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Maidenform Brands, Inc. Reports Second Quarter 2013 Results



         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.com and 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 ir@maidenform.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 cvieth@maidenform.com
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