TEFRON LTD. 
By MISGAV,
Second Quarter 2009 Results
Second quarter revenues were
The Company reported a gross loss in the quarter of
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
The 2009 first half gross margin was
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
The net effect of the required adjustment due to this error reduces the
Company's net income for the three months ended
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,
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
reran@tefron.com
SOURCE Tefron Ltd
