Haggar (NASDAQ:HGGR)
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Haggar Posts a 5% Sales Increase for the Fourth Quarter of Fiscal
2004 and Will Restate Fiscal 2002 Financial Results
DALLAS, Nov. 3 /PRNewswire-FirstCall/ --
Fourth Quarter and Annual Highlights:
* Increased sales 5% in the fiscal fourth quarter to $131.8 million and
increased annual sales 1% to $487.9 million
* Grew core earnings per share 24% for the year to $1.46 in fiscal 2004
from $1.18 in fiscal 2003
* Improved gross margin percentages to 30.2% in the fiscal fourth quarter
and to 28.8% overall for fiscal 2004
* Introduced ForeverNew(TM), a line of casual and dress pants and sport
shirts that won't fade, shrink, wrinkle or stain
* Announced a multi-year licensing agreement with BMB Group, Ltd. to
further develop the men's wear business under the Haggar(R) brand in
the United Kingdom and Republic of Ireland
* Reduced debt by 77% to $2.1 million at September 30, 2004 from
$9.3 million at September 30, 2003
* Combined men's and women's operations into a new global corporate
headquarters
Haggar Corp. (NASDAQ:HGGR) announced results for the fourth quarter and full
year for fiscal year 2004, which ended September 30, 2004. Haggar also
announced that it will restate its fiscal 2002 financial results to correct
certain accounting errors. The adjustments resulting from the restatement do
not impact the Company's cash or liquidity position nor do they affect the
Company's compliance with its financial covenants under its debt facilities.
Net sales for the fourth quarter of fiscal 2004 increased 5% to $131.8 million
as compared to $125.5 million in the fourth quarter of fiscal 2003. Net income
was $3.8 million, or $0.54 earnings per diluted share, as compared to net
income for 2003 of $7.3 million or $1.12 earnings per diluted share. Core
earnings, which excludes the impact of unusual charges (benefits) as presented
in the table below, were $3.8 million for the fourth quarter of fiscal 2004, or
$0.54 core earnings per diluted share, as compared to $4.2 million for the
fourth quarter of fiscal 2003 or $0.64 core earnings per diluted share.
Net sales for the full fiscal year of 2004 increased 1% to $487.9 million as
compared to $482.4 million in 2003. Net income for the full fiscal year of
2004 was $9.4 million, or $1.34 earnings per diluted share, as compared to net
income for fiscal 2003 of $9.9 million, or $1.53 income per share. For the
full fiscal year of 2004, Haggar reported $10.2 million in core earnings, or a
24% increase in core earnings per diluted share to $1.46 in fiscal 2004. This
compares to fiscal 2003, in which the Company reported $7.6 million in core
earnings, or core earnings per diluted share of $1.18.
Earnings Summary (unaudited) Three Months Ended Twelve Months Ended
(in thousands, except per
share amounts) September 30, September 30,
2004 2003 2004 2003
Net income $3,882 $7,326 $9,408 $9,856
Net income per common share
- Diluted $0.54 $1.12 $1.34 $1.53
Unusual charges (benefits) net
of tax:
Relocation of global
headquarters - - 509 -
Wrongful termination lawsuit - - 309 -
Gain on sale of global
headquarters, net - (3,225) - (3,225)
Reduction in force - 90 - 90
Proxy defense costs - - - 752
Gain on sale of Edinburg,
Texas facility - - - (203)
Legal settlement on landlord
dispute - - - 329
Core earnings $3,882 $4,191 $10,226 $7,599
Core earnings per share - Diluted $0.54 $0.64 $1.46 $1.18
Weighted average shares
outstanding - Diluted 7,195 6,529 7,022 6,453
Review of Core Earnings:
J. M. Haggar, III, the Company's Chairman and Chief Executive Officer, stated,
"Fiscal 2004 was a year of progress for Haggar - both financially and
geographically. For the first time, our men's and women's wear personnel are
working under one roof at our new global corporate headquarters. We are
already seeing the benefits of combined expertise, as the women's pant programs
introduced during fiscal 2004 have been very successful. We are very pleased
that we improved our gross profit percentages to 28.8% in fiscal 2004 from
26.8% in fiscal 2003, which resulted from increased men's sourcing
efficiencies, strategic cost reductions in the women's division and increased
retail division gross margins."
Frank Bracken, President and Chief Operating Officer, noted, "We are excited
that the Company's innovative products continued to perform in a difficult
retail environment during the past year. These successes provide solid
building blocks for fiscal 2005. Our ongoing national marketing campaign
introduces the consumer to the latest offering, the Haggar(R)ForeverNew(TM)
line, which includes casual and dress pants and sport shirts that won't fade,
shrink, wrinkle or stain. Our Kenneth Cole(R) programs, which exceeded
expectations in fiscal 2004, also provided a spark which will carry over into
fiscal 2005."
John Feray, acting Chief Financial Officer, noted, "The Company was able to
repay $3.6 million in senior notes prior to September 30, 2004, to reduce
outstanding debt to $2.1 million, from $9.3 million at September 30, 2003. The
Company was also investing over $25 million of cash and cash equivalents at the
end of fiscal 2004. During fiscal 2005, the Company is focused on
strategically reducing selling, general and administrative expenses, as well as
identifying new, lower cost sourcing opportunities in an effort to further
improve earnings per share and shareholder value."
The Haggar Board of Directors continued the $0.05 per share quarterly dividend.
The dividend will be payable on November 15, 2004, to shareholders of record
as of November 1, 2004.
The Company will file a Form 8-K with the Securities and Exchange Commission
with its financial projections for fiscal 2005 with estimated net sales of $475
million to $493 million and an earnings per share estimate of $1.39 to $1.59.
The Company also will announce in its Form 8-K that it will restate its
financial results for the fiscal year ended September 30, 2002 to correct
errors in the accounting for certain intercompany transactions and related
foreign currency translation adjustments. On a pretax basis, these errors
resulted in understatements of cost of goods sold, accounts payable and
cumulative translation adjustment of $1.3 million, $1.1 million and $0.2
million, respectively, in fiscal 2002. Accordingly, after the related tax
benefit of $0.5 million, net income for fiscal 2002 will be reduced by
approximately $0.8 million, or $0.12 per basic and diluted share. Additionally,
as a result of the restatement, the Company's consolidated balance sheets at
September 30, 2002 and 2003, and at the interim periods of fiscal 2004, will
reflect an increase in total liabilities of $0.6 million and a decrease in
total stockholders' equity of $0.6 million. As such, the referenced financial
statements should not be relied upon. The adjustments do not impact the
Company's cash or liquidity position nor do they affect the Company's
compliance with its financial covenants under its debt facilities.
The decision to restate its financial statements was made today by the Audit
Committee of Haggar's Board of Directors, upon the recommendation of management
and with the concurrence of the Company's independent registered public
accountants. The Company expects to file its restated financial statements in
its Form 10-K for fiscal 2004.
Haggar Clothing Co., a wholly-owned subsidiary of Haggar Corp., is a leading
marketer of men's casual and dress apparel and women's sportswear, with global
headquarters in Dallas, TX. Haggar markets in the United States, United
Kingdom, Canada, Mexico, and Indonesia. Haggar also holds exclusive licenses
to use the Claiborne(R) trademark in the United States to manufacture, market,
and sell men's shorts and pants and to use the Kenneth Cole New York(R) and
Kenneth Cole Reaction (R) trademarks throughout the United States to
manufacture, distribute and sell men's tailored dress pants and men's
classification dress and casual pants and shorts in men's classification pant
departments. For more information visit the Haggar website at
http://www.haggar.com/.
The statements contained in this release that are not historical facts are
forward-looking statements. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions that could cause actual
results to differ materially from those anticipated or implied by the forward-
looking statements; the results could be affected by, among other things,
general business conditions, the impact of competition, the seasonality of the
Company's business, labor relations, governmental regulations, unexpected
judicial decisions, and inflation. In addition, the financial results for the
quarter just ended do not necessarily indicate the results that may be expected
for any future quarters or for any fiscal year. Investors also should consider
other risks and uncertainties discussed in documents filed by the Company with
the Securities and Exchange Commission. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements. The
Company undertakes no obligation to update any such statements or publicly
announce any updates or revisions to any of the forward-looking statements
contained herein to reflect any change in the Company's expectations with
regard thereto or any changes in events, conditions, circumstances or
assumptions underlying such statements.
Use of Non-Generally Accepted Accounting Principles (Non-GAAP) Financial
Information
The Company reports its financial results in accordance with GAAP. However, the
Company uses core earnings as a non-GAAP performance measure to provide both
management and investors a more complete understanding of the Company's
underlying operational results. This non-GAAP measure is an indicator
management uses to provide additional meaningful comparisons between current
results and prior reported results, and as a basis for planning and forecasting
for future periods. Core earnings is calculated by taking actual net income
(loss) and adjusting that amount for unusual charges or benefits (based on
management's interpretation) which are calculated net of tax. The presentation
of core earnings is not meant to be considered in isolation or as a substitute
for comparable metrics prepared in accordance with GAAP in the United States.
HAGGAR CORP.
Condensed Consolidated Three Months Ended Year Ended
September 30, September 30,
Statements of Operations 2004 2003 2004 2003
(In thousands, except per share amounts)
Net sales $ 131,743 $ 125,546 487,890 $ 482,375
Cost of sales 91,891 90,984 347,581 353,091
Gross profit 39,852 34,562 140,309 129,284
Selling, general and
administrative
expenses (34,226) (29,222) (125,655) (119,300)
Royalty income 350 542 1,203 1,593
Other income (expense),
net 323 6,085 692 6,687
Interest expense (397) (563) (1,706) (2,535)
Income before provision
for income taxes 5,902 11,404 14,843 15,729
Provision for income
taxes 2,020 4,078 5,435 5,873
Net income $3,882 $7,326 $9,408 $9,856
Net income per common
share
- Basic $0.55 $1.14 $1.37 $1.53
- Diluted $0.54 $1.12 $1.34 $1.53
Weighted average shares
outstanding
- Basic 7,095 6,442 6,883 6,424
- Diluted 7,195 6,529 7,022 6,453
HAGGAR CORP.
Condensed Consolidated
Balance Sheet Sept. 30, 2004 Sept. 30, 2003
Assets (In thousands)
Cash and cash equivalents $30,667 $7,674
Accounts receivable, net 56,132 56,528
Inventories 95,229 96,959
Deferred tax benefit 9,933 10,505
Other current assets 7,392 3,557
Total current assets 199,353 175,223
Property, plant and equipment, net 44,394 45,932
Goodwill 9,472 9,472
Other assets 7,165 7,580
Total Assets $260,384 $238,207
Liabilities and Stockholders' Equity
Accounts payable $30,621 $27,395(A)
Accrued liabilities 36,639 31,339(A)
Accrued wages and other employee compensation 8,538 7,228
Current portion of long-term debt 100 3,671
Total current liabilities 75,898 69,633
Other non-current liabilities 12,760 9,554
Deferred tax liability 374 523
Long term debt 2,000 5,671
Stockholders' equity 169,352 152,826(A)
Total Liabilities and Stockholders' Equity $260,384 $238,207
(A) Reflects balance sheet impact of 2002 financial statement restatement.
DATASOURCE: Haggar Corp.
CONTACT: John Feray, Chief Financial Officer of Haggar Corp.,
+1-214-352-8481, fax, +1-214-956-4239
Web site: http://www.haggar.com/