New
York, New York, (August 21, 2001)—Movie Star, Inc., (AMEX:MSI) today announced
financial results for its three months and year ended June 30, 2001.
Fourth quarter net sales from continuing
operations declined to $11,604,000 this year from $12,094,000 of a year ago.
Net income for the fourth quarter was $266,000 for fiscal 2001, or $.02 per
diluted share, as compared to $40,000, for fiscal 2000. Income from continuing operations before
extraordinary items related to the purchases of the 12.875% Subordinated
Debentures and 8% Senior Notes for the quarter was $109,000, or $0.01 per
diluted share, compared to a net loss of $384,000, or $0.02 per diluted share,
in the corresponding period last year.
Income from continuing operations before extraordinary items included a
one-time income tax benefit of $922,000 (net of current year’s income tax
expense) related to the reversal of a deferred tax valuation allowance. Excluding the tax benefit, the Company
recorded a loss from continuing operations before extraordinary items in the
fourth quarter of $813,000, or $0.05 per diluted share, compared to a loss of
$384,000, or $0.02 per diluted share, in the fourth quarter of last year.
As previously announced, the Company classified
its retail business as discontinued operations in the second quarter and the
results for those operations are reported separately in the financial
statements.
Fourth
quarter gross margin from continuing operations decreased to 24.9% from 26.5%
last year, due to a higher volume of close out sales. Operating losses from continuing operations increased to $519,000
from $134,000 in fiscal 2000. The
increase in operating losses resulted principally from lower sales and reduced
gross margin.
“Our fourth quarter sales and earnings performance was
largely affected by a slowing in general economic activity and overall weakness
in the soft goods retail market,” stated Mr. Mel Knigin, Movie Star’s President
and CEO. “Due to the current uncertain
economic climate retailers have been reducing inventory commitments
particularly in light of the continued softness in retail intimate apparel
sales.”
For all of fiscal 2001, net sales from continuing operations
declined to $62,643,000 from $62,712,000 for fiscal 2000. The sales decline was due principally to a
slowing in the general economy and loss of a customer due to a bankruptcy. Gross margin for the year improved to 29.4 %
from 28.2 % for fiscal 2000. The
improvement resulted from the Company’s continuing efforts to streamline its
operations and improve efficiencies. Net income was $1,714,000, or $.11
per diluted share, for fiscal 2001, compared to $3,120,000, or $.20 per diluted
share, for fiscal 2000. Income from continuing operations before
extraordinary items related to the purchases of the 12.875% Subordinated
Debentures and 8% Senior Notes decreased to $1,751,000, or $0.11 per diluted
share, from $2,329,000, or $0.15 per diluted share, for fiscal 2000. Included in continuing operations
before extraordinary items is a one-time charge of
$1,188,000 related to the closing of the Company’s Virginia distribution
facility and an income tax benefit of $888,000 (net of current year’s income tax
expense) related to the reversal of a deferred tax valuation allowance in
fiscal 2001.
“Excluding one-time charges, our financial performance for
the fiscal year fell below our initial growth expectation,” stated Mr.
Knigin. “We have, however, devoted considerable
effort to improving our operations and financial position during fiscal 2001.
As a result, our portfolio of products, merchandise quality, and broad price
point offerings are some of the strongest in our Company’s history. Substantially all of our manufacturing has
been transferred offshore, we closed our retail operations, and consolidated
our distribution centers into two locations.
Our financial position has steadily improved as we continue to focus on
improving inventory management. At the
end of fiscal 2001, inventory was down by over $2.6 million, or 18 % from June
30, 2000. As previously announced, we
successfully renegotiated our line of credit and will be using it to retire our
long-term debt. On September 1, 2001,
we will retire our 8% Senior Notes at maturity and the 12.875% Subordinated
Debentures one-month early. The
refinancing effort will substantially lower our overall interest cost. We are a much different Company
operationally and financially than we were just 12 months ago. Even though we remain cautious over the
near-term because of current weak market conditions, our Company is better
positioned to withstand the market softness and to realize sales and earnings
improvements as industry conditions strengthen.”
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 |
|
Year Ended |
|||||
|
|
June 30, |
|
June 30, |
|||||
|
|
2001 |
|
2000 |
|
2001 |
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$11,604 |
|
$12,094 |
|
$62,643 |
|
$ 62,712 |
|
|
Cost of sales |
8,718 |
|
8,892 |
|
44,253 |
|
45,012 |
|
|
Gross profit |
2,886 |
|
3,202 |
|
18,390 |
|
17,700 |
|
|
Selling, general and administrative expenses |
3,361 |
|
3,336 |
|
14,869 |
|
13,797 |
|
|
Loss
on closing of distribution facility |
44 |
|
— |
|
1,188 |
|
— |
|
|
Operating income (loss) from continuing operations |
(519) |
|
(134) |
|
2,333 |
|
3,903 |
|
|
Gain on purchases of subordinated debentures |
— |
|
— |
|
— |
|
(164) |
|
|
Interest expense, net |
294 |
|
283 |
|
1,470 |
|
1,711 |
|
|
Income (loss) from continuing operations
before income taxes and extraordinary items |
(813) |
|
(417) |
|
863 |
|
2,356 |
|
|
Income taxes |
(922) |
|
(33) |
|
(888) |
|
27 |
|
|
Income (loss) from continuing operations
before extraordinary items |
109 |
|
(384) |
|
1,751 |
|
2,329 |
|
|
Income (loss) on discontinued operations, net
of income taxes |
216 |
|
181 |
|
(326) |
|
398 |
|
|
Income (loss) before extraordinary items |
325 |
|
(203) |
|
1,425 |
|
2,727 |
|
|
Extraordinary gain (loss) on purchases of
subordinated debentures and senior notes, net of income taxes |
(59) |
|
243 |
|
289 |
|
393 |
|
|
Net income |
$ 266 |
|
$ 40 |
|
$ 1,714 |
|
$
3,120 |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From continuing operations |
$ .01 |
|
$ (.02) |
|
$ .12 |
|
$ .16 |
|
|
From discontinued operations |
.01 |
|
.01 |
|
(.02) |
|
.03 |
|
|
From extraordinary items |
— |
|
.01 |
|
.02 |
|
.02 |
|
|
Net income per share |
$ .02 |
|
$ – |
|
$ .12 |
|
$ .21 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
From continuing operations |
$ .01 |
|
$ (.02) |
|
$ .11 |
|
$ .15 |
|
|
From discontinued operations |
.01 |
|
.01 |
|
(.02) |
|
.03 |
|
|
From extraordinary items |
— |
|
.01 |
|
.02 |
|
.02 |
|
|
Net income per share |
$ .02 |
|
$ – |
|
$ .11 |
|
$ .20 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares
outstanding |
14,904 |
|
14,897 |
|
14,899 |
|
14,889 |
|
|
Diluted weighted average number of shares
outstanding |
15,094 |
|
15,580 |
|
15,301 |
|
15,928 |
|
MOVIE STAR, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Number of Shares)
|
June 30, |
|
June
30, |
|
2001 |
|
2000 |
|
|
|
|
ASSETS
|
Current
Assets |
|
|
|
|
Cash |
$ 261 |
|
$ 712 |
|
Receivables, net |
7,859 |
|
7,960 |
|
Inventory |
11,947 |
|
14,643 |
|
Deferred
income taxes |
2,226 |
|
1,706 |
|
Prepaid expenses and other current assets |
318 |
|
437 |
|
Total current assets |
22,611 |
|
25,458 |
|
|
|
|
|
|
Property,
plant and equipment, net |
2,217 |
|
3,247 |
|
Other
assets |
282 |
|
619 |
|
Deferred
income taxes |
2,689 |
|
2,303 |
|
|
|
|
|
|
Total assets |
$27,799 |
|
$ 31,627 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
Current
Liabilities |
|
|
|
|
Notes payable |
$ 3,734 |
|
$ 1,690 |
|
Current maturities of long-term debt and
capital lease obligations |
6,593 |
|
83 |
|
Accounts payable |
2,853 |
|
4,597 |
|
Accrued expenses and other current
liabilities |
1,497 |
|
1,835 |
|
Total current liabilities |
14,677 |
|
8,205 |
|
|
|
|
|
|
Long-term
debt and capital lease obligations |
70 |
|
12,130 |
|
|
|
|
|
|
Deferred
lease liability |
30 |
|
— |
|
|
|
|
|
|
Commitments
and Contingencies |
— |
|
— |
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
Common
stock $.01 par value – authorized 30,000,000
shares; issued 16,954,000 shares in 2001 and 16,914,000 shares in 2000 |
170 |
|
169 |
|
Additional paid-in capital |
4,093 |
|
4,078 |
|
Retained earnings |
12,377 |
|
10,663 |
|
|
16,640 |
|
14,910 |
|
|
|
|
|
|
Less: Treasury stock, at cost – 2,017,000
shares |
3,618 |
|
3,618 |
|
Total shareholders’ equity |
13,022 |
|
11,292 |
|
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$ 27,799 |
|
$ 31,627 |