Rochester Medical Reports Fourth Quarter and Year-End Results

STEWARTVILLE, Minn., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (Nasdaq: ROCM) today announced operating results for its fourth quarter and year ended September 30, 2010.

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The Company reported record sales of $11,121,000 for the current quarter compared to $9,009,000 for the fourth quarter of last year. It also reported quarterly net income of $172,000 or $.01 per diluted share compared to a net loss of ($229,000) or ($.02) per diluted share for the same quarter of last year.

The approximate 23% increase in total sales (26% on a constant currency basis) resulted from a 27% increase in Rochester Medical Branded Sales (31% on a constant currency basis), and a 15% increase in Private Label Sales (15% increase on a constant currency basis). Constant currency basis assumes current exchange rates for all periods in order to exclude the impact of foreign exchange variations. In the fourth quarter of 2010 the U.S. dollar was somewhat stronger versus the pound sterling, thus having a negative effect on Rochester Medical Branded Sales levels in translated U.S. dollars given the significant volume of branded sales in the United Kingdom.

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 $506,000 or $.04 per diluted share compared to Non-GAAP Net Income of $95,000 or $.01 per diluted share for the fourth quarter of last year. The increase for the current quarter is primarily attributable to increased gross profit from higher sales volume partially offset by increased costs, primarily consisting of increased investment in sales and marketing programs.

For the fiscal year ended September 30, 2010, the Company reported record sales of $41,443,000 compared to sales of $34,799,000 for the previous year. It reported a net loss for the year of ($254,000) or ($.02) per diluted share compared to net income of $109,000 or $.01 per diluted share for the previous year. The approximate 19% increase in annual total sales (19% increase on a constant currency basis) resulted from a 28% increase in Rochester Medical Branded Sales (28% increase on a constant currency basis) and a 1% increase in Private Label Sales (1% increase on a constant currency basis). The decrease in net profit was primarily due to increased investment in sales and marketing.

Non-GAAP Net Income for the current year was $1,220,000 or $.09 per diluted share compared to Non-GAAP Net Income of $865,000 or $.07 per diluted share for the previous year. The increase for the current year on a Non-GAAP basis is primarily due to increased gross profit resulting from higher sales, partially offset by our increased investment in sales and marketing programs.

Commenting on today’s announcement, Rochester Medical CEO and President Anthony Conway said, “Rochester Medical continues to make solid progress. We are particularly pleased that our ongoing strategic effort to grow our branded sales through increased investment in sales and marketing programs is producing positive results. Now, in order to further enhance the sales and acceptance of Rochester Medical’s branded products, we are in the process of significantly expanding our U.S. sales and marketing presence. By 2010 calendar year end, we plan to complete the addition of over 30 new sales people to our staff.”

Conway continued, “This staffing increase and related investment is part of our updated strategic business plan, which includes an objective of doubling the Company’s annual overall sales in the next three fiscal years, while also producing net income in an estimated range of $9 to $10 million dollars in the third year.

“We expect most of the anticipated acceleration in our sales growth rate to occur in fiscal years 2012 and 2013. Sales in fiscal 2011 are expected to remain strong with an annual growth rate in a range comparable to fiscal 2010. Some quarter to quarter fluctuation in sales growth remains likely through the term of the plan, primarily due to the timing of large private label orders. Our expectations for net income exclude any unusual charges or gains that might occur during any fiscal year, and only reflect information available to the Company at this time.”

He concluded, by saying “These are interesting and exciting times for Rochester Medical Corporation.”

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” with the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results. Such statements are based on currently available information, operating plans and management’s expectations about future events and trends. Such statements inherently involve significant 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, and our level of success in marketing our Rochester Medical branded products, 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 and its updated strategic business plan. 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:

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.