Exhibit 99.1
I.C. Isaacs Reports Second Quarter 2005
Results; Net Sales Increased 10.2% to $21.7 Million; Diluted Earnings
Per Share Increased 36.4% to $0.15 On Improved Margins
NEW YORK--(BUSINESS WIRE)--Aug. 2, 2005--I.C. Isaacs & Company,
Inc. (OTCBB:ISAC), designer and marketer of the Marithe+Francois
Girbaud brand of casual denim and sportswear, today reported second
quarter 2005 results. For the three months ended June 30, 2005, the
Company reported that net sales increased 10.2% to $21.7 million and
diluted earnings per share increased by 36.4% to $0.15 versus $0.11
during the second quarter of 2004. For the six months ended June 30,
2005, the Company reported that net sales increased 12.6% to $45.5
million and diluted earnings per share increased by 88.9% to $0.34
versus $0.18 during the second quarter of 2004.
Peter Rizzo, Chairman and CEO commented, "We are pleased with our
accomplishments in the second quarter and first half of the fiscal
year. The repositioning of the Girbaud brand is going as planned and
we are clearly benefiting from the improvements we have made in the
areas of management, infrastructure and distribution. Our sales,
design, finance, sourcing and planning divisions are now highly
capable, responsive and streamlined for greater cost-efficiencies. Our
distribution strategy, which is the final piece of our repositioning,
is well under way and generating higher levels of profitability and
setting a firm base from which to accelerate the growth of our
business."
Second Quarter 2005 Results
Net income increased $0.7 million to $2.0 million, or $0.15 per
diluted share, for the three months ended June 30, 2005, compared to
net income of $1.3 million, or $0.11 per diluted share, for the same
period of 2004.
Gross profit increased 17.3% to $8.8 million in the second quarter
of 2005 from $7.5 million in the same quarter of 2004. Gross margins
increased 250 basis points to 40.6% in the second quarter of 2005 from
38.1% in the same period of 2004.
Operating expenses increased 11.9% to $6.6 million in the second
quarter of 2005 from $5.9 million in the same period of 2004. The
increase in operating expenses resulted primarily from design sample
expenses, professional fees and other operating personnel expenses.
Operating expenses as a percentage of net sales were 30.4% in the
second quarter of 2005, compared to 29.9% in the same period of 2004.
Mr. Rizzo concluded, "During the second quarter, our men's
division continued to increase the level of productivity in our
existing doors and also continued to open new store locations through
an increasingly diversified product line. In our women's teen
business, we continued to make excellent progress with the
repositioning of the brand and believe the enhancement and broadening
of our women's line to a fresher, young contemporary look is the right
strategic direction for this business going forward."
Year to Date 2005 Results
Net income increased $2.3 million to $4.5 million, or $0.34 per
diluted share, for the six months ended June 30, 2005, compared to net
income of $2.2 million, or $0.18 per diluted share, for the same
period of 2004.
Gross profit increased 27.9% to $18.8 million in the six months
ended June 30, 2005 from $14.7 million in the same period of 2004.
Gross margins increased 490 basis points to 41.3% in the six months
ended June 30, 2005 from 36.4% in the same period of 2004.
Operating expenses increased 14.9% to $13.9 million in the six
month period ended June 30, 2005 from $12.1 million in the same period
of 2004. The increase in operating expenses resulted primarily from
commission expenses associated with higher sales, design sample
expenses, professional fees and operating personnel expenses.
Operating expenses as a percentage of net sales were 30.5% in the six
months ended June 30, 2005, compared to 30.0% in the same period of
2004.
Order Backlog
The Company's order backlog was $26.1 million at June 30, 2005, a
decrease of 30.2% compared to $37.4 million at June 30, 2004. This is
largely the function of a reordering of the Company's priorities. Last
year, the objective was more concentrated on selling than effectively
communicating a focused brand identity through balanced merchandise
assortments. While orders were strong in the prior year period,
profitability was negatively impacted at the end of the season. This
year, new sales management has instituted appropriate procedures to
guard and refine the brand identity as well as improve profitability.
The planned exit from underperforming men's doors combined with an
exit from most of the women's urban department stores, essentially a
clean-up versus last year, is reflected in the reduced backlog
numbers. The Company remains comfortable with its ability to meet
revenue and earnings targets for the remainder of the 2005 fiscal
year.
Fiscal Year 2005 Operating Forecast
For the 2005 fiscal year, the Company expects its diluted earnings
per share to be in the range of $0.62 to $0.65 compared to fiscal 2004
revenues of $80.7 million and diluted earnings per share of $0.46.
About I.C. Isaacs & Company
I.C. Isaacs & Company, Inc. is a designer and marketer of branded
casual denim and sportswear based in New York and Baltimore. The
Company offers full lines of casual denim and sportswear for men and
women under the Marithe+Francois Girbaud brand in the United States
and Puerto Rico.
This announcement contains forward-looking statements 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. Those
statements include statements regarding the intent, belief, or current
expectations of I.C. Isaacs and its management with respect to
expenses and expected financial results of the Company for the year
2005, including, without limitation, statements regarding the
Company's expectations with respect to the economic environment in
2005 and belief in the strength and future of the Girbaud brand. Such
statements are subject to a variety of risks and uncertainties, many
of which are beyond the Company's control, which could cause actual
results to differ materially from those contemplated in such
forward-looking statements, including, but not limited to, (i) changes
in the marketplace for the Company's products, including customers'
taste, (ii) the introduction of new products or pricing changes by the
Company's competitors, (iii) changes in the economy, (iv) termination
of one or more of its agreements for the use of the Girbaud brand
names and images, (v) the risk that the Company's sales estimate will
differ from actual orders and the Company will order too much or too
little inventory, (vi) the effect the restructuring of the women's
line will have on future income, and (vii) the Company's expectation
of net sales and diluted earnings per share for the fiscal year ending
2005. Existing and prospective investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date hereof. The Company undertakes no obligation to update
or revise the information contained in this press release, whether as
a result of new information, future events or circumstances or
otherwise.
I.C. Isaacs & Company, Inc.
Consolidated Statements of Operations (Unaudited)
(000's omitted except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $21,749 $19,667 $45,451 $40,432
Cost of sales 12,907 12,211 26,658 25,729
-------- -------- -------- --------
Gross profit 8,842 7,456 18,793 14,703
-------- -------- -------- --------
Operating Expenses
Selling 2,691 2,165 5,690 4,795
License fees 1,235 1,298 2,723 2,651
Distribution and shipping 580 484 1,130 987
General and administrative 2,136 1,981 4,385 3,679
-------- -------- -------- --------
Total operating expenses 6,642 5,928 13,928 12,112
-------- -------- -------- --------
Operating income 2,200 1,528 4,865 2,591
-------- -------- -------- --------
Other income (expense)
Interest, net of interest income (140) (192) (250) (391)
Other, net -- 23 -- 24
-------- -------- -------- --------
Total other income (expense) (140) (169) (250) (367)
-------- -------- -------- --------
Income before income taxes 2,060 1,359 4,615 2,224
Income tax expense 41 46 92 46
-------- -------- -------- --------
Net income $ 2,019 $ 1,313 $ 4,523 $ 2,178
-------- -------- -------- --------
Basic income per share $ 0.17 $ 0.12 $ 0.39 $ 0.20
Basic weighted average shares
outstanding 11,713 11,135 11,682 11,135
Diluted income per share $ 0.15 $ 0.11 $ 0.34 $ 0.18
Diluted weighted average shares
outstanding 13,407 12,280 13,407 12,277
I.C. Isaacs & Company, Inc.
Consolidated Balance Sheets (Unaudited)
(000's omitted except per share data)
June 30, December 31,
2005 2004
------------ ------------
Assets
Current
Cash, including temporary investments of
$250 and $70 $ 698 $ 1,046
Accounts receivable, less allowance for
doubtful accounts of $475 and $316 14,631 10,016
Inventories 6,531 8,317
Deferred tax asset 1,193 1,193
Prepaid expenses and other 397 510
------------ ------------
Total current assets 23,450 21,082
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 2,851 2,087
Other assets 4,702 4,663
------------ ------------
$ 31,003 $ 27,832
============ ============
Liabilities And Stockholders' Equity
Current
Overdrafts $ 943 $ --
Revolving line of credit 1,315 223
Current maturities of long-term debt 4,085 3,366
Accounts payable 1,820 3,098
Accrued expenses and other current
liabilities 3,552 5,799
------------ ------------
Total current liabilities 11,715 12,486
------------ ------------
Long-term debt 2,473 3,192
Commitments and Contingencies
Stockholders' Equity
Preferred stock; $.0001 par value; 5,000
shares authorized, none outstanding -- --
Common stock; $.0001 par value; 50,000
shares authorized, 12,922 and 12,791
shares issued; 11,746 and 11,614 shares
outstanding 1 1
Additional paid-in capital 44,239 44,101
Accumulated deficit (25,102) (29,625)
Treasury stock, at cost (1,177 shares) (2,323) (2,323)
------------ ------------
Total stockholders' equity 16,815 12,154
------------ ------------
$ 31,003 $ 27,832
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CONTACT: I.C. Isaacs & Company, Inc.
by
Integrated Corporate Relations
Bill Zima, 203-682-8200