TEFRON LTD. 
By MISGAV,
Tefron has prepared its full 2008 results in accordance with IFRS accounting rules as opposed to US GAAP, under which results had previously been prepared. This is due to the regulations of the Israeli Securities Authority, which requires Tefron to now report its results according to IFRS.
Fourth Quarter 2008 Results
Fourth quarter revenues were
The company reported a gross loss in the quarter of
The main reasons for the losses are (i) the lower revenue levels compared
with that of last year, (ii) manufacturing inefficiencies in the Hi-Tex
division, (iii) the Company's write-off of
Results for Full Year 2008
Full year 2008 revenues were
Full year 2008 gross margin decreased to 3.6%, compared with 12.3% as
reported in 2007. Operating loss was
In
Management Comments
Mr.
"A positive development in the quarter was first-time initial orders from a number of new customers including Umbro, a top UK sports clothing brand," continued Mr. Livneh. "We are taking advantage of the current economic decline to increase and diversify our customer-base, focusing on regions which, for us, are under-penetrated. Thus, we have increased our focusing in marketing our products to European retailers, and we are indeed seeing good traction."
"While the global economy is facing a particularly challenging year ahead, we have placed significant effort in matching our current expense footprint with our expected level of revenues, and closely watching and reacting to developments as they occur. I believe Tefron's competitive position as a leading developer, designer and manufacturer of unmatched high-end performance apparel, will enable us to emerge the downturn as a leaner and more efficient leader in our markets," concluded Mr. Livneh.
Earnings Conference Calls
Until further notice, we have decided to end our practice of hosting
quarterly earnings conference calls.
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, 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 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 BT SEGMENTS
Year ended Year ended Three months Three months
December 31, December 31, ended December ended December
2008 2007 31, 2008 31, 2007
USD USD USD USD
Thou- % of Thou- % of Thou- % of Thou- % of
Segments sands total sands total sands total sands total
Cut & 87,564 50.4% 77,020 48.6% 16,614 46.2% 23,047 59.3%
sew
Seamless 86,265 49.6% 81,594 51.4% 19,350 53.8% 15,846 40.7%
Total 173,829 100.0% 158,614 100.0% 35,964 100.0% 38,893 100.0%
TABLE 2: sales by product line
Year ended Year ended Three months Three months
December 31, December 31, ended December ended December
2008 2007 31, 2008 31, 2007
Product USD USD USD USD
line Thou- % of Thou- % of Thou- % of Thou- % of
sands total sands total sands total sands total
Intimate
Apparel 93,683 53.9% 89,877 56.7% 21,402 59.5% 21,010 54.0%
Active
wear 47,189 27.1% 42,047 26.5% 7,639 21.2% 11,284 29.0%
Swimwear 32,957 19.0% 26,690 16.8% 6,923 19.2% 6,599 17.0%
Total 173,829 100.0% 158,614 100.0% 35,964 100.0% 38,893 100.0%
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2008 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,566 $ 2,384
Short-term investments 847 12,731
Trade receivables, net 23,446 29,033
Other accounts receivable and prepaid
expenses 4,558 4,940
Inventories 32,125 33,793
Total current assets 62,542 82,881
NON- CURRENT ASSETS:
Marketable securities - 1,284
Subordinated note 2,700 3,000
Property, plant and equipment, net 64,469 72,978
Intangible assets, net 2,021 597
69,190 77,859
Total assets $ 131,732 $ 160,740
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2008 2007
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 24,809 $ 5,948
Trade payables 25,167 29,720
Other accounts payable and accrued
expenses 7,636 8,635
Total current liabilities 57,612 44,303
LONG-TERM LIABILITIES:
Long term loans from banks (net of current
maturities) - 13,374
Other accounts payable 1,309 -
Accrued severance pay, net 2,169 1,485
Deferred taxes, net 6,897 12,198
Total long-term liabilities 10,375 27,057
EQUITY:
Ordinary shares 7,518 7,518
Additional paid-in capital 107,104 106,864
Accumulated deficit (43,716) (17,594)
Less - 997,400 Ordinary shares in
treasury, at cost (7,408) (7,408)
63,498 89,380
Employee stock options in subsidiary 247 -
Total shareholders' equity 63,745 89,380
Total liabilities and total shareholders'
equity $ 131,732 $ 160,740
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year ended Three months ended
December 31, December 31,
2008 2007 2008 2007
Sales $ 173,829 $ 158,614 $ 35,964 $ 38,893
Cost of sales 167,557 139,145 38,077 36,781
Gross profit (loss) 6,272 19,469 (2,113) 2,112
Selling, general and
administrative expenses 23,365 17,633 6,316 4,784
Other expenses 2,135 - 2,135 -
Operating income (loss) (19,228) 1,836 (10,564) (2,672)
Financial expenses, net 3,028 1,289 73 329
Income (loss) before
taxes on income (22,256) 547 (10,637) (3,001)
Taxes benefit (4,677) (35) (1,818) (680)
Net income (loss) $ (17,579) $ 582 $ (8,819) $ (2,321)
Basic and diluted net
earnings (losses) per
share:
Basic net earnings
(losses) per share $ (8.3) $ 0. 2 $ (4.2) $ (1.1)
Diluted net earnings
(losses) per share $ (8.3) $ 0. 2 $ (4.2) $ (1.1)
Weighted average number
of shares used for
computing basic earnings
(losses) per share 2,120,299 2,118,816 2,120,299 2,120,299
Weighted average number
of shares used for
computing diluted
earnings (losses) per
share 2,120,299 2,163,012 2,120,299 2,120,299
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Three months
Year ended ended
December 31, December 31,
2008 2007 2008 2007
Cash flows from operating
activities:
Net income (loss) $(17,579) $ 582 $(8,819) $(2,321)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation of property,
plant and equipment and
intangible assets 8,925 8,568 2,450 2,127
Compensation related to
options granted to employees 487 489 96 (9)
Fixed assets impairment 2,135 - 2,135 -
Inventory write-off 4,523 1,260 1,519 655
Increase (decrease) in
severance pay, net 420 72 3 (72)
Accrual of interest on short
and long-term deposits (75) (613) - (117)
Gain related to sale of
marketable securities (22) (134) - (124)
Interest and amortization of
premium and accretion of
discount of marketable
securities (263) (189) - 136
Impairment of marketable
securities 553 - 240 -
Increase (decrease) in
deferred taxes, net (5,558) 64 (2,231) 43
Loss (gain) on disposal of
property, plant and equipment 188 (651) 209 (10)
Decrease in trade receivables,
net 5,587 1,622 2,585 52
Decrease (increase) in other
accounts receivable and
prepaid expenses 661 (920) 161 (94)
Increase in inventories (3,051) (4,925) (2,835) (6,887)
Increase (decrease) in trade
payables (4,553) (1,423) (1,198) 4,941
Decrease in other accounts
payable and accrued expenses (96) (768) (638) (316)
Net cash provided by (used in)
operating activities (7,718) 3,034 (6,323) (1,996)
Cash flows from investing
activities:
Purchase of property, plant
and equipment (3,151) (6,089) (311) (1,765)
Purchase of intangible assets (223) (288) - -
Purchase of business activity (300) - -
Proceeds from sale of
property, plant and equipment 35 943 - 16
Investment in marketable
securities - (18,973) - (2,013)
Investment in short-term and
long-term deposits (13,060) (8,321) - (5,821)
Proceeds from sale of
marketable securities 5,914 17,240 - 2,259
Proceeds from repayment of
deposits 20,198 12,989 500 10,489
Net cash provided by (used in)
investing activities 9,413 (2,499) 189 3,165
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Three months
Year ended ended
December 31, December 31,
2008 2007 2008 2007
Cash flows from financing
activities:
Short-term bank credit, net 9,323 - 5,123 -
Repayment of long-term bank
loans (9,836) (5,948) (1,037) (1,487)
Proceeds from long-term bank
loans 6,000 - - -
Proceeds from exercise of
options - 4,382 - 7
Dividend paid to shareholders (8,000) (551) - -
Net cash provided by (used in)
financing activities (2,513) (2,117) 4,086 (1,480)
Total decrease in cash and cash
equivalents (818) (1,582) (2,048) (311)
Cash and cash equivalents at
beginning of period 2,384 3,966 3,614 2,695
Cash and cash equivalents at end
of period $ 1,566 $ 2,384 $ 1,566 $ 2,384
Contacts
Company Contact: IR Contact:
Eran Rotem Ehud Helft / Kenny Green
Chief Financial Officer G.K. Investor Relations
+972-4-990-0803 +1-646-201-9246
reran@tefron.com info@gkir.com
SOURCE Tefron Ltd
