Ashworth Inc. Reports Fiscal 2003 Third Quarter and Nine-Month Results.Business Editors 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.--(BUSINESS WIRE)--Aug. 28, 2003 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 sportswear and golf apparel, today announced financial results for the third quarter and first nine-months of fiscal 2003. 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 July: see month. 31, 2003 increased 5.0% to $38.0 million as compared to $36.2 million for the third quarter of 2002. Consolidated third quarter net income was $2.1 million or $0.16 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 consolidated net loss of $573,000 or $0.04 per diluted share in the same quarter of the prior year. During the third quarter of fiscal 2002 the company established a $4.25 million increase in the reserve for bad debts reserve for bad debts See allowance for doubtful accounts. related to a single major retail account. Without the increase in reserve, the company would have reported consolidated net income of $2.0 million or $0.15 per basic share for the third quarter of fiscal 2002. The company believes that excluding the effect of the increase in reserve for bad debts booked in the third quarter of fiscal 2002 for the single customer filing for protection under the U.S. bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most laws provides additional information to investors to better understand the impact the transaction had on the company's performance for the third quarter of 2003 as compared to the same quarter of fiscal 2002 and, therefore, the adjusted consolidated net income measure is useful to investors. Consolidated net revenue for the company's domestic business segment increased 1.6% to $31.7 million from $31.2 million in the same period of the prior year. Consolidated net revenue for the company's international business segment increased 26.0% to $6.3 million from $5.0 million in the like period of the last year. Third quarter revenue from Ashworth(R) branded merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain increased 5.5% to $30.3 million and revenue from Callaway Callaway may refer to:
For the nine-month period ended July 31, 2003 consolidated net revenue increased 17.2% to $117.1 million compared to $99.9 million for the same period in fiscal 2002. Consolidated net income for the first nine-months of fiscal 2003 was $6.5 million or $0.49 per diluted share, compared to consolidated net income of $2.0 million, or $0.14 per diluted share, for the same period of fiscal 2002. Without the effect of the reserve increase, the company would have reported consolidated net income of $4.5 million or $0.33 per diluted share for the nine-month period of fiscal 2002. Consolidated net revenue in the company's domestic business segment increased 14.4% to $98.6 million from $86.2 million in fiscal 2002. Consolidated net revenue for the company's international business segment increased 35.0% to $18.5 from $13.7 million for the same period of the prior year. Nine-month fiscal 2003 revenue from Ashworth branded merchandise increased 5.3% to $93.3 million and revenue from Callaway Golf apparel, which was introduced in April 2002, increased 110% to $23.8 million for the nine-month period. Randall Randall may refer to the following: In places:
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results are due to our new multi-brand, multi-channel See multichannel. global business and strategy, which is being fully implemented in fiscal 2003. The increase in our domestic business segment during the current quarter resulted from the 68.2% growth in the retail channel and the 1.2% increase in the corporate channel. This was partially offset by the 3.8% decline in the golf and off-course specialty channel A specialty channel (or speciality channel) is a television channel which consists of programming focused on a single type or targeted at a specific demographic. , which we believe was due to the challenging economic and industry environment, as well as poor weather on the east coast." 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, "Our gross margins increased 30 basis points to 41.3% for the third quarter of fiscal 2003 from 41.0% for the same period last year, due primarily to our continued initiative to improve sourcing. This initiative enables the company to stay competitive without affecting our gross margin in the golf apparel market which is experiencing price compression Price compression The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price. ." Tsang continued, "Our balance sheet continues to get stronger as we manage our working capital and seek to optimize optimize - optimisation our financial leverage. 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 decreased 13.0% over the prior year while net revenues increased 5.0% for the third quarter. Our total inventory increased 8.7% to $42.3 million as of July 31, 2003 as compared to $38.9 million as of July 31, 2002. While the Ashworth brand inventory decreased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8.5% over the prior year, the Callaway Golf apparel brand inventory increased to approximately $11.1 million as of July 31, 2003 as compared to $4.8 million as of July 31, 2002. As we are still in a developing stage for the Callaway Golf apparel brand, we are expecting to carry a higher level of inventory as we continue to penetrate new accounts. Finally, our total debt decreased $5.0 million to $9.0 million as of July 31, 2003 as compared to $14.0 million as of July 31, 2002 due to management initiatives to improve cash flow." The company confirmed and updated its revenue and earnings guidance for the balance of fiscal 2003. Based on current information, the company expects consolidated net revenues for fiscal 2003 of $147.6 million to $149.6 million, an increase in the range of approximately 14% to 16% compared to fiscal 2002, and earnings of $0.54 to $0.57 per diluted share, an increase in the range of 184% to 200% compared to fiscal 2002. Excluding the $2.55 million after tax effect of the additional bad debt reserve booked in fiscal 2002, or $0.19 per diluted share, the increase in earnings per diluted share for fiscal 2003 as compared to fiscal 2002 is expected to be in the range of 42% to 50%. The company believes that excluding the effect of the bad debt charge booked in the third quarter of fiscal 2002 resulting from a significant national retail customer filing for protection under U.S. bankruptcy laws provides a more accurate projected rate of growth in earnings per diluted share for fiscal 2003 as compared to fiscal 2002 and, therefore, the projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. is useful to investors. Based on current business trends the company expects fiscal 2003 fourth quarter net revenues of $30.5 million to $32.5 million, an increase in the range of approximately 4% to 11% compared to the same quarter of fiscal 2002, and earnings of $0.05 to $0.08 per diluted share, compared to earnings of $0.04 in the same quarter of fiscal 2002. The company currently plans to report fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results on Thursday Thursday: see week. , December December: see month. 18th at market close. Herrel concluded, "We continue to be 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. We have two strong brands to grow our business. As evidenced by our positive operating results starting in the fourth quarter of fiscal 2002 and continuing during the first nine-months of fiscal 2003, our new business model, which includes multi-brand and multi-channel strategies, is a key driver of this success." Investors and all others are invited to listen to a conference call discussing the third quarter 2003 results and fiscal 2003 outlook, 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 at www.ashworthinc.com. An online replay will be available until Sept. 5, 2003. Additionally, a 48-hour telephone replay will be accessible by calling 877-519-4471 for domestic callers and 973-341-3080 for international callers; conference ID# 4131524. 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 any climatic condition. 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, Calif. 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. To learn more, 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 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 timely completion and successful operation of the new distribution facilities 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. , Calif. and Basildon Basildon (bă`zəldən), city (1991 pop. 94,800) and district, Essex, E England. The southern portion is Basildon New Town, a planned community with many factories. Industries include light engineering, chemicals, printing, and clothing manufacturing. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. 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 Oct. 31, 2002 and Form 10-Q's filed thereafter.
ASHWORTH INC.
Consolidated Statements of Income
Third Quarter ended July 31, 2003 and 2002
(Unaudited)
Summary of Results of
Operations
2003 2002
-------------------------
Third Quarter
---------------------------------------------
Net Revenue $37,960,000 $36,236,000
Cost of Sales 22,284,000 21,385,000
-------------------------
Gross Profit 15,676,000 14,851,000
Selling, General and Administrative Expenses 12,051,000 15,609,000
-------------------------
Income from Operations 3,625,000 (758,000)
Other Income (Expense):
Interest Income 9,000 7,000
Interest Expense (232,000) (258,000)
Other Income, net 37,000 54,000
-------------------------
Total Other Expense, net (186,000) (197,000)
Income Before Provision for Income Tax
Expense 3,439,000 (955,000)
Provision for Income Tax Expense (1,376,000) 382,000
-------------------------
Net Income $2,063,000 $(573,000)
=========================
Income Per Share - BASIC $0.16 $(0.04)
Weighted Average Common Shares Outstanding 13,006,000 13,289,000
=========================
Income Per Share - DILUTED $0.16 ($0.04)
Adjusted Weighted Average Shares and Assumed
Conversions 13,211,000 13,289,000
=========================
Nine Months
---------------------------------------------
Net Revenue $117,118,000 $99,920,000
Cost of Sales 69,515,000 59,444,000
-------------------------
Gross Profit 47,603,000 40,476,000
Selling, General and Administrative Expenses 36,445,000 36,654,000
-------------------------
Income from Operations 11,158,000 3,822,000
Other Income (Expense):
Interest Income 24,000 39,000
Interest Expense (683,000) (655,000)
Other Income, net 253,000 59,000
-------------------------
Total Other Expense, net (406,000) (557,000)
Income Before Provision for Income Tax
Expense 10,752,000 3,265,000
Provision for Income Tax Expense (4,301,000) (1,306,000)
-------------------------
Net Income $6,451,000 $1,959,000
=========================
Income Per Share - BASIC $0.50 $0.15
Weighted Average Common Shares Outstanding 12,972,000 13,224,000
=========================
Income Per Share - DILUTED $0.49 $0.14
Adjusted Weighted Average Shares and Assumed
Conversions 13,124,000 13,597,000
=========================
ASHWORTH INC.
Consolidated Balance Sheets
As of July 31, 2003 and 2002
(Unaudited)
July 31, July 31,
ASSETS 2003 2002
----------------------------------------------------------------------
CURRENT ASSETS
Cash and Cash Equivalents $4,029,000 $399,000
Accounts Receivable-Trade, net 33,733,000 38,766,000
Inventories, net 42,321,000 38,857,000
Other Current Assets 8,553,000 7,664,000
--------------------------
Total Current Assets 88,636,000 85,686,000
Property and Equipment, net 17,579,000 18,177,000
Other Assets, net 704,000 970,000
--------------------------
Total Assets $106,919,000 $104,833,000
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------
CURRENT LIABILITIES
Line of Credit Payable $6,000,000 $10,350,000
Current Portion of Long-Term Debt 284,000 803,000
Accounts Payable - Trade 7,079,000 7,365,000
Other Current Liabilities 3,809,000 3,436,000
--------------------------
Total Current Liabilities 17,172,000 21,954,000
Long-Term Debt 2,706,000 2,866,000
Other Long-Term Liabilities 1,584,000 1,279,000
Stockholders' Equity 85,457,000 78,734,000
--------------------------
Total Liabilities and Stockholders' Equity $106,919,000 $104,833,000
==========================
This earnings release includes information presented on a pro
forma basis. These pro-forma financial measures are considered
"non-GAAP" financial measures within the meaning of SEC Regulation G.
The company believes that this presentation of pro forma results
provides useful information to both management and investors to better
understand the impact of the additional bad debt charge booked in the
third quarter of fiscal 2002. 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 pro forma financial
measure with the most directly comparable GAAP-based financial
measure.
ASHWORTH INC.
Pro Forma Consolidated Statements of Income
Third Quarter ended July 31, 2003 and 2002
(Unaudited)
Quarter
Ended Quarter Ended
7/31/03 7/31/02
----------------------------------------------
Additional
As As Bad Debt Pro Forma
Reported Reported Reserve Results
----------------------------------------------
Net Revenue $37,960,000 $36,236,000 - 36,236,000
Cost of Sales 22,284,000 21,385,000 - 21,385,000
----------------------------------------------
Gross Profit 15,676,000 14,851,000 - 14,851,000
Selling, General and
Administrative
Expenses 12,051,000 15,609,000 (4,250,000)11,359,000
----------------------------------------------
Income from Operations 3,625,000 (758,000) 4,250,000 3,492,000
Other Income (Expense):
Interest Income 9,000 7,000 - 7,000
Interest Expense (232,000) (258,000) - (258,000)
Other Income, net 37,000 54,000 - 54,000
----------------------------------------------
Total Other Expense,
net (186,000) (197,000) - (197,000)
Income Before Provision
for Income Tax Expense 3,439,000 (955,000) 4,250,000 3,295,000
Provision for Income Tax
Expense (1,376,000) 382,000 (1,700,000)(1,318,000)
----------------------------------------------
Net Income $2,063,000 ($573,000)$2,550,000 $1,977,000
==============================================
Income Per Share - BASIC $0.16 ($0.04) $0.19 $0.15
Weighted Average Common
Shares Outstanding 13,006,000 13,289,000 13,289,000 13,289,000
==============================================
Income Per Share -
DILUTED $0.16 ($0.04) $0.18 $0.14
Adjusted Weighted
Average Shares
and Assumed
Conversions 13,211,000 13,289,000 13,833,000 13,833,000
==============================================
ASHWORTH INC.
Pro Forma Consolidated Statements of Income
Nine Months ended July 31, 2003 and 2002
(Unaudited)
Nine Months
Ended Nine Months Ended
7/31/03 7/31/02
-----------------------------------------------
Additional
As As Bad Debt Pro Forma
Reported Reported Reserve Results
-----------------------------------------------
Net Revenue $117,118,000 $99,920,000 - 99,920,000
Cost of Sales 69,515,000 59,444,000 - 59,444,000
-----------------------------------------------
Gross Profit 47,603,000 40,476,000 - 40,476,000
Selling, General and
Administrative Expenses 36,445,000 36,654,000 (4,250,000)32,404,000
-----------------------------------------------
Income from Operations 11,158,000 3,822,000 4,250,000 8,072,000
Other Income (Expense):
Interest Income 24,000 39,000 - 39,000
Interest Expense (683,000) (655,000) - (655,000)
Other Income, net 253,000 59,000 - 59,000
-----------------------------------------------
Total Other
Expense, net (406,000) (557,000) - (557,000)
Income Before Provision
for Income Tax Expense 10,752,000 3,265,000 4,250,000 7,515,000
Provision for Income
Tax Expense (4,301,000) (1,306,000)(1,700,000)(3,006,000)
-----------------------------------------------
Net Income $6,451,000 $1,959,000 $2,550,000 $4,509,000
===============================================
Income Per Share -
BASIC $0.50 $0.15 $0.19 $0.34
Weighted Average Common
Shares Outstanding 12,972,000 13,224,000 13,224,000 13,224,000
===============================================
Income Per Share -
DILUTED $0.49 $0.14 $0.19 $0.33
Adjusted Weighted
Average Shares and Assumed
Conversions 13,124,000 13,597,000 13,597,000 13,597,000
===============================================
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