DRAPER, Utah, Aug. 16 /PRNewswire-FirstCall/ -- 1-800 CONTACTS, INC.
(Nasdaq: CTAC), today reported updated results for its second quarter ended
July 2, 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040107/LACONTACTSLOGO )
On August 2, 2005, the Company announced its results for the quarter ended
July 2, 2005. Subsequent to the announcement, the Company reassessed the
revenue recognition of a certain sales transaction in ClearLab, the Company's
international manufacturing business, based upon certain facts and
circumstances which included among others, the customer requesting the
restructure of an amount owed to the Company of approximately $0.5 million.
Upon further analysis, the Company determined that the transaction should have
been accounted for as a consignment arrangement in the fourth quarter of
fiscal 2004. Accordingly, the Company has reversed the sales transaction in
the quarter ended July 2, 2005. The effect of this subsequent adjustment on
the Company's results reported on August 2, 2005 is discussed below.
Net sales for the second quarter ended July 2, 2005 were adjusted by
approximately $0.5 million to $61.4 million. The Company is now reporting net
income of $41,000, or $0.0 per diluted common share, for the second quarter of
fiscal 2005, compared to $269,000, or $0.02 per diluted common share, reported
earlier.
The results for the Company's US retail business for the second quarter of
fiscal 2005 remain unchanged from what was reported earlier. Net sales and
operating loss for ClearLab for the second quarter of fiscal 2005 were
adjusted to $4.6 million and $(2.0) million, respectively, from net sales of
$5.1 million and an operating loss of $(1.7) million reported earlier.
Corresponding adjustments were recorded on the balance sheet to accounts
receivable and inventories.
Please refer to the Company's Form 10-Q for the quarterly period ended
July 2, 2005 for additional information relating to the Company's results.
About 1-800 CONTACTS, INC.
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 almost all of the popular brands of contact lenses. 1-800
CONTACTS offers products at competitive prices, while delivering a high level
of customer service.
ClearLab develops and manufactures a wide range of disposable contact lens
products and distributes these lenses in international markets. More
information about ClearLab can be found at its website, http://www.clearlab.com.
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, governmental regulations, integrations and growth of the Company's
acquisitions into its business, exchange rate fluctuations, advertising
spending and effectiveness, the length of time required for completion of the
Company's obligations under the Japanese license agreement, the ability to
complete the milestones under the Japanese license agreement, the amount of
license fees and royalties that will ultimately be received under the Japanese
license agreement, unanticipated costs and expected benefits associated with
the Japanese license agreement and the Company's supply agreements and related
arrangements, development of a nationwide retail optical store network,
research and development initiatives, prescription verification requirements
of The Fairness to Contact Lens Consumers Act, and other regulatory
considerations. Information on the Company's websites shall not be deemed to
be part of this press release.
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
(in thousands, except per share amounts)
(unaudited)
Quarter Ended Two Quarters Ended
July 3, July 2, July 3, July 2,
2004 2005 2004 2005
NET SALES $49,971 $61,365 $100,820 $121,648
COST OF GOODS SOLD 30,698 37,697 62,251 75,472
Gross profit 19,273 23,668 38,569 46,176
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES:
Advertising 7,224 7,120 16,039 13,658
Legal and professional 1,341 906 3,181 2,190
Research and development 443 811 1,335 1,866
Purchased in-process
research and development -- -- 83 --
Other selling, general &
administrative 10,766 12,304 20,648 23,821
Total selling, general &
administrative expenses 19,774 21,141 41,286 41,535
INCOME (LOSS) FROM OPERATIONS (501) 2,527 (2,717) 4,641
OTHER EXPENSE, net (699) (1,166) (1,055) (1,807)
INCOME (LOSS) BEFORE BENEFIT
(PROVISION) FOR INCOME TAXES (1,200) 1,361 (3,772) 2,834
BENEFIT (PROVISION) FOR INCOME
TAXES 52 (1,320) 418 (2,610)
NET INCOME (LOSS) $(1,148) $41 $(3,354) $224
PER SHARE INFORMATION:
Basic and diluted net income
(loss)
per common share $(0.09) $0.00 $(0.25) $0.02
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING:
Basic 13,286 13,312 13,237 13,307
Diluted 13,286 13,463 13,237 13,476
OTHER DATA:
Depreciation $987 $1,115 $1,876 $2,170
Amortization 943 1,050 1,730 2,121
Total depreciation and
amortization $1,930 $2,165 $3,606 $4,291
Depreciation and amortization
included in the following
captions:
Cost of goods sold $660 $711 $1,122 $1,403
Research and development 20 26 38 53
Other selling, general &
administrative 1,250 1,428 2,446 2,835
Total depreciation and
amortization $1,930 $2,165 $3,606 $4,291
SEGMENT INFORMATION:
Quarter Ended
July 3, 2004
U.S. International Eliminations Total
Net sales $48,742 $1,229 $-- $49,971
Gross profit (loss) 19,825 (552) -- 19,273
Research and development -- 443 -- 443
Other selling, general &
administrative 9,606 1,160 -- 10,766
Income (loss) from operations 1,835 (2,336) -- (501)
Quarter Ended
July 2, 2005
U.S. International Eliminations Total
Net sales $56,767 $4,601 $(3) $61,365
Gross profit (loss) 22,857 703 108 23,668
Research and development -- 811 -- 811
Other selling, general &
administrative 10,794 1,510 -- 12,304
Income (loss) from operations 4,389 (1,970) 108 2,527
Two Quarters Ended
July 3, 2004
U.S. International Eliminations Total
Net sales $98,193 $2,627 $-- $100,820
Gross profit (loss) 38,755 (186) -- 38,569
Research and development 536 799 -- 1,335
Purchased in-process
research and development -- 83 -- 83
Other selling, general &
administrative 18,575 2,073 -- 20,648
Income (loss) from operations 686 (3,403) -- (2,717)
Two Quarters Ended
July 2, 2005
U.S. International Eliminations Total
Net sales $113,133 $8,889 $(374) $121,648
Gross profit (loss) 45,044 1,306 (174) 46,176
Research and development -- 1,866 -- 1,866
Purchased in-process
research and development -- -- -- --
Other selling, general &
administrative 20,872 2,949 -- 23,821
Income (loss) from operations 8,792 (3,977) (174) 4,641
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
(unaudited)
ASSETS
January 1, July 2,
2005 2005
CURRENT ASSETS:
Cash $3,105 $646
Accounts receivable, net 3,178 3,965
Inventories, net 22,206 21,592
Deferred income taxes 1,328 1,535
Other current assets 3,944 5,397
Total current assets 33,761 33,135
PROPERTY, PLANT AND EQUIPMENT, net 20,618 20,993
DEFERRED INCOME TAXES 720 817
GOODWILL 34,320 33,975
DEFINITE-LIVED INTANGIBLE ASSETS,
net 17,897 15,976
OTHER ASSETS 1,669 3,031
Total assets $108,985 $107,927
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $1,632 $1,599
Current portion of capital lease
obligations 47 44
Accounts payable and accrued
liabilities 22,125 25,556
Total current liabilities 23,804 27,199
LONG-TERM LIABILITIES:
Line of credit 14,404 13,493
Long-term debt, net of current
portion 8,170 7,160
Capital lease obligations, net of
current portion 98 75
Deferred income tax liabilities 1,458 545
Other long-term liabilities 2,547 778
Total long-term liabilities 26,677 22,051
STOCKHOLDERS' EQUITY 58,504 58,677
Total liabilities and
stockholders' equity $108,985 $107,927
SOURCE 1-800 CONTACTS, INC.
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Related links:
http://www.contacts.com
http://www.clearlab.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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