• In the first half of 2007 the Company had negative operating cash flow of $3.2 million compared to positive operating cash flow of $10.8 million in the first half of 2006.
CEO Comments on the Quarter results and State of the Business:
Mr. Aviram Lahav, Delta's CEO, stated, "The net and operating loss in the second quarter of the year are due to several factors including an exceptional decrease in the US Mass Market division's sales; our exit from sales of certain unprofitable product categories to customers in the US and in Europe; and the continued implementation of the restructuring plan including the transfer of production to Egypt."
"US Mass Market division sales decreased 14% in the second quarter compared to the second quarter of last year, primarily due to significantly lower sales to a major customer that had accumulated inventory and due to a decrease in that customer's sales during the quarter. This decline in sales impacted the operating profit in this division as well. We anticipate sales to this customer increasing in the second half of 2007."
"Second quarter sales in the Europe and US Intimate Apparel division decreased 30% from the comparable quarter last year. These goods are produced in Israel, Jordan, Egypt and Thailand. This decrease is primarily due to significantly lower sales to a major US customer that had accumulated inventory and due to a decrease in this customer's own sales, as well as our decision to exit certain unprofitable categories."
"Sales for this division were also affected by a decrease in sales to a major European customer as a result of price erosion and our exit from unprofitable categories. The operating loss in the Europe and US Intimate Apparel division resulted from the decreases in sales described above, as well as the transfer of this division's production from our facilities in Israel to Egypt, as part of the restructuring plan started in the beginning of the year."
"Sales and operating income in the Socks division for the second quarter were maintained at the same level as in the comparable quarter last year. Delta Marketing Israel, our domestic retail and wholesale activity reported consistently growing sales and operating income compared to the second quarter of last year."
"We continue to implement the restructuring plan and are working to reduce production in high cost sites, while transferring production into lower cost countries and reducing overhead. We believe that the completion of the restructuring plan will improve Delta's competitiveness and return us to profitability," concluded Mr. Lahav.
Delta Galil Industries Ltd
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