New York, New
York (February 9, 2004)—Movie Star, Inc.
(AMEX: MSI), today announced lower financial results for the fiscal 2004
second quarter and first half ended December 31, 2003.
For the fiscal 2004 second quarter, net sales
declined to $14,166,000 from last year’s $16,689,000. Gross margin decreased during this period to 30.2 percent from
31.5 percent for the same period a year ago.
Second-quarter pre-tax income fell to $695,000 compared with last year’s
$1,252,000. Net income also declined
during the quarter to $417,000 from $751,000 reported a year ago. Earnings per basic and diluted share were
$0.03 versus $0.05 in 2003’s fiscal second quarter.
Net sales, for the first half of fiscal 2004,
were $30,992,000 compared with fiscal 2003’s $32,469,000. Gross margin was modestly higher at 30.8
percent compared with 30.6 percent in the year-ago first half. Pre-tax income declined to $2,115,000 from
$2,368,000 in last year’s comparable period.
For the fiscal first-half, net income declined to $1,269,000 from
$1,421,000 in the corresponding period a year ago. Earnings per basic and diluted share were $0.08 compared with
$0.09 for the prior year.
Mel Knigin, President and Chief Executive
Officer, stated: “Business at retail was extremely soft for ladies intimate
apparel in general for this past holiday season, which resulted in lower sales
for the Company. Also, due to this poor
retail environment, the Company incurred a higher percentage of markdowns than
in the previous year’s quarter, resulting in lower gross margins for the
current year’s quarter. Additionally,
because of the poor holiday season at retail, the retailers are refocusing
their spring and summer purchasing plans and to date the orders we have
received for the January through June period are significantly lower than we
had at the same time last year.
Accordingly, we anticipate that the Company will experience a
significant reduction in sales and net income for the remainder of our fiscal
year, which ends on June 30, 2004 as compared to the January through June
period in the prior year.
While
we are disappointed with the near-term outlook, there are a number of positives
that bode well for the Company, including our healthy relationships with our
customers, an exciting product line, lean inventories, a strong cash position,
and no debt. Furthermore, our asset
management has been outstanding as the Company’s balance sheet is the strongest
it has been in a number of years.
Shareholders’ equity at December 31, 2003 was $18.7 million or $1.20 per
share. Management is also continuing to
review various strategic alternatives designed to increase our business
profitably.”
Page
2
February
9, 2004
MOVIE STAR,
INC. produces and sells ladies apparel, including sleepwear, robes,
leisurewear, and daywear. Current
collections include the Cinema Etoile
premium line of intimate apparel and the Movie
Star line of apparel sold as private label programs.
Certain of the
matters set forth in this press release are forward-looking and involve a
number of risks and uncertainties. Among the factors that could cause actual
results to differ materially are the following: business conditions and growth
in the industry; general economic conditions; addition or loss of significant
customers; the loss of key personnel; product development; competition; risks
of doing business abroad; foreign government regulations; fluctuations in
foreign rates; rising costs for raw materials and the unavailability of sources
of supply; the timing of orders booked; and the risk factors listed from time
to time in the Company’s SEC reports.
CONTACT: INVESTOR RELATIONS:
Movie Star,
Inc. -or- SM Berger & Company,
Inc.
Thomas Rende,
CFO Stanley Berger
(212) 798-4700 (216) 464-6400
[Tables follow]
Page 3
February 9, 2004
MOVIE STAR, INC.
STATEMENTS
OF INCOME
(Unaudited)
(In Thousands, Except Per Share
Amounts)
|
Three Months Ended |
Six Months Ended |
|
December
31, |
December
31, |
|
2003 2002 |
2003 2002 |
|
Net sales |
$14,166 |
16,689
|
$30,992 |
$32,469 |
|
Cost of sales |
9,889 |
11,426 |
21,433 |
22,520 |
|
Gross profit |
4,277 |
5,263 |
9,559 |
9,949 |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
3,554 |
3,893 |
7,374 |
7,362 |
|
|
|
|
|
|
|
Income from
operations |
723 |
1,370 |
2,185 |
2,587 |
|
|
|
|
|
|
|
Interest income |
- |
(1) |
- |
(2) |
|
Interest expense |
28 |
119 |
70 |
221 |
|
|
|
|
|
|
|
Income
before income taxes |
695 |
1,252 |
2,115 |
2,368 |
|
Income taxes |
278 |
501 |
846 |
947 |
|
|
|
|
|
|
|
Net income |
$ 417 |
$ 751 |
$ 1,269 |
$ 1,421 |
|
|
|
|
|
|
|
BASIC NET
INCOME PER SHARE |
$.03 |
$.05 |
$.08 |
$.09 |
|
|
|
|
|
|
|
DILUTED NET
INCOME PER SHARE |
$.03 |
$.05 |
$.08 |
$.09 |
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding |
15,596 |
15,085 |
15,548 |
15,085 |
|
Diluted weighted average number of shares outstanding |
16,274 |
15,089 |
16,241 |
15,087 |
|
|
|
|
|
|
Page 4
February 9, 2004
MOVIE STAR, INC.
CONDENSED
BALANCE SHEETS
(In
Thousands, Except Number of Shares)
|
December
31, |
June 30, |
December
31, |
|
2003 (Unaudited) |
2003* |
2002 (Unaudited) |
Assets
|
Current Assets |
|
|
|
|
Cash |
$ 1,245 |
$ 219 |
$ 168 |
|
Receivables, net |
8,141 |
8,992 |
10,420 |
|
Inventory |
8,362 |
10,392 |
9,688 |
|
Deferred income taxes |
1,792 |
2,511 |
1,037 |
|
Prepaid expenses and other current assets |
305 |
365 |
176 |
|
Total current assets |
19,845 |
22,479 |
21,489 |
|
|
|
|
|
|
Property, plant
and equipment, net |
1,047 |
1,153 |
1,292 |
|
Deferred income
taxes |
50 |
50 |
2,662 |
|
Other assets |
407 |
407 |
373 |
|
|
|
|
|
|
Total assets |
$21,349 |
$24,089 |
$25,816 |
Liabilities and Shareholders’ Equity
|
Current Liabilities |
|
|
|
|
Notes payable |
$ - |
$ 2,277 |
$ 6,155 |
|
Current maturities of capital lease
obligations |
6 |
27 |
38 |
|
Accounts payable and other current
liabilities |
2,330 |
4,196 |
4,296 |
|
Total current liabilities |
2,336 |
6,500 |
10,489 |
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities |
347 |
325 |
282 |
|
|
|
|
|
|
Commitments and
Contingencies |
- |
- |
- |
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
Common stock, $.01 par value – authorized
30,000,000 shares; |
|
|
|
|
issued
17,617,000 shares in December 2003, 17,412,000 in June 2003 and 17,102,000 in December 2002 |
176 |
174 |
171 |
|
Additional paid-in capital |
4,484 |
4,353 |
4,147 |
|
Retained earnings |
17,624 |
16,355 |
14,345 |
|
|
22,284 |
20,882 |
18,663 |
|
|
|
|
|
|
Less: Treasury stock, at cost – 2,017,000
shares |
3,618 |
3,618 |
3,618 |
|
|
|
|
|
|
Total shareholders’ equity |
18,666 |
17,264 |
15,045 |
|
|
|
|
|
|
Total liabilities
and shareholders’ equity |
$21,349 |
$24,089 |
$25,816 |
*
Derived from audited financial statements.