Tarrant Apparel Group Provides Fourth Quarter and Fiscal 2004
Update
~ Company Reaffirms Fiscal 2005 Outlook ~
LOS ANGELES, Feb. 9 /PRNewswire-FirstCall/ -- Tarrant Apparel Group
(NASDAQ:TAGS), a leading provider of private label and private brand casual
apparel, today announced its updated outlook for the fourth quarter and fiscal
2004 and reaffirmed its fiscal 2005 outlook.
The Company now anticipates that revenues and net loss for the 2004 fourth
quarter will be in the range of $36.0 million to $38.0 million and $27.5
million to $27.0 million, respectively. This compares to the Company's
previous fourth quarter outlook for revenue in the range of $40.0 million to
$45.0 million and net loss in the range of $23.1 million to $22.1 million. The
revised fourth quarter outlook translates into expected full year revenue of
$154.0 million to $156.0 million and net loss of $103.1 million to $102.6
million.
As previously disclosed, the anticipated net loss for the fourth quarter and
full year includes a non-cash charge of approximately $23.0 million expected to
be incurred in the fourth quarter, resulting from a reclassification of foreign
currency translation adjustments presently recorded on the balance sheet as a
reduction of stockholders' equity. The anticipated loss for the full year also
includes a non-cash charge of $64.3 million recorded in the second quarter of
2004, which is the Company's portion of a $78.0 million charge for impairment
of assets resulting from an appraisal of the Company's fixed assets in Mexico.
Excluding both non-cash charges, the Company anticipates a net loss of $4.5
million to $4.0 million for the fourth quarter and a net loss of $15.8 million
to $15.3 million for fiscal 2004.
For fiscal 2005, the Company continues to expect sales to be in the range of
approximately $220 million to $240 million and net income to be between
approximately $7 million and $11 million. This outlook anticipates growth in
both the Private Brand and Private Label business segments.
Barry Aved, President and CEO of Tarrant Apparel Group, commented, "Our revised
guidance reflects a greater than expected impact from the factors we discussed
in our third quarter conference call: softer than expected holiday bookings,
internal challenges faced by certain large customers, and increased air freight
costs related to congestion in the West Coast ports. That said, we are pleased
with the development of our Private Brands business, especially the recent
agreements with Jessica Simpson and Beyonce Knowles, and believe we are
on-track to meet our goals for 2005." Tarrant Apparel Group serves specialty retailers, mass merchants, national
department stores, and branded wholesalers by designing, merchandising,
contracting for the manufacture of, and selling casual and well-priced apparel
for women, men, and children.
Forward Looking Statements Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are inherently unreliable and actual results may differ materially. Examples of forward looking statements in this news release include net loss
and adjusted net loss estimates, revenue projections, estimated non-cash
charges, and anticipated growth in the private brands and private label
businesses. Factors which could cause actual results to differ materially from
these forward-looking statements include a softening of retailer or consumer
acceptance of the Company's products, pricing pressures and other competitive
factors, continued delays at West Coast ports, delays in the deployment of new
private brands, and the unanticipated loss of a major customer. These and
other risks are more fully described in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
Pro Forma Financial Information Tarrant Apparel Group has prepared adjusted net income (loss) data applicable
to 2004 to supplement its estimated results determined under applicable
generally accepted accounting principles (GAAP). The adjusted amounts are not
meant as a substitute for GAAP, but are included solely for informational
purposes. The adjusted data has been adjusted for two items that the Company
believes to be one-time charges as described above.
The following table illustrates the adjustments to estimated net loss described
in this press release and reconciles the adjusted data to the estimated net
loss determined in accordance with GAAP: Three Months Ended Year Ended
December 31, 2004 December 31, 2004
(in millions)
Estimated net income
(loss) after income taxes $ (27.5) $ (27.0) $(103.1) $(102.6)
Add back impairment of
assets charge net of
minority interest(a) -- -- 64.3 64.3
Add back foreign currency
translation adjustment (b) 23.0 23.0 23.0 23.0
Adjusted estimated
net income (loss) $ (4.5) $ (4.0) $(15.8) $(15.3) (a) Represents the Company's portion of a $78 million charge incurred in
the 2004 second quarter for impairment of assets resulting from an
appraisal of the Company's fixed assets in Mexico.
(b) Represents a charge expected to be incurred in the fourth quarter,
resulting from a reclassification of foreign currency translation
adjustments presently recorded on the balance sheet as a reduction of
stockholders' equity. This reclassification and charge will occur
upon the substantial liquidation of the Company's Mexico subsidiaries
following the previously announced sale of the Company's fixed assets
in Mexico. DATASOURCE: Tarrant Apparel Group CONTACT: Corazon Reyes, Chief Financial Officer, +1-323-780-8250, or Investors: Melissa Myron/Lila Sharifian, +1-212-850-5600
|