Tefron Reports Fourth Quarter and Annual 2009 Results
MISGAV, Israel, March 29, 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 fourth quarter and for the year 2009.
Fourth Quarter 2009 Results
Fourth quarter revenues were $22.3 million, representing 38.1% decrease from the fourth quarter of 2008 revenues of $36.0 million. The decrease in revenues in the quarter was due to a decrease in sales in all the Company's product lines, primarily due to the worldwide economic slowdown.
The company reported a gross loss in the fourth quarter of $2.16 million, compared with $2.16 million in the fourth quarter of 2008. Operating loss for the quarter was $5.6 million, as compared with an operating loss of $10.6 million in the fourth quarter of 2008. The Company's decrease in gross and operating losses during 2009 in relation to the 2008 losses reflects the implementation of the Company's efficiency plan during 2009. Net loss for the quarter was $4.7 million, or $2.2 per diluted share, as compared with a net loss of $8.8 million, or $4.2 per share, in the fourth quarter of 2008.
Results for Annual 2009
Year 2009 revenues were $115.5 million, representing a 33.5% decrease from 2008 revenues of $173.8 million. The decrease in revenues was across all the Company's product lines, primarily due to the worldwide economic slowdown, which led to more conservative inventory management policies among some of the company's customers and a decline in sales to our two major customers.
Gross loss for the year 2009 was $3.8 million compared with gross margin of $ 6.3 million in 2008. Operating loss was $20.9 million compared with an operating loss of $19.2 million as reported in 2008. Net loss was $17.4 million, or $8.2 per diluted share, compared with a net loss of $17.6 million or $8.3 per share, as reported in 2008.
Gross and operating losses in 2009 were primarily due to the manufacturing challenges faced in the Hi-Tex division which continued to bear heavy costs. As discussed during 2009, these challenges are mainly due to the learning curve required for the manufacture of various new and technologically advanced products, which have been ordered in short production runs for a larger number of apparel categories. The relatively high cost of sales, as a percentage of sales, was primarily due to the significant decline in sales volumes, which exceeded the corresponding decline in our fixed expenses that resulted from the implementation of our 2009 efficiency plan, and due to maintenance costs associated with new sales offices that we opened in 2009.
Commenting on the 2009 results, Tefron new CEO, Amit Meridor, said, "The efficiency plan implemented in 2009 laid the groundwork for the more aggressive restructuring of Tefron in which we are now actively engaged to restore financial and operational strength to Tefron. We have secured a more solid financial position following the success of the bank refinancing last month and the fund raising programs completed last week and it is now the focus of the management team to implement operational changes to manufacturing and to raise the level of customer service to restore Tefron's leadership position in the industry."
Tefron manufactures boutique-quality everyday seamless intimate apparel, active wear and swim wear sold throughout the world by such name-brand marketers as Victoria's Secret, Nike, lululemon athletica, Warnaco/Calvin Klein , Walmart Stores Inc, The Gap, J. C. Penney, Maidenform, , Patagonia, Reebok, and El Corte Ingles, 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, swim wear, 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 cyclical nature of the clothing retail industr 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; - fluctuations in the 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: Year ended December Year ended December 31, 2009 31, 2008 USD USD Segment Thousands % of total Thousands % of total Cut & sew 53,232 46.1% 87,564 50.4% Seamless 62,306 53.9% 86,265 49.6% Total 115,538 100.0% 173,829 100.0% (table continued) Three months ended Three months ended December 31, 2009 December 31, 2008 USD USD Segment Thousands % of total Thousands % of total Cut & sew 8,763 39.3% 16,614 46.2% Seamless 13,512 60.7% 19,350 53.8% Total 22,275 100.0% 35,964 100.0% Table 2: Sales by product line Year ended December Year ended December 31, 2009 31, 2008 USD % of total USD % of total Product line Thousands Thousands Intimate Apparel 64,143 55.5% 93,683 53.9% Active wear 21,533 18.6% 47,189 27.1% Swimwear 29,862 25.8% 32,957 19.0% Total 115,538 100.0% 173,829 100.0% (table continued) Three months ended Three months ended December 31, 2009 December 31, 2008 USD % of total USD % of total Product line Thousands Thousands Intimate Apparel 15,394 69.1% 21,402 59.5% Active wear 3,759 16.9% 7,639 21.2% Swimwear 3,122 14.0% 6,923 19.2% Total 22,275 100.0% 35,964 100.0% CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, 2009 2008 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,904 $ 1,566 Short-term investments 737 847 Trade receivables, net 14,597 23,446 Other accounts receivable and prepaid expenses 2,892 4,558 Inventories 19,778 32,125 Total current assets 39,908 62,542 NON- CURRENT ASSETS: Subordinated note - 2,700 Deferred taxes, net 1,409 - Property, plant and equipment, net 56,920 64,469 Intangible assets, net 960 2,021 59,289 69,190 Total assets $ 99,197 $ 131,732 CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, 2009 2008 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit $ 25,847 $ 24,809 Trade payables 15,042 25,167 Other accounts payable and accrued expenses 5,666 7,636 Total current liabilities 46,555 57,612 LONG-TERM LIABILITIES: Other accounts payable 1,838 1,309 Accrued severance pay, net 729 2,169 Deferred taxes, net 3,080 6,897 Total long-term liabilities 5,647 10,375 EQUITY: Ordinary shares 7,518 7,518 Additional paid-in capital 107,522 107,104 Accumulated deficit (60,666) (43,716) Less - 997,400 Ordinary shares in treasury, at cost (7,408) (7,408) Other capital reserves 29 23 46,995 63,498 Employee stock options in subsidiary - 247 Total shareholders' equity 46,995 63,745 Total liabilities and total shareholders' equity $ 99,197 $ 131,732 CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Year ended Three months ended December 31, December 31, 2009 2008 2009 2008 Sales $ 115,538 $ 173,829 $ 22,275 $ 35,964 Cost of sales 119,339 167,557 24,437 38,077 Gross profit (loss) (3,801) 6,272 (2,162) (2,113) Selling, general and administrative expenses 17,621 23,365 3,951 6,316 Other expenses (income) (496) 2,135 (496) 2,135 Operating income (loss) (20,926) (19,228) (5,617) (10,564) Other expenses 1,285 - 1,285 - Financing income (1,747) (319) (169) (819) Financing expenses 2,259 3,347 267 892 Financing expenses, net 512 3,028 98 73 Taxes benefit (5,330) (4,677) (1,060) (1,818) Net income (loss) $ (17,393) $ (17,579) $ (4,655) $ (8,819) Basic and diluted net earnings (losses) per share: Basic net earnings (losses) per share $ (8.2) $ (8.3) $ (2.2) $ (4.2) Diluted net earnings (losses) per share $ (8.2) $ (8.3) $ (2.2) $ (4.2) Weighted average number of shares used for computing basic earnings (losses) per share 2,120,298 2,120,298 2,120,298 2,120,298 Weighted average number of shares used for computing diluted earnings (losses) per share 2,120,298 2,120,298 2,120,298 2,120,298 CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Three months Year ended ended December 31, December 31, 2009 2008 2009 2008 Cash flows from operating activities: Net income (loss) $(17,393) $(17,579) $(4,655) $(8,819) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment and intangible assets 9,256 8,925 2,512 2,450 Compensation related to options granted to employees 171 487 30 96 Fixed assets impairment (impairment reversal) (496) 2,135 (496) 2,135 Inventory write-off 2,808 4,523 584 1,519 Elimination of contingent proceeds versus P&L (399) - (399) Increase (decrease) in severance pay, net (850) 420 (224) 3 Loss from early payment of subordinated note 1,285 - Accrual of interest on short and long-term deposits - (75) - - Gain related to sale of marketable securities - (22) - - Interest and amortization of premium and accretion of discount of marketable securities - (263) - - Impairment of marketable securities - 553 - 240 Increase (decrease) in deferred taxes, net (5,364) (5,558) (1,066) (2,231) Loss (gain) on disposal of property, plant and equipment (17) 188 - 209 Decrease in trade receivables, net 8,849 5,587 1,661 2,585 Decrease (increase) in other accounts receivable and prepaid expenses 1,497 488 181 161 Decrease (increase) in inventories 9,730 (3,051) (125) (2,835) Decrease in trade payables (10,125) (4,553) (3,573) (1,198) Increase (decrease) in other accounts payable and accrued expenses (428) 77 1,844 (638) Net cash provided by (used in) operating activities (1,476) (7,718) (3,726) (6,323) Cash flows from investing activities: Purchase of property, plant and equipment (611) (3,151) (146) (311) Purchase of intangible assets (75) (224) (19) - Purchase of business activity - (300) - - Contingent consideration paid (271) - (200) Proceeds from sale of property, plant and equipment 18 35 - - Proceeds from early payment of a subordinated note 1,715 - Investment in marketable securities - - - - Investment in short-term and long-term deposits - (13,060) - - Proceeds from sale of marketable securities - 5,914 - - Proceeds from repayment of deposits - 20,199 - 500 Net cash provided by (used in) investing activities 776 9,413 (365) 189 CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Three months Year ended ended December 31, December 31, 2009 2008 2009 2008 Cash flows from financing activities: Short-term bank credit, net 4,923 9,323 1,441 5,123 Repayment of long-term bank loans (3,885) (9,836) (772) (1,037) Proceeds from long-term bank loans - 6,000 - - Dividend paid to shareholders - (8,000) - - Net cash provided by (used in) financing activities 1,038 (2,513) 669 4,086 Total increase (decrease) in cash and cash equivalents 338 (818) (3,422) (2,048) Cash and cash equivalents at beginning of period 1,566 2,384 5,326 3,614 Cash and cash equivalents at end of period $ 1,904 $ 1,566 $ 1,904 $ 1,566 Contacts Company Contact: Eran Rotem Chief Financial Officer +972-4-990-0881 firstname.lastname@example.org
SOURCE Tefron Ltd