New
York, New York (May 6, 2002)—Movie Star, Inc. (AMEX:MSI), today announced
financial results for the three months and nine months ended March 31, 2002.
Net
sales from continuing operations for the fiscal 2002 third quarter were
$13,567,000 versus $13,908,000 in last year's comparable quarter. The sales decline was due to continued
weakness in the general economy and sluggish industry fundamentals. Gross margin during the third quarter
declined to 27.9% compared with 30.1% last year. The decline was principally due to market pricing pressure and,
to a lesser extent, sales of excess inventory.
Third-quarter selling, general & administrative expenses declined
9.1% in dollar terms and, as a percentage of sales, declined to 24.8% compared
with 26.6% for the prior year’s third quarter.
Operating
income was $416,000 for the quarter, versus $355,000 in last year's comparable
period. Fiscal 2001's third-quarter results include a pre-tax loss of $136,000
associated with the closing of the Virginia distribution facility. Net income for the quarter increased to
$180,000, or $0.01 per basic and diluted share, compared with $54,000, or
breakeven on a per-share basis, reported for last year's fiscal third quarter.
Commenting on the quarterly results, Mel Knigin, Movie
Star’s President and CEO, stated: “As anticipated and expressed in our
second-quarter announcement, sales for the third quarter decreased from the
year-ago period. We are very pleased,
however, with the success of our efforts to control corporate and general
operating costs, which has allowed us to remain profitable during this
difficult economic cycle.
“We made considerable progress during the quarter reducing
operating costs and improving inventory management,” continued Mr. Knigin. “We have stated that our focus will be on
improving inventory balances, and at the end of the third quarter, our
inventory was down by more than 32%, or almost $4 million as compared to March
31, 2001. Our borrowing costs also have
been substantially reduced since renegotiating our credit facility and retiring
substantially all of our long-term debt.
Our interest expense for the third quarter declined more than 61% as
compared to the same period last year.”
For
the nine-month period, net sales from continuing operations were $43,884,000,
compared with $51,039,000 for the corresponding period in fiscal 2001. Gross
margin from continuing operations for the nine-month period was 28.2% versus
30.4% in last year's comparable period.
The decrease in gross margin during the period also related to market
pricing pressure and excess inventory sales.
Operating income for the nine months declined to $2,002,000 from
$2,852,000 last year. Income from
continuing operations before extraordinary items declined to $833,000, or $0.06
per diluted share, from $1,642,000, or $0.11 per diluted share, in the
corresponding period last year.
Last
year's nine-month results included a pre-tax loss of $1,144,000 related to the
closure of the Virginia distribution facility, partially offset by an after-tax
$348,000 extraordinary gain on the purchases of subordinated debentures. Reported net income for the fiscal 2002
nine-month period was $876,000, or $0.06 per diluted share, compared with
$1,448,000, or $0.09 per diluted share, last year.
At
March 31, 2002, total debt was $5,189,000, down from $10,397,000 at the start
of the fiscal year, and shareholders’ equity increased to $13,953,000 from
$13,021,000 at June 30, 2001.
“The
current economic conditions and existing apparel industry fundamentals cause us
to be cautious, but the recent strength in our open order position gives us
reason to be optimistic,” added Mr. Knigin.
“Recent trends in our new order rates lead us to believe that we are
approaching a turning point. Although
we expect the current sales trend to extend into the fourth quarter and result
in lower sales than the previous year’s fourth quarter, we are encouraged by
the recent level of business activity and are anticipating a stronger
year-over-year performance in the first-half of fiscal 2003. We are a much leaner organization and more
efficient operationally than we have ever been and stand to benefit from an
expected, but gradual economic recovery.”
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
[Tables follow]
MOVIE STAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
March 31, |
|
March 31, |
||||
|
|
2002 |
|
2001 |
|
2002 |
|
2001 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$13,567 |
|
$13,908 |
|
$43,884 |
|
$51,039 |
|
Cost of sales |
9,786 |
|
9,715 |
|
31,492 |
|
35,535 |
|
Gross profit |
3,781 |
|
4,193 |
|
12,392 |
|
15,504 |
|
Selling, general and administrative expenses |
3,365 |
|
3,702 |
|
10,390 |
|
11,508 |
|
Loss
on closing of distribution facility |
- |
|
136 |
|
- |
|
1,144 |
|
Operating income from continuing operations |
416 |
|
355 |
|
2,002 |
|
2,852 |
|
|
|
|
|
|
|
|
|
|
Interest income |
- |
|
(2) |
|
(2) |
|
(5) |
|
Interest expense |
115 |
|
301 |
|
616 |
|
1,181 |
|
Income from continuing operations before
income taxes and extraordinary gain |
301 |
|
56 |
|
1,388 |
|
1,676 |
|
Income taxes |
121 |
|
2 |
|
555 |
|
34 |
|
Income from continuing operations before
extraordinary gain |
180 |
|
54 |
|
833 |
|
1,642 |
|
Discontinued operations |
|
|
|
|
|
|
|
|
Income from operations of discontinued retail
stores, net of income taxes |
- |
|
- |
|
43 |
|
189 |
|
Loss on disposal of retail stores, including
provision for operating losses during phase-out period, net of income taxes |
- |
|
- |
|
- |
|
(731) |
|
Income before extraordinary gain |
180 |
|
54 |
|
876 |
|
1,100 |
|
Extraordinary gain on purchases of
subordinated debentures and senior notes, net of income taxes |
- |
|
- |
|
- |
|
348 |
|
Net income |
$
180 |
|
$
54 |
|
$ 876 |
|
$ 1,448 |
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
From continuing operations |
$.01 |
|
$
- |
|
$.06 |
|
$.11 |
|
From discontinued operations |
- |
|
- |
|
- |
|
(.04) |
|
From extraordinary gain |
- |
|
- |
|
- |
|
.03 |
|
Net income per share |
$.01 |
|
$
- |
|
$.06 |
|
$.10 |
|
|
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
From continuing operations |
$.01 |
|
$
- |
|
$.06 |
|
$.11 |
|
From discontinued operations |
- |
|
- |
|
- |
|
(.04) |
|
From extraordinary gain |
- |
|
- |
|
- |
|
.02 |
|
Net income per share |
$.01 |
|
$
- |
|
$.06 |
|
$.09 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding |
15,085 |
|
14,897 |
|
15,085 |
|
14,897 |
|
Diluted weighted average number of shares
outstanding |
15,087 |
|
15,378 |
|
15,118 |
|
15,370 |
MOVIE STAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Number of Shares)
|
March 31, |
|
June
30, |
|
2002 |
|
2001* |
|
(Unaudited) |
|
|
ASSETS
|
Current
Assets |
|
|
|
|
Cash |
$
258 |
|
$
261 |
|
Receivables, net |
8,035 |
|
7,859 |
|
Inventory |
7,911 |
|
11,947 |
|
Prepaid expenses and other current assets |
2,283 |
|
2,544 |
|
Total current assets |
18,487 |
|
22,611 |
|
|
|
|
|
|
Property,
plant and equipment, net |
1,321 |
|
2,217 |
|
Other
assets |
2,989 |
|
2,971 |
|
|
|
|
|
|
Total assets |
$22,797 |
|
$27,799 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
Current
Liabilities |
|
|
|
|
Notes payable |
$ 5,107 |
|
$
3,734 |
|
Current maturities of long-term debt and
capital lease obligations |
32 |
|
6,593 |
|
Accounts payable and accrued expenses |
3,543 |
|
4,351 |
|
Total current liabilities |
8,682 |
|
14,678 |
|
|
|
|
|
|
Long-term
debt and capital lease obligations |
50 |
|
70 |
|
|
|
|
|
|
Deferred
lease liability |
112 |
|
30 |
|
|
|
|
|
|
Commitments
and Contingencies |
- |
|
- |
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
Common
stock $.01 par value – authorized
30,000,000 shares; issued 17,102,000 shares in March 2002 and 16,954,000
shares in June 2001 |
171 |
|
170 |
|
Additional paid-in capital |
4,147 |
|
4,092 |
|
Retained earnings |
13,253 |
|
12,377 |
|
|
17,571 |
|
16,639 |
|
|
|
|
|
|
Less: Treasury stock, at cost – 2,017,000
shares |
3,618 |
|
3,618 |
|
Total shareholders’ equity |
13,953 |
|
13,021 |
|
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$22,797 |
|
$27,799 |
* Derived from
audited financial statements