SALT LAKE CITY, Aug. 29 /PRNewswire-FirstCall/ -- Iomed, Inc. today reported financial results for the fourth quarter and fiscal year ended June 30, 2006.
Fourth Quarter Results
For the quarter ended June 30, 2006, sales were $2,617,000 compared with $2,941,000 a year ago. The decreased sales were primarily due to reduced unit sales volume to certain large dealers. Gross margin improved to 63.2% in the fourth quarter versus 61.6% a year ago.
Selling, general and administrative (SG&A) expenses decreased 13% during the fourth quarter compared with a year ago due to reduced professional fees and lower personnel costs. Research and development expenses were higher than a year ago due to increased investment in new product development activities.
Iomed reported net income of $53,000, or $0.01 per diluted share, for the fourth quarter of fiscal 2006 compared with net income of $30,000, or nil per share, for the fourth quarter of fiscal 2005. Net income in the quarter benefited from net interest income of $90,000 compared to $51,000 in the prior year. Pursuant to new accounting rules, which became effective for the Company beginning this fiscal year, net income in the current period was affected by a non-cash charge of $34,000 in stock option related compensation expense.
Fiscal Year Results
For the fiscal year ended June 30, 2006, Iomed reported sales of $10,843,000, down 5% from a year ago. This decline was primarily due to the reduced unit sales volumes, which affected fourth quarter sales. Gross margin declined slightly to 60.6% from 61.6% during the comparable fiscal year.
SG&A expenses were down 9% during the fiscal year due to reduced personnel, professional fees and litigation-related expenses. Litigation-related expenses were $887,000 for the fiscal year of 2006 versus $971,000 a year ago.
Net income during fiscal 2006 was up 41% from a year ago. The Company reported net income of $600,000, or $0.08 per diluted share, compared with net income of $425,000, or $0.06 per diluted share, a year ago. Net income for the fiscal year benefited from increased net interest income from improved rates. Net income in the current fiscal year was negatively affected by a non-cash charge of $150,000 in stock option related compensation expense.
During fiscal year 2006, Iomed generated operating cash flow of $967,000. Working capital increased 4% to $9.4 million, long-term debt decreased 53% to $393,000 and total equity increased 10% to $10.8 million. Cash and cash equivalents were $8.4 million at June 30, 2006.
"Reduced unit sales volume was the major factor affecting our sales during the year," said Robert J. Lollini, President and CEO. "Lower sales to Compex Technologies, our second largest customer, reimbursement pressures and increased competition all contributed to this decline. The acquisition of Compex by Encore Medical Inc., the parent company of our largest competitor, will likely have a continuing effect on our sales in fiscal 2007. However, we are optimistic that our efforts to retain and service Compex's end-user customer accounts either directly or through alternative channels within our distributor network will be effective in reducing the impact on future periods," continued Mr. Lollini.
"During fiscal 2006, we continued to generate strong gross profit margins, generate cash, reduce debt and build equity, while increasing investment in new products that may enhance our competitive position as well as the competitive position of our distribution partners. We also settled two intellectual property lawsuits, limiting our potential exposure and future litigation-related expense," Mr. Lollini said.
Iomed is a leader in developing, manufacturing and marketing active drug delivery systems used primarily to treat acute local inflammation in the physical and occupational therapy and sports medicine markets. The Company is pursuing opportunities to advance its position as a provider of quality, innovative non-invasive medical products that improve patient healthcare. Iomed seeks to accomplish this by expanding its product line, distributing new products, developing strategic partnerships, and through acquisitions. To find out more about Iomed, Inc. , visit our website at www.iomed.com.
The statements contained in this news release that are not purely historical are forward-looking statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and include Iomed's beliefs, expectations or intentions regarding its future operations and financial condition. All forward-looking statements included in this news release are made as of the date hereof and are based upon information available to Iomed as of such date. Iomed assumes no obligation to update any forward-looking statement. It is important to note that actual outcomes could differ materially from those in such forward-looking statements. Readers should also refer to the risk factors and other disclosures set forth in Iomed's filings with the Securities Exchange Commission, including Forms 10-K, 10-Q and 8-K.
Three Months Ended Twelve Months Ended
June 30, June 30,
2006 2005 2006 2005
Product sales $2,617,000 $2,941,000 $10,843,000 $11,426,000
Cost of products sold 963,000 1,129,000 4,277,000 4,401,000
Gross profit 1,654,000 1,812,000 6,566,000 7,025,000
Operating costs and
Selling, general and
administrative 1,362,000 1,566,000 5,171,000 5,703,000
Research and product
development 329,000 267,000 1,101,000 993,000
costs and expenses 1,691,000 1,833,000 6,272,000 6,696,000
Operating income (loss) (37,000) (21,000) 294,000 329,000
Other income (expense):
Interest expense (16,000) (23,000) (78,000) (121,000)
Interest and other
income, net 106,000 74,000 384,000 217,000
Net income $53,000 $30,000 $600,000 $425,000
Income per share:
Basic $0.01 $0.00 $0.09 $0.06
Diluted $0.01 $0.00 $0.08 $0.06
Shares used in the
computation of income
Basic 7,335,000 6,585,000 7,039,000 6,585,000
Diluted 7,886,000 7,666,000 7,910,000 7,665,000
CONDENSED BALANCE SHEETS
June 30, June 30,
Cash and cash equivalents $8,426,000 $8,293,000
Working capital, net $9,418,000 $9,032,000
Restricted cash $275,000 $585,000
Total assets $12,673,000 $12,538,000
Long-term obligations $393,000 $836,000
Accumulated deficit $(31,132,000) $(31,732,000)
Shareholders' equity $10,816,000 $9,868,000
STATEMENTS OF CASH FLOWS
Twelve Months Ended
Cash flows from operating activities (unaudited)
Net income $600,000 $425,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 381,000 550,000
Other non-cash charges 150,000 --
Changes in operating assets and
Accounts receivable 104,000 28,000
Inventories 14,000 (58,000)
Prepaid expenses (1,000) (8,000)
Trade accounts payable 66,000 (237,000)
Other accrued liabilities (347,000) 442,000
Net cash provided by operating activities 967,000 1,142,000
Cash flows from investing activities
Purchases of equipment and furniture (60,000) (61,000)
Purchase of intangible assets (750,000) --
Net cash used in investing activities (810,000) (61,000)
Cash flows from financing activities
Change in restricted cash balance 310,000 477,000
Proceeds from issuance of common shares 198,000 --
Payments on long-term obligations (532,000) (603,000)
Net cash used in financing activities (24,000) (126,000)
Net increase in cash and cash equivalents 133,000 955,000
Cash and cash equivalents at beginning
of period 8,293,000 7,338,000
Cash and cash equivalents at end of
period $8,426,000 $8,293,000