Coastal Contacts reports third consecutive quarter of record revenues


    TSX Symbol: COA

    VANCOUVER, March 15 /CNW/ - Coastal Contacts Inc. (TSX:COA) today
announced its unaudited financial results for the quarter ended January 31,
2007. Revenue for the first quarter was $23.6 million, a new quarterly record
and an increase of $ 5.2 million or 28% from the same period in 2006. EBITDA
during the quarter was $1.2 million versus $0.6 million in the first quarter
of 2006. Net income for the quarter was $0.7 million or $0.01 per share versus
$0.2 million for the same period in 2006.
    "Our financial results for the first fiscal quarter of 2007 reflect our
commitment to profitable growth," said Roger Hardy, Coastal Contacts' Chairman
and CEO. "We are encouraged by activities in all of our markets around the
world, each holding opportunities for sales growth and margin enhancement. The
two businesses acquired in Singapore and the Netherlands in late 2006 are now
fully integrated and aggressively pursuing growth in their respective regions.
The revenue increase we experienced in Q1 was a balance of organic growth in
existing markets, favourable foreign exchange rates, and incremental revenue
from the acquisitions completed in the fourth quarter of 2006."

    Highlights for the first fiscal quarter of 2007:

    -   Total order volume for the quarter was 248,489 orders, an increase of
        66,979 orders (37%) over the same period in 2006.
    -   Reorders represented 52% of the orders in the quarter.
    -   Gross profit margin increased to 27% in the quarter compared to 25%
        in the first fiscal quarter of 2006.
    -   Selling, general and administrative expenses (SG&A) increased to 25%
        in the quarter compared to 24% in the same period in 2006.

    "Strategically we have positioned Coastal to take advantage of rapidly
increasing Internet adoption rates in high growth markets such as Asia and
Europe", said Hardy. "This trend in both regions is opening the market for
direct to consumer marketing of contact lenses, allowing us to leverage our
business model and continue our profitable growth."
    Strategic initiatives undertaken during the quarter included the

    -   Actively engaged in the development of branded vision care products
        to broaden Coastal's product offering.
    -   Actively engaged in discussion with potential acquisition targets in
        global markets.
    -   Further development of its strong co-marketing relationships with
        contact lens manufacturers.

    Company guidance for Q2, fiscal 2007 is revenue of $25.5 million, an
increase of 45% over the same period in 2006. EBITDA is forecast in the range
of $1.0-$1.5 million, excluding the impact of foreign exchange.
    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 January 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 SEDAR.
    EBITDA as referenced in this release is a non-GAAP figure and is defined
as earnings before interest, taxes, depreciation and stock based compensation.

                         CONSOLIDATED BALANCE SHEETS

                                                     January 31,  October 31,
                                                           2007         2006
                                                         $000's       $000's

    Cash and cash equivalents                            23,358       24,273
    Accounts receivable                                   7,665        7,127
    Inventory                                            13,453       12,262
    Prepaid expenses                                      1,230          702
    Due from related parties                                606          610
                                                         46,312       44,974
    Property, equipment and leasehold improvements        2,924        2,773
    Intangible assets                                    12,969       13,632
    Goodwill                                              8,562        6,697
                                                         70,767       68,076


    Accounts payable and accrued liabilities             14,005       11,867
    Income taxes payable                                    472          212
    Deferred revenue                                        350          205
    Current portion of lease inducement                      67           26
                                                         14,894       12,310
    Long-term lease inducement                              106           86
    Future income tax liability                           4,034        4,227
                                                         19,034       16,623

    Shareholders' equity
    Share capital
        Unlimited common shares without par value
        Unlimited Class A preferred shares without
         par value
      Issued and outstanding:
        73,180,412 common shares (2006 - 74,681,712)     53,263       53,515
      Shares held in Treasury
        1,135,500 common shares (2006 - 42,700)          (1,242)         (41)
    Contributed surplus                                     636          530
    Accumulated other comprehensive income               (1,088)      (2,135)
    Retained earnings (deficit)                             164         (416)
                                                         51,733       51,453
                                                         70,767       68,076


    For the three months ended January 31                  2007         2006
                                                         $000's       $000's

    Sales                                                23,605       18,410
    Cost of sales                                        17,305       13,790
    Gross profit                                          6,300        4,620

    Selling, general and administration expenses          5,802        4,329
    Share-based compensation                                106           27
    Amortization on property, equipment and
     leasehold improvements                                 160          171
    Amortization on intangible assets                       344           90
    Foreign exchange gains                                 (685)        (273)
    Interest on long-term debt                               13           16
    Interest income                                        (252)         (86)
    Income before income taxes                              812          346
    Income tax expense - current                            160           89
    Income tax expense (recovery) - future                  (29)          20
    Net income                                              681          237
    Other comprehensive income, net of tax

    Unrealized foreign exchange gains on
     translation of financial statements of
     self-sustaining foreign operations                   1,047          158

    Comprehensive Income                                  1,728          395

    Basic earnings per share                               0.01         0.00
    Diluted earnings per share                             0.01         0.00

    Weighted average number of common shares
     outstanding - basic                             74,338,984   58,034,604
    Weighted average number of common shares
     outstanding - diluted                           74,869,028   60,264,972

    Coastal Contacts will host a conference call on Thursday, March 15 at
2:00pm (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
    A live audio webcast of the call will be available in real time or on
demand. The PowerPoint presentation to be used in the presentation will also
be available by following the webcast instructions at
in the Investor Relations section.

    About Coastal Contacts:

    Coastal Contacts is the world's fastest-growing vision care supplier.
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 most 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, 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.

    Neither the TSX nor any other regulatory body has reviewed and therefore
    does not accept responsibility for the adequacy or accuracy of this

For further information:

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

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