NEW YORK, Aug. 1, 2012 /PRNewswire/ -- Kenneth Cole
Productions, Inc. (NYSE: KCP) today reported financial results for
the second quarter ended June 30,
2012. The Company reported a loss per fully-diluted share for
the period of $(0.20) versus net
income per share of $0.03 in the
year-ago period. On a non-GAAP basis, after adjusting for (i)
costs associated with the proposed acquisition of the Company by a
group led by Mr. Kenneth D. Cole and
(ii) one-time transition costs relating to changing distribution
centers described below, the Company's adjusted net loss per
fully-diluted share for the second quarter was $(0.03).
(Logo:
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Net revenues in the second quarter were $97.3 million versus the year-ago level of
$102.2 million. Wholesale
revenues decreased 3.3% to $50.3
million versus the year-ago period primarily from private
label footwear and Reaction handbags. Consumer Direct
revenues decreased 6.1% to $37.2
million versus the year-ago period due to the operation of
two fewer stores and a comparable store sales decline of
2.7%. Licensing revenues in the second quarter declined 7.8%
to $9.8 million versus the prior
year's level due principally to the transition of the women's
apparel business to an in-house operation from a licensing model
and the resetting of contractual minimum royalties of a
licensee.
Gross profit, as a percentage of revenues, was 40.6% for the
second quarter ended June 30, 2012,
unchanged from the year-ago period.
Selling, general and administrative expenses ("SG&A") in the
quarter were $43.7 million, or 44.9%
of revenues, versus $40.4 million, or
39.6% of revenues, in the year-ago period. In the current
quarter, the Company incurred certain charges for transition costs
to a new distribution center as a result of one of its third-party
logistics operator's insolvency, as well as professional service
costs in connection with the proposed acquisition of the Company by
a group led by Mr. Kenneth D.
Cole. Excluding these one-time items adjusted SG&A
in the second quarter was $39.7
million, or 40.8% of revenues versus 39.6% in the year-ago
period.
The net loss for the second quarter was $(3.7) million or $(0.20) per fully diluted share versus income of
$0.6 million or $0.03 per fully diluted share in the prior year's
quarter. Excluding the two items described in the previous
paragraph, the adjusted loss per fully diluted share would have
been $(0.03) for the second quarter
as compared to adjusted earnings per fully diluted share of
$0.04 in the year-ago period.
The Company noted that due to losses in prior periods, it did
not provide for any federal income tax (benefit)/expense in its
(loss)/earnings per share calculations.
The Company ended the quarter with $49.0
million in cash and no long-term debt. Inventory
increased 20.3% to $49.7 million
versus the prior year's level of $41.3
million.
Presentation of Financial Information
In addition to providing financial results and guidance in
accordance with GAAP, the Company has provided non-GAAP adjusted
earnings per share information for the quarter ended June 30, 2012. This non-GAAP financial
information is provided to enhance the user's overall understanding
of the Company's current financial performance. Specifically,
the Company believes the non-GAAP adjusted results provide useful
information to both management and investors by excluding charges
that the Company believes are not indicative of the Company's core
operating results. The non-GAAP financial information should
be considered in addition to, not as a substitute for or as being
superior to, operating income, cash flows, or other measures of
financial performance prepared in accordance with GAAP. A
reconciliation of this non-GAAP information to the Company's actual
and expected results is included in the financial tables of this
press release.
About Kenneth Cole Productions, Inc.
Kenneth Cole Productions, Inc. designs, sources, and markets a
broad range of footwear, handbags, apparel and accessories under
the brand names Kenneth Cole New York; Kenneth Cole
Reaction; Unlisted; and Le
Tigre, as well as footwear under the proprietary
trademark Gentle Souls. The Company has also granted a
wide variety of third party licenses for the production of men's,
women's and children's apparel as well as fragrances, watches,
jewelry, eyewear, and several other accessory categories. The
Company's products are distributed through department stores,
better specialty stores, company-owned retail stores and its
e-commerce website. Further information can be found at
http://www.kennethcole.com/.
Forward Looking Statement Disclosure
The statements contained in this release, which are not
historical facts, may be deemed to constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Actual future results might differ
materially from those projected in such statements due to a number
of risks and uncertainties, including but not limited to, demand
and competition for the Company's products, the ability to enter
into new product license agreements or to renew or replace existing
product licensee agreements, changes in consumer preferences or
fashion trends, delays in anticipated store openings, and changes
in the Company's relationships with retailers, licensees, vendors
and other resources. The forward looking statements contained
herein are also subject to other risks and uncertainties that are
described in the Company's reports and registration statements
filed with the Securities and Exchange Commission.
Kenneth
Cole Productions, Inc.
(unaudited)
|
(In thousands, except
per share & outstanding share amounts)
|
Quarter Ended
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
06/30/12
|
|
06/30/11
|
|
06/30/12
|
|
06/30/11
|
|
|
|
|
|
|
|
|
Net sales
|
$87,540
|
|
$91,643
|
|
$195,221
|
|
$199,339
|
|
|
|
|
|
|
|
|
Royalty Revenue
|
9,778
|
|
10,602
|
|
18,937
|
|
20,379
|
|
|
|
|
|
|
|
|
Net revenues
|
$97,318
|
|
$102,245
|
|
$214,158
|
|
$219,718
|
|
|
|
|
|
|
|
|
Gross profit
|
39,533
|
|
41,496
|
|
82,683
|
|
83,167
|
|
|
|
|
|
|
|
|
Selling, gen'l & administrative
expenses
|
39,700
|
|
40,441
|
|
85,861
|
|
86,746
|
Distribution center transition and
proposed
transaction costs
|
3,856
|
|
--
|
|
4,401
|
|
--
|
Store closing and severance costs
|
127
|
|
--
|
|
378
|
|
12,482
|
Total Operating Expense
|
43,683
|
|
40,441
|
|
90,640
|
|
99,228
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
(4,150)
|
|
1,055
|
|
(7,957)
|
|
(16,061)
|
|
|
|
|
|
|
|
|
Deferred compensation plan investment
(loss)/gain
|
(645)
|
|
--
|
|
1,071
|
|
--
|
Interest & other income, net
|
32
|
|
73
|
|
64
|
|
120
|
Investment impairment
|
(24)
|
|
(376)
|
|
(32)
|
|
(376)
|
Total Interest & Other (Expense)
Income
|
(637)
|
|
(303)
|
|
1,103
|
|
(256)
|
|
|
|
|
|
|
|
|
(Loss) Income before taxes
|
(4,787)
|
|
752
|
|
(6,854)
|
|
(16,317)
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
(1,092)
|
|
173
|
|
(1,279)
|
|
306
|
|
|
|
|
|
|
|
|
Net (loss) income
|
$(3,695)
|
|
$579
|
|
$(5,575)
|
|
$(16,623)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:Basic
|
$(0.20)
|
|
$0.03
|
|
$(0.30)
|
|
$(0.91)
|
|
|
|
|
|
|
|
|
Net (loss) income per share:Diluted
|
$(0.20)
|
|
$0.03
|
|
$(0.30)
|
|
$(0.91)
|
|
|
|
|
|
|
|
|
Average shares outstanding:Basic
|
18,364,000
|
|
18,296,000
|
|
18,285,000
|
|
18,268,000
|
|
|
|
|
|
|
|
|
Average shares outstanding:Diluted
|
18,364,000
|
|
18,581,000
|
|
18,285,000
|
|
18,268,000
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
06/30/12
|
|
06/30/11
|
|
|
|
|
Cash & Cash Equivalents
|
$48,969
|
|
$56,247
|
|
|
|
|
Accounts Receivable, Net
|
33,703
|
|
35,785
|
|
|
|
|
Inventory
|
49,736
|
|
41,329
|
|
|
|
|
Total Assets
|
234,056
|
|
246,077
|
|
|
|
|
Working Capital
|
93,749
|
|
75,362
|
|
|
|
|
Accounts Payable & Accrued Expenses
|
34,674
|
|
46,904
|
|
|
|
|
Long-term Debt
|
-
|
|
-
|
|
|
|
|
Total Shareholders' Equity
|
142,821
|
|
130,537
|
|
|
|
|
Kenneth
Cole Productions, Inc.
(unaudited)
|
- As required by the Securities and Exchange Commission
Regulation G, the
following table contains information regarding the non-GAAP
adjustments
used by the Company in the presentation of its financial
results.
|
(In thousands, except
|
Quarter Ended
|
|
per share & outstanding share amounts)
|
|
|
|
|
|
06/30/12
|
|
06/30/11
|
|
|
|
|
|
|
Net (loss)
income, as reported
|
$(3,695)
|
|
$579
|
|
|
|
|
|
|
Income tax
(benefit) expense, as reported
|
(1,092)
|
|
173
|
|
|
|
|
|
|
(Loss)
income before taxes, as reported
|
(4,787)
|
|
752
|
|
|
|
|
|
|
|
|
|
|
|
Proposed transaction charges
|
1,925
|
|
--
|
|
Warehouse transition charges
|
1,931
|
|
--
|
|
Investment impairment
|
24
|
|
376
|
|
Total Other Charges
|
3,880
|
|
376
|
|
|
|
|
|
|
Adjusted (Loss) income before taxes
|
(907)
|
|
1,128
|
|
|
|
|
|
|
Adjusted Income tax (benefit) expense *
|
(354)
|
|
440
|
|
|
|
|
|
|
Adjusted Net (loss) income
|
(553)
|
|
688
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share: Basic, as
reported
|
$(0.20)
|
|
$0.03
|
|
|
|
|
|
|
Other Charges per share: Basic
|
(0.17)
|
|
0.01
|
|
|
|
|
|
|
Adjusted Net (loss) income per share:
Basic
|
$(0.03)
|
|
$0.04
|
|
|
|
|
|
|
Net (loss) income per share: Diluted, as
reported
|
$(0.20)
|
|
$0.03
|
|
|
|
|
|
|
Other Charges per share: Diluted
|
(0.17)
|
|
0.01
|
|
|
|
|
|
|
Adjusted Net (loss) income per share:
Diluted
|
$(0.03)
|
|
$0.04
|
|
|
|
|
|
|
Average shares outstanding:Basic
|
18,364,000
|
|
18,296,000
|
|
|
|
|
|
|
Average shares outstanding:Diluted
|
18,364,000
|
|
18,581,000
|
|
|
|
|
|
|
* Assumes a 39% tax rate
|
|
|
|
|
SOURCE Kenneth Cole Productions, Inc.