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Orange 21 Reports Second Quarter Results

CARLSBAD, Calif., Aug 11, 2005 (BUSINESS WIRE) -- Orange 21 Inc. (NASDAQ:ORNG):

  • Second quarter revenues of $10.4 million, a 36% year-over-year increase
  • Second quarter EPS of $0.04 compared to a loss per share of $0.02 in the second quarter of 2004

Orange 21 Inc. (NASDAQ:ORNG), a leading developer of brands that produce premium optical products, today announced financial results for the three months ended June 30, 2005.

The Company's net sales for the second quarter of 2005 were $10.4 million compared to $7.6 million in the second quarter of 2004, an increase of 36%. The Company reported net income for the second quarter of 2005 of approximately $362,000 versus a net loss of approximately $84,000 in the second quarter of 2004. Earnings per diluted share for the second quarter were $0.04 on approximately 8.2 million average shares outstanding compared to a loss per share of $0.02 on approximately 4.5 million average shares outstanding in the same period a year ago.

Cash, cash equivalents, and short term investments at June 30, 2005, totaled $11.6 million.

"We are pleased with our results for second quarter 2005, particularly our strong sales growth of 36% year-over-year," said Barry Buchholtz, Chief Executive Officer. "We believe this demonstrates the increased awareness of our brands achieved through the execution of the strategic initiatives we have put in place. We look forward to taking this momentum into the second half of the year. We will continue to work on expanding global distribution, improving service levels, and developing innovative sales and marketing programs that reach our target audience and drive our business."

Updated 2005 Guidance

In accordance with the Company's policy to provide periodic earnings guidance, it remains comfortable with its previous annual revenue guidance of 25% - 30% growth and the current annual consensus estimate of $0.16 EPS. However, the Company believes sales will be more heavily weighted toward the fourth quarter in 2005 due to selected goggle shipments that will occur later in the second half of the year.

As previously stated, the guidance discussion excludes the impact of legal costs associated with the Oakley and shareholder class action law suits.

Investor Conference Call

Orange 21's quarterly earnings conference call is scheduled to begin today, Thursday, August 11, 2005 at 1:30 p.m., Pacific Daylight Time. The conference call will be broadcast live over the Internet. Investors may listen to the live webcast at www.orangetwentyone.com. For those who are not available for the live broadcast, the call will be archived on Orange 21's investor website.

About Orange 21 Inc.

Orange 21 develops brands that produce premium optical products. Orange 21's brands include Spy Optic(TM), which manufactures sunglasses and goggles targeted towards the action sports and youth lifestyle market, and E Eyewear(TM), which manufactures the signature Dale Earnhardt, Jr. sunglass line.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements and forecasts about Orange 21 and its business, such as management's estimates of net sales and earnings for 2005. Because forecasts are inherently estimates that cannot be made with precision, the company's performance may at times differ from its estimates and targets.

Statements in this press release regarding financial guidance, management's statements and statements that refer to Orange 21's estimated and anticipated future results are forward-looking statements. All forward-looking statements in this press release reflect Orange 21's current analysis of existing trends and information and represent Orange 21's judgment only as of the date of this press release. Actual results may differ from current expectations based on a number of factors affecting Orange 21's business, including but not limited to, adjustments made pursuant to the final audit by our outside auditors; uncertainties associated with Orange 21's ability to maintain a sufficient supply of products and to successfully manufacture its products; the performance of new products and continued acceptance of current products; the execution of strategic initiatives and alliances; the impact of ongoing litigation; and the uncertainties associated with intellectual property protection for its products. In addition, matters generally affecting the domestic and global economy, such as changes in interest and currency exchange rates, can affect Orange 21's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. Orange 21 disclaims any intent or obligation to update these forward-looking statements.

Further information on potential risk factors that could affect Orange 21's business and its financial results are detailed in its filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q. Undue reliance should not be placed on forward-looking statements.

Orange 21, Inc.
                     Consolidated Balance Sheets

                                             December 31,   June 30,
                                                 2004         2005
                                                           unaudited
                                             ------------ ------------
Assets
Current assets
Cash and cash equivalents                    $11,476,828   $1,729,098
Short-term investments                                 -    9,874,331
Accounts receivable -- net                     8,244,910    7,975,984
Inventories                                   11,814,846   13,295,229
Prepaid expenses and other current assets      1,073,181    1,838,479
Deferred income taxes                          1,074,000    1,183,000
                                             ------------ ------------

           Total current assets               33,683,765   35,896,121
Property and equipment - net                   3,687,907    4,245,493

Intangible assets, net of accumulated
 amortization of $318,332 and $348,153
 at 2004 and 2005, respectively                  152,543      183,137
                                             ------------ ------------

           Total assets                      $37,524,215  $40,324,751
                                             ============ ============

Liabilities and Stockholders' Equity
Current liabilities
Current portion of notes payable                $125,000           $-
Current portion of capitalized leases             37,370       37,041
Accounts payable                               2,243,955    1,853,342
Accrued expenses and other liabilities         2,433,371    2,767,369
Income taxes payable                             443,619       89,060
                                             ------------ ------------

           Total current liabilities           5,283,315    4,746,812

Notes payable, less current portion              166,667            -
Capitalized leases, less current portion          31,369       12,752
Deferred income taxes                            143,000      110,000
                                             ------------ ------------

           Total liabilities                   5,624,351    4,869,564
Commitments and contingencies
Stockholders' equity
Preferred stock; par value $0.0001;
 5,000,000 authorized                                  -            -
Common stock; par value $0.0001; 100,000,000
 shares authorized; 7,491,218 and 8,012,483
 shares issued and outstanding at 2004 and
 2005, respectively                                  747          799
Additional paid-in capital                    31,655,426   35,836,456
Accumulated other comprehensive income
 (loss)                                          437,673      (55,475)
Accumulated deficit                             (193,982)    (326,593)
                                             ------------ ------------

           Total stockholders' equity         31,899,864   35,455,187
                                             ------------ ------------

           Total liabilities and
            stockholders' equity             $37,524,215  $40,324,751
                                             ============ ============


                           Orange 21, Inc.
                Consolidated Statements of Operations
                             (unaudited)

                       Three months ended          Six months ended
                            June 30,                   June 30,
                    ------------------------ -------------------------

                       2004         2005         2004         2005
                    ----------- ------------ ------------ ------------

Net sales           $7,647,545  $10,415,630  $14,050,961  $18,888,183
Cost of sales        3,066,510    4,786,473    6,310,875    9,184,167
                    ----------- ------------ ------------ ------------

Gross Profit         4,581,035    5,629,157    7,740,086    9,704,016
                    ----------- ------------ ------------ ------------

Operating expenses:
  Sales and
   marketing         2,561,719    3,050,056    4,827,084    5,918,557
  General and
   administrative    1,188,110    1,555,128    2,172,636    2,855,069
  Shipping and
   warehousing         192,311      297,402      354,671      589,591
  Research and
   development          98,154      178,381      187,205      314,456
                    ----------- ------------ ------------ ------------

    Total operating
     expenses        4,040,294    5,080,967    7,541,596    9,677,673
                    ----------- ------------ ------------ ------------

  Income from
   operations          540,741      548,190      198,490       26,343

Other (expense)
 income
  Interest
   (expense) income
   - net              (112,966)      86,302     (234,250)     150,413
  Foreign currency
   translation
   (loss) gain        (228,381)      32,686     (145,714)     (99,588)
  Other income
   (expense) - net      14,793       (8,570)        (175)     (12,621)
                    ----------- ------------ ------------ ------------
    Total other
     (expense)
     income           (326,554)     110,418     (380,139)      38,204
                    ----------- ------------ ------------ ------------
    Income (loss)
     before income
     taxes             214,187      658,608     (181,649)      64,547
Income tax
 provision             297,959      296,158      249,959      197,158
                    ----------- ------------ ------------ ------------
  Net (loss) income   $(83,772)    $362,450    $(431,608)   $(132,611)
                    =========== ============ ============ ============
Net (loss) earnings
 per common share
  Basic                 $(0.02)       $0.05       $(0.10)      $(0.02)
                    =========== ============ ============ ============
  Diluted               $(0.02)       $0.04       $(0.10)      $(0.02)
                    =========== ============ ============ ============
Weighted average
 common shares
 outstanding
  Basic              4,504,674    8,012,483    4,454,241    8,012,483
                    =========== ============ ============ ============
  Diluted            4,504,674    8,153,149    4,454,241    8,012,483
                    =========== ============ ============ ============

SOURCE: Orange 21 Inc.

Orange 21 Inc.
Michael Brower, 760-804-8420
or
Integrated Corporate Relations
Andrew Greenebaum/Allyson Pooley, 310-395-2215
agreenebaum@icrinc.com
apooley@icrinc.com