Donnkenny, Inc. Reports 42% Increase in Net Profit for Third Quarter 2002.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 12, 2002 Donnkenny, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: DNKY) today reported its financial results for the third quarter and the first three quarters of 2002. Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. H. Levy To assess; raise; execute; exact; tax; collect; gather; take up; seize. Thus, to levy a tax; to levy a Nuisance; to levy a fine; to levy war; to levy an execution, i.e., to levy or collect a sum of money on an execution. A seizure. , Chairman & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "We are very pleased that we were able to substantially improve our net income for the third quarter of 2002. This performance continues to reflect our ability to make a profit, despite a very difficult retail environment. This result is due to our continuing emphasis and improvement in our gross margin, continuing tight expense control and management of our inventory levels, which are down considerably at the end of the quarter compared to last year ($21.0 million vs. $28.0 million last year)." Levy continued, "The sales decrease is due to the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of our cashmere cashmere Animal-hair fibre forming the downy undercoat of the Kashmir goat. The fibre became known for its use in beautiful shawls and other handmade items produced in Kashmir, India. The fibres have diameters finer than those of the best wools. program, competitive price reductions and the continuing slow retail environment. While most of the sales drop was anticipated, the company has not seen any indications of improvement in the retail climate. Additionally, retailers remain very cautious for the first quarter of 2003." The Company reported that for the nine months ended September September: see month. 30, 2002, it had a net profit, before the accounting treatment of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , of $1.6 million, or $0.36 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net profit of $28,000 or $0.01 per diluted share for the same period a year ago. In the first quarter of 2002, the Company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142 "Goodwill and Other Intangible Assets". SFAS 142 requires that companies change the accounting for goodwill from an amortization method to an impairment-only approach. This resulted in a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge for the accounting change of $28.7 million. The Company ceased the amortization of goodwill and intangible assets in 2002. In the nine months ended September 30, 2002, 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 were $77.5 million as compared to $112.1 million reported for the same period a year ago. The Company reported a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $3.3 million compared to an operating profit of $3.8 million year-to-date in 2001. The average number of common shares and common stock equivalents outstanding for purposes of computing computing - computer diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were 4,367,417 for 2002 and 4,384,067 for the comparable period in 2001. For the third quarter, the Company had a net profit of $1.6 million, or $0.36 per diluted share, compared to a net profit of $1.1 million or $0.25 profit per diluted share for the same period a year ago. Net sales for the third quarter were $30.7 million as compared with $44.2 million reported for last year's third quarter. The Company reported an operating profit for the third quarter of $1.6 million, compared to an operating profit of $1.1 million in the third quarter of fiscal 2001. The average number of common shares and common stock equivalents outstanding for purposes of computing diluted earnings per share were 4,391,036 for 2002 and 4,394,606 for the comparable period in 2001. Donnkenny, Inc. designs, manufactures, imports and markets a broad line of moderately priced women's sportswear. The Company's major labels include Pierre Cardin
American military leader who commanded the Texans who died in the defense of the Alamo (1836). (R).
DONNKENNY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
September 30, December 31,
2002 2001
------------ -----------
(Unaudited)
CURRENT ASSETS
Cash $ 33 $ 39
Accounts receivable - net of
allowances of $127 and $116,
in 2002 and 2001 respectively 22,446 25,225
Recoverable income taxes 380 381
Inventories 20,996 17,773
Deferred tax assets 1,662 1,662
Prepaid expenses and other
current assets 793 1,220
Assets held for sale 579 788
--------- ----------
Total current assets 46,889 47,088
PROPERTY, PLANT AND EQUIPMENT, NET 4,799 5,379
OTHER ASSETS 297 368
INTANGIBLE ASSETS 821 4,198
GOODWILL - 25,367
--------- ----------
TOTAL $ 52,806 $ 82,400
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 433 $ 933
Accounts payable 11,830 7,760
Accrued expenses and other
current liabilities 2,259 3,504
----------- -----------
Total current liabilities 14,522 12,197
----------- -----------
LONG-TERM DEBT 30,083 34,844
DEFERRED TAX LIABILITIES 1,662 1,662
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par value;
authorized 500
shares, issued none
Common stock, $.01 par value.
Authorized 10,000
shares, issued and
outstanding 4,367 shares
in 2002 and 2001 44 44
Additional paid-in capital 50,449 50,449
Deficit (43,954) (16,796)
---------- ----------
Total Stockholders' Equity 6,539 33,697
---------- ----------
TOTAL $ 52,806 $ 82,400
========== ==========
DONNKENNY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Nine Months Ended
--------------------- -----------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
--------- ----------- ----------- -----------
NET SALES $ 30,688 $ 44,242 $ 77,484 $ 112,089
COST OF SALES 22,755 33,947 57,946 86,369
--------- ----------- ----------- -----------
Gross profit 7,933 10,295 19,538 25,720
OPERATING EXPENSES:
Selling, general and
administrative
expenses 5,810 7,542 16,222 20,781
Amortization of
goodwill and other
related acquisition
costs - 372 - 1,117
---------- ----------- ----------- -----------
Operating income 2,123 2,381 3,316 3,822
INTEREST EXPENSE 504 1,233 1,595 3,659
---------- ----------- ----------- -----------
Income before income
taxes and cumulative
effect of change in
accounting principle 1,619 1,148 1,721 163
INCOME TAXES 45 45 135 135
---------- ----------- ----------- -----------
Income before
cumulative effect
of change in
accounting principle 1,574 1,103 1,586 28
CUMULATIVE EFFECT
OF CHANGE IN
ACCOUNTING PRINCIPLE
(NO TAX BENEFIT
RECOGNIZED) - - 28,744 -
---------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,574 $ 1,103 $ (27,158) $ 28
========== =========== =========== ===========
Basic earnings
per common share:
Income before
accounting change $ 0.36 $ 0.25 $ 0.36 $ 0.01
Cumulative effect of
accounting change - - (6.58) -
---------- ----------- ----------- -----------
Net income (loss) $ 0.36 $ 0.25 $ (6.22) $ 0.01
========== =========== =========== ===========
Diluted earnings
per common share:
Income before
accounting change $ 0.36 $ 0.25 $ 0.36 $ 0.01
Cumulative effect of
accounting change - - (6.58) -
---------- ----------- ----------- -----------
Net income (loss) $ 0.36 $ 0.25 $ (6.22) $ 0.01
========== =========== =========== ===========
Shares used in the
calculation
of earnings per share:
Basic 4,367,417 4,367,417 4,367,417 4,367,417
========== =========== =========== ===========
Diluted 4,391,036 4,394,606 4,367,417 4,384,067
========== =========== =========== ===========
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