Exhibit 99.1
Deckers Outdoor Corporation Reports
Record Fourth Quarter and Fiscal Year 2005 Financial Results
GOLETA, Calif.--(BUSINESS WIRE)--Feb. 28, 2006--Deckers Outdoor
Corporation (NASDAQ:DECK):
-- Fourth Quarter Revenue Increases 22.6% to a Record $91.0
Million
-- Fourth Quarter Diluted EPS Increases 30.6% to a Record $0.94
-- Raises Fiscal 2006 Sales Guidance to $260 to $270 Million
-- Raises Low-End of Previous Fiscal 2006 EPS Guidance Range to
$2.05 to $2.15
Deckers Outdoor Corporation (NASDAQ: DECK) today announced record
financial results for the fourth quarter and fiscal year ended
December 31, 2005.
For the quarter ended December 31, 2005, net sales increased 22.6%
to a record of $91.0 million versus $74.2 million in the same period
last year. Net earnings for the quarter increased to $12.1 million,
compared to net earnings of $9.2 million last year, and earnings per
diluted share increased 30.6% to $0.94, versus earnings per diluted
share of $0.72 in the fourth quarter of 2004.
For the year ended December 31, 2005, net sales increased 23.3% to
a record $264.8 million versus $214.8 million last year. Net earnings
for the year increased to $31.8 million, compared to net earnings of
$25.5 million a year ago, and earnings per diluted share increased
18.1% to $2.48, versus earnings per diluted share of $2.10 in fiscal
2004.
The results for both the fourth quarter and the year ended
December 31, 2005 include incremental income tax expense of
approximately $300,000 related to the Company's repatriation of
overseas earnings under Section 965 of the American Jobs Creation Act
of 2004.
Angel Martinez, President & Chief Executive Officer, stated, "Our
fourth quarter results were much stronger than we anticipated and
represent a great finish to another record year for our Company. Our
top-line performance was once again driven by robust sales of our
entire UGG product line, including our heritage Classic and Ultra
styles, our new Metropolitan Collection, our men's and women's
slippers and casuals, and our kids' product. In addition, our improved
inventory position versus a year ago allowed us to significantly
reduce shipping costs which helped contribute to the 170 basis point
gain in gross margin for the fourth quarter."
Including sales from both the wholesale divisions and the consumer
direct (our Internet, catalog and retail outlet division) business,
Teva net sales for the fourth quarter were $11.3 million compared to
$11.8 million in the same period last year. UGG net sales increased
30.4% to $78.5 million versus $60.2 million a year ago, driven by
strong sales across the board. Simple sales decreased 44.4% to $1.2
million for the fourth quarter compared to $2.2 million for the same
period last year, as the fourth quarter of 2004 included approximately
$1.0 million of sales of the Simple sheep offering, a program which
the Company discontinued in late 2004. Sales for the consumer direct
business, which are included in the brand sales numbers above,
increased 153.4% to $15.2 million for the fourth quarter of 2005
compared to $6.0 million for the fourth quarter of 2004 due to greater
availability of UGG product in 2005, the addition of our first true
retail outlet store, and consumers' increased reliance on the Internet
as a source for holiday purchases.
For the year ended December 31, 2005, Teva net sales were $85.2
million compared to $88.2 million in 2004, UGG net sales in 2005
increased 47.7% to $171.6 million versus $116.2 million last year, and
Simple net sales were $7.9 million compared to $10.3 million a year
ago. Net sales for the consumer direct business, which are included in
the brand sales numbers above, aggregated approximately $27.1 million
for the year ended December 31, 2005, up 36.2% from $19.9 million for
2004.
Mr. Martinez further stated, "Fiscal 2005 was a tremendous year
for UGG as the brand delivered its eighth consecutive year of double
digit growth. This was achieved through several important initiatives,
including significantly diversifying our product offering with the
introduction of new collections, expanding our penetration within our
key channels of distribution, and more effectively managing our
inventories. Looking ahead, we are focused on building on our positive
momentum as we look to increase UGG's selling season, further enhance
our men's offering, and broaden our presence overseas."
"While Teva's sales were down slightly year-over-year, we are very
encouraged by our initial results aimed at reducing the brand's
dependency on warm weather," continued Mr. Martinez. "To that end, we
have had good response to our Fall 2006 product offering and will
continue to make key investments in research and development in order
to more effectively leverage our proprietary technologies and create a
more complete line of closed-toe footwear. In addition, for 2006 we
have increased our worldwide marketing expenditures as we look to
revitalize our presentation at retail and attract a younger consumer
to the brand, building on our foundation as an authentic outdoor
performance brand."
"With regard to Simple, we experienced meaningful gains in gross
margins in 2005 driven by strong retail sell through of our original
sneakers and clogs. For 2006, we are expecting double digit growth for
the brand as we introduce new athletically inspired casual products,
launch our new "9 to 5" collection of leather casual footwear and
begin deliveries of our highly-anticipated Green Toe collection of
environmentally friendly footwear."
Gross margin was comparable at 42.1% for the years ended December
31, 2005 and 2004. Selling, general and administrative expenses
("SG&A") increased to $59.3 million in 2005 compared $48.0 million in
2004 and was comparable as a percentage of sales at 22.4% in 2005
compared to 22.3% in 2004. The resulting operating margins were 19.7%
in fiscal 2005 versus 19.8% in 2004.
Overall, inventories decreased to $33.4 million at December 31,
2005 from $66.8 million at September 30, 2005, and compared to $30.3
million at December 31, 2004. UGG inventories were $17.7 million at
December 31, 2005 compared to $13.0 million at December 31, 2004; Teva
inventories decreased to $11.3 million at December 31, 2005 compared
to $14.9 million at December 31, 2004; and, Simple inventories
increased to $4.4 million at December 31, 2005 compared to $2.3
million at December 31, 2004. In addition, the Company ended fiscal
2005 with approximately $50.7 million in cash on the balance sheet
compared to $10.4 million at the end of fiscal 2004.
Deckers also increased its guidance for fiscal 2006. The Company
now expects net sales to range from $260 million to $270 million
compared to its previous guidance of $255 million to $265 million. The
Company also raised the low end of its previous earnings per diluted
share guidance and now expects to report earnings of $2.05 to $2.15
per diluted share. The Company also reiterated its comfort with its
previous guidance for the first quarter of 2006 of net sales in the
range of $48 million to $50 million and earnings per diluted share of
$0.22 to $0.24.
The fiscal 2006 guidance includes approximately $700,000 of
additional stock compensation expense related to the adoption of
Statement of Financial Accounting Standards No. 123R, effective
January 1, 2006.
Mr. Martinez concluded, "Over the past 12 months we implemented a
number of key initiatives to better position Deckers for the future.
These included solidifying our management team, restructuring our
international business, and making important investments to our
operating platform. We move forward with three powerful brands, a
strong balance sheet, and an organization more focused than ever on
executing our strategic plan in order to take this Company to the next
level."
Deckers Outdoor Corporation builds niche products into global
lifestyle brands by designing and marketing innovative, functional and
fashion-oriented footwear developed for both high performance outdoor
activities and everyday casual lifestyle use. The Company's products
are offered under the Teva(R), Simple(R) and UGG(R) brand names, which
are also its registered trademarks.
All statements in this press release that are not historical facts
are forward-looking statements, including statements about the near-
and long-term prospects for the Company and its brands; the Company's
expectations regarding net sales and earnings per diluted share for
the first quarter of 2006 and the full year ending December 31, 2006;
the Company's expectations for a double-digit sales increase in 2006
for Simple; the Company's plans to build on its positive momentum, to
increase UGG's selling season, to further enhance its UGG men's
offering and to broaden its presence overseas; the Company's ability
to reduce Teva's dependency on warm weather; the Company's
expectations to make key investments in research and development in
order to more effectively leverage its proprietary technologies and
create a more complete line of closed-toe footwear; and the Company's
expectations to increase worldwide marketing expenditures, to
revitalize its presentation at retail and to attract younger
consumers, among others. These forward-looking statements are
inherently uncertain and are based on the Company's expectations as of
today, February 28, 2006. No one should assume that any
forward-looking statement made by the Company will remain consistent
with the Company's expectations after the date the forward-looking
statement is made. In addition, such forward-looking statements
involve known and unknown risks, uncertainties and other factors that
may cause the actual results to differ materially from those expressed
or implied by such forward-looking statements. Many of the risks,
uncertainties and other factors are discussed in detail in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004. Among the factors which could affect our financial
condition and results of operations are the following: our ability to
anticipate fashion trends; whether the UGG brand will continue to grow
at the rate it has experienced in the recent past; possible shortages
in top grade sheepskin or interruption in the supply of other
materials, which could interrupt product manufacturing and increase
product costs; the risk on how our licensees will perform under their
licenses; the risk that we are unable to accurately forecast consumer
demand; the risk that retailers could postpone or cancel existing
orders; the sensitivity of the footwear industry to changes in general
economic conditions; whether we are successful in continuing to
implement our growth strategy; the success of our customers; our
ability to protect our intellectual property; our ability to develop
and patent new technologies as our existing patents expire; the
difficulty of matching inventory to future customer demand; the risk
that counterfeiting can harm our sales or our brand image; our
dependence on independent manufacturers to supply our products; the
availability of products, which can affect our ability to fulfill our
customers' orders; the risk that raw materials do not meet our
specifications or that the prices of raw materials may increase, which
would potentially cause a high return rate, a loss of sales or a
reduction in our gross margins; risks of international commerce
resulting from our reliance on manufacturers outside the U.S.; the
risk that our manufacturers, suppliers or licensees might fail to
conform to labor laws or to our ethical standards; the need to secure
sufficient and affordable sources of raw materials; our reliance on
licensing partners to expand our business; the challenge of managing
our brands for growth; currency risk; delays and unexpected costs that
can result from customs regulations; the sensitivity of our sales,
particularly of the Teva(R) and UGG(R) brands, to seasonal and weather
factors; our reliance on independent distributors in international
markets; legal compliance challenges and political and economic risk
in our international markets; the potential impact of litigation; the
effect of consolidations and restructurings on our customers in the
footwear industry; intense competition within the footwear industry;
the threat that terrorism could disrupt commerce in the U.S. and
abroad; our ability to defend attacks on the validity of our
intellectual property; and our ability to register and protect our
intellectual property in expanding product and geographic markets.
Given these uncertainties, prospective investors are cautioned not to
place undue reliance on such forward-looking statements. The Company
intends to continue its practice of not updating projections until its
next quarterly results announcement. The Company disclaims any
obligation to update any such factors or to publicly announce the
results of any revisions to any of the forward-looking statements
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, the Company's Quarterly Reports on Form
10-Q, the Company's Current Reports on Form 8-K or this news release.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
Assets 2005 2004
-------------- --------------
Current assets:
Cash and cash equivalents $ 50,749,000 10,379,000
Short-term investments 2,500,000 15,475,000
Trade accounts receivable, net 40,918,000 40,226,000
Inventories 33,374,000 30,260,000
Prepaid expenses and other current assets 1,364,000 1,491,000
Deferred tax assets 5,949,000 3,240,000
-------------- --------------
Total current assets 134,854,000 101,071,000
Property and equipment, at cost, net 4,711,000 2,838,000
Intangible assets, less applicable
amortization 70,009,000 70,319,000
Other assets 52,000 592,000
-------------- --------------
$ 209,626,000 174,820,000
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 14,506,000 16,524,000
Accrued expenses 6,095,000 7,968,000
Income taxes payable 7,133,000 6,725,000
-------------- --------------
Total current liabilities 27,734,000 31,217,000
-------------- --------------
Deferred tax liabilities-noncurrent 4,337,000 2,607,000
Stockholders' equity:
Common stock 124,000 122,000
Additional paid-in capital 76,788,000 71,959,000
Retained earnings 100,436,000 68,591,000
Accumulated other comprehensive income 207,000 324,000
-------------- --------------
Total stockholders' equity 177,555,000 140,996,000
-------------- --------------
$ 209,626,000 174,820,000
============== ==============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
Three-month period ended Year ended
December 31, December 31,
---------------------------------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $90,963,000 74,172,000 264,760,000 214,787,000
Cost of sales 54,047,000 45,286,000 153,238,000 124,354,000
------------ ------------ ------------ ------------
Gross profit 36,916,000 28,886,000 111,522,000 90,433,000
Selling, general
and administrative
expenses 17,742,000 14,684,000 59,254,000 47,971,000
------------ ------------ ------------ ------------
Earnings from
operations 19,174,000 14,202,000 52,268,000 42,462,000
Other expense
(income):
Interest, net (75,000) (25,000) 29,000 2,236,000
Other (1,000) 3,000 (4,000) 3,000
------------ ------------ ------------ ------------
Earnings before
income tax expense 19,250,000 14,224,000 52,243,000 40,223,000
Income tax expense 7,174,000 4,976,000 20,398,000 14,684,000
------------ ------------ ------------ ------------
Net earnings $12,076,000 9,248,000 31,845,000 25,539,000
============ ============ ============ ============
Net earnings per
share:
Basic $ 0.97 0.78 2.58 2.32
Diluted 0.94 0.72 2.48 2.10
============ ============ ============ ============
Weighted-average
shares:
Basic 12,406,000 11,894,000 12,349,000 11,005,000
Diluted 12,900,000 12,817,000 12,866,000 12,142,000
============ ============ ============ ============
CONTACT: Deckers Outdoor Corporation
Scott Ash, 805-967-7611
or
Investor Relations:
Integrated Corporate Relations, Inc.
Chad A. Jacobs/Brendon E. Frey, 203-682-8200