UNITED STATES | ||||
FORM 8-K | ||||
CURRENT REPORT
| ||||
Date of Report(Date of earliest event reported):July 28, 2010 | ||||
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 | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||
[ ] | Pre-commencement communications pursuant to rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||
[ ] | Pre-commencement communications pursuant to rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 - Financial Information
Item 2.02 - Results of Operations and Financial Condition.
On July 28, 2010, the registrant issued the following press release announcing financial results for the three and six month periods ended July 3, 2010:
C R O S S®
News Release
Company Contact: | Investor Relations: |
FOR IMMEDIATE RELEASE
A.T. CROSS COMPANY DELIVERS EXCELLENT SECOND QUARTER PERFORMANCE
* Sales Grow 11.9%
* EPS of $0.20 vs. $0.04 in 2009
* EPS Guidance Increased from $0.34 to $0.45
* Company Repurchases 1.25 Million Shares, or 9% of Outstanding Shares for $5.0 Million
* Company Establishes New $40 Million Credit Facility
Lincoln, RI - July 28, 2010 - A.T. Cross Company (NASDAQ: ATX) today announced financial results for the second quarter ended July 3, 2010.
David G. Whalen, President and Chief Executive Officer of A.T. Cross said, "We were very pleased with our second quarter performance. Our business grew at a double digit rate and our bottom line improved dramatically. The Cross Optical Group powered through its second quarter peak season with both brands generating strong, double digit revenue growth and operating income up significantly. The Cross Accessory Division continued to see top line year-to-date growth in every region of the world. Importantly, due to work done in 2009 to reduce its cost base, the higher Accessory Division revenue resulted in significantly improved operating earnings."
Second Quarter 2010 Results
Consolidated sales for the second quarter of 2010 increased by 11.9% to $41.7 million compared to $37.3 million in the second quarter of 2009. The Cross Accessory Division (CAD) recorded revenue of $21.4 million, an increase of 3.0%, compared to last year. The Cross Optical segment reported a second quarter sales increase of 23.1% to $20.3 million, compared to last year. The Optical Group's revenue growth was driven by growth of both the Costa and Native brands.
Gross margin in the quarter was 57.3% compared to 54.7% in last year's second quarter.
Operating income in the quarter was $3.9 million as compared to $1.5 million in the second quarter of last year.
Net income for the second quarter was $2.7 million, or $0.20 per share, compared to $0.6 million, or $0.04 per share, last year.
Year-To-Date 2010 Results
Consolidated sales for the first six months of 2010 increased by 11.7% to $76.1 million compared to $68.1 million for the same period of 2009. CAD recorded revenue of $42.1 million or 6.5% higher compared to last year while COG's revenue grew 18.9% to $34.0 million from 2009's $28.6 million. Both Costa and Native reported double digit revenue growth.
Gross margin for the six months 2010 was 57.0% or 250 basis points higher than the 2009 six-month period.
Year-to-date operating income was $4.4 million or $5.1 million higher than the six month 2009 operating loss of $0.6 million.
Mr. Whalen continued, "We delivered a very successful first half of 2010. As a result, the Company is increasing its EPS guidance by over 30%. The outlook for A.T. Cross is very favorable. That is why, as announced earlier this month, we initiated the repurchase of 9% of our outstanding shares. In 2009 and the first half of 2010, we continued to invest in our strategies and we are now realizing the benefits of that resolve. We are excited by our position and will work to enhance it as the year moves forward."
Guidance
The Company has raised 2010 earnings per share guidance from $0.34 to $0.45.
New Credit Facility
The Company has agreed with its senior lender to a new three-year credit facility for $40 million at rates favorable to its prior facility.
Stock Repurchase
As announced on July 8, 2010, the Company repurchased 1.25 million shares of its Class A common stock for approximately $5 million. Since December 2009, when the Company acquired 1.5 million shares, a total of 2.75 million of 18% of the outstanding shares have been repurchased for approximately $10.2 million.
Conference Call
The Company's management will host a conference call today, July 28, 2010 at 4:30 PM Eastern Time. Parties interested in participating in the conference call may dial-in at (877) 303-2912, while international callers may dial-in at (408) 427-3877. A live webcast of the call will be accessible on the Company's website atwww.cross.com. The webcast will be archived for 30 days on this site, while a telephone replay of the call will be available beginning at 7:30 PM Eastern Time on July 28, 2010 through August 4, 2010 by dialing (800) 642-1687 or (706) 645-9291 for international callers, and entering the pass code of 87335673.
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. A.T. Cross provides a range of distinctive products that appeal to a growing market of consumers seeking to enhance their image and facilitate their lifestyle. A.T. Cross products, including award-winning quality writing instruments, timepieces, business accessories and Costa Del Mar and Native Eyewear sunglasses, are distributed in retail and corporate gift channels worldwide. For more information, visit the A.T. Cross website atwww.cross.com , the Costa website atwww.costadelmar.com and the Native website atwww.nativeyewear.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 sales and earnings performance for 2010 due to both a lowered cost base and strategic investments in the business made in 2009). 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 the ability to deliver products as planned, the ability to maintain a substantially reduced cost base, and the continued effect of the economic climate on consumers' willingness to purchase discretionary items and are not guarantees since there are inherent difficulties in predicting future results. Actual results could differ materially from those expre ssed or implied in the forward-looking statements. The information contained in this document is as of July 28, 2010. 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 STATEMENTS OF OPERATIONS | ||||||||||
(in thousands, except per share amounts) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
July 3, | July 4, | July 3, | July 4, | |||||||
2010 | 2009 | 2010 | 2009 | |||||||
Net sales | $41,748 | $37,306 | $76,121 | $68,146 | ||||||
Cost of goods sold | 17,843 | 16,904 | 32,697 | 30,988 | ||||||
Gross Profit | 23,905 | 20,402 | 43,424 | 37,158 | ||||||
Selling, general and administrative expenses | 17,435 | 15,909 | 34,135 | 32,463 | ||||||
Service and distribution costs | 1,841 | 1,727 | 3,469 | 3,339 | ||||||
Research and development expenses | 708 | 576 | 1,373 | 1,195 | ||||||
Restructuring charges | - | 737 | - | 797 | ||||||
Operating Income (Loss) | 3,921 | 1,453 | 4,447 | (636 | ) | |||||
Interest and other expense | (139 | ) | (183 | ) | (416 | ) | (774 | ) | ||
Income (Loss)Before Income Taxes | 3,782 | 1,270 | 4,031 | (1,410 | ) | |||||
Income tax provision (benefit) | 1,068 | 635 | 1,143 | (1,096 | ) | |||||
Net Income (Loss) | $ 2,714 | $ 635 | $ 2,888 | $ (314 | ) | |||||
Net Income (Loss) per Share: | ||||||||||
Basic | $0.20 | $0.04 | $0.22 | $(0.02 | ) | |||||
Diluted | $0.20 | $0.04 | $0.21 | $(0.02 | ) | |||||
Weighted Average Shares Outstanding: | ||||||||||
Basic | 13,339 | 14,581 | 13,332 | 14,835 | ||||||
Diluted | 13,458 | 14,593 | 13,434 | 14,835 | ||||||
Three Months Ended | Six Months Ended | |||||||||
July 3, | July 4, | July 3, | July 4, | |||||||
2010 | 2009 | 2010 | 2009 | |||||||
Segment Data: | Cross Accessory Division | |||||||||
Net Sales | $21,383 | $20,762 | $42,099 | $39,527 | ||||||
Operating Loss | (609 | ) | (2,069 | ) | (1,200 | ) | (4,932 | ) | ||
Segment Data: | Cross Optical Group | |||||||||
Net Sales | $20,365 | $16,544 | $34,022 | $28,619 | ||||||
Operating Income | 4,530 | 3,522 | 5,647 | 4,296 |
A.T. CROSS COMPANY | ||||||||
July 3, 2010 | July 4, 2009 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ 9,021 | $ 11,998 | ||||||
Short-term investments | 1,063 | 3,483 | ||||||
Accounts receivable | 28,933 | 26,979 | ||||||
Inventories | 32,769 | 32,704 | ||||||
Deferred income taxes | 4,151 | 4,337 | ||||||
Other current assets | 9,681 | 5,581 | ||||||
Total Current Assets | 85,618 | 85,082 | ||||||
Property, plant and equipment, net | 15,944 | 15,717 | ||||||
Goodwill | 15,379 | 15,279 | ||||||
Intangibles and other assets | 11,122 | 12,697 | ||||||
Deferred income taxes | 10,425 | 11,490 | ||||||
Total Assets | $ 138,488 | $ 140,265 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Accounts payable and other current liabilities | $ 26,661 | $ 20,737 | ||||||
Retirement plan obligations | 2,310 | 2,407 | ||||||
Total Current Liabilities | 28,971 | 23,144 | ||||||
Long-term debt | 15,221 | 21,721 | ||||||
Retirement plan obligations | 13,750 | 14,552 | ||||||
Deferred gain on sale of real estate | 2,998 | 3,520 | ||||||
Other long term liabilities | 1,091 | 2,044 | ||||||
Accrued warranty costs | 1,504 | 1,333 | ||||||
Shareholders' equity | 74,953 | 73,951 | ||||||
Total Liabilities and Shareholders' Equity | $ 138,488 | $ 140,265 | ||||||
For information at A. T. Cross contact: | ||||||||
Kevin F. Mahoney | ||||||||
Senior 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 29, 2010 | KEVIN F. MAHONEY |