TEFRON LTD. 
By MISGAV,
Fourth Quarter 2009 Results
Fourth quarter revenues were
The company reported a gross loss in the fourth quarter of
Results for Annual 2009
Year 2009 revenues were
Gross loss for the year 2009 was
Gross and operating losses in 2009 were primarily due to the manufacturing challenges faced in the Hi-Tex division which continued to bear heavy costs. As discussed during 2009, these challenges are mainly due to the learning curve required for the manufacture of various new and technologically advanced products, which have been ordered in short production runs for a larger number of apparel categories. The relatively high cost of sales, as a percentage of sales, was primarily due to the significant decline in sales volumes, which exceeded the corresponding decline in our fixed expenses that resulted from the implementation of our 2009 efficiency plan, and due to maintenance costs associated with new sales offices that we opened in 2009.
Commenting on the 2009 results, Tefron new CEO,
About Tefron
Tefron manufactures boutique-quality everyday seamless intimate apparel,
active wear and swim wear sold throughout the world by such name-brand
marketers as Victoria's Secret, Nike, lululemon athletica, Warnaco/
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 cyclical nature of the clothing retail industr 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;
- fluctuations in the 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:
Year ended December Year ended December
31, 2009 31, 2008
USD USD
Segment Thousands % of total Thousands % of total
Cut & sew 53,232 46.1% 87,564 50.4%
Seamless 62,306 53.9% 86,265 49.6%
Total 115,538 100.0% 173,829 100.0%
(table continued)
Three months ended Three months ended
December 31, 2009 December 31, 2008
USD USD
Segment Thousands % of total Thousands % of total
Cut & sew 8,763 39.3% 16,614 46.2%
Seamless 13,512 60.7% 19,350 53.8%
Total 22,275 100.0% 35,964 100.0%
Table 2: Sales by product line
Year ended December Year ended December
31, 2009 31, 2008
USD % of total USD % of total
Product line Thousands Thousands
Intimate Apparel 64,143 55.5% 93,683 53.9%
Active wear 21,533 18.6% 47,189 27.1%
Swimwear 29,862 25.8% 32,957 19.0%
Total 115,538 100.0% 173,829 100.0%
(table continued)
Three months ended Three months ended
December 31, 2009 December 31, 2008
USD % of total USD % of total
Product line Thousands Thousands
Intimate Apparel 15,394 69.1% 21,402 59.5%
Active wear 3,759 16.9% 7,639 21.2%
Swimwear 3,122 14.0% 6,923 19.2%
Total 22,275 100.0% 35,964 100.0%
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2009 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,904 $ 1,566
Short-term investments 737 847
Trade receivables, net 14,597 23,446
Other accounts receivable and prepaid
expenses 2,892 4,558
Inventories 19,778 32,125
Total current assets 39,908 62,542
NON- CURRENT ASSETS:
Subordinated note - 2,700
Deferred taxes, net 1,409 -
Property, plant and equipment, net 56,920 64,469
Intangible assets, net 960 2,021
59,289 69,190
Total assets $ 99,197 $ 131,732
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2009 2008
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 25,847 $ 24,809
Trade payables 15,042 25,167
Other accounts payable and accrued
expenses 5,666 7,636
Total current liabilities 46,555 57,612
LONG-TERM LIABILITIES:
Other accounts payable 1,838 1,309
Accrued severance pay, net 729 2,169
Deferred taxes, net 3,080 6,897
Total long-term liabilities 5,647 10,375
EQUITY:
Ordinary shares 7,518 7,518
Additional paid-in capital 107,522 107,104
Accumulated deficit (60,666) (43,716)
Less - 997,400 Ordinary shares in
treasury, at cost (7,408) (7,408)
Other capital reserves 29 23
46,995 63,498
Employee stock options in subsidiary - 247
Total shareholders' equity 46,995 63,745
Total liabilities and total shareholders'
equity $ 99,197 $ 131,732
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year ended Three months ended
December 31, December 31,
2009 2008 2009 2008
Sales $ 115,538 $ 173,829 $ 22,275 $ 35,964
Cost of sales 119,339 167,557 24,437 38,077
Gross profit (loss) (3,801) 6,272 (2,162) (2,113)
Selling, general and
administrative expenses 17,621 23,365 3,951 6,316
Other expenses (income) (496) 2,135 (496) 2,135
Operating income (loss) (20,926) (19,228) (5,617) (10,564)
Other expenses 1,285 - 1,285 -
Financing income (1,747) (319) (169) (819)
Financing expenses 2,259 3,347 267 892
Financing expenses, net 512 3,028 98 73
Taxes benefit (5,330) (4,677) (1,060) (1,818)
Net income (loss) $ (17,393) $ (17,579) $ (4,655) $ (8,819)
Basic and diluted net
earnings (losses) per
share:
Basic net earnings
(losses) per share $ (8.2) $ (8.3) $ (2.2) $ (4.2)
Diluted net earnings
(losses) per share $ (8.2) $ (8.3) $ (2.2) $ (4.2)
Weighted average number
of shares used for
computing basic earnings
(losses) per share 2,120,298 2,120,298 2,120,298 2,120,298
Weighted average number
of shares used for
computing diluted
earnings (losses) per
share 2,120,298 2,120,298 2,120,298 2,120,298
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Three months
Year ended ended
December 31, December 31,
2009 2008 2009 2008
Cash flows from operating
activities:
Net income (loss) $(17,393) $(17,579) $(4,655) $(8,819)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation of property,
plant and equipment and
intangible assets 9,256 8,925 2,512 2,450
Compensation related to
options granted to employees 171 487 30 96
Fixed assets impairment
(impairment reversal) (496) 2,135 (496) 2,135
Inventory write-off 2,808 4,523 584 1,519
Elimination of contingent
proceeds versus P&L (399) - (399)
Increase (decrease) in
severance pay, net (850) 420 (224) 3
Loss from early payment of
subordinated note 1,285 -
Accrual of interest on short
and long-term deposits - (75) - -
Gain related to sale of
marketable securities - (22) - -
Interest and amortization of
premium and accretion of
discount of marketable
securities - (263) - -
Impairment of marketable
securities - 553 - 240
Increase (decrease) in
deferred taxes, net (5,364) (5,558) (1,066) (2,231)
Loss (gain) on disposal of
property, plant and equipment (17) 188 - 209
Decrease in trade receivables,
net 8,849 5,587 1,661 2,585
Decrease (increase) in other
accounts receivable and
prepaid expenses 1,497 488 181 161
Decrease (increase) in
inventories 9,730 (3,051) (125) (2,835)
Decrease in trade payables (10,125) (4,553) (3,573) (1,198)
Increase (decrease) in other
accounts payable and accrued
expenses (428) 77 1,844 (638)
Net cash provided by (used in)
operating activities (1,476) (7,718) (3,726) (6,323)
Cash flows from investing
activities:
Purchase of property, plant
and equipment (611) (3,151) (146) (311)
Purchase of intangible assets (75) (224) (19) -
Purchase of business activity - (300) - -
Contingent consideration paid (271) - (200)
Proceeds from sale of
property, plant and equipment 18 35 - -
Proceeds from early payment of
a subordinated note 1,715 -
Investment in marketable
securities - - - -
Investment in short-term and
long-term deposits - (13,060) - -
Proceeds from sale of
marketable securities - 5,914 - -
Proceeds from repayment of
deposits - 20,199 - 500
Net cash provided by (used in)
investing activities 776 9,413 (365) 189
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Three months
Year ended ended
December 31, December 31,
2009 2008 2009 2008
Cash flows from financing
activities:
Short-term bank credit, net 4,923 9,323 1,441 5,123
Repayment of long-term bank
loans (3,885) (9,836) (772) (1,037)
Proceeds from long-term bank
loans - 6,000 - -
Dividend paid to shareholders - (8,000) - -
Net cash provided by (used in)
financing activities 1,038 (2,513) 669 4,086
Total increase (decrease) in
cash and cash equivalents 338 (818) (3,422) (2,048)
Cash and cash equivalents at
beginning of period 1,566 2,384 5,326 3,614
Cash and cash equivalents at end
of period $ 1,904 $ 1,566 $ 1,904 $ 1,566
Contacts
Company Contact:
Eran Rotem
Chief Financial Officer
+972-4-990-0881
reran@tefron.com
SOURCE Tefron Ltd
