K-Swiss Inc.reported that net earnings for the first quarter of 2003 increased 41.1% to $13,644,000, or $0.72 per diluted share, compared with $9,668,000, or $0.49 per diluted share, in the prior-year period.
For the first quarter of 2003, total worldwide revenues increased 43.7% to $115,933,000 compared with $80,671,000 in the prior-year period. Domestic revenues increased 43.7% to $100,814,000 in the first quarter, and international revenues increased 44.0% to $15,119,000.
Worldwide futures orders with start ship dates from April through September 2003 increased 62.8% to $171,779,000 at March 31, 2003, compared with $105,495,000 at March 31, 2002. Domestic futures orders increased 68.0% to $152,446,000 at March 31, 2003, from $90,756,000 at March 31, 2002. International futures orders increased 31.2% to $19,333,000 at March 31, 2003, from $14,739,000 the previous year.
The Company purchased 475,400 shares of Class A Common Stock during the first quarter of 2003 for a total expenditure of approximately $11,064,000 as part of its stock repurchase program. Since August 1996, K-Swiss has purchased a total of 11.3 million shares of Class A Common Stock for a total expenditure of $100.7 million.
Commenting on the announcement, Steven Nichols, Chairman of the Board and President, stated, “The momentum in Classics we established last year has now been extended to the entire K-Swiss brand. With revenue increases in virtually every product category and at-once business higher than we had anticipated, we were able to post record first quarter revenues and earnings that surpassed our previous expectations. We believe the high levels of sell through at retail and the sustained growth in our backlog are good indicators that retailers continue to choose proven sellers such as our Classics in today’s retail environment. This trend should play right to our strengths.”
K-Swiss also issued guidance for 2003. The Company expects revenues for the second quarter of 2003 will be in the range of $114 to $117 million and earnings per diluted share to be in the range of $0.60 to $0.65. The Company expects full year revenues to be $390 to $400 million and expects to report full year earnings per diluted share of approximately $2.05 to $2.15.
These estimates reflect the continued investments in marketing and product development for the National Geographic and Royal Elastics brands as well as the expansion of European operations and are based upon the following assumptions: gross margins will be approximately 44% for the year; SG&A will not rise above $108 million for the year; cancellations will be moderate; and the Company’s growth initiatives with respect to National Geographic and Royal Elastics will not exceed a net loss of $0.40 per share for the entire year.
Mr. Nichols added, “Our priorities for 2003 remain unchanged – sustaining the K-Swiss momentum through responsive, innovative products and focused marketing, developing the National Geographic and Royal Elastics brands and expanding our presence in Europe and Asia. While our progress has certainly been much greater in regards to the K-Swiss brand and international sales, we continue to pursue the potential that exists in both National Geographic and Royal Elastics.”
K-Swiss Inc. Consolidated Statements of Earnings
(In thousands, except earnings per share data)
Three Months Ended
March 31,
-------------------
(Unaudited)
2003 2002
-------- --------
Revenues $115,933 $80,671
Cost of goods sold 65,462 44,640
-------- --------
Gross profit 50,471 36,031
Selling, general and administrative expenses 28,035 20,001
-------- --------
Operating profit 22,436 16,030
Interest income, net 116 197
-------- --------
Earnings before income taxes 22,552 16,227
Income tax expense 8,908 6,559
-------- --------
Net earnings $13,644 $9,668
