UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 26, 2001
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GALEY & LORD, INC.
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Exact name of registrant as specified in its charter
DELAWARE 56-1593207
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State or other jurisdiction of IRS Employer Identification No.
incorporation or organization
980 Avenue of the Americas, New York, New York 10018
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Address of principal executive offices Zip Code
212/465-3000
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Registrant's telephone number, including area code
Not Applicable
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Former name, former address and former fiscal year,
if changed since last report.
Item 5. Other Events.
Incorporated by reference herein and attached as an exhibit hereto is the press
release of Galey & Lord, Inc. (the "Company") dated July 26, 2001 (the "Press
Release"), announcing a series of strategic initiatives due to the continuing
difficult business environment.
Additional Information
The actions mentioned in the Press Release will result in pretax charges of $70
million to $80 million in the September quarter 2001 including $50 million to
$54 million dollars related to fixed asset and goodwill impairments and $20
million to $26 million representing cash costs related to severance, lease
obligations, inefficiencies during closure, cash losses associated with
completing garment customer orders and relocation of equipment to other
facilities. The majority of these charges will be incurred in the September
quarter 2001. Costs to relocate and start up equipment as well as the cost to
ready equipment for sale will be expensed as incurred after September 2001.
Of the $70 million to $80 million pretax charges, approximately $34 million to
$38 million will relate to the closure of Galey & Lord Service Company, N.A.,
the Company's garment making operation in Mexico. Approximately $20 million to
$22 million will be non-cash charges related to fixed asset and goodwill
impairments with the remaining $14 million to $16 million representing cash
costs.
The remainder of the charges, approximately $36 million to $42 million, will
relate to the closure of certain greige fabric manufacturing operations.
Approximately $30 million to $32 million will be non-cash charges related to
fixed asset and goodwill impairments with the remaining $6 million to $10
million representing cash costs.
Total employees to be terminated as a result of the above actions is
approximately 3,300 in Mexico and 500 in the U.S.
The Company expects to avoid cash losses of approximately $6 million to $9
million in fiscal 2002 by closing its garment operations. The greige
manufacturing rationalization will allow the Company to avoid approximately $4.5
million of curtailment costs in fiscal 2002, and headcount reductions unrelated
to plant closings are projected to save approximately $4.5 million annually.
Forward-Looking Statements
This Form 8-K contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Those
statements include statements regarding the intent, belief or current
expectations of the Company and its management team. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, among other things, competitive and economic
factors in the textile, apparel and home furnishings markets, raw material and
other costs, the level of the Company's indebtedness, interest rate
fluctuations, weather-related delays, general economic conditions, governmental
legislation and regulatory changes, the long-term implications of regional trade
blocs and the effect of quota phase-out and lowering of tariffs under the WTO
trade regulations and other risks and uncertainties that may be detailed herein
or from time to time in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2000 and in its other reports filed with the Securities
and Exchange Commission.
Exhibits
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1. Press Release dated July 26, 2001
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Galey & Lord, Inc.
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(Registrant)
/s/ Leonard F. Ferro
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Leonard F. Ferro
Vice President
July 26, 2001
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Date