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A.T. CROSS COMPANY REPORTS IMPROVED PROFITABILITY
FOR BOTH SECOND QUARTER AND SIX MONTHS
~ Optical Segment Sales Grow Nearly 50% in the Quarter~
~Writing Instrument Sales and Gross Margins Improve~
Lincoln, RI – July 26, 2006 – A.T. Cross Company (AMEX:
ATX) today announced financial results for the second quarter and six
months ended July 1, 2006.
Second Quarter Results
Net sales in the second quarter of 2006 were $32.5 million compared to $29.0 million
in the second quarter of 2005. Global writing instrument and accessory revenue was
$23.6 million, up 2.5% compared to $23.1 million in the same period last year. The
Company’s optical segment, comprised of Costa Del Mar, had a second quarter net
sales increase of 48.6% to $8.9 million compared to $5.9 million in the prior year’s
quarter.
Gross margin was 54.5% compared to 49.6% last year. The gross margin improvement
was primarily attributable to lower costs resulting from the writing instrument
segment’s manufacturing and distribution initiatives and included a LIFO benefit
resulting from lower domestic inventories. Operating expenses, including restructuring
charges, were $17.0 million, or 52.4% of net sales in the quarter, versus $15.2
million, or 52.5% of net sales a year ago. The higher spending levels are largely
in support of the second quarter sales growth of Costa Del Mar.
Net income for the second quarter was $409,000, or $0.03 per share, compared to
a net loss of $463,000, or $0.03 per share, last year.
David G. Whalen, President and Chief Executive Officer of A.T. Cross, stated, “We
are pleased with the first half performance of both our business segments. Costa
Del Mar’s high-quality, well-designed products continue to resonate with a growing
number of consumers, as revenue growth of almost 50% surpassed even our own high
expectations. Further, the improvement we are seeing in our quality writing instrument
financial results stems from the successful execution of our stated strategies to
build the Cross brand while reducing our cost structure.
Looking forward, we will continue to focus on initiatives that are designed to generate
additional momentum for the Company. In the second half of 2006, we will launch
a number of compelling new products in our writing instrument and accessory segment
including several million dollars of Cross branded line extensions. Additionally,
we will invest in new products and expanded distribution for Costa Del Mar as that
brand accelerates through the year.”
Six-Month Results
Net sales in the first half of 2006 were $62.1 million compared to $58.6 million
in 2005. Global writing instrument and accessory revenue was $47.2 million, down
1.7%, compared to $48.0 million in the same period last year. Costa Del Mar’s net
sales increased 40.3% to $14.9 million compared to $10.6 million in the first six
months of 2005.
Net income for the year to date was $280,000, or $0.02 per share, compared to a
net loss of $971,000 or $0.07 per share, last year.
Cash flow from operating activities was approximately $7,000,000 during the current
six-month period.
Mr. Whalen concluded, “Cross has delivered a successful first half performance.
We are well positioned as we move into the peak season for our writing instrument
and accessory business and expect to deliver improved second half and full year
results.”
Conference Call
The Company’s management will host a conference call tomorrow, July 27, 2006, 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
27, 2006 through August 3, 2006 at 1-877-519-4471 or 973-341-3080, pin number 7644943.
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
and the Costa Del Mar website at
www.costadelmar.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 Company’s direct
to consumer initiatives, including direct mail catalogs, the Company’s shop-in-shop
initiative, the Company’s new merchandising and branding efforts, the impact of
new writing instrument products, and the anticipated continued performance of Costa
Del Mar). 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, consumers’ and retailers’ reaction to the Company’s
existing and new writing instrument products, retailers’ support for the Company’s
merchandising initiatives, the continued expansion of Costa Del Mar, and the potential
impact of increasing energy prices, 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 26, 2006. 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:
Kevin F. Mahoney
Vice President, Finance and
Chief Financial Officer
401-335-8470
Investor Relations:
Financial Dynamics
Melissa Myron/Rachel Albert
212-850-5600
Download a spreadsheet
with 2006 Second Quarter Results
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