American Apparel: Drowning in Debt?

Analyze two major components based on the common-size income statements and the trends of those components over the three years. Use 10.00% as a threshold.

Common-Size Income Statements (Amounts and shares in thousands, except per share amounts) Years ended December 31 2013 2012 2011 100.00% 100.00% 100.00% 49.38% 46.97% 46.12% 50.62% 53.03% 53.88% 38.12% 36.84% 38.34% 16.87% 15.77% 19.02% 0.24% 0.27% 0.78% -4.62% 0.16% -4.26% 6.20% 6.73% 6.06% 0.00% 0.02% 0.31% Net sales Cost of sales Gross profit Selling expenses General and administrative expenses Retail store impairment (Loss) income from operations Interest expense Foreign currency transaction loss Unrealized loss (gain) on change in fair value Ofwarrants and purchase rights Loss (gain) on extinguishment of debt Other expense (income) Loss before income taxes Income tax provision Netloss Basic and diluted loss per share Weighted average basic and diluted shares Outstanding 0.59% 5.06% 0.02% -16.49% 0.28% -16.77% 0.00% 0.00% 17.40% 0.67% -1.88% 0.03% 5.42% 0.62% -6.04% 0.00% 0.00% 17.17% -4.29% 0.57% -0.04% -6.87% 0.31% -7.18% 0.00% 0.00% 16.92% Other comprehensive (loss) income item: Foreign currency translation, net of tax Other comprehensive (loss) income, net of tax Comprehensive loss -0.25% -0.25% -17.02% 0.10% 0.10% -5.94% -0.03% -0.03% -7.22% Common-Size Income Statements (Amounts and shares in thousands, except per share amounts) Years ended December 31 2013 2012 2011 100.00% 100.00% 100.00% 49.38% 46.97% 46.12% 50.62% 53.03% 53.88% 38.12% 36.84% 38.34% 16.87% 15.77% 19.02% 0.24% 0.27% 0.78% -4.62% 0.16% -4.26% 6.20% 6.73% 6.06% 0.00% 0.02% 0.31% Net sales Cost of sales Gross profit Selling expenses General and administrative expenses Retail store impairment (Loss) income from operations Interest expense Foreign currency transaction loss Unrealized loss (gain) on change in fair value Ofwarrants and purchase rights Loss (gain) on extinguishment of debt Other expense (income) Loss before income taxes Income tax provision Netloss Basic and diluted loss per share Weighted average basic and diluted shares Outstanding 0.59% 5.06% 0.02% -16.49% 0.28% -16.77% 0.00% 0.00% 17.40% 0.67% -1.88% 0.03% 5.42% 0.62% -6.04% 0.00% 0.00% 17.17% -4.29% 0.57% -0.04% -6.87% 0.31% -7.18% 0.00% 0.00% 16.92% Other comprehensive (loss) income item: Foreign currency translation, net of tax Other comprehensive (loss) income, net of tax Comprehensive loss -0.25% -0.25% -17.02% 0.10% 0.10% -5.94% -0.03% -0.03% -7.22%