The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Business Wire

K-Swiss Reports Second Quarter Results

Thursday, August 04, 2011

K-Swiss Reports Second Quarter Results07:00 EDT Thursday, August 04, 2011 WESTLAKE VILLAGE, Calif. (Business Wire) -- K•Swiss Inc. (NASDAQ: KSWS) today announced results for the second quarter ended June 30, 2011. Financial Results Net loss for the second quarter of 2011 was $20,026,000, or $0.56 per diluted share, compared with a net loss of $14,545,000, or $0.41 per diluted share, for the prior-year period. Net loss for the six months ended June 30, 2011, was $29,868,000, or $0.84 per diluted share, compared with a net loss of $19,243,000, or $0.55 per diluted share, for the six months ended June 30, 2010. For the second quarter of 2011, total worldwide revenues increased 40.0% to $65,542,000 from $46,831,000 in the prior-year period. Domestic revenues increased 43.5% to $32,576,000 in the second quarter, and international revenues increased 36.6% to $32,966,000 for the same period. Total worldwide revenues for the first six months of 2011 increased 22.6% to $138,162,000 from $112,701,000 for the first six months of 2010. Domestic revenues increased 37.3% to $64,035,000 in the first half of 2011, and international revenues increased 12.2% to $74,127,000. Futures Orders Worldwide futures orders with start ship dates from July through December 2011 increased 39.2% to $89,915,000 at June 30, 2011. Domestic futures orders increased 47.9% to $37,016,000 at June 30, 2011, from $25,034,000 the previous year. International futures orders increased 33.7% to $52,899,000 at June 30, 2011, from $39,567,000 the previous year. Steven Nichols, Chairman of the Board and President, stated, “We are encouraged by what we see with increases in revenues and backlog and growth of our Performance category. The crucial selling season for K•Swiss and Palladium brands is starting shortly. That will reveal how our marketing efforts and products perform.” 2011 Guidance For 2011, the Company expects full year consolidated revenues to be 25% to 30% above 2010. Consolidated gross margin is expected to be approximately 37.5%, compared to 39.2% in 2010. Selling, general and administrative expenses are expected to be $155 million to $160 million due to continued support of the Company's marketing initiatives. Investor Conference Call and Web Simulcast K•Swiss will conduct a conference call on its second quarter 2011 results today, at 11:00 a.m. ET. The number to call for this interactive teleconference is (212) 231-2908. A replay of this conference call will be available until August 11, 2011, by dialing (402) 977-9140 and entering the passcode, 21532934. The Company will also provide an online Web simulcast and rebroadcast of this conference call. The live broadcast of K•Swiss' quarterly conference call will be available online at www.streetevents.com and www.earnings.com today, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through August 11, 2011. Founded more than forty years ago in Van Nuys, California, K•Swiss introduced the first all-leather tennis shoe, the K•Swiss “Classic” in 1966. Since its inception, K•Swiss has rooted itself in California Sport with an aim to be the most inspiring and innovative sports brand in the market. Today the Company offers performance and lifestyle footwear and apparel for several categories under its California Sports umbrella including Tennis Heritage, California Fit (Running, Triathlon and Fitness) and California Youth. K•Swiss also designs, develops and markets footwear under the Palladium brand and owns the FORM Athletics brand. For more information about K•Swiss, visit www.kswiss.com. Certain matters discussed in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to:non-achievement of the assumptions discussed herein, general and regional economic conditions, availability of credit, industry trends, merchandise trends, including market acceptance of the Company's product offerings, customer demand, competition, the impact of terrorism and/or a potential global conflict on the worldwide economy, dependence on large customers and credit concentrations and order cancellations and reduced sales resulting from a deepening of the current worldwide recession. A complete description of these factors, as well as others which could affect the Company's business, is set forth in the Company's periodic filings, including its Form 10-Q for the quarter ended June 30, 2011, which is currently on file with the SEC.Futures orders as of any date, represents orders scheduled to be shipped within the next six months.Futures orders as of a certain date do not include orders scheduled to be shipped on or prior to that date.The mix of “futures” and “at-once” orders can vary significantly from quarter to quarter and year to year and, therefore, “futures” are not necessarily indicative of revenues for subsequent periods.         K•Swiss Inc. Consolidated Statements of Loss (In thousands, except earnings per share data)   Three Months EndedSix Months EndedJune 30,June 30,2011201020112010 (unaudited) (unaudited) Revenues $65,542 $ 46,831 $138,162 $ 112,701 Cost of goods sold   43,035     29,305     87,129     66,529   Gross profit 22,507 17,526 51,033 46,172 Selling, general and administrative expenses 39,830 32,980 80,613 68,303 Impairment on intangibles and goodwill   3,689     -     3,689     -   Operating loss (21,012) (15,454 ) (33,269) (22,131 ) Other income/(expense) - (3,320 ) 3,000 (3,320 ) Interest income, net   2,024     228     1,963     367   Loss before income taxes (18,988) (18,546 ) (28,306) (25,084 ) Income tax expense/(benefit)   1,038     (4,001 )   1,562     (5,841 ) Net loss $(20,026) $ (14,545 ) $(29,868) $ (19,243 ) Basic loss per share $(0.56) $ (0.41 ) $(0.84) $ (0.55 ) Diluted loss per share $(0.56) $ (0.41 ) $(0.84) $ (0.55 ) Weighted average number of shares outstanding Basic 35,475 35,186 35,433 35,164 Diluted 35,475 35,186 35,433 35,164     K•Swiss Inc. Condensed Balance Sheets (In thousands)   June 30,20112010 ASSETS (unaudited) CURRENT ASSETS Cash and cash equivalents $45,185 $ 63,921 Restricted cash and cash equivalents and restricted investments available for sale 22,698 23,085 Investments available for sale 17,730 81,377 Accounts receivable, net 40,401 30,185 Inventories 101,120 47,195 Prepaid expenses and other current assets 5,544 6,451 Income taxes receivable - 13,821 Deferred income taxes   -     2,879   Total current assets 232,678 268,914 PROPERTY, PLANT AND EQUIPMENT, NET 19,663 21,332 OTHER ASSETS Intangible assets 14,715 14,340 Deferred income taxes 4,730 15,406 Other   10,140     9,862   Total other assets   29,585     39,608   $281,926   $ 329,854     LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit $11,281 $ 1,493 Current portion of long-term debt 316 260 Trade accounts payable 28,336 19,478 Accrued income taxes payable 916 136 Accrued liabilities   12,375     12,035   Total current liabilities 53,224 33,402 OTHER LIABILITIES Long-term debt 173 410 Other liabilities 14,907 14,062 Contingent purchase price   4,148     3,320   Total other liabilities 19,228 17,792 STOCKHOLDERS' EQUITY   209,474     278,660   $281,926   $ 329,854   K?Swiss Inc.George Powlick, 818-706-5100Chief Financial Officer