Deckers Outdoor Corporation Reports First Quarter Results; Reports 1Q03 Diluted EPS of $0.37; Exceeding First Call Consensus Estimate of $0.29; Raises Guidance for 2003.Business Editors GOLETA, Calif.--(BUSINESS WIRE)--April 24, 2003 Deckers Outdoor Corporation Deckers Outdoor Corporation is a footwear manufacturer based in Goleta, California, United States. Deckers currently makes three brands:
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 :DECK) today announced financial results for the first quarter ended March 31, 2003. For the first quarter, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 9% to $36.1 million versus $33.3 million in the same period last year. Net earnings for the quarter increased to $4,203,000 compared to earnings before cumulative effect of change in accounting principle described below of $2,162,000 last year and 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 increased 68% to $0.37, versus diluted earnings per share before cumulative effect of change in accounting principle of $0.22 in the first quarter of 2002. As previously reported, on January January: see month. 1, 2002 Deckers implemented Statement of Financial Accounting Standards No. 142 ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142"), Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , which requires that goodwill and intangible assets with indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those useful lives no longer be amortized to earnings but instead be reviewed periodically for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . The implementation of SFAS 142 resulted in a goodwill impairment charge of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $9.0 million during the quarter ended March 31, 2002, which was recorded as a cumulative effect of change in accounting principle. In addition, SFAS 142 provides that goodwill no longer be amortized. Douglas Douglas, city, Isle of Man Douglas, city (1991 pop. 19,950), capital of the Isle of Man, Great Britain. It is a popular resort, connected by rail to Ramsey and Port Erin, on the Irish Sea. Tourism is the chief industry. Otto Otto, Austrian archduke Otto: see Hapsburg, Otto von. , Chairman and Chief Executive Officer stated, "We begin fiscal 2003 with solid momentum that reflects both the strength of our brands and the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. earnings resulting from our acquisition of Teva. Strong sales of Teva, especially in the domestic market, coupled with the elimination of Teva 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. expenses resulted in a significant increase in earnings per share for the first quarter." Including both wholesale sales and the sales of the newly acquired catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and 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 retailing business, Teva sales for the quarter increased 8% to $31.7 million compared to $29.3 million in the same period a year ago. Ugg sales for the quarter increased 297% to $1.6 million from $0.4 million last year, while Simple sales decreased 22% to $2.8 million compared to $3.6 million last year. Included above are aggregate catalog and Internet retail sales of $1.1 million, including $0.6 million for Teva, $0.4 million for Ugg and $0.1 million for Simple. Gross margin for the quarter was 45.0% compared to 45.4% for the first quarter of 2002, largely due to the non-recurrence of a supplier rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. received in 2002. In addition, Deckers experienced an increased volume of discounted sales for Simple and Teva, which was partially offset by lower inventory write-downs, above average margins at the newly acquired Internet and catalog retail sales operation and the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of the strong Euro. Selling, general and administrative expenses decreased $3.2 million to $8.2 million for the first quarter of 2003 from $11.4 million in the first quarter of 2002, primarily due to the elimination of $2.3 million of Teva royalty expense and related license costs. Deckers also had a $1.1 million reduction in first quarter marketing costs as the timing of marketing programs will occur later in the year in 2003 than in 2002 and Deckers experienced a $0.3 million reduction in bad debt expense. These decreases were partially offset by increased 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. with the addition of the catalog and Internet retailing business and slightly higher sales commission expense on the increased sales levels. Mr. Otto further commented, "During the quarter, Teva increased its retail presence and experienced strong domestic sell-through sell-through Adjective of the sale of prerecorded video cassettes, without their first being for hire only in several key accounts including REI, Dillard's
n. 1. A durable covering for the human foot, made of leather or similar material with a rigid sole and heel, usually extending no higher than the ankle. 2. A horseshoe. 3. . We are also encouraged by the continued success in several of our closed toe footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). styles, including the recently introduced Gamma amphibious am·phib·i·ous adj. 1. Biology Living or able to live both on land and in water. 2. Able to operate both on land and in water: amphibious tanks. 3. model. We intend to build on our existing share of the sport sandal category while simultaneously leveraging the strength and lifestyle nature of the Teva brand in order to further penetrate the substantially larger outdoor footwear market." "Coming off its fifth straight year of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. annual sales growth, Ugg posted record first quarter revenues of $1.6 million. While historically the first quarter has not been a seasonally significant period for the brand, Ugg continues to experience strong momentum, fueled by new product introductions, geographic expansion and celebrity exposure. Early reaction to the Fall 2003 line has been very positive and we remain enthusiastic about our growth prospects for this year and beyond." Mr. Otto continued, "Simple remains a work in progress. While it did not meet our financial targets in the first quarter, we are pleased with early feedback on Simple's fall line of athletically inspired styles and expect to see growth in the second half of this year. For 2004, we plan to expand Simple's sandal offering and introduce Simplegirl, a moderately priced collection aimed at a younger teen demographic. We believe we have taken the necessary steps to get the brand back on track and are headed in the right direction. However, we have established specific performance criteria criteria (krītēr´ē  ),n. for the remainder of 2003 and will consider other strategic alternatives for Simple if they are not met." Despite the debt incurred to finance the Teva acquisition, Deckers' cash flow and liquidity remain strong. Due to the seasonal nature of the business, March has historically been the peak borrowing period for Deckers. Even with this historical seasonality, at March 31, 2003 Deckers had cash of $4.8 million and had reduced the outstanding borrowings under its $20 million line of credit to $1.8 million. Deckers also increased its guidance for 2003. Deckers currently anticipates sales for fiscal year 2003 to range from $103 million to $107 million and expects diluted earnings per share to range from $0.50 to $0.53, up from the previous guidance of $0.41 to $0.46 per share. Deckers currently expects second quarter of 2003 sales to range from $23 million to $24 million and diluted earnings per share to range from $0.10 to $0.11 per share. Deckers expects 2003 Teva sales to be $68 million to $70 million, Simple sales to be $11 million to $12 million and Ugg sales to be $24 million to $25 million. Mr. Otto concluded, "Teva remains the sport sandal leader. Its strong heritage in whitewater Whitewater, city, United States Whitewater, city (1990 pop. 12,636), Jefferson and Walworth counties, SE Wis., in a dairy and farm area; inc. 1885. sports and its lifestyle status in the market should enable us to effectively leverage the Teva name across a host of additional footwear and non-footwear products. We believe similar opportunities exist for Ugg. We are committed to executing a strategy that will allow us to fully maximize the strength of our assets and expand our business into the future." Deckers Outdoor Corporation builds niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the products into global lifestyle brands by designing and marketing innovative, functional and fashion-oriented footwear, developed for both high performance outdoor activities and everyday casual lifestyle use. The Company's products are offered under the Teva, Simple and Ugg brand names. Deckers Outdoor Corporation will host a conference call to review first quarter fiscal 2003 results, which will be broadcast live over the Internet on Thursday Thursday: see week. , April 24, 2003 at 10:00 a.m. Eastern Time. The broadcast will be hosted at http://www.viavid.com/detailpage.asp?sid=1992. A replay of the call will be available until May 1, 2003 at 12:00 AM at (877) 519-4471, passcode: 3880180. All statements in this press release that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including the Company's estimates regarding sales and earnings per share results for the year ending December December: see month. 31, 2003 and for the quarter ending June June: see month. 30, 2003 as well as the 2003 sales expectations for each of the Company's three brands. These forward-looking statements are based on the Company's expectations as of today, April 24, 2003. No one should assume that any forward-looking statement made by the Company will remain consistent with the Company's expectations after the date the forward-looking statement is made. The Company intends to continue its practice of not updating forward-looking statements until its next quarterly results announcement. In addition, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Many of the risks, uncertainties and other factors are discussed in detail in the Company's 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 fiscal year ended December 31, 2002. Among the factors that could impact results are the general economic conditions and strength or weakness in the retail environments in which the Company's products are sold. In addition, the Company's sales are highly dependent on consumer preferences, which are difficult to assess and can shift rapidly. Any shift in consumer preferences away from one or more of the Company's product lines could result in lower sales as well as 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. , both of which could adversely affect the Company's results of operations, financial condition and cash flows. The Company also depends on its customers continuing to carry and promote its various lines. Availability of products can also affect the Company's ability to meet its customers' orders. Sales of the Company's products, particularly those under the Teva(R) and Ugg(R) lines, are very sensitive to weather conditions. Extended periods of unusually cold weather during the spring and summer could adversely impact demand for the Company's Teva(R) line. Likewise, unseasonably warm weather during the fall and winter months could adversely impact demand for the Company's Ugg(R) product line. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in the 2002 Annual Report on Form 10-K, the Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. or this news release.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
Assets March 31, 2003 December 31, 2002
--------------- -----------------
Current assets:
Cash and cash equivalents $ 4,769,000 3,941,000
Trade accounts receivable, net 25,354,000 20,851,000
Inventories 16,713,000 17,067,000
Prepaid expenses and other
current assets 719,000 783,000
Deferred tax assets 1,919,000 1,919,000
-------------- ------------------
Total current assets 49,474,000 44,561,000
Property and equipment, at cost, net 3,603,000 3,864,000
Intangible assets, less applicable
amortization 70,763,000 70,773,000
Deferred tax assets 1,428,000 1,428,000
Other assets 1,695,000 1,786,000
-------------- ------------------
$ 126,963,000 122,412,000
============== ==================
Liabilities and
Stockholders' Equity
Current liabilities:
Notes payable and current
installments of long-term debt $ 4,787,000 3,951,000
Trade accounts payable 12,714,000 12,916,000
Accrued expenses 3,736,000 4,509,000
Income taxes payable 4,017,000 732,000
-------------- ------------------
Total current liabilities 25,254,000 22,108,000
-------------- ------------------
Long-term debt, less current
installments 31,471,000 35,077,000
Stockholders' equity:
Preferred stock 5,500,000 5,500,000
Common stock 95,000 95,000
Additional paid-in capital 26,386,000 26,210,000
Retained earnings 38,101,000 33,898,000
Accumulated other comprehensive
income (loss) 156,000 (476,000)
-------------- ------------------
Total stockholders' equity 70,238,000 65,227,000
-------------- ------------------
$ 126,963,000 122,412,000
============== ==================
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three-month period ended
March 31,
------------------------
2003 2002
----------- -----------
Net sales $36,102,000 33,259,000
Cost of sales 19,862,000 18,145,000
----------- -----------
Gross profit 16,240,000 15,114,000
Selling, general and administrative
expenses 8,153,000 11,400,000
----------- -----------
Earnings from operations 8,087,000 3,714,000
Other expense (income):
Interest, net 1,097,000 (17,000)
Other (15,000) 17,000
----------- -----------
Income before income taxes and cumulative
effect of accounting change 7,005,000 3,714,000
Income taxes 2,802,000 1,552,000
----------- -----------
Income before cumulative effect of
accounting change 4,203,000 2,162,000
Cumulative effect of accounting change, net
of $843,000 income tax benefit --- (8,973,000)
----------- -----------
Net income (loss) $ 4,203,000 (6,811,000)
=========== ===========
Basic income per common share before
cumulative effect of accounting change $ 0.44 0.23
Cumulative effect of accounting change --- (0.96)
----------- -----------
Basic net income (loss) per common share $ 0.44 (0.73)
=========== ===========
Average basic common shares 9,474,000 9,344,000
=========== ===========
Diluted income per common share before
cumulative effect of accounting change $ 0.37 0.22
Cumulative effect of accounting change --- (0.92)
----------- -----------
Diluted net income (loss) per common share $ 0.37 (0.70)
=========== ===========
Average diluted common shares 11,266,000 9,792,000
=========== ===========
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