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A.T. Cross Company Reports Fourth Quarter Results
Lincoln, RI – February 16, 2005 – A.T. Cross Company
(AMEX: ATX) today announced financial results for the fourth quarter
and full year ended January 1, 2005.
Fourth Quarter Results
Net sales increased 4.8% to $41.0 million from $39.1 million in the fourth quarter
of fiscal 2003. Global writing instrument and accessory revenue rose 3.0% to $37.7
million compared to $36.6 million in the prior year period. Costa Del Mar contributed
$3.3 million in net sales for the quarter versus $2.5 million last year.
Gross margin decreased to 45.9% of net sales from 54.6% in the comparable period
last year. This decline was primarily attributable to additional provisions for
inventory reserves in the quality writing instrument and accessories segment. In
addition, gross margin was negatively impacted by highly competitive market conditions.
Selling, general and administrative expenses were $14.7 million, or 35.9% of net
sales, versus $16.5 million, or 42.1% of net sales last year. The improvement was
primarily due to greater expense control and the recognition of cost benefits from
the restructuring of our global writing instrument operations.
On a GAAP basis, net income was $1.8 million, or $0.12 per share, versus $2.1 million,
or $0.14 per share, in 2003. On a comparable basis, which excludes unusual items
in both periods, net income decreased to $2.1 million, or $0.14 per share, compared
to $2.8 million, or $0.19 per share, in the fourth quarter of 2003. Please see the
schedule accompanying this release for the full reconciliation of GAAP to comparable
basis (non-GAAP) net income (loss) and net income (loss) per share.
David G. Whalen, President and Chief Executive Officer of A.T. Cross Company, stated,
“During the fourth quarter, we made progress in several areas of our business. In
addition to growing our top line, we focused on lowering our operating expenses,
which allowed us to improve our SG&A levels. Moreover, we generated an increase
in our international business, which was consistent with the performance in those
markets all year. Costa Del Mar continued to outperform in the quarter as well,
increasing its sales by approximately 32% over last year.”
“Our fourth quarter accomplishments were offset by the decline in gross profit margin
which was affected by the inventory obsolescence adjustments recorded in the quarter.
Our decision to provide for additional inventory obsolescence reserves, we believe,
was a prudent business decision to streamline our product lines as we entered into
the new fiscal year. While this strategy caused us to miss our profitability goal,
we are now poised to focus more aggressively on a faster moving product mix designed
to drive better sell though.”
Full Year Results
Net sales increased 2.5% to $129.5 million from $126.4 million in 2003. Net sales
were favorably impacted by a $6.1MM increase in Costa Del Mar net sales and unfavorably
impacted by a $3.0MM decline in writing instrument and accessory revenue.
On a GAAP basis, the Company reported a net loss of $0.9 million, or $0.06 per share,
compared to net income of $1.8 million, or $0.12 per share last year. On a comparable
basis, which excludes non-recurring items in both periods, the net loss for fiscal
2004 was $0.2 million, or $0.01 per share, versus net income of $2.9 million, or
$0.20 per share. Please see the schedule accompanying this release for the full
reconciliation of GAAP to comparable basis (non-GAAP) net income (loss) and net
income (loss) per share.
Mr. Whalen concluded, “Throughout the course of the year, we experienced continued
success in new product innovation and our restructuring program moved forward. Looking
at the year ahead, we anticipate continuing the positive momentum we have generated
in our international and Costa Del Mar businesses, while also implementing plans
designed to stabilize other areas of our business, such as the U.S. national accounts
and corporate gifts. We will continue to evolve our business in 2005 to strengthen
the Cross brand name and lay the foundation for long-term growth.”
The Company’s management will host a conference call tomorrow, February 17, 2005,
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 February 17th through February 24th at 1-800-283-8486 or 402-220-0869.
Non-GAAP Measures
This release contains comparable basis (non-GAAP) measures of net income and earnings
per share that are provided 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 income or 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. 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 continued growth
of the Company’s international writing instrument and the Costa Del Mar businesses,
and the anticipated stabilization of the Company’s national accounts and corporate
gifts businesses). 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 economic and political stability of the numerous international
markets in which the Company operates, the ability of the Company to continue to
successfully transfer manufacturing offshore, the continued consumer acceptance
of the Company’s products, including those of its subsidiary, Costa del Mar, the
ability of the Company to continue to develop and launch innovative new products
that are relevant to its existing distribution channels, and the possibility that
the national accounts have not completed reducing their writing instrument inventory
levels 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 February 16, 2005. 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 2004 Fourth Quarter Results
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