[GALEY & LORD LOGO APPEARS HERE]
P.O. Box 35528
Greensboro, North Carolina 27425-0528
Contact: Leonard F. Ferro
(336) 665-3037
GALEY & LORD ANNOUNCES THIRD QUARTER OF FISCAL 2001 RESULTS
GREENSBORO, NC, JULY 18, 2001/PRNewswire - Galey & Lord, Inc. (GNL:NYSE)
announced today net sales for the third quarter of fiscal 2001 (June quarter
2001) of $220.2 million, a decrease of 16% from the $262.2 million of net sales
for the third quarter of fiscal 2000 (June quarter 2000).
The Company's net income for the June quarter 2001 would have been $1.7 million
or $.14 per common share, excluding run-out costs associated with the Company's
strategic initiatives announced on September 20, 2000, compared to net income
for the June quarter 2000 of $2.5 million or $.21 per common share. Including
the run-out charges related to the strategic initiatives, the Company reported
net income for the June quarter 2001 of $0.8 million or $.07 per share.
The Company reported that for the first nine months of fiscal 2001, net sales
were $673.6 million, a decrease of 6% from the $714.4 million of net sales for
the first nine months of fiscal 2000.
The Company's net income for the first nine months of fiscal 2001 would have
been $4.6 million or $.39 per common share, excluding run-out costs associated
with the Company's strategic initiatives announced on September 20, 2000,
compared to net income for the first nine months of fiscal 2000 of $1.8 million
or $.15 per common share. Including the run-out charges related to the
strategic initiatives, the Company reported net income for the first nine months
of fiscal 2001 of $1.1 million or $.09 per common share.
At June 30, 2001, the Company was in compliance with all of its lenders'
covenants.
Arthur C. Wiener, Chairman and CEO, commented, "It continues to be a most
difficult environment for textiles. The relative strength of the dollar, along
with a difficult domestic retail environment has continued to put price and
volume pressure upon our products.
"Our denim division performed well in this environment. The closure of our
Erwin facility last December caused a 21% decline in denim sales in the June
quarter. However, operating income excluding strategic initiatives improved
39%. Galey & Lord Apparel, however, had a decline both in net sales (16.8%) and
operating income excluding strategic initiatives (62.6%). The Company expects
further deterioration of both volume and margins for this unit in the current
(September 2001) quarter.
"Both European divisions (Swift Europe and Klopman International) performed
well. The Company's Home Fashion Fabrics division performed poorly primarily
because of lower priced greige fabric.
"As a result of the continued erosion of our Galey & Lord khaki business, the
Company expects to report a net loss in the current (September 2001) period.
"The Company has taken and will continue to take the appropriate long-term
actions to adjust to what it believes is a permanent change in the marketplace.
Management continues to evaluate alternatives, including if necessary the
potential rationalization and sale of assets, that it believes will position the
Company to be profitable in fiscal year 2002 and it expects to conclude such
evaluation shortly."
A conference call to discuss the third quarter 2001 earnings will be held at
11:00 am eastern time on July 18, 2001. All persons interested in accessing the
conference call may via the internet at
http://www.videonewswire.com/event.asp?id=222. Replay of the conference call
- ---------------------------------------------
will be available approximately 2-1/2 hours after the end of the call on the
internet at http://www.prnewswire.com or via telephone at 1-800-475-6701 (access
-------------------------
code: 594931).
Galey & Lord is a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim and corduroy, as well as a major international
manufacturer of workwear fabrics. In order to offer sportswear customers a
complete package of fabrics and garments from one source, the Company provides
garment manufacturing from its owned and operated garment facilities. The
Company also is a manufacturer of dyed and printed fabrics for use in home
fashions.
This press release 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 of 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 materials 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, from
time-to time, in Galey & Lord's reports filed with the Securities and Exchange
Commission.
GALEY & LORD, INC.
STATEMENT OF OPERATIONS RECONCILIATION
Unaudited
(Amounts in thousands except per share data)
Three Months Ended June 30, 2001
------------------------------------------------------------
Excluding Strategic Strategic
Initiatives Initiatives As Reported
------------------- ----------- -----------
Net sales $220,161 $ - $220,161
Cost of sales 197,298 1,274 198,572
-------- ------- --------
Gross profit 22,863 (1,274) 21,589
Selling, general and
Administrative expenses 7,904 - 7,904
Amortization of intangibles 1,201 - 1,201
-------- ------- --------
Operating income (loss) 13,758 (1,274) 12,484
Interest expense 14,431 - 14,431
Equity in (income) loss from
associated companies (2,689) - (2,689)
-------- ------- --------
Income (loss) before income
Taxes 2,016 (1,274) 742
Income tax expense (benefit) 366 (471) (105)
-------- ------- --------
Net income (loss) $ 1,650 $ (803) $ 847
======== ======= ========
Net income (loss) per common share -
basic and diluted $ .14 $ (.07) $ .07
======== ======= ========
Nine Months Ended June 30, 2001
------------------------------------------------------------
Excluding Strategic Strategic
Initiatives Initiatives As Reported
------------------- ----------- -----------
Net sales $673,553 $ - $673,553
Cost of sales 598,516 8,417 606,933
-------- ------- --------
Gross profit 75,037 (8,417) 66,620
Selling, general and
administrative expenses 25,332 131 25,463
Amortization of intangibles 3,591 - 3,591
Plant closing costs - (587) (587)
Net gain on benefit plan curtailment
- (2,327) (2,327)
-------- ------- --------
Operating income (loss) 46,114 (5,634) 40,480
Interest expense 46,230 - 46,230
Equity in (income) loss from
associated companies (6,427) - (6,427)
-------- ------- --------
Income (loss) before income
taxes 6,311 (5,634) 677
Income tax expense (benefit) 1,688 (2,122) (434)
-------- ------- --------
Net income (loss) $ 4,623 $(3,512) $ 1,111
======== ======= ========
Net income (loss) per common share -
basic and diluted $ .39 $ (.29) $ .09
======== ======= ========
GALEY & LORD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(Amounts in thousands except per share data)
Three Months Ended Nine Months Ended
------------------------ ----------------------
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
-------- -------- -------- ---------
Net sales $220,161 $262,243 $673,553 $ 714,387
Cost of sales 198,572 231,731 606,933 636,718
-------- -------- -------- ---------
Gross profit 21,589 30,512 66,620 77,669
Selling, general and administrative
expenses 7,904 9,960 25,463 27,181
Amortization of intangibles 1,201 1,192 3,591 3,576
Plant closing costs - - (587) -
Net gain on benefit plan curtailment - - (2,327) -
-------- -------- -------- ---------
Operating income 12,484 19,360(1) 40,480 46,912(1)
Interest expense 14,431 16,850 46,230 49,330
Equity in (income) loss from
associated companies (2,689) (1,549) (6,427) (5,014)
-------- -------- -------- ---------
Income (loss) before income taxes 742 4,059 677 2,596
Income tax expense (benefit)
Current 2,095 3,066 7,529 4,046
Deferred (2,200) (1,513) (7,963) (3,267)
-------- -------- -------- ---------
Net income (loss) $ 847 $ 2,506 $ 1,111 $ 1,817
======== ======== ======== =========
Net income (loss) per common share:
Basic:
Average common shares outstanding 11,997 11,961 11,981 11,935
Net income (loss) per common share
- basic $ .07 $ .21 $ .09 $ .15
======== ======== ======== =========
Diluted:
Average common shares outstanding 12,007 11,979 12,003 11,949
Net income (loss) per common share
- diluted $ .07 $ .21 $ .09 $ .15
======== ======== ======== =========
(1) Includes $1,850 related to a recovery from a vendor for previous product
losses due to defective chemicals supplied by that vendor.
GALEY & LORD, INC.
SELECTED SEGMENT OPERATING RESULTS
Unaudited
(Amounts in thousands)
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
-------- -------- -------- --------
Net Sales Per Segment
- ---------------------
Galey & Lord Apparel $103,258 $124,060 $322,931 $339,939
Swift Denim 78,103 99,182 234,450 254,725
Klopman International 35,351 34,357 106,123 103,046
Home Fashion Fabrics 3,449 4,644 10,049 16,677
-------- -------- -------- --------
Total
$220,161 $262,243 $673,553 $714,387
======== ======== ======== ========
Operating Income (Loss)
- -----------------------
Per Segment Excluding
---------------------
Strategic Initiatives
---------------------
Galey & Lord Apparel $ 4,426 $ 11,847(1) $ 22,044 $ 27,938(1)
Swift Denim 7,777 5,576 20,185 11,096
Klopman International 3,425 2,935 8,876 10,363
Home Fashion Fabrics (1,489) (728) (3,862) (1,241)
Corporate (381) (270) (1,129) (1,244)
-------- -------- -------- --------
Total $ 13,758 $ 19,360 $ 46,114 $ 46,912
======== ======== ======== ========
% of Total Net Sales 6.2% 7.4% 6.8% 6.6%
Operating Income (Loss)
- -----------------------
Per Segment As Reported
-----------------------
Galey & Lord Apparel $ 4,289 $ 11,847(1) $ 19,901 $ 27,938(1)
Swift Denim 6,640 5,576 16,825 11,096
Klopman International 3,425 2,935 8,876 10,363
Home Fashion Fabrics (1,489) (728) (3,862) (1,241)
Corporate (381) (270) (1,260) (1,244)
-------- --------- -------- --------
Total $ 12,484 $ 19,360 $ 40,480 $ 46,912
======== ======== ======== ========
% of Total Net Sales 5.7% 7.4% 6.0% 6.6%
(1) Includes $1,850 related to a recovery from a vendor for previous product
losses due to defective chemicals supplied by that vendor.
GALEY & LORD, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Unaudited
-------------------------------
June 30, July 1, September 30,
2001 2000 2000*
--------- --------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,143 $ 19,302 $ 9,641
Trade accounts receivable 163,531 204,450 197,422
Sundry notes and accounts receivable 3,715 7,069 7,461
Inventories 164,854 177,046 166,522
Income taxes receivable 2,269 6,144 1,556
Deferred income taxes 9,776 12,710 12,902
Prepaid expenses and other current assets 4,432 4,147 3,957
--------- --------- ---------
Total current assets 355,720 430,868 399,461
Property, plant and equipment, at cost 480,041 521,506 472,567
Less accumulated depreciation and amortization (191,052) (164,379) (172,484)
--------- --------- ---------
288,989 357,127 300,083
Investment in and advances to associated companies 40,822 25,187 31,878
Deferred charges 11,891 13,599 13,571
Other non-current assets 1,662 1,675 1,735
Intangibles 145,784 150,568 149,376
--------- --------- ---------
$ 844,868 $ 979,024 $ 896,104
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,860 $ 3,064 $ 3,072
Trade accounts payable 60,713 61,971 59,907
Accrued salaries and employee benefits 25,124 24,452 24,028
Accrued liabilities 37,290 41,378 45,583
Income taxes payable 4,460 2,326 1,507
--------- --------- ---------
Total current liabilities 132,447 133,191 134,097
Long-term debt 616,893 665,993 648,505
Other long-term liabilities 17,163 19,799 22,813
Deferred income taxes 24,011 58,094 35,100
Stockholders' equity:
Common stock 124 124 124
Contributed capital in excess of par value 40,609 39,651 39,673
Retained earnings 33,648 72,642 32,537
Treasury stock, at cost (2,247) (2,247) (2,247)
Accumulated other comprehensive income (17,780) (8,223) (14,498)
--------- --------- ---------
Total stockholders' equity 54,354 101,947 55,589
--------- --------- ---------
$ 844,868 $ 979,024 $ 896,104
========= ========= =========
* Condensed from audited financial statements.
GALEY & LORD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
(Amounts in thousands)
Nine Months Ended
-------------------------
June 30, July 1,
2001 2000
-------- ---------
Cash flows from operating activities:
Net income (loss) $ 1,111 $ 1,817
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation of property, plant and equipment 24,323 30,169
Amortization of intangible assets 3,591 3,576
Amortization of deferred charges 2,234 2,122
Deferred income taxes (7,963) (3,267)
Non-cash compensation 936 232
(Gain)/loss on disposals of property, plant and
equipment 78 293
Undistributed income from associated companies (6,427) (5,014)
Plant closing costs (587) -
Net gain on benefit plan curtailment (2,327) -
Other 165 -
Changes in assets and liabilities:
(Increase)/decrease in accounts receivable - net 32,812 (30,601)
(Increase)/decrease in sundry notes & accounts
receivable 1,856 (198)
(Increase)/decrease in inventories 25 (5,216)
(Increase)/decrease in prepaid expenses and other
current assets (537) 309
(Increase)/decrease in other non-current assets 62 625
(Decrease)/increase in accounts payable - trade 1,540 761
(Decrease)/increase in accrued liabilities (4,739) 8,870
(Decrease)/increase in income taxes payable 3,695 1,692
(Decrease)/increase in other long-term liabilities (4,401) (665)
-------- --------
Net cash provided by (used in) operating activities 45,447 5,505
Cash flows from investing activities:
Property, plant and equipment expenditures (20,324) (11,775)
Proceeds from sale of property, plant and equipment 907 336
Distributions received from associated companies 3,076 1,808
Investment in affiliates (1,122) -
Other 328 362
-------- --------
Net cash provided by (used in) investing activities (17,135) (9,269)
Cash flows from financing activities:
Increase/(decrease) in revolving line of credit (11,105) 21,900
Principal payments on long-term debt (31,063) (12,559)
Issuance of long-term debt 12,094 -
Payment of bank fees and loan costs (540) (100)
-------- --------
Net cash provided by (used in) financing activities (30,614) 9,241
Effect of exchange rate changes on cash and cash
Equivalents (196) (475)
-------- --------
Net increase/(decrease) in cash and cash equivalents (2,498) 5,002
Cash and cash equivalents at beginning of period 9,641 14,300
-------- --------
Cash and cash equivalents at end of period $ 7,143 $ 19,302
======== ========