Ashworth, Inc. Reports Record Third Quarter and Nine-Month Revenue, Increases Guidance for Fiscal 2004 and Provides Guidance for Fiscal 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:ASHW): --Third quarter net revenue increased 12.8% to a record $42.8 million --Third quarter 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. increased 23.2% to a record $4.5 million --Nine-month year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 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 increased 6.6% to $124.8 million, also a record level --Recently acquired Gekko
LLC - Logical Link Control contributed $3.4 million to revenue and $0.01 to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of Ashworth, Inc. (Nasdaq:ASHW), a leading designer of sportswear and golf apparel, today announced financial results for the third quarter and first nine months of fiscal 2004. Consolidated net revenue for the third quarter ended July July: see month. 31, 2004 increased 12.8% to a record $42.8 million as compared to $38.0 million for the third quarter of 2003. Consolidated third quarter net income was $0.5 million or $0.04 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 net income of $2.1 million or $0.16 per diluted share in the same quarter of the prior year. During the third quarter of fiscal 2004, the Company incurred a $3.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge related to a tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. settlement to conclude a 1999 securities class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax against the Company and certain current and former directors and officers. Excluding this charge, the Company would have reported consolidated net income and earnings per diluted share of $2.3 million and $0.17, respectively. The Company believes that excluding the effect of the charge related to the settlement provides useful information to investors in analyzing the Company's operations in fiscal 2004 as compared to fiscal 2003. The Company attributed the record consolidated third quarter revenue to increases in its domestic and international segments and a $3.4 million contribution from Gekko Brands, LLC, which was acquired July 6, 2004. Third quarter domestic revenue increased 13.0% to $35.8 million compared to $31.7 million for the third quarter of 2003. Third quarter revenue from international sales increased 11.9% to $7.0 million for the third quarter of fiscal 2004 from $6.3 million for the third quarter of 2003. For the nine-month period ended July 31, 2004, consolidated net revenue increased 6.6% to a record $124.8 million compared to $117.1 million for the same period in fiscal 2003. Consolidated net income for the same period was $6.3 million or $0.46 per diluted share compared to consolidated net income of $6.5 million or $0.49 per diluted share for the same period of fiscal 2003. For the nine-month period ended July 31, 2004, net income was impacted by the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. pre-tax charge related to the settlement of a class action lawsuit and the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain on sale of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → recorded in the second quarter of fiscal 2004. Excluding these two items, the Company would have reported consolidated net income of $7.2 million or $0.52 per diluted share for the nine-month period ended July 31, 2004. The Company believes that excluding the effects of the charge related to the settlement and the gain on sale of fixed assets provides useful information to investors in analyzing the impact the non-operational transactions had on the Company's performance in fiscal 2004 as compared to fiscal 2003. Net revenue for the domestic segment increased 4.7% to $103.3 million for the first nine months of fiscal 2004 from $98.7 million for the same period of fiscal 2003. Net revenue from the international segment increased 16.6% to $21.5 million for the first nine months of fiscal 2004 from $18.5 million for the same period of fiscal 2003. Randall Randall may refer to the following: In places:
"We are very excited about our strategic acquisition of Gekko Brands," continued Mr. Herrel. "The Gekko acquisition was immediately accretive and contributed $0.2 million or $0.01 per share to our third quarter results. This acquisition expands our multi-channel, multi-brand distribution strategy as it provides us with new distribution channels for the Ashworth(R) and Callaway Golf apparel brands. We also expect sales growth from Gekko's The Game(R) brand when we begin delivering this brand to our existing distribution channels." In reviewing the Company's financial position, 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:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and Chief Financial Officer, stated, "We are pleased with the continuing improvements in our operations and profitability. Third quarter gross margin expanded 80 basis points to 42.1% primarily due to our continual efforts to improve sourcing and reduce product costs while controlling other expenses. This marks the fifth consecutive year-over-year quarterly gross margin improvement. Third quarter operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased 80 basis points to 10.4% reflecting the gross margin improvement and seasonally high sales of Gekko products and the associated operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. ." Mr. Tsang continued, "Our balance sheet remains strong as we continue managing our working capital and seek to optimize optimize - optimisation our financial leverage. As compared to a year ago, net accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and inventory increased 25.1% and 9.7%, respectively, primarily as a result of the Gekko acquisition. Total debt increased to $34.5 million as of July 31, 2004 compared to $9.0 million last year, $21.0 million of which was used for the Gekko acquisition and $11.6 million to finance a portion of our new distribution center in Oceanside, California Oceanside is the third largest city in San Diego County, California. The city has a population of 173,303. Together with Vista and Carlsbad, it makes up the Tri-City area. The city is just south of U.S. ." The Company is increasing its guidance for the fourth quarter fiscal 2004 due to the acquisition of Gekko Brands, LLC. Based on current business trends, the Company expects a 35% to 45% increase in fiscal 2004 fourth quarter net revenues to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $43.7 million to $46.9 million, as compared to the same quarter of fiscal 2003, and earnings of $0.10 to $0.14 per diluted share, compared to $0.07 in the same quarter of fiscal 2003. Included in the Company's expected fiscal 2004 fourth quarter earnings is a $0.02 to $0.03 per diluted share contribution from the acquisition of Gekko Brands, LLC. The Company currently plans to report fourth quarter 2004 results on Thursday Thursday: see week. , December December: see month. 16, 2004. As a result of the increased guidance for the fourth quarter, the Company updated its guidance for the full year fiscal 2004. Based on current information, the Company expects a 13% to 15% increase in consolidated net revenues for fiscal 2004 to approximately $168.6 million to $171.8 million. The Company expects to report fiscal 2004 earnings of $0.56 to $0.60 per diluted share including the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $1.8 million or $0.13 per diluted share related to the settlement of a class action lawsuit and a $1.0 million or $0.07 per diluted share after-tax gain on sale of its distribution center buildings 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. . Included in the Company's expected fiscal 2004 earnings is a $0.03 to $0.04 per diluted share contribution from the acquisition of Gekko Brands, LLC. The Company also announced its initial revenue and earnings guidance for fiscal 2005, which includes the operations of Gekko Brands, LLC. Based on current information, the Company expects an increase in consolidated net revenues for fiscal 2005 to approximately $207 million to $215 million. The Company expects an earnings increase to approximately $0.76 to $0.82 per diluted share for fiscal 2005. Mr. Herrel concluded, "Though we remain prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. conservative in our guidance due to the uncertainty and challenges in the golf industry, we are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future of Ashworth and the opportunities provided from the strategic acquisition of Gekko Brands, LLC. The acquisition enhances Ashworth, Inc.'s multi-brand, multi-channel, global business model in several ways. The transaction increases the Company's channels of distribution from three to six and increases the number of brands that can be sold into each distribution channel while leveraging existing channel relationships, sales forces and expertise." Investors and all others are invited to listen to a conference call discussing fiscal 2004 third quarter results and the outlook for the remainder of fiscal 2004, today at 4:30 p.m. Eastern Time. The call will be broadcast 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 and can be accessed by visiting the Company's investor information page at www.ashworthinc.com. An online replay will be available until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 18, 2004. Additionally, a 48-hour telephone replay will be accessible by calling (877) 519-4471 for domestic callers and (973) 341-3080 for international callers; enter pass code 5113982. 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 the most 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 2004, Ashworth, Inc. acquired Gekko Brands, LLC ("Gekko"), a leading designer, producer and distributor of headwear head·wear n. A hat or other covering for the head. 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 new,
quality channels of distribution for the Ashworth and Callaway Golf
apparel brands as well as further growth from The Game(R) and Kudzu(R)
brands' sales into the Company's 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" . The Company undertakes no responsibility to publicly release the results of any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements that may arise from changing circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or unanticipated events. 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. , the potential inadequacy of booked reserves, the timely completion and 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 October: see month. 31, 2003 and Form 10-Q's filed thereafter.
ASHWORTH, INC.
Consolidated Statements of Income
Third Quarter ended July 31, 2004 and 2003
Summary of Results of
(Unaudited) Operations
2004 2003
------------- -------------
THIRD QUARTER
------------------------------------------
Net Revenue $42,825,000 $37,960,000
Cost of Sales 24,798,000 22,284,000
------------- -------------
Gross Profit 18,027,000 15,676,000
Selling, General and Administrative
Expenses 13,560,000 12,051,000
------------- -------------
Income from Operations 4,467,000 3,625,000
Other Income (Expense):
Interest Income 14,000 9,000
Interest Expense (452,000) (232,000)
Other Income (Expense), net (3,183,000) 37,000
------------- -------------
Total Other Expense, net (3,621,000) (186,000)
Income Before Provision for Income Taxes 846,000 3,439,000
Provision for Income Taxes (338,000) (1,376,000)
------------- -------------
Net Income $508,000 $2,063,000
============= =============
Net Income Per Share - BASIC $0.04 $0.16
Weighted Average Common Shares Outstanding 13,444,000 13,006,000
============= =============
Net Income Per Share - DILUTED $0.04 $0.16
Adjusted Weighted Average Shares and
Assumed Conversions 13,757,000 13,211,000
============= =============
NINE MONTHS
------------------------------------------
Net Revenue $124,835,000 $117,118,000
Cost of Sales 72,808,000 69,515,000
------------- -------------
Gross Profit 52,027,000 47,603,000
Selling, General and Administrative
Expenses 39,052,000 36,445,000
------------- -------------
Income from Operations 12,975,000 11,158,000
Other Income (Expense):
Interest Income 46,000 24,000
Interest Expense (848,000) (683,000)
Other Income (Expense), net (1,664,000) 253,000
------------- -------------
Total Other Expense, net (2,466,000) (406,000)
Income Before Provision for Income Taxes 10,509,000 10,752,000
Provision for Income Taxes (4,204,000) (4,301,000)
------------- -------------
Net Income $6,305,000 $6,451,000
============= =============
Net Income Per Share - BASIC $0.47 $0.50
Weighted Average Common Shares Outstanding 13,366,000 12,972,000
============= =============
Net Income Per Share - DILUTED $0.46 $0.49
Adjusted Weighted Average Shares and
Assumed Conversions 13,703,000 13,124,000
ASHWORTH, INC.
Consolidated Balance Sheets
As of July 31, 2004 and 2003
(Unaudited)
July 31, July 31,
ASSETS 2004 2003
------------------------------------------ ------------- -------------
CURRENT ASSETS
Cash and Cash Equivalents $3,140,000 $4,029,000
Accounts Receivable-Trade, net 42,185,000 33,733,000
Inventories, net 46,406,000 42,321,000
Other Current Assets 7,703,000 8,656,000
------------- -------------
Total Current Assets 99,434,000 88,739,000
Property and Equipment, net 32,717,000 17,579,000
Other Assets, net 23,919,000 704,000
------------- -------------
Total Assets $156,070,000 $107,022,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------
CURRENT LIABILITIES
Line of Credit $1,750,000 $6,000,000
Current Portion of Long-Term Debt 4,545,000 284,000
Accounts Payable - Trade 12,133,000 7,079,000
Other Current Liabilities 10,271,000 3,997,000
------------- -------------
Total Current Liabilities 28,699,000 17,360,000
Long-Term Debt 28,237,000 2,706,000
Other Long-Term Liabilities 1,932,000 1,570,000
Stockholders' Equity 97,202,000 85,386,000
------------- -------------
Total Liabilities and Stockholders' Equity $156,070,000 $107,022,000
============= =============
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 charge related to the
settlement of the class action lawsuit booked in the third quarter of
fiscal 2004 and the gain on sale of the Company's existing
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
Third Quarter ended July 31, 2004 and 2003
(Unaudited)
Quarter
Quarter Ended Ended
7/31/04 7/31/03
--------------------------------------- ----------
Elimination
of Class
Action Adjusted
As Settlement Non-GAAP As
Reported Charge Results Reported
------------ ----------- ------------ ------------
Net Revenue $42,825,000 $- $42,825,000 $37,960,000
Cost of Sales 24,798,000 - 24,798,000 22,284,000
------------ ----------- ------------ ------------
Gross Profit 18,027,000 18,027,000 15,676,000
Selling, General
and Administrative
Expenses 13,560,000 - 13,560,000 12,051,000
------------ ----------- ------------ ------------
Income from
Operations 4,467,000 4,467,000 3,625,000
Other Income
(Expense):
Interest Income 14,000 - 14,000 9,000
Interest Expense (452,000) - (452,000) (232,000)
Other Income
(Expense), net (3,183,000) 3,000,000 (183,000) 37,000
------------ ----------- ------------ ------------
Total Other Income
(Expense), net (3,621,000) 3,000,000 (621,000) (186,000)
Income Before
Provision for
Income Taxes 846,000 3,000,000 3,846,000 3,439,000
Provision for
Income Taxes (338,000) (1,200,000) (1,538,000) (1,376,000)
------------ ----------- ------------ ------------
Net Income $508,000 $1,800,000 $2,308,000 $2,063,000
============ =========== ============ ============
Net Income Per
Share - BASIC $0.04 $0.13 $0.17 $0.16
Weighted Average
Common
Shares Outstanding 13,444,000 13,444,000 13,444,000 13,006,000
============ =========== ============ ============
Net Income Per
Share - DILUTED $0.04 $0.13 $0.17 $0.16
Adjusted Weighted
Average Shares
And Assumed
Conversions 13,757,000 13,757,000 13,757,000 13,211,000
============ =========== ============ ============
ASHWORTH, INC.
Adjusted Non-GAAP Consolidated Statements of Income
Nine Months ended July 31, 2004 and 2003
(Unaudited)
Nine Months Nine Months
Ended Ended
7/31/04 7/31/03
----------------------------------------- ------------
Elimination
of Gain on
Sale of
Existing
Distribution
Center
and the Class
Action Adjusted
As Settlement Non-GAAP As
Reported Charge Results Reported
------------- ------------- ------------- ------------
Net Revenue $124,835,000 $- $124,835,000 $117,118,000
Cost of Sales 72,808,000 - 72,808,000 69,515,000
------------- ------------- ------------- ------------
Gross Profit 52,027,000 52,027,000 47,603,000
Selling,
General and
Administrative
Expenses 39,052,000 - 39,052,000 36,445,000
------------- ------------- ------------- ------------
Income from
Operations 12,975,000 12,975,000 11,158,000
Other Income
(Expense):
Interest
Income 46,000 - 46,000 24,000
Interest
Expense (848,000) - (848,000) (683,000)
Other Income
(Expense),
net (1,664,000) 1,411,000(a) (253,000) 253,000
------------- ------------- ------------- ------------
Total Other
Income
(Expense),
net (2,466,000) 1,411,000 (1,055,000) (406,000)
Income Before
Provision for
Income Taxes 10,509,000 1,411,000 11,920,000 10,752,000
Provision for
Income Taxes (4,204,000) (564,000) (4,768,000) (4,301,000)
------------- ------------- ------------- ------------
Net Income $6,305,000 $847,000 $7,152,000 $6,451,000
============= ============= ============= ============
Net Income Per
Share - BASIC $0.47 $0.06 $0.54 $0.50
Weighted
Average Common
Shares
Outstanding 13,366,000 13,366,000 13,366,000 12,972,000
============= ============= ============= ============
Net Income Per
Share -
DILUTED $0.46 $0.06 $0.52 $0.49
Adjusted
Weighted
Average Shares
And Assumed
Conversions 13,703,000 13,703,000 13,703,000 13,124,000
============= ============= ============= ============
(a) Class action settlement of $3,000,000 less gain on sale of existing distribution center of $1,589,000. |
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