LaCrosse Footwear, second quarter 2005, consolidated net sales were $19.8 million, up 6% from $18.6 million in the second quarter of 2004. Sales in 2004 included $500,000 from General Services Administration (GSA) delivery orders for uniform boots (not part of an on-going contract) and $1.5 million from the discontinued PVC boot line (PVC). For the first half of 2005, consolidated net sales were $38.6 million, compared to $42.3 million in the same period of 2004. Sales for the first half of 2004 included $4.7 million from GSA delivery orders and $3.2 million from PVC.
Consolidated net income was $0.4 million or 7 cents per common share in Q2, an increase from a net loss of $200,000 or 4 cents loss per common share in the second quarter of 2004. For the first half of 2005, consolidated net income was $0.7 million, or $.12 income per common share, compared to $0.9 million or $.14 income per common share in the same period of 2004. The results in the second quarter and first half of 2005 include an income tax expense of $0.2 million and $0.4 million, respectively, as compared to zero income tax expense in the same periods of 2004 due to the use of federal net operating loss carryforwards, which were fully utilized during 2004. Results in the first half of 2004 also reflect the dollar volume of gross profit related to the GSA delivery orders and an expense reduction due to a one-time cash payment of $0.9 million from a former vendor.
Sales to the outdoor market were $8.9 million for the second quarter of 2005, up 36% from $6.5 million in the same period of 2004. While outdoor sales are typically stronger in the second half of the year, the year-over- year growth in the second quarter of 2005 reflects stronger penetration into various hunting markets, combined with an additional $1.0 million of sales relating to the early delivery of preseason fall orders. Sales to the work market were $10.8 million for the second quarter of 2005, compared to $12.1 million in the same period of 2004. Work sales in the second quarter of 2004 included revenue from GSA and PVC totaling $2.0 million. In the second quarter of 2005, work sales grew in a number of targeted product categories, including boots for public safety and overall general work.
In the second quarter of 2005, the Company's gross margin was 35.8% of consolidated net sales, an increase from 32.1% in the same period of 2004. The margin improvement of 370 basis points reflects increased sales of new higher-margin products as well as our strategic discontinuation of lower margin products, including PVC. The Company's selling and administrative expenses increased 5.3% from the second quarter of 2004, due primarily to our continued investments in product development.
As a result of its continued profitability, LaCrosse had cash and cash equivalents of $2.0 million and zero outstanding bank debt at the end of second quarter of 2005, significantly improved from funded debt of $3.4 million at the end of second quarter of 2004.
“We are pleased with our sales and earnings growth in our core work and outdoor business in the second quarter, which is typically our slowest quarter,” said Joseph P. Schneider, CEO of LaCrosse Footwear. “During the quarter, we continued to increase our brand equity in both the work and outdoor footwear markets and successfully introduced our fall line of high- performance, innovative and quality footwear. We are very encouraged by our customers' response to our new products and have increased our inventories to prepare for the second half of 2005.”
“At the same time, we continue to focus on future product development. We are already previewing the Spring line for 2006, which will include a much broader selection of more compelling, high-performance footwear, in both work and outdoor categories, as well as new boot platforms and extensions of our powerful brands into new product categories. As we move into the second half of 2005, we are pleased with the momentum of our fall line and continue to be very excited about the potential of our spring line.”
LaCrosse Footwear, Inc. Condensed Consolidated Statement of Operations (Amounts in thousands, except per share amounts) (Unaudited) Quarter Ended First Half Ended June 25, June 26, June 25, June 26, 2005 2004 2005 2004 Net sales $19,752 $18,600 $38,618 $42,326 Cost of goods sold 12,686 12,630 24,548 29,123 Gross profit 7,066 5,970 14,070 13,203 Operating expenses 6,376 6,057 12,829 12,054 Operating income (loss) 690 (87) 1,241 1,149 Non-operating expenses, net (52) (150) (106) (291) Income (loss) before income taxes 638 (237) 1,135 858 Income tax expense 230 -- 409 -- Net income (loss) $408 $(237) $726 $858 Net income (loss) per common share, basic $0.07 $(0.04) $0.12 $0.15 Net income (loss) per common share, diluted $0.07 $(0.04) $0.12 $0.14 Weighted average shares outstanding: Basic 5,941 5,886 5,932 5,882 Diluted 6,145 5,886 6,150 6,065 Supplemental Information Work Market Sales $10,840 $12,056 $22,829 $29,197 Outdoor Market Sales 8,912 6,544 15,789 13,129 $19,752 $18,600 $38,618 $42,326 GSA Delivery Order Sales $ -- $451 $ -- $4,719 Discontinued PVC Boot Line Sales $ -- $1,462 $71 $3,197