Ashworth, Inc. Reports Third Quarter and First Nine Months of Fiscal 2006 Financial Results; Updates Strategic Evaluation Process and Fiscal 2006 Guidance.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), a leading designer of golf-inspired lifestyle sportswear, today announced financial results for its third quarter and first nine months ended July July: see month. 31, 2006. Third Quarter and Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Highlights: During the third quarter and first nine months of fiscal 2006, the Company's management team continued to implement the profit improvement initiatives outlined in the fourth quarter of 2005. Highlights for the third quarter and first nine months of fiscal 2006 include:
-- Third quarter consolidated sales of $52.8 million were up 9.3%
over last year, and first nine months consolidated sales of
$159.4 million were up 6.7% over the same period last year;
-- Third quarter consolidated EPS of $0.05 per diluted share, as
compared to a loss of ($0.24) per share in the third quarter
of fiscal 2005, and first nine months EPS of $0.37 compared to
$0.11 for the same period of the prior year on a fully diluted
basis. Included in the current results are special expenses
related to the 2006 proxy contest, strategic alternatives
process, implementation of FAS 123R, and Sarbanes-Oxley 404
("SOX 404") totaling approximately $0.4 million pretax for the
third quarter and $2.0 million pretax for the first nine
months, that were not incurred in the same periods of the
prior year. Last year's three and nine-months results included
approximately $4.4 million of inventory provisions and
approximately $3.0 million of higher than normal retail
markdown charges
-- Sales growth in five of six distribution channels:
-- Fifth successive quarter of strong growth in the corporate
channel
-- Improved merchandising in the retail channel resulting in
strong year-over-year growth in sales while reducing
granted markdown allowances as compared to the second half
of fiscal 2005
-- Continued growth in the international channel driven
primarily by sales in Europe
-- Solid growth in the collegiate channel
-- Continued growth in the Company-owned outlet store channel
on a comparable store basis and the addition of new stores
-- Continued to meet operating direct labor efficiency targets at
the Company's U.S. Embroidery and Distribution Center (EDC);
and
-- Net Inventory levels declined 2.2% over the prior year.
Summary of Third Quarter and First Nine Months Results: 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 third quarter ended July 31, 2006 increased 9.3% to $52.8 million as compared to $48.3 million for the third quarter of 2005. The Company reported consolidated third quarter net income of $0.7 million, or $0.05 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 a net loss of $(3.4) million, or $(0.24) per diluted share, for the same quarter of the prior year. Net revenue for the domestic segment increased 7.0% to $42.8 million for the third quarter of fiscal 2006 from $40.0 million for the same period of the prior year. Net revenue from the international segment increased 20.8% to $10.0 million for the third quarter of fiscal 2006 from $8.3 million for the same period of the prior year. Consolidated net revenue for the first nine months ended July 31, 2006 increased 6.7% to $159.4 million as compared to $149.5 million for the first nine months of fiscal 2005. The Company reported consolidated net income of $5.3 million, or $0.37 per diluted share, for the first nine months of fiscal 2006 compared to net income of $1.5 million, or $0.11 per diluted share, for the same period of the prior year. Included in the current results are special expenses related to the 2006 proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. , strategic alternatives process, implementation of FAS 123R and SOX (1) (Schema for Object-oriented XML) An XML schema developed by Veo Systems and Muzino Communications, which was submitted to the W3C. SOX is based on DTD, but adds data typing and reuse mechanisms. 404, totaling approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.4 million for the third quarter and $2.0 million for the first nine months that were not incurred in the same periods of the prior year. Net revenue for the domestic segment increased 5.1% to $130.4 million for the first nine months of fiscal 2006 from $124.0 million for the same period of the prior year. Net revenue from the international segment increased 14.1% to $29.0 million for the first nine months of fiscal 2006 from $25.4 million for the same period of the prior year. In the third quarter of fiscal 2006, the Company's gross margin was 41.0% compared to 31.1% for the third quarter of 2005. For the first nine months of fiscal 2006, the gross margin was 43.6% compared to 38.6% for the same period of fiscal 2005. This gross margin improvement was primarily due to the previously noted retail markdown Markdown The difference between the highest current bid price among broker-dealers in the market and the lower price that a dealer charges a customer. Notes: The broker offers a lower price to try stimulate trading in hopes that they will make the money back on the extra charges and inventory provisions taken in 2005 and an improved merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. strategy focused on classic key item products with a lower percentage of fashion products in the Company's domestic retail distribution channel which resulted in improved sell-through sell-through Adjective of the sale of prerecorded video cassettes, without their first being for hire only at retail. The improved sell-through has resulted in a reduction in the actual markdown allowances requested and granted as well improvements in domestic inventory management, yielding lower reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. as compared to the same quarter in the prior year. The gross margin also benefited from continued improvement in direct labor efficiencies at the Company's domestic EDC EDC See: Export Development Corp. . Included in the selling, general and administrative ("SG&A") expenses for the third quarter of fiscal 2006 are pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of approximately $0.4 million, consisting primarily of consulting and legal expenses associated with the now-resolved issues relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's 2006 Annual Meeting of Stockholders, the exploration of strategic alternatives and FAS 123R stock option expenses not incurred in the same period last year. Included in the first nine months of fiscal 2006 are pre-tax charges of approximately $2.0 million for these SG&A expenses including SOX 404 related expenses incurred in the first quarter of fiscal 2006 and not incurred in the same period of the prior year. On an after tax basis, these SG&A expenses equate e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to a $0.01 per diluted share reduction in earnings for the third quarter and $0.08 per diluted share for the first nine months of fiscal 2006. Profit Improvement Initiatives: Management noted that over the first three quarters of fiscal 2006 the Company has achieved solid results versus last year and has returned to profitability. These results reflect the benefit of the actions management has taken since the company implemented the initial phase of its profit improvement initiatives in late 2005. These included increased efficiency at the EDC, lower retail markdowns as compared to the second half of fiscal 2005, and improved domestic inventory management. Management also believes these and additional actions being taken will continue to improve the company's operating performance. Domestic Golf Channel: Total revenues in the domestic golf channel in the third quarter of fiscal 2006 decreased to $17.3 million, or 18.5%, from the same period last year. Management believes that the overall softness in the golf industry combined with the proxy contest, strategic alternatives process and product mix adversely affected the Company's sales in the first nine months of fiscal 2006. The Company has seen growth in its technical product lines, which has partially offset the decline in sales of the Company's more traditional all-cotton product lines, and believes that its more balanced Spring/Summer 2007 product offering positions it for future growth in this channel which is supported by very early prebook results. Some of the highlights for Spring/Summer 2007 in the Ashworth brand include the introduction of the "Ashworth Perfect Foursome" which includes the introduction of four new Authentic AUTHENTIC. This term signifies an original of which there is no doubt. product offerings that are unique to the market and exclusive to Ashworth, along with an expanded offering of Ashworth Weather Systems(R) (AWS AWS Amazon Web Services AWS American Welding Society AWS Advanced Warning System AWS Advanced Wireless Services AWS Automatic Weather Station AWS Alien Workshop (skateboard company) AWS Austria Wirtschaftsservice GmbH ) including replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. styles, seasonal key items and three Collections. The Callaway Callaway may refer to:
1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. of The Callaway Golf Performance Center. The Performance Center introduces new elements of X Series including: Drysport(TM), Windsport A windsport is any type of sport which involves wind-power, often involving a non-rigid airfoil such as a sail or a power kite. The activities can be land-based, on snow, on ice or on water:
In addition, Callaway Golf apparel has introduced a new luxury performance pant pant v. To breathe rapidly and shallowly. and short called Tour Authentic(TM). The Tour Authentic bottoms line continues a long history of strong bottoms business for the brand and takes it to the next level with an unprecedented combination of performance and comfort. Corporate Channel: Revenues for the corporate distribution channel were $7.5 million for the third quarter of 2006, an increase of 7.1% over the same period last year. The increase in net revenues in the corporate distribution channel was primarily due to the success of certain sales promotions and the addition of technical performance product offerings. Retail Channel: Third quarter revenues for the retail distribution channel were $2.9 million, an increase of $2.3 million over the same period last year which was adversely impacted by the previously mentioned retail markdown. This year's sales performance benefited from the Company's enhanced merchandising strategy focused on classic key item products with a lower percentage of fashion products. Sell-through of early Fall/Holiday 2006 product in the channel continues to improve and, as a result, the Company anticipates continued success in managing markdown allowances. Ashworth East (Gekko
LLC - Logical Link Control ): Third quarter revenues for Ashworth East were $11.9 million, an increase of 34.4% over the same period last year. The increase was primarily due to 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. of Ashworth(R) apparel into the collegiate/bookstore channel, the direct import headwear head·wear n. A hat or other covering for the head. program, increased sales in the NASCAR/racing channel as well as a result of being the exclusive on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. event merchandiser for the 2006 Kentucky Derby Kentucky Derby One of the classic U.S. Thoroughbred horse races. It was established in 1875 and run annually on the first Saturday in May at Churchill Downs track in Louisville, Ky. With the Preakness and the Belmont Stakes, it makes up U.S. racing's coveted Triple Crown. . 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. : Revenues from the Company-owned outlet stores were $2.9 million for the third quarter of 2006, an increase of 38.5% over the same period last year. Since the end of the third quarter of 2005, the Company added a net of two new outlet stores (four outlet outlet /out·let/ (-let) a means or route of exit or egress. pelvic outlet the inferior opening of the pelvis. openings and two outlet closings) bringing the Company's total number of outlet stores to 16. The new outlet stores net of closings contributed $0.3 million in sales in the third quarter of fiscal 2006 while sales on a comparative store basis increased 12.6% as compared to last year's third quarter. International Channel: Third quarter revenues from the international distribution channel were $10.0 million, an increase of 20.8% over the same period last year. The increase in revenues was primarily driven by growth in the Company's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. subsidiary which is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased demand in the United Kingdom and Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. and the addition of new corporate channel partners in mainland Mainland. 1 Island (1991 pop. 14,150), 178 sq mi (461 sq km), N Scotland. The largest of the Orkney Islands, it is also called Pomona. Kirkwall, the seat of the Orkney Islands council area, is on the island. 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). , partially offset by lower
royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. revenues from international distributors.
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 (EDC): The Company's EDC continues to meet operating direct labor efficiency targets. Results for the EDC were driven by efficiency measures that focused on direct labor utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be . As a result of the improved efficiency, the Company has been able to better serve customers, provide quicker turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. to the Company's corporate and golf customers for their at-once needs, improve the quality of the Company's embroidery operations, reduce customer returns for processing defects, achieve higher customer satisfaction, provide additional capacity for improved economies of scale, and support the Company's multi-brand, multi-channel See multichannel. growth strategy. The Company also noted that labor overtime Overtime is the amount of time someone works beyond normal working hours. Normal hours may be determined in several ways:
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and is significantly below last year's levels. Balance Sheet: The Company's Balance Sheet, which was a key area of focus in the initial phase of the profit improvement initiatives, continued to show improvement in the third quarter of fiscal 2006 primarily due to a focus on domestic inventory management and 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 initiatives. As a result of the Company's implementation of multiple inventory and supply chain initiatives, overall net inventory decreased 2.2% to $53.0 million as of July 31, 2006 as compared to $54.2 million as of July 31, 2005. Domestic net inventory, excluding Ashworth East, decreased 10.9% from the third quarter of 2005. All other inventory grew 18.1% to $19.1 million as of July 31, 2006 as compared to $16.2 million as of July 31, 2005 in support of third quarter fiscal 2006 sales growth, which was up 27.9% for these operations as compared to the third quarter of fiscal 2005. Net accounts receivable increased 1.4% to $39.3 million at July 31, 2006 as compared to $38.8 million at July 31, 2005, while revenues increased 9.3% for the third quarter as compared to last year. FY 2006 Guidance The Company stated that consolidated revenues for fiscal 2006 are expected to be at the lower end of the previously indicated range of $210 to $220 million. The Company noted that its previous guidance for consolidated net earnings (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) for fiscal 2006 of $0.48 to $0.56 per diluted share excluded the additional SG&A expenses associated with the 2006 proxy contest and the strategic alternatives process. Management also advised that this guidance was dependent on many factors such as but not limited to achieving traditional in-season order rates. Due to somewhat lower at-once order rates in the domestic golf channel, the Company now expects its normal operating results will be modestly below the low end of the previously provided EPS guidance. In addition, the Company noted that certain SG&A expenses may be higher that previously expected due to potential additional profit improvement initiatives, organizational / structural changes, and other actions the Company is considering in order to position the Company for further growth in 2007. Evaluation of Strategic Alternatives: Commencing in November November: see month. 2005, the Company's Board of Directors, in consultation with its independent financial advisor, Houlihan Lokey Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. & Zukin, undertook an extensive review and evaluation of a range of strategic alternatives, including a possible sale of the Company, to enhance value for all stockholders. At the present time, the Board has determined that the interests of the Company's stockholders will best be served by focusing principally on improving the Company's operations and financial performance. The Board remains committed to enhancing value for all Ashworth stockholders and remains open to considering any and all alternatives that would achieve that goal. As a result, the Company will continue to carefully consider available strategic alternatives opportunities if and when presented as it focuses on key areas of potential operational improvement. Conference Call Investors and all others are invited to listen to a conference call discussing third quarter results, today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Domestic participants can access the conference call by dialing 888-344-1107. International participants should dial 973-582-2859. Callers should ask to be connected to Ashworth's third quarter earnings teleconference or provide the conference ID number: 7817112. The call will also 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 and can be accessed by visiting the Company's investor information page at www.ashworthinc.com. About Ashworth, Inc. Ashworth, Inc. (NASDAQ:ASHW) is a leading 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's three market-leading brands include: Ashworth Collection(TM), 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), which showcases popular items from the Ashworth line; and Ashworth Weather Systems(R), a technical performance line. Ashworth is also an official apparel 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 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 is also 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. The Game(R)
is a leading headwear brand to 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. bookstores and Kudzu(R) products are sold into the NASCAR/racing markets and through outdoor sports distribution channels, including fishing and hunting. Ashworth is also the exclusive on-site event merchandiser for the Kentucky Derby. For more information, please visit the Company's 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 and business plans and strategies within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . These forward-looking statements may contain the words "believed," "anticipated," "expected," "predicted," "estimate," "project," "will be," 'will continue," "will likely result," or other similar words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. . 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" . Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, changed 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 unless required by law. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the evaluation of strategic alternatives that may be presented, timely development and acceptance of new products, as well as strategic alliances, the integration of the Company's acquisition of Gekko Brands LLC, 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 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, the successful implementation of the Company's ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. system, and other risks described in Ashworth, Inc.'s SEC reports, including the annual 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, 2005, quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed thereafter and amendments to any of the foregoing reports, including the Form 10-K/A for the year ended October 31, 2005.
ASHWORTH, INC.
Consolidated Statements of Income
Third Quarter and Nine Months ended July 31, 2006 and 2005
(Unaudited)
Summary of Results of
Operations
2006 2005
------------- -------------
THIRD QUARTER
-------------
Net Revenue $52,816,000 $48,304,000
Cost of Sales 31,190,000 33,298,000
------------- -------------
Gross Profit 21,626,000 15,006,000
Selling, General and Administrative
Expenses 19,836,000 19,866,000
------------- -------------
Income (Loss) from Operations 1,790,000 (4,860,000)
Other Income (Expense):
Interest Income 21,000 15,000
Interest Expense (828,000) (624,000)
Other Income (Expense), net 151,000 (169,000)
------------- -------------
Total Other Expense, net (656,000) (778,000)
------------- -------------
Income (Loss) Before Provision for Income
Taxes 1,134,000 (5,638,000)
Provision for Income Taxes (453,000) 2,255,000
------------- -------------
Net Income (Loss) $681,000 ($3,383,000)
============= =============
Income (Loss) Per Share - BASIC $0.05 ($0.24)
Weighted Average Common Shares Outstanding 14,495,000 13,929,000
============= =============
Income (Loss) Per Share - DILUTED $0.05 ($0.24)
Adjusted Weighted Average Shares and
Assumed Conversions 14,624,000 13,929,000
============= =============
NINE MONTHS
------------------------------------------
Net Revenue $159,448,000 $149,484,000
Cost of Sales 89,963,000 91,761,000
------------- -------------
Gross Profit 69,485,000 57,723,000
Selling, General and Administrative
Expenses 59,044,000 53,259,000
------------- -------------
Income from Operations 10,441,000 4,464,000
Other (Expense):
Interest Income 40,000 49,000
Interest Expense (2,229,000) (1,733,000)
Other Income (Expense), net 590,000 (262,000)
------------- -------------
Total Other Expense, net (1,599,000) (1,946,000)
------------- -------------
Income Before Provision for Income Taxes 8,842,000 2,518,000
Provision for Income Taxes (3,536,000) (1,007,000)
------------- -------------
Net Income $5,306,000 $1,511,000
============= =============
Income Per Share - BASIC $0.37 $0.11
Weighted Average Common Shares Outstanding 14,359,000 13,823,000
============= =============
Income Per Share - DILUTED $0.37 $0.11
Adjusted Weighted Average Shares and
Assumed Conversions 14,513,000 14,198,000
============= =============
ASHWORTH, INC.
Consolidated Balance Sheets
As of July 31, 2006 and 2005
(Unaudited)
July 31, July 31,
ASSETS 2006 2005
------ ------------- -------------
CURRENT ASSETS
Cash and Cash Equivalents $3,892,000 $2,094,000
Accounts Receivable - Trade, net 39,325,000 38,796,000
Inventories, net 52,978,000 54,179,000
Other Current Assets 9,674,000 13,061,000
------------- -------------
Total Current Assets 105,869,000 108,130,000
Property and Equipment, net 38,993,000 38,280,000
Intangible Assets, net 24,193,000 23,328,000
Other Assets, net 326,000 262,000
------------- -------------
Total Assets $169,381,000 $170,000,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Line of Credit $17,850,000 $13,300,000
Current Portion of Long-Term Debt 2,103,000 4,461,000
Accounts Payable - Trade 10,434,000 15,159,000
Other Current Liabilities 8,230,000 6,946,000
------------- -------------
Total Current Liabilities 38,617,000 39,866,000
Long-Term Debt 16,146,000 23,777,000
Other Long-Term Liabilities 2,137,000 2,400,000
Stockholders' Equity 112,481,000 103,957,000
------------- -------------
Total Liabilities and Stockholders'
Equity $169,381,000 $170,000,000
============= =============
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 financial results provides useful information to both Management and investors to better understand the impact of additional SG&A expenses associated with the now-resolved issues relating to the Company's 2006 Annual Meeting of Stockholders, the exploration of strategic alternatives, stock option expenses under FAS 123R and SOX 404 related expenses not incurred in the same period last year. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . 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 Operations
Third Quarter ended July 31, 2006 and 2005
(Unaudited)
Quarter
Quarter Ended Ended
7/31/06 7/31/05
--------------------------------------------------
Elimination
of
Additional Adjusted
As SG&A Non-GAAP As
Reported Expenses(1) Results Reported
--------------------------------------------------
Net Revenue $52,816,000 $- $52,816,000 $48,304,000
Cost of Sales 31,190,000 - 31,190,000 33,298,000
------------ ----------- ------------ ------------
Gross Profit 21,626,000 21,626,000 15,006,000
Selling, General
and Administrative
Expenses 19,836,000 (395,000) 19,441,000 19,866,000
------------ ----------- ------------ ------------
Income (Loss) from
Operations 1,790,000 395,000 2,185,000 (4,860,000)
Other Income
(Expense):
Interest Income 21,000 - 21,000 15,000
Interest Expense (828,000) - (828,000) (624,000)
Other Income
(Expense), net 151,000 - 151,000 (169,000)
------------ ----------- ------------ ------------
Total Other
Expense, net (656,000) - (656,000) (778,000)
Income (Loss)
Before Provision
for Income Taxes 1,134,000 395,000 1,529,000 (5,638,000)
Provision for
Income Taxes (453,000) (158,000) (611,000) 2,255,000
------------ ----------- ------------ ------------
Net Income (Loss) $681,000 $237,000 $918,000 ($3,383,000)
============ =========== ============ ============
Income (Loss) Per
Share - BASIC $0.05 $0.01 $0.06 ($0.24)
Weighted Average
Common Shares
Outstanding 14,495,000 14,495,000 14,495,000 13,929,000
============ =========== ============ ============
Income (Loss) Per
Share - DILUTED $0.05 $0.01 $0.06 ($0.24)
Adjusted Weighted
Average Shares
And Assumed
Conversions 14,624,000 14,624,000 14,624,000 13,929,000
============ =========== ============ ============
(1) Additional SG&A expenses are primarily consulting and legal
expenses associated with the now-resolved issues relating to the
Company's 2006 Annual Meeting of Stockholders, the exploration of
strategic alternatives and stock option expenses under FAS 123R booked
in the third quarter of fiscal 2006 but not incurred last year.
ASHWORTH, INC.
Adjusted Non-GAAP Consolidated Statements of Operations
Nine Months ended July 31, 2006 and 2005
(Unaudited)
Nine Months
Nine Months Ended Ended
7/31/06 7/31/05
------------------------------------------------------
Elimination
of
Additional Adjusted
As SG&A Non-GAAP As
Reported Expenses(2) Results Reported
------------- ------------ ------------ -------------
Net Revenue $159,448,000 $- $159,448,000 $149,484,000
Cost of Sales 89,963,000 - 89,963,000 91,761,000
------------- ------------ ------------- -------------
Gross Profit 69,485,000 69,485,000 57,723,000
Selling,
General and
Administrative
Expenses 59,044,000 (1,995,000) 57,049,000 53,259,000
------------- ------------ ------------- -------------
Income from
Operations 10,441,000 1,995,000 12,436,000 4,464,000
Other Income
(Expense):
Interest
Income 40,000 - 40,000 49,000
Interest
Expense (2,229,000) - (2,229,000) (1,733,000)
Other Income
(Expense),
net 590,000 - 590,000 (262,000)
------------- ------------ ------------- -------------
Total Other
Expense, net (1,599,000) - (1,599,000) (1,946,000)
Income Before
Provision for
Income Taxes 8,842,000 1,995,000 10,837,000 2,518,000
Provision for
Income Taxes (3,536,000) (798,000) (4,334,000) (1,007,000)
------------- ------------ ------------- -------------
Net Income $5,306,000 $1,197,000 $6,503,000 $1,511,000
============= ============ ============= =============
Income Per
Share - BASIC $0.37 $0.08 $0.45 $0.11
Weighted
Average Common
Shares
Outstanding 14,359,000 14,359,000 14,359,000 13,823,000
============= ============ ============= =============
Income Per
Share -
DILUTED $0.37 $0.08 $0.45 $0.11
Adjusted
Weighted
Average Shares
And Assumed
Conversions 14,513,000 14,513,000 14,513,000 14,198,000
============= ============ ============= =============
(2) Additional SG&A expenses are primarily consulting and legal
expenses associated with the now-resolved issues relating to the
Company's 2006 Annual Meeting of Stockholders, the exploration of
strategic alternatives, stock option expenses under FAS 123R and SOX
404 related expenses booked in the first nine months of fiscal 2006
but not incurred in the same period last year.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion