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 Third Quarter Results

Thursday, November 01, 2012

K-Swiss Reports Third Quarter Results07:00 EDT Thursday, November 01, 2012 WESTLAKE VILLAGE, Calif. (Business Wire) -- K•Swiss Inc. (NASDAQ: KSWS) today announced results for the third quarter ended September 30, 2012. The operations of FORM Athletics are accounted for as a discontinued operation in the Company's financial results and are excluded from futures orders data for the prior-year periods. Financial Results Net loss for the third quarter of 2012 was $1,926,000, or $0.05 per diluted share, compared with a net loss of $15,418,000, or $0.43 per diluted share, for the prior-year period. Net loss for the nine months ended September 30, 2012, was $20,263,000, or $0.57 per diluted share, compared with a net loss of $45,286,000, or $1.28 per diluted share, for the nine months ended September 30, 2011. For the third quarter of 2012, total worldwide revenues decreased 16.0% to $67,551,000 compared with $80,456,000 in the prior-year period. Domestic revenues decreased 31.8% to $22,301,000 in the third quarter, and international revenues decreased 5.3% to $45,250,000 for the same period. Total worldwide revenues for the first nine months of 2012 decreased 16.8% to $181,621,000 from $218,194,000 for the first nine months of 2011. Domestic revenues decreased 35.8% to $61,861,000 in the first nine months of 2012, and international revenues decreased 1.7% to $119,760,000. Futures Orders Worldwide futures orders with start ship dates from October 2012 through March 2013 decreased 8.6% to $70,003,000 at September 30, 2012, from $76,598,000 the previous year. Domestic futures orders decreased 18.6% to $21,556,000 at September 30, 2012, from $26,494,000 the previous year. International futures orders decreased 3.3% to $48,447,000 at September 30, 2012, from $50,104,000 the previous year. Steven Nichols, Chairman of the Board and President, stated, “The third quarter results benefitted from the positive contribution from our Palladium brand as well as disciplined expense and inventory controls. While we continue to gain momentum and demonstrate product innovation with the K•Swiss brand, we have yet to convert these efforts into a sustainable futures order trend.” 2012 Guidance For 2012, the Company is presently forecasting full year consolidated revenues to be approximately $221 million to $223 million. Consolidated gross margin is expected to be approximately 35% to 36%. Selling, general and administrative expenses are expected to be about $105 to $107 million. Investor Conference Call and Web Simulcast K•Swiss will conduct a conference call on its third quarter 2012 results today, at 11:00 a.m. ET. The number to call for this interactive teleconference is (212) 231-2901. A replay of this conference call will be available until November 8, 2012, by dialing (402) 977-9140 and entering the passcode, 21575277. 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 and today, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through November 8, 2012. 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. For more information about K•Swiss, visit 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, and the Company's ability to reduce the Company's operating losses and inventory levels, 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 concerns related to the Company's liquidity is set forth in the Company's periodic filings, including its Form 10-Q for the quarter ended September 30, 2012, 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 loss per share data)         Three Months EndedNine Months EndedSeptember 30September 302012201120122011(unaudited)(unaudited) Revenues $67,551 $ 80,456 $181,621 $ 218,194 Cost of goods sold   43,509     51,631     117,777     138,413   Gross profit 24,042 28,825 63,844 79,781 Selling, general and administrative expenses   25,805     42,357     82,031     120,620   Operating loss (1,763) (13,532 ) (18,187) (40,839 ) Other income - - - 3,000 Interest (expense)/income, net   (19)   242     (62)   95   Loss before income taxes and discontinued operations (1,782) (13,290 ) (18,249) (37,744 ) Income tax expense   144     342     2,014     1,904   Loss from continuing operations (1,926) (13,632 ) (20,263) (39,648 ) Loss from discontinued operations, less applicable income tax   -     (1,786 )   -     (5,638 ) Net loss $(1,926) $ (15,418 ) $(20,263) $ (45,286 ) Basic loss per share $(0.05) $ (0.43 ) $(0.57) $ (1.28 ) Diluted loss per share $(0.05) $ (0.43 ) $(0.57) $ (1.28 ) Weighted average number of shares outstanding Basic 35,601 35,572 35,601 35,480 Diluted 35,601 35,572 35,601 35,480     K•Swiss Inc. Condensed Balance Sheets (In thousands)   September 3020122011 ASSETS (unaudited) CURRENT ASSETS Cash and cash equivalents $39,851 $ 37,419 Restricted cash and cash equivalents and restricted investments available for sale 200 22,702 Investments available for sale - 6,228 Accounts receivable, net 39,066 43,298 Inventories, net 65,870 93,700 Prepaid expenses and other current assets   3,671     10,181   Total current assets 148,658 213,528 PROPERTY, PLANT AND EQUIPMENT, NET 18,096 20,122 OTHER ASSETS Intangible assets 11,500 14,575 Deferred income taxes 2,043 3,853 Other   4,966     4,719   Total other assets   18,509     23,147   $185,263   $ 256,797     LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit $5,323 $ 15,060 Current portion of long-term debt 148 284 Current portion of long-term capital leases 82 - Trade accounts payable 11,606 14,822 Accrued income taxes payable 44 - Current portion of contingent purchase price 1,909 - Accrued liabilities   11,762     22,612   Total current liabilities 30,874 52,778 OTHER LIABILITIES Long-term debt - 155 Long-term capital leases 139 - Contingent purchase price - 3,886 Other liabilities   8,549     7,610   Total other liabilities 8,688 11,651 STOCKHOLDERS' EQUITY   145,701     192,368   $185,263   $ 256,797   K?Swiss Inc.George Powlick, Chief Financial Officer, 818-706-5100