Message #4 From:
NewsBot Date: February 21, 2007 01:01:00 PM
ATX News A.T. Cross Company Reports Sales and Profit Growth for the Fourth Quarter and Full Year 2006; Issues 2007 Guidance
LINCOLN, R.I.--(BUSINESS WIRE)--A.T. Cross Company (AMEX: ATX) today announced financial results for the fourth quarter and full year ended December 30, 2006.
Fourth Quarter Results
Consolidated sales for the fourth quarter of 2006 were up 9.4% to $45.3 million compared to $41.4 million in the fourth quarter of 2005. Global writing instruments and accessories revenue was $39.4 million, up 6.5% compared to $37.0 million in the same period last year. The Company’s optical segment, comprised of Costa Del Mar, had a fourth quarter sales increase of 33.1% to $5.9 million compared to $4.5 million in the same period last year.
Gross margin improved 180 basis points to 50.7% compared to 48.9% last year. Operating expenses, including restructuring charges, were $18.9 million, or 41.7% of sales in the quarter, versus $15.9 million, or 38.5% of sales, a year ago. The higher operating expenses were a significant factor in the Company's effort to drive growth in both businesses. Consolidated operating income was $4.1 million compared to $4.3 million in the fourth quarter of 2005.
Net income for the fourth quarter was $2.7 million, or $0.18 per share, compared to net income of $2.4 million, or $0.16 per share, last year.
Full Year Results
Consolidated sales for the year ended December 30, 2006 were $139.3 million, up 7.9% from $129.1 million in 2005. Sales for the writing instrument and accessories segment were $111.9 million, up 2.2% from $109.6 million in 2005. Sales for the optical segment increased 40.0% to $27.4 million, compared to $19.6 million in 2005.
Gross margin improved 400 basis points to 52.7% compared to 48.7% last year. The improvement in gross margin was primarily due to lower manufacturing costs as a result of the Company’s move to China, lower inventory reserve costs and an increase in the LIFO benefit from the prior year.
Operating expenses, including restructuring charges, were $68.7 million, or 49.3% of sales, compared to $62.0 million, or 48.0% of sales, in the prior year. Costa Del Mar’s operating expenses increased approximately $3.2 million in 2006 and were associated with the 40% growth in its business, the QWI restructuring costs increased $0.5 million, and the remaining increase in consolidated 2006 operating expenses was associated with the Company’s writing instruments and accessories business.
Net income for the year was $3.3 million, or $0.22 per share, compared to net income of $0.4 million, or $0.03 per share, last year.
Cash flow from operating activities was approximately $9.4 million for 2006, up $9.0 million from $0.4 million in 2005. 2006 EBITDA totaled $11.1 million.
2007 Outlook
The Company currently anticipates that consolidated 2007 revenue will grow in the mid single-digit range. 2007 EPS is expected to be in the range of $0.37 to $0.40 per share.
David G. Whalen, President and Chief Executive Officer of A.T. Cross said, “We continue to reinvent our business, diversifying by brand and product category, and creating a more efficient, more effective operating platform. We now have the combination of a stronger Cross branded business that generates significant cash flow and a fast-growing, potentially national optical business with the Costa Del Mar brand. Our next step in our transformation is to leverage both of these operating groups to create new opportunities for growth. We believe that we continue to be in a position to deliver compelling value to shareholders both in the immediate future and over the long-term.”
Conference Call
The Company’s management will host a conference call today, February 21, 2007 at 4:30 p.m. Eastern Time. Parties interested in participating in the conference call may dial-in at (877) 704-5386, while international callers may dial-in at (913) 312-1302. A live webcast of the call will be accessible on the Company’s website at www.cross.com or www.viavid.net. The webcast will be archived for 30 days on the site, while a telephone replay of the call will be available beginning at 6:30 p.m. Eastern Time on February 21, 2007 through March 7, 2007 at 888-203-1112 or 719-457-0820 for international callers, pin number 3154293.
About A.T. Cross Company
Building on the rich tradition of its award-winning writing instruments and reputation for innovation and craftsmanship, A.T. Cross Company is a designer and marketer of branded personal and business accessories. Cross provides a range of distinctive products that appeal to a growing market of consumers seeking to enhance their image and facilitate their lifestyle. Cross products, including award-winning quality writing instruments, leather goods, timepieces, and business accessories and Costa Del Mar sunglasses, are distributed in retail and corporate gift channels worldwide. For more information, visit the A.T. Cross website at www.cross.com and the Costa Del Mar website at www.costadelmar.com.
Statements contained in this release that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (including but not limited to statements relating to improved revenue and earnings growth and expected cash flow, the potential national presence of the Costa Del Mar business, expected operational efficiencies, new product introductions and cost reductions).In addition, words such as "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including but not limited to consumers’ and retailers’ reaction to the Company’s existing and new writing instrument and accessory products, retailers’ support for the Company’s merchandising initiatives, and the ability of the Company to match forecasts and production with consumer demand, and are not guarantees since there are inherent difficulties in predicting future results.Actual results could differ materially from those expressed or implied in the forward-looking statements. The information contained in this document is as of February 21, 2007. The Company assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.Additional discussion of factors that could cause actual results to differ materially from management's expectations is contained in the Company's filings under the Securities Exchange Act of 1934.
