Dan River Inc. Reports Fourth Quarter Earnings of $0.19 Per Diluted Share and Fiscal 2002 Results.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)--Feb. 4, 2003 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. 28, 2002. 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 fiscal 2002 were $153.2 million, up $7.4 million or 5.0% from $145.8 million in the fourth quarter of fiscal 2001. For the fourth quarter of fiscal 2002, the Company reported net income of $4.2 million, or $0.19 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. These results compare to a net loss of $10.0 million or $0.46 per diluted share for the fourth quarter of fiscal 2001. Sales of Dan River's home fashions products for the fourth quarter of fiscal 2002 were $112.1 million, up $3.4 million or 3.1% from the fourth quarter of fiscal 2001. Sales of apparel fabrics were $31.3 million, up $3.7 million or 13.3%, and sales of engineered products were $9.8 million, up $0.3 million or 2.9%. For fiscal 2002 net sales were $612.9 million, down $18.1 million or 2.9% from $631.1 million for the 52 weeks of fiscal 2001. Before the cumulative effect of a change in an accounting principle related to goodwill, the Company reported income of $7.4 million, or $0.33 per diluted share for fiscal 2002, compared to a net loss of $20.9 million, or $0.96 per diluted share for fiscal 2001. For the 2002 fiscal year, net sales of Dan River home fashions products were $441.2 million, down $28.7 million, or 6.1%, from fiscal 2001. Net sales of apparel fabrics were $131.5 million, up $12.6 million or 10.6%, and net sales of engineered products were $40.3 million, down $2.0 million or 4.8%. "We are pleased to be able to deliver these fourth quarter and full year operating results," commented 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 CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "At this time last year, we had set in motion a plan that would allow us to return to our historic levels of profitability. All the necessary actions had been taken to bring inventory and capacity levels more in line with the current business environment. Our expectations materialized in 2002 as our operations ran at more normal levels, raw material prices declined, and our product mix and margins improved. "Accordingly, we were able to generate significantly increased cash flow in fiscal 2002 due to the successful execution of our plan and our focus on working capital management," commented Mr. Lanier, "enabling us to repay $73.4 million of debt during fiscal 2002. Total debt at year end fiscal 2002 was $252 million, down from $369 million just two years ago. Both our existing credit facility and our senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes mature this year in the third and fourth quarter, and accordingly, they are reflected in the current portion of long term debt on our balance sheet. We are currently monitoring market conditions and intend to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. our bank debt with a new credit facility and our senior subordinated notes with a new issue of notes when market conditions are favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. . We expect that we will complete these refinancings prior to the respective maturities of our existing credit facility and notes." In closing, Mr. Lanier said, "As we look to fiscal 2003, we presently expect sales and operating results similar to fiscal 2002. For the full fiscal year of 2003, we are anticipating net income of $0.40 to $0.45 per share. In the first quarter of fiscal 2003, we are expecting net income of $0.05 to $0.10 per share." The fiscal 2001 fourth quarter 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. In addition, in the fourth quarter of fiscal 2001 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 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. Included in the full fiscal 2002 results is a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. increase in income tax expense of $2.8 million, attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the tax law changes associated with the Job Creation and Worker Assistance Act of 2002, and a $1.6 million pre-tax charge ($1.0 million after tax) for bad debt expense related to the Chapter 11 filing of Kmart Corporation. The fiscal 2001 results include a one-time tax benefit of $5.0 million recorded as a result of the completion of an IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. examination and goodwill amortization expense of $3.6 million. In compliance with the new accounting pronouncement, SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142, "Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of Goodwill and Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," the Company completed the required transitional impairment test of goodwill in the third quarter of fiscal 2002. As a result of the test, a $20.7 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. has been recorded to reflect the writedown of goodwill. This writedown reflects impairment of goodwill in our engineered products, apparel fabrics and import specialty products businesses, and is reported as the cumulative effect of a change in accounting principle as of the first day of fiscal 2002. Including this effect of the change in accounting principle, the Company reported a net loss of $13.3 million, or $0.60 per diluted share, for fiscal 2002. The Company has also announced that its annual meeting of shareholders will be held at 10 a.m. Eastern Time on April 25, 2003, at the Riverview Riverview, city (1990 pop. 13,894), Wayne co., SE Mich., on the Detroit River, a suburb of Detroit; inc. 1959. Plumbing fixtures, industrial chemicals, and steel wheels are among the manufactures of Riverview. Inn, Country Club Drive, in Danville, Virginia Danville is an independent city in Virginia, bounded by Pittsylvania County, Virginia and Caswell County, North Carolina. The Bureau of Economic Analysis combines the city of Danville with Pittsylvania county for statistical purposes under the Danville, Virginia Metropolitan . Shareholders of record on February February: see month. 28, 2003 will be eligible to participate in and vote at the annual meeting. 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. We believe our forward-looking statements are reasonable; however, undue reliance should not be placed on such statements, which are based on current expectations. Among our forward-looking statements are expectations concerning the refinancing Refinancing An extension and/or increase in amount of existing debt. of our credit facility and our senior subordinated notes. There can be no assurance that we will be able to refinance this indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. on terms that we consider to be favorable or at all. Our inability to refinance this indebtedness prior to its maturity would have a material adverse effect on our liquidity and results of operations. Additionally, our financial condition and results of operations could be materially and adversely affected (i) by economic and political factors outside of our control, including, for example, the effects of military conflicts or terrorist activity on the U.S. economy generally, including in particular any resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials adverse effects on retail demand and the cost of energy and raw materials used in our manufacturing processes; and (ii) by numerous other market and industry factors which are outside our control. Risks associated with our business are detailed in our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC on March 22, 2002 and in our quarterly report on Form 10-Q Form 10-Q See 10-Q. filed with the SEC on November November: see month. 8, 2002. The following are the financial highlights:
UNAUDITED
CONDENSED CONSOLIDATED INCOME STATEMENT
(000's EXCEPT PER SHARE DATA)
Fourth Quarter Year
-------------------- ---------------------
2002 2001 2002 2001
--------- ---------- ---------- ----------
Net Sales $153,178 $145,824 $612,949 $631,072
Cost of Sales 123,343 130,182 500,351 562,606
--------- ---------- ---------- ----------
Gross Profit 29,835 15,642 112,598 68,466
S, G and A 17,399 18,601 68,805 67,910
Amortization of Goodwill - 902 - 3,617
Other Operating Costs, Net (240) 4,282 (550) 4,282
--------- ---------- ---------- ----------
Operating Income (Loss) 12,676 (8,143) 44,343 (7,343)
Other Income (Expense) 352 (2) 455 694
Equity in Loss of Joint
Venture - - - (244)
Interest Expense 5,906 7,320 26,884 32,063
--------- ---------- ---------- ----------
Income (Loss) Before Income
Taxes And Cumulative
Effect of Accounting
Change 7,122 (15,465) 17,914 (38,956)
Provision (Benefit) for
Income Taxes 2,964 (5,442) 10,534 (18,087)
--------- ---------- ---------- ----------
Income (Loss) Before
Cumulative Effect of
Accounting Change 4,158 (10,023) 7,380 (20,869)
Cumulative Effect of
Accounting Change, Net
of Tax - - (20,701) -
--------- ---------- ---------- ----------
Net Income (Loss) $4,158 $(10,023) $(13,321) $(20,869)
========= ========== ========== ==========
UNAUDITED
CONDENSED CONSOLIDATED INCOME STATEMENT
(000's EXCEPT PER SHARE DATA)
Fourth Quarter Year
-------------------- ---------------------
2002 2001 2002 2001
--------- ---------- ---------- ----------
Earnings (Loss) Per Share -
Basic:
Income (Loss) Before
Cumulative Effect
of Accounting
Change $0.19 $(0.46) $0.34 ($ 0.96)
Cumulative Effect of
Accounting Change - - (0.95) -
--------- ---------- ---------- ----------
Net Income (Loss) $0.19 $(0.46) ($ 0.61) ($ 0.96)
========= ========== ========== ==========
Earnings (Loss) Per Share -
Diluted:
Income (Loss) Before
Cumulative Effect
of Accounting
Change $0.19 $(0.46) $0.33 ($ 0.96)
Cumulative Effect of
Accounting Change - - (0.93) -
--------- ---------- ---------- ----------
Net Income (Loss) $0.19 $(0.46) ($ 0.60) ($ 0.96)
========= ========== ========== ==========
Wtd. Avg. No. Shares:
Basic 21,839 21,766 21,827 21,766
Diluted 22,234 21,766 22,163 21,766
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's)
2002 2001
--------- ---------
Assets:
-------
Cash $2,832 $8,316
Accounts Receivable 71,292 75,029
Inventories 151,586 156,508
Other Current Assets 19,667 25,107
--------- ---------
Total Current Assets 245,377 264,960
Property, Plant & Equipment, Net 248,175 273,735
Goodwill, Net 91,701 115,134
Other Assets 10,269 12,540
--------- ---------
Total Assets $595,522 $666,369
========= =========
Liabilities and Shareholders' Equity:
-------------------------------------
Current Maturities of Long-Term Debt $241,231 $26,375
Accounts Payable & Accrued Expenses 58,439 54,222
--------- ---------
Total Current Liabilities 299,670 80,597
Long-Term Debt 10,792 299,024
Deferred Income Taxes and Other Liabilities 56,023 36,410
Shareholders' Equity 229,037 250,338
--------- ---------
Total Liabilities & Shareholders' Equity $595,522 $666,369
========= =========
UNAUDITED
SEGMENT INFORMATION
(000's)
Fourth Quarter Year
------------------- -------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Net Sales:
Home Fashions $112,097 $108,689 $441,157 $469,862
Apparel Fabrics 31,329 27,660 131,482 118,881
Engineered Products 9,752 9,475 40,310 42,329
--------- --------- --------- ---------
Consolidated Net
Sales $153,178 $145,824 $612,949 $631,072
========= ========= ========= =========
Operating Income (Loss):
Home Fashions $12,477 $1,044 $43,634 $10,922
Apparel Fabrics 730 (3,949) 2,158 (8,579)
Engineered Products (333) 81 (1,474) (830)
Corporate Items Not
Allocated to
Segments:
Amortization of
Goodwill - (902) - (3,617)
Other Operating Costs,
Net 240 (4,282) 550 (4,282)
Other (438) (135) (525) (957)
--------- --------- --------- ---------
Consolidated Operating
Income $12,676 $(8,143) $44,343 $(7,343)
========= ========= ========= =========
UNAUDITED
OTHER FINANCIAL DATA
(000's)
Fourth Quarter Year
---------------- -----------------
2002 2001 2002 2001
-------- ------- -------- --------
EBITDA $21,957 $6,665 $81,653 $40,007
Depreciation & Amortization of
Property, Plant & Equipment $9,521 $9,624 $37,860 $39,451
Capital Expenditures in Cash $3,797 $2,455 $12,384 $18,246
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