Hartmarx Corporation (NYSE: HMX) reported operating results for its third quarter ended August 31, 2002. Revenues were $149.1 million in 2002 compared to $159.7 million in 2001. Earnings before interest and taxes ("EBIT") improved to $6.8 million compared to a loss of $7.4 million in 2001. After consideration of interest expense and income taxes, net earnings before extraordinary item were $1.8 million or $.05 per share in 2002 compared to a loss of $6.6 million or $.22 per share in 2001.
Homi B. Patel, president and chief executive officer of Hartmarx Corporation, commented, "In spite of very difficult retail conditions which resulted in poor in-stock sales this quarter, restructuring actions initiated last year along with ongoing programs to reduce manufacturing and sourcing costs resulted in a $14.2 million EBIT improvement from a loss of $7.4 million in last year's third quarter to a positive $6.8 million this year."
"We are also pleased with the significant progress made in reducing working capital requirements and debt levels. Inventory reductions of $71 million resulted in total debt declining by $32.6 million or 18.4% from last year's level. Our new financing agreement will reduce cash interest by several million dollars annually while providing us with adequate funding for all our needs, including retiring our 12.5% senior unsecured notes, and allowing us to grow our business both internally and through acquisitions."
"At our stockholders meeting in April, we publicly stated three financial objectives for 2002. We anticipate that we will meet our objective of being profitable for the year and will significantly exceed the goals to reduce working capital by 15% and debt by $25 million. The implementation of actions taken to improve our margins and reduce our cost structure should enable us to achieve a major earnings improvement next year, even without a significant improvement in the economy or retail business," Mr. Patel concluded.
For the nine months, revenues were $419.3 million compared to $446.9 million in 2001. EBIT was $13.6 million this year compared to a loss of $9.2 million in 2001. Restructuring charges included in year-to-date EBIT were $.9 million in 2002 compared to $8.5 million last year, including $5.9 million in the third quarter of 2001. As previously reported, year-to-date results for the current year also included $4.5 million of litigation settlement proceeds recorded in the second quarter. Interest expense was $12.4 million for the nine months this year compared to $10.1 million for the nine months of 2001 and reflected $2.9 million of non-cash interest expense this year compared to $.3 million in 2001. After consideration of interest expense and taxes, net earnings before extraordinary item were $.7 million or $.02 per share in 2002 compared to a loss of $11.7 million or $.39 per share in 2001. Third quarter and nine months results for 2002 also included an extraordinary charge of $1.7 million or $.05 per share associated with the previously announced refinancing of the Company's senior credit facility, completed on August 30th. The prior year included a nominal second quarter extraordinary loss related to repurchases of the Company's then outstanding senior subordinated notes.
Hartmarx produces and markets business, casual and golf apparel under its own brands including Hart Schaffner & Marx, Hickey-Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch, Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In addition, the Company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberrys men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone, Pierre Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs.
The comments set forth above contain forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements could be significantly impacted by such factors as the level of consumer spending for men's and women's apparel, the prevailing retail environment, the Company's relationships with its suppliers, customers, licensors and licensees, actions of competitors that may impact the Company's business and the impact of unforeseen economic changes, such as interest rates, or in other external economic and political factors over which the Company has no control. The reader is also directed to the Company's periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company's results of operations and financial condition. Forward-looking statements are not guarantees as actual results could differ materially from those expressed or implied in forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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