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A.T. Cross: Earnings News Release
Released by Strategic IR, Inc.
530 Fifth Avenue, NY 10036 (212) 391-4868
For Immediate Release
A.T. Cross Company Reports 1998 Third Quarter Results
Lincoln, R.I., October 20, 1998 - A.T. Cross Company (ASE-ATX.A), manufacturer
of fine writing instruments and pen computing products, today reported sales
for the third quarter ended September 30, 1998 of $33.9 million, down 7.6% from
$36.6 million in the same period of 1997, and a net loss of $4.4 million, or 27
cents per share, compared with a net loss of $588,000, or 4 cents per share,
one year earlier, Russell A. Boss, president and chief executive officer,
reported.
For the nine months ended September 30, 1998, net sales were $100.1 million,
down 1.3% from $101.4 million for the same period of the previous year. The
net loss for the nine months ended September 30, 1998 was $4.1 million, or 25
cents per share, compared with a net loss of $4.7 million, or 29 cents per
share for the same period a year ago. Results for the nine months ended
September 30, 1998, included income from discontinued operations of $1.7
million, or 10 cents per share. For the nine months ended September 30, 1997,
the company recorded a loss from discontinued operations of $2.3 million, or 14
cents per share.
Sales of pen computing products, which are presently sold only in the United
States, were $7.2 million in the third quarter, representing 34% of total
domestic revenue. For the nine months ended September 30, 1998, pen computing
revenue was $15.8 million, which represented 27% of total U.S. revenue. Pen
computing sales in the third quarter and nine months ended September 30, 1997
were $644,000 and $761,000, respectively.
"We were very pleased to achieve our distribution goal of 3,000 doors for pen
computing products in the third quarter. In addition, we successfully launched
CrossPad XP in late September. CrossPad XP features a redesigned CrossWriterII
digital pen and the latest upgrade of IBM Ink Manager software to enhance note
management. The CrossPad XP, which holds a standard 6"x9" notepad, was a
logical product line extension for consumers who prefer to take notes with a
smaller pad. Both the CrossPad and CrossPad XP will be supported with an
extensive advertising and promotion campaign during the fourth quarter."
"We were also very pleased with IBM's recent announcement of a software
developers' kit that will enable companies to create forms and applications for
use with the CrossPad and CrossPad XP. Developers can utilize this tool kit to
create customized forms for specific industries, such as legal, medical,
insurance, finance, government and transportation," said Mr. Boss.
The Pen Computing Group generated a pre-tax operating loss of $2.3 million in
the third quarter of 1998 and approximately $5.3 million for the nine months
ended September 30, 1998 due to expense levels required to establish Cross in
this arena.
Total writing instrument sales for the third quarter were $26.3 million, down
26.7% from the 1997 quarter. Domestic writing instrument sales decreased 36.0%
to $13.5 million, while foreign sales decreased 13.3% to $12.8 million, due to
economic conditions in the Asian markets. For the nine months ended September
30, 1998, domestic writing instrument sales decreased 18.1% to $42.3 million,
while foreign sales decreased 15.8 % to $41.1 million, once again, attributed
to declining Asian revenue.
"Growth in Europe and Canada was encouraging during the third quarter. We
believe the domestic quality writing instrument business continues to be a
challenge for most companies in the industry. Poor sell-through during the
Father's Day and graduation gift seasons has resulted in retailers working off
higher than normal inventories. Strict expense controls are continuing in the
writing instrument business."
"The test of Cross timepieces continues with an enhanced product offering and
advertising campaign," said Mr. Boss.
"Because of a disappointing third quarter and consumer uncertainty heading into
the fourth quarter, it now appears that the combined losses of the pen
computing and timepiece businesses will exceed the expected profitable results
of the writing instrument business; therefore, we do not expect 1998 to be
profitable on a consolidated basis," Mr. Boss said.
A.T. Cross Company is a major international manufacturer of fine writing
instruments. The company also manufactures pen computing products and is
testing designs and distribution of Cross timepieces.
For information at A.T. Cross contact:
John T. Ruggieri, Senior Vice President and Chief Financial Officer
(401) 333-1200
jruggieri@cross.com
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (including but not limited to
statements relating to the introduction of Cross timepieces, writing
instruments and pen computing products, the effect of advertising and
promotional campaigns, the ongoing effect of cost controls and the continued
growth in certain foreign markets). These forward-looking statements are
subject to risks and uncertainties, including but not limited to risks
associated with consumer acceptance of the Company's new product lines,
consumer reaction to the Company's advertising and promotions, the Company's
strategic initiatives, customer and consumer support for such initiatives and
the inherent uncertainty of foreign markets. Additional discussions 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.
(Financial information follows)
A.T. Cross Company
CONSOLIDATED SUMMARY OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
Net Sales $33,852 $36,626 $100,070 $101,438
Cost of goods sold 19,002 19,084 53,889 53,449
Gross Profit 14,850 17,542 46,181 47,989
Selling, general and
administrative expenses 20,072 17,397 50,896 47,991
Research and development 1,146 555 3,372 2,317
Service and distribution
costs 805 990 2,433 2,784
Operating Loss (7,173) (1,400) (10,520) (5,103)
Interest and other income 678 495 2,089 1,378
Loss From Continuing Operations
Before Income Taxes (6,495) (905) (8,431) (3,725)
Income tax benefit (2,078) (317) (2,698) (1,304)
Loss From Continuing
Operations (4,417) (588) (5,733) (2,421)
Income (Loss) from discontinued
operations(net of income taxes) 0 0 1,653 (2,321)
Net Loss $(4,417) $(588) $(4,080) $(4,742)
Basic and diluted earnings
(loss) per share:
Continuing operations $(0.27) $(0.04) $(0.35) $(0.15)
Discontinued operations 0.00 0.00 0.10 (0.14)
Net Loss Per Share $(0.27) $(0.04) $(0.25) $(0.29)
Weighted average shares
outstanding 16,548 16,500 16,530 16,496
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
September 30
1998 1997
Assets
Cash and short-term investments $41,859 $45,062
Accounts receivable 25,155 26,111
Inventories 32,128 25,520
Other current assets 9,046 10,772
Total Current Assets 108,188 107,465
Property, plant and equipment, net 38,026 39,907
Intangibles and other assets 9,314 8,308
Total Assets $155,528 $155,680
Liabilities and Shareholders' Equity
Current liabilities $42,659 $32,220
Accrued warranty costs 6,046 5,734
Shareholders' equity (per share $6.46 and $7.13) 106,823 117,726
Total Liabilities and Shareholders' Equity $155,528 $155,680
For information at A.T. Cross contact:
John T. Ruggieri
Senior Vice President / Chief Financial Officer
(401) 333-1200
jruggieri@cross.com
Ends.