CLOSURE Medical Reports Fourth Quarter and Fiscal Year 2004 Results
RALEIGH, N.C., Feb. 23 /PRNewswire-FirstCall/ -- CLOSURE Medical
Corporation (NASDAQ:CLSR), a global leader in biomaterial-based
medical devices, today announced results for the fourth quarter and
year-ended December 31, 2004. Net income for the fourth quarter of
2004 was $2.8 million, or $0.19 per share, compared to prior-year
net income of $2.3 million, or $0.15 per share. Net income for the
fourth quarter included a $670,000 income tax benefit partially
offset by a pre-tax severance charge of $325,000. Fourth-quarter
revenues were $9.1 million compared to $9.5 million during the same
period of 2003. The year-over-year decline in revenues for the
quarter was primarily due to lower sales of the BAND-AID(R) Brand
Liquid Bandage in the second half of the year as a result of
competition in the U.S. liquid adhesive bandage market. In
addition, DERMABOND products experienced lower-than-normal growth
as the Company completed a majority of the inventory reduction
initiatives of its marketing partner, ETHICON, Inc., a Johnson
& Johnson Company. Full-year 2004 net income was $9.8 million,
or $0.65 per share, compared to $7.8 million, or $0.54 per share,
for the comparable 2003 period. Full-year 2004 revenues increased
15 percent to $40.1 million compared to $35.0 million in the 2003
period. DERMABOND adhesive revenues grew by approximately 15
percent during 2004 and contributed over 75 percent of total
revenues. The DERMABOND growth was supported by the adoption and
continued penetration of our premium-priced ProPen product.
BAND-AID(R) Brand Liquid Bandage revenues grew approximately 20
percent over the prior year primarily due to the introduction and
continued promotion of the product in international markets, and
the U.S. product launch of the new Skin Crack Gel line extension
during January 2004. Daniel A. Pelak, President and CEO, commented,
"We made major strides during 2004. The introduction of ProPen
during the year has created a solid growth platform for our
DERMABOND product line. Also, the recent European approval of our
OMNEX(TM) Surgical Sealant is a major milestone for the Company
that we believe will open new markets for many years in the future.
Although competitive pressures in our consumer business dampened
our top-line growth during 2004, we are pleased with the continued
strength of our earnings growth." Pelak continued, "Our
organization is well positioned for the future. We feel the
opportunities and benefits that our OMNEX product will bring
patients and surgeons worldwide are excellent." Gross margins for
the fourth quarter and year-ended December 31, 2004 were 78 and 75
percent, respectively, compared to 76 percent for each of the
comparable 2003 periods. "Overall, we are pleased with the
improvements in our gross margin percentage after experiencing a
slight decline at the beginning of 2004. As expected, gross margins
trended higher and were comparable to historical levels in the
second half of the year supported by higher-margin products in our
revenue mix and ProPen manufacturing process improvements." said
Benny Ward, VP of Finance and CFO. The $670,000 income tax benefit
resulted from recording the expected benefits of a recently
completed study of pre-2004 qualified R&D credits that will be
utilized to reduce future tax liabilities. The net effect of the
tax study, including professional fees to the conduct the study,
was $0.04 per share for the fourth quarter and year-ended December
31, 2004. R&D and regulatory expenses as a percentage of
revenues for the three- and twelve-month periods ended December 31,
2004 were 26 and 25 percent, respectively, versus 22 and 23 percent
for the comparable 2003 periods. These increases in R&D and
regulatory expenses were to gain regulatory approval in Europe and
complete the U.S. 150-patient clinical study for the OMNEX(TM)
Surgical Sealant. As a percentage of revenues, general and
administrative expenses decreased to 17 percent of total revenues
for the full-year 2004 versus 19 percent in the 2003 period.
Full-year 2004 operating margin remained strong at 33 percent
versus 34 percent in the prior period, despite the increased
investment in R&D and regulatory expenses and the $325,000
severance charge. Cash and investments increased $17.6 million
during 2004 and was $51.0 million at December 31, 2004, while net
working capital totaled $37.4 million. Total assets were $69.5
million, up from $53.8 million at the beginning of the year, and
stockholders' equity was $62.0 million. The Company had no
outstanding debt and a $3.0 million available line of credit. About
CLOSURE Medical Corporation CLOSURE Medical Corporation is a global
leader in the development and manufacture of innovative
biomaterial-based medical devices that fulfill the needs of
healthcare practitioners, patients and consumers. For additional
information on CLOSURE Medical visit its website at
http://www.closuremed.com/ or visit the "Clients" section of the
Allen & Caron website at http://www.allencaron.com/. This
release contains certain forward-looking statements which involve
known and unknown risks, delays, uncertainties or other factors not
under the Company's control which may cause actual results,
performance or achievements of the Company to be materially
different from the results, performance, or other expectations
implied by these forward-looking statements. These factors include,
but are not limited to the early stage of commercialization of the
Company's products; the Company's success in securing a marketing
and distribution partner for its OMNEX(TM) product; the ability of
the Company to increase the efficiencies in its manufacturing
processes; the effectiveness of initiatives launched in response to
the Company's competitors' product introductions; the progress and
success of its research and development programs for future
products; the success of its clinical study for its OMNEX(TM)
product and future clinical studies; the successful enrollment of
current and future clinical studies; the need for regulatory
approval and effects of governmental regulation; technological
uncertainties; the inventory management policies adopted by the
Company's marketing partners; end-user growth for the products sold
by the Company's marketing partners; the Company's success in
securing marketing partners for future products; the satisfactory
conclusion of negotiations with, and dependence on marketing
partners, and dependence on patents and trade secrets, as well as
those detailed in the Company's Annual Report on Form 10-K for the
year ended December 31, 2003, filed with the Securities and
Exchange Commission. Although the Company believes that the
expectations in the forward-looking statements are reasonable, the
Company cannot guarantee such results. The Company undertakes no
obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof.
CLOSURE Medical Corporation Statements of Operations (In thousands,
except per share data) THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, 2004 2003 2004 2003 Product sales $9,079
$9,220 $39,691 $33,933 License and product development revenue 59
264 434 1,054 Total revenues 9,138 9,484 40,125 34,987 Cost of
products sold 2,040 2,250 10,157 8,332 Gross profit 7,098 7,234
29,968 26,655 Research, development and regulatory affairs expenses
2,409 2,103 10,013 8,134 General and administrative expenses 2,128
1,716 6,859 6,592 Total operating expenses 4,537 3,819 16,872
14,726 Income from operations 2,561 3,415 13,096 11,929 Interest
income, net 256 96 684 312 Income before income taxes 2,817 3,511
13,780 12,241 Provision for income taxes 56 1,240 3,946 4,430 Net
income $2,761 $2,271 $9,834 $7,811 Shares used in computation of
net income per common share: Basic 14,370 13,991 14,294 13,758
Diluted 14,614 15,588 15,116 14,457 Net income per common share:
Basic $0.19 $0.16 $0.69 $0.57 Diluted $0.19 $0.15 $0.65 $0.54
CLOSURE Medical Corporation Balance Sheet Data (In thousands)
December 31, December 31, 2004 2003 Cash, cash equivalents and
investments $51,020 $33,427 Working capital $37,443 $30,974 Total
assets $69,521 $53,768 Total debt obligations $-- $-- Total
stockholders' equity $61,985 $47,428 Total shares outstanding
14,393 14,127 DATASOURCE: CLOSURE Medical Corporation CONTACT:
investors, Joe Allen, +1-212-691-8087, , or media, Len Hall,
+1-949-474-4300, , both of Allen & Caron Inc, for CLOSURE
Medical Corporation, or Benny Ward, CFO of CLOSURE Medical
Corporation, +1-919-876-7800 Web site: http://www.allencaron.com/
Web site: http://www.closuremed.com/
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