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L.A. GEAR REPORTS FINANCIAL RESULTS FOR THIRD QUARTER

 L.A. GEAR REPORTS FINANCIAL RESULTS FOR THIRD QUARTER
 LOS ANGELES, Oct. 13 /PRNewswire/ --- L.A. Gear Inc. (NYSE: LA)


announced today that for its third quarter ended August 31, 1992, the Company posted a loss from continuing operations and a loss applicable to common stock of $11.4 million ($.51 per share) and $13.3 million ($.59 per share),
respectively, on net sales of $136.4 million. These losses include a $3.6 million ($.16 per share) after-tax charge in connection with the court approved settlement by the Company of the claims against it in the three separate consolidated shareholder class action lawsuits pending in the United States District Court for the Central District of California. In the third quarter of 1991, the Company lost $8.1 million ($.42 per share) from continuing operations on net sales of $170.5 million and had a net loss of $11.4 million ($.59 per share). The 1991 net loss included a $3.3 million loss from discontinued operations ($.17 per share).
 For the nine months ended August 31, 1992, the Company reported a loss from continuing operations and a loss applicable to common stock (both of which include $17.45 million of charges related to the settlement of the class action lawsuits) of $42.1 million ($2.02 per share), and $47.9 million ($2.30 per share), respectively, on net sales of $350.7 million. For the nine months ended August 31, 1991, the Company lost $22.7 million ($1.17 per share) from continuing operations on net sales of $491.8 million and had a net loss of $27.9 million ($1.44 per share). The 1991 net loss included a $5.3 million loss from discontinued operations ($.27 per share).
 Stanley P. Gold, Chairman and Chief Executive Officer, stated, "During this restructuring period, L.A. Gear's management has been confronted by many operational and financial challenges. In fiscal 1992, our efforts have been focussed on strengthening our financial position and improving our product quality, engineering and delivery."
 William L. Benford, Senior Vice President and Chief Financial Officer added that, "The Company continues to strengthen its liquidity position. Our credit facility has not been used for cash borrowings since March 31, 1992 and our cash and cash equivalents balances have increased to $56.7 million as of August 31, 1992. This improvement is principally a result of a reduction in the Company's inventory levels by approximately 4.9 million pairs ($67.1 million) or 48 percent from the beginning of the fiscal year and 2.1 million pairs ($29.9 million) or 28.4 percent since May 31, 1992. In addition, a $24.3 million federal income tax refund, the previously announced purchase of newly issued Company Common Stock by an affiliate of Pentland Group plc for an aggregate purchase price of $14 million, and collections on accounts receivable all added to the Company's positive cash position."
 The availability of cash and the related reduction in average borrowings outstanding resulted in net interest income of $0.2 million in the third quarter of 1992 and net interest expense of $0.7 million for the nine months ended August 31, 1992, as compared to interest expense of $3.4 million and $12.3 million in the respective prior year periods.
 The 20.0 percent and 28.7 percent decline, respectively, in net sales for the three and nine months ended August 31, 1992 from the comparable 1991 periods principally was due to a drop in the number of pairs sold worldwide resulting from decreased customer demand and, to a lesser extent, from a decrease in the average selling price per pair (associated with the Company's inventory reduction program). The discounted prices, along with the added costs associated with air shipments required in fiscal 1992's third quarter to meet customer demand for "Back to School" products, contributed to the overall decline in gross margin to 25.5 percent for both the three- and nine- month periods ended August 31, 1992. These margins compare to 27.8 percent and 26.7 percent in the respective 1991 periods.
 Selling, general and administrative expenses, excluding the litigation settlements, decreased 24.3 percent to $42.8 million in the third quarter of 1992 and 21.8 percent to $121.4 million during the nine months ended August 31, 1992, compared to $56.4 million and $155.2 million for the respective periods
in 1991. These decreases are principally a result of the expense reduction programs initiated by new senior management in the fourth quarter of 1991, and decreases in media, advertising and promotional expenses.
 The Company anticipates pricing pressure on the sale of certain existing inventory which will continue to have a negative impact on gross margins for the remainder of 1992.
 Mark R. Goldston, President and Chief Operating Officer, stated that, "Although we anticipate lower margins on selected styles during our fourth quarter, we have substantially completed the initial phase of our restructuring plan -- the reduction of excess inventories, the significant decrease in our operating costs and the strengthening of our financial condition. As we enter fiscal 1993, we are encouraged by the positive reaction to our 'Galactica' and 'Twilight' lighted shoes for boys and girls, and by the increase in our international shipments during the third quarter of this year."
 L.A. Gear is a leading designer, developer and marketer of a broad range of quality athletic and casual/lifestyle footwear.
 L.A. GEAR, INC. AND SUBSIDIARIES
 Consolidated Condensed


Statements of Operations and Retained Earnings (Accumulated Deficit)
 (Unaudited)
 (in thousands, except per share amounts)
 Three months ended Nine months ended
 August 31, August 31,
 1992 1991 1992 1991
 Net sales $136,415 $170,483 $350,699 $491,802
 Cost of sales 101,656 123,148 261,296 360,476
 Gross profit 34,759 47,335 89,403 131,326
 Selling, general
 and administrative
 expenses 42,749 56,449 121,371 155,221
 Litigation
 settlements 3,600 --- 23,075 ---
 Interest expense
 (income), net (225) 3,395 685 12,301
 Loss from continuing
 operations before
 income taxes (11,365) (12,509) (55,728) (36,196)
 Income tax benefit --- 4,378 13,584 13,519
 Loss from continuing
 operations (11,365) (8,131) (42,144) (22,677)
 Loss from discontinued
 operations (net of
 income tax benefits
 for the three
 months and nine
 months ended
 August 31, 1991
 of $1,762 and $3,013,
 respectively) --- (3,272) --- (5,267)
 Net loss (11,365) (11,403) (42,144) (27,944)
 Dividends on
 mandatorily
 redeemable
 preferred stock (1,957) --- (5,747) ---
 Loss applicable
 to common stock (13,322) (11,403) (47,891) (27,944)
 Retained earnings,
 beginning of
 period 4,815 98,157 39,384 114,698
 Retained earnings
 (accumulated
 deficit), end
 of period ($8,507) $86,754 ($8,507) $86,754
 Loss per common share:
 Continuing
 operations ($.59) ($.42) ($2.30) ($1.17)
 Discontinued
 operations --- (.17) --- (.27)
 Total ($.59) ($.59) ($2.30) ($1.44)
 Weighted average
 common shares
 outstanding 22,428 19,469 20,819 19,354
 L.A. GEAR, INC. AND SUBSIDIARIES
 Selected Balance Sheet Data
 (in thousands)
 August 31, November 30,
 1992 1991
 (Unaudited)
 Cash and cash equivalents $56,725 $1,422
 Accounts receivable, net 105,808 111,470
 Inventories 65,134 141,115
 Borrowings under line of credit 0 20,000
 Working capital 203,359 203,215
 Mandatorily redeemable
 preferred stock 105,747 100,000
 Common stock 127,702 92,331
 Retained earnings (accumulated
 deficit) (8,507) 39,384
 Total shareholders' equity 119,195 131,715
 -0- 10/13/92
 /CONTACT: Michael Sitrick of Sitrick And Company, 310-788-2850
 (LA) CO: L.A. Gear Inc. ST: California IN: TEX SU: ERN


KJ -- LA009 -- 9139 10/13/92 09:03 EDT
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