DRAPER, Utah, Feb. 24 /PRNewswire-FirstCall/ -- 1-800 CONTACTS, INC.
(Nasdaq: CTAC), today reported results for its fourth quarter and fiscal year
2003 ended January 3, 2004.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040107/LACONTACTSLOGO )
Net sales for the fourth quarter ended January 3, 2004 were $45.9 million,
compared to $40.4 million for the comparable quarter of the prior year, a
13.4% increase. For the fourth quarter of fiscal 2003, the Company reported a
net loss of $(0.9) million, or $(0.07) per diluted common share, compared to a
net loss of $(0.6) million, or $(0.05) per diluted common share for the fourth
quarter of fiscal 2002. The Company's fiscal year is a 52 or 53 week period
ending on the Saturday nearest to December 31. Fiscal 2003 was a 53-week
year. The fourth quarter of fiscal 2003 consisted of 14 weeks compared to
13 weeks for the fourth quarter of fiscal 2002.
"We have just finished a productive year that saw passage of landmark
legislation that creates a national standard and a more level playing field,"
said Jonathan Coon, Chief Executive Officer. "We have greatly improved and
enhanced our relationships with key suppliers -- negotiating improved pricing
and implementing co-operative marketing programs, such as rebates designed for
our business model. We have returned to television advertising to rebuild
brand awareness and position the company for growth. We are expanding our
manufacturing capabilities to add international revenue potential. Finally,
we have strengthened our management team to capitalize on the opportunities we
see ahead."
For the fourth quarter ended January 3, 2004, net sales and operating loss
exclusive of the Company's Singapore operations (ClearLab) were $44.6 million
and $(0.3) million, respectively. For the fourth quarter ended December 28,
2002, net sales and operating income exclusive of ClearLab's operations were
$39.3 million and $1.5 million, respectively. For the fourth quarter of
fiscal 2003, net sales and operating loss for ClearLab, excluding intercompany
sales, were $1.3 million and $(0.5) million, respectively, compared to net
sales and operating loss of $1.1 million and $(1.0) million, respectively, for
the comparable quarter of the prior year. No income tax benefit was recorded
on the net loss from ClearLab's operations due to the uncertainty of
realization of the related deferred income tax assets in Singapore.
The Company's consolidated gross margin improved to 38.4% for the fourth
quarter of 2003 from 28.7% for the comparable quarter of the prior year.
During the fourth quarter of 2003, the Company expensed $1.8 million for
research and development. The majority was for payments to VisionTec, an
innovative developer and manufacturer of contact lenses that the Company
acquired today, to fund research and development activities on behalf of the
Company. The Company also incurred $0.5 million in incremental amortization
related to the acquired Lens Express and Lens 1st customer database
definite-lived intangible assets and $0.4 million relating to ongoing
operations of facilities acquired from Lens 1st.
For the fiscal year ended January 3, 2004, net sales were $187.3 million,
compared to $168.6 million for the fiscal year ended December 28, 2002. The
net loss for fiscal 2003 was $(1.4) million, or $(0.11) per diluted common
share, compared to a net loss of $(4.0) million, or $(0.35) per diluted common
share, for fiscal 2002. The results for fiscal 2003 include approximately
$4.6 million for research and development (the majority of which was for
payments to VisionTec to fund research and development activities on behalf of
the Company), $1.8 million for amortization of the acquired Lens Express and
Lens 1st customer database definite-lived intangible assets, $0.3 million for
integration costs related to the acquisition of Lens Express and Lens 1st,
$1.7 million relating to ongoing operations of facilities acquired from Lens
1st, and non-cash compensation expense of $0.7 million relating to the grant
of shares of 1-800 CONTACTS' common stock owned by ClearLab's chief technology
officer to key employees of ClearLab. The results for fiscal 2002 include a
charge of $7.8 million for purchased in-process research and development from
the July 2002 acquisition of ClearLab. The Company did not record a tax
benefit on this charge. Absent the purchased in-process research and
development charge, net income was $3.8 million, or $0.33 per diluted common
share, for fiscal 2002.
1-800 CONTACTS has completed the acquisition of VisionTec, an innovative
developer and manufacturer of contact lenses based in the United Kingdom. The
transaction was accomplished as a purchase of 100% of the stock of VisionTec.
The consideration paid includes approximately $3.2 million in cash and
155,084 shares of 1-800 CONTACTS' common stock. In addition, the Company has
agreed to pay a per unit royalty to the former shareholders of VisionTec for a
period of ten years. 1-800 CONTACTS financed the cash portion of this
acquisition with its revolving credit facility from its current lender.
Brian Bethers, President and Chief Financial Officer, commented,
"VisionTec, is an innovative contact lens manufacturer that has developed a
unique method for low cost production of daily disposable contact lenses. We
initially began funding research and development in the company in March 2003
and have been extremely impressed by the milestones that VisionTec has
achieved since that date. Daily disposable contacts are one of the highest
growth segments of the international contact lens market. We believe this
acquisition gives us an immediate entry into the daily lens market and will
enhance our ability to grow the ClearLab business by offering a more
attractive array of products to wholesale customers. VisionTec will have
products available in the near future, and we expect the company to grow
rapidly."
"Several of the initiatives we have pursued over the past several years,
such as passage of the Fairness to Contact Lens Consumers Act and our supplier
agreements, required significant costs to accomplish," said Jonathan Coon.
"We have consistently invested in key initiatives that will build our business
over the long term. We will be investing this year in advertising to build
our brand and US retail business and in manufacturing capability to build our
international wholesale business."
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. 1-800 CONTACTS offers 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
operations, integrations and growth of VisionTec, ClearLab, Lens Express and
Lens 1st into the Company's operations, exchange rate fluctuations,
advertising spending and effectiveness, unanticipated costs and unrealized
benefits associated with the Company's agreements with Johnson & Johnson
Vision Care and CIBAVision, the Company's doctor referral program with Cole
National, research and development initiatives, prescription verification
requirements of The Fairness to Contact Lens Consumers Act, and other
regulatory considerations.
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
(in thousands, except per share amounts)
(unaudited)
Quarter Ended Year Ended
December 28, January 3, December 28,
January 3,
2002 2004 2002 2004
NET SALES $40,450 $45,887 $168,580 $187,303
COST OF GOODS SOLD 28,825 28,244 118,181 116,873
Gross profit 11,625 17,643 50,399 70,430
OPERATING EXPENSES:
Advertising 2,858 5,640 12,642 20,191
Legal and professional 1,294 1,375 4,738 6,352
Research and development 247 1,848 247 4,625
Purchased in-process
research and development -- -- 7,789 --
Other operating expenses 6,717 9,546 23,870 37,615
Total operating
expenses 11,116 18,409 49,286 68,783
INCOME (LOSS) FROM
OPERATIONS 509 (766) 1,113 1,647
OTHER EXPENSE, net (288) (183) (1,186) (1,167)
INCOME (LOSS) BEFORE
PROVISION
FOR INCOME TAXES 221 (949) (73) 480
BENEFIT (PROVISION) FOR
INCOME TAXES (801) 67 (3,931) (1,918)
NET LOSS $(580) $(882) $(4,004) $(1,438)
PER SHARE INFORMATION:
Basic and diluted net
loss per common share $(0.05) $(0.07) $(0.35) $(0.11)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING:
Basic and diluted 11,384 13,109 11,417 12,696
OTHER DATA:
Depreciation and
amortization included
in the following
captions:
Cost of goods sold $315 $344 $520 $1,258
Research and
development -- 9 -- 17
Other operating
expenses 675 1,407 2,067 5,102
Total depreciation
and amortization $990 $1,760 $2,587 $6,377
SEGMENT INFORMATION:
Quarter Ended
December 28, 2002 January 3, 2004
U.S. Singapore Total U.S. Singapore Total
Net sales $39,296 $1,154 $40,450 $44,576 $1,311 $45,887
Gross profit
(loss) 12,116 (491) 11,625 17,194 449 17,643
Income (loss)
from
operations 1,554 (1,045) 509 (287) (479) (766)
Year Ended
December 28, 2002 January 3, 2004
U.S. Singapore Total U.S. Singapore Total
Net sales $166,511 $2,069 $168,580 $181,331 $5,972 $187,303
Gross profit
(loss) 50,678 (279) 50,399 68,178 2,252 70,430
Purchased
in-process
research
and
development -- 7,789 7,789 -- -- --
Income (loss)
from
operations 10,053 (8,940) 1,113 3,701 (2,054) 1,647
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
(unaudited)
ASSETS
December 28, January 3,
2002 2004
CURRENT ASSETS:
Cash $259 $1,075
Accounts receivable 655 944
Inventories, net 37,785 24,127
Prepaid income taxes 769 797
Deferred income taxes 756 548
Other current assets 1,095 1,752
Total current assets 41,319 29,243
PROPERTY, PLANT AND EQUIPMENT, net 12,862 13,183
DEFERRED INCOME TAXES, net of current portion 365 710
GOODWILL -- 33,853
DEFINITE-LIVED INTANGIBLE ASSETS, net 7,089 9,207
OTHER ASSETS 369 735
Total assets $62,004 $86,931
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $5,770 $--
Current portion of long-term debt 2,853 3,381
Current portion of capital lease obligations 372 191
Accounts payable and accrued liabilities 12,327 13,405
Total current liabilities 21,322 16,977
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 17,365 14,683
Capital lease obligations, net of current
portion 250 64
Liability related to contingent consideration 5,470 --
Total long-term liabilities 23,085 14,747
STOCKHOLDERS' EQUITY 17,597 55,207
Total liabilities and stockholders' equity $62,004 $86,931
SOURCE 1-800 CONTACTS, INC.
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Related links:
http://www.contacts.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20040107/LACONTACTSLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Brian W. Bethers, President and CFO, or
Robert G. Hunter, Vice President, Finance, both of 1-800
CONTACTS, INC., +1-801-924-9800, investors@contacts.com
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