NEW YORK, Feb. 28 /PRNewswire-FirstCall/ -- Everlast(R) Worldwide Inc. (Nasdaq: EVST), manufacturer, marketer and licensor of sporting goods, apparel and footwear under the Everlast brand name, today announced its financial results for the fourth quarter and year ended December 31, 2005. On December 14, 2005, Everlast announced the signing of a licensing agreement whereby it licensed its United States men's apparel category to Jacques Moret, Inc. effective January 1, 2006. Accordingly, Everlast has reported its results of operations on a GAAP basis, which includes the application of SFAS No. 144, "Accounting for the Disposal of Long-Lived Assets," which requires Everlast to report its results of operations of its men's apparel business as a discontinued component. Investors may refer to the December 14, 2005 press release describing the licensing agreement and the attached table for further details of the reconciliation of GAAP operating income from continuing operations to reported EBITDA. For the year ended December 31, 2005, net revenues from these continuing operations increased 29% to a record $43.3 million as compared to $33.5 million in 2004. The net revenue growth was achieved by a 32% increase in net licensing revenue to $12 million as compared to $9.1 million in 2004, along with an increase in sporting goods net revenues of $6.8 million to a record $31.3 million, a 28% increase over 2004. The Company achieved a 392% increase in operating income from continuing operations to $5.2 million, while earnings from continuing operations, and before interest, taxes, depreciation and amortization ("EBITDA"), adjusted for certain non-recurring and one-time charges aggregating $469,000, increased to $7.3 million compared with $2.4 million reported in the 2004 comparable period. The increase in operating income and EBITDA was largely a result of increased net revenues and resulting gross margin dollars along with a reduction in our operating expense ratio of 29.5% (excluding 1% of certain non-recurring and one-time charges mentioned above) compared with 41.4% in the 2004 comparable period. Net income from continuing operations available to common stockholders was $1.8 million, or $0.55 per basic common share and $0.47 per diluted common share, as compared to a net loss from continuing operations of ($53,000), or ($0.02) loss per basic and diluted common share, in the 2004 comparable period. The results herein do not include the effects from the $2 million gain on the redemption of our Series A Preferred Stock and prepayment of related notes payable that was disclosed on February 8, 2006, that will be included in our first quarter fiscal 2006 results of operations. Reported net loss available to common stockholders under GAAP, which includes our loss from our discontinued components in 2005 and 2004, was ($948,000), or ($0.28) per basic common share in 2005, as compared to a ($1.0) million loss, or ($0.33) per basic share loss in 2004. For the fourth quarter of fiscal 2005, net revenues advanced 34.8% to a record $14.1 million as compared to net revenues of $10.5 million in 2004. The increase was derived from record sporting goods sales of $11 million, which achieved a 31% increase over the 2004 period, along with a 49% increase in record net licensing revenues. The Company achieved a 349% increase in operating income from continuing operations to $1.7 million, while earnings from continuing operations, and before interest, taxes, depreciation and amortization ("EBITDA"), increased to $2.2 million compared with ($0.3) million reported in the 2004 comparable period. The increase in operating income and EBITDA was largely a result of our increased net revenues and resulting gross margin dollars along with a reduction in our operating expense ratio of 27.8% compared with 33.3% in the 2004 comparable period. Net income from continuing operations available to common stockholders was $630,000, or $0.18 per basic common share and $0.16 per diluted common share, as compared to a net loss from continuing operations of ($1.2 million), or ($0.38) loss per basic and diluted common share, in the 2004 comparable period. Reported net loss available to common stockholders under GAAP, which includes our loss from our discontinued components in 2005 and 2004, was ($433,000), or ($0.13) per basic share, for the 2005 period as compared to a reported net loss of ($1.2) million, or ($0.37) per basic share, in 2004. "Over the past five years, the management of Everlast Worldwide has taken the brand to new heights of consumer awareness through innovative marketing and merchandising programs. The execution of this brand-building strategy has resulted in a worldwide and world class licensing business model that has resulted in the achievement of record net licensing revenues in 2005 of $12 million, a 32% increase over 2004 levels. Coupled with a growing and flourishing sporting goods business that set record net revenues of $31 million in 2005, a 28% increase over the 2004 comparable period, this has allowed the Company to achieve income from continuing operations and EBITDA of $5.2 million and $7.3 million, respectively, along with basic earnings from continuing operations of $0.55 cents per share," said Seth Horowitz, Chairman, President and Chief Executive of Everlast Worldwide Inc. Mr. Horowitz continued, "We believe our 2005 EBITDA and earnings from continuing operations are truer benchmarks of our performance and should be measured against for future years. The Jacques Moret men's license agreement has not only allowed us to focus our talents and efforts on our professional and retail boxing equipment and worldwide licensing businesses, but also enabled us to further identify and eliminate certain corporate overhead costs which will favorably impact our 2006 earnings and EBITDA. Furthermore, our recent announcement concerning the closing of our four-year $25 million Term Facility, with our senior lender Wells Fargo Century, and subsequent redemption of the Series A Preferred Stock and prepayment of Notes Payable, achieves one of the Company's financial objectives by simplifying our prior complex capital structure and providing an immediate benefit to existing common shareholders with a gain on the extinguishment of the Series A Preferred Stock and notes payable in the aggregate of $2.0 million, or $0.53 per diluted share." Mr. Horowitz concluded, "One of our objectives in 2006 is to expand our licensing business into untapped geographic locations, including India and China. We also plan to grow our existing licensing programs across Europe with licensees in manufacturing, marketing and distributing in our core competency categories of apparel, sporting goods, boxing equipment and footwear. We will also work closely with our current licensees to help further enhance the merchandising and sales execution of their existing Everlast businesses. In addition, we are continuously looking at ways to reduce costs in our manufacturing, importing and distribution of our sporting goods business. We believe our recent mesh-packaging launch, unveiled at the Super-Show in Orlando last month, is a perfect example of a cost containment initiative that increases customer value while decreasing our cost of goods. Moreover, new and expanded sales distribution into Target, Home Depot and Sharper Image will benefit the sporting goods net revenues in 2006. For the year ended 2006, we expect EBITDA and earnings per share to grow by double-digit increases over 2005 reported amounts from continuing operations." About Everlast Worldwide Inc. Everlast Worldwide Inc. manufactures, markets and licenses sporting goods and apparel products under the Everlast brand name. Since 1910, Everlast has been the preeminent brand in the world of boxing and is among the most dominant brands in the overall sporting goods and apparel industries. Over the past 96 years, Everlast products have become the "Choice of Champions(TM)", having been used for training and professional fights by many of the biggest names in the sport. Everlast is the market leader in nearly all of its product categories, responsible for leading eight of the top ten boxing equipment products in sales. In addition to producing and marketing the equipment and accessories, Everlast Worldwide Inc. licenses its brand to providers of men's and women's sportswear and active wear, children's wear, footwear, watches, cardiovascular exercise equipment, nutritional foods and gym/duffel bags to name just a few categories. At the retail level, Everlast's licensed products generate more than $700 million in revenues. The company's Web site can be found at http://www.everlast.com. Statements made in this Press Release that are estimates of past or future performance are based on a number of factors, some of which are outside of the Company's control. Statements made in this Press Release that state the intentions, beliefs, expectations or predictions of Everlast Worldwide, Inc. and its management for the future are forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in forward- looking statements is contained from time to time in filings of Everlast Worldwide with the U.S. Securities and Exchange Commission. Copies of these filings may be obtained by contacting Everlast Worldwide or the SEC (Tables Follow) EVERLAST WORLDWIDE INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Audited) (Audited) Net sales $10,982,000 $8,370,000 $31,271,000 $ 24,438,000 Net license revenues 3,136,000 2,107,000 11,982,000 9,059,000 Net revenues 14,118,000 10,477,000 43,253,000 33,497,000 Cost of goods sold 8,463,000 7,683,000 24,807,000 18,553,000 Gross profit 5,655,000 2,794,000 18,446,000 14,944,000 Operating expenses: Selling and shipping 1,735,000 1,506,000 5,178,000 6,262,0008 General and administrative 1,950,000 1,755,000 6,660,000 6,706,000 Restructuring and non-recurring charges 14,000 - 287,000 - Costs in connection with warrant issuance - - 182,000 - Amortization 228,000 228,000 913,000 913,000 3,927,000 3,498,000 13,220,000 13,881,000 Income (loss) from continuing operations 1,728,000 (695,000) 5,226,000 1,063,000 Other income (expense): Interest expense and financing costs (604,000) (331,000) (2,238,000) (1,087,000) Proceeds from life insurance benefit, net 653,000 - 653,000 - Loss on litigation (692,000) - (692,000) - Investment income 4,000 4,000 22,000 17,000 (639,000) (327,000) (2,255,000) (1,070,000) Income (loss) before provision for income taxes from continuing operations 1,089,000 (1,022,000) 2,971,000 (7,000) Provision (benefit) for income taxes 459,000 164,000 1,145,000 46,000 Net income (loss) from continuing operations $630,000 ($1,186,000) $1,826,000 ($53,000) Income (loss) from discontinued components, net of tax (1,063,000) 32,000 (2,774,000) (973,000) Net loss available to common stockholders ($433,000) ($1,154,000) ($948,000) ($1,026,000) Basic earnings (loss) per share from continuing operations $0.18 ($0.38) $0.55 ($0.02) Diluted earnings (loss) per share from continuing operations $0.16 ($0.38) $0.47 ($0.02) Basic income (loss) per share from discontinued component ($0.31) $0.01 ($0.83) ($0.31) Diluted income (loss) per share from discontinued component ($0.27) $0.01 ($0.71) ($0.31) Net basic earnings (loss) per share ($0.13) ($0.37) ($0.28) ($0.33) Net diluted earnings (loss) per share ($0.11) ($0.37) ($0.24) ($0.33) EBITDA (Operating earnings excluding certain non-cash and non-recurring costs) $2,184,000 ($325,000) $7,310,000 $2,387,000 EVERLAST WORLDWIDE INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $58,000 $649,000 Accounts and licensing receivables - net 11,117,000 9,781,000 Inventories 6,997,000 11,762,000 Inventories of discontinued component 940,000 1,020,000 Prepaid expenses and other current assets 2,761,000 921,000 Total current assets 21,873,000 24,133,000 Property and equipment, net 6,213,000 6,182,000 Goodwill 6,718,000 6,718,000 Trademarks, net 22,664,000 23,576,000 Restricted cash 1,059,000 1,028,000 Other assets 2,914,000 3,119,000 $61,441,000 $ 64,756,000 LIABILITIES, REDEEMABLE PARTICIPATING PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of Series A redeemable participating preferred stock $ - $3,000,000 Due to factor 13,028,000 11,316,000 Accounts payable 3,159,000 6,530,000 Current maturities of long term debt 2,141,000 249,000 Accrued expenses and other liabilities 3,252,000 1,062,000 Total current liabilities 21,580,000 22,157,000 License deposits payable 465,000 440,000 Series A redeemable participating preferred stock - 22,000,000 Notes payable - 4,000,000 Other liabilities - 190,000 Long term debt, net of current maturities 26,531,000 2,643,000 Total liabilities 48,576,000 51,430,000 Stockholders' equity: Common stock, par value $.002; 19,000,000 shares authorized, 3,378,743 and 3,070,359 outstanding 8,000 7,000 Class A common stock, par value $.01; 100,000 shares authorized; 100,000 shares issued and outstanding 1,000 1,000 Paid-in capital 12,307,000 11,821,000 Retained earnings 1,276,000 2,224,000 13,592,000 14,053,000 Less treasury stock (727,000) (727,000) Total stockholders' equity 12,865,000 13,326,000 $61,441,000 $ 64,756,000 EVERLAST WORLDWIDE INC. & SUBSIDIARIES RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA EXCLUDING CERTAIN CHARGES FROM CONTINUING OPERATIONS Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Audited) (Audited) Income (loss) from continuing operations as reported GAAP basis 1,728,000 (695,000) 5,226,000 1,063,000 Adjustments: Depreciation and amortization included in operating income 442,000 370,000 1,615,000 1,324,000 Restructuring and non-recurring costs 14,000 - 287,000 - Costs in connection with warrant issuance - - 182,000 - Adjusted EBITDA (Earnings excluding certain costs before interest, taxes, depreciation and amortization) $2,184,000 ($325,000) $7,310,000 $2,387,000 Note: To supplement its financial statements presented on a GAAP basis, the Company uses non-GAAP additional measures of EBITDA adjusted to exclude certain nonrecurring restructuring costs and non-cash costs in connection with a warrant issuance. The Company believes that the use of these additional measures is appropriate to enhance an overall understanding of its past financial performance. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors with a more complete understanding of the underlying operational results and trends and its marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or earnings per share prepared in accordance with generally accepted accounting principles in the United States.
SOURCE Everlast Worldwide Inc.