American Apparel Inc. Reports First Quarter Financial Results
Fully diluted weighted average shares outstanding were 111.6 million in the first quarter 2014 versus 109.9 million for the first quarter 2013. As of May 1, 2014there were approximately 173.5 million shares outstanding. As of April 30, 2014 the Company had $18.3 million available for borrowing under its revolving credit agreement.
Explanation of Unrealized Gain (loss) of Change in Fair Value of Warrants
Lion Capital currently holds 24.5 million warrants to purchase American Apparel common stock at a price of $0.66 per share and as the share price of American Apparel's stock increases the fair value of the warrant liability recorded on the balance sheet increases and the Company records an expense to recognize the increase in the fair value of the warrant liability. Conversely, when the share price of American Apparel's stock decreases, the Company records a gain to recognize the related reduction in the fair value of the warrant liability on the balance sheet. Although the income statement impacts associated with the warrants are appropriate and required under GAAP, they do not impact the operating performance of the Company nor do the credits and charges have an impact on cash balances since the liability recorded is not an obligation that will be settled with cash. Instead, these warrants will be reclassified to equity when they are exercised.
The company reaffirms its prior estimate of Adjusted EBITDA for 2014 of $40 million to $50 million.
For more information or to view the full release, visit American Apparel's investors site.