New
York, New York, (November 13, 2001)—Movie Star, Inc., (AMEX:MSI) today
announced financial results for its three months ended September 30, 2001.
Fiscal 2002’s first-quarter net sales from
continuing operations declined to $14,963,000 from $17,251,000 last year. Net income for the first quarter was
$301,000, or $0.02 per diluted share, compared to $1,270,000, or $0.08 per
diluted share for fiscal 2001. Income
from continuing operations was $258,000, or $0.02 per diluted share, compared
to income of $1,332,000, or $0.09 per diluted share, in the corresponding
period last year.
First-quarter
gross margin from continuing operations decreased to 27.7% from 31.6% last
year. The decline was due to increased
pricing pressures from certain customers and an increase in the sale of excess
inventory at discounted prices.
Operating income from continuing operations dropped to $700,000 from $1,792,000
in fiscal 2000. The decline in
operating income resulted principally from lower sales and reduced gross
margin.
“The
weak sales trend that began in the fourth quarter extended into the first
quarter and is concealing many of the operational and financial improvements we
made over the past year,” stated Mr. Mel Knigin, Movie Star’s President and
CEO. The sharp slowdown in consumer
spending and the plunging consumer confidence had a strong influence over the
quarter’s sales and earnings results.
Although the events of September 11 forced first-quarter shipments into
the next quarter, we believe that the pullback in consumer spending to its
weakest pace in eight years will carry into the second quarter and beyond. With retailers closely monitoring inventory
levels and consumer confidence dropping to a 7.5 year low, we expect sales for
the second quarter to be below the level reported in fiscal 2001.
Financial
improvements continued during the quarter, as the Company used its renegotiated
line of credit to retire its 8% Senior Notes and 12.875% Subordinated
Debentures on September 1, 2001. The
Company also sold two properties associated with its discontinued Virginia
manufacturing and distribution operations and one retail store located in Mississippi
for $780,000. Proceeds from the sales
were used to reduce the outstanding balance on the Company’s line of credit.
“It
is unfortunate that we are entering such a difficult and uncertain economic
period at a time when we have made many fundamental improvements. Our financial position improved
substantially with our previously announced new line of credit. The credit agreement was negotiated at more
favorable interest rates and has significantly reduced our interest expense. The steps we have taken to strengthen our
business will allow us to better withstand the decline in economic activity and
will leave us in a much stronger position when business conditions
improve. As we move through this
uncertain period, we will continue our efforts to reduce inventory levels and
focus additional efforts on aligning our cost structure to the level of
business activity.”
Page
2
November
13, 2001
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 Steve
Warcholak
(212) 798-4700 (216)
464-6400
MOVIE STAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME
(In Thousands, Except Per Share Amounts)
|
|
Three Months Ended |
||
|
|
September
30, |
||
|
|
2001 |
|
2000 |
|
|
|
|
|
|
Net sales |
$14,963 |
|
$17,251 |
|
Cost of sales |
10,813 |
|
11,805 |
|
Gross profit |
4,150 |
|
5,446 |
|
|
|
|
|
|
Selling, general and administrative expenses |
3,450 |
|
3,654 |
|
Operating income from continuing operations |
700 |
|
1,792 |
|
|
|
|
|
|
Interest expense, net |
272 |
|
433 |
|
Income from continuing operations before
income taxes |
428 |
|
1,359 |
|
|
|
|
|
|
Income taxes |
170 |
|
27 |
|
Income from continuing operations |
258 |
|
1,332 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Income (loss) on discontinued operations, net
of income taxes |
43 |
|
(62) |
|
|
|
|
|
|
Net Income |
$ 301 |
|
$
1,270 |
|
|
|
|
|
|
BASIC NET INCOME PER SHARE |
|
|
|
|
From continuing operations |
$.02 |
|
$
.09 |
|
From discontinued operations |
- |
|
- |
|
Net income per share |
$.02 |
|
$
.09 |
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE |
|
|
|
|
From continuing operations |
$.02 |
|
$
.09 |
|
From discontinued operations |
- |
|
(.01) |
|
Net income per share |
$.02 |
|
$
.08 |
|
|
|
|
|
|
Basic weighted average number of shares
outstanding |
15,085 |
|
14,897 |
|
Diluted weighted average number of shares
outstanding |
15,137 |
|
15,419 |
MOVIE STAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Number of Shares)
|
September 30, |
|
June
30, |
|
2001 |
|
2001 * |
|
(Unaudited)
|
|
|
ASSETS
|
Current
Assets: |
|
|
|
|
Cash |
$ 401 |
|
$ 261 |
|
Receivables, net |
12,726 |
|
7,859 |
|
Inventory |
11,870 |
|
11,947 |
|
Prepaid expenses and other current assets |
2,284 |
|
2,544 |
|
Total
current assets |
27,281 |
|
22,611 |
|
|
|
|
|
|
Property,
plant and equipment, net |
1,431 |
|
2,217 |
|
Other
assets |
2,969 |
|
2,971 |
|
|
|
|
|
|
Total
assets |
$31,681 |
|
$27,799 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
Current
Liabilities: |
|
|
|
|
|
Notes payable |
$14,948 |
|
$
3,734 |
|
|
Current maturities of long-term debt and
capital lease obligations |
63 |
|
6,593 |
|
|
Accounts payable and accrued expenses |
3,177 |
|
4,351 |
|
|
Total
current liabilities |
18,188 |
|
14,678 |
|
|
|
|
|
|
|
|
Long-term
debt and capital lease obligations |
57 |
|
70 |
|
|
|
|
|
|
|
|
Deferred
lease liability |
58 |
|
30 |
|
|
|
|
|
|
|
|
Commitments
and Contingencies |
- |
|
- |
|
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
Common stock
$.01 par value – authorized 30,000,000 shares; issued |
|
|
|
|
|
|
17,102,000
shares in September 2001 and 16,954,000 shares in June 2001 |
171 |
|
170 |
|
Additional paid-in capital |
4,147 |
|
4,092 |
|
|
Retained earnings |
12,678 |
|
12,377 |
|
|
|
16,996 |
|
16,639 |
|
|
|
|
|
|
|
|
Less
|
Treasury
stock, at cost – 2,017,000 shares |
3,618 |
|
3,618 |
|
|
|
|
|
|
|
|
Total
shareholders’ equity |
13,378 |
|
13,021 |
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$31,681 |
|
$27,799 |
|
*Derived from audited financial statements.