HGGR Haggar (MM)

DALLAS, Aug. 2 /PRNewswire-FirstCall/ -- Haggar Corp. (NASDAQ:HGGR) announced results for the third quarter ended June 30, 2005. For the third quarter of fiscal 2005, Haggar reported net income of $4.8 million on net sales of $119.5 million, or net income of $0.67 per diluted share. This compares to the third quarter of fiscal 2004 when the Company reported net income of $1.7 million on net sales of $116.3 million, or net income of $0.23 on a diluted per share basis. The 2.7% net sales increase in the third quarter of fiscal 2005 is primarily related to an increase in the men's wholesale business and an increase in retail sales due to strong same store sales and the addition of new stores. The Company currently has 82 retail stores. The increase in earnings per share to $0.67 in the third quarter of fiscal 2005 from $0.23 in the third quarter of fiscal 2004 is primarily due to increased net sales of 2.7% and an overall improved gross profit percentage of 28.8%, as adjusted for reorganization costs, as compared to a gross profit percentage of 27.7% in the third quarter of fiscal 2004. The increase in gross profit percentage is attributable to an improved product mix and fewer customer allowances. Included in the results for the third quarter of fiscal 2005, as previously reported, is a $2.6 million pre-tax credit to reorganization costs related to a favorable Texas Supreme Court ruling in an employee wrongful termination lawsuit. This is partially offset by a $0.8 million pre-tax charge to reorganization costs related to the closure of the final two Company-operated sewing facilities, as previously reported. Also included in the results of the third quarter of fiscal 2005 is a $0.5 million pre-tax gain related to the sale of a Company owned apartment. The net impact of these items to the third quarter of fiscal 2005 is $2.3 million pre-tax and $1.4 million after tax, or $0.19 on a diluted per share basis. For the nine months ended June 30, 2005, Haggar reported net income of $4.9 million, or $0.69 per diluted share, on net sales of $340.8 million. This compares to the nine months ended June 30, 2004, in which the Company reported net income of $5.5 million, or $0.79 per diluted share, on net sales of $356.1 million. The decrease in earnings per share during the first nine months of fiscal 2005 is partly due to the selling results of the Company's ForeverNew(TM) products, which resulted in higher customer allowances as the product did not meet the customers' expectations, and an incremental $2.5 million pre-tax in marketing expense ($1.5 million after tax or $0.21 on a diluted per share basis) related to the Company's ForeverNew(TM) product introduction. Also included in the first nine months of fiscal 2005 results is a $1.6 million pre-tax charge ($1.0 million after-tax or $0.14 on a diluted per share basis) to reorganization costs related to the closure of two Company-operated sewing facilities. Offsetting these costs in the first nine months of fiscal 2005 is the $0.5 million pre-tax gain ($0.3 million after tax or $0.04 on a diluted per share basis) related to the sale of a Company owned apartment. Also offsetting these costs during the first nine months ended June 30, 2005 is the net financial impact of three wrongful termination lawsuits; a $2.6 million pre-tax reversal of a prior legal reserve in reorganization costs related to a favorable Texas Supreme Court ruling as mentioned above, a $0.3 million reversal of a prior legal reserve in reorganization costs due to a second favorable outcome in an unrelated case also before the Texas Supreme Court, and a $2.0 million pre-tax charge to selling, general and administrative expenses for an unfavorable decision in a trial court that is pending appeal. Combined, these three lawsuits net to a $0.9 million pre-tax ($0.5 million after tax) increase to earnings for the nine months ended June 30, 2005, or $0.08 on a diluted per share basis. According to J.M. Haggar, III, Chairman and Chief Executive Officer, "We are excited about our increase in earnings per share for the third quarter of 2005 and are pleased with the Texas Supreme Court rulings in our favor. The results of our quarter are evidence of our efforts to improve our gross margins and the value we bring to our customers." Frank Bracken, President and Chief Operating Officer, added, "Sales and margins were strong for the quarter. In our continuing effort to improve our quality and cost of goods, we have successfully completed the closure of our two Company-operated manufacturing facilities in Mexico and the Dominican Republic during the quarter. This will allow us to continue to focus on reducing our costs in both the Eastern and Western Hemispheres." John W. Feray, Senior Vice President of Finance and Chief Accounting Officer, noted, "The Company's increased sales for the quarter and a focus on inventory management have allowed the company to pay down debt and reduce inventory levels. As of June 30, 2005, the Company has no debt and an inventory balance of $88 million, compared to $5.7 million in debt and $96 million in inventory as of June 30, 2004." The Company filed a Form 8-K with the Securities and Exchange Commission today with its updated 4th Quarter and full year financial projections for fiscal 2005. The Company revised its net sales and net income projections for fiscal 2005. The Company now projects net income for fiscal 2005 between $9.0 million and $9.6 million, with projected sales for the year between $460 million and $466 million, and earnings per diluted share for the year between $1.26 and $1.35. 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, Canada, Mexico, and the United Kingdom. Haggar also holds exclusive licenses in the United States to use the Claiborne(R) trademark, Kenneth Cole New York(R), and Kenneth Cole Reaction(R) trademarks to manufacture, market, and sell men's shorts and pants 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. HAGGAR CORP. Condensed Consolidated Three Months Ended Nine Months Ended Statements of Operations June 30, June 30, (unaudited) (unaudited) (In thousands, except per share amounts) 2005 2004 2005 2004 Net sales $119,492 $116,347 $340,833 $356,146 Cost of goods sold 85,026 84,109 243,725 255,690 Reorganization costs (1,765) --- (1,291) --- Gross profit 36,231 32,238 98,399 100,456 Selling, general and administrative expenses (28,837) (29,368) (91,601) (91,429) Royalty income 224 255 852 854 Other income (expense) 398 (30) 608 369 Interest expense (208) (393) (653) (1,309) Income before provision for income taxes 7,808 2,702 7,605 8,941 Provision for income taxes 3,052 1,032 2,695 3,415 Net income $4,756 $1,670 $4,910 $5,526 Net income per common share - Basic $0.68 $0.24 $0.70 $0.81 Net income per common share - Diluted $0.67 $0.23 $0.69 $0.79 Weighted average shares outstanding -Basic 6,997 7,049 7,017 6,810 -Diluted 7,090 7,164 7,124 6,962 Condensed Consolidated Balance Sheets June 30, 2005 September 30, 2004 (unaudited) Assets (In thousands) Cash and cash equivalents $20,175 $30,667 Accounts receivable, net 49,605 56,132 Inventories, net 87,995 95,229 Deferred tax asset 11,027 11,021 Property held for sale 2,538 --- Other current assets 5,923 7,392 Total current assets 177,263 200,441 Property, plant and equipment, net 41,316 44,394 Goodwill, net 9,472 9,472 Other assets 10,197 7,165 Total assets $238,248 $261,472 Liabilities and Stockholders' Equity Accounts payable $18,983 $30,621 Accrued liabilities 29,962 36,678 Accrued wages and other employee compensation 4,119 8,538 Current portion of long-term debt --- 100 Total current liabilities 53,064 75,937 Other non-current liabilities 13,417 12,760 Deferred tax liability 374 374 Long term debt --- 2,000 Stockholders' equity 171,393 170,401 Total liabilities and stockholders' equity $238,248 $261,472 DATASOURCE: Haggar Corp. CONTACT: John W. Feray, Senior Vice President and Chief Accounting Officer of Haggar Corp., +1-214-956-4511, or fax, +1-214-956-4446 Web site: http://www.haggar.com/

Copyright