New
York, New York, (May 14, 2001)—Movie Star, Inc., (AMEX:MSI) today announced
financial results for its three months and nine months ended March 31, 2001.
Third quarter net sales from continuing
operations were $13,908,000 this year, 7.8% above the $12,898,000 of a year
ago. Quarterly net income from
continuing operations decreased to $54,000, or breakeven on a diluted per-share
basis, from $240,000, or $0.02 per diluted share, reported last year. Excluding a non-recurring pre-tax charge of
$136,000 related to the closing of the Company's Virginia distribution
facility, net income from continuing operations was $190,000, or $0.01 per
diluted share, for the quarter.
Gross
margin from continuing operations for the third quarter decreased to 30.1% from
30.9% last year, due to product mix, while operating income for the third
quarter declined to $355,000 from $600,000 in fiscal 2000. Excluding the non-recurring charge for the
closing of the Virginia distribution facility, the operating income would have
been $491,000 for the quarter this year.
The decline in operating income resulted principally from additional
shipping costs related to the transfer of inventory from the discontinued
Virginia distribution facility to the Company’s Mississippi distribution center
and an increase in administrative costs.
“As planned, our retail segment ceased operations during the
third quarter and the transfer from Virginia to Mississippi was completed by
the end of April,” said Mel Knigin, Movie Star’s President and CEO. “ We expect the cost-structure improvements
we have been implementing to increasingly expand our profit margins in fiscal
2002. Even though we did not achieve
the sales growth we were expecting, we were pleased to reach fiscal
year-to-date sales levels that are comparable to last year despite a weak
economic environment in which soft goods sales are trending lower. We anticipate this trend will continue in
the near term which is likely to result in our sales for the fourth quarter
being flat in comparison to the same period last year.”
For the
nine-month period, sales increased 0.8% to $51,039,000 from $50,618,000 for the
corresponding period last year. Net
income from continuing operations before extraordinary items declined to
$1,642,000, or $0.11 per diluted share, from $2,713,000, or $0.17 per diluted
share.
Gross
margin from continuing operations for the nine-month period increased to 30.4%
from 28.6% a year ago, primarily because of the shift of production to offshore
locations from the Company’s Virginia manufacturing facility. Operating income for the nine months
declined to $2,852,000 from $4,037,000 for the corresponding period last
year. Excluding the non-recurring
charge from the closing of the Virginia distribution facility, the operating
income would have been $3,996,000 for this year's nine-month period.
During the nine
months ended March 31, 2001, the Company purchased $3,050,000 in principal
amount of its 8% Senior Notes and $167,000 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. So far
in the fourth quarter of 2001, the Company has purchased an additional
$2,233,000 of the 8% Senior Notes, resulting in a corresponding extraordinary
gain of $123,000, net of related costs and income taxes. The outstanding principal balance of 12.875% Subordinated Debentures due October
1, 2001 is $4,180,000 and the outstanding principal balance of 8% Senior Notes
and convertible Senior Notes due September 1, 2001 is $2,354,500. The Company
is currently engaged in discussions with financial institutions to refinance
the remaining balance of its 8% Senior Notes and 12.875% Subordinated
Debentures.
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 |
|
Nine Months Ended |
|||||
|
|
March 31, |
|
March 31, |
|||||
|
|
2001 |
|
2000 |
|
2001 |
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 13,908 |
|
$12,898 |
|
$ 51,039 |
|
$ 50,618 |
|
|
Cost of sales |
9,715 |
|
8,916 |
|
35,535 |
|
36,120 |
|
|
Gross profit |
4,193 |
|
3,982 |
|
15,504 |
|
14,498 |
|
|
Selling, general and administrative expenses |
3,702 |
|
3,382 |
|
11,508 |
|
10,461 |
|
|
Loss
on closing of distribution facility |
136 |
|
– |
|
1,144 |
|
— |
|
|
Operating Income from continuing
operations |
355 |
|
600 |
|
2,852 |
|
4,037 |
|
|
Gain on purchases of subordinated debentures |
— |
|
— |
|
— |
|
(164) |
|
|
Interest income |
(2) |
|
(33) |
|
(5) |
|
(53) |
|
|
Interest expense |
301 |
|
384 |
|
1,181 |
|
1,481 |
|
|
Income from continuing operations before
income taxes and extraordinary gain |
56 |
|
249 |
|
1,676 |
|
2,773 |
|
|
Income taxes |
2 |
|
9 |
|
34 |
|
60 |
|
|
Income from continuing operations before
extraordinary gain |
54 |
|
240 |
|
1,642 |
|
2,713 |
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
Income from operations of discontinued retail
stores, net of income taxes |
— |
|
— |
|
189 |
|
217 |
|
|
Loss on disposal of retail stores, including
provision for operating losses during phase-out period, net of income taxes |
— |
|
— |
|
(731) |
|
– |
|
|
Income before extraordinary gain |
54 |
|
240 |
|
1,100 |
|
2,930 |
|
|
Extraordinary gain on purchases of
subordinated debentures and senior notes, net of income taxes |
— |
|
— |
|
348 |
|
150 |
|
|
Net income |
$ 54 |
|
$ 240 |
|
$ 1,448 |
|
$ 3,080 |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From continuing operations |
$ .00 |
|
$ .02 |
|
$ .11 |
|
$ .18 |
|
|
From discontinued operations |
— |
|
— |
|
(.04) |
|
.02 |
|
|
From extraordinary gain |
— |
|
— |
|
.03 |
|
.01 |
|
|
Net income per share |
$ .00 |
|
$ .02 |
|
$ .10 |
|
$ .21 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From continuing operations |
$ .00 |
|
$ .02 |
|
$ .11 |
|
$ .17 |
|
|
From discontinued operations |
— |
|
— |
|
(.04) |
|
.01 |
|
|
From extraordinary gain |
— |
|
— |
|
.02 |
|
.01 |
|
|
Net income per share |
$ .00 |
|
$ .02 |
|
$ .09 |
|
$ .19 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares
outstanding |
14,897 |
|
14,892 |
|
14,897 |
|
14,884 |
|
|
Diluted weighted average number of shares
outstanding |
15,378 |
|
15,804 |
|
15,370 |
|
16,041 |
|
May 14, 2001
Page 4
MOVIE STAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Number of Shares)
|
March 31, |
|
June
30, |
|
2001 |
|
2000* |
|
(Unaudited) |
|
|
ASSETS
|
Current
Assets |
|
|
|
|
Cash |
$ 396 |
|
$ 712 |
|
Receivables, net |
10,535 |
|
7,960 |
|
Inventory |
11,785 |
|
14,643 |
|
Prepaid expenses and other current assets |
1,997 |
|
2,143 |
|
Total current assets |
24,713 |
|
25,458 |
|
|
|
|
|
|
Property,
plant and equipment, net |
2,215 |
|
3,247 |
|
Other
assets |
2,571 |
|
2,922 |
|
|
|
|
|
|
Total assets |
$ 29,499 |
|
$ 31,627 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
Current
Liabilities |
|
|
|
|
Notes payable |
$ 3,372 |
|
$ 1,690 |
|
Current maturities of long-term debt and
capital lease obligations |
8,848 |
|
83 |
|
Accounts payable and accrued expenses |
4,454 |
|
6,432 |
|
Total current liabilities |
16,674 |
|
8,205 |
|
|
|
|
|
|
Long-term
debt and capital lease obligations |
85 |
|
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 |
12,111 |
|
10,663 |
|
|
16,358 |
|
14,910 |
|
|
|
|
|
|
Less: Treasury stock, at cost – 2,017,000
shares |
3,618 |
|
3,618 |
|
Total shareholders’ equity |
12,740 |
|
11,292 |
|
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$ 29,499 |
|
$ 31,627 |
* Derived from
audited financial statements