Tefron Ltd. Reports Third Quarter 2005 Results

Business Wire, Nov 10, 2005

MISGAV, Israel -- Tefron Ltd. (NYSE:TFR):

--Sales rose 10.1% over the third quarter of 2004 to $48.1 million for the quarter and 8.9% to $150.5 million for the nine month period.

--Net income of $2.8 million for the quarter and $5.5 million for the nine month period.

--Significant margins growth: gross margin up almost ten percentage points to 20.4%; operating margin reached 10.3% versus an operating loss of 3.6% in the third quarter of 2004.

--Strong EBITDA of $7.5 million for the quarter and $19.1 million for the nine month period.

--Diluted EPS reached $0.15 for the quarter versus $(0.17) in the third quarter of 2004.

Tefron Ltd. (NYSE:TFR), one of the world's leading producers of seamless intimate apparel and active wear, today announced financial results for the third quarter and nine months ended September 30, 2005.

Sales for the third quarter rose 10.1% to $48.1 million, compared to sales of $43.7 million in the third quarter of 2004. Gross profit for the third quarter was $9.8 million, compared to $4.6 million in the third quarter of 2004. Operating income for the third quarter of 2005 increased to $4.9 million, compared to an operating loss of $1.6 million in the third quarter of 2004. Net income rose to $2.8 million, or $0.16 per basic share and $0.15 per diluted share, for the third quarter of 2005, compared to a net loss of $2.9 millions, or $(0.17) per basic and diluted share, in the third quarter of 2004. Operating cash flow for the third quarter was $4.9 million, compared to $1.2 million for the third quarter of 2004. EBITDA for the third quarter was $7.5 million, compared to $2.7 million in the third quarter of 2004.

Results for the third quarter include a capital gain of approximately $400,000, or $0.02 per diluted share, resulting from a settlement with the insurance company regarding the recovery of losses from the February 2005 fire at the Company's sewing plant in Jordan. Excluding this capital gain, net income for the third quarter was $2.5 million, or $0.13 per diluted share.

The Company reported sales of $150.5 million for the first nine months of 2005, up 8.9% compared to sales of $138.2 million for the same period last year. Gross profit for the first nine months was $26.5 million, compared to $19.5 million for the same period last year. Operating income increased 358.3% to $11.6 million for the first nine months of 2005, compared to $2.5 million for the same period last year. Net income for the first nine months was $5.5 million, or $0.31 per basic share and $0.30 per diluted share, compared to a net loss of $2.7 million, or $(0.18) per basic and diluted share, for the same period last year. Operating cash flow for the first nine months was $16.8 million, up 153.0% compared to operating cash flow of $6.7 million for the same period last year. EBITDA for the first nine months was $19.1 million, up 64.7% compared to EBITDA of $11.6 million for the same period last year.

Sales by product line:

          Nine months    Nine months     Three months   Three months
             ended          ended           ended          ended
          September 30,  September 30,   September 30,  September 30,
             2005           2004            2005           2004
----------------------------------------------------------------------
          USD      % of   USD      % of  USD      % of  USD      % of
          millions total  millions total millions total millions total
----------------------------------------------------------------------
Intimate
 Apparel     73.2  48.6      90.3  65.3     27.0  56.1     28.3  64.8
----------------------------------------------------------------------
Active
 wear        40.2  26.7      13.8  10.0     12.4  25.8      6.1  14.0
----------------------------------------------------------------------
Swimwear (a) 11.9   7.9       8.3   6.0      0.6   1.2      0.3   0.6
----------------------------------------------------------------------
Health
 care
 products    25.2  16.7      25.8  18.7      8.1  16.8      9.0  20.6
----------------------------------------------------------------------
Total       150.5 100.0     138.2 100.0     48.1 100.0     43.7 100.0
----------------------------------------------------------------------
 (a) Seasonal sales
Sales by segments:

            Nine months    Nine months    Three months   Three months
               ended         ended           ended          ended
            September 30,  September 30,  September 30,  September 30,
               2005           2004           2005           2004
----------------------------------------------------------------------
           USD      % of  USD      % of  USD      % of  USD      % of
           millions total millions total millions total millions total
----------------------------------------------------------------------
Seamless
 (HiTex)      81.5  54.2     62.1  44.9     28.7  59.7     20.5  46.9
----------------------------------------------------------------------
Cut & Sew     43.8  29.1     50.3  36.4     11.3  23.5     14.2  32.5
----------------------------------------------------------------------
Health        25.2  16.7     25.8  18.7      8.1  16.8      9.0  20.6
----------------------------------------------------------------------
Total        150.5 100.0    138.2 100.0     48.1 100.0     43.7 100.0
----------------------------------------------------------------------