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A.T. CROSS COMPANY REPORTS FIRST QUARTER RESULTS
Net Sales Increase 11.6%
Lincoln, RI – April 22, 2004 – A.T. Cross Company (AMEX:
ATX), today announced financial results for the first quarter ended April
3, 2004.
First Quarter Results
Net sales increased 11.6% to $29.3 million from $26.2 million in the first quarter
of 2003. On a constant dollar basis, consolidated net sales rose 7.3%. Global writing
instrument and accessory revenue was $25.7 million compared to $26.2 million in
the year-ago period due to a $1.0 million decline in OEM business, which includes
private label and digital pen products. Costa Del Mar contributed $3.6 million in
net sales for the quarter.
Gross margin climbed 420 basis points to 54.3% of net sales from 50.1% of net sales
in the same period last year. This increase was primarily driven by productivity
improvements, leverage from the revenue increase and income related to a favorable
property tax settlement. The settlement included a $682,000 tax refund, recorded
as a reduction to cost of goods sold, and $401,000 of interest income. Excluding
the benefit of the tax settlement, gross margin increased 190 basis points.
Selling, general and administrative expenses were $14.8 million versus $11.9 million
in the same period last year. This increase is due to $1.6 million of Costa Del
Mar’s SG&A expenses as well as $1.3 million of increased selling and marketing support
primarily associated with the East and West Coast direct sales force, the recent
launch of Verve, and the unfavorable impact of foreign exchange.
As part of its previously announced restructuring plan, the Company recorded a pre-tax
restructuring charge of $1.1 million for costs associated with global reorganization
efforts that were primarily focused on the EMEA (Europe, Middle East & Africa) region.
On a reported basis, the net loss was $704,000, or $0.05 per share compared to net
income of $151,000, or $0.01 per share in the prior year quarter. On a comparable
basis, which excludes non-recurring items, the net loss was $667,000 or $0.05 per
share. Please see the schedule accompanying this release for the full reconciliation
of GAAP to comparable basis (non-GAAP) net (loss) income and (loss) earnings per
share.
David G. Whalen, President and Chief Executive Officer of A.T. Cross, commented,
“The increased consolidated sales, continued strength in international markets and
improved gross margins we experienced in the first quarter are all encouraging indicators.
As we move to the remainder of the year, we remain focused on delivering exceptional
products and programs to all of our accounts. We are particularly focused on our
newest quality writing instrument, Verve, and of course our off shelf holiday gift
offerings. In addition, Costa Del Mar generated sound results during the quarter
and we expect this positive momentum to continue in the second quarter, its seasonally
strongest period.
With regard to the increased selling and marketing expenses, we chose to spend more
heavily than normal in the quarter, given the programs we are implementing. We expect
these early investments to generate momentum as we enter our key writing instrument
and accessories selling season later in the year. The growth of our spending levels,
compared to the prior year, will moderate as the year progresses.”
Mr. Whalen concluded, “Additionally, we are pleased with the progress we are making
with our “Cross into the Future” corporate reorganization program. The cost savings
generated by this program will ultimately support our marketing and selling programs,
improve the bottom line and contribute to long-term shareholder value. As such,
we reiterate our previously announced expectations for annual consolidated net revenue
to increase in the mid-to-high single digit range and for improvement in reported
annual profitability.”
The Company’s management will host a conference call tomorrow, April 23, 2004, at
9:00 a.m. Eastern Time. A live webcast of the call will be accessible on the Company’s
website at www.cross.com. The webcast will be archived for 30 days on the site,
while a telephone replay of the call will be available beginning at 11:00 a.m. Eastern
Time on April 23rd through April 30, 2004 at 1-402-220-2331 or 1-888-276-5302.
Non-GAAP Measures
This release contains comparable basis (non-GAAP) measures of net (loss) income
and (loss) earnings per share that are included as a complement to results provided
in accordance with generally accepted accounting principles. These non-GAAP results
are among the indicators management uses as a basis for evaluating financial performance
as well as for forecasting future periods. For these reasons, management believes
these non-GAAP measures can be useful to investors, potential investors and others.
The presentation of this additional information is not meant to be considered in
isolation or as a substitute for net (loss) income or (loss) earnings per share
prepared in accordance with GAAP.
About A.T. Cross Company
Building on the rich tradition of its award-winning writing instruments and reputation
for innovation and craftsmanship, A.T. Cross Company is a designer and marketer
of branded personal and business accessories. Cross provides a range of distinctive
products that appeal to a growing market of consumers seeking to enhance their image
and facilitate their lifestyle. Cross products, including award-winning quality
writing instruments, timepieces, business accessories and Costa Del Mar sunglasses,
are distributed in retail and corporate gift channels worldwide. For more information,
visit the A.T. Cross web site at www.cross.com.
Statements contained in this release that are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (including statements relating to the strength of
international markets, continued increased sales, particularly relating the expected
sales strength in the latter half of the year, improved gross margins, the anticipated
effect of the launch of new writing instrument products, in particular, Verve, the
anticipated performance of Costa Del Mar, the anticipated success of holiday programs
with office superstores, and the anticipated financial and operational benefits
from restructuring). In addition, words such as "believes," "anticipates," "expects,"
and similar expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to risks and uncertainties, including but
not limited to the uncertainty of foreign markets, the difficulty in preserving
and maintaining the benefits of cost reduction programs, the ability to launch new
products successfully, consumers’ reaction to the Company’s existing and new writing
instrument products, consumers’ reaction to the Company’s ability to transfer its
brand beyond writing instruments, and are not guarantees since there are inherent
difficulties in predicting future results. Actual results could differ materially
from those expressed or implied in the forward-looking statements. The information
contained in this document is as of April 22, 2004. The Company assumes no obligation
to update any forward-looking statements contained in this document as a result
of new information or future events or developments. Additional discussion of factors
that could cause actual results to differ materially from management's expectations
is contained in the Company's filings under the Securities Exchange Act of 1934.
CONTACTS:
John T. Ruggieri
Senior Vice President and
Chief Financial Officer
401-335-8470
Investor Relations:
Financial Dynamics
Cara O’Brien/Melissa Myron/Lila Sharifian
212-850-5600
Download a spreadsheet
with 2004 First Quarter Results
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