Donnkenny, Inc. Reports Net Profit Before Accounting Change in the First Half of 2002, Versus a Loss Last Year.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 13, 2002 Donnkenny, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :DNKY) today reported its financial results for the first half of 2002 and the second quarter ended June June: see month. 30, 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, 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 pleased that 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. , Donnkenny was able to record a small profit for the first half, against a $1.1 million loss for the same period last year. The ongoing performance (before accounting change) continues to reflect the Company's ability to make a profit despite a very difficult economic environment. This result is due to our continuing emphasis on gross margin improvement, expense control and the management of our inventory levels." Levy continued, "The sales decrease is due to the closing of the Decade dress business, the de-emphasis and consolidation of Pierre Cardin
v. knit or knit·ted, knit·ting, knits v.tr. 1. To make (a fabric or garment) by intertwining yarn or thread in a series of connected loops either by hand, with knitting needles, or on a , the decision to exit the private label career business, and the continuing slow retail environment. While most of the sales drop was anticipated, the Company has not seen any indications of an improvement in the retail business." The Company reported that for the six months ended June 30, 2002, it had a net profit before the accounting treatment of intangible assets of $12,000, or a break-even 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 loss of $1.1 million, or $0.25 loss 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 six months ended June 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 $46.8 million as compared to $67.8 million reported for the same period a year ago. The Company reported a net 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. for the first half of $1.2 million compared to an operating profit of $1.4 million in the first half of 2001. The average number of common shares and common stock option 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 both 2002 and the comparable period in 2001. For the second quarter, the Company had a net loss of $0.3 million, or $0.08 loss per diluted share, compared to a net loss of $1.4 million or $0.33 loss per diluted share for the same period a year ago. Net sales for the second quarter were $22.4 million as compared with $30.5 million reported for last year's second quarter. The Company reported an operating profit for the second quarter of $121,000, compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $267,000 in the second quarter of fiscal 2001. The average number of common shares and common stock equivalents outstanding for purposes of computing diluted earnings per share were 4,367,417 for both 2002 and 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(R), Delta Burke The name Burke (from Irish Gaelic de Burca, of Norman origin). In English the meaning of the name Burke is "fortified hill." See also Berkley. Places Australia
American military leader who commanded the Texans who died in the defense of the Alamo (1836). (R). Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of 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. 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. involve known and unknown risks and uncertainties that may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. of retailer or consumer acceptance of the company's products or pricing pressures and other competitive factors. These and other risks are more fully described in the company's 10-K and 10-Q filings with the Securities and Exchange Commission.
DONNKENNY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
June 30, December 31,
2002 2001
----------- -----------
(Unaudited)
CURRENT ASSETS
Cash $ 32 $ 39
Accounts receivable
- net of allowances of
$114 and $116, in 2002
and 2001 respectively 15,974 25,225
Recoverable income taxes 379 381
Inventories 18,518 17,773
Deferred tax assets 1,662 1,662
Prepaid expenses and
other current assets 435 1,220
Assets held for sale 601 788
--------- ---------
Total current assets 37,601 47,088
PROPERTY, PLANT AND EQUIPMENT, NET 5,010 5,379
OTHER ASSETS 333 368
INTANGIBLE ASSETS 821 4,198
GOODWILL - 25,367
--------- ---------
TOTAL $ 43,765 $ 82,400
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 433 $ 933
Accounts payable 10,608 7,760
Accrued expenses and other
current liabilities 1,782 3,504
--------- ---------
Total current liabilities 12,823 12,197
--------- ---------
LONG-TERM DEBT 24,315 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 (45,528) (16,796)
--------- ---------
Total Stockholders' Equity 4,965 33,697
--------- ---------
TOTAL $ 43,765 $ 82,400
========= =========
DONNKENNY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
-------- -------- -------- --------
NET SALES $ 22,358 $ 30,539 $ 46,796 $ 67,847
COST OF SALES 17,170 23,968 35,191 52,422
--------- --------- --------- ---------
Gross profit 5,188 6,571 11,605 15,425
OPERATING EXPENSES:
Selling, general and
administrative
expenses 5,067 6,466 10,412 13,239
Amortization of goodwill
and other related
acquisition costs - 372 - 745
--------- --------- --------- ---------
Operating income (loss) 121 (267) 1,193 1,441
INTEREST EXPENSE 423 1,120 1,091 2,426
--------- --------- --------- ---------
Income (loss) before income
taxes and cumulative
effect of change in
accounting principle (302) (1,387) 102 (985)
INCOME TAXES 45 45 90 90
--------- --------- --------- ---------
Income (loss) before
cumulative effect of
change in accounting
principle (347) (1,432) 12 (1,075)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE
(NO TAX BENEFIT
RECOGNIZED) - - 28,744 -
--------- --------- --------- ---------
NET LOSS $ (347) $ (1,432) $ (28,732) $ (1,075)
========= ========= ========= =========
Basic earnings per common share:
Income (loss) before
accounting change $ (0.08) $ (0.33) $ - $ (0.25)
Cumulative effect of
accounting change - - (6.58) -
--------- --------- --------- ---------
Net loss $ (0.08) $ (0.33) $ (6.58) $ (0.25)
========= ========= ========= =========
Diluted earnings per common share:
Income (loss) before
accounting change $ (0.08) $ (0.33) $ - $ (0.25)
Cumulative effect of
accounting change - (6.58) -
--------- --------- --------- ---------
Net loss $ (0.08) $ (0.33) $ (6.58) $ (0.25)
========= ========= ========= =========
Shares used in the calculation of earnings per share:
Basic 4,367,417 4,367,417 4,367,417 4,367,417
========= ========= ========= =========
Diluted 4,367,417 4,367,417 4,367,417 4,367,417
========= ========= ========= =========
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