Tefron Also Restates First Quarter 2009 MISGAV, Israel, August 21
/PRNewswire-FirstCall/ -- Tefron Ltd. (OTC:TFRFF)(TASE:TFRN), a
leading producer of seamless intimate apparel and
engineered-for-performance (EFP(TM)) active wear, today announced
financial results for the second quarter of 2009. Second Quarter
2009 Results Second quarter revenues were $25.3 million,
representing a 48.1% decrease from the second quarter of 2008
revenues of $48.6 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 quarter of $1.6 million, compared with
a gross profit of $4.0 million in the second quarter of 2008.
Operating loss for the quarter was $5.7 million, as compared with
an operating loss of $1.6 million in the second quarter of 2008.
Net loss for the quarter was $4.6 million, or $2.2 loss per diluted
share, as compared with net loss of $2.2 million, or $1.0 per
diluted share, in the second quarter of 2008. The decline in gross
and operating margins in the quarter compared with the second
quarter of 2008 was primarily due to the significant decline in
revenues which exceeded the corresponding decline in our fixed
expenses, that resulted from the implementation of our efficiency
plan and the devaluation of the US Dollar versus the New Israeli
Shekel. First Half 2009 Results Revenues in the first half of 2009
were $72.2 million, representing a 27.5% decrease from first half
of 2008 revenues of $99.6 million. The decrease in revenues was due
to a decrease in sales of both the active-wear and intimate apparel
product lines. This decrease was partly offset by a slight increase
in sales of swimwear, due to an initial sales to new customer. The
2009 first half gross margin was $3.9 million compared to a gross
margin of $10.5 in the first half of 2008. Operating loss was $6.0
million compared to an operating loss of $1.3 million in the first
half of 2008. Net loss was $4.5 million, or $2.1 loss per diluted
share, compared with net loss of $2.8 million, or $1.3 per diluted
share, in the first half of 2008. These decreases in margins were
due to the significant decline in sales, which exceeded the
corresponding decline in our fixed expenses, that resulted from the
implementation of our efficiency plan and due to maintenance costs
associated with new sales offices that we opened in 2009.
Restatement of first quarter 2009 results The Company also
announced that it is restating its financial results for the first
quarter of 2009 due to a failure to record purchasing expenses in
the amount of $653 thousand in connection with one sale made by the
Company's subsidiary, Macro Clothing Ltd.. The net effect of the
required adjustment due to this error reduces the Company's net
income for the three months ended March 31, 2009 by $488 thousand.
This error has no effect on the net loss for the six months ended
June 30, 2009. The following table shows reconciliation of all
amounts as previously reported and as restated: As of March 31,
2009 (and a period of three months ended March 31, 2009) Previously
reported Adjustments Restated USD Thousand USD Thousand USD
Thousand Trade payable 24,116 653 24,769 Other accounts Payable
7,135 (165) 6,970 Shareholders' equity 64,181 (488) 63,693 Cost of
sales 40,867 653 41,520 Taxes on income 181 (165) 16 Net Income 633
(488) 145 Revised financial statements for the first quarter of
2009 will be submitted separately to the Securities and Exchange
Commission on Form 6-K, early next week. About Tefron 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, Target, The Gap,
J.C. Penney, Maidenform, lululemon Athletica, Warnaco/Calvin Klein,
Patagonia, Reebok, Swimwear Anywhere, Abercombie&Fitch, 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
liquidity challenges that we face; - our dependence on a small
number of principal customers and on their continued purchase of
our products in the same volumes or on the same terms and their
ability to meet their payment obligations to us; - the effect of
the worldwide recession on our target markets and the cyclical
nature of the clothing retail industry and the ongoing changes in
fashion preferences; - our failure to generate sufficient cash from
our operations to pay our debt and our failure to meet our
financial covenants in our bank loan agreements; - 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 future
operating efficiency resulting from our expansion into new product
lines with more complicated products, different raw materials and
changes in market trends; - fluctuations in inflation and currency
exchange rates; - cost increase in the purchase of finish products
or production services; - the limitations and restrictions imposed
by our substantial debt obligations; - 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); -
political, economic and social risks associated with international
business and relating to operations in Israel. - the purchase of
new equipment that may be necessary as a result of our expansion
into new product lines; - our dependence on subcontractors in
connection with our manufacturing process, in particular the
sewing, dyeing and finishing process; - the fluctuating costs of
raw materials; and - dependence on our suppliers for our machinery
and the maintenance of our machinery. 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 SEGMENT Six months ended Six months ended
June 30, 2009 June 30, 2008 USD % of USD % of Segment Thousands
total Thousands total Cut & sew 37,295 51.6% 57,240 57.5%
Seamless 34,950 48.4% 42,343 42.5% Total 72,245 100.0% 99,583
100.0% Three months ended Three months ended Year ended June 30,
2008 June 30, 2008 December 31, 2008 USD % of USD % of USD % of
Segment Thousands total Thousands total Thousands total Cut &
sew 11,961 47.4% 25,530 52.5% 87,564 50.4% Seamless 13,299 52.6%
23,111 47.5% 86,265 49.6% Total 25,260 100.0% 48,641 100.0% 173,829
100.0% TABLE 2: SALES BY PRODUCT LINE Six months ended Six months
ended June 30, 2008 June 30, 2008 USD % of USD % of Product line
Thousands total Thousands total Intimate Apparel 32,792 45.4%
48,060 48.3% Active wear 13,948 19.3% 27,197 27.3% Swimwear 25,505
35.3% 24,326 24.4% Total 72,245 100.0% 99,583 100.0% Three months
ended Three months ended Year ended June 30, 2009 June 30, 2008
December 31, 2008 USD % of USD % of USD % of Product line Thousands
total Thousands total Thousands total Intimate Apparel 12,775 50.6%
25,134 51.7% 93,683 53.9% Active wear 5,205 20.6% 14,253 29.3%
47,189 27.1% Swimwear 7,280 28.8% 9,254 19.0% 32,957 19.0% Total
25,260 100.0% 48,641 100.0% 173,829 100.0% CONSOLIDATED BALANCE
SHEETS U.S. dollars in thousands June 30, December 31, 2009 2008
2008 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 837 $ 1,203 $ 2,384 Marketable securities 1,188 - 847
Trade receivables, net 24,123 35,924 23,446 Other accounts
receivable and prepaid expenses 3,616 4,175 4,558 Inventories
21,452 31,220 32,125 Total current assets 51,216 72,522 62,542 NON
CURRENT ASSETS: Marketable securities - 1,155 - Subordinated note
2,100 3,000 2,700 Fixed assets, net 60,643 71,090 64,469 Goodwill
and other intangible assets, net 1,710 625 2,021 64,453 75,870
69,190 Total assets $115,669 $148,392 $131,732 CONSOLIDATED BALANCE
SHEETS U.S. dollars in thousands June 30, December 31, 2009 2008
2008 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Short-term bank credit $ 25,259 $ 6,993 $ 24,809 Trade
payables 16,875 27,910 25,167 Other accounts payable and accrued
expenses 5,619 10,665 7,636 Total current liabilities 47,753 45,568
57,612 NON CURRENT LIABILITIES: Long-term loans from banks (net of
current maturities) - 13,411 - Liabilities in respect of employee
benefits 1,550 1,429 2,169 Long-term accounts payable -
institutions 1,166 - 1,309 Deferred taxes, net 5,429 10,181 6,897
8,145 25,021 10,375 SHAREHOLDERS' EQUITY: Ordinary shares 7,518
7,518 7,518 Additional paid-in capital 107,460 106,968 107,104
Accumulated deficit (48,214) (28,773) (43,739) Less - 99,740
Ordinary shares in treasury, at cost (7,408) (7,408) (7,408) Other
capital reserves 415 (749) 23 Total equity attributable to equity
holders of the Company 59,771 77,556 63,498 Employee stock options
in a subsidiary - 247 247 Total shareholders' equity 59,771 77,803
63,745 Total liabilities and shareholders' equity $115,669 $148,392
$131,732 CONSOLIDATED STATEMENTS OF INCOME U.S. dollars in
thousands (except per share data) Six months Three months Year
ended ended June 30, ended June 30, December 31 2009 2008 2009 2008
2008 Unaudited Audited $ in thousands (except per share data) Sales
$ 72,245 $ 99,583 $ 25,260 $ 48,641 $173,829 Cost of sales 68,360
89,056 26,840 44,619 167,557 Gross profit (loss) 3,885 10,527
(1,580) 4,022 6,272 Selling and marketing expenses 7,787 8,604
3,280 3,945 16,959 General and administrative expenses 2,093 3,256
802 1,713 6,406 Other expenses - - - - 2,135 Operating loss (5,995)
(1,333) (5,662) (1,636) (19,228) Financing income (2,155) (330)
(332) (154) (319) Financing expenses 2,095 2,627 766 1,270 3,347
Finance expenses (income), net (60) 2,297 434 1,116 3,028 Loss
before taxes on income (5,935) (3,630) (6,096) (2,752) (22,256) Tax
benefit (1,460) (819) (1,476) (511) (4,677) Loss $ (4,475) $
(2,811) $ (4,620) $ (2,241) $(17,579) Loss per share, attributable
to equity holders of the Company($) Basic and diluted loss (2.1)
(1.3) (2.2) (1.0) (8.3) CONSOLIDATED STATEMENTS OF CASH FLOWS U.S.
dollars in thousands Six months Three months Year ended ended June
30, ended June 30, December 31 2009 2008 2009 2008 2008 Unaudited
Audited $ in thousands OPERATING ACTIVITIES: Loss $ (4,475) $
(2,811) $ (4,620) $ (2,241) $(17,579) Depreciation of fixed assets
and intangible assets 4,481 4,336 2,268 2,169 8,925 Impairment of
fixed assets - - - - 2,135 Inventories write-off 860 643 380 368
4,523 Impairment of marketable securities - - - - 553 Share-based
payment expenses 109 351 52 288 487 Loss (gain) from sale of fixed
assets (17) (19) - (13) 188 Gain from sale of marketable securities
- (22) - - (22) Deferred taxes, net (1,468) (2,017) (1,259) (941)
(5,558) Change in employee benefit liabilities, net (619) (56) 137
(206) 420 Interest and amortization of marketable securities -
(263) - (61) (263) Interest on deposits - (75) - (7) (75) Taxes on
income 638 - 399 - - Financing expenses, net 307 323 51 (59) 1,638
4,291 3,201 2,028 1,538 12,951 Changes in asset and liability
items: Decrease (increase) in trade receivables (677) (6,891) 6,472
2,886 5,587 Decrease (increase) in other accounts receivable 1,499
679 1,000 (956) 488 Decrease (increase) in inventory 9,813 1,809
4,194 2,228 (3,051) Decrease in trade payables (8,292) (1,810)
(7,894) (4,395) (4,553) Increase (decrease) in other accounts
payable (2,160) 908 (1,061) 290 (96) 183 (5,305) 2,711 53 1,625
Cash paid and received during the period for: Interest paid (245)
(362) (20) 11 (1,528) Interest received 32 125 16 92 63 Taxes paid
(638) - (399) - - (851) (237) (403) 103 (1,465) Net cash used for
operating activities (852) (5,152) (284) (547) (7,718) CONSOLIDATED
STATEMENTS OF CASH FLOWS U.S. dollars in thousands Six months Three
months Year ended ended June 30, ended June 30, December 31 2009
2008 2009 2008 2008 Unaudited Audited $ in thousands INVESTING
ACTIVITIES: Purchase of fixed assets (305) (2,037) (73) (693)
(3,151) Purchase of intangible assets (40) (147) (14) (51) (223)
Acquisition of operations (a) - - - - (300) Proceeds from sale of
fixed assets 18 21 - 15 35 Proceeds from sale of marketable
securities, net - 5,914 - 4,332 5,914 Proceeds from repayment of
deposits, net - 7,138 - 3,013 7,138 Net cash from (used in)
investing activities (327) 10,889 (87) 6,616 9,413 FINANCING
ACTIVITIES: Short-term credit from banks, net 2,526 2,842 2,035
2,842 9,323 Repayment of long-term loans (2,076) (7,760) (1,038)
(1,079) (9,836) Proceeds from long-term loans - 6,000 - - 6,000
Dividends paid to shareholders - (8,000) - (8,000) (8,000) Net cash
from (used in) financing activities 450 (6,918) 997 (6,237) (2,513)
Increase (decrease) in cash and cash equivalents (729) (1,181) 626
(168) (818) Cash and cash equivalents at the start of the period
1,566 2,384 211 1,371 2,384 Cash and cash equivalents at the end of
the period $ 837 $ 1,203 $ 837 $ 1,203 $ 1,566 Contacts Company
Contact: Eran Rotem Chief Financial Officer +972-4-990-0803
DATASOURCE: Tefron Ltd CONTACT: Company Contact: Eran Rotem, Chief
Financial Officer, +972-4-990-0803,
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