Revenue rebound from first quarter 2007 to $15.2 million
Ophthalmic sales increase 9% year over year to $8.4 million
Aesthetic sales increase 28% over first quarter 2007 to $6.9 million
MOUNTAIN VIEW, Calif., Aug. 14 /PRNewswire-FirstCall/ -- IRIDEX Corporation (Nasdaq: IRIX) today reported financial results for the second quarter ended June 30, 2007. Revenue for the period was $15.2 million, up 73% from $8.8 million reported for the second quarter of 2006 and 21% from $12.6 million reported for the first quarter of 2007. Excluding revenue from the acquired Laserscope products, revenues for the Company increased by 9% over the second quarter of 2006. The net loss for the quarter was $343,000 or $0.04 per share, compared with a net loss of $534,000, or $0.07 per share in the prior year period.
"Revenues for the quarter increased globally across both the ophthalmic and aesthetic product lines. U.S. ophthalmic product sales increased by 9% while international ophthalmic sales also increased by 9%. This performance demonstrates a well balanced return to the level of growth we are expecting from our ophthalmic business." said Barry G. Caldwell, IRIDEX President and CEO. "Our aesthetic laser console sales which exclude service revenue increased by 56% in the U.S. and 24% in our international markets for the second quarter of 2007 compared to the first quarter of 2007, reflecting the progress that we have made since the mid January acquisition of the Laserscope aesthetics business. While the domestic pipeline for aesthetic orders in the U.S. market was empty at the time of the acquisition, the pipeline of orders has increased during the first and second quarters of 2007."
Gross margin for the quarter was 43.2%, which was an increase of 1.7 percentage points over the first quarter and compares to 52.9% for the comparable prior year three month period. Included in the cost of goods for the quarter was $0.5 million of non-cash amortization expense for the recently acquired intangible assets which had a negative impact of 3 percentage points on overall gross margin. "During the second quarter, we continued to focus on the Laserscope products manufacturing transfer, added Mr. Caldwell. Approximately a dozen of our employees were at the Laserscope facility shadowing Laserscope's manufacturing process during this period at the Laserscope facility. As expected this additional investment of employee expense negatively impacted our second quarter gross margin. During the third quarter we will be manufacturing sub assemblies of Laserscope products at our Mountain View facility and during the fourth quarter all of the Gemini consoles will be produced at this same facility. We expect to see continued improvement in our gross margin as we complete the transfer of the manufacturing of these products to our facility."
Total operating expenses were $9.1 million for the quarter as compared to $5.2 million during the second quarter of 2006 and $10 million the first quarter of 2007. Research and development costs increased by 20% over the prior year period as efforts continued on the new yellow laser for ophthalmology and the Laserscope products transition. Selling, general and administrative expenses were $7.5 million for the second quarter of 2007 compared to $3.9 million the second quarter of 2006 and $8.3 million during the first quarter of 2007. "Although our operating expenses declined as compared to the first quarter of 2007 we are disappointed in our progress in this area. We have initiated various actions to further reduce expenses for the remainder of the year. We believe that we will generate additional expense savings that will be realized during the remainder of 2007 and into 2008."
During the second quarter of 2007, the Company received the first cash payment of $2.5 million under the $6.5 million litigation settlement with Synergetics, Inc. This payment was recorded as other income. Under terms of the settlement, the Company will receive additional payments of $800,000 in the second quarter of each year for the next five years.
For the six-month period ended June 30, 2007, sales were $27.8 million, a 58% increase from the $17.7 million reported for the same period of 2006. The net loss for the six-month period was $5.3 million or $0.65 per share compared to a net loss of $0.8 million or $0.11 per share for the same period of 2006.
Cash and cash equivalents and available-for-sale-securities as of June 30, 2007 were $3.6 million which does not include the $3.8 million of restricted cash, down from $21.4 million at December 31, 2006. Inventory turns were 2.55 turns in the second quarter of 2007 compared with 1.89 turns for the second quarter of 2006. Accounts receivable were $10.2 million as of June 30, 2006 compared with $6.1 million on December 31, 2006. Quarterly days sales outstanding (DSOs) improved to 59 days in the second quarter of 2007 compared with 65 days for the second quarter of 2006.
The Company also announced that it has entered into a Final Settlement Agreement with American Medical Systems, Inc. (AMS) with respect to previously outstanding disputes related to the acquisition of the assets of the Laserscope aesthetics business from AMS. Under that agreement the post-close adjustment mechanism resulted in a $2.8 million reduction in the purchase price of the Laserscope business. Since the Company obtained through the acquisition cash in the foreign subsidiaries due AMS, the Company will pay AMS $1.2 million over a twelve month period beginning August 24, 2007. Under the original Product Supply Agreement with Laserscope the Company was obliged to purchase work-in-process and raw materials up to a limit of $9 million. Under this Final Settlement Agreement the parties have agreed that this inventory obligation amounts to $3.7 million. In addition the Company received $0.4 million of service parts at the time of the acquisition for which payment was due Laserscope at the end of the Product Supply Agreement. The parties have agreed that the Company will pay Laserscope this total of $4.1 million over a nine month period beginning in January 2008.
"Our second quarter revenue results begin to illustrate the potential we believe can be realized through the combination of the two operations," continued Mr. Caldwell. "While 2007 continues to be a transition year for the Company as we integrate the acquired Laserscope business, we have successfully handled several challenges associated with nearly doubling the size of our Company during the past six months. We will have additional challenges to meet during the remainder of the year. These include the transfer of manufacturing that should result in an increase in our gross margin; effectively managing the synergies from the acquisition that should result in reduced operating expenses and arranging more flexible financing alternatives."
Conference Call
IRIDEX management will conduct a conference call today at 5:00 p.m. (Eastern Time) to discuss its second quarter 2007 results and recent corporate developments. Interested parties may access the live conference call via telephone by dialing (800) 219-6110 (US) or (303) 262-2175 (International), or by visiting the Company's website at http://www.iridex.com. A telephone replay will be available beginning on Tuesday, August 14 through Tuesday, August 21, 2007 by dialing (800) 405-2236 (US) or (303) 590-3000 (International) and entering Passcode 11095681#. In addition, later today an archived version of the webcast will be available on the Company's website at http://www.iridex.com.
About IRIDEX
IRIDEX Corporation is a leading worldwide provider of therapeutic based laser systems, disposable laser probes and delivery devices used to treat eye diseases in the ophthalmology market and skin conditions in the aesthetics market. IRIDEX products are sold in the United States through a direct sales force and internationally through a combination of a direct sales force and a network of approximately 95 independent distributors into 107 countries. For further information, visit the Company's website at http://www.iridex.com.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Act of 1934, as amended, relating to the Company's growth strategy and prospects, revenues, gross margins, and earnings, expenses, integrating the aesthetics business acquired from Laserscope and realizing efficiencies and synergies relating thereto, obtaining alternative financing, and addressing our liquidity and capital resource needs. Actual results could differ materially and adversely from those projected in the forward-looking contained in our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal year ended December 30, 2006 filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date and will not be updated.
IRIDEX Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
2007* 2006 2007* 2006
Sales $15,249 $8,804 $27,815 $17,647
Cost of sales 8,665 4,145 16,023 8,726
Gross profit 6,584 4,659 11,792 8,921
Operating expenses:
Research and development 1,588 1,328 3,317 2,449
Sales, general and administrative 7,546 3,864 15,820 7,796
Total operating expenses 9,134 5,192 19,137 10,245
Income (loss) from operations (2,550) (533) (7,345) (1,324)
Legal settlement 2,500 0 2,500 0
Interest and other income, net (293) 177 (418) 356
Income (loss) before income taxes (343) (356) (5,263) (968)
Benefit from (provision for) income
taxes 0 (178) 0 131
Net income (loss) ($343) ($534) ($5,263) ($837)
Net income (loss) per common share -
basic & diluted ($0.04) ($0.07) ($0.65) ($0.11)
Shares used in per common share basic &
diluted calculations 8,196 7,694 8,138 7,641
* Includes the impact of FAS123(R).
IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 30,
2007 2006
Assets (unaudited)
Current Assets:
Cash and cash equivalents $3,551 $21,051
Restricted cash $3,800 -
Accounts receivable, net 10,208 6,052
Inventories 13,973 9,499
Prepaids and other current assets 4,152 1,264
Total current assets 35,684 37,866
Property and equipment, net 1,836 1,087
Goodwill 9,903 -
Other intangibles, net 15,250 -
Other long term debt 294 1,224
Total assets $62,967 $40,177
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $6,075 $1,830
Short term debt 3,863 -
Accounts compensation 2,244 1,517
Accrued expenses 8,251 2,392
Accrued warranty 2,335 866
Deferred revenue 4,239 1,415
Current portion of long term debt 5,508 -
Total current liabilities 32,515 8,020
Stockholders' Equity:
Common stock 83 79
Additional paid-in capital 33,273 29,697
Accumulated other comprehensive loss (22) -
Treasury stock (430) (430)
Retained earnings (2,452) 2,811
Total stockholders' equity 30,452 32,157
Total liabilities and stockholders'
equity $62,967 $40,177
SOURCE IRIDEX Corporation
08/14/2007
CONTACT: Larry Tannenbaum, Chief Business Officer of IRIDEX Corporation,
+1-650-940-4700
Web site: http://www.iridex.com
(IRIX)
