Everlast Q2 Net Income falls 50% as Sales Slide 12.2%

Everlast Worldwide Inc. reported second quarter net sales were $12.9 million as compared to $14.7 million reported in 2002. Net licensing revenues advanced 11.8% to $1.6 million. Net income available to common stockholders (after giving effect to the redeemable preferred stock dividend) was $.1 million, or $0.04 per basic share, compared with $.2 million, or $0.08 per basic share, in 2002.

For the six months ended June 30, 2003, net sales were $25.3 million as compared to $30.4 million in 2002. During the six months, net licensing increased 15.4% to $3.2 million. Net income available to common stockholders (after giving effect to the redeemable preferred stock dividend) was $.1 million, or $0.04 per basic share, compared with $.6 million, or $0.20 per basic share, in 2002.

“The challenges posed by the economy along with unfavorable weather conditions throughout most of the U.S. in the second quarter forced retailers to continue their cautious stance and thus, reduced orders. However, against this difficult backdrop, we posted positive operating results for the quarter,” said George Q. Horowitz, Chairman and Chief Executive of Everlast Worldwide Inc. “During the quarter, we continued to enhance the Everlast brand and expand our product portfolio, develop new manufacturing efficiencies, and execute our long-term growth strategies.”

Mr. Horowitz continued, “While the current environment has been challenging, we continue to see opportunities that will position the company for long-term profitable growth. This is evidenced by our recent new product development and new licensing activities particularly in the area of nutritional products, health and beauty aids for men and women, as well as consumer non-durables. We also expanded our presence in the important children's apparel segment through a number of licensing agreements. We are positioned to capitalize on consumer demand for niche market brands such as Everlast.”

Mr. Horowitz concluded, “Regardless of what the balance of the year holds in terms of the economy, we remain committed to our brand building activities and product expansion efforts. Licensing the Everlast brand in important product categories will remain a corporate priority and we have identified a number of market segments, which hold great promise for us. Our flagship apparel line will be updated with new styles and products. The stature of our boxing brand will continue to grow as we unfold new event sponsorship activities in the coming months. We will also continue to support the Everlast brand name with unique and impactful advertising and merchandising efforts. We are now looking forward to leveraging the strategic progress we have made to deliver strong returns and enhanced value for our shareholders.”

  
                            EVERLAST WORLDWIDE INC. & SUBSIDIARIES                       
                                   CONSOLIDATED STATEMENTS OF INCOME
                              Three months ended          Six months ended                                     
                                   June 30,                   June 30,
                              2003          2002          2003        2002                           
                           (Unaudited)   (Unaudited)  (Unaudited)  (Unaudited)
    Net sales             $12,939,061   $14,725,911 $ 25,294,344 $ 30,460,507
    Cost of goods sold      9,386,797    10,144,052   18,306,839   20,604,882
    Gross profit            3,552,264     4,581,859    6,987,505    9,855,625   
    Net license revenues    1,586,415     1,418,950    3,235,251    2,803,617
                            5,138,679     6,000,809   10,222,756   12,659,242
    Operating expenses:
      Selling and shipping  2,795,667     3,079,581    5,832,111    5,882,041
      General and
       administrative       1,550,477     1,354,123    2,937,341    3,081,265
     Amortization             228,168       228,168      456,336      456,336
                            4,574,312     4,661,872    9,225,788    9,419,642

    Income from operations    564,367     1,338,937      996,968    3,239,600

    Other income (expense):
      Interest expense       (238,297)     (168,478)    (475,209)    (319,580)
      Investment income        15,259         7,047       27,906       13,658
                             (223,038)     (161,431)    (447,303)    (305,922)

    Income before provision
     for income taxes         341,329     1,177,506      549,665    2,933,678

    Provision for income
     taxes                    110,465       588,242      285,825    1,400,432

    Net income              $ 230,864     $ 589,264    $ 263,840  $ 1,533,246

    Redeemable preferred
     stock dividend           119,705       349,191      136,805      908,586

    Net income available to
     common stockholders     $111,159      $240,073     $127,035     $624,660

    Basic earnings per share    $0.04         $0.08         $.04         $.20