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Accuray Reports Q2 Fiscal 2009 Results

Accuray Incorporated (Accuray) has reported total revenues of $57.6 million for the second quarter of fiscal 2009, up 10.8%, compared with the total revenue of $52 million in the year-ago quarter. It has also reported a net income of $1.4 million, or $0.02 per share, for the second quarter of fiscal 2009, compared with the net income of $2.3 million, or $0.04 per share, in the year-ago quarter.

In the second quarter of fiscal 2009, company recorded a market fair value charge of $860,000, or $0.02 per share, in connection with a settlement agreement entered into with the distributor of the auction rate securities that guarantees repayment of the securities at par value beginning in June 2010.

For the six months ended December 27, 2008, total revenue was $113.5 million, up 12.7% over total revenue of $100.7 million for the same period last year. Net loss for the first half of fiscal 2009 was $1.8 million, or a loss of $0.03 per diluted share, compared to net income of $4.6 million, or $0.08 per diluted share, for the first half of fiscal 2008. The net loss in the first six months of fiscal 2009 was primarily driven by non- recurring costs associated with employee separation expenses and inventory write downs incurred during the fiscal first quarter of 2009.

“We are encouraged by the year-over-year revenue growth plus strong installation and shipment numbers for the quarter, reflecting an expanding demand for our CyberKnife(R) Robotic Radiosurgery System,” said Euan S. Thomson Accuray’s president and chief executive officer.

In an effort to contain costs, Accuray has eliminated about 60 positions or about 13 percent of its US workforce. The company is focused on improving processes and cross-company collaboration with the goal of raising efficiency, and has taken these actions to enhance the company’s success in the long term and position itself to weather the potential impact of the current global downturn. The company estimates that the future savings in employment related expenses will be about $8.7 million per year. Due to severance pay and the timing of employment terminations, limited savings will begin in the fourth fiscal quarter of 2009 with the full benefit starting in the first quarter of fiscal 2010. Most of the affected jobs are located at Accuray’s Sunnyvale, Calif. headquarters.

At December 27, 2008, non-contingent contracts, for which all contractual obligations have been satisfied, accounted for about $452 million or 76 percent of total backlog. Accuray’s backlog is composed of signed contracts that the company believes have a substantially high probability of being recognized as revenue in future periods. Total backlog at the end of the second fiscal quarter of 2009 was $598 million, with about $311 million associated with CyberKnife Robotic Radiosurgery System contracts and about $287 million associated with services and other recurring revenue. Contingent contracts made up $146 million of backlog.

Accuray’s cash and investment balances at the end of the second quarter of 2009 totaled $154.7 million, which includes cash and cash equivalents of $29.4 million, restricted cash of $0.6 million, short-term investments of $80.2 million and long-term investments of $44.5 million. At the end of the second quarter of 2009 the company continued to have zero debt.

Guidance

Accuray projects total revenues for fiscal 2009 to be in the range of $230 million to $250 million.