-----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, KtC/5F5/3q79QJsAg2c5HnVGmUcK7iDBahYOp8IUPDAb9BkdKW8a4uDu0pty5mjs lnPtRoL9OlJlKMYPBlanZA== 0001157523-03-003251.txt : 20030724 0001157523-03-003251.hdr.sgml : 20030724 20030724080232 ACCESSION NUMBER: 0001157523-03-003251 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030724 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DECKERS OUTDOOR CORP CENTRAL INDEX KEY: 0000910521 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 953015862 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22446 FILM NUMBER: 03799406 BUSINESS ADDRESS: STREET 1: 495A SOUTH FAIRVIEW AVENUE CITY: GOLETA STATE: CA ZIP: 93117 BUSINESS PHONE: 8059677611 MAIL ADDRESS: STREET 1: 495-A S FAIRVIEW AVE CITY: GOLETA STATE: CA ZIP: 93117 FORMER COMPANY: FORMER CONFORMED NAME: DECKERS FOOTWEAR CORP DATE OF NAME CHANGE: 19930811 8-K 1 a4440722.txt DECKERS 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 EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) : July 24, 2003 DECKERS OUTDOOR CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-22446 95-3015862 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 495A South Fairview Avenue, Goleta, California 93117 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (805) 967-7611 ------------------------- None - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description ----------- ----------- 99.1 Press release, dated July 24, 2003 Item 9. Regulation FD Disclosure. In accordance with SEC Release No. 34-47583, the following information, intended to be furnished under "Item 12. Results of Operations and Financial Condition," is instead furnished under this "Item 9. Regulation FD Disclosure." On July 24, 2003, Deckers Outdoor Corporation issued a press release announcing financial results for the quarter ended June 30, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. 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 hereunto duly authorized. Deckers Outdoor Corporation Date: July 24, 2003 /s/ M. Scott Ash ---------------- M. Scott Ash, Chief Financial Officer EX-99 3 a4440722_ex991.txt DECKERS EXHIBIT 99.1 Exhibit 99.1 Deckers Outdoor Corporation Reports Second Quarter Results; Exceeds First Call Earnings Per Share Consensus Estimate GOLETA, Calif.--(BUSINESS WIRE)--July 24, 2003--Deckers Outdoor Corporation (Nasdaq:DECK) Company Announces Favorable Ruling in European Anti-Dumping Case Raises Guidance for FY 2003 Deckers Outdoor Corporation (Nasdaq:DECK) today announced financial results for the second quarter ended June 30, 2003. For the second quarter, net sales increased 9% to $24.3 million compared to $22.4 million in the same period last year. Net earnings for the quarter increased 212% to $2,006,000, compared to net earnings of $642,000 last year, and diluted earnings per share increased 143% to $0.17 compared to diluted earnings per share of $0.07 in the second quarter of 2002. The improvement in second quarter earnings partly resulted from a favorable final ruling in the Company's appeal against European anti-dumping duties which were levied in 1997. The matter was ultimately decided in the Company's favor during the second quarter, resulting in the reversal of the previously established $500,000 accrual ($300,000 after tax, or $0.03 per share). For the six months ended June 30, 2003, net sales increased 9% to $60.4 million compared to $55.6 million in the same period last year. Net earnings for the first half of fiscal 2003 increased 121% to $6.2 million, compared to net earnings before cumulative effect of change in accounting principle described below of $2.8 million last year. Diluted earnings per share increased 86% to $0.54 compared to earnings before cumulative effect of change in accounting principle of $0.29 in the first half of fiscal 2002. As previously reported, on January 1, 2002 Deckers implemented Statement of Financial Accounting Standards No. 142 ("SFAS 142"), Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized to earnings but instead be reviewed periodically for impairment. The implementation of SFAS 142 resulted in a goodwill impairment charge of approximately $9.0 million during the six months ended June 30, 2002, which was recorded as a cumulative effect of change in accounting principle. In addition, SFAS 142 provides that goodwill no longer be amortized. Douglas Otto, Chairman & CEO, stated, "We exceeded expectations primarily due to double digit growth in our Teva business during the second quarter. Teva branded product experienced a strong sell through and healthy reorder business despite the unseasonably cold weather experienced throughout much of the country. Additionally, our earnings continue to be positively impacted by our recent Teva acquisition which has resulted in the elimination of royalty payments as well as increased sales from the growing high-margin Internet and catalog retailing business, which was acquired as part of the Teva acquisition." Teva sales for the second quarter increased 15% to $22.4 million from $19.5 million in the same period a year ago, while Simple sales were $1.5 million compared to $2.6 million last year. Reflecting the seasonal nature of Ugg's business, Ugg sales were $0.4 million compared to $0.3 million. Otto further commented, "Strong retail response to our core Teva product helped the brand outpace the competition in the sport sandal category. As we approach the fall selling season we are encouraged by our second full line of closed toe product, led by the introduction of the Oraibi model in our Nomadic series of rugged outdoor footwear. Ugg's popularity continues to outperform our expectations and, as we enter the back half of the year, the brand is well positioned to once again deliver another solid performance in 2003. As for Simple, we continue to execute a strategy that we believe will result in a resurgence of the brand in the casual footwear market. To that end, we will be introducing several new styles and categories at the WSA trade show in August, highlighted by several new styles of retro inspired sneakers and the introduction of a Simplegirl line of sandals and thongs for a younger demographic." Gross margin for the quarter increased to 48.6% compared to 45.0% in the second quarter of last year, primarily due to the strength of the Euro in the European market, the addition of the higher gross margin Internet and catalog sales and a reduced impact of closeout sales compared to that of the second quarter last year. Selling, general and administrative expenses decreased by $1,813,000 to $7,154,000 for the second quarter compared to $8,967,000 in the year ago period. The decrease was due to a variety of factors including the favorable impact of the recent Teva acquisition, which eliminated $1,287,000 of Teva royalties and $236,000 of Teva license cost amortization. In addition, selling, general and administrative expenses decreased as a result of the favorable resolution of the anti-dumping duties matter and lower bad debt expense, partially offset by higher sales commissions on the increased sales levels, increased marketing expenditures and the addition of the operating costs of the newly acquired Internet and catalog retailing business. In June 2003, Deckers made a $2 million early repayment of a portion of its outstanding subordinated debt which was otherwise not due until 2008. In connection with the repayment, Deckers incurred a $100,000 pre-payment fee and recorded an additional $100,000 charge to write off a pro rata share of the related loan costs. These aggregate costs of $200,000 are included in interest expense for the second quarter of 2003. By replacing this debt with a lower interest-bearing advance on its line of credit, the Company estimates it has eliminated annual interest costs of approximately $200,000 to $250,000 for each of the next five years. During the second quarter, Deckers reduced its outstanding debt by approximately $3.9 million, including the $2 million repayment of subordinated debt described above. While sales increased 9% compared to the same period last year, through improved collections Deckers has reduced its accounts receivable by 9% since June 30, 2002. Inventories increased $6.2 million compared to those at June 30, 2002, reflecting an increase for Ugg of $4.7 million, an increase for Teva of $2.3 million and a decrease for Simple of $0.8 million. The increase in inventory resulted primarily from a continuing change in the seasonality and nature of the business which includes the increase in Ugg sales in general, and more particularly, the further expansion of Ugg business in the third quarter. In addition, Teva's fall closed toe shoe business is increasing, while retailers are also carrying Teva's basic sport sandal models year round. As a result of these trends, Deckers brought in its fall inventories earlier in the season this year and also increased the depth of inventory for the fall season. Because this shift is in response to fall seasonality, Deckers expects the inventory balances to return to amounts comparable to last year's by December 31, 2003. Due to the better-than-expected second quarter results, Deckers increased its guidance for fiscal year 2003. Deckers now anticipates sales for fiscal year 2003 to range from $104 million to $108 million and expects diluted earnings per share to range from $0.57 to $0.59, up from the previous guidance of $0.50 to $0.53 per share. Deckers currently expects third quarter 2003 sales to range from $19 million to $20 million and loss per share to range from ($0.04) to ($0.05) per share. Deckers expects 2003 Teva sales to be $70 million to $72 million, Simple sales to be $9 million to $10 million and Ugg sales to be $25 million to $26 million. Otto concluded, "We believe our strong performance in the first six months of 2003 bodes well for business throughout the remainder of the year and beyond. We are extremely pleased with our performance during the spring 2003 Teva season, and as it comes to a close we are enthusiastic about the coming transition to the fall season as we continue to roll out our Teva closed toe footwear offering and as we enter the Ugg selling season, which we expect will contribute to another record year for Ugg. Over the past several years we have successfully diversified our brands, product, and distribution to become a well balanced company, both operationally and financially. We move ahead with a powerful platform and a solid management team dedicated to delivering long-term earnings growth." Deckers Outdoor Corporation builds niche products into global lifestyle brands by designing and marketing innovative, functional and fashion-oriented footwear, developed for both high performance outdoor activities and everyday casual lifestyle use. The Company's products are offered under the Teva, Simple and Ugg brand names. Deckers Outdoor Corporation will host a conference call to review second quarter fiscal 2003 results, which will be broadcast live over the Internet on Thursday, July 24, 2003 at 10:00 a.m. Eastern Time. The broadcast will be hosted at http://www.viavid.com and http://www.deckers.com . A replay of the call will be available until July 31, 2003 at midnight at 877-519-4471, passcode: 4041391. All statements in this press release that are not historical facts are forward-looking statements, including the Company's estimates regarding sales and earnings per share results for the year ending December 31, 2003 and for the quarter ending September 30, 2003 as well as the 2003 sales expectations for each of the Company's three brands. These forward-looking statements are based on the Company's expectations as of today, July 24, 2003. No one should assume that any forward-looking statement made by the Company will remain consistent with the Company's expectations after the date the forward-looking statement is made. The Company intends to continue its practice of not updating forward-looking statements until its next quarterly results announcement. In addition, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Many of the risks, uncertainties and other factors are discussed in detail in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. Among the factors that could impact results are the general economic conditions and strength or weakness in the retail environments in which the Company's products are sold. In addition, the Company's sales are highly dependent on consumer preferences, which are difficult to assess and can shift rapidly. Any shift in consumer preferences away from one or more of the Company's product lines could result in lower sales as well as obsolete inventory, both of which could adversely affect the Company's results of operations, financial condition and cash flows. The Company also depends on its customers continuing to carry and promote its various lines. Availability of products can also affect the Company's ability to meet its customers' orders. Sales of the Company's products, particularly those under the Teva(R) and Ugg(R) lines, are very sensitive to weather conditions. Extended periods of unusually cold weather during the spring and summer could adversely impact demand for the Company's Teva(R) line. Likewise, unseasonably warm weather during the fall and winter months could adversely impact demand for the Company's Ugg(R) product line. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in the 2002 Annual Report on Form 10-K, the Quarterly Reports on Form 10-Q or this news release. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, Assets 2003 2002 -------------- -------------- Current assets: Cash and cash equivalents $ 2,212,000 3,941,000 Trade accounts receivable, net 15,822,000 20,851,000 Inventories 22,957,000 17,067,000 Prepaid expenses and other current assets 685,000 783,000 Deferred tax assets 1,919,000 1,919,000 -------------- -------------- Total current assets 43,595,000 44,561,000 Property and equipment, at cost, net 3,397,000 3,864,000 Intangible assets, less applicable amortization 70,710,000 70,773,000 Deferred tax assets 1,428,000 1,428,000 Other assets 1,485,000 1,786,000 -------------- -------------- $ 120,615,000 122,412,000 ============== ============== Liabilities and Stockholders' Equity Current liabilities: Notes payable and current installments of long-term debt $ 3,620,000 3,951,000 Trade accounts payable 8,351,000 12,916,000 Accrued expenses 3,433,000 4,509,000 Income taxes payable 3,782,000 732,000 -------------- -------------- Total current liabilities 19,186,000 22,108,000 -------------- -------------- Long-term debt, less current installments 28,774,000 35,077,000 Stockholders' equity: Preferred stock 5,500,000 5,500,000 Common stock 96,000 95,000 Additional paid-in capital 26,761,000 26,210,000 Retained earnings 40,107,000 33,898,000 Accumulated other comprehensive income (loss) 191,000 (476,000) -------------- -------------- Total stockholders' equity 72,655,000 65,227,000 -------------- -------------- $ 120,615,000 122,412,000 ============== ============== DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three-month period ended Six-month period ended June 30, June 30, ------------------------ ------------------------ 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Net sales $24,342,000 22,369,000 60,444,000 55,628,000 Cost of sales 12,510,000 12,298,000 32,372,000 30,443,000 ----------- ----------- ----------- ----------- Gross profit 11,832,000 10,071,000 28,072,000 25,185,000 Selling, general and administrative expenses 7,154,000 8,967,000 15,307,000 20,367,000 ----------- ----------- ----------- ----------- Earnings from operations 4,678,000 1,104,000 12,765,000 4,818,000 Other expense (income): Interest, net 1,334,000 (10,000) 2,431,000 (27,000) Other 1,000 11,000 (14,000) 28,000 ----------- ----------- ----------- ----------- Income before income taxes and cumulative effect of accounting change 3,343,000 1,103,000 10,348,000 4,817,000 Income taxes 1,337,000 461,000 4,139,000 2,013,000 ----------- ----------- ----------- ----------- Income before cumulative effect of accounting change 2,006,000 642,000 6,209,000 2,804,000 Cumulative effect of accounting change, net of $843,000 income tax benefit --- --- --- (8,973,000) ----------- ----------- ----------- ----------- Net income (loss) $ 2,006,000 642,000 6,209,000 (6,169,000) =========== =========== =========== =========== Basic income per common share before cumulative effect of accounting change $ 0.21 0.07 0.65 0.30 Cumulative effect of accounting change --- --- --- (0.96) ----------- ----------- ----------- ----------- Basic net income (loss) per common share $ 0.21 0.07 0.65 (0.66) =========== =========== =========== =========== Average basic common shares 9,536,000 9,307,000 9,545,000 9,326,000 =========== =========== =========== =========== Diluted income per common share before cumulative effect of accounting change $ 0.17 0.07 0.54 0.29 Cumulative effect of accounting change --- --- --- (0.93) ----------- ----------- ----------- ----------- Diluted net income (loss) per common share $ 0.17 0.07 0.54 (0.64) =========== =========== =========== =========== Average diluted common shares 11,611,000 9,732,000 11,487,000 9,665,000 =========== =========== =========== =========== CONTACT: Deckers Outdoor Corporation Scott Ash, 805-967-7611 or Investor Relations: Integrated Corporate Relations, Inc. Chad A. Jacobs or Brendon Frey, 203-222-9013 -----END PRIVACY-ENHANCED MESSAGE-----