MSI..GREAT NEWS!!
Movie Star Announces Fiscal 1999 Results; Net Income Up 122%
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Movie Star Announces Fiscal 1999 Results; Net Income Up 122% Despite a Special Charge NEW YORK--(BUSINESS WIRE)--Sept. 28, 1999--MOVIE STAR, INC. (ASE: MSI) today reported financial results for the fourth quarter and fiscal year ended June 30, 1999. (See Accompanying Tables). For the year ended June 30, 1999, net income rose 122% to $2,673,000, or $.17 per diluted share, from $1,202,000, or $.08 per diluted share, in fiscal 1998. These results are all the more significant in light of the previously announced $625,000 special charge taken in the fourth quarter of fiscal 1999 in connection with the retirement from day-to-day operations of Mark M. David, who remains Chairman of the Board. Despite this charge, selling, general and administrative expenses still declined to 21.9% of sales from 23.6% in fiscal 1998. Exclusive of this special charge, net income would have been approximately $3.3 million, or $.21 per diluted share. Furthermore, in fiscal year 1998, the Company recorded a gain on the purchase of subordinated debentures and convertible notes of $157,000. Sales for the 1999 fiscal year increased 12.3% to $72,506,000 from last year's $64,537,000. The improvement was attributable to higher sales by the intimate apparel division, where demand for the Company's moderately priced fashion forward garments continued to grow. At the same time, gross profit for intimate apparel rose to 28.0% from 27.5% due to an improved product mix, better control over product costs, and the continued shift of production to offshore contractors. Sales for the retail division were lower in fiscal 1999. The retail stores were adversely affected by poor weather patterns and hurricanes in the geographic regions where the stores are located. This resulted in higher markdowns and lower gross margins as compared to fiscal 1998. Sales for the fourth quarter of fiscal year 1999 were $13,044,000, down slightly from last year's fourth quarter sales of $13,680,000, with both the retail and intimate apparel divisions contributing to the sales decline. Excluding the aforementioned $625,000 special charge, income from operations would have approximated last year's fourth quarter's $72,000. After the charge, there was a loss from operations of $552,000, which with interest and taxes, produced a net loss of $1,042,000, or $.07 per diluted share. In the comparable period last year, the Company reported a net loss of $500,000, or $.03 per diluted share. Commenting on the Company's performance, Movie Star's President & CEO, Mel Knigin, stated, "Fiscal 1999 was a very rewarding year in terms of growth in sales and profitability." Mr. Knigin continued, "Sales for the first quarter of fiscal 2000 may be slightly below the $18,958,000 achieved in the first quarter of fiscal 1999, however, our open order position, as of June 30, 1999, of $32,300,000, which approximated last year's level, gives us confidence in the year as a whole. As we've previously stated, in fiscal year 2000 we are focusing our efforts on increasing sales volume in the second half by expanding our spring-to-summer merchandise collections. This was one of the primary considerations in launching the Meant To Be line." Saul Pomerantz, the Company's Executive Vice President & COO, noted that, "Movie Star's balance sheet continued to strengthen as working capital rose 14% to $22,616,000. In fact, we were able to use cash flow from operations to fund the repurchase of approximately $2.7 million of our 12.875% Subordinated Debentures during August and September 1999, substantially reducing the mandatory sinking fund payment due October 1, 2000. As a result of the transaction, our Company will record a gain of approximately $105,000, net of related costs, in the first quarter of fiscal 2000 and will benefit from lower interest expense going forward." MOVIE STAR, INC. produces and sells ladies sleepwear, robes, leisurewear, loungewear, panties and daywear and also operates 28 retail outlet stores. 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 exchange 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.
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