1115 Broadway, New York ,
NY 10010
Movie
Star, Inc., Reports Fiscal 2005 Third-Quarter and Nine-Month Financial Results
For
the fiscal 2005 third quarter, net sales increased 20.4% to $14,659,000 from
$12,175,000 compared with the same period last year. This improvement in net sales was due to the
addition of the lower margin Sidney Bernstein & Son division (“SB&S”),
which was acquired in August 2004. However, the overall gross margin of 23.7%
was down for the fiscal 2005 third quarter compared with the same period last
year when it was 31.5%. For the 2005
third quarter, the Company recorded a net loss of $761,000, or $0.05 per share,
compared to a net loss in the prior year of $636,000, or $0.04 per share.
For
the fiscal 2005 nine-month period, net sales increased 16.9% to $50,479,000
from $43,167,000 in the same period last year.
Gross margin decreased to 24.4% from the prior year’s 31.0%. The decline
in gross margin was primarily due to the addition of the SB&S division, the
shipment of an extremely low margin $7,800,000 order and additional closeouts
in the current year. The Company has declined to bid on this low margin order for
fiscal 2006. For the 2005 nine-month
period, a net loss of $1,066,000, or $0.07 per share, was recorded compared
with net income of $634,000, or $0.04 per diluted share, earned for the same
period last year.
Mel
Knigin, President and Chief Executive Officer, stated: “We are extremely
disappointed in our financial performance this year and although net sales in
the third quarter improved over the same period last year, the fiscal 2004
third quarter did not have the benefit of sales from the SB&S division. Our struggle with gross margin continued into
the third quarter and was the main contributor in the decline in profitability.
Also, looking at our current open order position and shipments to date for the
fourth quarter, we expect the continued softness in sales for our core Movie
Star business to continue into the fourth quarter. As a result of the lower
sales, we expect to record a loss in the fourth quarter.
“On a more positive note, we are encouraged by the initial
response to our core Movie Star product line for the fall. Although the response has been positive, due
to the seasonality of our business, we will not begin to see the benefits of
these potential orders until the first half of fiscal 2006 (July through
December 2005). While we are working hard to obtain these orders, we are also
continuing to seek opportunities that, in time, can diversify and strengthen
our future business.”
May 11, 2005
Page 2
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]
May
11, 2005
Page
3
MOVIE STAR, INC.
STATEMENTS
OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share
Amounts)
|
Three Months
Ended |
Nine Months Ended |
|
March 31, |
March 31, |
|
2005 2004 |
2005 2004 |
|
Net sales |
$14,659 |
$12,175 |
$50,479 |
$43,167
|
|
Cost of sales |
11,186 |
8,344 |
38,146 |
29,777 |
|
Gross profit |
3,473 |
3,831 |
12,333 |
13,390 |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
4,666 |
4,893 |
13,877 |
12,267 |
|
|
|
|
|
|
|
(Loss) income from operations
|
(1,193) |
(1,062) |
(1,544) |
1,123 |
|
|
|
|
|
|
|
Interest income |
- |
(4) |
(1) |
(5) |
|
Interest expense |
76 |
2 |
234 |
72 |
|
|
|
|
|
|
|
(Loss) income before income taxes |
(1,269) |
(1,060) |
(1,777) |
1,056 |
|
Income taxes |
(508) |
(424) |
(711) |
422 |
|
|
|
|
|
|
|
Net (loss) income |
$
(761) |
$
(636) |
$(1,066) |
$
634 |
|
|
|
|
|
|
|
BASIC NET (LOSS) INCOME PER
SHARE |
$(.05) |
$(.04) |
$(.07) |
$.04 |
|
|
|
|
|
|
|
DILUTED NET (LOSS) INCOME PER
SHARE |
$(.05) |
$(.04) |
$(.07) |
$.04 |
|
|
|
|
|
|
|
Basic weighted average # of
shares outstanding |
15,620 |
15,600 |
15,619 |
15,565 |
|
Diluted weighted average # of
shares outstanding |
15,620 |
15,600 |
15,619 |
16,224 |
|
|
|
|
|
|
May 11, 2005
Page 4
MOVIE STAR, INC.
CONDENSED
BALANCE SHEETS
(In
Thousands, Except Number of Shares)
|
March 31, |
June 30, |
March 31, |
|
2005
(Unaudited) |
2004*
|
2004
(Unaudited) |
Assets
|
Current
Assets |
|
|
|
|
Cash |
$
435 |
$
2,527 |
$
2,836 |
|
Receivables, net |
9,278 |
7,577 |
7,376 |
|
Inventory |
7,132 |
5,938 |
7,476 |
|
Deferred income taxes |
1,781 |
2,571 |
2,152 |
|
Prepaid expenses and other current assets |
812 |
588 |
424 |
|
Total current assets |
19,438 |
19,201 |
20,264 |
|
|
|
|
|
|
Property,
plant and equipment, net |
1,012 |
1,021 |
1,018 |
|
Deferred
income taxes |
1,542 |
148 |
50 |
|
Goodwill |
537 |
- |
- |
|
Other
assets |
445 |
409 |
370 |
|
|
|
|
|
|
Total assets |
$22,974 |
$20,779 |
$21,702 |
Liabilities and Shareholders’ Equity
|
Current Liabilities |
|
|
|
|
Note payable |
$
3,763 |
$ - |
$ - |
|
Accounts payable and other current
liabilities |
2,109 |
2,658 |
3,296 |
|
Total current liabilities |
5,872 |
2,658 |
3,296 |
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities |
388 |
374 |
359 |
|
|
|
|
|
|
Commitments
and Contingencies |
- |
- |
- |
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
Common
stock, $.01 par value – authorized 30,000,000 shares; |
|
|
|
|
issued
17,637,000 shares at March 31, 2005, 17,617,000 shares at June 30, 2004 and 17,617,000 shares at
March 31, 2004 |
176 |
176 |
176 |
|
Additional paid-in capital |
4,729 |
4,706 |
4,500 |
|
Retained earnings |
15,417 |
16,483 |
16,989 |
|
Accumulated other comprehensive income |
10 |
- |
- |
|
Less: Treasury stock, at cost – 2,017,000
shares |
(3,618) |
(3,618) |
(3,618) |
|
|
|
|
|
|
Total shareholders’ equity |
16,714 |
17,747 |
18,047 |
|
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$22,974 |
$20,779 |
$21,702 |
* Derived from audited financial statements.