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Warnaco Q1 profit declines on restructuring expenses

13
May '08
Swimwear - Swimwear Group revenues were $107.2 million, a 5% decline compared to the prior year period, and operating income decreased to $14.8 million, or 14% of Swimwear Group net revenues. Calvin Klein swim revenues were sharply higher, driven by strong European demand. Speedo(R) revenues were flat while Speedo operating income was down. Speedo operating income was adversely affected by restructuring expense and the timing of certain manufacturing variances which favorably affected the prior year period.

Balance Sheet - Cash and cash equivalents at April 5, 2008 rose to $138.0 million from $105.2 million at March 31, 2007. During the quarter, the Company used approximately $44 million in proceeds from the previously announced sale of Lejaby to reduce the principal amount of the Company's outstanding 8 7/8% Senior Notes due 2013. Net inventories were $321.0 million at April 5, 2008, down from $380.9 million at March 31, 2007, primarily as a result of discontinued operations, and appropriate for the Company's needs to service its ongoing business.

"While our reported results include restructuring expenses (primarily related to our previously announced transfer of the Calvin Klein Collection business) as well as a substantially non-cash tax charge of $19.5 million associated with the repatriation of the proceeds from the sale of Lejaby, our as adjusted results exceeded our expectations and are reflected in our updated adjusted guidance," commented Larry Rutkowski, Warnaco's Executive Vice President and Chief Financial Officer.

The Warnaco Group Inc


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