EXHIBIT 99.1
Press Release
For Release September 10, 2004 at 7:00 am EST
Compex Technologies FY2004 Revenue $86.0
Mil. Net Income $3.1 Mil or $0.24 Diluted EPS
Company Meets Guidance with Q4 Revenue $22.7M,
Net Income $1.0Mil or $0.08 Diluted EPS
New Brighton, MN — September 10, 2004 —Compex Technologies (Nasdaq: CMPX) reported today consolidated revenue for the fiscal year ended June 30, 2004 increased 14% to a record $86.0 million compared with $75.5 million a year earlier. Net income for the year was $3.1 million or $0.24 diluted earnings per share compared with net income of $5.0 million or $0.45 diluted earnings per share in the fiscal year 2003.
For the fourth quarter ended June 30, 2004, consolidated revenue increased 14% to a record $22.7 million from $19.8 million in the fourth quarter of FY2003. Net income for the fourth quarter was $1.0 million or $0.08 diluted earnings per share versus $1.7 million or $0.15 diluted earnings per share in the fourth quarter of fiscal year 2003.
U.S. revenue for the year was $52.8 million, up 7% from $49.2 million in the same period last year. International revenue was $33.2 million, an increase of 26% compared with $26.3 million in the prior year. Approximately 16% of international growth was generated by a favorable impact of exchange rates, reflecting the strength of the euro versus the dollar.
Consolidated revenue by product line for the year was $17.7 million in rehabilitation products, $16.7 million in pain management products, $26.1 million in consumer products and $25.5 million in accessories and supplies.
Gross profit margin for the fiscal year was 66.9%, compared with 70.1% last year. Selling, general and administrative expenses were $50 million, or 58.1% of revenue, compared with $42.2 million, or 55.9% of revenue in the fiscal year 2003.
Compex President and CEO Dan W. Gladney said, “We finished the year within our range for fourth quarter guidance. Our medical business in the United States had a solid year, recording increases in revenue and profitability although there was some decrease in margin due to shifts in product mix. Our domestic medical gross sales rose 11% primarily due to an increase in sales and rentals of medical devices, reflecting the ongoing expansion of our direct selling efforts to physicians.
“Our U.S. consumer business, although modest, showed a steady increase in sales. The U.S. consumer business contributed 1% of our fiscal year 2004 growth mostly in the fourth quarter, since our televised advertising endorsements featuring Sarah Ferguson, Duchess of York, were not launched until mid-fourth quarter.”
“Our European operations posted a revenue increase of 26% for the fiscal year, however 16% was generated by favorable exchange rates. The acquisition of Filsport in Italy accounted for 12%. Revenue from the addition of
Slendertone products contributed 6%. During the fourth quarter we introduced the Energy and Body line of products targeted at the health and wellness markets, which is an entirely new market in Europe where we have traditionally targeted the athletic and fitness market.
“The increase in SG&A expenses was primarily due to expenses associated with the July 2003 acquisition of Filsport and marketing expenses for our new consumer products both domestically and in Europe. In addition, we increased the number of direct U.S. sales employees from 40 to 58. Gross profit was down primarily due to a decrease in higher margin accessories and supplies as a percentage of total revenue and lower average selling prices in Europe due to the introduction of our new lower-priced models of our Compex fitness products. We anticipate gross profit will stabilize in the mid-60% range as our domestic consumer business becomes a greater percentage of revenue and as we build our share of the health and wellness markets in Europe,” Gladney said.
Looking forward, the company said for the year ending June 30, 2005 its targets for diluted earnings per share is in the range of $.28 to $.32 with revenues of $94 million to $100 million. The foregoing statement regarding annual targets is forward-looking, and actual results may differ materially. These are the company’s targets, not predictions of actual performance.
Compex Technologies has scheduled an investor conference call at 1:00 p.m. Eastern Time, September 10, 2004, to discuss fourth quarter and annual results and to answer questions.
To participate in the live call, domestic callers should dial 866-453-5550 and enter PIN 4402212. International callers should dial 678-460-1860 and use the same PIN. A telephone replay will be available until 11:00 p.m. Eastern Time on September 24th by dialing 866-453-6660 and reference number 151428.
An investment profile on Compex Technologies, Inc. may be found at http://www.hawkassociates.com/compex/profile.htm.
About Compex Technologies
Compex Technologies is a worldwide leader in designing and manufacturing transcutaneous electrical nerve stimulation and electrical muscle stimulation (EMS) products used for pain management, rehabilitation, fitness and sports performance enhancement in clinical, home healthcare, sports and occupational medicine settings. Compex is the first U. S. company to offer consumers EMS technology in FDA-cleared, over-the-counter products for sports-performance enhancement, improved physical fitness and general well being.
For investor relations information contact CFO Scott Youngstrom at (800) 676-6489 or Frank Hawkins or Julie Marshall, Hawk Associates at (305) 852-2383. Email: info@hawkassociates.com. Detailed information about Compex may be found on the websites http://www.compextechnologies.com and http://www.slendertone.com. Copies of Compex press releases, price quotes, SEC filings, analyst reports and other valuable information for investors may be found on the website http://www.hawkassociates.com.
Cautionary Statement: All statements other than historical facts included in this release regarding future operations, and particularly on the outlook for 2004, are subject to the risks inherent in predictions and “forward looking statements.” These statements are based on the beliefs and assumptions of management of Compex Technologies and on information currently available to management. Nevertheless, these forward-looking statements should not be construed as guarantees of future performance. They involve risks, uncertainties, and assumptions identified in Compex Technologies filings with the SEC, including, but not limited to:
| | • | | The increasing reliance on results of international operations; |
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| | • | | The effect of fluctuating exchange rates on international results; |
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| | • | | Compex Technologies substantial balances of third-party billing business and resulting accounts receivable and the sensitivity of its results to the accuracy of its reserve for uncollectible receivables; |
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| | • | | Changes in, and Compex Technologies compliance with, regulation and industry practice that affects the rates at which its products are reimbursed, the way it manufactures its products, and the documentation which it submits for reimbursement; |
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| | • | | The United States consumer market for electrical stimulation products is new and developing; |
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| | • | | Our ability in the United States to establish consumer demand with a limited marketing budget and secure contracts with significant retailers; |
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| | • | | Negative publicity about electrical stimulation products; |
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| | • | | World events that affect the economies of the countries in which its products are sold; and |
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| | • | | Other factors that affect the industry in which Compex Technologies functions. |
—Tables to Follow—
COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30
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ASSETS
| | 2003
| | 2004
|
CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 5,056,007 | | | $ | 3,198,832 | |
| Receivables, less reserves of $15,200,590 and $17,665,865 | | | 24,955,130 | | | | 28,802,468 | |
| at June 30, 2003 and 2004, respectively | | | | | | | | |
| Inventories | | | | | | | | |
| Raw materials | | | 1,393,470 | | | | 1,037,944 | |
| Work in process | | | 33,670 | | | | 10,765 | |
| Finished goods | | | 10,301,198 | | | | 11,981,708 | |
| Defered tax assets | | | 4,675,394 | | | | 4,975,394 | |
| Prepaid expenses | | | 2,378,044 | | | | 3,881,425 | |
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| Total current assets | | | 48,792,913 | | | | 53,888,536 | |
| Property, plant, and equipment, net | | | 4,536,804 | | | | 4,798,656 | |
| Goodwill, net | | | 10,583,287 | | | | 15,428,362 | |
| Other intangible assets, net | | | 883,634 | | | | 982,045 | |
| Deferred tax assets | | | 750,926 | | | | 800,267 | |
| Other assets | | | 104,743 | | | | 128,701 | |
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| Total current assets | | $ | 65,652,307 | | | $ | 76,026,567 | |
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LIABILITIES & STOCKHOLDERS’ EQUITY | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Current maturities of long-term debt | | $ | 5,363,850 | | | $ | 1,268,910 | |
| Notes payable | | | 4,500,000 | | | | 2,200,000 | |
| Accounts payable | | | 4,028,608 | | | | 5,678,181 | |
| Accrued liabilities - | | | | | | | | |
| Payroll | | | 1,567,710 | | | | 1,990,591 | |
| Commissions | | | 679,015 | | | | 917,068 | |
| Income taxes | | | 2,725,341 | | | | 1,167,496 | |
| Other | | | 3,349,986 | | | | 3,377,681 | |
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| Total current liabilities | | | 22,214,510 | | | | 16,599,927 | |
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| LONG-TERM LIABILITIES | | | | | | | | |
| Long-term debt | | | 1,217,268 | | | | 2,436,200 | |
| Deferred tax liabilities | | | 675,885 | | | | 659,405 | |
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| Total liabilities | | | 24,107,663 | | | | 19,695,532 | |
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| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, $.10 par value: 30,000,000 shares authorized; | | | 1,094,847 | | | | 1,242,574 | |
| issued and outstanding 10,948,469 and 12,425,747 shares at June 30, 2003 and 2004, respectively | | | | | | | | |
| Preferred stock, no par value: 5,000,000 shares authorized; | | | — | | | | | |
| none issued and outstanding | | | | | | | | |
| Additional paid in capital | | | 21,650,978 | | | | 32,887,912 | |
| Unearned compensation on restricted stock | | | — | | | | (119,370 | ) |
| Accumulated other non-owner changes in equity | | | 1,870,183 | | | | 2,340,916 | |
| Retained earnings | | | 16,928,636 | | | | 19,979,003 | |
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| Total stockholders’ equity | | | 41,544,644 | | | | 56,331,035 | |
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| Total liabilities and stockholders’ equity | | $ | 65,652,307 | | | $ | 76,026,567 | |
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COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | June 30
| | June 30
|
| | | 2003
| | 2004
| | 2003
| | 2004
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| Net sales and rental revenue | | $ | 19,843,748 | | | $ | 22,688,201 | | | $ | 75,459,916 | | | $ | 85,960,663 | |
| Cost of sales and rentals | | | 5,647,921 | | | | 7,757,375 | | | | 22,578,263 | | | | 28,435,680 | |
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| Gross profit | | | 14,195,827 | | | | 14,930,826 | | | | 52,881,653 | | | | 57,524,983 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Selling, general and administrative | | | 10,811,686 | | | | 13,062,579 | | | | 42,170,026 | | | | 49,960,356 | |
| Research and development | | | 508,687 | | | | 499,506 | | | | 2,122,659 | | | | 2,554,290 | |
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| Total operating expenses | | | 11,320,373 | | | | 13,562,085 | | | | 44,292,685 | | | | 52,514,646 | |
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| Income from operations | | | 2,875,454 | | | | 1,368,741 | | | | 8,588,968 | | | | 5,010,337 | |
| Other income (expense): | | | | | | | | | | | | | | | | |
| Interest expense | | | (111,977 | ) | | | (140,420 | ) | | | (428,467 | ) | | | (517,717 | ) |
| Other | | | 31,377 | | | | (2,429 | ) | | | 109,054 | | | | 84,747 | |
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| Income before income taxes | | | 2,794,854 | | | | 1,225,892 | | | | 8,269,555 | | | | 4,577,367 | |
| Income tax provision | | | 1,118,000 | | | | 187,000 | | | | 3,308,000 | | | | 1,527,000 | |
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| Net income | | $ | 1,676,854 | | | $ | 1,038,892 | | | $ | 4,961,555 | | | $ | 3,050,367 | |
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| Net income per common and common equivalent share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.15 | | | $ | 0.08 | | | $ | 0.45 | | | $ | 0.26 | |
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| Diluted | | $ | 0.15 | | | $ | 0.08 | | | $ | 0.45 | | | $ | 0.24 | |
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| Weighted average number of shares outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 10,945,667 | | | | 12,403,237 | | | | 10,951,808 | | | | 11,804,768 | |
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| Diluted | | | 11,276,031 | | | | 13,048,717 | | | | 11,068,860 | | | | 12,683,587 | |
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