New York, New York, (February 13, 2001)—Movie
Star, Inc., (AMEX:MSI) today announced its results for its fiscal 2001 second
quarter and first six months, which ended December 31, 2000. The Company’s results include one-time charges
for discontinuing the operation of its retail segment and closing its
distribution center in Virginia, which should improve the Company’s
profitability going forward. Excluding these one-time events and absent the
gains on the purchases of the Company’s subordinated debentures and senior notes,
net income would have been $1,515,000 or $.10 per diluted share and $2,785,000
or $.18 per diluted share for the three and six months ended December 31, 2000,
respectively, as compared to net income in the prior year of $1,802,000 or $.11
per diluted share and $2,526,000 or $.16 per diluted share.
Second
quarter net sales from continuing operations were $19,880,000 this year, 1.5%
below the $20,192,000 of a year ago, while net sales for the six months
decreased by 1.6% to $37,131,000 from $37,720,000 in the comparable period in
1999.
Gross margins from continuing operations for
the second quarter improved to 29.5% from 28.3% last year and for the six months increased to 30.5% from
27.9% a year ago, primarily because of the shift of production to offshore
locations from the Company’s Virginia manufacturing facility.
During the second quarter of fiscal 2001, the
Company implemented a plan to close the distribution operation at its Virginia
facility and to consolidate these operations with the distribution facility
located in Mississippi. This decision was made to increase the overall
efficiencies of the Mississippi facility and reduce overall shipping costs. The
Company recorded a charge of $1,008,000 in connection with this closure. The
charge consisted of a non-cash charge for the impairment of assets of $915,000
and other charges totaling $93,000.
Income
from continuing operations before extraordinary gains for the three and six
months ended December 31, 2000, absent the one-time charge for the closing of
the Virginia distribution center, was $1,264,000 or $.08 per diluted share and
$2,596,000, or $.17 per diluted share, respectively, as compared to $1,523,000
or $.10 per diluted share and $2,473,000 or $.16 per diluted share in the prior
year.
Due
to the continued decline in performance of the Company’s retail segment, in
December 2000 the Company made the decision to dispose of the majority of the
assets of this segment. Accordingly, the operating results of this segment for
the three and six months ended December 31, 2000 and 1999, have been
reclassified as income from discontinued operations.
In
the second quarter ended December 31, 2000, the Company recorded a loss on the disposal
of the retail segment of $731,000, net of a benefit from income taxes of
$15,000. The estimated loss on disposal provides for the write-down of assets
to the estimated market value, the loss on fulfilling lease obligations, the
costs of disposal and future operating losses.
The
retail division had income from discontinued operations of $251,000 and
$189,000 for the three and six months ended December 31, 2000, respectively, as
compared to $329,000 and $217,000 for the similar periods in 1999.
During
the second quarter ended December 31, 2000, the Company purchased $3,050,000 in
principal amount of its 8% Senior Notes and $157,000 in principal amount of its
12.875% Subordinated Debentures. As a result of these purchases, the Company
recorded an extraordinary gain of $348,000, net of related costs and income
taxes. The Company is currently
exploring its options to refinance the remaining balance of its 8% Senior Notes
and 12.875% Subordinated Debentures which mature on September 1, 2001 and
October 1, 2001, respectively.
The Company had net income of $124,000 or $.01 per diluted share and
$1,394,000 or $.09 per diluted share for the three and six months ended
December 31, 2000, respectively, as compared to $2,002,000 or $.13 per diluted
share and $2,840,000 or $.18 per diluted share in the prior year.
“By closing our retail operation and
consolidating our distribution, we will be positioned for more profitable
revenue growth,” said Mel Knigin, Movie Star’s President and CEO. “Our retail segment will cease operations by
the end of March and the transfer from Virginia to Mississippi will be complete
by the end of April.”
“In our effort to increase sales, we are
working diligently to open sales channels to market segments that were beyond
our reach when our manufacturing costs were higher,” Mr. Knigin continued. “The new spring fashion products we
introduced in the first quarter to bolster our sales during the traditionally
slower second half of the fiscal year are being well received so far.”
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) 684-3400 (216)
464-6400
MOVIE STAR, INC.
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
|
|
Three Months Ended |
|
Six Months Ended |
|||||
|
|
December 31, |
|
December 31, |
|||||
|
|
2000 |
|
1999 |
|
2000 |
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 19,880 |
|
$20,192 |
|
$ 37,131 |
|
$ 37,720 |
|
|
Cost of sales |
14,015 |
|
14,471 |
|
25,820 |
|
27,204 |
|
|
Gross profit |
5,865 |
|
5,721 |
|
11,311 |
|
10,516 |
|
|
Selling,
general and administrative expenses |
4,152 |
|
3,681 |
|
7,806 |
|
7,079 |
|
|
Loss on closing of distribution facility |
1,008 |
|
– |
|
1,008 |
|
– |
|
|
Operating Income from continuing operations |
705 |
|
2,040 |
|
2,497 |
|
3,437 |
|
|
Gain on purchases
of subordinated debentures and senior notes |
– |
|
(50) |
|
– |
|
(164) |
|
|
Interest
income |
(2) |
|
(2) |
|
(3) |
|
(20) |
|
|
Interest
expense |
446 |
|
538 |
|
880 |
|
1,097 |
|
|
Income from continuing
operations before income taxes and extraordinary gain |
261 |
|
1,554 |
|
1,620 |
|
2,524 |
|
|
Income taxes |
5 |
|
31 |
|
32 |
|
51 |
|
|
Income from
continuing operations before extraordinary gain |
256 |
|
1,523 |
|
1,588 |
|
2,473 |
|
|
Discontinued
operations |
|
|
|
|
|
|
|
|
|
Income from
operations of discontinued retail stores, net of income taxes |
251 |
|
329 |
|
189 |
|
217 |
|
|
Loss on disposal
of retail stores, including provision for operating losses during phase-out
period |
(731) |
|
– |
|
(731) |
|
– |
|
|
Income (loss)
before extraordinary gain |
(224) |
|
1,852 |
|
1,046 |
|
2,690 |
|
|
Extraordinary
gain on purchases of subordinated debentures |
348 |
|
150 |
|
348 |
|
150 |
|
|
Net income |
$ 124 |
|
$
2,002 |
|
$
1,394 |
|
$ 2,840 |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME
(LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From
continuing operations |
$ .02 |
|
$ .10 |
|
$ .11 |
|
$ .17 |
|
|
From
discontinued operations |
(.03) |
|
.02 |
|
(.04) |
|
. 01 |
|
|
From
extraordinary gain |
.02 |
|
.01 |
|
.02 |
|
.01 |
|
|
Net income
per share |
$ .01 |
|
$ .13 |
|
$ .09 |
|
$ .19 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED NET
INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From continuing
operations |
$ .02 |
|
$ .10 |
|
$ .11 |
|
$ .16 |
|
|
From
discontinued operations |
(.03) |
|
.02 |
|
(.04) |
|
.01 |
|
|
From
extraordinary gain |
.02 |
|
.01 |
|
.02 |
|
.01 |
|
|
Net income
per share |
$ .01 |
|
$ .13 |
|
$ .09 |
|
$ .18 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average number of shares outstanding |
14,897 |
|
14,880 |
|
14,897 |
|
14,880 |
|
|
Diluted weighted
average number of shares outstanding |
15,313 |
|
15,964 |
|
15,366 |
|
16,159 |
|
MOVIE STAR, INC.
CONSOLIDATED CONDENSED
BALANCE SHEETS
(In Thousands, Except
Number of Shares)
|
December 31, |
|
June 30, |
|
2000 |
|
2000* |
|
(Unaudited) |
|
|
ASSETS
|
Current Assets |
|
|
|
|
Cash |
$ 452 |
|
$ 712 |
|
Receivables, net |
9,198 |
|
7,960 |
|
Inventory |
11,320 |
|
14,643 |
|
Prepaid
expenses and other current assets |
2,101 |
|
2143 |
|
Total current assets |
23,071 |
|
25,458 |
|
|
|
|
|
|
Property, plant and equipment, net |
1,911 |
|
3,247 |
|
Other assets |
2,571 |
|
2,922 |
|
|
|
|
|
|
Total assets |
$27,553 |
|
$31,627 |
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
Current Liabilities |
|
|
|
|
Notes
payable |
$ 585 |
|
$ 1,690 |
|
Current
maturities of long-term debt and capital lease obligations |
8,858 |
|
83 |
|
Accounts payable and accrued expenses |
5,327 |
|
6,432 |
|
Total current liabilities |
14,770 |
|
8,205 |
|
|
|
|
|
|
Long-term debt and capital lease obligations |
97 |
|
12,130 |
|
|
|
|
|
|
Commitments and Contingencies |
— |
|
— |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
Common stock $.01 par value – authorized 30,000,000 shares;issued 16,914,000
shares |
169 |
|
169 |
|
Additional paid-in capital |
4,078 |
|
4,078 |
|
Retained earnings |
12,057 |
|
10,663 |
|
|
16,304 |
|
14,910 |
|
|
|
|
|
|
Less: Treasury
stock, at cost – 2,017,000 shares |
3,618 |
|
3,618 |
|
Total shareholders’ equity |
12,686 |
|
11,292 |
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
$27,553 |
|
$31,627 |
* Derived from audited financial statements