Golfsmith Reports Fiscal 2006 Third Quarter Financial Results.AUSTIN, Texas -- Golfsmith International Holdings, 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 : GOLF) today reported results for its fiscal 2006 third quarter, which ended September 30, 2006. For the third quarter of 2006, Golfsmith reported net revenues of $94.0 million, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $3.8 million, and net income of $3.4 million or earnings per diluted share of $0.21. Financial Highlights For third quarter 2006, Golfsmith reported: * Net revenues increased 9.9 percent to $94.0 million compared with $85.5 million for the third quarter of 2005. The increase was driven by the addition of seven retail stores over the past year and a 5.1 percent increase in net revenues from its direct-to-consumer channel. * Comparable store sales increased 0.2 percent, compared with 6.2 percent in the same period a year ago, driven by sales of golf clubs, apparel, technology-related accessories and tennis products. The company delivered this performance against a challenging year-over-year comparison, a quarterly decrease in golf rounds played, and vendor promotions. * Operating income of $3.8 million, or 4.0 percent of sales, compared with operating income of $4.1 million, or 4.8 percent of sales, for the third quarter of fiscal 2005. This decline was a result of increased sales in lower margin categories such as golf clubs; increased freight costs due to higher fuel prices; and increased selling, general and administrative expenses associated with seven stores opened subsequent to October 1, 2005. * Net income of $3.4 million, or earnings per diluted share of $0.21, compared with net income of $1.2 million, or earnings per diluted share of $0.12. This was based on 15.9 million diluted weighted average shares outstanding at September 30, 2006, and 9.9 million diluted weighted average shares outstanding at October 1, 2005, respectively. Net income for the quarter ended September 30, 2006, was positively affected by a $2.1 million decrease in interest expense year over year. For the nine months ended September 30, 2006, Golfsmith reported: * Net revenues increased 12.3 percent to $282.9 million compared with $252.0 million for the corresponding period a year ago. * Comparable store sales increased 4.2 percent compared with negative 0.2 percent for the same period a year ago. * Operating income of $12.2 million, or 4.3 percent of sales, versus operating income of $13.9 million, or 5.5 percent of sales, for the same period of fiscal 2005. * A net loss of $5.4 million, after certain net charges of $14.7 million in conjunction with the initial public offering, or a loss per diluted share of $0.45 based on 12.1 million diluted weighted average shares outstanding. This compares with net income of $5.2 million, or earnings per average diluted share of $0.52 based on 9.9 million diluted weighted average shares outstanding, in the nine months ended October 1, 2005. "We are pleased with our performance in the third quarter and the progress we've made year-to-date executing our strategic initiatives and increasing our position in the marketplace," said Jim Thompson, president and 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 team was able to grow year-over-year comparable store sales during a three-month period that included a decrease in golf rounds played, an increase in competition and vendor promotions." Operations The company focused on key growth initiatives during the quarter: * Store Growth - On October 12, the company announced that it had signed leases to open stores in Houston, Tucson and Chicago by the end of 2006. Golfsmith will end the year having opened 10 stores, raising its national footprint to 62 stores. * Tennis - On August 16, the company announced the creation of its first-ever tennis 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. . Simultaneously, Golfsmith re-launched its tennis website (tennis.golfsmith.com). Both will showcase the latest apparel, footwear, accessories and racquets racquets, game played by two or four persons on a court 60 by 30 ft (18.3 m by 9.1 m); it is surrounded by three walls 30 ft (9.1 m) high and a backwall 15 ft (4.6 m) high. The ball, 1 in. (2.54 cm) in diameter, is made of polyethylene with an adhesive tape cover. in tennis and complement Golfsmith's 41 full-service tennis departments in stores around the country. * Proprietary Business - On October 17, the company announced an exclusive partnership with PGA (1) (Professional Graphics Adapter) An early IBM PC display standard for 3D processing with 640x480x256 resolution. It was not widely used. (2) (Programmable Gate Array) See gate array and FPGA. Teaching Pro Hank Haney to create a comprehensive line of golf training aides. Haney will collaborate on the development of a product line that will be sold nationally in 2007 exclusively through Golfsmith's stores, catalogs and website. This development is designed to help expand and diversify the company's proprietary offerings. Outlook Based on current business trends, the company anticipates net revenues for the fourth quarter of fiscal 2006 will range from $73 million to $76 million. Because of challenging year-over-year comparisons of 13.5 percent comparable store sales in the fourth quarter of 2005, the company expects comparable store sales of between negative 8 percent and negative 4 percent for the fourth quarter of 2006. The diluted loss per share is expected to be between $0.11 and $0.07 based on diluted weighted average shares outstanding of 15.9 million. For the year ending December 30, 2006, Golfsmith expects net revenues to range from $356 million to $359 million and comparable store sales from 1.5 percent to 2.4 percent. This compares with comparable store sales of 2.6 percent for fiscal year 2005. Based on a diluted weighted average share count of 13.3 million, the company now expects pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma 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 of between $0.60 and $0.66 compared with its previously announced full-year outlook of $0.58 to $0.64. This upward revision reflects stronger third quarter results. About Golfsmith Golfsmith International Holdings, Inc. (NASDAQ: GOLF), is a specialty retailer of golf and tennis equipment, apparel and accessories. The company operates as an integrated multi-channel retailer, offering its guests the convenience of shopping in its 60 stores across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , through its Internet site and from its assortment of catalogs. Golfsmith offers an extensive product selection that features premier branded merchandise, as well as its proprietary products, clubmaking components and pre-owned clubs. Cautionary Language Certain statements made in this news release are forward looking in nature and, accordingly, are subject to risks and uncertainties. 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 only predictions based on our current expectations and projections about future events. Important factors could cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, those discussed in our Form 10-Q Form 10-Q See 10-Q. , filed August 15, 2006 and our Registration Statement on Form S-1, filed on June 15, 2006 under the caption "Risk Factors." Non-GAAP Financial Measurements Golfsmith provides a non-GAAP measure of net income (loss) and net income (loss) per share in its earnings release. The presentation is intended to be a supplemental measure of performance and excludes: (i) charges related to the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of the company's 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. ; (ii) expenses related to the termination of a management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects agreement; (iii) expenses related to the initial recognition of stock-based compensation in the second fiscal quarter ended July 1, 2006 for the modification of existing stock options to accelerate a portion of the respective grant's vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: provisions and new stock option grants issued; and (iv) derivative income associated with the initial public offering. Golfsmith believes that excluding these items from the reported net loss represents a better basis for the comparison of its current results to past, present, and future operating results, and a better means to highlight the results of core ongoing operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The non-GAAP financial measures included in the press release have been reconciled to the corresponding GAAP financial measures as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. The names "Golfsmith [R]," "ASI ASI, n See Anxiety Sensitivity Index. [TM] " "Black Cat [R]," "Crystal Cat [R]," "GearForGolf [TM]," "GiftsForGolf [TM]," "Killer Bee killer bee An individual or organization that assists a firm in repelling a takeover attempt, especially by devising defensive strategies. [R]," "Lynx lynx, name given to several related small, ferocious members of the cat family. All have small heads, tufted ears, and heavy bodies with long legs and short tails. All are primarily terrestrial, although they are able to climb trees. [R]," "Parallax parallax (pâr`əlăks), any alteration in the relative apparent positions of objects produced by a shift in the position of the observer. In astronomy the term is used for several techniques for determining distance. [R]," "Predator [R]," "Snake Eyes [R]," "Tigress [R]," and "Zevo [R]," and the Golfsmith logo are trademarks, service marks or trade names owned by Golfsmith International, Inc. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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