Columbia Sportswear Company second quarter net sales were $211.6 million, an increase of 13.6% over net sales of $186.2 million for the same period of 2005. Net income decreased 23.8% to $4.8 million for the second quarter of 2006 from $6.3 million for the same period of 2005.
Net income for the second quarter of 2006 included $2.0 million in after-tax stock-based compensation expense, or five cents per diluted share. Diluted earnings per share for the second quarter of 2006 were 13 cents on 37.0 million weighted average shares, compared to diluted earnings per share of 16 cents for the second quarter of 2005 on 39.3 million weighted average shares. The decrease in weighted average shares outstanding is the result of the Company’s repurchases of shares over the last twelve months.
Compared to the second quarter of 2005, Other International sales increased 25.2% to $51.1 million, U.S. sales increased 7.8% to $118.9 million, Europe sales increased 14.6% to $29.1 million, and Canada sales increased 28.9% to $12.5 million for the second quarter of 2006.
Excluding changes in currency exchange rates, consolidated net sales increased 13.5%, Other International sales increased 25.7%, U.S. sales increased 7.8%, Europe sales increased 17.3%, and Canada sales increased 17.5% for the second quarter of 2006, compared to the same period of 2005.
For the second quarter of 2006, sportswear sales increased 9.6% to $112.2 million, footwear sales increased 25.9% to $43.2 million, equipment sales increased 159.3% to $7.0 million, outerwear sales increased 8.0% to $43.2 million and accessories sales decreased 11.8% to $6.0 million, compared to the second quarter of 2005.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Second quarter gross margins were higher than anticipated due primarily to better than expected sportswear margins and lower than expected closeout sales at higher margins for sportswear and outerwear. Second quarter sales growth was driven by increased demand for our apparel products in international markets and strong shipments of footwear products domestically. Consolidated selling and operating expenses increased $11.0 million, primarily due to additional personnel costs, including incremental stock-based compensation expense, but were less than expected as a result of our cost control measures. The stronger than projected sales and margins, coupled with effective cost management drove better than expected results for the quarter.”
“In reviewing the second quarter results, investors should be aware that the second quarter is our smallest revenue quarter of the year, as we conclude our spring product shipping season and begin shipping fall products late in the quarter. Because of the comparatively low revenue levels in the quarter, changes in shipments in any one channel, geography or category may be amplified and therefore, changes in operating results may not necessarily be indicative of future results,” continued Mr. Boyle.
During the second quarter, the Company repurchased approximately 1.5 million shares at an aggregate purchase price of $73.7 million. The Company has repurchased a total of approximately 6.0 million shares at an aggregate purchase price of $284.3 million of the $400 million authorized since the inception of the stock repurchase program in April 2004.
Mr. Boyle continued, “Based on our current outlook, we anticipate third quarter 2006 revenue growth of 11 to 12 percent and net income decline of approximately 12 percent, including approximately $2 million in after-tax stock-based compensation expense, compared to the same period of 2005. For the full year 2006, we anticipate net sales growth of approximately 11 percent compared to 2005, and diluted earnings per share of up to approximately $3.22, including $0.20 in stock-based compensation expense. These projections are forward-looking in nature, and are based on backlog and forecasts, which may change, perhaps significantly.”
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Net sales $211,553 $186,231 $471,764 $431,937 Cost of sales 130,129 112,678 278,703 251,141 Gross profit 81,424 73,553 193,061 180,796 38.5% 39.5% 40.9% 41.9% Selling, general, and administrative 77,080 66,119 161,899 142,910 Net licensing income (1,119) (907) (2,124) (1,623) Income from operations 5,463 8,341 33,286 39,509 Interest (income) expense, net (1,915) (1,298) (3,813) (2,705) Income before income tax 7,378 9,639 37,099 42,214 Income tax provision 2,545 3,326 12,799 14,564 Net income $4,833 $6,313 $24,300 $27,650 Net income per share: Basic $0.13 $0.16 $0.66 $0.70 Diluted 0.13 0.16 0.65 0.69 Weighted average shares outstanding: Basic 36,555 38,956 36,712 39,546 Diluted 36,965 39,329 37,134 39,987