Closure Medical (NASDAQ:CLSR)
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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/