Attached files
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| 8-K - FORM 8-K - AMERICAN APPAREL, INC | aai_8k.htm |
Exhibit 99.1
AMERICAN APPAREL REPORTS FOURTH QUARTER AND FULL YEAR 2011 FINANCIAL RESULTS AND PROVIDES INITIAL OUTLOOK FOR 2012
LOS ANGELES--(BUSINESS WIRE) -- American Apparel, Inc. (NYSE Amex: APP), a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced its financial results for the fourth quarter and year ended December 31, 2011. The Company also provided guidance with respect to its expected 2012 performance.
Summary of Fourth Quarter 2011 Financial Performance (4Q 2011 vs. 4Q 2010)
Comparing the 2011 fourth quarter to the corresponding period last year, the Company reported that:
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Net sales increased 9% to $157.6 million on a 7% increase in comparable store sales, a 19% increase in online sales, a 6% increase in wholesale net sales and a 9% decrease in the average number of stores. In addition, total net sales increased as a result of extensive warehouse-type clearance sales conducted in the 2011 fourth quarter.
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Gross margin decreased to 53.2% from 55.6% due primarily to higher raw material and manufacturing overhead costs, the effect of lower margins on warehouse clearance sales and promotional activities. Partially offsetting these reductions were the impacts of reduced shrink and lower manufacturing direct labor expense.
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Operating expenses decreased $5.8 million driven by lower occupancy expenses as the result of fewer stores and lower professional fees.
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Cash generated from operating activities improved by $17.1 million to $12.2 million.
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Adjusted EBITDA improved by $9.6 million to $9.1 million from a previous year loss of $0.5 million.
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Net loss per share was $0.11 in 2011 vs. $0.27 in 2010.
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During the quarter the Company opened five retail stores and closed three to end the year with 249 stores worldwide.
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The existing senior credit facility due to mature in July 2012 was replaced with a new three year senior credit facility. In addition, the second lien loan due on December 31, 2013 was extended to December 31, 2015. Accordingly, after considering the refinancing and recent operating performance improvements, the Company has concluded that there no longer is substantial doubt about its ability to operate as a going concern.
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Summary of 2011 Financial Performance (2011 vs. 2010)
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Net sales increased 3% to $547.3 million on flat comparable store sales, a 17% increase in online sales, a 2% increase in wholesale net sales and a 9% decrease in the average number of stores. The quarter over quarter and full year changes in sales between 2011 and 2010 were as follows:
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Q1
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Q2
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Q3
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Q4
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2011
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Comparable Store Sales
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-8%
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0%
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2%
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7%
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0%
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Comparable Online Sales
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27%
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17%
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11%
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19%
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17%
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Comparable Store & Online Sales
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-5%
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1%
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3%
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8%
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2%
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Wholesale Net Sales
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-4%
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-4%
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10%
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6%
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2%
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Total Net Sales
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-5%
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0%
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5%
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9%
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3%
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Gross margin increased to 53.9% from 52.5% in 2010 due to significantly improved manufacturing efficiency. The manufacturing cost improvement was partially offset by an increase in yarn and fabric costs and unit cost increases associated with factory overhead due to lower production levels.
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Operating expenses decreased $11.8 million driven by lower occupancy expenses as the result of fewer stores and lower professional fees.
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Cash generated from operating activities was $2.3 million, an improvement of $34.7 million.
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Capital expenditures decreased $4.6 million to $11.1 million.
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Adjusted EBITDA increased by $24.1 million to $14.5 million from a previous year loss of $9.6 million.
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Net loss per share was $0.42 in 2011 vs. $1.21 in 2010.
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Dov Charney, Chairman and CEO of American Apparel commented, “We are pleased with our overall financial performance and significant operating improvements in 2011. This was an important transitional year for American Apparel, one in which we achieved the following significant accomplishments:
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Sequential improvements in our quarterly sales that resulted in an overall increase in total net sales despite a drop in the average number of stores in our portfolio. Net sales have also been strong in the first two months this year and comparable sales thus far in March are tracking in the +10% range. We improved timely delivery of goods to our stores, we noticeably improved product quality and assortment and we began a process to improve in store presentation.
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We aggressively began marketing to our imprintable wholesale customers and saw positive results. We introduced a new catalog, increased our direct marketing efforts and improved our product offering. So far in 2012 we are continuing to experience growth in the 20%+ range.
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We drove improvements in our manufacturing costs. Our sewing costs are near historic lows and we have been consistently performing this way since the second quarter of 2011.
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We began a process to reduce overall inventory levels and reduced our unit inventories by 7% in 2011.
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We delivered improvements in our distribution capability and have begun a process to drive an additional $3 to $5 million in future annual distribution savings.
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We closed 29 stores most of which were either underperforming or that did not fit our profile on a go-forward basis. This substantially completed our store rationalization program.
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We improved financial controls, added key personnel in our finance and accounting group and expect to eliminate our remaining material control weakness in 2012.
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Despite liquidity constraints, we invested in key processes and systems that will contribute to future sales and earnings growth. We now have RFID installed in 100 stores and continue to integrate our financial systems on a world-wide platform.
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With our refinancing in place our focus in 2012 is to continue to drive top line sales in all channels and achieve improved efficiency in operations. Our expectation is to deliver another year of solid improvement in EBITDA performance in 2012.”
Initial 2012 Outlook
For 2012, the Company is initially projecting adjusted EBITDA to be in the range of $32 million to $40 million. The outlook assumes net sales between $552 million and $559 million and a gross profit rate between 54.5% and 55.8%. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels. Capital expenditures are estimated at $15.9 million for the year with a modest number of new store openings.
Today’s Webcast
The Company will make available a webcast to review its fourth quarter and full year 2011 results and initial outlook for 2012. To access the call, go to the Events and Presentation section of the Investor Relations website at www.investors.americanapparel.net.
About American Apparel
American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of February 29, 2012, American Apparel had approximately 10,000 employees and operated 250 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. American Apparel also operates a leading wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://www.americanapparel.net.
Safe Harbor Statement
This press release, and other statements that the Company may make, may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and include statements regarding, among other things, the Company’s future financial condition, results of operations and plans and the Company’s prospects and strategies for future growth and cost savings. Such forward-looking statements are based upon the current beliefs and expectations of American Apparel’s management, but are subject to risks and uncertainties, which could cause actual results and/or the timing of events to differ materially from those set forth in the forward-looking statements, including, among others: the ability to generate sufficient liquidity for operations and debt service; changes in the level of consumer spending or preferences or demand for the Company’s products; increasing competition, both in the U.S. and internationally; the evolving nature of the Company’s business; the Company’s ability to hire and retain key personnel and the Company’s relationship with its employees; suitable store locations and the Company’s ability to attract customers to its stores; the availability of store locations at appropriate terms and the Company’s ability to identify and negotiate new store locations effectively and to open new stores and expand internationally; effectively carrying out and managing the Company’s strategy, including growth and expansion both in the U.S. and internationally; disruptions in the global financial markets; failure to maintain the value and image of the Company’s brand and protect its intellectual property rights; declines in comparable store sales and wholesale revenues; financial nonperformance by the Company’s wholesale customers; the adoption of new accounting pronouncements or changes in interpretations of accounting principles; seasonality of the business; consequences of the Company’s significant indebtedness, including the Company’s relationships with its lenders and the Company’s ability to comply with its debt agreements, including the risk of acceleration of borrowings thereunder as a result of noncompliance; the Company’s ability to generate cash flow to service its debt; the Company’s liquidity and losses from operations; the Company’s ability to develop and implement plans to improve its operations and financial position; costs of materials and labor, including increases in the price of yarn and the cost of certain related fabrics; the Company’s ability to pass on the added cost
of raw materials to its wholesale and retail customers; the Company’s ability to improve manufacturing efficiency at its production facilities; the Company’s ability to effectively manage inventory and inventory reserves; location of the Company’s facilities in the same geographic area; manufacturing, supply or distribution difficulties or disruptions; risks of financial nonperformance by customers; investigations, enforcement actions and litigation, including exposure from which could exceed expectations; compliance with or changes in U.S. and foreign government laws and regulations, legislation and regulatory environments, including environmental, immigration, labor and occupational health and safety laws and regulations; costs as a result of operating as a public company; material weaknesses in internal controls; interest rate and foreign currency risks; loss of U.S. import protections or changes in duties, tariffs and quotas and other risks associated with international business including disruption of markets and foreign supply sources and changes in import and export laws; technological changes in manufacturing, wholesaling, or retailing; the Company’s ability to upgrade its information technology infrastructure and other risks associated with the systems that are used to operate the Company’s online retail operations and manage the Company’s other operations; adverse changes in its credit ratings and any related impact on financing costs and structure; general economic and industry conditions, including U.S. and worldwide economic conditions; disruptions due to severe weather or climate change; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, including the Company’s Reports on Form 10-K and 10-Q. The Company’s filings with the SEC are available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
AMERICAN APPAREL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share amounts)
(unaudited)
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Three Months Ended December 31,
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Twelve Months Ended December 31,
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2011
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2010
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2011
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2010
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Net sales
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$ | 157,576 | $ | 143,969 | $ | 547,336 | $ | 532,989 | ||||||||
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Cost of sales
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73,731 | 63,870 | 252,436 | 253,080 | ||||||||||||
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Gross profit
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83,845 | 80,099 | 294,900 | 279,909 | ||||||||||||
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Operating expenses
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86,196 | 91,985 | 318,193 | 329,962 | ||||||||||||
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Loss from operations
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(2,351 | ) | (11,886 | ) | (23,293 | ) | (50,053 | ) | ||||||||
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Interest expense
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9,452 | 6,661 | 33,167 | 23,752 | ||||||||||||
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Foreign currency transaction loss (gain)
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899 | (66 | ) | 1,679 | (686 | ) | ||||||||||
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Unrealized (gain) loss on change in fair value of warrants and purchase rights
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(2,266 | ) | 369 | (23,467 | ) | 993 | ||||||||||
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Loss on extinguishment of debt
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- | - | 3,114 | - | ||||||||||||
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Other (income) expense
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47 | 275 | (193 | ) | 39 | |||||||||||
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Loss before income taxes
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(10,483 | ) | (19,125 | ) | (37,593 | ) | (74,151 | ) | ||||||||
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Income tax provision
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679 | 178 | 1,721 | 12,164 | ||||||||||||
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Net Loss
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(11,162 | ) | $ | (19,303 | ) | $ | (39,314 | ) | $ | (86,315 | ) | |||||
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Basic and diluted loss per share
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$ | (0.11 | ) | $ | (0.27 | ) | $ | (0.42 | ) | $ | (1.21 | ) | ||||
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Weighted average basic and diluted shares outstanding
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104,274 | 72,327 | 92,599 | 71,626 | ||||||||||||
AMERICAN APPAREL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(unaudited)
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December 31, 2011
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December 31, 2010
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ASSETS
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CURRENT ASSETS:
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Cash
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$ | 10,293 | $ | 7,656 | ||||
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Trade accounts receivable, net of allowances
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20,939 | 16,688 | ||||||
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Prepaid expenses and other current assets
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7,631 | 9,401 | ||||||
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Inventories, net
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185,764 | 178,052 | ||||||
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Income taxes receivable and prepaid income taxes
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5,955 | 4,114 | ||||||
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Deferred income taxes, net of valuation allowance
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148 | 626 | ||||||
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Total current assets
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230,730 | 216,537 | ||||||
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PROPERTY AND EQUIPMENT, net
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67,438 | 85,400 | ||||||
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DEFERRED INCOME TAXES, net of valuation allowance
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1,529 | 1,695 | ||||||
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OTHER ASSETS, net
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25,024 | 24,318 | ||||||
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TOTAL ASSETS
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$ | 324,721 | $ | 327,950 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY
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CURRENT LIABILITIES:
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Cash overdraft
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$ | 1,921 | $ | 3,328 | ||||
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Revolving credit facilities and current portion long-term debt, net of unamortized discount
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50,375 | 138,478 | ||||||
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Accounts payable
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33,920 | 31,534 | ||||||
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Accrued expenses and other current liabilities
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43,725 | 39,028 | ||||||
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Fair value of warrants
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9,633 | 993 | ||||||
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Income taxes payable
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2,445 | 230 | ||||||
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Deferred income tax liability, current
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150 | - | ||||||
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Current portion of capital lease obligations
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1,181 | 560 | ||||||
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Total current liabilities
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143,350 | 214,151 | ||||||
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LONG-TERM DEBT, net of unamortized discount
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97,142 | 444 | ||||||
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SUBORDINATED NOTES PAYABLE TO RELATED PARTY
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- | 4,611 | ||||||
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CAPITAL LEASE OBLIGATIONS, net of current portion
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1,726 | 542 | ||||||
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DEFERRED TAX LIABILITY
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96 | 260 | ||||||
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DEFERRED RENT
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22,231 | 24,924 | ||||||
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OTHER LONG-TERM LIABILITIES
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12,046 | 7,994 | ||||||
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TOTAL LIABILITIES
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276,591 | 252,926 | ||||||
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STOCKHOLDERS' EQUITY
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Common stock
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11 | 8 | ||||||
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Additional paid-in capital
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166,486 | 153,881 | ||||||
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Accumulated other comprehensive loss
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(3,356 | ) | (3,168 | ) | ||||
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Accumulated deficit
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(112,854 | ) | (73,540 | ) | ||||
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Less: Treasury Stock, 304 shares at cost
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(2,157 | ) | (2,157 | ) | ||||
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TOTAL STOCKHOLDERS' EQUITY
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48,130 | 75,024 | ||||||
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TOTAL LIABIILTIES AND STOCKHOLDERS' EQUITY
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$ | 324,721 | $ | 327,950 | ||||
AMERICAN APPAREL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
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Twelve Months Ended December 31
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2011
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2010
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CASHFLOWS FROM OPERATING ACTIVITIES
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Cash received from customers
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$ | 542,930 | $ | 532,601 | ||||
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Cash paid to suppliers, employees and others
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(534,497 | ) | (559,386 | ) | ||||
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Income taxes (paid) refunds
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(866 | ) | 698 | |||||
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Interest paid
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(5,535 | ) | (6,456 | ) | ||||
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Other
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273 | 173 | ||||||
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Net cash provided by (used in) operating activities
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2,305 | (32,370 | ) | |||||
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CASH FLOWS USED IN INVESTING ACTIVITIES
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Capital expenditures
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(11,070 | ) | (15,701 | ) | ||||
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Proceeds from sale of fixed assets
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311 | 39 | ||||||
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Net cash used in investing activities
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(10,759 | ) | (15,662 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Cash overdraft
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(1,407 | ) | (404 | ) | ||||
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(Repayments) borrowings under revolving credit facilities, net
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(6,874 | ) | 50,852 | |||||
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Net proceeds from issuance of common stock and sale of treasury stock
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21,710 | 1,650 | ||||||
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Payroll withholding tax payments associated with issuance of common stock to employees
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(759 | ) | (2,051 | ) | ||||
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Payment of debt issuance costs
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(1,881 | ) | - | |||||
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Repayment of term loans and notes payable
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(13 | ) | (15 | ) | ||||
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Proceeds from capital lease financing
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3,100 | - | ||||||
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Repayment of capital lease obligations
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(1,294 | ) | (1,860 | ) | ||||
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Net cash provided by financing activities
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12,582 | 48,172 | ||||||
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EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH
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(1,491 | ) | (1,530 | ) | ||||
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NET INCREASE (DECREASE) IN CASH
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2,637 | (1,390 | ) | |||||
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CASH, beginning of period
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7,656 | 9,046 | ||||||
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CASH, end of period
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$ | 10,293 | $ | 7,656 | ||||
AMERICAN APPAREL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
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Twelve Months Ended December 31
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2011
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2010
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RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
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Net (loss) income
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$ | (39,314 | ) | $ | (86,315 | ) | ||
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Depreciation and amortization of property and equipment and other assets
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24,980 | 28,130 | ||||||
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Retail store impairment charges
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4,267 | 8,597 | ||||||
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Loss on disposal of property and equipment
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80 | 212 | ||||||
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Stock-based compensation expense
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6,814 | 3,719 | ||||||
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Unrealized (gain) loss on change in fair value of warrants and purchase rights
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(23,467 | ) | 993 | |||||
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Amortization of debt discount and deferred financing costs
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9,024 | 5,997 | ||||||
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Loss on extinguishment of debt
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3,114 | - | ||||||
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Accrued interest - paid in kind
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18,711 | 11,299 | ||||||
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Foreign currency transaction loss (gain)
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1,679 | (686 | ) | |||||
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Allowance for inventory shrinkage and obsolescence
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(1,652 | ) | 1,051 | |||||
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Bad debt expense
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996 | 1,357 | ||||||
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Deferred income taxes
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701 | 14,789 | ||||||
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Deferred rent
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(1,969 | ) | 2,963 | |||||
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Changes in cash due to changes in operating assets and liabilities
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Trade accounts receivables
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(5,402 | ) | (1,746 | ) | ||||
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Inventories
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(6,771 | ) | (37,239 | ) | ||||
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Prepaid expenses and other current assets
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1,770 | 624 | ||||||
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Other assets
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(5,075 | ) | (629 | ) | ||||
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Accounts payable
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3,944 | 10,057 | ||||||
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Accrued expenses and other liabilities
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9,701 | 3,668 | ||||||
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Income taxes (receivable)/payable
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174 | 789 | ||||||
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Net cash used in operating activities
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$ | 2,305 | $ | (32,370 | ) | |||
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NON-CASH INVESTING AND FINANCING ACTIVITIES
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Conversion of debt to equity
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Property and equipment acquired and included in accounts payable
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$ | 4,688 | $ | - | ||||
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Reclassification of Lion warrants from equity to debt
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$ | 1,559 | $ | 2,735 | ||||
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Issuance and exercise of warrants and purchase rights
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$ | 11,339 | $ | - | ||||
| $ | 9,244 | $ | - | |||||
AMERICAN APPAREL, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Amounts in thousands)
(unaudited)
The following table presents key financial information for American Apparel's business segments before unallocated corporate expenses:
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Three Months Ended December 31, 2011
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U.S. Wholesale
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U.S. Retail
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Canada
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International
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Consolidated
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Net sales to external customers
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$ | 41,261 | $ | 54,354 | $ | 19,609 | $ | 42,352 | $ | 157,576 | ||||||||||
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Gross profit
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12,082 | 35,197 | 10,336 | 26,230 | 83,845 | |||||||||||||||
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Income (loss) from segment operations
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6,403 | 2,468 | (1,741 | ) | 816 | 7,946 | ||||||||||||||
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Depreciation and amortization
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1,742 | 2,605 | 321 | 1,203 | 5,871 | |||||||||||||||
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Capital expenditures
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1,459 | 1,041 | 198 | 1,088 | 3,786 | |||||||||||||||
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Retail store impairment charges
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- | 262 | 166 | 1,403 | 1,831 | |||||||||||||||
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Deferred rent expense (benefit)
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46 | (321 | ) | (44 | ) | 212 | (107 | ) | ||||||||||||
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Three Months Ended December 31, 2010
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U.S. Wholesale
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U.S. Retail
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Canada
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International
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Consolidated
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Net sales to external customers
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$ | 37,558 | $ | 50,276 | $ | 18,780 | $ | 37,355 | $ | 143,969 | ||||||||||
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Gross profit
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11,943 | 32,300 | 12,659 | 23,197 | 80,099 | |||||||||||||||
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Income (loss) from segment operations
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8,779 | (4,663 | ) | 1,943 | (1,906 | ) | 4,153 | |||||||||||||
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Depreciation and amortization
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2,313 | 2,695 | 506 | 1,498 | 7,012 | |||||||||||||||
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Capital expenditures
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800 | 2,612 | 380 | 593 | 4,385 | |||||||||||||||
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Retail store impairment charges
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- | 1,525 | 598 | 301 | 2,424 | |||||||||||||||
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Deferred rent expense (benefit)
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90 | 25 | (61 | ) | 473 | 527 | ||||||||||||||
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Twelve Months Ended December 31, 2011
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U.S. Wholesale
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U.S. Retail
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Canada
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International
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Consolidated
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Net sales to external customers
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$ | 156,454 | $ | 174,837 | $ | 61,865 | $ | 154,180 | $ | 547,336 | ||||||||||
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Gross profit
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42,599 | 117,228 | 35,799 | 99,274 | 294,900 | |||||||||||||||
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Income (loss) from segment operations
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22,406 | (4,659 | ) | (3,695 | ) | 8,434 | 22,486 | |||||||||||||
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Depreciation and amortization
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7,757 | 10,492 | 1,567 | 5,164 | 24,980 | |||||||||||||||
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Capital expenditures
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3,638 | 4,889 | 407 | 2,136 | 11,070 | |||||||||||||||
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Retail store impairment charges
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- | 558 | 808 | 2,901 | 4,267 | |||||||||||||||
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Deferred rent expense (benefit)
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257 | (1,662 | ) | (121 | ) | (443 | ) | (1,969 | ) | |||||||||||
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Twelve Months Ended December 31, 2010
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U.S. Wholesale
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U.S. Retail
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Canada
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International
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Consolidated
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Net sales to external customers
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$ | 148,997 | $ | 177,610 | $ | 65,638 | $ | 140,744 | $ | 532,989 | ||||||||||
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Gross profit
|
32,007 | 117,496 | 43,309 | 87,097 | 279,909 | |||||||||||||||
|
Income (loss) from segment operations
|
11,200 | (18,455 | ) | 5,051 | (5,064 | ) | (7,268 | ) | ||||||||||||
|
Depreciation and amortization
|
9,282 | 10,484 | 2,170 | 6,194 | 28,130 | |||||||||||||||
|
Capital expenditures
|
4,696 | 7,584 | 1,456 | 1,965 | 15,701 | |||||||||||||||
|
Retail store impairment charges
|
- | 4,366 | 1,348 | 2,883 | 8,597 | |||||||||||||||
|
Deferred rent expense (benefit)
|
431 | 1,437 | (152 | ) | 1,247 | 2,963 | ||||||||||||||
AMERICAN APPAREL, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Amounts in thousands)
(unaudited)
|
Three Months Ended December 31,
|
Twelve Months Ended December 31,
|
|||||||||||||||
|
Reconciliation to loss before Income Taxes
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
|
Income (loss) from segment operations
|
$ | 7,946 | $ | 4,153 | $ | 22,486 | $ | (7,268 | ) | |||||||
|
Unallocated corporate expenses
|
(10,297 | ) | (16,039 | ) | (45,779 | ) | (42,785 | ) | ||||||||
|
Interest expense
|
(9,452 | ) | (6,661 | ) | (33,167 | ) | (23,752 | ) | ||||||||
|
Unrealized gain (loss) on warrants and purchase rights
|
2,266 | (369 | ) | 23,467 | (993 | ) | ||||||||||
|
Loss on extinguishment of debt
|
- | - | (3,114 | ) | - | |||||||||||
|
Foreign currency transaction (loss) gain
|
(899 | ) | 66 | (1,679 | ) | 686 | ||||||||||
|
Other (expense) income
|
(47 | ) | (275 | ) | 193 | (39 | ) | |||||||||
|
Consolidated loss before income taxes
|
$ | (10,483 | ) | $ | (19,125 | ) | $ | (37,593 | ) | $ | (74,151 | ) | ||||
|
Three Months Ended December 31,
|
Twelve Months Ended December 31,
|
|||||||||||||||
|
Net sales to external customers
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
|
U.S. Wholesale
|
||||||||||||||||
|
Wholesale
|
$ | 33,296 | $ | 30,334 | $ | 132,135 | $ | 127,749 | ||||||||
|
Online consumer
|
7,965 | 7,224 | 24,319 | 21,248 | ||||||||||||
|
Total
|
$ | 41,261 | $ | 37,558 | $ | 156,454 | $ | 148,997 | ||||||||
|
U.S. Retail
|
$ | 54,354 | $ | 50,276 | $ | 174,837 | $ | 177,610 | ||||||||
|
Canada
|
||||||||||||||||
|
Wholesale
|
$ | 2,222 | $ | 2,939 | $ | 11,492 | $ | 11,915 | ||||||||
|
Retail
|
16,839 | 15,321 | 48,527 | 51,969 | ||||||||||||
|
Online consumer
|
548 | 520 | 1,846 | 1,754 | ||||||||||||
|
Total
|
$ | 19,609 | $ | 18,780 | $ | 61,865 | $ | 65,638 | ||||||||
|
International
|
||||||||||||||||
|
Wholesale
|
$ | 2,927 | $ | 2,905 | $ | 10,406 | $ | 11,474 | ||||||||
|
Retail
|
34,810 | 31,291 | 126,868 | 116,800 | ||||||||||||
|
Online consumer
|
4,615 | 3,159 | 16,906 | 12,470 | ||||||||||||
|
Total
|
$ | 42,352 | $ | 37,355 | $ | 154,180 | $ | 140,744 | ||||||||
|
Consolidated
|
||||||||||||||||
|
Wholesale
|
$ | 38,445 | $ | 36,177 | $ | 154,033 | $ | 151,138 | ||||||||
|
Retail
|
106,003 | 96,888 | 350,232 | 346,379 | ||||||||||||
|
Online consumer
|
13,128 | 10,903 | 43,071 | 35,472 | ||||||||||||
|
Total
|
$ | 157,576 | $ | 143,969 | $ | 547,336 | $ | 532,989 | ||||||||
Table A
American Apparel, Inc. and Subsidiaries
Calculation and Reconciliation of Consolidated Adjusted EBITDA
(Amounts in thousands)
(unaudited)
In addition to its GAAP results, American Apparel considers non-GAAP measures of its performance. EBITDA, as defined below, is an important supplemental financial measure of American Apparel's performance that is not required by, or presented in accordance with, GAAP. EBITDA represents net income (loss) before income taxes, interest and other expense (income), and depreciation and amortization. American Apparel's management uses EBITDA as a financial measure to assess the ability of its assets to generate cash sufficient to pay interest on its indebtedness, meet capital expenditure and working capital requirements, pay taxes, and otherwise meet its obligations as they become due. American Apparel's management believes that the presentation of EBITDA provides useful information regarding American Apparel's results of operations because they assist in analyzing and benchmarking the performance and value of American Apparel's business. American Apparel believes that EBITDA is useful to stockholders as a measure of comparative operating performance, as it is less susceptible to variances in actual performance resulting from depreciation and amortization and more reflective of changes in pricing decisions, cost controls and other factors that affect operating performance. EBITDA also is used by American Apparel's management for multiple purposes, including:
|
·
|
to calculate and support various coverage ratios with American Apparel's lenders
|
|
|
·
|
to allow lenders to calculate total proceeds they are willing to loan to American Apparel based on its relative strength compared to its competitors
|
|
|
·
|
to more accurately compare American Apparel's operating performance from period to period and company to company by eliminating differences caused by variations in capital structures (which affect relative interest expense), tax positions and amortization of intangibles.
|
In addition, EBITDA is an important valuation tool used by potential investors when assessing the relative performance of American Apparel in comparison to other companies in the same industry. Although American Apparel uses EBITDA as a financial measure to assess the performance of its business, there are material limitations to using a measure such as EBITDA, including the difficulty associated with using it as the sole measure to compare the results of one company to another and the inability to analyze significant items that directly affect a company's net income (loss) or operating income because it does not include certain material costs, such as interest and taxes, necessary to operate its business. In addition, American Apparel's calculation of EBITDA may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measures that are computed in accordance with GAAP. American Apparel's management compensates for these limitations in considering EBITDA in conjunction with its analysis of other GAAP financial measures, such as net income (loss).
Table A (continued)
American Apparel Inc. and Subsidiaries
Calculation and Reconciliation of Consolidated Adjusted EBITDA
(Amounts in thousands)
(unaudited)
|
Three Months Ended December 31,
|
Twelve Months Ended December 31,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Net Loss
|
$ | (11,162 | ) | $ | (19,303 | ) | $ | (39,314 | ) | $ | (86,315 | ) | ||||
|
Incometaxprovision
|
679 | 178 | 1,721 | 12,164 | ||||||||||||
|
Interestandotherexpense,net
|
7,233 | 7,305 | 12,621 | 24,784 | ||||||||||||
|
Depreciationandamortization
|
5,871 | 7,012 | 24,980 | 28,130 | ||||||||||||
|
Foreigncurrencyloss(gain)
|
899 | (66 | ) | 1,679 | (686 | ) | ||||||||||
|
Retailstoreimpairmentcharges
|
1,831 | 2,424 | 4,267 | 8,597 | ||||||||||||
|
Stockbasedcompensationexpense
|
2,276 | 1,956 | 6,814 | 3,719 | ||||||||||||
|
Severance
|
1,477 | - | 1,696 | - | ||||||||||||
|
Consolidated Adjusted EBITDA
|
$ | 9,104 | $ | (494 | ) | $ | 14,464 | $ | (9,607 | ) | ||||||
The following table reflects the forecasted guidance range for 2012 for adjusted EBITDA and reconciles such adjusted EBITDA guidance to Net Loss:
|
Twelve Months Ended December 31, 2012
|
||||||||
|
Low End Range
|
High End Range
|
|||||||
|
Net Loss
|
$ | (32,000 | ) | $ | (24,000 | ) | ||
|
Income tax provision
|
2,000 | 2,000 | ||||||
|
Interest and other expense, net
|
37,000 | 37,000 | ||||||
|
Depreciation and amortization
|
23,000 | 23,000 | ||||||
|
Stock based compensation expense
|
2,000 | 2,000 | ||||||
|
Consolidated Adjusted EBITDA
|
$ | 32,000 | $ | 40,000 | ||||