Gerber Childrenswear, Inc. Announces First Quarter 2002 Results

Business Wire,  May 10, 2002  

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Business Editors

NEW YORK--(BUSINESS WIRE)--May 10, 2002

Gerber Childrenswear, Inc. (NYSE:GCW) today announced financial results for the first quarter ended March 30, 2002.

Net sales were $51.0 million compared to $54.2 million reported for the first quarter last year. Net income was $3.6 million, or $0.18 per diluted share, compared to net income of $4.7 million, or $0.24 per diluted share last year. Net income for the first quarter of 2001 included a non-recurring after-tax gain of $1.1 million, or $0.06 per diluted share, relating to curtailment of postretirement benefit costs and goodwill amortization expense of approximately $262,000, or $0.01 per diluted share. Net income for the first quarter of 2002 includes approximately $355,000 (net of income taxes), or $0.02 per diluted share, of postretirement income related to the discontinuance of the postretirement health care plan. Excluding the favorable impact of these postretirement benefit adjustments in both periods and the unfavorable goodwill amortization in 2001, net income would be approximately $3.3 million, or $0.17 per diluted share, for the first quarter of 2002, versus approximately $3.8 million, or $0.19 per diluted share in the comparable period of the prior year.

Edward Kittredge, Chairman and Chief Executive Officer, stated, "We continue to manage our business efficiently as evidenced by our ability to achieve a 20 basis point increase in gross margin and a reduction in selling, general and administrative expenses both on a total dollar basis as well as a percentage of sales. While our sales performance was negatively impacted by a sustained softness in the retail environment, we were able to navigate through the highly promotional market environment and post profitable results. These were achieved despite incremental depreciation of approximately $0.5 million related to the new enterprise resource planning and warehouse management systems. We are pleased to remain consistently profitable despite the challenges and are particularly gratified to have exceeded our expectations for the first quarter of the year."

Mr. Kittredge concluded, "Despite the fact that we are faced with a somewhat unpredictable environment, we believe that we are well-positioned from an operational standpoint and have a solid financial foundation from which to grow. We have leading brand names and significant market share both domestically and abroad, and see further opportunities for top line expansion, especially in the areas of new licensing opportunities and line extensions. We continue to execute our business strategy effectively while controlling costs, generating efficiencies, and managing our inventory levels. Furthermore, we are extremely proud of our strong balance sheet with $42.9 million in cash and virtually no long-term debt. As we look to the remainder of 2002, while the economic outlook remains uncertain and we remain conservative in our outlook, we continue to believe we will achieve annual sales in the range of $205.0 to $215.0 million and earnings per diluted share between $0.70 and $0.76."

Interested stockholders and other persons are invited to listen to the first quarter 2002 earnings conference call, scheduled for Friday, May 10, 2002 at 9:00 a.m. Eastern Standard Time. The call will be broadcast live over the Internet at www.videonewswire.com. An online archive will be available immediately following the call and will be accessible until May 24, 2002. Additionally, a replay can be accessed by dialing (800) 938-2796, and will be available through end of business day May 10th, May 13th, May 14th and May 15th.

Gerber Childrenswear, Inc. is a leading marketer of infant and toddler apparel, bedding, bath and related products, which it offers under its flagship licensed brand, Gerber, as well as the Baby Looney Tunes, Curity and Little Suzy's Zoo licensed brand names and the Onesies trademark. The Company is the leading provider of these products to volume retailers, and also distributes to mid-tier department stores and specialty retailers. Its hosiery subsidiaries, Auburn Hosiery Mills Inc. and Sports Socks Company (Ireland) Limited (collectively referred to as "Auburn"), manufacture, market and sell branded sport socks for men, women and children under licensed brand names such as Wilson, Coca-Cola and Converse.

This press release contains statements that are forward-looking within the meaning of applicable federal securities laws and are based on Gerber Childrenswear, Inc.'s current expectations and assumptions, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Primary factors that could cause actual results to differ are indicated in the Company's filings with the Securities and Exchange Commission.