NexCen Brands, Inc., the parent of The Athlete's Foot, filed its 2008 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the periods ending December 31, 2008 and March 31, 2009, respectively, with the Securities and Exchange Commission (SEC). The company showed a net loss of $256 million in 2009 and a loss from continuing operations of $700,000 in the first quarter.

Kenneth J. Hall, Chief Executive Officer of NexCen Brands, Inc., stated, “Our team continues to work diligently to regain compliance with the SEC's financial reporting requirements. At the same time, we remain focused on executing our strategic plan. From the first quarter of 2008 to the first quarter of 2009, we have expanded our international presence, reduced our debt and improved financial results. We look forward to continuing to strengthen our operations and expand our global franchised brands.”

First Quarter 2009 Financial Highlights

The operating results for the first quarter ended, March 31, 2009 are as follows:

    * Total revenues remain as previously reported at $11.9 million compared to $10.2 million in the first quarter of 2008.
    * Total operating expenses remain as previously reported at $10.1 million compared to $12.8 million in the first quarter of 2008.
    * Operating income was $1.8 million in first quarter 2009, compared to an operating loss of $2.6 million in the first quarter of 2008.
    * The company's loss from continuing operations in the first quarter of 2009 was $0.7 million, or $0.02 per fully diluted share, improving from a loss in the first quarter of 2008 of $6.4 million, or $0.11 per fully diluted share. Operating results exclude businesses that were discontinued during 2008 (Bill Blass, Waverly and UCC Capital).
    * Cash generated from operations remain as previously reported at $0.4 million in first quarter of 2009 compared to cash used in operations of $4.2 million in first quarter 2008. The first quarter of 2009 was the first quarter in three years in which the company generated cash from its operations.
    * The company had total cash as previously reported of approximately $8.3 million as of March 31, 2009, compared to total cash of $20.7 million at March 31, 2008 and total cash of $8.3 million at December 31, 2008.
    * The outstanding debt balance as previously reported was $142.5 million at March 31, 2009 compared to $178.7 million at March 31, 2008 and $142.3 million at December 31, 2008.

Full Year 2008 Financial Highlights

The audited operating results for the full year ended December 31, 2008 are as follows:

    * Total revenues in 2008 remain as previously reported at $47.0 million compared to $19.6 million in 2007.
    * Operating expenses were $194.2 million in 2008 compared to $26.7 million in 2007. Operating expenses in 2008 encompassed many significant expenses that are specific to the events of 2008, including impairment charges related to intangible assets of $137.9 million, $3.9 million in professional fees related to special investigations, and $1.1 million in restructuring charges.
    * Operating loss in 2008 was $147.2 million compared to $7.1 million in 2007.
    * Pre-tax loss from continuing operations was $159.6 million versus $8.0 million in 2007. Excluding significant special items, pre-tax loss on an adjusted non-GAAP basis was $10.5 million in 2008. A table displaying the adjustments to pre-tax loss from continued operations is provided below.
    * Loss from continuing operations in 2008 was $153.6 million, or $2.71 per fully diluted share, compared to $8.9 million, or $0.17 per fully diluted share, in 2007.
    * Net loss from discontinued operations in 2008 was $102.2 million, which includes impairment charges of $104.4 million and a net loss of approximately $10.6 million on the sale of the Waverly and Bill Blass brands.
    * Net loss in 2008 was $255.8 million, or $4.52 per fully diluted share, compared to $4.9 million, or $0.09 per fully diluted share, in 2007.
    * Cash used in operations in 2008 was $10.4 million compared to cash used in operations in 2007 of $3.4 million.

NexCen faced a number of challenges in 2008, both internal and external. Starting in May 2008, the company sought to address the immediate financial and operational challenges that it faced. By December 31, 2008, the company had reduced non-essential staff and recurring expenses; restructured its credit facility; sold its Waverly and Bill Blass businesses; made significant changes in management, its management structure and corporate governance; and improved its corporate infrastructure and internal control environment. The events of 2008 and the company's responsive actions had a significant impact on its 2008 financial results, which are not expected to recur, primarily due to impairment expenses related to its intangible assets, restructuring charges, and increased professional fees related to the internal and external investigations in second and third quarter of 2008. First quarter 2009 results reflect the company's restructured business and cost reduction efforts.

The following table details the company's adjusted operating results for each 2008 quarter and the first quarter of 2009.

Non-GAAP Adjustments to Loss from
Pre-Tax
Continuing Operations for the Rolling Five-Quarter



 
 2008
 
 2009


Q1


 

Q2


 

Q3


 

Q4


 

Total


Q1

Pre-tax loss from continuing operations (GAAP)
$ (5,105 )
$ (116,841 )
$ (32,215 )
$ (5,405 )

$

(159,566

)


$ (658 )

Addback:












Impairment of intangible assets1


–



(109,733
)


(28,148
)




(137,881
)


Special investigations2


–



(1,932
)


(1,640
)


(325
)


(3,897
)


(33
)

Financing charges3


(37
)


(889
)


(791
)


(97
)


(1,814
)


(33
)

Restructuring and other charges4


(732
)


(1,500
)


(725
)


(444
)


(3,401
)


(444
)

Stock compensation5

 
 –
 

 
 –
 

 
 –
 

 
 (2,100 )

 
 (2,100 )

 
 –
 

Total special items


(769
)


(114,054
)


(31,304
)


(2,966
)


(149,093
)


(510
)
Pre-tax loss from continuing operations (Pro-forma)
$ (4,336
Share This