LIFECORE REPORTS THIRD QUARTER FINANCIAL RESULTS
CHASKA, MN. APRIL 15, 2003 -- LIFECORE BIOMEDICAL, INC. (NASDAQ:LCBM) today
reported record quarterly revenue of $11,833,000 for the third quarter ended
March 31, 2003, an increase of 15% from $10,254,000 reported for the same period
of a year ago. Revenue for the current nine-month period also increased 15% to
$31,067,000 compared to $27,072,000 reported for the nine-month period of a year
ago.
The Company reported record quarterly earnings of $947,000 or $0.07 per
share, for the third quarter compared to a loss of $657,000, or $(0.05) per
share, during the third quarter of a year ago. The Company also recorded
earnings of $213,000, or $0.02 per share, for the current nine-month period
compared to a loss of $4,669,000, or $(0.37) per share, in the nine-month period
of a year ago.
Additionally, Lifecore recorded positive cash flow from operations of
$1,253,000 for the nine months ended March 31, 2003 and held cash and cash
equivalents of $3,277,000 on that date.
HYALURONAN DIVISION
Hyaluronan Division third quarter revenue decreased 4% to $4,547,000 as
compared to $4,717,000 reported for the third quarter of a year ago. Conversely,
nine-month revenue increased 13% to a record $11,656,000 from the $10,270,000
reported for the nine-month period of a year ago. The year-over-year decrease in
the third quarter was due to reduced veterinary hyaluronan product shipments.
The year-over-year increase in the nine-month period was due to increased
ophthalmic and orthopedic hyaluronan shipments.
Operating income for the Hyaluronan Division increased over five-fold
to $595,000 in the current three-month period compared to operating income of
$93,000 for the same period of a year ago. Operating income of $732,000 was
recorded for the nine-month period compared to an operating loss of $3,239,000
reported for the same period of a year ago.
During the third quarter, the Company's ferric hyaluronan anti-adhesion
product, GYNECARE INTERGEL* Adhesion Prevention Solution ("INTERGEL Solution"),
was voluntarily withdrawn from the market. The withdrawal was made in order to
assess
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LIFECORE THIRD QUARTER 2003 FINANCIAL RESULTS--PAGE 2
post-marketing experience associated with the device. The assessment will
include a review of technical issues, surgical techniques, and circumstances
associated with the postmarketing events, including reports from off-label use.
The components of that review process have not yet been completely defined.
Lifecore currently believes that such review will be conducted expeditiously and
that the product will return to the market following completion of the review
and implementation of any appropriate action.
Therefore, the change in market status of INTERGEL Solution will
negatively impact the financial performance of this Division in future periods.
In particular, INTERGEL Solution manufacturing has been suspended and will cause
an increase in unused manufacturing capacity charges beginning with the current
fiscal fourth quarter.
ORAL RESTORATIVE DIVISION
Oral Restorative Division third quarter revenue increased 32% to a
record $7,286,000 compared to $5,537,000 for the period of a year ago. Current
nine-month revenue increased 16% to $19,411,000 compared to $16,802,000 reported
for the nine-month period of a year ago. Domestic and international revenues
increased over the previous year in both reporting periods due to benefits
obtained from past investments in sales and marketing infrastructure.
Operating income of $377,000 was reported for third quarter compared
to an operating loss of $544,000 for the same period of a year ago. A reduced
operating loss of $177,000 was reported for the nine-month period compared to an
operating loss of $899,000 for the same period of last year.
FUTURE GUIDANCE
Financial performances for the fourth quarter of fiscal 2003 and the
first quarter of fiscal 2004 are expected to result in a loss ranging from $0.05
to $0.09 and $0.07 to $0.11 per share, respectively. This expectation reflects
management's current understanding of the effects of the INTERGEL Solution sales
suspension, increased unused capacity charges, and additional expenses for
consulting and professional fees. Terms of the Company's INTERGEL Solution
Supply Agreement require payment for outstanding firm purchase orders which is
expected to result in INTERGEL Solution revenue to Lifecore of approximately
$1,100,000 for the fourth quarter of fiscal 2003. Unused manufacturing capacity
charges and increased operating expenses are expected to aggregate $1,300,000
for the fourth quarter of fiscal 2003.
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LIFECORE THIRD QUARTER 2003 FINANCIAL RESULTS--PAGE 3
SAFE HARBOR STATEMENT
Certain statements in this release are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Such statements
may imply the accuracy of certain financial projections, the adequacy of cash
flow, the successful market re-introduction of INTERGEL Solution, and the
continued general regulatory and market acceptance of the Company's products and
are subject to change. Because of numerous risks and uncertainties in Lifecore's
business activity, actual results may differ materially from those implied.
Investors are strongly cautioned to refer to more detailed discussions of those
risks presented in the Company's periodic reports on Forms 10-Q and 10-K.
Lifecore Biomedical develops, manufactures, and markets biomaterials
and medical devices for various surgical markets.
Additional Company news and general information are available at
http://www.lifecore.com.
Lifecore Biomedical's quarterly earnings conference call will be
available online at www.lifecore.com and www.streetevents.com. The live web cast
will begin at 3:45 PM, Central Daylight Time on Tuesday, April 15, 2003. The web
cast replay will begin shortly after the completion of the live call. To access
the telephone replay, call (719) 457-0820, passcode 746330.
CONTACT: 952.368.4300
Jim Bracke, President and CEO
Dennis J. Allingham, E.V.P. and CFO
Colleen M. Olson, VP Corporate Administrative Operations
*Trademark of ETHICON, INC.
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LIFECORE BIOMEDICAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------------------------------------------------------------------
2003 2002 2003 2002
--------------- -------------------- --------------------- -----------------------
Net sales $ 11,833,000 $ 10,254,000 $ 31,067,000 $ 27,072,000
Cost of goods sold 5,413,000 5,653,000 14,487,000 15,911,000
--------------- -------------------- --------------------- -----------------------
Gross profit 6,420,000 4,601,000 16,580,000 11,161,000
Operating expenses
Research and development 890,000 1,057,000 2,858,000 3,820,000
Marketing and sales 3,154,000 2,778,000 9,059,000 7,913,000
General and administrative 1,404,000 1,217,000 4,108,000 3,566,000
--------------- -------------------- --------------------- -----------------------
5,448,000 5,052,000 16,025,000 15,299,000
--------------- -------------------- --------------------- -----------------------
Operating income (loss) 972,000 (451,000) 555,000 (4,138,000)
Other income (expense)
Interest income 3,000 (26,000) 38,000 52,000
Interest expense (163,000) (178,000) (591,000) (571,000)
Other 135,000 (2,000) 211,000 (12,000)
--------------- -------------------- --------------------- -----------------------
(25,000) (206,000) (342,000) (531,000)
--------------- -------------------- --------------------- -----------------------
Net income (loss) $ 947,000 $ (657,000) $ 213,000 $ (4,669,000)
=============== ==================== ===================== =======================
Net income (loss) per share
Basic $ 0.07 $ (0.05) $ 0.02 $ (0.37)
=============== ==================== ===================== =======================
Diluted $ 0.07 $ (0.05) $ 0.02 $ (0.37)
=============== ==================== ===================== =======================
Weighted average shares outstanding
Basic 12,885,206 12,806,177 12,880,683 12,785,059
=============== ==================== ===================== =======================
Diluted 12,962,378 12,806,177 12,965,972 12,785,059
=============== ==================== ===================== =======================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
2003 2002
-------------------- ---------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,277,000 $ 2,528,000
Accounts receivable 7,253,000 7,882,000
Inventories 12,695,000 11,810,000
Prepaid expense 950,000 997,000
-------------------- ---------------------
Total current assets 24,175,000 23,217,000
PROPERTY, PLANT AND EQUIPMENT, NET 25,431,000 26,794,000
LONG-TERM INVENTORY 2,873,000 3,317,000
OTHER ASSETS 6,411,000 6,768,000
-------------------- ---------------------
$ 58,890,000 $ 60,096,000
==================== =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 3,993,000 $ 5,434,000
Long-term obligations 6,024,000 6,114,000
Shareholders' equity 48,873,000 48,548,000
-------------------- ---------------------
$ 58,890,000 $ 60,096,000
==================== =====================
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LIFECORE BIOMEDICAL, INC.
Divisional Statements of Operations
Three Months Ended March 31,
(Unaudited)
HYALURONATE DIVISION ORAL RESTORATIVE DIVISION CONSOLIDATED
--------------------------------- --------------------------------- ---------------------------------
2003 2002 2003 2002 2003 2002
----------------- --------------- ----------------- --------------- --------------- -----------------
Net sales $ 4,547,000 $ 4,717,000 $ 7,286,000 $ 5,537,000 $ 11,833,000 $ 10,254,000
Cost of goods sold 2,619,000 3,278,000 2,794,000 2,375,000 5,413,000 5,653,000
----------------- --------------- ----------------- --------------- --------------- -----------------
Gross profit 1,928,000 1,439,000 4,492,000 3,162,000 6,420,000 4,601,000
Operating expenses
Research and development 668,000 815,000 222,000 242,000 890,000 1,057,000
Marketing and sales 164,000 54,000 2,990,000 2,724,000 3,154,000 2,778,000
General and administrative 501,000 477,000 903,000 740,000 1,404,000 1,217,000
----------------- --------------- ----------------- --------------- --------------- -----------------
1,333,000 1,346,000 4,115,000 3,706,000 5,448,000 5,052,000
----------------- --------------- ----------------- --------------- --------------- -----------------
Operating income (loss) $ 595,000 $ 93,000 $ 377,000 $ (544,000) $ 972,000 $ (451,000)
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LIFECORE BIOMEDICAL, INC.
Divisional Statements of Operations
Nine Months Ended March 31,
(Unaudited)
HYALURONATE DIVISION ORAL RESTORATIVE DIVISION CONSOLIDATED
------------------------------------ ------------------------------- --------------------------------
2003 2002 2003 2002 2003 2002
------------------ ----------------- ---------------- -------------- ----------------- --------------
Net sales $11,656,000 $ 10,270,000 $19,411,000 $ 16,802,000 $ 31,067,000 $ 27,072,000
Cost of goods sold 6,707,000 8,901,000 7,780,000 7,010,000 14,487,000 15,911,000
------------------ ----------------- ---------------- -------------- ----------------- --------------
Gross profit 4,949,000 1,369,000 11,631,000 9,792,000 16,580,000 11,161,000
Operating expenses
Research and development 2,171,000 3,132,000 687,000 688,000 2,858,000 3,820,000
Marketing and sales 517,000 183,000 8,542,000 7,730,000 9,059,000 7,913,000
General and administrative 1,529,000 1,293,000 2,579,000 2,273,000 4,108,000 3,566,000
------------------ ----------------- ---------------- -------------- ----------------- --------------
4,217,000 4,608,000 11,808,000 10,691,000 16,025,000 15,299,000
------------------ ----------------- ---------------- -------------- ----------------- --------------
Operating income (loss) $ 732,000 $ (3,239,000) $ (177,000) $ (899,000) $ 555,000 $ (4,138,000)
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