KSwiss Inc. (KSWS, Financial) filed Annual Report for the period ended 2011-12-31.
Kswiss Inc. has a market cap of $123.9 million; its shares were traded at around $3.75 with and P/S ratio of 0.6.
Overall selling, general and administrative expenses increased 8.9% to $153,626,000 (57.3% of revenues) in 2011 from $141,039,000 (65.1% of revenues) in 2010. The increase in selling, general and administrative expenses during 2011 was the result of increases in compensation, warehousing and advertising expenses. Compensation expenses, which includes commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, increased 12.8% for 2011 as a result of an increase in average headcount from the prior year, severance related expenses and reserve of an employee receivable. During 2011, average headcount increased as a result of an increase in headcount for the Palladium brand on a worldwide basis and increases in headcount especially in Asia, where we are expanding our retail operations and also our manufacturing to regions outside of China. This increase was offset by approximately a 20% reduction in United States and European headcount as a result of cost reduction programs which led to an increase in severance related expenses from the prior year. Other warehousing expenses, which do not include compensation expenses, increased 27.8% during 2011 as a result of increases in freight and transportation costs to customers, rent and storage expenses and third party handling fees as a result of increases in inventories, sales, the number of customers and the volume of shipments to customers. Advertising expenses increased 4.4% for 2011 mainly as a result of strategic efforts to drive revenue in domestic and international markets for the Palladium brand. Corporate expenses of $13,856,000 and $15,261,000 for 2011 and 2010, respectively, are included in selling, general and administrative expenses and include expenses such as salaries and related expenses for executive management and support departments such as accounting and treasury, information technology and legal which benefit the entire Company. The decrease in corporate expenses for 2011 compared to 2010 was primarily due to decreases in legal and data processing expenses. The decrease in legal expenses was a result of decreases in expenses incurred to defend the Companys trademarks. The decrease in data processing expenses was a result of decreases in on-going maintenance expense for the Companys SAP computer software system.
Overall gross profit margin, as a percentage of revenues, was 39.2% in 2010, an increase from 35.8% in 2009. This increase was largely the result of the lower level of sales of closeout product in 2010 compared to 2009. KSwiss brand gross profit margin, as a percentage of revenues, was 38.0% in 2010, an increase from 36.2% in 2009. This increase was the result of the lower level of sales of closeout product in 2010 compared to 2009. Palladium brand gross profit margin, as a percentage of revenues, was 40.6% in 2010, a decrease from 42.9% in 2009. This decrease was a result of lower gross profit margins earned in 2010 on closeout product in France. Warehousing costs were $13,610,000 and $13,489,000 for 2010 and 2009, respectively, and are recognized in selling, general and administrative expenses.
Overall selling, general and administrative expenses increased 19.2% to $141,039,000 (65.1% of revenues) in 2010 from $118,303,000 (49.1% of revenues) in 2009. The increase in selling, general and administrative expenses during 2010 was the result of increases in advertising expenses, offset by decreases in compensation expenses and data processing expenses. Advertising expenses increased 104.0% as a result of strategic efforts to drive revenue in both domestic and international markets. Compensation expenses, which include commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, decreased 6.2% mainly as a result of decreases in average headcount from 2009 and stock option compensation expenses. Data processing costs decreased 35.4% as a result of the decreases in on-going maintenance expense for our SAP computer software system due to the completion of the SAP implementation in certain international regions in the fourth quarter of 2008. Corporate expenses of $15,261,000 and $18,008,000 for the years ended December 31, 2010 and 2009, respectively, are included in selling, general and administrative expenses. The decrease in corporate expenses for 2010 was a result of decreases in data processing expenses and compensation expenses, as discussed above.
Net interest income was $435,000 (0.2% of revenues) and $1,050,000 (0.4% of revenues) for 2010 and 2009, respectively. The decrease in net interest income for 2010 was a result of lower average balances in cash and investments available for sale as well as lower interest rates, offset by a decrease in the amount recognized for the change in the fair value of the CPP ($369,000 in interest expense in 2010) or MRMI ($658,000 in interest expense in 2009) and a decrease in interest expense on Palladium debt.
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Kswiss Inc. has a market cap of $123.9 million; its shares were traded at around $3.75 with and P/S ratio of 0.6.
Highlight of Business Operations:
Palladium brand revenues increased 39.5% to $43,588,000 in 2011 (13.6% of which were derived from domestic sales) compared to $31,253,000 in 2010 (14.0% of which were derived from domestic sales). The increase in Palladium sales in 2011 was due to the increase in sales in all regions, including France. We began marketing and selling Palladium product outside of France beginning in the second half of 2009. The volume of footwear sold increased 23.4% to 969,000 pair in 2011 from 785,000 pair in 2010, due to an increase in sales in all regions, as discussed above. The average underlying wholesale price per pair was $44.57 in 2011 and $39.57 in 2010, an increase of 12.6%, resulting from the geographic mix of sales, increase in certain selling prices and decrease in percentage of sales of closeout product in France, which sell at a lower price.Overall selling, general and administrative expenses increased 8.9% to $153,626,000 (57.3% of revenues) in 2011 from $141,039,000 (65.1% of revenues) in 2010. The increase in selling, general and administrative expenses during 2011 was the result of increases in compensation, warehousing and advertising expenses. Compensation expenses, which includes commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, increased 12.8% for 2011 as a result of an increase in average headcount from the prior year, severance related expenses and reserve of an employee receivable. During 2011, average headcount increased as a result of an increase in headcount for the Palladium brand on a worldwide basis and increases in headcount especially in Asia, where we are expanding our retail operations and also our manufacturing to regions outside of China. This increase was offset by approximately a 20% reduction in United States and European headcount as a result of cost reduction programs which led to an increase in severance related expenses from the prior year. Other warehousing expenses, which do not include compensation expenses, increased 27.8% during 2011 as a result of increases in freight and transportation costs to customers, rent and storage expenses and third party handling fees as a result of increases in inventories, sales, the number of customers and the volume of shipments to customers. Advertising expenses increased 4.4% for 2011 mainly as a result of strategic efforts to drive revenue in domestic and international markets for the Palladium brand. Corporate expenses of $13,856,000 and $15,261,000 for 2011 and 2010, respectively, are included in selling, general and administrative expenses and include expenses such as salaries and related expenses for executive management and support departments such as accounting and treasury, information technology and legal which benefit the entire Company. The decrease in corporate expenses for 2011 compared to 2010 was primarily due to decreases in legal and data processing expenses. The decrease in legal expenses was a result of decreases in expenses incurred to defend the Companys trademarks. The decrease in data processing expenses was a result of decreases in on-going maintenance expense for the Companys SAP computer software system.
Overall gross profit margin, as a percentage of revenues, was 39.2% in 2010, an increase from 35.8% in 2009. This increase was largely the result of the lower level of sales of closeout product in 2010 compared to 2009. KSwiss brand gross profit margin, as a percentage of revenues, was 38.0% in 2010, an increase from 36.2% in 2009. This increase was the result of the lower level of sales of closeout product in 2010 compared to 2009. Palladium brand gross profit margin, as a percentage of revenues, was 40.6% in 2010, a decrease from 42.9% in 2009. This decrease was a result of lower gross profit margins earned in 2010 on closeout product in France. Warehousing costs were $13,610,000 and $13,489,000 for 2010 and 2009, respectively, and are recognized in selling, general and administrative expenses.
Overall selling, general and administrative expenses increased 19.2% to $141,039,000 (65.1% of revenues) in 2010 from $118,303,000 (49.1% of revenues) in 2009. The increase in selling, general and administrative expenses during 2010 was the result of increases in advertising expenses, offset by decreases in compensation expenses and data processing expenses. Advertising expenses increased 104.0% as a result of strategic efforts to drive revenue in both domestic and international markets. Compensation expenses, which include commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, decreased 6.2% mainly as a result of decreases in average headcount from 2009 and stock option compensation expenses. Data processing costs decreased 35.4% as a result of the decreases in on-going maintenance expense for our SAP computer software system due to the completion of the SAP implementation in certain international regions in the fourth quarter of 2008. Corporate expenses of $15,261,000 and $18,008,000 for the years ended December 31, 2010 and 2009, respectively, are included in selling, general and administrative expenses. The decrease in corporate expenses for 2010 was a result of decreases in data processing expenses and compensation expenses, as discussed above.
Net interest income was $435,000 (0.2% of revenues) and $1,050,000 (0.4% of revenues) for 2010 and 2009, respectively. The decrease in net interest income for 2010 was a result of lower average balances in cash and investments available for sale as well as lower interest rates, offset by a decrease in the amount recognized for the change in the fair value of the CPP ($369,000 in interest expense in 2010) or MRMI ($658,000 in interest expense in 2009) and a decrease in interest expense on Palladium debt.
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