UNITED STATES | |||
FORM 8-K | |||
CURRENT REPORT | |||
Date of Report (Date of earliest event reported)July 24, 2007 | |||
A. T. CROSS COMPANY | |||
Rhode Island | 1-6720 | 05-0126220 | |
One Albion Road, Lincoln, Rhode Island | 02865 | ||
Registrant's telephone number, including area code(401) 333 1200 N/A |
Section 2 - Financial Information
Item 2.02 - Results of Operations and Financial Condition.
On July 24, 2007, the registrant issued the following press release announcing financial results for the second quarter ended June 30, 2007:
NEWS RELEASE
CONTACTS: | Kevin F. Mahoney |
Integrated Corporate Relations |
FOR IMMEDIATE RELEASE
A.T. CROSS COMPANY REPORTS A DOUBLE DIGIT INCREASE IN
SECOND QUARTER 2007 SALES
Quarterly Earnings Per Share more than doubled
Earnings Guidance raised to high end of $0.37-$0.40 range
Lincoln, RI - July 24, 2007 - A.T. Cross Company (AMEX: ATX) today announced financial results for the second quarter and six months ended June 30, 2007.
Second Quarter Results
Consolidated sales for the second quarter of 2007 increased 12.2% to $36.5 million compared to $32.5 million in the second quarter of 2006. Global writing instruments and accessories revenue was $23.9 million, up 1.1% compared to the same period last year. The Company's optical segment, comprised of Costa Del Mar, had a second quarter sales increase of 41.8% to $12.6 million, compared to the same period last year.
Gross margin in the second quarter increased 160 basis points to 56.1%, compared to 54.5% in last year's second quarter, as both segments reported improvements from the prior year's second quarter. Operating expenses were $18.6 million, or 50.9% of sales in the quarter, versus $17.0 million, or 52.4% of sales for the same period a year ago. Consolidated operating income in the second quarter was $1.9 million, a $1.2 million improvement compared to the operating profit of $0.7 million in the second quarter of 2006.
Net income for the quarter was $1.0 million, or $0.07 per share, compared to net income of $0.4 million, or $0.03 per share, last year.
David G. Whalen, President and Chief Executive Officer of A.T. Cross said, "A.T. Cross continued to build on the strong financial results of the first quarter. We view the second quarter as the one where Costa Del Mar must perform well in its peak season and the Cross Writing Instrument and Accessory business must continue its drive to prepare for the critical September to December period. Our financial results indicate that both of these goals were accomplished."
Six-Month Results
Consolidated sales in the first half of 2007 increased 11.2% to $69.0 million compared to $62.1 million in 2006. Global writing instrument and accessory revenue was $48.6 million, up 2.9% compared to the same period last year. Costa Del Mar's net sales increased 37.7% to $20.4 million compared to the same period last year.
Year to date net income was $1.1 million or $0.07 per share, compared to net income of $0.3 million or $0.02 per share, last year.
Guidance
Costa Del Mar excelled in its peak season and the Cross writing instrument and accessory segment is poised for a successful September to December period. As a result, the Company is raising its 2007 revenue guidance from mid single digit growth to high single digit growth and is now targeting 2007 earnings per share at the high end of its $0.37-$0.40 range.
Conference Call
The Company's management will host a conference call today, July 24, 2007 at 4:30 p.m. Eastern Time. Parties interested in participating in the conference call may dial-in at (800) 811-8845, while international callers may dial-in at (913) 981-4905. A live webcast of the call will be accessible on the Company's website atwww.cross.com orwww.viavid.net. The webcast will be archived for 30 days on these sites, while a telephone replay of the call will be available beginning at 6:30 p.m. Eastern Time on July 24, 2007 through July 31, 2007 at (888) 203-1112 or (719) 457-0820 for international callers, and entering the pass code of 1460522.
About A.T. Cross Company
Building on the rich tradition of its award-winning writing instruments and reputation for innovation and craftsmanship, A.T. Cross Company is a designer and marketer of branded personal and business accessories. Cross provides a range of distinctive products that appeal to a growing market of consumers seeking to enhance their image and facilitate their lifestyle. Cross products, including award-winning quality writing instruments, leather goods, timepieces, and business accessories and Costa Del Mar sunglasses, are distributed in retail and corporate gift channels worldwide. For more information, visit the A.T. Cross website atwww.cross.com and the Costa Del Mar website atwww.costadelmar.com.
Statements contained in this release that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (including but not limited to statements relating to the expected revenue and earnings growth for the Writing Instrument and Accessory segment of the business.) In addition, words such as "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including but not limited to consumers' and retailers' reaction to the Company's existing and new writing instrument and accessory products, retailers' support for the Company's merchandising initiatives, and the ability of the Company to match forecasts and production with consumer demand, and are not guarantees since there are inherent difficulties in predicting future results. Actual results could differ materiall y from those expressed or implied in the forward-looking statements. The information contained in this document is as of July 24, 2007. The Company assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments. Additional discussion of factors that could cause actual results to differ materially from management's expectations is contained in the Company's filings under the Securities Exchange Act of 1934.
(Tables to follow)
A. T. CROSS COMPANY | ||||||||||
CONSOLIDATED SUMMARY OF OPERATIONS | ||||||||||
(in thousands, except per share amounts) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, 2007 | July 1, 2006 | June 30, 2007 | July 1, 2006 | |||||||
Net sales | $36,476 | $32,509 | $69,048 | $62,071 | ||||||
Cost of goods sold | 16,022 | 14,777 | 30,222 | 28,658 | ||||||
Gross Profit | 20,454 | 17,732 | 38,826 | 33,413 | ||||||
Selling, general and administrative expenses | 16,462 | 14,596 | 32,341 | 28,148 | ||||||
Service and distribution costs | 1,335 | 1,607 | 2,789 | 2,816 | ||||||
Research and development expenses | 636 | 598 | 1,235 | 1,131 | ||||||
Restructuring charges | 143 | 239 | 295 | 817 | ||||||
Operating Income | 1,878 | 692 | 2,166 | 501 | ||||||
Interest and other (expense) income | (226 | ) | 14 | (266 | ) | (13 | ) | |||
Income Before Income Taxes | 1,652 | 706 | 1,900 | 488 | ||||||
Income tax provision | 662 | 297 | 787 | 208 | ||||||
Net Income | $ 990 | $ 409 | $ 1,113 | $ 280 | ||||||
Basic and diluted net income per share | $0.07 | $ 0.03 | $0.07 | $0.02 | ||||||
Weighted average shares outstanding | 14,940 | 14,699 | 14,848 | 14,692 | ||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, 2007 | July 1, 2006 | June 30, 2007 | July 1, 2006 | |||||||
Segment Data: | Writing Instruments & Accessories | |||||||||
Net Sales | $23,906 | $23,646 | $48,599 | $47,216 | ||||||
Operating Loss | (1,343 | ) | (1,326 | ) | (1,710 | ) | (2,439 | ) | ||
Interest and Other (Expense) Income | (197 | ) | 15 | (237 | ) | (11 | ) | |||
Loss Before Income Taxes | (1,540 | ) | (1,311 | ) | (1,947 | ) | (2,450 | ) | ||
Segment Data: | Optical | |||||||||
Net Sales | $12,570 | $ 8,863 | $20,449 | $14,855 | ||||||
Operating Income | 3,221 | 2,018 | 3,876 | 2,940 | ||||||
Interest and Other Expense | (29 | ) | (1 | ) | (29 | ) | (2 | ) | ||
Income Before Income Taxes | 3,192 | 2,017 | 3,847 | 2,938 | ||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, 2007 | July 1, 2006 | June 30, 2007 | July 1, 2006 | |||||||
Writing Instruments & Accessories Sales Data: | ||||||||||
Americas | $10,277 | $11,408 | $20,412 | $21,194 | ||||||
Europe, Middle East and Africa | 8,507 | 7,455 | 17,014 | 15,151 | ||||||
Asia Pacific | 4,452 | 4,275 | 9,572 | 9,662 | ||||||
Other | 670 | 508 | 1,601 | 1,209 | ||||||
Total Net Sales | $23,906 | $23,646 | $48,599 | $47,216 |
A. T. CROSS COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, unaudited) | |||||||
June 30, 2007 | July 1, 2006 | ||||||
Assets | |||||||
Cash and cash equivalents | $ 13,808 | $ 10,592 | |||||
Accounts receivable | 24,091 | 22,432 | |||||
Inventories | 33,366 | 22,962 | |||||
Deferred income taxes | 5,095 | 6,346 | |||||
Other current assets | 6,141 | 4,869 | |||||
Total Current Assets | 82,501 | 67,201 | |||||
Property, plant and equipment, net | 14,492 | 20,642 | |||||
Goodwill | 7,288 | 7,288 | |||||
Intangibles and other assets | 5,455 | 5,265 | |||||
Deferred income taxes | 8,748 | 5,058 | |||||
Total Assets | $118,484 | $105,454 | |||||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and other current liabilities | $ 21,307 | $ 18.849 | |||||
Retirement plan obligations | 2,178 | 2,056 | |||||
Total Current Liabilities | 23,485 | 20,905 | |||||
Retirement plan obligations | 7,205 | 10,137 | |||||
Deferred gain on sale of real estate | 4,562 | 0 | |||||
Long-term debt, less current maturities | 3,487 | 4,950 | |||||
Other long-term liabilities | 2,829 | 0 | |||||
Accrued warranty costs | 1,308 | 1,478 | |||||
Shareholders' equity | 75,608 | 67,984 | |||||
Total Liabilities and Shareholders' Equity | $118,484 | $105,454 | |||||
For information at A.T. Cross contact: | |||||||
Kevin F. Mahoney | |||||||
Vice President, Finance and Chief Financial Officer | |||||||
(401) 335-8470 | |||||||
kmahoney@cross.com | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
A. T. CROSS COMPANY | |
Date:July 24, 2007 | KEVIN F. MAHONEY |