, WebMD® Health Exchange and Medscape® Mobile are trademarks of WebMD Health Corp. or its subsidiaries.

    WEBMD HEALTH CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited) Three Months Ended June 30, -------- 2010 2009 ---- ---- Revenue $122,707 $98,631 Cost of operations 45,368 39,229 Sales and marketing 29,425 26,797 General and administrative 20,577 22,003 Depreciation and amortization 6,318 6,956 Interest income 420 1,958 Interest expense 3,170 5,781 (Loss) gain on convertible notes (11,011) 3,473 Gain (loss) on investments 6,002 - Other income (expense), net 99 (552) --- ---- Income (loss) from continuing operations before income tax provision (benefit) 13,359 2,744 Income tax provision (benefit) 5,675 750 ----- --- Consolidated income from continuing operations 7,684 1,994 Consolidated loss from discontinued operations, net of tax - (13,284) --- ------- Consolidated net income (loss) inclusive of noncontrolling interest 7,684 (11,290) Income attributable to noncontrolling interest - (387) --- ---- Net income (loss) attributable to Company stockholders $7,684 $(11,677) ====== ======== Amounts attributable to Company stockholders: Income from continuing operations $7,684 $703 Loss from discontinued operations - (12,380) --- ------- Net income (loss) attributable to Company stockholders $7,684 $(11,677) ====== ======== Basic income (loss) per common share: Income from continuing operations $0.14 $0.02 Loss from discontinued operations - (0.28) --- ----- Net income (loss) attributable to Company stockholders $0.14 $(0.26) ===== ====== Diluted income (loss) per common share: Income from continuing operations $0.13 $0.01 Loss from discontinued operations - (0.26) --- ----- Net income (loss) attributable to Company stockholders $0.13 $(0.25) ===== ====== Weighted-average shares outstanding used in computing income (loss) per common share: Basic 53,521 45,599 ====== ====== Diluted 62,504 46,733 ====== ====== Six Months Ended June 30, -------- 2010 2009 ---- ---- Revenue $230,737 $188,895 Cost of operations 88,362 75,794 Sales and marketing 57,832 54,358 General and administrative 39,386 43,851 Depreciation and amortization 13,333 14,059 Interest income 3,829 4,220 Interest expense 8,309 12,317 (Loss) gain on convertible notes (14,738) 10,120 Gain (loss) on investments (22,846) - Other income (expense), net (199) (821) ---- ---- Income (loss) from continuing operations before income tax provision (benefit) (10,439) 2,035 Income tax provision (benefit) (14,333) (467) ------- ---- Consolidated income from continuing operations 3,894 2,502 Consolidated loss from discontinued operations, net of tax - (12,767) --- ------- Consolidated net income (loss) inclusive of noncontrolling interest 3,894 (10,265) Income attributable to noncontrolling interest - (997) --- ---- Net income (loss) attributable to Company stockholders $3,894 $(11,262) ====== ======== Amounts attributable to Company stockholders: Income from continuing operations $3,894 $509 Loss from discontinued operations - (11,771) --- ------- Net income (loss) attributable to Company stockholders $3,894 $(11,262) ====== ======== Basic income (loss) per common share: Income from continuing operations $0.07 $0.01 Loss from discontinued operations - (0.26) --- ----- Net income (loss) attributable to Company stockholders $0.07 $(0.25) ===== ====== Diluted income (loss) per common share: Income from continuing operations $0.07 $0.01 Loss from discontinued operations - (0.25) --- ----- Net income (loss) attributable to Company stockholders $0.07 $(0.24) ===== ====== Weighted-average shares outstanding used in computing income (loss) per common share: Basic 52,856 45,408 ====== ====== Diluted 57,272 46,446 ====== ====== WEBMD HEALTH CORP. CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION (In thousands, except per share data, unaudited) Three Months Ended June 30, -------- 2010 2009 ---- ---- Revenue Public portal advertising and sponsorship $100,592 $75,992 Private portal services 22,115 22,639 $122,707 $98,631 ======== ======= Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (a) $34,301 $20,021 Interest, taxes, non-cash and other items (b) Interest income 420 1,958 Interest expense (3,170) (5,781) Income tax (provision) benefit (5,675) (750) Depreciation and amortization (6,318) (6,956) Non-cash stock-based compensation (6,964) (9,412) Non-cash advertising - - (Loss) gain on convertible notes (11,011) 3,473 Gain (loss) on investments 6,002 - Other income (expense), net 99 (559) --- ---- Consolidated income from continuing operations 7,684 1,994 Consolidated loss from discontinued operations, net of tax - (13,284) --- ------- Consolidated net income (loss) inclusive of noncontrolling interest 7,684 (11,290) Income attributable to noncontrolling interest - (387) --- ---- Net income (loss) attributable to Company stockholders $7,684 $(11,677) ====== ======== Six Months Ended June 30, -------- 2010 2009 ---- ---- Revenue Public portal advertising and sponsorship $186,849 $143,281 Private portal services 43,888 45,614 $230,737 $188,895 ======== ======== Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (a) $59,958 $35,282 Interest, taxes, non-cash and other items (b) Interest income 3,829 4,220 Interest expense (8,309) (12,317) Income tax (provision) benefit 14,333 467 Depreciation and amortization (13,333) (14,059) Non-cash stock-based compensation (14,801) (18,566) Non-cash advertising - (1,753) (Loss) gain on convertible notes (14,738) 10,120 Gain (loss) on investments (22,846) - Other income (expense), net (199) (892) ---- ---- Consolidated income from continuing operations 3,894 2,502 Consolidated loss from discontinued operations, net of tax - (12,767) --- ------- Consolidated net income (loss) inclusive of noncontrolling interest 3,894 (10,265) Income attributable to noncontrolling interest - (997) --- ---- Net income (loss) attributable to Company stockholders $3,894 $(11,262) ====== ======== (a) See Annex A-Explanation of Non-GAAP Financial Measures. (b) Reconciliation of Adjusted EBITDA to consolidated income from continuing operations. WEBMD HEALTH CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) June 30, 2010 December 31, 2009 ------------- ----------------- Assets ------ Cash and cash equivalents $534,705 $459,766 Accounts receivable, net 104,907 118,155 Prepaid expenses and other current assets 14,197 11,419 Investments - 9,932 Deferred tax asset 30,011 - Total current assets 683,820 599,272 Investments - 338,446 Property and equipment, net 51,953 52,194 Goodwill 202,104 202,104 Intangible assets, net 24,166 26,020 Deferred tax asset 82,119 50,789 Other assets 18,074 19,723 Total Assets $1,062,236 $1,288,548 ========== ========== Liabilities and Equity ---------------------- Accrued expenses $52,426 $63,721 Deferred revenue 113,070 98,474 1.75% convertible notes - 264,583 Deferred tax liability - 12,955 Liabilities of discontinued operations 19,655 34,197 Total current liabilities 185,151 473,930 3 1/8% convertible notes, net of discount of $9,083 at June 30, 2010 and $22,641 at December 31, 2009 112,414 227,659 Other long-term liabilities 22,220 22,191 Stockholders' equity 742,451 564,768 Total Liabilities and Equity $1,062,236 $1,288,548 ========== ========== WEBMD HEALTH CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Six Months Ended June 30, -------- 2010 2009 ---- ---- Cash flows from operating activities: Consolidated net income (loss) inclusive of noncontrolling interest $3,894 $(10,265) Adjustments to reconcile consolidated net income (loss) inclusive of noncontrolling interest to net cash provided by operating activities: Consolidated loss from discontinued operations, net of tax - 12,767 Depreciation and amortization 13,333 14,059 Non-cash interest, net 3,885 5,310 Non-cash advertising - 1,753 Non-cash stock-based compensation 14,801 18,566 Deferred income taxes (27,729) (2,363) Loss (gain) on convertible notes 14,738 (10,120) Loss on investments 22,846 - Changes in operating assets and liabilities: Accounts receivable 13,248 14,408 Prepaid expenses and other, net (2,144) (3,775) Accrued expenses and other long- term liabilities (4,801) (9,544) Deferred revenue 14,596 6,648 ------ ----- Net cash provided by continuing operations 66,667 37,444 Net cash (used in) provided by discontinued operations (15,501) 5,509 ------- ----- Net cash provided by operating activities 51,166 42,953 Cash flows from investing activities: Proceeds from sales of available- for-sale securities 362,206 1,100 Purchases of property and equipment (9,719) (10,955) Finalization of sale price of discontinued operations (1,430) 250 ------ --- Net cash provided by (used in) continuing operations 351,057 (9,605) Net cash used in discontinued operations - (2,356) --- ------ Net cash provided by (used in) investing activities 351,057 (11,961) Cash flows from financing activities: Proceeds from issuance of common stock, net of cash used for employee withholding taxes 8,386 18,194 Repurchases of convertible notes (81,362) (123,857) Purchase of treasury stock under repurchase program (14,914) - Payment for shares tendered in 2009, delivered in 2010 (6,818) - Purchase of treasury stock in tender offer (242,795) - Tax benefit on stock-based awards 10,219 - ------ --- Net cash used in financing activities (327,284) (105,663) Effect of exchange rates on cash - 70 --- --- Net increase (decrease) in cash and cash equivalents 74,939 (74,601) Cash and cash equivalents at beginning of period 459,766 629,848 ------- ------- Cash and cash equivalents at end of period $534,705 $555,247 ======== ======== FINANCIAL GUIDANCE SUMMARY WebMD Health Corp. 2010 Financial Guidance (in millions, except per share amounts) Year Ended December 31, 2010 Guidance Range -------------- Revenue $515.0 $535.0 ====== ====== Earnings before interest, taxes, non- cash and other items ("Adjusted EBITDA") (a) $158.0 $168.0 Interest, taxes, non-cash and other items (b) Interest income 4.0 4.0 Interest expense (13.0) (12.0) Depreciation and amortization (30.0) (28.0) Non-cash stock-based compensation (33.0) (31.0) Loss on convertible notes (14.7) (14.7) Loss on investments (22.8) (22.8) Other expenses, net (0.2) (0.2) ---- ---- Consolidated pre-tax income from continuing operations 48.3 63.3 Income tax provision (11.0) (17.0) Consolidated income from continuing operations $37.3 $46.3 ===== ===== Income from continuing operations per share Basic $0.65 $0.80 ===== ===== Diluted $0.59 $0.73 ===== ===== Weighted-average shares outstanding used in computing income from continuing operations per common share: Basic 57.0 57.0 Diluted 65.0 65.0 (a) See Annex A - Explanation of Non-GAAP Financial Measures (b) Reconciliation of Adjusted EBITDA to consolidated income from continuing operations Additional information regarding forecast for third quarter of 2010: - Revenue is forecasted to be in excess of $133 in quarter ending September 30, 2010, an increase in excess of 19% from last year. Advertising revenue is expected to grow in excess of 24% over the prior year period. - Adjusted EBITDA as a percentage of revenue is forecasted to be in excess of 32% in quarter ending September 30, 2010. - Consolidated income from continuing operations as a percentage of revenue is forecasted to be in excess of 9% in quarter ending September 30, 2010. Additional information regarding full year 2010 forecast: - Income tax rate is forecasted to be approximately 43% of pretax income for the third and fourth quarters of 2010. - The distribution of the annual revenue is expected to be approximately 83% public portal advertising and sponsorship and 17% private portal services. - Advertising revenue is expected to grow 23% to 29%, while private portals revenue is expected to decline 5%. Quarterly revenue distributions may vary from this annual estimate. The above table reflects actual amounts through June 30, 2010 for "loss on convertible notes," "loss on investments" and "other expenses" but does not reflect guidance for these items in any future quarter. We do not make projections for these items, although they may recur in future quarters. ANNEX A Explanation of Non-GAAP Financial Measures (All dollar amounts in thousands)

    The accompanying WebMD Health Corp. press release and financial tables include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, non-cash and other items (which we refer to as "Adjusted EBITDA") and related per share amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, "consolidated income (loss) from continuing operations" or "net income (loss) attributable to Company stockholders" calculated in accordance with GAAP. The accompanying financial tables include reconciliations of non-GAAP financial measures to GAAP financial measures.

    Adjusted EBITDA is used by our management as an additional measure of our company's performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our company's financial results that may not be shown solely by period-to-period comparisons of consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders. In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our company's performance. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the accompanying financial tables.

    We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders, helps investors make comparisons between our company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is intended to provide a supplemental way of comparing our company with other public companies and is not intended as a substitute for comparisons based on "consolidated income (loss) from continuing operations" or "net income (loss) attributable to Company stockholders" calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

    The following is an explanation of the items excluded by us from Adjusted EBITDA but included in consolidated income (loss) from continuing operations:

    -- Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods. -- Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in its operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future. Stock-based compensation expenses included in the Consolidated Statement of Operations are summarized as follows: Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2010 2009 2010 2009 ---- ---- ---- ---- Non-cash stock-based compensation included in: Cost of operations $1,475 $1,555 $3,264 $3,178 Sales and marketing $1,689 $2,001 $3,882 $3,551 General and administrative $3,800 $5,856 $7,655 $11,837 Income (loss) from discontinued operations $-- $225 $-- $542 -- Non-Cash Advertising Expense. This expense relates to the usage of non-cash advertising obtained from News Corporation ("Newscorp") in exchange for equity securities issued in 2000. The advertising was available only on various Newscorp properties, primarily its television network and cable channels, without any cash cost to us and expired in 2009. We exclude this expense from Adjusted EBITDA (i) because it is a non-cash expense, (ii) because it is incremental to other non-television cash advertising expense that we may otherwise incur and (iii) to assist management and investors in comparing its operating results over multiple periods. Investors should note that it is likely that we derived some benefit from such advertising. Non-cash advertising expenses included in the Consolidated Statement of Operations in Sales and Marketing expense were $1,753 for the six months ended June 30, 2009. -- Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which we invest, as well as with interest expense arising from our company's capital structure (including non-cash interest expense relating to our convertible notes). Interest income and expense varies over time due to a variety of financing transactions and due to acquisitions and divestitures that we have entered into or may enter into in the future. We have, in the past, issued convertible debentures, repurchased shares in cash tender offers and repurchased shares and convertible debentures through other repurchase transactions, and completed the divestiture of certain businesses. We exclude interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income and expense will recur in future periods. The following provides detail of the components of interest expense of our convertible notes: Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2010 2009 2010 2009 ---- ---- ---- ---- Non-cash interest expense 1.75% Convertible Notes $580 $303 $885 $667 3 1/8% Convertible Notes $1,215 $2,208 $3,287 $4,643 Cash interest expense 1.75% Convertible Notes $406 $1,190 $1,564 $2,603 3 1/8% Convertible Notes $968 $2,078 $2,572 $4,399 -- Income Tax Provision (Benefit). We maintain a valuation allowance on a portion of our net deferred tax assets (including our net operating loss carryforwards), the amount of which may change from quarter to quarter based on factors that are not directly related to our results for the quarter. The valuation allowance is either reversed through the statement of operations or additional paid-in capital. The timing of such reversals has not been consistent and as a result, our income tax expense can fluctuate significantly from period to period in a manner not directly related to our operating performance. We exclude the income tax provision (benefit) from Adjusted EBITDA (i) because we believe that the income tax provision (benefit) is not directly attributable to the underlying performance of our business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. Investors should note that income tax provision (benefit) will recur in future periods. -- Other Items. We engage in other activities and transactions that can impact our overall consolidated income (loss) from continuing operations. In recent periods, these other items have included, but were not limited to, (i) legal expenses relating to the ongoing Department of Justice investigation, (ii) gain or loss on repurchases and conversions of our convertible notes, (iii) a reduction of certain sales and use tax contingencies resulting from the expiration of certain applicable statutes of limitations, (iv) advisory expenses relating to the merger of HLTH Corporation into our company in 2009, (v) gain or loss on investments, and (vi) restructuring charge. We exclude these other items from Adjusted EBITDA because we believe these activities or transactions are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.

    WebMD

    CONTACT: Investors: Risa Fisher, +1-212-624-3817, rfisher@webmd.net, or
    Media: Kate Hahn, +1-212-624-3760, khahn@webmd.net

    Web Site: http://www.webmd.com/




    CBS Corporation Reports Second Quarter 2010 ResultsRevenues of $3.3 Billion Up 11% Adjusted OIBDA of $580 Million Up 46% Adjusted Diluted EPS of $.25 Up from $.09 Year-to-date Free Cash Flow of $1.15 Billion Up 107%

    NEW YORK, Aug. 3 /PRNewswire-FirstCall/ -- CBS Corporation today reported results for the second quarter ended June 30, 2010.

    "CBS turned in terrific results in the second quarter of 2010," said Sumner Redstone, Executive Chairman, CBS Corporation. "We remain focused on all the things that matter most - growing our businesses, enhancing our financial strength and broadening the reach of our industry-leading content - and I have never been more confident in our Company's prospects. The operational expertise and financial discipline of Leslie and his management team continue to serve our audiences and shareholders well, and to position CBS as a long-term industry leader."

    "For the second consecutive quarter, CBS delivered double-digit year-over-year revenue and profit growth, significant margin expansion and higher free cash flow," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. "With top-line gains in all of our businesses, and a continued vigilance on cost containment, revenues are translating more efficiently into profits. Meanwhile, our content is thriving: The network finished another television season in first place, which helped us sell next year's schedule in a very strong Upfront marketplace at attractive rates. And during the quarter we extended our sports programming deal with the NCAA in a truly beneficial way. At the same time, our large-market presence and dramatically improved cost structure make CBS a leading beneficiary of the rebounding local advertising marketplace. Looking to the second half of 2010, all signs point to ongoing growth and profitability. The very healthy ad sales pacing we're seeing today indicates that the recovery is continuing, and we expect a significant lift in political advertising around the November elections. Going forward, we see continued and sustainable benefits from growth in retransmission consent fees, expanded international distribution of our content and the vastly improved economics of our NCAA deal, for many years to come. All the while, we'll keep evolving our business model to meet the increasing demand for top-quality content on all of the leading emerging platforms, which represents a huge opportunity for CBS."

    Second Quarter 2010 Results

    Revenues of $3.33 billion for the second quarter of 2010 increased 11% from $3.01 billion for the same quarter last year, reflecting growth at all of the Company's segments, led by an increase of 17% at Local Broadcasting, 12% at Cable Networks and 10% at Entertainment. Compared to the same quarter last year, total advertising sales were up 9%, content licensing and distribution revenues were up 19% and affiliate and subscription fees were up 12%.

    Adjusted operating income before depreciation and amortization ("OIBDA") was $580.2 million for the second quarter of 2010, up 46% versus $396.2 million for the same prior-year period, with increases across all of the Company's segments driven by the revenue growth, partially offset by increased investment in content and higher costs associated with sports programming in the Entertainment segment, including the 2010 NCAA Division I Men's Basketball Championship. The adjusted OIBDA margin of 17% for the second quarter of 2010 increased seven percentage points from the first quarter of 2010 and four percentage points from the same prior-year period, driven by significant improvement in Local Broadcasting, Outdoor and Cable Networks. Adjusted operating income for the second quarter of 2010 increased 74% to $436.7 million from $251.0 million for the same quarter last year.

    Adjusted net earnings of $175.2 million for the second quarter of 2010 increased 180% from $62.6 million for the same quarter last year, and adjusted diluted earnings per share of $.25 increased 178% from $.09.

    Adjusted results for the second quarter of 2010 exclude a pre-tax loss of $40.3 million on early extinguishment of debt and restructuring charges of $1.7 million. Adjusted results for the second quarter of 2009 exclude a pre-tax loss of $30.5 million on early extinguishment of debt, restructuring charges of $8.8 million and a $23.3 million reduction of deferred tax assets associated with stock-based compensation. Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.

    Reported OIBDA for the second quarter of 2010 increased 49% to $578.5 million from $387.4 million for the same quarter last year, and reported operating income increased 80% to $435.0 million from $242.2 million. Reported net earnings were $150.1 million, or $.22 per diluted share, for the second quarter of 2010 versus $15.4 million, or $.02 per diluted share, for the same time last year.

    Free cash flow for the second quarter of 2010 increased 40% to $491.5 million from $351.7 million for the same prior-year period, principally reflecting higher OIBDA partially offset by the timing of interest payments.

    First Half 2010 Results

    Revenues of $6.86 billion for the first half of 2010 increased 11% from the same prior-year period, led by an increase of 18% at Local Broadcasting, 13% at Entertainment, 10% at Cable Networks and 4% at Outdoor. Total advertising sales were up 13% in the first half of 2010, which included the 2010 telecast of Super Bowl XLIV on the CBS Television Network; affiliate and subscription fees were up 12%; and content licensing and distribution revenues were up 8%.

    Adjusted OIBDA was $931.5 million for the first half of 2010, up 44% versus $646.8 million for the same prior-year period, with increases across all of the Company's segments, driven by the aforementioned revenue growth, partially offset by increased investment in content and higher sports programming costs, largely attributable to Super Bowl XLIV and the 2010 NCAA Division I Men's Basketball Championship. Adjusted operating income for the first half of 2010 increased 80% to $647.2 million from $359.3 million for the same time last year.

    Adjusted net earnings of $208.1 million for the first half of 2010 increased $182.0 million from $26.1 million for the same prior-year period, and adjusted diluted earnings per share were $.30, up from $.04.

    Adjusted results exclude restructuring charges of $58.8 million for the first half of 2010 and $9.6 million for the first half of 2009; pre-tax losses on early extinguishment of debt of $37.9 million for the first half of 2010 and $29.8 million for the same prior-year period; and discrete tax items totaling $25.9 million for the first half of 2010 and $42.1 million for the same period in 2009. Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.

    Reported OIBDA for the first half of 2010 increased 37% to $872.7 million from $637.2 million for the same prior-year period and reported operating income increased 68% to $588.4 million from $349.7 million. Reported net earnings were $123.9 million, or $.18 per diluted share, for the first half of 2010 versus a net loss of $39.9 million, or a loss of $.06 per diluted share, for the same period last year.

    Free cash flow for the first half of 2010 increased 107% to $1.15 billion from $556.0 million for the same prior-year period, principally reflecting higher advertising sales, the timing of tax payments and lower payments for capital expenditures.

    Balance Sheet and Liquidity

    During the first half of the year, the Company reduced its outstanding debt by $840.2 million, through a $400.0 million reduction to the accounts receivable securitization program and the repurchase and early redemption of $940.2 million of debt principally due between 2010 and 2012, using cash on hand and proceeds from the second quarter issuance of $500.0 million of senior notes due in 2020. Taken together, these actions extended the maturity of the Company's debt and are expected to result in annualized net interest expense savings of approximately $40 million. At June 30, 2010, the Company's cash balance was $838.1 million, an increase of $121.4 million from $716.7 million at December 31, 2009.

    Consolidated and Segment Results

    The tables below present the Company's revenues by segment and type and its adjusted OIBDA and adjusted operating income by segment for the three and six months ended June 30, 2010 and 2009 (dollars in millions).

    Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.

    Three Months Ended Six Months Ended June 30, June 30, Revenues by Segment 2010 2009 2010 2009 ------------------- ---- ---- ---- ---- Entertainment $1,671.7 $1,515.5 $3,753.2 $3,333.1 Cable Networks 368.8 328.4 736.8 669.0 Publishing 189.7 181.4 341.4 343.1 ---------- ----- ----- ----- ----- Content Group 2,230.2 2,025.3 4,831.4 4,345.2 Local Broadcasting 678.2 579.5 1,283.7 1,089.9 Outdoor 456.3 434.1 848.5 814.0 ------- ----- ----- ----- ----- Local Group 1,134.5 1,013.6 2,132.2 1,903.9 Eliminations (33.7) (32.6) (101.7) (82.9) ------------ ----- ----- ------ ----- Total Revenues $3,331.0 $3,006.3 $6,861.9 $6,166.2 -------------- -------- -------- -------- -------- Three Months Ended Six Months Ended June 30, June 30, Revenues by Type 2010 2009 2010 2009 ---------------- ---- ---- ---- ---- Advertising $2,157.0 $1,986.3 $4,538.4 $4,014.7 Content licensing and distribution 733.7 614.0 1,447.3 1,344.4 Affiliate and subscription fees 381.4 340.8 764.0 684.1 Other 58.9 65.2 112.2 123.0 ----- ---- ---- ----- ----- Total Revenues $3,331.0 $3,006.3 $6,861.9 $6,166.2 -------------- -------- -------- -------- -------- Three Months Ended Six Months Ended June 30, June 30, Adjusted OIBDA 2010 2009 2010 2009 -------------- ---- ---- ---- ---- Entertainment $222.6 $208.9 $367.4 $360.0 Cable Networks 129.3 96.9 230.2 180.3 Publishing 16.9 10.3 20.5 10.4 ---------- ---- ---- ---- ---- Content Group 368.8 316.1 618.1 550.7 Local Broadcasting 214.0 105.3 348.0 159.4 Outdoor 78.7 44.7 110.9 70.6 ------- ---- ---- ----- ---- Local Group 292.7 150.0 458.9 230.0 Corporate (55.9) (34.7) (94.6) (63.2) Residual costs (26.2) (35.9) (52.5) (71.9) Eliminations .8 .7 1.6 1.2 ------------ --- --- --- --- Adjusted OIBDA 580.2 396.2 931.5 646.8 Restructuring charges (1.7) (8.8) (58.8) (9.6) --------------------- ---- ---- ----- ---- Total OIBDA $578.5 $387.4 $872.7 $637.2 ----------- ------ ------ ------ ------ Three Months Ended Six Months Ended June 30, June 30, Adjusted Operating Income (Loss) 2010 2009 2010 2009 ------------------------- ---- ---- ---- ---- Entertainment $181.2 $165.1 $284.7 $272.1 Cable Networks 123.7 91.0 218.9 168.4 Publishing 15.2 8.3 17.2 6.2 ---------- ---- --- ---- --- Content Group 320.1 264.4 520.8 446.7 Local Broadcasting 189.6 83.6 299.2 115.5 Outdoor 13.5 (22.3) (17.2) (59.7) ------- ---- ----- ----- ----- Local Group 203.1 61.3 282.0 55.8 Corporate (61.1) (39.5) (104.7) (72.5) Residual costs (26.2) (35.9) (52.5) (71.9) Eliminations .8 .7 1.6 1.2 ------------ --- --- --- --- Adjusted Operating Income 436.7 251.0 647.2 359.3 Restructuring charges (1.7) (8.8) (58.8) (9.6) --------------------- ---- ---- ----- ---- Total Operating Income $435.0 $242.2 $588.4 $349.7 ---------------------- ------ ------ ------ ------

    Entertainment (CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Films and CBS Interactive)

    Entertainment revenues for the second quarter of 2010 increased 10% to $1.67 billion from $1.52 billion for the same prior-year period reflecting a 12% increase in revenues from the licensing and distribution of television programming, primarily due to higher international syndication sales, including the CSI: franchise, NCIS: Los Angeles and The Good Wife. Revenue growth also reflects 5% higher Network advertising revenues, driven by increases in primetime and sports, including the Final Four of the 2010 NCAA Division I Men's Basketball Championship, the addition of theatrical revenues in 2010 and 22% growth in CBS Interactive display advertising.

    Entertainment adjusted OIBDA for the second quarter of 2010 increased 7% to $222.6 million from $208.9 million, with the revenue growth partially offset by increased investment in content and higher programming costs associated with sporting events such as the 2010 NCAA Division I Men's Basketball Championship. Adjusted OIBDA excludes restructuring charges of $.1 million for the second quarter of 2010 and a $.6 million reversal of restructuring charges for the second quarter of 2009.

    Cable Networks (Showtime Networks, Smithsonian Networks and CBS College Sports Network)

    Cable Networks revenues for the second quarter of 2010 increased 12% to $368.8 million from $328.4 million for the same prior-year period due to rate increases and subscription growth at both Showtime Networks and CBS College Sports Network, as well as higher home entertainment revenues from sales of Showtime original series, including Dexter and The Tudors. Showtime Networks (which includes Showtime, The Movie Channel and Flix) subscriptions totaled 63.5 million as of June 30, 2010, up by 5.1 million, or 9%, from the same time last year, reflecting increased direct broadcast satellite and telephone company subscriptions. CBS College Sports Network subscriptions of 36.0 million were up by 5.6 million, or 18%, resulting from increased carriage across all platforms and launches on additional multi-system operators. Smithsonian Networks subscriptions totaled 5.3 million, up by 1.1 million, or 26%.

    Cable Networks OIBDA for the second quarter of 2010 increased 33% to $129.3 million from $96.9 million, primarily due to the revenue growth and lower costs for theatrical programming, partially offset by an increased investment in original series. The OIBDA margin of 35% for the second quarter of 2010 increased by five percentage points from the same prior-year period.

    Publishing (Simon & Schuster)

    Publishing revenues for the second quarter of 2010 increased 5% to $189.7 million from $181.4 million for the same prior-year period, reflecting growth in digital content sales and the strength of best-selling titles in the second quarter of 2010, including Spoken from the Heart by Laura Bush and Women Food and God by Geneen Roth.

    Publishing adjusted OIBDA for the second quarter of 2010 increased 64% to $16.9 million from $10.3 million, reflecting higher revenues and the impact of cost containment measures. Adjusted OIBDA excludes restructuring charges of $.2 million for the second quarter of 2010 and $2.2 million for the same prior-year period.

    Local Broadcasting (CBS Television Stations and CBS Radio)

    Local Broadcasting revenues for the second quarter of 2010 increased 17% to $678.2 million from $579.5 million for the same prior-year period, primarily driven by 17% growth in advertising sales. CBS Television Stations revenues increased 31% to $337.9 million from $257.9 million due to the improved advertising marketplace across many key categories, including automotive and financial services, and higher political advertising sales. CBS Radio revenues increased 6% to $340.9 million from $322.0 million for the same prior-year period, and revenues from the ten largest radio markets increased 10%, also reflecting the improved advertising marketplace.

    Local Broadcasting OIBDA for the second quarter of 2010 more than doubled to $214.0 million from adjusted OIBDA of $105.3 million for the same prior year period, primarily due to the revenue growth and cost containment. Adjusted OIBDA for the second quarter of 2009 included a charge of $14.0 million to write-down programming inventory to its net realizable value. The OIBDA margin of 32% for the second quarter of 2010 was up 14 percentage points from last year's second quarter adjusted OIBDA margin. Adjusted OIBDA for the second quarter of 2009 excludes restructuring charges of $4.7 million.

    Outdoor (CBS Outdoor)

    Outdoor revenues for the second quarter of 2010 increased 5% to $456.3 million from $434.1 million for the same prior-year period as outdoor advertising began to benefit from the improved advertising marketplace. In constant dollars, Outdoor revenues increased 6%, led by increases of 9% and 14% in the United States and United Kingdom, respectively. Americas revenues for the second quarter of 2010 increased 6% in constant dollars from the same period last year, driven by growth in the U.S. displays business. Europe revenues increased 5% in constant dollars, reflecting growth in the United Kingdom, Holland and Italy.

    Outdoor adjusted OIBDA for the second quarter of 2010 increased 76% to $78.7 million from $44.7 million for the same prior-year period due to the revenue growth, as well as lower transit and billboard maintenance and lower display costs resulting from expense reduction initiatives. Adjusted OIBDA excludes restructuring charges of $1.4 million for the second quarter of 2010 and $2.5 million for the same prior-year period.

    About CBS Corporation

    CBS Corporation is a mass media company with constituent parts that reach back to the beginnings of the broadcast industry, as well as newer businesses that operate on the leading edge of the media industry. The Company, through its many and varied operations, combines broad reach with well-positioned local businesses, all of which provide it with an extensive distribution network by which it serves audiences and advertisers in all 50 states and key international markets. It has operations in virtually every field of media and entertainment, including broadcast television (CBS and The CW - a joint venture between CBS Corporation and Warner Bros. Entertainment), cable television (Showtime Networks, Smithsonian Networks and CBS College Sports Network), local television (CBS Television Stations), television production and syndication (CBS Television Studios, CBS Studios International and CBS Television Distribution), radio (CBS Radio), advertising on out-of-home media (CBS Outdoor), publishing (Simon & Schuster), interactive media (CBS Interactive), music (CBS Records), licensing and merchandising (CBS Consumer Products), video/DVD (CBS Home Entertainment), motion pictures (CBS Films) and sustainable media (EcoMedia). For more information, log on to http://www.cbscorporation.com/.

    Cautionary Statement Concerning Forward-looking Statements

    This news release contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements are not based on historical facts, but rather reflect the Company's current expectations concerning future results and events. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual results, performance or achievements of the Company to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: advertising market conditions generally; changes in the public acceptance of the Company's programming; changes in technology and its effect on competition in the Company's markets; changes in the Federal Communications laws and regulations; the impact of piracy on the Company's products, the impact of the consolidation in the market for the Company's programming; other domestic and global economic, business, competitive and/or other regulatory factors affecting the Company's businesses generally; the impact of union activity, including possible strikes or work stoppages or the Company's inability to negotiate favorable terms for contract renewals; and other factors described in the Company's news releases and filings with the Securities and Exchange Commission including but not limited to the Company's most recent Form 10-K, Form 10-Qs and Form 8-Ks. The forward-looking statements included in this document are made only as of the date of this document, and under section 27A of the Securities Act and section 21E of the Exchange Act, we do not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

    CBS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS ----------------------------------------------- (Unaudited; all amounts, except per share amounts, are in millions) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 --- --- ---- --- Revenues $3,331.0 $3,006.3 $6,861.9 $6,166.2 -------- -------- -------- -------- -------- Operating income 435.0 242.2 588.4 349.7 Interest expense (133.6) (133.9) (271.6) (267.1) Interest income 1.1 1.1 2.2 2.7 Loss on early extinguishment of debt (40.3) (30.5) (37.9) (29.8) Other items, net (13.6) (3.5) (26.7) (15.4) ---------------- ----- ---- ----- ----- Earnings before income taxes 248.6 75.4 254.4 40.1 Provision for income taxes (91.7) (56.9) (112.7) (65.7) Equity in loss of investee companies, net of tax (6.8) (3.1) (17.8) (14.3) ------------------------ ---- ---- ----- ----- Net earnings (loss) $150.1 $15.4 $123.9 $(39.9) ------------------- ------ ----- ------ ------ Basic and diluted net earnings (loss) per common share $.22 $.02 $.18 $(.06) Weighted average number of common shares outstanding Basic 679.1 673.4 677.7 672.5 Diluted 693.4 680.2 692.8 672.5 Dividends per common share $.05 $.05 $.10 $.10 -------------------- ---- ---- ---- ---- CBS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- (Unaudited; Dollars in millions) At At December 31, June 30, 2010 2009 ------------- ------------- Assets Cash and cash equivalents $838.1 $716.7 Receivables, net 2,895.6 2,900.2 Programming and other inventory 496.8 1,085.0 Prepaid expenses and other current assets 1,011.0 935.0 Total current assets 5,241.5 5,636.9 -------------------- ------- ------- Property and equipment 4,954.1 4,998.0 Less accumulated depreciation and amortization 2,238.7 2,139.3 --------------------------------- ------- ------- Net property and equipment 2,715.4 2,858.7 Programming and other inventory 1,296.2 1,464.2 Goodwill 8,660.1 8,667.5 Intangible assets 6,682.0 6,753.7 Other assets 1,419.0 1,581.0 Total Assets $26,014.2 $26,962.0 ------------ --------- --------- Liabilities and Stockholders' Equity Accounts payable $332.7 $436.4 Participants' share and royalties payable 1,046.4 955.0 Program rights 626.7 729.2 Current portion of long-term debt 26.1 443.6 Accrued expenses and other current liabilities 1,875.8 2,182.3 Total current liabilities 3,907.7 4,746.5 ------------------------- ------- ------- Long-term debt 6,515.9 6,553.3 Other liabilities 6,407.6 6,642.8 Stockholders' equity 9,183.0 9,019.4 Total Liabilities and Stockholders' Equity $26,014.2 $26,962.0 ----------------------------------- --------- --------- CBS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Unaudited; Dollars in millions) Six Months Ended June 30, 2010 2009 ---- ---- Operating Activities: Net earnings (loss) $123.9 $(39.9) Adjustments to reconcile net earnings (loss) to net cash flow provided by operating activities: Depreciation and amortization 284.3 287.5 Stock-based compensation 69.6 66.8 Loss on early extinguishment of debt 37.9 29.8 Equity in loss of investee companies, net of tax and distributions 17.9 15.8 Decrease to accounts receivable securitization program - (300.0) Change in assets and liabilities, net of effects of acquisitions 717.4 335.3 ----- ----- Net cash flow provided by operating activities 1,251.0 395.3 ----------------------------------- ------- ----- Investing Activities: Acquisitions, net of cash acquired (7.9) (9.3) Capital expenditures (99.7) (139.3) Investments in and advances to investee companies (41.2) (23.7) Purchases of marketable securities - (35.6) Proceeds from dispositions 1.6 22.5 Other investing activities (.1) (.4) --- --- Net cash flow used for investing activities (147.3) (185.8) -------------------------------- ------ ------ Financing Activities: Repayments to banks, including commercial paper, net - (2.3) Proceeds from issuance of senior notes 496.9 974.4 Repayment of notes and debentures (976.1) (1,007.5) Payment of capital lease obligations (8.1) (7.7) Dividends (73.7) (228.6) Purchase of Company common stock (35.6) (16.5) Proceeds from exercise of stock options 2.7 - Excess tax benefit from stock-based compensation 12.0 .7 Decrease to accounts receivable securitization program (400.0) - Other financing activities (.4) - --- --- Net cash flow used for financing activities (982.3) (287.5) -------------------------------- ------ ------ Net increase (decrease) in cash and cash equivalents 121.4 (78.0) Cash and cash equivalents at beginning of period 716.7 419.5 ----------------------------------------- ----- ----- Cash and cash equivalents at end of period $838.1 $341.5 ----------------------------------- ------ ------ CBS CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (Unaudited; Dollars in millions)

    Adjusted Operating Income (Loss) Before Depreciation and Amortization and Adjusted Operating Income (Loss)

    The following tables set forth the Company's adjusted Operating Income (Loss) Before Depreciation and Amortization ("OIBDA") and adjusted Operating Income (Loss) for the three and six months ended June 30, 2010 and 2009. The Company defines OIBDA as net earnings (loss) adjusted to exclude the following line items presented in its Consolidated Statements of Operations: Equity in loss of investee companies, net of tax; Provision for income taxes; Other items, net; Loss on early extinguishment of debt; Interest income; Interest expense; and Depreciation and amortization. The Company defines "Adjusted OIBDA" as OIBDA before restructuring charges and "Adjusted Operating Income" as Operating Income before restructuring charges.

    The Company uses Adjusted OIBDA and Adjusted Operating Income, among other things, to evaluate the Company's operating performance, to value prospective acquisitions and as one of several components of incentive compensation targets for certain management personnel, and these measures are among the primary measures used by management for planning and forecasting of future periods. These measures are important indicators of the Company's operational strength and performance of its business because they provide a link between profitability and operating cash flow. The Company believes the presentation of these measures is relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by the Company's management, help improve their ability to understand the Company's operating performance and make it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, these measures are among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry.

    Since Adjusted OIBDA and Adjusted Operating Income are not measures of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), they should not be considered in isolation of, or as a substitute for, net earnings (loss) as an indicator of operating performance. OIBDA, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, this measure does not necessarily represent funds available for discretionary use, and is not necessarily a measure of the Company's ability to fund its cash needs. As Adjusted OIBDA and Adjusted Operating Income exclude certain financial information compared with net earnings (loss), the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded. The Company provides the following reconciliations of Adjusted OIBDA and Adjusted Operating Income to net earnings (loss) for each segment to such segment's operating income (loss), the most directly comparable amounts reported under GAAP.

    CBS CORPORATION AND SUBSIDIARIES -------------------------------- SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (continued) ----------------------------------------------------------------- (Unaudited; Dollars in millions) -------------------------------- Three Months Ended June 30, 2010 -------------------------------- Adjusted Depreciation Operating Operating Adjusted and Income Restructuring Income OIBDA Amortization (Loss) Charges (Loss) -------- ------------ --------- ------------- --------- Entertainment $222.6 $(41.4) $181.2 $(.1) $181.1 Cable Networks 129.3 (5.6) 123.7 - 123.7 Publishing 16.9 (1.7) 15.2 (.2) 15.0 ---------- ---- ---- ---- --- ---- Content Group 368.8 (48.7) 320.1 (.3) 319.8 Local Broadcasting 214.0 (24.4) 189.6 - 189.6 Outdoor 78.7 (65.2) 13.5 (1.4) 12.1 -------------- ---- ----- ---- ---- ---- Local Group 292.7 (89.6) 203.1 (1.4) 201.7 Corporate (55.9) (5.2) (61.1) - (61.1) Residual costs (26.2) - (26.2) - (26.2) Eliminations .8 - .8 - .8 ------------ --- --- --- --- --- Total $580.2 $(143.5) $436.7 $(1.7) $435.0 ----- ------ ------- ------ ----- ------ Three Months Ended June 30, 2009 -------------------------------- Adjusted Depreciation Operating Operating Adjusted and Income Restructuring Income OIBDA Amortization (Loss) Charges (Loss) -------- ------------ --------- ------------- --------- Entertainment $208.9 $(43.8) $165.1 $.6 $165.7 Cable Networks 96.9 (5.9) 91.0 - 91.0 Publishing 10.3 (2.0) 8.3 (2.2) 6.1 ---------- ---- ---- --- ---- --- Content Group 316.1 (51.7) 264.4 (1.6) 262.8 Local Broadcasting 105.3 (21.7) 83.6 (4.7) 78.9 Outdoor 44.7 (67.0) (22.3) (2.5) (24.8) -------------- ---- ----- ----- ---- ----- Local Group 150.0 (88.7) 61.3 (7.2) 54.1 Corporate (34.7) (4.8) (39.5) - (39.5) Residual costs (35.9) - (35.9) - (35.9) Eliminations .7 - .7 - .7 ------------ --- --- --- --- --- Total $396.2 $(145.2) $251.0 $(8.8) $242.2 ----- ------ ------- ------ ----- ------ Three Months Ended June 30, 2010 2009 ---- -- Adjusted OIBDA $580.2 $396.2 Restructuring charges (1.7) (8.8) --------------------- ---- ---- Total OIBDA 578.5 387.4 Depreciation and amortization (143.5) (145.2) ----------------------------- ------ ------ Operating income 435.0 242.2 Interest expense (133.6) (133.9) Interest income 1.1 1.1 Loss on early extinguishment of debt (40.3) (30.5) Other items, net (13.6) (3.5) ---------------- ----- ---- Earnings before income taxes 248.6 75.4 Provision for income taxes (91.7) (56.9) Equity in loss of investee companies, net of tax (6.8) (3.1) Net earnings $150.1 $15.4 ------------ ------ ----- CBS CORPORATION AND SUBSIDIARIES -------------------------------- SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (continued) ----------------------------------------------------------------- (Unaudited; Dollars in millions) -------------------------------- Six Months Ended June 30, 2010 ------------------------------ Adjusted Operating Operating Adjusted Depreciation Income Restructuring Income OIBDA and (Loss) Charges (Loss) -------- Amortization --------- ------------- --------- ------------ Entertainment $367.4 $(82.7) $284.7 $(10.4) $274.3 Cable Networks 230.2 (11.3) 218.9 - 218.9 Publishing 20.5 (3.3) 17.2 (1.7) 15.5 ---------- ---- ---- ---- ---- ---- Content Group 618.1 (97.3) 520.8 (12.1) 508.7 Local Broadcasting 348.0 (48.8) 299.2 (25.2) 274.0 Outdoor 110.9 (128.1) (17.2) (21.5) (38.7) ------- ----- ------ ----- ----- ----- Local Group 458.9 (176.9) 282.0 (46.7) 235.3 Corporate (94.6) (10.1) (104.7) - (104.7) Residual costs (52.5) - (52.5) - (52.5) Eliminations 1.6 - 1.6 - 1.6 ------------ --- --- --- --- --- Total $931.5 $(284.3) $647.2 $(58.8) $588.4 ----- ------ ------- ------ ------ ------ Six Months Ended June 30, 2009 ------------------------------ Adjusted Depreciation Operating Operating Adjusted and Income Restructuring Income OIBDA Amortization (Loss) Charges (Loss) -------- ------------ --------- ------------- --------- Entertainment $360.0 $(87.9) $272.1 $.6 $272.7 Cable Networks 180.3 (11.9) 168.4 - 168.4 Publishing 10.4 (4.2) 6.2 (2.2) 4.0 ---------- ---- ---- --- ---- --- Content Group 550.7 (104.0) 446.7 (1.6) 445.1 Local Broadcasting 159.4 (43.9) 115.5 (4.7) 110.8 Outdoor 70.6 (130.3) (59.7) (3.3) (63.0) ------- ---- ------ ----- ---- ----- Local Group 230.0 (174.2) 55.8 (8.0) 47.8 Corporate (63.2) (9.3) (72.5) - (72.5) Residual costs (71.9) - (71.9) - (71.9) Eliminations 1.2 - 1.2 - 1.2 ------------ --- --- --- --- --- Total $646.8 $(287.5) $359.3 $(9.6) $349.7 ----- ------ ------- ------ ----- ------ Six Months Ended June 30, 2010 2009 ---- -- Adjusted OIBDA $931.5 $646.8 Restructuring charges (58.8) (9.6) --------------------- ----- ---- Total OIBDA 872.7 637.2 Depreciation and amortization (284.3) (287.5) ----------------------------- ------ ------ Operating income 588.4 349.7 Interest expense (271.6) (267.1) Interest income 2.2 2.7 Loss on early extinguishment of debt (37.9) (29.8) Other items, net (26.7) (15.4) ---------------- ----- ----- Earnings before income taxes 254.4 40.1 Provision for income taxes (112.7) (65.7) Equity in loss of investee companies, net of tax (17.8) (14.3) Net earnings (loss) $123.9 $(39.9) ------------------- ------ ------ CBS CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (continued) ----------------------------------------------------------------- (Unaudited; Dollars in millions) Free Cash Flow

    Free cash flow reflects the Company's net cash flow provided by (used for) operating activities before increases and decreases to the accounts receivable securitization program and less capital expenditures. The Company's net cash flow provided by (used for) operating activities is the most directly comparable GAAP financial measure.

    The Company's calculation of free cash flow for 2009 does not include increases and decreases to the accounts receivable securitization program because the Company does not consider the cash flow from this program to be indicative of the cash generated by the underlying operating performance of the Company. Accordingly, the Company considers its decision to increase or decrease its accounts receivable securitization program a financing decision. In 2010, as a result of the adoption of amended Financial Accounting Standards Board guidance on accounting for transfers of financial assets, increases and decreases to the accounts receivable securitization program are reflected as financing activities on the Consolidated Statement of Cash Flows. Under the previous guidance these changes were reflected as operating activities. Also, the Company's calculation of free cash flow includes capital expenditures since investment in capital expenditures is a use of cash that is directly related to the Company's operations.

    Management believes free cash flow provides investors with an important perspective on the cash available to the Company to service debt, make strategic acquisitions and investments, maintain its capital assets, satisfy its tax obligations and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of the Company's ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of the Company's operating performance. The Company believes the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from the Company's underlying operations in a manner similar to the method used by management. Free cash flow is one of several components of incentive compensation targets for certain management personnel. In addition, free cash flow is also a primary measure used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry.

    As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by operating activities as a measure of liquidity or net earnings (loss) as a measure of operating performance. Free cash flow, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, and does not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company's ability to fund its cash needs. When comparing free cash flow to net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are not reflected in free cash flow.

    The following table presents a reconciliation of the Company's net cash flow provided by operating activities to free cash flow:

    Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 ---- ---- ---- ---- Net cash flow provided by $550.3 $416.8 $1,251.0 $395.3 operating activities Exclude: Decrease to accounts - - - 300.0 receivable securitization program Capital expenditures (58.8) (65.1) (99.7) (139.3) -------------------- ----- ----- ----- ------ Free cash flow $491.5 $351.7 $1,151.3 $556.0 -------------- ------ ------ -------- ------ The following table presents a summary of the Company's cash flows: Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 ---- ---- ---- ---- Net cash flow provided by operating activities $550.3 $416.8 $1,251.0 $395.3 Net cash flow used for investing activities $(73.7) $(78.1) $(147.3) $(185.8) Net cash flow used for financing activities $(511.2) $(236.8) $(982.3) $(287.5) ---------------------- ------- ------- ------- ------- CBS CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (continued) ----------------------------------------------------------------- (Unaudited; all amounts, except per share amounts, are in millions) 2010 and 2009 Adjusted Results

    The following tables reconcile financial measures excluding restructuring charges, pre-tax losses on early extinguishment of debt and discrete tax items to the reported measures included in this earnings release. The Company believes that adjusting its financial results for the impact of these items is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company's management and provides a clearer perspective on the current underlying performance of the Company, and adjusting each period's results on the same basis makes it easier to compare the Company's year-over-year results.

    Three Months Ended June 30, 2010 2010 Restructuring Extinguishment Tax 2010 Reported Charges of Debt Items Adjusted -------- ------- ------- ----- -------- Revenues $3,331.0 $- $- $- $3,331.0 -------- -------- --- --- --- -------- OIBDA 578.5 1.7 - - 580.2 ----- ----- --- --- --- ----- OIBDA margin 17.4% 17.4% ------------ ---- ---- Operating income 435.0 1.7 - - 436.7 Interest expense (133.6) - - - (133.6) Interest income 1.1 - - - 1.1 Loss on early extinguishment of debt (40.3) - 40.3 - - Other items, net (13.6) - - - (13.6) ---------------- ----- --- --- --- ----- Earnings before income taxes 248.6 1.7 40.3 - 290.6 Provision for income taxes (91.7) (.7) (16.2) - (108.6) ------------- ----- --- ----- --- ------ Effective income tax rate 36.9% 37.4% ---------------- ---- ---- Equity in loss of investee companies, net of tax (6.8) - - - (6.8) ------------------ ---- --- --- --- ---- Net earnings $150.1 $1.0 $24.1 $- $175.2 ------------ ------ ---- ----- --- ------ Diluted EPS $.22 $- $.03 $- $.25 Diluted weighted average number of common shares outstanding 693.4 693.4 ------------------ ----- ----- Three Months Ended June 30, 2009 Tax 2009 Restructuring Extinguishment Items(a) 2009 Reported Charges of Debt -------- Adjusted -------- ------- ------- -------- Revenues $3,006.3 $- $- $- $3,006.3 -------- -------- --- --- --- -------- OIBDA 387.4 8.8 - - 396.2 ----- ----- --- --- --- ----- OIBDA margin 12.9% 13.2% ------------ ---- ---- Operating income 242.2 8.8 - - 251.0 Interest expense (133.9) - - - (133.9) Interest income 1.1 - - - 1.1 Loss on early extinguishment of debt (30.5) - 30.5 - - Other items, net (3.5) - - - (3.5) ------------ ---- --- --- --- ---- Earnings before income taxes 75.4 8.8 30.5 - 114.7 Provision for income taxes (56.9) (3.6) (11.8) 23.3 (49.0) ------------- ----- ---- ----- ---- ----- Effective income tax rate 75.5% 42.7% ----------- ---- ---- Equity in loss of investee companies, net of tax (3.1) - - - (3.1) --------------- ---- --- --- --- ---- Net earnings $15.4 $5.2 $18.7 $23.3 $62.6 ------------ ----- ---- ----- ----- ----- Diluted EPS $.02 $.01 $.03 $.03 $.09 Diluted weighted average number of common shares outstanding 680.2 680.2 --------------- ----- ----- (a) A charge to income tax expense for the reduction of deferred tax assets associated with stock-based compensation. CBS CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION (continued) ----------------------------------------------------------------- (Unaudited; all amounts, except per share amounts, are in millions) Six Months Ended June 30, 2010 ------------------------------ Tax 2010 Restructuring Extinguishment Items(b) 2010 Reported Charges(a) of Debt --------- Adjusted -------- ---------- ------- -------- Revenues $6,861.9 $- $- $- $6,861.9 -------- -------- --- --- --- -------- OIBDA 872.7 58.8 - - 931.5 ----- ----- ---- --- --- ----- OIBDA margin 12.7% 13.6% ------------ ---- ---- Operating income 588.4 58.8 - - 647.2 Interest expense (271.6) - - - (271.6) Interest income 2.2 - - - 2.2 Loss on early extinguishment of debt (37.9) - 37.9 - - Other items, net (26.7) - - - (26.7) ------------ ----- --- --- --- ----- Earnings before income taxes 254.4 58.8 37.9 - 351.1 Provision for income taxes (112.7) (23.2) (15.2) 25.9 (125.2) ------------- ------ ----- ----- ---- ------ Effective income tax rate 44.3% 35.7% ----------- ---- ---- Equity in loss of investee companies, net of tax (17.8) - - - (17.8) ----------- ----- --- --- --- ----- Net earnings $123.9 $35.6 $22.7 $25.9 $208.1 ------------ ------ ----- ----- ----- ------ Diluted EPS $.18 $.05 $.03 $.04 $.30 Diluted weighted average number of common shares outstanding 692.8 692.8 ------------ ----- ----- Six Months Ended June 30, 2009 ------------------------------ Tax 2009 2009 Restructuring Extinguishment Items(d) Adjusted Reported Charges(c) of Debt -------- -------- -------- ---------- ------- Revenues $6,166.2 $- $- $- $6,166.2 -------- -------- --- --- --- -------- OIBDA 637.2 9.6 - - 646.8 ----- ----- --- --- --- ----- OIBDA margin 10.3% 10.5% ------------ ---- ---- Operating income 349.7 9.6 - - 359.3 Interest expense (267.1) - - - (267.1) Interest income 2.7 - - - 2.7 Loss on early extinguishment of debt (29.8) - 29.8 - - Other items, net (15.4) - - - (15.4) ---------------- ----- --- --- --- ----- Earnings before income taxes 40.1 9.6 29.8 - 79.5 Provision for income taxes (65.7) (3.9) (11.6) 42.1 (39.1) -------------------- ----- ---- ----- ---- ----- Effective income tax rate 163.8% 49.2% -------------------- ----- ---- Equity in loss of investee companies, net of tax (14.3) - - - (14.3) -------------------- ----- --- --- --- ----- Net earnings (loss) $(39.9) $5.7 $18.2 $42.1 $26.1 ------------------- ------ ---- ----- ----- ----- Diluted EPS $(.06) $.01 $.03 $.06 $.04 Diluted weighted average number of common shares outstanding 672.5 678.2 ------------------ ----- ----- (a) Restructuring charges at Entertainment, Publishing, Local Broadcasting and Outdoor primarily reflecting severance costs associated with the elimination of positions and contract terminations. (b) Comprising a $62.2 million reduction of deferred tax assets associated with the 2010 Patient Protection and Affordable Care Act, partially offset by a $26.4 million reversal of previously established deferred tax liabilities and a $9.9 million tax benefit from the settlements of income tax audits. (c) Restructuring charges principally at Publishing, Local Broadcasting and Outdoor primarily reflecting severance costs associated with the elimination of positions and contract terminations. (d) A charge to income tax expense for the reduction of deferred tax assets associated with stock-based compensation.

    CBS Corporation

    CONTACT: Press: Gil Schwartz, Executive Vice President, Corporate
    Communications, +1-212-975-2121, gdschwartz@cbs.com, Dana McClintock, Senior
    Vice President, Corporate Communications, +1-212-975-1077,
    dlmcclintock@cbs.com, Andrea Prochniak, Vice President, Corporate
    Communications, +1-212-975-1942, andrea.prochniak@cbs.com; Investors: Adam
    Townsend, Executive Vice President, Investor Relations, +1-212-975-5292,
    adam.townsend@cbs.com; Jessica Kourakos, Vice President, Investor Relations,
    +1-212-975-6106, jessica.kourakos@cbs.com

    Web Site: http://www.cbscorporation.com/




    Masimo Reports Second Quarter 2010 Financial ResultsTotal quarterly revenue exceeds $100 million for first time in company's history Q2 2010 Highlights (compared to Q2 2009): -- Total revenue rose 20% to $100.1 million -- Product revenue rose 26% to $88.0 million -- Masimo SET and Masimo Rainbow SET unit shipments rose 35% to 36,700 -- Rainbow revenue rose 60% to $7.2 million -- GAAP EPS of $0.24 included $0.01 in one-time expenses. Adjusted EPS of $0.25, compared to $0.22 in year-ago period

    IRVINE, Calif., Aug. 3 /PRNewswire-FirstCall/ -- Masimo Corporation , today announced its financial results for the second quarter of 2010.

    Masimo's total revenue for the second quarter rose 19.8% to $100.1 million, compared to $83.6 million for the second quarter of 2009. Masimo's second quarter product revenue rose 25.6% to $88.0 million, compared to $70.0 million for the second quarter of 2009. Revenue from Masimo Rainbow SET products rose 59.5% to $7.2 million in the second quarter, compared to $4.5 million for the second quarter of 2009.

    Net income for the second quarter was $14.3 million, or $0.24 per diluted share, including $0.01 per diluted share in one-time marketing-related expenses that Masimo had previously planned and announced after receiving $30.1 million in proceeds from an antitrust lawsuit against Covidien in the first quarter of 2010. Excluding these one-time expenses, adjusted net income for the second quarter was $15.2 million, or $0.25 per diluted share, compared to net income of $13.1 million, or $0.22 per diluted share, in the second quarter of 2009.

    During the second quarter, the company shipped 36,700 Masimo SET pulse oximetry and Masimo Rainbow SET Pulse CO-Oximetry units, excluding handheld units, up 35.4% compared to 27,100 in the same period last year. Masimo estimates its worldwide installed base as of July 3, 2010 to be 789,000 units, up 16.9% from 675,000 as of July 4, 2009.

    Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, "Masimo's second quarter results reveal momentum across virtually all parts of our business, demonstrating the underlying strength and value of our technology to clinicians and patients. Our core SET franchise grew by double digits again this quarter and revenue from Rainbow SET products achieved a new high, allowing Masimo to deliver our first-ever $100 million revenue quarter. Our second quarter performance reflects strong domestic and international customer demand from both our direct and OEM sales channels. The quarter was also highlighted by the launch of two new Masimo innovations: Rainbow Acoustic Monitoring for continuous and noninvasive respiration rate monitoring, and Pronto-7, a palm-sized device for noninvasive spot-check hemoglobin testing."

    As of July 3, 2010, cash, cash equivalents and short-term investments totaled $111.0 million, compared to $189.0 million as of January 2, 2010. The decline was due primarily to the March 31, 2010 dividend payment of $117.5 million, partially offset by the net proceeds from the antitrust lawsuit and operating cash flow in the first six months of 2010.

    Conference Call

    Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to discuss the results. The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706) 679-9937 for international callers. The reservation code for both dial-in numbers is 88305128. A live webcast of the conference call will be available online from the investor relations page of the company's corporate web site at http://www.masimo.com/. After the live webcast, the call will be available on Masimo's website through September 3, 2010. In addition, a telephonic replay of the call will be available through August 17, 2010. The replay dial-in numbers are (800) 642-1687 for domestic callers and +1 (706) 645-9291 for international callers. Please use reservation code 88305128.

    About Masimo

    Masimo develops innovative monitoring technologies that significantly improve patient care--helping solve "unsolvable" problems. In 1995, the company debuted Measure-Through Motion and Low Perfusion pulse oximetry, known as Masimo SET®, which virtually eliminated false alarms and increased pulse oximetry's ability to detect life-threatening events. More than 100 independent and objective studies demonstrate Masimo SET provides the most reliable SpO2 and pulse rate measurements even under the most challenging clinical conditions, including patient motion and low peripheral perfusion. In 2005, Masimo introduced Rainbow Pulse CO-Oximetry(TM), allowing noninvasive and continuous monitoring of blood constituents that previously required invasive procedures, including total hemoglobin (SpHb®), oxygen content (SpOC(TM)), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), and Pleth Variability Index (PVI®), in addition to SpO2, pulse rate, and perfusion index (PI). In 2009, Masimo introduced Rainbow Acoustic Monitoring(TM), the first-ever noninvasive and continuous monitoring of acoustic respiration rate (RRa(TM)). Masimo's Rainbow platform offers a breakthrough in patient safety by helping clinicians detect life-threatening conditions and helping guide treatment options. Founded in 1989, Masimo has the mission of "Improving Patient Outcomes and Reducing Cost of Care ... by Taking Noninvasive Monitoring to New Sites and Applications®." Additional information about Masimo and its products may be found at http://www.masimo.com/. Any information contained in, or that can be accessed through, our website is not incorporated by reference into, nor is it in any way a part of, this release.

    Forward-Looking Statements

    All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our financial condition, results of operations and business generally. These forward-looking statements are based on management's current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to: our dependence on Masimo SET and Masimo Rainbow SET products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors' assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; any failure to continue developing innovative products and technologies; the lack of acceptance of any new or existing products and technologies of ours; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce the anticipated operational and financial benefits, including a continued lower effective tax rate; the loss of our customers; the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the impact of the decline in the worldwide credit markets on us and our customers; the amount and type of equity awards that we may grant to employees and service providers in the future; and other factors discussed in the "Risk Factors" section of our most recent periodic reports filed with the Securities and Exchange Commission ("SEC"), which you may obtain for free on the SEC's website at http://www.sec.gov/. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

    Investor Contact: Sheree Aronson Media Contact: Dana Banks Vice President, Investor Relations, Manager, Public Relations, Masimo Masimo Corporation Corporation (949) 297-7043 (949) 297-7348 saronson@masimo.com dbanks@masimo.com

    Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and Reducing Cost of Care ... by Taking Noninvasive Monitoring to New Sites and Applications, Rainbow, SpHb, SpOC, SpCO, SpMet, PVI, Rainbow Acoustic Monitoring, RRa, Radical-7, Rad-87, Rad-57, Rad-8, Rad-5, Pulse CO-Oximetry, Pulse CO-Oximeter, and SEDLine are trademarks or registered trademarks of Masimo Corporation.

    MASIMO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) July 3, January 2, 2010 2010 ---- ---- ASSETS Current assets Cash and cash equivalents $110,971 $132,054 Short-term investments - 56,989 Accounts receivable, net of allowance for doubtful accounts 49,093 38,897 Royalties receivable 11,500 11,500 Inventories 37,110 31,559 Prepaid expenses 4,158 5,447 Deferred tax assets 11,589 11,585 Other current assets 1,445 1,357 --- --- Total current assets 225,866 289,388 Deferred cost of goods sold 32,557 28,163 Property and equipment, net 13,083 11,682 Deferred tax assets 11,363 11,500 Intangible assets, net 10,129 9,829 Other assets 7,653 5,783 --- --- Total assets $300,651 $356,345 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $21,751 $16,716 Accrued compensation 15,833 17,793 Accrued liabilities 9,541 9,754 Income taxes payable 1,013 477 Deferred revenue 15,585 14,641 Current portion of capital lease obligation 58 60 - - Total current liabilities 63,781 59,441 Deferred revenue 2,029 270 Capital lease obligation, less current portion 145 171 Other liabilities 7,839 6,775 --- --- Total liabilities 73,794 66,657 Stockholders' equity Common stock 59 58 Treasury stock (1,209) (1,209) Additional paid-in capital 208,329 195,690 Accumulated other comprehensive income 517 63 Retained earnings 17,603 94,112 ---- ---- Total Masimo Corporation stockholders' equity 225,299 288,714 Noncontrolling interest 1,558 974 --- - Total stockholders' equity 226,857 289,688 ----- ----- Total liabilities and stockholders' equity $300,651 $356,345 ======== ======== MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share amounts) Three Months Ended Six Months Ended ------------------ ---------------- July 3, July 4, July 3, July 4, 2010 2009 2010 2009 ---- ---- ---- ---- Revenue: Product $87,958 $70,047 $173,824 $144,544 Royalty 12,122 13,522 25,021 24,517 ------ ------ ------ ---- Total revenue 100,080 83,569 198,845 169,061 Cost of goods sold 29,775 23,574 59,003 48,319 ------ ------ ------ ---- Gross profit 70,305 59,995 139,842 120,742 Operating expenses: Research and development 9,051 7,252 18,461 15,019 Selling, general and administrative 41,004 32,766 90,315 65,646 Antitrust litigation expense (proceeds) (760) 29 (30,728) 43 ---- --- ------- --- Total operating expenses 49,295 40,047 78,048 80,708 ------ ------ ------ ------ Operating income 21,010 19,948 61,794 40,034 Non-operating income (expense) 309 368 (38) 81 --- --- --- --- Income before provision for income taxes 21,319 20,316 61,756 40,115 Provision for income taxes 7,403 7,065 21,676 13,600 ----- ----- ------ ------ Net income including noncontrolling interests 13,916 13,251 40,080 26,515 Net (income) loss attributable to the noncontrolling interests 371 (159) 917 (402) --- ---- --- ---- Net income attributable to Masimo Corporation $14,287 $13,092 $40,997 $26,113 ======= ======= ======= ======= Net income per share attributable to Masimo Corporation stockholders: Basic $0.24 $0.23 $0.70 $0.45 ===== ===== ===== ===== Diluted $0.24 $0.22 $0.68 $0.43 ===== ===== ===== ===== Weighted average shares used in per share calculations: Basic 58,798 57,552 58,532 57,480 ====== ====== ====== ====== Diluted 60,510 60,185 60,496 60,177 ====== ====== ====== ====== Cash dividend declared per share $- $- $2.00 $- === === ===== === MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended ---------------- July 3, 2010 July 4, 2009 ------------ ------------ Cash flows from operating activities: Net income including noncontrolling interests $40,080 $26,515 Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: Depreciation and amortization 3,151 3,063 Share-based compensation 6,318 5,473 Loss on disposal of property and equipment - 5 Provision for doubtful accounts 154 370 Provision for obsolete inventory 359 527 Provision for warranty costs 1,150 981 Provision for deferred income taxes 133 - Income tax benefit from exercise of stock options granted prior to January 1, 2006 1,631 820 Excess tax benefit from share-based payment arrangements (537) (152) Changes in operating assets and liabilities: Increase in accounts receivable (10,338) (8,295) Decrease in royalties receivable - 269 Increase in inventories (5,910) (2,994) Increase in deferred cost of goods sold (4,499) (497) (Increase) decrease in prepaid expense 1,243 (2,148) Increase in other assets (2,003) (250) Increase (decrease) in accounts payable 5,084 (1,869) Decrease in accrued compensation (1,752) (2,000) Decrease in accrued liabilities (1,291) (192) Increase (decrease) in income taxes payable 1,073 (10,403) Increase in deferred revenue 2,703 1,493 Increase in other liabilities 1,064 416 ----- - Net cash provided by operating activities 37,813 11,132 ------ ------ Cash flows from investing activities: Purchase of short-term investments (75,986) - Proceeds from sale and maturities of short-term investments 132,975 - Purchases of property and equipment (3,930) (1,987) Increase in intangible assets (911) (743) (Increase) decrease in restricted cash 40 (15) --- --- Net cash provided by (used in) investing activities 52,188 (2,745) ------ ------ Cash flows from financing activities: Repayments on long-term debt (28) (255) Proceeds from issuance of common stock 5,662 1,415 Excess tax benefit from share-based payment arrangements 537 152 Dividends paid (117,506) - -------- - Net cash provided by (used in) financing activities (111,335) 1,312 Effect of foreign currency exchange rates on cash 251 (43) --- --- Net increase (decrease) in cash and cash equivalents (21,083) 9,656 Cash and cash equivalents at beginning of period 132,054 146,910 ------- ------- Cash and cash equivalents at end of period $110,971 $156,566 ======== ========

    Masimo Corporation

    CONTACT: Investors, Sheree Aronson, Vice President, Investor Relations,
    +1-949-297-7043, saronson@masimo.com, or Media, Dana Banks, Manager, Public
    Relations, +1-949-297-7348, dbanks@masimo.com, both of Masimo Corporation

    Web Site: http://www.masimo.com/




    TOR Minerals International Inc. Announces Second Quarter Financial Results

    CORPUS CHRISTI, Texas, Aug. 3 /PRNewswire-FirstCall/ -- TOR Minerals International Inc. , producer of synthetic titanium dioxide and color pigments, specialty aluminas, and other high performance mineral fillers, today announced its financial results for the second quarter ended June 30, 2010. The Company reported net income available to common shareholders of $455,000, or $0.18 per diluted share, on net sales of $7,928,000. This compares with a net loss available to common shareholders of ($23,000), or ($0.01) per share, on net sales of $5,654,000 for the quarter ended June 30, 2009.

    Net sales increased 40.2 percent during the second quarter of 2010. During the second quarter of 2010, sales of HITOX® increased 9.0 percent to $3.1 million as end market demand in paint and plastic markets continued to improve. Sales of specialty alumina products increased 78.7 percent during the second quarter of 2010 as demand for new and existing specialty alumina products also improved.

    During the second quarter of 2010, operating income increased to $571,000, or 7.2 percent of sales, compared to operating income of $100,000, or 1.8 percent of sales reported during the second quarter of 2009. The year-over-year improvement in profitability resulted from increased sales levels, increased plant utilization, and greater operational efficiencies.

    Net sales for the six months ended June 30, 2010, were $14,784,000 an increase of 30.2 percent compared to $11,357,000 reported during the six-month period ended June 30, 2009. Net income available to common shareholders was $1,024,000, or $0.43 per diluted share, for the six months ended June 30, 2010 compared to a net loss of ($307,000), or ($0.16) per share, for the same period a year ago.

    Commenting on the results, Dr. Olaf Karasch, Chief Executive Officer said, "Second quarter marked our highest quarterly sales in more than four and one half years and our sixth quarter of year-over-year improvement in profitability. The continued growth in revenue and profitability is a result of improving market conditions, the successful introduction of new products, and the hard work we have completed over the past two years to improve efficiencies and remove costs from our business. The improvement also reflects the powerful leverage in our business, as a large portion of each incremental sales dollar makes a significant contribution to our bottom line."

    "We've come a long way in diversifying our product and geographic mix in the past several years. The addition of several new large customers also diversifies our customer concentration. Greater diversification should improve our ability to deliver consistent growth in revenue and profitability," Dr. Karasch continued.

    The Company said it expects to continue to produce year-over-year improvement in financial results during the second half of fiscal year 2010.

    A webcast discussing second quarter 2010 results can be accessed for a period of 30 days via the News section of the TOR Minerals' website at http://www.torminerals.com/.

    Headquartered in Corpus Christi, Texas, TOR Minerals International is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing and regional offices located in the United States, Netherlands and Malaysia.

    This statement provides forward-looking information as that term is defined in the Private Securities Litigation Reform Act of 1995, and, therefore, is subject to certain risks and uncertainties. There can be no assurance that the actual results, business conditions, business developments, losses and contingencies and local and foreign factors will not differ materially from those suggested in the forward-looking statements as a result of various factors, including market conditions, general economic conditions, including the present slow down in U.S. construction and the risks of a general business slow down or recession, the increasing cost of energy, raw materials and labor, competition, the receptivity of the markets for our anticipated new products, advances in technology, changes in foreign currency rates, freight price increase, commodity price increases, delays in delivery of required equipment and other factors.

    Contact for Further Information: David Mossberg Three Part Advisors, LLC (817) 310-0051 Financial Tables Follow TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2010 2009 2010 2009 ---- ---- ---- ---- NET SALES $7,928 $5,654 $14,784 $11,357 Cost of sales 6,325 4,789 11,531 9,678 ----- ----- ------ ----- GROSS MARGIN 1,603 865 3,253 1,679 Technical services and research and development 61 40 118 92 Selling, general and administrative expenses 971 725 1,820 1,736 OPERATING INCOME (LOSS) 571 100 1,315 (149) OTHER INCOME (EXPENSE): Interest income - - - 2 Interest expense (112) (136) (233) (248) Gain (loss) on foreign currency exchange rate 34 (12) 6 42 Other, net - 2 - 4 --- --- --- --- INCOME (LOSS) BEFORE INCOME TAX 493 (46) 1,088 (349) Income tax expense (benefit) 23 (38) 34 (72) --- --- --- --- NET INCOME (LOSS) $470 $(8) $1,054 $(277) Less: Preferred Stock Dividends 15 15 30 30 --- --- --- --- Income (Loss) Available to Common Shareholders $455 $(23) $1,024 $(307) ==== ==== ====== ===== Income (loss) per common share: Basic $0.24 $(0.01) $0.54 $(0.16) Diluted $0.18 $(0.01) $0.43 $(0.16) Weighted average common shares outstanding: Basic 1,897 1,891 1,894 1,891 Diluted 2,585 1,891 2,389 1,891 TOR Minerals International, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share amounts) December June 30, 31, 2010 2009 (Unaudited) ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $984 $1,002 Trade accounts receivable, net 4,170 3,380 Inventories 10,859 9,101 Other current assets 696 540 --- --- Total current assets 16,709 14,023 PROPERTY, PLANT AND EQUIPMENT, net 17,844 18,800 OTHER ASSETS 45 53 Total Assets $34,598 $32,876 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,840 $1,452 Accrued expenses 2,443 1,036 Notes payable under lines of credit 1,462 3,313 Export credit refinancing facility 1,031 - Current deferred tax liability 50 60 Current maturities - capital leases 93 140 Current maturities of long-term debt - financial institutions 248 435 --- --- Total current liabilities 7,167 6,436 LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES Capital leases 4 49 Long-term debt - financial institutions 1,164 1,477 Long-term debt - convertible debentures, net 1,180 1,122 DEFERRED TAX LIABILITY 690 577 --- --- Total liabilities 10,155 9,661 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Series A 6% convertible preferred stock $.01 par value: 2 2 authorized, 5,000 shares; 200 shares issued and outstanding at 6/30/2010 and 12/31/2009 Common stock $1.25 par value: authorized, 6,000 shares; 2,385 2,363 1,908 and 1,891 shares issued and outstanding at 6/30/2010 and 12/31/2009, respectively Additional paid-in capital 25,306 25,214 Accumulated deficit (6,783) (7,807) Accumulated other comprehensive income: Cumulative translation adjustment 3,533 3,443 ----- ----- Total shareholders' equity 24,443 23,215 Total Liabilities and Shareholders' Equity $34,598 $32,876 ======= ======= TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, ---------------- 2010 2009 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $1,054 $(277) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 937 862 Share-based compensation 91 50 Warrant interest expense 33 9 Deferred income taxes 24 (75) Provision for bad debts - (3) Changes in working capital: Trade accounts receivables (886) (761) Inventories (1,604) 1,191 Other current assets (165) (527) Accounts payable and accrued expenses 1,883 (1,139) Net cash provided by (used in) operating activities 1,367 (670) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (420) (578) Proceeds from sales of property, plant and equipment 17 - --- --- Net cash used in investing activities (403) (578) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments on) proceeds from lines of credit (1,675) 1,098 Net proceeds from export credit refinancing facility 1,031 15 Payments on capital lease (75) (43) Payments on long-term bank debt (292) (496) Proceeds from convertible debentures - 1,475 Increase in restricted cash - (475) Proceeds from the issuance of common stock, 48 - and exercise of common stock options Preferred stock dividends paid (30) (30) --- --- Net cash (used in) provided by financing activities (993) 1,544 Effect of exchange rate fluctuations on cash and cash equivalents 11 (283) --- ---- Net (decrease) increase in cash and cash equivalents (18) 13 Cash and cash equivalents at beginning of year 1,002 191 ----- --- Cash and cash equivalents at end of year $984 $204 ==== ==== Supplemental cash flow disclosures: Interest paid $233 $236 Income taxes paid $10 $ -

    TOR Minerals International, Inc.

    CONTACT: David Mossberg of Three Part Advisors, LLC, +1-817-310-0051,
    for TOR Minerals International, Inc.

    Web Site: http://www.torminerals.com/




    ZST Digital Networks, Inc. Schedules 2010 Second Quarter Earnings Release on Tuesday, August 10, 2010

    Earnings Conference Call to be held on Tuesday, August 10, 2010 at 8:00 am

    (U.S. Pacific Time) / 11:00 am (U.S. Eastern Time) / 11:00 pm (HK / Beijing

    Time)

    ZHENGZHOU, China, Aug. 3 /PRNewswire-Asia-FirstCall/ -- ZST Digital Networks, Inc. ("ZST" or the "Company") , a major developer, manufacturer and supplier of digital and optical network equipment to cable system operators in China, announced today that it will release financial results for the quarter ended June 30, 2010 before NASDAQ market open on Tuesday, August 10, 2010.

    The earnings release will be available on the investor relations page of the Company's website at http://www.shenyangkeji.com/english/investor.asp .

    Following the release of the earnings announcement, ZST senior management will host a conference call at 8:00 am (U.S. Pacific Time) / 11:00 am (U.S. Eastern Time) / 11:00 pm (HK / Beijing Time) to discuss its 2010 second quarter financial results and recent business activity.

    The conference call may be accessed by calling +1-866-519-4004 or +1-718-354-1231 (for callers in the U.S.), 800-819-0121 (for callers in China), 800-930-346 (for callers in Hong Kong), +0808-234-6646 (for callers in United Kingdom) or +65-6723-9381 (for other international callers) and entering pass code 92298808. Please dial in approximately 10 minutes before the scheduled time of the call.

    A recording of the conference call will be available through August 24, 2010, by calling +1-866-214-5335 (for callers in the U.S.) or +61-2-8235-5000 (for callers outside the U.S.) and entering pass code 92298808.

    About ZST Digital Network, Inc.

    ZST Digital Networks, Inc. is a China-based company, principally engaged in supplying digital and optical network equipment and providing installation services to cable system operators in China. The Company has developed a line of IPTV devices that are used to provide bundled cable television, Internet and telephone services to residential and commercial customers. The Company has assisted in the installation and construction of over 400 local cable networks in more than 90 municipal districts, counties, townships, and enterprises. The Company has also launched a commercial line of GPS devices and support services for transport-related enterprises to track, monitor and optimize their businesses. For more information about ZST Digital Networks, Inc., please visit http://www.shenyangkeji.com/ .

    Forward-Looking Statements

    Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including our ability to maintain and increase revenues and sales of our products; our ability to develop and market new products; our strategic investments and acquisitions; compliances and changes in the laws of the People's Republic of China (the "PRC") that affect our operations; our ability to obtain all necessary government certifications and/or licenses to conduct our business; vulnerability of our business to general economic downturn, especially in the PRC; adverse capital and credit market conditions and our ability to meet liquidity needs; and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.

    Contacts: Company Contact: ZST Digital Networks, Inc. John Chen, Chief Financial Officer Email: jchen@shenyangkeji.com Investor Contact (HK): Taylor Rafferty, LLC Ruby Yim Tel: +852-3196-3712 Email: zstdigital@taylor-rafferty.com Web: http://www.taylor-rafferty.com/ Investor Contact (US): Taylor Rafferty, LLC Mahmoud Siddig Tel: +1-212-889-4350 Email: zstdigital@taylor-rafferty.com Web: http://www.taylor-rafferty.com/ Investor Contact (US): BPC Financial Marketing John Baldissera Tel: +1-800-368-1217

    ZST Digital Networks, Inc.

    CONTACT: ZST Digital Networks, Inc., John Chen, CFO,
    jchen@shenyangkeji.com; Investor Relations (US): Mahmoud Siddig, Director
    Taylor Rafferty, +1-212-889-4350, or zstdigital@taylor-rafferty.com; Investor
    Relations (HK): Ruby Yim of Taylor Rafferty, +852-3196-3712, or
    zstdigital@taylor-rafferty.com; Investor Relations (US): BPC Financial
    Marketing, John Baldissera, +1-800-368-1217

    Web site: http://www.shenyangkeji.com/




    Harris Names Peter Engel and Tom Bolger to Key Wisconsin Leadership Positions

    MILWAUKEE, Aug. 3 /PRNewswire-FirstCall/ -- Harris today announced the appointments of Peter Engel to head Retail banking and Tom Bolger to head Commercial banking in Wisconsin.

    Peter Engel, a Wisconsin native, has been named President, Retail banking, Wisconsin. He is responsible for Harris' Retail banking business in Wisconsin, which includes delivering an exemplary customer experience to the bank's retail clients, maximizing growth and profitability, and maintaining governance and a sound credit portfolio by managing risk. He will be based out of Harris' main offices in Milwaukee at 1000 N. Water Street.

    "Peter is a proven leader with deep knowledge and ties to the Wisconsin business and civic community," said Chris McComish, Executive Vice-President, Head of Retail Banking, Harris Bank. "His long track record of success coupled with his proven expertise in leading teams of skilled individuals position him strongly to build on our strategic customer focus of delivering simplicity, guidance and financial know-how."

    Tom Bolger has been named President, Commercial banking, Wisconsin. Bolger has nearly 40 years of financial services experience. He most recently led Harris' Wisconsin operations. In his new role, his efforts will be focused on growing Harris' commercial business in Wisconsin, bringing strong local leadership to the Commercial team that has been serving Wisconsin customers for decades.

    "Now is the time to aggressively grow our Commercial business in Wisconsin, and with Tom's leadership, passion and energy, we are extremely well positioned to increase our market share," said Dave Casper, Executive Vice President and Head of Commercial Banking, Harris Bank. "With the addition of an experienced retail banking leader like Peter, Tom can now focus his attention on growing our Commercial business and providing our customers with an exceptional experience."

    About Peter Engel

    Peter Engel was most recently the founder of theXcalibur, LLC, a Wisconsin-based independent management consulting service. Prior to forming his company, he was a Senior Vice President with M&I Marshall & Ilsley Bank for 20 years, where he led retail banking and branch expansion in multiple markets including the greater Milwaukee area, functioned as the bank's strategic sales director, managed merger integration and performance management processes.

    Engel joins Harris with more than 25 years of financial services experience.

    Engel received his undergraduate degree in Political Science from the University of Wisconsin - Milwaukee and holds a master's degree in Management from Cardinal Stritch University in Milwaukee. He earned a Paralegal Graduate Certificate from Roosevelt University in Chicago. He is also the Chairman of the Board of Directors for the Wisconsin Better Business Bureau. Engel and his family reside in Brookfield, Wis.

    About Tom Bolger

    Prior to joining Harris in October of 2007, Tom Bolger spent more than 30 years with M&I Marshall & Ilsley Bank in Milwaukee, including three years as President. He also served as President and Chief Executive Officer of Park National Bank in Illinois for several years.

    Bolger received his undergraduate degree in Business Administration from Marquette University and is a graduate of the Graduate School of Banking at the University of Wisconsin. He is active in the Milwaukee community and is currently a board member of the Aurora Healthcare System, Children's Hospital of Wisconsin, the Boys & Girls Club of Greater Milwaukee. He is also a member of the Greater Milwaukee Committee. Bolger and his family reside in Wauwatosa, Wis.

    About Harris

    Harris is an integrated financial service organization providing more than 1.2 million personal, business and corporate clients with banking, lending, investing and wealth management solutions. The organization is a member of the BMO Financial Group (NYSE, TSX: BMO), which also provides corporate and investment banking services in the U.S. under the BMO Capital Markets name.

    Harris® is a trade name used by various financial service subsidiaries of Harris Financial Corp. Banking products and services are provided by Harris N.A., The Harris Bank, N.A. and their bank affiliates, Members FDIC. Brokerage products are offered through Harris Investor Services, Inc. (HIS), a registered broker/dealer, member FINRA/SIPC, and SEC-registered investment advisor. Insurance and annuities are offered through Harris Bancorp Insurance Services, Inc. (HBIS). Investment banking services are provided by BMO Capital Markets Corp. (BMOCMC) and BMO Capital Markets GKST, Inc. (GKST), a Municipal Bond Dealer and member FINRA and SIPC. Financial planning and investment advisory services are provided by Sullivan, Bruyette, Speros & Blayney, Inc. (HSBSB), an SEC registered investment advisor. Family Office Services are provided by Harris myCFO, Inc. Investment advisory services are offered by Harris myCFO Investment Advisory Services LLC (HmyCFO), a SEC-registered investment advisor and wholly-owned subsidiary of Harris myCFO, Inc. Stoker Ostler Wealth Advisors (SOWA) is an SEC-registered investment advisor. Investment advisory services to institutional clients are provided by Harris Investment Management (HIM), an SEC-registered investment advisor. Products offered by HIS, HBIS, BMOCM, HSBSB, HmyCFO and HIM, affiliated companies and are wholly owned subsidiaries of Harris Financial Corp.,: Are Not Insured by the FDIC or any Federal Government Agency, Not a Deposit of or guaranteed by Any Bank or Bank Affiliate, May lose Value. The purchase of insurance or an annuity is not a condition to any bank loan or service. Not all products and services are offered in every state and/or location.

    Harris Bank

    CONTACT: Chris Nardella, +1-312-461-6625, or Patrick O'Herlihy,
    +1-312-461-6970, both for Harris Bank

    Web Site: http://www.harrisbank.com/




    ESCO Announces Third Quarter Results

    ST. LOUIS, Aug. 3 /PRNewswire-FirstCall/ -- ESCO Technologies Inc. today reported its operating results for the third quarter ended June 30, 2010.

    EPS is presented from "Continuing Operations" and "Discontinued Operations." Fiscal 2009 discontinued operations include the results of Comtrak which was sold in March 2009.

    Third Quarter 2010 Summary: -- Net sales were $157.6 million, an increase of $9.5 million, or 6.4 percent, over Q3 2009 sales of $148.1 million; -- Sequentially, Q3 2010 net sales increased $28.3 million, or 21.9 percent, over Q2 2010 sales of $129.3 million; -- EPS was $0.55 per share, an increase of $0.12 per share, or 27.9 percent, over Q3 2009 EPS of $0.43 per share; -- Sequentially, Q3 2010 EPS increased $0.33 per share, or 150 percent, over Q2 2010 EPS of $0.22 per share; -- Entered orders were $150.0 million resulting in book-to-bill ratio of .95x; -- Aclara RF AMI gas orders with PG&E were $20.8 million, bringing total PG&E gas orders to 4.4 million units and $247 million, exceeding the 4.1 million units originally expected under the contract; and -- Aclara RF AMI water orders with New York City Water were $9.4 million, bringing total NYC orders to 866,000 units and $66.8 million. Chairman's Commentary

    Vic Richey, Chairman and Chief Executive Officer, commented, "I am very pleased with our third quarter results compared to both the prior year third quarter and our fiscal 2010 second quarter. We continue to focus on sales growth and execution, and again demonstrated our success in the third quarter.

    "Compared to the prior year third quarter, we increased sales by $9.5 million in spite of a $9.7 million decrease at Aclara RF related to the wind-down of PG&E's gas deployment. We increased our EBIT contribution $8.0 million, or 84 percent of the sales increase, resulting from exceptional operating performance at Doble and Aclara PLS.

    "Filtration delivered a 19.4 percent EBIT margin on strong performance from all three operating units. Test reported an EBIT margin of nearly 10 percent as changes in sales mix impacted its EBIT margins compared to the prior year. The Utility Solutions Group was clearly the brightest spot in the quarter with an EBIT margin of 22.3 percent compared to 14.4 percent in the prior year.

    "Coming off our significant second quarter orders, I'm very pleased with the $150 million in orders we received in Q3. This brings our year-to-date orders to a record $507 million resulting in a book-to-bill ratio of 1.27x for the nine months of fiscal 2010.

    "Nearly halfway through the fourth quarter, I'm very comfortable with where we are in relation to meeting our full-year operating goals. My confidence in the remainder of the fiscal year is supported by the level and mix of our shippable backlog.

    "Looking forward, we remain confident in our ongoing prospects across all segments of our business, both domestically and internationally. Our Aclara products, in particular, are well positioned on several international projects in Central America and South America as well as Asia. We expect these geographic areas to be significant contributors to our multi-year growth outlook."

    Business Outlook

    Statements contained in the preceding and following paragraphs are based on current expectations. Statements that are not strictly historical are considered forward-looking, and actual results may differ materially.

    Dividend Payment

    The next quarterly cash dividend of $0.08 per share will be paid on October 20 to stockholders of record on October 6.

    FY 2010

    Management's expectations for fiscal year 2010 remain consistent with the Business Outlook discussions noted in the Company's Earnings Release dated November 12, 2009.

    Chairman's Commentary - Wrap-Up

    Mr. Richey concluded, "I am very pleased with our selection to begin negotiations of a definitive agreement for SoCalGas' Advanced Metering Infrastructure (AMI) project. I remain very optimistic about our current business prospects, both domestically and internationally, as well as our new product roadmap. Our commitment remains the same - to achieve our long-term goal of increasing shareholder value."

    Conference Call

    The Company will host a conference call today, August 3, at 4 p.m. Central Time, to discuss the Company's third quarter fiscal 2010 operating results. A live audio webcast will be available on the Company's web site at http://www.escotechnologies.com/. Please access the web site at least 15 minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available for seven days on the Company's web site noted above or by phone (dial 1-888-203-1112 and enter the pass code 4585825).

    Forward-Looking Statements

    Statements in this press release regarding the Company's success in capturing international and domestic AMI opportunities, achievement of fiscal 2010 operating goals, negotiation of a contract with SoCalGas, success of new products and technologies, the long-term success of the Company, and any other statements which are not strictly historical are "forward-looking" statements within the meaning of the safe harbor provisions of the federal securities laws. Investors are cautioned that such statements are only predictions and speak only as of the date of this release, and the Company undertakes no duty to update. The Company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment including, but not limited to: the risk factors described in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2009; the success of negotiations between SoCalGas and the Company; changes in requirements of SoCalGas; SoCalGas' ability to successfully negotiate appropriate terms and conditions with other subcontractors and project participants; financial constraints impacting SoCalGas; the receipt of necessary regulatory approvals pertaining to the SoCalGas project; the effect of the American Recovery and Reinvestment Act of 2009; the success of the Company's competitors; changes in Federal or State energy laws; the Company's successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; unforeseen charges impacting corporate operating expenses; the performance of the Company's international operations; material changes in the costs and availability of certain raw materials including steel and copper; worldwide availability of electronic components; delivery delays or defaults by customers; termination for convenience of customer contracts; timing and magnitude of future contract awards; containment of engineering and development costs; performance issues with key customers, suppliers and subcontractors; labor disputes; changes in laws and regulations including but not limited to changes in accounting standards and taxation requirements; costs relating to environmental matters; uncertainty of disputes in litigation or arbitration; and the Company's successful execution of internal operating plans.

    ESCO, headquartered in St. Louis, is a proven supplier of special purpose utility solutions for electric, gas, and water utilities, including hardware and software to support advanced metering applications and fully automated intelligent instrumentation. In addition, the Company provides engineered filtration products to the aviation, space, and process markets worldwide and is the industry leader in RF shielding and EMC test products. Further information regarding ESCO and its subsidiaries is available on the Company's web site at http://www.escotechnologies.com/.

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Three Months Three Months ended ended June 30, 2010 June 30, 2009 ------------- ------------- Net Sales $157,582 148,102 Cost and Expenses: Cost of sales 91,994 88,040 SG&A 38,144 36,636 Amortization of intangible assets 2,891 4,792 Interest expense 791 1,587 Other expenses (income), net 551 2,617 --- ----- Total costs and expenses 134,371 133,672 Earnings before income taxes 23,211 14,430 Income taxes 8,664 3,337 ----- ----- Net earnings from continuing operations 14,547 11,093 Earnings from discontinued operations, net of tax benefit of $456 0 332 --- --- Net earnings $14,547 11,425 Earnings per share: Basic Continuing operations 0.55 0.42 Discontinued operations 0.00 0.02 ---- ---- Net earnings $0.55 0.44 ===== ==== Diluted Continuing operations 0.55 0.42 Discontinued operations 0.00 0.01 ---- ---- Net earnings $0.55 0.43 ===== ==== Average common shares O/S: Basic 26,448 26,241 ------ ------ Diluted 26,679 26,586 ====== ====== ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Nine Months ended Nine Months ended June 30, 2010 June 30, 2009 ----------------- ----------------- Net Sales $399,568 449,615 Cost and Expenses: Cost of sales 238,829 272,880 SG&A 114,161 114,158 Amortization of intangible assets 8,662 14,379 Interest expense 3,028 5,961 Other expenses (income), net 1,862 2,860 ----- ----- Total costs and expenses 366,542 410,238 ------- ------- Earnings before income taxes 33,026 39,377 Income taxes 12,076 11,839 ------ ------ Net earnings from continuing operations 20,950 27,538 Earnings from discontinued operations, net of tax benefit of $568 0 135 Loss on sale from discontinued operations, net of tax benefit of $905 0 (32) --- --- Net earnings from discontinued operations 0 103 Net earnings $20,950 27,641 ======= ====== Earnings per share: Basic Continuing operations 0.79 1.05 Discontinued operations 0.00 0.01 ---- ---- Net earnings $0.79 1.06 Diluted Continuing operations 0.79 1.04 Discontinued operations 0.00 0.00 ---- ---- Net earnings $0.79 1.04 ===== ==== Average common shares O/S: Basic 26,437 26,176 ====== ====== Diluted 26,697 26,494 ====== ====== ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Business Segment Information (Unaudited) (Dollars in thousands) Three Months Nine Months Ended Ended June 30, June 30, -------------- ----------------- 2010 2009 2010 2009 ---- ---- ---- ---- Net Sales ---------- Utility Solutions Group $91,718 91,113 224,950 273,380 Test 34,575 29,108 93,143 98,310 Filtration 31,289 27,881 81,475 77,925 ------ ------ ------ ------ Totals $157,582 148,102 399,568 449,615 ======== ======= ======= ======= EBIT ---- Utility Solutions Group $20,424 13,158 35,615 39,851 Test 3,397 3,400 6,193 10,382 Filtration 6,072 4,837 11,419 11,927 Corporate (5,891) (1) (5,378) (1) (17,173) (2) (16,822) (2) ------ ------ ------- ------- Consolidated EBIT 24,002 16,017 36,054 45,338 Less: Interest expense (791) (1,587) (3,028) (5,961) ----- ---- ------ ------ ------ Earnings before income taxes $23,211 14,430 33,026 39,377 -------- ------- ------ ------ ------ Note: Depreciation and amortization expense was $5.4 million and $7.6 million for the quarters ended June 30, 2010 and 2009, respectively, and $16.6 million and $22.7 million for the nine-month periods ended June 30, 2010 and 2009, respectively. (1) Includes $1.2 million of amortization of acquired intangible assets. (2) Includes $3.5 million of amortization of acquired intangible assets. ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) September June 30, 30, 2010 2009 ---- ---- Assets ------ Cash and cash equivalents $20,334 44,630 Accounts receivable, net 121,952 108,620 Costs and estimated earnings on long-term contracts 9,065 10,758 Inventories 84,411 82,020 Current portion of deferred tax assets 21,240 20,417 Other current assets 17,395 13,750 Total current assets 274,397 280,195 Property, plant and equipment, net 70,606 69,543 Goodwill 330,860 330,719 Intangible assets, net 218,445 221,600 Other assets 21,329 21,630 $915,637 923,687 ======== ======= Liabilities and Shareholders' Equity ------------------------------------ Current maturities of long-term debt $50,000 50,000 Accounts payable 38,577 47,218 Current portion of deferred revenue 25,737 20,215 Other current liabilities 48,312 46,552 Total current liabilities 162,626 163,985 Deferred tax liabilities 76,564 78,471 Other liabilities 31,251 33,424 Long-term debt 114,000 130,467 Shareholders' equity 531,196 517,340 $915,637 923,687 ======== ======= ESCO TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Nine months ended June 30, 2010 ------------- Cash flows from operating activities: Net earnings $20,950 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 16,559 Stock compensation expense 2,996 Changes in current assets and liabilities (25,642) Effect of deferred taxes (2,730) Change in deferred revenue and costs, net 3,780 Other 4 --- Net cash provided by operating activities 15,917 Cash flows from investing activities: Acquisition of business (1,250) Additions to capitalized software (6,237) Capital expenditures (10,108) ------- Net cash used by investing activities (17,595) Cash flows from financing activities: Proceeds from long-term debt 12,000 Principal payments on long-term debt (28,467) Dividends paid (4,230) Proceeds from exercise of stock options 429 Other 936 Net cash used by financing activities (19,332) ------- Effect of exchange rate changes on cash and cash equivalents (3,286) ------ Net decrease in cash and cash equivalents (24,296) Cash and cash equivalents, beginning of period 44,630 ------ Cash and cash equivalents, end of period $20,334 ======= ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Other Selected Financial Data (Unaudited) (Dollars in thousands) Backlog And Entered Orders Utility -Q3 FY 2010 Solutions Test Filtration Total --------------- --------- ---- ---------- ----- Beginning Backlog - 3/31/10 $214,460 84,951 114,951 414,362 Entered Orders 88,592 30,331 31,062 149,985 Sales (91,718) (34,575) (31,289) (157,582) ------- ------- ------- -------- Ending Backlog - 6/30/10 $211,334 80,707 114,724 406,765 ======== ====== ======= ======= Backlog And Entered Orders -YTD Q3 FY Utility 2010 Solutions Test Filtration Total --------------- ---------- ---- ---------- ----- Beginning Backlog - 9/30/09 $132,376 54,240 112,755 299,371 Entered Orders 303,908 119,610 83,444 506,962 Sales (224,950) (93,143) (81,475) (399,568) -------- ------- ------- -------- Ending Backlog - 6/30/10 $211,334 80,707 114,724 406,765 ======== ====== ======= =======

    ESCO Technologies Inc.

    CONTACT: Kate Lowrey, Director, Investor Relations, +1-314-213-7277, or
    Media, David P. Garino, +1-314-982-0551, both of ESCO Technologies Inc.

    Web Site: http://www.escotechnologies.com/




    Universal Corporation Announces Quarterly Dividends

    RICHMOND, Va., Aug. 3 /PRNewswire-FirstCall/ -- George C. Freeman, III, Chairman, President and Chief Executive Officer of Universal Corporation , announced today that the Company's Board of Directors declared a quarterly dividend of forty-seven cents ($0.47) per share on the common shares of the Company, payable November 8, 2010, to common shareholders of record at the close of business on October 12, 2010.

    In addition, the Board of Directors declared a quarterly dividend of $16.875 per share on the Series B 6.75% Convertible Perpetual Preferred Stock ("Series B Preferred Stock"), payable September 15, 2010, to shareholders of record as of 5:00 p.m. Eastern Time on September 1, 2010.

    Headquartered in Richmond, Virginia, Universal Corporation is the world's leading tobacco merchant and processor and conducts business in more than 30 countries. Its revenues from continuing operations for the fiscal year ended March 31, 2010, were $2.5 billion. For more information on Universal Corporation, visit its web site at http://www.universalcorp.com/.

    Universal Corporation

    CONTACT: Karen M. L. Whelan, +1-804-359-9311, Fax: +1-804-254-3594,
    investor@universalleaf.com

    Web Site: http://www.universalcorp.com/




    James Hardie® Recognized for Sixth Straight Year by David Weekley Homes for Outstanding Quality and Service

    MISSION VIEJO, Calif., Aug. 3 /PRNewswire-FirstCall/ -- James Hardie Building Products Inc. , the world's leading manufacturer of fiber cement building products, was today awarded its sixth straight illustrious "Partners of Choice Award" for outstanding quality and service by David Weekley Homes. James Hardie received top honors with a perfect score of "A" for both the quality of its products and the service that James Hardie provides to the nation's second largest for-profit privately held homebuilder.

    "It is an honor to be recognized as a 'Partner of Choice' for the sixth straight year by David Weekley Homes and to receive our sixth straight A, A rating," said Dan Tresch, strategic accounts and business development manager for James Hardie. "We constantly strive to provide all of our customers, be they builders, contractors, installers or homeowners, with only the highest quality experience. This award is a reaffirmation of the hard work and effort put in by everyone at James Hardie and our valued channel partners."

    The distinguished "Partners of Choice Award" is based on Weekley's renowned National Trading Partner survey. Now in its seventh year, the survey represents Weekley's groundbreaking approach for fostering the partnering proposition with its suppliers, and is consequently setting new industry standards. Approximately 600 team members, representing every facet of David Weekley Homes' extensive building and construction business, review approximately 150 of David Weekley Homes' partners and suppliers. Scores are then tallied, averaged, and placed in descending order. Alpha rankings are then assigned in descending order in 20% increments from A to F.

    "World-class excellence is an abstract term. In short, it is when you are willing to put your products and services up against anybody anywhere, anytime, and come out on top. We believe the National Trading Partner Survey is a practical way to measure world-class excellence," says Bill Justus vice president of Supply Chain Services for David Weekley Homes and chief architect behind this visionary approach. Justus continues, "What James Hardie has done is beyond incredible. For six consecutive years, they have demonstrated world-class excellence in the face of radical swings in the marketplace. They work their channel -- training, checking, rechecking -- working with everyone from designers to applicators to ensure that they are able to execute their jobs at the highest level."

    About James Hardie

    James Hardie has been manufacturing building products for more than 100 years. It introduced fiber cement siding products to the U.S. in the early 90s as a durable, low-maintenance alternative to wood and vinyl. James Hardie products are Engineered for Climate(TM), delivering specific performance attributes relative to the climate where the product is being used. Other products include HardieWrap(TM) weather barrier and HardieBacker® backer board. Currently installed on more than 4 million homes, James Hardie products have earned a favorable reputation within the industry and have been specified in some of the country's most prestigious projects. More information about James Hardie is available at http://www.jameshardie.com/.

    About David Weekley Homes

    David Weekley Homes, founded in 1976, is headquartered in Houston and operates in 14 cities across the United States. David Weekley Homes was the first builder in the United States to be awarded the Triple Crown of American Home Building, an honor which includes "America's Best Builder," "Builder of the Year," and the "National Housing Quality Award." Weekley has also appeared seven times on FORTUNE® magazine's coveted "100 Best Companies to Work For" list. Since inception, David Weekley Homes has closed more than 60,000 homes. http://www.davidweekleyhomes.com/.

    James Hardie Building Products Inc.

    CONTACT: Lindsay Vaughn, +1-404-479-2239, lvaughn@brunnerworks.com

    Web Site: http://www.jameshardie.com/




    Healthcare Realty Trust Announces Second Quarter Dividend

    NASHVILLE, Tenn., Aug. 3 /PRNewswire-FirstCall/ -- Healthcare Realty Trust Incorporated today announced its common stock cash dividend for the quarter ended June 30, 2010. This dividend, in the amount of $0.30 per share, is payable on September 2, 2010 to shareholders of record on August 19, 2010.

    Healthcare Realty Trust is a real estate investment trust that integrates owning, managing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $2.3 billion in 205 real estate properties and mortgages as of March 31, 2010, excluding assets classified as held for sale and including an investment in one unconsolidated joint venture. The Company's 200 owned real estate properties, excluding assets classified as held for sale, are comprised of six facility types, located in 28 states, totaling approximately 12.4 million square feet. The Company provides property management services to approximately 9.3 million square feet nationwide.

    In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2009 under the heading "Risk Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims any obligation to update forward-looking material.

    Healthcare Realty Trust Incorporated

    CONTACT: Gabrielle M. Andres, Corporate Communications, +1-615-269-8175

    Web Site: http://www.healthcarerealty.com/




    CORRECTED: Ampio Pharmaceuticals Announces Completion of Negotiations for Acquisition of DMI BioSciences, Inc.

    GREENWOOD VILLAGE, Colo., Aug. 3 /PRNewswire-FirstCall/ -- Ampio Pharmaceuticals, Inc. (BULLETIN BOARD: AMPE) , discovered an error in the title of its press release on July 27, and provides the corrected title to that release above. As reflected in the body of the press release, Ampio has completed the final negotiations with DMI BioSciences, Inc. concerning the pending acquisition of DMI BioSciences. Ampio will file a Form 8-K with the SEC announcing the definitive agreement upon its execution.

    About Ampio Pharmaceuticals

    Ampio Pharmaceuticals, Inc. develops innovative proprietary drugs for metabolic disease, eye disease, kidney disease, inflammation and CNS disease. The product pipeline includes new uses for previously approved drugs and new molecular entities ("NMEs"). By concentrating on development of new uses for previously approved drugs, approval timelines, costs and risk of clinical failure are reduced because these drugs have strong potential to be safe and effective while their shorter development times can significantly increase near-term value. A key strategy includes actively exploring partnership, licensing and other collaboration opportunities to maximize Ampio's product development programs.

    About DMI BioSciences, Inc.

    DMI BioSciences, Inc. was founded by Dr. David Bar-Or in 1990 to develop innovative diagnostic tests and drugs for the medical device and biopharmaceutical industry.

    Safe Harbor Statement

    Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors.

    Investor Contact: Redwood Consultants, LLC Tel: +1 415-884-0348

    Ampio Pharmaceuticals, Inc.

    CONTACT: Investors, Redwood Consultants, LLC, +1-415-884-0348, for Ampio
    Pharmaceuticals, Inc.

    Web Site: http://www.ampiopharma.com/




    Pardee Resources Company Option Payment

    PHILADELPHIA, Aug. 3 /PRNewswire-FirstCall/ -- Pardee Resources Company (Pink Sheets: PDER) (the "Company") announced today that it has received a special $7 Million option payment in connection with a mineral lease, which will add approximately $6.00 to the Company's 3rd Quarter earnings per share. This payment is in addition to the Company's regular royalty payments from on-going operations.

    In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include statements that relate to the impact of the option payment described above. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: difficult economic conditions, the possibility of increased or adverse government regulation, and the risk that the mineral reserves may not be as we currently expect, and other risks and uncertainties. As a result, these forward-looking statements may turn out to be incorrect. We are under no obligation to (and expressly disclaim any obligation to) update or alter these forward-looking statements whether as a result of new information, future events or otherwise.

    Pardee Resources Company

    CONTACT: Pardee Resources Company, Linda Dougherty, Shareholder
    Relations, +1-215-405-1260, ShareholderRelations@pardee.com




    Weatherford Announces Conference Call

    GENEVA, Aug. 3 /PRNewswire-FirstCall/ -- Weatherford International Ltd. today announced that it has scheduled a conference call for Tuesday, October 19, 2010 at 9:00 a.m. Eastern, 8:00 a.m. Central. The purpose of the conference call is to discuss results for the company's third quarter ended September 30, 2010. The call will be open to the public.

    (Logo: http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO) (Logo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO)

    To access the call please contact the conference call operator at 800-659-2056, or 617-614-2714 for international calls, approximately 10 minutes prior to the scheduled start time, and ask for the Weatherford conference call. The passcode is "Weatherford". A replay will be available until 5:00 p.m. Central, October 29, 2010. The number for the replay is 888-286-8010, or 617-801-6888 for international calls; passcode 47149202.

    An enhanced webcast of the conference call and replay will be provided by Thomson Reuters and will be available through Weatherford's web site at http://www.weatherford.com/. To access the conference call and replay, click on the Investor Relations link and then click on the Enhanced Audio Webcast link. The webcast requires Microsoft® Windows Media Player. If you experience problems listening to the broadcast, send an email to streetevents@streetevents.com.

    Weatherford is a Swiss-based, multi-national oilfield service company. It is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs over 53,000 people worldwide.

    Contacts: Andrew P. Becnel +41.22.816.1502 Chief Financial Officer Karen David-Green +713.693.2530 Vice President -Investor Relations

    Photo: http://www.newscom.com/cgi-bin/prnh/19990308/WEATHERFORDLOGO
    AP Archive: http://photoarchive.ap.org/
    http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO
    PRN Photo Desk, photodesk@prnewswire.com Weatherford International Ltd.

    CONTACT: Andrew P. Becnel, Chief Financial Officer, +41-22-816-1502, or
    Karen David-Green, +1-713-693-2530, both of Weatherford International Ltd.

    Web Site: http://www.weatherford.com/




    aVinci Media Signs Agreement With Circle Graphics to Offer Large Format Photo Print ProductsCreate a Large Format Photo Poster from a Personal Photo in Seconds

    DRAPER, Utah, Aug. 3 /PRNewswire-FirstCall/ -- aVinci Media Corporation (BULLETIN BOARD: AVMC) announced an agreement with Circle Graphics coupling aVinci's multimedia technology with Circle Graphics' printing expertise to offer any customer the ability to create a large format photo poster at price points ranging from $9.99 to $29.99. Originally released for its ESPN branded line, aVinci intends to add poster designs for special occasions like birthdays, anniversaries, sports highlights, weddings, reunions and many more occasions over the next few months.

    "aVinci now offers enlargements and posters from 24" x 36" to 44" x 66" at prices normally associated with much smaller prints," stated Chett Paulsen, CEO of aVinci Media. "At http://www.ginormousposter.com/ anyone can use a personal photo to create a photo poster instantly. With our large sizes and small prices, we have had customers order our ESPN themed poster just to hold up at games to show their support for their son or daughter."

    "We are using our world-leading inkjet printing knowledge to provide outstanding value, quality and service on consumer products including posters, pressure-sensitive-wall-graphics, banners and canvas art and photo prints," said Hank Ridless, CEO of Circle Graphics. "Our partnership with aVinci provides us with a great opportunity to work with a leader in the personal photo product industry."

    About aVinci® Media Corporation

    aVinci develops easy-to-use multi-media authoring solutions which allow customers to use photo images to create photo archive, photo book, poster, DVD archive and other products to enjoy at home or share on social networks and mobile platforms. aVinci products are available online and in more than 10,500 storefronts through retailers and partners such as Walmart, Walgreens, Meijer, HP, and Fujicolor. For more information, visit http://www.avincimedia.com/.

    About Circle Graphics

    Circle Graphics is the world's largest producer of large-format digital graphics. The eight-year-old technology company began as a producer of outdoor advertising, earned a very dominant U.S. market share and serves the largest media companies and advertisers in the U.S. Circle Graphics develops, builds and customizes proprietary inkjet printing equipment, formulates ink and unique substrates, and creates advanced software and production systems to manage a true mass-customization e-commerce business in its plant which prints more than 30-million square feet of digital output each month.

    aVinci Media Corporation

    CONTACT: Ted B. Paulsen of aVinci Media Corporation, +1-801-984-2600,
    tpaulsen@avincimedia.com

    Web Site: http://www.avincimedia.com/




    American Airlines Offers Award Flights for Fewer AAdvantage MilesFor Limited Time AAdvantage Members Can Book Economy Class, Short-Hop Flights for Fewer Miles

    FORT WORTH, Texas, Aug. 3 /PRNewswire-FirstCall/ -- Travel is just a "short hop" away as American Airlines offers AAdvantage® members the opportunity to book award travel within the United States and Canada for fewer miles, with the company's popular "Short-Hop" awards. For a limited time customers can book Economy Class MileSAAver® award tickets on routes under 700 miles each way for only 8,750 AAdvantage miles (17,500 round trip), which is 30 percent less miles than normally required.

    These special Short-Hop awards are available when AAdvantage members book by Aug. 31, 2010, and travel between Aug. 2 and Dec. 15, 2010, on nonstop flights marketed and operated by American Airlines, American Eagle or AmericanConnection® carriers.

    "As the world's first travel rewards program, we consistently look for ways to provide value to our AAdvantage members by making it easier than ever for customers to use their miles," said Derek DeCross, President - AAdvantage Marketing Programs. "Introducing Short-Hop awards gives AAdvantage members the opportunity to save miles when traveling on shorter flights."

    Some of the popular Short-Hop markets offered include: -- Dallas/Forth Worth - Denver, Memphis, Tenn., or Santa Fe, N.M. -- Chicago, O'Hare - Atlanta, Nashville, Tenn., or Toronto -- New York - Boston, Traverse City, Mich., or Montreal -- Miami - Atlanta, Charleston, S.C., or New Orleans -- Los Angeles - Reno, Nev. or San Francisco

    AAdvantage members can view availability and book Short-Hop awards by using the AAdvantage award booking tool on AA.com. For more information on Short-Hop awards visit http://www.aa.com/shorthops or visit http://www.aa.com/ to book your award today.

    Terms & Conditions

    Award inventory is subject to seat availability and capacity controls. Seats for award travel may not be available on all flights. The Short-Hop award is valid for travel only on nonstop flights less than 700 air miles one way, which are marketed and operated by American Airlines, American Eagle or AmericanConnection carriers in the continental U.S. and Canada. Determination of the 700 air miles restriction will be made by American Airlines. Travel on Short-Hop awards must be completed by Dec. 15, 2010. Visit http://www.aa.com/aadvantage for complete details, terms and conditions regarding award travel.

    About the AAdvantage® Program

    The AAdvantage program was the first frequent flyer program. Established in 1981, the program now has more than 62 million members. Members can earn miles at more than 1,000 participating companies, which include more than 30 hotel chains representing more than 60 brands, more than 20 airlines, eight car-rental companies, 10 financial companies, and over 350 brand name retailers. In addition, members can earn miles when making purchases with one of more than 100 affinity card products in over 40 countries. In 2009, AAdvantage members redeemed more than 150 billion miles to claim more than 6.9 million awards for flights, upgrades and car rentals. For more information and a listing of AAdvantage program participating companies, visit http://www.aa.com/aadvantage.

    About American Airlines

    American Airlines, American Eagle and AmericanConnection® serve 250 cities in 40 countries with, on average, more than 3,400 daily flights. The combined network fleet numbers more than 900 aircraft. American's award-winning website, AA.com®, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld® Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve nearly 700 destinations in more than 130 countries and territories. American Airlines, Inc. and American Eagle Airlines, Inc. are subsidiaries of AMR Corporation. AmericanAirlines, American Eagle, AmericanConnection, AA.com, We know why you fly and AAdvantage are registered trademarks of American Airlines, Inc.

    AmericanAirlines® We know why you fly® Current AMR Corp. releases can be accessed on the Internet. The address is http://www.aa.com

    American Airlines

    CONTACT: Billy Sanez, Corporate Communications of American Airlines,
    Fort Worth, Texas, +1-817-967-1577, mediarelations@aa.com

    Web Site: http://www.aa.com/




    Air Products' CEO to Address Jefferies 6th Annual Global Industrial and A&D Conference on August 10

    LEHIGH VALLEY, Pa., Aug. 3 /PRNewswire-FirstCall/ -- Air Products announced today that John McGlade, chairman, president and chief executive officer, will be presenting at Jefferies 6th Annual Global Industrial and A&D Conference in New York City on Tuesday, August 10, 2010 at 1:15 p.m. EDT.

    McGlade will discuss the company's recent quarterly earnings results and will provide an outlook for its businesses and an update on Air Products' offer to acquire Airgas.

    An audio Webcast and presentation slides will be available on Air Products' Investor Relations web site at http://www.airproducts.com/Invest/PresentationSummary.htm.

    Air Products serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. In fiscal 2009, Air Products had revenues of $8.3 billion, operations in over 40 countries, and 18,900 employees around the globe. For more information, visit http://www.airproducts.com/.

    ***NOTE: This release may contain forward-looking statements. Actual results could vary materially, due to changes in current expectations.

    Air Products

    CONTACT: Media Inquiries, Robert Brown, +1-610-481-1192,
    brownrf@airproducts.com; or Investor Inquiries, Nelson Squires,
    +1-610-481-7461, squirenj@airproducts.com, or Simon Moore, +1-610-481-7461,
    mooresr@airproducts.com, all of Air Products

    Web Site: http://www.airproducts.com/




    Webcast Alert: Saraiva S. A. Livreiros Editores Announces Second Quarter 2010 Earnings Results Webcast

    SAO PAULO, Aug. 3 /PRNewswire-FirstCall/ -- Saraiva S.A. Livreiros Editores (OTC Bulletin Board: SVLSY; BM&FBOVESPA: SLED3; SLED4) announces the following Webcast:

    Second Quarter 2010 Results Conference Call, which will be What: released on August 13, after BM&FBOVESPA's trading session Monday, August 16, 2010 at 9:30 AM (EDT) in Portuguese and When: 11:00 AM (EDT) in English Where: http://www.mediatown.com.br/prnewswire/player/?id=342 Live over the Internet --Simply log on to the web at the How: address above. Saraiva Investor Relations , +55 11 3613-3302, or Contact: mpfanganiello@saraiva.com.br The conference call will be archived at http://www.saraivair.com/ To take part in the Conference Call dial: From the U.S.A. - (1 888) 700-0802 From Brazil - (11) 4688-6361 From Other Countries - (1 786) 924-6977

    Saraiva S.A. Livreiros Editores is one of the largest book publishers in Brazil and the largest bookstore chain in the country by revenues.

    Audio: http://www.mediatown.com.br/prnewswire/player/?id=342 Saraiva S.A. Livreiros Editores

    CONTACT: Saraiva Investor Relations, +55-11-3613-3302,
    mpfanganiello@saraiva.com.br

    Web Site: http://www.saraivair.com/




    Kmart is 'Most Likely to Rock' This Back to School Season by Offering the Hottest Trends in Fashions for Tweens and Juniors Without Breaking Their BudgetChicago and Los Angeles Kmart stores to host back to school fashion shows

    HOFFMAN ESTATES, Ill., Aug. 3 /PRNewswire/ -- According to a recent survey conducted by the National Retail Federation (NRF)(1) this year, teenagers and pre-teens will spend more of their own money for apparel, supplies and accessories for back to school. This year, Kmart is offering affordable prices on the hottest trends for tweens and teens from jeggings and skinny jeans to backpacks and candy-colored staplers, allowing customers to get even more for their money.

    To view the multimedia assets associated with this release, please click: http://multivu.prnewswire.com/mnr/kmart/45479/

    "For years Kmart has offered customers ways to make back to school more affordable without compromising on quality or style," said Mark Snyder, chief marketing officer, Kmart. "This year, we continue to offer the value that moms want, along with the fashions that their kids are asking for, with access to more exclusive brands including Dream Out Loud with Selena Gomez, Bongo and Rebecca Bonbon."

    Kmart is also bringing more value to its customers this back to school season by conducting in-store fashion shows in Chicago (Aug. 3) and Los Angeles (Aug. 5), to highlight the hottest fashions at prices that won't break the bank. The full-scale runway shows featuring the latest looks will give tweens and teens a sneak peek at pieces from Dream Out Loud by Selena Gomez, Bongo, Rebecca Bonbon, Route 66 and more.

    Kmart is making it convenient for their customer to find exactly what they want, when they want it with online shopping tools such as Kmart2go and layaway. Through Kmart2go, customers can shop for millions of products via iPhone and Android apps, giving users complete access to the full list of items and categories available on Kmart.com. Kmart2go customers can easily search, browse and buy directly from their phone, then have the order shipped to their door.

    With Kmart layaway - in store and online - budget-conscious consumers can secure "hot" back to school items early, interest-free and pick them up in time for school. From school supplies to apparel, electronics and home essentials, layaway is an easy way for families to get everything they need for back to school and beyond.

    Now shopping for back to school is even more rewarding with Shop Your Way Rewards. Shop Your Way Rewards members can earn 10 points for every $1 spent on qualifying goods and services purchased across Sears, Kmart, Lands' End, mygofer and The Great Indoors - in store and online. Members can earn and redeem points on almost everything they buy, from school supplies and apparel at Kmart to an oil change at a Sears Auto Center and more. For more information go to http://www.shopyourwayrewards.com/.

    For more information on back to school at Kmart, visit http://www.kmart.com/. About Kmart

    Kmart, a wholly owned subsidiary of Sears Holdings Corporation , is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Jaclyn Smith, Joe Boxer, County Living and Route 66. For more information visit the company's website at http://www.kmart.com/ or the Sears Holdings Corporation website at http://www.searsholdings.com/.

    (1) NRF's 2010 Back to School Consumer Intentions and Actions Survey, July 2010

    Video: http://multivu.prnewswire.com/mnr/kmart/45479 Kmart

    CONTACT: Shannelle Armstrong, Sears Holdings, +1-847-286-0715,
    Shannelle.Armstrong@searshc.com; or Leah Linder, Euro RSCG Worldwide PR,
    +1-212-367-6820, Leah.Linder@eurorscg.com

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