Rochester Medical Reports First Quarter Results

Jan 26, 2010, 16:00 ET from Rochester Medical Corporation

STEWARTVILLE, Minn., Jan. 26 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (Nasdaq: ROCM) today announced operating results for its first quarter ended December 31, 2009.

The Company reported record sales of $10,232,000 for the current quarter compared to $8,436,000 for the first quarter of last year.  It also reported net loss of $169,000 or ($.01) per diluted share compared to net income of $54,000 or $.00 per diluted share for the first quarter of last year.

The approximate 21% increase in sales (20% on a constant currency basis) resulted from a 21% increase in Rochester Medical Branded Sales (19% on a constant currency basis), and a 22% increase in Private Label Sales (22% on a constant currency basis). Constant currency basis assumes current exchange rates for all periods in order to exclude the impact of foreign exchange variations.  In the first quarter of 2010 the U.S. dollar was somewhat weaker versus the pound sterling thus having a small positive effect on Rochester Medical Branded Sales levels in translated U.S. dollars given the significant volume of branded sales in the United Kingdom.

Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter was $148,000 or $.01 per diluted share compared to Non-GAAP Net Income of $358,000 or $.03 per diluted share for the first quarter of last year. The decrease for the current quarter is primarily attributable to increased investment in sales and marketing.

Commenting on today's announcement Rochester Medical CEO and President Anthony J. Conway said, "We had a very solid quarter.  The overall sales growth is strong, and I am particularly pleased that combined sales of Rochester Medical Branded products in the U.S. and U.K. markets grew at a 25% pace, and combined Intermittent Catheter sales in this market increased 61% over last year.  These are the two markets in which we have our own direct sales force.  Also noteworthy is the fact that U.S. Foley catheter sales for the first quarter increased 73% over the first quarter of last year.  The new StrataSI™ and StrataNF™ Foley Catheters are being very well received for their latex-free comfort and anti-infection properties."

He added "We have just rolled out our FemSoft® Insert Introduction in the U.K., and we will be launching significant Direct to Consumer FemSoft pilot programs in North Carolina and Southern Florida in February.  This campaign will include television and print advertising and clinician based education efforts sponsored both by Rochester Medical and Homecare Distributors/Providers.  In addition to our other sales and marketing activities we are investing significantly in the FemSoft opportunity while maintaining our solid cash position."

Conway concluded, "We are off to a good start for fiscal 2010, and we expect to have a good year."

Rochester Medical has provided Non-GAAP Net Income in addition to earnings calculated in accordance with generally accepted accounting principles (GAAP) because management believes Non-GAAP Net Income provides a more consistent basis for comparisons that are not influenced by certain charges and non-cash expenses and are therefore helpful in understanding Rochester Medical's underlying operating results.  Similarly, constant currency represents reported sales with the cost/benefit of currency movements removed.  Management uses the measure to understand the growth of the business on a constant dollar basis, as fluctuations in exchange rates can distort the underlying growth of the business both positively and negatively.  While we recognize that foreign exchange volatility is a reality for a global company, we routinely review our company performance on a constant dollar basis, and we believe this also allows our shareholders to understand better our Company's growth trends.

Non-GAAP Net Income and constant currency are not measures of financial performance under GAAP, and should not be considered an alternative to net income or any other measure of performance or liquidity under GAAP. Non-GAAP Net Income and constant currency are not comparable to information provided by other companies. Non-GAAP Net Income and constant currency have limitations as analytical tools and should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP.  Reconciliations of Net Income and Non-GAAP Net Income, and reconciliations of sales under GAAP and sales on a constant currency basis, are presented at the end of this press release.

This press release contains "forward-looking statements" that are based on currently available information, operating plans and management's expectations about future events and trends.  They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements, including the uncertainty of estimated revenues and profits, the uncertainty of current domestic and international economic conditions that could adversely affect the level of demand for the Company's products and increased volatility in foreign exchange rates, the uncertainty of market acceptance of new product introductions, the uncertainty of gaining new strategic relationships or locating and capitalizing on strategic opportunities, the uncertainty of timing of private label sales revenues (particularly international customers), FDA and other regulatory review and response times, and other risk factors listed from time to time in the Company's SEC reports and filings, including, without limitation, the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended September 30, 2009 and reports on Forms 10-Q and 8-K.  Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.  The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company will hold a quarterly conference call to discuss its earnings report.  The call will begin at 3:30 p.m. central time (4:30 p.m. eastern time).

This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at www.rocm.com.  To listen live to the conference call via telephone, call:

Domestic:

888.680.0890

International:

617.213.4857

Pass code:

42439180

Pre Registration:

https://www.theconferencingservice.com/prereg/key.process?key=PQHYHBLEU

Replay will be available for seven days at www.rocm.com or via telephone at:

Domestic:

888-286-8010

International:

617-801-6888

Pass code:

11347827

Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents.  Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and devices for urological and continence care applications.  The Company markets under its own Rochester Medical® brand and under existing private label arrangements.

For further information, please contact Anthony J. Conway, President and Chief Executive Officer or David A. Jonas, Chief Financial Officer of Rochester Medical Corporation at (507) 533-9600.  More information about Rochester Medical is available on its website at http://www.rocm.com.

ROCHESTER MEDICAL CORPORATION

Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income

For the Three months ended

December 31, 2009

(unaudited)

Three months ended

December 31,

2009

2008

GAAP Net Income (Loss) as Reported

$              (169,000)

$                  54,000 

Diluted EPS as Reported

$                    (0.01)

$                      0.00 

Adjustments for recurring non-cash expenses:

  Intangible Amortization (1)

129,000 

129,000 

  ASC 718 Compensation Expense (2)

188,000 

175,000 

Subtotal

317,000 

304,000 

Non-GAAP Net Income

$                148,000 

$                358,000 

Non-GAAP Diluted EPS

$                      0.01 

$                      0.03 

Weighted Average Shares - Diluted

12,669,675 

12,697,645 

(1) Amortization of the intangibles acquired in June 2006 asset acquisition from Coloplast AS and Mentor Corporation.  Management believes these assets are appreciating.  This adjustment adds back amortization expense for the three months ended December 31, 2009 and 2008 related to certain intangibles. The gross amount of amortization is $163,000 per quarter after taxes of $34,000 for a net amount of $129,000.

(2) Compensation expense mandated by ASC 718.  This adjustment adds back the compensation expense recorded when stock options are granted to employees and directors for the three months ended December 31, 2009 and 2008.  The gross amount of compensation expense for the three months ended December 31, 2009 and 2008 is $285,000 net of taxes of $97,000 and $90,000 for net amounts of $188,000 and $175,000 respectively.

Condensed Balance Sheets

(unaudited)

December 31,

September 30,

2009

2009

Assets

Current Assets

Cash and equivalents

$             5,816,151

$             6,365,584

Marketable securities

30,455,507

29,896,740

Accounts receivable

6,517,646

6,418,656

Inventories

9,253,262

9,710,234

Prepaid expenses and other assets

1,472,710

1,076,183

Deferred income tax asset

1,140,375

1,153,964

Total current assets

54,655,651

54,621,361

Property and equipment, net

9,783,381

9,683,808

Deferred income tax asset

839,936

768,874

Patents, net

227,092

224,815

Intangible assets, net

5,874,847

6,017,944

Goodwill

4,691,458

4,648,165

Total Assets

$           76,072,365

$           75,964,967

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$             1,699,206

$             1,755,472

Accrued expenses

1,101,571

1,527,352

Short-term debt

3,066,201

2,786,622

Total current liabilities

5,866,978

6,069,446

Long-term liabilities

Other long term liabilities

62,424

55,889

Long-term debt

1,040,156

1,019,735

Total long term liabilities

1,102,580

1,075,624

Stockholders' equity

69,102,807

68,819,897

Total Liabilities and Stockholder Equity

$           76,072,365

$           75,964,967

Summary Statements Of Operations

(unaudited)

Three months ended

December 31,

2009

2008

Sales

$      10,231,812   

$        8,436,084   

Cost of sales

5,618,704   

4,511,171   

Gross profit

4,613,108   

3,924,913   

Gross profit %

45.1%

46.5%

Costs and expense:

Marketing and selling

2,777,317   

2,566,262   

Research and development

443,028   

317,660   

General and administrative

1,690,747   

1,365,757   

Total operating expenses

4,911,092   

4,249,679   

Loss from operations

(297,984)  

(324,766)  

Other income (expense)

Interest income

29,009   

167,272   

Interest expense

(41,118)  

(83,774)  

Other income

-   

200,442   

Net loss before income taxes

(310,093)  

(40,826)  

Income tax benefit

(140,935)  

(94,451)  

Net income (loss)

$         (169,158)  

$             53,625   

Earnings (loss) per common share - Basic

$               (0.01)  

$                 0.00   

Earnings (loss) per common share - Diluted

$               (0.01)  

$                 0.00   

Weighted Average Shares:

Basic

12,191,590   

11,980,875   

Weighted Average Shares:

Diluted

12,191,590   

12,697,645   

SOURCE Rochester Medical Corporation



RELATED LINKS

http://www.rocm.com