CHAD Therapeutics Reports Fourth Quarter and Fiscal 2006 Financial Results and Provides Update on Evaluation of Strategic Opportunities.CHATSWORTH Chatsworth, estate, Derbyshire, central England, near Chesterfield. It is the seat of the dukes of Devonshire. Begun in 1552, the present Classical-style Chatsworth House was rebuilt in 1686. , Calif. -- CHAD Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. , Inc. (AMEX AMEX See: American Stock Exchange :CTU CTU Colorado Technical University CTU Czech Technical University in Prague CTU Counter Terrorist Unit CTU Clinical Trials Unit CTU Catholic Theological Union CTU Chicago Teachers Union CTU Computer Training Unit CTU Control Unit ) today reported financial results for the fourth quarter and fiscal 2006, and provided an update on the Company's evaluation of strategic alternatives to maximize shareholder value. Fourth Quarter and Fiscal 2006 Results For the three months ended March 31, 2006, revenue declined to $5,177,000 from $5,435,000 for the fourth quarter of fiscal 2005. The net loss for the fourth quarter of fiscal 2006 was $460,000, or $0.05 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which included an inventory reserve of $739,000 reflected in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold for the Company's SAGE sage, any species of the large genus Salvia, aromatic herbs or shrubs of the family Labiatae (mint family). The common sage of herb gardens is S. officinalis, a strongly scented shrubby perennial, native from S Europe to Asia Minor. Oxygen Therapeutic Device, whose sales have not met expectations. For the fourth quarter of fiscal 2005, net earnings were $589,000, or $0.06 per diluted share. For the twelve months ended March 31, 2006, revenue declined to $22,354,000 from $24,287,000 for fiscal 2005. The net loss for fiscal 2006 was $673,000, or $0.07 per diluted share, which included the inventory reserve mentioned above. This compares to net earnings for fiscal 2005 of $1,811,000, or $0.17 per diluted share. Revenue from sales of oxygen conservers and therapeutic devices declined 11% for fiscal 2006 compared to fiscal 2005, reflecting a 29% decline in sales to domestic customers and a 331% increase in international sales. The decline in domestic sales was primarily due to pricing pressure and the reduction in sales to a major customer reported previously. Sales of CHAD's proprietary TOTAL O(2)(R) home oxygen filing system increased 3% for fiscal 2006 compared to fiscal 2005. President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Earl Yager Ya´ger n. 1. (Mil.) In the German army, one belonging to a body of light infantry armed with rifles, resembling the chasseur of the French army. said, "Effective January January: see month. 1, 2006, Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. procedures were modified to provide that title for equipment used by an oxygen patient transfers to the patient after 36 months. This new policy has intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: pressure on homecare British Gas HomeCare is the name for British Gas Services which operates in the United Kingdom, which was originally set up to provide maintenance for central heating and other gas appliances. providers to reduce operating and equipment costs. Over time, we believe this will stimulate demand for CHAD's TOTAL O(2) home oxygen filling system, which is a cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. solution to the changing economics of the home oxygen market. However, the immediate impact among our customers has been a 'wait and see' approach until important questions are answered regarding equipment repair and the provision of oxygen to patients after the transfer of title. We have taken appropriate steps to adjust our operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. and inventory posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural pos·ture n. 1. A position of the body or of body parts. 2. in light of these developments. We also are continuing our efforts to expand our product offerings, and are pleased by our progress in the development of proprietary diagnostic and therapeutic products for the sleep disorder Sleep disorder Any condition that interferes with sleep. At least 84 have been identified, according to the American Sleep Disorders Association. Mentioned in: Insomnia, Night Terrors market." Working capital was approximately $9.8 million at March 31, 2006, including cash and cash equivalents of $935,000 versus $177,000 at March 31, 2005. Yager noted that the Company's cash position has increased further during the first quarter of the new fiscal year. CHAD has no debt. Update on Evaluation of Strategic Opportunities As previously reported, CHAD is in discussions with several parties concerning the distribution of both the Company's TOTAL O(2) home oxygen filling system and the products it is developing for the sleep disorder market. During the course of these discussions, the Board of Directors decided to broaden the scope of its consideration of various strategic alternatives for the Company, and engaged an investment banking firm to assist the Board in evaluating strategic opportunities to maximize value for CHAD's shareholders. "While we cannot assure shareholders that we will be successful in these efforts, and no final determination will be made until all of our alternatives have been carefully analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. in concert with our investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. , we are pleased to report that this process is nearing its conclusion. We will report publicly as soon as new information is available," Yager said. 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 pulmonary /pul·mo·nary/ (pool´mo-nar?e) 1. pertaining to the lungs. 2. pertaining to the pulmonary artery. pul·mo·nar·y adj. Of, relating to, or affecting the lungs. diseases. For more information, visit www.CHADtherapeutics.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statements under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The foregoing statements regarding prospects for future earnings and revenues, future sales trends and the introduction of products under development are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 potential loss of one of our major customers upon whom we depend for a material portion of our business, increased competition and continuing downward pressure on prices for certain of our products, the potential introduction of new products with perceived competitive advantages over the Company's products, changes or proposed changes in health care reimbursement which affect home care providers, the terms of any distribution agreement which may be negotiated with respect to our TOTAL O(2) system or our sleep products, and CHAD's ability to anticipate and respond to technological and economic changes in the home oxygen market. Moreover, the success of the Company's products 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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."
CHAD THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Twelve Months Ended Three Months Ended
March 31, March 31,
----------------------------------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales $22,354,000 $24,287,000 $ 5,177,000 $ 5,435,000
Cost of sales 15,113,000 14,581,000 3,919,000 3,465,000
------------ ------------ ------------ ------------
Gross profit 7,241,000 9,706,000 1,258,000 1,970,000
Selling, general
and
administrative 6,788,000 6,947,000 1,687,000 1,641,000
Research and
development 1,574,000 1,473,000 372,000 266,000
------------ ------------ ------------ ------------
Total costs
and expenses 8,362,000 8,420,000 2,059,000 1,907,000
------------ ------------ ------------ ------------
Operating income
(loss) (1,121,000) 1,286,000 (801,000) 63,000
Other income, net 17,000 41,000 (6,000) 13,000
------------ ------------ ------------ ------------
Earnings (loss)
before income
taxes (1,104,000) 1,327,000 (807,000) 76,000
Income tax
(benefit) (431,000) (484,000) (347,000) (513,000)
------------ ------------ ------------ ------------
Net earnings
(loss) $ (673,000) $ 1,811,000 $ (460,000) $ 589,000
============ ============ ============ ============
Earnings (loss)
per share:
Basic $ (0.07) $ 0.18 $ (0.05) $ 0.06
Diluted $ (0.07) $ 0.17 $ (0.05) $ 0.06
============ ============ ============ ============
Weighted shares
outstanding:
Basic 10,146,000 10,122,000 10,158,000 10,131,000
Diluted 10,146,000 10,625,000 10,158,000 10,636,000
CHAD THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
March 31,
Assets 2006 2005
------------ ------------
Current assets:
Cash $ 935,000 $ 177,000
Accounts receivable, net 3,220,000 3,745,000
Income taxes refundable 383,000 --
Inventories, net 6,381,000 8,512,000
Prepaid expenses and other assets 178,000 264,000
Deferred income taxes 666,000 461,000
------------ ------------
Total current assets 11,763,000 13,159,000
------------ ------------
Property, plant and equipment, net 950,000 1,191,000
Intangible assets, net 972,000 802,000
Deferred income taxes 600,000 568,000
Other assets 71,000 70,000
------------ ------------
Total Assets $14,356,000 $15,790,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 522,000 $ 1,196,000
Accrued expenses 1,435,000 1,370,000
Income taxes payable -- 200,000
------------ ------------
Total current liabilities 1,957,000 2,766,000
Other long-term liabilities 4,000 --
------------ ------------
Total liabilities 1,786,000 2,766,000
------------ ------------
Shareholders' equity:
Common shares, $.01 par value, authorized
40,000,000 shares, 10,158,000 and
10,134,000 issued and outstanding 13,413,000 13,369,000
Accumulated deficit (1,018,000) (345,000)
------------ ------------
Shareholders' equity 12,395,000 13,024,000
------------ ------------
Total Liabilities and Shareholders'
Equity $14,356,000 $15,790,000
============ ============
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion