INGLEWOOD, Calif., Sept. 17, 2001 (PRIMEZONE) -- Citing the success of an aggressive cost reduction program, Signature Eyewear (OTCBB:SEYE) today reported results for its third fiscal quarter and nine-month period ended July 31, 2001, posting the company's third consecutive quarter of profitability.
For the three-month period, the company reported net income of $154,000, or $0.03 per share, on net sales of $11.8 million, compared with a net loss of $1.0 million, or $0.20 per share, on net sales of $17.4 million for the same period in fiscal 2000. Results for the quarter reflect a reduction in sales due primarily to the discontinuance of certain lines of eyewear, as well as a reduction in the company's sales force and an overall weak business environment within the optical industry.
For the nine-month period ended July 31, 2001, Signature Eyewear posted net income of $487,000, or $0.10 per share, on net sales of $34.2 million. This compares with a net loss of $3.7 million, or $0.74 per share, on sales of $41.9 million the year before.
The company's earnings before interest, taxes, depreciation and amortization (EBITDA) for the three-month period were $693,590, compared with negative EBITDA of $1.27 million for the same period last year, a $1.96 million improvement.
For the nine-month period, Signature Eyewear's EBITDA was $2.35 million, versus a negative EBITDA of $4.3 million the year before, a $6.6 million improvement.
For the quarter, gross profit equaled $7.2 million or 60.6 percent of net sales, compared with gross profit of $10.4 million or 59.4 percent of sales, the year before. For the first nine months of fiscal 2001, gross margin increased to 62.3 percent of net sales versus 59.5 percent last year. The margin increases were due, among other things, to the company achieving higher prices on its products and a reduction in its frame costs.
Total operating expenses for the third quarter was 56.4 percent of net sales, or $6.7 million. This compares with total operating expenses for the corresponding period in fiscal 2000 of $11.9 million, or 68.1 percent of sales, a year-over-year improvement of 44 percent. Total operating expenses for the nine-month period was $19.8 million, or 58 percent of sales, versus $30.1 million, or 72 percent of sales and a 10.3 percent improvement compared with the same period last year.
Selling expenses in the third quarter decreased more than 50 percent from the past year to less than $3.4 million, or 28.5 percent of net sales, compared with $6.9 million, or 39.3 percent of sales. The decline in selling expense was primarily due to reductions in launch advertising, promotional costs, trade shows, lower directs sales force expenses, and lower variable selling costs due to lower net sales.
General and administrative (G&A) expenses for the quarter declined to $3.4 million, or 29 percent of net sales compared with $4.7 million or 27.1 percent of net sales in the third quarter of fiscal 2000. Compared with last year, G&A expense declined by more than $3.0 million, a 35 percent improvement. The reduction in G&A expense was primarily the result of the company's continuing effort to reduce overhead expense, including costs associated with employee compensation and temporary staffing.
For the nine-month period, selling expenses declined to $9.3 million, or 29.3 percent of net sales, and G&A expenses fell to $9.7 million, or 28.4 percent of net sales. This compares with selling expenses for the corresponding period of fiscal 2000 of $16.5 million, or 39.5 percent of net sales, and G&A expenses of $12.7 million, or 30.3 percent of net sales.
Bernard Weiss, chairman and chief executive officer, said, "Signature Eyewear's third quarter results demonstrated once again the benefits of our aggressive efforts to streamline our business and reduce our cost structure. We are greatly encouraged by having achieved our third consecutive quarter of profitability, despite the current economic downturn in our industry," Weiss said.
Michael Prince, chief financial officer, noted that Signature Eyewear is negotiating proposals from two lenders to refinance its bank credit facility with a two-year revolving line of credit for up to approximately $13.0 million. The line of credit would be secured by the assets of the company with availability tied to eligible accounts receivable and inventory. Closing of the line of credit will be subject to satisfactory completion of due diligence and other conditions.
Commenting on the quarter, Prince said, "Signature Eyewear's balance sheet continues to improve. As of July 31, 2001, we had more than $6.2 million in working capital. We are making great progress in our efforts to reduce total liabilities, which have declined to $23.8 million compared with $33.0 million at fiscal year end October 31, 2000, a $9.2 million reduction. With the cooperation of our vendors, we have been able to achieve approximately $700,000 in trade discounts of outstanding payables for the nine-month period.
Prince noted that a critical component of the company's turnaround strategy is a long-term reduction in inventory. For the first nine months of fiscal 2001, inventory has been reduced by nearly $3.8 million.
"Clearly, we have made a great deal of progress in our efforts to return Signature Eyewear to profitability and to position the company for continued growth," Prince said. "While we will continue to work toward reaching our operating goals, we are concerned about current events which may have an added negative impact on the economy as well as the optical industry. This may have adverse affects on sales and lower EBITDA in coming quarters.
"This also makes it all the more important for Signature Eyewear to bring the company's cost structure in line with a difficult market environment and by increasing the efficiency in our operations. Staying ahead of this curve poses a real challenge," Prince said.
Signature Eyewear is a leading designer and marketer of prescription eyeglass frames under internationally recognized brand names such as Eddie Bauer Eyewear, Laura Ashley Eyewear, bebe eyes, Nicole Miller, and Hart Schaffner & Marx Eyewear, as well as its proprietary brands, including Dakota Smith, Camelot and the Signature line. In addition to producing distinctive frame designs, the company distinguishes itself through innovative sales and merchandising programs that are unique to the optical industry. Signature Eyewear's products are distributed in the U.S. and internationally to opticians, optometrists and ophthalmologists and sold directly to major worldwide retail chains.
This news release contains certain forward-looking statements that involve risks and uncertainties. Such statements include, but are not limited to, the company's ability to implement its turnaround strategy, including increasing liquidity, generating working capital, refinancing its credit facility, maintaining current sales levels, and reducing inventory levels. Actual results may differ materially from those indicated by such statements as a result of various factors, including those discussed in the company's 2000 annual report on form 10-K and other periodic reports filed with the Securities and Exchange Commission.
SIGNATURE EYEWEAR, INC.
Summary Financial Data
Statement of Income Data:
(in thousands, except per share data)
Three Months Ended Nine Months Ended
July 31, July 31,
2001 2000 2001 2000
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Net Sales $ 11,821 $ 17,442 $ 34,181 $ 41,835
Cost of Sales 4,656 7,076 12,846 16,942
---------- ---------- ---------- ----------
Gross Profit 7,165 10,366 21,335 24,893
Operating Expenses:
Selling 2,664 6,858 9,297 16,511
General &
administrative 3,772 4,735 9,703 12,676
Depreciation &
amortization 242 279 837 891
---------- ---------- ---------- ----------
Total Operating
Expenses 6,677 11,872 19,837 30,078
---------- ---------- ---------- ----------
Income (Loss)
from Operations 487 (1,506) 1,497 (5,185)
---------- ---------- ---------- ----------
Other income
(expense):
Interest, net (293) (280) (1,023) (770)
Sundry (36) (40) 18
---------- ---------- ---------- ----------
Total Other Income
(Expense) (329) (320) (1,005) (769)
---------- ---------- ---------- ----------
Income (Loss) before
Income Taxes 159 (1,826) 492 (5,954)
Provision (Benefit)
for Income Taxes 5 (808) 6 (2,215)
---------- ---------- ---------- ----------
Net Income (Loss) $ 154 $ (1,018) $ 487 $ (3,739)
========== ========== ========== ==========
Earnings (Loss)
Per Share, Basic
& Diluted;
Earnings (Loss)
per Common
Share $ 0.03 $ (0.20) $ 0.10 $ (0.74)
========== ========== ========== ==========
Weighted average
shares
outstanding 5,056,889 5,056,889 5,056,889 5,059,583
========== ========== ========== ==========
Balance Sheet Data:
July 31, October 31,
2001 2000
-------- -----------
Current assets $25,850 $33,006
Total assets $32,716 $41,435
Current liabilities $19,633 $28,187
Total liabilities $23,788 $32,993
Stockholders' equity $ 8,928 $ 8,441