SALT LAKE CITY, May 4 /PRNewswire-FirstCall/ -- Otix Global, Inc.
(Nasdaq: OTIX), a leading producer of advanced digital hearing
aids, today announced results for the first quarter ended
March 31, 2010.
Highlights include:
- Realized gross margin of 64.1 percent compared to 58.0 percent
in the first quarter 2009;
- Achieved 10.2 percent organic sales growth, to $7.7 million, in Rest-of-World segment compared
to the first quarter 2009;
- Renewed and extended the revolving credit facility to provide
over $2.0 million of additional
borrowing capacity; and
- May 2010 launch of Enduraâ„¢, a
super power behind-the-ear product.
"Our Rest-of-World and certain other international operations
continue to perform well," said Sam
Westover, Chairman and CEO. "We continue to remain
optimistic about improvements in our German operations and we are
seeing consistent growth in our sales to the Veteran's
Administration. Our Endura launch this month will allow the
Company to serve individuals with more profound hearing loss and
will further strengthen our product portfolio."
Net sales from continuing operations for the quarter ended
March 31, 2010 decreased 15.0 percent
over the same period in 2009 to $20.8
million, primarily due to the continued impact of the 2009
legislative changes in Germany.
North America sales of
$7.0 million in the first quarter
2010 decreased 15.4 percent from the same period in 2009.
Europe sales of $6.1 million in
the first quarter 2010 decreased 44.8 percent from the same period
in 2009 primarily as a result of the legislative changes in
Germany. Rest-of-World sales of
$7.7 million in the first quarter
2010 were up 50.0 percent from the same period in 2009 as a result
of organic growth of 10.2 percent and the weaker U.S. dollar.
The Company's gross margin from continuing operations for the
quarter ended March 31, 2010 was 64.1
percent compared to 58.0 percent for the quarter ended March 31, 2009, primarily as a result of a weaker
U.S. dollar, a higher concentration of sales in our retail
locations which carry higher gross margins compared to wholesale,
and a modification of German insurance company reimbursements that
results in higher margins. Gross profit from continuing
operations of $13.3 million in the
first quarter 2010 was a decrease of 6.0 percent from the same
period in 2009 and was primarily a result of lower sales volumes,
partially offset by a higher gross margin.
Selling, general and administrative expense increased 2.9
percent for the three months ended March 31,
2010 compared to the same period in 2009 due to a weaker
U.S. dollar. Excluding our Rest-of-World segment, where we hired
additional audiologists and increased marketing spending, and
including our Research and development expenditures, cost
reductions were approximately $2.5
million or 18.6 percent for the quarter ended March 31, 2010, compared to the prior year
quarter. These reductions were concentrated in our North America wholesale, European and
Corporate divisions. Research and development expense was
$1.1 million for the three months
ended March 31, 2010 compared to
$2.0 million for the same period in
2009, a decline of $0.9 million.
Loss from continuing operations for the quarter ended
March 31, 2010 was $2.3 million or $0.42 per share, as compared with a loss from
continuing operations of $16.9
million or $3.07 per share,
for the quarter ended March 31, 2009.
Excluding the $14.7 million of
goodwill and definite-lived intangibles impairment charges incurred
in the quarter ended March 31, 2009
results in a loss of $2.3 million, or
$0.41 per share.
As of March 31, 2010, the Company
had cash and cash equivalents of $12.4
million.
Otix Global designs, develops, manufactures and markets advanced
digital hearing aids designed to provide the highest levels of
satisfaction for hearing impaired consumers.
This press release contains "forward-looking statements" as
defined under securities laws. Actual results may differ materially
and adversely from those described herein depending on a number of
factors but not limited to, the following risks: deterioration of
economic conditions could harm our business; we have a history of
losses and negative cash flow; we face aggressive competition in
our business, and if we do not compete effectively our net sales
and operating results will suffer; our financial results may
fluctuate significantly, which may cause our stock price to
decline; we have made a number of acquisitions and could make
additional acquisitions, which could be difficult to integrate,
disrupt our existing business, dilute the equity of our
shareholders, harm our operating results, and create tension within
our existing customer bases; if we fail to maintain an effective
system of internal controls, we may not be able to accurately
report our financial results or prevent fraud, and as a result,
current and potential stockholders could lose confidence in our
financial reporting, which could harm our business and the trading
price of our common stock; the loss of any large customer or a
reduction in orders from any large customer or buying groups could
reduce our net sales and harm our operating results; we rely on
several suppliers and contractors, and our business will be
seriously harmed if these suppliers and contractors are not able to
meet our requirements; we have high levels of product returns,
remakes and repairs, and our net sales and operating results will
be lower if these levels increase; if we fail to develop new and
innovative products, our competitive position will suffer, and if
our new products are not well accepted, our net sales and operating
results will suffer; because of the complexity of our products,
there may be undiscovered errors or defects that could harm our
business or reputation; if we are subject to litigation and
infringement claims, they could be costly and disrupt our business;
we may be unable to adequately protect or enforce our proprietary
technology, which may result in its unauthorized use or reduced
sales or otherwise reduce our ability to compete; we are dependent
on international operations, which exposes us to a variety of
risks, including the recent German legislative changes and adverse
German court ruling in connection with our German operation, that
could result in lower sales and operating results; complications
may result from hearing aid use, and we may incur significant
expense if we are sued for product liability; if we fail to comply
with Food and Drug Administration regulations or various
sales-related laws, we may suffer fines, injunctions or other
penalties; there may be sales of our stock by our directors and
officers, and these sales could cause our stock price to fall;
provisions in our charter documents, our shareholders rights plan
and Delaware law may deter
takeover efforts that shareholders feel would be beneficial to
shareholder value; and we could default on our debt covenant on our
line of credit. For additional information regarding the risks
inherent in our business, please see "Factors That May Affect
Future Performance" included in our Annual Report on Form 10-K for
the year ended December 31, 2009, as
filed with the Securities and Exchange Commission.
This press release contains one non-GAAP ("Generally Accepted
Accounting Principles") financial measure ("LOSS FROM CONTINUING
OPERATIONS BEFORE INTEREST, TAXES, NON-CASH ITEMS, AND DEPRECIATION
AND AMORTIZATION.") We believe the inclusion of this non-GAAP
financial measure improves the transparency of our disclosure.
We have provided a reconciliation of this non-GAAP financial
measure to the most directly comparable GAAP measure.
We undertake no obligation to revise our forward-looking
statements to reflect events or circumstances after the date hereof
as a result of new information, future events or otherwise.
The Company will host a teleconference call in connection with
this release on Tuesday, May 4, 2010
at 3:00 p.m. Mountain Time
(5:00 p.m. Eastern Time).
To participate in the conference call, please call toll free
(866) 510-0676, or (617) 597-5361 outside the U.S., and use
participant passcode: 68209473. A live webcast will also be
available through our website at www.otixglobal.com. You may
also visit our website for an archive of prior press releases and
earnings announcements.
If you wish to hear a digital playback of the call, please dial
(888) 286-8010 within the U.S., or (617) 801-6888 outside the U.S.,
and enter passcode 48468812 (available through May 11, 2010, midnight), or access the playback
through our website.
OTIX GLOBAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands,
except per share data)
(unaudited)
|
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
|
|
2010
|
|
2009
|
|
Net
sales
|
|
$
20,777
|
|
$
24,432
|
|
Cost of
sales
|
|
7,461
|
|
10,269
|
|
|
|
|
|
|
|
Gross
profit
|
|
13,316
|
|
14,163
|
|
Selling, general
and administrative expense
|
|
14,723
|
|
14,321
|
|
Research and
development expense
|
|
1,065
|
|
1,979
|
|
Goodwill and
definite-lived intangibles impairment charges
|
-
|
|
14,658
|
|
|
|
|
|
|
|
Operating
loss
|
|
(2,472)
|
|
(16,795)
|
|
Interest
expense
|
|
(51)
|
|
(140)
|
|
Other income,
net
|
|
25
|
|
108
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(2,498)
|
|
(16,827)
|
|
Provision
(benefit) for income taxes
|
|
(172)
|
|
96
|
|
|
|
|
|
|
|
Loss from
continuing operations
|
|
(2,326)
|
|
(16,923)
|
|
Loss from
discontinued operations, net of income taxes
|
|
(7)
|
|
(45)
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(2,333)
|
|
$
(16,968)
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share:
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.42)
|
|
$
(3.07)
|
|
Discontinued
operations
|
|
-
|
|
(0.01)
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(0.42)
|
|
$
(3.08)
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic and
Diluted
|
|
5,570
|
|
5,517
|
|
|
|
|
|
|
|
Diluted
|
|
5,570
|
|
5,517
|
|
|
|
|
|
|
|
|
|
|
|
|
OTIX GLOBAL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION
(in
thousands)
(unaudited)
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2010
|
|
2009
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
12,412
|
|
$
12,225
|
|
Accounts receivable
|
|
10,048
|
|
10,625
|
|
Inventories
|
|
9,791
|
|
8,754
|
|
Property and equipment
|
|
8,792
|
|
8,755
|
|
Goodwill and intangibles
|
|
19,920
|
|
20,156
|
|
Other assets
|
|
6,115
|
|
6,610
|
|
|
|
|
|
|
|
Total assets
|
|
$
67,078
|
|
$
67,125
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
19,774
|
|
$
19,082
|
|
Loans payable
|
|
6,817
|
|
5,375
|
|
Deferred revenue
|
|
9,270
|
|
9,866
|
|
|
|
|
|
|
|
Total liabilities
|
|
35,861
|
|
34,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
Common stock
|
|
29
|
|
29
|
|
Additional paid-in capital
|
|
145,664
|
|
145,359
|
|
Accumulated deficit
|
|
(120,577)
|
|
(118,244)
|
|
Treasury stock and other comprehensive
income
|
|
6,101
|
|
5,658
|
|
|
|
|
|
|
|
Total shareholders’ equity
|
|
31,217
|
|
32,802
|
|
|
|
|
|
|
|
Total liabilities and shareholders’
equity
|
|
$
67,078
|
|
$
67,125
|
|
|
|
|
|
|
|
|
|
|
|
|
OTIX GLOBAL,
INC.
CONSOLIDATED
STATEMENT OF NET SALES INFORMATION
(in
thousands)
(unaudited)
|
|
|
|
Three months ended March
31,
|
|
|
|
2010
|
|
2009
|
|
Net
sales:
|
|
|
|
|
|
North
America
|
|
$
6,951
|
|
$
8,216
|
|
Europe
|
|
6,116
|
|
11,077
|
|
Rest-of-World
|
|
7,710
|
|
5,139
|
|
|
|
|
|
|
|
Total
|
|
$
20,777
|
|
$
24,432
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
CONTINUING OPERATIONS BEFORE INTEREST, TAXES, NON-CASH ITEMS, AND
DEPRECIATION AND AMORTIZATION
(in
thousands)
(unaudited)
|
|
|
|
Three months ended March
31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
$
(2,326)
|
|
$
(16,923)
|
|
Add back (deduct):
|
|
|
|
|
|
Interest
expense
|
|
51
|
|
140
|
|
Taxes
|
|
(172)
|
|
96
|
|
Non-cash
items:
|
|
|
|
|
|
Goodwill and
definite-lived intangibles impairment charges
|
|
-
|
|
14,658
|
|
Stock based
compensation
|
|
305
|
|
468
|
|
Depreciation and
amortization
|
|
843
|
|
1,047
|
|
|
|
|
|
|
|
Total
|
|
$
(1,299)
|
|
$
(514)
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Otix Global, Inc.