FGX International Holdings LTD
FGX International — Oppenheimer Annual Consumer Conference 2009
30 slides from FGX International's conference presentation, Jul 13, 2009
Slide 1: Oppenheimer Annual Consumer Conference July 14, 2009
Oppenheimer Annual Consumer Conference July 14, 2009
Slide 2: Forward-Looking Statements
2 This presentation contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates, forecasts and projections, as the case may be, and as such involve substantial risks and uncertainties. All statements, othe
Slide 3: The FGX Advantage
3 The FGX Advantage Leading market positions Portfolio of highly recognized brands Balanced business model Low-cost sourcing strategy Multiple growth opportunities Customer service focus #1 in readers, #1 in popular priced sunglasses, #1 in Fits-Over Competition is small and fragmented FosterGrant –
Slide 4: Leading Market Positions in Key Product Categories
4 Leading Market Positions in Key Product Categories Foster Grant + Magnivision hold #1 share in growing reading glass market Magnivision - the original reading glass brand Foster Grant - #1 in mass/popular priced sunglasses Solar Shields - #1 in Clip-On and Fits-Over categories Fragmented competiti
Slide 5: Compelling Industry Trends
5 Compelling Industry Trends Favorable demographics for reading glasses with aging baby boomers Increase in LASIK surgery and contact lens usage that correct nearsightedness, thus requiring reading glasses Compelling value proposition as OTC reading glasses cost a fraction of prescription glasses; c
Slide 6: Portfolio of Highly Recognized, Quality Eyewear Brands
6 Portfolio of Highly Recognized, Quality Eyewear Brands 80 year heritage Iconic “Who’s that” TV Campaign re-launched in 2009 Created mass reader category in early 1980’s Problem/Solution/Value TV campaign launched in 2009 30 Year heritage Strong medical positioning Sold at premium price points ($50
Slide 7: Capitalize on Existing Brand Awareness
7 Capitalize on Existing Brand Awareness Television advertising launched in February to raise category awareness Campaign ran for 15 weeks with over 6,000 total spots Strong problem/solution/value message with doctor’s endorsement Reader ad campaign began February featuring Raquel Welch from 70’s ad
Slide 8: Foster Grant Sunglasses TV Advertisement
8 Foster Grant Sunglasses TV Advertisement
Slide 9: Foster Grant Readers TV Advertisement
9 Foster Grant Readers TV Advertisement
Slide 10: Magnivision Readers TV Advertisement
10 Magnivision Readers TV Advertisement
Slide 11: Balanced Business Model
11 Balanced Business Model 2008 Sales by Product Line 2008 Sales by Channel Revenue from diverse product assortment of readers and sunglasses plus international segment Largest segment - reading glasses - is high margin, stable, non-seasonal Scalable international business Distribution through multi
Slide 12: Efficient, Low Cost Sourcing Model
12 Efficient, Low Cost Sourcing Model Scale Experience Relationships Operating Efficiency 80 million units sourced annually Economies of scale drive pricing leverage Over 25 years of China sourcing experience Operates logistics office and quality control lab in Shenzhen, China Average relationship w
Slide 13: Dioptics Overview
13 Dioptics Overview Seller of Solar Shields - #1 in Clip-On and Fits-Over categories Specialty distribution channels in medical, mass market, multimedia, sporting goods, chain drug and grocery Significant customers include Wal-Mart, Walgreens and QVC New FGX channel in medical category Over 400 U.S
Slide 14: Acquisition Strategy
14 Acquisition Strategy Criteria Complimentary to existing optical business High gross margins with opportunity to expand Cross selling opportunities Immediate synergies Accretive to earnings Funding Expected to generate over $40 million of free cash in 2009 Favorably priced revolving credit facilit
Slide 15: New Product Development
15 New Product Development Renewed emphasis on new product development with goal of creating a steady pipeline of new products Ample opportunities as market leader to license technologies from inventors and smaller companies Infrastructure in place to test new products before bringing to market New
Slide 16: Fox / Microvision
FOX mMICROVISIONss
Slide 17: [LOGO]
17 [LOGO]
Slide 18: [LOGO]
18 [LOGO]
Slide 19: Versasight
VERSASIGHT | > Fine
Slide 20: Green View
ee Green View ~
Slide 21: Long-Standing Relationships with National Retailers
21 Long-Standing Relationships with National Retailers Length of relationship Product Assortment Customer 20+ years 20+ years 19 years 16 years 15 years 14 years 13 years 12 years 12 years Sun, Readers, Dioptics, Frames Sun, Readers Sun, Readers, Dioptics Readers, Dioptics Sun, Readers, Dioptics Sun
Slide 22: Selected Cross-Selling Opportunities by Channel
22 Selected Cross-Selling Opportunities by Channel >50% Between 0% and 50% 0%
Slide 23: New Business Update
24 New Business Update Estimated Customer New Business Pick Up Annual Revenues $3 Million $1-$2 Million Sun and Readers Readers $.3 Million $1 Million Dioptics Dioptics Dioptics $1-$2 Million
Slide 24: Strong Capital Structure to Support Growth
25 Strong Capital Structure to Support Growth Current loan facility includes $100 million term loan with a $75 million revolving credit facility; $30+ million available at end of Q1; expires December 2012 Interest rate swap - fixed interest rate at 3.22% plus 1.75% for approximately 50% of term loan
Slide 25: Disposal of Costume Jewelry Business
26 Disposal of Costume Jewelry Business Entered into non-binding letter of intent in April 2009 to sell substantially all of the assets of costume jewelry business Transaction expected to close prior to Q2 2009 earnings release, subject to execution of definitive agreements. Purchase price of approx
Slide 26: Depreciation & Amortization Implications
27 Depreciation & Amortization Implications Other Considerations FGX supplies store fixtures to retailers at time of rollout $14 million of fixture purchases in 2006 to support WAG rollout. Fixtures – 2 year depreciation and 4 year average useful life Depreciation and amortization are expected to be
Slide 27: Historical Financial Performance
28 Historical Financial Performance *As adjusted (excluding $1.8 million Loss on Goodwill Impairment) DSO improved to 66 days in the current quarter from 72 days in first quarter 2008. DOH increased 13 days in current quarter due to retailer de-stocking. Consolidated Statement of Operations Data 1st
Slide 28: Summary
29 Summary Leading market positions Balanced business model Portfolio of highly recognized brands Low-cost sourcing strategy Scale and experience create barriers to entry Multiple growth opportunities Experienced management team Customer service focus
Slide 29: EBITDA Reconciliation
30 EBITDA Reconciliation (in thousands) The table below reconciles EBITDA to net income, the most directly comparable GAAP measure. Fiscal Period Ended April 4, 2009 March 29, 2008 (in thousands) (in thousands) The table below reconciles Free Cash flow to the EBITDA table above. April 4, 2009 March
Slide 30: Notes to Consolidated Statements of Income and Other Selected Data
31 NOTES TO CONSOLIDATED STATEMENTS OF INCOME AND OTHER SELECTED DATA EBITDA represents net income before interest, income taxes, depreciation and amortization. Free cash flow represents EBITDA less capital expenditures. We believe that EBITDA and free cash flow are performance measures that provide
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