STEWARTVILLE, Minn., July 31 Rochester MedicalCorporation (Nasdaq: ROCM) today announced operating results for its thirdquarter ended June 30, 2008.
The Company reported sales of $8,241,000 for the current quarter comparedto $8,367,000 for the third quarter of last year. The Company also reportednet income of $312,000 or $.02 per diluted share for the quarter compared to anet income of $807,000 or $.06 per diluted share for the same period of lastyear.
The approximately 2% decrease in sales resulted from a 23% increase inRochester Medical Branded Sales offset by a 36% decrease in Private LabelSales. Sales of the Company's Branded products hit an all time quarterly highof $6,019,000 and accounted for 73% of total sales. The Company believes thedecrease in Private Label Sales is attributable to the timing of orders andordering patterns of large private label customers that can vary up and downin any given quarter; they are expected to strengthen again in the fourthquarter.
Net income adjusted for certain non-recurring unusual items and certainrecurring non-cash expenses, or "Non-GAAP Net Income" for the current quarterwas $770,000 or $.06 per diluted share compared to Non-GAAP Net Income of$1,315,000 or $0.10 per diluted share for the third quarter of last year. Thedecrease for the current quarter is primarily attributable to increasedinvestment in Sales and Marketing programs as part of our strategic plan forthis fiscal year, and increased cost of sales.
Regarding today's announcement, Rochester Medical's CEO and PresidentAnthony J. Conway said, "The 23% growth rate in our Rochester Medical BrandedSales is very gratifying and reflects the continued excellent acceptance ofour branded products in the marketplace. All three of our major brandedproduct lines -- Foleys, Intermittents, and Male External Catheters -- areshowing very solid growth. Clearly our focused investment in Sales andMarketing is having productive results. As part of this Marketing Investmentthe Company has created a new corporate website which went live today. Weencourage your visit to http://www.rocm.com. Our Private Label Sales havefluctuated over the last three quarters; those ups and downs are reflective ofthe irregularity in ordering patterns of our large Private Label customers.We expect fourth quarter Private Label Sales levels to be considerablystronger. We also expect gross margins to improve as sales volumes of Foleysand Intermittents continue to rise.
"We are seeing strong interest in our Infection Control products, and weare beginning to see increased growth in the Intermittent Catheter marketplaceas a result of the new Medicare reimbursement policy which reimburses patientsfor up to 200 catheters per month instead of four catheters per month underthe previous policy. We are looking forward to introducing new advancementsin our product lines during this calendar year, and I believe theseintroductions will further establish Rochester Medical's reputation as anindustry leader and provide increased sales opportunities for the Company."
Rochester Medical has provided Non-GAAP Net Income in addition to earningscalculated in accordance with generally accepted accounting principles (GAAP)because management believes Non-GAAP Net Income provides a more consistentbasis for comparisons that are not influenced by certain charges and non-cashexpenses and are therefore helpful in understanding Rochester Medical'sunderlying operating results. Non-GAAP Net Income is not a measure offinancial performance under GAAP, and should not be considered an alternativeto net income or any other measure of performance or liquidity under GAAP.Non-GAAP Net Income is not comparable to information provided by othercompanies. Non-GAAP Net Income has limitations as an analytical tool andshould not be considered in isolation or as a substitution for analysis of ourr