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) May 5, 2009
KENNETH COLE PRODUCTIONS, INC.
(Exact name of registrant as specified in its charter)
New
York
1-13082
13-3131650
(State or other jurisdiction of
(Commission
(IRS Employer
incorporation)
File
Number)
Identification
No)
603
West 50th Street, New York, NY
10019
(Address
of principal executive offices)(Zip code)
Registrant’s telephone number, including area code
(212)
265-1500
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 May 5, 2009, Kenneth Cole Productions, Inc. (the “Company”)
issued a press release announcing the Company’s results for the first quarter
ended March 31, 2009. A copy of the press release is attached hereto as
Exhibit 99.1.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits:
99.1
Press Release dated May 5, 2009
Limitation on Incorporation by Reference
In accordance with General Instructions B.2 on Form 8-K, the
information in this report (including the exhibit) is furnished pursuant to Item
2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities
of that Section, unless we specifically incorporate it by reference in a
document filed under the Securities Act of 1933 or the Securities Exchange Act
of 1934. The filing of this Current Report on Form 8-K is not an admission
as to the materiality of any information in this report that is required to be
disclosed solely by Regulation FD.
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.
Kenneth
Cole Productions, Inc.
Registrant
Dated:
May 7, 2009
By:
/S/ DAVID P. EDELMAN
Name:
David P. Edelman
Title:
Chief Financial Officer
2
Exhibit
Index
Description
Exhibit
No. 99.1
Press
Release dated May 5, 2009
3
Exhibit 99.1
|
|
|
|
Company
Contact:
|
Investor
Relations Contact:
|
|
David
Edelman
|
James
R. Palczynski
|
|
Chief
Financial Officer
|
Principal
|
|
Kenneth
Cole Productions, Inc.
|
Integrated
Corporate Relations, Inc.
|
|
(212)
265-1500
|
(203)
682-8229
|
--
Kenneth Cole Productions, Inc. Reports Q1 EPS In-Line With Guidance --
-- Completes $20 million of Expected Annual Cost Reduction
--
-- Retains Strong Balance Sheet with $46 million in Cash and No
Long-Term Debt –
New York, New York, May 5, 2009 / PR Newswire – Kenneth Cole
Productions, Inc. (NYSE: KCP) today reported results for the quarter ended March
31, 2009. As anticipated, net revenues in the first quarter declined 15.6%
to $103.4 million versus $122.5 million in the year-ago quarter. Revenue
was down in all segments, including a comparable store sales decline of 20.4%.
Sales performance was significantly impacted by the severe pullback in
consumer spending and inventory cutbacks at major wholesale partners in response
to the difficult macroeconomic environment.
The Company reported an operating loss of $(0.46) per share
compared to earnings per share of $0.04 in the year-ago quarter. This
quarter’s results include $0.05 per share of restructuring and other unusual
items. Excluding these items, the loss per share would have been $(0.41), in
line with prior guidance.
Kenneth Cole, Chairman and Chief Creative Officer commented,
“While we continue to be disappointed with our financial results, we are
encouraged by some of the progress we are making in some of the new strategic
initiatives that we believe will appropriately position the Company to be able
to operate profitably in any business environment. The Company continues
to have a strong balance sheet, with no long-term debt, and a talented and
motivated organization focused on executing.”
Consolidated gross margin, which was 33.9% in the quarter compared
to 41.0% in the year-ago period, reflected the Company’s continued promotional
efforts to realize appropriate inventory levels in response to the current soft
market environment in all channels.
4
Selling, general and administrative expenses declined in the first
quarter to $47.7 million versus the year-ago level of $49.1 million. The
Company achieved $4.0 million of expense reduction versus the prior year’s
quarter offset by new store expenses, severance, and other unusual items.
The Company also noted that during the first quarter it completed
its previously announced initiative to reduce existing annual expenses. During
this process, the Company further rationalized its wholesale portfolio and
terminated its unprofitable
Bongo
license effective December 31, 2009.
As a result of the Company’s effort to become more focused and certain
cost cutting initiatives undertaken over the past twelve months, the Company
expects annual savings in excess of $20 million per year. The Company
further noted that it expects to reinvest approximately $5 million of these
savings into new initiatives designed to generate improved results consistent
with its strategic plan.
Jill Granoff, Chief Executive Officer of Kenneth Cole Productions,
commented, “We are taking decisive steps to make us a stronger, more focused
business that delivers increased profitability and shareholder value. We have
placed tighter controls on expenses, inventory and capital investment. At
the same time, we are pursuing product innovation and an enhanced customer
experience in all channels of distribution to build our brand for the
long-term.”
The Company noted that inventory at the close of the quarter was
$44.1 million, down approximately 4% versus the year-ago level. The
Company anticipates further improvement in the second quarter inventory level as
planned reductions in receipts take effect. Combined with an improved
product assortment and the cost cutting initiatives, the Company expects to
generate improved operating margins in the second half of the fiscal year.
Cash and cash equivalents at the end of the first quarter were
$46.3 million compared to $71.5 million at this same time last year. The
Company noted that it had used approximately $28.2 million of cash over the past
year for the repurchase of stock and for capital expenditures.
Ms. Granoff concluded, “In the quarter, we completed our
initiative to eliminate $20 million of expenses. We believe that the
second half of fiscal 2009 will show improvement in our financial results as we
realize the benefits of these activities, new product introductions and improved
inventory management. In addition, as we gain further traction with our
product, marketing and channel initiatives, we expect to enter 2010 with a
renewed capability to drive growth and increase profitability.”
5
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 March 31, 2009. 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.
6
Kenneth Cole Productions, Inc.
|
|
|
|
|
|
(In
thousands, except
|
Quarter
Ended
|
|
per
share & outstanding share amounts)
|
(Unaudited)
|
|
|
3/31/09
|
|
3/31/08
|
|
|
|
|
|
|
Net
sales
|
$
94,374
|
|
$112,615
|
|
|
|
|
|
|
Licensing and other
revenue
|
9,001
|
|
9,882
|
|
|
|
|
|
|
Net revenue
|
$103,375
|
|
$122,497
|
|
|
|
|
|
|
Gross profit
|
35,072
|
|
50,227
|
|
|
|
|
|
|
Selling, gen’l &
administrative
|
46,947
|
|
49,115
|
|
Severance, related benefits
and
|
|
|
|
|
Net lease
termination benefit
|
726
|
|
--
|
|
Total Operating Expense
|
47,673
|
|
49,115
|
|
|
|
|
|
|
Operating (loss) income
|
(12,601)
|
|
1,112
|
|
|
|
|
|
|
Interest income, net
|
206
|
|
888
|
|
Investment impairment
|
(399)
|
|
(594)
|
|
Total Interest & Other
(Expense) Income
|
(193)
|
|
294
|
|
|
|
|
|
|
(Loss) Income before
taxes
|
(12,794)
|
|
1,406
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
(4,626)
|
|
599
|
|
|
|
|
|
|
Net (loss) income
|
$(8,168)
|
|
$
807
|
|
|
|
|
|
|
|
|
|
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|
Net (loss) income per share:
Basic
|
$(0.46)
|
|
$0.04
|
|
|
|
|
|
|
Net (loss) income per share:
Diluted
|
$(0.46)
|
|
$0.04
|
|
|
|
|
|
|
Average shares outstanding:
Basic
|
17,889,000
|
|
19,325,000
|
|
|
|
|
|
|
Average shares outstanding:
Diluted
|
17,889,000
|
|
19,527,000
|
|
|
|
|
|
|
Balance Sheet
Data:
|
3/31/09
|
|
3/31/08
|
|
Cash & Cash
Equivalents
|
$ 46,333
|
|
$ 71,538
|
|
Due from Factor/Accounts
Receivable
|
47,230
|
|
60,379
|
|
Inventory
|
44,120
|
|
45,778
|
|
Total Assets
|
308,440
|
|
342,523
|
|
Working Capital
|
86,601
|
|
133,781
|
|
Accounts Payable & Accrued
Expenses
|
47,567
|
|
35,039
|
|
Long-term Debt
|
0
|
|
0
|
|
Total Shareholders’
Equity
|
194,437
|
|
234,809
|
7
Kenneth Cole Productions, Inc.
*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)
|
(Unaudited)
|
|
|
3/31/09
|
|
3/31/08
|
|
|
|
|
|
|
Net (loss)
income, as reported
|
$
(8,168)
|
|
$
807
|
|
|
|
|
|
|
Income tax (benefit) expense,
as reported
|
(4,626)
|
|
599
|
|
|
|
|
|
|
(Loss) income before taxes, as
reported
|
(12,794)
|
|
1,406
|
|
|
|
|
|
|
Investment Impairment
|
399
|
|
594
|
|
Severance, related benefits
and
|
|
|
|
|
Net lease
termination benefit
|
726
|
|
--
|
|
Total Other Charges
|
1,125
|
|
594
|
|
|
|
|
|
|
Adjusted (Loss) income before
taxes
|
(11,669)
|
|
2,000
|
|
|
|
|
|
|
Adjusted Income tax (benefit)
expense
|
(4,363)
|
|
599
|
|
|
|
|
|
|
Adjusted Net (loss)
income
|
$
(7,306)
|
|
$ 1,401
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
Basic, as reported
|
$(0.46)
|
|
$0.04
|
|
|
|
|
|
|
Other Charges
|
(0.05)
|
|
0.03
|
|
|
|
|
|
|
Adjusted Net (loss) income per
share: Basic
|
$(0.41)
|
|
$0.07
|
|
|
|
|
|
|
Net (loss) income per share:
Diluted, as reported
|
$(0.46)
|
|
$0.04
|
|
|
|
|
|
|
Other Charges
|
(0.05)
|
|
0.03
|
|
|
|
|
|
|
Adjusted Net (loss) income per
share: Diluted
|
$(0.41)
|
|
$0.07
|
|
|
|
|
|
|
Average shares outstanding:
Basic
|
17,889,000
|
|
19,325,000
|
|
|
|
|
|
|
Average shares outstanding:
Diluted
|
17,889,000
|
|
19,527,000
|
8