USA -- K•Swiss Inc announced results for the second quarter ended June 30, 2009. The sale of Royal Elastics on April 30, 2009, is being accounted for as a discontinued operation in the Company’s financial results and is excluded from futures orders data for the current and prior-year periods.
Net loss for the second quarter of 2009 was $11,497,000, or $0.33 per diluted share, compared with net earnings of $26,423,000, or $0.75 per diluted share, in the prior-year period. Net loss for the six months ended June 30, 2009, was $12,590,000, or $0.36 per diluted share, compared with net earnings of $33,533,000, or $0.95 per diluted share, in the six months ended June 30, 2008.
Results for the 2009 periods include a pre-tax non-operating loss of $2.6 million, or $0.08 per diluted share (after tax), from the acquisition of the remaining interest in Palladium SAS in June 2009, and a pre-tax gain of $1.9 million, or $0.05 per diluted share (after tax), from the sale of Royal Elastics in April 2009. Earnings for the 2008 periods include a pre-tax gain of $30,000,000, or $0.52 per diluted share (after tax), related to the settlement of litigation.
For the second quarter of 2009, total worldwide revenues decreased 34.8% to $54,032,000 compared with $82,885,000 in the prior-year period. Domestic revenues decreased 18.7% to $28,737,000 in the second quarter, and international revenues decreased 46.8% to $25,295,000. Total worldwide revenues for the first six months of 2009 decreased 29.4% to $128,076,000, compared with $181,286,000, in the first six months of 2008. Domestic revenues decreased 22.3% to $59,112,000 in the first half of 2009, and international revenues decreased 34.4% to $68,964,000.
Worldwide futures orders with start ship dates from July through December 2009 were $70,644,000 at June 30, 2009, compared with $101,852,000 at June 30, 2008. Domestic futures orders decreased 43.0% to $21,374,000 at June 30, 2009, from $37,528,000 the previous year. International futures orders decreased 23.4% to $49,270,000 at June 30, 2009, from $64,324,000 the previous year. Excluding Palladium, our international backlog would have been $37,939,000 at June 30, 2009, or a decrease of 41.0%.
For the quarter ended June 30, 2009, Palladium brand revenues were $2,090,000 with a net loss of $1,735,000. Futures orders with start ship dates from July through December 2009 were $11,524,000 at June 30, 2009. Revenues, financial results and futures orders for Palladium are included in the consolidated results above for the 2009 periods. On June 16, 2009, the Company completed the acquisition of the remaining 43% equity interest in Palladium SAS for 5.0 million Euros in cash plus a potential earn out based on Palladium’s EBITDA for 2012. K•Swiss had previously acquired a 57% equity interest in Palladium in July 2008, as well as the trademarks to the brand in the United States and Canada earlier in 2008.
Sale of Royal Elastics
On April 30, 2009, the Company completed the sale of Royal Elastics, the Company’s laceless fashion footwear brand. The sale resulted in a pre-tax gain of approximately $1.9 million, or $0.05 per diluted share, in the second quarter of 2009.
The Company expects full-year revenues to be approximately $215 million to $230 million and expects to report a full-year loss per diluted share of approximately $0.70 to $0.90. Full-year SG&A expenses are currently projected to be approximately $121 million, but are expected to fluctuate based on strategic decisions made during the year as well as general trends in the retail marketplace.
Steven Nichols, Chairman of the Board and President, stated, "The environment at retail, as well as our brand’s popularity, remain challenging and are evident in the continued year-over-year decline in sales, earnings and backlog. We are managing this environment with firm control of our administrative cost structure, but with an eye on the future as we continue product development investments establishing K•Swiss as an innovator in Classic, Tennis and Running. It is just beginning to pay off with athletes winning in our products. We are slowly beginning to attain the brand recognition we desire."