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ashw coming into buy area
is this bad news?? .....
Thursday December 17, 8:30 am Eastern Time
Company Press Release
SOURCE: Ashworth Inc.
Ashworth, Inc. Reports Results For Fiscal 1998 Year
End And Fourth Quarter
CARLSBAD, Calif., Dec. 17 /PRNewswire/ -- Randall L. Herrel, Sr., President and Chief Executive Officer of Ashworth Inc.
(Nasdaq: ASHW - news) today announced financial results for the fiscal year end and fourth quarter ended October 31, 1998.
Consolidated net sales for fiscal 1998 increased 20.4% to $107,341,000 as compared to $89,148,000 for fiscal 1997.
Consolidated net income increased 9.8% to $5,300,000 as compared to net income of $4,827,000 for the prior year. Earnings
per diluted share were $0.36 on 14,805,000 weighted average shares outstanding for 1998, as compared to $0.38 on
12,564,000 weighted average shares outstanding for fiscal 1997. Domestic sales increased 27.5% to $89,389,000 as
compared to $70,129,000 for fiscal 1997. Foreign sales decreased 5.6% to $17,952,000 as compared to $19,019,000 for
fiscal 1997. Ashworth sales in Europe for fiscal 1998 increased 17.4% over the prior year.
Consolidated net sales for the fourth quarter of fiscal 1998 increased 15.7% to $19,660,000 as compared to $16,987,000 for
the same period of the prior year. The consolidated net loss for the fourth quarter was $1,861,000 as compared to net income
of $4,000 in the same period of the prior year. The Company recorded a diluted loss per share of $0.13 as compared to $0.00
diluted earnings per share for the same period of last year. Domestic sales increased 24.6% to $17,274,000 as compared to
$13,868,000 for the same period of the prior year. Foreign sales decreased 23.5% to $2,386,000 as compared to
$3,118,000 for the same period of the prior year. Ashworth sales in Europe for the fourth quarter decreased 26.7% from the
same quarter in the prior year.
In reviewing 1998 operations, Mr. Herrel noted that the Company achieved its highest sales and net income despite the loss
incurred in the fourth quarter. The Company enters fiscal 1999 with an overall strong financial position and with a product
brand that continues to be the leading brand of golf shirts based on the Darrell Survey.
While the Company's consolidated sales for the fourth quarter increased, fourth quarter profitability suffered as a result of
weaker international sales and adjustments related to prior season inventory. The fourth quarter has historically been the
Company's least profitable quarter. Growth in fiscal '98 and in the Company's fourth quarter was primarily driven by growth in
the Company's domestic green grass/golf related business as well as its domestic retail/department store business. The
Company attributed this growth to the on-going strength of the Ashworth brand, as well as recent growth initiatives and the
Company's Golfman Shop fixture program. The international sales decrease was primarily a result of lower European and Asian
sales in the fourth quarter. While European bookings were well ahead of last year, European sales declines in the fourth quarter
were primarily attributed to order processing and inventory mix problems which caused lower than anticipated fill rates.
Management is currently in the process of strengthening its European management team and upgrading its systems to address
these issues.
Consolidated gross profit margin for the year and fourth quarter decreased to 37.8% and 28.9% respectively from 38.3% and
41.2% in the like period last year. Lower margins were primarily due to previously disclosed foreign sourcing issues,
adjustments related to excess prior season inventory and the discontinuation of the Company's young men's (AGCo label) line.
The Company believes its Ashworth label has stronger brand recognition than its AGCo label when selling younger fashion
forward product. As a result of this decision, the Company increased its inventory reserves related to this product line in the
fourth quarter.
Selling, general and administrative expenses (SG&A) for fiscal 1998 increased for the year and quarter by 25.4% and 31.5%
respectively primarily due to investments in sales and marketing programs, the Company's new women's division, the new
corporate division and increased distribution expenses. Domestically, the Company also invested significantly in special sales
programs to grow its Fall/Holiday account base by over 20%. The Company believes this investment will continue to grow its
off season business in the future. In addition, the Company incurred increased expense as a result of installation of
approximately 400 new Golfman shop fixtured locations in 1998 bringing the installation of Golfman shop fixtured locations
100% ahead of plan for the year.
The Company reported inventory increased 4.9% while sales for the year increased 20.4%. Accounts receivable increased
66.4% primarily due to sales programs with additional dating and a slow down in payment trends. The Company also
announced it repurchased 677,000 shares of its stock during fiscal 1998 for a total of $5.2 million.
The Company also reported that as of December 13, 1998 it continued to show improvements in overall Spring/Summer 1999
bookings as compared to last year. In looking forward into 1999, the Company has made a decision to emphasize improving
inventory turns, strengthening the management team and enhancing its marketing activities.
The Company also announced that the recently published 1998 Darrell Survey, a leading consumer usage survey, reported that
Ashworth remains the market leader in shirt usage among golfers in the United States. It also reported that it has approximately
25% market share among the better golfers (0-5 handicap) in America, which reinforces the Ashworth brand as one of the
most authentic brands in America.
Ashworth, Inc. is a Southern California-based designer and manufacturer of golf-inspired lifestyle sportswear distributed
domestically and internationally in golf pro shops, resorts and upscale department and specialty stores.
This press release contains forward looking statements related to the Company's market position, finances, marketing plans and
strategies. These statements involve risks and uncertainties that could cause actual results to differ materially from those
projected. These risks include the timely development and acceptance of new products, the impact of competitive products and
pricing, the success of the women's and corporate divisions, the preliminary nature of bookings information, the ongoing risk of
excess or obsolete inventory, potential inadequacy of booked reserves and other risks detailed frequently in Ashworth, Inc.
SEC reports, including the report on Form 10-K for the year ended October 31, 1997.
ASHWORTH, INC.
Fourth Quarter ended October 31, 1998
Summary of Results of Operations
(Unaudited)
1998 1997
Fourth Quarter
Net Sales $19,660,000 $16,987,000
Cost of Sales 13,985,000 9,988,000
Gross Profit 5,675,000 6,999,000
Selling, General and
Administrative expenses 8,692,000 6,610,000
(Loss) Income from Operations (3,017,000) 389,000
Other Income (Expense):
Interest Income 40,000 44,000
Interest Expense (110,000) (134,000)
Other Income (Expense) 96,000 (292,000)
Total Other Income (Expense) 26,000 (382,000)
(Loss) Income Before Provision for
Income Taxes (2,991,000) 7,000
Provision for Income Taxes 1,130,000 (3,000)
Net (Loss) Income (1,861,000) 4,000
(Loss) Earnings Per Share - BASIC ($0.13) $0.00
Weighted Average Commmon
Shares Outstanding 14,112,000 12,918,000
(Loss) Earnings Per Share - DILUTED ($0.13) $0.00
Weighted Average Commmon
Shares and Equivalents Outstanding 14,112,000 13,679,000
Year
Net Sales $107,341,000 $89,148,000
Cost of Sales 66,719,000 55,045,000
Gross Profit 40,622,000 34,103,000
Selling, General and
Administrative expenses 31,691,000 25,282,000
Income from Operations 8,931,000 8,821,000
Other Income (Expense):
Interest Income 152,000 67,000
Interest Expense (451,000) (606,000)
Other Income (Expense) 58,000 (413,000)
Total Other Income (Expense) (241,000) (952,000)
Income Before Provision for
Income Taxes 8,690,000 7,869,000
Provision for Income Taxes (3,390,000) (3,042,000)
Net Income 5,300,000 4,827,000
Earnings Per Share - BASIC $0.37 $0.39
Weighted Average Commmon
Shares Outstanding 14,185,000 12,403,000
Earnings Per Share - DILUTED $0.36 $0.38
Weighted Average Commmon
Shares and Equivalents Outstanding 14,805,000 12,564,000
ASHWORTH, INC.
Fourth Quarter ended October 31, 1998
(Unaudited)
October 31, October 31,
ASSETS 1998 1997
(Audited)
CURRENT ASSETS
Cash and cash equivalents $4,763,000 $3,787,000
Accounts receivable - trade 19,924,000 11,971,000
Accounts receivable - other 459,000 735,000
Inventories 35,288,000 33,645,000
Income tax receivable 1,149,000 1,522,000
Deferred tax benefit 1,486,000 1,218,000
Other current assets 3,160,000 2,089,000
Total current assets 66,229,000 54,967,000
PROPERTY AND EQUIPMENT 23,594,000 20,679,000
Less accumulated depreciation (11,432,000) (9,168,000)
12,162,000 11,511,000
CAPITAL LEASE - EQUIPMENT 545,000 1,140,000
Less accumulated amortization (391,000) (561,000)
154,000 579,000
INTANGIBLE ASSETS 66,000 80,000
OTHER ASSETS 3,023,000 1,680,000
81,634,000 68,817,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $0 $0
Current portion of long-term debt 940,000 1,114,000
Accounts payable - trade 6,260,000 6,146,000
Accrued salaries and commissions 1,596,000 979,000
Accrued - other 1,118,000 1,900,000
Total current liabilities 9,914,000 10,139,000
Long-Term Debt 3,445,000 4,336,000
Other Long Term Liabilities 432,000 665,000
Deferred Income Tax 738,000 676,000
STOCKHOLDERS' EQUITY
Common stock 14,000 13,000
Capital in excess of
par value 42,259,000 34,277,000
Retained earnings
At October 31, 1997 19,527,000
Current YTD 5,300,000
24,827,000 19,527,000
Deferred compensation (8,000) (59,000)
Notes Receivable -
Shareholder 0 (850,000)
Accum translation -
currency conversion 13,000 93,000
Total stockholders' equity 67,105,000 53,001,000
81,634,000 68,817,000
Working Capital: 56,315,000 44,828,000
Current Ratio: 6.68 5.42
Quick Ratio: 2.49 1.55 |
