A.T. Cross Reports Third Quarter Results; Continued significant improvement of operating results; Earnings per share of 13 cents in quarter vs. loss of 15 cents a year ago.Business Editors LINCOLN, R.I.--(BUSINESS WIRE)--Oct. 25, 2000 A.T. Cross Company (AMEX AMEX See: American Stock Exchange : ATX See ATX motherboard. (hardware, standard) ATX - An open PC motherboard specification by Intel. ATX is a development of the Baby AT specification with the motherboard rotated 90 degrees in the chassis. ) today reported sales for the third quarter ended September 30, 2000 of $31.2 million, an increase of 1.1%, versus $30.9 million in the same period of 1999. Consolidated 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. in the quarter was $2.9 million compared to an 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. of $2.5 million in the third quarter of 1999. The current quarter results include $555,000 of income resulting from a change in estimate related to the restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. recorded in the first quarter of this year. The writing instrument division recorded an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in the third quarter of $2.9 million as compared to $1.8 million in the third quarter of 1999. The Pen Computing See gesture recognition and tablet PC. Group recorded a $17,000 operating loss in the quarter compared to a $4.3 million operating loss in the third quarter of 1999. Consolidated income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $2.1 million, or 13 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 a loss from continuing operations of $1.5 million, or 10 cents per share, in the prior year quarter. Net income in the quarter was $2.1 million, or 13 cents per share, compared to a net loss of $2.4 million, or 15 cents per share, in the 1999 quarter. Income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. was $15,000 compared to a loss from discontinued operations of $903,000, or 5 cents per share, in the third quarter of 1999. Writing instrument revenue increased 1.1% in the quarter to $30.5 million. Domestic writing instrument sales declined 5.2% to $15.3 million, due to planned lower sales to warehouse club accounts. Excluding the impact of warehouse club business, domestic revenue was virtually unchanged from the prior year. International revenues increased 8.3% to $15.2 million due to growth across all major regions. Europe, the Middle East & Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ) sales increased 1.6% due to the continued success of the ATX(TM) line, offset by the adverse impact of a weakening Euro during the quarter. Excluding the adverse effect of exchange, EMEA sales grew approximately 12.0% in the quarter. Asian sales increased 20.4% in the quarter primarily due to a distributor change impacting several key markets and the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of exchange rates. Pen Computing Group revenue was equal to a year ago at $704,000. David G. Whalen, President and Chief Executive Officer, commented, "The revitalization re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. of A.T. Cross is evident in numerous ways, and we are pleased with our progress. Innovation on all fronts has been the cornerstone of our strategy and has resulted in increased sales. Importantly, we have achieved this growth while reducing costs in every operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. category, excluding restructuring. As a result, we reported our third consecutive quarter of improved performance." For the nine months ended September 30, 2000, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 2.4% to $88.0 million. Writing instrument sales increased 2.3% to $85.2 million. Domestic writing instrument sales decreased 0.6% to $40.8 million and international revenues increased 5.2% to $44.4 million. Sales of pen computing products were $2.8 million, compared to $2.7 million for the 1999 period. The Company recorded a consolidated operating loss of $10.8 million, which includes a $14.7 million restructuring charge. This compares to an operating loss of $15.9 million for the 1999 period. The loss from continuing operations was $5.5 million, or 33 cents per share, compared to a loss of $10.7 million, or 65 cents per share, for the prior year period. The net loss was $5.4 million, or 33 cents per share, compared with a net loss of $10.2 million, or 62 cents per share, for the 1999 period. Year-to-date results include income from discontinued operations of $71,000 in 2000 compared to $443,000, or 3 cents per share, for the same period in 1999. Mr. Whalen continued, "The Morph morph 1 n. An allomorph. [From morpheme.] morph 2 n. (TM), ATX and Bill Blass lines launched earlier this year have excited consumers, and we recently introduced these products into expanded geographic areas in time for the holiday selling season. We expect our newest product, the Ion(TM) pen, to contribute to revenue beginning in the fourth quarter of this year. We have many cutting edge innovations and designs in the pipeline and will strategically introduce them into the marketplace in the next few quarters. By year end 2000, we expect new products (products launched during 1999 and 2000) to represent over 15% of our business, which brings us half way toward our goal of 30%." "In the third quarter, Cross also moved forward its efforts to be a leader in technology based pen products. In our pursuit of profitable OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and opportunities, we signed an exclusive agreement with FinePoint Innovations, Inc. (FPI FPI Formal Public Identifier FPI Front Populaire Ivoirien (French: Ivorian Popular Front, Icory Coast) FPI Federal Prison Industries, Inc. FPI Front Pembela Islam (Indonesian: Islamic Defenders Front) ) to utilize their strong patents to develop and manufacture digital pen products. Under this agreement, we will manufacture a digital pen that FPI has designed for the Seiko Instruments Seiko Instruments Inc. (セイコーインスツル株式会社 SmartPad(TM). The SmartPad is a zippered zip·pered adj. 1. Having or equipped with zippers or a zipper: a coat with zippered pockets. 2. Closed or fastened with or as if with a zipper. notepad The text editor that comes with Windows. It is a very elementary utility, but gets the job done most of the time. See text editor and WordPad. (text, tool) Notepad - The very basic text editor supplied with Microsoft Windows. portfolio that captures handwritten hand·write tr.v. hand·wrote , hand·writ·ten , hand·writ·ing, hand·writes To write by hand. [Back-formation from handwritten.] Adj. 1. notes or drawings on an ordinary pad of paper and then transmits them automatically to a PDA (Personal Digital Assistant) A handheld computer for managing contacts, appointments and tasks. It typically includes a name and address database, calendar, to-do list and note taker, which are the functions in a personal information manager (see PIM). organizer. The pen contains a special transmitter A device that generates signals. Contrast with receiver. that communicates with the SmartPad. In addition, over time FinePoint and Cross will jointly develop other innovative new products and applications for consumers and businesses. One such effort could lead to a product that provides secure signatures over the Internet." "On a third front, through our collaboration with DigitalConvergence:Com Inc., we also made considerable progress in our efforts to link print to the Internet. The most recent issues of Forbes Magazine, Parade Magazine, Wired Magazine and the Dallas Morning News contain proprietary barcodes or "cues" throughout the publications that allow readers to quickly scan the codes, download the coded information to a PC and directly link to the related websites. Non-mobile devices currently dominate this nascent nascent /nas·cent/ (nas´ent) (na´sent) 1. being born; just coming into existence. 2. just liberated from a chemical combination, and hence more reactive because uncombined. market, but the benefits to having a mobile scanning device See scanner. are obvious. In November, we will launch a mobile pen-based scanner called the Cross:Convergence Pen. A.T. Cross has the exclusive right to provide this pen and is at the forefront of this latest technological innovation." "Our goals are to achieve improved profitability, heightened brand excitement, greater OEM revenue and to play a major role in the effort to link print to the Internet. In doing so, we will innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. and increase shareholder value in a meaningful way." A.T. Cross has scheduled a conference call on Thursday, October 26 at 9:00 a.m. Eastern Time to discuss its third quarter 2000 results. Investors and interested parties may listen to the call via a live Webcast accessible through VCall at www.vcall.com. To listen, please register and download audio software at the site at least 15 minutes prior. The Webcast will be available on the site for approximately three months, while a telephone replay of the call is available for 7 days beginning at 10:30 a.m. Eastern Time, October 26, at 1-800-633-8284 or 858-812-6440, reservation #16605094. A.T. Cross Company is a major international manufacturer of fine writing instruments. The Company also 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 OEM relationships and consumer reaction to new products). 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 continued expansion of the Company's OEM efforts, the uncertainty relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the expected savings from restructuring, consumer reaction to the Company's advertising and promotions, consumer reaction to new products, the Company's strategic initiatives, customer and consumer support for such initiatives, the inherent uncertainty of foreign markets, and the impact of new distribution methods and channels. 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.
A.T. Cross Company
Consolidated Summary of Operations
($ in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
------------------------------------------------
Sept. 30, Oct. 2, Sept. 30, Oct. 2,
2000 1999 2000 1999
------------------------------------------------
Net sales $ 31,227 $ 30,895 $ 88,011 $ 85,951
Cost of
goods sold 16,356 17,281 43,676 50,290
------------------------------------------------
Gross Profit 14,871 13,614 44,335 35,661
Selling, general
and administrative
expenses 11,482 14,316 37,472 46,556
Research and
development expenses 548 1,114 1,364 2,463
Service and
distribution costs 513 661 1,581 2,497
Restructuring
charges (555) 0 14,745 0
------------------------------------------------
Operating Income
(Loss) 2,883 (2,477) (10,827) (15,855)
Interest and other 524 493 4,717 1,406
------------------------------------------------
Income (Loss)
From Continuing
Operations
Before Income Taxes 3,407 (1,984) (6,110) (14,449)
Income tax expense
(benefit) 1,292 (516) (611) (3,757)
------------------------------------------------
Income (Loss) From
Continuing Operations 2,115 (1,468) (5,499) (10,692)
Income (Loss) from
discontinued operations
(net of income taxes) 15 (903) 71 443
------------------------------------------------
Net Income (Loss) $ 2,130 $ (2,371) $ (5,428) $(10,249)
================================================
Basic and diluted
earnings (loss)
per share:
Continuing operations $ 0.13 $ (0.10) $ (0.33) $ (0.65)
Discontinued operations 0.00 (0.05) 0.00 0.03
------------------------------------------------
Net Income (Loss)
Per Share $ 0.13 $ (0.15) $ (0.33) $ (0.62)
================================================
Weighted average
shares outstanding 16,719 16,655 16,628 16,622
================================================
----------------------------------------------------------------------
Segment Data
Net Sales:
Quality Writing
Instruments $ 30,523 $ 30,191 $ 85,172 $ 83,240
Pen Computing
Products 704 704 2,839 2,711
-------------------------------------------------
$ 31,227 $ 30,895 $ 88,011 $ 85,951
================================================
Income (Loss) From
Continuing Operations
Before Income Taxes:
Quality Writing
Instruments (includes
restructuring) $ 3,424 $ 2,081 $ (9,378) $ 2,124
Pen Computing
Products (17) (4,065) 3,268 (16,573)
-------------------------------------------------
$ 3,407 $ (1,984) $ (6,110) $(14,449)
================================================
A.T. Cross Company
Condensed Consolidated Balance Sheets
($ in thousands, unaudited)
----------------------
Sept. 30, Oct. 2,
2000 1999
----------------------
Assets
Cash and short-term investments $ 25,194 $ 34,888
Accounts receivable 22,390 23,862
Inventories 22,243 21,363
Other current assets 18,161 11,987
-----------------------
Total Current Assets 87,988 92,100
Property, plant and equipment, net 31,673 38,324
Intangibles and other assets 6,441 16,290
-----------------------
Total Assets $126,102 $146,714
=======================
Liabilities and Shareholders' Equity
Current liabilities 39,794 43,587
Accrued warranty costs 5,821 5,821
Shareholders' equity 80,487 97,306
-----------------------
Total Liabilities and Shareholders' Equity $126,102 $146,714
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