10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31,2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      to                     

Commission File Number: 0-18933

ROCHESTER MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

MINNESOTA	41-1613227
State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
ONE ROCHESTER MEDICAL DRIVE,
STEWARTVILLE, MN	55976
(Address of principal executive offices)	(Zip Code)

(507) 533-9600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer o      Accelerated filer o       Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

5,535,280 Common Shares as of February 10, 2006.

Table of Contents

ROCHESTER MEDICAL CORPORATION

Report on Form 10-Q
for quarter ended
December 31, 2005

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets — December 31, 2005 and September 30, 2005		1
Statements of Operations — Three months ended December 31, 2005 and 2004		2
Statements of Cash Flows — Three months ended December 31, 2005 and 2004		3
Notes to Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3. Quantitative and Qualitative Disclosures about Market Risk		11
Item 4. Controls and Procedures		11
PART II. OTHER INFORMATION		12

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

ROCHESTER MEDICAL CORPORATION
BALANCE SHEETS

	December 31,			September 30,
	2005			2005
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	1,999,919		$	1,129,876
Marketable securities		5,628,398			5,286,553
Accounts receivable, net		2,870,471			3,204,824
Inventories		3,589,222			3,936,243
Prepaid expenses and other assets		365,842			351,027
Deferred income tax asset		21,000			21,000
Total current assets		14,474,852			13,929,523
Property and equipment:
Land and buildings		6,360,447			6,360,447
Equipment and fixtures		11,890,479			11,783,213
		18,250,926			18,143,660
Less accumulated depreciation		(10,864,902	)		(10,582,357	)
Total property and equipment		7,386,024			7,561,303
Deferred income tax asset		433,000			433,000
Patents, less accumulated amortization		278,804			285,194
Total assets	$	22,572,680		$	22,209,020
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	350,157		$	283,332
Accrued expenses		671,325			744,256
Deferred revenue		157,143			157,143
Current maturities of debt		34,000			34,000
Current maturities of capital leases		40,348			39,785
Total current liabilities		1,252,973			1,258,516
Long-term liabilities:
Deferred revenue		525,000			564,286
Long-term debt, less current maturities		34,000			34,000
Capital leases, less current maturities		53,729			64,030
Total long-term liabilities		612,729			662,316
Shareholders’ equity:
Common Stock, no par value:
Authorized — 20,000,000
Issued and outstanding shares (5,529,500 – December 31, 2005; 5,523,500 – September 30, 2005)		42,514,067			42,407,912
Accumulated deficit		(21,733,272	)		(22,044,650	)
Unrealized loss on available-for-sale securities		(73,817	)		(75,074	)
Total shareholders’ equity		20,706,978			20,228,188
Total liabilities and shareholders’ equity	$	22,572,680		$	22,209,020

Note — The Balance Sheet at September 30, 2005 was derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See Notes to Financial Statements

1

ROCHESTER MEDICAL CORPORATION

STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended
	December 31,
	2005			2004
Net sales	$	4,607,200		$	3,665,272
Cost of sales		3,005,470			2,267,278
Gross profit		1,601,730			1,397,994
Operating expenses:
Marketing and selling		598,993			570,538
Research and development		173,623			196,730
General and administrative		572,255			537,028
Total operating expenses		1,344,871			1,304,296
Income from operations		256,859			93,698
Other income (expense):
Interest income		57,125			32,031
Interest (expense)		(2,606	)		(3,733	)
		54,519			28,298
Net income	$	311,378		$	121,996
Net income per share – basic	$	0.06		$	0.02
Net income per share – diluted	$	0.05		$	0.02
Weighted average number of common shares outstanding – basic		5,526,188			5,448,287
Weighted average number of common shares outstanding – diluted		5,752,370			5,683,360

See Notes to Financial Statements

2

ROCHESTER MEDICAL CORPORATION

STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended
	December 31,
	2005			2004
Operating activities:
Net income	$	311,378		$	121,996
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		298,691			325,453
Stock based compensation		79,996			—
Changes in assets and liabilities:
Accounts receivable		334,353			251,111
Inventories		347,021			(455,263	)
Other current assets		(14,815	)		(112,148	)
Accounts payable		66,828			(123,503	)
Deferred revenue		(39,286	)		(39,286	)
Other current liabilities		(72,935	)		(30,484	)
Net cash provided by (used in) operating activities		1,311,231			(62,124	)
Investing activities:
Capital expenditures		(107,266	)		(187,417	)
Patents		(9,755	)		(22,889	)
Purchases of marketable securities, net		(340,588	)		(19,475	)
Net cash used in investing activities		(457,609	)		(229,781	)
Financing activities:
Payments on capital leases		(9,738	)		(9,205	)
Proceeds from issuance of common stock		26,159			47,837
Net cash provided by financing activities		16,421			38,632
Increase (decrease) in cash and cash equivalents		870,043			(253,273	)
Cash and cash equivalents at beginning of period		1,129,876			620,441
Cash and cash equivalents at end of period	$	1,999,919		$	367,168

See Notes to Financial Statements

3

ROCHESTER MEDICAL CORPORATION

Notes to Financial Statements (Unaudited)

December 31, 2005

Note A — Basis of Presentation

     The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2005 Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended December 31, 2005 are not necessarily indicative of the results that may be expected for the year ending September 30, 2006.

Note B — Net Income Per Share

     Net income per share is calculated in accordance with Financial Accounting Standards Board Statement No. 128, “Earnings Per Share.” The Company’s basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing income by the weighted average number of common shares outstanding during the period, increased to include dilutive potential common shares issuable upon the exercise of stock options that were outstanding during the period. A reconciliation of the numerator and denominator in the basic and diluted net income per share calculation is as follows:

	Three Months Ended
	December 31,		December 31,
	2005		2004
Numerator:
Net income	$	311,378	$	121,996
Denominator:
Denominator for basic net income per share-weighted average shares outstanding		5,526,188		5,448,287
Effect of dilutive stock options		226,182		235,073
Denominator for diluted net income per share-weighted average shares outstanding	$	5,752,370	$	5,683,360
Basic net income per share	$	0.06	$	0.02
Dilute net income per share	$	0.05	$	0.02

Employee stock options of 264,000 and 429,500 for the first quarter of fiscal years 2006 and 2005, respectively, have been excluded from the diluted net income per share calculation because their exercise prices were greater than the average market price of the Company’s common stock.

Note C — Stock Based Compensation

     The Company has three stock option plans under which options have been granted to employees, including officers and directors of the Company, at a price not less than the fair market value of the Company’s common stock at the date the options were granted. Options under the 1991 Stock Option Plan are no longer granted because the 10-year granting period has expired. The granting period for the 2001 Stock Incentive Plan expires in 2011. Under the 1995

4

Non-Statutory Stock Option Plan, options also may be granted to certain non-employees at a price not less than the fair market value of the Company’s common stock at the date the options are granted. Options generally expire ten years from the date of grant or at an earlier date as determined by the committee of the Board of Directors of the Company that administers the plans. Options granted under the 1991, 1995 and 2001 Plans generally vest over four years from the date of grant.

     Effective October 1, 2005, the Company adopted SFAS 123(R) which requires all share-based payments, including grants of stock options, to be recognized in the statement of operations as an operating expense based on their fair values over the requisite service period. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” for periods beginning in fiscal 2006. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R). The Company elected to utilize the modified-prospective transition method as permitted by SFAS 123(R). Under this transition method, the Company’s financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Stock-based compensation expense for the first quarter ended December 31, 2005 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of, October 1, 2005, based on grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation;” and (b) compensation expense for all stock-based compensation awards granted subsequent to October 1, 2005, based on grant-date fair value estimated in accordance with the provisions of SFAS 123(R). The Company recorded approximately $80,000 of related stock-based compensation expense for the quarter ended December 31, 2005. This stock based compensation expense reduced both basic and diluted earnings per share by $0.01.

     On November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. SFAS 123(R)-3, “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent impact on the APIC pool and Consolidated Statements of Cash Flows of the tax effects of employee share-based compensation awards that are outstanding upon adoption of SFAS 123(R). The Company is in the process of evaluating whether to adopt the provisions of SFAS 123(R)-3.

     As of December 31, 2005, $257,729 of unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately thirty-five months.

     The following table illustrates the effect on operating results and per share information had the Company accounted for stock-based compensation in accordance with SFAS 123(R) for the three months ended December 31, 2004:

Net Income:
As reported	$	121,996
Deduct: Stock-based employee compensation under the fair value method for all awards		(70,995	)
Pro forma	$	51,001
Basic net income per share:
As reported	$	0.02
Deduct: Stock-based employee compensation under the fair value method for all awards		(0.01	)
Pro forma	$	0.01
Diluted net income per share:
As reported	$	0.02
Deduct: Stock-based employee compensation under the fair value method for all awards		(0.01	)
Pro forma	$	0.01

5

Stock Options

     There were no grants of stock options in the first quarter of fiscal 2005 or fiscal 2004. In the prior three fiscal years, there has been one grant in January of each year. We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards with the following weighted-average assumptions for the indicated periods.

	2005			2004
Dividend yield		0	%		0	%
Expected volatility		55	%		55	%
Risk-free interest rate		3.68	%		3.42	%
Expected holding period (in years)		6.44			6.63
Weighted-average grant-date fair value	$	5.34		$	5.35

     The risk-free rate is based on a treasury instrument whose term is consistent with the expected life of our stock options. The expected volatility, holding period, and forfeitures of options are based on historical experience.

     The following table represents stock option activity for the three months ended December 31, 2005:

				Weighted-		Weighted-
				Average		Average
	Number of			Exercise		Remaining
	Shares			Price		Contract Life
Outstanding options at beginning of period		1,023,000		$	8.84
Granted		0			—
Exercised		(6,000	)		4.36
Canceled		(66,250	)		12.61
Outstanding options at end of period		950,750		$	8.61	5.01 Yrs.
Outstanding exercisable at end of period		808,250		$	8.51	4.41 Yrs.

     Shares available for future stock option grants to employees and directors under existing plans were 81,500 at December 31, 2005. At December 31, 2005, the aggregate intrinsic value of options outstanding was $8,183,726, and the aggregate intrinsic value of options exercisable was $6,876,797. Total intrinsic value of options exercised was $17,943 for the three months ended December 31, 2005.

     The following table summarizes our nonvested stock option activity for the three months ended December 31, 2005:

				Weighted-
	Number of			Average Grant-
	Shares			Date Fair Value
Nonvested stock options at beginning of period		186,000		$	4.73
Vested		(37,250	)		2.51
Canceled		(6,250	)		5.17
Nonvested stock options at end of period		142,500		$	5.27

6

Note D — Inventories

     Inventories consist of the following:

	December 31,			September 30,
	2005			2005
Raw materials	$	1,029,254		$	1,076,839
Work-in-process		1,374,049			1,637,694
Finished goods		1,267,261			1,321,710
Reserve for inventory obsolescence		(81,342	)		(100,000	)
	$	3,589,222		$	3,936,243

Note E — Income Taxes

     The Company records a valuation allowance to reduce the carrying value of its net deferred tax assets to the amount that is more likely than not to be realized. Prior to fiscal 2005, the Company recorded a full valuation allowance against its deferred tax assets due to the uncertainty of the realization and timing of the benefits from those deferred tax assets as the Company had not achieved a sufficient level of sustained profitability. During 2005, management concluded that the Company had attained a sufficient level of sustained profitability to allow the valuation allowance to be reduced to reflect management’s estimate of the amount of deferred tax assets that will be realized in the near term. Considering projected levels of future income as well as the nature of the net deferred tax assets, management reduced the valuation allowance by $454,000 during 2005. During the three months ended December 31, 2005, the Company further reduced the valuation allowance by approximately $113,000 to reflect management’s estimate of the near term realization of its deferred income tax assets. The reduction in the valuation allowance was completely offset by federal and state income taxes. During the three months ended December 31, 2004, no income tax provision is presented as the Company utilized net operating loss carryforwards to offset taxable income.

Note F — Comprehensive Income

     Comprehensive income includes net income and all other nonowner changes in shareholders’ equity during a period.

     The comprehensive income for the three-month periods ended December 31, 2005 and 2004 consists of the following:

	Three Months Ended
	December 31,
	2005		2004
Net income	$	311,378	$	121,996
Unrealized gain (loss) on securities held		1,257		(8,189	)
Comprehensive income	$	312,635	$	113,807

7

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

     The following table sets forth, for the fiscal periods indicated, certain items from the statements of operations of the Company expressed as a percentage of net sales.

	Three Months Ended
	December 31,
	2005			2004
Net Sales		100	%		100	%
Cost of Sales		65	%		62	%
Gross Margin		35	%		38	%
Operating Expenses:
Marketing and Selling		13	%		16	%
Research and Development		4	%		5	%
General and Administrative		12	%		15	%
Total Operating Expenses		29	%		36	%
Income from Operations		6	%		2	%
Interest Income, Net		1	%		1	%
Net Income		7	%		3	%

     The following table sets forth, for the periods indicated, net sales information by product category (base products and advanced products), marketing method (private label and Rochester Medical® branded sales) and distribution channel (domestic and international markets)(all dollar amounts below are in thousands):

					Fiscal Quarter Ended December 31,
			2005						2004
	Domestic		International		Total		Domestic		International		Total
Private label sales:
Base products	$	1,253	$	1,132	$	2,385	$	887	$	881	$	1,768
Advanced products		161		25		186		23		1		24
Total private label sales	$	1,414	$	1,157	$	2,571	$	910	$	882	$	1,792
Branded sales:
Base products	$	814	$	748	$	1,562	$	697	$	955	$	1,652
Advanced products		326		148		474		170		51		221
Total branded sales	$	1,140	$	896	$	2,036	$	867	$	1,006	$	1,873
Total net sales:	$	2,554	$	2,053	$	4,607	$	1,777	$	1,888	$	3,665

Three Month Period Ended December 31, 2005 and December 31, 2004

     Net Sales. Net sales for the first quarter of fiscal 2006 increased 26% to $4,607,000 from $3,665,000 for the comparable quarter of last fiscal year. The sales increase primarily resulted from an increased volume of sales of Rochester Medical^® branded products, as well as an increase in private label sales. Domestic sales of branded products increased by 31% for the quarter compared to the same period last year, offset by a 10% decrease in international sales of branded products which the Company believes was primarily due to the timing of certain international orders and shipments. Private label sales increased by 43% for the quarter compared to the same period last year; however, the Company believes the increase was due in part to the timing of quarterly orders. The Company also believes that certain

8

customers may be increasing their inventory of male external catheters due to the uncertainty caused by the announced intention by Mentor Corporation to sell its urology business, further impacting private label sales.

     During the quarter ended September 30, 2003, the Company entered into an agreement granting Hollister Inc. exclusive marketing and distribution rights in certain geographic areas with respect to the Company’s hydrophilic intermittent catheters. Introduction of these products into certain European countries was delayed pending the outcome of the patent infringement action brought by Coloplast against Hollister. In December 2005, the European Patent Office revoked Coloplast’s packaging patent related to hydrophilic intermittent catheters. While the Company expected Hollister to resume introduction of the product in Europe as a result of the decision by the European Patent Office, Hollister has requested certain changes to the distribution agreement between the parties prior to commencing further introduction. The Company has not agreed to any changes to the current agreement, and the two companies are currently in discussions to attempt to resolve the matter. Sales to Hollister have remained relatively unchanged since the commencement of the patent infringement suit by Coloplast, and the Company expects sales of its male external catheters to Hollister to continue at a consistent level at least until calendar year end when the current contract for male external catheters expires. Renewal of the male external catheter contract is also under discussion, but no assurance can be given as to the outcome of discussions between the parties.

     Gross Margin. The Company’s gross margin as a percentage of net sales for the first quarter of fiscal 2006 was 35% compared to 38% for the comparable quarter of last fiscal year. The decrease in gross margin this quarter was primarily due to inefficiencies in manufacturing of newly introduced products such as our intermittent closed systems.

     Marketing and Selling. Marketing and selling expense primarily includes costs associated with base salary paid to sales and marketing personnel, sales commissions, and travel and advertising expense. Marketing and selling expense for the first quarter of fiscal 2006 increased 5% to $599,000 from $571,000 for the comparable quarter of last fiscal year. Marketing and selling expense as a percentage of net sales for the fiscal quarters ended December 31, 2005 and 2004 were 13% and 16%, respectively. The increase in marketing and selling expense is primarily due to increased compensation expense related to stock options in accordance with the new reporting requirements of SFAS 123(R).

     Research and Development. Research and development expense primarily includes internal labor costs, as well as expense associated with third-party vendors performing validation and investigative research regarding the Company’s products and development activities. Research and development expense for the first quarter of fiscal 2006 decreased to $174,000 from $197,000 for the comparable quarter of last fiscal year. Research and development expense as a percentage of net sales for the fiscal quarters ended December 31, 2005 and 2004 were 4% and 5%, respectively. The decrease in research and development expense relates primarily to decreased FemSoft clinical costs and new product development costs offset by increased compensation expense related to stock options in accordance with the new reporting requirements of SFAS 123(R).

     General and Administrative. General and administrative expense primarily includes payroll expense relating to the Company’s management and accounting, information technology and human resources staff, as well as fees and expenses of outside legal counsel and accounting advisors. General and administrative expense for the first quarter of fiscal 2006 increased 7% to $572,000 from $537,000 for the comparable quarter of last fiscal year. General and administrative expense as a percentage of net sales for the fiscal quarters ended December 31, 2005 and 2004 were 12% and 15%, respectively. The increase in general and administrative expense is primarily related to increased compensation expense related to stock options in accordance with the new reporting requirements of SFAS 123(R).

     Interest Income. Interest income for the first quarter of fiscal 2006 increased 78% to $57,000 from $32,000 for the comparable quarter of last fiscal year. The increase in interest income reflects an overall higher interest rate on short-term investments and higher principal cash balance.

     Interest Expense. Interest expense for the first quarter of fiscal 2006 decreased 30% to $3,000 from $4,000 for the comparable quarter of last fiscal year. The decrease in interest expense reflects less interest accrued in the first quarter of fiscal 2006 in connection with the debt related to the Company’s purchase of certain equipment and real estate in 2003.

     Income Taxes. The Company had a history of pre-tax losses and until fiscal 2003 had not generated taxable income. While the Company had pre-tax income in fiscal 2003, 2004 and 2005 and the first quarter of fiscal 2006, the

9

Company has net operating loss carryforwards of approximately $23 million that will offset its taxable income and, therefore, no federal income taxes are due.

     The Company established a deferred tax asset of $454,000 in fiscal 2005, which represents an estimate of the tax benefit to be realized based on projected taxable income over the next three fiscal years with a corresponding reduction in the Company’s reserve for tax loss carryforward. During the three months ended December 31, 2005, the Company further reduced the valuation allowance by approximately $113,000 to reflect management’s estimate of the near term realization of its deferred income tax assets. The Company has established a valuation allowance against the remaining amount of is deferred tax asset.

Liquidity and Capital Resources

     The Company’s cash, cash equivalents and marketable securities were $7.6 million at December 31, 2005 compared to $6.4 million at September 30, 2005. The increase in cash primarily resulted from the net cash provided by operating activities and cash generated by financing activities, offset by capital expenditures and cash used in investing activities.

     During the three-month period ended December 31, 2005, the Company generated $1,311,000 of cash from operating activities compared to a net $62,000 of cash used in operations during the comparable period of the prior fiscal year. Increased net cash from operating activities in fiscal 2006 primarily reflects net income before depreciation and decreases in accounts receivable and inventory, offset by increases in current assets and decreases in current liabilities. Accounts receivable balances during this period decreased 10% or $335,000, primarily as a result of relatively better collections. Inventories decreased 9% or $347,000, primarily as a result of increased sales and an ongoing effort to reduce inventory. Other current assets increased 4% or $15,000 during the recent three-month period, primarily as a result of prepaid insurance premiums. Current liabilities remained relatively flat. In addition, capital expenditures during this period were $107,000 compared to $187,000 for the comparable period of the prior fiscal year.

     During the fiscal quarter ended March 31, 2005, the Company renewed a $1,000,000 revolving line of credit with U.S. Bank National Association. The agreement calls for a variable interest rate that is equal to 1% plus the one-month LIBOR rate. The agreement runs through March 31, 2006. Although there can be no assurance, the Company expects to be able to renew the line of credit on substantially similar terms. As of December 31, 2005, the Company did not have any amounts outstanding under this line of credit.

     In relation to the exclusive distributorship agreement between the Company and Hollister Inc. and the related patent infringement action in the United Kingdom between Coloplast and Hollister, the Company entered into a Common Interest and Defense Agreement with Hollister in September 2004, whereby the Company agreed to share certain legal expenses incurred by Hollister under certain circumstances. In December 2005, Hollister provided invoices for significant legal fees for reimbursement by the Company. The Company does not believe the request for payment for any legal fees is justified within the terms of the agreements between the parties and, accordingly, has not reserved for payment for any portion of such invoices. The parties are in discussions in an attempt to resolve the matter. In the event that any or all of such fees are legally required to be paid by the Company, the payment of such fees could result in significant cash expenditures and expenses.

     The Company believes that its capital resources on hand at December 31, 2005, together with cash generated from sales, will be sufficient to satisfy its working capital requirements for the foreseeable future as described in the Liquidity and Capital Resources portion of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K (Part II, Item 6) for the fiscal year ended September 30, 2005. However, the Company may be required to seek additional funding sources, such as additional borrowings under the Company’s revolving line of credit or equity or debt financings, to fund the Company’s working capital requirements. If the Company decides to seek additional financing, there can be no assurance as to the outcome of such efforts, including whether financing will be available to the Company, or if available, whether it would be on terms favorable to the Company and its shareholders. Failure by the Company to secure additional financing could result in significant cash restraints and financial issues for the Company.

10

Forward-Looking Statements

     Statements other than historical information contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by the use of terminology such as “believe,” “may,” “will,” “expect,” “anticipate,” “predict,” “intend,” “designed,” “estimate,” “should” or “continue” or the negatives thereof or other variations thereon or comparable terminology. Such forward-looking statements involve known or unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the following: the uncertainty of market acceptance of new product introductions; the uncertainty of gaining new strategic relationships; the uncertainty of timing of revenues from private label sales (particularly with respect to international customers); FDA and other regulatory review and response times; the securing of Group Purchasing Organization contract participation; the uncertainty of reaching a satisfactory resolution of the current disagreements regarding contract terms and legal fees with the Company’s private label distributor for its hydrophilic intermittent catheters and any resulting effect on sales or liquidity; the uncertainty of the marketplace effects resulting from the potential Mentor Urology transaction; and other risk factors listed from time to time in the Company’s SEC reports, including, without limitation, the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K (Part II, Item 6) for the year ended September 30, 2005.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company does not believe its operations are currently subject to significant market risks for interest rates, foreign currency exchange rates, commodity prices or other relevant market price risks of a material nature. The Company does not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates.

Item 4. CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are adequately designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in applicable rules and forms.

     Changes in Internal Controls. During our first fiscal quarter, there have not been any significant changes in the Company’s internal control over financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is plaintiff in a lawsuit titled Rochester Medical Corporation vs. C.R. Bard, Inc.; Tyco International (US), Inc.; Tyco Health Care Group, L.P.; Novation LLC; VHA, Inc.; Premier, Inc.; and Premier Purchasing Partners, in the United States District Court for the Eastern District of Texas, Civil Action No. 504-CV-060. This suit alleges anti-competitive conduct against the defendants in the markets for standard and anti-infection Foley catheters as well as urethral catheters, and seeks an unspecified amount of damages and injunctive and other relief. The litigation is in the early stages of discovery, and the Company cannot now estimate the prospects for a favorable outcome.

     On November 28, 2005, the Company commenced an arbitration proceeding against Mentor Corporation to prevent Mentor from breaching its agreements with the Company. The Company requested the arbitration panel to enjoin Mentor from assigning its rights under the 1991 MEC License and Sales Distribution Agreement (the “MEC Agreement”) and the 2001 Supply Agreement in violation of those agreements and from misappropriating and wrongfully disclosing the Company’s confidential information and proprietary trade secrets licensed to Mentor under the MEC Agreement. On February 2, 2006, the Company and Mentor entered into an interim mediated settlement agreement which provided that the parties agreed to standstill on further motions or actions in the pending arbitration until 14 days after Mentor notifies the Company or publicly discloses the name of a proposed buyer of its urology business. The agreement further provides that during such 14-day period, Mentor, the Company and the proposed buyer will engage in good faith face-to-face negotiations in an effort to enter into a definitive supply or other agreement between the Company and the proposed buyer’s requirements of non-latex male external catheters or other related business. The Company cannot now estimate the prospects for a favorable outcome.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ROCHESTER MEDICAL CORPORATION
Date: February 14, 2006	By:	/s/ Anthony J. Conway
		Anthony J. Conway
		President and Chief Executive Officer
Date: February 14, 2006	By:	/s/ David A. Jonas
		David A. Jonas
		Chief Financial Officer and Treasurer

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INDEX TO EXHIBITS

Exhibit
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Anthony J. Conway, Chief Executive Officer of Rochester Medical Corporation, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Rochester Medical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 14, 2006	/s/ Anthony J. Conway
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David A. Jonas, Chief Financial Officer of Rochester Medical Corporation, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Rochester Medical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2006	/s/ David A. Jonas
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rochester Medical Corporation (the “Company”) on Form 10-Q for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony J. Conway, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Anthony J. Conway

Anthony J. Conway

Chief Executive Officer

February 14, 2006

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rochester Medical Corporation (the “Company”) on Form 10-Q for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Jonas, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David A. Jonas

David A. Jonas

Chief Financial Officer

February 14, 2006