EXHIBIT 99.1
FOR IMMEDIATE RELEASE
[CHAD LOGO]
21622 Plummer Street
THERAPEUTICS Chatsworth, CA 91311
The Ambulatory O2 Specialists! Toll Free: 800.432.8870
Phone: 818.882.0883
Main Fax: 818.882.1809
COMPANY CONTACT: INVESTOR CONTACT:
Earl L. Yager Neil Berkman Associates
President (310) 277 - 5162
www.CHADtherapeutics.com info@BerkmanAssociates.com
CHAD THERAPEUTICS REPORTS FOURTH QUARTER AND FISCAL 2003 RESULTS
CHATSWORTH, CALIFORNIA, May 22, 2003 . . . CHAD THERAPEUTICS, INC.
(ASE:CTU), a producer and distributor of oxygen conserving devices and oxygen
systems for pulmonary patients who need supplementary oxygen, today announced
operating results for the fourth quarter and fiscal year ended March 31, 2003.
For the fourth quarter, revenue increased 13% to $4,699,000 from
$4,176,000 for the fourth quarter of fiscal 2002. The net loss for the fourth
quarter of fiscal 2003 was $841,000, or $0.08 per share, which includes a
previously announced non-cash charge of $934,000 for the write-off of an
intangible license fee asset under FASB Statement No. 144, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of." For
the fourth quarter of fiscal 2002, net earnings were $996,000, or $0.10 per
diluted share, which included an income tax benefit of $995,000 that resulted
from newly enacted Federal income tax regulations extending the period during
which net operating losses may be carried back.
For the year, revenue increased 3% to $19,541,000 from $19,006,000 for
fiscal 2002. The net loss for fiscal 2003 was $433,000, or $0.04 per diluted
share, after the $934,000 non-cash charge mentioned above and $165,000 in
unanticipated expenses incurred in connection with a proxy contest waged by a
group of dissident shareholders who attempted unsuccessfully to elect nominees
to CHAD's Board. For fiscal 2002, net earnings were $1,157,000, or $0.11 per
diluted share, which included the $995,000 income tax benefit mentioned above.
NON-GAAP FINANCIAL MEASURES
In light of the significance of the events discussed above, we believe it
is helpful to consider the following non-GAAP measures in assessing the
company's financial results:
For the fourth quarter of fiscal 2003, net earnings before the non-cash
charge were $93,000, or $0.01 per diluted share. For the fourth quarter of
fiscal 2002, net earnings before the income tax benefit were $1,000, or $0.00
per diluted share.
For fiscal 2003, pro forma net earnings before the non-cash charge were
$501,000, or $0.05 per diluted share. For fiscal 2002, pro forma net earnings
before the income tax benefit were $162,000, or $0.02 per diluted share.
The following table reconciles these items.
Twelve Months Ended Three Months Ended
March 31, March 31,
RECONCILIATION TO GAAP EARNINGS 2003 2002 2003 2002
---------- ---------- --------- --------
GAAP net earnings (loss) $(433,000) $1,157,000 $(841,000) $996,000
Non-cash charge for intangible license fee write-off 934,000 -- 934,000 --
Income tax (benefit) -- (995,000) -- (995,000)
--------- ---------- --------- --------
Pro forma net earnings
before non-cash charges and income tax benefits 501,000 162,000 93,000 1,000
RECONCILIATION TO DILUTED EARNINGS PER SHARE:
GAAP net earnings (loss) per share (0.04) 0.11 (0.08) 0.10
Non-cash charge for intangible license fee write-off 0.09 -- 0.09 --
Income tax (benefit) -- (0.09) -- (0.10)
--------- ---------- --------- --------
Pro forma diluted earnings per share
before non-cash charges and income tax benefits $ 0.05 $ 0.02 $ 0.01 $ 0.00
(more)
CHAD, OXYMATIC, OXYMIZER, OXYLITE, AND TOTAL O2 ARE REGISTERED TRADEMARKS OF
CHAD THERAPEUTICS, INC.
ISO 9001 CERTIFIED COMPANY
WWW.CHADTHERAPEUTICS.COM
CHAD THERAPEUTICS REPORTS FOURTH QUARTER AND FISCAL 2003 RESULTS
May 22, 2003
Page Two
OPERATIONS REVIEW
Thomas E. Jones, Chief Executive Officer, said, "The increase in revenue
for fiscal 2003 was driven by domestic sales of oxygen conservers, which
increased 22% compared to fiscal 2002. The fourth quarter of fiscal 2003 also
saw a $177,000 increase in international revenue versus the fourth quarter of
fiscal 2002, again primarily the result of higher conserver sales. By giving
homecare providers a choice to fit virtually every patient need, the success of
our OXYMATIC(R) 400 Series and CYPRESS(TM) OXYPneumatic(R) conservers have
allowed us to continue to gain share in the domestic conserver market and to
begin to expand our position internationally as well."
Jones continued, "As anticipated, the continuing strong performance of our
conserver products was offset by lower sales of our TOTAL O2(R) Delivery System.
We previously reported that the decline in TOTAL O2 system sales resulted
primarily from the acquisition, in October 2001, of a customer that was
purchasing significant numbers of this product by a national chain that has
discontinued these purchases. October 2002 was the last month that this factor
had a significant impact on sales comparisons to the prior year. While current
sales levels have led to the previously mentioned write-off of our TOTAL O2
system intangible license fee asset, we continue to support and promote this
proprietary product and believe it will ultimately be successful in the home
respiratory care market."
OUTLOOK
Jones added, "We are pleased with our progress in implementing CHAD's
strategic growth plan. The success of our conservers is restoring CHAD's
traditional leadership in this important market segment, and we expect continued
growth for these products throughout the new fiscal year. We are optimistic that
products emerging from the recently announced license and product development
agreements with AirMatrix Technologies, Inc. and ACOBA, LLC will provide
additional growth opportunities beginning later this year.
"We currently expect positive revenue comparisons for fiscal 2004 compared
to fiscal 2003. We also expect net earnings for fiscal 2004 to exceed net
earnings for fiscal 2003 after factoring out the non-cash charge."
OPERATING LOSS CARRYFORWARDS
At March 31, 2003, the company had fully utilized its net operating loss
carrybacks and had approximately $346,000 and $2,785,000 in Federal and
California net operating loss carryforwards, respectively, available to offset
future taxable income. In September of 2002, the State of California enacted
legislation that suspended the utilization of net operating loss carryforwards
during tax years starting in 2002 and 2003 effective retroactively to January 1,
2002. As a result, CHAD will be unable to use its California net operating loss
carry forwards until the tax year beginning April 1, 2004.
ABOUT CHAD THERAPEUTICS
CHAD Therapeutics, Inc. is in the business of developing, producing and
marketing respiratory care devices designed to improve the efficiency of oxygen
delivery systems for home health care and hospital treatment of patients
suffering from pulmonary diseases. For more information, visit
www.CHADtherapeutics.com.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
The foregoing statements regarding prospects for future earnings and
revenues, future sales trends for the OXYMATIC 400 series and CYPRESS conservers
and the introduction of products under development are forward-looking
statements that involve certain risks and uncertainties. A number of important
factors could cause actual results to differ materially from those contemplated
by such forward-looking statements. These include the loss of one or more major
customers, increased competition, the introduction of new products with
perceived competitive advantages over the OXYMATIC 400 series and CYPRESS
conservers, changes or proposed changes in health care reimbursement which
affect home care providers and CHAD's ability to anticipate and respond to
technological and economic changes in the home oxygen market. Moreover, the
success of the OXYMATIC 400 series and CYPRESS conservers and products under
development will depend on their efficacy, reliability and the health care
community's perception of the products' capabilities and benefits, the degree of
acceptance the products achieve among homecare providers and, with respect to
products under development, obtaining timely regulatory approval. Additional
factors that could cause actual results to differ materially from those
contemplated in this press release can be found in the Company's annual and
quarterly reports filed with the Securities and Exchange Commission under the
caption "Outlook: Issues and Risks."
(tables attached)
#3317
CHAD THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Twelve Months Ended Three Months Ended
March 31, March 31,
------------------------------- -------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net sales $ 19,541,000 $ 19,006,000 $ 4,699,000 $ 4,176,000
Cost of sales 11,190,000 11,839,000 2,663,000 2,435,000
------------ ------------ ------------ ------------
Gross profit 8,351,000 7,167,000 2,036,000 1,741,000
Costs and expenses:
Selling, general and administrative 7,810,000 6,231,000 2,621,000 1,532,000
Research and development 989,000 819,000 294,000 214,000
------------ ------------ ------------ ------------
Total costs and expenses 8,799,000 7,050,000 2,915,000 1,746,000
------------ ------------ ------------ ------------
Operating income (loss) (448,000) 117,000 (879,000) (5,000)
Interest income 20,000 50,000 5,000 7,000
------------ ------------ ------------ ------------
Earnings (loss) before income taxes (428,000) 167,000 (874,000) 2,000
Income tax (benefit) expense 5,000 (990,000) (33,000) (994,000)
------------ ------------ ------------ ------------
Net earnings (loss) $ (433,000) $ 1,157,000 $ (841,000) $ 996,000
============ ============ ============ ============
Basic earnings (loss) per share $ (0.04) $ 0.12 $ (0.08) $ 0.10
Diluted earnings (loss) per share $ (0.04) $ 0.11 $ (0.08) $ 0.10
============ ============ ============ ============
Weighted shares outstanding:
Basic 10,071,000 10,053,000 10,076,000 10,056,000
Diluted 10,376,000 10,386,000 10,310,000 10,442,000
CHAD THEREAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(unaudited)
March 31, March 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash $ 1,596,000 $ 520,000
Accounts receivable 2,517,000 2,333,000
Income taxes refundable 4,000 995,000
Inventories, net 5,511,000 5,284,000
Prepaid expenses 601,000 315,000
------------ ------------
Total current assets 10,229,000 9,447,000
------------ ------------
Property, plant and equipment, net 1,236,000 1,652,000
Other assets 640,000 1,224,000
------------ ------------
Total Assets $ 12,105,000 $ 12,323,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 741,000 $ 777,000
Accrued expenses 1,263,000 1,169,000
Income taxes payable 1,000 4,000
------------ ------------
Total current liabilities 2,005,000 1,950,000
------------ ------------
Shareholders' equity:
Common shares, no par value, authorized 40,000,000
shares, 10,076,000 and 10,059,000 issued and outstanding 13,117,000 13,097,000
Retained earnings (accumulated deficit) (3,017,000) (2,724,000)
------------ ------------
Net shareholders' equity 10,100,000 10,373,000
------------ ------------
Total Liabilities and Shareholders' Equity $ 12,105,000 $ 12,323,000
============ ============