DRAPER, Utah, Feb. 18 /PRNewswire-FirstCall/ --
1-800 CONTACTS, INC. (Nasdaq: CTAC), today reported results for its fourth
fiscal quarter and fiscal year ended December 28, 2002.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990917/1800CONTACTS )
Net sales for the fourth quarter ended December 28, 2002 were
$40.4 million, compared to $37.6 million for the same period last year. The
Company reported a net loss for the fourth quarter of $0.6 million, or
$.05 per diluted common share, compared to net income of $2.2 million, or
$.18 per diluted common share for the fourth quarter of 2001. For the fourth
quarter ended December 28, 2002, net sales and operating income from the
Company's operations, exclusive of the Company's Singapore operations
(ClearLab), were $39.3 million and $1.5 million, respectively. Net sales and
operating loss for ClearLab were $1.1 million and $1.0 million, respectively,
during the fourth quarter. ClearLab's operating results were negatively
impacted by significant product development expenses, net realizable value
adjustments to inventories and increased payroll expense due to additions to
the management team.
For the fiscal year ended December 28, 2002, net sales were
$168.6 million, compared to $169.0 million for the fiscal year ended
December 29, 2001. The net loss for fiscal 2002 was $4.0 million, or $.35 per
diluted common share, compared to net income of $9.9 million, or $.84 per
diluted common share, for fiscal 2001. The results for fiscal 2002 include a
charge of $7.8 million for purchased in-process research and development from
the July 24, 2002 acquisition of IGEL (subsequently renamed ClearLab), a
developer and contract manufacturer of contact lenses based in Singapore. The
Company did not record an income tax benefit on this charge. Absent the
purchased in-process research and development charge, net income was
$3.8 million, or $.33 per diluted common share for fiscal 2002.
The Company's balance sheet reflects the acquisition of IGEL (ClearLab)
during the third quarter of 2002. The transaction was accomplished as an
asset purchase and included certain net assets and the majority of the
business operations of IGEL. The assets acquired included principally the
long-term leasehold interests in the land and building where the manufacturing
facility is located, as well as equipment, inventories, and certain
intellectual property rights, including patents key to the operation of the
acquired business.
Subsequent to year end, on January 30, 2003, the Company finalized the
acquisition of certain assets and the assumption of certain liabilities of
Lens Express and Lens 1st and, concurrent with the closing, David Katzman
joined the Company's Board of Directors. In the next few weeks, the Company
expects to begin buying directly from Johnson & Johnson once the Company's new
procedures for Johnson & Johnson orders have been tested and approved. The
Company has implemented new procedures for Johnson & Johnson orders in the
Pacific time zone states and plans to phase in these procedures for other
regions as follows: Mountain time zone states -- February 28, Central time
zone states -- March 21, and Eastern time zone states -- April 11.
Jonathan Coon, Chief Executive Officer, said, "Fiscal 2002 brought some
significant changes for us. We acquired a contact lens developer and
manufacturer, entered an agreement to acquire certain assets and assume
certain liabilities of Lens Express and Lens 1st and reached an agreement with
Johnson & Johnson to become an authorized retailer. We are excited by the
opportunities these developments present for us in fiscal 2003 and beyond.
With all of these changes, we were pleased by the fourth quarter's sales
levels, which were solid despite a decline in advertising expenditures."
1-800 CONTACTS offers consumers an attractive alternative for obtaining
replacement contact lenses in terms of convenience, price and speed of
delivery. Through its easy-to-remember, toll-free telephone number,
"1-800 CONTACTS" (1-800-266-8228), and its Internet web site,
http://www.contacts.com, the Company sells all of the popular brands of contact
lenses. High volume, cost-efficient operations enable 1-800 CONTACTS to offer
products at competitive prices while delivering a high level of customer
service.
This news release contains forward-looking statements about the Company's
future business prospects. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in or implied by such forward-looking statements. Factors that may
cause future results to differ materially from the Company's current
expectations include, among others: general economic conditions, the health of
the contact lens industry, inventory acquisition and management, manufacturing
issues, integration of IGEL, integrations of Lens Express and Lens 1st,
exchange rate fluctuations, advertising spending and effectiveness,
unanticipated delays or difficulty certifying with Johnson & Johnson
requirements, and regulatory considerations.
Company News On Call: http://www.prnewswire.com
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
(in thousands, except per share amounts)
(unaudited)
Quarter Ended Year Ended
December 29, December 28, December 29, December 28,
2001 2002 2001 2002
NET SALES $37,647 $40,450 $169,036 $168,580
COST OF GOODS SOLD 24,449 28,825 103,093 118,181
Gross profit 13,198 11,625 65,943 50,399
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES:
Advertising expense 3,533 2,858 26,850 12,642
Legal and
professional fees 892 1,294 2,838 4,738
Purchased in-process
research and
development - - - 7,789
Other selling, general
and administrative
expenses 5,209 6,964 19,874 24,117
Total selling,
general and
administrative
expenses 9,634 11,116 49,562 49,286
INCOME FROM OPERATIONS 3,564 509 16,381 1,113
OTHER EXPENSE, net (44) (288) (252) (1,186)
INCOME (LOSS) BEFORE
PROVISION FOR
INCOME TAXES 3,520 221 16,129 (73)
PROVISION FOR INCOME
TAXES (1,367) (801) (6,265) (3,931)
NET INCOME (LOSS) $2,153 $(580) $9,864 $(4,004)
PER SHARE INFORMATION:
Basic net income (loss)
per common share $0.19 $(0.05) $0.85 $(0.35)
Diluted net income
(loss) per common
share $0.18 $(0.05) $0.84 $(0.35)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING:
Basic 11,574 11,384 11,574 11,417
Diluted 11,703 11,384 11,752 11,417
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
(unaudited)
ASSETS
December 29, December 28,
2001 2002
CURRENT ASSETS:
Cash and cash equivalents $36 $259
Accounts receivable - 655
Inventories 43,000 37,785
Prepaid income taxes - 769
Deferred income taxes 985 756
Other current assets 1,019 1,095
Total current assets 45,040 41,319
PROPERTY AND EQUIPMENT, net 3,309 12,862
DEFERRED INCOME TAXES 439 365
INTANGIBLE ASSETS, net 1,544 7,089
OTHER ASSETS 73 369
Total assets $50,405 $62,004
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $12,526 $5,770
Current portion of capital lease
obligations - 372
Current portion of long-term debt - 3,253
Income taxes payable 141 -
Accounts payable and accrued
liabilities 13,985 11,927
Total current liabilities 26,652 21,322
CAPITAL LEASE OBLIGATIONS, less
current portion - 250
LONG-TERM DEBT, less current portion - 17,365
LIABILITY RELATED TO CONTINGENT
CONSIDERATION - 5,470
STOCKHOLDERS' EQUITY 23,753 17,597
Total liabilities and
stockholders' equity $50,405 $62,004
SOURCE 1-800 CONTACTS, INC.
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Related links:
http://www.contacts.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/19990917/1800CONTACTS
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, 888-776-6555 or 212-782-2840
Company News On-Call:
http://www.prnewswire.com/comp/109239.html
CONTACT:
Jonathan C. Coon, Chief Executive Officer, or
Robert G. Hunter, Interim Chief Financial Officer,
investors@contacts.com, of 1-800 CONTACTS, INC., +1-801-924-9800
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