ReSound Corporation Reports First Quarter 1999 Results
Company Press Release - Wednesday April 21, 4:30 pm EDT
REDWOOD CITY, Calif.--(BW HealthWire)--April 21, 1999--
ReSound Corporation (Nasdaq: RSND - news) today reported
financial results for the first quarter ended March 27, 1999.
Net sales for the first quarter of 1999 were $34.2 million, a
10 percent increase over net sales of $31.1 million in the
first quarter of 1998. Net income for the first quarter of
1999 increased 60 percent to $1.6 million, or $0.08 per share,
compared to net income of $1.0 million, or $0.05 per share, in
the same period a year ago.
Sales growth during the first quarter of 1999 was led by
strong performance in our international markets, where sales
increased 22 percent over the prior year to $18.2 million from
$14.9 million. Sales of the Company's analog devices were
strong, particularly in Europe, and included the shipment of a
large tender order delayed from the fourth quarter of 1998. In
addition, the Digital 5000 Series products, which were
launched in the fourth quarter of 1998, have been well
received in Europe.
North American sales during the first quarter of 1999 were
$16.0 million, down slightly from $16.3 million in the first
quarter of last year. This decrease was due primarily to a
decline in sales of the Company's analog products as the
market demand shifts to the next generation digital devices,
including the Company's Digital 5000 Series products.
The Company is experiencing an excellent market response to
its new digital devices, and during the first quarter, sales
of the Digital 5000 Series products in North America
substantially offset the decline in analog product sales.
''Dispensers and audiologists as well as end users are
extremely positive about the performance of the Digital 5000
Series product. This new product platform incorporates not
only ReSound's digital signal processing technology but a
host of patient benefits that provide enhanced speech clarity
and improved sound quality. Production is on schedule and
we are meeting customer demand,'' said Russell D. Hays,
ReSound president and chief executive officer.
Gross profit for the first quarter of 1999 was 52 percent of
sales, compared to 54 percent in the prior year's first quarter.
Excluding the impact of the European tender order shipped in
the quarter, gross margin was 56 percent for the first quarter
of 1999.
Research and development spending for the first quarter of
1999 was $3.4 million compared to $4.0 million in the prior
year. Spending levels in the prior year were higher due to the
development efforts on the Digital 5000 Series products.
Selling, general and administrative expenses of $12.2 million
in the first quarter of 1999 were comparable to the prior year's
quarter, but decreased as a percentage of sales from 39 percent
to 36 percent. The Company's corporate-wide restructuring
program to increase efficiency and reduce costs led to a
significantly improved operating expense profile.
''In 1998, we put together a solid plan for growth and
profitability and we're now beginning to realize the real
benefit of this strategy in our 1999 first quarter results,''
said Hays. ''While we're very pleased with our progress so far,
we are focused on achieving the remaining benefits from this
restructuring program. We look forward to continuing this
momentum throughout the year.''
ReSound Corporation is a hearing health care company that
designs, develops, manufactures and markets technologically
advanced hearing devices throughout the world.
Safe Harbor Under the Private Securities Litigation Reform
Act of 1995: Except for historical information, the matters
discussed in this news release are forward-looking statements
that are subject to certain risks and uncertainties that could
cause actual results to differ materially from those statements.
Words such as ''anticipates'', ''expects'', ''believes'', and
the like identify many of these forward-looking statements.
Risks and uncertainties include risks associated with the
timely development, introduction, acceptance and availability
of new products; related technologies in existing and new
markets; the effect of competition; worldwide political and
economic conditions and uncertainties; the continuance of a
successful relationship with technology partners; the ability
of the Company to achieve improved operating results; the
Company's ability to attract and retain qualified sales and
other personnel; and the Company's ability to realize the full
benefit of the 1998 restructuring program. Other risks are
detailed from time to time in the Company's SEC reports,
including the annual report filed on Form 10-K and quarterly
filings on Form 10-Q. The Company assumes no obligation to
update the information in this release. ReSound Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
-----------------------
March 27, March 28,
1999 1998
--------------------------
(Unaudited) (Unaudited)
Net sales $ 34,230 $ 31,143
Cost of sales 16,271 14,457
-------- --------
Gross profit 17,959 16,686
Operating expenses
Research and development 3,388 3,975
Selling, general and administrative 12,158 12,148
-------- --------
Total operating expenses 15,546 16,123
-------- --------
Income from operations 2,413 563
Interest expense, net (234) (256)
Other income (expense), net (412) 848
-------- --------
Income before income taxes 1,767 1,155
Provision for income taxes (1) 163 181
-------- --------
Net income $ 1,604 $ 974
======== ========
Basic and diluted net
income per common share $ 0.08 $ 0.05
======== ========
Shares used in basic net income
per common share calculation 20,746 20,259
======== ========
Shares used in diluted net income per
common share calculation 20,918 20,744
======== ========
(1) Principally state and foreign income taxes.
ReSound Corporation
Condensed Consolidated Balance Sheets
(in thousands)
March 27, December 31,
1999 1998
----------------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 6,323 $ 6,715
Accounts receivable, net 26,611 16,892
Inventories 15,813 16,199
Other receivables 876 2,313
Other current assets 878 1,452
------- -------
Total current assets 50,501 43,571
Property and equipment, net 9,955 10,734
Goodwill, net 10,951 12,263
Other assets 3,045 3,194
------- -------
$74,452 $69,762
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank loans $ 7,057 $ 4,646
Accounts payable 11,449 8,253
Accrued liabilities 18,536 18,548
Long-term debt, current portion 11,107 1,790
------- -------
Total current liabilities 48,149 33,237
Long-term debt, non-current portion 2,686 12,815
Employee benefits 2,708 2,891
Other accrued liabilities 125 125
------- -------
Total long-term liabilities 5,519 15,831
Shareholders' equity 20,784 20,694
------- -------
$74,452 $69,762
======= ======= Contact:
ReSound Corporation
Kathy Call, 650/261-6932
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