DRAPER, Utah, May 6 /PRNewswire-FirstCall/ -- 1-800 CONTACTS, INC.
(Nasdaq: CTAC), today reported results for its first fiscal quarter ended
March 29, 2003.
(NewsCom: http://www.newscom.com/cgi-bin/prnh/19990917/1800CONTACTS )
Net sales for the first quarter ended March 29, 2003 were $46.7 million,
compared to $41.6 million for the same period last year. The Company reported
a net loss for the first quarter of $0.5 million, or $.04 per diluted common
share, compared to net income of $1.9 million, or $.17 per diluted common
share for the first quarter of 2002. For the first quarter ended March 29,
2003, net sales and operating income from the Company's operations, exclusive
of the Company's Singapore operations (ClearLab), were $45.2 million and
$0.6 million, respectively. Net sales and operating loss for ClearLab were
$1.5 million and $0.4 million, respectively, during the first quarter. The
Company's gross margin improved to 34.5% for the first quarter of 2003 from
30.5 % for the comparable quarter of the prior year.
During the first quarter of 2003, the Company expensed approximately
$1.8 million for research and development, $0.3 million for amortization
related to the acquired Lens Express and Lens 1st customer database intangible
assets, and $0.3 million for integration costs related to the acquisition of
Lens Express and Lens 1st.
The Company's financial statements reflect the acquisition of Lens Express
and Lens 1st during the first quarter of 2003. The transaction was
accomplished as an asset purchase and included certain assets and the
assumption of certain liabilities. The assets acquired included customer
databases, customer information, web sites and Internet addresses or domain
names, telephone numbers, certain specified contracts and intellectual
property rights. In addition, acquired assets included certain property,
equipment, inventories, receivables and prepaid expenses. With the exception
of specifically identified liabilities, the Company did not assume the
liabilities of the Seller. The liabilities assumed by the Company included
certain of the Seller's identified contracts, accounts payable, accrued
liabilities, certain customer program obligations and severance obligations as
of January 30, 2003. The consideration paid included approximately $6.9
million in cash (including $0.4 million in transaction costs), approximately
$4.1 million in assumed liabilities and 900,000 shares of restricted common
stock with a fair market value of approximately $19.9 million. The Company
recorded goodwill of approximately $22.2 million and definite-lived intangible
assets of approximately $5.1 million in connection with the preliminary
allocation of the purchase consideration.
Jonathan Coon, Chief Executive Officer, said, "During the first quarter we
began buying directly from Johnson & Johnson. Our gross margin improved this
quarter and should continue to increase as a result of the Johnson & Johnson
supply agreement. We look forward to building upon the recent improvements in
our business and further strengthening our position as the leading mail order
and internet supplier of contact lenses."
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 of ClearLab, Lens Express and Lens 1st, exchange rate
fluctuations, advertising spending and effectiveness, unanticipated costs and
unrealized benefits associated with the Company's supply agreement with
Johnson & Johnson, and regulatory considerations.
Company News On Call: http://www.prnewswire.com or fax 800-758-5804,
ext. 109239.
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
(in thousands, except per share amounts)
(unaudited)
Quarter Ended
March 30, March 29,
2002 2003
NET SALES $41,581 $46,662
COST OF GOODS SOLD 28,894 30,560
Gross profit 12,687 16,102
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES:
Advertising expense 2,719 3,794
Legal and professional fees 1,260 1,621
Research and development expenses -- 1,803
Other selling, general and
administrative expenses 5,391 8,649
Total selling, general and
administrative expenses 9,370 15,867
INCOME FROM OPERATIONS 3,317 235
OTHER EXPENSE, net (130) (500)
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 3,187 (265)
PROVISION FOR INCOME TAXES (1,247) (223)
NET INCOME (LOSS) $1,940 $(488)
PER SHARE INFORMATION:
Basic net income (loss) per common share $0.17 $(0.04)
Diluted net income (loss) per common share $0.17 $(0.04)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING:
Basic 11,521 11,985
Diluted 11,622 11,985
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
(unaudited)
ASSETS
December 28, March 29,
2002 2003
CURRENT ASSETS:
Cash and cash equivalents $259 $554
Accounts receivable 655 904
Inventories, net 37,785 34,895
Prepaid income taxes 769 644
Deferred income taxes 756 773
Other current assets 1,095 1,700
Total current assets 41,319 39,470
PROPERTY AND EQUIPMENT, net 12,862 13,204
DEFERRED INCOME TAXES 365 520
GOODWILL -- 22,196
INTANGIBLE ASSETS, net 7,089 11,435
OTHER ASSETS 369 963
Total assets $62,004 $87,788
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $5,770 $8,534
Current portion of long-term debt 2,853 2,829
Current portion of capital lease obligations 372 329
Accounts payable and accrued liabilities 12,327 16,286
Total current liabilities 21,322 27,978
LONG-TERM DEBT, less current portion 17,365 16,464
CAPITAL LEASE OBLIGATIONS, less current portion 250 172
LIABILITY RELATED TO CONTINGENT CONSIDERATION 5,470 5,357
STOCKHOLDERS' EQUITY 17,597 37,817
Total liabilities and
stockholders' equity $62,004 $87,788
SOURCE 1-800 CONTACTS, INC.
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Related links:
http://www.1800contacts.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/19990917/1800CONTACTS
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, +1-888-776-6555 or +1-212-782-2840
CONTACT:
Jonathan C. Coon, Chief Executive Officer,
+1-801-924-9800, or Robert G. Hunter, Interim Chief Financial
Officer, +1-801-924-9800, both of 1-800 CONTACTS, INC.,
investors@contacts.com
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