The Company noted the following balance sheet highlights as of July 2, 2005:
Cash and cash equivalents were $153.9 million compared to $162.7 million at July 3, 2004, notwithstanding the $40.0 million in cash used for the acquisition of Op in August 2004 and greater working capital needs.
Inventories increased 21.5 percent to $277.3 million at July 2, 2005 from $228.3 million at July 3, 2004. On a percentage basis, the majority of the increase reflects inventory to support the planned expansion of Chaps to the mid-tier channel, growth in the Company's international businesses and increases in Swimwear Group inventory due to a challenging swimwear season.
Commenting on the results, Larry Rutkowski, Warnaco's Chief Financial Officer stated, "They are pleased with the Company's performance in the second quarter. They continued to enhance shareholder value with a meaningful increase in earnings and a strong balance sheet at quarter-end."
Inventories were up year-over-year; however, they expect inventories for the remainder of the year to be in line with prior year levels. They continue to drive toward their three year goals, on balance and over time, of: (i) no less than high single-digit sales growth; (ii) gross margin increases on average of 100 basis points annually; (iii) competitive SG&A expense; and (iv) annual double-digit growth in operating margin percentage.
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