Exhibit 99.1
I.C. Isaacs Reports Fourth Quarter and Full Year Fiscal 2005 Results
NEW YORK--(BUSINESS WIRE)--March 31, 2006--I.C. Isaacs & Company, Inc.
(OTCBB:ISAC), designer and marketer of the Marithe & Francois Girbaud brand of
casual denim and sportswear, today reported fourth quarter and full year 2005
results. For the three months ended December 31, 2005, the Company reported that
net sales were $17.5 million compared to $18.3 million in the year ago period.
The company reported a fourth quarter net loss of $384 thousand, or ($0.03) per
diluted share compared to net income of $1.5 million or $0.11 per diluted share
in the prior year period.
As previously announced, the company incurred a fourth quarter charge of
$0.13 related to the settlement of arbitration proceedings commenced against it
by a former executive. This settlement was recorded as a non-recurring charge in
the fourth quarter of fiscal 2005. Excluding this one-time charge, diluted
earnings per share would have increased to $0.10, which was in line with
management prior earnings estimates.
For the 2005 fiscal year, net sales increased 3.3% to $83.3 million
compared to $80.7 million in the prior year period. Net income for fiscal 2005
was $6.4 million, or $0.48 per diluted share, compared to net income of $6.2
million, or $0.46 in the prior year period. Excluding the one-time, fourth
quarter settlement charge of $0.13, diluted earnings per share for the full year
would have been $0.61, an increase of 32.6%.
Peter Rizzo, Chairman and CEO commented, "We accomplished a great deal over
the course of fiscal 2005. The second half of the year represented the final
stage of our nearly two-year long project to reposition this company. Over that
time, we have eliminated redundancy from our corporate structure, installed a
highly capable executive management team, rebuilt the design department,
repositioned the Girbaud brand appropriately for growth, and made vast
improvements in customer service and the timing of our deliveries."
Mr. Rizzo continued, "The stage is now set for I.C. Isaacs to use its
revitalized operating capabilities to create significant value for our
shareholders and our customers. We now have a highly capable platform which we
believe can support new products, with expanded tiers of distribution, and
additional branded businesses. It is now our mission to not only execute well on
our core business, but to diversify and maximize our opportunity for growth."
Fourth Quarter 2005 Results
Net sales for the fourth quarter of fiscal 2005 decreased to $17.5 million
compared to $18.3 million in the prior year period. Gross profit margins
increased 110 basis points to 37.8% in the fourth quarter of 2005 from 36.7% in
the fourth quarter of 2004. This decrease in sales and increase in margin
reflects the Company's planned exit from approximately two hundred unproductive
men's and women's doors that commenced last year.
Operating expense for the fourth quarter was $8.2 million, or 47.0% of
sales compared to $6.5 million, or 34.0% of sales in the prior year period.
Excluding the $1.75 million litigation charge, operating expense in the fourth
quarter would have been $6.5 million, or 37.0% of sales compared to $6.3
million, or 34.0% in the prior year period.
Full Year 2005 Results
Net sales for fiscal 2005 increased 3.3% to $83.3 million compared to $80.7
million in the prior year period.
Gross profit margins increased 260 basis points to 41.1% in 2005 from 38.5%
in 2004. The Company experienced higher gross profit and gross margins due to
higher initial markups on its products and better performance liquidating unsold
inventory, particularly in the second half of 2005.
Operating income as a percentage of net sales was 6.8% in fiscal 2005,
compared to 7.2% in fiscal 2004. Excluding the one-time settlement charge,
operating margin for the full year would have improved 170 basis points to 8.9%.
Net income for the 2005 fiscal year was $6.4 million, or $0.48 per diluted
share compared to net income of $6.2 million, or $0.46 in the prior year period.
Excluding the one-time settlement charge of $0.13 in the fourth quarter, diluted
earnings per share for the full year would have been $0.61, an increase of
30.4%.
Fiscal 2006 Operating Forecast
The company is comfortable it will grow earnings at least 10% in the first
half of fiscal 2006 with the growth occurring in the second quarter. For the
full 2006 fiscal year, the company expects earnings to grow at a pace of
approximately 20% over the 2005 diluted earnings per share result of $0.61,
excluding the one-time settlement charge.
Mr. Rizzo concluded, "We look forward to expanding our customer base and
growing results in fiscal 2006. The quality and design of our improved product
offering is gaining momentum with our customers, which will accelerate sales and
profitability beginning in the second quarter. We are encouraged by the trends
we are seeing in our bookings and look forward to maximizing our performance for
our shareholders."
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 press release includes disclosures of certain non-GAAP financial
measures, as such the term is defined under SEC Regulation G. Management
believes the non-GAAP financial measures employed in this release will help an
investor to understand the impact of a non-recurring charge on the Company's
financial position and the results of its operations.
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 2006, including, without limitation, statements regarding
the Company's expectations with respect to the economic environment in 2006 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
result of improved operating procedures will have on the order backlog. 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.
(financial tables below)
I.C. Isaacs & Company, Inc.
Consolidated Statements of Operations
(000's omitted except per share data)
Three Months Ended Year Ending
December 31, December 31,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $17,541 $18,329 $83,289 $80,649
Cost of sales 10,913 11,595 49,070 49,583
-------- -------- -------- --------
Gross profit 6,628 6,734 34,219 31,066
-------- -------- -------- --------
Operating Expenses
Selling 2,380 2,583 10,834 10,413
License fees 1,138 1,323 5,114 5,330
Distribution and shipping 585 488 2,248 1,968
General and administrative 2,386 1,835 8,604 7,532
Litigation settlement 1,750 -- 1,750 --
-------- -------- -------- --------
Total operating expenses 8,239 6,229 28,550 25,243
-------- -------- -------- --------
Operating (loss) income (1,611) 505 5,669 5,823
-------- -------- -------- --------
Other income (expense)
Interest, net of interest income (92) (146) (436) (729)
Other, net -- 1 -- 26
-------- -------- -------- --------
Total other income (expense) (92) (145) (436) (703)
-------- -------- -------- --------
Income (loss) before income taxes (1,703) 360 5,233 5,120
Income tax benefit, net 1,139 1,139 1,178 1,045
-------- -------- -------- --------
Net income (loss) $(384) $1,499 $6,411 $6,165
-------- -------- -------- --------
Basic income (loss) per share $(0.03) $0.13 $0.55 $0.55
Basic weighted average shares
outstanding 11,799 11,545 11,729 11,264
Diluted income (loss) per share $(0.03) $0.11 $0.48 $0.46
Diluted weighted average shares
outstanding 13,275 13,636 13,397 13,355
I.C. Isaacs & Company, Inc.
Consolidated Balance Sheets
(000's omitted except per share data)
December 31, December 31,
2005 2004
------------ ------------
Assets
Current
Cash, including temporary investments of
$561 and $70 $943 $1,046
Accounts receivable, less allowance for
doubtful accounts of $700 and $316 14,829 10,016
Inventories 5,287 8,317
Deferred tax asset 2,517 1,193
Prepaid expenses and other 404 510
------------ ------------
Total current assets 23,980 21,082
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 2,839 2,087
Other assets 323 4,663
------------ ------------
$27,142 $27,832
============ ============
Liabilities And Stockholders' Equity
Current
Checks issued against future deposits $447 $--
Revolving line of credit -- 223
Current maturities of long-term debt 2,893 3,366
Accounts payable 2,064 3,098
Accrued expenses and other current
liabilities 5,492 5,799
------------ ------------
Total current liabilities 10,896 12,486
------------ ------------
Long-term debt 1,726 3,192
Minimum pension liability 1,377 --
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, 12,967 and 12,722
shares issued; 11,790 and 11,614 shares
outstanding 1 1
Additional paid-in capital 44,295 44,101
Accumulated deficit (23,214) (29,625)
Accumulated other comprehensive income (5,616) --
Treasury stock, at cost (1,177 shares) (2,323) (2,323)
------------ ------------
Total stockholders' equity 13,143 12,154
------------ ------------
$27,142 $27,832
============ ============
CONTACT: I.C. Isaacs & Company, Inc.
Investor Relations:
Integrated Corporate Relations
James Palczynski/Bill Zima
203-682-8200