Ashworth, Inc. announced consolidated net revenue for the fourth quarter ended October 31, 2003 increased 9.5% to a record $32.2 million as compared to $29.4 million for the fourth quarter of fiscal 2002. The Company reported consolidated fourth quarter net income of $877,000 or $0.07 per diluted share as compared to consolidated net income of $550,000 or $0.04 per diluted share in the same quarter of the prior year.
Net revenue for the domestic segment increased 8.6% to $27.7 million from
$25.5 million reported the same quarter of the prior year. Net revenue
from the international segment increased 15.4% to $4.5 million from
$3.9 million in the same period of the previous year. Fourth quarter
revenue from Ashworth branded merchandise increased 5.8% to $25.2
million and revenue from Callaway Golf apparel, increased 25.6% to
$7.0 million during the quarter.
Consolidated net revenue for fiscal 2003 increased 15.5% to a
record $149.3 million as compared to $129.3 million for fiscal 2002.
Consolidated net income for fiscal 2003 was a record $7.3 million or
$0.56 per diluted share compared to $2.5 million or $0.19 per diluted
share in fiscal 2002. During the third quarter of fiscal 2002 the
Company recorded a $4.25 million increase in the reserve for bad debts
related to a single major retail account. Without the increase in
reserve, the Company would have reported consolidated net income of
$5.1 million or $0.38 per diluted share in fiscal 2002. The increase
in net income for fiscal 2003 over fiscal 2002 would have been 43.1%.
The Company believes that excluding the effect of the increase in
reserve for bad debts booked in the third quarter of fiscal 2002 for
the single customer filing for protection under the U.S. bankruptcy
laws provides additional information to investors to better understand
the impact the transaction had on the Company's performance for fiscal
2003 as compared to fiscal 2002 and, therefore, the adjusted
consolidated net income measure is useful to investors. Net revenue
for the domestic segment increased 13.2% to $126.4 million from $111.7
million in the prior year. Net revenue from the international segment
increased 30.1% to $22.9 million from $17.6 million in the prior year.
Fiscal 2003 revenue from Ashworth branded merchandise increased 5.5%
to $118.5 million and revenue from Callaway Golf apparel, which was
introduced in April 2002, increased 81.9% to $30.8 million for the
twelve-month period.
Randall L. Herrel, Sr., Chairman and Chief Executive Officer,
stated, “We are pleased with our record net revenues and significant
improvement in the fourth quarter and full fiscal year 2003 results.
This performance is notable in light of a continuing weak industry and
a challenging economic environment during the period. We believe the
record full year results are due to our successful multi-brand,
multi-channel global strategy. The increase in our domestic business
segment during the fiscal year resulted from the 79.1% growth in the
retail channel, an 8.6% increase in the corporate channel, as well as
an 8.9% increase in the core golf channel. In addition, we are
encouraged by the increase in Ashworth branded merchandise as it
represents the first increase since fiscal 2000.”
Mr. Herrel continued, “The response to our Spring/Summer 2004
Ashworth and Callaway Golf apparel lines has been favorable. We
believe we are on plan to increase account penetration and grow our
overall market share. Ashworth, Inc.'s consolidated global bookings
for both brands increased 18.9% versus last year. As compared to last
year, the Ashworth brand's bookings increased 13.4%, with domestic
bookings increasing 9.7% and international bookings increasing 34.0%.
The Callaway Golf apparel bookings increased 35.1%, with domestic
bookings increasing 29.4% and international bookings increasing 54.6%
versus last year.”
In reviewing the Company's financial position, Terence Tsang,
Chief Operating Officer and Chief Financial Officer, stated, “Our
gross margins increased 70 basis points to 40.6% for the fourth
quarter of fiscal 2003, due primarily to our continued initiative to
improve sourcing. This sourcing initiative enables the Company to stay
competitive without affecting our gross margin in the golf apparel
market which is experiencing price compression.”
Mr. Tsang continued, “Our balance sheet continues to get stronger
as we manage our working capital and seek to optimize our financial
leverage. Net accounts receivable decreased 8.0% over the prior year
while net revenues increased 9.5% for the fourth quarter. Our total
inventory increased 8.0% to $44.5 million as of October 31, 2003 as
compared to $41.2 million as of October 31, 2002 and is in line with
the increase in net revenues. Finally, we utilized our solid cash flow
to reduce our total debt by 56.8% to $6.3 million from $14.6 million
as of October 31, 2003 and 2002, respectively.”
The Company issued its initial revenue and earnings guidance for
fiscal 2004. Based on current information, the Company expects
consolidated net revenues for fiscal 2004 of $155.0 million to $162.0
million and earnings of $0.59 to $0.65 per share.
Based on current business trends the Company expects fiscal 2004
first quarter net revenues of $26.7 million to $27.2 million and
earnings of $0.01 to $0.02 per diluted share. The Company currently
expects to report fiscal 2004 first quarter results on Thursday, March
4th at market close.
Mr. Herrel concluded, “Though we remain prudently conservative in
our guidance due to the uncertainty of the economy as well as the golf
industry challenges, we continue to be optimistic about the future of
Ashworth. In 2004, we have two strong brands to grow our business and
we are encouraged by recent strong results in the department store
channel. As evidenced by our positive operating results starting in
the fourth quarter of fiscal 2002 and continuing throughout fiscal
2003, our new business model, which includes multi-brand and
multi-channel strategies, is a key driver of this success.”
ASHWORTH, INC.
Consolidated Statements of Income
Fourth Quarter ended October 31, 2003 and 2002
(Unaudited)
Summary of Results of
Operations
2003 2002
------------- -------------
Fourth Quarter
--------------
Net Revenue $32,174,000 $29,366,000
Cost of Sales 19,112,000 17,653,000
------------- -------------
Gross Profit 13,062,000 11,713,000
Selling, General and Administrative
Expenses 11,489,000 10,624,000
------------- -------------
Income from Operations 1,573,000 1,089,000
Other Income (Expense):
Interest Income 12,000 7,000
Interest Expense (193,000) (188,000)
Other Income, net 70,000 9,000
------------- -------------
Total Other Expense, net (111,000) (172,000)
Income Before Provision for Income Tax
Expense 1,462,000 917,000
Provision for Income Tax Expense (585,000) (367,000)
------------- -------------
Net Income $877,000 $550,000
============= =============
Income Per Share -- BASIC $0.07 $0.04
Income Per Share -- DILUTED $0.07 $0.04
Twelve Months
-------------
Net Revenue $149,292,000 $129,286,000
Cost of Sales 88,627,000 77,097,000
------------- -------------
Gross Profit 60,665,000 52,189,000
Selling, General and Administrative
Expenses 47,934,000 47,279,000
------------- -------------
Income from Operations 12,731,000 4,910,000
Other Income (Expense):
Interest Income 36,000 46,000
Interest Expense (876,000) (842,000)
Other Income, net 323,000 68,000
------------- -------------
Total Other Expense, net (517,000) (728,000)
Income Before Provision for Income Tax
Expense 12,214,000 4,182,000
Provision for Income Tax Expense (4,886,000) (1,673,000)
------------- -------------
Net Income $7,328,000 $2,509,000
============= =============
Income Per Share -- BASIC $0.56 $0.19
=============
Income Per Share -- DILUTED $0.56 $0.19
