UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended September 27, 2003 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to . |
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Commission file number: 0-23633 |
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1-800 CONTACTS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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87-0571643 |
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(State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
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66 E. Wadsworth Park Drive, 3rd
Floor |
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84020 |
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(Address of principal executive offices) |
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(Zip Code) |
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(801) 924-9800 |
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(Registrant’s telephone number, including area code) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
ý Yes o No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange act).
o Yes ý No
As of November 4, 2003, the Registrant had 13,106,228 shares of Common Stock, par value $0.01 per share, outstanding.
1-800 CONTACTS, INC.
INDEX
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Condensed Consolidated Balance Sheets as of December 28, 2002 and September 27, 2003 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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December 28, |
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September 27, |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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$ |
259 |
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$ |
819 |
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Accounts receivable |
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655 |
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970 |
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Inventories, net |
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37,785 |
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29,723 |
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Prepaid income taxes |
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769 |
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— |
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Deferred income taxes |
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756 |
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691 |
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Other current assets |
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1,095 |
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1,183 |
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Total current assets |
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41,319 |
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33,386 |
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PROPERTY, PLANT AND EQUIPMENT, net |
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12,862 |
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13,258 |
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DEFERRED INCOME TAXES |
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365 |
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636 |
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GOODWILL |
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— |
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33,674 |
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DEFINITE-LIVED INTANGIBLE ASSETS, net |
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7,089 |
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9,966 |
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OTHER ASSETS |
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369 |
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888 |
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Total assets |
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$ |
62,004 |
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$ |
91,808 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Line of credit |
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$ |
5,770 |
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$ |
2,528 |
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Current portion of long-term debt |
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2,349 |
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2,856 |
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Current portion of note payable to a related party |
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504 |
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343 |
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Current portion of capital lease obligations |
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372 |
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261 |
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Accounts payable |
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8,597 |
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8,199 |
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Accrued liabilities |
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3,327 |
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6,280 |
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Unearned revenue |
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403 |
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191 |
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Total current liabilities |
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21,322 |
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20,658 |
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LONG-TERM LIABILITIES: |
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Long-term debt, less current portion |
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15,988 |
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14,151 |
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Note payable to a related party, less current portion |
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1,377 |
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1,111 |
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Capital lease obligations, less current portion |
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250 |
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67 |
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Liability related to contingent consideration |
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5,470 |
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— |
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Total long-term liabilities |
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23,085 |
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15,329 |
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STOCKHOLDERS’ EQUITY: |
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Common stock, 12,861 and 13,106 shares issued, respectively |
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129 |
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131 |
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Additional paid-in capital |
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24,013 |
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42,257 |
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Retained earnings |
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14,272 |
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13,716 |
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Treasury stock at cost, 1,473 and 0 shares, respectively |
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(20,739 |
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— |
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Accumulated other comprehensive loss |
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(78 |
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(283 |
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Total stockholders’ equity |
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17,597 |
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55,821 |
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Total liabilities and stockholders’ equity |
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$ |
62,004 |
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$ |
91,808 |
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See accompanying notes to condensed consolidated financial statements.
3
1-800 CONTACTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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Quarter Ended |
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Three Quarters Ended |
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September 28, |
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September 27, |
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September 28, |
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September 27, |
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NET SALES |
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$ |
44,316 |
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$ |
48,400 |
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$ |
128,130 |
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$ |
141,416 |
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COST OF GOODS SOLD |
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30,659 |
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29,489 |
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89,356 |
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88,629 |
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Gross profit |
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13,657 |
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18,911 |
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38,774 |
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52,787 |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: |
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Advertising expense |
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3,175 |
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7,171 |
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9,784 |
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14,551 |
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Legal and professional fees |
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1,044 |
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1,601 |
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3,444 |
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4,977 |
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Research and development expenses |
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— |
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777 |
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2,777 |
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Purchased in-process research and development |
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7,789 |
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— |
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7,789 |
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— |
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Other selling, general and administrative expenses |
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6,239 |
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9,316 |
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17,153 |
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28,069 |
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Total selling, general and administrative expenses |
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18,247 |
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18,865 |
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38,170 |
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50,374 |
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INCOME (LOSS) FROM OPERATIONS |
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(4,590 |
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46 |
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604 |
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2,413 |
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OTHER EXPENSE, net |
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(575 |
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(161 |
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