K-Swiss Inc.Jason Corbett ACG2021.080

Executive Summary

Upon completion of reviewing the annual report of K-Swiss Inc., I have come to the conclusion that this company is not doing too bad for itself. As you will see in the following slides, the information provided shows that K-Swiss nearly doubled their Net income from 2002-2003, as well as maintained a strong and healthy business which has been audited and approved by the G.A.A.P.

www.wssource.com

• Chief Executive Officer…

• Home Office…

• Fiscal Year…

• Main productivity…

• Geographic area…

• STEVEN NICHOLS

• Delaware

31248 Oak Crest Drive,

Westlake Village, California

• For the fiscal year ended December 31, 2003

• K-Swiss primarily produces a wide variety of athletic and casual footwear for everyday use, along with other athletic apparel.

• North-East United States

Audit Report• All in all, the auditors of K-Swiss Inc. had

very little to comment on about the company. The only thing they reported was that they reviewed the financial statements according to the G.A.A.P and that they believed they looked to be fair in content.

• Grant Thornton (LLP)

Stock Market Information

• Most recent price stock…

• Twelve month trading range of the company’s stock…

• Dividend per share…

• Date of the above information…

• $.01 Per Share

• January 1st – December 31st

• $.04 per share

• Balances derived December 31st, 2003

I believe that now is a good time to hold K-Swiss stock for those who currently own it and for investors to seriously consider buying some stock while the market is prosperous. As the Income statement reflects, K-Swiss nearly doubled it’s income from 2002 – 2003, and if it continues on the path it is going, then investing in this company could prove to be rewarding.

Industry Situation and Company Plans

K-Swiss Inc. looks like they have a good forecast in there future. They are almost doubling there income, and continue to

improve. They will more than likely continue to sell the same quality products while

keeping up with the modern day fashions. From the looks of it, the stockholder’s will

always own the majority of the business

Income Statement

• K-Swiss resembles a multi-step income statement the most

NET SALES

-C.O.G.S.

GROSS

MARGIN

OPERATING

-EXPENSES

E.B.I.T.

-INCOME TAXES

INCOME FROM

CONT. OPS.

-LOSS

NET INCOME

$429,126 $289,593

-235,603 -159,026

193,559 130,567

-106,966 -80,316

87,991 52,367

-34,199 -20,554

53,792 31,813

-3,736 -3,116

$50,056 $28,697

Balance SheetAssets = Liabilites + S.H.E.

TOTAL CURRENT ASSETS $213,895 $163,793

PROPERTY, PLANT AND EQUIPMENT 8,596 8,444

INTANGIBLE AND

OTHER ASSETS 12,139 11,646

TOTAL ASSETS

2002 $183,883

2003 $234,630

2002 2003

TOTAL CURRENT $36,509 $30,875

LIABILITIES

OTHER

LIABILITIES 15,234 7,408

DEFERRED

TAXES 3,360 5,807

TOTAL

LIABILITIES 55,103 44,090

2002 2003

PAID IN

CAPITAL $31,059 $47,612

RETAINED

EARNINGS 143,427 180,318

OTHER

S.H.E. 5,041 (88,137)

TOTAL

S.H.E. 179,527 139,793

2002 2003

TOTAL LIABILITES AND S.H.E

2002 $183,833

2003 $234,360

Assets = Liabilites + S.H.E.

Accounting PoliciesAccounting Policies•Significant accounting policies include:

–Revenue recognition: K-Swiss recognizes revenue when title passes which is normally upon shipment. They also maintain allowances for doubtful accounts.

–Cash: cash equivalents are considered by the company when they are highly liquid and if maturity is within 3 months.

–Inventories: K-Swiss accounts for it’s inventory using the F.i.f.o. Method.

– property and equipment: K-Swiss calculates depreciation and amortization using straight-line and accelerated methods.

•List Of The Topics for Notes To The Financial Statements:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : PROPERTY PLANT AND EQUIPMENT: INTANGIBLE ASSETS: ACCRUED LIABILITIES: OTHER LIABILITIES: BANK LINES OF CREDIT: INCOME TAXES: COMMITMENTS AND CONTINGENCIES: EMPLOYEE BENEFIT PLANS: STOCKHOLDERS’ EQUITY: CONCENTRATIONS OF CREDIT RISK: NATIONAL GEOGRAPHIC: ROYAL ELASTICS: SEGMENT INFORMATION: QUARTERLY FINANCIAL DATA (Unaudited)

• Working Capital: $213,895-36,509 = $177,386

• Current Ratio: $213,895/36,509 = 5.9

• Receivable turnover: $429,162/44,027 = 9.75

• Average days’ sales uncollected: ~38days

• Inventory turnover: $235,603/63,444 = 3.71

• Average days’ inventory on hand: ~99days

• Profit margin: $50,056/429,162 = 11.7% 

• Asset turnover: $429,162/209,257 = 2.1 times

• Return on assets: $50,056/209,257= 23.9%

• Return on equity: $50,056/ 51,743= 96.7%

• Debt to equity ’02: $38,283/183,883 = .21

• Debt to equity ’03: $51,743/234,630 = .22

Comments: It is quite evident that the stockholder’s are the primary owner’s of K-Swiss Inc. The debt to equity is extremely less than 1.

• Price/earnings per share» $50,056/35,438,096 = $.001

• Dividend yield:» $.04/.01= $4