OAKLAND, N.J., Nov. 13 /PRNewswire-FirstCall/ -- Media Sciences
International, Inc. (NASDAQ:MSII), the leading independent
manufacturer of color toner cartridges and solid inks for use in
color business printers, today announced its quarterly financial
results for the three months ended September 30, 2009. The Company
will host an investor conference call Monday morning at 8:45 a.m.
ET to discuss its quarterly results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020604/NYTU016LOGO )
Financial results for the quarter ended September 30, 2009 include:
-- Net revenues of $5,507,000, representing a $245,000 or 4%
decrease year-over-year and an $118,000 or 2% decrease over the
prior quarter. -- Gross margin at 38.7% of net revenues, versus
45.6% for the same period last year. -- Net loss of $259,000 ($0.02
per share), versus net income of $477,000 ($0.04 per share) in the
year ago quarter, which included a non-recurring $1,500,000
litigation settlement recovery. Our first quarter results were
impacted by and include the following new or significant cash and
non-cash items: -- Product Warranty. We recognized $468,000 of
warranty expense, representing a $254,000 increase (about $168,000
after tax or about $0.01 per share) compared with the $214,000
recognized in the comparative year ago period. -- Foreign Currency
Devaluation. Year-over-year US dollar translated revenues were
adversely affected by devaluation of the British pound and euro.
All told, the devaluation of the pound and euro adversely impacted
our reported revenues and gross profits by about $156,000 (about
$103,000 after tax or about $0.01 per share). -- Stock-Based
Compensation Expense (non-cash). Our operating results include
$187,000 of pretax non-cash stock-based compensation expense
($124,000 after tax or about $0.01 per share). -- Warrant
Obligation & Related Fair Value Adjustment (non-cash).
Effective July 1, 2009, we adopted a new accounting pronouncement
which resulted in the recognition of a non-cash charge of $19,000
(about $13,000 after tax or about $0.00 per share). Despite the
fact that our outstanding warrants do not meet the criteria of
derivative instruments, this new rule requires us to treat them as
such with mark-to-market adjustments each reporting period reported
as income or expense in our statement of operations and the value
of the warrants reflected as a deemed liability on our balance
sheet. Regardless of whether these warrants expire unexercised or
are exercised by the holder this deemed obligation will never be
settled in cash. CEO's Comments Michael W. Levin, President and CEO
of Media Sciences International, Inc., noted the following
regarding the quarter, "Our results are in line with internal
expectations and reflect our cost reduction efforts over the last
year and record U.S. office products and European revenues. With
the financial rightsizing effort behind us, our focus is on driving
revenue growth, optimizing our supply chain to improve our service
levels to our partners, and returning to consistent profitability."
Revenues For the three months ended September 30, 2009, as compared
to the same period last year, net revenues decreased by $245,000 or
4% from $5,752,000 to $5,507,000. This decline in net revenues was
primarily driven by the revenue impact resulting from the
year-over-year devaluation of the British pound and the euro and a
decrease in revenues from our INKlusive program. Adjusting for the
effect of currencies, our net revenues would have been about
$5,667,000, down about $85,000 or 1% year-over-year. Based on the
declining INKlusive sales volumes, the Company made the decision to
discontinue the program effective April 1, 2009. Although no new
INKlusive contracts have been originated since April 1, 2009, we
continue to fulfill our remaining INKlusive supply commitments. In
the year ago period ending September 30, 2008 we recognized
$117,000 in net revenues associated with new INKlusive printer
placements. With discontinuance of the program, no similar revenues
were generated during the three months ended September 30, 2009. We
ended the quarter with an order backlog of $374,000, representing a
$133,000 increase over the prior quarter ended June 30, 2009. For
the comparative year ago period, we had $463,000 of order backlog
at September 30, 2008. Gross Profit Consolidated gross profit for
the three months ended September 30, 2009, compared to the same
period last year, decreased by $492,000 or 19% to $2,129,000 from
$2,621,000. For the three months ended September 30, 2009, our
gross margins declined by about 690 basis points to 38.7% from
45.6% in the comparative year ago period. The year-over-year
decline in the gross profit and margins for the quarter was
primarily attributed to an increase in our warranty expense and the
revenue and margin impact resulting from the devaluation of the
British pound and the euro. The year-over-year increase in our
warranty expense is related to one of our products where a latent
issue was determined to have been caused by a change in
manufacturing processes by one of our vendors. While the issue is
now resolved, we expect a higher than normal rate of warranty
claims in the near future. Gross margins were also adversely
impacted by year-over-year increases in: customer freight costs
borne by the Company; inbound freight costs; and manufacturing
depreciation costs. These increases were only partially offset by
some year-over-year reductions in our product costs. Our margins
reflect a portfolio of products. Generally, solid ink products
generate greater margins than do toner-based products. While
margins within the solid ink product line are very consistent,
margins within the toner-based product line vary quite
significantly. As a result, our margins can vary materially, not
only as a function of the solid ink to toner sales mix, but of the
sales mix within the toner-based product line itself. We expect to
see changes in our margins, both favorable and unfavorable, as a
result of continued changes in our sales mix. Research and
Development Research and development spending for the three months
ended September 30, 2009, compared to the same period last year,
decreased by $32,000 or 9% to $341,000 from $373,000. The decrease
in our research and development costs is attributed to our cost
reduction efforts over the past year. Looking forward, we expect
our research and development spending to represent a similar
proportion of our net revenues. Selling, General and Administrative
Selling, general and administrative expense, exclusive of
depreciation and amortization, for the three months ended September
30, 2009, compared to the same period last year, decreased by
$836,000 or 30% to $1,917,000 from $2,753,000. The decrease in
selling, general and administrative expense was primarily driven by
our cost reduction efforts and lower year-over-year costs of
litigation. For the three months ended September 30, 2009,
litigation costs were immaterial versus $184,000 in the year ago
period. Also in the year ago quarter ended September 30, 2008, the
Company incurred $299,000 of costs associated with the start-up of
its manufacturing operations in China. During the three months
ended September 30, 2009, we had no comparable costs as this
manufacturing facility was closed and these operations ceased in
the preceding fiscal quarter. Selling, general and administrative
expense, exclusive of depreciation and amortization, for the three
months ended September 30, 2009 includes about $158,000 of non-cash
stock-based compensation expense. This compares with about $163,000
of stock-based compensation expense in the comparative year ago
three months ended September 30, 2008. Net Income (Loss) For the
three months ended September 30, 2009, we lost $259,000 ($0.02 per
share basic and diluted). This compares with net income of $477,000
($0.04 per share basic and diluted) for the three months ended
September 30, 2008. But for the benefit of the non-recurring
litigation settlement recognized in the comparative year ago
period, the Company would have reported a recurring net loss of
about $513,000. Thus, the Company realized about $254,000 of
improvement year-over-year in its recurring operating results.
Conference Call Note Media Sciences International, Inc. will hold a
conference call to discuss its quarterly results on Monday,
November 16, 2009, at 8:45 a.m. Eastern Time. The call will be
webcast live by Thomson/CCBN and may be accessed through Media
Sciences' web site at http://www.mediasciences.com/. Investors and
other interested parties in the United States may access the
teleconference by calling 866.543.6405. International callers may
dial 617.213.8897. The passcode for the teleconference is 68634274.
For more information on Media Sciences, its SEC filings, or to
access more information about Media Science's quarter and
year-to-date financial results, including supplemental financial
schedules, please visit the investor relations section of the
Company's website at http://www.mediasciences.com/ or directly at
http://phx.corporate-ir.net/phoenix.zhtml?c=79804&p=irol-irhome.
(Note: If clicking on the above links does not open in a new web
page, please cut and paste the above urls into your browser's
address bar.) About Media Sciences International, Inc.
(NASDAQ:MSII): Media Sciences International, Inc. (NASDAQ:MSII),
the leading independent manufacturer of solid ink and color toner
cartridges for office color printers, has a strong reputation for
being the informed customer's choice. As the premium quality price
alternative to the printer manufacturer's brand, Media Sciences'
newly manufactured color toner and solid ink products for use in
Brother®, Dell®, Epson®, Konica Minolta®, OKI®, Ricoh®, Samsung®,
and Xerox® office color printers deliver up to and over 30% in
savings when compared to the printer manufacturer's brand. Behind
every Media Sciences product is The Science of Color®--the
company's proprietary process for delivering high quality products
at the very best price, including its commitment to exceptional,
highly responsive technical support and its longstanding,
industry-leading warranty. For more information on the Company, its
products, and its programs, visit http://www.mediasciences.com/,
E-mail , or call 201.677.9311. Brand names are used for descriptive
purposes only and are the properties of their respective owners.
Forward Looking Statements This press release contains certain
forward-looking statements about our goals and prospects within the
meaning of the Private Securities Litigation Reform Act. These
statements are based on management's current beliefs and
expectations and are subject to risks and uncertainties. Actual
results may differ materially from those included in these
statements due to a variety of factors, including those factors
identified in our Annual Report on Form 10-K for the year ended
June 30, 2009, on file with the Securities and Exchange Commission.
Any forward-looking statements contained in this release speak only
as of the time made and we assume no duty to update them, whether
as a result of new information, unexpected events, future changes,
or otherwise.
http://www.newscom.com/cgi-bin/prnh/20020604/NYTU016LOGO
http://photoarchive.ap.org/ DATASOURCE: Media Sciences
International, Inc. CONTACT: Media Sciences International, Inc.:
Investor Contact: Kevan D. Bloomgren, Chief Financial Officer, ,
+1-201-677-9311, ext. 213, or Media Contact: Bill Besold, Marketing
Communications Director, , +1-201-677-9311, ext. 299 Web Site:
http://www.mediasciences.com/
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