HAUPPAUGE, N.Y.--(BUSINESS WIRE)--March 26, 2003--Twinlab Corporation (OTCBB: TWLB) today announced its results for the fourth quarter and year ended December 31, 2002.
The Company incurred a net loss of $(6.5) million or $(0.22) per share for the fourth quarter of 2002, versus a net loss of $(66.8) million or $(2.33) per share for the fourth quarter of last year. The net loss for the fourth quarter of 2002 includes restructuring and asset impairment charges totaling $3.9 million relating to the consolidation of the Company's manufacturing and distribution facilities. The net loss for the fourth quarter of 2001 includes (i) non-cash asset impairment charges of $3.8 million primarily relating to the write-down of goodwill and fixed assets of Health Factors International, Inc., (ii) non-cash asset impairment charges of $30.0 million (included in loss from discontinued operations) relating to the write-down of goodwill and intangible assets of Bronson Laboratories, Inc. ("Bronson"); and (iii) a $27.4 million non-cash charge relating to the write-down of deferred tax assets. Fourth quarter net sales, excluding the operations of Bronson which has been accounted for as a discontinued operation, were $38.3 million compared to $39.8 million in the comparable quarter last year.
For the year ended December 31, 2002, the Company incurred a net loss of $(32.4) million or $(1.12) per share, versus a net loss of $(91.6) million or $(3.19) per share last year. The net loss for the year ended December 31, 2002 includes restructuring and asset impairment charges totaling $16.8 million relating to the consolidation of the Company's manufacturing and distribution facilities offset by a federal income tax benefit of $6.9 million representing a refund received by the Company. The net loss for the year ended December 31, 2002 also includes an incremental charge for sales returns and allowances of $8.8 million recorded during the third quarter in connection with a plan to rationalize product offerings to several key customers. The net loss for the year ended December 31, 2001 includes: (i) non-cash asset impairment charges totaling $33.8 million, discussed above, (ii) a $22.8 million non-cash charge related to a write-down of deferred tax assets ($27.4 million recorded in the fourth quarter, discussed above); and (iii) a loss on the disposition of Changes International, Inc. ("Changes") of approximately $8.7 million. Net sales, excluding the operations of Bronson and Changes which have been accounted for as discontinued operations, were $146.6 million for the year ended December 31, 2002 compared to $187.1 million for fiscal 2001.
Ross Blechman, Twinlab's Chairman, President and Chief Executive Officer stated, "Fiscal 2002 sales and operating results have been negatively impacted by our continued restructuring efforts. However, on relatively consistent fourth quarter sales versus last year, gross profit increased $2.9 million to $14.1 million and our gross profit margin improved from 28.1% to 36.9%. Operating expenses, which increased slightly from the fourth quarter of last year, reflect approximately $1.0 million of additional advertising expenditures to drive future sales."
Mr. Blechman continued, "The consolidation of our manufacturing and distribution facilities was substantially completed during 2002. In January 2003, we completed the disposal of our non-strategic businesses with the previously announced sale of Bronson. We believe that these actions, coupled with previously completed cost reduction initiatives, have better positioned Twinlab for the future."
The Company also announced today that as a result of the sale of Bronson, it has entered into an amendment of its Revolving Credit Facility which, among other things, revised the financial covenants relating to EBITDA (as defined therein) and reduced the total facility from $50 million to $45 million.
Twinlab Corporation, headquartered in Hauppauge, N.Y., is a leading manufacturer and marketer of high quality, science-based, nutritional supplements, including a complete line of vitamins, minerals, nutraceuticals, herbs and sports nutrition products.
Except for historical information contained herein, this release contains, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, forward- looking statements that are based on management's beliefs and assumptions, current expectations, estimates and projections. Many of the factors that will determine the Company's financial results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. The Company disclaims any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise. Important factors and risks that may affect future results include but are not limited to: (i) the impact of competitive products; (ii) changes in law and regulations; (iii) adequacy and availability of insurance coverage; (iv) limitations on future financing; (v) increases in the cost of borrowings and unavailability of debt or equity capital; (vi) the effect of adverse publicity regarding nutritional supplements; (vii) uncertainties relating to acquisitions; (viii) the inability of the Company to gain and/or hold market share; (ix) exposure to and expense of resolving and defending product liability claims and other litigation; (x) consumer acceptance of the Company's products; (xi) managing and maintaining growth; (xii) customer demands; (xiii) the inability to achieve cost savings and operational efficiencies from the recent consolidation of the manufacturing and distribution facilities; (xiv) dependence on individual products; (xv) dependence on individual customers, (xvi) market and industry conditions including pricing, demand for products, levels of trade inventories and raw materials availability, (xvii) the success of product development and new product introductions into the marketplace including the Company's line of ephedra-free products; (xviii) lack of available product liability insurance for ephedra-containing products; (xix) slow or negative growth in the nutritional supplement industry; (xx) the departure of key members of management; (xxi) the absence of clinical trials for many of the Company's products; (xxii) the ability of the Company to efficiently manufacture its products; as well as other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission, copies of which are available upon request from the Company's investor relations department.