Cygne Designs, Inc. Announces First Quarter 2008 Results
June 19 2008 - 2:15PM
Business Wire
Cygne Designs, Inc. (NASDAQ: CYDS) today announced results of
operations for the first quarter ended April 30, 2008. Net sales
for the first quarter of 2008 were $15,282,000, a decrease of
$5,581,000 from $20,863,000 net sales for the first quarter of
2007. This decrease in sales is comprised of a $1,616,000 decrease
in sales from branded garments, and a decrease of $10,430,000 from
the loss of business of two major customers, partially offset by an
increase in sales of our private label business of $5,559,000 and
an increase in our non-denim products of $906,000. Gross profit for
the first quarter of 2008 was $547,000, a decrease of $3,626,000,
or 86.9%, from the gross profit of $4,173,000 for the first quarter
of 2007. Gross margins decreased to 3.6% compared to 20% in the
prior year period as a result of the product categories sold and
the fact that the Company no longer has a guaranteed margin
agreement in place with its former supplier. Additionally, the
Company�s initial gross margins with its new suppliers were lower
overall compared to the prior year period and, due to late
deliveries during the period, the Company incurred significant
chargebacks and late delivery fees, which negatively impacted gross
margins during the period. The Company recorded a net loss of
$3,800,000, or $0.10 loss per share on a basic and diluted share
basis, for the quarter ended April 30, 2008 as compared to a net
loss of $1,372,000, or $0.05 per share on a basic and diluted share
basis, for the prior year period. The net loss of $3,800,000 for
the three months ended April 30, 2008 included expenses of
$1,008,000 for a severance expense attributable to the Company�s
former CEO and $273,000 for non-cash stock compensation issued to
the Company�s current CEO. Cygne and its bank use EBITDA as a
supplemental financial measure to assess the financial performance
of its assets without regard to financing methods and capital
structure. EBITDA should not be considered an alternative to net
income, operating income and cash flow from operating activities or
any other measure of financial performance or liquidity presented
in accordance with GAAP. EBITDA excludes some items that affect net
income and operating income. Since these items may vary among other
companies, EBITDA as presented below may not be comparable to
similarly titled measures of other companies. A reconciliation of
the net (loss) to EBITDA is shown in the table below.
Reconciliation of EBITDA � Quarter Ended (In thousands) April
30,2008 � � April 30,2007 Net (loss) $ (3,800 ) � $ (1,372 )
Depreciation and amortization of intangible assets 35 508 Interest
expense including amortization of the debt discount 217 957
Provision for income taxes � 12 � � 480 � EBITDA $ (3,536 ) $ 573
Cygne Designs, Inc. is a designer, merchandiser, manufacturer and
distributor of branded and private label women�s denim, casual and
career apparel with sales to retailers located in the United
States. Statements contained in this press release, which are not
historical facts, are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
All forward-looking statements are subject to risks and
uncertainties, which could cause actual results to differ from
those projected. Such risks and uncertainties are discussed more
fully in the Company�s Annual Report on Form 10-K for the year
ended January 31, 2008 and the Company�s other filings with the
Securities and Exchange Commission. (Financial table to follow)
CYGNE DESIGNS, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of Operations (in thousands, except per share data) � �
Quarters Ended April 302008 � April 302007 Net sales $ 15,282 $
20,863 Cost of goods sold � 14,735 � � 16,690 � Gross profit 547
4,173 Selling, general and administrative expenses 4,143 3,600
Depreciation and amortization � 35 � � 508 � (Loss) Income from
operations before interest and income taxes (3,631 ) � 65 Interest
expense 217 957 Other (income) (60 ) (Loss) from operations before
income taxes (3,788 ) � (892 ) Provision for income taxes � 12 � �
480 � Net loss $ (3,800 ) � $ (1,372 ) � Net loss per share-basic
and diluted $ (0.10 ) � $ (0.05 ) � Weighted average common shares
outstanding: Basic � 37,976 � � 26,462 � Diluted � 37,976 � �
26,462
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