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1-800-CONTACTS reports rise in 2nd-quarter earnings

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DRAPER — 1-800-CONTACTS Inc. said Tuesday it had net income of $3.3 million, or 28 cents per share, for the second quarter. That compares with net income of $3 million, or 25 cents per share, for the same period a year earlier.

The company said it had record net sales of $44.2 million in the most recent quarter, up from $35.7 million in the prior-year period.

In the first six months of the year, the company had net income of $5.7 million, or 48 cents per share, up from $4.8 million, or 39 cents per share, for the same period a year earlier. Sales for the first six months of 2001 totaled a record $87 million, up from $67.1 million year-over-year.

Repeat sales in the second quarter increased 39 percent, to $30.8 million. Internet sales grew to $17.1 million, up from $12.6 million.

1-800 CONTACTS offers consumers an Internet and mail order service for ordering replacement contact lenses.

The company also said Tuesday that a class-action lawsuit in Florida may be settled that could lead to the company being able to buy lenses directly from Johnson & Johnson's eye care division, Vistakon. But Vistakon's interpretation of the settlement agreement and some subsequent actions have made its products more difficult for the Utah company to obtain, causing 1-800-CONTACTS to reduce its expectations for short-term net sales and gross margin.

It has suspended quantity discounts on all Vistakon contact lenses, which it expects to cut into third-quarter revenues because customers who had previously benefited by purchasing a one-year supply of lenses at a discounted price may now shift to purchasing a six-month supply of lenses. But sales in the 2002 first quarter should be boosted as customers will need replacements of those lenses sooner, 1-800-CONTACTS said.

The company also said that legal expenses in the next two quarters will be higher than originally expected because of the settlement situation.

The company's stock price closed at $20.38 Tuesday, down 2 cents during the day. In the past year, it has ranged from $18.50 to $63.75.