Coastal Contacts reports healthy third quarter results


    TSX Symbol: COA

    VANCOUVER, Sept. 13 /CNW/ - Coastal Contacts Inc. (TSX:COA) today
announced its unaudited financial results for the third fiscal quarter ended
July 31, 2007. Revenue for the third quarter grew 26% to a new quarterly
record of $27.3 million, an increase of $5.6 million versus the same period in
2006. EBITDA during the quarter was $1.1 million versus a loss of $1.8 million
in the third quarter of 2006. Net income was $0.4 million or $0.01 per share,
versus a loss of $2.1 million or $0.03 per share for the same period in 2006.
    "Our financial results for the third fiscal quarter of 2007 demonstrate
our ability to combine rapid growth with profitability," commented Roger
Hardy, Coastal Contacts' President and CEO, "We continue to focus on markets
that offer strong margin and high growth opportunities, leveraging Coastal's
comparative advantages to build a recurring revenue stream that we believe
will create significant value for our shareholders. In addition, we are
actively pursuing private label product development, such as the recent launch
of Healthy Eyes Multi-Purpose Contact Lens Solution to further monetize our
growing database."

    The Company noted the following highlights for the third fiscal quarter
of 2007:

    -  Total orders shipped for the quarter increased 19% to 278,272, an
       increase of 43,595 orders over the same period in 2006

    -  Gross profit of $7.5 million represented 28% of sales in the quarter
       compared to 21% in the third fiscal quarter of 2006

    -  Selling, general and administrative expenses (SG&A) decreased to 23%
       of sales in the quarter compared to 30% in the same period in 2006

    -  Coastal ranked 128th out of the top 500 e-tailers in the United States
       by industry leading Internet Retailer magazine

    -  Coastal ranked 18th in the Profit 100 listing of the fastest growing
       companies in Canada for the past five fiscal years

    Mr. Hardy added, "Coastal now has annualized sales of over $100 million,
profitable operating results in four consecutive quarters, and increasing
growth opportunities available due to a larger scale, international business
platform. Coastal is well positioned to rapidly advance towards its goal of
becoming a dominant global vision care supplier."
    The company is currently anticipating a revenue range of approximately
$120 - $125 million for our 2008 fiscal year beginning November 1, 2007. This
forecast is based on successful deployment of our business initiatives, stable
foreign exchange rates, reorder rates and customer acquisition costs, and
current economic and business conditions. The forecast is a forward looking
statement and is subject to these assumptions and the various risks and
uncertainties outlined in this press release.
    At the end of the third quarter Coastal announced the launch of its own
private label Healthy Eyes Multi Purpose Solution for soft contact lenses. The
global market for contact lens solutions is estimated at over $1.6 billion
annually. Initially the Company plans to market the solution to its growing
base of customers focusing on its natural formulation, proper eye care
protocols and the ability to provide "one stop shopping" to customers for
contact lenses and solutions.
    The following selected financial information is qualified in its entirety
by, and should be read in conjunction with, our unaudited consolidated
financial statements as at and for the three month period ended July 31, 2007
and related notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations filed on SEDAR.
    Coastal Contacts' risks and uncertainties are discussed in detail in the
Company's 2006 Annual Information Form (AIF) filed January 29, 2007. The AIF
is available on
    EBITDA and orders shipped as referenced in this release are non-GAAP
figures. EBITDA is defined as earnings before interest, income taxes,
amortization and share-based compensation.

    Coastal Contacts Inc.

                         CONSOLIDATED BALANCE SHEETS
                             (Unaudited) ($000's)

                                                       July 31,   October 31,
                                                         2007        2006

    Cash and cash equivalents                          19,483         24,273
    Short-term investments                              3,934              -
    Accounts receivable                                 8,258          7,127
    Inventory                                           9,091         12,262
    Prepaid expenses                                    2,199            702
    Due from related parties                              628            610
                                                       43,593         44,974
    Property, equipment and leasehold improvements      2,761          2,773
    Intangible assets                                  12,287         13,632
    Goodwill                                            8,009          6,697
                                                       66,650         68,076

    Accounts payable and accrued liabilities           11,803         11,793
    Income taxes payable                                  842            212
    Deferred revenue                                      179            205
    Current portion of lease inducement                    53             53
                                                       12,877         12,263
    Long-term lease inducement                             93            133
    Future income tax liability                         3,727          4,227
                                                       16,697         16,623
    Shareholders' equity
    Share capital
      Unlimited common shares without par value
      Unlimited Class A preferred shares without
       par value
      Issued and outstanding:
        72,479,512 common shares (2006 - 74,681,712)   51,937         53,515
      Shares held in Treasury
        423,200 common shares (2006 - 42,700)            (460)           (41)
    Contributed surplus                                   845            530
    Accumulated other comprehensive income             (2,669)        (2,135)
    Retained earnings (deficit)                           300           (416)
                                                       49,953         51,453
                                                       66,650         68,076

                             (Unaudited) ($000's)

                                                        Three months ended
                                                      July 31,       July 31,
                                                         2007           2006

    Sales                                              27,310         21,657
    Cost of sales                                      19,772         17,027
    Gross profit                                        7,538          4,630

    Selling, general and administration expenses        6,286          6,534
    Share-based compensation                              132             40
    Amortization on property, equipment
     and leasehold improvements                           210            181
    Amortization on intangible assets                     327            151
    Foreign exchange (gain) loss                          165           (111)
    Interest income, net                                 (176)          (300)
    Income (loss) before income taxes                     594         (1,865)
    Income tax expense - current                          268            195
    Income tax expense (recovery) - future                (48)            83
    Net income (loss)                                     374         (2,143)

    Coastal Contacts will host a conference call on Thursday, September 13,
2007 at 4:30pm (EST) to discuss financial results and Company operations.
    To attend the conference call, participants in Toronto may dial
416-850-9140. Participants outside the greater Toronto area may dial the North
American toll-free number 1-866-400-3320.
    A replay of the call will be available for 7 days. To access the replay
in Toronto listeners may dial 416-915-1035. The North American toll-free
number for the replay is 1-866-245-6755. The passcode to access the replay is

    About Coastal Contacts:

    Coastal Contacts is one of the world's fastest-growing vision care
suppliers. Leveraging its world class operations in Europe, North America and
Asia, Coastal is building a predictable recurring revenue stream in the
contact lens segment and is developing complementary branded vision care
products. Already No. 1 in many of its markets, Coastal is rapidly advancing
toward its goal of becoming the dominant global vision care supplier.

    This news release contains certain forward-looking statements that
reflect the current views and/or expectations of Coastal Contacts Inc. with
respect to its performance, business and future events. Investors are
cautioned that all forward-looking statements involve risks and uncertainties
including, without limitation, those relating to changes in the market,
potential downturns in economic conditions, limited suppliers, inventory risk,
disruption in our distribution facilities, foreign exchange fluctuations,
regulatory requirements, demand for contact lenses, changes in business
strategy, competition and dependence on the internet. These risks, as well as
others, could cause actual results and events to vary significantly. Coastal
Contacts does not undertake any obligations to release publicly any revisions
for updating any voluntary forward-looking statements.

For further information:

For further information: Terry Vanderkruyk, Vice President, Corporate
Development, Coastal Contacts Inc., (604) 676-4498,

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