Maidenform Brands, Inc. Reports Second Quarter 2013 Results PR Newswire ISELIN, N.J., Aug. 7, 2013 ISELIN, N.J., Aug.7, 2013 /PRNewswire/ --Maidenform Brands, Inc. (NYSE: MFB), a global intimate apparel company, today reported second quarter 2013 net sales of $145.4 million and earnings per share of $0.34. On July 23, 2013, Maidenform entered into a definitive agreement with Hanesbrands Inc. pursuant to which Hanesbrands will acquire all of the outstanding shares of Maidenform for $23.50 per share in cash, representing a transaction value of approximately $575 million. For a more detailed description of the Merger Agreement, please refer to the Current Report on Form 8−K filed by the Company on July 24, 2013. "Our second quarter results were in line with our expectations," stated Maurice S. Reznik, Chief Executive Officer of Maidenform. Financial Results for Second Quarter 2013 versus Second Quarter 2012 Net sales for the second quarter of 2013 decreased $12.1 million, or 7.7%, to $145.4 million. Wholesale segment net sales for the second quarter of 2013 decreased $11.6 million, or 8.2%, to $129.8 million. Retail segment net sales decreased $0.5 million, or 3.1%, to $15.6 million. The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release. Wholesale Segment Department Stores and National Chain Stores Net sales for the department stores and national chain stores channel decreased $7.9 million, or 11.2%, to $62.5 million for the second quarter of 2013 from softness in the bra and shapewear categories resulting from lower replenishment orders, increased shapewear competition at a chain customer as well as a decrease resulting from the initial shipments for the Jennifer Lopez brand which occurred in 2012. Somewhat offsetting this decline was improved replenishment at a mid-tier department store customer. Mass Merchants Mass merchant channel net sales decreased $0.5 million, or 1.0%, to $47.7 million for the second quarter of 2013 resulting from lower strapless bra replenishment orders and lower replenishment orders on new introductions. This decrease was predominately offset by increased sales in the bra and shapewear categories at our other mass customers, including shapewear rebranding initiatives at a warehouse club customer. Other Net sales in the other channel decreased $3.2 million, or 14.0%, to $19.6 million for the second quarter of 2013 primarily from sales declines to a specialty retailer, decreased program sales to off-price retailers and lower liquidation sales. Total international net sales, which are included in the wholesale segment, increased $0.5 million, or 3.4%, to $15.3 million with growth in significant markets, most notably Canada, Germany and Mexico. Partially offsetting this increase were sales decreases in other markets, such as the United Kingdom and Russia. Retail Segment Total retail segment net sales decreased $0.5 million, or 3.1%, to $15.6 million. Same store sales, defined as outlet stores that have been open for more than one year, increased 1.5%. Internet sales remained unchanged at $2.3 million for the second quarter of 2013. The retail segment operated 68 outlet stores as of the end of the second quarter 2013 and 75 outlet stores as of the end of the second quarter of 2012. Consolidated gross profit decreased $7.1 million, or 13.2%, to $46.5 million for the second quarter of 2013. As a percentage of net sales, consolidated gross margins were 32.0% for the second quarter of 2013 versus 34.0% for the second quarter of 2012, driven by increased promotional activity to drive inventory productivity and increased inventory clearing costs. Consolidated selling, general and administrative expenses (SG&A) decreased $1.3 million, or 3.8%, to $33.3 million for the second quarter of 2013. This decrease is a result of decreased payroll and related benefits, including lower incentive compensation and lower variable compensation at our North Carolina distribution center, somewhat offset by increased costs associated with our West Coast distribution initiative, and professional fees associated with the definitive agreement with Hanesbrands. As a percentage of net sales, SG&A increased to 22.9% for the second quarter of 2013 compared to 21.9% for the second quarter of 2012. Due to all the factors described above, operating income for the second quarter of 2013 was $13.2 million, or 9.1% of net sales, compared to operating income of $19.0 million, or 12.1% of net sales, for the second quarter of 2012. Net interest expense for the second quarter of 2013 was unchanged at $0.2 million. The Company recorded income tax expense of $5.1 million and $7.4 million for the three months ended June 29, 2013 and June 30, 2012, respectively. The Company's effective income tax rate for the second quarter of 2013 was 38.4% compared to 39.1% for the second quarter of 2012. Net income for the second quarter of 2013 and 2012 was $7.9 million and $11.4 million, respectively, and EPS was $0.34 and $0.49, respectively. Financial Results for Year-To-Date 2013 versus Year-To-Date 2012 Net sales for the first six months of 2013 decreased $38.4 million, or 12.2%, to $276.6 million. Wholesale segment net sales, on a year-to-date basis, decreased $37.7 million, or 13.2%, to $248.5 million resulting from the reasons mentioned above. Total international net sales decreased $0.5 million, or 1.6%, to $30.8 million. This decrease was driven by lower sales in the United Kingdom and Russia. Partially offsetting these decreases were sales increases in other markets, such as Mexico and South Korea. Retail segment net sales for the first six months of 2013 decreased $0.7 million, or 2.4%, to $28.1 million. Same store sales, defined as outlet stores that have been open for more than one year, increased 2.7%. Internet sales decreased $0.2 million, or 4.3%, to $4.4 million. The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release. Consolidated gross margins on a year-to-date basis were 27.9% versus 30.6% for the same period in 2012. The decrease in gross margin was a result of increased promotional activity to drive inventory productivity and increased inventory clearing costs. Slightly offsetting this decrease was a favorable mix of sales. Consolidated SG&A decreased $1.9 million, or 2.8%, to $65.8 million for the first six months of 2013. This decrease is primarily due to the same drivers sighted above for the second quarter of 2013. As a percentage of net sales, SG&A increased to 23.8% for the first six months of 2013 compared to 21.5% for the same period of 2012. Year-to-date operating income for 2013 was $11.3 million, or 4.1% of net sales. Year-to-date operating income for 2012 was $28.8 million, or 9.1% of net sales. The Company's effective income tax rate for the first six months of 2013 was 37.4% compared to 39.1% for the same period of 2012. Net income for the first six months of 2013 and 2012 was $6.7 million and $17.2 million, respectively, and EPS was $0.29 and $0.74, respectively. Total cash and cash equivalents as of June 29, 2013 were $54.5 million compared to $59.1 million as of June 30, 2012. The Company's outstanding debt was $67.4 million as of June 29, 2013 versus $68.5 million as of June 30, 2012. Conference Call Information In light of the pending transaction with Hanesbrands, Maidenform will not be hosting a quarterly conference call. Investors and other interested parties may access the press release by visiting ir.maidenform.comand clicking on News Releases. About Maidenform Brands, Inc. Maidenform Brands, Inc. is a global intimate apparel company with a portfolio of established, well-known brands, top-selling products and an iconic heritage. Maidenform designs, sources and markets an extensive range of intimate apparel products, including bras, panties and shapewear. Maidenform sells its products under some of the most recognized brands in the intimate apparel industry, including Maidenform^®, Control It!^®, Fat Free Dressing^®, Flexees^®, Lilyette^®, Bodymates^®, Inspirations^®, Self Expressions^® and Sweet Nothings^®. Maidenform products are currently distributed in approximately 63 countries and territories outside the United States. IMPORTANT INFORMATION FOR INVESTORS AND STOCKHOLDERS: This press release does not constitute a solicitation of any vote or approval. On July 24, 2013, Maidenform announced that it had entered into a definitive agreement with Hanesbrands pursuant to which Hanesbrands will acquire Maidenform by merger. In connection with the proposed merger, Maidenform will file a proxy statement with the Securities and Exchange Commission (the "SEC"). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the proxy statement (when available) and any other relevant documents filed with the SEC from the SEC's website at http://www.sec.gov. In addition, investors will be able to obtain, without charge, a copy of the proxy statement and other relevant documents (when available) at Maidenform's website at ir.Maidenform.com or by contacting Maidenform's investor relations department by telephone at (732) 621-2300 or via e-mail at email@example.com. Forward Looking Statement: This press release contains forward-looking statements relating to future events and the Company's future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects" or similar words or phrases, although not all forward-looking statements contain such identifying words. All forward-looking statements included in this press release are based on information available to the Company on the date hereof. It is routine for the Company's internal projections and expectations to change as the year or each quarter in the year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of each quarter or the year. Although these expectations may change, we assume no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Actual events or results may differ materially from those contained in the projections or forward-looking statements. The following factors, among others, could cause the Company's actual results to differ materially from those expressed in any forward-looking statements: the worldwide apparel industry may be harmed by a global economic downturn, the conditions in the financial and credit markets may affect the availability and cost of our funding, the Company's growth cannot be assured and any growth may be unprofitable; potential fluctuations in our results of operations or rate of growth; our dependence on a limited number of customers; the Company has larger competitors with greater resources; retail trends in the intimate apparel industry, including consolidation and continued growth in the development of private brands, resulting in downward pressure on prices, reduced floor space and other harmful changes; failure to anticipate, identify or promptly react to changing trends, styles, or consumer preferences; the Company's credit agreement could limit growth opportunities; external events that disrupt the Company's supply chain, result in increased cost of goods or an inability to deliver its products; events which result in difficulty in procuring or producing products on a cost-effective basis; disputes with third parties for infringement or misappropriation of their proprietary rights or other litigation; increases in the prices of raw materials; changing international trade regulation, including as it relates to the imposition or elimination of quotas on imports of textiles and apparel; foreign currency exposure; and the sufficiency of cash to fund operations and capital expenditures; and Maidenform's and Hanesbrands' ability to complete the proposed merger on a timely basis or at all. This list is intended to identify only certain of the principal factors that could cause actual results to differ from those discussed in the forward-looking statements. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (unaudited) June 29, December 29, 2013 2012 Assets Current assets Cash and cash equivalents $ $ 54,521 83,747 Accounts receivable, net 84,551 72,538 Inventories 125,137 119,015 Deferred income taxes 15,081 15,081 Prepaid expenses and other current assets 21,548 15,089 Total current assets 300,838 305,470 Property and equipment, net 30,538 31,347 Goodwill 7,162 7,162 Intangible assets, net 91,235 91,789 Other non-current assets 138 183 Total assets $ $ 429,911 435,951 Liabilities and stockholders' equity Current liabilities Current portion of long-term debt $ $ 67,400 1,100 Accounts payable 39,788 53,050 Accrued expenses and other current liabilities 21,439 21,882 Total current liabilities 128,627 76,032 Long-term debt - 67,125 Deferred income taxes 28,530 26,927 Other non-current liabilities 11,020 11,583 Total liabilities 168,177 181,667 Stockholders' equity Preferred stock - $0.01 par value; 10,000,000 shares authorized and none issued and outstanding - - Common stock - $0.01 par value; 100,000,000 shares authorized; 24,399,732 shares issued and 22,910,581 outstanding at June 29, 2013 and 24,399,732 shares issued and 22,754,212 244 244 outstanding at December 29, 2012 Additional paid-in 79,552 80,628 capital Retained earnings 218,865 213,423 Accumulated other comprehensive loss (8,609) (8,647) Treasury stock, at cost (1,489,151 shares at June 29, 2013 and 1,645,520 shares at December 29, 2012) (28,318) (31,364) Total stockholders' equity 261,734 254,284 Total liabilities and stockholders' $ $ equity 429,911 435,951 MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share and per share amounts) (unaudited) Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 2013 2012 2013 2012 Net sales $ $ $ $ 145,450 157,485 276,606 315,031 Cost of sales 98,908 103,927 199,502 218,566 Gross 46,542 53,558 77,104 96,465 profit Selling, general and administrative 33,335 34,570 65,790 67,638 expenses Operating 13,207 18,988 11,314 28,827 income Interest expense, 277 296 548 549 net Income before provision for 12,930 18,692 10,766 28,278 income taxes Income tax expense 4,960 7,308 4,030 11,049 Net income $ $ $ $ 7,970 11,384 6,736 17,229 Basic earnings per $ $ $ $ common share 0.35 0.49 0.29 0.75 Diluted earnings per $ $ $ $ common share 0.34 0.49 0.29 0.74 Basic weighted average number of shares 22,902,895 23,052,429 22,842,848 22,995,539 outstanding Diluted weighted average number of shares 23,102,664 23,399,367 23,115,724 23,389,694 outstanding MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited) Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 2013 2012 2013 2012 Net income $ $ $ $ 7,970 11,384 6,736 17,229 Other comprehensive income (loss), before tax: Foreign currency 115 (724) (151) (219) translation adjustments Adjustments to benefit 158 137 316 274 plans Other comprehensive income 273 (587) 165 55 (loss), before tax Income tax expense related to items of other comprehensive 63 55 127 110 income (loss) (1) Other comprehensive income 210 (642) 38 (55) (loss), net of tax Comprehensive income $ $ $ $ 8,180 10,742 6,774 17,174 (1) Tax expense provided relates to benefit plan deferrals. MAIDENFORM BRANDS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended June 29, June 30, 2013 2012 Cash flows from operating activities Net income $ $ 6,736 17,229 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization 2,978 2,560 Amortization of intangible assets 554 546 Amortization of deferred financing costs 87 94 Stock-based compensation 1,929 2,301 Deferred income taxes 1,475 1,396 Excess tax benefits related to (495) (843) stock-based compensation Bad debt expense 340 277 Other non-cash items 101 411 Net changes in operating assets and liabilities Accounts receivable (12,443) (33,928) Inventories (6,252) 4,251 Prepaid expenses and other current and non-current assets (3,068) (454) Accounts payable (13,250) 686 Accrued expenses and other current and non-current liabilities (680) 1,188 Income taxes payable (3,173) (778) Net cash used in (25,161) (5,064) operating activities Cash flows from investing activities Capital expenditures (2,178) (2,835) Net cash used in (2,178) (2,835) investing activities Cash flows from financing activities Term loan repayments (825) (550) Proceeds from stock options exercised 56 636 Excess tax benefits related to stock-based 495 843 compensation Payments of employee withholding taxes related (1,578) (1,566) to equity awards Payments of capital lease obligations (110) (152) Financing fees paid - (250) Net cash used in (1,962) (1,039) financing activities Effects of exchange rate changes on cash and 75 (35) cash equivalents Net decrease in cash and (29,226) (8,973) cash equivalents Cash and cash equivalents Beginning of period 83,747 68,041 End of period $ $ 54,521 59,068 Supplementary disclosure of cash flow information Cash paid during the period Interest $ $ 588 510 Income taxes $ $ 5,752 10,310 Supplemental schedule of non-cash financing activities Treasury stock issued related to equity award $ $ activity 4,624 4,483 Exhibit 1 MAIDENFORM BRANDS, INC. AND SUBSIDIARIES SALES BY CHANNEL OF DISTRIBUTION AND PRODUCT MIX (in millions) (unaudited) Three months ended June 29, June 30, $ % 2013 2012 change change (in millions) Department stores and national chain $ $ $ (11.2%) stores 62.5 70.4 (7.9) Mass merchants 47.7 48.2 (0.5) (1.0) Other 19.6 22.8 (3.2) (14.0) Total wholesale 129.8 141.4 (11.6) (8.2) Retail 15.6 16.1 (0.5) (3.1) Total net sales $ $ $ (7.7%) 145.4 157.5 (12.1) Six months ended June 29, June 30, $ % 2013 2012 change change (in millions) Department stores and national chain $ $ $ (9.9%) stores 116.2 129.0 (12.8) Mass merchants 91.2 107.2 (16.0) (14.9) Other 41.1 50.0 (8.9) (17.8) Total wholesale 248.5 286.2 (37.7) (13.2) Retail 28.1 28.8 (0.7) (2.4) Total net sales $ $ $ (12.2%) 276.6 315.0 (38.4) Three months ended Six months ended June 29, June 30, June 29, June 30, 2013 2012 2013 2012 Bras 58% 59% 59% 57% Shapewear 34 34 33 36 Panties 8 7 8 7 100% 100% 100% 100% SOURCE Maidenform Brands, Inc. Website: http://www.maidenformbrands.com Contact: Chris Vieth, Chief Operating Officer & Chief Financial Officer, (732) 621-2101 or firstname.lastname@example.org
Maidenform Brands, Inc. Reports Second Quarter 2013 Results
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