Corporate: Revenues for the corporate distribution channel were $4.3 million, a decrease of 31.5% as compared to the same period last year. This distribution channel has been adversely affected by reduced corporate spending and unusually high levels of discounted merchandise in the marketplace due to the economy.
Retail: Revenues for the retail distribution channel were $1.1 million, a decrease of 30.9% from $1.7 million in the third quarter 2007. This decrease was driven by a consolidation of retail accounts and their associated location closures, a challenging retail environment as well as a decision by the Company's management team to strategically exit a number of large accounts.
Collegiate/Racing (The Game/Kudzu): Third quarter revenues for Gekko Brands, LLC were $11.7 million, a decrease of 7.2% over the third quarter 2007. The decrease was primarily due to softness in the collegiate/bookstore channel as well as continued deterioration from the Outdoor Direct catalog sales and the timing of certain events in the golf and NASCAR/racing channels.
Company-owned Outlet Stores: Revenues from the Company-owned stores were $2.6 million, a decrease of 19.8% over third quarter 2007. The decrease in revenues from the Company-owned outlet stores was primarily due to the difficult economic environment combined with product assortment and merchandizing issues.
International: Revenues from the international segment decreased 14.4% to $7.3 million, a decrease of $1.2 million over the same period last year. Revenues were significantly lower in Europe largely due to reduced in-season replenishment orders from the Company's resort, golf and retail customers as well as lower corporate revenues, due in part to the slowing economy in Europe.
Balance Sheet: Net accounts receivable increased 3.7% from the prior year, while revenues decreased 8.7% for the third quarter. The $1.2 million increase in net accounts receivable was primarily due to a reduction in reserves for markdown allowances of $0.8 million and an increase in trade receivables of $0.4 million due to the timing of shipments during the three months ended July 31, 2008 as compared to the same period of the prior year. Net inventory increased 3.3% to $55.4 million as of July 31, 2008 as compared with the same period last year primarily due to the addition of the Sun Ice brand.
Income Taxes: The effective tax rate for the income tax provision for the three months ended July 31, 2008 and 2007 was a negative 22% and a negative 48%, respectively. The increase in the effective rate for the current period as compared to the same period of the prior fiscal year is due to discrete one-time charges in the third quarter of the current fiscal year of $4.3 million to increase the valuation allowance against the Company's net deferred tax assets, primarily consisting of estimated net operating losses.
Exploration of Strategic Alternatives: Ashworth is exploring strategic alternatives to enhance shareholder value and, in particular, capitalize on the global strength of the Ashworth brand. These alternatives include, but are not limited to, a sale or merger of the Company. The Company has retained Kurt Salmon Associates Capital Advisors as its financial advisor.
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
