Donnkenny Inc. Reports Second Quarter Results.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 13, 2003 Donnkenny, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: DNKY) today reported its financial results for the second quarter ended June June: see month. 30, 2003. The Company reported that in the second quarter of 2003, 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 $17.8 million vs. $22.4 million in the second quarter of 2002. The continued sales decline is primarily due to the slow retail environment, competitive price reductions, and low consumer confidence, all of which contributed to the drop in the Company's volume. Gross margin as a percentage of sales was 21.8% in the second quarter 2003 vs. 23.2% in the second quarter of 2002. This drop in the gross margin as a percent of sales was primarily due to the sell-off Sell-Off The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the value of the security. Notes: A sell-off may occur for many reasons. of non-current inventory and competitive price reductions. Selling, general and administrative expenses of $5.1 million for the second quarter 2003 are essentially flat with the second quarter of 2002. The second quarter 2003 expenses included incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. associated with establishing the Donnkenny Coat business in connection with the acquisition of its Bill Blass Blass can refer to several people
The Company reported a net loss for the second quarter of 2003 of $1.6 million or $(0.36) a share vs. a loss of $0.3 million or $(0.08) a share in the second quarter of 2002. The weighted average number of common shares and common stock equivalents for purposes of computing computing - computer basic earnings per share and for 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 was 4,367,417 in both 2003 and 2002. In commenting on second quarter results, 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 and 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. of Donnkenny, said, "We continue to be unhappy with our sales and profit performance, both for the quarter and the first half of this year. While the retail business is beginning to show some signs of sales improvement, it appears that the improvement is coming from the sale of clearance merchandise. Although early Fall goods seem to be starting off better than Spring goods, it is too early to tell if the sales improvement will continue. We will continue to plan and manage our business conservatively until we see more signs of a continuing uptick Uptick A transaction occurring at price above its previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. at retail." Levy continued, "We continue to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our new Bill Blass coat business and we are looking forward to improved results in the second half of the year. We also are continuing our efforts to look for other opportunities to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. and improve Donnkenny's sales volume and net profit." The Company reported that for the six months ended June 30, 2003, it had a net loss of $1.5 million or a loss of $(0.34) a share compared to a profit, before the change in 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 $12,000 essentially a breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations per share in the second quarter of 2002. For the six months ended June 30, 2003, net sales were $36.8 million vs. $46.8 in the same period for 2002. Donnkenny designs, manufactures, imports and markets a broad line of moderately priced women's sportswear and ladies coats. The Company's major labels include Pierre Cardin
Except for historical information contained herein, the statements in this release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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,
2003 2002
----------- --------
(Unaudited)
CURRENT ASSETS
Cash $ 48 $ 66
Accounts receivable - net of allowances
for bad debts of $119 and $116, in 2003
and 2002 respectively 11,860 20,634
Recoverable income taxes 62 203
Inventories, net 16,655 15,949
Prepaid expenses and other current assets 951 615
Assets held for sale 358 402
------------ ---------
Total current assets 29,934 37,869
PROPERTY, PLANT AND EQUIPMENT, NET 3,892 4,515
OTHER ASSETS 189 234
INTANGIBLE ASSETS 1,325 821
------------ ---------
TOTAL $ 35,340 $ 43,439
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ - $ 253
Accounts payable 6,481 10,101
Accrued expenses and other current
liabilities 1,904 2,209
------------ ---------
Total current liabilities 8,385 12,563
------------ ---------
LONG-TERM DEBT 21,310 23,730
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 2003 and 2002 44 44
Additional paid-in capital 50,449 50,449
Deficit (44,848) (43,347)
------------ ---------
Total Stockholders' Equity 5,645 7,146
------------ ---------
TOTAL $ 35,340 $ 43,439
============ =========
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,
2003 2002 2003 2002
---------- ---------- ---------- ----------
NET SALES $ 17,846 $ 22,358 $ 36,799 $ 46,796
COST OF SALES 13,948 17,170 27,196 35,191
---------- ----------- ----------- -----------
Gross profit 3,898 5,188 9,603 11,605
OPERATING EXPENSES:
Selling, general and
administrative
expenses 5,115 5,067 10,461 10,412
---------- ----------- ----------- -----------
Operating income
(loss) (1,217) 121 (858) 1,193
INTEREST EXPENSE 294 423 612 1,091
---------- ----------- ----------- -----------
(Loss) income before
income taxes and
cumulative effect of
change in accounting
principle (1,511) (302) (1,470) 102
INCOME TAXES 45 45 31 90
---------- ----------- ----------- -----------
(Loss) income before
cumulative effect of
change in accounting
principle (1,556) (347) (1,501) 12
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE (no tax
benefit recognized) - - - 28,744
----------- ----------- ----------- -----------
NET LOSS $ (1,556) $ (347) $ (1,501) $ (28,732)
=========== =========== =========== ===========
Basic loss per common
share:
(Loss) before
accounting change $ (0.36) $ (0.08) $ (0.34) $ -
Cumulative effect of
accounting change - - - (6.58)
----------- ----------- ----------- -----------
Net loss $ (0.36) $ (0.08) $ (0.34) $ (6.58)
=========== =========== =========== ===========
Diluted loss per common
share:
(Loss) before
accounting change $ (0.36) $ (0.08) $ (0.34) $ -
Cumulative effect of
accounting change - - - (6.58)
----------- ----------- ----------- -----------
Net loss $ (0.36) $ (0.08) $ (0.34) $ (6.58)
=========== =========== =========== ===========
Shares used in the
calculation of loss
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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