[S&K LOGO] NEWS RELEASE
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AMERICA'S MEN'S STORE
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P. O. Box 31800 Company Contact: Robert E. Knowles NASDAQ Trading Symbol: SKFB
Richmond, VA 23294-1800 Chief Financial Officer
(804) 346-2500
FOR IMMEDIATE RELEASE
S & K FAMOUS BRANDS ANNOUNCES FISCAL YEAR AND 4th
QUARTER RESULTS, ADDS INDUSTRY LEADER TO EXECUTIVE TEAM
AND INITIATES CASH TENDER OFFER FOR 1.8 MILLION SHARES
Experienced retail executive Stewart Kasen to become Chief Executive
Officer; Company to repurchase up to 45% of outstanding stock as
strategy to increase return on equity and enhance shareholder value.
Richmond, VA, March 27, 2002 -- S&K Famous Brands, Inc. (NASDAQ:SKFB;
www.skmenswear.com), today announced earnings for the year and fourth quarter
ended February 2, 2002.
FINANCIAL RESULTS
Net income for the fiscal year ended February 2, 2002 was $3.4 million, or $0.83
per diluted share, compared to net income of $4.5 million, or $1.04 per diluted
share, in fiscal 2001. Sales for the 52-week year were $160.9 million compared
to $167.9 million in the 53-week period last year. Comparable store sales for
the recent 52 weeks decreased 3%.
Net income for the fourth quarter was $1.9 million, or $0.47 per diluted share,
compared to net income of $2.6 million, or $0.64 per diluted share, in the same
period last year. Net income in the fourth quarter this year includes $325,000
or $0.08 per share related to income from an insurance claim. Total sales for
the 13-week fourth quarter were $48.1 million compared to $52.5 million for the
14-week quarter ended February 3, 2001. Comparable store sales for the recent 13
weeks were down 4% compared to the 13-week period ended February 3, 2001.
Stuart C. Siegel, Chairman and Chief Executive Officer, said, "While lower sales
challenged our earnings results in the latter part of the year, we are pleased
with our expense reduction efforts while showing significant improvements in our
balance sheet. We ended the year with our bank borrowings completely paid off
and $3.9 million excess cash equivalents, substantial inventory reductions due
to improved stock balancing and clearance of older merchandise, and book value
per share of $14.63. We are pleased with the renewed consumer interest in
tailored clothing, the improving economy and the new spring merchandise
assortments in our stores."
ADDITION TO EXECUTIVE TEAM
Mr. Siegel also announced that Stewart Kasen has been named President and Chief
Executive Officer and has become a member of the Board of Directors. Siegel will
continue as Chairman of the Board and Donald W. Colbert has been elevated to
Vice Chairman, in addition to serving as Chief Operating Officer. Kasen has held
senior management positions during a 30-year career with several leading retail
chains, including Chairman, CEO and President of Best Products Co., Inc.,
President and CEO of the Emporium and Thalhimers Divisions of Carter Hawley Hale
Stores and President of Schwarzchild Jewelers, Inc. He has worked as a
consultant to the Company in the past and was unanimously approved as President
and CEO by the Company's Board of Directors at its recent meeting. Mr. Kasen
will assume his duties as President and CEO in mid-April.
Mr. Siegel added, "We have been looking for a seasoned merchandising and
operations executive to add to our management team and believe we have found the
ideal person in Stewart Kasen. He has proven his ability to lead in the
value-based retail segment and his addition is good news for all S&K
shareholders. I and the rest of
S&K FAMOUS BRANDS ANNOUNCES FISCAL YEAR AND 4th QUARTER RESULTS, ADDS INDUSTRY
LEADER TO EXECUTIVE TEAM AND INITIATES CASH TENDER OFFER FOR 1.8 MILLION SHARES
Page 2
our management team are very supportive of Stewart coming on board, and we look
forward to working with him to help deliver strong results to our shareholders
for many years to come." Stuart Siegel will remain active in the Company as
Chairman of the Board, while Don Colbert will assume additional responsibilities
as Vice Chairman. The Company does not anticipate any other additions or changes
to its management structure at this time.
CASH TENDER
The Company is pleased to announce that it will offer to purchase up to
approximately 1.8 million shares of S&K's common stock (approximately 45% of the
outstanding shares). The Offer will be made at $11.00 per share, representing
approximately an 18% premium to the $9.30 closing price per share on March 26,
2002, the day of its authorization by the Company's Board of Directors. If more
than approximately 1.8 million shares are tendered, there will be a pro-ration
of the tendered shares. The offer will be made pursuant to the Offer of Purchase
dated March 28, 2002, and related materials, and will expire on April 26, 2002
at 5:00 p.m. unless otherwise extended. S&K will finance the tender offer
through available cash and a new $46 million credit facility provided by
SunTrust Bank, an existing lender to the Company, and Branch Banking & Trust
Company of Virginia (BB&T). The Offer to Purchase has no financing contingencies
or minimum requirements and may be withdrawn by the Company at any time.
The Company's management and Board of Directors believe that the Company's
business and prospects, coupled with the current market price of its shares of
Common Stock, make the purchase of the shares pursuant to the terms and
conditions of the Offer an attractive investment opportunity. While the Board of
Directors has approved the Offer to Purchase, the Board makes no recommendation
to shareholders as to whether to tender or refrain from tendering their shares.
Each shareholder must make the decision whether to tender shares and, if so, how
many shares to tender.
Stewart Kasen, the Company's recently-named Chief Executive Officer, added, "We
believe that the Company shares continue to be undervalued in the market and
that a repurchase of shares enables us to enhance shareholder value and still
preserve sufficient financial liquidity to execute our strategic plan. Our offer
also provides those who wish to sell shares a window of opportunity to do so at
a premium over recent trading prices. Following the completion of the Offer, we
expect that our book value per share will increase as the Offer to Purchase,
while at a premium to the current price, is well below the Company's current
book value of $14.63 per share. We further expect that this Offer will be
significantly accretive to the Company's earnings per share based on our pro
forma assumptions for the current year."
This press release is for informational purposes only and is not an offer to buy
or a solicitation of an offer to sell S&K common stock. The offer is being made
solely by the offer to purchase which, together with the letter of transmittal
and related documents, is being mailed to S&K record shareholders today and will
be made available to other beneficial owners.
S&K Famous Brands, Inc. is a retailer of value-priced menswear operating 237
stores in 27 states reaching from the East Coast to Texas and from Maine to
Florida. S&K offers a complete line of men's apparel generally priced 20-40%
below department store and specialty store regular prices. For more information,
go to our Web site at www.skmenswear.com.
(Financial Tables Follow)
Except for historical information contained herein, the statements in this
release may be forward-looking and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the Company's actual results in future periods to differ
materially from forecasted or expected results. Those risks include, among other
things, the competitive environment in the value-priced men's apparel industry
in general and in the Company's specific market area, inflation, changes in
costs of goods and services and economic conditions in general and in the
Company's specific market area. Those and other risks are more fully described
in the Company's filings with the Securities and Exchange Commission.
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S&K FAMOUS BRANDS ANNOUNCES FISCAL YEAR AND 4th QUARTER RESULTS, ADDS INDUSTRY
LEADER TO EXECUTIVE TEAM AND INITIATES CASH TENDER OFFER FOR 1.8 MILLION SHARES
Page 3
S & K FAMOUS BRANDS, INC.
STATEMENTS OF INCOME
($ and shares in 000s) Three Months Ended Twelve Months Ended
(unaudited)
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February 2, February 3, February 2, February 3,
2002 2001 2002 2001
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Net sales .......................................... $48,094 $52,494 $160,858 $167,913
Cost of sales ...................................... 25,451 26,697 83,080 84,830
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Gross profit ....................................... 22,643 25,797 77,778 83,083
Other costs and expenses:
Selling, general and administrative ............. 19,241 20,440 69,308 71,753
Interest ........................................ 53 271 375 869
Depreciation and amortization ................... 761 835 3,183 3,239
Other income, net ............................... (478) (14) (549) (86)
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Income before income taxes ......................... 3,066 4,265 5,461 7,308
Provision for income taxes ......................... 1,165 1,620 2,075 2,777
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Net income ......................................... $ 1,901 $ 2,645 $ 3,386 $ 4,531
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Diluted net earnings per share ..................... $ 0.47 $ 0.64 $ 0.83 $ 1.04
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Weighted average common shares outstanding plus
dilutive potential common shares ................ 4,069 4,123 4,072 4,375
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Effective income tax rate .......................... 38.0% 38.0% 38.0% 38.0%
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Note: The fourth quarter was a 13-week period this year compared to a 14-week
period last year. The current year was a 52-week period compared to a
53-week period last year.
CONDENSED BALANCE SHEETS
February 2, February 3,
($ in 000s) 2002 2001
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Assets:
Cash equivalents .......................... $ 3,850 $ 0
Inventory ................................. 44,869 52,031
Other current assets ...................... 3,891 3,590
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Total current assets ................... 52,610 55,621
Property and equipment, net ............... 17,571 18,522
Other assets .............................. 6,550 5,805
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$76,731 $79,948
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Liabilities and Shareholders' Equity:
Accounts payable .......................... $ 9,408 $ 6,691
Other current liabilities ................. 3,885 5,161
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Total current liabilities .............. 13,293 11,852
Long-term debt ............................ 1,260 9,050
Other long-term liabilities ............... 1,583 1,485
Deferred income taxes ..................... 1,437 1,695
Shareholders' equity ...................... 59,158 55,866
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$76,731 $79,948
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