| 1-800 Contacts, Inc. | |||
| Proposed Ticker: | CTAC | 13751 South Wadsworth Park Drive, Suite D-140 | |
| Exchange: | NASDAQ-National Market | Draper, UT 84020 | |
| Industry: | Retail (SIC Code 5961) | (801) 572-8225 | |
| # of Employees: | 47 | ||
| Type of Shares: | Common Shares | Filing Date: | 11/26/97 | |
| U.S. Shares Filed: | 2,200,000 | Filing Range: | $10.00 - $12.00 | |
| Non-U.S. Shares Filed: | 0 | Offering Amount: | $24,200,000 | |
| Primary Shares: | 1,925,000 | Expenses: | $750,000 | |
| Secondary Shares: | 275,000 | Shares Out After: | 6,141,818 |
| Manager | Tier | Phone |
| McDonald & Company Securities, Inc. | Lead Manager | (216) 443-2370 |
| Morgan Keegan & Company, Incorporated | Co-manager | (901) 529-5357 |
| Issuer's Law Firm: | Kirkland & Ellis |
| Bank's Law Firm: | Squire, Sanders & Dempsey |
| Auditor: | Arthur Andersen |
Dollar amounts in U.S. millions except for per share data | |||||
| 9 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 9/30/97 | 9/30/96 | 9/30/97 | ||
| Revenue: | $3.63 | $14.14 | $1.86 | Assets: | $5.76 |
| Net Income: | $0.35 | $0.49 | $0.16 | Curr Assets: | $3.34 |
| EPS: | $0.05 | $0.10 | Liabilities: | $5.09 | |
| Prior EPS: | -$1.03 | $0.10 | Curr Liabilities: | $4.76 | |
| Cash Flow/Oper: | $0.11 | $1.72 | $0.10 | Equity: | $0.68 |
| Cash Flow/Fin: | $0.29 | -$0.69 | -$0.18 | Cash: | $0.00 |
| Cash Flow/Inv: | -$0.41 | -$0.69 | Working Cap: | -$1.43 | |
| Business Description |
| The company is a leading and rapidly growing direct marketer of replacement contact lenses. Through its easy-to-remember, toll-free telephone number, the company sells substantially all of the most popular brands of contact lenses. The company's high volume, cost-efficient operations, supported by its proprietary management information system, enable it to offer its products at competitive prices while delivering a high level of customer service. As a result of its extensive inventory, the company is generally able to ship approximately 80% of its orders within 24 hours of receipt. The company believes that it offers consumers an attractive alternative for obtaining replacement contact lenses in terms of price, convenience and speed of delivery. The company's net sales have grown rapidly, from $609,470 in 1995 to $3.6 million in 1996, an increase of 495%. For the nine months ended September 30, 1997, the company generated net sales of approximately $14.1 million, as compared to approximately $1.9 million for the nine months ended September 30, 1997, an increase of 661%. |
| Competition |
| The retail sale of contact lenses is a highly competitive and fragmented industry. Traditionally, contact lenses were almost exclusively sold to customers by eye care practitioners in connection with providing them an eye examination. Competition for patients and the revenue related to providing them contact lenses significantly increased as optical chains and large discount retailers began providing optical services and has further intensified with the entry of direct marketers such as the company. The company believes that the eye care profession suffers from a surplus of eye care practitioners, and that the resulting competitive pressure has been exacerbated by the increased prevalence of retail optical chains, mass merchandisers and direct marketers. Consequently, the competition amongst eye care practitioners to acquire customers and the competition to provide replacement lenses to such customers has intensified. The company's principal competitors include ophthalmologists and optometrists in private practice, which collectively accounted for approximately 70% of all contact lens sales in 1996. The company also competes with national optical chains such as Cole National Corporation, LensCrafters and National Vision Association and mass merchandisers, such as Wal-Mart, Sam's and Costco, which accounted for approximately 25% of all contact lens sales in 1996. The company also competes with other mail-order contact lens distributors, one of the future from new entrants in the direct marketing business, which may include national optical chains and mass merchandisers, some of which may have significantly greater resources than the company. The company believes that many of its competitors, including most eye care practitioners, national optical chains and mass merchandisers, have direct supply arrangements with contact lens manufacturers, which in some cases affords such competitors with better pricing terms and access to supply. In addition, some of the competitors are significantly larger and have significantly greater resources than the company. The company believes that the principal basis of competition in the industry include price, product availability, customer service and consumer awareness. |
| Business Plan |
| The company believes that it has significant opportunities to attract and retain new customers and increase sales through several strategic initiatives, including the following: (I) Expand Sales and Marketing Activities, (ii) Continue to Deliver High Level of Customer Service and (iii) Leverage Existing Infrastructure. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to fund additional sales and marketing activities, to increase inventory, to repay certain existing indebtedness, to fund an S Corporation distribution, to repurchase shares of common stock from a current stockholder, and for general corporate purposes and working capital. |
| Name of Shareholder | % Owned Before | % Owned After |
| Jonathan C. Coon | 66.20% | 40.90% |
| John F. Nichols | 22.10% | 15.20% |
| Donald A. Yacktman | 6.10% | 4.20% |
| Stephen A. Yactman | 5.50% | 3.80% |
| Officer Name | Title | Age |
| Scott S. Tanner | Chief Financial Officer and Director | 37 |
| Robert G. Hunter | Controller | 30 |
| Craig A. Heesch | Manager , Network Administration | 33 |
| S. Todd Witzel | Manager, Management Information Systems | 26 |
| Jonathan C. Coon | President and Director | 27 |
| John F. Nichols | Vice President, Operations and Director | 37 |