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Cygne Designs Inc. announces third quarter and nine months 1995 results.


NEW YORK--(BUSINESS WIRE)--Nov. 21, 1995--Cygne Designs, Inc. (Nasdaq:CYDS) today announced results of operations for the third quarter and nine months ended October 28, 1995. The third quarter and nine month results were adversely affected by a write-off of approximately $37.2 million of the goodwill incurred in connection with the acquisition of Fenn, Wright & Manson in April 1994 and approximately $8.2 million of costs relating to charges from discontinued customers, the reorganization of certain production operations and settlements with discontinued vendors.

Net sales for the third quarter were $160.1 million compared to $159.9 million for the comparable prior year period. The Company incurred a net loss of $43.3 million, or $3.48 per share, in the third quarter of 1995 (including a goodwill write-off of approximately $37.2 million, or $2.99 per share) compared to net income of $2.6 million, or $0.20 per share, in the third quarter of 1994. The weighted average number of shares outstanding decreased to 12,438,000 from 12,867,000. On a combined pro forma basis, giving effect to the October 1994 acquisition of GJM GJM - Gay Japanese Male
GJM - Golden Jubilee Medal
 as of January 30, 1994, net sales for the third quarter of 1994 were $177.7 million and net income was $3.0 million, or $0.22 per share on a pro forma weighted average number of shares outstanding of 13,367,000.

Net sales for the nine months increased 17.2% to $420.5 million from $358.7 million for the comparable prior year period. The Company incurred a net loss of $53.0 million, or $4.21 per share, for the nine months of 1995 compared to net income of $6.2 million, or $0.56 per share, for the nine months of 1994. The weighted average number of shares outstanding increased to 12,587,000 from 11,140,000. On a combined pro forma basis, giving effect to the April 1994 acquisition of Fenn, Wright & Manson and the October 1994 acquisition of GJM as of January 30, 1994, net sales for the nine months of 1994 were $435.3 million and net income was $4.8 million, or $0.39 per share on a pro forma weighted average number of shares outstanding of 12,224,000.

The Company stated that as a result of the third quarter loss it is not in compliance with certain financial covenants in its credit agreement with the Hongkong and Shanghai Banking Corporation Limited, under which borrowings are due on the earlier of demand or the maturity date specified by the Bank for each borrowing. In addition, the Company stated that its trade credit
Trade credit
Credit one firm grants to another firm for the purchase of goods or services.
 facility of $17 million has been suspended as a result of the failure to make payments thereunder when due. As a result of the Company's noncompliance with financial covenants and the failure to make payments under the trade credit facility, the Hongkong and Shanghai Bank has the right to cancel the credit facilities it provides to the Company and to CAT and to demand immediate repayment of the amounts outstanding under both these facilities. The Company has commenced discussions with the Bank regarding a waiver and with the providers of the trade credit facility regarding a new payment schedule, but there is no assurance that a waiver, a new payment schedule and a restoration of the trade credit facility will be obtained on acceptable terms or at all.

Cygne Designs, Inc. is a leading private label designer, merchandiser and manufacturer of women's and men's apparel, serving several prominent retailers, including Ann Taylor, The Limited Stores, Victoria's Secret Stores and Lerner. The Company's products include a broad range of woven and knit career, casual and intimate women's apparel, as well as men's casual sportswear. -0-
                    CYGNE DESIGNS, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Operations
             (Unaudited, in thousands, except per share data)


                        Three Months Ended     Nine Months Ended
                    October 28, October 29, October 28,    October 29,
                       1995        1994       1995           1994


Net sales           $160,080    $159,878   $420,514       $358,689
Cost of goods sold   149,146     137,676    385,776        303,641
Gross profit          10,934(a)   22,202     34,738(a)      55,048
Selling, general and
 administrative
 expenses             16,187(a)   15,272     50,530(a)      37,729
Gain from sale of
 subsidiary, net           -           -     (4,742)             -
Bad debt expense           -           -      1,030              -
Amortization of
 intangibles             957         624      2,868          1,405
Write-off of goodwill 37,206          -      37,206            -
Income (loss) from
 operations          (43,416)      6,306    (52,154)        15,914
Interest expense       1,984       2,077      6,574          4,908
Income (loss) before
 provision (benefit)
 for income taxes and
 minority interests  (45,400)      4,229    (58,728)        11,006
Provision (benefit)
 for income taxes     (2,712)      1,218     (7,126)         3,461
Income (loss) before
 minority interests  (42,688)      3,011    (51,602)         7,545
Income attributable to
 minority interests      578         438      1,399          1,352


Net income (loss)   $(43,266)   $  2,573   $(53,001)      $  6,193


Net income (loss)
 per share          $  (3.48)   $   0.20   $  (4.21)      $   0.56


Weighted average
 number of common and
 common equivalent
 shares outstanding   12,438      12,867     12,587         11,140




(a)  Gross profit and selling, general and administrative
     expenses include approximately $7,750,000 and $400,000,
     respectively, relating to charges from discontinued customers,
     the reorganization of certain production operations and
     settlements with discontinued vendors.




                    CYGNE DESIGNS, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Operations
             (Unaudited, in thousands, except per share data)


The following represents the pro forma effect of the FWM
Acquisition (which occurred on April 6, 1994) and the GJM Acquisition
(which occurred on October 7, 1994) as if such acquisitions had
occurred on January 30, 1994.  The pro forma information does not
purport to be indicative of the results that actually would have
occurred had the FWM Acquisition and the GJM Acquisition been
effected on January 30, 1994, nor do they project the Company's
results of operations for any future period.




                       Three Months Ended       Nine Months Ended
                    October 28, October 29,  October 28,    October 29,
                       1995        1994       1995            1994


                     Actual     Pro Forma   Actual          Pro Forma


Net sales           $160,080    $177,707   $420,514         $435,260
Cost of goods sold   149,146     153,050    385,776           370,753
Gross profit          10,934(a)   24,657     34,738(a)         64,507
Selling, general and
 administrative
 expenses             16,187(a)   16,516     50,530(a)         46,815
Gain from sale of
 subsidiary, net           -           -     (4,742)                -
Bad debt expense           -           -      1,030                 -
Amortization of
 intangibles             957         797      2,868             2,454
Write-off of goodwill 37,206          -      37,206                 -
Income (loss) from
 operations          (43,416)      7,344    (52,154)           15,238
Interest expense       1,984       2,535      6,574             6,356
Other income               -           -          -               660
Income (loss) before
 provision (benefit)
 for income taxes and
 minority interests  (45,400)      4,809    (58,728)            9,542
Provision (benefit)
 for income taxes     (2,712)      1,376     (7,126)            3,403
Income (loss) before
 minority interests  (42,688)      3,433    (51,602)            6,139
Income attributable to
 minority interests      578         438      1,399             1,352


Net income (loss)   $(43,266)   $  2,995   $(53,001)         $  4,787


Net income (loss)
 per share          $  (3.48)   $   0.22   $  (4.21)         $   0.39


Weighted average
 number of common and
 common equivalent
 shares outstanding   12,438      13,367     12,587            12,224




(a)  Gross profit and selling, general and administrative
     expenses include approximately $7,750,000 and $400,000,
     respectively, relating to charges from discontinued customers,
     the reorganization of certain production operations and
     settlements with discontinued vendors.


                    CYGNE DESIGNS, INC. AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets
                ($ in thousands, except per share amounts)


                                              October 28, January 28,
                                                 1995      1995
Assets
Current Assets:
  Cash                                         $ 15,504  $  7,558
  Restricted cash                                     -     6,644
  Trade accounts receivable                      96,586    64,921
  Inventory                                      43,440    57,570
  Other receivables and prepaid expenses         12,819    15,966
  Deferred income taxes                           6,164     2,602
Total current assets                            174,513   155,261
Fixed assets, net                                17,686    14,652
Other assets, including intangibles               5,841     6,075
Deferred income taxes                             2,281       881
Goodwill, net                                    41,205    76,659


Total assets                                   $241,526  $253,528


Liabilities and stockholders' equity
Current liabilities:
  Short-term borrowings                        $ 61,659  $ 38,889
  Accounts payable                               58,184    42,429
  Credit facilities outstanding                  11,131     3,562
  Accrued expenses                               15,022    13,440
  Income taxes payable                            4,493     7,081
  Current portion of long-term debt               2,059     1,829
Total current liabilities                       152,548   107,230
Long-term debt                                    1,727     1,460
Deferred rent credits                             1,299       635


Total liabilities                               155,574   109,325


Minority interests in subsidiaries                3,942     2,511


Stockholders' equity:
  Preferred stock, $0.01 par value;
   4,000,000 shares authorized, none
   issued and outstanding                             -         -
  Common stock, $0.01 par value;
   75,000,000 shares authorized;
   12,438,038 (October 28, 1995)
   and 12,979,750 (January 28, 1995)
   shares issued and outstanding                    124       130
  Paid-in capital                               120,918   127,716
  Retained earnings (deficit)                   (38,942)   14,059
  Foreign currency translation adjustment           (90)     (213)
Total stockholders' equity                       82,010   141,692


Total liabilities and stockholders' equity     $241,526  $253,528




CONTACT: Roy E. Green

Chief Financial Officer

(212) 354-6474

or

IR CONTACT:

David Walke, Howard Zar

Press: Stacy Berns

Morgen-Walke Associates

(212) 850-5600
COPYRIGHT 1995 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:Nov 21, 1995
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