Rochester Medical Reports Third Quarter Results

News provided by

Rochester Medical Corporation

Jul 29, 2010, 04:00 ET

STEWARTVILLE, Minn., July 29 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (Nasdaq: ROCM) today announced operating results for its third quarter ended June 30, 2010.

The Company reported record sales of $10,244,000 for the current quarter compared to $8,908,000 for the third quarter of last year. The Company also reported net income of $95,000 or $.01 per diluted share for the quarter compared to net loss of $77,000 or ($.01) per diluted share for the same period of last year.

The 15% increase in sales (17% on a constant currency basis) resulted from a 32% increase in Rochester Medical Branded Sales (35% on a constant currency basis), partially offset by a 16% decrease in Private Label Sales (16% decrease on a constant currency basis).

Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter was $428,000 or $.03 per diluted share compared to Non-GAAP Net Income of $245,000 or $.02 per diluted share for the third quarter of last year. The increase for the current quarter is primarily attributable to higher gross profit resulting from increased sales and higher gross margin, partially offset by increased investment in the Company's Sales and Marketing programs as part of our ongoing strategy to increase branded sales.

"We believe our emphasis on strategic growth of Rochester Medical® branded products is having a positive impact," said Anthony J. Conway, Company President and CEO. "Once again, the 32% overall branded growth is solid, and we continue to be pleased by the strong growth in sales of our MAGIC3™ Intermittent Catheters and StrataSI™ and StrataNF™ Foley Catheters. Our branded sales now make up nearly 75% of total sales."

Conway continued, "We have recently invested significantly in pilot introductory activities for the FemSoft Insert in both the United States and United Kingdom. This unique disposable device offers immediate relief for women dealing with the difficulties of urinary incontinence. While it is still too early to know the ultimate potential of this product in the marketplace, we are confident of its viability and believe it will become an integral part of our offering in both countries as we move forward."

Conway then added, "The future looks bright for Rochester Medical. We believe we will continue to show excellent growth going forward."

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. Similarly, constant currency represents reported sales with the cost/benefit of currency movements removed. Management uses the measure to understand the growth of the business on a constant dollar basis, as fluctuations in exchange rates can distort the underlying growth of the business both positively and negatively. While we recognize that foreign exchange volatility is a reality for a global company, we routinely review our company performance on a constant dollar basis, and we believe this also allows our shareholders to understand better our Company's growth trends.

Non-GAAP Net Income and constant currency are not measures 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 and constant currency are not comparable to information provided by other companies. Non-GAAP Net Income and constant currency have limitations as analytical tools 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, and reconciliations of sales under GAAP and sales on a constant currency basis, are presented at the end of this press release.

This press release contains "forward-looking statements" that are based on currently available information, operating plans and management's expectations about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements, including the uncertainty of estimated revenues and profits, the uncertainty of current domestic and international economic conditions that could adversely affect the level of demand for the Company's products and increased volatility in foreign exchange rates, 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, 2009 and reports on Forms 10-Q and 8-K. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company will hold a quarterly conference call to discuss its earnings report. The call will begin at 3:30 p.m. central time (4:30 p.m. eastern time).

This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at www.rocm.com.  To listen live to the conference call via telephone, call:

Domestic:

888.679.8040

International:

617.213.4851

Pass code:

97798974

Pre Registration:

https://www.theconferencingservice.com/prereg/key.process?key=PG3QT3L6T

Replay will be available for seven days at www.rocm.com or via telephone at:

Domestic:

888-286-8010

International:

617-801-6888

Pass code:

79705563

Individual investors can listen to the call at 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 (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® brand and under existing private label arrangements.

For further information, please contact Anthony J. Conway, President and Chief Executive Officer or David A. Jonas, Chief Financial 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 Revenue to Non-GAAP Revenue in Constant Currency



For the Three and Nine months ended





June 30, 2010





















(unaudited)

(unaudited)


Three months ended

Nine months ended


June 30,

June 30,


2010

2009

2010

2009







GAAP Sales as Reported

$             10,244,158

$            8,908,416

$            30,321,451

$               25,789,530

        Exchange rate as Reported

1.49

1.55

1.56

1.52














Constant Currency Sales

$             10,244,158

$            8,796,578

$            30,321,451

$               26,001,407

 (1)  Exchange rate used for Constant Currency Purposes

1.49

1.49

1.56

1.56














Net Effect of Constant Currency Illustration

$                              -

$             (111,838)

$                             -

$                    211,877





































































































































(1) For illustrative purposes Constant currency translates prior period foreign sales at current exchange rates.

  For Rochester Medical Corporation this is the conversion rate of British pounds to US dollars.  The rate represents the

  average exchange rate for the respective three or nine month period.

ROCHESTER MEDICAL CORPORATION




Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income


For the Three and Nine months ended




June 30, 2010 and 2009

















(unaudited)

(unaudited)

Three months ended

Nine months ended

June 30,

June 30,

2010

2009

2010

2009






GAAP Net Income (Loss) as Reported

$      95,000

$    (77,000)

$  (426,000)

$    338,000






Diluted EPS as Reported

$          0.01

$        (0.01)

$        (0.03)

$          0.03












Adjustments for non-recurring unusual items:




  Settlement income after taxes (1)

            -

             -

             -

(637,000)

Subtotal

-

-

-

(637,000)












Adjustments for recurring non-cash expenses:




  Intangible amortization (2)

129,000

129,000

387,000

386,000

  ASC 718 compensation expense (3)

204,000

193,000

754,000

683,000

Subtotal

333,000

322,000

1,141,000

1,069,000












Non-GAAP Net Income

$    428,000

$    245,000

$    715,000

$    770,000






Non-GAAP Diluted EPS

$          0.03

$          0.02

$          0.06

$          0.06






Weighted Average Shares - Diluted

12,724,610

12,603,331

12,747,669

12,637,414






























(1) Settlement income received January 15, 2009 from Covidien Ltd. of $1,000,000, $637,000 after taxes of $363,000.

    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, 2009.

(2) 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 ninth months ended June 30, 2010 and 2009 related to certain intangibles.

     The gross amount of amortization is $163,000 per quarter after taxes of $34,000 for a net amount of $129,000.

(3) Compensation expense mandated by ASC 718.  This adjustment adds back the compensation expense

     recorded for stock options granted to employees and directors that vested during the three and ninth months ended

     June 30, 2010 and 2009.  The gross amount of compensation expense for the three months ended June 30, 2010

     and 2009 is $314,000 and $293,000 net of taxes of $110,000 and $100,000 for net amounts of $204,000 and

     $193,000 respectively.  The gross amount of compensation expense for the nine months ended June 30, 2010  

     and 2009 is $1,164,000 and $1,035,000 net of taxes of $410,000 and $352,000 for net amounts of $754,000 and

     $683,000 respectively.

Rochester Medical Corporation


Press Release - F10 Third Quarter




















Condensed Balance Sheets








(unaudited)






June 30,

September 30,






2010

2009









Assets












Current Assets






Cash and equivalents

$              4,568,223

$              6,365,584


Marketable securities

30,853,898

29,896,740


Accounts receivable

6,944,048

6,418,656


Inventories

8,839,536

9,710,234


Prepaid expenses and other assets

975,763

1,076,183


Deferred income tax

1,119,902

1,153,964












Total current assets

53,301,370

54,621,361










Property and equipment, net

10,003,912

9,683,808

Deferred income tax

1,094,759

768,874

Patents, net

212,376

224,815

Intangible assets, net

5,430,522

6,017,944

Goodwill


4,338,316

4,648,165










Total Assets

$            74,381,255

$            75,964,967









Liabilities and Stockholders' Equity












Current liabilities:






Accounts payable

$              1,961,962

$              1,755,472


Accrued expenses

1,379,406

1,527,352


Short-term debt

2,345,546

2,786,622












Total current liabilities

5,686,914

6,069,446










Long-term liabilities






Other long-term liabilities

62,424

55,889


Long-term debt

-

1,019,735












Total long-term liabilities

62,424

1,075,624










Stockholders' equity

68,631,917

68,819,897










Total Liabilities and Stockholders' Equity

$            74,381,255

$            75,964,967

Rochester Medical Corporation
Press Release - F10 Third Quarter




Summary Statements Of Operations







(unaudited)

(unaudited)





Three months ended

Nine months ended





June 30,

June 30,





2010

2009

2010

2009
























Sales


$ 10,244,158

$ 8,908,416

$ 30,321,451

$ 25,789,530












Cost of sales

5,202,198

4,724,893

16,007,297

13,266,735












Gross profit

5,041,960

4,183,523

14,314,154

12,522,795

Gross profit %

49%

47%

47%

49%












Costs and expenses:









Marketing and selling

3,151,458

2,541,552

8,800,449

7,555,936

Research and development

246,401

352,248

930,819

969,011

General and administrative

1,369,406

1,451,041

4,807,757

4,574,296












Total operating expenses

4,767,265

4,344,841

14,539,025

13,099,243












Income (loss) from operations

274,695

(161,318)

(224,871)

(576,448)












Other income (expense)




















Interest income

55,733

39,964

99,684

241,490

Interest expense

(36,434)

(54,586)

(116,987)

(218,714)

Other income







1,200,442












Net income (loss) before income taxes

293,994

(175,940)

(242,174)

646,770












Income tax expense(benefit)

198,974

(99,040)

183,379

308,843












Net income (loss)

$        95,020

$    (76,900)

$    (425,553)

$      337,927
























Earnings (loss) per common share - Basic

$            0.01

$        (0.01)

$          (0.03)

$            0.03












Earnings (loss) per common share - Diluted

$            0.01

$        (0.01)

$          (0.03)

$            0.03












Weighted Average Shares:

12,196,977

12,025,966

12,194,620

12,029,629

Basic




















Weighted Average Shares:








Diluted

12,724,610

12,025,966

12,194,620

12,637,414

SOURCE Rochester Medical Corporation

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