EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: | Lorraine D. Miller, CFA |
Senior Vice President Finance and External Communications | |
404.378.0491 |
WESTPOINT STEVENS REPORTS THIRD QUARTER 2004 RESULTS
WEST POINT, GEORGIA (November 9, 2004) -- WestPoint Stevens Inc. (OTCBB: WSPTQ) (www.westpointstevens.com) today reported results for the third quarter ended September 30, 2004.
The Company's net sales for the third quarter of 2004 decreased 6.5% to $416.1 million compared with $445.2 million a year ago. Bed Product sales decreased 4.5% and Bath Product sales decreased 4.4% due to slower retail sales at department stores, national chains and warehouse clubs which more than offset gains with mass merchants and specialty stores. Other (Mill Stores and International) sales decreased, primarily from a reduction in the Company's mill store sales as a result of restructuring initiatives that have reduced the total number of retail stores to 36 from 57 in the year ago period. Furthermore, one of the Company's foreign subsidiaries, WestPoint Stevens (Europe) Ltd., filed for bankruptcy in the United Kingdom in August of 2003 and is in the process of liquidating. WestPoint Stevens Stores' same-store sales decreased 0.8% for the remaining stores in the third quarter of 2004 versus the year ago period due to severe weather that impacted store sales in coastal locations.
Net income for the third quarter of 2004 was a loss of $52.6 million or $1.05 per diluted share compared with a loss of $12.8 million or $0.26 per diluted share in 2003.
Loss before taxes for the third quarter of 2004 was $54.0 million compared with a loss before taxes in 2003 of $16.0 million. Included in the third quarter of 2004 were $14.1 million in expenses related to the Company's restructuring initiatives, $7.9 million in charges related to fixed asset impairments, and $7.2 million in expenses related to the current bankruptcy proceedings compared with $8.7 million in expenses in the third quarter of 2003 related to WestPoint Stevens previously announced restructuring initiatives and $12.7 million in expenses related to the current bankruptcy proceedings.
M. L. "Chip" Fontenot, WestPoint Stevens President and CEO commented, "The retail environment continued to be challenging for home fashions in the third quarter as retailers experienced slower sales growth in textile home furnishings. Nevertheless, we increased our market share with targeted key accounts and received positive retailer response during our recent Fall Market. Furthermore, we remain adequately funded with availability under our $300 million debtor-in-possession facility of $146 million at the end of the third quarter."
Mr. Fontenot continued, "We have completed our revised Business Plan and are in final negotiations with our creditors regarding our exit from bankruptcy. We are hopeful this process will be concluded in the first quarter of 2005. On September 28, the Company received an additional extension of its exclusive period to file a plan of reorganization through December 1, 2004."
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507 West Tenth Street - Post Office Box 71 - West Point, Georgia 31833 |
www.westpointstevens.com |
WestPoint Stevens Inc. is the nation's premier home fashions consumer products marketing company, with a wide range of bed linens, towels, blankets, comforters and accessories marketed under the well-known brand namesGRAND PATRICIAN, PATRICIAN, MARTEX, ATELIER MARTEX, BABY MARTEX, UTICA, STEVENS, LADY PEPPERELL, SEDUCTION, VELLUXandCHATHAM -- all registered trademarks owned by WestPoint Stevens Inc.and its subsidiaries -- and under licensed brands includingRALPH LAUREN HOME, DISNEY HOMEandGLYNDA TURLEY.WestPoint Stevens can be found on the World Wide Web atwww.westpointstevens.com.
Safe Harbor Statement: Except for historical information contained herein, certain matters set forth in this press release are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties may be attributable to important factors that include but are not limited to the following: Product margins may vary from those projected; Raw material prices may vary from those assumed; Additional reserves may be required for bad debts, returns, allowances, governmental compliance costs, or litigation; There may be changes in the performance of financial markets or fluctuations in foreign currency exchange rates; Unanticipated natural disasters could have a material impact upon results of operations; There may be changes in the general economic conditions that affect customer p ractices or consumer spending; Competition for retail and wholesale customers, pricing and transportation of products may vary from time to time due to seasonal variations or otherwise; Customer preferences for our products can be affected by competition, or general market demand for domestic or imported goods or the quantity, quality, price or delivery time of such goods; There could be an unanticipated loss of a material customer or a material license; The availability and price of raw materials could be affected by weather, disease, energy costs or other factors; The future results of operations may be adversely affected by factors relating to the Chapter 11 proceedings. The information contained in this release is as of November 9, 2004. WestPoint Stevens assumes no obligation to update publicly any forward-looking statements, contained in this document as a result of new information or future events or developments.
FINANCIAL STATEMENTS TO FOLLOW
WESTPOINT STEVENS INC. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2004 |
| 2003 | ||||||||||||||||||||||
ProForma | Restructuring | ProForma | Restructuring | |||||||||||||||||||||
Before | And Other | Before | And Other | |||||||||||||||||||||
Restructuring | Items | Actual | Restructuring | Items | Actual | |||||||||||||||||||
Net sales | $ | 416,100 | $ | - | $ | 416,100 | $ | 445,160 | $ | - | $ | 445,160 | ||||||||||||
Cost of goods sold | 363,526 | 3,686 | 367,212 | 357,857 | 7,708 | 365,565 | ||||||||||||||||||
Gross earnings (loss) | 52,574 | (3,686) | 48,888 | 87,303 | (7,708) | 79,595 | ||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||
expenses | 54,059 | - | 54,059 | 58,934 | - | 58,934 | ||||||||||||||||||
Restructuring and impairment charge | - | 10,380 | 10,380 | - | 967 | 967 | ||||||||||||||||||
Fixed asset impairment charge | 7,929 | - | 7,929 | - | - | - | ||||||||||||||||||
Goodwill impairment charge | - | - | - | - | - | - | ||||||||||||||||||
Operating earnings (loss) | (9,414) | (14,066) | (23,480) | 28,369 | (8,675) | 19,694 | ||||||||||||||||||
Interest expense | 19,822 | - | 19,822 | 19,181 | - | 19,181 | ||||||||||||||||||
Other expense-net | 3,441 | - | 3,441 | 3,796 | - | 3,796 | ||||||||||||||||||
Chapter 11 expenses | 7,242 | - | 7,242 | 12,709 | - | 12,709 | ||||||||||||||||||
Income (loss) before income | ||||||||||||||||||||||||
tax expense (benefit) | (39,919) | (14,066) | (53,985) | (7,317) | (8,675) | (15,992) | ||||||||||||||||||
Income tax expense (benefit) | (3,718) | (5,064) | (1,346) | (67) | (3,123) | (3,190) | ||||||||||||||||||
Net income (loss) | $ | (43,637) | $ | (9,002) | $ | (52,639) | $ | (7,250) | $ | (5,552) | $ | (12,802) | ||||||||||||
Basic and diluted net income (loss) | ||||||||||||||||||||||||
per common share | $ | (0.88) | $ | (1.05) | $ | (0.15) | $ | (0.26) | ||||||||||||||||
Basic and diluted average common | ||||||||||||||||||||||||
shares outstanding | 49,897 | 49,897 | 49,897 | 49,897 | ||||||||||||||||||||
WESTPOINT STEVENS INC. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2004 |
| 2003 | ||||||||||||||||||||||
ProForma | Restructuring | ProForma | Restructuring | |||||||||||||||||||||
Before | And Other | Before | And Other | |||||||||||||||||||||
Restructuring | Items | Actual | Restructuring | Items | Actual | |||||||||||||||||||
Net sales | $ | 1,198,732 | $ | - | $ | 1,198,732 | $ | 1,190,118 | $ | - | $ | 1,190,118 | ||||||||||||
Cost of goods sold | 1,017,208 | 12,145 | 1,029,353 | 964,147 | 15,280 | 979,427 | ||||||||||||||||||
Gross earnings (loss) | 181,524 | (12,145) | 169,379 | 225,971 | (15,280) | 210,691 | ||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||
expenses | 166,136 | - | 166,136 | 183,334 | - | 183,334 | ||||||||||||||||||
Restructuring and impairment charge | - | 18,666 | 18,666 | - | 14,291 | 14,291 | ||||||||||||||||||
Fixed asset impairment charge | 7,929 | - | 7,929 | - | - | - | ||||||||||||||||||
Goodwill impairment charge | - | - | - | 46,298 | - | 46,298 | ||||||||||||||||||
Operating earnings (loss) | 7,459 | (30,811) | (23,352) | (3,661) | (29,571) | (33,232) | ||||||||||||||||||
Interest expense | 56,734 | - | 56,734 | 82,840 | - | 82,840 | ||||||||||||||||||
Other expense-net | 4,451 | - | 4,451 | 14,225 | - | 14,225 | ||||||||||||||||||
Chapter 11 expenses | 23,744 | - | 23,744 | 18,953 | - | 18,953 | ||||||||||||||||||
Income (loss) before income | ||||||||||||||||||||||||
tax expense (benefit) | (77,470) | (30,811) | (108,281) | (119,679) | (29,571) | (149,250) | ||||||||||||||||||
Income tax expense (benefit) | (5,677) | (11,092) | (16,769) | (36,850) | (10,645) | (47,495) | ||||||||||||||||||
Net income (loss) | $ | (71,793) | $ | (19,719) | $ | (91,512) | $ | (82,829) | $ | (18,926) | $ | (101,755) | ||||||||||||
Basic and diluted net income (loss) | ||||||||||||||||||||||||
per common share | $ | (1.44) | $ | (1.83) | $ | (1.66) | $ | (2.04) | ||||||||||||||||
Basic and diluted average common | ||||||||||||||||||||||||
shares outstanding | 49,897 | 49,897 | 49,882 | 49,882 | ||||||||||||||||||||
WESTPOINT STEVENS INC. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
September 30, | December 31, | September 30, | |||||||
2004 | 2003 | 2003 | |||||||
Assets | |||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | 8,698 | $ | 3,660 | $ | - | |||
Accounts receivable, net | 247,913 | 243,507 | 266,870 | ||||||
Inventories, net | 369,711 | 368,620 | 419,910 | ||||||
Prepaid expenses and other current assets | 15,331 | 32,996 | 42,675 | ||||||
Total current assets | 641,653 | 648,783 | 729,455 | ||||||
Property, Plant and Equipment, net | 552,069 | 616,422 | 659,974 | ||||||
Other Assets | |||||||||
Deferred financing fees, net | 3,090 | 12,837 | 16,742 | ||||||
Other assets | 712 | 1,737 | 2,110 | ||||||
$ | 1,197,524 | $ | 1,279,779 | $ | 1,408,281 | ||||
Liabilities and Stockholders' Equity (Deficit) | |||||||||
Current Liabilities | |||||||||
Senior Credit Facility | $ | 484,749 | $ | 490,689 | $ | 490,689 | |||
Second-Lien Facility | 165,000 | 165,000 | 165,000 | ||||||
DIP Credit Agreement | 118,137 | 89,017 | 107,133 | ||||||
Accrued interest payable | 5,566 | 295 | 6,168 | ||||||
Accounts payable | 54,453 | 56,198 | 68,759 | ||||||
Other accrued liabilities | 135,078 | 111,731 | 113,670 | ||||||
Total current liabilities | 962,983 | 912,930 | 951,419 | ||||||
Noncurrent Liabilities | |||||||||
Deferred income taxes | 474 | 87,179 | 111,951 | ||||||
Pension and other liabilities | 142,779 | 141,936 | 154,161 | ||||||
Total noncurrent liabilities | 143,253 | 229,115 | 266,112 | ||||||
Liabilities Subject to Compromise | 1,087,889 | 1,086,869 | 1,098,114 | ||||||
Stockholders' Equity (Deficit) | (996,601) | (949,135) | (907,364) | ||||||
$ | 1,197,524 | $ | 1,279,779 | $ | 1,408,281 | ||||
WESTPOINT STEVENS INC. | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(In thousands) | ||||||||||
Nine Months Ended September 30, | ||||||||||
2004 | 2003 | |||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (91,512) | $ | (101,755) | ||||||
Adjustments to reconcile net loss to net | ||||||||||
cash provided by (used for) operating activities: | ||||||||||
Depreciation and other amortization | 59,625 | 53,508 | ||||||||
Deferred income taxes | (16,804) | (47,451) | ||||||||
Changes in working capital | 19,525 | 39,112 | ||||||||
Other-net | 592 | 21,041 | ||||||||
Non-cash component of restructuring and | ||||||||||
impairment charge | 9,421 | 7,805 | ||||||||
Fixed asset impairment charge | 7,929 | - | ||||||||
Goodwill impairment charge | - | 46,298 | ||||||||
Net cash provided by (used for) operating activities | (11,224) | 18,558 | ||||||||
Cash flows from investing activities: | ||||||||||
Capital expenditures | (14,257) | (9,790) | ||||||||
Net proceeds from sale of assets | 7,339 | 59 | ||||||||
Net cash used for investing activities | (6,918) | (9,731) | ||||||||
Cash flows from financing activities: | ||||||||||
Senior Credit Facility: | ||||||||||
Borrowings | - | 720,333 | ||||||||
Repayments | (5,940) | (677,439) | ||||||||
DIP Credit Agreement: | ||||||||||
Borrowings | 603,120 | 377,481 | ||||||||
Repayments | (574,000) | (270,348) | ||||||||
Fees associated with DIP Credit Agreement | - | (5,150) | ||||||||
Trade Receivables Program | - | (154,800) | ||||||||
Net cash provided by (used for) financing activities | 23,180 | (9,923) | ||||||||
Net increase (decrease) in cash and cash equivalents | 5,038 | (1,096) | ||||||||
Cash and cash equivalents at beginning of period | 3,660 | 1,096 | ||||||||
Cash and cash equivalents at end of period | $ | 8,698 | $ | - | ||||||
