Attached files
| file | filename |
|---|---|
| 8-K - Swank, Inc. | f8k03012010.htm |
Exhibit
99
|
FOR IMMEDIATE
RELEASE
|
Contact: Jerold
R. Kassner
|
|
March 1,
2010
|
Swank,
Inc.
|
|
Taunton, MA
02708
|
|
|
(508)
822-2527
|
SWANK,
INC. REPORTS FINANCIAL RESULTS
FOR
THE QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2009
NEW YORK, NEW YORK
March 1, 2010 -- John Tulin, Chairman of the Board and Chief Executive Officer
of SWANK, INC. (OTC: SNKI), today reported financial results for the Company's
fourth quarter and twelve months ended December 31, 2009.
Net income for the fourth quarter ended
December 31, 2009 was $1,266,000 or $.22 per diluted share compared to net
income of $2,576,000 or $.44 per diluted share for the corresponding quarter in
2008. For the twelve-month period ended December 31, 2009, net income
was $1,778,000 or $.31per diluted share compared to $2,090,000 or $.35 per
diluted share last year. Net sales for the quarter increased 2.5% to $35,687,000
and, for the twelve-month period, increased .7% to $114,798,000, in both cases
as compared to the corresponding periods in 2008. Net income for both
the quarter and twelve-month periods in 2008 reflect a $2,000,000 gain recorded
during last year’s fourth quarter associated with the settlement of a coverage
dispute with one of the Company’s insurance companies.
Excluding last year’s insurance settlement,
income before taxes for the quarter ended December 31, 2009 was $2,784,000
compared to $2,245,000 for the comparable prior year, and for the year ended
December 31, 2009 income before taxes was $3,633,000 compared to $1,466,000 for
the year ended December 31, 2008. Income before taxes for the quarter
ended December 31, 2008 including the insurance settlement was $4,245,000 and
for the twelve months ended December 31, 2008 including the effects of the
settlement was $3,466,000.
Commenting on the results for the quarter and
twelve-month periods, Mr. Tulin said, "We are very pleased with our results this
year. It is important to note that our income before taxes more than
doubled to $3,633,000 in 2009 compared to $1,466,000 in 2008 excluding last
year’s insurance settlement. Despite the challenges of a very
difficult economy, our net sales increased for both the quarter and year with
corresponding increases in our income before taxes for the twelve-month period
as well as for the quarter, exclusive of the insurance settlement. We ended
fiscal 2009 with a very strong balance sheet and no borrowings under our
revolving credit facility. We believe that we are well positioned to take
advantage of the opportunities presented by an anticipated strengthening of the
US economy later this year.”
Results
for the Fourth Quarter ended December 31, 2009
Net income for the fourth quarter ended
December 31, 2009 was $1,266,000 or $.22 per diluted share compared to net
income of $2,576,000 or $.44 per diluted share for the corresponding quarter in
2008. Income before taxes for the fourth quarter was $2,784,000 compared to
$4,245,000 for the same period in 2008 or $2,245,000 exclusive of the insurance
settlement. The decrease in net income during the quarter was also due to a
higher effective tax rate in 2009 compared to the fourth quarter of
2008.
Net sales during the quarter increased 2.5% to
$35,687,000 compared to $34,809,000 for the corresponding period in 2008. The
increase during the quarter was principally due to higher gross shipments of our
men’s belt merchandise offset in part by an increase in allowances for
anticipated customer returns. The increase in men’s belt shipments
during the quarter was mostly due to sales of certain private brand merchandise
to major chain store accounts. Net sales for our men’s personal leather goods
declined during the quarter as an increase in department and chain store net
sales was offset by decreases at certain labels for less and international
accounts. The increase in returns allowances was primarily due to
anticipated customer returns associated with certain product transitions planned
for the spring 2010 selling season.
Gross profit for the quarter ended December 31,
2009 increased $1,198,000 or 11.0% and, as a percentage of net sales, increased
to 33.9% compared to 31.4%, in both cases as compared to the same period last
year. The increase in gross profit during the quarter was mainly due to an
increase in net sales as well as reductions in certain inventory-related
expenses, including merchandise markdowns associated with out of line inventory
and product royalty expense.
Selling and administrative expenses for
the quarter ended December 31, 2009 increased $797,000 or 9.5% from last year’s
fourth quarter. As a percentage of net sales, selling and
administrative expenses were 25.9% and 24.2% for the quarters ended December 31,
2009 and 2008 respectively.
Selling expenses for the quarter increased
$568,000 or 8.3% compared to last year and, as a percentage of net sales,
increased to 20.7% from 19.6%. The increases were primarily due to expenses
associated with the start-up of our new women’s accessories division and our
China representative office which was established late in 2008, as well as
increases in certain advertising expenses and other variable sales related
costs. Expenses during the quarter related to our women’s accessories
division and China representative office totaled $307,000.
Administrative expenses increased $229,000 or
14.3% during the quarter and totaled 5.1% and 4.6% of net sales for the quarters
ended December 31, 2009 and 2008, respectively. The increase during
the quarter was mainly due to higher professional fees and miscellaneous (non
income-related) tax expenses offset in part by a decrease in certain fringe
benefit expenses.
Net interest expense for the quarter decreased
by $138,000 or 58.0% compared to last year. The decrease was due to
both lower average borrowings and lower borrowing costs during the
quarter. Average outstanding borrowings declined 53.0% during the
quarter compared to last year mainly due to decreases in inventory
levels.
Results
for the Twelve Months Ended December 31, 2009
Net income for the twelve months ended December
31, 2009 was $1,778,000 or $.31 per diluted share compared to net income of
$2,090,000 or $.35 per diluted share last year. Income before taxes
was $3,633,000 for the period compared to $3,466,000 last year or $1,466,000
exclusive of the insurance settlement.
Net sales for the twelve-month period were
$114,798,000 reflecting a .7% increase over last year’s
$113,967,000. The increase was due to higher shipments of our men’s
personal leather goods, gift accessories, and belts as well as reductions in
in-store markdown and promotion expenses offset in part by lower shipments of
men’s jewelry and higher customer returns allowances. The increase in
personal leather and gift accessories shipments was due to increases in certain
licensed collections at department store accounts as well as in private label
merchandise shipments to a major chain store customer. The decrease
in in-store markdown expense during 2009 was mainly due to a reduction in
promotional commitments during the first half of the year as compared to the
same time in 2008. As described above, the increase in return
allowances is due to certain product transitions planned for spring
2010.
Included in net sales for the twelve months
ended December 31, 2009 and 2008 are annual adjustments recorded during the
second quarter to reflect the variance between customer returns of prior year
shipments actually received in the current year and the allowance for customer
returns which was established at the end of the preceding fiscal year. This
adjustment increased net sales by $668,000 for the twelve-month period ended
December 31, 2009, compared to an increase of $872,000 in 2008. The favorable
adjustments in both years resulted from actual returns experience during the
spring 2009 and spring 2008 seasons being better than anticipated compared to
the respective reserves established at the end of the previous
year.
Gross profit for the twelve months ended
December 31, 2009 increased $591,000 or 1.7%, as compared to
2008. Gross profit expressed as a percentage of net sales for 2009
increased to 31.7% compared to 31.4% for the prior year. The increase in gross
profit was due to higher net sales and lower royalty expense offset in part by
higher inventory control costs, primarily merchandise markdowns during the first
half of the year, and higher product costs for certain of our merchandise
collections.
Included in gross profit for the twelve months
ended December 31, 2009 and 2008 are annual adjustments recorded during the
second quarter to reflect the variance between customer returns of prior year
shipments actually received in the current year and the allowance for customer
returns which was established at the end of the preceding fiscal year. The
adjustments to net sales recorded during our second quarter described above
resulted in a favorable adjustment to gross profit of $440,000 and $682,000 for
the twelve-month periods ended December 31, 2009 and December 31, 2008,
respectively. As previously discussed, customer returns were lower than
anticipated during both the spring 2009 and spring 2008 seasons.
Selling and administrative expenses for the
twelve-month period ended December 31, 2009 decreased $1,118,000 or 3.3%compared
to the prior period. Selling and administrative expenses expressed as a
percentage of net sales were 28.2% and 29.4% for 2009 and 2008,
respectively.
Selling expenses for the twelve-month period
decreased $328,000 or 1.3% and as a percentage of net sales decreased to 21.7%
compared to 22.1% in 2008. The decreases were primarily due to reductions in
warehouse and distribution, in-store servicing, travel, and other domestic
selling expenses offset partially by costs associated with the launch of our
women’s accessories division and China representative office.
Administrative expenses during 2009 decreased
$790,000 or 9.6% compared to the prior period. Administrative
expenses expressed as a percentage of net sales were 6.5% and 7.3% for the
twelve months ended December 31, 2009 and 2008, respectively. The decrease in
administrative expenses for the twelve-month period was due to reductions in bad
debt and environmental-related and travel expenses, offset in part by increases
in professional fees and miscellaneous taxes. We made substantial additions to
our bad debt reserves during the second quarter of 2008 following the bankruptcy
filings of two of our department store customers. We also recorded an
expense of $197,000 during 2008’s third quarter in connection with a certain
environmental matter.
Net interest expense for the twelve-months
ended December 31, 2009 decreased by $458,000 or 52.8% compared to the prior
year. As was the case during the fourth quarter, the decrease was due
to both lower average borrowings and lower borrowing costs. For the
year, our average outstanding borrowings decreased 39.1% relative to 2008
primarily due to decreases in inventory investment especially during the second
half of 2009.
Forward-Looking
Statements
Certain of the
preceding paragraphs contain forward-looking statements, which are based upon
current expectations and involve certain risks and uncertainties. Under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995,
readers should note that these statements may be impacted by, and the Company's
actual performance and results may vary as a result of, a number of factors
including general economic and business conditions, continuing sales patterns,
pricing, competition, consumer preferences, and other factors.
* * * * *
Swank designs and
markets men's jewelry and men’s and women’s belts and personal leather
accessories. The Company distributes its products to retail outlets
throughout the United States and in numerous foreign countries. These products,
which are known throughout the world, are distributed under the names "Kenneth
Cole", "Tommy Hilfiger", “Nautica”, "Geoffrey Beene", "Claiborne", "Guess?",
“Tumi”, “Buffalo David Bitton”, “Chaps”, “Donald Trump”, "Pierre Cardin", “US
Polo Association”, and "Swank". Swank also distributes men's jewelry
and leather items to retailers under private labels.
SWANK,
INC.
CONDENSED
STATEMENTS OF INCOME (UNAUDITED)
FOR
THE QUARTERS ENDED DECEMBER 31, 2009 AND 2008
(Dollars
in thousands except share and per share data)
---------------------------------
|
2009
|
2008
|
|||||||
|
Net
sales
|
$ 35,687 | $ 34,809 | ||||||
|
Cost of goods
sold
|
23,575 | 23,895 | ||||||
|
Gross
profit
|
12,112 | 10,914 | ||||||
|
Selling and
administrative expenses
|
9,228 | 8,431 | ||||||
|
Other
(income) – insurance settlement
|
- | (2,000 | ) | |||||
|
Income from
operations
|
2,884 | 4,483 | ||||||
|
Interest
expense
|
100 | 238 | ||||||
|
Income before
income taxes
|
2,784 | 4,245 | ||||||
|
Income tax
provision
|
1,518 | 1,669 | ||||||
|
Net
income
|
$ 1,266 | $ 2,576 | ||||||
|
Share and per share
information:
|
||||||||
|
Basic net
income per weighted average common share outstanding
|
$ .22 | $ .44 | ||||||
|
Basic
weighted average common shares outstanding
|
5,666,300 | 5,831,558 | ||||||
|
Diluted net
income per weighted average common share outstanding
|
$ .22 | $ .44 | ||||||
|
Diluted
weighted average common shares outstanding
|
5,667,005 | 5,831,709 | ||||||
SWANK,
INC.
CONDENSED
STATEMENTS OF INCOME (UNAUDITED)
FOR
THE TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Dollars
in thousands except share and per share data)
---------------------------------
|
2009
|
2008
|
|||||||
|
Net
sales
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$ 114,798 | $ 113,967 | ||||||
|
Cost of goods
sold
|
78,372 | 78,132 | ||||||
|
Gross
profit
|
36,426 | 35,835 | ||||||
|
Selling and
administrative expenses
|
32,384 | 33,502 | ||||||
|
Other
(income) – insurance settlement
|
- | (2,000 | ) | |||||
|
Income from
operations
|
4,042 | 4,333 | ||||||
|
Interest
expense
|
409 | 867 | ||||||
|
Income before
income taxes
|
3,633 | 3,466 | ||||||
|
Income tax
provision
|
1,855 | 1,376 | ||||||
|
Net
income
|
$ 1,778 | $ 2,090 | ||||||
|
Share and
per share information:
|
||||||||
|
Basic net
income per weighted average common share outstanding
|
$ .31 | $ .35 | ||||||
|
Basic
weighted average common shares outstanding
|
5,670,438 | 5,961,066 | ||||||
|
Diluted net
income per weighted average common share outstanding
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$ .31 | $ .35 | ||||||
|
Diluted
weighted average common shares outstanding
|
5,670,756 | 5,961,921 | ||||||
SWANK,
INC.
CONDENSED BALANCE
SHEETS
(Dollars
in thousands except share data)
|
(Unaudited)
December 31, 2009
|
December 31, 2008
|
|||||||||||||||
|
ASSETS
|
||||||||||||||||
|
Current:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$ 571 | $ 343 | ||||||||||||||
|
Accounts
receivable, less allowances
|
||||||||||||||||
|
of
$6,137 and $5,419 respectively
|
16,324 | 13,502 | ||||||||||||||
|
Inventories,
net:
|
||||||||||||||||
|
Work
in process
|
872 | 1,174 | ||||||||||||||
|
Finished
goods
|
22,872 | 25,113 | ||||||||||||||
| 23,744 | 26,287 | |||||||||||||||
|
Deferred
taxes, current
|
2,132 | 1,874 | ||||||||||||||
|
Prepaid
and other current assets
|
1,293 | 2,966 | ||||||||||||||
|
Total
current assets
|
44,064 | 44,972 | ||||||||||||||
|
Property,
plant and equipment, net of accumulated depreciation
|
888 | 1,162 | ||||||||||||||
|
Deferred
taxes, noncurrent
|
2,252 | 2,242 | ||||||||||||||
|
Other
assets
|
3,479 | 3,638 | ||||||||||||||
|
Total
assets
|
$ 50,683 | $ 52,014 | ||||||||||||||
|
LIABILITIES
|
||||||||||||||||
|
Current:
|
||||||||||||||||
|
Note
payable to bank
|
$ - | $ 10,005 | ||||||||||||||
|
Current
portion of long-term obligations
|
497 | 891 | ||||||||||||||
|
Accounts
payable
|
9,456 | 4,222 | ||||||||||||||
|
Accrued
employee compensation
|
1,565 | 1,126 | ||||||||||||||
|
Other
current liabilities
|
3,149 | 2,047 | ||||||||||||||
|
Total
current liabilities
|
14,667 | 18,291 | ||||||||||||||
|
Long-term
obligations
|
6,432 | 6,048 | ||||||||||||||
|
Total
liabilities
|
21,099 | 24,339 | ||||||||||||||
|
STOCKHOLDERS’
EQUITY
|
||||||||||||||||
|
Preferred
stock, par value $1.00:
|
||||||||||||||||
|
Authorized
– 300,000 shares and 1,000,000 shares, respectively
|
- | - | ||||||||||||||
|
Common stock,
par value $.10:
|
||||||||||||||||
|
Authorized
- 43,000,000 shares:
|
||||||||||||||||
|
Issued
-- 6,418,789 shares and 6,385,379 shares, respectively
|
642 | 639 | ||||||||||||||
|
Capital in
excess of par value
|
2,322 | 2,037 | ||||||||||||||
|
Retained
earnings
|
29,256 | 27,478 | ||||||||||||||
|
Accumulated
other comprehensive (loss), net of tax
|
(493 | ) | (378 | ) | ||||||||||||
|
Treasury
stock, at cost, 752,489 and 736,999 shares, respectively
|
(2,143 | ) | (2,101 | ) | ||||||||||||
|
Total
stockholders' equity
|
29,584 | 27,675 | ||||||||||||||
|
Total
liabilities and stockholders' equity
|
$ 50,683 | $ 52,014 | ||||||||||||||