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Tarrant
Apparel Group Announces First Quarter Results
LOS ANGELES--(BUSINESS WIRE)--
May 12, 2009 --Tarrant Apparel Group (NASDAQ:TAGS), a design and
sourcing company for private label and private brand casual apparel,
today announced financial results for the three months ended March 31,
2009.
The Company reported total net sales of $37.3 million in the first
quarter of 2009, a 26.1% decrease compared to total net sales of $50.5
million in the same period of 2008. Private Brands sales were $11.1
million in the first quarter of 2009, compared to $8.3 million in the
first quarter of 2008. Private Label sales in the first quarter of 2009
were $26.2 million, as compared to $42.2 million reported in the same
period last year.
Gross profit decreased by $2.1 million, or 20.5%, to $8.0 million in
the first quarter of 2009 from $10.0 million in the first quarter of 2008.
The decrease in gross profit was primarily due to a decrease in total
amount of sales. As a percentage of total net sales, gross profit
increased from 19.9% in the first quarter of 2008 to 21.4% in the first
quarter of 2009. The increase in gross margin in the first quarter of 2009
was due primarily to an increased proportion of sales of Private Brands
products that yielded a higher gross margin.
Selling, general and administrative expenses in the first quarter of
2009 were $7.6 million compared to $9.7 million in the first quarter of
2008. The decrease of these expenses in the first quarter of 2009 was due
to overhead reduction and cost-cutting efforts. As a percentage of total
net sales, selling, general and administrative expenses increased from
19.3% in the first quarter of 2008 to 20.3% in the first quarter of 2009
due to a lower level of sales in the first quarter of 2009. Included in
selling, general and administrative expenses in the first quarter of 2008
was a charge of $848,000 resulting from liquidated damages imposed by the
U.S. Customs on two of the Company’s overseas vendors in April 2008.
Royalty expenses decreased by $72,000, or 21.6%, to $262,000 in the
first quarter of 2009 from $334,000 in the first quarter of 2008. The
decrease was caused by lowered royalty rates under the amended license
agreement with American Rag Cie, LLC reached in December 2008. As a
percentage of total net sales, these expenses remained at 0.7% in the
first quarter of 2009 and 2008.
Income from operations was $153,000 in the first quarter of 2009
compared to loss from operations of $43,000 in the first quarter of 2008.
Income before provision for income taxes and minority interest was $2,000
in the first quarter of 2009 compared to loss before provision for income
taxes and minority interest of $139,000 in the first quarter of 2008. The
net loss for the 2009 first quarter was $171,000 or a net loss of $(0.01)
per basic and diluted share compared to a net loss of $253,000 or $(0.01)
per basic and diluted share in the year earlier period.
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TARRANT APPAREL GROUP |
|
CONSOLIDATED BALANCE SHEETS |
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(in thousands, except share data) |
|
|
|
|
|
|
|
March 31, 2009
|
|
December 31, 2008
|
|
|
(Unaudited) |
|
|
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ASSETS |
|
|
|
|
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Current assets: |
|
|
|
|
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Cash and cash equivalents |
|
$ |
603 |
|
|
$ |
5,212 |
|
|
Restricted cash |
|
|
100 |
|
|
|
100 |
|
|
Accounts receivable, net of $0.7 million and
$0.6 million allowance for returns, discounts and bad debts at
March 31, 2009 and December 31, 2008, respectively
|
|
|
23,327 |
|
|
|
19,199 |
|
|
Due from related parties |
|
|
15,431 |
|
|
|
21,581 |
|
|
Inventory |
|
|
8,574 |
|
|
|
7,066 |
|
|
Temporary quota rights |
|
|
- |
|
|
|
36 |
|
|
Prepaid expenses |
|
|
1,221 |
|
|
|
1,203 |
|
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Deferred tax assets |
|
|
153 |
|
|
|
146 |
|
|
|
|
|
|
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Total current assets |
|
|
49,409 |
|
|
|
54,543 |
|
|
|
|
|
|
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Property and equipment, net of $6.2 million and
$7.4 million accumulated depreciation and amortization at March
31, 2009 and December 31, 2008, respectively
|
|
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2,034 |
|
|
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1,985 |
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Due from related parties, net of $2.6 million
reserve and $0.8 million adjustment to fair value both at March
31, 2009 and December 31, 2008
|
|
|
132 |
|
|
|
139 |
|
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Deferred financing cost, net of $0.4 million
accumulated amortization both at March 31, 2009 and December 31,
2008
|
|
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30 |
|
|
|
67 |
|
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Other assets |
|
|
2 |
|
|
|
2 |
|
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Goodwill, net |
|
|
3,283 |
|
|
|
3,283 |
|
|
|
|
|
|
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Total assets |
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$ |
54,890 |
|
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$ |
60,019 |
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|
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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|
|
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Short-term bank borrowings |
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$ |
8,226 |
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$ |
10,630 |
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Accounts payable |
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|
9,175 |
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|
|
11,680 |
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Accrued expenses |
|
|
4,825 |
|
|
|
5,850 |
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Income taxes, current portion |
|
|
4,214 |
|
|
|
4,223 |
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Debt facility and factoring arrangement |
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14,167 |
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|
|
12,607 |
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|
|
|
|
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Total current liabilities |
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40,607 |
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|
|
44,990 |
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|
|
|
|
|
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Income taxes, net of current portion |
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4,528 |
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|
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5,164 |
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Total liabilities |
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45,135 |
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|
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50,154 |
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|
|
|
|
|
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Minority interest in PBG7 |
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|
60 |
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|
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60 |
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|
|
|
|
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Commitments and contingencies |
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|
|
|
|
|
|
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Shareholders’ equity: |
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|
|
|
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Preferred stock, 2,000,000 shares authorized; no
shares issued and outstanding at March 31, 2009 and December 31,
2008
|
|
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- |
|
|
|
- |
|
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Common stock, no par value, 100,000,000 shares
authorized: 30,543,763 shares issued and outstanding at March 31,
2009 and December 31, 2008
|
|
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115,757 |
|
|
|
115,757 |
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Warrants to purchase common stock |
|
|
5,471 |
|
|
|
5,516 |
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Contributed capital |
|
|
13,023 |
|
|
|
12,919 |
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Accumulated deficit |
|
|
(122,915 |
) |
|
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(122,744 |
) |
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Notes receivable from officer and shareholder |
|
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(1,641 |
) |
|
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(1,643 |
) |
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Total shareholders’ equity |
|
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9,695 |
|
|
|
9,805 |
|
|
|
|
|
|
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Total liabilities and shareholders’ equity |
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$ |
54,890 |
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$ |
60,019 |
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TARRANT APPAREL GROUP |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except share data) |
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(unaudited) |
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Three Months
Ended
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Three Months
Ended
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March 31, 2009
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March 31, 2008
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Net sales |
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$ |
34,574 |
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$ |
46,322 |
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Net sales to related party |
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2,759 |
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|
|
4,177 |
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Total net sales |
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37,333 |
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|
|
50,499 |
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|
|
|
|
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Cost of sales |
|
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26,831 |
|
|
|
36,654 |
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Cost of sales to related party |
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|
2,520 |
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|
|
3,806 |
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Total cost of sales |
|
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29,351 |
|
|
|
40,460 |
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|
|
|
|
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Gross profit |
|
|
7,982 |
|
|
|
10,039 |
|
|
|
|
|
|
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Selling and distribution expenses |
|
|
2,194 |
|
|
|
3,429 |
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General and administrative expenses |
|
|
5,373 |
|
|
|
6,319 |
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Royalty expenses |
|
|
262 |
|
|
|
334 |
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|
|
|
|
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Income (loss) from operations |
|
|
153 |
|
|
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(43 |
) |
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|
|
|
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Interest expense |
|
|
(166 |
) |
|
|
(230 |
) |
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Interest income |
|
|
33 |
|
|
|
40 |
|
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Interest in loss of equity method investee |
|
|
- |
|
|
|
(23 |
) |
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Other income |
|
|
32 |
|
|
|
181 |
|
|
Other expense |
|
|
(50 |
) |
|
|
(64 |
) |
|
|
|
|
|
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Income (loss) before provision for income taxes and minority
interest |
|
|
2 |
|
|
|
(139 |
) |
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Provision for income taxes |
|
|
173 |
|
|
|
114 |
|
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Minority interest |
|
|
- |
|
|
|
(0 |
) |
|
|
|
|
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Net loss |
|
$ |
(171 |
) |
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$ |
(253 |
) |
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Net loss per share: |
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|
|
|
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Basic and Diluted |
|
$ |
(0.01 |
) |
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$ |
(0.01 |
) |
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Weighted average common and common equivalent shares outstanding:
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Basic and Diluted |
|
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30,543,763 |
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32,043,763 |
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Contact:
CEOcast, Inc. for Tarrant Apparel Group
Gary Nash, 212-732-4300
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