CARLSBAD, Calif., May 19 /PRNewswire-FirstCall/ -- Phoenix Footwear
Group, Inc. (NYSE Alternext US: PXG) today reported its results of
operations for the first quarter of fiscal 2009. For the first
fiscal quarter ended April 4, 2009, the Company reported net sales
from continuing operations of $6.1 million, down 35% compared to
net sales from continuing operations of $9.4 million during the
quarter ended March 29, 2008. The Company recorded a loss from
continuing operations during the first quarter of $2.7 million, or
$0.33 per share, compared to a loss of $500,000, or $0.05 per
share, for the first quarter of fiscal 2008. Included in the
Company's first quarter loss for 2009 are severance charges
totaling $1.0 million. During the first quarter of fiscal 2008, the
Company recorded other income of $750,000 related to its
divestiture of Altama Delta Corporation. The loss from discontinued
operations totaled $241,000 for the quarter ended April 4, 2009
compared to earnings of $199,000 for the quarter ended March 29,
2008. Included in discontinued operations are the Company's Tommy
Bahama business unit and Chambers Belt Company. As previously
reported, on February 24, 2009, the Company entered into an
Amendment to its License Agreement with Tommy Bahama that amended
and terminated the License. In connection with ceasing the Tommy
Bahama business operations, the Company has sold its entire Tommy
Bahama product inventory and eliminated all related staff
positions. In the first quarter of fiscal 2009, the Company
incurred $286,000 of severance charges. All but $38,000 of cash
expenditures relating to employee severance costs incurred as of
April 4, 2009 are expected to be paid by the end of fiscal 2009. In
addition, the Company recorded non-cash charges in the first
quarter of fiscal 2009 of $363,000 of inventory and other
write-offs and $36,000 of fixed assets and intangible impairment
charges. Also, as previously reported on April 23, 2009, Chambers
Belt Company (Chambers), a wholly owned subsidiary of the Company,
entered into an Asset Purchase Agreement with Tandy Brands
Accessories, Inc. (Tandy). Subject to the terms and conditions of
the Asset Purchase Agreement, at closing, Tandy will purchase
Chambers' manufacturing equipment, certain inventory at cost,
certain intellectual property and customer relationships, and
provide for payment at closing of the inventory costs, an
additional $500,000 and a $430,000 advance payment against the
earn-out payments which will be due. The earn-out payments will be
made on a monthly basis based on actual revenue and will equal
21.5% of the revenue of the acquired business during the first 12
months following closing, subject to a $2 million minimum. The sale
of assets does not include the Company's accounts receivable, or
Wrangler mass license or cash on hand. This transaction is expected
to close during the second quarter. The net proceeds of these two
transactions together with the monetization and collection of
Chambers' receivables following the closing and the collection of
the earn-out payments, when fully collected, are expected to
generate net cash in excess of $14 million, which would allow the
Company to repay its bank indebtedness. The Company's funded bank
debt totaled $7.9 million as of May 16, 2009 down from $13.1
million as of April 4, 2009. The Company continues to be in default
under its revolving line of credit and is seeking amendments and
waivers as well as increased borrowing availability. However, there
is no assurance that the Company will obtain either. Commenting,
CEO Rusty Hall said, "The first quarter marked a continuation of an
extraordinarily challenging retail environment. Our focus has been
on taking significant actions to ensure we have both a capital
structure and cost structure that allows us to exit this downturn
as a viable and healthy enterprise. Towards that end, we have made
very measurable progress; the benefits of which will be visible in
the upcoming quarters." About Phoenix Footwear Group, Inc. Phoenix
Footwear Group, Inc., headquartered in Carlsbad, California,
designs, develops and markets men's and women's footwear and
accessories. Phoenix Footwear's brands include Trotters (R),
SoftWalk (R), H.S. Trask (R) and it is a licensee of the Wrangler
brand. Emphasizing quality, fit and traditional and authentic
designs, these brands are primarily sold through department stores,
specialty retailers, mass merchants and catalogs. Phoenix Footwear
Group, Inc. is traded on the NYSE Alternext US under the symbol
PXG. Forward-Looking Statements The words "anticipates," "will,"
"expects," "intends" and words of similar meaning identify
forward-looking statements. Forward-looking statements also include
representations of the Company's expectations or beliefs concerning
future events that involve risks and uncertainties, including the
Company's statements regarding the Chambers sale transaction, the
expected closing and timing of that transaction and the expected
net proceeds from that transaction and the monetization of
Chambers' working capital and the repayment of the Company's debt
and other risks detailed in the Company's periodic report filings
with the Securities and Exchange Commission. The potential risks
and uncertainties include, among others, the possibility that a
Chambers transaction is not successfully concluded, or the
unexpected liabilities related to the disposition arise or the
transactions do not yield the anticipated proceeds. The
forward-looking statements speak only as of the date of this press
release, and the Company expressly disclaims any obligation to
release publicly any update or revision to any forward-looking
statement contained herein if there are changes in the Company's
expectations or if any events, conditions or circumstances on which
any such forward-looking statement is based. This press release
contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. These
forward-looking statements include, but are not limited to,
statements regarding future growth and performance of individual
brands, Phoenix Footwear's expected financial performance and
condition for fiscal 2009 and/or statements preceded by, followed
by or that include the words "believes," "could," "expects,"
"anticipates," "estimates," "intends," "plans," "projects,"
"seeks," "exploring, " or similar expressions. Many of these risks
and uncertainties are discussed in Phoenix Footwear's Annual Report
on Form 10-K for the fiscal year ended January 3, 2009 filed with
the Securities and Exchange Commission (the "SEC"), and in any
subsequent reports filed with the SEC, all of which are available
at the SEC's website at http://www.sec.gov/. These include, without
limitation: Phoenix Footwear's ability to obtain a replacement bank
facility or waiver of defaults and amendments to its defaulted
secured credit arrangement and the attendant risk of increased
costs or stockholder dilution from refinancing the defaulted debt
or foreclosure on the Company's assets if a waiver/amendment is not
obtained or the debt is not refinanced; the risk that Phoenix
Footwear will not be able to continue as a going concern; Phoenix
Footwear's ability to return to profitability despite its
restructuring efforts and debt reduction; risk associated with the
recent disruptions in the overall economy and the impact on the
retail industry, including Phoenix Footwear's customers; risk
associated with Phoenix's accessories business; the concentration
of Phoenix Footwear's sales to a relatively small group of
customers; changing consumer preferences and fashion trends;
Phoenix's ability to execute on its growth strategies, including
the introduction of new products or the distribution of products
through new channels; competition from other companies in Phoenix
Footwear's markets; the potential financial instability of Phoenix
Footwear's customers and the risk of loss of future and pending
orders; Phoenix Footwear's ability to protect its intellectual
property rights; the risk of losing third party trademark licenses;
Phoenix Footwear's ability to manage inventory levels; fluctuations
in its financial results as a result of the seasonality in its
business; the risks of doing business in international markets;
Phoenix Footwear's reliance on independent manufacturers, including
those to whom the Company may be past-due; disruptions in Phoenix
Footwear's manufacturing system; the loss of one or more senior
executives; fluctuations in the price, availability and quality of
raw materials; a decline in general market and economic conditions;
and, risk associated with claims arising from divestiture
transactions, including indemnification claims. Although Phoenix
Footwear believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of
the assumptions could be inaccurate, and therefore, there can be no
assurance that the forward-looking statements included in this
press release will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information
should not be regarded as a representation by Phoenix Footwear or
any other person that the objectives and plans of Phoenix Footwear
will be achieved. All forward-looking statements included in this
press release are based on Phoenix Footwear's current expectations
and projections about future events, based on information available
at the time of the release, and Phoenix Footwear assumes no
obligation to update any forward-looking statements. Phoenix
Footwear Group, Inc. Consolidated Condensed Balance Sheets (In
thousands) As of As of April 4, January 3, 2009 2009 ASSETS Current
assets: Cash and cash equivalents $354 $456 Accounts receivable,
net 3,984 3,153 Inventories, net 8,617 9,503 Other current assets
1,021 916 Income taxes receivable 330 302 Current assets of
discontinued operations 14,389 16,615 Total current assets 28,695
30,945 Property, plant & equipment, net 1,206 1,290 Other
assets 78 93 Long-term assets of discontinued operations 723 821
TOTAL ASSETS $30,702 $33,149 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Notes payable, current $13,059 $11,173
Accounts payable 2,615 1,887 Accrued expenses 2,315 1,557 Other
current liabilities 21 155 Income taxes payable 8 78 Current
liabilities of discontinued operations 3,917 6,406 Total current
liabilities 21,935 21,256 Other long-term liabilities 377 382
Long-term liabilities of discontinued operations - 149 Total
liabilities 22,312 21,787 Stockholders' equity 8,390 11,362 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $30,702 $33,149 Phoenix
Footwear Group, Inc. Consolidated Condensed Statements of
Operations (In thousands, except per share data) For the Three
Months Ended (Unaudited) April 4, March 29, 2009 2008 Net sales
$6,091 100.0% $9,440 100.0% Cost of goods sold 4,024 66.1% 5,503
58.3% Gross profit 2,067 33.9% 3,937 41.7% Operating expenses:
Selling, general and administrative expenses 3,782 62.1% 5,038
53.4% Other (income) expense, net 1,018 16.7% (750) -% Total
operating expenses 4,800 78.8% 4,288 45.4% Operating Loss (2,733)
-44.9% (351) -3.7% Interest expense, net 16 111 Loss before income
taxes and discontinued operations (2,749) -45.1% (462) -4.9% Income
tax provision (benefit) (28) 17 Loss before discontinued operations
(2,721) -44.7% (479) -5.1% (Loss) earnings from discontinued
operations, net of tax (241) -4.0% 199 2.1% Net loss $(2,962)
-48.6% $(280) -3.0% Loss per share: Basic and diluted Continuing
operations $(0.33) $(0.05) Discontinued operations (0.03) 0.02 Net
loss $(0.36) $(0.03) Weighted-average shares outstanding: Basic and
diluted 8,166 8,077 DATASOURCE: Phoenix Footwear Group, Inc.
CONTACT: Dennis Nelson, Chief Financial Officer of Phoenix Footwear
Group, Inc., +1-760-602-9688 Web Site:
http://www.phoenixfootwear.com/
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