Fila Holding S.p.A. has reported its unaudited results for the third quarter ended September 30, 2000.
In U.S. dollars, third quarter net income was U.S.$2.4 million, or U.S.$0.09 per ADS, compared with a net income of U.S.$0.2 million, or U.S.$0.01 per ADS in the third quarter of 1999.
The Italian lira depreciated by 16% against the U.S. dollar on a quarterly average basis; the average exchange rate was U.S.$1=Lit.2,140 in the third quarter of 2000 and U.S.$1=Lit.1,846 in the corresponding quarter of 1999.
In Italian lire, worldwide revenues for the third quarter were Lit.588.8 billion, up 9% from Lit 539.7 billion in the corresponding period of 1999. Net income for the quarter was Lit.5.1 billion compared with net income of Lit.0.5 billion in the third quarter of 1999.
Total backlog of customer orders** as of September 30th, 2000, scheduled for delivery from October through March 2001, increased by 7% (in Italian lire) compared with the corresponding period in 1999. In particular, apparel increased by 9% and footwear increased by 5%.
U.S. backlog increased by 6% (in U.S. dollars), with apparel up by 3% and footwear up by 10%.
Outside the U.S. and excluding the markets where Fila sells its products on a delivery basis (such as Korea), backlog decreased by 1% (in Italian lire), with apparel up by 3% and footwear down by 6% over the previous corresponding period.
Michele Scannavini, Chief Executive Officer of Fila, said: ‘The quarter confirms our progress in revenues and operating margin, the highest in three years. Particularly encouraging is the progress in the U.S., where the Fila brand is enjoying a double digit increase in its order portfolio for next six months.
Asia Pacific markets are also growing at a very fast pace (+45%), representing now around 18% of the total Fila business and confirming their strategic role in the future growth of our Company.’
Net direct sales in the third quarter of 2000 totaled Lit.575.5 billion, up by 9% from Lit.529.5 billion in the corresponding period of 1999. Apparel sales were Lit.304.3 billion, up by 15% from Lit.265.6 billion in the third quarter of 1999, while footwear sales increased by 3% to Lit.271.2 billion. Sales in the U.S. were Lit.130.7 billion in the quarter, increasing by 21% from Lit.108.4 billion or by 4% in U.S. dollar terms; in Europe sales decreased by 6% to Lit.286.3 billion. Sales in the Rest of the World increased by 37%.
Gross profit for the quarter was Lit.240.8 billion (up 13% versus third quarter of 1999) representing 40.9% of total net revenues compared to 39.6% in the third quarter of 1999, despite the Euro depreciation, thanks to a lower incidence of obsolete products on total sales and effective purchasing.
SG&A expenses for the quarter totaled Lit.202.6 billion compared with Lit.187.2 billion in the previous year. The SG&A increase is completely due to the exchange rate effect, net of which there would have been a decrease of 1% over last year. The incidence of SG&A on total turnover went from 34.7% to 34.4%.
As a consequence of the above mentioned factors, income from operations in the quarter was Lit.38.3 billion compared with Lit.26.5 billion in the same quarter of 1999, representing a 45% improvement.
Other income and expenses were Lit.21.4 billion compared with Lit.15.3 for the corresponding quarter of last year. The increase is mainly related to higher interest rates both in the U.S. and in the Euro zone as well as higher indebtedness.
Income taxes were Lit.11.8 billion compared with Lit.10.7 billion in the corresponding quarter of 1999 as due to the improved income before taxes.
Net financial indebtedness as of September 30th, 2000 was Lit.888.0 billion compared with Lit.597.2 billion as of September 30th, 1999; on a constant exchange basis the net financial indebtedness would have been Lit.826.3 billion. The net financial position reflects high capital expenditures in the quarter, mostly related to the acquisition of the 40% minority interest in Fila U.K. and the purchase of a warehouse in Brandon Woods (U.S.A.).
Michele Scannavini added: ‘We are facing a challenging new scenario with the weakness of the Euro against the Dollar and the strong increase in interest rates, penalizing us on margins, structural costs and interest expense. If the current exchange ratio continues till the end of the year, we estimate that the negative impact on our net result in Lire for the full year will be approximately Lit. 50 billion. We are reviewing our pricing and sourcing strategies as well as planning a further rationalization of structural costs in the U.S. to reduce our dependence on U.S. Dollar and increase our competitiveness in 2001 and beyond.’
Fila Holding S.p.A., headquartered in Biella (Italy), is a leading designer and marketer of athletic and casual footwear and of activewear, casualwear and sportswear. Fila has created strong brand recognition by marketing products with a high design and style content and by securing professional athletic endorsements.
Fila maintains its financial statements in Italian lire. For convenience, however, certain key results are presented herein as translated into U.S. dollars at the average exchange rates in effect for the respective periods. Converting Fila’s consolidated results from Italian lire into U.S. dollars at the average exchange rate for each period, rather than at the period-end rate, is consistent with Fila’s practice of converting the income statements of its foreign subsidiaries into Italian lire at the respective average exchange rates during the applicable period.
For More Information, Contact:
Fila Holding S.p.A.
Investor Relations Office:
Giulia Muzio (39.015) 3506 418
Citigate Dewe Rogerson
Anu Gupta (1.212) 419 8354