Westpoint Stevens (NASDAQ:WSPT)
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WestPoint Stevens Reports Second Quarter 2004 Results
WEST POINT, Ga., Aug. 9 /PRNewswire-FirstCall/ -- WestPoint Stevens Inc.
(OTC:WSPT) (BULLETIN BOARD: WSPT) ( http://www.westpointstevens.com/ ) today
reported results for the second quarter ended June 30, 2004.
The Company's net sales for the second quarter of 2004 increased 4.7% to $383.0
million compared with $365.7 million a year ago. Bed Product sales decreased
3% due to slower sales of bedding accessories, Bath Product sales increased 29%
given WestPoint Stevens increased market share due to a competitor's
liquidation, and 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 37 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 increased 7% for the remaining
stores in the second quarter of 2004 versus the year ago period.
Net income for the second quarter of 2004 was a loss of $24.0 million or $0.48
per diluted share compared with a loss of $72.0 million or $1.44 per diluted
share in 2003.
Loss before taxes for the second quarter of 2004 was $33.1 million compared
with a loss before taxes in 2003 of $106.8 million. Included in the second
quarter of 2004 were $9.0 million in expenses related to the Company's
restructuring initiatives, and $8.4 million in expenses related to the current
bankruptcy proceedings compared with $16.6 million in expenses in the second
quarter of 2003 related to WestPoint Stevens previously announced restructuring
initiatives and $6.2 million in expenses related to the current bankruptcy
proceedings.
M. L. "Chip" Fontenot, WestPoint Stevens President and CEO, commented, "The
retail environment was more challenging for home fashions in the second quarter
as retailers experienced slower sales growth in textile home furnishings.
Nevertheless, we increased our market share in bath products in the quarter and
are maintaining the high service levels that our customers expect from
WestPoint Stevens. Furthermore, we remain adequately funded with availability
under our $300 million debtor-in-possession facility of $120 million at the end
of the second quarter."
Mr. Fontenot continued, "The Company is in the final stages of revising its
business plan and is continuing to move forward on a consensual basis with
negotiating new terms for a Chapter 11 plan of reorganization with all its
major creditor constituencies. On July 30, the Company received an additional
extension of its exclusive period to file such a plan through October 1, 2004."
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 names GRAND
PATRICIAN, PATRICIAN, MARTEX, ATELIER MARTEX, BABY MARTEX, UTICA, STEVENS, LADY
PEPPERELL, SEDUCTION, VELLUX and CHATHAM -- all registered trademarks owned by
WestPoint Stevens Inc. and its subsidiaries -- and under licensed brands
including RALPH LAUREN HOME, DISNEY HOME and GLYNDA TURLEY. WestPoint Stevens
can be found on the World Wide Web at http://www.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 practices 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 August 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.
Contact: Lorraine D. Miller, CFA
Senior Vice President Finance and External Communications
404.378.0491
FINANCIAL STATEMENTS TO FOLLOW
WESTPOINT STEVENS INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended June 30, 2004
ProForma Restructuring
Before And Other
Restructuring Items Actual
Net sales $382,992 $- $382,992
Cost of goods sold 325,165 5,502 330,667
Gross earnings (loss) 57,827 (5,502) 52,325
Selling, general and administrative
expenses 56,292 - 56,292
Restructuring and impairment charge - 3,473 3,473
Goodwill impairment charge - - -
Operating earnings (loss) 1,535 (8,975) (7,440)
Interest expense 19,099 - 19,099
Other expense (income)-net (1,820) - (1,820)
Chapter 11 expenses 8,383 - 8,383
Income (loss) before income tax
expense (benefit) (24,127) (8,975) (33,102)
Income tax expense (benefit) (5,877) (3,231) (9,108)
Net income (loss) $(18,250) $(5,744) $(23,994)
Basic and diluted net income (loss)
per common share $(0.36) $(0.48)
Basic and diluted average common
shares outstanding 49,897 49,897
Three Months Ended June 30, 2003
ProForma Restructuring
Before And Other
Restructuring Items Actual
Net sales $365,695 $- $365,695
Cost of goods sold 303,317 4,677 307,994
Gross earnings (loss) 62,378 (4,677) 57,701
Selling, general and administrative
expenses 60,937 - 60,937
Restructuring and impairment charge - 11,946 11,946
Goodwill impairment charge 46,298 - 46,298
Operating earnings (loss) (44,857) (16,623) (61,480)
Interest expense 31,194 - 31,194
Other expense (income)-net 7,924 - 7,924
Chapter 11 expenses 6,244 - 6,244
Income (loss) before income tax
expense (benefit) (90,219) (16,623) (106,842)
Income tax expense (benefit) (28,811) (5,984) (34,795)
Net income (loss) $(61,408) $(10,639) $(72,047)
Basic and diluted net income (loss)
per common share $(1.23) $(1.44)
Basic and diluted average common
shares outstanding 49,897 49,897
WESTPOINT STEVENS INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Six Months Ended June 30, 2004
ProForma Restructuring
Before And Other
Restructuring Items Actual
Net sales $782,632 $- $782,632
Cost of goods sold 653,682 8,459 662,141
Gross earnings (loss) 128,950 (8,459) 120,491
Selling, general and administrative
expenses 112,077 - 112,077
Restructuring and impairment charge - 8,286 8,286
Goodwill impairment charge - - -
Operating earnings (loss) 16,873 (16,745) 128
Interest expense 36,912 - 36,912
Other expense (income)-net 1,010 - 1,010
Chapter 11 expenses 16,502 - 16,502
Income (loss) before income tax
expense (benefit) (37,551) (16,745) (54,296)
Income tax expense (benefit) (9,395) (6,028) (15,423)
Net income (loss) $(28,156) $(10,717) $(38,873)
Basic and diluted net income (loss)
per common share $(0.56) $(0.78)
Basic and diluted average common
shares outstanding 49,897 49,897
Six Months Ended June 30, 2003
ProForma Restructuring
Before And Other
Restructuring Items Actual
Net sales $744,958 $- $744,958
Cost of goods sold 606,290 7,572 613,862
Gross earnings (loss) 138,668 (7,572) 131,096
Selling, general and administrative
expenses 124,400 - 124,400
Restructuring and impairment charge - 13,324 13,324
Goodwill impairment charge 46,298 - 46,298
Operating earnings (loss) (32,030) (20,896) (52,926)
Interest expense 63,659 - 63,659
Other expense (income)-net 10,429 - 10,429
Chapter 11 expenses 6,244 - 6,244
Income (loss) before income tax
expense (benefit) (112,362) (20,896) (133,258)
Income tax expense (benefit) (36,783) (7,522) (44,305)
Net income (loss) $(75,579) $(13,374) $(88,953)
Basic and diluted net income (loss)
per common share $(1.51) $(1.78)
Basic and diluted average common
shares outstanding 49,874 49,874
WESTPOINT STEVENS INC.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31, June 30,
2004 2003 2003
Assets
Current Assets
Cash and cash equivalents $10,096 $3,660 $-
Accounts receivable 229,872 243,507 202,382
Inventories 417,291 368,620 415,519
Prepaid expenses and other
current assets 20,157 32,996 43,103
Total current assets 677,416 648,783 661,004
Property, Plant and Equipment, net 592,264 616,422 673,288
Other Assets
Deferred financing fees 6,082 12,837 20,646
Other assets 1,110 1,737 2,457
$1,276,872 $1,279,779 $1,357,395
Liabilities and Stockholders'
Equity (Deficit)
Current Liabilities
Senior Credit Facility $486,419 $490,689 $490,091
Second-Lien Facility 165,000 165,000 165,000
DIP Credit Agreement 136,137 89,017 80,000
Accrued interest payable 5,611 295 11,345
Accounts payable 51,974 56,198 37,954
Other accrued liabilities 140,638 111,731 100,579
Total current liabilities 985,779 912,930 884,969
Noncurrent Liabilities
Deferred income taxes 5,373 87,179 113,033
Pension and other liabilities 144,994 141,936 151,068
Total noncurrent liabilities 150,367 229,115 264,101
Liabilities Subject to Compromise 1,087,450 1,086,869 1,104,571
Stockholders' Equity (Deficit) (946,724) (949,135) (896,246)
$1,276,872 $1,279,779 $1,357,395
WESTPOINT STEVENS INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended June 30,
2004 2003
Cash flows from operating activities:
Net loss $(38,873) $(88,953)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and other amortization 33,300 37,748
Deferred income taxes (15,439) (44,245)
Changes in working capital (17,667) 39,181
Other-net 5,837 14,829
Non-cash component of restructuring
and impairment charge 1,818 6,959
Goodwill impairment charge - 46,298
Net cash provided by (used for) operating
activities (31,024) 11,817
Cash flows from investing activities:
Capital expenditures (10,883) (6,649)
Net proceeds from sale of assets 5,493 92
Net cash used for investing activities (5,390) (6,557)
Cash flows from financing activities:
Senior Credit Facility:
Borrowings - 720,333
Repayments (4,270) (678,037)
DIP Credit Agreement:
Borrowings 426,120 130,000
Repayments (379,000) (50,000)
Fees associated with DIP Credit Agreement - (5,150)
Trade Receivables Program - (123,502)
Net cash provided by (used for)
financing activities 42,850 (6,356)
Net increase in cash and cash equivalents 6,436 (1,096)
Cash and cash equivalents at beginning of period 3,660 1,096
Cash and cash equivalents at end of period $10,096 $-
DATASOURCE: WestPoint Stevens
CONTACT: Lorraine D. Miller, CFA, Senior Vice President Finance and
External Communications of WestPoint Stevens, +1-404-378-0491
Web site: http://www.westpointstevens.com/