A.T. Cross Co., the parent of Native Eyewear, reported a net loss in
the fourth quarter of $3.7 million, or 25 cents per diluted share,
after $6.3 million of restructuring
and impairment charges on a pre-tax basis. In the year-ago quarter, the company earned $3.3 million net income, or 21 cents. Sales declined 12.6% to $41.7 million.
The CAD segment recorded a drop
of 19.9%, for revenue of $32.4 million, compared with the 2007 fourth
quarter. The Cross Optical segment reported a fourth-quarter sales
increase of 27.6% to $9.3 million, from the same period the year
before, driven by continued growth of the Costa Del Mar brand.
Gross margin in the quarter was 54.5% compared to 55.6%
in last year's fourth quarter due primarily to promotional
activities related to the CAD segment.
Operating expenses, excluding $6.3 million of restructuring
and impairment charges, were $19.6 million, or 47.0% of
sales, in the quarter versus $21.4 million, or 44.8% of
sales, for the same period a year ago.
In the fourth quarter, the company recorded a non-cash goodwill
impairment charge of $3.9 million, representing all of the
CAD segment's goodwill.The CAD segment's goodwill was the
result of the acquisition of assets in 1999 associated with
the Company's OEM effort.
Operating loss in the fourth quarter was $3.1 million, including
$6.3 of restructuring and impairment charges, compared to
operating income of $5.1 million in the fourth quarter of
Net loss for the quarter, after restructuring and impairment
charges, was $3.7 million, or a loss of $0.25 per basic
share, compared to $3.3 million, or $0.22 per basic share
and $0.21 per diluted share, last year.
Full Year Results
Consolidated sales in 2008 increased 5.4% to $160.1 million
compared to $151.9 million in 2007. The Cross Accessory
Division revenue was $111.4 million, down 3.3% from $115.3
million in the prior year. The Cross Optical segment reported
a full year sales increase of 33.1% to $48.7 million, compared
to the full year 2007. The Optical Group's revenue increase
was driven by double digit growth of the Costa Del Mar brand
as well as the contribution from Native Eyewear.
Gross margin for 2008 was 55.8% as compared to 56.1% in
Operating expenses, excluding restructuring and impairment
charges, were $79.3 million, or 49.5% of sales, in 2008
as compared to $75.5 million, or 49.7% of sales, in 2007.
For 2008, net income was $0.5 million or $0.03 per basic
and diluted share, compared to $6.7 million or $0.45 per
basic share and $0.43 per diluted share in 2007. Included
in 2008 and 2007 results are restructuring and impairment
charges of $6.5 million and $0.3 million, respectively.
Excluding these restructuring and impairment charges, basic
earnings would have been $0.40 per share for 2008 compared
to $0.46 per share in 2007.
For 2008, the company generated operating cash flow of $14.3
million, up $16.6 million from 2007.
David G. Whalen, president and chief executive officer of
A.T. Cross said, “A. T. Cross made progress in 2008. While
the global economic events of the year had a negative impact
on our results, particularly our CAD segment, we left the
year a stronger company than when we entered. Our sales
grew 5%, operating income before restructuring and impairment
charges grew 2% and our operating cash flow grew to over
$14 million. Also, we made a major strategic acquisition
with Native Eyewear. While our pre-restructuring and impairment
EPS declined from $0.46/share in 2007 to $0.40/share in
2008, that performance outstripped many companies that rely
on discretionary items and fourth quarter revenue to drive
their business. Today, the Company has a good strategy,
an experienced management team and a strong balance sheet
to endure the challenging period ahead and prosper once
the global economy recovers.''