FGX International Sees 5% Q4 Revenue Gain

Adjusted income from continuing operations in the current period, excluding transaction costs of $1.9 million, or $0.08 per diluted share, related to the pending merger with a subsidiary of Essilor International, was $9.4 million, or $0.42 per diluted share. As reported income from continuing operations in the current period was $7.5 million, or $0.34 per diluted share, an increase of 9% compared to $6.9 million, or $0.31 per diluted share, in the fourth quarter of 2008.

Adjusted earnings before interest, taxes, depreciation and amortization from continuing operations, excluding merger costs, (Adjusted EBITDA) was $19.6 million. Earnings before interest, taxes, depreciation and amortization from continuing operations (EBITDA) was flat at approximately $18.0 million, compared to the fourth quarter of 2008.

Net sales in the sunglasses and prescription frames segment decreased 17% in the fourth quarter of 2009 compared to the fourth quarter of 2008 due to a non-anniversaried rollout to a major customer and the deferral of orders by several major retailers from the fourth quarter of 2009 to the first and second quarters of 2010. This decrease was partially offset by a full quarter of sales by Dioptics Medical Products, which was acquired November 26, 2008.

Net sales in the companyâ€s international segment were up 40% in the fourth quarter, while on a constant currency basis international net sales increased 28%, when compared to the corresponding year ago period. This increase was principally due to strong sales of reading glasses to a major Canadian chain.

Highlights for fiscal 2009 include:

Net sales increased 9% to $259.3 million from $237.1 million in fiscal 2008.

Adjusted income from continuing operations in fiscal 2009, excluding merger costs of $1.9 million, or $0.08 per diluted share, was $23.0 million, or $1.03 per diluted share. As reported income from continuing operations in fiscal 2009 was $21.1 million or $0.95 per diluted share, a 30% increase from the fiscal 2008 results of $16.3 million, or $0.76 per diluted share.

Adjusted EBITDA for fiscal 2009 was $59.2 million. EBITDA for fiscal 2009 was $57.3 million, an increase of 9% compared to $52.3 million in fiscal 2008.

Net sales in the sunglasses and prescription frames segment increased 26% in fiscal 2009 compared to the corresponding year-ago period due to the addition of sales by Dioptics Medical Products, partially offset by a reduction of promotional programs in the current year at a major retailer and a non-anniversaried roll-out at a second large customer.

International net sales were down 1% in fiscal 2009 compared to fiscal 2008, while on a constant currency basis international net sales were up 13% due to a reading glass roll-out at a major Canadian chain, partially offset by non-anniversaried roll-outs in the U.K.

Additional fiscal 2009 and fourth quarter 2009 details:

In the fourth quarter of 2009, gross profit as a percentage of net sales was 60.0%, compared to 58.0% in the fourth quarter of 2008. This improvement was due to favorable product mix, lower product costs and reduced freight rates. For fiscal 2009, gross profit as a percentage of net sales was 56.8% compared to 56.1% in fiscal 2008, with the improvement resulting from the same factors that impacted the fourth quarter of 2009.

In the fourth quarter of 2009, adjusted operating income increased to $16.0 million, or 25% of net sales, from $13.0 million, or 21% of net sales, in the fourth quarter of 2008. The increase in operating income was driven by increased sales, improved gross margins and the leveraging effect of increased volume. For fiscal 2009, adjusted operating income increased to $42.0 million, or 16% of net sales, compared to $33.0 million or 14% of net sales, in fiscal 2008, with the improvement resulting from the same factors that impacted the fourth quarter of 2009.

Merger

As previously announced on December 16, 2009, the Company has signed a definitive agreement to merge with a subsidiary of Essilor International of Charenton-le-Pont, France. The transaction is subject to customary closing conditions, including FGX International shareholder approval. A special meeting of shareholders to consider and vote upon a proposal to approve the merger is scheduled for March 9, 2010.

In light of the merger agreement with Essilor International, FGX will not be hosting a conference call to discuss its fourth quarter and fiscal year 2009 financial results and will not update prior financial guidance for 2010.

FGX International’s eyewear brands include Foster Grant, Magnivision, Angel ™ , Gargoyles, Anarchy, SolarShield, PolarEyes and Corinne McCormack. FGXI also holds licenses for brands such as Ironman, Levi Strauss, Body Glove, Rawlings and C9 by Champion.