Tefron Corrects and Replaces Previous Earnings Announcement, BW1059, TEFRON.--(BUSINESS WIRE)-- Tefron Reports Fourth Quarter And Full Year 1998 Results BNEI-BRAK, Israel--Feb. 18, 1999-- -- Recovery of Tefron Division Slightly Ahead of Plan - -- Continued Heavy Investment to Meet Unprecedented Hi-Tex Demand Tefron Ltd. (NYSE NYSE See: New York Stock Exchange :TFR TFR Total fertility rate, see there ) today announced financial results for the fourth quarter and full year ended December December: see month. 31, 1998. Sales for the fourth quarter of 1998 increased by 1.9% to $22.4 million compared to $22.0 million for the same period in 1997. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the fourth quarter of 1998 was $1.4 million compared to $4.6 million in the fourth quarter of 1997. Net income was $1.4 million, or $0.11 per share (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. ) on 13.4 million shares compared to $3.6 million, or $0.26 per share (diluted) on 13.6 million shares, for the fourth quarter of 1997. For the full year 1998, sales increased by 23.4% to $97.4 million from $78.9 million in 1997. Operating income for the year was $14.1 million as compared to $16.0 million in 1997. Net income for 1998 was $12.0 million, or $0.90 per share (diluted) on 13.3 million shares, an increase of 3.3% as compared to $11.6 million, or $1.06 per share (diluted) on 10.9 million shares, for 1997. Commenting on the results, Sigi SIGI Sisterhood Is Global Institute SIGI Space Integrated GPS/INS SIGI System for Interactive Guidance and Information Rabinowicz, Tefron's Chief Executive Officer, said, "The fourth quarter brought both challenges and opportunities to Tefron. As previously announced, during the fourth quarter we faced quality issues which affected production for one customer in our Tefron division. In order to contain the problem, the Company tightened the division's quality assurance and supervision, temporarily reducing both total production of the Tefron division and its use of subcontractors. As a result, the quality of Tefron production has returned to its previously high level. However, there has been a temporary reduction in the capacity of the Tefron division. "These activities significantly reduced revenues from the Tefron division for the quarter, and will continue to affect revenues through the first half of 1999, during which time we will gradually increase again our production capacity. We expect the Tefron Division to be back at its full production level by the second half of 1999. "In addition, the Tefron Division has made a market breakthrough. Because of new developments to its advanced technology, the Tefron Division is now addressing the rapidly growing market for intimate apparel made of man-made man-made or man·made adj. Made by humans rather than occurring in nature; synthetic: man-made fibers; a manmade lake. See Usage Note at man. microfibers. This advance positions the Tefron Division for accelerated growth. "At the same time, demand for our Hi-Tex seamless garments The phrase "seamless garment" refers to the seamless robe of Jesus, which the Gospel of John describes Jesus as having worn to his crucifixion. In 1971, Roman Catholic pacifist Eileen Egan used St. John the Apostle's phrase to describe a holistic reverence for life. continues to be explosive. To meet the demand, we have stepped up our investments in Hi-Tex equipment, resulting in a total of 226 fully equipped stations at the end of 1998, compared to 54 at the end of 1997. We continue to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale Hi-Tex capacity rapidly, and plan to reach a total of about 440 stations by the end of the year. Production in the new Hi-Tex facility is running smoothly, and we have plans to continue expanding Hi-Tex facilities in the future." Mr. Rabinowicz continued, "We continued to broaden our base of customers during the quarter, adding prestigious clients from around the world. During the past year, we doubled our base of prestigious customers from six at the end of 1997 to 12 at the end of 1998. During the quarter, we added British Home Stores, among the biggest intimate apparel retailers in the United Kingdom, and expect to continue adding new clients as the year progresses. Our relationships with new customers such as Cacharel Cacharel is a French brand of ready-to-wear clothing, perfume and accessories. It was created in 1962 by Jean Bousquet, who founded the company of the same name in 1964. Cacharel is named after the local name of the garganey (Anas querquedula) in the Camargue (cacharel, standard are proceeding according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan. "Our financial results for the year were affected by the combination of increased investment in the Hi-Tex Division and the occurrence which limited Tefron Division production in the fourth quarter. We are pleased that our quality is now back to its previous high standard. We are proud that, despite these factors, we were nevertheless able to record growth in net income over last year. We are very excited by the potential for both the Hi-Tex and Tefron Divisions going forward, and look forward to a strong year ahead." Tefron manufactures boutique-quality everyday intimate apparel sold throughout the world by such name-brand marketers as Victoria's Secret For the Sonata Arctica single, see Victoria's Secret (song) Victoria's Secret is an American retailer of high quality lingerie and beauty products.[2] , Gap, Banana Republic banana republic n. A small country that is economically dependent on a single export commodity, such as bananas, and is typically governed by a dictator or the armed forces. , DIM DIM - DIM statement , Cacharel, Schiesser, the Benetton Group Benetton Group S.p.A. (NYSE: BNG) is a global clothing brand, based in Treviso, Italy. The name comes from four members of the Benetton family who founded the company in 1965. , and British Home, as well as two other well known American designer labels. The Company's product line includes knitted knit 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 briefs, tank tops, loungewear lounge·wear n. Clothing suitable for relaxing. Noun 1. loungewear - clothing suitable for relaxation article of clothing, clothing, habiliment, wearable, vesture, wear - a covering designed to be worn on a person's , nightwear, bras, T-shirts and bodysuits, primarily for women. This press release contains certain 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. with respect to the Company's business, financial condition and results of operations. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including, but not limited to, fluctuations in product demand, economic conditions as well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. -0-
Tefron Ltd.
Consolidated Statements of Income
in thousands of US dollars (except share and per share data)
Three Months ended Year ended
December 31, December 31, December 31, December 31,
1998 1997 1998 1997
Sales $22,441 $22,023 $97,408 $78,914
Cost of sales 19,856 16,458 79,130 59,584
Gross profit 2,585 5,565 18,278 19,330
Selling, general
and
administrative
expenses 1,223 941 4,184 3,290
Operating income 1,362 4,624 14,094 16,040
Financing income
(expenses), net 82 347 941 (254)
Income before
income
taxes 1,444 4,971 15,035 15,786
Income taxes 31 1,411 3,032 4,166
Net income $1,413 $3,560 $12,003 $11,620
Earnings per share
Basic $0.11 $0.27 $0.91 $1.07
Diluted $0.11 $0.26 $0.90 $1.06
Weighted average
number
of ordinary
shares
outstanding
Basic 13,081 13,409 13,238 10,910
Diluted 13,081 13,560 13,326 10,938
Memo: EBITDA $2,610 $5,401 $18,205 $18,823
Tefron Ltd.
Consolidated Balance Sheets
(in thousands of US dollars)
December 31, December 31,
1998 1997
(Audited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $18,520 $34,608
Trade receivables 13,312 9,077
Other receivables 5,670 4,585
Inventories 10,964 11,462
Total current assets 48,466 59,732
Severance pay deposits 682 446
Fixed assets 44,845 21,550
Total assets $93,993 $81,728
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank debt $3,973 $546
Trade payables 13,532 12,064
Other payables and accrued expenses 4,182 5,618
Total current liabilities 21,687 18,228
Long-term liabilities
Deferred taxes 3,442 1,854
Accrued severance pay 1,376 1,230
4,818 3,084
Total shareholders' equity 67,488 60,416
Total liabilities and shareholders' equity $93,993 $81,728
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