Fourth quarter net income was $107.0 million, or $0.64 per diluted share, which included a net benefit of $0.03 per share comprised of the following items: a benefit recorded in cost of sales of $9.8 million, or $0.06 per diluted share, related to the release of a portion of the reserves for commercial taxes on software imports into Brazil, for which the statute of limitations for an assessment has expired; and costs of approximately $7.7 million, or $0.03 per diluted share, related to expense-reduction programs primarily in North America and Europe.
In the fourth quarter of 2008, the company posted a net loss of $564.3 million, or $3.48 per diluted share, which included: a non-cash charge of $742.6 million ($659.8 million after tax), or $4.07 per diluted share, for the impairment of goodwill; a benefit recorded in cost of sales of $8.2 million, or $0.05 per diluted share, related to the release of a portion of the reserves for commercial taxes in Brazil; and costs of approximately $6.8 million or $0.03 per diluted share, related to expense-reduction programs.
Gross margin for the 2009 fourth quarter was 5.69 percent, a decrease of 23 basis points versus the ten-year high achieved in the prior-year quarter. The partial release of commercial tax reserves in Brazil, described above, had a positive fourth-quarter impact of 11 basis points in 2009 and nine basis points in 2008. Year-over- year comparisons are impacted by softer volumes in the fee-for-service division, weak margins in our North American high-end home entertainment division, greater mix of business in lower-margin geographies such as China, and the limited, strategic use of gross margins to drive sales growth.
Total operating expenses were $354.7 million (4.03 percent of total sales), which included $7.7 million (0.09 percent of total sales) in costs associated with the company’s expense-reduction programs. In the year-ago quarter, operating expenses were $1.11 billion, which included the previously discussed goodwill impairment charge. Excluding this charge, non-GAAP operating expenses in the prior year quarter were $368.8 million, or 4.25 percent of sales, which included $6.8 million (0.08 percent of sales) in severance and other costs related to the company’s expense-reduction programs.
Worldwide operating income was $146.5 million (1.66 percent of total sales), which included the aggregate benefit of $2.1 million (0.02 percent of total sales) from the release of Brazilian commercial tax reserves, partially offset by expense-reduction program costs. In the prior-year quarter, the company posted an operating loss of $597.1 million including the goodwill impairment charge. Excluding this charge, non-GAAP operating income was $145.5 million (1.68 percent of sales), which included a two-basis-point net benefit related to the partial release of Brazilian commercial tax reserves and the expense-reduction program costs.
For the twelve months ended Jan. 2, 2010, worldwide sales were $29.52 billion, a 14 percent decrease from $34.36 billion reported for the same period a year ago, reflecting the challenging global economic environment and unfavorable translation impact of weaker foreign currencies of approximately three percentage points.Sales for North America were $12.33 billion (a 13 percent decrease versus 2008); $9.48 billion for EMEA (an 18 percent decrease, which included a six-percentage-point negative impact from the translation of weaker foreign currencies); $6.24 billion for Asia-Pacific (a 10 percent decrease, which included a five-percentage-point negative impact from the translation of weaker foreign currencies); and $1.46 billion for Latin America (a 16 percent decrease, which included a nine-percentage-point negative impact from the translation of weaker foreign currencies). Worldwide operating income for the full year was $295.9 million (1.00 percent of total sales), which included items aggregating to a net charge of $30.4 million (0.11 percent of sales) comprised of the following: a benefit of $9.8 million (0.03 percent of sales) related to the partial release of the Brazilian tax reserve, more than offset by expense-reduction program costs of $37.6 million (0.13 percent of sales) and a goodwill impairment charge totaling $2.5 million (0.01 percent of sales).For the 2008 fiscal year, the company posted a worldwide operating loss of $332.2 million, which included items aggregating to a charge of $753.0 million (2.19 percent of sales) comprised of the following: a benefit of $8.2 million (0.02 percent of sales) related to the partial release of the Brazilian tax reserve, more than offset by expense-reduction program costs of $18.6 million (0.05 percent of sales) and a goodwill impairment charge of $742.6 million (2.16 percent of sales). Twelve-month net income was $202.1 million, or $1.22 per diluted share, which included the items listed above aggregating to an after-tax charge of $19.9 million, or $0.12 per diluted share. For the 2008 fiscal year, the company posted a net loss of $394.9 million, or $2.37 per diluted share, which included the goodwill impairment charge of $742.6 million ($659.8 million after tax, or $3.96 per diluted share) discussed previously, as well as net charges described above totaling $0.03 per diluted share.
Want to stay in the loop? Register with our World of Photo newsletter, and receive the latest news articles regularly.
