Cygne Designs, Inc. Announces Third Quarter and First Nine Months 2007 Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Cygne Designs, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CYDS CYDS Centre for Youth Drug Studies (Australia) ) today announced results of operations for the third quarter and nine months ended October 31, 2007. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the third quarter of 2007 were $22.9 million, a decrease of $10.1 million, or 30.5%, from $33.0 million in the third quarter of 2006. This decrease was primarily attributable to a decrease in sales of our branded jeans and a decrease in sales of the private label division of the Innovo Group, Inc. that we acquired in May 2006. Gross profit for the third quarter was $4.2 million, a decrease of $2.2 million from the gross profit of $6.4 million for the third quarter of 2006. Gross margins in the third quarter of 2007 decreased to 18.4% compared to 19.3% in the prior year period in 2006 as a result of the mix of product categories sold. The decrease in gross profit for the third quarter of 2007 compared to the third quarter of 2006 was primarily caused by a decrease in sales volume. Gross margins for products produced in Mexico by Diversified Apparel, a related party, for Target and American Eagle Outfitters have been guaranteed through a Supply Agreement with Diversified Apparel. Net income for the third quarter ended October 31, 2007 was $707,000, or $0.02 on a basic and diluted per share basis, compared to net income of $765,000, or $0.03 on a basic and diluted per share basis, in the comparable prior period in 2006. Net income was positively affected by a $2.2 million gain on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt that we recorded primarily as a result of our exchange of $37 million principal amount of debt for common stock, a warrant and a $15 million convertible note, which exchange was approved by our stockholders in August 2007. Net sales for the nine months of 2007 were $77.0 million, a decrease of $22.0 million, or 22.3%, from $99.0 million in the nine months ended October 31, 2006. This decrease in sales was primarily attributable to a decrease in sales of our branded jeans. Gross profit for the nine months of 2007 was $16.2 million, a decrease of $5.1 million from the gross profit of $21.3 million for the nine months of 2006. Gross margins decreased to 21.0% compared to 21.5% in the prior year period as a result of the mix of product categories sold. As discussed above, gross margins on certain of our products was guaranteed in both periods. The decrease in gross profit for the nine months of 2007 compared to the nine months of 2006 was primarily caused by a decrease in sales volume. Net income for the nine months ended October 31, 2007 was $916,000, or $0.03 on a basic and diluted per share basis, compared to a net income of $1,779,000, or $0.07 on a basic and diluted per share basis, in the comparable prior period in 2006. Net income was positively affected by the $2.2 million gain on extinguishment of debt referred to above. Cygne and its lender use EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become as a supplemental financial measure to assess the financial performance of its assets without regard to financing methods and capital structure. EBITDA should not be considered an alternative to net income, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . EBITDA excludes some items that affect net income and operating income. Since these items may vary among other companies, EBITDA as presented below may not be comparable to similarly titled measures of other companies. A reconciliation of EBITDA to net income (loss) is shown in the table below. [TABLE OMITTED] Cygne Designs, Inc. is a designer, merchandiser, manufacturer and distributor of branded and private label women's denim, casual and career apparel and men's denim apparel with sales to retailers located in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Statements contained in this press release, which are not historical facts, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those projected. Such risks and uncertainties are discussed more fully in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended January 31, 2007 and the Company's other filings with the Securities and Exchange Commission. 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