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Coastal Contacts Reports Fourth Quarter And Fiscal Year 2010 Results

We believe having more than 2.8 million vision corrected customers in our system, provides Coastal with a clear advantage in the online eyeglasses category, allowing us to acquire eyeglasses customers more cost effectively than other competitors.

Our core contact lens business continues to show predictable recurring sales as more than 71% of orders this year were from repeat customers. Coastal's contact lens business grew 7% during the year, exclusive of exchange rate fluctuations, outpacing the growth of the contact lens industry. While we continue to invest in this important category, we are directing more of our growth investments toward our eyeglasses offering which targets a market almost ten times the size of the contact lens market and one which we believe will prove more lucrative over the long term."

The Company noted the following financial highlights for 2010:

  • Total order volume was approximately 1.6 million orders in fiscal 2010, a 17% increase over fiscal 2009.  
  • Sales increased to $153 million in fiscal 2010, an increase of 10% over the previous year (15% excluding the impact of foreign exchange rate fluctuations).  
  • Eyeglasses sales increased 113% to $20 million in 2010.  
  • Sales in Canada and the United States increased 36% to $61 million in 2010.  
  • Repeat orders accounted for more than 71% of total orders.  
  • Gross margins were 29% of sales compared with 31% in fiscal 2009.   
  • Cash balance of $18.3 million at the end of fiscal 2010 compared with $11.5 million at the end of fiscal 2009.  
  • Purchased and cancelled approximately 1.7 million shares of the Company's common stock during fiscal 2010 under the terms of the approved Normal Course Issuer Bid.
COASTAL CONTACTS INC. 
CONSOLIDATED BALANCE SHEETS 
(CAD $000's) 
     
     
As at October 31  2010 2009
     
ASSETS     
Current     
Cash and cash equivalents  $18,266 $11,532
Accounts receivable  8,866 7,965
Inventory  17,536 15,701
Other current assets  3,410 2,015
  48,078 37,213
     
Property, equipment and leasehold improvements  5,558 2,813
Intangibles and Goodwill  16,623 17,274
  $70,259 $57,300
     
LIABILITIES     
Current     
Accounts payable and accrued liabilities  $27,012 $17,908
Other current liabilities  943 615
  27,955 18,523
     
Capital lease obligation  2,508  --
Other liabilities  425  --
Future income tax  3,359 3,614
  34,247 22,137
     
SHAREHOLDERS' EQUITY     
Shareholders' equity  36,012 35,163
  $70,259 $57,300
     
COASTAL CONTACTS INC.
CONSOLIDATED STATEMENTS OF EARNINGS 
(CAD $000's)
     
     
Years ended October 31 2010 2009
     
Sales  $ 153,166  $ 139,870
Cost of sales 109,390 97,009
Gross profit 43,776 42,861
     
Advertising 18,069 18,098
Selling, general and administration  19,708 16,758
Amortization  2,272 2,585
Share-based compensation  485 694
Interest expense (income) 96 (67)
Foreign exchange (gain) loss 97 (110)
Listing costs -- 906
Earnings before income taxes 3,049 3,997
Income tax expense (recovery) (53) 1,250
Net earnings 3,102 2,747
     
     
Basic net earnings per share  $ 0.05  $ 0.05
Diluted net earnings per share  $ 0.05  $ 0.05
     
COASTAL CONTACTS INC.
CONSOLIDATED STATEMENTS OF EARNINGS 
(CAD $000's)
     
Three months ended October 31 2010 2009
     
Sales  $ 40,485  $ 37,716
Cost of sales 28,653 25,930
Gross profit 11,832 11,786
     
Advertising 5,268 4,678
Selling, general and administration  5,143 4,280
Amortization  242 751
Share-based compensation  26 209
Interest expense (income) 67 1
Foreign exchange (gain) loss (174) (121)
Listing costs -- 906
Earnings before income taxes 1,260 1,082
Income tax expense (recovery) (181) 434
Net earnings 1,441 648
     
     
Basic net earnings per share  $ 0.03  $ 0.01
Diluted net earnings per share  $ 0.02  $ 0.01

Coastal Contacts will host a conference call to review the financial results and company operations on Thursday, December 16, 2010 at 1:30pm PT.   Participating in the call will be Roger Hardy, Founder and CEO and Glen Kayll, CFO. 

To attend the call, participants may dial:
     
North American Toll Free   1-888-892-3255
     
Sweden   46 8 5250 3436
     
A replay of the call will be available for 7 days. To access the replay listeners may dial:
     
Local/International   1-800-937-6305
Passcode   818757

The following selected financial information is qualified in its entirety by, and should be read in conjunction with our audited consolidated financial statements for the fiscal year ended October 31, 2010 and accompanying notes and Management's Discussion and Analysis which may be viewed on SEDAR at www.sedar.com .

Coastal's risks and uncertainties are discussed in detail in Coastal's Annual Information Form dated January 29, 2010, which is also available on SEDAR.

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