TEFRON LTD. 
By MISGAV,
First Quarter 2009 Results
First quarter revenues were
First quarter gross margin was 13.0% compared with a gross margin of
12.8% in the first quarter of 2008. Operating income for the quarter was
The improvement in profitability was primarily due to the implementation of part of the company's 2009 efficiency plan, which included among others reduction manufacturing costs through consolidation of the Tefron's production sites, as well as an across-the-board headcount reduction of approximately 15%. We expect to implement the remaining part of the efficiency plan in the second quarter of 2009. In addition, the appreciation of the US Dollar versus the New Israeli Shekel contributed to the improvement.
Management comments
Mr.
About Tefron
Tefron manufactures boutique-quality everyday seamless intimate apparel,
active wear and swimwear sold throughout the world by such name-brand
marketers as Victoria's Secret, Nike, Target, The Gap,
This press release contains certain forward-looking statements, within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, with respect to the Company's business, financial condition and results of operations. We have based these forward-looking statements on our current expectations and projections about future events.
Words such as "believe," "anticipate," "expect," "intend," "will," "plan," "could," "may," "project," "goal," "target," and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Except for statements of historical fact contained herein, the matters set forth in this press release regarding our future performance, plans to increase revenues or margins and any statements regarding other future events or future prospects are forward-looking statements.
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:
- the effect of the worldwide recession on our sales to our customers in
the United States and in Europe and on our ability to finance our
operations;
- our customers' continued purchase of our products in the same volumes
or on the same terms;
- the failure of any of our principal customers to satisfy its payment
obligations to us;
- the cyclical nature of the clothing retail industry and the ongoing
changes in fashion preferences;
- the competitive nature of the markets in which we operate, including
the ability of our competitors to enter into and compete in the
seamless market in which we operate;
- the potential adverse effect on our business resulting from our
international operations, including increased custom duties and import
quotas (e.g., in China, where we manufacture for our swimwear division)
- fluctuations in inflation and currency rates;
- the potential adverse effect on our future operating efficiency
resulting from our expansion into new product lines with more
complicated products, different raw materials and changes in market
trends;
- the purchase of new equipment that may be necessary as a result of our
expansion into new product lines;
- our dependence on our suppliers for our machinery and the maintenance
of our machinery;
- the fluctuations costs of raw materials;
- our dependence on subcontractors in connection with our manufacturing
process
- our failure to generate sufficient cash from our operations to pay our
debt;
- political, economic, social, climatic risks, associated with
international business and relating to operations in Israel;
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 after the date hereof or to reflect the occurrence of unanticipated events.
TABLE 1: SALES BY SEGMENTS
Three months ended Three months ended Year ended December
March 31, 2009 March 31, 2008 31, 2008
USD % of USD % of USD % of
Segment Thousands total Thousands total Thousands total
Cut & sew 25,334 53.9% 31,710 62.2% 87,564 50.4%
Seamless 21,651 46.1% 19,232 37.8% 86,265 49.6%
Total 46,985 100.0% 50,942 100.0% 173,829 100.0%
TABLE 2: SALES BY PRODUCT LINE
Three months ended Three months ended Year ended
March 31, 2008 March 31, 2008 December 31, 2008
Product line USD % of USD % of USD % of
Thousands total Thousands total Thousands total
Intimate Apparel 20,017 42.6% 22,926 48.8% 93,683 53.9%
Active wear 8,743 18.6% 12,944 27.5% 47,189 27.1%
Swimwear 18,225 38.8% 15,072 32.1% 32,957 19.0%
Total 46,985 100.0% 50,942 108.4% 173,829 100.0%
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
March 31, December 31,
2009 2008 2008
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 211 $ 1,371 $ 1,566
Short-term investments 1,149 7,267 847
Trade receivables, net 30,595 38,810 23,446
Other accounts receivable and
prepaid expenses 4,312 3,263 4,558
Inventories 26,026 33,937 32,125
Total current assets 62,293 84,648 62,542
NON- CURRENT ASSETS:
Marketable securities - 1,277 -
Subordinated note 2,400 3,000 2,700
Property, plant and equipment, net 62,613 72,190 64,469
Intangible assets, net 1,921 635 2,021
66,934 77,102 69,190
Total assets $ 129,227 $ 161,750 $ 131,732
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
March 31, December 31,
2009 2008 2008
Unaudited Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 13,965 $ 4,161 $ 24,809
Trade payables 24,116 32,305 25,167
Other accounts payable and accrued
expenses 7,135 10,179 7,636
Total current liabilities 45,216 46,645 57,612
LONG-TERM LIABILITIES:
Long term loans from banks (net of
current maturities) 10,297 14,480 -
Other accounts payable 1,432 - 1,309
Accrued severance pay, net 1,413 1,635 2,169
Deferred taxes, net 6,688 11,122 6,897
Total long-term liabilities 19,830 27,237 10,375
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares 7,518 7,518 7,518
Additional paid-in capital 107,161 106,927 107,104
Accumulated deficit (43,106) (18,532) (43,739)
Less - 99,740 Ordinary shares in
treasury, at cost (7,408) (7,408) (7,408)
Other capital reserve (231) (637) 23
63,934 87,868 63,498
Employee stock options in subsidiary 247 - 247
Total shareholders' equity 64,181 87,868 63,745
Total liabilities and shareholders'
equity $ 129,227 $ 161,750 $ 131,732
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year
ended
Three months ended December
March 31, 31,
2009 2008 2008
Unaudited Audited
Sales $ 46,985 $ 50,942 $ 173,829
Cost of sales 40,867 44,437 167,557
Gross profit (loss) 6,118 6,505 6,272
Selling, general and administrative
expenses 5,798 6,202 23,365
Other expenses - - 2,135
Operating income (loss) 320 303 (19,228)
Financial expenses (income), net (494) 1,181 3,028
Income (loss) before taxes on income 814 (878) (22,256)
Taxes (tax benefit) on income 181 (308) (4,677)
Net income (loss)
$ 633 $ (570) $ (17,579)
Basic and diluted net earnings (losses)
per share:
Basic net earnings (losses) per share $ 0.3 $ (0.3) $ (8.3)
Diluted net earnings (losses) per share $ 0.3 $ (0.3) $ (8.3)
Weighted average number of shares used
for computing basic earnings (losses)
per share 2,120,299 2,120,299 2,120,299
Weighted average number of shares used
for computing diluted earnings (losses)
per share 2,120,299 2,120,299 2,120,299
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year
ended
Three months ended December
March 31, 31,
2009 2008 2008
Unaudited Audited
Cash flows from operating activities
Net income (loss) $ 633 $ (570) $ (17,579)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation of property, plant and
equipment and intangible assets 2,213 2,167 8,925
Compensation related to options granted
to employees 57 63 487
Fixed assets impairment - - 2,135
Inventory write-off 480 275 4,523
Increase (decrease) in severance pay, net (756) 150 420
Accrual of interest on short and
long-term deposits - (68) (75)
Gain related to sale of marketable
securities - (22) (22)
Interest and amortization of premium and
accretion of discount of marketable
securities - (202) (263)
Impairment of marketable securities - - 553
Increase (decrease) in deferred taxes,
net (209) (1,076) (5,558)
Loss (gain) on disposal of property,
plant and equipment (17) (6) 188
Decrease (increase) in trade receivables,
net (7,149) (9,777) 5,587
Decrease in other accounts receivable and
prepaid expenses 546 1,677 661
Decrease (increase) in inventories 5,619 (419) (3,051)
Increase (decrease) in trade payables (1,051) 2,585 (4,553)
Decrease in other accounts payable and
accrued expenses (934) 618 (96)
Net cash provided by (used in) operating
activities (568) (4,605) (7,718)
Cash flows from investing activities
Purchase of property, plant and equipment (232) (1,344) (3,151)
Purchase of intangible assets (26) (96) (223)
Purchase of business activity - - (300)
Proceeds from sale of property, plant and
equipment 18 - 35
Investment in short-term and long-term
deposits - (12,560) (13,060)
Proceeds from sale of marketable
securities - 1,582 5,914
Proceeds from repayment of deposits - 16,685 20,198
Net cash provided by (used in) investing
activities (240) 4,273 9,413
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year
Three months ended ended
December
March 31, 31,
2009 2008 2008
Unaudited Audited
Cash flows from financing activities
Short-term bank credit, net $ 491 $ - $ 9,323
Repayment of long-term bank loans (1,038) (6,681) (9,836)
Proceeds from long-term bank loans - 6,000 6,000
Dividend paid to shareholders - - (8,000)
Net cash provided by (used
in)financing activities (547) (681) (2,513)
Increase (decrease) in cash and cash
equivalents (1,355) (1,013) (818)
Cash and cash equivalents at the
beginning of the period 1,566 2,384 2,384
Cash and cash equivalents at the end
of the period $ 211 $ 1,371 $ 1,566
Contacts
Company Contact:
Eran Rotem
Chief Financial Officer
+972-4-990-0803
reran@tefron.com
SOURCE Tefron Ltd
