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A.T. CROSS COMPANY REPORTS THIRD QUARTER RESULTS
Lincoln, RI – October 20, 2004 – A.T. Cross Company (AMEX:
ATX) today announced financial results for the third quarter and nine
months ended October 2, 2004.
Third Quarter Results
Net sales were $30.1 million compared to $31.5 million in the same quarter last
year. Global writing instrument and accessory revenue was $26.7 million compared
to $28.3 million in the same period last year due to a combination of factors, including
continued softness in the U.S. national accounts and U.S. corporate gift channels.
Costa Del Mar sales were $3.4 million compared to $3.2 million for the same quarter
in 2003.
Gross margin was 46.5% for the quarter versus 49.5% last year. The Company took
actions in the quarter to stimulate future business in its U.S. national accounts,
as well as other retail accounts, by replacing slower-moving products and lowering
certain retail price points on key products. Reserves related to these actions were
the primary reason for the decline in gross margin from the prior year quarter.
Selling, general and administrative expenses remained relatively flat at $13.9 million
compared to $13.8 million last year. Also, as part of its previously announced restructuring
plan, the Company recorded a pre-tax restructuring charge of $0.3 million in the
quarter compared to $1.7 million in the prior year.
On a reported basis, net loss was $1.1 million, or $0.07 per share, compared to
a net loss of $1.0 million, or $0.06 per share, in the prior year’s quarter. On
a comparable basis, which excludes non-recurring items, the net loss for the third
quarter of 2004 was $0.9 million, or $0.06 per share, compared to income of $0.1
million, or $0.01 per share. 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,
“In the third quarter, business in our U.S. national accounts channel remained challenging.
While our holiday program sales with these accounts were at last year’s levels,
stricter inventory practices on non-seasonal items continued to adversely impact
our business. We continue to develop innovative new products and programs for this
channel with the goal of returning this business to healthy operating levels.”
“Costa Del Mar has continued to outperform comparable quarter sales results, with
the third quarter increasing by approximately 6% over last year. Brand loyalty and
demand for Costa Del Mar’s unique product offering allowed us to reach our sales
goals despite the four damaging hurricanes that hit the Florida region, Costa Del
Mar’s primary market, this August and September.”
Nine-Month Results
Net sales increased 1.4% to $88.5 million from $87.3 million last year. On a reported
basis, net loss was $2.7 million, or $0.18 per share. This compares to a net loss
of $0.4 million, or $0.02 per share, in the same period last year. On a comparable
basis, which excludes non-recurring items, the net loss was $2.1 million, or $0.14
per share, compared to income of $0.1 million, or breakeven on a per share basis,
for the prior year period. Please see the schedule accompanying this release for
the full reconciliation of GAAP to comparable basis (non-GAAP) results.
Outlook
In the fourth quarter, the Company expects a positive response to its holiday programs
and a return to more normalized gross margin levels. However, due to the softer
than anticipated results in the third quarter, the Company now expects annual consolidated
revenue to increase in the low single digit range and reported earnings to be approximately
breakeven for the full fiscal year.
Commenting on the Company’s outlook, Mr. Whalen said, “Despite our difficulties
to date with U.S. national accounts, we are encouraged by the acceptance, in all
of our channels of distribution, of several new product offerings that we have launched
in the past month and earlier this year. We expect that these products will help
us improve performance in the U.S. and maintain momentum in our international markets.
Additionally, response to Costa Del Mar’s new products, particularly the Fluid Metals
line that was launched in the third quarter, has been very positive. We expect this
business to perform well in the fourth quarter as it prepares for the 2005 peak
season.”
“We are also pleased to report that the non-manufacturing portion of our “Cross
into the Future” corporate reorganization plan was completed this quarter and the
manufacturing initiative continued to move forward at an appropriate pace. The cost
savings generated by this program support our selling and marketing initiatives
and will help to ultimately drive top line growth.” Mr. Whalen concluded, “We are
focused on executing our strategic plans to bring innovation and excitement to the
quality writing instrument category while also exploring other avenues to diversify
our Company and believe we remain on the right track to deliver long-term value.”
Conference Call
The Company’s management will host a conference call tomorrow, October 21, 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 October
21, 2004 through October 28, 2004 at 1-877-519-4471 or 973-341-3080, pin number
5283534.
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. A.T. 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.
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 impact of new writing instrument products and programs,
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 the difficulty in preserving and maintaining
the benefits of cost reduction programs, the uncertainty of the national accounts
buying patterns, consumers’ reaction to the Company’s existing and new writing instrument
products, and consumers’ acceptance of new Costa del Mar products, 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 20, 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:
David G. Whalen
President and Chief Executive Officer
401-335-8212
Investor Relations:
Financial Dynamics
Melissa Myron/Rachel Albert
212-850-5600
Download a spreadsheet
with 2004 Third Quarter Results
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