A.T. Cross Company Reports Second Quarter Results

Wed Jul 25, 2012 4:01pm EDT

* Reuters is not responsible for the content in this press release.

  • EPS increased 17% from $0.24 in 2011 to $0.28 in 2012
  • Sales increased 2.2% to $48.8 million
  • Operating income increased 14.9%
  • Net cash grew $12.3 million
  • Company repurchased $1.5 million of its common stock during the six months ended June 30, 2012
  • Company reiterates 2012 EPS guidance of $0.70 to $0.75 per share

LINCOLN, R.I., July 25, 2012 (GLOBE NEWSWIRE) -- A.T. Cross Company (Nasdaq:ATX) today announced financial results for the second quarter ended June 30, 2012.

David G. Whalen, President and Chief Executive Officer of A.T. Cross said, "A.T. Cross delivered a good second quarter performance. Our business grew 2% and our net income improved 16% as we continued to generate operating leverage from increased sales. For the first six months of 2012, sales increased 4%; operating earnings increased 15% and net cash when compared to the second quarter of 2011 increased by over $12 million. I view this performance as a fine start to the year in light of all that is going on with the world economies, particularly Europe." 

Second Quarter 2012 Results

Consolidated sales for the second quarter of 2012 increased by 2.2% to $48.8 million compared to $47.8 million in the second quarter of 2011.  The Cross Optical Group (COG) reported second quarter sales of $27.5 million, an 11.2% increase compared to last year. The Cross Accessory Division (CAD) recorded sales of $21.3 million, a 7.5% decrease, compared to $23.0 million last year. 

Gross margin in the quarter was 57.0%, compared to last year's second quarter gross margin of 57.4%.

Operating income in the quarter increased 14.9% to $5.6 million as compared to $4.9 million in the second quarter of last year.

Net income for the second quarter was $3.7 million, or $0.28 per diluted share, compared to $3.2 million, or $0.24 per diluted share, last year.

Year-To-Date 2012 Results

Consolidated sales for the first six months of 2012 increased by 3.7% to $90.8 million compared to $87.6 million for the same period of 2011. CAD recorded sales of $43.3 million, 5.7% lower as compared to last year while COG's sales grew 14.0% to $47.5 million from 2011's $41.7 million. 

Gross margin for the six months of 2012 was 56.6% or 120 basis points below the 2011 six month period.

Year-to-date operating income was $8.0 million or 15.2% higher than the 2011 operating income of $6.9 million.

Mr. Whalen continued, "A.T. Cross delivered a solid first half of the year. The Cross Optical Group generated a 17.5% profit increase on a 14.0% sales improvement, as the strategies we have put in place to build our sunglass business are working well. As for the Cross Accessory Division, the business continued to be affected primarily by the economic problems in Europe. For the first six months, the Division's revenue was off 6% with the Americas and Asia growing, and business in Europe significantly declining. We expect this performance to improve, as we move into the peak season for our writing instrument business."

Stock Repurchase

In the second quarter, the Company repurchased $0.9 million of its Class A common stock. Year-to-date, the Company has repurchased $1.5 million of its Class A common stock.

Guidance

The Company is reiterating its 2012 earnings per share guidance of $0.70 to $0.75 per share.

Conference Call

The Company's management will host a conference call today, July 25, 2012 at 4:30 PM Eastern Time. Parties interested in participating in the conference call may dial-in at (877) 303-2912, while international callers may dial-in at (408) 427-3877. The conference call will be webcast and can be accessed at www.cross.com. A replay of the webcast will be archived on the Company's website for 60 days.

About A.T. Cross Company

Building on the rich tradition of its award-winning writing instruments and reputation for innovation and craftsmanship, A.T. Cross Company is a designer and marketer of branded personal and business accessories. A.T. Cross provides a range of distinctive products that appeal to a growing market of consumers seeking to enhance their image and facilitate their lifestyle. A.T. Cross products, including award-winning Cross-branded quality writing instruments, timepieces, business accessories and Costa and Native Eyewear sunglasses, are distributed in retail and corporate gift channels worldwide. For more information, visit the A.T. Cross website at www.cross.com, the Costa website at www.costadelmar.com and the Native website at www.nativeyewear.com.

The A.T. Cross Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5932

Statements contained in this release that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (including but not limited to statements relating to the expected continued operating results for COG and CAD during the second half of 2012 and the expected overall results for A.T. Cross). In addition, words such as "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including but not limited to the potential effect of both domestic and international economic issues, particularly in Europe, on consumer confidence, as well as consumer preferences and consumers' willingness to purchase discretionary items, and are not guarantees since there are inherent difficulties in predicting future results. Actual results could differ materially from those expressed or implied in the forward-looking statements. The information contained in this document is as of July 25, 2012. The Company assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments. Additional discussion 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.

 A. T. CROSS COMPANY 
 CONSOLIDATED STATEMENTS OF INCOME 
 (in thousands, except per share amounts) 
 (unaudited) 
           
           
   Three Months Ended   Six Months Ended 
   June 30,  July 2,  June 30,  July 2,
   2012   2011   2012   2011   
           
 Net sales   $ 48,807  $47,768  $90,753  $87,550  
 Cost of goods sold   20,993  20,371  39,369  36,988  
 Gross Profit   27,814  27,397  51,384  50,562  
 Selling, general and administrative expenses   19,354  19,721  37,829  38,673  
 Service and distribution costs   2,167  2,116  4,215  3,695  
 Research and development expenses   716  707  1,376  1,278  
 Operating Income   5,577  4,853  7,964  6,916  
 Interest and other expense   (279)  (163)  (411)  (353)  
 Income Before Income Taxes   5,298  4,690  7,553  6,563  
 Income tax provision   1,637  1,531  2,354  2,139  
 Net Income   $ 3,661  $ 3,159  $ 5,199  $ 4,424  
           
 Net Income per Share:           
 Basic   $ 0.30  $ 0.26  $ 0.42  $ 0.36  
 Diluted   $ 0.28  $ 0.24  $ 0.40  $ 0.34  
           
 Weighted Average Shares Outstanding:         
 Basic   12,397  12,191  12,343  12,153  
 Diluted   12,977  13,001  12,926  12,943  
           
           
   Three Months Ended   Six Months Ended 
   June 30  July 2,  June 30  July 2,
   2012   2011   2012   2011   
 Segment Data: Cross Accessory Division       
 Net Sales   $ 21,321  $23,046  $43,250  $45,886  
 Operating Loss   (700)  (536)  (1,162)  (849)  
           
 Segment Data: Cross Optical Group         
 Net Sales   $ 27,486  $24,722  $47,503  $41,664  
 Operating Income   6,277  5,389  9,126  7,765  
 
 
 
A. T. CROSS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
     
     
     
  June 30, 2012 July 2, 2011
Assets    
Cash and cash equivalents  $ 22,615  $ 12,775
Short-term investments 99 604
Accounts receivable 32,271 30,051
Inventories 40,282 45,086
Deferred income taxes 4,161 4,450
Other current assets 7,554 6,515
Total Current Assets 106,982 99,481
     
Property, plant and equipment, net 12,909 14,258
Goodwill 15,279 15,279
Intangibles and other assets 11,295 12,099
Deferred income taxes 10,773 10,591
     
 Total Assets  $ 157,238  $151,708
     
Liabilities and Shareholders' Equity  
Accounts payable and other current liabilities  $ 29,055  $ 27,420
Retirement plan obligations 2,452 2,401
Income taxes payable 1,313 2,266
Total Current Liabilities 32,820 32,087
     
Long-term debt 18,221 21,221
Retirement plan obligations 19,258 14,380
Deferred gain on sale of real estate 1,955 2,477
Other long-term liabilities 482 506
Accrued warranty costs 1,386 1,422
Shareholders' equity 83,116 79,615
     
 Total Liabilities and Shareholders' Equity  $ 157,238  $151,708
CONTACT: Kevin F. Mahoney
         Senior Vice President, Finance and
         Chief Financial Officer
         401-335-8470
         
         Investor Relations:
         Dave Mossberg
         Three Part Advisors, LLC
         817-310-0051