By  on June 30, 1994

MILAN -- GFT SpA, citing costs associated with its "massive restructuring effort," reported a 1993 consolidated net loss of $125 million (196 billion lire) at current exchange.

The deficit compares with a loss of 88.8 billion lire in 1992. GFT said operating results for 1993, however, returned to the black at $20.7 million (32.4 billion lire), compared with an operating loss of 8.4 billion lire a year earlier.

The company said sales from continuing operations increased 21.5 percent last year, to $940 million (1.47 trillion lire), compared with 1.21 trillion lire the previous year. Including sales from its sportswear and Mexican operations, which were sold in 1993, sales in 1992 totaled 1.55 trillion lire.

Meanwhile, industry sources said Wednesday that Plaid Clothing Group PLC, after completing due diligence in its negotiations to buy GFT, is seeking a discount of $22 million (35 billion lire) off its initial offer of $255 million (400 billion lire). As reported, GFT said last week that Plaid had finalized its offer in a letter to GFT's Italian creditor banks, which must approve the deal.

GFT disclosed no terms, but sources indicate there may be more haggling. They say the banks aren't willing to go any lower than $248.7 million (390 billion lire).

Furthermore, Plaid has also reportedly amended its initial offer to include a provision that Giorgio Armani -- one of the stars of GFT's stable of licensed designer names -- sign a contract with GFT before the Plaid closing. Although Armani has given an initial nod to Plaid, he has not formally renewed his GFT contract, which he traditionally has renewed retroactively. Other than signaling his initial approval in early meetings with Plaid representatives, Armani has declined to comment on the Plaid-GFT talks.

In a development that could possibly complicate the Plaid deal further, Armani confirmed he has had talks with Clemente Signoroni, GFT's former managing director, about Signoroni possibly joining Simint SpA, which manufactures Armani jeans. Signoroni reportedly was against a GFT/Plaid deal (See related story, this page).

Discussing GFT's 1993 results, a company spokeswoman pointed out: "While the extent of the [net] loss is certainly bad news, it wasn't unexpected. And the positive news is that revenues are up and so is the operating result."GFT said the 1993 net loss includes charges of $52.3 million (82 billion lire) related to financial charges and exchange rate fluctuations and extraordinary costs of $88.6 million (139 billion lire) related to the restructuring.

GFT also reported that consolidated net debts at the end of the year amounted to $298.5 million (468 billion lire), up $12.8 million (20 billion lire) from the end of 1992, when they totaled 448 billion lire. The firm also attributed the increase in indebtedness to restructuring costs.

On the positive side, GFT pointed out that sales are steadily increasing due to the streamlining of the product portfolio and overall regained competitiveness, in part because of the organizational restructuring and in part because of exchange rate benefits and the fact that GFT derives more than 75 percent of its revenues from exports.

Looking ahead, GFT said 1994 operating profit should be around $51 million (80 billion lire), more than double the amount reported in 1993. However, GFT didn't say when it expects the bottom line to return to the black.

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