Charles & Colvard Reports Record Fourth Quarter and Year End Results.Business Editors MORRISVILLE Morrisville, borough (1990 pop. 9,765), Bucks co., SE Pa., on the Delaware River opposite Trenton, N.J.; settled c.1624 by the Dutch West India Company, inc. 1804. Water pumps, clutches, coatings, and concrete and rubber products are among the manufactures. , N.C.--(BUSINESS WIRE)--Feb. 13, 2003 Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by & Colvard, Ltd., (Nasdaq:CTHR) the sole source of moissanite - a created jewel available for use in fine jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion. The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring. - today reported operating results for the fourth quarter and year ended December December: see month. 31, 2002. The Company reported fourth quarter sales of $5.1 million on shipments of 29,800 carats resulting in income before taxes of $1,040,000 and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income of $557,000 or $.04 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. This represents a 28% increase over last year's fourth quarter sales of $4.0 million on shipments of 23,200 carats, a 127% gain over last year's pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern income of $457,000 and a 131% improvement over pro forma net income of $242,000 or $.02 per diluted share. The Company has reported eight consecutive quarters of profitably. This demonstration of sustained profitable operations has resulted in the Company recording a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. $6.7 million non-operating and non-cash addition to fourth quarter earnings due to the expected realization of deferred tax benefits from tax net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Pro forma amounts are shown so as to compare the results of operations for the periods presented excluding this one-time gain and giving effect to income tax expense, which will be recorded in all profitable future periods. Actual tax payments will not be made until the $16.0 million tax net operating loss carryforwards are completely utilized or if alternative minimum taxes are payable. A full explanation of this tax reconciliation can be found at the end of this release. A comparison of key operating results for the fourth quarter and year are as follows (in thousands, except for per share data):
Fourth Quarter Year
--------------- -----------------
2002 2001 2002 2001
------- ------- -------- --------
Net Sales $5,108 $4,004 $16,514 $11,505
Operating Income $995 $398 $2,551 $899
Reported after tax net income $7,698 $457 $9,408 $1,225
Reported after tax net
income per diluted share $0.56 $0.03 $0.69 $0.10
Pro Forma Net Income $557 $242 $1,463 $634
Pro Forma Net
Income per diluted share $0.04 $0.02 $0.11 $0.05
Carat shipments for the final 2002 quarter were 28% above shipments during the same period of 2001. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. carat shipments, which represent 90% of total shipments, were up 30% for the quarter, primarily due to distribution expansion into a number of new markets and increased volume with retailers. International sales for the quarter increased 14% due to growing sales through home shopping Home Shopping commonly refers to the electronic retailing / home shopping channels industry, which includes such billion dollar companies as HSN, QVC, eBay, ShopNBC, Buy.com, and Amazon.com. customers. Gross margin as a percentage of sales for the fourth quarter was 61.9%, an increase of 9.7 percentage points when compared to the same quarter in 2001. This increase was primarily caused by improved finished goods yields during the specific FIFO (First In First Out) A storage method that retrieves the item stored for the longest time. Contrast with LIFO. See traffic engineering methods. FIFO - first-in first-out period being relieved from inventory. Sales for the year ended December 31, 2002 were $16.5 million on shipments of 98,200 carats. For the year, income before taxes was $2,751,000 resulting in pro forma net income of $1,463,000 or $.11 per diluted share. For 2001, sales were $11.5 million on shipments of 62,900 carats, while pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. was $1,225,000 and pro forma net income was $634,000 or $.05 per diluted share. Bob Thomas For the Irish footballer, see . Bob Thomas (born March 1, 1965 in Appalachia, Virginia) is a radio personality, actor, and writer. He was one of the top radio announcers in Knoxville, Tennessee for 25 years. , President and chief executive officer of Charles & Colvard, said, "Our Company's fourth quarter carat sales represent the highest quarterly shipment in our history. Our 30% increase in North American sales is extraordinary in light of the relatively flat sales levels seen within the jewelry industry during the fourth quarter. I am very pleased with these record results." Mr. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs continued, "We have high expectations for 2003. Overall, moissanite demand is building both domestically and overseas as growing numbers of consumers have come to appreciate this jewel and its defining attributes of fire, brilliance and luster." Conference Call Management will host a conference call tomorrow morning, Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , February February: see month. 14th at 9:00 a.m. ET to discuss these results as well as recent corporate developments. After opening remarks, there will be a question and answer period. Interested parties may participate in the call by dialing 800-863-1575 (973-582-2866 for international callers). Please call in 10 minutes before the conference is scheduled to begin and ask for the Charles & Colvard call. The conference call will also be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . To listen to the live call, please go to www.moissanite.com and click on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section where conference calls are posted. Please go to the website 15 minutes early to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 30 days. A recorded telephone replay of the call will also be available for approximately one week following the live call. Listeners may dial 877-519-4471 (973-341-3080 for international callers) and use the code # 3723400 for the telephone replay. Charles & Colvard, based in the Research Triangle Park Research Triangle Park, research, business, medical, and educational complex situated in central North Carolina. It has an area of 6,900 acres (2,795 hectares) and is 8 × 2 mi (13 × 3 km) in size. Named for the triangle formed by Duke Univ. area of North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , is the sole source of moissanite, a created jewel used in fine jewelry. Moissanite is near colorless col·or·less adj. 1. Lacking color. 2. Weak in color; pallid. 3. Lacking animation, variety, or distinction; dull. See Synonyms at dull. , with more fire, brilliance and luster than a fine diamond, but retails for only a fraction of the cost. For more information, please access www.moissanite.com. This press release may contain 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. . Such forward-looking statements are subject to a number of material risks, uncertainties and contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. that could cause actual results to differ materially from those set forth in the forward-looking statements. Those risks and uncertainties include but are not limited to: the company's reliance on Cree Cree, Native North Americans whose language belongs to the Algonquian branch of the Algonquian-Wakashan linguistic stock (see Native American languages). They formerly inhabited the area S of Hudson Bay and James Bay in what is now Quebec, Ontario, and Manitoba S of , Inc. as the sole supplier of the raw materials; the cost of developing distribution channels; difficulties obtaining silicon carbide silicon carbide, chemical compound, SiC, that forms extremely hard, dark, iridescent crystals that are insoluble in water and other common solvents. Widely used as an abrasive, it is marketed under such familiar trade names as Carborundum and Crystolon. crystals from the sole supplier in desired qualities, sizes and volumes; and other risks and uncertainties set forth in the Company's 10-K for the year ended December 31, 2001, 10-Q and other filings with the Securities and Exchange Commission.
Charles & Colvard, Ltd.
Condensed Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ------------------------
(Unaudited)
2002 2001 2002 2001
---------------------- ------------------------
Net sales $5,107,724 $4,003,978 $16,513,515 $11,505,129
Cost of goods 1,944,794 1,911,919 6,586,925 5,137,630
---------------------- ------------------------
Gross profit 3,162,930 2,092,059 9,926,590 6,367,499
Operating expenses:
Marketing and sales 1,609,367 1,200,762 4,967,215 3,222,743
General and
administrative 552,473 480,406 2,401,087 2,104,180
Research
and development 5,775 14,271 7,259 21,977
Other expense (income) - (1,400) (450) 119,460
---------------------- ------------------------
Total
operating expenses 2,167,615 1,694,039 7,375,111 5,468,360
---------------------- ------------------------
Operating income 995,315 398,020 2,551,479 899,139
Interest income, net 44,947 59,277 199,084 325,596
---------------------- ------------------------
Income before taxes 1,040,262 457,297 2,750,563 1,224,735
Income tax
expense (benefit) (6,657,874) - (6,657,874) -
---------------------- ------------------------
Net income $7,698,136 $457,297 $9,408,437 $1,224,735
====================== ========================
Basic net
income per share $0.58 $0.03 $0.70 $0.10
====================== ========================
Diluted net
income per share $0.56 $0.03 $0.69 $0.10
====================== ========================
Weighted-average
common shares:
Basic 13,324,555 13,401,453 13,355,027 12,546,108
====================== ========================
Diluted 13,669,885 13,412,518 13,644,177 12,555,630
====================== ========================
Charles & Colvard, Ltd.
Condensed Consolidated Balance Sheets
Dec. 31, Dec. 31,
2002 2001
------------------------
Assets
Current Assets:
Cash and equivalents $13,282,245 $10,236,319
Accounts receivable 2,195,952 2,803,117
Interest receivable 11,926 13,824
Inventory 22,365,325 21,341,071
Prepaid expenses and other assets 327,179 214,749
Deferred Income Taxes 250,601 -
------------------------
Total Current Assets 38,433,228 34,609,080
Long-Term Assets
Equipment, net 449,947 342,281
Patent and license rights, net 272,291 290,569
Deferred Income Taxes 6,793,296 -
------------------------
Total Long Term Assets 7,515,534 632,850
------------------------
Total Assets $45,948,762 $35,241,930
========================
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable:
Cree, Inc. $780,029 $405,020
Other 122,931 154,831
Accrued payroll 723,467 202,012
Accrued expenses 387,417 272,490
Deferred revenue 183,367 129,801
------------------------
Total Current Liabilities 2,197,211 1,164,154
Shareholders' Equity:
Common stock (13,324,555 shares o/s) 54,972,302 55,182,692
Additional paid-in capital - stock options 2,439,734 1,964,006
Accumulated deficit (13,660,485)(23,068,922)
------------------------
Total Shareholders' Equity 43,751,551 34,077,776
------------------------
Total Liabilities and
Shareholders' Equity $45,948,762 $35,241,930
========================
Charles & Colvard, Ltd.
Pro Forma Net Income Reconciliation
Three Months Year Ended
Ended December 31, December 31,
---------------------- ------------------------
2002 2001 2002 2001
----------- ---------- ------------ -----------
As reported:
Income before
income tax expense $1,040,262 $457,297 $2,750,563 $1,224,735
Income tax benefit $6,657,874 $ - $6,657,874 $ -
----------- ---------- ------------ -----------
Net Income $7,698,136 $457,297 $9,408,437 $1,224,735
=========== ========== ============ ===========
Pro Forma (unaudited):
Income before income
tax expense $1,040,262 $457,297 $2,750,563 $1,224,735
Income taxes
expense (38% of
U.S. taxable income) $(483,098) $(215,757) $(1,287,639) $(591,180)
----------- ---------- ------------ -----------
Net Income $557,164 $241,540 $1,462,924 $633,555
=========== ========== ============ ===========
Pro forma net income is comprised of the Company's net income for the period before a one-time, non-operating, non-cash addition to earnings of $6.7 million which reflects the expected future tax benefits from net operating loss carryforwards ($16.0 million at December 31, 2002) and other deferred tax assets, and after adjustment for estimated income taxes utilizing an effective tax rate of 38% of U.S. taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . Recognition of this deferred tax asset will result in the recording of tax expense in all profitable quarters in the future. U.S. Federal tax payments will only resume once the tax net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. has been completely utilized or if alternative minimum taxes are applicable. |
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