K SWISS INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 3, 2011

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8-K - K-SWISS INC. 8-K - K SWISS INCa50055335.htm

Exhibit 99.1

K-Swiss Reports Third Quarter Results

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--November 3, 2011--K•Swiss Inc. (NASDAQ: KSWS) today announced results for the third quarter ended September 30, 2011. The operations of FORM Athletics are accounted for as a discontinued operation in the Company’s financial results and are excluded from futures orders data for the prior-year periods.

Financial Results

Net loss for the third quarter of 2011 was $15,418,000, or $0.43 per diluted share, compared with a net loss of $28,334,000, or $0.80 per diluted share, for the prior-year period. Net loss for the nine months ended September 30, 2011, was $45,286,000, or $1.28 per diluted share, compared with a net loss of $47,577,000, or $1.35 per diluted share, for the nine months ended September 30, 2010.

For the third quarter of 2011, total worldwide revenues increased 30.8% to $80,456,000 from $61,491,000 in the prior-year period. Domestic revenues increased 21.0% to $32,676,000 in the third quarter, and international revenues increased 38.6% to $47,780,000 for the same period. Total worldwide revenues for the first nine months of 2011 increased 25.3% to $218,194,000 from $174,192,000 for the first nine months of 2010. Domestic revenues increased 30.8% to $96,360,000 in the first nine months, and international revenues increased 21.2% to $121,834,000.

Futures Orders

Worldwide futures orders with start ship dates from October 2011 through March 2012 decreased 4.2% to $76,598,000 at September 30, 2011. Domestic futures orders decreased 24.1% to $26,494,000 at September 30, 2011, from $34,894,000 the previous year. International futures orders increased 11.3% to $50,104,000 at September 30, 2011, from $45,021,000 the previous year.

Steven Nichols, Chairman of the Board and President, stated, “Our performance category and international operations continue to strengthen, but our domestic business, in total, needs more work to restore us to profitability.”

2011 Guidance

For 2011, the Company expects full year consolidated revenues to be approximately $260 million. Consolidated gross margin is expected to be approximately 36.5%, compared to 39.2% in 2010. Selling, general and administrative expenses are expected to be $153 million to $155 million.

Investor Conference Call and Web Simulcast

K•Swiss will conduct a conference call on its third quarter 2011 results today, at 11:00 a.m. ET. The number to call for this interactive teleconference is (212) 231-2928. A replay of this conference call will be available until November 10, 2011, by dialing (402) 977-9140 and entering the passcode, 21542237.

The Company will also provide an online Web simulcast and rebroadcast of this conference call. The live broadcast of K•Swiss’ quarterly conference call will be available online at www.streetevents.com and www.earnings.com today, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through November 10, 2011.

Founded more than forty years ago in Van Nuys, California, K•Swiss introduced the first all-leather tennis shoe, the K•Swiss “Classic” in 1966. Since its inception, K•Swiss has rooted itself in California Sport with an aim to be the most inspiring and innovative sports brand in the market. Today the Company offers performance and lifestyle footwear and apparel for several categories under its California Sports umbrella including Tennis Heritage, California Fit (Running, Triathlon and Fitness) and California Youth. K•Swiss also designs, develops and markets footwear under the Palladium brand. For more information about K•Swiss, visit www.kswiss.com.

Certain matters discussed in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to: non-achievement of the assumptions discussed herein, general and regional economic conditions, availability of credit, industry trends, merchandise trends, including market acceptance of the Company’s product offerings, customer demand, competition, the impact of terrorism and/or a potential global conflict on the worldwide economy, dependence on large customers and credit concentrations and order cancellations and reduced sales resulting from a deepening of the current worldwide recession. A complete description of these factors, as well as others which could affect the Company's business, is set forth in the Company's periodic filings, including its Form 10-Q for the quarter ended September 30, 2011, which is currently on file with the SEC. Futures orders as of any date, represents orders scheduled to be shipped within the next six months. Futures orders as of a certain date do not include orders scheduled to be shipped on or prior to that date. The mix of “futures” and “at-once” orders can vary significantly from quarter to quarter and year to year and, therefore, “futures” are not necessarily indicative of revenues for subsequent periods.

 
K•Swiss Inc. Consolidated Statements of Loss
(In thousands, except earnings per share data)
     
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
 
Revenues $ 80,456 $ 61,491 $ 218,194 $ 174,192
Cost of goods sold   51,631     36,458     138,413     102,987  
Gross profit 28,825 25,033 79,781 71,205
Selling, general and administrative expenses   42,357     38,685     120,620     106,988  
Operating loss (13,532 ) (13,652 ) (40,839 ) (35,783 )
Other income/(expense) - - 3,000 (3,320 )
Interest income/(expense), net   242     (197 )   95     170  
Loss before income taxes and discontinued operations (13,290 ) (13,849 ) (37,744 ) (38,933 )
Income tax expense   342     13,993     1,904     8,152  
Loss from continuing operations (13,632 ) (27,842 ) (39,648 ) (47,085 )
Loss from discontinued operations, less applicable income tax   (1,786 )   (492 )   (5,638 )   (492 )
Net loss $ (15,418 ) $ (28,334 ) $ (45,286 ) $ (47,577 )
Basic loss per share $ (0.43 ) $ (0.80 ) $ (1.28 ) $ (1.35 )
Diluted loss per share $ (0.43 ) $ (0.80 ) $ (1.28 ) $ (1.35 )
Weighted average number of shares outstanding
Basic 35,572 35,246 35,480 35,192
Diluted 35,572 35,246 35,480 35,192
 
 
K•Swiss Inc. Condensed Balance Sheets
(In thousands)
 
September 30,
2011 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 37,419 $ 44,116
Restricted cash and cash equivalents and restricted investments available for sale 22,702 24,373
Investments available for sale 6,228 71,637
Accounts receivable, net 43,298 44,174
Inventories 93,700 55,292
Prepaid expenses and other current assets 10,181 4,523
Income taxes receivable   -     14,865  
Total current assets 213,528 258,980
PROPERTY, PLANT AND EQUIPMENT, NET 20,122 21,156
OTHER ASSETS
Intangible assets 14,575 18,269
Deferred income taxes 3,853 3,320
Other   4,719     10,120  
Total other assets   23,147     31,709  
$ 256,797   $ 311,845  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank lines of credit $ 15,060 $ 5,116
Current portion of long-term debt 284 300
Trade accounts payable 14,822 15,327
Accrued income taxes payable - 165
Accrued liabilities   22,612     16,599  
Total current liabilities 52,778 37,507
OTHER LIABILITIES
Long-term debt 155 436
Other liabilities 7,610 13,757
Contingent purchase price   3,886     5,857  
Total other liabilities 11,651 20,050
STOCKHOLDERS' EQUITY   192,368     254,288  
$ 256,797   $ 311,845  
 

CONTACT:
K•Swiss Inc.
George Powlick, 818-706-5100
Chief Financial Officer

K SWISS INC Reports