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A.T. CROSS COMPANY REPORTS SECOND QUARTER RESULTS
Lincoln, RI – July 21, 2004 – A.T. Cross Company (AMEX:
ATX) today announced financial results for the second quarter ended July
3, 2004.
Second Quarter Results
Net sales were $29.1 million compared to $29.5 million in the second quarter of
2003. Global writing instrument and accessory revenue was $24.3 million compared
to $26.3 million in the same period last year. A strong performance from international
markets in the quarter was more than offset by a significant decline in U.S. national
accounts. Several factors adversely impacted the Company’s sales to this channel,
including the implementation of tighter inventory controls by these accounts. Costa
Del Mar contributed $4.8 million in net sales for the quarter compared to $3.2 million
in the prior year quarter. Costa Del Mar was acquired on April 21, 2003.
Gross margin was 50.3%, flat with the comparable period last year. Selling, general
and administrative expenses were $13.9 million compared to $13.9 million in the
year-ago period reflecting a 3% decline in writing instrument and accessory expense
levels offset by the inclusion of Costa Del Mar for a full quarter. As part of its
previously announced restructuring plan, the Company recorded a pre-tax restructuring
charge of $0.4 million for costs associated with global reorganization efforts in
the quarter that were primarily focused on the EMEA (Europe, Middle East & Africa)
region.
On a reported basis, net loss was $0.9 million, or $0.06 per share. Net income in
the prior year quarter was $0.5 million, or $0.03 per share, which included an after-tax
gain of approximately $0.7 million, or $0.04 per share, due to the sale of the Company’s
former Irish facility. On a comparable basis, which excludes non-recurring items,
the net loss for the second quarter of 2004 was $0.6 million, or $0.04 per share
compared to a loss of $0.2 million, or $0.01 per share for the prior year quarter.
Please see the schedule accompanying this release for the full reconciliation of
GAAP to comparable basis (non-GAAP) results.
David G. Whalen, President and Chief Executive Officer of A.T. Cross, commented,
“Though the second quarter proved challenging for us, we made a good deal of progress
in many areas of our business. We increased sales in our international business,
specifically in the EMEA and Asia Pacific regions, by 25% overall, and 17% on a
constant dollar basis. Costa Del Mar continued to perform very well as evidenced
by its $4.8 million revenue contribution during its seasonally strongest quarter,
and we are pleased with the performance of Verve, our newest quality writing instrument.
Finally, our new direct sales force in the West and East regions of the United States
has done an excellent job and we look forward to its continued contribution.”
“In addition to driving efforts to expand the top line, we continued to advance
our ‘Cross into the Future’ corporate reorganization program. As part of this effort,
we substantially completed our EMEA restructuring plan and our manufacturing initiative
continued to move forward.” Mr. Whalen added.
Six-Month Results
Net sales increased 4.7% to $58.4 million from $55.7 million last year. On a reported
basis, the net loss was $1.6 million, or $0.11 per share. This compares to net income
of $0.6 million, or $0.04 per share, in the same period last year. On a comparable
basis, which excludes non-recurring items, the net loss was $1.3 million, or $0.09
per share, compared to a loss of $43,000, for the prior year period. Please see
the schedule accompanying this release for the full reconciliation of GAAP to comparable
basis (non-GAAP) results.
Mr. Whalen concluded, “Looking ahead, we plan to build on the improvements made
in the first half of the year and address the challenges that have been presented.
We are currently preparing for our upcoming key writing instrument and accessories
selling period and are encouraged by the holiday programs we have secured thus far.
That said, we continue to expect improvement in reported annual profitability. However,
given softer than anticipated sales in the second quarter, we now expect annual
consolidated revenue to increase in the mid single digit range.”
Conference Call
The Company’s management will host a conference call tomorrow, July 22, 2004, at
9:00 a.m. Eastern Time. A live webcast of the call will be accessible here. 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 22, 2004 through July 29, 2004 at 1-877-519-4471 or 973-341-3080, pin
number 4978525.
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, the anticipated and continuing benefits of the direct sales
force in the United States, the impact 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, consumers’ reaction to
the Company’s existing and new writing instrument products, the continued expansion
for Costa del Mar, and the ability of the new sales rep structure to continue to
deliver improved results, 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 21, 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 Second Quarter Results
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