Exhibit 99.2
Media Contact: David T. Lanzillo
607-377-8259
lanzillodt@worldkitchen.com
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WORLD KITCHEN, INC. ANNOUNCES AMENDED CREDIT AGREEMENT,
NEXT STEPS IN RESTRUCTURING PROGRAM, AND YEAR 2000 OPERATING RESULTS
o COMPANY SUCCESSFULLY REACHES AGREEMENT TO AMEND AND RESTATE ITS SENIOR
CREDIT FACILITY AND SECURES ADDITIONAL FINANCING COMMITMENTS.
o ADDITIONAL RESTRUCTURING STEPS TAKEN TO IMPROVE COST STRUCTURE THROUGH
CONSOLIDATION OF MANUFACTURING CAPACITY AND OUTSOURCING OF CERTAIN
OPERATIONS.
o SALES AND INCOME RESULTS FOR THE YEAR 2000 WERE BELOW COMPANY EXPECTATIONS
DUE TO INTEGRATION AND SUPPLY ISSUES AND A WEAK FOURTH QUARTER RETAIL
MARKET.
ELMIRA, NEW YORK, April 16, 2001 - WKI Holding Company, Inc., which
operates as World Kitchen, Inc., released full financial results for year 2000
and announced the next steps in a company-wide restructuring program to improve
its cost structure.
The Company also said that on April 12, 2001 it reached an agreement with
its bank syndicate to amend and restate its senior credit facility. The Company
also received an additional $50.0 million in long-term financing commitments.
These commitments consist of an additional $25.0 million in connection with the
amended and restated credit facility and a $25.0 million
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revolving credit facility from Borden, Inc., both maturing March 30, 2004,
effective upon the termination of its current short-term line of credit from
Borden.
"The completion of our long-term financing plan is a major step forward in
our effort to transform World Kitchen into the leader in the housewares
industry," said Steven G. Lamb, president & CEO. "Backed by Borden's clear
expression of support, and our amended bank agreement, World Kitchen can proceed
with our new product investments and continuous improvement strategies to drive
future business growth, customer satisfaction, and improved financial
performance."
CREDIT AGREEMENT AMENDED, NEW LIQUIDITY SECURED
On April 12, 2001, the Company reached agreement with its lenders to amend
and restate its senior credit facility, under which the $292.0 million of term
loans remain outstanding and the $275.0 million revolving credit facility
remains in effect. The amended and restated credit agreement also waived the
financial covenants for the quarter ended December 31, 2000, amended the future
financial covenants beginning March 31, 2001, provided a first priority lien on
substantially all of its and its subsidiaries' assets and a pledge of the stock
of its subsidiaries, and obtained an additional secured revolving credit
facility of $25.0 million, maturing on March 30, 2004.
The Company also received an additional $25.0 million revolving credit
facility from Borden, Inc., an affiliate of the Company's parent, maturing on
March 30, 2004. Both facilities become effective upon the termination of its
$40.0 million of revolving commitments from Borden to occur on the date that is
91 days after the perfection of the collateral under the Company's amended and
restated senior credit facility.
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RESTRUCTURING PROGRAM UPDATE
The Company, as part of an overall plan to increase cash flow and reduce
warehousing costs, discontinued a significant number of its stock-keeping units
(SKUs) throughout all of its product lines. Additionally, the Company also
accumulated a significant amount of excess inventory in certain of the Company's
active SKUs that it intends to liquidate in 2001. The Company recorded a
provision of $20.1 million in 2000 to adjust inventory to the lower of cost or
market.
In addition, in the fourth quarter of 2000 the Company made the decision
to close 30 unprofitable Company-operated factory stores at various locations
throughout the U.S. The cost of these closures is included in the Company's 2000
results.
On April 3, 2001, World Kitchen announced a plan to restructure several
aspects of the Company's manufacturing and distribution operations, a measure
that will result in a restructuring charge of approximately $35 million, which
will be recorded in the first half of 2001. The previously announced program
includes three major components:
o Exit from manufacturing at the Martinsburg, West Virginia facility for the
CORNINGWARE and VISIONS product lines by the end of the first quarter
2002. The Company remains committed to these brands and is evaluating
several alternative sources in order to ensure future product supply.
o Consolidation of distribution operations at Waynesboro, Virginia into
World Kitchen's existing distribution centers at Monee, Illinois and
Greencastle, Pennsylvania. Waynesboro is expected to cease operations
during the first quarter of 2002.
o Significant restructuring of metal bakeware manufacturing at Massillon,
Ohio to reduce costs.
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On April 12, 2001, World Kitchen's Board of Directors approved the closure
of the CHICAGO CUTLERY facility in Wauconda, Illinois as an additional step in
the Company's restructuring plan. The Company expects to cease manufacturing at
the facility and re-source the CHICAGO CUTLERY product line by year-end 2001.
"This was a difficult decision because of the high quality, dedicated workforce
at the plant," said Mr. Lamb, "but a necessary one in order to ensure that we
can continue to profitably grow our cutlery business." This move will result in
an additional charge of approximately $5.0 million, which will be recorded in
the first half of 2001. Management is continuing to evaluate the necessity of
additional restructuring measures, Mr. Lamb said.
2000 OPERATING RESULTS
As previously announced, the Company reported 2000 net sales of $827.6
million, compared to $633.5 million in 1999. On a pro forma basis 2000 net sales
were $813.5 million, compared to 1999 net sales of $818.6 million (assuming the
late-1999 acquisitions of EKCO Group, Inc. and General Housewares Corporation
had occurred on January 1, 1999 and excluding the commercial tableware and
cleaning lines, which the Company exited in 1999 and 2000, respectively).
The pro forma net sales decline of $5.1 million was due to supply
shortages at the Company-operated factory stores, competitive pricing pressures
on its EKCO brand product line, and weaker economic conditions in the fourth
quarter of 2000.
Offsetting some of the sales shortfall were the successful introduction
of the PYREX STORAGE DELUXE product line and strong sales gains for OXO brand
products, fueled by the successful introduction of new lines of kitchen tool,
hardware and cutlery products. Sales gains
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for World Kitchen products were also achieved outside the United States,
especially in Asia and Canada. The Company launched more than 75 new products
during the course of 2000, which are expected to have a positive impact on 2001
performance.
Net loss was $150.1 million in 2000, compared to a net loss of $34.5
million in 1999. The net figures include 2000 interest and income tax expenses
of $75.0 million and $51.5 million, respectively, versus 1999 interest expense
of $48.1 million and income tax benefit of $47.3 million.
In addition, the 2000 results included higher than normal distribution
costs primarily relating to operational inefficiencies associated with the
start up of its Monee, Illinois distribution center. Also, selling, general
and administrative expenses increased year over year primarily as a result of
the Company's continued investment in new product development.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
was $25.1 million in 2000 versus $7.4 million in 1999. Year 2000 EBITDA includes
inventory-related costs of $20.1 million primarily related to closeout programs,
$9.0 million in distribution and manufacturing-related costs which were not
capitalized into inventory because of their non-recurring nature, and $26.6
million for integration-related expenses. 1999 EBITDA includes $69.0 million for
restructuring and $9.2 million in integration-related expenses.
World Kitchen's principal products are glass, glass ceramic and metal
cookware, bakeware, kitchenware, tabletop products and cutlery sold under
well-known brands including CORNINGWARE, PYREX, CORELLE, VISIONS, REVERE, EKCO,
BAKER'S SECRET, CHICAGO CUTLERY, OXO and GRILLA GEAR. World Kitchen has been an
affiliate of Borden, Inc. and a member of the Borden Family of Companies since
April 1998.
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World Kitchen currently employs approximately 5,200 people and has major
manufacturing and distribution operations in the United States, Canada, United
Kingdom, South America and Asia-Pacific regions. Additional information can be
found at:
www.worldkitchen.com.
Certain matters discussed in this press release are forward-looking statements
based on World Kitchen's current expectations and estimates as to prospective
events about which World Kitchen can give no firm assurance. These
forward-looking statements are based on management's expectations as of the date
hereof, and World Kitchen does not undertake any responsibility to update any of
these statements in the future. Actual future performance and results could
differ from that contained in or suggested by these forward-looking statements
as a result of the factors set forth in filings with the Securities and Exchange
Commission. See the cautionary statement relating to forward-looking statements
filed with the SEC in WKI Holding Company's Quarterly Report on Form 10-K for
the period ended December 31, 2000.
[Editor's note: Chicago Cutlery, Corelle, Revere, Baker's Secret, Visions, EKCO
and OXO are registered trademarks and Storage Deluxe is a trademark of World
Kitchen, Inc. CorningWare and Pyrex are registered trademarks of Corning
Incorporated, under license to World Kitchen, Inc.]
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