A.T. Cross Company Reports Fourth Quarter Results

Lincoln, RI – February 13, 2003 – A.T. Cross Company (AMEX: ATX), today announced fourth quarter and full year results for the period ended December 28, 2002.

David G. Whalen, President and Chief Executive Officer of A.T. Cross said, “We made progress in 2002 toward achieving our goal of becoming a leading global marketer and manufacturer of innovative, high-quality branded accessories. We did this by launching new, innovative fine writing products, executing creative marketing strategies and diversifying our revenue stream by leveraging our strong brand name into new product categories and distribution channels.”

Mr. Whalen continued, “For example, for the third consecutive year, new products represented greater than 20% of our revenue. As part of that effort, we successfully launched timepieces into our corporate gift channel during 2002 and completed the development of our business accessories line, which is currently being shipped into our retail and corporate gift channels. These initiatives will leverage our existing sales force and distribution channels, expand our demographic reach and provide opportunities for entry into additional product categories. We look forward to building on these, and other, programs to generate significant value for our shareholders.”

Fourth Quarter Results

• Net sales were $33.3 million compared to $38.2 million in the year-ago period. Domestic writing instrument sales declined 25.6%, primarily due to a slowdown in the office superstore national accounts, as well as continued softness in the corporate gift channel. The decline was partially offset by a 1.4% increase in sales from our international writing instrument business.
• Gross profit improved 50 basis points to 54.4% of net sales versus 53.9% of net sales in 2001. Writing instrument gross margins declined, primarily due to the revenue shortfall. Comparative margins were favorably impacted by prior year write-offs in the Pen Computing Group.
• Selling, general and administrative expenses increased 2.4% to $14.2 million, or 42.6% of net sales, compared to $13.8 million, or 36.3% of net sales, last year. The increase was primarily driven by greater marketing and selling support of the Company’s initiatives to strengthen and promote the Cross brand, partially offset by lower general and administrative expenses.
• Service and distribution costs resulted in a credit of $890,000, which reflects a reduction of the Company’s accrued warranty cost liability in the quarter. The $2.2 million pre-tax adjustment ($0.09 per share) was recorded as a reduction of service and distribution expense, due to a change in estimate (refer to footnote in attached income statement for greater detail).
• The effective tax rate was 26.2% compared to an effective rate of 57.4% last year. The decrease in the tax rate is due to greater than expected benefits from net operating loss carryforwards and foreign tax credits in 2002. Loss provisions on Internet investments that utilized offshore funds adversely impacted the 2001 rate.
• Net income was $3.4 million, or $0.21 per share, in the fourth quarter compared to $1.7 million, or $0.10 per share, in 2001.

Mr. Whalen continued, “As we previously announced, our fourth quarter and full year results were below our initial expectations, primarily due to softer than anticipated orders from our U.S. office superstore national accounts and a slowdown in consumer spending that was reflected in retailers’ holiday sales results. While we did not attain the financial targets set forth at the beginning of the year, we firmly believe our long-term strategy to revitalize the Cross brand remains on track.”

“We are encouraged by the positive momentum we gained in several of our efforts to strengthen the Cross brand and diversify our revenue stream. For example, we successfully introduced several new, innovative writing instruments to the market, including Cross Matrix®, ion® colors and ATX® colors. The new business accessory line, mentioned previously, received strong reviews last month at the Promotional Products Association International trade show in Las Vegas and at the Paperworld show in Frankfurt, Germany. Our OEM business nearly doubled, and late in the year, we reached an agreement with the English designer, Paul Smith, to build quality writing instruments for his brand. We look forward to experiencing tangible benefits from these exciting initiatives in fiscal 2003.”

Full Year Results

• Net sales were $117.3 million compared to $123.5 million in 2001. Total domestic writing instrument sales were essentially flat, while international writing instrument sales declined 5.5%.
• Net income was $4.9 million, or $0.31 per share, which includes $0.09 per share attributable to the adjustment of the Company’s accrued warranty liability. This compares to $980,000, or $0.06 per share, in 2001. The Company’s former Pen Computing segment incurred significant losses in 2001, primarily due to write-offs of Internet related investments.

During the fourth quarter, the Company repurchased 233,700 shares of its Class A common stock for approximately $1.4 million. For the full year, the Company repurchased 1,056,367 shares for approximately $7.1 million.

The Company’s management will host a conference call tomorrow, February 14, 2003, at 9:00 a.m. Eastern Time. A live webcast of the call will be accessible on the Company’s Web site at www.cross.com. 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 am ET on February 14th through February 21st at 1-888-567-0677 or 1-402-530-0677.

A.T. Cross Company is a leading designer, manufacturer and marketer of fine writing instruments, including digital pens, with distribution in major markets around the world. The Company also designs and markets timepieces and business accessories.

For information contact:
John T. Ruggieri
Senior Vice President and Chief Financial Officer
401-335-8470

Investor Relations:
FD Morgen-Walke
Suzanne Rosenberg/Melissa Myron
Press: Claudine Cornelis/Laura Novak
212-850-5600

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 new writing instrument products, new consumer targets, additional product categories, a diversification of the Company’s revenue stream and an expectation that the Company’s existing distribution channels remain stable). 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, existing and new consumers’ reaction to the Company’s writing instrument products, consumer reaction to the Company’s ability to transfer its brand beyond writing instruments and the Company’s ability to maintain its existing distribution channels, 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 13, 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.