Everlast fourth quarter net revenues increased 20.3% to $14.8 million as compared to net revenues of $12.3 million in 2003. The increase was derived from strong men's apparel sales of $4.5 million which achieved a 200% increase over the 2003 period, along with a 14% increase in net licensing revenues. Reported net loss available to common stockholders' under GAAP was ($1.2) million, or (37) cents per basic share for the 2004 period as compared to a reported net loss of ($1.2) million, or (38) cents per basic share in 2003.
On December 17, 2004, Everlast announced the signing of the largest licensing agreement in the Company's history whereby it licensed its United States women's apparel category to Jacque Moret, Inc. effective January 1, 2005. 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 women's apparel business as a discontinued component.
In addition, Everlast has also provided pro-forma results, excluding the affects of the discontinued component and including the licensing revenues from the Jacque Moret license agreement, had the agreement been in place at the beginning of the periods presented. Investors may refer to the December 17, 2004 press release describing the licensing agreement and the attached table for further details of the reconciliation of GAAP earnings and EBITDA to Non- GAAP earnings and EBITDA.
For the year ended December 31, 2004, net revenues increased 13% to $45.0 million as compared to $39.8 million in 2003. The net revenue growth was achieved by a 36% increase in net licensing revenue to $9.1 million as compared to $6.7 million in 2003, along with increases in men's apparel and sporting goods revenues of $2.8 million, a 9% increase over 2003. Pro-forma earnings were $.2 million, or $0.07 per basic share as compared to $34,000, or $0.01 per basic share in 2003. Pro-forma EBITDA was $4.0 million in 2004 as compared to $2.9 million in 2003. Reported net loss available to common stockholders under GAAP, was ($1.0) million, or ($0.33) per basic share in 2004, as compared to a ($1.0) million loss, or ($0.31) per basic share loss in 2003.
“The execution of our brand building strategy resulted in the achievement of record net licensing revenues in 2004 of $9.1 million, a 36% increase over 2003 levels. We expect our net licensing revenues to exceed $12 million for 2005 which will be a 33% increase over 2004 reported net licensing revenues. Since we acquired Everlast four years ago, we have grown our licensing revenues by over 300%.
“I am also pleased with the performance of our men's apparel business which grew 40% in 2004 over 2003 levels. This increase was partly a result of the strategic licensing and business alliance we entered into with Contender Partners, LLC, (a venture between DreamWorks LLC and Mark Burnett Productions) previously announced in the third quarter, resulting in a merchandising agreement with Footlocker for a 'Contender' hang-tag line of Everlast sports apparel, shoes and equipment that we began shipping in October 2004.
“During the beginning of 2005, our men's apparel business continued to benefit from the tremendous exposure of its anticipated product placement on The Contender reality television drama which recently premiered on NBC on March 7th. This exposure has enabled us to expand our market penetration by securing new product placement in sporting goods retail establishments such as Dicks Sporting Goods and Olympia along with department stores such as JC Penney,” said George Q Horowitz, Chairman and Chief Executive of Everlast Worldwide Inc.
Mr. Horowitz continued, “We believe our 2004 pro-forma earnings and EBITDA are truer benchmarks of our performance and should be measured against future years. The Jacques Moret license agreement has not only allowed us to focus our talents and efforts on our US men's apparel, professional and retail boxing equipment and worldwide licensing businesses, but has enabled us to further identify and eliminate certain corporate overhead costs which will favorably impact our 2005 earnings and EBITDA. In addition, the global exposure the Everlast brand has experienced from the Academy Award winning movie Million Dollar Baby to the reality drama The Contender will certainly enhance our ability to attract and grow our licensing business with expanded product categories reaching millions of consumers in countries all over the world.”
