ROCM Rochester Medical Corp. (MM)

STEWARTVILLE, Minn., Nov. 6 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (NASDAQ:ROCM) today announced operating results for its fourth quarter and year ended September 30, 2008. The Company reported record sales of $9,512,000 for the current quarter compared to $8,437,000 for the fourth quarter of last year. The Company also reported quarterly net income of $342,000 or $.03 per diluted share compared to $733,000 or $.06 per diluted share for the fourth quarter of last year. The approximate 13% increase in sales (16% on a constant currency basis) resulted from an 18% increase in Rochester Medical Branded Sales (23% on a constant currency basis), and a 4% increase in Private Label Sales (4% 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. Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter is $789,000 or $.06 per diluted share compared to Non-GAAP Net Income of $1,211,000 or $.10 per diluted share for the fourth quarter of last year. The decrease for the current quarter is primarily attributable to increased strategic investment in Sales and Marketing Programs. For the fiscal year ended September 30, 2008, the Company reported record sales of $35,192,000 compared to sales of $32,663,000 for the previous year. It reported net income for the year of $759,000 or $.06 per diluted share compared to a net income of $34,050,000 or $2.77 per diluted share for the previous year. The approximate 8% annual increase in sales (8% on a constant currency basis) resulted from a 24% annual increase in Rochester Medical Branded sales (24% increase on a constant currency basis) offset by a 16% decrease in Private Label Sales (16% decrease on a constant currency basis). Non-GAAP Net Income for the current year is $2,776,000 or $.22 per diluted share compared to Non-GAAP net income of $4,966,000 or $.40 per diluted share for the previous year. The decrease for the current year is primarily attributable to the increased strategic investment in Sales and Marketing Programs. Due to significant swings in the currency exchange rates, the Company is now also showing sales levels on a constant currency basis. In the fourth quarter the dollar strengthened significantly versus the pound sterling, thus affecting Branded sales growth levels in actual dollars. Commenting on today's announcement, Rochester Medical's CEO and President Anthony J. Conway said, "We had an excellent quarter and excellent year, and we look forward to building on that success in the United States, the United Kingdom, and other global markets. Our planned investments in Sales and Marketing are showing strong results. We are very pleased with the increasing interest in our Infection Control Catheters and with the solid growth in our Intermittent Catheter Sales. As we have previously stated, we look forward to exciting new product introductions this year which will further boost our reputation as a leader in the industry and also help boost our sales. We expect 2009 to be a good year for Rochester Medical." 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. Non-GAAP Net Income is not a measure 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 is not comparable to information provided by other companies. Non-GAAP Net Income has limitations as an analytical tool 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 are presented at the end of this press release. This press release contains forward-looking statements that involve risks and uncertainties, including the uncertainty of estimated revenues and profits, as well as 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, 2007. The Company will hold a quarterly conference call this afternoon to discuss its earnings report. The call will begin at 4:00 p.m. Central Daylight Time (5:00 p.m. eastern time).This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at http://www.rocm.com/. To listen live to the conference call via telephone, call: Domestic: 888.713.4214, password 27129424 International: 617.213.4866, password 27129424 Pre Registration: https://www.theconferencingservice.com/prereg/key.process?key=PKQEEFANR Replay will be available for seven days at http://www.rocm.com/ or via telephone at: Domestic: 888-286-8010, password 85160784 International: 617-801-6888, password 85160784 The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://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 (http://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(R) brand and under existing private label arrangements. For further information, please contact Anthony J. Conway, President and Chief Executive 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 and Twelve months ended September 30, 2008 (unaudited) (unaudited) Three months ended Twelve months ended September 30, September 30, 2008 2007 2008 2007 GAAP Net Income as Reported $342,000 $733,000 $759,000 $34,050,000 Diluted EPS as Reported $0.03 $0.06 $0.06 $2.77 Adjustments for non- recurring unusual items: Settlement income after taxes (1) - - - (31,305,000) Deferred revenue (2) - - - (564,000) Subtotal - - - (31,869,000) Adjustments for recurring non-cash expenses: Intangible Amortization (3) 164,000 167,000 653,000 668,000 FAS 123R Compensation Expense (4) 283,000 311,000 1,364,000 2,117,000 Subtotal 447,000 478,000 2,017,000 2,785,000 Non-GAAP Net Income $789,000 $1,211,000 $2,776,000 $4,966,000 Non-GAAP Diluted EPS $0.06 $0.10 $0.22 $0.40 Weighted Average Shares - Diluted 12,587,427 12,582,793 12,577,337 12,272,172 (1) Settlement income received November 20, 2006 from Premier, Inc. of $5,155,000 and December 14, 2006 from CR Bard, Inc. of $33,450,000 after taxes of $7,300,000. This adjustment reduces net income for amounts received net of taxes paid in connection with one-time settlement of certain litigation. These amounts were recorded in Other Income in the Statement of Operations for the fiscal year ended September 30, 2007. (2) Deferred revenue from a $1,000,000 fee paid by Coloplast A/S in June 2002 for marketing rights to our antibacterial Release NF foley catheter. These rights with Coloplast A/S were cancelled by mutual agreement in March 2007, thus accelerating the recognition of the remaining amount as all conditions for revenue recognition have now been met. Also includes a $200,000 fee paid by Hollister for marketing rights to our hydorphilic intermittent catheter in September 2003. The fee paid by Hollister was fully recognized in December 2006. This adjustment reduces net income related to the realization of certain one-time revenue from marketing rights. The amounts were recorded in net sales in the Statement of Operations. (3) 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 and twelve months ended September 30, 2008 and 2007 related to certain intangibles. (4) Compensation expense mandated by SFAS 123R. This adjustment adds back the compensation expense recorded when stock options are granted to employees and directors for the three and twelve months ended September 30, 2008 and 2007. Condensed Balance Sheets (unaudited) September 30, September 30, 2008 2007 Assets Current Assets Cash and equivalents $8,508,000 $6,671,356 Marketable securities 28,493,648 30,465,244 Accounts receivable 6,009,023 5,527,518 Inventories 8,745,873 7,698,889 Prepaid expenses and other assets 1,110,291 6,480 Deferred income tax asset 1,143,931 876,032 Total current assets 54,010,766 51,245,519 Property and equipment, net 9,883,329 9,679,035 Deferred income tax asset 831,299 571,721 Patents, net 227,358 257,353 Intangible assets, net 6,860,213 7,821,562 Goodwill 5,169,661 5,920,255 Total Assets $76,982,626 $75,495,445 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $2,127,470 $1,091,874 Accrued expenses 1,152,118 1,978,937 Short-term debt 1,958,828 1,849,463 Total current liabilities 5,238,416 4,920,274 Long-term liabilities Other long-term liabilities 239,496 - Long-term debt 3,806,185 6,066,246 Total long term liabilities 4,045,681 6,066,246 Stockholders' equity 67,698,529 64,508,925 Total Liabilities and Stockholder Equity $76,982,626 $75,495,445 Summary Statements Of Operations (unaudited) (unaudited) Three months ended Twelve months ended Sept 30, Sept 30, 2008 2007 2008 2007 Sales $9,512,191 $8,437,378 $35,191,949 $32,663,087 Cost of sales 4,889,789 4,044,975 18,483,985 15,619,178 Gross profit 4,622,402 4,392,403 16,707,964 17,043,909 Gross profit % 49% 52% 47% 52% Costs and expense: Marketing and selling 2,544,014 1,926,222 9,498,596 6,490,497 Research and development 308,913 232,725 1,044,205 943,225 General and administrative 1,447,707 1,540,034 6,658,002 6,742,665 Total operating expenses 4,300,634 3,698,981 17,200,803 14,176,387 Income (loss) from operations 321,768 693,422 (492,839) 2,867,522 Other income (expense) Interest income 197,997 380,656 1,239,689 1,288,603 Interest expense (82,674) (110,848) (477,560) (513,296) Other income (expense) (88,642) 250,000 (88,642) 38,855,000 Net income (loss) before income taxes $348,449 $1,213,230 $180,648 $42,497,829 Income tax expense(benefit) 6,291 479,747 (578,455) 8,447,649 Net income 342,158 733,483 759,103 34,050,180 Earnings per common share - Basic $0.03 $0.06 $0.06 $2.97 Earnings per common share - Diluted $0.03 $0.06 $0.06 $2.77 Weighted Average Shares: Basic 11,878,956 11,680,364 11,815,904 11,449,646 Weighted Average Shares: Diluted 12,587,427 12,582,793 12,577,337 12,272,172 DATASOURCE: Rochester Medical Corporation CONTACT: Anthony J. Conway, President and Chief Executive Officer of Rochester Medical Corporation, +1-507-533-9600 Web site: http://www.rocm.com/

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