FOR IMMEDIATE RELEASE:
Frederick’s of Hollywood Group Inc. Reports
Pre-Merger Fiscal 2008 Second-Quarter and First-Half Financial Results
Net
sales for the fiscal 2008 second quarter were $17,735,000, compared to last
year’s $17,524,000. Gross margin, as a
percentage of sales, was 33.6% for the fiscal 2008 second quarter, compared to
34.6% in the fiscal 2007 second quarter.
Pre-tax income for the fiscal 2008 second quarter was $495,000, compared
to $963,000 in the same quarter last year. Pre-tax income for the fiscal 2008 second
quarter included $559,000 of merger related fees. The fiscal 2007 second quarter pre-tax income
included a $496,000 gain on the sale of property, plant and equipment and
$803,000 of merger related fees. The
Company recorded net income of $297,000, or $0.02 per diluted share, for the
fiscal 2008 second quarter, as compared to $578,000, or $0.04 per diluted
share, for the fiscal 2007 second quarter.
All per share data contained in this press release does not reflect the
one-for-two reverse stock split effected by the Company on January 28, 2008 in
connection with the Merger.
Net
sales for the first half of fiscal 2008 were $29,674,000, compared to
$36,214,000 in the same period last year.
For the first half of fiscal 2008, the gross margin was 31.4%, compared
to 32.8% in the comparable period of fiscal 2007. For the fiscal 2008 first half, the Company
recorded a net loss of $669,000, or $0.04 per share, compared to net income of $944,000,
or $0.06 per diluted share, in the comparable period of fiscal 2007. Net income for the first half of fiscal 2008
included $917,000 of merger related fees.
Net income for the first half of fiscal 2007 included $1,342,000 of
merger related fees and a $496,000 gain on the sale of property, plant and
equipment, which was primarily attributable to the sale of the Company’s former
distribution center in
Mel
Knigin, President and CEO of the Company’s Movie Star division, stated, “We
expect second-half sales for the Movie Star division to compare favorably to
last year’s second half, as a result of our strong open order position, which
was approximately $26,830,000 at December 31, 2007, compared with $25,241,000
at December 31, 2006, as well as our subsequent receipt of a $2,500,000 order that
was not included in our open orders at December 31, 2007. In the prior year, we had received a
comparable order in the month of December and it was therefore included in our open
order position at December 31, 2006. This
additional order brings our increase in comparable open orders to approximately
$4,000,000.”
Mr.
Knigin continued, “We have worked hard
to complete the merger and are excited that we can now focus on successfully
growing a company that currently has over $200 million in combined annual revenue
and offers greater growth opportunities than each company had previously on a
stand alone basis.”
About Frederick’s
of Hollywood Group Inc.
About the
About the Movie Star Division
Movie
Star designs, manufactures (through independent contractors), imports, markets
and distributes women’s intimate apparel, including sleepwear, robes,
leisurewear and daywear, to mass merchandisers, specialty and department
stores, discount retailers, national and regional chains and direct mail
catalog marketers throughout the United States.
Current collections include the Cinema Etoile premium line of intimate
apparel and the Movie Star line of apparel sold as private label programs.
Forward
Looking Statement
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: competition; business conditions and industry growth;
rapidly changing consumer preferences and trends; general economic conditions;
large variations in sales volume with significant customers; addition or loss
of significant customers; continued compliance with government regulations;
loss of key personnel; labor practices; management of growth, increases in
costs of operations or inability to meet efficiency or cost reduction
objectives; the timing of orders and deliveries of products; foreign government
regulations and risks of doing business abroad; failure to realize the merger’s
anticipated synergies; and the other risks that are described from time to time
in Frederick’s of Hollywood Group Inc.’s SEC reports.
CONTACT: INVESTOR RELATIONS:
Thomas Rende, CFO Stanley Berger
(212)
798-4700 (216)
464-6400
CONSOLIDATED
CONDENSED BALANCE SHEETS
(In
Thousands, Except Share Information)
|
December 31, |
June 30, |
December 31, |
|
2007
(Unaudited) |
2007*
|
2006 (Unaudited) |
Assets
|
Current Assets |
|
|
|
|
Cash |
$ 215 |
$ 53 |
$ 90
|
|
Receivables, net |
10,018 |
8,266 |
10,090 |
|
Inventory |
10,729 |
6,816 |
10,168 |
|
Deferred income taxes |
1,322 |
1,518 |
1,728 |
|
Prepaid expenses and other current assets |
223 |
291 |
244 |
|
Total current assets |
22,507 |
16,944 |
22,320 |
|
|
|
|
|
|
Property, plant and equipment,
net |
1,156 |
943 |
1,028 |
|
Deferred income taxes |
4,096 |
3,438 |
2,915 |
|
Goodwill |
537 |
537 |
537 |
|
Other assets |
646 |
476 |
453 |
|
|
|
|
|
|
Total assets |
$28,942 |
$22,338 |
$27,253 |
Liabilities and Shareholders’ Equity
|
Current Liabilities |
|
|
|
|
Note payable |
$11,328 |
$ 4,126 |
$ 7,651 |
|
Current maturities of capital lease
obligations |
58 |
57 |
55 |
|
Accounts payable and other current
liabilities |
3,213 |
3,171 |
4,074 |
|
Total current liabilities |
14,599 |
7,354 |
11,780 |
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
304 |
379 |
434 |
|
|
|
|
|
|
Shareholders’ equity ** |
|
|
|
|
Common stock, $.01 par value – authorized
30,000,000 shares; |
|
|
|
|
issued 18,502,000 shares at December 31,
2007, 18,440,000 shares at June 30, 2007 and 17,960,000 shares at December 31, 2006 |
185 |
184 |
180 |
|
Additional paid-in capital |
5,640 |
5,552 |
5,180 |
|
Retained earnings |
11,838 |
12,507 |
13,305 |
|
Accumulated other comprehensive loss |
(6) |
(20) |
(8) |
|
Treasury stock, at cost—2,017,000 shares |
(3,618) |
(3,618) |
(3,618) |
|
Total shareholders’ equity |
14,039 |
14,605 |
15,039 |
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$28,942 |
$22,338 |
$27,253 |
|
|
|
|
|
* Derived from audited financial
statements.
** All share data contained in this press release does not reflect the one-for-two reverse stock split effected by the Company on January 28, 2008.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In
Thousands, Except Per Share Amounts)
Three Months Ended Six
Months Ended
December 31, December 31,
2007 2006
2007 2006
|
Net sales |
$17,735 |
$17,524 |
|
$29,674 |
$36,214 |
|
Cost of sales |
11,780 |
11,462 |
|
20,357 |
24,329 |
|
Gross profit |
5,955 |
6,062 |
|
9,317 |
11,885 |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
4,704 |
4,580 |
|
9,206 |
9,067 |
|
Merger related fees |
559 |
803 |
|
917 |
1,342 |
|
Gain on sale of property, plant and equipment |
- |
(496) |
|
- |
(496) |
|
|
|
|
|
|
|
|
Income/(loss) from operations |
692 |
1,175 |
|
(806) |
1,972 |
|
|
|
|
|
|
|
|
Interest expense |
197 |
212 |
|
309 |
399 |
|
|
|
|
|
|
|
|
Income/(loss) before provision for (benefit from) income taxes |
495 |
963 |
|
(1,115) |
1,573 |
|
Provision for (benefit from) income taxes |
198 |
385 |
|
(446) |
629 |
|
|
|
|
|
|
|
|
Net income (loss) |
$ 297 |
$ 578 |
|
$ (669) |
$ 944 |
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER
SHARE * |
$.02 |
$.04 |
|
$(.04) |
$.06 |
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER
SHARE * |
$.02 |
$.04 |
|
$(.04) |
$.06 |
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding * |
16,447 |
15,810 |
|
16,439 |
15,786 |
|
Diluted weighted average number of shares outstanding * |
16,924 |
16,232 |
|
16,439 |
16,090 |
|
|
|
|
|
|
|
* All share and per share data contained in this press release does not reflect the one-for-two reverse stock split effected by the Company on January 28, 2008.