Dan River Inc. Reports Second Quarter 2002 Earnings Per Share of $0.16.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)--August 2, 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 second fiscal quarter and six months ended June June: see month. 29, 2002. For the second quarter of 2002, the Company reported net earnings of $3.7 million, or $0.16 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. This compares to a net loss of $6.1 million or $0.28 per diluted share for the second quarter of 2001. The results for the second quarter of 2001 included goodwill amortization of $0.9 million, or $0.04 per share. Under Statement of Financial Accounting Standards No. 142 "Goodwill and Other 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. " effective as of the beginning of 2002, goodwill is no longer amortized. 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 second quarter of 2002 were $153.9 million, down $7.9 million or 4.9% from $161.9 million for the second quarter of 2001. Sales of Dan River's home fashions products were $107.2 million, down $9.8 million or 8.4% compared to the same quarter of last year. Sales of apparel fabrics were $37.0 million, up $3.1 million or 9.2%. Sales of engineered products were $9.8 million, down $1.3 million or 11.4%. The Company reported a net loss of $1.5 million, or $0.07 per diluted share for the six months ending June 29, 2002. Included in these results are 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, or $0.13 per share, 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 enacted in March of this year, and a $1.4 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge ($0.8 million after tax or $0.04 per share) for bad debt expense related to the Chapter 11 filing of 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. Excluding these unusual items, the results for the first half would have been net earnings of $2.2 million, or $0.10 per diluted share. The Company generated a net loss of $12.7 million or $0.58 per diluted share in the first half of 2001. The amortization of goodwill included in the results for the first half of fiscal 2001 was $1.6 million, or $0.07 per share. For the first half of fiscal 2002, the Company's net sales were $312.4 million, down $13.5 million or 4.1% from $325.9 million for the first six months of fiscal 2001. Sales of Dan River's home fashions products were $223.2 million, down $14.3 million or 6.0% compared to the first half of last year. Sales of apparel fabrics were $68.9 million, up $2.8 million or 4.3%. Sales of engineered products were $20.3 million, down $2.1 million or 9.2% compared to the first half of 2001. "We are pleased to report better than expected net income and earnings per share for a second consecutive quarter," said J. 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. . "Our profit improvement came as a result of better manufacturing performance from increased capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , lower raw material costs, and an improved product mix compared to the second quarter of last year. The sales volume decline in the second quarter of 2002, compared to the same quarter a year ago, was mostly due to lower sales in our home fashions segment. The decline in home fashions sales was due primarily to the fact that the second quarter of 2001 included the rollout of a large juvenile juvenile /ju·ve·nile/ (ju´vin-il) 1. pertaining to youth or childhood. 2. a youth or child; a young animal. 3. a cell or organism intermediate between immature and mature forms. program, whereas the second quarter of 2002 had no such introduction. Additionally, sluggish consumer demand and the absence of aggressive inventory reduction efforts contributed to the lower sales in this year's second quarter." Mr. Lanier continued, "Our focus over the last 18 months has been on inventory, cost and debt reduction. We have been successful in each of these areas. Our current cost structure in home fashions permits us to be reasonably profitable even at the sluggish demand levels we are now experiencing. The return of more traditional demand levels should only improve our profitability going forward. "I am also encouraged with the progress we've we've Contraction of we have. we've have made in our apparel fabrics business, which returned to profitability in the second quarter. Our product development efforts are resulting in orders for new constructions and designs. These new fabrics, primarily bottom weights, were the source of the segment's growth in sales in the second quarter of this year when compared to a year ago. The primary reasons for its return to profitability were these product development efforts and much better capacity utilization due to the apparel fabrics segment's recent downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing . "During the second quarter our engineered fabrics division experienced lower sales caused primarily by soft demand from the industrial sector and a very competitive pricing situation in the automotive sector." "We continued to strengthen our balance sheet during the quarter," Mr. Lanier stated. "We were able to further reduce debt by $40 million since the end of 2001, almost $35 million of which was repaid in the last three months alone." Mr. Lanier finished by saying, "Barring something unforeseen with the economy, we should continue the momentum we have shown during the first half. We remain comfortable with our previous guidance of $.30 to $.40 for the back half and we now believe earnings per share should come in at the upper end of that range." To comply 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," the Company was required to complete the first step of the transitional impairment test of goodwill by the end of the second quarter of 2002. The results of the test indicate that the goodwill associated with the Company's home fashions business is not impaired See assistive technology. , but that a 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. may have to be taken for the impairment of goodwill associated with its other business units. The measurement of the impairment is expected to be completed in the third quarter of 2002, and could result in the Company recording a one-time non-cash writedown of up to $21 million. The charge would be reflected as a cumulative effect of a change in accounting principle and will not affect third quarter earnings. 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 results of operations could be materially and adversely affected by numerous market and industry factors, many of which are outside our control, including, for example, political or economic conditions or other circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that constrain con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. consumer demand for textile textile Any filament, fibre, or yarn that can be made into fabric or cloth, and the resulting material itself. The word originally referred only to woven fabrics but now includes knitted, bonded, felted, and tufted fabrics as well. products at retail, such that we are forced to sell an unfavorable mix of products and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. are unable to run our manufacturing facilities at efficient rates of production, lack of consumer acceptance of new product offerings, financial difficulties experienced by key customers, our inability to achieve the expected savings from manufacturing consolidations or capital expenditures, or unanticipated increases in the cost of raw materials or other manufacturing costs. Risks generally 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. 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 INCOME STATEMENT
(000's EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
------------------ ----------------
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Net Sales $153,942 $161,858 $312,360 $325,859
Cost of Sales 123,874 144,515 260,539 292,460
-------- -------- -------- --------
Gross Profit 30,068 17,343 51,821 33,399
S, G and A 17,150 16,846 34,965 33,666
Amortization of Goodwill - 889 - 1,694
Other Operating Costs, Net (310) - (310) -
-------- -------- -------- --------
Operating Income (Loss) 13,228 (392) 17,166 (1,961)
Other Income (Expense) 148 (113) 207 48
Equity in Loss of Joint Venture - (177) - (244)
Interest Expense 7,146 8,407 14,528 17,055
-------- -------- -------- --------
Income (Loss) Before Taxes 6,230 (9,089) 2,845 (19,212)
Provision (Benefit) for
Income Taxes 2,572 (2,950) 4,322 (6,553)
-------- -------- -------- --------
Net Income (Loss) $ 3,658 ($ 6,139) ($1,477) ($ 12,659)
========== ======== ======= ========
Earnings (Loss) Per Share:
Basic $ 0.17 ($ 0.28) ($ 0.07) ($ 0.58)
Diluted $ 0.16 ($ 0.28) ($ 0.07) ($ 0.58)
Wtd. Avg. No. Shares:
Basic 21,840 21,766 21,815 21,766
Diluted 22,335 21,766 21,815 21,766
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's)
June 29, December 29,
2002 2001
------------ ------------
Assets:
Cash $ 1,181 $ 8,316
Accounts Receivable 78,478 75,029
Inventories 143,303 156,508
Other Current Assets 28,308 25,107
------------ ------------
Total Current Assets 251,270 264,960
Property, Plant &
Equipment, Net 258,799 273,735
Goodwill, Net 115,134 115,134
Other Assets 11,375 12,540
------------- ------------
Total Assets $ 636,578 $ 666,369
============= ============
Liabilities and Shareholders' Equity:
------------------------------------
Current Maturities of
Long-Term Debt $ 41,344 $ 26,375
Accounts Payable &
Accrued Expenses 57,360 54,222
------------- ------------
Total Current Liabilities 98,704 80,597
Long-Term Debt 243,953 299,024
Deferred Income Taxes and
Other Liabilities 44,914 36,410
Shareholders' Equity 249,007 250,338
------------- ------------
Total Liabilities &
Shareholders' Equity $ 636,578 $ 666,369
============= ============
UNAUDITED
SEGMENT INFORMATION
(000's)
Three Months Ended Six Months Ended
----------------------- ----------------------
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
----------- ---------- ---------- ----------
Net Sales:
Home Fashions $ 107,194 $ 116,962 $ 223,202 $ 237,493
Apparel Fabrics 36,951 33,835 68,882 66,036
Engineered Products 9,797 11,061 20,276 22,330
----------- ---------- ---------- ----------
Consolidated Net
Sales $ 153,942 $ 161,858 $ 312,360 $ 325,859
=========== ========== ========== ==========
Operating Income (Loss):
Home Fashions $ 12,211 $ 2,675 $ 17,525 $ 3,160
Apparel Fabrics 1,323 (1,777) (253) (2,274)
Engineered Products (307) (340) (610) (737)
Corporate Items Not
Allocated to Segments:
Amortization of
Goodwill - (889) - (1,694)
Other Operating
Costs, Net 310 - 310 -
Other (309) (61) 194 (416)
----------- ---------- ---------- ----------
Consolidated
Operating Income
(Loss) $ 13,228 ($ 392) $ 17,166 ($ 1,961)
=========== ========== ========== ==========
UNAUDITED
OTHER FINANCIAL DATA
(000's)
Three Months Ended Six Months Ended
----------------------- ----------------------
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
----------- ---------- ---------- ----------
EBITDA $ 22,431 $ 10,495 $ 35,675 $ 19,496
Depreciation &
Amortization of
Property, Plant &
Equipment $ 9,513 $ 9,998 $ 18,819 $ 19,763
Capital Expenditures
in Cash $ 2,714 $ 5,142 $ 5,337 $ 12,055
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