CLOSURE Medical Reports Continued Growth in Revenue and Net Income
for Fourth Quarter and Fiscal Year 2003 Market Acceptance of Key
Products Drives 47 Percent Annual Revenue Growth RALEIGH, N.C.,
Feb. 12 /PRNewswire-FirstCall/ -- CLOSURE Medical Corporation , a
global leader in biomaterial-based medical devices, today announced
results for the fourth quarter and fiscal year ended December 31,
2003, and provided revenue and earnings guidance for the first
quarter of 2004. Fourth-quarter revenues increased 40 percent to
$9.5 million, from $6.8 million during the same period of 2002.
Full-year revenues increased by 47 percent, totaling $35.0 million,
versus $23.7 million in the 2002 period. DERMABOND adhesive
continued to be the Company's main revenue contributor, driven by
the early-2003 introduction of High-Viscosity DERMABOND, a thicker,
easier to use formulation. Introduced into international markets in
2003, BAND-AID(R) Brand Liquid Bandage continued to provide
significant revenue growth in just its second year of availability
in the U.S. Net income for the fourth quarter of 2003 was $2.3
million, or $0.15 per share, compared to prior-year adjusted net
income of $1.2 million, or $0.08 per share. Full-year 2003 net
income was $7.8 million, or $0.54 per share, representing an
increase of 187 percent over adjusted 2002 net income of $2.7
million. The adjusted net income for the 2002 periods assumes the
Company was required to report fully-taxed earnings at a 36 percent
tax rate, as well as the elimination of a tax benefit recorded
during the periods. The reported net income for the three- and
twelve-month periods ended December 31, 2002, was $7.7 million and
$10.1 million, respectively. Daniel A. Pelak, President and CEO,
commented, "Our financial performance in 2003 was unprecedented for
CLOSURE, and we set forth a number of initiatives that we feel will
provide a platform for long-term growth at CLOSURE. We enhanced the
design of the DERMABOND delivery system by introducing ProPen and
ProPen XL, which we launched in the U.S. in January 2004. By
providing greater precision of application and control, we believe
that these devices could increase the market penetration of
DERMABOND. We also reorganized the management structure and added
new senior executives in order to execute our strategy and continue
growing the Company." Pelak continued, "Looking ahead, we are
excited about the prospects for 2004. The strategic plan we adopted
last year calls for continuing extensions of the current product
portfolio, as well as a road map for expanding the core technology
into new products, applications and markets. With our new synthetic
vascular sealant product, we are now applying our core technology
in an application inside the human body for the first time. Our
pilot study for this product is now complete and, given the
positive results thus far, we anticipate beginning the definitive
study in the first half of 2004." Gross margins for both the fourth
quarter and year ended December 31, 2003 were 76 percent, up from
74 and 73 percent, respectively, in the comparable 2002 periods.
The improvement in gross margins during the 2003 periods is
primarily attributable to increased efficiencies in both the
automation of a filling process and the expansion of our adhesive
manufacturing scale. The Company's fourth-quarter and full-year
2003 operating margins also improved to 36 and 34 percent,
respectively, compared to 25 and 17 percent in the corresponding
2002 periods. "Our solid financial performance during 2003
demonstrates the operating leverage of our business model and its
ability to generate positive cash flow. Our commitment to
operational efficiency and expense control provided cash flow from
operations of $11.5million. Total cash and investments increased by
$16.4 million, totaling $33.4 million at December 31, 2003," said
Benny Ward, VP of Finance and CFO. Revenues for the first quarter
of 2004 are expected to be in the range of $10.1 to $10.7 million,
and earnings per share are expected to be in the range of $0.13 to
$0.16. These estimates include a one-time revenue reduction of
$490,000 for incentive payments to be made by CLOSURE to ETHICON,
INC., a Johnson & Johnson Company. These incentive payments are
being made to resolve issues related to the payment provisions of
the supply and distribution agreement for the DERMABOND product and
to maintain goodwill and the positive relationship between the
companies. The Company maintains its current full- year 2004
guidance for revenue and earnings per share of $45.0 to $47.0
million and $0.65 to $0.70 per share, respectively. 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 progress
of its research and development programs for future products; the
need for regulatory approval and effects of governmental
regulation; technological uncertainties; the satisfactory
conclusion of negotiations with, anddependence 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, 2002, 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 Reconciliation of Non - GAAP Financial
Measures (In thousands) THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2002 DECEMBER 31, 2002 Net income, as reported $7,739
$10,123 Reversal of tax expense recorded (5,941) (5,864) Income
before income taxes, as reported 1,798 4,259 Tax expense assuming a
36% tax rate 647 1,533 Adjusted net income $1,151 $2,726 CLOSURE
Medical Corporation Statement of Operations (In thousands, except
per share data) THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31,
DECEMBER 31, 2003 2002 2003 2002 Product sales $9,220 $6,515
$33,933 $22,711 License and product development revenue 264 258
1,054 1,020 Total revenues 9,484 6,773 34,987 23,731 Cost of
products sold 2,250 1,747 8,332 6,496 Gross profit 7,234 5,026
26,655 17,235 Research, development and regulatory affairs expenses
2,103 1,519 8,134 6,436 General and administrative expenses 1,716
1,799 6,592 6,855 Total operating expenses 3,819 3,318 14,726
13,291 Income from operations 3,415 1,708 11,929 3,944 Interest
income, net 96 90 312 315 Income before income taxes 3,511 1,798
12,241 4,259 Provision (benefit) for income taxes 1,240 (5,941)
4,430 (5,864) Net income $2,271 $7,739 $7,811 $10,123 Shares used
in computation of net income per common share: Basic 13,991 13,549
13,758 13,535 Diluted 15,588 13,709 14,457 13,783 Net income per
common share: Basic $0.16 $0.57 $0.57 $0.75 Diluted $0.15 $0.56
$0.54 $0.73 CLOSURE Medical Corporation Balance Sheet Data (In
thousands) December 31, December 31, 2003 2002 Cash, cash
equivalents and investments $33,427 $17,042 Working capital $30,974
$16,815 Total assets $53,768 $36,747 Total debt obligations $--
$336 Total stockholders' equity $47,428 $29,190 Total shares
outstanding 14,126 13,549 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.closuremed.com/
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