Deckers Outdoor Corporation Reports First Quarter Results.Business Editors GOLETA, Calif.--(BUSINESS WIRE)--April 25, 2002 -- The Company Raises FY2002 Guidance Before Goodwill Impairment -- Company Anticipates FY2003 EPS Will Increase More Than 50% to a Range of $0.35 to $0.40 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, 2002. 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 for the first quarter were $33.3 million versus $34.9 million in the same period last year. For the quarter, earnings before cumulative effect of change in accounting principle were $2.2 million, or $0.22 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 $2.5 million, or $0.26 per diluted share last year. The net sales and earnings from operations were both above the guidance previously provided by the Company earlier in the year. In July July: see month. 2001, The Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). ("FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ") issued 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 Intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. Assets. SFAS 142 requires that goodwill and 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. 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 Company implemented this new accounting standard on January January: see month. 1, 2002, resulting 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, or $0.92 per diluted share, in the first quarter of 2002, which has been recorded as a cumulative effect of a change in accounting principle, net of its tax benefit, in the Company's statement of operations See Income statement. for the first quarter. This non-cash impairment charge included a write down of approximately $1.2 million, on an after tax basis, for Simple goodwill and $7.8 million for Ugg goodwill. As a result of these write downs, Simple has no remaining goodwill and Ugg has approximately $6.1 million of goodwill remaining on the balance sheet at March 31, 2002, representing the estimated fair value of the goodwill. In addition, SFAS 142 provides that goodwill no longer be amortized, and as a result the Company recorded no goodwill amortization in the first quarter of 2002, whereas the Company had recorded approximately $200,000 of goodwill amortization in the first quarter of 2001. After taking into account the cumulative effect of the change in accounting principle, the net loss for the quarter ended March 31, 2002 was $6,811,000, or $0.70 per diluted share. "Our first quarter results, before the goodwill impairment charge, exceeded expectations for both sales and earnings and represent a solid start to fiscal 2002," stated 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. , Deckers' Chairman & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our brands performed well during the quarter, highlighted by strong spring sell-throughs at Teva and a significant 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. in our Simple business at retail." Teva sales for the quarter were $29.3 million compared to $30.0 million in the same period a year ago, while Simple sales were $3.6 million compared to $4.2 million and Ugg sales were $0.4 million compared to $0.6 million last year. Due to Ugg's seasonality, the first quarter is not a meaningful quarter for the brand. Mr. Otto further commented, "On the strength of our powerful brand name, proprietary technologies and new product introductions, Teva continues to occupy the leadership position in sport sandals at our core accounts. We are experiencing strong sell-throughs at a number of our key retailers including REI, The Sports Authority Sports Authority is the USA's largest full line sporting goods retailer. The company is headquartered in Englewood, Colorado. It operates over 400 stores in 45 U.S. states under the Sports Authority name. Total sales for the fiscal year ending January 29 2005 were $2.44 billion. and Nordstrom Nordstrom, Inc. (NYSE: JWN) is an upscale department store chain in the United States which was initially a shoe retailer, the company today also sells clothing, accessories, handbags, jewelry, cosmetics, fragrance, and home furnishings. , and we continue to be very pleased with the strong response to our 2002 Fall line, Teva's first broad offering of 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). . Our ability to successfully leverage the Teva name across new footwear categories such as trailrunning, hiking hiking Walking, often among hills or mountains, as recreational sport. It represents an activity in its own right and also figures in backpacking, camping, hunting, mountaineering, and orienteering. and rugged outdoor further solidifies our dominant position in the sport sandal market and underscores the lifestyle nature of the brand." Mr. Otto continued, "We are also pleased to see a turnaround at retail for Simple. The new spring line is performing at department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , specialty accounts and in catalogs alike, and we are excited by the reaction to our fall offering. Finally, while Q1 is historically a small quarter for Ugg, it is important to note that, even in a time where retailers are ordering closer in season, we have already received greater pre-season orders for fall delivery than we had received at this time last year. We will continue to expand Ugg geographically and anticipate our fifth consecutive year of growth for the brand in 2002." The Company's balance sheet at the end of the quarter was strong with approximately $13.0 million in cash and virtually no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . The Company also signed a new $20 million line of credit agreement with Comerica Comerica Incorporated NYSE: CMA is a financial services company headquartered in Dallas, Texas. The bank was founded in Detroit in 1849 as the Detroit Savings Fund Institute, by Elon Farnsworth. Bank during the quarter, providing for borrowing availability through May 2004. Based on strong in-season orders, good reaction to the fall lines, and continuing momentum for Ugg, the Company expects to return to double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in the second half of this year. The Company has raised its guidance for 2002 and introduced guidance for 2003. For the second quarter ending June June: see month. 30, 2002, the Company currently expects sales to range between $18 million and $19 million and earnings per share to range from $0.02 to $0.03. For the fiscal year ending December December: see month. 31, 2002, the Company expects sales to range between $90 million and $94 million and earnings per share to range from $0.23 to $0.26, excluding the first quarter goodwill impairment charge. For fiscal 2003 the Company expects sales to range from $100 million to $105 million and earnings per share to range from $0.35 to $0.40. Mr. Otto concluded, "After a year highlighted by a number of external challenges, we are pleased to begin fiscal 2002 with solid momentum across all of our brands. Teva will continue to be the platform on which we will grow our business into the future. Our sustained leadership position in the sport sandal industry, coupled with our successful entree into the much larger outdoor footwear category, affords us significant growth opportunities. Furthermore, Ugg continues to dominate the U.S. luxury sheepskin footwear market, while Simple allows us to take advantage of trends in casual footwear. We believe our ongoing commitment to design and innovation, our proprietary technologies, and the lifestyle status of our brands allows us to maintain premier shelf space, creates a high degree of customer loyalty, helps us protect margins and provides Deckers with multiple growth opportunities in the years ahead." 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. This press release contains a number of forward looking statements, such as the Company's estimates regarding sales and earnings per share results for the quarter ending June 30, 2002 and for the years ending December 31, 2002 and 2003, as well as its statements regarding its expectations for Ugg's growth in 2002. These 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. are based on the Company's expectations as of today, April 25, 2002. 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, 2001. Among the factors which could impact results are the general economic conditions, world events and the 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 is also dependent 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 2001 Annual Report on Form 10-K, the Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. or this news release. (Tables to follow)
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 2002 2001
---------------------------
Current assets:
Cash and cash equivalents $12,966,000 16,689,000
Trade accounts receivable, net 24,640,000 20,395,000
Inventories 15,355,000 18,425,000
Prepaid expenses and other current
assets 1,055,000 1,694,000
Refundable and deferred tax assets 3,455,000 4,155,000
-----------------------------
Total current assets 57,471,000 61,358,000
Property and equipment, at cost, net 4,264,000 3,857,000
Intangible assets, less applicable
amortization 9,807,000 19,941,000
Other assets 695,000 728,000
----------------------------
$72,237,000 85,884,000
=============================
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable and current installments
of long-term debt $222,000 290,000
Trade accounts payable 6,838,000 13,915,000
Accrued expenses 5,220,000 4,988,000
-----------------------------
Total current liabilities 12,280,000 19,193,000
-----------------------------
Long-term debt, less current
installments 120,000 159,000
Stockholders' equity:
Preferred stock --- ---
Common stock 93,000 93,000
Additional paid-in capital 25,304,000 25,689,000
Retained earnings 34,440,000 41,251,000
Accumulated other comprehensive
income --- 123,000
-----------------------------
59,837,000 67,156,000
Less note receivable from stockholder/
former director --- 624,000
-----------------------------
Total stockholders' equity 59,837,000 66,532,000
-----------------------------
$72,237,000 85,884,000
=============================
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three-month period ended
March 31,
----------------------------
2002 2001
Net sales $33,259,000 34,911,000
Cost of sales 18,145,000 19,177,000
-------------------------------
Gross profit 15,114,000 15,734,000
Selling, general and
administrative expenses 11,400,000 11,653,000
-------------------------------
Earnings from operations 3,714,000 4,081,000
Other expense (income):
Interest, net (17,000) (79,000)
Other 17,000 (203,000)
------------------------------
Income before income
taxes and cumulative effect of
accounting change 3,714,000 4,363,000
Income taxes 1,552,000 1,876,000
------------------------------
Income before cumulative effect of
accounting change 2,162,000 2,487,000
Cumulative effect of accounting change,
net of $843,000 income tax benefit (8,973,000) ---
------------------------------
Net income (loss) $(6,811,000) 2,487,000
==============================
Basic income per common share before
cumulative effect of accounting change $0.23 0.27
Cumulative effect of accounting change (0.96) ---
------------------------------
Basic net income (loss) per common
share $(0.73) 0.27
==============================
Average basic common shares 9,344,000 9,179,000
==============================
Diluted income per common share before
cumulative effect of accounting change $0.22 0.26
Cumulative effect of accounting change (0.92) ---
------------------------------
------------------------------
Diluted net income (loss) per common
share $(0.70) 0.26
==============================
Average diluted common shares 9,792,000 9,584,000
==============================
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