New York, New York (August 22, 2002)—Movie Star,
Inc. (AMEX:MSI), today announced financial results for the three months and
full year ended June 30, 2002.
Net sales from continuing operations for the
fiscal 2002 fourth quarter were $10,710,000 compared with $11,559,000 reported
for 2001's comparable quarter. The
sales decline was due to continued softness in retail activity stemming from
the current economic environment. Gross
margin during the quarter increased to 26.2% compared with 25.0% last year as a
result of proportionately lower sales volumes of marked-down inventory.
The Company's loss from continuing operations
before extraordinary items was $372,000, or $(.02) per share, in the fiscal
2002 fourth quarter versus income in last year's fourth quarter of $109,000, or
$.01 per share. Results for 2001's
fourth quarter include an income tax benefit of $922,000 related to the
reversal of a deferred tax valuation allowance in fiscal 2001.
"As we had anticipated in earlier
statements throughout the year, sales in the fourth quarter decreased from the
year-ago period," stated Mel Knigin, Movie Star’s President and CEO. "The slowdown in retail spending on soft
goods continued during the fiscal year's final quarter; however, we were
pleased to have generated a profit for the full year despite the difficult
market conditions that began at the end of last year."
For the fiscal 2002 full year, net sales from
continuing operations were $54,359,000 compared with $62,462,000 for fiscal
2001. Operating income from continuing
operations for the year declined to $1,513,000 from $2,333,000 last year. Reported income from continuing operations
before extraordinary items was $461,000, or $.03 per diluted share, compared
with income from continuing operations before extraordinary items of
$1,751,000, or $0.11 per diluted share, in fiscal 2001. Last year's results also included a pre-tax
loss of $1,188,000 related to the closure of the Virginia distribution
facility, offset by an income tax benefit of $888,000.
"Fiscal
2002 marked the completion of initiatives started several years ago aimed at
strengthening the Company's balance sheet and the continuing improvement of efficiencies
throughout the organization. During the
year, we greatly improved cashflow, paid down a substantial amount of debt and
reduced selling, general and administrative expenses. Successful execution of these initiatives played a significant
role in sustaining profitability in a very difficult market," continued
Mr. Knigin. "We successfully
reduced our inventory balances by more than 26%, or approximately $3 million,
versus the end of last year. Also, we
benefited substantially from reduced interest expense due to lower interest
rates and the refinancing we completed early in the fiscal year."
Total debt declined 60% for the year, thus
reducing interest expense more than 73% for the fourth quarter and more than
52% for the full year. At June 30,
2002, total debt was $4,199,000, down from $10,397,000 at the start of the
fiscal year. Furthermore, shareholders’
equity increased approximately 5% to $13,624,000 from $13,021,000 at June 30,
2001.
"Trends in new orders are encouraging and
we expect to report improved year-over-year performance during fiscal
2003. Actions taken over the past
several quarters have improved our organization's efficiency and, as such,
although the outlook is guarded for the near term due to the uncertain economy,
we are positioned to fully capitalize on a rebound in the soft goods
market," concluded Mr. Knigin.
MOVIE STAR, INC. produces and sells ladies
sleepwear, robes, leisurewear, loungewear, panties and daywear.
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 Matt
Dennis
(212) 684-3400 (216)
464-6400
MOVIE STAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands,
Except Per Share Amounts)
|
|
Three Months Ended |
|
Year Ended |
||||
|
|
June 30, |
|
June 30, |
||||
|
|
2002 |
|
2001 |
|
2002 |
|
2001 |
|
|
|
|
|
|
|
|
|
|
Net
sales |
$10,710 |
|
$11,559 |
|
$54,359 |
|
$62,462 |
|
Cost
of sales |
7,900 |
|
8,673 |
|
39,157 |
|
44,072 |
|
Gross
profit |
2,810 |
|
2,886 |
|
15,202 |
|
18,390 |
|
Selling,
general and administrative expenses |
3,299 |
|
3,361 |
|
13,689 |
|
14,869 |
|
Loss on disposal of distribution
facility |
- |
|
44 |
|
- |
|
1,188 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) from continuing
operations |
(489) |
|
(519) |
|
1,513 |
|
2,333 |
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
78 |
|
294 |
|
692 |
|
1,470 |
|
Income
(loss) from continuing operations before income taxes and extraordinary gain |
(567) |
|
(813) |
|
821 |
|
863 |
|
Income
taxes (benefit) |
(195) |
|
(922) |
|
360 |
|
(888) |
|
Income
(loss) from continuing operations before extraordinary gain |
(372) |
|
109 |
|
461 |
|
1,751 |
|
Discontinued
operations: |
|
|
|
|
|
|
|
|
Income
(loss) from operations and disposal of discontinued retail stores |
43 |
|
216 |
|
86 |
|
(326) |
|
Income
(loss) before extraordinary gain |
(329) |
|
325 |
|
547 |
|
1,425 |
|
Extraordinary
(gain) loss on purchases of subordinated debentures and senior notes, net of
income taxes |
- |
|
59 |
|
- |
|
(289) |
|
Net
income (loss) |
$
(329) |
|
$ 266 |
|
$ 547 |
|
$ 1,714 |
|
|
|
|
|
|
|
|
|
|
BASIC
NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
From
continuing operations |
$(.02) |
|
$.01 |
|
$.03 |
|
$ .12 |
|
From
discontinued operations |
- |
|
.01 |
|
.01 |
|
(.02) |
|
From
extraordinary gain |
- |
|
- |
|
- |
|
.02 |
|
Net
income (loss) per share |
$(.02) |
|
$.02 |
|
$.04 |
|
$ .12 |
|
|
|
|
|
|
|
|
|
|
DILUTED
NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
From
continuing operations |
$(.02) |
|
$.01 |
|
$.03 |
|
$ .11 |
|
From
discontinued operations |
- |
|
.01 |
|
.01 |
|
(.02) |
|
From
extraordinary gain |
- |
|
- |
|
- |
|
.02 |
|
Net
income (loss) per share |
$(.02) |
|
$.02 |
|
$.04 |
|
$ .11 |
|
|
|
|
|
|
|
|
|
|
Basic
weighted average number of shares outstanding |
15,085 |
|
14,904 |
|
15,085 |
|
14,899 |
|
Diluted
weighted average number of shares outstanding |
15,097 |
|
15,094 |
|
15,112 |
|
15,301 |
MOVIE STAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In Thousands,
Except Number of Shares)
|
June 30, |
|
June 30, |
|
2002 |
|
2001 |
|
|
|
|
ASSETS
|
Current Assets |
|
|
|
|
Cash |
$ 215 |
|
$ 261 |
|
Receivables, net |
7,001 |
|
7,859 |
|
Inventory |
8,797 |
|
11,947 |
|
Deferred income taxes |
1,842 |
|
2,226 |
|
Prepaid expenses and other current assets |
202 |
|
318 |
|
Total current assets |
18,057 |
|
22,611 |
|
|
|
|
|
|
Property, plant and
equipment, net |
1,350 |
|
2,217 |
|
Other assets |
337 |
|
282 |
|
Deferred income taxes |
2,662 |
|
2,689 |
|
|
|
|
|
|
Total assets |
$22,406 |
|
$27,799 |
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Notes payable |
$
4,129 |
|
$ 3,734 |
|
Current maturities of long-term debt and
capital lease obligations |
40 |
|
6,593 |
|
Accounts payable |
3,355 |
|
2,853 |
|
Accrued expenses and
other current liabilities |
1,004 |
|
1,415 |
|
Total current liabilities |
8,528 |
|
14,595 |
|
|
|
|
|
|
Long-term debt and
capital lease obligations |
30 |
|
70 |
|
|
|
|
|
|
Deferred lease
liability |
140 |
|
30 |
|
|
|
|
|
|
Other long-term
liability |
84 |
|
83 |
|
|
|
|
|
|
Commitments and
Contingencies |
- |
|
- |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
Common stock $.01 par value – authorized 30,000,000 shares; issued
17,102,000 shares in June 2002 and 16,954,000 shares in June 2001 |
171 |
|
170 |
|
Additional paid-in capital |
4,147 |
|
4,092 |
|
Retained earnings |
12,924 |
|
12,377 |
|
|
17,242 |
|
16,639 |
|
|
|
|
|
|
Less: Treasury stock, at cost – 2,017,000
shares |
3,618 |
|
3,618 |
|
Total shareholders’ equity |
13,624 |
|
13,021 |
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$22,406 |
|
$27,799 |