-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AujFLlfF00d2T2sR4/b1b1AttfgMihivwuDeNuyslCWMA2x4CEg96EkbMRm4FYcI uo1dXDwcNQwnR0ltclYJKA== 0001157523-05-000995.txt : 20050203 0001157523-05-000995.hdr.sgml : 20050203 20050203072017 ACCESSION NUMBER: 0001157523-05-000995 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050203 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050203 DATE AS OF CHANGE: 20050203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K SWISS INC CENTRAL INDEX KEY: 0000862480 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 954265988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18490 FILM NUMBER: 05571303 BUSINESS ADDRESS: STREET 1: 31248 OAK CREST DRIVE CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 BUSINESS PHONE: 8187065100 MAIL ADDRESS: STREET 1: 31248 OAK CREST DR CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 8-K 1 a4814150.txt K-SWISS INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of the Securities Act of 1934 Date of Report (Date of earliest event reported) February 3, 2005 ---------------- K-SWISS INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-18490 95-4265988 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 31248 Oak Crest Drive, Westlake Village, CA 91361 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) 818-706-5100 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On February 3, 2005, K-Swiss Inc. (the "Company") issued a press release announcing its results of operations and financial condition for the three and twelve months ended December 31, 2004. A copy of the press release is furnished as Exhibit 99.1 to this report. The information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished under Item 2.02 "Results of Operations and Financial Condition." Such information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference in any filing, registration statement or other document filed under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description of Exhibit -------------- ---------------------- 99.1 Press release issued February 3, 2005. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. K-Swiss Inc. Date: February 3, 2005 By: /s/ GEORGE POWLICK --------------------------------------- George Powlick, Vice President Finance, Chief Operating Officer, Chief Financial Officer and Director EXHIBIT INDEX ------------- Exhibit Description - ------- ----------- 99.1 Press Release dated February 3, 2005. EX-99.1 2 a4814150ex991.txt K-SWISS INC. EXHIBIT 99.1 Exhibit 99.1 K-Swiss Reports Record Fourth Quarter and Year-End Results WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 3, 2005--K-Swiss Inc. (NASDAQ/NM: KSWS) today announced results for the fourth quarter and year ended December 31, 2004. Financial Highlights Net earnings and net earnings per diluted share for the fourth quarter of 2004 increased 79.7% and 87.0%, respectively, to $15,614,000, or $0.43 per diluted share, compared with $8,687,000, or $0.23 per diluted share, in the prior-year period. Net earnings and net earnings per diluted share for the year ended December 31, 2004, increased 42.3% and 48.5%, respectively, to $71,251,000, or $1.96 per diluted share, compared with $50,056,000, or $1.32 per diluted share, at December 31, 2003. In the fourth quarter of 2004, pursuant to the American Jobs Creation Act of 2004, we repatriated dividends of $22,700,000 related to foreign subsidiary earnings which were not considered indefinitely invested. We will receive an 85% dividends received deduction for eligible dividends, resulting in a lower effective tax rate for the fourth quarter of 2004 and the year ended December 31, 2004. The repatriation resulted in a tax credit of 29.1% for the quarter and tax rate of 28.7% for the year, which amounted to a one-time benefit of $0.20 per share for both the quarter and the year. We will use these funds on qualified expenditures in the United States in accordance with our approved Domestic Reinvestment Plan. For the fourth quarter of 2004, total worldwide revenues increased 9.9% to $88,356,000 compared with $80,432,000 in the prior-year period. Domestic revenues decreased 0.1% to $68,381,000 in the fourth quarter, and international revenues increased 66.2% to $19,975,000. Total worldwide revenues for 2004 increased 12.8% to $484,079,000 compared with $429,162,000 in 2003. Domestic revenues increased 6.7% to $397,390,000 in 2004, while international revenues increased 52.8% to $86,689,000. Futures Orders Worldwide futures orders with start ship dates from January through June decreased 0.3% to $224,233,000 at December 31, 2004, compared with $224,863,000 at December 31, 2003. Domestic futures orders decreased 11.9% to $170,291,000 at December 31, 2004, from $193,390,000 at December 31, 2003. International futures orders increased 71.4% to $53,942,000 at December 31, 2004, from $31,473,000 the previous year. Stock Repurchase Program The Company purchased 169,000 and 1,343,000 shares of Class A Common Stock during the fourth quarter and all of 2004, respectively, for a total expenditure of approximately $3,371,000 and $27,000,000, respectively, as part of its stock repurchase program. There remains authorization to repurchase approximately 4,990,000 shares under the Company's existing stock repurchase program. Since August 1996, K-Swiss has purchased a total of 24.4 million shares of Class A Common Stock for a total expenditure of $136.3 million. K-Swiss also issued guidance for the first quarter of 2005 and for 2005. The Company expects revenues for the first quarter of 2005 to be approximately $138 to $143 million and earnings per diluted share to be in the range of $0.52 to $0.57. The Company expects full year revenues to be approximately $480 to $500 million and expects to report full year earnings per diluted share of approximately $1.70 to $1.80. The Company's estimates for the first quarter of 2005 and full year 2005 reflect the continued investments in marketing, sales and product development for the Royal Elastics brand as well as the expansion of European operations. They are based upon the following assumptions: gross margins will be between 44% and 45%; SG&A will not rise above $32 million for the quarter and $127 million for the year; cancellations will be moderate; and the Company's growth initiatives with respect to Royal Elastics will not exceed a net loss of $0.07 to $0.08 per share for the year. Steven Nichols, Chairman of the Board and President, stated, "In a year filled with many notable accomplishments, the fourth quarter lived up to our expectations. We noted with pleasure the recent improvement in sales to our largest customer, yet another quarter of company-leading sales from our Classic shoe and the increasingly significant contribution from our international business. We also successfully executed a fourth quarter television campaign - our largest in that time period - that resulted in a sizable increase in at-once business and improvement in margin. "Excluding the one-time repatriation credit, our earnings grew by 28% for the year - a strong report by any measure. Looking ahead to 2005, we are modeling flat revenue growth in the first half of the year and 7% growth in the second half. Utilizing our existing backlog as the primary source for our full year forecast, we expect international operations to be the key growth driver until the return to historical sales levels by our largest customer and improvements to our Limited Edition offerings take hold in domestic operations. In summary, 2005 holds great potential for us to deliver a well-diversified sales and earnings performance, particularly in the second half of the year." Discontinued operations are comprised of the results of the National Geographic brand. Investor Conference Call and Web Simulcast K-Swiss will conduct a conference call on its fourth quarter 2004 earnings release on February 3, 2005, at 10:00 am EST. The number to call for this interactive teleconference is (913) 981-5532. A replay of this conference call will be available until February 10, 2005, by dialing (719) 457-0820 and entering the passcode, 786774. The Company will also provide an online Web simulcast and rebroadcast of this conference call. The live broadcast of K-Swiss' quarterly conference call will be available online at www.streetevents.com and www.fulldisclosure.com on February 3, 2005, beginning at 10:00 a.m. EST. The online replay will follow shortly after the call and continue through February 17, 2005. K-Swiss Inc. designs, develops and markets an array of athletic footwear for high performance sports use, fitness activities and casual wear under the K-Swiss brand. The Company also designs and manufactures footwear under the Royal Elastics brand. Royal Elastics, a wholly owned subsidiary, is the leading innovator of slip-on, laceless footwear. Certain matters discussed in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to: non-achievement of the assumptions discussed herein, general and regional economic conditions, industry trends, merchandise trends, including market acceptance of the Company's training shoe and new Limited Edition lines, and Royal Elastics brand, market acceptance of the Company's casual product in Europe, customer demand, competition, the impact of terrorism and/or a potential global conflict on the worldwide economy, dependence on large customers and credit concentrations and order cancellations and reduced sales resulting from a slower worldwide economy. A complete description of these factors, as well as others which could affect the Company's business, is set forth in the Company's periodic filings, including its Form 10-Q for the quarter ended September 30, 2004, which is currently on file with the SEC. "Backlog" as of any date, represents orders scheduled to be shipped within the next six months. Backlog does not include orders scheduled to be shipped on or prior to the date of determination of backlog. The mix of "future" and "at-once" orders can vary significantly from quarter to quarter and year to year and, therefore, "futures" are not necessarily indicative of revenues for subsequent periods. K-Swiss Inc. Consolidated Statements of Earnings (In thousands, except earnings per share data) Three Months Ended Year Ended December 31, December 31, ------------------ ------------------ (Unaudited) 2004 2003 2004 2003 -------- -------- -------- -------- Revenues $88,356 $80,432 $484,079 $429,162 Cost of goods sold 48,404 45,436 262,859 235,603 -------- -------- -------- -------- Gross profit 39,952 34,996 221,220 193,559 Selling, general and administrative expenses 28,342 23,542 122,262 106,267 -------- -------- -------- -------- Operating profit 11,610 11,454 98,958 87,292 Interest income, net 486 248 1,038 699 -------- -------- -------- -------- Earnings from continuing operations before income taxes 12,096 11,702 99,996 87,991 Income tax expense (benefit) (3,518) 4,140 28,745 34,199 -------- -------- -------- -------- Earnings from continuing operations 15,614 7,562 71,251 53,792 Income (loss) from discontinued operations -- 1,125 -- (3,736) -------- -------- -------- -------- Net earnings $15,614 $8,687 $71,251 $50,056 ======== ======== ======== ======== Basic earnings per share $0.45 $0.25 $2.04 $1.41 ======== ======== ======== ======== Diluted earnings per share $0.43 $0.23 $1.96 $1.32 ======== ======== ======== ======== Weighted average number of shares outstanding Basic 34,473 35,345 34,917 35,396 Diluted 36,073 37,925 36,433 37,913 K-Swiss Inc. Condensed Balance Sheets (In thousands) December 31, 2004 2003 -------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents $144,857 $81,455 Accounts receivable, net 49,411 50,879 Inventories 64,901 73,787 Prepaid expenses and other 7,710 4,760 Deferred taxes 4,654 3,014 -------- -------- Total current assets 271,533 213,895 PROPERTY, PLANT AND EQUIPMENT, NET 8,228 8,596 OTHER ASSETS Intangible assets 4,700 7,301 Deferred taxes 5,305 -- Other 5,111 4,838 -------- -------- 15,116 12,139 -------- -------- $294,877 $234,630 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit $6,750 $-- Trade accounts payable 22,262 19,359 Accrued liabilities 23,952 17,150 -------- -------- Total current liabilities 52,964 36,509 OTHER LIABILITIES 15,083 15,234 DEFERRED TAXES -- 3,360 STOCKHOLDERS' EQUITY 226,830 179,527 -------- -------- $294,877 $234,630 ======== ======== CONTACT: K-Swiss Inc., Westlake Village George Powlick, 818-706-5100 -----END PRIVACY-ENHANCED MESSAGE-----