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American Apparel, Inc (APP) SEC Filing 10-Q Quarterly report for the period ending Tuesday, September 30, 2014

SEC Filings

American Apparel, Inc

CIK: 1336545


Exhibit 99.1
AMERICAN APPAREL, INC. REPORTS THIRD QUARTER
FINANCIAL RESULTS

LOS ANGELES, November 10, 2014 - American Apparel, Inc. (the "Company") (NYSE MKT: APP), a vertically-integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced financial results for its third quarter ended September 30, 2014.
Financial Highlights for the Third Quarter of 2014
Loss per share was $0.11 compared to $0.01 in the third quarter of 2013
Adjusted EBITDA was $13.5 million, an increase of 38% against $9.8 million for the same period in 2013
Income from operations, excluding unusual and non-recurring expenses, was $4.8 million, compared to $1.6 million in the same period for 2013
Operating expenses, excluding unusual and non-recurring expenses, decreased $5.7 million, or 7%, for the quarter, compared to the same period in 2013
Inventories decreased $18.4 million, or 11%, from December 31, 2013

Scott Brubaker, Interim Chief Executive Officer, commented, “The strength of American Apparel’s operating model is evident in the 38% year-over-year improvement in adjusted EBITDA. We are proud to have achieved this growth during a period of company-wide operational restructuring and in a challenging macro-economic environment for retailers. I am encouraged by these results, and am optimistic about the future prospects of the business.”  
Operating Results
Net sales for the third quarter of 2014 decreased $8.7 million, or 5%, compared to the same period in 2013. Lower retail and online sales were partially offset by increased wholesale sales. Comparable retail and online sales decreased by 7% and 5%, respectively, while wholesale sales increased by 2% over the same period in 2013.
Gross profit for the third quarter of 2014 decreased 2% to $82.5 million from $84.6 million for the same period in 2013, primarily due to the lower retail and online sales volume. Gross profit, excluding unusual and non-recurring expenses increased to 53.5% of net sales in the third quarter of 2014 from 52.2% in the third quarter of 2013, primarily due to a decrease in freight costs associated with the completion of our transition to the La Mirada distribution center in late 2013, partially offset by an increase in retail store sales discounts.
Operating expense for the third quarter of 2014 was $92.6 million, compared to $89.1 million for the same period in 2013. Excluding the effects of unusual and non-recurring costs related to the settlement of certain customs duties assessments and contingencies, the internal investigation of Dov Charney and employment settlement and severance costs, operating expenses decreased $5.7 million, or 7%, over the same period in 2013. The decrease in costs was due to lower payroll and lower costs related to our advertising and promotional activities from our ongoing cost reduction initiatives.
Net loss for the third quarter of 2014 was $19.2 million or $0.11 per share, compared to net loss of $1.5 million, or $0.01 per share for the third quarter of 2013. Results for the third quarter of 2014 include approximately $14.9 million, or $0.09 per share, related to unusual and non-recurring costs. Results for the third quarter of 2013 include approximately $6.1 million, or $0.05 per share, related to unusual and non-recurring costs.
Unusual and Non-Recurring Costs
Customs settlements and contingencies - In 2012, German customs issued retroactive punitive customs duty assessments of $5.4 million on certain containers of goods imported from 2009-2011, including interest and penalties. Although the Company has continued to dispute the special assessments with the German authorities and the European Commission, during the third quarter of 2014, the German authorities demanded, and we paid, $4.4 million in the third quarter of 2014 and the final balance of $85,000 in the fourth quarter of 2014. Additionally, during the third quarter of 2014 we incurred additional costs related to other customs settlements and contingencies.
Internal Investigation - On June 18, 2014, the Board of Directors (the "Board") voted to replace Mr. Charney as Chairman of the Board, suspended him, and notified him of its intent to terminate his employment as our President and CEO for cause. In connection with the Nomination, Standstill and Support agreement, dated July 9, 2014, with Standard General and Mr. Charney, the Board formed a new special committee for the purpose of overseeing the continuing investigation into the alleged misconduct



The following information was filed by American Apparel, Inc on Monday, November 10, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document
Consolidated Balance Sheets (unaudited)
Consolidated Balance Sheets Parenthetical
Consolidated Statements Of Cash Flows Reconciliation Of Net Loss To Net Cash Provided By (used In) Operating Activities (unaudited)
Consolidated Statements Of Cash Flows Statements (unaudited)
Consolidated Statements Of Operations And Comprehensive Loss (parentheticals)
Consolidated Statements Of Operations And Comprehensive Loss Statements (unaudited)
Accrued Expenses And Other Current Liabilities
Accrued Expenses And Other Current Liabilities (details)
Accrued Expenses And Other Current Liabilities (tables)
Business Segment And Geographic Area Information
Business Segment And Geographic Area Information (tables)
Business Segment And Geographic Area Information Key Financial Information Of The Company's Reportable Segments Before Unallocated Corporate Expenses (details)
Business Segment And Geographic Area Information Narrative (details)
Business Segment And Geographic Area Information Net Sales By Geographic Location Of Customer (details)
Business Segment And Geographic Area Information Reconciliation Of Reportable Segments Combined Loss From Operations To The Consolidated Loss Before Income Taxes (details)
Commitments And Contingencies
Commitments And Contingencies Loss Contingencies (details)
Commitments And Contingencies Operating Leases (details)
Condensed Consolidating Financial Information (tables)
Condensed Consolidating Financial Information Balance Sheet (details)
Condensed Consolidating Financial Information Cash Flow Statements (details)
Condensed Consolidating Financial Information Level 1 (notes)
Condensed Consolidating Financial Information Ownership (details)
Condensed Consolidating Financial Information Statement Of Operations And Comprehensive Loss (details)
Fair Value Of Financial Instruments
Fair Value Of Financial Instruments (tables)
Fair Value Of Financial Instruments Fair Value Of Financial Instruments (details)
Fair Value Of Financial Instruments Fv Measurements Of Liabilities Using Significant Unobservable Inputs On A Recurring Basis (details)
Income Taxes
Income Taxes (details)
Inventories
Inventories (tables)
Inventories Components Of Inventories (details)
Inventories Narrative (details)
Litigation
Litigation (details)
Long-term Debt
Long-term Debt (details)
Long-term Debt (tables)
Organization And Business
Organization And Business (details)
Property And Equipment
Property And Equipment (details)
Related Party Transaction
Related Party Transaction (details)
Revolving Credit Facilities And Current Portion Of Long-term Debt
Revolving Credit Facilities And Current Portion Of Long-term Debt (tables)
Revolving Credit Facilities And Current Portion Of Long-term Debt Narrative (details)
Revolving Credit Facilities And Current Portion Of Long-term Debt Revolving Credit Facilities And Current Portion Of Long-term Debt (details)
Shared-based Compensation
Shared-based Compensation (details)
Shared-based Compensation (tables)
Stockholders' Deficit
Stockholders' Deficit (tables)
Stockholders' Deficit Common Stock Warrants Issued, Forfeited, Expired And Outstanding (details)
Stockholders' Deficit Common Stock Warrants Narrative (details)
Stockholders' Deficit Earnings Per Share Dilutive Effect On The Shares Outstanding (details)
Stockholders' Deficit Public Offering Narrative (details)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (details)
Summary Of Significant Accounting Policies (policies)
Summary Of Significant Accounting Policies Subsidiary (details)
Workers' Compensation And Other Self-insurance Reserves
Workers' Compensation And Other Self-insurance Reserves (details)
CIK: 1336545
Form Type: 10-Q Quarterly Report
Accession Number: 0001336545-14-000173
Submitted to the SEC: Mon Nov 10 2014 4:39:59 PM EST
Accepted by the SEC: Mon Nov 10 2014
Period: Tuesday, September 30, 2014
Industry: Blank Checks

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