One of the coldest Southern California summers on record apparently took it’s toll on Spy Eyewear parent Orange 21. The company said sales were down six percent to $8.2 million in the quarter ended September 30, 2010.
“We experienced a challenging quarter given the lack of sun in Southern California this summer, which negatively affected our net sales,” commented Stone Douglass, the Company’s Chief Executive Officer. “Gross margins increased to 47% for the three months ended September 30, 2010 from 33% during the comparable period in 2009, aided by more effective sourcing in Asia as well as improved operations and a more favorable Euro to U.S. Dollar exchange rate on purchases from LEM, our manufacturing subsidiary in Italy.
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Orange 21 Inc. Reports Financial Results for the Three Months Ended September 30, 2010 and Announces Investor Conference Call
CARLSBAD, CA, Nov 15, 2010 — Orange 21 Inc., a leading designer, producer and distributor of sunglasses, prescription eyewear, snow and motocross goggles, and branded apparel and accessories for the action sports, motorsports, snowsports and lifestyle markets, today announced financial results for the quarter ended September 30, 2010.
Consolidated net sales decreased 6% to $8.2 million for the three months ended September 30, 2010 from $8.8 million for the three months ended September 30, 2009.
Consolidated net loss decreased to $0.9 million for the three months ended September 30, 2010 from $1.1 million for the three months ended September 30, 2009. The three months ended September 30, 2010 included approximately $0.4 million in additional direct operating expenses related to the addition of the Margaritaville(TM) and Melodies by MJB(TM) eyewear brands for which there were minimal sales during the period. There were no such expenses during the comparable period in 2009.
“We experienced a challenging quarter given the lack of sun in Southern California this summer, which negatively affected our net sales,” commented Stone Douglass, the Company’s Chief Executive Officer. “Gross margins increased to 47% for the three months ended September 30, 2010 from 33% during the comparable period in 2009, aided by more effective sourcing in Asia as well as improved operations and a more favorable Euro to U.S. Dollar exchange rate on purchases from LEM, our manufacturing subsidiary in Italy. We are especially pleased that these results were achieved even though we had substantial direct and indirect additional operating costs related to our two newest brands, Margaritaville(TM) and Melodies by MJB(TM), for which there have been minimal sales during this period. Our Melodies by MJB(TM) line began to sell in stores and online at www.melodiesbymjb.com during September and was promoted in cities that Mary J. Blige was touring. We expect our Margaritaville(TM) line to launch the later part of November in select stores and online at www.margaritavilleeyewear.com.”
Investor Conference Call
We invite you to join us for an investor conference call on Wednesday, November 17, 2010 at 1:30 p.m. Pacific Time. The dial-in number for the call in North America is 1-866-730-5770 and 1-857-350-1594 for international callers. The participant pass code is 60970034. The call will also be webcast live on the internet and can be accessed by logging onto www.orangetwentyone.com.
The webcast will be archived on the Company’s website for at least 60 days following the call. An audio replay of the conference call will be available for seven days beginning approximately two hours after the completion of the call on November 17, 2010. The audio replay dial-in number for North America is 1-888-286-8010 and 1-617-801-6888 for international callers. The replay pass code is 27158016.
About Orange 21 Inc.
Orange 21 designs, develops, markets and produces premium products for the action sports, motorsports, snowsports and lifestyle markets under the brands Spy Optic(TM), O’Neill(TM), Margaritaville(TM) and Melodies by MJB(TM).
Safe Harbor Statement
This press release contains forward-looking statements. These statements relate to future events or future financial performance and are subject to risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “feel,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: delays in the launch of the Margaritaville(TM) line in stores or online, the general conditions of the domestic and global economy, changes in consumer discretionary spending; changes in the value of the U.S. dollar, Canadian dollar and Euro; changes in commodity prices; our ability to source raw materials and finished products at favorable prices; risks related to the limited visibility of future orders; our ability to continue to develop, produce and introduce innovative new products in a timely manner; our ability to identify and execute successfully cost-control initiatives without adversely impacting sales; the performance of new products and continued acceptance of current products; our execution of strategic initiatives and alliances; uncertainties associated with intellectual property protection for our products; and other risks identified from time to time in our filings made with the U.S. Securities and Exchange Commission. Although, we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results. Moreover, we assume no responsibility for the accuracy or completeness of such forward-looking statements and undertake no obligation to update any of these forward-looking statements.
ORANGE 21 INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Thousands, except number of shares and per share amounts) September 30, December 31, ------------ ------------ 2010 2009 ------------ ------------ (Unaudited) Assets Current assets Cash $ 710 $ 654 Accounts receivable, net 5,051 5,886 Inventories, net 10,935 7,759 Prepaid expenses and other current assets 813 1,036 Income taxes receivable 3 56 ------------ ------------ Total current assets 17,512 15,391 Property and equipment, net 4,206 4,892 Intangible assets, net of accumulated amortization of $780 and $714 at September 30, 2010 and December 31, 2009, respectively 217 296 Other long-term assets 78 92 ------------ ------------ Total assets $ 22,013 $ 20,671 ============ ============ Liabilities and Stockholders' Equity Current liabilities Lines of credit $ 2,626 $ 3,750 Current portion of capital leases 423 395 Current portion of notes payable 3,800 723 Accounts payable 6,055 5,431 Accrued expenses and other liabilities 3,640 3,350 Income taxes payable 65 - ------------ ------------ Total current liabilities 16,609 13,649 Capitalized leases, less current portion 592 812 Notes payable, less current portion 114 308 Deferred income taxes 404 404 ------------ ------------ Total liabilities 17,719 15,173 Stockholders' equity Preferred stock: par value $0.0001; 5,000,000 authorized; none issued - - Common stock: par value $0.0001; 100,000,000 shares authorized; 11,970,197 and 11,903,943 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively 1 1 Additional paid-in-capital 40,856 40,515 Accumulated other comprehensive income 790 874 Accumulated deficit (37,353) (35,892) ------------ ------------ Total stockholders' equity 4,294 5,498 ------------ ------------ Total liabilities and stockholders' equity $ 22,013 $ 20,671 ============ ============ ORANGE 21 INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2010 2009 2010 2009 -------- -------- -------- -------- (Unaudited) (Unaudited) Net sales $ 8,224 $ 8,776 $ 26,020 $ 25,313 Cost of sales 4,353 5,915 12,918 14,635 -------- -------- -------- -------- Gross profit 3,871 2,861 13,102 10,678 Operating expenses: Sales and marketing 2,268 1,781 6,537 5,463 General and administrative 1,812 1,655 5,667 5,838 Shipping and warehousing 235 255 802 765 Research and development 375 292 1,186 803 -------- -------- -------- -------- Total operating expenses 4,690 3,983 14,192 12,869 -------- -------- -------- -------- Loss from operations (819) (1,122) (1,090) (2,191) Other income (expense): Interest expense (160) (70) (397) (235) Foreign currency transaction gain 85 110 76 293 Other income (expense) 20 (3) 84 (1) -------- -------- -------- -------- Total other income (expense) (55) 37 (237) 57 -------- -------- -------- -------- Loss before provision for income taxes (874) (1,085) (1,327) (2,134) Income tax provision 58 51 134 60 -------- -------- -------- -------- Net loss $ (932) $ (1,136) $ (1,461) $ (2,194) ======== ======== ======== ======== Net loss per share of Common Stock Basic $ (0.08) $ (0.10) $ (0.12) $ (0.19) ======== ======== ======== ======== Diluted $ (0.08) $ (0.10) $ (0.12) $ (0.19) ======== ======== ======== ======== Shares used in computing net loss per share of Common Stock Basic 11,961 11,865 11,948 11,291 ======== ======== ======== ======== Diluted 11,961 11,865 11,948 11,291 ======== ======== ======== ========