UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 9, 2005
TARRANT APPAREL GROUP
(Exact Name of Registrant as Specified in Charter)
CALIFORNIA 0-26006 95-4181026
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
3151 EAST WASHINGTON BOULEVARD
LOS ANGELES, CALIFORNIA 90023
(Address of Principal Executive Offices) (Zip Code)
(323) 780-8250
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 7.01 REGULATION FD DISCLOSURE.
On February 9, 2005, Tarrant Apparel Group (the "Registrant") issued a
press release updating its outlook for the fourth quarter and fiscal year 2004
results of operations and financial condition and outlook for 2005. A copy of
the press release is attached hereto as Exhibit 99.1 and is incorporated herein
by this reference.
The information in this report shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except as shall be expressly set forth by
specific reference in such a filing.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
None.
(b) Pro forma Financial Information.
None.
(c) Exhibits.
99.1 Press Release dated February 9, 2005, published by
the Registrant.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TARRANT APPAREL GROUP
Date: February 11, 2005 By: /S/ CORAZON REYES
--------------------------------------
Corazon Reyes, Chief Financial Officer
3
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release dated February 9, 2005, published by the Registrant.
4
EXHIBIT 99.1
FOR:TARRANT APPAREL GROUP
FOR IMMEDIATE RELEASE
TARRANT APPAREL GROUP PROVIDES FOURTH QUARTER AND FISCAL 2004 UPDATE
~ COMPANY REAFFIRMS FISCAL 2005 OUTLOOK ~
LOS ANGELES, Feb. 9 -- Tarrant Apparel Group (Nasdaq: TAGS - NEWS), a leading
provider of private label and private brand casual apparel, today announced its
updated outlook for the fourth quarter and fiscal 2004 and reaffirmed its fiscal
2005 outlook.
The Company now anticipates that revenues and net loss for the 2004 fourth
quarter will be in the range of $36.0 million to $38.0 million and $27.5 million
to $27.0 million, respectively. This compares to the Company's previous fourth
quarter outlook for revenue in the range of $40.0 million to $45.0 million and
net loss in the range of $23.1 million to $22.1 million. The revised fourth
quarter outlook translates into expected full year revenue of $154.0 million to
$156.0 million and net loss of $103.1 million to $102.6 million.
As previously disclosed, the anticipated net loss for the fourth quarter and
full year includes a non-cash charge of approximately $23.0 million expected to
be incurred in the fourth quarter, resulting from a reclassification of foreign
currency translation adjustments presently recorded on the balance sheet as a
reduction of stockholders' equity. The anticipated loss for the full year also
includes a non-cash charge of $64.3 million recorded in the second quarter of
2004, which is the Company's portion of a $78.0 million charge for impairment of
assets resulting from an appraisal of the Company's fixed assets in Mexico.
Excluding both non-cash charges, the Company anticipates a net loss of $4.5
million to $4.0 million for the fourth quarter and a net loss of $15.8 million
to $15.3 million for fiscal 2004.
For fiscal 2005, the Company continues to expect sales to be in the range of
approximately $220 million to $240 million and net income to be between
approximately $7 million and $11 million. This outlook anticipates growth in
both the Private Brand and Private Label business segments.
Barry Aved, President and CEO of Tarrant Apparel Group, commented, "Our revised
guidance reflects a greater than expected impact from the factors we discussed
in our third quarter conference call: softer than expected holiday bookings,
internal challenges faced by certain large customers, and increased air freight
costs related to congestion in the West Coast ports. That said, we are pleased
with the development of our Private Brands business, especially the recent
agreements with Jessica Simpson and Beyonce Knowles, and believe we are on-track
to meet our goals for 2005."
Tarrant Apparel Group serves specialty retailers, mass merchants, national
department stores, and branded wholesalers by designing, merchandising,
contracting for the manufacture of, and selling casual and well-priced apparel
for women, men, and children.
Forward Looking Statements
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are inherently unreliable and actual results may differ materially. Examples of
forward looking statements in this news release include net loss and adjusted
net loss estimates, revenue projections, estimated non-cash charges, and
anticipated growth in the private brands and private label businesses. Factors
which could cause actual results to differ materially from these forward-looking
statements include a softening of retailer or consumer acceptance of the
Company's products, pricing pressures and other competitive factors, continued
delays at West Coast ports, delays in the deployment of new private brands, and
the unanticipated loss of a major customer. These and other risks are more fully
described in the Company's
filings with the Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Pro Forma Financial Information
Tarrant Apparel Group has prepared adjusted net income (loss) data applicable to
2004 to supplement its estimated results determined under applicable generally
accepted accounting principles (GAAP). The adjusted amounts are not meant as a
substitute for GAAP, but are included solely for informational purposes. The
adjusted data has been adjusted for two items that the Company believes to be
one-time charges as described above.
The following table illustrates the adjustments to estimated net loss described
in this press release and reconciles the adjusted data to the estimated net loss
determined in accordance with GAAP:
Three Months Ended Year Ended
December 31, 2004 December 31, 2004
----------------- -----------------
(in millions)
Estimated net income
(loss) after income taxes $ (27.5) $ (27.0) $(103.1) $(102.6)
Add back impairment of
assets charge net of
minority interest(a) -- -- 64.3 64.3
Add back foreign currency
translation adjustment (b) 23.0 23.0 23.0 23.0
Adjusted estimated
net income (loss) $ (4.5) $ (4.0) $(15.8) $(15.3)
(a) Represents the Company's portion of a $78 million charge incurred in
the 2004 second quarter for impairment of assets resulting from an
appraisal of the Company's fixed assets in Mexico.
(b) Represents a charge expected to be incurred in the fourth quarter,
resulting from a reclassification of foreign currency translation
adjustments presently recorded on the balance sheet as a reduction of
stockholders' equity. This reclassification and charge will occur upon
the substantial liquidation of the Company's Mexico subsidiaries
following the previously announced sale of the Company's fixed assets
in Mexico.