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K-Swiss reports fourth quarter results

19
Feb '10
K-Swiss Inc. announced results for the fourth quarter and year ended December 31, 2009. The sale of Royal Elastics on April 30, 2009, is accounted for as a discontinued operation in the Company's financial results and is excluded from futures orders data for the current and prior-year periods.

Financial Highlights

Net loss for the fourth quarter of 2009 was $12,488,000, or $0.36 per diluted share, compared with net loss of $13,714,000, or $0.39 per diluted share, in the prior-year period. Results for the fourth quarter of 2009 include a one-time, pre-tax, non-cash impairment charge related to the goodwill and intangible assets related to the trademarks of Palladium of $4,830,000, or $0.13 per diluted share (after tax). Net loss for the year ended December 31, 2009, was $27,962,000, or $0.80 per diluted share, compared with net earnings of $20,885,000, or $0.59 per diluted share, in the year ended December 31, 2008.

Results for the year ended December 31, 2009, include the impairment charge noted above, plus a pre-tax non-operating loss of $2,616,000, or $0.08 per diluted share (after tax), from the acquisition of the remaining interest in Palladium SAS in June 2009, and a pre-tax gain of $1,367,000, or $0.03 per diluted share (after tax), from the sale of Royal Elastics in April 2009. Earnings for 2008 include a pre-tax gain of $30,000,000, or $0.52 per diluted share (after tax), related to the settlement of litigation.

For the fourth quarter of 2009, total worldwide revenues decreased 21.4% to $42,020,000 compared with $53,490,000 in the prior-year period. Domestic revenues decreased 31.8% to $18,087,000 in the fourth quarter, and international revenues decreased 11.2% to $23,933,000. Total worldwide revenues for 2009 decreased 26.5% to $240,729,000, compared with $327,405,000, in 2008. Domestic revenues decreased 26.9% to $101,181,000, and international revenues decreased 26.2% to $139,548,000.

Futures Orders

Worldwide futures orders with start ship dates from January through June 2010 decreased 12.6% to $80,924,000 at December 31, 2009, compared with $92,566,000 at December 31, 2008. Domestic futures orders decreased 6.6% to $29,583,000 at December 31, 2009, from $31,689,000 the previous year. International futures orders decreased 15.7% to $51,341,000 at December 31, 2009, from $60,877,000 the previous year.

Stock Repurchase Authorization

In November 2009, the Board of Directors authorized a new stock repurchase program for the Company to repurchase up to $70 million of the Company's Class A Common Stock through December 31, 2014. The program replaced the Company's previous 2004 stock repurchase authorization for up to 5,000,000 shares that expired on December 31, 2009.

2010 Guidance Policy

Due to uncertainty surrounding the projected marketing investment for 2010, the potential for a deferred tax asset reserve in the second half of the year and a post-year-end decline in second quarter 2010 backlog relative to the prior year, the Company will only issue revenue guidance and certain key assumptions for 2010.


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