Exhibit 99.1
Media Contact: David Lanzillo
607-377-8259
lanzillodt@worldkitchen.com
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WORLD KITCHEN, INC. ANNOUNCES SECOND QUARTER RESULTS
- SALES AND INCOME RESULTS REFLECT SLOWER 2001 RETAIL ENVIRONMENT AND EXIT OF
THE COMPANY'S CLEANING PRODUCTS BUSINESS.
- COMPANY PROGRESSING WITH PREVIOUSLY-ANNOUNCED RESTRUCTURING PLAN DESIGNED
TO IMPROVE COST STRUCTURE AND CUSTOMER SERVICE CAPABILITIES.
ELMIRA, N.Y, August 13, 2001 - WKI Holding Company, Inc., which operates as
World Kitchen, Inc., today announced results for its second fiscal quarter ended
July 1, 2001.
SECOND QUARTER 2001 OPERATING RESULTS
The Company's second quarter net sales were $162.8 million, compared to
year 2000 second quarter net sales of $174.3 million. The net sales decline of
$11.5 million generally reflects a slower retail economy in 2001 versus 2000, as
well as the Company's exit of its cleaning products business. Excluding the
impact of the cleaning products line, net sales for the second quarter of 2001
declined $6.5 million versus the second quarter of 2000.
Net loss for the quarter was $37.1 million, which includes a $15.0 million
charge, reflecting the Company's progress on the implementation of its
previously-announced restructuring plan. Year 2000 second quarter net loss was
$34.2 million and included $9.5 million in integration related expenses and a
$2.9 million provision for close-out of inventories related to the sale of the
Company's cleaning products line.
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Gross profit for the second quarter of 2001 was $42.3 million, a decrease
of $9.6 million when compared to second quarter 2000 gross profit of $51.9
million. As a percentage of net sales, gross profit decreased to 26.0% in the
second quarter of 2001 from 29.8% in the second quarter of 2000.
The decrease in gross profit is primarily attributable to the decline in
net sales, a shift in channel mix, and the Company's decision to discontinue a
significant number of stock-keeping units (SKUs) across all product lines to
reduce inventory and warehousing costs and improve customer service. A
substantial portion of these discontinued products were liquidated in the first
half of 2001.
Selling, general and administrative expenses for the second quarter 2001
were $41.8 million, a decrease of $11.9 million from $53.7 million in the second
quarter of 2000. As a percentage of net sales, selling, general and
administrative expenses decreased in the second quarter to 25.6% from 30.8% in
the second quarter of 2000.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was
$10.0 million in the second quarter of 2001, excluding a $15.0 million charge
for restructuring and rationalization. Second quarter 2000 EBITDA was $8.9
million and excluded $9.5 million in integration related expenses and a $2.9
million provision for close-out of inventories related to the sale of the
Company's cleaning products business.
"Despite weaknesses in the economy, which are affecting overall sales, we
continue to make progress in restructuring our operations in order to reduce
costs and improve our customer service performance," said Steven Lamb, World
Kitchen president and CEO. "These efforts have led to a decline in Selling,
General and Administrative spending, reflecting the
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continued commitment from World Kitchen partners worldwide to closely manage all
discretionary spending, aggressively attack our cost base and position World
Kitchen for future business growth and improved financial performance."
The company's successful new product introductions positively contributed
to operating results. Highlights include the launch of the CorningWare(R)
Tableware line, Chicago Cutlery(R), OXO SteeL(TM) line of stainless steel
kitchen tools and utensils, and OXO Good Grips(TM) enamel tea kettles, garden
tools and cutlery products. Also noteworthy was the successful introduction of
Martha Stewart rangetop and kitchenware items at K-Mart.
YEAR TO DATE OPERATING RESULTS
Year to date net sales for the first half of 2001 were $333.6 million, a
decrease of $28.6 million versus the first half of 2000 net sales of $362.2
million. Excluding the impact of the cleaning products line, net sales for the
first half of 2001 declined $18.9 million versus the first half of 2000.
The net sales decline was primarily attributable to the exit of the
cleaning product line as well as lower volumes in certain international markets
and the Company's factory stores.
Gross profit for the first half of 2001 was $90.8 million, a decrease of
$21.7 million when compared to $112.5 million in the first half of 2000. As a
percentage of net sales, gross profit decreased to 27.2% in the first half of
2001 from 31.1% in the first half of 2000.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for
the first half of 2001 was $19.1 million, excluding a $37.1 million charge for
restructuring and rationalization. First half 2000 EBITDA was $25.9 million and
excluded $14.1 million in integration related expenses and a $2.9 million
provision for close-out of inventories related to the sale of the Company's
cleaning products business.
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CREDIT FACILITY UPDATE
The Company also said that in conjunction with its previously-announced
Amended and Restated Credit Agreement it has secured $50.0 million in long-term
funding commitments, effective upon the termination of the current $50.0 million
short-term line of credit from Borden Inc., an affiliate of the Company's
parent. These commitments consist of a secured revolving credit facility of
$25.0 million and a $25.0 million revolving credit facility from Borden, Inc.,
which will become effective on August 16, 2001. Both of these credit facilities
mature on March 30, 2004.
"Borden's continued confidence and support are great assets to us as we
work to reinvent our operational capabilities and transform World Kitchen into a
leader in the housewares industry," said Mr. Lamb.
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(R), Pyrex(R), Corelle(R), Visions(R),
Revere(R), EKCO(R), Baker's Secret(R), Chicago Cutlery(R), OXO(R) and Grilla
Gear(R). World Kitchen has been an affiliate of Borden, Inc. and a member of the
Borden Family of Companies since April 1998. The Company currently 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.
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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-Q for
the period ended July 1, 2001.