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8-K - FORM 8-K - MATRIXX INITIATIVES INC | p18549e8vk.htm |
Exhibit 99.1
Matrixx Initiatives, Inc. Reports Fiscal 2011 Third Quarter Net Sales of $20.3 Million and Net Loss
of $11.3 Million, or $(1.21) Per Share
of $11.3 Million, or $(1.21) Per Share
SCOTTSDALE, AZ January 20, 2011; Matrixx Initiatives, Inc. (Nasdaq: MTXX), an
over-the-counter healthcare company that develops and markets Zicam® products, today announced
financial results for its fiscal third quarter and nine months ended December 31, 2010.
For the third quarter ended December 31, 2010, the Company reported net sales of $20.3 million, or
29% below the $28.5 million in net sales for the comparable quarter last year. The Company reported
a net loss for the quarter ended December 31, 2010 of $11.3 million, or $(1.21) per diluted share,
compared to net income of $3.8 million, or $0.41 per diluted share, for the quarter ended December
31, 2009. The net loss includes $15.0 million of net costs associated with the settlement of the
personal injury product liability claims ($15.5 million for the settlement less the $523,000
previously reserved) , $2.2 million to reserve for costs associated with the potential settlement
of the economic injury claims, and approximately $1.8 million for merger-related expenses. The
lower level of sales versus the quarter ended December 31, 2009 is primarily attributable to last
years high pre-season inventory purchases by retailers due to publicity of the H1N1 flu outbreak.
For the nine months ended December 31, 2010, the Company reported net sales of $44.8 million, and a
net loss of $8.4 million, or $(0.91) per diluted share. This compares to net sales of $61.0
million, and a net loss of $(13.9) million, or $(1.51) per diluted share, for the nine months ended
December 31, 2009. Results for the nine months ended December 31, 2009 included $2.0 million of
sales of nasal Cold Remedy products, which were withdrawn from the market in June 2009, and charges
of $32.9 million related to withdrawal of the products.
Bill Hemelt, President and Chief Executive Officer, said, We began to see increases in consumer
purchases of our products during the last half of our fiscal third quarter as new advertising
commenced and the incidence of illness surpassed last years illness level. Retailers continued to
trim their inventory levels in comparison to last year; however, we believe retailers inventory of
our products has reached a point where they will increase purchases to offset the increased
consumer takeaway. For the four weeks ended December 26, 2010, retail unit sales (three-outlet
syndicated scanner data, not including Wal-Mart or club stores) of Zicam Cold Remedy oral delivery
products increased approximately 30%, while the total cough/cold category increased approximately
5% compared to the prior year. We attribute the market share gains to increased and improved
advertising and other marketing activities. For the full fiscal year ending March 31, 2011, we
anticipate revenue increasing 3% to 5% above the $67.3 million achieved in fiscal 2010.
As previously disclosed, on December 13, 2010, the Company executed a settlement agreement
associated with the bulk of the personal injury product liability claims and lawsuits. The
settlement calls for the Company to pay $15.5 million to the claimants. The Company paid the first
installment of $11.5 million into an escrow account and that amount is recorded as restricted cash
on the Companys balance sheet until certain terms of the settlement are met. The remaining $4.0
million will be paid out over the next 20 months.
Results for the quarter ended December 31, 2010 include legal defense costs of approximately $2.2
million, which was reduced by $942,000 of insurance reimbursement, resulting in net legal
defense expense of $1.3 million, compared to expense of $1.8 million in the quarter ended December
31, 2009. For the nine months ended December 31, 2010, product liability and regulatory legal
defense costs were $7.0 million which was offset by $5.0 million of insurance reimbursement (which
exhausted the insurance policy), compared to $4.7 million in the nine months ended December 31,
2009.
Matrixx Initiatives, Inc.
(Unaudited)
(Unaudited)
Three Months Ended Dec. 31, | Nine Months Ended Dec. 31, | |||||||||||||||
($000s) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Net Sales |
$ | 20,289 | $ | 28,463 | $ | 44,807 | $ | 61,006 | ||||||||
Cost of Sales |
5,948 | 7,650 | 12,871 | 17,273 | ||||||||||||
Gross Profit |
14,341 | 20,813 | 31,936 | 43,733 | ||||||||||||
Selling, General & Administrative |
32,333 | 14,068 | 44,411 | 40,707 | ||||||||||||
Research and Development |
338 | 543 | 1,222 | 1,896 | ||||||||||||
Goodwill Impairment |
| | | 15,040 | ||||||||||||
Asset Impairments |
| | | 8,827 | ||||||||||||
Income (Loss) from Operations |
(18,330 | ) | 6,202 | (13,697 | ) | (22,737 | ) | |||||||||
Total Other Income |
5 | 33 | 28 | 119 | ||||||||||||
Income (Loss) Before Tax |
(18,325 | ) | 6,235 | (13,669 | ) | (22,618 | ) | |||||||||
Income Taxes |
(7,045 | ) | 2,409 | (5,247 | ) | (8,691 | ) | |||||||||
NetIncome (Loss) |
$ | (11,280 | ) | $ | 3,826 | $ | (8,422 | ) | $ | (13,927 | ) | |||||
Net Income (Loss) per Diluted Share |
$ | (1.21 | ) | $ | 0.41 | $ | (0.91 | ) | $ | (1.51 | ) | |||||
Average Shares Outstanding (mil) |
9.3 | 9.2 | 9.3 | 9.2 |
Selected Balance Sheet Information
($000s) | Dec. 31, 2010 | March 31, 2010 | Dec. 31, 2009 | |||||||||
Cash and Certificates of Deposit |
$ | 23,530 | $ | 30,219 | $ | 33,270 | ||||||
Accounts Receivable Trade |
$ | 9,385 | $ | 5,386 | $ | 15,787 | ||||||
Inventory |
$ | 8,076 | $ | 6,167 | $ | 5,340 | ||||||
Restricted Cash |
$ | 11,500 | | | ||||||||
Total Assets |
$ | 70,225 | $ | 61,465 | $ | 73,536 | ||||||
Current Liabilities |
$ | 26,927 | $ | 10,384 | $ | 12,247 | ||||||
Working Capital |
$ | 26,223 | $ | 44,355 | $ | 53,529 | ||||||
Total Debt |
$ | 0 | $ | 0 | $ | 0 | ||||||
Shareholders Equity |
$ | 43,298 | $ | 51,082 | $ | 61,289 |
About Matrixx Initiatives, Inc.
Matrixx Initiatives, Inc. is an over-the-counter healthcare company that develops and
markets Zicam® products. Zicam, LLC, its wholly-owned subsidiary, markets and sells Zicam® products
in the cough and cold category. The Company markets Zicam brand pharmaceuticals, including Zicam
Cold Remedy in multiple oral delivery forms; Zicam Allergy and Congestion Relief products; as well
as Zicam Cough and Zicam Multi-Symptom relief items. For more information regarding Matrixx
products, go to www.Zicam.com. To find out more about Matrixx Initiatives, Inc. (Nasdaq:
MTXX), visit our website at www.matrixxinc.com. For additional information, contact
William Hemelt, President and Chief Executive Officer, 602-385-8888, or Bill Barba, Vice President
of Finance & Accounting, 602-385-8881. Matrixx is located at 8515 E. Anderson Dr., Scottsdale,
Arizona 85255.
Matrixx Initiatives, Inc. Forward-Looking Statement Disclaimer:
This news release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The words believe, expect, plan, anticipate, and other
similar statements of expectation identify forward-looking statements and include statements
regarding: (i) our expectations of increased sales in the fourth quarter ending March 31, 2011;
(ii) our expectations regarding reorders and consumer purchases of Zicam products; and (iii) our
expectations regarding the settlement of legal issues. These forward-looking statements are based
on the Companys current expectations and are subject to a number of risks and uncertainties, many
of which cannot be predicted or quantified and are beyond the Companys control. Future events and
actual results could differ materially from those set forth in, contemplated by, or underlying the
forward-looking statements. Factors that could cause actual results to differ materially from the
Companys expectations include: (a) the severity and timing of the cold season; (b) the possibility
that future sales of our products will not be as strong as expected; (c) the possibility that
supply issues may impact future sales of our products; (d) the possibility that our products may
face increased competition or negative publicity; (e) the potential impact of current and future
product liability, advertising, and securities litigation; (f) regulatory issues or public
relations challenges, including those associated with the FDAs June 2009 warning letter, which
required the withdrawal of our nasal Cold Remedy products; (g) the possibility of delays or other
difficulties in selling our products or in implementing new product improvements and introducing to
the marketplace new products and brands; (h) the possibility that expenses, including legal
expenses, reserves, and expenses associated with adverse litigation outcomes may exceed expected
amounts; (i) the possibility of future product recalls; (j) increased competition from private
label manufacturers; and (k) the possibility that adverse economic conditions may affect consumer
demand. Other factors that could cause actual results to differ materially from the Companys
expectations are described in the Companys Annual Report on Form 10-K filed on June 7, 2010, under
the heading Risk Factors, filed pursuant to the Securities Exchange Act of 1934. We do not
undertake, and we specifically disclaim, any obligation to publicly update or revise any
forward-looking statement whether as a result of new information, future events or otherwise.
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