Tefron Reports First Quarter 2010 Results
MISGAV, Israel, May 21, 2010 /PRNewswire-FirstCall/ -- Tefron Ltd. (OTC:TFRFF; TASE:TFRN), a leading producer of seamless intimate apparel and engineered-for-performance (EFPTM) active wear, today announced financial results for the first quarter of 2010.
First Quarter 2010 Results
Tefron reported revenues for the first quarter of 2010 of $25.8 million. This compares with revenues of $22.3 million in the fourth quarter of 2009 and $47 million in the first quarter of 2009. The Company reported a gross profit in the first quarter of $0.9 million, compared with a gross loss of $2.16 million in the fourth quarter of 2009 and a gross profit of $5.5 million in the first quarter of 2009. Operating loss for the first quarter of 2010 was $3.6 million, compared with an operating loss of $5.6 million for the fourth quarter of 2009 and an operating loss of $0.3 million in the first quarter of 2009. Net loss for the first quarter of 2010 was $3.3 million, equivalent to a loss of $1.5 per diluted share, compared with net loss of $4.7 million in the prior fourth quarter, or a loss of $2.2 per diluted share, and net income of $0.1 million in the first quarter of 2009, equivalent to earnings per diluted share of $0.1.
Commenting on the results, CEO Amit Meridor, said, "In the first quarter we successfully completed the financial restructuring of Tefron culminating in the agreement with the banks on March 2, 2010 and the rights issue at the end of the quarter on March 25, 2010. The sales and operational results reported today met the targets we presented to the Board of Directors in our budget. We are pleased that having achieved these results, we can now focus on the next stage of the turnaround program with the implementation of stricter quality control, enhanced manufacturing effectiveness and efficiency and more consistent, dependable customer service."
Tefron manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria's Secret, Nike, The Gap, J.C. Penney, Wall-Mart, lululemon Athletica, Calvin Klein, Maidenform, Patagonia, Reebok, , and El Corte Englese, as well as other well known retailers and designer labels. The company's product line includes knitted briefs, bras, tank tops, boxers, leggings, crop, T-shirts, nightwear, bodysuits, swimwear, beach wear and active-wear.
This press release contains certain forward-looking statements, within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, with respect to the Company's business, financial condition and results of operations. We have based these forward-looking statements on our current expectations and projections about future events
Words such as "believe," "anticipate," "expect," "intend," "will," "plan," "could," "may," "project," "goal," "target," and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Except for statements of historical fact contained herein, the matters set forth in this press release regarding our future performance, plans to increase revenues or margins and any statements regarding other future events or future prospects are forward-looking statements.
These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including, but not limited to:
- the effect of the worldwide recession on our sales to our customers in the United States and in Europe and on our ability to finance our operations; - our customers' continued purchase of our products in the same volumes or on the same terms; - the failure of any of our principal customers to satisfy its payment obligations to us; - the cyclical nature of the clothing retail industry and the ongoing changes in fashion preferences; - the competitive nature of the markets in which we operate, including the ability of our competitors to enter into and compete in the seamless market in which we operate; - the potential adverse effect on our business resulting from our international operations, including increased custom duties and import quotas (e.g., in China, where we manufacture for our swimwear division) - fluctuations in inflation and currency rates; - the potential adverse effect on our future operating efficiency resulting from our expansion into new product lines with more complicated products, different raw materials and changes in market trends; - the purchase of new equipment that may be necessary as a result of our expansion into new product lines; - our dependence on our suppliers for our machinery and the maintenance of our machinery; - the fluctuations costs of raw materials; - our dependence on subcontractors in connection with our manufacturing process - our failure to generate sufficient cash from our operations to pay our debt; - political, economic, social, climatic risks, associated with international business and relating to operations in Israel;
As well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
TABLE 1: SALES BY SEGMENTS Three months ended Three months ended Year ended December March 31, 2010 March 31, 2009 31, 2009 USD USD USD Segment Thousands % of total Thousands % of total Thousands % of total Cut & sew 14,349 55.7% 25,334 53.9% 53,232 46.1% Seamless 11,424 44.3% 21,651 46.1% 62,306 53.9% Total 25,773 100.0% 46,985 100.0% 115,538 100.0% TABLE 2: SALES BY PRODUCT LINE Three months Three months Year ended ended March ended March December 31, 2010 31, 2009 31, 2009 Product line USD % of USD % of USD % of Thousands total Thousands total Thousands total Intimate Apparel 13,014 50.5% 20,017 42.6% 64,143 55.5% Active wear 2,329 9.0% 8,743 18.6% 21,533 18.6% Swimwear 10,430 40.5% 18,225 38.8% 29,862 25.8% Total 25,773 100.0% 46,985 100.0% 115,538 100.0% Swimwear growth -42.8% Intimate Apparel growth -35.0% Active wear -73.4% CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands March 31, December 31, 2010 2009 2009 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 326 $ 211 $ 1,904 Short-term investments 737 1,149 737 Trade receivables, net 14,974 30,595 14,597 Other accounts receivable and prepaid expenses 2,971 4,312 2,892 Inventories 21,348 26,026 19,778 Total current assets 40,356 62,293 39,908 NON- CURRENT ASSETS: Subordinated note - 2,400 - Deferred taxes, net 1,220 - 1,409 Property, plant and equipment, net 54,706 62,613 56,920 Intangible assets, net 857 1,921 960 56,783 66,934 59,289 Total assets $ 97,139 $ 129,227 $ 99,197 CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data) March 31, December 31, 2010 2009 2009 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit $ 2,971 $ 24,262 $ 25,847 Trade payables 18,215 24,769 15,042 Other accounts payable and accrued expenses 4,346 6,970 5,666 Total current liabilities 25,532 56,001 46,555 LONG-TERM LIABILITIES: Long term loans from banks (net of current maturities) 19,790 - - Other accounts payable 1,454 1,432 1,838 Accrued severance pay, net 648 1,413 729 Deferred taxes, net 1,906 6,688 3,080 Total long-term liabilities 23,798 9,533 5,647 SHAREHOLDERS' EQUITY: Share capital - Ordinary shares 10,351 7,518 7,518 Additional paid-in capital 108,782 107,161 107,522 Accumulated deficit (63,920) (43,594) (60,666) Less - 99,740 Ordinary shares in treasury, at cost (7,408) (7,408) (7,408) Other capital reserve 4 (231) 29 47,809 63,446 46,995 Employee stock options in subsidiary - 247 - Total shareholders' equity 47,809 63,693 46,995 Total liabilities and shareholders' equity $ 97,139 $ 129,227 $ 99,197 CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Year Three months ended ended December March 31, 31, 2010 2009 2009 Unaudited Audited Sales $ 25,773 $ 46,985 $ 115,538 Cost of sales 24,829 41,520 119,339 Gross profit (loss) 944 5,465 (3,801) Selling, general and administrative expenses 4,519 5,798 17,621 Other income - - (496) Operating loss (3,575) (333) (20,926) Loss from early repayment of subordinated note receivable - - (1,285) Financial expenses (income), net 538 (494) 512 Income (loss) before taxes on income (4,113) 161 (22,723) Taxes on income (tax benefit) (859) 16 (5,330) Net income (loss) $ (3,254) $ 145 (17,579) Basic and diluted net earnings (losses) per share: Basic net earnings (losses) per share $ (1.5) $ 0.1 $ (8.1) Diluted net earnings (losses) per share $ (1.5) $ 0.1 $ (8.1) Weighted average number of shares used for computing basic earnings (losses) per share 2,178,746 2,137,178 2,137,178 Weighted average number of shares used for computing diluted earnings (losses) per share 2,178,746 2,137,178 2,137,178 CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year Three months ended ended December March 31, 31, 2010 2009 2009 Unaudited Audited Cash flows from operating activities Net income (loss) $ (3,254) $ 145 $ (17,393) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment and intangible assets 2,340 2,213 9,256 Compensation related to options granted to employees 70 57 171 Impairment reversal of property, plant and equipment and intangible assets - - (496) Inventory write-off 297 480 2,808 Extinguishment of contingent consideration against profit or loss - - (399) Change in employee benefit liabilities, net (81) (756) (850) Loss from early repayment of subordinated note receivable - - (75) Deferred taxes, net (985) (209) (5,364) Loss (gain) on disposal of property, plant and equipment - - 1,285 Decrease (increase) in trade receivables, net (377) (7,149) 8,849 Decrease (increase) in other accounts receivable and prepaid expenses (294) 499 1,497 Decrease (increase) in inventories (1,867) 5,619 9,730 Increase (decrease) in trade payables 3,173 (398) (10,125) Decrease in other accounts payable and accrued expenses (1,514) (1,052) (428) Net cash used in operating activities (2,496) (568) (1,476) Cash flows from investing activities Purchase of property, plant and equipment (22) (232) (611) Purchase of intangible assets (1) (26) (75) Contingent consideration paid - - (271) Proceeds from sale of property, plant and equipment 4 18 18 Proceeds from early repayment loss from subordinated note receivable - - 1,715 Net cash provided by (used in) investing activities (19) (240) 776 CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year Three months ended ended December March 31, 31, 2010 2009 2009 Unaudited Audited Cash flows from financing activities Short-term bank credit, net $ (11,275) $ 491 $ 4,923 Repayment of long-term bank loans (11,601) (1,038) (3,885) Proceeds from long-term bank loans 20,000 - - Issue of shares (net of issue expenses) 3,813 - - Net cash provided by (used in)financing activities 937 (547) 1,038 Increase (decrease) in cash and cash equivalents (1,578) (1,355) 338 Cash and cash equivalents at the beginning of the period 1,904 1,566 1,566 Cash and cash equivalents at the end of the period $ 326 $ 211 $ 1,904 Contacts Company Contact: Eran Rotem Chief Financial Officer +972-4-990-0881 firstname.lastname@example.org
SOURCE Tefron Ltd