Hanover Direct Reports Improvement in Fiscal 2003 Results from
Operations of $6.5 Million Over Prior Year and the Restatement of
its 2002 10-K EDGEWATER, N.J., April 9 /PRNewswire-FirstCall/ --
Hanover Direct, Inc. today announced operating results for the
52-weeks ended December 27, 2003. The Company reported income from
operations of $6.1 million for the year ended December 27, 2003
compared with a $0.4 million loss for the year ended December 28,
2002. The improvement in income from operations was achieved
through reductions in special charges, general and administrative
expenses and depreciation and amortization. The Company reported
that Internet sales continue to demonstrate strong growth over the
prior year, reaching 27.9% of total revenues for the 52-week period
ended December 27, 2003. Internet net revenues for the 52-week
period ended December 27, 2003 were $108.6 million, or 24.2% above
the comparable fiscal period in 2002. Total net revenues for the
52-weeks ended December 27, 2003 were $414.8 million, a decrease of
$42.8 million (9.4%), from the comparable period in 2002. The
decrease was due to a number of factors, including softness in the
economy and demand for the Company's products during the firstsix
months of the 2003 year. In addition, the Company's strategy of
reducing unprofitable circulation also contributed to the decrease
throughout the year. The Company reported a net loss of $15.4
million or $0.16 per share for the year ended December 27, 2003,
compared with a net loss of $9.1 million or $0.18 per share for the
comparable period in the 2002 fiscal year. The per share amounts
were calculated after deducting preferred dividends and accretion
of $7.9 million and $15.6 million in fiscal years 2003 and 2002,
respectively. The weighted average number of shares of common stock
outstanding was 144,387,672 and 138,280,196 for the fiscal years
ended December 27, 2003 and December 28, 2002, respectively. The
increase in weighted average number of shares was a result of the
Chelsey Recapitalization consummated on November 30, 2003. The $6.3
million increase in net loss was primarily due to: (i) a $7.6
million deferred Federal income tax provision incurred during 2003
to increase the valuation allowance and fully reserve the remaining
net deferred tax asset. Due to a number of factors, including the
continued softness in the demand for the Company's products,
management lowered its projections of future taxable income. As a
result of lower projections of future taxable income, the future
utilization of the Company's net operating losses were no longer
"more-likely-than-not" to be achieved; (ii) $7.2 million of
additional interest expense incurred on the Series B Preferred
Stock as a result of the implementation of FAS 150. Effective June
29, 2003, FAS 150 required the Company to reclassify its Series B
Preferred Stock as a liability and reflect the accretion of the
preferred stock balance as interest expense; (iii) a $3.6 million
decrease due to loss of variable contribution associated with
declines in net revenues; (iv) a $3.3 million increase due to a
favorable summary judgment ruling at the District Court level in
the Kaul litigation, resulting in a reversal of a substantial
portion of the loss reserve related to this litigation; (v) a $3.1
million increase due to the reduction of special charges recorded;
(vi) a $2.8 million increase due to continued reductions in cost of
sales and operating expenses, general and administrative expenses
and a decrease in depreciation and amortization; (vii) an increase
of $1.3 million due to the recognition of the deferred gain related
to the June 29, 2001 sale of the Company's Improvements business;
and (viii) a $1.6 million benefit due to the implementation of the
Company's revised vacation and sick benefit policy. The Company
filed an amendment to the Annual Report on Form 10-K for the year
ended December 28, 2002 as well as an amendment to the Quarterly
Report on Form 10-Q for the quarter ended September 27, 2003. The
Company has re-examined the provisions of the Congress Credit
Facility and, based on EITF Issue No. 95-22, "Balance Sheet
Classification of Borrowings Outstanding under Revolving Credit
Agreements that Include Both a Subjective Acceleration Clause and a
Lock-Box Arrangement," and certain provisions in the credit
agreement, the Company is required to reclassify its revolving
credit facility from long-term to short-term debt, though the
existing revolving loan facility does not mature until January 31,
2007. As a result, the Company has reclassified $8.8 million as of
December 28, 2002 and $13.2 million as of September 27, 2003 from
Long-term debt to Short-term debt and capital lease obligations
thatis classified as Current liabilities. A conference call with
the management of Hanover Direct, Inc. to review the Fiscal Year
2003 operating results will be held on Tuesday, April 13, 2004 at
2:00 p.m. Eastern Daylight Time. If you would like to participate
in the call, please call 877-691-0878 (Domestic) and 973-582-2741
(International) between 1:50 p.m. and 1:55 p.m. Eastern Daylight
Time. The call will begin promptly at 2:00 p.m. Eastern Daylight
Time. A re-play of the conference will be available from 5:00 p.m.
Eastern Daylight Time on Tuesday, April 13, 2004 until 5:00 p.m.
Eastern Daylight Time on Wednesday, April 14, 2004 and can be
accessed by calling 877-519-4471 (Domestic) and 973-341-3080
(International) and entering the Reservation No.: 4685907. The
Hanover Direct, Inc. 2004 Annual Shareholders Meeting has been
scheduled for Thursday, June 3, 2004. The meeting will be held at
the Sheraton Suites on Hudson, located at 500 Harbor Boulevard,
Weehawken, NJ, and will commence at 9:30a.m. Eastern Daylight Time.
The record date for shareholders entitled to vote at the Annual
Meeting is the close of business on April 19, 2004. About Hanover
Direct, Inc. Hanover Direct, Inc. (AMEX:HNV) and its business units
provide quality, branded merchandise through a portfolio of
catalogs and e-commerce platforms to consumers, as well as a
comprehensive range of Internet, e-commerce, and fulfillment
services to businesses. The Company's catalog and Internet
portfolio of home fashions, appareland gift brands include
Domestications, The Company Store, Company Kids, Silhouettes,
International Male, Scandia Down, and Gump's By Mail. The Company
owns Gump's, a retail store based in San Francisco. Each brand can
be accessed on the Internet individually by name. Keystone Internet
Services, LLC (http://www.keystoneinternet.com/), the Company's
third party fulfillment operation, also provides the logistical, IT
and fulfillment needs of the Company's catalogs and web sites.
Information on HanoverDirect, including each of its subsidiaries,
can be accessed on the Internet at http://www.hanoverdirect.com/.
HANOVER DIRECT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands ofdollars, except share amounts) As
Restated December 27, December 28, 2003 2002 ASSETS CURRENT ASSETS:
Cash and cash equivalents $2,282 $785 Accounts receivable, net
14,335 16,945 Inventories 41,576 53,131 Prepaid catalog costs
11,808 13,459 Other current assets 3,951 3,967 Total Current Assets
73,952 88,287 PROPERTY AND EQUIPMENT, AT COST: Land 4,361 4,395
Buildings and building improvements 18,210 18,205 Leasehold
improvements 10,108 9,915 Furniture, fixtures and equipment 53,212
56,094 85,891 88,609 Accumulated depreciation and amortization
(58,113) (59,376) Property and equipment, net 27,778 29,233
Goodwill, net 9,278 9,278 Deferred tax assets 2,213 12,400 Other
non-current assets 1,575 902 Total Assets $114,796 $140,100
LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT LIABILITIES:
Short-term debt and capital lease obligations $13,468 $12,621
Accounts payable 41,880 42,873 Accrued liabilities 12,918 26,351
Customer prepayments and credit 5,485 4,722 Deferred tax liability
2,213 1,100 Total Current Liabilities 75,964 87,667 NON-CURRENT
LIABILITIES: Long-term debt 9,042 12,508 Series C Participating
Preferred Stock, authorized, issued and outstanding 564,819 shares
at December 27, 2003; liquidation preference of $56,482 at December
27, 2003 72,689 -- Other 4,609 6,387 Total Non-current Liabilities
86,340 18,895 Total Liabilities 162,304 106,562 SERIES B
PARTICIPATING PREFERRED STOCK, authorized, issued and outstanding
1,622,111 shares at December 28, 2002 -- 92,379 SHAREHOLDERS'
DEFICIENCY: Common Stock, $.66 2/3 par value, authorized
300,000,000 shares; 222,294,562 shares issued and outstanding at
December 27, 2003 and 140,336,729 shares issued and outstanding at
December 28, 2002 148,197 93,625 Capital in excess of par value
302,432 337,507 Accumulated deficit (494,791) (486,627) (44,162)
(55,495) Less: Treasury stock, at cost (2,120,929 shares at
December 27, 2003 and December 28, 2002) (2,996) (2,996) Notes
receivable from sale of Common Stock (350) (350) Total
Shareholders' Deficiency (47,508) (58,841) Total Liabilities and
Shareholders' Deficiency $114,796 $140,100 HANOVER DIRECT, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In
thousands of dollars, except per share amounts) For the
13-WeeksEnded For the 52-Weeks Ended December December December
December 27, 28, 27, 28, 2003 2002 2003 2002 NET REVENUES 110,002
128,251 414,874 457,644 OPERATING COSTS AND EXPENSES: Cost of sales
and operating expenses 66,757 80,152 261,118 290,531 Special
charges 627 2,702 1,308 4,398 Selling expenses 25,444 28,685 99,543
105,239 General and administrative expenses 11,223 15,452 42,080
52,258 Depreciation and amortization 1,330 1,274 4,719 5,650
105,381 128,265 408,768 458,076 INCOME (LOSS) FROM OPERATIONS 4,621
(14) 6,106 (432) Gain on sale of Improvement -- (252) (1,911) (570)
INCOME (LOSS) BEFORE INTEREST AND INCOME TAXES 4,621 238 8,017 138
Interest expense, net 4,246 1,461 12,088 5,477 INCOME (LOSS) BEFORE
INCOME TAXES 375 (1,223) (4,071) (5,339) Provision for deferred
Federal income taxes -- 3,700 11,300 3,700 Provision for state
income taxes 11 1 28 91 NET INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS) 364 (4,924) (15,399) (9,130) Preferred stock dividends and
accretion -- 4,964 7,922 15,556 NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS $364 $(9,888) $(23,321) $(24,686) NET INCOME
(LOSS) PER COMMON SHARE: Net income (loss) per common share - basic
and diluted $.00 $(.07) $(.16) $(.18) Weighted average common
shares outstanding basic and diluted (thousands) 162,603 138,316
144,388 138,280 HANOVER DIRECT, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousandsof dollars) For
the 52-Weeks Ended Dec. 27, Dec. 28, 2003 2002 CASH FLOWS FROM
OPERATING ACTIVITIES: Net loss (15,399) (9,130) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, including deferred fees 5,715 7,203
Provision for doubtful accounts 378 304 Special charges 16 18
Deferred tax asset 11,300 3,700 Gainon the sale of Improvements
(1,911) (570) Gain on the sale of property and equipment (4) (167)
Interest expense related to Series B Participating Preferred Stock
redemption price increase 7,235 -- Compensation expense related to
stock options 1,141 1,332 Changes in assets and liabilities:
Accounts receivable 2,232 2,207 Inventories 11,555 6,092 Prepaid
catalog costs 1,651 1,161 Accounts payable (993) (3,475) Accrued
liabilities (13,433) 1,219 Customer prepayments and credits 763
(421) Other, net (2,173) (4,814) Net cash provided by operating
activities 8,073 4,659 CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (1,895) (639) Proceeds from
sale of Improvements 2,000 570 Costs related to the early release
of escrow funds (89) -- Proceeds from disposal of property and
equipment 78 169 Net cash provided by investing activities 94 100
CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (payments)
under Congress revolving loan facility 179 (4,704) Borrowings under
Congress Tranche B term loan facility -- 3,500 Payments under
Congress Tranche A term loan facility (1,991) (1,991) Payments
under Congress Tranche B term loan facility (1,800) (1,314)
Payments of capital lease obligations (466) (104) Payments of debt
issuance costs (910) (722) Payment of Series C Participating
Preferred Stock issuance costs (1,334) Proceeds from issuance of
common stock -- 25 Series B Participating Preferred Stock
Transaction Cost Adjustment -- 215 Payment of estimated Richemont
tax obligation on Series B Participating Preferred Stock accretion
(347) -- Other, net (1) Net cash used by financing activities
(6,670) (5,095) Net increase (decrease) in cash and cash
equivalents 1,497 (336) Cash and cash equivalents at the beginning
of the year 785 1,121 Cash and cash equivalents at the end of the
period $2,282 $785 Supplemental Disclosures of Cash Flow
Information: Cash paid for: Interest $3,325 $3,405 Income taxes 705
193 Non-cash investing and financing activities: Series B
Participating Preferred Stock redemption price increase $7,575
$15,556 Redemption of Series B Participating Preferred Stock
107,536 Issuance of Series C Participating Preferred Stock 72,689
Gain on issuance of Series C Participating Preferred Stock 13,867
Tandem share expirations 55 Capital lease obligations 1,459 32
DATASOURCE: Hanover Direct, Inc. CONTACT: Charles E. Blue, S.V.P.
& Chief Financial Officer, of Hanover Direct, Inc.,
+1-201-272-3389; or Rich Tauberman of The MWW Group,
+1-201-507-9500, for Hanover Direct, Inc. Web site:
http://www.hanoverdirect.com/
Copyright
Hanover Direct (AMEX:HNV)
Historical Stock Chart
From Sep 2024 to Oct 2024
Hanover Direct (AMEX:HNV)
Historical Stock Chart
From Oct 2023 to Oct 2024