Haggar Posts a 5% Sales Increase for the Fourth Quarter of Fiscal
2004 and Will Restate Fiscal 2002 Financial Results DALLAS, Nov. 3
/PRNewswire-FirstCall/ -- Fourth Quarter and Annual Highlights: *
Increased sales 5% in the fiscal fourth quarter to $131.8 million
and increased annual sales 1% to $487.9 million * Grew core
earnings per share 24% for the year to $1.46 in fiscal 2004 from
$1.18 in fiscal 2003 * Improved gross margin percentages to 30.2%
in the fiscal fourth quarter and to 28.8% overall for fiscal 2004 *
Introduced ForeverNew(TM), a line of casual and dress pants and
sport shirts that won't fade, shrink, wrinkle or stain * Announced
a multi-year licensing agreement with BMB Group, Ltd. to further
develop the men's wear business under the Haggar(R) brand in the
United Kingdom and Republic of Ireland * Reduced debt by 77% to
$2.1 million at September 30, 2004 from $9.3 million at September
30, 2003 * Combined men's and women's operations into a new global
corporate headquarters Haggar Corp. (NASDAQ:HGGR) announced results
for the fourth quarter and full year for fiscal year 2004, which
ended September 30, 2004. Haggar also announced that it will
restate its fiscal 2002 financial results to correct certain
accounting errors. The adjustments resulting from the restatement
do not impact the Company's cash or liquidity position nor do they
affect the Company's compliance with its financial covenants under
its debt facilities. Net sales for the fourth quarter of fiscal
2004 increased 5% to $131.8 million as compared to $125.5 million
in the fourth quarter of fiscal 2003. Net income was $3.8 million,
or $0.54 earnings per diluted share, as compared to net income for
2003 of $7.3 million or $1.12 earnings per diluted share. Core
earnings, which excludes the impact of unusual charges (benefits)
as presented in the table below, were $3.8 million for the fourth
quarter of fiscal 2004, or $0.54 core earnings per diluted share,
as compared to $4.2 million for the fourth quarter of fiscal 2003
or $0.64 core earnings per diluted share. Net sales for the full
fiscal year of 2004 increased 1% to $487.9 million as compared to
$482.4 million in 2003. Net income for the full fiscal year of 2004
was $9.4 million, or $1.34 earnings per diluted share, as compared
to net income for fiscal 2003 of $9.9 million, or $1.53 income per
share. For the full fiscal year of 2004, Haggar reported $10.2
million in core earnings, or a 24% increase in core earnings per
diluted share to $1.46 in fiscal 2004. This compares to fiscal
2003, in which the Company reported $7.6 million in core earnings,
or core earnings per diluted share of $1.18. Earnings Summary
(unaudited) Three Months Ended Twelve Months Ended (in thousands,
except per share amounts) September 30, September 30, 2004 2003
2004 2003 Net income $3,882 $7,326 $9,408 $9,856 Net income per
common share - Diluted $0.54 $1.12 $1.34 $1.53 Unusual charges
(benefits) net of tax: Relocation of global headquarters - - 509 -
Wrongful termination lawsuit - - 309 - Gain on sale of global
headquarters, net - (3,225) - (3,225) Reduction in force - 90 - 90
Proxy defense costs - - - 752 Gain on sale of Edinburg, Texas
facility - - - (203) Legal settlement on landlord dispute - - - 329
Core earnings $3,882 $4,191 $10,226 $7,599 Core earnings per share
- Diluted $0.54 $0.64 $1.46 $1.18 Weighted average shares
outstanding - Diluted 7,195 6,529 7,022 6,453 Review of Core
Earnings: J. M. Haggar, III, the Company's Chairman and Chief
Executive Officer, stated, "Fiscal 2004 was a year of progress for
Haggar - both financially and geographically. For the first time,
our men's and women's wear personnel are working under one roof at
our new global corporate headquarters. We are already seeing the
benefits of combined expertise, as the women's pant programs
introduced during fiscal 2004 have been very successful. We are
very pleased that we improved our gross profit percentages to 28.8%
in fiscal 2004 from 26.8% in fiscal 2003, which resulted from
increased men's sourcing efficiencies, strategic cost reductions in
the women's division and increased retail division gross margins."
Frank Bracken, President and Chief Operating Officer, noted, "We
are excited that the Company's innovative products continued to
perform in a difficult retail environment during the past year.
These successes provide solid building blocks for fiscal 2005. Our
ongoing national marketing campaign introduces the consumer to the
latest offering, the Haggar(R)ForeverNew(TM) line, which includes
casual and dress pants and sport shirts that won't fade, shrink,
wrinkle or stain. Our Kenneth Cole(R) programs, which exceeded
expectations in fiscal 2004, also provided a spark which will carry
over into fiscal 2005." John Feray, acting Chief Financial Officer,
noted, "The Company was able to repay $3.6 million in senior notes
prior to September 30, 2004, to reduce outstanding debt to $2.1
million, from $9.3 million at September 30, 2003. The Company was
also investing over $25 million of cash and cash equivalents at the
end of fiscal 2004. During fiscal 2005, the Company is focused on
strategically reducing selling, general and administrative
expenses, as well as identifying new, lower cost sourcing
opportunities in an effort to further improve earnings per share
and shareholder value." The Haggar Board of Directors continued the
$0.05 per share quarterly dividend. The dividend will be payable on
November 15, 2004, to shareholders of record as of November 1,
2004. The Company will file a Form 8-K with the Securities and
Exchange Commission with its financial projections for fiscal 2005
with estimated net sales of $475 million to $493 million and an
earnings per share estimate of $1.39 to $1.59. The Company also
will announce in its Form 8-K that it will restate its financial
results for the fiscal year ended September 30, 2002 to correct
errors in the accounting for certain intercompany transactions and
related foreign currency translation adjustments. On a pretax
basis, these errors resulted in understatements of cost of goods
sold, accounts payable and cumulative translation adjustment of
$1.3 million, $1.1 million and $0.2 million, respectively, in
fiscal 2002. Accordingly, after the related tax benefit of $0.5
million, net income for fiscal 2002 will be reduced by
approximately $0.8 million, or $0.12 per basic and diluted share.
Additionally, as a result of the restatement, the Company's
consolidated balance sheets at September 30, 2002 and 2003, and at
the interim periods of fiscal 2004, will reflect an increase in
total liabilities of $0.6 million and a decrease in total
stockholders' equity of $0.6 million. As such, the referenced
financial statements should not be relied upon. The adjustments do
not impact the Company's cash or liquidity position nor do they
affect the Company's compliance with its financial covenants under
its debt facilities. The decision to restate its financial
statements was made today by the Audit Committee of Haggar's Board
of Directors, upon the recommendation of management and with the
concurrence of the Company's independent registered public
accountants. The Company expects to file its restated financial
statements in its Form 10-K for fiscal 2004. Haggar Clothing Co., a
wholly-owned subsidiary of Haggar Corp., is a leading marketer of
men's casual and dress apparel and women's sportswear, with global
headquarters in Dallas, TX. Haggar markets in the United States,
United Kingdom, Canada, Mexico, and Indonesia. Haggar also holds
exclusive licenses to use the Claiborne(R) trademark in the United
States to manufacture, market, and sell men's shorts and pants and
to use the Kenneth Cole New York(R) and Kenneth Cole Reaction (R)
trademarks throughout the United States to manufacture, distribute
and sell men's tailored dress pants and men's classification dress
and casual pants and shorts in men's classification pant
departments. For more information visit the Haggar website at
http://www.haggar.com/. The statements contained in this release
that are not historical facts are forward-looking statements. These
forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions that could cause actual results to
differ materially from those anticipated or implied by the forward-
looking statements; the results could be affected by, among other
things, general business conditions, the impact of competition, the
seasonality of the Company's business, labor relations,
governmental regulations, unexpected judicial decisions, and
inflation. In addition, the financial results for the quarter just
ended do not necessarily indicate the results that may be expected
for any future quarters or for any fiscal year. Investors also
should consider other risks and uncertainties discussed in
documents filed by the Company with the Securities and Exchange
Commission. Given these uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. The
Company undertakes no obligation to update any such statements or
publicly announce any updates or revisions to any of the
forward-looking statements contained herein to reflect any change
in the Company's expectations with regard thereto or any changes in
events, conditions, circumstances or assumptions underlying such
statements. Use of Non-Generally Accepted Accounting Principles
(Non-GAAP) Financial Information The Company reports its financial
results in accordance with GAAP. However, the Company uses core
earnings as a non-GAAP performance measure to provide both
management and investors a more complete understanding of the
Company's underlying operational results. This non-GAAP measure is
an indicator management uses to provide additional meaningful
comparisons between current results and prior reported results, and
as a basis for planning and forecasting for future periods. Core
earnings is calculated by taking actual net income (loss) and
adjusting that amount for unusual charges or benefits (based on
management's interpretation) which are calculated net of tax. The
presentation of core earnings is not meant to be considered in
isolation or as a substitute for comparable metrics prepared in
accordance with GAAP in the United States. HAGGAR CORP. Condensed
Consolidated Three Months Ended Year Ended September 30, September
30, Statements of Operations 2004 2003 2004 2003 (In thousands,
except per share amounts) Net sales $ 131,743 $ 125,546 487,890 $
482,375 Cost of sales 91,891 90,984 347,581 353,091 Gross profit
39,852 34,562 140,309 129,284 Selling, general and administrative
expenses (34,226) (29,222) (125,655) (119,300) Royalty income 350
542 1,203 1,593 Other income (expense), net 323 6,085 692 6,687
Interest expense (397) (563) (1,706) (2,535) Income before
provision for income taxes 5,902 11,404 14,843 15,729 Provision for
income taxes 2,020 4,078 5,435 5,873 Net income $3,882 $7,326
$9,408 $9,856 Net income per common share - Basic $0.55 $1.14 $1.37
$1.53 - Diluted $0.54 $1.12 $1.34 $1.53 Weighted average shares
outstanding - Basic 7,095 6,442 6,883 6,424 - Diluted 7,195 6,529
7,022 6,453 HAGGAR CORP. Condensed Consolidated Balance Sheet Sept.
30, 2004 Sept. 30, 2003 Assets (In thousands) Cash and cash
equivalents $30,667 $7,674 Accounts receivable, net 56,132 56,528
Inventories 95,229 96,959 Deferred tax benefit 9,933 10,505 Other
current assets 7,392 3,557 Total current assets 199,353 175,223
Property, plant and equipment, net 44,394 45,932 Goodwill 9,472
9,472 Other assets 7,165 7,580 Total Assets $260,384 $238,207
Liabilities and Stockholders' Equity Accounts payable $30,621
$27,395(A) Accrued liabilities 36,639 31,339(A) Accrued wages and
other employee compensation 8,538 7,228 Current portion of
long-term debt 100 3,671 Total current liabilities 75,898 69,633
Other non-current liabilities 12,760 9,554 Deferred tax liability
374 523 Long term debt 2,000 5,671 Stockholders' equity 169,352
152,826(A) Total Liabilities and Stockholders' Equity $260,384
$238,207 (A) Reflects balance sheet impact of 2002 financial
statement restatement. DATASOURCE: Haggar Corp. CONTACT: John
Feray, Chief Financial Officer of Haggar Corp., +1-214-352-8481,
fax, +1-214-956-4239 Web site: http://www.haggar.com/
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