Exhibit 99.1
I.C. Isaacs Reports Second Quarter 2007 Financial Results
NEW YORK--(BUSINESS WIRE)--Aug. 14, 2007--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 2007 results.
For the three months ended June 30, 2007, the Company reported that net
sales were $8.5 million compared to $24.0 million in the year ago period. The
Company reported a second quarter net loss of $(3.4) million, or $(0.28) per
share compared to net income of $2.3 million or $0.19 per diluted share in the
prior year period. The Company noted that net income for the second quarter of
2006 included an income tax benefit of $272,000 or $.02 per diluted share.
`Robert Stec, Interim Chief Executive Officer, commented, "While our
financial results show clearly that our challenges continue, we have made very
good progress in a number of areas. We have restructured our design department
to focus on merchandise strategies and to reduce our costs. We have completed a
comprehensive restructuring of our sales organization, creating efficiency and
significantly improving our capabilities to penetrate both the urban and
contemporary market segments. We have made a strong effort to cut costs across
the organization, reduced our headcount from 110 employees at year end to just
over 80 currently, and implemented cost reduction programs in all areas of the
organization. We also have exercised more creative control and have therefore,
improved the effectiveness of our marketing campaigns. A new brand positioning
and marketing campaign is currently under development for the U.S. and will be
launched in first quarter of 2008. At the same time, we are increasingly excited
about diversifying our business. We are focused on introducing a new line, "Le
Jean de Marithe + Francois Girbaud" for Holiday and will follow with a
comprehensive jean based lifestyle assortment for Spring. The early previews of
both the revamped urban line and the contemporary line have been received very
positively by the retail community. We expect to see order backlog building in
both segments during and after the upcoming MAGIC trade show. Additionally, we
are continuing to work toward diversifying our brand portfolio through
acquisition and licensing and further segmentation of the Girbaud brand".
While we do expect to have a difficult second half, we believe we are
successfully positioning our business to improve significantly next year and
into the future. We have the complete support of our licensor and continue to
work on both the long term growth plans and positioning as well as a contract
extension beyond 2011.
The Company noted that inventories at quarter's end were $7.3 million, an
improvement versus the year-end level of $10.5 million driven by utilization of
off-price clearance and rationalization of purchasing activity.
The Company also reported that order backlog as of June 30, 2007 was
approximately $11.8 million, down from $26.9 million on June 30, 2006.
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 2007, including, without limitation, statements regarding
the Company's expectations with respect to the economic environment in 2007 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.
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,
----------------- -----------------
2007 2006 2007 2006
-------- -------- -------- --------
Net sales $ 8,496 $24,041 $22,690 $45,304
Cost of sales 5,501 14,270 14,812 26,467
-------- -------- -------- --------
Gross profit 2,995 9,771 7,878 18,837
-------- -------- -------- --------
Operating Expenses
Selling 1,679 2,599 3,945 5,293
License fees 1,125 1,581 2,250 2,959
Distribution and shipping 478 618 1,114 1,230
General and administrative 2,444 2,800 4,723 4,838
Severance 599 -- 1,212 --
-------- -------- -------- --------
Total operating expenses 6,325 7,598 13,244 14,320
-------- -------- -------- --------
Operating (loss) income (3,330) 2,173 (5,366) 4,517
-------- -------- -------- --------
Other income (expense)
Interest, net of interest income (54) (98) (124) (180)
Other, net 5 (2) 4 4
-------- -------- -------- --------
Total other income (expense) (49) (100) (120) (176)
-------- -------- -------- --------
Income (loss) before income taxes (3,379) 2,073 (5,486) 4,341
Income tax benefit (expense) -- 272 -- 549
-------- -------- -------- --------
Net (loss) income $(3,379) $ 2,345 $(5,486) $ 4,890
-------- -------- -------- --------
Basic (loss) income per share $ (0.28) $ 0.20 $ (0.45) $ 0.41
Basic weighted average shares
outstanding 12,283 11,996 12,249 11,996
Diluted (loss) income per share $ (0.28) $ 0.19 $ (0.45) $ 0.39
Diluted weighted average shares
outstanding 12,283 12,665 12,249 12,666
I.C. Isaacs & Company, Inc.
Consolidated Balance Sheets (Unaudited)
(000's omitted except per share data)
June 30, December 31,
2007 2006
------------ ------------
Assets
Current
Cash, including temporary investments of
$59 and $77 $ 2,437 $ 525
Accounts receivable, less allowance for
doubtful accounts of $700 and $725 6,113 13,268
Inventories 7,301 10,492
Prepaid expenses and other 862 1,004
------------ ------------
Total current assets 16,713 25,289
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 3,044 3,233
Other assets 276 287
------------ ------------
$ 20,033 $ 28,809
============ ============
Liabilities And Stockholders' Equity
Current
Overdrafts $ -- $ 8
Revolving line of credit -- 3,390
Current maturities of long-term debt 2,103 2,103
Accounts payable 1,271 2,831
Accrued expenses and other current
liabilities 2,810 1,806
------------ ------------
Total current liabilities 6,184 10,138
------------ ------------
Minimum pension liability 1,813 1,603
Stockholders' Equity
Preferred stock; $.0001 par value; 5,000
shares authorized, none outstanding -- --
Common stock; $.0001 par value; 50,000
shares authorized, 13,459 and 13,251
shares issued; 12,283 and 12,074 shares
outstanding 1 1
Additional paid-in capital 45,757 45,302
Accumulated deficit (26,093) (20,606)
Accumulated other comprehensive income (5,306) (5,306)
Treasury stock, at cost (1,177 shares) (2,323) (2,323)
------------ ------------
Total stockholders' equity 12,036 17,068
------------ ------------
$ 20,033 $ 28,809
============ ============
I.C. Isaacs & Company, Inc.
Consolidated Condensed Statements of Cash Flows (Unaudited)
(000's omitted except per share data)
Six Months Ended
June 30,
-----------------
2007 2006
-------- --------
Operating Activities
Net (loss) income $(5,486) $ 4,889
Adjustments to reconcile net income to cash provided
by (used in) operating activities
Provision for doubtful accounts 401 135
Write off of accounts receivable (426) (142)
Provision for sales returns and discounts 769 1,120
Sales returns and discounts (1,050) (1,699)
Deferred tax asset -- (650)
Depreciation and amortization 448 256
Stock-based compensation 454 774
(Increase) decrease in assets
Accounts receivable 7,460 (4,183)
Inventories 3,191 (5,766)
Prepaid expenses and other 143 (105)
Other assets (2) 4
(Decrease) increase in liabilities
Accounts payable (1,561) 1,962
Accrued expenses and other current liabilities 1,004 (1,992)
Minimum pension liability 210 221
-------- --------
Cash provided by (used in) operating activities 5,555 (5,176)
-------- --------
Investing Activities
Capital expenditures (246) (110)
-------- --------
Cash used in investing activities (246) (110)
-------- --------
Financing Activities
Net change in overdrafts (7) (447)
Net (payments) borrowings on revolving line of
credit (3,390) 6,346
Principal payments on long-term debt -- (1,106)
-------- --------
Cash (used in) provided by financing activities (3,397) 4,793
-------- --------
Increase (decrease) in cash and cash equivalents 1,912 (493)
Cash and Cash Equivalents, at beginning of period 525 943
-------- --------
Cash and Cash Equivalents, at end of period $ 2,437 $ 450
-------- --------
CONTACT: For: I.C. Isaacs & Company
Investor Relations:
Integrated Corporate Relations
James Palczynski, 203-682-8229