A.T. Cross Reports Solid Third Quarter Results; Consolidated revenue advances 4.6%; Net income increases 25%.Business Editors LINCOLN Lincoln, city and district, England Lincoln, city (1991 pop. 79,980) and district, Lincolnshire, E England, in the Parts of Kesteven, on the Witham River. , R.I.--(BUSINESS WIRE)--Oct. 23, 2002 A.T. Cross Company (AMEX-ATX) today reported results for the third quarter ended September September: see month. 28, 2002. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue for the quarter increased to $29.1 million compared to $27.8 million in the third quarter of 2001. Net income in the quarter was $1.3 million, or 8 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to net income of $1.0 million, or 6 cents per share, in the third quarter of 2001. Total writing instrument revenue increased 6.9% to $29.1 million. Domestic revenue increased 18.5% to $15.4 million, due primarily to increases in the retail division. Retail division growth was generated by new Century(R) holiday programs in existing accounts, new distribution in the department store channel of trade and the continuation of new product efforts with the launch of Ion(R) colors and the new Penatia(TM) line. International revenue decreased 3.6% to $13.7 million, due primarily to a 13.2% decline in Asia in the quarter. Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Middle East and Africa revenue increased 3.2% in the quarter.
There was no significant pen computing See gesture recognition and tablet PC. activity during the third quarter
2002. Pen computing revenue was $603,000 for the same period of 2001.The Company recorded operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $1.5 million in the quarter compared to operating income of $1.7 million in the prior year period. Included in third quarter operating results was $340,000 of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. expenses related to the review of a strategic acquisition target as part of the ongoing search for external growth opportunities. No significant similar expenses were incurred prior to the third quarter or are expected for the balance of the year. Marketing and selling support expenses increased 9.4% in the quarter. All other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 3.8% in the quarter. The effective tax rate in the third quarter of 2002 was 25% compared to an effective rate of 45% for the prior year quarter. The significant decrease is due to a reduction in the quarter of the estimated rate for the full year 2002, due to greater than expected tax benefits from operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforwards Carryforwards Tax losses allowed to be applied to offset future income in some specified number of future years. and export sales. The 2001 rate was impacted by the unfavorable tax treatment of loss provisions on Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the investments that utilized offshore funds. David G. Whalen Whalen may be:
 ·zilˑ·yens),n of the Cross brand were clearly demonstrated. The growth in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. revenue was especially satisfying. For the first six months of 2002, we invested in new products and programs that we believed would set the stage for a solid performance during our July July: see month. through December December: see month. peak season. Our third quarter results indicate that these efforts are working." For the nine months ended September 28, 2002, total revenue decreased 1.5% to $84.0 million. Net income for the nine months ended September 28, 2002 was $1.6 million, or 10 cents per share, compared with a net loss of $671,000, or 4 cents per share, for the prior year period. Writing instrument revenue increased 1.0% to $84.0 million. Domestic writing instrument sales increased 11.8% to $43.7 million. International revenue decreased 8.5% to $40.3 million. There was no significant pen computing activity during the period. Pen computing revenue was $2.1 million for the 2001 period. Consolidated income from operations was $1.5 million for the nine months ended September 28, 2002 compared to operating income of $3.9 million for the nine months ended September 29, 2001. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for Quality Writing Instruments decreased approximately two percentage points, due to product mix and the effect of higher fixed manufacturing costs on relatively flat revenue. Marketing and selling support expenses increased $980,000, or 4.4%, over the prior year period. Due diligence expenses were $340,000 during the 2002 period with no similar expenses incurred in the prior year. Cash provided by operations was $6.9 million for the nine months ended September 28, 2002 compared to $1.6 million for the prior year period. The effective tax rate for the nine months ended September 28, 2002 was 27%, which represents the Company's best estimate for the full year. This compares to an effective rate of 35% that was used for the six months ended June June: see month. 29, 2002. The estimated rate for the year was reduced in the third quarter, due to greater than expected tax benefits from operating loss carryforwards and export sales. The effective tax rate was 45% for the nine months ended September 29, 2001. For the full year 2001, the rate was 64%. Mr. Whalen concluded, "In the third quarter, Cross continued to make progress. We grew our business. We searched for new sources of revenue and profit. We kept our balance sheet strong. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the coming quarter and our future and look forward to the results they will bring." In April 2001, the Company's Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to 10% of the Company's outstanding Class A common stock. Pursuant to the plan, the Company expected to purchase up to approximately 1.5 million shares from time to time depending on market conditions. From the inception of the program to September 28, 2002, the Company repurchased 1,446,267 shares for approximately $9.9 million at an average price of $6.81 per share. The repurchase plan was completed in October October: see month. . A.T. Cross' management will conduct a conference call on October 24, 2002 at 9:00 a.m. Eastern Time to discuss results for the third quarter and nine months ended September 28, 2002. Investors and interested parties may listen to the call via a live webcast accessible on the Company's Web site at www.cross.com. To listen, please register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. audio software from the site at least 15 minutes prior to the start of the call. The webcast will be archived for 30 days on the site while a telephone replay of the call will be available beginning at 12:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on October 24 through October 28 at 888-266-2081 or 703-925-2533 using password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. #6239045. A.T. Cross Company is a leading designer, manufacturer and marketer of fine writing instruments with distribution in major markets around the world. The Company also designs and markets timepieces and manufactures pen computing products. Statements contained in this release that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (including but not limited to statements related to the anticipated success of new product introductions, new programs, the anticipated continued effect of new distribution, and the anticipated effect of the strength of the Cross brand). 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 risks associated with the significant uncertainty of the global and domestic economies, potential involvement of the United States and other countries in armed conflict, consumer reaction to the Company's new products, new distribution and promotions, and customer support for the Company's strategic initiatives. The information contained in this document is as of October 23, 2002. 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. (Financial information follows)
A. T. CROSS COMPANY
CONSOLIDATED SUMMARY OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2002 2001 2002 2001
-------- -------- -------- --------
Net sales $ 29,075 $ 27,805 $ 84,046 $ 85,329
Cost of goods sold 13,913 13,574 40,260 40,684
-------- -------- -------- --------
Gross Profit 15,162 14,231 43,786 44,645
Selling, general and
administrative expenses 12,346 10,759 38,262 36,771
Research and development
expenses 542 516 1,659 1,519
Service and distribution
costs 809 1,240 2,389 2,484
Restructuring charges and
loss on impairment of assets 0 10 0 (62)
-------- -------- -------- --------
Operating Income 1,465 1,706 1,476 3,933
Interest and other 231 146 649 (5,207)
-------- -------- -------- --------
Income (Loss) From
Continuing Operations
Before Income Taxes 1,696 1,852 2,125 (1,274)
Income tax expense (benefit) 424 834 574 (573)
-------- -------- -------- --------
Income (Loss) From
Continuing Operations 1,272 1,018 1,551 (701)
Income from discontinued
operations (net of
income taxes) 0 0 0 30
-------- -------- -------- --------
Net Income (Loss) $ 1,272 $ 1,018 $ 1,551 $ (671)
======== ======== ======== ========
Basic and diluted earnings
(loss) per share:
Continuing operations $ 0.08 $ 0.06 $ 0.10 $ (0.04)
Discontinued operations 0.00 0.00 0.00 0.00
-------- -------- -------- --------
Net Income (Loss)
Per Share $ 0.08 $ 0.06 $ 0.10 $ (0.04)
======== ======== ======== ========
Weighted average shares
outstanding 15,765 16,674 16,007 16,752
======== ======== ======== ========
Segment Data
Quality Writing Instruments:
Net sales $ 29,075 $ 27,202 $ 84,046 $ 83,179
Operating Income 1,465 2,177 1,476 5,204
Interest and other 231 158 649 720
Income From Continuing
Operations Before
Income Taxes 1,696 2,335 2,125 5,924
Pen Computing Products: *
Net sales $ 603 $ 2,150
Operating Loss (471) (1,271)
Interest and other (12) (5,927)
Loss From Continuing
Operations Before
Income Taxes (483) (7,198)
* Effective for 2002, pen computing results are no longer
reported as a separate segment.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
Sept. 28, Sept. 29,
2002 2001
--------- ---------
Assets
Cash and short-term investments $ 20,278 $ 21,299
Accounts receivable 22,103 21,096
Inventories 15,512 21,836
Deferred income taxes 5,297 8,127
Other current assets 4,652 3,658
--------- ---------
Total Current Assets 67,842 76,016
Property, plant and equipment, net 28,430 30,727
Deferred income taxes 2,427 503
Intangibles and other assets 6,171 6,292
--------- ---------
Total Assets $ 104,870 $ 113,538
========= =========
Liabilities and Shareholders' Equity
Current liabilities 29,124 33,871
Accrued warranty costs 4,686 4,688
Shareholders' equity 71,060 74,979
--------- ---------
Total Liabilities and Shareholders' Equity $ 104,870 $ 113,538
========= =========
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