K-Swiss Inc. widened its loss for the fourth quarter to $20.6 million, or 58 cents a share, from $12.5 million, or 36 cents, a year earlier. Worldwide revenues increased 1.5% to $42.7 million from $42.0 million a year ago. Domestic revenues increased 2.8% to $18,596,000 in the fourth quarter, and international revenues increased 0.6% to $24,069,000 for the same period.
Net loss for the year ended Dec. 31, 2010, was $68.2 million, or $1.94 per share, compared with a net loss of $28.0 million, or 80 cents, a year ago.
Results for 2010 include a one-time charge of $3.3 million, or 9 cents per diluted share (after tax), for recognition of the net present value of the â¬3 million future purchase price of Palladium SAS, which was revised in May 2010, and a valuation allowance taken against the company's deferred tax assets, resulting in income tax expense for the year of $7.9 million compared with an income tax benefit of $9.7 million in the prior year. Results for 2009 also include a one-time, pre-tax, non-cash impairment charge related to the goodwill and intangible assets related to the trademarks of Palladium of $4.8 million, or 13 cents per diluted share (after tax), a pre-tax non-operating loss of $2.6 million or 8 cents per diluted share (after tax), from the acquisition of the remaining interest in Palladium SAS in June 2009, and a pre-tax gain of $1.4 million, or 3 cents, from the sale of Royal Elastics in April 2009.
Total worldwide revenues for 2010 decreased 9.9% to $217.0 million compared with $240.7 million in 2009. Domestic revenues decreased 8.7% to $92.4 million in 2010, and international revenues decreased 10.7% to $124.6 million.
Futures Orders
Worldwide futures orders with start ship dates from January through June 2011 increased 14.8% to $92.9 million at Dec. 31, 2010. Domestic futures orders increased 52.8% to $45.2 million at Dec. 31, 2010, from $29.6 million the previous year. International futures orders decreased 7.1% to $47.7 million at December 31, 2010, from $51.3 million the previous year.
Steven Nichols, Chairman of the Board and President, stated, “2010 was a year we committed to innovation and increased brand awareness – at all costs. The positive swing in our future orders suggests our expenditures and efforts were not in vain.”
2011 Guidance
For 2011, the company expects full year consolidated revenues to be 25% to 35% above 2010. Consolidated gross margin is expected to be approximately 39%, which is comparable to 2010. Selling, general and administrative expenses are expected to be $145 million to $155 million due to continued support of the company�â¬ï¿½s marketing initiatives. These expenditures will be continually evaluated and could change over time, including the possibility of even greater marketing expenditures depending on available branding opportunities.
| K-Swiss Inc. Consolidated Statements of Loss | ||||||||||||||||
(In thousands, except earnings per share data) |
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Three Months Ended |
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Year Ended |
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December 31, |
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December 31, | ||||||||||||
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2010 |
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2009 |
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2010 |
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2009 | ||||||||
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(Unaudited) |
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Revenues |
|
$ | 42,665 |
|
|
$ |
42,020 |
|
|
$ | 216,987 |
|
|
$ |
240,729 |
|
Cost of goods sold |
|
28,860 |
|
26,693 |
|
131,908 |
|
154,558 |
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Gross profit |
|
|
13,805 |
|
|
|
15,327 |
|
|
|
85,079 |
|
|
|
86,171 |
|
Selling, general and administrative expenses |
|
|
34,925 |
|
|
|
27,694 |
|
|
|
142,474 |
|
|
|
118,303 |
|
Impairment on intangibles and goodwill |
|
– |
|
4,830 |
|
– |
|
4,830 |
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Operating loss |
|
|
(21,120 | ) |
|
|
(17,197 |
) |
|
|
(57,395 | ) |
|
|
(36,962 |
) |
Other expense, net |
|
|
– |
|
|
|
– |
|
|
|
(3,320 | ) |
|
|
(1,249 |
) |
Interest income, net |
|
265 |
|
352 |
|
435 |
|
1,050 |
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Loss before income taxes and discontinued operations |
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|
(20,855 | ) |
|
|
(16,845 |
) |
|
|
(60,280 | ) |
|
|
(37,161 |
) |
Income tax expense (benefit) |
|
(220 | ) |
|
(4,605 |
) |
|
7,932 |
|
(9,663 |
) |
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Loss from continuing operations |
|
|
(20,635 | ) |
|
|
(12,240 |
) |
|
|
(68,212 | ) |
|
|
(27,498 |
) |
Loss from discontinued operations, less applicable income tax benefit |
|
– |
|
(248 |
) |
|
– |
|
(464 |
) |
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Net loss |
|
$ | (20,635 | ) |
|
$ |
(12,488 |
) |
|
$ | (68,212 | ) |
|
$ |
(27,962 |
) |
Basic loss per share |
|
$ | (0.58 | ) |
|
$ |
(0.36 |
) |
|
$ | (1.94 | ) |
|
$ |
(0.80 |
) |
Diluted loss per share |
|
$ | (0.58 | ) |
|
$ |
(0.36 |
) |
|
$ | (1.94 | ) |
|
$ |
(0.80 |
) |
Weighted average number of shares outstanding |
|
|
|
|
|
|
|
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Basic |
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35,297 | < | ||||||||||||
