Cygne Designs, Inc. Announces First Quarter 2008 Results

  
    
  
  
    
      Cygne Designs, Inc. (NASDAQ: CYDS) today announced results of operations 
      for the first quarter ended April 30, 2008.
    
    
      Net sales for the first quarter of 2008 were $15,282,000, a decrease of 
      $5,581,000 from $20,863,000 net sales for the first quarter of 2007. 
      This decrease in sales is comprised of a $1,616,000 decrease in sales 
      from branded garments, and a decrease of $10,430,000 from the loss of 
      business of two major customers, partially offset by an increase in 
      sales of our private label business of $5,559,000 and an increase in our 
      non-denim products of $906,000.
    
    
      Gross profit for the first quarter of 2008 was $547,000, a decrease of 
      $3,626,000, or 86.9%, from the gross profit of $4,173,000 for the first 
      quarter of 2007. Gross margins decreased to 3.6% compared to 20% in the 
      prior year period as a result of the product categories sold and the 
      fact that the Company no longer has a guaranteed margin agreement in 
      place with its former supplier. Additionally, the Company’s 
      initial gross margins with its new suppliers were lower overall compared 
      to the prior year period and, due to late deliveries during the period, 
      the Company incurred significant chargebacks and late delivery fees, 
      which negatively impacted gross margins during the period.
    
    
      The Company recorded a net loss of $3,800,000, or $0.10 loss per share 
      on a basic and diluted share basis, for the quarter ended April 30, 2008 
      as compared to a net loss of $1,372,000, or $0.05 per share on a basic 
      and diluted share basis, for the prior year period. The net loss of 
      $3,800,000 for the three months ended April 30, 2008 included expenses 
      of $1,008,000 for a severance expense attributable to the Company’s 
      former CEO and $273,000 for non-cash stock compensation issued to the 
      Company’s current CEO.
    
    
      Cygne and its bank 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 the 
      net (loss) to EBITDA is shown in the table below.
    
    
      
        
          
            Reconciliation of EBITDA
          
        
      
      
        
           
        
      
      
        
        
        
          Quarter Ended
        
        
        
      
      
        
        
        
          (In thousands)
        
        
        
      
      
        
        
        
          
            April 30,2008
          
        
        
           
        
        
           
        
        
          
            April 30,2007
          
        
        
        
      
      
        
          Net (loss)
        
        
          $
        
        
          (3,800
        
        
          
            )
          
        
        
          
             
          
        
        
          $
        
        
          (1,372
        
        
          )
        
      
      
        
          Depreciation and amortization of intangible assets
        
        
        
        
          35
        
        
        
        
        
        
        
        
          508
        
        
        
      
      
        
          Interest expense including amortization of the debt discount
        
        
        
        
          217
        
        
        
        
        
        
        
        
          957
        
        
        
      
      
        
          Provision for income taxes
        
        
           
        
        
          12
        
        
           
        
        
        
        
           
        
        
          480
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EBITDA
        
        
          $
        
        
          (3,536
        
        
          )
        
        
        
        
          $
        
        
          573
        
        
        
      
    
    
      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, 2008 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
          
          
            (in thousands, except per share data)
          
        
      
      
        
           
        
      
      
        
        
        
           
        
        
          Quarters Ended
        
        
        
      
      
        
        
        
        
        
          April 302008
        
        
           
        
        
          April 302007
        
        
        
      
      
        
          Net sales
        
        
        
        
          $
        
        
          15,282
        
        
        
        
        
        
          $
        
        
          20,863
        
        
        
      
      
        
          Cost of goods sold
        
        
        
        
           
        
        
          14,735
        
        
           
        
        
        
        
           
        
        
          16,690
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Gross profit
        
        
        
        
        
        
          547
        
        
        
        
        
        
        
        
          4,173
        
        
        
      
      
        
          Selling, general and administrative expenses
        
        
        
        
        
        
          4,143
        
        
        
        
        
        
        
        
          3,600
        
        
        
      
      
        
          Depreciation and amortization
        
        
        
        
           
        
        
          35
        
        
           
        
        
        
        
           
        
        
          508
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (Loss) Income from operations before interest and income taxes
        
        
        
        
        
        
          (3,631
        
        
          
            )
          
        
        
          
             
          
        
        
        
        
          65
        
        
        
      
      
        
          Interest expense
        
        
        
        
        
        
          217
        
        
        
        
        
        
        
        
          957
        
        
        
      
      
        
          Other (income)
        
        
        
        
        
        
          (60
        
        
          )
        
        
        
        
        
        
        
        
        
      
      
        
          (Loss) from operations before income taxes
        
        
        
        
        
        
          (3,788
        
        
          
            )
          
        
        
          
             
          
        
        
        
        
          (892
        
        
          )
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          12
        
        
           
        
        
        
        
           
        
        
          480
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (3,800
        
        
          
            )
          
        
        
          
             
          
        
        
          $
        
        
          (1,372
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss per share-basic and diluted
        
        
        
        
          $
        
        
          (0.10
        
        
          
            )
          
        
        
          
             
          
        
        
          $
        
        
          (0.05
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average common shares outstanding:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
           
        
        
          37,976
        
        
           
        
        
        
        
           
        
        
          26,462
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted
        
        
        
        
           
        
        
          37,976
        
        
           
        
        
        
        
           
        
        
          26,462