KSwiss,Inc. reported that total worldwide revenues increased 1.7% to $93.8 million for the fourth quarter of 2006, compared with $92.3 million in the prior-year period. Domestic revenues decreased 18.4% to $52.5 million in Q4 and international revenues increased 47.8% to $41.3 million. Net earnings for the fourth quarter of 2006 were $10.7 million, or 30 cents per diluted share, compared with $11.6 million, or 33 cents per diluted share, in the prior-year period.
For the full year, total worldwide revenues decreased 1.5% to $501.1 million compared with $508.6 million in 2005. Domestic revenues decreased 16.2% to $318.7 million in 2006, while international revenues increased 42.4% to $182.5 million. Net earnings and net earnings per diluted share for the year ended December 31, 2006, increased 2.1% and 2.8%, respectively, to $76.9 million, or $2.17 per diluted share, compared with $75.2 million, or $2.11 per diluted share, for the year ended December 31, 2005.
Worldwide futures orders with start ship dates from January through June 2007 decreased 22.5% to $168.9 million at December 31, 2006, compared with $217.9 million at December 31, 2005. Domestic futures orders decreased 43.5% to $84.0 million at December 31, 2006, from $148.7 million the previous year. International futures orders increased 22.7% to $84.9 million at December 31, 2006, from $69.2 million the previous year.
KSWS purchased 5,000 shares of Class A Common Stock during the fourth quarter of 2006 for a total expenditure of approximately $161,000 as part of its stock repurchase program. At December 31, 2006, there remains authorization to repurchase approximately 4,076,000 shares under the Company's existing stock repurchase program. Since August 1996, KSwiss has purchased a total of 25.3 million shares of Class A Common Stock for a total expenditure of $164.2 million.
KSwiss also issued guidance for the first quarter of 2007 and full-year 2007. The company expects revenues for the first quarter of 2007 to be approximately $120 million to $130 million and earnings per diluted share to be in the range of 41 cents to 51 cents. The company expects full-year revenues to be approximately $420 million to $460 million and expects to report full-year earnings per diluted share of approximately $1.20 to $1.50.
KSWS estimates for the first quarter of 2007 and full-year 2007 reflect a significant decline in domestic revenues; substantial investments in product development and marketing for the KSwiss brand, including a retail strategy; continued expansion of international operations; and continued investment in the Royal Elastics brand.
The estimates are based upon the following assumptions: domestic revenues will decline approximately 30% for the year; gross margins will be approximately 46%; SG&A will not rise above $40 million for the first quarter of 2007 or $152 million for the full-year 2007; the tax rate will approximate 20%; customer order cancellations will be moderate; and the Company's growth initiatives with respect to Royal Elastics will not exceed a net loss of 11 cents per share for the full year.
Steven Nichols, Chairman of the Board and President, stated, “The fourth quarter results were in line with our previously announced expectations for a continued decline in the domestic business offset by robust growth in international sales. Although these trends have been evident throughout the year in our revenues and backlog, we have now reached the point where the international backlog is larger than the domestic backlog for the first time in our history. Over the past several months we have been assembling a talented team to lead in key areas such as apparel, product development, international operations and marketing. Our initial forecast for 2007 reflects the significant level of investment we have committed to showcasing the KSwiss brand, including a new retail strategy, and returning the brand to its former prominence domestically by relying on its tennis heritage. The continuing decline in domestic sales and the projected higher level of expenditures make for a hard financial reality a year-over-year decline in earnings growth in 2007 but we believe these investments will make KSwiss a much stronger company in 2008 and beyond.”
