Exhibit 99.1
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| For: | | Cygne Designs, Inc. |
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| | Cygne Designs, Inc. |
| | Roy Green, Chief Financial Officer |
| | (212) 997-7767, ext. 242 |
CYGNE DESIGNS, INC. ANNOUNCES SECOND QUARTER
AND FIRST SIX MONTHS 2006 RESULTS
New York, New York, September 14, 2006-Cygne Designs, Inc. (NASDAQ: CYDS) today announced results of operations for the second quarter and six months ended July 31, 2006.
Net sales for the second quarter of 2006 were $45.1 million, an increase of $41.0 million from $4.1 million in the second quarter of 2005. $42.7 million of the increase in sales resulted from Cygne’s acquisition of the branded and private label denim business of Diversified Apparel Resources LLC (“DAR”) on July 31, 2005 and its acquisition of the private label denim business of Innovo Group, Inc. on May 12, 2006. The increase in sales was offset primarily by decreased non-denim sales. Gross profit for the second quarter of 2006 increased to $10.0 million compared to $0.3 million for the prior year period. Gross margins increased to 22.1% compared to 7.2% in the prior year period as a result of higher gross margins on sales stemming from the acquisition of product primarily sourced through a supply agreement with DAR for the second quarter. Net profit for the second quarter ended July 31, 2006 was $2,412,000 or $0.09 on a basic and diluted per share basis, compared to a net loss of $426,000 or $0.03 on a basic and diluted per share basis in the comparable prior period in 2005.
Net sales for the six months ended July 31, 2006 were $66.0 million, an increase of $56.4 million from $9.6 million in the six months ended July 30, 2005. $61.9 million of the increase in sales resulted from Cygne’s acquisition of the branded and private label denim business of Diversified Apparel Resources LLC (“DAR”) on July 31, 2005 and its acquisition of the private label denim business of Innovo Group, Inc. on May 12, 2006. The increase in sales was offset
CYGNE DESIGNS, INC. ANNOUNCES SECOND QUARTER
AND FIRST SIX MONTHS 2006 RESULTS
by decreased non-denim sales. Gross profit for the six months ended July 31, 2006 increased to $14.9 million compared to $0.9 million for the prior year period. Gross margins increased to 22.6% compared to 9.6% in the prior year period as a result of higher gross margins on sales stemming from the acquisition of product primarily sourced through a supply agreement with DAR for the six months ended July 31, 2006. Net profit for the six months ended July 31, 2006 was $1,828,000 or $0.07 on a basic and diluted per share basis, compared to a net loss of $617,000 or $0.05 on a basic and diluted per share basis in the comparable prior period in 2005. Cygne and its factor 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 EBITDA to net income (loss) is shown in the table below.
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Reconciliation of EBITDA | | Six Months Ended | |
| | | (In thousands) | |
| | | July 31,
2006 | | July 30,
2005 | |
Net income | | $ | 1,828 | | $ | (617 | ) |
Depreciation and amortization of intangible assets | | | 828 | | | 132 | |
Interest expense (income) including amortization of the debt discount | | | 2,583 | | | (22 | ) |
Provision for income taxes | | | 36 | | | 10 | |
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EBITDA | | $ | 5,275 | | $ | (497 | ) |
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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, 2006 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
(Unaudited, in thousands, except per share data)
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| | | Quarters Ended | | | Six Months Ended | |
| | | July 31
2006 | | July 30
2005 | | | July 31
2006 | | July 30
2005 | |
Net sales | | $ | 45,116 | | $ | 4,062 | | | $ | 66,011 | | $ | 9,617 | |
Cost of goods sold | | | 35,140 | | | 3,770 | | | | 51,071 | | | 8,693 | |
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Gross profit | | | 9,976 | | | 292 | | | | 14,940 | | | 924 | |
Selling, general and administrative expenses | | | 5,629 | | | 708 | | | | 9,665 | | | 1,416 | |
Depreciation and amortization | | | 624 | | | 18 | | | | 828 | | | 35 | |
Provision for restructuring | | | — | | | — | | | | — | | | 102 | |
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Income (loss) from operations before interest and income taxes | | | 3,723 | | | (434 | ) | | | 4,447 | | | (629 | ) |
Interest expense (income), net | | | 1,293 | | | (13 | ) | | | 2,583 | | | (22 | ) |
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Income (loss) from operations before income taxes | | | 2,430 | | | (421 | ) | | | 1,864 | | | (607 | ) |
Provision for income taxes | | | 18 | | | 5 | | | | 36 | | | 10 | |
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Net income (loss) | | $ | 2,412 | | $ | (426 | ) | | $ | 1,828 | | $ | (617 | ) |
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Net income (loss) per share-basic and diluted | | $ | 0.09 | | $ | (0.03 | ) | | $ | 0.07 | | $ | (0.05 | ) |
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Weighted average common shares outstanding: | | | | | | | | | | | | | | |
Basic | | | 26,223 | | | 12,458 | | | | 25,343 | | | 12,448 | |
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Diluted | | | 26,223 | | | 12,458 | | | | 25,343 | | | 12,448 | |
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