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A.T. CROSS COMPANY REPORTS SECOND QUARTER RESULTS
Lincoln, RI - July 24, 2003 - A.T. Cross Company (AMEX:
ATX), today announced financial results for the second quarter ended
June 28, 2003.
The Company also announced separately today a corporate restructuring program designed
to increase the Company's competitiveness in the global marketplace.
Second Quarter Results
- Net sales increased 6.4% to $29.2 million compared to $27.5 million last year. The
increase was driven by strong sales of Costa Del Mar, a manufacturer and marketer
of premium polarized sunglasses, which was acquired on April 21, 2003. Costa Del
Mar's second quarter is the seasonally strongest of the year. Writing instruments
and related accessory product revenue declined 5.2% to $26.1 million compared to
the prior year quarter.
- Gross margin was 51.6% versus 52.0% in the prior year period.
- Selling, general and administrative expenses were $13.9 million, or 47.7% of net
sales. This compares to SG&A expenses of $13.7 million, or 49.9% of net sales, in
the second quarter of 2002. SG&A margin improvement was primarily due to the leverage
from increased sales.
- Operating income was $0.8 million compared to a loss of $0.8 million in the prior
year's quarter. Second quarter operating results include a gain of $1.0 million
on the disposition of the Company's former Irish manufacturing facility that was
sold in the second quarter.
- Net income was $0.5 million, or $0.03 per share, which includes approximately $0.7
million, or $0.04 per share, due to the activities related to the sale of the Irish
property. During the second quarter of 2002, the Company incurred a net loss of
$0.3 million, or $0.02 per share.
David G. Whalen, President and Chief Executive Officer of A.T. Cross said, "In the
second quarter, we furthered our strategy to create a market-leading portfolio of
distinctive branded personal and business accessories. While the market for quality
writing instruments, particularly in the corporate gift channel, remained challenging,
Costa Del Mar, our newly acquired sunglass company, delivered solid results in its
seasonally strongest quarter. We continue to look for new ways to diversify our
product portfolio and expand our distribution of existing products. During the quarter,
we introduced several Cross branded line extensions that offered fresh takes on
classic favorites as well as increased the number of doors for our recently launched
business accessories line."
Six-Month Results
- Net sales remained relatively flat at $55.3 million versus $55.0 million in the
comparable period last year.
- Operating income was $0.9 million compared to breakeven in the prior year period.
Six-month operating results include a gain of $1.0 million on the sale of the Company's
former Irish facility that was sold in the second quarter.
- Net income was $0.6 million, or $0.04 per share, which includes approximately $0.7
million, or $0.04 per share, due to the activities related to the sale of the Irish
property. This compares to net income of $0.3 million, or $0.02 per share, for the
prior year period.
Mr. Whalen continued, "We are pleased about the initial response to, and future
opportunity for, our recent initiatives in light of a continuously challenging environment.
As we also announced today, we have initiated a reorganization strategy that will
both enhance our profitability as well as provide additional resources to support
these growth and diversification initiatives."
Mr. Whalen concluded, "Looking to the second half of the year, we expect to improve
upon the results we achieved in the first half. While we do not anticipate a rebound
in our corporate gift business, our retail business will benefit from the significant
progress we've made securing commitments from our office superstore customers to
provide their consumers unique holiday gift offerings. Additionally, we expect our
Europe and Asia businesses to begin to recover from the impact that the war and
SARS had in those regions. The second half of the year is the seasonally smallest
for Costa Del Mar, and we intend to use this time to focus on developing strategic
initiatives for this business. We look forward to capitalizing on the investments
we have made and the momentum we have built thus far as we move into the second
half of the year and beyond."
During the second quarter, the Company repurchased 135,000 shares of its Class A
common stock for approximately $0.7 million.
The Company's management will host a conference call tomorrow, July 25, 2003, at
9:00 a.m. Eastern Time. A live webcast of the call will be accessible on the Company's
web site 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 July 25th through August 1st at 1-800-934-4850 or 1-402-220-1178.
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 expected economic
recovery from the war and SARS, the anticipated success of business accessories,
sunglasses, new writing instrument products, programs with office superstores, and
a diversification of the Company's revenue stream). 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 ability to launch new products successfully, the
ability to successfully operate a new line of business, existing and new consumers'
reaction to the Company's writing instrument products, consumer reaction to the
Company's ability to transfer its brand beyond writing instruments, the inability
of the Company to impact the overall economic environment and the inability to enforce
the office superstores' commitments for holiday gift programs, 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 July 24, 2003. 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.
For information contact:
John T. Ruggieri
Senior Vice President and Chief Financial Officer
(401) 335-8470
jruggieri@cross.com
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with 2003 Second Quarter Results
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