Sept. 21, 2000--Movie Star, Inc., (AMEX:MSI) today reported continuing improvement in its financial results for the fiscal 2000 fourth quarter and full year, which ended June 30, 2000.
Net sales for the fourth quarter of fiscal 2000 increased 6.9% to $13,944,000 from $13,044,000 for fiscal 1999's fourth quarter. Fourth quarter net income of $40,000 was a significant turnaround from a net loss of $1,042,000 a year ago.
``We continue to see positive results from our efforts to become more efficient and the Company has been profitable for four successive quarters,'' said Mel Knigin, Movie Star's President and Chief Executive Officer. ``In the lingerie business, the April through June quarter is typically a difficult one. After April's shipments for Mothers Day, May is relatively uneventful and June is characterized by promotional business. But thanks to the improvements we have been steadily making in our operations, we lost only a penny a share for the quarter and with the benefit from the debt retirement, we actually had a fourth quarter net profit.''
Fourth quarter sales for the Company's intimate apparel division increased 10% over the same period in 1999, while the retail division's sales were down 10% primarily due to the closing, in the fourth quarter, of eight of its stores. Gross margin for the intimate apparel division increased to 28.2% for fiscal 2000 from 28.0% in the prior year, while the retail division's gross margin increased to 37.4% from 37.0%.
``Our focus is on our intimate apparel division, where we expect to increase sales within the current fiscal year. Our new Meant to Be(TM) line of loungewear and sundresses is being well received in the market. This coupled with our new fashion lines, Private Property by Cinema Etoile and the Heather Nicole Sleepwear line, which have already been received with enthusiasm from the retailers, should prove to be a healthy addition in fiscal 2001.''
For all of fiscal 2000, net sales were down 2.1% to $71,004,000 from $72,506,000 for fiscal 1999. For the fiscal year, sales for the Company's intimate apparel division decreased less than one half of one percent as compared to the same period in 1999, while the retail division accounted for the majority of the decrease, losing approximately 13% of its sales as compared to the prior year. Net income increased 16.7% to $3,120,000, or $0.20 per diluted share, in fiscal 2000 from $2,673,000, or $0.17 per diluted share, for fiscal 1999. Included in net income for the year ended June 30, 2000, is an extraordinary gain of $393,000, or $0.03 per diluted share, attributable to purchases of the Company's 12.875% subordinated debentures and 8 % senior notes. Excluding this extraordinary gain, income increased 2% to $2,727,000 from $2,673,000. Diluted net income per share before the extraordinary gain was $0.17 for both years.
Over the past five years, Movie Star has made steady progress in improving its profitability. In fiscal 2000, the Company closed its last fully operational domestic manufacturing facility and completed its shift to offshore manufacturing. Today, the Company manufactures substantially all of its products offshore at higher margins with excellent quality and high efficiency and no longer sells price-sensitive commodity apparel.
``We reduced our inventories by 11% during fiscal 2000,'' Mr. Knigin noted. ``Inventory reduction improved our cash flow, which in turn has allowed us to reduce debt and related interest expense. We are increasing our efforts to sell additional products to our existing customers and to broaden our customer base by actively reaching out to new customers. We incurred costs this year to strengthen our sales staff in preparation for opportunities we expect this fall, and we expect to start seeing tangible benefits from these efforts as fiscal 2001 progresses.''
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; 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.
MOVIE
STAR, INC. produces and sells ladies sleepwear, robes, leisurewear, loungewear,
panties and daywear and also operates 20 retail outlet stores.
MOVIE STAR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Three Months Ended Year Ended June 30, June 30, 2000 1999 2000 1999 ------- ------- ------- ------- (Unaudited) Net sales $13,944 $13,044 $71,004 $72,506Cost of sales 9,930 9,325 50,199 51,363 ------- ------- ------- ------- Gross profit 4,014 3,719 20,805 21,143 Selling, general and administrative expenses 3,962 4,271 16,496 15,859 ------- ------- ------- ------- Income from operations 52 (552) 4,309 5,284 Gain on purchases of subordinated debentures - - (164) -Interest income (92) (59) (145) (118)Interest expense 375 590 1,856 2,694 ------- ------- ------- ------- Income before (benefit from) provision for income taxes and extraordinary gain (231) (1,083) 2,762 2,708 (Benefit from) provision for income taxes (28) (41) 35 35 ------- ------- ------- ------- Income before extraordinary gain (203) (1,042) 2,727 2,673 Extraordinary gain on purchases of subordinated debentures and senior notes, net of income taxes (243) - (393) - ------- ------- ------- -------Net income $ 40 $(1,042) $ 3,120 $ 2,673 ------- ------- ------- ------- ------- ------- ------- ------- BASICIncome (loss) before extraordinary gain per share $(.01) $(.07) $.18 $.19Extraordinary gain per share .01 - .03 - ------- ------- ------- -------Net income (loss) per share $ - $(.07) $.21 $.19 ------- ------- ------- ------- ------- ------- ------- ------- DILUTEDIncome (loss) before extraordinary gain per share $(.01) $(.07) $.17 $.17Extraordinary gain per share .01 - .03 - ------- ------- ------- -------Net income (loss) per share $ - $(.07) $.20 $.17 ------- ------- ------- ------- ------- ------- ------- ------- Basic weighted average number of shares outstanding 14,897 14,877 14,889 14,309 ------- ------- ------- ------- ------- ------- ------- -------Diluted weighted average number of shares outstanding 15,580 14,877 15,928 15,869 ------- ------- ------- ------- ------- ------- ------- ------- MOVIE STAR, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Number of Shares) June 30, June 30, 2000 1999 ---------- ---------- ASSETSCurrent Assets Cash $ 712 $ 4,597 Receivables, net 7,960 6,864 Inventory 14,643 16,460 Deferred income taxes 1,706 1,983 Prepaid expenses and other current assets 437 602 ------- ------- Total current assets 25,458 30,506 Property, plant and equipment, net 3,247 3,495Other assets 619 732Deferred income taxes 2,303 2,026 ------- ------- Total assets $31,627 $36,759 ------- ------- ------- ------- LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities Notes payable $ 1,690 $ - Current maturities of long-term debt and capital lease obligations 83 45 Accounts payable 4,597 4,529 Accrued expenses and other current liabilities 1,835 3,316 ------- ------- Total current liabilities 8,205 7,890 Long-term debt and capital lease obligations 12,130 20,703 ------- ------- Commitments and Contingencies - - Stockholders' equity Common Stock $.01 par value - authorized 30,000,000 shares, issued 16,914,000 shares in 2000 and 16,897,000 shares in 1999 169 169 Additional paid-in capital 4,078 4,072 Retained earnings 10,663 7,543 ------- ------- 14,910 11,784 Less: Treasury stock, at cost - 2,017,000 shares 3,618 3,618 ------- ------- Total stockholders' equity 11,292 8,166 ------- ------- Total liabilities and stockholders' equity $31,627 $36,759 ------- ------- ------- -------
Contact:
Movie Star, Inc. Thomas Rende, 212/684-3400 or INVESTOR RELATIONS: SM Berger & Company, Inc. Steve Warcholak, 216/464-6400