NEW YORK -- Citing lower-than-expected operating results, Cherokee Inc. said it will probably miss a Nov. 1 interest rate payment on about $75 million in notes.

At the same time, Cherokee's auditor said the manufacturer's continuing operating losses and difficulty making the interest payments "raise substantial doubt about the company's ability to continue as a going concern."

The remarks by Cherokee, Sunland, Calif., and its auditor, Ernst & Young, were made in Cherokee's 10-K annual filing with the Securities & Exchange Commission.

Cary Cooper, Cherokee's chief financial officer, could not be reached for comment.

The company, which emerged from Chapter 11 last year, has faced financial difficulties, including losses, slumping sales and canceled orders because of missed delivery dates.

In June, Cherokee hired the investment banking firm Chanin & Co. to examine its financial structure and advise on ways to improve the balance sheet. Cherokee has also received proposals from two investors looking to invest cash.

In its SEC filing, which covers fiscal 1994, Cherokee said it is talking with lenders to refinance the senior subordinated notes or restructure its entire capital structure.

Despite its efforts, Cherokee said operating results for the six months ended May 28 and lower-than-expected levels of shipping, booking and backlog in the current quarter should prevent it from making the Nov. 1 interest payment.

Based on preliminary discussions with lenders, Cherokee said it "believes it should be able to" restructure. But, if unsuccessful, Cherokee said in the SEC filing that it might "be forced to seek protection under applicable bankruptcy laws so it could obtain the financing necessary to continue its operations."

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