• Operating expenses as a percentage of revenue were 28.6% in the quarter, strong leverage of 110 basis points when compared to an adjusted 29.7% in 2010. Reported operating expenses grew to $88.8 million in the quarter, driven by higher variable costs associated with the quarter's revenue growth and continued brand-building investments in advertising and marketing initiatives, including the support of the Merrell Barefoot Collection. Reported operating expenses as a percentage of revenue for the second quarter of 2010 were 30.6%. • The effective tax rate in the quarter was 25.7% and includes the favorable settlement of a state tax audit and a more favorable dispersion of taxable income to lower-tax jurisdictions. • Fully diluted earnings were a record $0.48 per share compared to adjusted fully diluted earnings of $0.39 per share in the prior year, an increase of 23.1%. The prior year's adjusted earnings exclude the impact of restructuring charges and other expenses related to a strategic restructuring plan that was completed in the second quarter of 2010. Reported fully diluted earnings for the second quarter of 2010 were $0.35 per share. • The Company repurchased approximately 479,000 of its own shares in the quarter for an aggregate cost of $18.1 million. Through the end of the second quarter, the Company has repurchased approximately 621,000 shares for a total cost of $23.1 million. The Company has a solid balance sheet, with little debt and $118.5 million of cash and cash equivalents at the end of the second quarter.
Today, the Company is reaffirming both its full-year revenue estimate of $1.380 billion to $1.420 billion (representing growth of 10.5% to 13.7%) and its fully diluted earnings per share estimate of $2.40 to $2.50 (representing growth of 10.6% to 15.2% versus the prior year's adjusted earnings per share and growth of 13.7% to 18.5% versus the prior year's reported earnings per share). Included in the earnings guidance are the outlooks for flat full-year gross margin and modest full-year operating expense leverage.
marketing@alchempro.com
