Ashworth, Inc. Announces Record Revenues for Second Quarter 2005.CARLSBAD Carlsbad, cities, United States Carlsbad (kärlz`băd). 1 City (1990 pop. 63,126), San Diego co., S Calif., on the Pacific coast; settled in the 1880s, inc. 1952. , Calif. -- Ashworth, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ASHW): --Company Grows in Five of its Six Channels --Weather Impacts Company's Core Domestic Golf Distribution Channel --Early Success in Cross Channel Selling from Gekko
Ashworth, Inc. (NASDAQ:ASHW), a leading designer of golf-inspired lifestyle sportswear, today announced financial results for the second quarter ended April 30, 2005. During the quarter, the Company experienced growth in revenues from its International golf channel, Retail distribution channel, Corporate distribution channel, its Gekko brands headwear head·wear n. A hat or other covering for the head. lines and its Company-owned outlet stores An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. . 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: net revenue for the quarter ended April 30, 2005 rose 18% to $64.7 million compared to $54.7 million in the same quarter last year. Revenues from the Company's acquisition of Gekko's brands provided 14% of the overall increase while net revenues from the Company's Ashworth(R) and Callaway Callaway may refer to:
Net income for the second quarter was $4.8 million or $0.34 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $5.7 million or $0.41 per diluted share for the same quarter last year. In February February: see month. 2004, the Company sold its existing distribution center facility located in Carlsbad, California Carlsbad is a coastal resort-town in northern San Diego County, California. According to the state Department of Finance, the city had a total population of 90,271 in 2003. and recorded an after tax-gain on disposal of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → of $1.0 million. Without the gain on sale of fixed assets, the Company would have reported consolidated net income of $4.7 million or $0.34 per diluted share for its second quarter fiscal 2004. The Company believes that excluding the effect of the gain on sale of fixed assets in the second quarter of fiscal 2004 provides useful information to investors in analyzing the impact the non-operational transaction had relative to the Company's performance in fiscal 2005 as compared to fiscal 2004; and, the adjusted consolidated net income measure more closely reflects consolidated net income based on the Company's operations. Net income in the second quarter was primarily impacted by sluggish golf sales and higher than anticipated 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. associated with the new embroidery embroidery, ornamental needlework applied to all varieties of fabrics and worked with many sorts of thread—linen, cotton, wool, silk, gold, and even hair. Decorative objects, such as shells, feathers, beads, and jewels, are often sewn to the embroidered piece. and distribution center. Driving the overall 4% increase in net revenues from Ashworth and Callaway Golf branded goods were increases in revenues from the Company's International business, up 25% from the same quarter last year, the Company's Retail distribution channel, up 15% compared to the second quarter last year, its Corporate distribution channel, up 6% from last year, and revenues from Company-owned outlet stores, up 11%. These increases were offset by a 6% decrease in net revenues from the domestic Golf distribution channel, the Company's largest distribution channel. The Company attributed the decrease in domestic golf-related net revenues to poor weather and the resulting decline in rounds played. The strength of the Company's brands limited the effect of the weakness in U.S. rounds played. Revenues from Ashworth-branded goods overall increased by 3% for the quarter to $42.6 million from $41.4 million in the same quarter in 2004, and revenues from Callaway Golf apparel branded goods increased by 6% to $14.1 million from $13.3 million in the second quarter last year. Randall Randall may refer to the following: In places:
Mr. Herrel continued, "Our cross channel sales initiatives are showing early signs of success. In our first three months of effort, cross channel bookings of Ashworth apparel into collegiate col·le·giate adj. 1. Of, relating to, or held to resemble a college. 2. Of, for, or typical of college students. 3. Of or relating to a collegiate church. and event channels are over $1 million." Excluding the 2004 gain on sale of fixed assets, the Company's net income for the second quarter fiscal 2005 increased 2% to $4.8 million compared to the pro-forma net income of $4.7 million in the same quarter of the prior year, even with the decline in net revenues from its Golf distribution channel. Other factors affecting the Company's net income were higher than anticipated expenses from its new U.S. embroidery and distribution center, which have pushed back the expected cost savings from that facility, and the impact of recent clarifications on lease accounting requirements for newly opened and planned openings of outlet stores, offset in part by cost-cutting initiatives on discretionary expenses instituted by the Company during the quarter. Terence Terence (Publius Terentius Afer) (tĕr`əns), b. c.185 or c.195 B.C., d. c.159 B.C., Roman writer of comedies, b. Carthage. As a boy he was a slave of Terentius Lucanus, a Roman senator, who brought him to Rome, educated him, and gave him his Tsang Tsang can refer to:
v. To moderate in force or intensity. mit  i·ga tion n. the
expected logistics logisticsIn military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. bottleneck A lessening of throughput. It often refers to networks that are overloaded, which is caused by the inability of the hardware and transmission lines to support the traffic. It can also refer to a mismatch inside the computer where slower-speed peripheral buses and devices prevent the CPU resulting from lifting of some quotas on Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. goods by the U.S. We believe our financial condition continues to be strong. As of April 30, 2005, our debt, net of cash, is $42.5 million and shareholder equity is $107.8 million." The Company also revised its guidance for the full fiscal year ended October October: see month. 31, 2005. Revenues are expected to be between $207 and $212 million compared to its previous guidance of $207 to $215 million, and earnings per share are expected to be in the range of $0.72 to $0.76 compared to previous guidance range to $0.76 to $0.82. Summing up, Mr. Herrel continued, "The first half of this fiscal year proved more challenging than we expected, mainly due to the weather and the start up of our new U.S. embroidery and distribution center, but we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the remainder of the year and the prospects for 2006. Overall, we expect to meet the challenges set for us this year and emerge stronger. We are encouraged with the success of our diversified business model as five of our six distribution channels continued to grow and we continue to be excited about the cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. potential of our various distribution channels." Ashworth management will conduct a conference call and webcast providing details on its second-quarter results and outlook for the remainder of fiscal 2005 today, Thursday Thursday: see week. , May 26, 2005, at 4:30 p.m. ET (1:30 p.m.). This event replaces the previously announced June June: see month. 9, 2005 conference call. The call will be broadcast live over the 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 at www.ashworthinc.com. Randall Herrel, Chairman and Chief Executive Officer, and Terence Tsang, Executive Vice President and Chief Financial Officer, will host the call. An online archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the broadcast will be available after the completion of the call and will be accessible on the Company's website until June 4, 2005. Additionally, a telephone replay will be accessible for 48 hours by calling 1-877-519-4471 or 1-973-341-3080 for international callers; enter conference ID 6104786. Ashworth, Inc. is a designer of men's and women's golf-inspired lifestyle sportswear distributed domestically and internationally in golf pro shops, resorts, upscale department and specialty stores Noun 1. specialty store - a store that sells only one kind of merchandise shop, store - a mercantile establishment for the retail sale of goods or services; "he bought it at a shop on Cape Cod" and to corporate customers. Ashworth products include three main brand extensions. Ashworth Collection(TM) is a range of upscale sportswear designed to be worn on and off course. Ashworth Authentics AUTHENTICS, civ. law. This is the name given to a collection of the Novels of Justinian, made by an anonymous author. It is called authentic on account of its authority. 2. There is also another collection which bears the name of authentics. (TM) showcases popular items from the Ashworth line. Ashworth Weather Systems(R) utilizes technology to create a balance between fashion and function in a variety of climatic conditions. Callaway Golf is a trademark of Callaway Golf Company Callaway Golf Company is an American golf company based in Carlsbad, California. They manufacture woods, irons, wedges, putters and golf balls and license its name for apparel, footwear, timepieces and accessories. . Ashworth, Inc., 2765 Loker </noinclude> Loker (unofficial French Locre) is a small village in the Belgian province of West Flanders, and a part ("deelgemeente") of the municipality of Heuvelland. Avenue West, Carlsbad, CA 92008 is an Official Licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. of Callaway Golf Company. In July July: see month. 2004, Ashworth, Inc. acquired Gekko Brands, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Gekko"), a leading designer, producer and distributor of headwear and apparel under The Game(R) and Kudzu kudzu (k  d`z ), plant of the family Leguminosae (pulse family), native to Japan. (R) brands. This
strategic acquisition provides opportunity for additional growth in
three new, quality channels of distribution for the Ashworth(R) and
Callaway Golf apparel brands as well as further growth from The Game(R)
and Kudzu(R) brands' sales into the Company's three current
distribution channels. The Game(R) brand products are marketed primarily
under licenses to over 1,000 colleges and universities, as well as to
the PGA TOUR The PGA Tour is an organization that operates the USA's main professional golf tours. It is headquartered in Ponte Vedra Beach, Florida, USA. Its name is officially rendered in all caps as “PGA TOUR". , resorts, entertainment complexes and sporting goods Noun 1. sporting goods - sports equipment sold as a commoditycommodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport dealers that serve the high school and college markets. The Game(R) brand is one of the leading headwear brands in the College/Bookstore distribution channel. The Kudzu(R) brand products are sold into the NASCAR/racing markets and through outdoor sports distribution channels, including fishing and hunting. To learn more, please visit our Web site at www.ashworthinc.com. This press release contains 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. related to the Company's market position, finances, operating results, marketing plans and strategies. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the timely development and acceptance of new products, as well as strategic alliances, the integration of the Company's recent acquisition, the impact of competitive products and pricing, the success of the Callaway Golf apparel product line, the preliminary nature of bookings information, the ongoing risk of excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. , potential inadequacy of booked reserves, the successful operation of the new distribution facility in Oceanside Oceanside. 1 City (1990 pop. 128,398), San Diego co., S Calif., on the Gulf of Santa Catalina; inc. 1888. It is a commercial and trading center for an inland farm area and for nearby Camp Pendleton, a huge U.S. marine corps amphibious base. , CA, and other risks described in Ashworth, Inc.'s SEC reports, including the report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended October 31, 2004 and Form 10-Qs Form 10-Q See 10-Q. filed thereafter.
ASHWORTH, INC.
Consolidated Statements of Income
Second Quarter ended April 30, 2005 and 2004
(Unaudited)
Summary of Results
of Operations
2005 2004
------------- ------------
SECOND QUARTER
--------------
Net Revenue $64,668,000 $54,672,000
Cost of Sales 36,585,000 31,363,000
------------- ------------
Gross Profit 28,083,000 23,309,000
Selling, General and Administrative
Expenses 19,303,000 13,555,000
------------- ------------
Income from Operations 8,780,000 9,754,000
Other Income (Expense):
Interest Income 14,000 11,000
Interest Expense (576,000) (227,000)
Other Expense, net (200,000) (98,000)
------------- ------------
Total Other Income (Expense), net (762,000) (314,000)
------------- ------------
Income Before Provision for Income Taxes 8,018,000 9,440,000
Provision for Income Taxes (3,207,000) (3,777,000)
------------- ------------
Net Income $4,811,000 $5,663,000
============= ============
Income Per Share - BASIC $0.35 $0.42
Weighted Average Common Shares Outstanding 13,813,000 13,373,000
============= ============
Income Per Share - DILUTED $0.34 $0.41
Adjusted Weighted Average Shares and
Assumed Conversions 14,271,000 13,737,000
============= ============
SIX MONTHS
----------
Net Revenue $101,180,000 $82,010,000
Cost of Sales 58,463,000 48,010,000
------------- ------------
Gross Profit 42,717,000 34,000,000
Selling, General and Administrative
Expenses 33,393,000 23,960,000
------------- ------------
Income from Operations 9,324,000 10,040,000
Other Income (Expense):
Interest Income 34,000 32,000
Interest Expense (1,109,000) (396,000)
Other Expense, net (93,000) (13,000)
------------- ------------
Total Other Income (Expense), net (1,168,000) (377,000)
------------- ------------
Income Before Provision for Income Taxes 8,156,000 9,663,000
Provision for Income Taxes (3,262,000) (3,866,000)
------------- ------------
Net Income $4,894,000 $5,797,000
============= ============
Income Per Share - BASIC $0.36 $0.43
Weighted Average Common Shares Outstanding 13,769,000 13,331,000
============= ============
Income Per Share - DILUTED $0.35 $0.42
Adjusted Weighted Average Shares and
Assumed Conversions 14,184,000 13,679,000
============= ============
ASHWORTH, INC.
Consolidated Balance Sheets
As of April 30, 2005 and 2004
(Unaudited)
April 30, April 30,
ASSETS 2005 2004
------ ------------- -------------
CURRENT ASSETS
Cash and Cash Equivalents $3,032,000 $1,747,000
Accounts Receivable-Trade, net 52,443,000 48,149,000
Inventories, net 53,931,000 43,539,000
Other Current Assets 9,965,000 8,644,000
------------- -------------
Total Current Assets 119,371,000 102,079,000
Property and Equipment, net 37,802,000 29,321,000
Intangible Assets, net 23,410,000 572,000
Other Assets, net 283,000 1,019,000
------------- -------------
Total Assets $180,866,000 $132,991,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Line of Credit $16,000,000 $7,000,000
Current Portion of Long-Term Debt 4,457,000 308,000
Accounts Payable - Trade 16,415,000 9,199,000
Other Current Liabilities 9,234,000 7,235,000
------------- -------------
Total Current Liabilities 46,106,000 23,742,000
Long-Term Debt 25,082,000 11,528,000
Other Long-Term Liabilities 1,914,000 1,923,000
Stockholders' Equity 107,764,000 95,798,000
------------- -------------
Total Liabilities and Stockholders' Equity $180,866,000 $132,991,000
============= =============
This earnings release includes information presented on an
adjusted non-GAAP basis. These adjusted non-GAAP financial measures
are considered "non-GAAP" financial measures within the meaning of SEC
Regulation G. The Company believes that this presentation of adjusted
non-GAAP results provides useful information to both management and
investors to better understand the impact of the gain on sale of the
Company's distribution facility in Carlsbad, California booked in the
second quarter of fiscal 2004. The presentation of this additional
information should not be considered in isolation or as a substitute
for results prepared in accordance with generally accepted accounting
principles. The reconciliation set forth below is provided in
accordance with Regulation G and reconciles the adjusted non-GAAP
financial measure with the most directly comparable GAAP-based
financial measure.
ASHWORTH, INC.
Adjusted Non-GAAP Consolidated Statements of Income
Second Quarter ended April 30, 2005 and 2004
(Unaudited)
Quarter
Ended Quarter Ended
4/30/05 4/30/04
------------- ---------------------------------------
Elimination
of Gain on
Sale of
Existing
As As Distribution Pro Forma
Reported Reported Center Results
------------- ------------ ------------- ------------
Net Revenue $64,668,000 $54,672,000 - $54,672,000
Cost of Sales 36,585,000 31,363,000 - 31,363,000
------------- ------------ ------------- ------------
Gross Profit 28,083,000 23,309,000 - 23,309,000
Selling, General
and
Administrative
Expenses 19,303,000 13,555,000 1,589,000 15,144,000
------------- ------------ ------------- ------------
Income from
Operations 8,780,000 9,754,000 (1,589,000) 8,165,000
Other Income
(Expense):
Interest
Income 14,000 11,000 - 11,000
Interest
Expense (576,000) (227,000) - (227,000)
Other
Expense, net (200,000) (98,000) - (98,000)
------------- ------------ ------------- ------------
Total Other
Expense, net (762,000) (314,000) - (314,000)
Income Before
Provision for
Income Taxes 8,018,000 9,440,000 (1,589,000) 7,851,000
Provision for
Income Taxes (3,207,000) (3,777,000) 636,000 (3,141,000)
------------- ------------ ------------- ------------
Net Income $4,811,000 $5,663,000 ($ 953,000) $4,710,000
============= ============ ============= ============
Income Per Share
- BASIC $0.35 $0.42 ($0.07) $0.35
Weighted Average
Common
Shares
Outstanding 13,813,000 13,373,000 13,373,000 13,373,000
============= ============ ============= ============
Income Per Share
- DILUTED $0.34 $0.41 ($0.07) $0.34
Adjusted
Weighted
Average Shares
and Assumed
Conversions 14,271,000 13,737,000 13,737,000 13,737,000
============= ============ ============= ============
ASHWORTH, INC.
Pro Forma Consolidated Statements of Income
Six Months ended April 30, 2005 and 2004
(Unaudited)
Six Months
Ended Six Months Ended
4/30/05 4/30/04
------------- ---------------------------------------
Elimination
of Gain on
Sale of
Existing
As As Distribution Pro Forma
Reported Reported Center Results
------------- ------------ ------------- ------------
Net Revenue $101,180,000 $82,010,000 - 82,010,000
Cost of Sales 58,463,000 48,010,000 - 48,010,000
------------- ------------ ------------- ------------
Gross Profit 42,717,000 34,000,000 - 34,000,000
Selling, General
and
Administrative
Expenses 33,393,000 23,960,000 1,589,000 25,549,000
------------- ------------ ------------- ------------
Income from
Operations 9,324,000 10,040,000 (1,589,000) 8,451,000
Other Income
(Expense):
Interest
Income 34,000 32,000 - 32,000
Interest
Expense (1,109,000) (396,000) - (396,000)
Other
Expense, net (93,000) (13,000) - (13,000)
------------- ------------ ------------- ------------
Total Other
Expense, net (1,168,000) (377,000) - (377,000)
Income Before
Provision for
Income Taxes 8,156,000 9,663,000 (1,589,000) 8,074,000
Provision for
Income Taxes (3,262,000) (3,866,000) 636,000 (3,230,000)
------------- ------------ ------------- ------------
Net Income $4,894,000 $5,797,000 ($953,000) $4,844,000
============= ============ ============= ============
Income Per Share
- BASIC $0.36 $0.43 ($0.07) $0.36
Weighted Average
Common
Shares
Outstanding 13,769,000 13,331,000 13,331,000 13,331,000
============= ============ ============= ============
Income Per Share
- DILUTED $0.35 $0.42 ($0.07) $0.35
Adjusted
Weighted
Average Shares
and Assumed
Conversions 14,184,000 13,679,000 13,679,000 13,679,000
============= ============ ============= ============
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