|
A.T. CROSS COMPANY REPORTS THIRD QUARTER RESULTS
Lincoln, RI – October 22, 2003 – A.T. Cross Company (AMEX:
ATX), today announced financial results for the third quarter and nine
months ended October 4, 2003.
Third Quarter Results
Net sales increased 7.6% to $31.3 million compared with $29.1 million for the third
quarter of 2002. The improvement was driven by the continued contribution from the
recently acquired Costa Del Mar, a manufacturer and marketer of premium polarized
sunglasses, and was partially offset by a decline in revenue from the writing instruments
and accessories segment. Costa Del Mar revenue was $3.2 million in the quarter.
Writing instrument and accessory revenue declined 3.2% to $28.1 million compared
to the prior year quarter.
The Company reported a third quarter operating loss of $1.5 million compared to
an operating profit of $1.5 million for the 2002 third quarter. The operating loss
in the third quarter of 2003 includes a pre-tax restructuring charge of $1.7 million
related to the Company’s previously announced global reorganization efforts. In
addition to the restructuring costs, the decline in third quarter operating profit
was primarily due to lower gross margins from the writing instruments and accessories
segment. Margins were impacted by several factors including product mix and a highly
competitive retail and corporate gift environment.
The net loss in the third quarter was $1.0 million, or $0.06 per share, versus net
income of $1.3 million, or $0.08 per share, last year. The third quarter of 2003
includes the aforementioned restructuring costs, which total $1.1 million after-tax,
or $0.07 per share.
The restructuring costs incurred in the third quarter are primarily for severance
costs in accordance with the Company's global reorganization efforts. The reorganization
program was designed to eliminate certain non-manufacturing positions and to systematically
transfer certain manufacturing operations offshore. These efforts are being undertaken
to consolidate and reduce costs, and free capital for product and brand development.
Commenting on the third quarter performance, David G. Whalen, President and Chief
Executive Officer of A.T. Cross Company, stated, “Although the overall environment
has remained challenging, we did experience pockets of strength during the third
quarter, including a rebound in our Asia business and growth in our corporate gift
business. In addition, our Costa Del Mar sunglass business continues to perform
on plan. Importantly, we made significant progress during the quarter in launching
our corporate restructuring and cost rationalization programs. Our initiatives to
reduce non-manufacturing costs as well as our program to move a portion of our manufacturing
operations to Asia are advancing according to plan. As previously announced, we
continue to expect these actions will result in pre-tax restructuring charges of
approximately $2.5 million in 2003. This important program is on track and we look
forward to the positive impact this initiative will have on resource and capital
allocation as we continue to build and diversify the Cross business going forward.”
Nine-Month Results
Net sales for the first nine months of 2003 increased 3.0% to $86.5 million from
$84.0 million for the first nine months of 2002. The improvement was due to the
contribution of $6.3 million of Costa Del Mar revenue, since the acquisition date,
partially offset by a decline in writing instrument and related accessory revenue
of 4.6% to $80.2 million compared to the prior year period.
The Company reported an operating loss of $562,000 compared to an operating profit
of $1.5 million for the prior year period. Year-to-date operating results include
a pre-tax restructuring charge of $1.7 million as well as a gain of $1.0 million
on the disposition of the Company's former Irish manufacturing facility that was
sold in the second quarter.
The net loss for the nine-month period was $359,000, or $0.02 per share, which includes
after-tax restructuring costs of approximately $1.1 million, or $0.07 per share,
as well as an after-tax gain of approximately $644,000, or $0.04 per share, related
to the sale of the Irish property. This compares to net income of $1.6 million,
or $0.10 per share, for the prior year period.
“As we enter the fourth quarter, our most important selling period, we believe we
are well positioned for the holiday season,” added Mr. Whalen. “We have strong programs
in place with our largest customers and we also have an important product launch
scheduled, the Cross Vice, a unique and versatile writing instrument that will hit
shelves in time for the holiday season. Moreover, although it is too early to accurately
predict how consumer sentiment will trend, we are encouraged by preliminary external
economic predictions for the remainder of the year.”
Mr. Whalen concluded, “We have accomplished a great deal thus far in 2003, a year
during which we have focused on evolving the business and creating a strong foundation
for the future. We believe we are on track to meet our long-term goal of creating
a distinctive, diversified and profitable personal accessories business that will
enhance shareholder value.”
The Company’s management will host a conference call tomorrow, October 23, 2003,
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 October
23rd through October 30th at 1-402-220-1605 or 1-877-710-5302.
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 external
economic recovery, the anticipated effect of the launch of new writing instrument
products, in particular, Vice, and the anticipated success of fourth quarter programs
with office superstores. 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, consumers’ reaction
to the Company’s existing and new writing instrument products, consumer reaction
to the Company’s ability to transfer its brand 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 October 22, 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
CONTACTS:
John T. Ruggieri
Senior Vice President and
Chief Financial Officer
401-335-8470
Investor Relations:
Financial Dynamics
Cara O’Brien/Melissa Myron
Press: Claudine Cornelis/Stephanie Sampiere
212-850-5600
Download a spreadsheet
with 2003 Third Quarter Results
|