<PAGE>
Exhibit 99
FOR: McNaughton Apparel Group Inc.
APPROVED BY: Peter Boneparth
Chief Executive Officer
Amanda Bokman
Chief Financial Officer
(212) 947-2960
FOR IMMEDIATE RELEASE
---------------------
CONTACT: Investor Relations:
Shannon Froehlich/Natasha Boyden
Press: Michael McMullan/Kate Talbot
Morgen-Walke Associates
(212) 850-5600
MCNAUGHTON APPAREL GROUP INC. ANNOUNCES RECORD FOURTH QUARTER
AND YEAR-END EARNINGS RESULTS
~ Net Income Increased 47% Over Prior Year Quarter ~
~ Company Posted EPS of $0.70 Per Diluted Share Over $0.62 A Year Ago ~
~ Net Income for the Year Tripled Over the Prior Year ~
New York, New York, January 17, 2001 - McNaughton Apparel Group Inc.
(Nasdaq: MAGI) today announced results for its fourth quarter and year-
ended November 4, 2000.
Net income for the fourth quarter increased 47% to $7.3 million, or $0.70 per
diluted share, compared to net income of $5.0 million, or $0.62 per diluted
share in the comparable 1999 quarter. Cash earnings per share, or earnings per
share before goodwill amortization, increased to $0.85 per diluted share,
compared to $0.65 per diluted share in the comparable 1999 quarter. Net sales
for the fourth quarter increased 10% to $136.6 million, compared to $124.4
million for the comparable period in fiscal 1999. This year's fourth quarter
included 13 weeks of operating results compared to 14 weeks in the fourth
quarter of fiscal 1999.
For the year ended November 4, 2000, net income increased 215% to $26.9
million, or $3.05 per diluted share, compared to net income of $8.5 million, or
$1.11 per diluted share for the same period in fiscal 1999. Cash earnings per
share, or earnings per share before goodwill amortization, increased to $3.42
per diluted share, compared to $1.21 per diluted share in the comparable period
in fiscal 1999. Net sales for fiscal 2000 increased 24% to $506.3 million,
compared to $407.8 million reported for fiscal 1999.
Peter Boneparth, Chief Executive Officer of McNaughton Apparel Group,
commented, "We are extremely pleased with our overall performance during the
fourth quarter, as we experienced broad-based strength across all our brands,
clearly highlighting ongoing consumer acceptance for our merchandise. In
particular, our Miss Erika division exceeded our internal plan as a result of
~ more ~
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MCNAUGHTON APPAREL GROUP INC. ANNOUNCES FOURTH QUARTER Page: 2
AND YEAR END EARNINGS RESULTS
expanded product offerings for the Fall season. All of our brands performed well
at retail throughout the year, with sales at each of our businesses increasing
significantly year-over-year."
Mr. Boneparth noted, "We are also pleased by our gross margins which,
despite an extremely challenging retail environment, increased 60 basis points
to 28.7% over last year's fourth quarter. This was primarily a result of fewer
closeouts in the Miss Erika division stemming from the positive response from
retailers to their expanded fall product offerings."
Mr. Boneparth continued, "Another positive trend in the fourth quarter was
the decrease in selling, general & administrative costs as a percentage of net
sales by approximately 280 basis points to 12.0% from 14.8% in the comparable
prior year quarter. In addition to the non-recurrence of certain one-time
charges last year, we continued to gain operating leverage. We believe that
this trend will continue as we further increase our sales base."
Mr. Boneparth concluded, "Fiscal 2000 marked a year of unprecedented sales
and earnings growth for the Company. Looking ahead, we remain comfortable with
our previous financial guidance given on December 12, 2000. Our visibility
remains strong due to our forward bookings to date, and backlog as of December
30, 2000 continued to run ahead of prior year by approximately 20%. We have
established a solid operating platform and we are optimistic that this will
enable us to continue to deliver strong performance in fiscal 2001.
The Company invites investors to listen to a broadcast of the Company's
conference call discussing fourth quarter and year-end results. The call will
be broadcast live over the Internet on Wednesday, January 17, 2001 at 10:00 a.m.
(EST) and can be accessed by visiting the investor relations web page at
http://www.mcnaughtonapparel.com.
An online archive of the broadcast will be available within one hour of the
completion of the call and will be accessible on the http://www.vcall.com web
site as well as on the http://www.mcnaughtonapparel.com web site until January
31, 2001.
McNaughton Apparel Group Inc. designs, contracts for the manufacture of and
markets a broad line of brand name, moderately-priced women's and juniors'
career and casual clothing. The Company's product lines include collections of
related separates coordinated by color and style, as well as casual weekend wear
and related knitwear separates. The Company markets its products under its
nationally known labels, including Norton McNaughton(R) and Norton Studio(R),
through its subsidiary Norton McNaughton of Squire, Inc., Erika(R), through its
subsidiary Miss Erika, Inc., and Energie(R), Currants(R), Jamie Scott(R) and
Polar 2000(R), through its subsidiary Jeri-Jo Knitwear, Inc.
~ more ~
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MCNAUGHTON APPAREL GROUP INC. ANNOUNCES FOURTH QUARTER Page: 3
AND YEAR END EARNINGS RESULTS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This press release contains forward-looking information about the
Company's anticipated operating results. The Company undertakes no obligation
to correct or update any forward-looking information, whether as a result of new
information, future events or otherwise. The Company's ability to achieve its
projected results is dependent on many factors, which are outside of
management's control. Some of the most significant factors would be a
deterioration in retailing conditions for women's and juniors' apparel,
including as a result of any continued slowdown in the U.S. economy, an increase
in price pressures and other competitive factors, any of which could result in
an unanticipated decrease in gross profit margins, unanticipated problems
arising with the integration of Miss Erika's and Jeri-Jo's businesses, the
unanticipated loss of a major customer, contractor or supplier, unanticipated
problems arising out of Norton McNaughton of Squire's relocation of its
distribution function to South Carolina where the activities are now being
performed "in-house", increases in interest rates, and weather conditions which
could impact retail traffic and the Company's ability to ship on a timely basis.
Accordingly, there can be no assurance that the Company will achieve its
anticipated operating results.
[Financial Tables to Follow]
<PAGE>
MCNAUGHTON APPAREL GROUP INC. ANNOUNCES FOURTH QUARTER Page: 4
AND YEAR END EARNINGS RESULTS
McNaughton Apparel Group Inc.
Consolidated Statements of Income
(In Thousands, Except Per Share Amount)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
---------------------------------------------------------------------------------
November 4, 2000 November 6, 1999 November 4, 2000 November 6, 1999
---------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $136,648 $124,365 $506,289 $407,812
Cost of goods sold 97,462 89,376 362,483 303,769
---------------------------------------------------------------------------------
Gross Profit 39,186 34,989 143,806 104,043
Depreciation and amortization 4,288 1,923 10,860 5,282
SG&A 16,374 18,359 67,525 64,146
---------------------------------------------------------------------------------
Income from operations 18,524 14,707 65,421 34,615
Interest Income (28) (118) (361) (364)
Interest expense and amortization of
deferred financing costs 6,196 5,042 20,221 18,712
---------------------------------------------------------------------------------
Income before income taxes 12,356 9,783 45,561 16,267
Provision for income taxes 5,066 4,818 18,680 7,736
---------------------------------------------------------------------------------
Net income $ 7,290 $ 4,965 $ 26,881 $ 8,531
=================================================================================
Per Share Data:
Basic:
Net income $0.79 $0.67 $3.39 $1.15
=================================================================================
Weighted average number of common shares
outstanding
9,201 7,445 7,924 7,432
=================================================================================
Diluted:
Net income $0.70 $0.62 $3.05 $1.11
=================================================================================
Weighted average number of common shares
outstanding
10,477 8,063 8,802 7,708
=================================================================================
</TABLE>
~ more ~
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MCNAUGHTON APPAREL GROUP INC. ANNOUNCES FOURTH QUARTER Page: 5
AND YEAR END EARNINGS RESULTS
McNaughton Apparel Group Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
November 4, 2000 November 6, 1999
(Unaudited)
------------------------------------------
(In Thousands)
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 468 $ 13,842
Due from factor 99,695 82,189
Inventory 59,720 40,917
Income taxes receivable 14,916 2,145
Prepaid expenses and other current assets 2,908 3,787
-------- --------
Total current assets 177,707 142,880
Fixed assets, net 13,416 10,177
Notes receivable from management stockholders 1,596 2,287
Intangible assets, net 246,425 63,198
Deferred financing costs 5,651 6,642
Other assets 2,445 2,914
-------- --------
Total assets $447,240 $228,098
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 24,120 $ 14,237
Revolving credit loan 65,820 725
Income taxes payable 18,874 7,151
Earn-out obligations payable 20,000 10,000
Accrued expenses and other current liabilities 17,351 17,160
-------- --------
Total current liabilities 146,165 49,273
12 1/2% Senior Notes due 2005 125,000 125,000
Earn-out obligations payable 59,000 -
Subordinated promissory notes 10,000 -
Other long-term liabilities 1,596 3,758
-------- --------
Total liabilities 341,761 178,031
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, authorized 30,000,000 shares and
20,000,000 shares, respectively, 10,628,256 and 8,096,324 shares issued,
respectively, and 9,759,456 and 7,445,324 shares outstanding, respectively 106 81
Capital in excess of par 54,362 23,989
Retained earnings 58,413 31,532
Treasury stock, at cost 868,800 and 651,000 shares, respectively (7,402) (5,535)
-------- --------
Total stockholders' equity 105,479 50,067
-------- --------
Total liabilities and stockholders' equity $447,240 $228,098
======== ========
</TABLE>
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