Dan River Inc. Reports Financial Results for Year End 2001.Business Editors DANVILLE Danville. 1 City (1990 pop. 33,828), seat of Vermilion co., E Ill., on the Vermilion River at the Ind. line; inc. 1839. It is a commercial and industrial center in a dairy, farm, and coal area. , Va.--(BUSINESS WIRE)--March 5, 2002 Dan River Inc. (NYSE NYSE See: New York Stock Exchange : DRF DRF Daily Racing Form (horse racing) DRF Dansk Ride Forbund (Danish) DRF Deafness Research Foundation DRF Disaster Relief Fund DRF Data Recovery Field DRF Demat Request Form DRF Dose Reduction Factor ) today reported results for the fourth quarter and year ended December December: see month. 29, 2001. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter of 2001 were $145.8 million, down $20.0 million or 12.1% from $165.8 million in the fourth quarter of 2000. For the fourth quarter of 2001, the Company reported a net loss of $10.0 million, or $0.46 per share. These results include net nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $4.3 million, consisting mostly of a noncash writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. in connection with the manufacturing consolidation announced by the Company in December 2001. Moreover, in the fourth quarter the Company recorded $3.5 million in bad debt expense related to the Kmart For the Australasian department store chain, see Kmart Australia. "K-Mart" is also a nickname for NBA player Kenyon Martin. Kmart is a chain of department stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam. Corporation Chapter 11 bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filing. Without the charges related to the consolidation and the Kmart filing, our net loss would have been $5.3 million, or $0.24 per share, somewhat better than the $0.30 - $0.35 per share loss that had been projected for the fourth quarter. This compares to a net loss of $2.3 million or $0.10 per share for the fourth quarter of 2000. Sales of Dan River's home fashions products for the fourth quarter of 2001 were $108.7 million, down $12.2 million or 10.1% from the fourth quarter of 2000. Sales of apparel fabrics were $27.7 million, down $6.4 million or 18.9% and sales of engineered products were $9.5 million, down $1.3 million or 12.4%. "We continued our successful focus on inventory and debt reduction during the fourth quarter of 2001," Joseph L. Lanier La·nier , Sidney 1842-1881. American writer and musician noted for his melodic poems, including "The Marshes of Glynn" (1878). His novel Tiger Lilies (1867) is based on his experiences as a Confederate soldier. , Jr., Chairman and Chief Executive Officer stated. "Inventories were reduced an additional $10.9 million from the end of the third quarter, and $49.7 million from the end of 2000. This reduction enabled the Company to reduce debt by $16.9 million from the end of the third quarter, and $43.9 million from the end of 2000." "In early December," Mr. Lanier commented, "we announced plans to consolidate some home fashions operations into our facilities in Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). as well as consolidate additional apparel fabrics manufacturing at Sevierville, Tennessee Sevierville (pronounced /səˈvɪrvɪl/) is a city in Sevier County, Tennessee, located in the Southeastern United States. . We closed our home fashions cut and sew sew v. sewed, sewn or sewed, sew·ing, sews v.tr. 1. To make, repair, or fasten by stitching, as with a needle and thread or a sewing machine: facility in Newnan, Georgia Newnan is a city in Coweta County, Georgia, 39 miles (63 km) southwest of Atlanta. In 1900: 3,654 people lived in Newnan, Georgia; in 1910: 5,548, and in 1940: 7,182. The population was 16,242 at the 2000 Census. , and moved that production to our Brookneal, Virginia Brookneal is a town in Campbell County, Virginia, United States. The population was 1,259 at the 2000 census. Geography Brookneal is located at (37.052001, -78.944958)GR1. plant, and we closed part of our home fashions greige greige adj. Not bleached or dyed; unfinished. Used of textiles. [French grège, from Italian (seta) greggia, raw (silk), from greggio, gray, of Germanic origin.] facility in Greenville, South Carolina
Greenville is a mid-sized city located in the upstate of South Carolina. It is the county seat of Greenville CountyGR6 . For the charges related to plant consolidations, the Company incurred a $4.3 million pre-tax charge in the fourth quarter, or $0.12 per share after tax, mostly non-cash related to the writedown of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → . These consolidation efforts are on track for completion during the second quarter of fiscal 2002. The Company expects annual savings of $6.5 million related to this consolidation." "As noted above," Mr. Lanier continued, "we recorded a $3.5 million pre-tax charge in the fourth quarter of 2001 related to Kmart Corporation's Chapter 11 reorganization filing. Monitoring our exposure to Kmart, we had purchased a put option to transfer a portion of the Kmart receivable, which limited our 2001 charge. This charge impacted our fourth quarter earnings by $2.1 million after tax or $0.10 per share, and we expect to record an additional pre-tax $1.4 million in bad debt expense in our first quarter of fiscal 2002. We continue to sell to Kmart in the post-petition structure and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that their efforts will lead to a strong and revitalized re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. organization." Net sales for the 52 weeks of fiscal 2001 were $631.1 million, down $32.4 million or 4.9% from $663.5 million for the 52 weeks of fiscal 2000. The Company reported a net loss of $20.9 million, or $0.96 per share for fiscal 2001. Without the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges related to the consolidation effort and the Kmart bankruptcy filing, the fiscal 2001 net loss would have been $16.1 million, or $0.74 per share. This compares to earnings of $10.8 million, or $0.49 per share for fiscal 2000. For the 2001 fiscal year, sales of Dan River home fashions products were $469.9 million, virtually unchanged from fiscal 2000. Sales of apparel fabrics were $118.9 million, down $24.8 million or 17.2%, and sales of engineered products were $42.3 million, down $7.7 million or 15.5%. It should be noted that the 2001 results are subject to final audit. Specifically, our outside auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together are continuing to review the bad debt provision established in connection with the Kmart bankruptcy, which we believe is adequate. Additionally, our internal projections show continued compliance with the financial covenants contained in our bank credit agreement. Our outside auditors are in the process of completing their evaluation of these projections. "Although the sales environment for our three divisions was very difficult throughout 2001," remarked Mr. Lanier, "our outlook is one of increasing optimism. Orders for our apparel fabrics division are currently at $32.9 million, up 60% from the end of 2001 and up 10% over the same period last year. The increase in order activity is due in part to our success in developing new products as well as the consolidation that has taken place in the apparel fabrics business. The home fashions order book has also stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. . Our expectation is for continued improvement in the order book and, due to our accomplishments in reducing inventories in 2001, manufacturing schedules are projected to run full for the remainder of 2002. Running a full manufacturing schedule will enable us to eliminate most of the underabsorption of fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). that we experienced last year. Additionally, all three of our divisions will benefit from the lower cost of raw materials in the current year, including cotton, polyester polyester, synthetic fiber, produced by the polymerization of the product formed when an alcohol and organic acid react. The outstanding characteristic of polyesters is their ability to resist wrinkling and to spring back into shape when creased. and energy. "While we are very positive about 2002, we expect the first quarter to be a transitional period," Mr. Lanier continued. "There will be some unfavorable manufacturing costs from the fourth quarter of 2001 affecting results for the first quarter of 2002, and we expect a $1.4 million pre-tax charge related to pre-petition Kmart receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . Additionally, the benefits of lower raw material costs will not be fully recognized during the quarter due to our FIFO (First In First Out) A storage method that retrieves the item stored for the longest time. Contrast with LIFO. See traffic engineering methods. FIFO - first-in first-out accounting basis. As a result, we expect a loss in the range of $0.20 per share for the first quarter. We project a return to profitability in the second quarter of 2002 with earnings of $0.05 to $0.10 per share. As the full benefits of improved running schedules and lower raw material costs kick in, we anticipate the back half of 2002 to be considerably better with earnings of $0.30 to $0.40 per share for the six month period. For the full fiscal year of 2002, we are anticipating EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of approximately $80 million. In our view, the worst is behind us. Our inventories are in line and the demand for our products is good, which should permit us to return to more historical levels of profitability." Note: This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. under applicable securities laws. Our financial liquidity and our results of operations could be materially and adversely affected if we are unable to achieve the expected savings from our manufacturing consolidation, if the economy does not generally improve, and if consumer demand for textile products does not improve at retail, or by other market and industry factors, many of which are outside our control. Risks generally associated with our business are detailed in our Current Report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the SEC on July 20, 1998. We believe our forward-looking statements are reasonable; however, undue reliance should not be placed on such statements, which are based on current expectations.
The following are the financial highlights:
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(OOO's EXCEPT PER SHARE DATA)
Fourth Quarter Year
-------------- ----
2001 2000 2001 2000
---- ---- ---- ----
Net Sales $ 145,824 $ 165,828 $ 631,072 $ 663,467
Cost of Sales 130,182 142,475 562,606 541,063
--------- --------- --------- ---------
Gross Profit 15,642 23,353 68,466 122,404
S, G and A 18,601 16,828 67,910 67,335
Amortization
of Goodwill 902 812 3,617 3,137
Other Operating
Costs, Net 4,282 - 4,282 -
--------- --------- --------- ---------
Operating Income
(Loss) (8,143) 5,713 (7,343) 51,932
Other Income
(Expense) (2) (208) 694 226
Equity in Loss
of Joint
Venture - (96) (244) (226)
Interest Expense 7,320 8,883 32,063 32,931
--------- --------- --------- ---------
Income (Loss)
Before Taxes (15,465) (3,474) (38,956) 19,001
Provision
(Benefit) for
Income Taxes (5,442) (1,222) (18,087) 8,228
--------- --------- --------- ---------
Net Income
(Loss) ($ 10,023) ($ 2,252) ($20,869) $ 10,773
========= ========== ========= =========
Earnings (Loss)
Per Share:
Basic and
Diluted ($ 0.46) ($ 0.10) ($ 0.96) $ 0.49
Wtd. Avg. No.
Shares:
Basic and
Diluted 21,766 21,766 21,766 22,024
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's)
2001 2000
---- ----
Assets:
-------
Cash $ 8,316 $ 3,675
Accounts Receivable 75,029 84,726
Inventories 156,508 206,227
Other Current Assets 25,107 22,910
---------- ----------
Total Current Assets 264,960 317,538
Property, Plant &
Equipment, Net 273,735 292,463
Goodwill, Net 115,134 115,011
Other Assets 12,540 20,461
---------- ----------
Total Assets $ 666,369 $ 745,473
========== ==========
Liabilities and
Shareholders' Equity:
----------------------
Current Maturities
of Long-Term Debt $ 26,375 $ 25,872
Accounts Payable &
Accrued Expenses 54,222 59,292
---------- ----------
Total Current
Liabilities 80,597 85,164
Long-Term Debt 299,024 343,399
Deferred Income
Taxes and Other
Liabilities 36,410 39,718
Shareholders'
Equity 250,338 277,192
---------- ----------
Total Liabilities &
Shareholders' Equity $ 666,369 $ 745,473
========== ==========
UNAUDITED
SEGMENT INFORMATION
(000's)
Fourth Quarter Year
-------------- ----
2001 2000 2001 2000
---- ---- ---- ----
Net Sales:
Home Fashions $ 108,689 $ 120,922 $ 469,862 $ 469,758
Apparel Fabrics 27,660 34,088 118,881 143,639
Engineered
Products 9,475 10,818 42,329 50,070
--------- --------- --------- ---------
Consolidated
Net Sales $ 145,824 $ 165,828 $ 631,072 $ 663,467
========= ========= ========= =========
Operating Income
(Loss):
Home Fashions $ 1,044 $ 4,496 $ 10,922 $ 43,344
Apparel Fabrics (3,949) 1,388 (8,579) 10,930
Engineered
Products 81 266 (830) 2,341
Corporate
Items Not
Allocated
to Segments:
Amortization
of Goodwill (902) (812) (3,617) (3,137)
Other
Operating
Costs, Net (4,282) - (4,282) -
Other (135) 375 (957) (1,546)
--------- --------- --------- ---------
Consolidated
Operating
Income
(Loss) ($ 8,143) $ 5,713 ($ 7,343) $ 51,932
========= ========= ========= =========
UNAUDITED
OTHER FINANCIAL DATA
(000's)
Fourth Quarter Year
-------------- ----
2001 2000 2001 2000
---- ---- ---- ----
EBITDA $ 6,665 $ 15,540 $ 40,007 $ 92,279
Depreciation &
Amortization
of Property,
Plant & Equipment $ 9,624 $ 9,015 $ 39,451 $ 37,210
Capital
Expenditures
in Cash $ 2,455 $ 5,955 $ 18,246 $ 33,743
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