CARLSBAD, Calif., Nov. 16 /PRNewswire-FirstCall/ -- Phoenix
Footwear Group, Inc. (NYSE Amex: PXG) today reported its final
results of operations for the third quarter of fiscal 2009. The
Company previously announced a preliminary net profit of $310,000
for the third quarter. Final net profit was $60,000, reflecting an
additional charge arising solely from closing transaction costs
relating to the Company's divestiture of certain discontinued
operations. -- Net profit of $60,000, or $0.01 per share, compared
to a net loss of $2.1 million for the third quarter of fiscal 2008.
-- A loss from continuing operations during the third quarter of
$1.0 million, or $0.12 per share. Included in this loss is $303,000
in amortized financing exit fees, $180,000 of payroll related
expenses for terminated employees, and $115,000 of financial
consulting and other fees. This loss compares to a loss from
continuing operations of $1.3 million for the third quarter of
fiscal 2008. -- Net sales from continuing operations during the
third quarter of $5.5 million, down 32% compared to net sales from
continuing operations of $8.0 million during the third quarter of
fiscal 2008. -- Funded bank debt balance of $2.6 million at the
close of the third quarter, which is a reduction of $5.4 million
from the close of the second fiscal quarter of 2009. Banking Update
On November 5, 2009 the Company and Wells Fargo Bank, National
Association entered into a Fifth Amendment to Credit and Security
Agreement. Under the terms of this Amendment, the existing credit
agreement was changed by, among other things, decreasing the
inventory sublimit of the borrowing base to $2.1 million and
resetting the percentage of Eligible Inventory included in the
borrowing base to 41% and eliminating the one percent (1%) daily
reductions included in the previous amendment. As of November 11,
2009, the Company had $2.6 million outstanding under the Credit
Agreement with remaining availability of $257,000. The Company is
engaged in discussions with several different financing sources
concerning the refinancing of the revolving line of credit debt on
or before November 30, 2009. The description of the agreements
above is qualified in its entirety by reference to the full text of
the applicable agreements, copies of which will be attached as an
exhibit to the Company's Quarterly Report on Form 10-Q for the
period ended October 3, 2009. Liquidity Update Recently the Worker,
Homeownership and Business Assistance Act of 2009 (the Act) was
enacted. The Act provides for an election for federal taxpayers to
increase the carry back period for an applicable net operating loss
to 3, 4 or 5 years. Accordingly, the Company is applying for a
refund of approximately $2.0 million with the Internal Revenue
Service. The Company expects to receive these funds in the next 45
days, which will be applied to increase the Company's liquidity and
working capital. NYSE Amex Notice Update On October 9, 2009, the
Company received a notice from the NYSE Amex LLC (NYSE Amex),
indicating that as of its quarter ended July 4, 2009, the Company
failed to meet one of the continued listing standards of the NYSE
Amex. Specifically, the letter stated that the Company is not in
compliance with Section 1003(a)(ii) of the NYSE Amex Company Guide,
with stockholders' equity of less than $4,000,000 and losses from
continuing operations and/or net losses in three of its four most
recent fiscal years. On November 9, 2009, the Company submitted a
plan to the NYSE Amex addressing how it intends to regain
compliance with this continued listing standard by April 11, 2011.
The plan must be approved by the NYSE Amex in order for the Company
to maintain its listing. The policy of the NYSE Amex is to make a
determination within 45 days of a company's submission of a plan
for compliance as to whether the company has made reasonable
demonstration in the plan of an ability to regain compliance with
the continued listing standards within the requisite time frame.
The NYSE Amex may either accept the plan, at which time the Company
will be subject to ongoing monitoring for compliance with the plan,
or not accept the plan and initiate delisting proceedings. There
can be no assurance that the NYSE Amex will accept any plan that
the Company submits or that, if it does accept any such plan, the
NYSE Amex will not subsequently initiate delisting proceedings as a
result of the NYSE Amex's compliance monitoring with respect to
that plan or otherwise. 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®, SoftWalk®
and H.S. Trask®. 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 Amex
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
Company's ability to repay its bank debt in a timely manner, obtain
an extension of the forbearance agreement by Wells Fargo,
successfully regain compliance with the NYSE Amex listing standards
and other risks detailed in the Company's periodic report filings
with the Securities and Exchange Commission. 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 refinance its existing
bank facility in a timely manner, obtain an extension of the Wells
Fargo forbearance agreement, obtain waiver of future defaults and
amendments to its 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 could be delisted from the NYSE Amex;
the risk that Phoenix Footwear will not be able to continue as a
going concern; Phoenix Footwear's ability to sustain its 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 (Unaudited) (In thousands) As of As of October 3,
January 3, 2009 2009 ---- ---- ASSETS Current assets: Cash and cash
equivalents $207 $456 Accounts receivable, net 3,829 3,153
Inventories, net 6,016 9,503 Other current assets 1,687 916 Income
taxes receivable 245 302 Current assets of discontinued operations
171 16,615 --- ------ Total current assets 12,155 30,945 Property,
plant & equipment, net 1,087 1,290 Other assets - 93 Long-term
assets of discontinued operations - 821 --- --- TOTAL ASSETS
$13,242 $33,149 ======= ======= LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Notes payable, current $2,573 $11,173
Accounts payable 2,441 1,887 Accrued expenses 1,522 1,557 Other
current liabilities 22 155 Income taxes payable 5 78 Current
liabilities of discontinued operations 2,870 6,406 ----- -----
Total current liabilities 9,433 21,256 Other long-term liabilities
378 382 Long-term liabilities of discontinued operations - 149 ---
--- Total liabilities 9,811 21,787 Stockholders' equity 3,431
11,362 ----- ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$13,242 $33,149 ======= ======= Phoenix Footwear Group, Inc.
Consolidated Condensed Statements of Operations (Unaudited) (In
thousands, except per share data) For the Three Months Ended
October 3, September 27, 2009 2008 ---- ---- Net sales $5,453
100.0% $8,028 100.0% Cost of goods sold 3,536 64.8% 4,567 56.9%
----- ----- Gross profit 1,917 35.2% 3,461 43.1% Operating
expenses: Selling, general and administrative expenses 2,621 48.1%
4,722 58.8% ----- ----- Total operating expenses 2,621 48.1% 4,722
58.8% ----- ----- Operating loss (704) -12.9% (1,261) -15.7%
Interest expense, net 306 5.6% 47 0.6% --- --- Loss before income
taxes and discontinued operations (1,010) -18.5% (1,308) -16.3%
Income tax expense (benefit) 9 0.2% 7 -% --- --- Loss before
discontinued operations (1,019) -18.7% (1,315) -16.4% Earnings
(loss) from discontinued operations, net of tax 1,079 19.8% (803)
-10.0% ----- ---- Net earnings (loss) $60 1.1% $(2,118) -26.4% ===
======= Earnings (loss) per share: Basic and diluted Continuing
operations $(0.12) $(0.16) Discontinued operations 0.13 (0.10) ----
----- Net earnings (loss) $0.01 $(0.26) ===== ======
Weighted-average shares outstanding: Basic and diluted 8,166 8,166
Phoenix Footwear Group, Inc. Consolidated Condensed Statements of
Operations (Unaudited) (In thousands, except per share data) For
the Nine Months Ended October 3, September 27, 2009 2008 ---- ----
Net sales $15,505 100.0% $23,650 100.0% Cost of goods sold 11,003
71.0% 13,737 58.1% ------ ------ Gross profit 4,502 29.0% 9,913
41.9% Operating expenses: Selling, general and administrative
expenses 8,883 57.3% 14,460 61.1% Other expense (income), net 1,018
6.6% (1,500) -6.3% ----- ------ Total operating expenses 9,901
63.9% 12,960 54.8% ----- ------ Operating loss (5,399) -34.8%
(3,047) -12.9% Interest expense, net 457 2.9% 849 3.6% --- --- Loss
before income taxes and discontinued operations (5,856) -37.8%
(3,896) -16.5% Income tax expense (benefit) 18 0.1% 45 0.2% --- ---
Loss before discontinued operations (5,874) -37.9% (3,941) -16.7%
Earnings (loss) from discontinued operations, net of tax (2,143)
-13.8% (616) -2.6% ------ ---- Net earnings (loss) $(8,017) -51.7%
$(4,557) -19.3% ======= ======= Earnings (loss) per share: Basic
and diluted Continuing operations $(0.72) $(0.48) Discontinued
operations (0.26) (0.08) ----- ----- Net earnings (loss) $(0.98)
$(0.56) ====== ====== Weighted-average shares outstanding: Basic
and diluted 8,166 8,136 DATASOURCE: Phoenix Footwear Group, Inc.
CONTACT: Dennis T. Nelson, Chief Financial Officer of Phoenix
Footwear Group, Inc., +1-760-602-9688 Web Site:
http://www.phoenixfootwear.com/
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