K•Swiss Inc. (NASDAQ: KSWS) today announced results for the
second quarter ended June 30, 2011.
Financial Results
Net loss for the second quarter of 2011 was $20,026,000, or
$0.56 per diluted share, compared with a net loss of $14,545,000,
or $0.41 per diluted share, for the prior-year period. Net
loss for the six months ended June 30, 2011, was $29,868,000, or
$0.84 per diluted share, compared with a net loss of $19,243,000,
or $0.55 per diluted share, for the six months ended June 30,
2010.
For the second quarter of 2011, total worldwide revenues
increased 40.0% to $65,542,000 from $46,831,000 in the prior-year
period. Domestic revenues increased 43.5% to $32,576,000 in the
second quarter, and international revenues increased 36.6% to
$32,966,000 for the same period. Total worldwide revenues for the
first six months of 2011 increased 22.6% to $138,162,000 from
$112,701,000 for the first six months of 2010. Domestic revenues
increased 37.3% to $64,035,000 in the first half of 2011, and
international revenues increased 12.2% to $74,127,000.
Futures Orders
Worldwide futures orders with start ship dates from July through
December 2011 increased 39.2% to $89,915,000 at June 30, 2011.
Domestic futures orders increased 47.9% to $37,016,000 at
June 30, 2011, from $25,034,000 the previous year.
International futures orders increased 33.7% to $52,899,000 at June
30, 2011, from $39,567,000 the previous year.
Steven Nichols, Chairman of the Board and President, stated, “We
are encouraged by what we see with increases in revenues and
backlog and growth of our Performance category. The crucial selling
season for K•Swiss and Palladium brands is starting shortly. That
will reveal how our marketing efforts and products perform.”
2011 Guidance
For 2011, the Company expects full year consolidated revenues to
be 25% to 30% above 2010. Consolidated gross margin is expected to
be approximately 37.5%, compared to 39.2% in 2010. Selling, general
and administrative expenses are expected to be $155 million to $160
million due to continued support of the Company’s marketing
initiatives.
Investor Conference Call and Web Simulcast
K•Swiss will conduct a conference call on its second quarter
2011 results today, at 11:00 a.m. ET. The number to call for this
interactive teleconference is (212) 231-2908. A replay of this
conference call will be available until August 11, 2011, by dialing
(402) 977-9140 and entering the passcode, 21532934.
The Company will also provide an online Web simulcast and
rebroadcast of this conference call. The live broadcast of K•Swiss’
quarterly conference call will be available online at
www.streetevents.com and www.earnings.com today, beginning at 11:00
a.m. ET. The online replay will follow shortly after the call and
continue through August 11, 2011.
Founded more than forty years ago in Van Nuys, California,
K•Swiss introduced the first all-leather tennis shoe, the K•Swiss
“Classic” in 1966. Since its inception, K•Swiss has rooted itself
in California Sport with an aim to be the most inspiring and
innovative sports brand in the market. Today the Company offers
performance and lifestyle footwear and apparel for several
categories under its California Sports umbrella including Tennis
Heritage, California Fit (Running, Triathlon and Fitness) and
California Youth. K•Swiss also designs, develops and markets
footwear under the Palladium brand and owns the FORM Athletics
brand. For more information about K•Swiss, visit
www.kswiss.com.
Certain matters discussed in this press release are subject to
certain risks and uncertainties that could cause actual results to
differ materially, including, but not limited to: non-achievement
of the assumptions discussed herein, general and regional economic
conditions, availability of credit, industry trends, merchandise
trends, including market acceptance of the Company’s product
offerings, customer demand, competition, the impact of terrorism
and/or a potential global conflict on the worldwide economy,
dependence on large customers and credit concentrations and order
cancellations and reduced sales resulting from a deepening of the
current worldwide recession. A complete description of these
factors, as well as others which could affect the Company's
business, is set forth in the Company's periodic filings, including
its Form 10-Q for the quarter ended June 30, 2011, which is
currently on file with the SEC. Futures orders as of any date,
represents orders scheduled to be shipped within the next six
months. Futures orders as of a certain date do not include orders
scheduled to be shipped on or prior to that date. The mix of
“futures” and “at-once” orders can vary significantly from quarter
to quarter and year to year and, therefore, “futures” are not
necessarily indicative of revenues for subsequent periods.
K•Swiss Inc. Consolidated Statements
of Loss (In thousands, except earnings per share data)
Three Months Ended Six Months Ended June 30,
June 30, 2011 2010 2011 2010
(unaudited) (unaudited) Revenues
$ 65,542 $ 46,831
$ 138,162 $ 112,701 Cost of goods sold
43,035 29,305
87,129
66,529 Gross profit
22,507 17,526
51,033 46,172 Selling, general and administrative expenses
39,830 32,980
80,613 68,303 Impairment on intangibles
and goodwill
3,689 -
3,689 - Operating loss
(21,012
) (15,454 )
(33,269 ) (22,131 ) Other
income/(expense)
- (3,320 )
3,000 (3,320 ) Interest
income, net
2,024 228
1,963 367 Loss before income taxes
(18,988 ) (18,546 )
(28,306 ) (25,084 )
Income tax expense/(benefit)
1,038
(4,001 )
1,562 (5,841 ) Net loss
$ (20,026 ) $ (14,545 )
$
(29,868 ) $ (19,243 ) Basic loss per share
$
(0.56 ) $ (0.41 )
$ (0.84 ) $
(0.55 ) Diluted loss per share
$ (0.56 ) $
(0.41 )
$ (0.84 ) $ (0.55 ) Weighted average
number of shares outstanding Basic
35,475 35,186
35,433 35,164 Diluted
35,475 35,186
35,433
35,164
K•Swiss Inc. Condensed Balance Sheets
(In thousands)
June 30, 2011 2010
ASSETS (unaudited) CURRENT ASSETS Cash and cash equivalents
$ 45,185 $ 63,921 Restricted cash and cash
equivalents and restricted investments available for sale
22,698 23,085 Investments available for sale
17,730
81,377 Accounts receivable, net
40,401 30,185 Inventories
101,120 47,195 Prepaid expenses and other current assets
5,544 6,451 Income taxes receivable
- 13,821 Deferred
income taxes
- 2,879 Total
current assets
232,678 268,914 PROPERTY, PLANT AND
EQUIPMENT, NET
19,663 21,332 OTHER ASSETS Intangible assets
14,715 14,340 Deferred income taxes
4,730 15,406
Other
10,140 9,862 Total other
assets
29,585 39,608
$
281,926 $ 329,854 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit
$ 11,281 $ 1,493 Current portion of long-term debt
316 260 Trade accounts payable
28,336 19,478 Accrued
income taxes payable
916 136 Accrued liabilities
12,375 12,035 Total current liabilities
53,224 33,402 OTHER LIABILITIES Long-term debt
173
410 Other liabilities
14,907 14,062 Contingent purchase
price
4,148 3,320 Total other
liabilities
19,228 17,792 STOCKHOLDERS' EQUITY
209,474 278,660
$ 281,926
$ 329,854
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