EXHIBIT 99.1
[HANOVER DIRECT LOGO]
FOR IMMEDIATE RELEASE
CONTACT: Hanover Direct, Inc The MWW Group
Edward M. Lambert Rich Tauberman
E.V.P & Chief Financial Officer Tel: (201) 507-9500
Tel: (201) 272-3325
HANOVER DIRECT, INC. REPORTS FIRST HALF OPERATING RESULTS FOR FISCAL 2003;
INTERNET SALES CONTINUE STRONG GROWTH AT 32.2% OVER PRIOR YEAR
EDGEWATER, NJ, August 7, 2003 - Hanover Direct, Inc. (AMEX: HNV) today announced
operating results for the 13- and 26-weeks ended June 28, 2003.
The Company reported that internet sales continue to show strong growth,
comprising 27.0% of total revenues for the 26-week period ended June 28, 2003.
Internet net revenues for the 13-week and 26-week periods ended June 28, 2003
were $27.5 million and $53.1 million, respectively, or 31.9% and 32.2% above the
comparable fiscal periods in 2002. Total net revenues for the 13-weeks and
26-weeks ended June 28, 2003 were $105.8 million and $208.2 million,
respectively, a decrease of $8.1 million (7.1%) and $15.2 million (6.8%),
respectively, from the prior year 13-week and 26-week results. The decreases
were due primarily to softness in demand related to general economic conditions.
For the 26-weeks ended June 28, 2003, the Company reported a net loss of $7.0
million compared with a net loss of $6.4 million for the 26-weeks ended June 29,
2002. The results for the 26-week periods ended June 28, 2003 and June 29, 2002
include $1.9 million and $0.3 million, respectively, in after tax gains
resulting from the sale of the Improvements business in June 2001. Net loss per
common share was $.05 for both the 26-weeks ended June 28, 2003 and June 29,
2002. The per share amounts were calculated after deducting preferred dividends
and accretion of $7.9 million and $6.4 million for the 26-weeks ended June 28,
2003 and June 29, 2002, respectively. The Company also announced that EBITDA
(earning before interest, taxes, depreciation and amortization) adjusted to add
back stock option expense was $6.1 million for the 26-weeks ended June 28, 2003
compared with $6.4 million for the comparable period in 2002.
The Company also reported net income of $0.7 million for the 13-weeks ended
June 28, 2003 compared with $1.8 million for the 13-weeks ended June 29, 2002.
The results for the 13-weeks ended June 29, 2002 include $0.3 million in after
tax gains resulting from the sale of the Improvements business in June 2001.
Net loss per common share was $.03 for the 13-weeks ended June 28, 2003
compared to a net loss per common share of $.01 for the 13-weeks ended June 29,
2002. The per share amounts were calculated after deducting preferred dividends
and accretion of $4.3 million and $3.5 million for the 13-weeks ended June 28,
2003 and June 29, 2002, respectively. The Company also announced that EBITDA
(earning before interest, taxes, depreciation and amortization) adjusted to add
back stock option expense was $3.1 million for the 13-weeks ended June 28, 2003
compared with $5.0 million for the comparable period in 2002.
A conference call with the management of Hanover Direct, Inc. to review the
Fiscal 2003 second quarter operating results will be held on Thursday, August 7,
2003 at 3:00 p.m. Eastern Daylight Time. If you would like to participate in the
call, please call 877-691-0878 (Domestic) and 973-582-2741 (International)
between 2:50 p.m. and 2:55 p.m. Eastern Daylight Time. The call will begin
promptly at 3:00 p.m. Eastern Daylight Time. A re-play of the conference will be
available from 5:00 p.m. Eastern Daylight Time on Thursday, August 7, 2003 until
5:00 p.m. Eastern Daylight Time on Friday, August 8, 2003 and can be accessed by
calling 877-519-4471 (Domestic) and 973-341-3080 (International) and entering
the Reservation No.: 4094320.
ABOUT HANOVER DIRECT, INC.
Hanover Direct, Inc. (AMEX: HNV) and its business units provide quality, branded
merchandise through a portfolio of catalogs and e-commerce platforms to
consumers, as well as a comprehensive range of Internet, e-commerce, and
fulfillment services to businesses. The Company's catalog and Internet portfolio
of home fashions, apparel and gift brands include Domestications, The Company
Store, Company Kids, Silhouettes, International Male, Scandia Down, and Gump's
By Mail. The Company owns Gump's, a retail store based in San Francisco. Each
brand can be accessed on the Internet individually by name. Keystone Internet
Services, LLC (www.keystoneinternet.com), the Company's third party fulfillment
operation, also provides the logistical, IT and fulfillment needs of the
Company's catalogs and web sites. Information on Hanover Direct, including each
of its subsidiaries, can be accessed on the Internet at www.hanoverdirect.com.
HANOVER DIRECT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
JUNE 28, DECEMBER 28,
2003 2002
--------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 708 $ 785
Accounts receivable, net 15,360 16,945
Inventories 49,382 53,131
Prepaid catalog costs 15,091 13,459
Other current assets 4,126 3,967
--------- ---------
Total Current Assets 84,667 88,287
--------- ---------
Property and equipment, at cost 89,179 88,609
Accumulated depreciation and amortization (61,080) (59,376)
--------- ---------
Property and equipment, net 28,099 29,233
--------- ---------
Goodwill, net 9,278 9,278
Deferred tax assets 13,600 12,400
Other assets 253 902
--------- ---------
Total Assets $ 135,897 $ 140,100
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 29,659 $ 3,802
Accounts payable 41,245 42,873
Accrued liabilities 15,760 26,351
Customer prepayments and credits 7,118 4,722
Deferred tax liabilities 2,300 1,100
--------- ---------
Total Current Liabilities 96,082 78,848
--------- ---------
NON-CURRENT LIABILITIES:
Long-term debt 23 21,327
Other 5,378 6,387
--------- ---------
Total Non-current Liabilities 5,401 27,714
--------- ---------
Total Liabilities 101,483 106,562
--------- ---------
SERIES B REDEEMABLE PREFERRED STOCK, authorized, issued
and outstanding, 1,622,111 shares at June 28, 2003 and December 28,
2002; liquidation preference was $105,015 and $92,379 at June 28,
2003 and December 28, 2002 99,954 92,379
SHAREHOLDERS' DEFICIENCY:
Common Stock, $.66 2/3 par value, authorized 300,000,000 shares;
140,436,729 shares issued at June 28, 2003 and December 28, 2002 93,625 93,625
Capital in excess of par value 329,926 337,507
Accumulated deficit (485,745) (486,627)
--------- ---------
(62,194) (55,495)
--------- ---------
Less:
Treasury stock, at cost (2,120,929 shares at June 28, 2003 and
December 28, 2002) (2,996) (2,996)
Notes receivable from sale of Common Stock (350) (350)
--------- ---------
Total Shareholders' Deficiency (65,540) (58,841)
--------- ---------
Total Liabilities and Shareholders' Deficiency $ 135,897 $ 140,100
========= =========
HANOVER DIRECT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
FOR THE 13- WEEKS ENDED FOR THE 26- WEEKS ENDED
----------------------- ----------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
2003 2002 2003 2002
--------- --------- --------- ---------
NET REVENUES $ 105,765 $ 113,852 $ 208,239 $ 223,363
--------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Cost of sales and operating expenses 66,265 70,326 131,804 141,489
Special charges 211 - 488 233
Selling expenses 26,859 26,579 51,312 51,199
General and administrative expenses 9,487 12,552 20,765 24,972
Depreciation and amortization 1,138 1,481 2,321 2,983
--------- --------- --------- ---------
103,960 110,938 206,690 220,876
--------- --------- --------- ---------
INCOME FROM OPERATIONS 1,805 2,914 1,549 2,487
Gain on sale of Improvements - 318 1,911 318
--------- --------- --------- ---------
INCOME BEFORE INTEREST AND
INCOME TAXES 1,805 3,232 3,460 2,805
Interest expense, net 1,120 1,386 2,568 2,739
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 685 1,846 892 66
Provision (benefit) for state income taxes (5) 30 10 60
--------- --------- --------- ---------
NET INCOME AND COMPREHENSIVE
INCOME 690 1,816 882 6
Preferred stock dividends and accretion 4,290 3,503 7,922 6,407
--------- --------- --------- ---------
NET LOSS APPLICABLE TO COMMON
SHAREHOLDERS $ (3,600) $ (1,687) $ (7,040) $ (6,401)
========= ========= ========= =========
NET LOSS PER COMMON SHARE:
Net loss per common share - basic and diluted $ (.03) $ (.01) $ (.05) $ (.05)
========= ========= ========= =========
Weighted average common shares outstanding -
basic (thousands) 138,316 138,264 138,316 138,245
========= ========= ========= =========
Weighted average common shares outstanding -
diluted (thousands) 138,316 138,264 138,316 138,245
========= ========= ========= =========
HANOVER DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
-----------------------
FOR THE 26- WEEKS ENDED
-----------------------
JUNE 28, JUNE 29,
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 882 $ 6
Depreciation and amortization, including deferred fees 2,966 3,696
Compensation expense related to stock options 341 627
Gain on sale of Improvements (1,911) -
Other, net 312 83
CHANGES IN ASSETS AND LIABILITIES:
Inventories 3,749 7,957
Prepaid catalog costs (1,632) (2,721)
Accounts payable (1,628) (5,838)
Accrued liabilities (10,591) (4,961)
Customer prepayments and credits 2,396 2,253
Other, net (1,087) (2,426)
-------- --------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (4,916) 189
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (1,202) (300)
Proceeds from sale of Improvements 2,000 -
Other, net (87) -
-------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES: 711 (300)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Congress facilities 4,559 (54)
Other, net (431) (71)
-------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 4,128 (125)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (77) (236)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 785 1,121
-------- --------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 708 $ 885
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest $ 1,642 $ 1,706
Income taxes $ 663 $ 137
Non-cash investing and financing activities
Series B Preferred Stock redemption price increase $ 7,575 $ 6,407
Tandem share expirations $ - $ 55
EBITDA COMPARISON SCHEDULE
FOR THE 26- WEEKS ENDED
JUNE 28, JUNE 29,
2003 2002
-------- --------
INCOME BEFORE INTEREST & TAXES $ 3,460 $ 2,805
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Add: Depreciation and amortization 2,321 2,983
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EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION 5,781 5,788
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Add: Compensation expense related to stock options 341 627
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EBITDA AS DEFINED FOR DEBT COVENANT $ 6,122 6,415
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