LaCrosse Footwear, Inc. first quarter 2006 consolidated net sales were $21.4 million, up 13% from $18.9 million in the first quarter of 2005. Approximately $1.7 million of the net sales in the first quarter of 2006 can be attributed to five additional business days compared to the first quarter of 2005, a result of the Company's quarterly reporting calendar. Net income was $400,000 or 6 cents per diluted share, up 23% from 300,000 or 5 cents per diluted share in 2005.
Sales to the work market were $13.6 million for the first quarter, up 14% from $12.0 million for the same period in 2005. The year-over-year growth in work sales primarily reflects the success of the Company's innovative new products and continued penetration into the general work and fire boot markets. Sales to the outdoor market were $7.8 million for the first quarter of 2006, up 13% from $6.9 million for the same period in 2005. The year-over- year growth primarily reflects the success of innovative new products and continued penetration into hunting and hiking boot markets.
The Company continued to improve its overall gross margin, which was a record 39.2% of net sales for the first quarter of 2006, up from 37.1% in the same period of 2005, an increase of 210 basis points. The continued margin improvement reflects the increased sales of higher-margin products introduced in recent years and a reduction in the rate of sales discounts and allowances.
LaCrosse's total operating expenses were $7.8 million in the first quarter of 2006, up 20.0% from $6.5 million in the same period of 2005. Approximately $0.5 million of the expense increase in the first quarter of 2006 can be attributed to the five additional business days noted above. The balance of the increase primarily reflects expansion of the Company's product development and sales teams, opening an office in China and increased incentive compensation. It also includes stock-based compensation expense of $0.2 million or approximately $0.02 per diluted share after tax, related to the implementation of SFAS 123R (Accounting for Stock Option Expense). As a result of strong demand for its products and execution of its inventory management plan, the Company reduced inventory levels by approximately $4.2 million or 17% from the end of 2005. At the end of the first quarter of 2006, LaCrosse had no funded debt and had cash and cash equivalents of $11.2 million, up 84% from $6.1 million at the end of 2005.
“We are pleased with our sales and earnings performance for the first quarter,” said Joseph P. Schneider, CEO of LaCrosse Footwear. “We continued to increase our brand equity and capture market share in both our work and outdoor businesses, improve our gross margins, more effectively manage our inventory and strengthen our balance sheet. We also extended our powerful brands into new product categories, expanded our sales and marketing and product development efforts, and launched our new office in China. We also made steady progress on our new distribution facility, anticipated to be operational by mid-year, which we expect will help us continue to improve our customer responsiveness and manage our growth.”
“Our investment in innovative boot technology and creating a broader selection of more compelling, high-performance footwear is paying off. We are seeing strong demand for our new spring product lines and we are very encouraged by our customers' response to our new fall products. We continue to focus on niche market segments that are quality and performance driven, which offer opportunities for sustainable and profitable growth over the long term.”
LaCrosse Footwear, Inc. Condensed Consolidated Statements of Operations (Amounts in thousands, except per share amounts) (Unaudited) Quarter Ended April 1, 2006 March 26, 2005 Net sales $21,401 $18,866 Cost of goods sold 13,017 11,862 Gross profit 8,384 7,004 Operating expenses 7,821 6,453 Operating income 563 551 Non-operating income (expense), net 50 (54) Income before income taxes 613 497 Income tax expense 221 179 Net income $392 $318 Net income per common share, basic $0.07 $0.05 Net income per common share, diluted $0.06 $0.05 Weighted average shares outstanding: Basic 5,998 5,923 Diluted 6,182 6,154 Supplemental Product Line Information Work Market Sales $13,645 $12,002 Outdoor Market Sales 7,756 6,864 $21,401 $18,866