On March 15, fashion-forward denim designer True Religion Apparel (NASDAQ:TRLG) released fourth-quarter earnings for the 2006 fiscal year ended Dec. 31. Here's a look at its abbreviated financial report.

  • Both sales and earnings came in right where management told us they would, and on top of that, gross margins are riding up higher than ever.
  • That doesn't translate into very generous earnings increases, though, particularly if you back out a $2.1 million legal settlement expense from last year's earnings. The difference goes into costs of opening new stores, as well as paychecks for the upgraded executive staff. I'm inclined to say it's money well spent.
  • Those company-run, branded retail stores add to the existing distribution arrangements with stores like Nordstrom (NYSE:JWN), Urban Outfitters (NASDAQ:URBN), and Saks Fifth Avenue (NYSE:SKS).
  • A fresh, fat wad of cash is largely the result of a year's worth of free-flowing cash from operations -- not stock offerings or corporate debt. It would rock to have an updated cash flow statement to fill in the final details, but no such luck.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$29,794.1

$25,471.1

17.0%

Net Profit

$4,892.8

$3,687.4

32.7%

EPS

$0.21

$0.16

31.3%

Diluted Shares

23,576.5

23,179.5

1.7%


Get back to basics with the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

54.1%

51.1%

2.9

Operating Margin

23.5%

32.2%

(8.7)

Net Margin

16.4%

14.5%

1.9
*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$44,877.6

$15,407.0

191.3%

Inventory

$9,399.3

$10,052.7

(6.5%)


The balance sheet reflects the company's health.

Cash Flow Highlights
The company didn't even give us a full balance sheet. Cash flow statement? Dream on.

Free cash flow is a Fool's best friend.

Related Foolishness:

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund owned shares in True Religion but had no other position in any company mentioned. Fool rules are here.