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WAYLAND, Mass.--(BW HealthWire)--Jan. 15, 1997-- Lower-than-expected sales of medical laser devices and a decision to close its Scottsdale, AZ, skin care location resulted in Candela Corporation (NASDAQ:CLZR - news) posting a fiscal 1998 second-quarter net loss of $4,441,000, or 78 cents per share. During the same period of fiscal 1997, the company had net income of $736,000, or 13 cents per share.
The company said that the medical device business accounted for approximately $232,000, or 4 cents of the loss, before the charges described below. The largest portion of the total net loss reflects operating losses from the skin care centers of $1,053,000 and a restructuring charge of $2,610,000 primarily for closing Scottsdale. A charge against earnings also includes $550,000 mostly to cover receivables from one of Candela's outside distributors of medical devices.
Candela's total sales for the quarter ended December 27, 1997, were $8,522,000, compared with $9,406,000 during the prior year. The current year's sales were below expectations for both medical and aesthetic laser devices, including a significant decline in orders from South Korea and elsewhere in the Far East. Candela normally derives about half of its revenues from outside the United States. In fiscal 1997, second-quarter sales included an larger-than-expected increase in demand for the company's MDL 3000 LaserTripter(a) device, which fragments urinary and biliary stones.
For the first half of fiscal 1998, Candela reported sales of $16,345,000 and a net loss of $5,293,000, or 94 cents per share. In 1997, sales were $17,045,000 for the first six months, with net income of $1,245,000, or 22 cents per share.
In announcing the company's results today, Gerard E. Puorro, president and chief executive officer said: ``We have been monitoring developments at our two U.S. spa locations very closely. And while we remain convinced that they have the potential to become winners someday, what we encountered became a much-too-large drain on our capital and more of a distraction than an opportunity. Clearly, Candela will have a much brighter future if we focus most of our resources and efforts on our core business.
``For nearly three decades,'' Mr. Puorro continued, ``we have been quite successful at developing, marketing and producing leading-edge medical and cosmetic laser devices, and we stand to regain our sales and earnings momentum quickest by focusing on what we do best as we work to rebuild shareholder value.
``Accordingly, we closed our location in Scottsdale effective today,'' Mr. Puorro stated, ``but our Boston facility will conduct business as usual as we work to continue to improve its financial performance and evaluate alternative strategies to maximize its value. This Candela LaserSpa(TM) Skin Care Center is located in one of Boston's best residential/ commercial neighborhoods, and -- unlike Scottsdale -- it has an established clientele.''
Commenting on Candela's outlook, Mr. Puorro said: ``We believe that the recent quarter's disappointing sales results were an aberration, masking the significant progress we are making in developing new products and serving growing markets for our medical and cosmetic lasers.'' Mr. Puorro cited as one example the recent introduction of a high-performance, low-cost Erbium:YAG laser for improving the aesthetic appearance of a person's face. Candela's technological advances enable the product to be manufactured and sold at a breakthrough price of under $50,000.
During December, Candela's GentleLASE long-pulse alexandrite laser, with the company's unique Dynamic Cooling Device -- which the U.S. Food and Drug Administration had already cleared for use in treating facial veins -- was submitted to the FDA for permission to be marketed for hair removal. ``The price/performance of GentleLASE is extremely attractive,'' Mr. Puorro added, ``and we are seeing a great deal of interest in this product.''
The Candela CEO concluded his remarks: ``By taking these difficult restructuring steps today, Candela's outlook has been greatly strengthened as we focus on our core business. We know we have the technologies, the products, the people, the market potential and a fundamentally healthy financial position. Working together, we are committed to resuming profitable growth at the earliest possible time.''
Candela Corporation develops, manufactures, and distributes innovative clinical solutions that enable physicians, surgeons and personal care practitioners to treat selected cosmetic and medical conditions using lasers, cryosurgery and other proven technologies. In addition, the company is applying its capabilities and experience with skin care and related problems to develop a network of company-owned skin care centers and spas. Founded near Boston in 1970 as Candela Laser Corporation, Candela markets and services its products in over 40 countries from offices in the United States, Europe and Asia. For more information about Candela Corporation, visit the company's Web site at http://www.clzr.com . For more information about Candela's LaserSpas, visit the web site at http:/www.laserspa.com
This press release includes certain forward-looking statements. Any such statements are subject to risks that could cause the actual results to vary materially, including negative developments relating to unforeseen order cancellations or push-outs, Candela's strategic relationships, the impact of intense competition, and changes in the laser industry.
CANDELA CORPORATION (Nasdaq: CLZR - news; in thousands except per share data) For the three months ended: December 27, 1997 December 28, 1996 Revenue Cost $ 8,522 $ 9,406 Cost of sales 4,824 4,750 Gross profit 3,698 4,656 Operatingexpenses: Research and development 742 555 Selling, general and administrative 4,694 3,031 Restructuring charge 2,610 0 Total operating expenses 8,046 3,586 (Loss)Income from (4,348) 1,070 operations Other income (expense): Interest income 9 16 Interest expense (69) (15) Other income (expense) (33) (20) Total other income (expense) (93) (19) (Loss)Income before income taxes (4,441) 1,051 Provision for income taxes 0 315 Net (loss) income $ (4,441) $ 736 Net (loss) income per share $ (0.78) $ 0.13 Weighted average number of common and common equivalent shares outstanding 5,659 5,658 -0- CANDELA CORPORATION (Nasdaq: CLZR - news) (in thousands except per share data) For the six months ended: December 27, 1997 December 28, 1996 Revenue 16,345 $ 17,045 Cost of sales 9,326 8,635 Gross profit 7,019 8,410 Operating expenses: Research and development 1,320 1,127 Selling, general and administrative 8,090 5,537 Restructuring charge 2,610 0 Total operating expenses 12,020 6,664 (Loss)Income from operations (5,001) 1,746 Other income (expense): Interest income 17 31 Interest expense (135) (31) Other income (expense) (96) 33 Total other income (expense) (214) 33 (Loss)Income before income taxes (5,215) 1,779 Provision for income taxes 78 534 Net (loss) income $ (5,293) $ 1,245 Net (loss) income per share $ (0.94) $ 0.22 Weighted average number of common and common equivalent shares outstanding 5,659 5,669 -0- CANDELA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 27, June 28, 1997 1997 Assets Current assets: Cash $ 1,727 $ 2,674 Accounts receivable 5,228 8,848 Notes receivable 1,345 1,284 Inventory 7,550 6,776 Other current assets 486 522 Total current assets 16,336 20,104 Property and equipment, net 3,380 3,523 Other assets 863 1,210 $ 20,579 $ 24,837 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 2,666 $ 1,827 Deferred income 1,743 2,071 Accounts payable 4,149 5,879 Accrued payroll and related expenses 739 833 Accrued warranty 1,239 1,338 Accrued income taxes 358 516 Other accrued liabilities 1,154 608 Reserve for restructuring 2,610 0 Total current liabilities 14,658 13,072 Long-term debt 1,227 1,519 Stockholders' equity Common stock 54 54 Additional paid-in capital 17,300 17,223 Retained deficit (12,178) (6,885) Accumulated translation adjustment (482) (146) Total stockholders' equity 4,694 10,246 20,579 $ 24,837
Candela Corporation F. Paul Broyer, 508/358-7400 x435 or Phase Two Strategies Stuart Pearlman, 212/716-3400
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