EXHIBIT 99.1
K-Swiss Reports Record First Quarter Results
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--April 28, 2004--K-Swiss
Inc. (NASDAQ/NM: KSWS) today announced record results for the first
quarter ended March 31, 2004.
Financial Highlights
Net earnings and net earnings per diluted share for the first
quarter of 2004 increased 59.5% and 58.3%, respectively, to
$21,768,000, or $0.57 per diluted share, compared with $13,644,000, or
$0.36 per diluted share, in the prior-year period.
For the first quarter of 2004, total worldwide revenues increased
31.3% to $152,020,000 compared with $115,809,000 in the prior-year
period. Domestic revenues increased 28.6% to $129,575,000 in the first
quarter, and international revenues increased 48.9% to $22,445,000.
Futures Orders
Worldwide futures orders with start ship dates from April through
September 2004 increased 13.7% to $194,954,000 at March 31, 2004,
compared with $171,488,000 at March 31, 2003. Domestic futures orders
increased 6.6% to $162,313,000 at March 31, 2004, from $152,266,000 at
March 31, 2003. International futures orders increased 69.8% to
$32,641,000 at March 31, 2004, from $19,222,000 the previous year.
Stock Repurchase Program
The Company purchased 179,000 shares of Class A Common Stock
during the first quarter of 2004 for a total expenditure of
approximately $4,258,000 as part of its stock repurchase program.
There remains authorization to repurchase $22,457,000 of stock under
the Company's existing stock repurchase programs. Since August 1996,
K-Swiss has purchased under all of its repurchase programs a total of
23.2 million shares of Class A Common Stock for a total expenditure of
$112.8 million.
K-Swiss also issued guidance for the second quarter of 2004 and
revised guidance for 2004. The Company expects revenues for the second
quarter of 2004 to be approximately $111 to $117 million and earnings
per diluted share to be in the range of $0.28 to $0.33. The Company
expects full year revenues to be approximately $460 to $480 million
and expects to report full year earnings per diluted share of
approximately $1.40 to $1.50.
The Company's estimates for the second quarter and the year
reflect the continued investments in marketing, sales and product
development for the Royal Elastics brand as well as the expansion of
European operations. They are based upon the following assumptions:
gross margins will be between 44% and 45% for the year; SG&A will not
rise above $121 million for the year; cancellations will be moderate;
and the Company's growth initiatives with respect to Royal Elastics
will not exceed a net loss of $0.14 per share for the entire year.
Commenting on the first quarter results and outlook for 2004,
Steven Nichols, Chairman of the Board and President, stated, "While
the lowering of our 2004 sales and earnings forecast will no doubt
overshadow the record first quarter results, we are keeping several
things in perspective. This year should be the best year in K-Swiss'
history with year-over-year growth in revenue and earnings per share.
European operations have shown marked improvement by reaching
profitability in the first quarter and posting sizable increases in
backlog, while Asia is starting to show signs of renewed life with a
strong backlog and a new Japanese distributor. With over $90 million
of cash on our balance sheet, we will also continue to invest in these
opportunities, the Royal Elastics brand and in our own stock."
The per share results reported herein reflect the effect of the
two-for-one stock split which was distributed on December 26, 2003, to
stockholders of record on December 22, 2003. Discontinued operations
are comprised of the results of the National Geographic brand.
Investor Conference Call and Web Simulcast
K-Swiss will conduct a conference call on its first quarter 2004
earnings release on April 28, 2004, at 10:00 am EDT. The number to
call for this interactive teleconference is (719) 867-0640. A replay
of this conference call will be available until May 6, 2004, by
dialing (719) 457-0820 and entering the passcode, 435357.
The Company will also provide an online Web simulcast and
rebroadcast of this conference call. The live broadcast of K-Swiss'
quarterly conference call will be available online at
www.streetevents.com and www.fulldisclosure.com on April 28, 2004,
beginning at 10:00 a.m. EDT. The online replay will follow shortly
after the call and continue through May 13, 2004.
K-Swiss Inc. designs, develops and markets an array of athletic
footwear for high performance sports use, fitness activities and
casual wear under the K-Swiss brand. The Company also designs and
manufactures footwear under the Royal Elastics brand. Royal Elastics,
a wholly owned subsidiary, is the leading innovator of slip-on,
laceless footwear.
Certain matters discussed in this press release are subject to
certain risks and uncertainties that could cause actual results to
differ materially, including, but not limited to: non-achievement of
the assumptions discussed herein, general and regional economic
conditions, industry trends, merchandise trends, including market
acceptance of the Company's training shoe and new Limited Edition
lines, and Royal Elastics brand, market acceptance of the Company's
casual product in Europe, customer demand, competition, the impact of
terrorism and/or a potential global conflict on the worldwide economy,
dependence on large customers and credit concentrations and order
cancellations and reduced sales resulting from a slower worldwide
economy. A complete description of these factors, as well as others
which could affect the Company's business, is set forth in the
Company's periodic filings, including its Form 10-K for the year ended
December 31, 2003, which is currently on file with the SEC. "Backlog"
as of any date, represents orders scheduled to be shipped within the
next six months. Backlog does not include orders scheduled to be
shipped on or prior to the date of determination of backlog. The mix
of "future" and "at-once" orders can vary significantly from quarter
to quarter and year to year and, therefore, "futures" are not
necessarily indicative of revenues for subsequent periods.
K-Swiss Inc. Consolidated Statements of Earnings
(In thousands, except earnings per share data)
Three Months Ended
March 31,
(Unaudited)
2004 2003
--------- ---------
Revenues $152,020 $115,809
Cost of goods sold 82,254 61,593
--------- ---------
Gross profit 69,766 54,216
Selling, general and administrative expenses 34,207 26,531
--------- ---------
Operating profit 35,559 27,685
Interest income, net 127 187
--------- ---------
Earnings from continuing operations
before income taxes 35,686 27,872
Income tax expense 13,918 10,972
--------- ---------
Earnings from continuing operations 21,768 16,900
Loss from discontinued operations -- (3,256)
--------- ---------
Net earnings $21,768 $13,644
========= =========
Basic earnings per share $0.62 $0.38
========= =========
Diluted earnings per share $0.57 $0.36
========= =========
Weighted average number of shares outstanding
Basic 35,376 35,562
Diluted 37,968 37,823
K-Swiss Inc. Condensed Balance Sheets
(In thousands)
March 31,
2004 2003
-------- --------
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $90,239 $47,785
Accounts receivable, net 93,286 78,636
Inventories 56,727 45,628
Prepaid expenses and other 1,988 2,022
Deferred taxes 2,863 3,667
-------- --------
Total current assets 245,103 177,738
PROPERTY, PLANT AND EQUIPMENT, NET 8,466 8,535
OTHER ASSETS
Intangible assets 5,571 7,295
Other 5,026 4,260
-------- --------
10,597 11,555
-------- --------
$264,166 $197,828
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank lines of credit $-- $--
Trade accounts payable 16,516 13,269
Accrued liabilities 32,314 27,835
-------- --------
Total current liabilities 48,830 41,104
OTHER LIABILITIES 15,359 7,107
DEFERRED TAXES 3,984 6,408
STOCKHOLDERS' EQUITY 195,993 143,209
-------- --------
$264,166 $197,828
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CONTACT: K-Swiss Inc., Westlake Village
George Powlick, 818-706-5100