Rawlings Announces First Quarter Improved Earnings

    FENTON, Mo., Jan. 9 /PRNewswire-FirstCall/ --
 Rawlings Sporting Goods Company, Inc. (Nasdaq:   RAWL) announced today first
 quarter fiscal year 2003 operating results for the three months ended November
 30, 2002.  Earnings per share (EPS) for first quarter fiscal year 2003
 improved to a loss of ($0.08) versus a loss of ($0.10) in first quarter fiscal
 year 2002.  Net loss for first quarter fiscal year 2003 was $0.7 million
 compared to a loss in first quarter fiscal year 2002 of $0.8 million.  Because
 of the seasonal nature of Rawlings' business, the Company typically reports
 losses in its first and fourth quarters.
     Rawlings' first quarter fiscal year 2003 sales were $30.0 million, down
 10.3% from first quarter fiscal year 2002 sales of $33.4 million.  The sales
 decline primarily reflected the loss of NCAA basketball sales and a drop in
 low-end football sales.  These declines were partially offset by stronger
 baseball and softball equipment sales versus a year ago.
     Gross profit for first quarter fiscal year 2003 was $8.9 million, down
 5.3% from the first quarter fiscal year 2002 of $9.4 million.  Gross profit
 margin for first quarter 2003 was 29.9% versus 28.3% for first quarter fiscal
 2002.  Improvements in gross margin percentage on baseball equipment,
 footballs and apparel drove this increase.  Selling, general and
 administrative (SG&A) expenses in first quarter fiscal year 2003 were
 $9.5 million, down 5.7% from first quarter fiscal year 2002 of $10.0 million.
 Royalty expense reductions represented most of this decrease.
     Continuing the debt reduction trend from prior fiscal years, Rawlings bank
 debt net of cash at the end of first quarter fiscal year 2003 was
 $39.4 million, down 12.8% from $45.2 million at the end of first quarter
 fiscal year 2002.
     Commenting on the results, Steve O'Hara, Chairman and CEO, noted, "We are
 pleased that the forecasted gross profit margin improvements and expense
 reductions materialized as expected, enabling us to improve earnings despite
 the drop in sales.  We are encouraged that our core baseball and softball
 sales continue to grow as anticipated.  We continue to expect significant
 earnings improvements in fiscal year 2003 from our cost reduction efforts on
 basically flat sales, as baseball and softball revenue gains offset declines
 in other categories."
     Mr. O'Hara continued, "We continue to move forward with our previously
 announced merger plans with K2, Inc. and expect to file soon a joint proxy
 statement as part of K2's registration statement on Form S-4, as well as our
 pre-merger notification under the Hart Scott Rodino Act."
     Rawlings is a leading marketer and manufacturer of baseball equipment in
 the United States.  Rawlings is the official baseball of Major League Baseball
 and the NCAA baseball Championships.  Over half of all Major League players
 use a Rawlings glove, including such stars as Derek Jeter, Alex Rodriquez, Ken
 Griffey, Jr., and Pedro Martinez.  Over one third of all Major League players
 use a Rawlings bat.  Rawlings is also a leading marketer of basketballs,
 footballs, and team apparel, including the new patented Rawlings Ten
 basketball, a new ten seam basketball to provide greater ball control, and the
 new patented Rawlings VR5 football, a 5 panel football for better handling.
 
     Rawlings announced previously that a conference call would be held at 4:00
 p.m. CST on Thursday, January 9, 2003 to discuss first quarter results.  The
 dial in number is (800) 450-0821 in the United States and (612) 332-0820
 internationally.  Participants should ask for the Rawlings First Quarter
 Earnings Release conference call.  A replay of the call may be heard by
 calling (800) 475-6701 in the United States and (320) 365-3844 internationally
 and using the access code 670149.  The replay will be available through
 February 9, 2003.
 
     Certain information contained in this press release are forward looking
 statements that involve risks and uncertainties such as the Company's plan to:
 achieve targeted sales and gross margin levels, reduce expenses through
 various actions, improve operating income, increase EBITDA and earnings per
 share, improve the Company's balance sheet by reducing indebtedness or other
 means, execute new plans successfully, and successfully complete the planned
 merger with K2, Inc.  It is important to note that actual results could differ
 materially from those expressed in such forward looking statements.  Factors
 that could cause or contribute to such differences include, but are not
 limited to, the ability of the Company to deliver planned results, changes in
 customer buying patterns, a general economic slowdown, changes in retail sell
 rates for the Company's products, changes in the Company's financial position,
 changes in the competitive environment and any other material adverse changes
 in Rawlings' or K2's businesses.  Other risks and uncertainties are detailed
 from time to time in the Company's SEC filings, including the Company's Report
 on Form 10-K for the year ending August 31, 2002.
 
 
             Rawlings Sporting Goods Company, Inc. and Subsidiaries
 
                       Consolidated Statements of Income
                 (Amounts in thousands, except per share data)
                                  (Unaudited)
 
 
                                                           Quarter Ended
                                                            November 30,
                                                         2002           2001
 
     Net revenues                                     $29,974        $33,408
 
     Cost of goods sold                                21,026         23,963
 
       Gross profit                                     8,948          9,445
 
     Selling, general and administrative expenses       9,459         10,029
 
       Operating loss                                    (511)          (584)
 
     Interest expense                                     533            634
 
       Loss before income taxes                        (1,044)        (1,218)
 
     Benefit for income taxes                            (386)          (420)
 
       Net loss                                         $(658)         $(798)
 
 
     Net loss per common share, basic and diluted      $(0.08)        $(0.10)
 
 
     Shares used in computing per share amounts:
       Basic                                            8,138          8,080
 
       Assumed exercise of stock options                   46              -
 
       Diluted                                          8,184          8,080
 
 
 
             Rawlings Sporting Goods Company, Inc. and Subsidiaries
 
                          Consolidated Balance Sheets
                   (Amounts in thousands, except share data)
 
 
 
                                 November 30,       August 31,    November 30,
                                     2002             2002            2001
                                 (Unaudited)                      (Unaudited)
 
     Assets
     Current assets:
       Cash and cash equivalents        $268            $603          $913
       Accounts receivable, net of
        allowance of $2,940, $2,861
        and $3,055 respectively       28,735          24,107        31,500
       Inventories                    40,879          31,796        42,476
       Deferred income taxes           3,115           3,115         4,277
       Prepaid expenses                  975             396           462
         Total current assets         73,972          60,017        79,628
     Property, plant and equipment     7,637           7,742         7,446
     Deferred income taxes            22,394          21,983        22,816
     Long-term receivables               417             417             -
     Other assets                      1,570           1,674         2,054
         Total assets               $105,990         $91,833      $111,944
     Liabilities and Stockholders'
      Equity
     Current liabilities:
       Current portion of long-term
        debt and revolving credit
        agreement                    $36,988         $27,037       $42,122
       Accounts payable               12,789           7,689        17,475
       Accrued liabilities             9,708           9,613         8,465
         Total current liabilities    59,485          44,339        68,062
     Long-term debt, less current
      maturities                       2,673           2,941         3,975
     Other long-term liabilities           -               -         9,291
         Total liabilities            62,158          47,280        81,328
     Stockholders' equity:
       Preferred stock, none issued        -               -             -
       Common stock, 8,088,656;
        8,088,656 and 8,030,249
        shares issued and outstanding,
        respectively                      81              81            80
     Additional paid-in capital       39,742          39,742        31,216
     Stock subscription receivable         -               -        (1,421)
     Cumulative other comprehensive
      loss                            (1,680)         (1,617)       (1,549)
     Retained earnings                 5,689           6,347         2,290
         Stockholders' equity         43,832          44,553        30,616
         Total liabilities and
          stockholders' equity      $105,990         $91,833      $111,944
 
 
 

SOURCE Rawlings Sporting Goods Company, Inc.

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