Sonic Innovations Inc, Salt Lake City, has announced results for the third quarter ended September 30, 2008.
"In the third quarter of 2008, we launched three new products including two at the lower end of the price spectrum, which should drive our sales in a soft economy," says Sam Westover, chairman and CEO. "Our consolidation activities are virtually completed in Europe and we are seeing improved performance from these efforts."
Record third quarter 2008 net sales from continuing operations of $31.3 million were 4.3% higher than third quarter 2007 sales of $30 million. North American sales of $11.9 million in the third quarter 2008 decreased 5.4% from 2007. European sales of $11.7 million in the third quarter 2008 increased 8.9% from 2007. Rest-of-world sales of $7.7 million in the third quarter 2008 were up 15.2% from 2007.
Net sales from continuing operations of $97.6 million for the nine months ended September 30, 2008 increased 12 % over the same period in 2007. Net sales increased by 2.3% in North America, 13.8% in Europe, and 27.7% for rest-of-world for the first nine months of 2008 compared to 2007.
Gross profit from continuing operations of $20.1 million in the third quarter 2008 increased 6.5% from 2007. Gross margin from continuing operations for the third quarter was 64.3% in 2008 compared to last year’s third quarter level of 62.9% as a result of cost reductions in manufacturing, distribution activities, lower warranty costs, and changes in foreign currency exchange rates.
The company’s gross profit from continuing operations increased to 63.5% for the nine months ended September 30, 2008 from 62.8% for the same nine months of 2007.
Selling, general and administrative expense as a percentage of net salesfrom continuing operations increased from 54.4% in the third quarter 2007 to 57.5% in the third quarter 2008 as a result of retail acquisitions and changes in foreign currency exchange rates. Research and development expense in the third quarter 2008 of $2.0 million was down $0.1 million from $2.1 million in the prior year.
The company expects that consolidation activities will result in total restructuring charges of approximately $2.5 million in non-cash charges and $2.4 million in cash charges in 2008. Restructuring charges from continuing
operations are expected to be $0.3 million and $2.3 million in non-cash and cash charges, respectively. For the third quarter of 2008, the company recorded total restructuring charges of $0.4 million, or $0.01 per share, and
$4.1 million, or $0.15 per share, on a year-to-date basis. In the third quarter of 2008, the company recorded restructuring charges from continuing operations of $0.2 million, or $0.01 per share, and $1.6 million, or $0.06 per share, on a year-to-date basis.
Income from continuing operations for the third quarter of 2008 was $0.6 million, or $0.02 per share, compared to income $0.7 million, or $0.03 per share, for the third quarter 2007.
The year-to-date loss from continuing operations for the nine months ended September 30, 2008 was $0.5 million, or $0.02 per share, as compared with income from continuing operations of $1.1 million or $0.04 per share, for the nine months ended September 30, 2007.
During the third quarter 2008, the company recognized a tax benefit on the reversal of a deferred tax asset valuation allowance of $1.3 million related to its Australian operation. In the third quarter 2008, the company closed one of its European operations and sold another operation in Europe as part of the consolidation
efforts. These units have been classified as discontinued operations for the three and nine months ended September 30, 2008, and 2007, respectively.
As of September 30, 2008, the company had cash and cash equivalents of $13.6 million and an available line of credit of $6.0 million.
[Source: Sonic Innovations]