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Morrow Snowboards Reports Third Quarter 1998 Results and Net Income Gain Of 91% Over 1997
SALEM, Ore., Nov. 10 -- Morrow Snowboards, Inc. (Nasdaq: MRRW) today announced financial results for its 1998 third quarter. Net income for the 1998 third quarter ending September 26, 1998 was $860,000, or $0.14 per share, compared with a net income of $450,000, or $0.08 per share, in the prior year's third quarter, a 91% gain. Sales for the third quarter 1998 were $12,278,000, a 21% increase over the third quarter of 1997. For the nine months ended September 26, 1998, net loss was $4,128,000 versus $1,617,000 for the first nine months in 1997. Sales for the nine months in 1998 were $18,280,000, versus sales of $13,011,000 in 1997. "We are pleased with the positive trends in third quarter sales and earnings, as well as sales for the first nine months," commented Blair Mullin, president of Morrow Snowboards. "They indicate that progress is being made in turning this company around. Cost cutting measures taken in the first half of the year, along with synergies resulting from the Westbeach acquisition, are beginning to benefit the company overall. While progress has been made, we also acknowledge that we have a long way to go for Morrow to achieve the performance level we expect. "The increase in sales revenue is a direct result of the addition of Westbeach apparel revenues and retail store revenues this year, due to the acquisition of Westbeach on November 12, 1997. A substantial backlog of fall orders remained to be shipped as of the end of the third quarter, including all of our Engage step-in boots and bindings, so we expect to see an increase in revenues for the full year 1998 over 1997. We have resolved alleged patent infringement issues with both K2 and Burton relating to the Engage boot and binding system through license agreements on certain of their patents. The introduction of Engage boots and bindings, along with the continuing strength of both the Morrow and Westbeach brands, provides a solid base from which to improve the operations of the company in the future." The Company's credit facility requires that it comply with certain financial covenants, including an "EBITDA" test as defined in the credit facility. The Company did not meet the "EBITDA" test as of September 26, 1998 but the Lender has waived the requirement to meet this test for that period. Based on current projections, the Company will not meet the "EBITDA" test for the period ended December 26, 1998. Management estimates the Company will require up to $5,000,000 in additional working capital in 1999 to continue its current level of operations. |
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