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 |
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