WestPoint Stevens Reports 2001 First-Quarter Fully Diluted Net Loss Per Share Before Charges Associated With Its Eight-Point Plan of $0.10 Versus Net Income Of $0.31 a Year Ago

Apr 26, 2001, 01:00 ET from WestPoint Stevens Inc.

    WEST POINT, Ga., April 26 /PRNewswire/ -- WestPoint Stevens Inc.
 (NYSE:   WXS) (www.westpointstevens.com ) today reported results for the first
 quarter and three months ended March 31, 2001.
     The Company's net sales for the first quarter of 2001 decreased 6.5% or
 $29.2 million to $418.6 million compared with $447.8 million a year ago.
 Excluding sales from the recently acquired Chatham blankets unit and sales of
 the newly acquired Disney Home license, sales declined 8% in the period.
 Continued weak retail demand for home fashions products during the quarter led
 to an increase in promotional activity.  As a result, sales declined in all
 product categories except for basic bedding products, which experienced strong
 double-digit growth in the quarter, as well as towels and the Company's retail
 stores division, which experienced modest increases in sales.
     Operating earnings for the first quarter of 2001, before charges
 associated with WestPoint Stevens' Eight-Point Plan, decreased 45.0% to $29.6
 million or 7.1% of sales, compared with operating earnings of $53.9 million,
 or 12.0% of sales for the same period in 2000.  This decline reflected the
 sales decline, promotional product mix, increased raw material and energy
 costs and under-absorption of overhead due to additional downtime taken in the
 quarter to reduce inventories.  The Company also recorded an unusual charge
 for cotton derivatives of $0.03 per share in accordance with FASB 133,
 Accounting for Derivative Instruments and Hedging Activities, which will be
 recovered in subsequent quarters.
     Net income for the first quarter of 2001, again excluding charges
 associated with the Eight-Point Plan, was a loss of $5.1 million or a loss of
 $0.10 per diluted share compared with net income of $15.6 million or $0.31 per
 diluted share for the first quarter of 2000.
     During the first quarter of 2001, WestPoint recognized a $5.8 million
 charge net of taxes for the implementation of its Eight-Point Plan.  Including
 this charge, net income for the first quarter of 2001 was a loss of $10.9
 million or a loss of $0.22 per diluted share compared with net income of $15.6
 million or $0.31 per diluted share for the first quarter of 2000.
     Holcombe T. Green, Jr., Chairman and CEO of WestPoint Stevens, said, "We
 are keenly disappointed with our first-quarter earnings -- well below our
 expectations of $0.10 per share despite achieving the low end of our sales
 target of a decline of 5%-7%.  Inventory imbalances have created enormous
 challenges for WestPoint Stevens and the entire home fashions industry.  We
 continue to maintain strict inventory controls and believe we are well ahead
 of the industry in this regard.  Faced with very weak sales in January and
 February 2001, we curtailed manufacturing operations approximately one week in
 the first quarter and also continued to liquidate excess inventories in
 several categories.  In the quarter, we incurred a net margin loss of $10.1
 million as a result of promotional sales and $3.5 million in fixed costs as a
 result of curtailed operations.  These aggressive actions, while costly in the
 short term, will lead to a more rapid and sustainable recovery as sales
 improve.  We are pleased that total inventories declined $6.0 million in the
 quarter after adjusting for $4.5 million in inventory assumed with the Chatham
 blanket acquisition in January.  In a normal year, WestPoint would have a
 seasonal build in inventories in the first quarter in excess of $30 million;
 thus, this inventory decline is far more significant."
     Mr. Green concluded, "Given the shortfall in our first-quarter results and
 the lack of visibility of the economy and the retail market, we are
 substantially altering our EPS guidance for 2001 before charges associated
 with the Eight-Point Plan from $1.50 - $1.55 to a much wider range of $0.90 -
 $1.20. The low end of the range assumes a continued decline in core sales for
 the remainder of the year and a continuation of the weak economic environment
 that existed in the first quarter and overall sales growth of 4%.  The high
 end of the range assumes a modest improvement in the economy and in core sales
 with single-digit growth in the second half of 2001 and overall sales growth
 of 8%. For the second quarter of 2001, we anticipate sales to be flat to
 slightly down versus a year ago and EPS before charges associated with our
 Eight-Point Plan to exceed results in the first quarter, but to approximate
 breakeven.  Although we do not expect the economy or retail sales to improve
 until the second half of 2001, we believe that WestPoint has made substantial
 changes during the past year that have strengthened the Company and will pay
 significant rewards in the future.  Our new management team has been in place
 only a short time, but we already see progress with our retail customers. Our
 new designs and product introductions were well received in the April home
 fashions market and we will be aggressive in seeking new markets and
 opportunities."
     As of March 31, 2001, the Company had not purchased any shares during the
 year under various stock repurchase programs and as such approximately 3.8
 million shares are still authorized to be purchased under these programs.
     WestPoint Stevens Inc. is the nation's leading 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 of GRAND
 PATRICIAN, PATRICIAN, MARTEX, UTICA, STEVENS, LADY PEPPERELL, VELLUX and
 CHATHAM, and under licensed brands including RALPH LAUREN HOME, DISNEY HOME,
 SANDERSON, DESIGNERS GUILD, JOE BOXER, GLYNDA TURLEY and SERTA PERFECT
 SLEEPER.  WestPoint Stevens is also a manufacturer of the MARTHA STEWART bed
 and bath lines. WestPoint Stevens can be found on the World Wide Web at
 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 Company assumes no obligation to update
 publicly any forward-looking statements, whether as a result of new
 information, future events or otherwise.
 
 
                               WESTPOINT STEVENS INC.
 
              Condensed Consolidated Statements of Income (Unaudited)
                       (In thousands, except per share data)
 
                                     Three Months Ended March 31,
                                          2001                      2000
                         ProForma     Restructuring
                          Before        And Other
                       Restructuring     Items        Actual        Actual
 
 
 
     Net Sales             $418,613          $---     $418,613      $447,815
     Cost of goods sold     324,916         3,991      328,907       331,385
       Gross earnings
        (loss)               93,697        (3,991)      89,706       116,430
     Selling, general and
      administrative
      expenses               64,075           ---       64,075        62,549
     Restructuring and
      impairment charge         ---         5,008        5,008           ---
       Operating earnings
       (loss)                29,622        (8,999)      20,623        53,881
     Interest expense        34,230           ---       34,230        29,027
     Other expense, net       3,388           ---        3,388           529
       Income (loss) before
        income tax expense
        (benefit)            (7,996)       (8,999)      (16,995)      24,325
     Income tax expense
      (benefit)              (2,855)       (3,240)       (6,095)       8,775
       Net income (loss)    $(5,141)     $ (5,759)     $(10,900)    $ 15,550
 
 
     Basic net income (loss)
      per common share       $ (.10)           ---       $ (.22)       $ .31
     Diluted net income (loss)
      per common share       $ (.10)          ---        $ (.22)       $ .31
 
     Basic average common
      shares outstanding     49,559           ---       49,559        49,633
       Dilutive effect of
       stock options
       and stock bonus plan     ---           ---          ---           488
     Diluted average common
      shares outstanding     49,559           ---       49,559        50,121
 
 
     EBITDA                 $50,097           ---          ---       $75,024
 
 
                               WESTPOINT STEVENS INC.
 
                       Condensed Consolidated Balance Sheets
                                   (In thousands)
 
 
                                   March 31,    December 31,     March 31,
                                     2001          2000            2000
                                 (Unaudited)                   (Unaudited)
     Assets
     Current Assets
       Cash and cash equivalents        $520            $167          $540
       Accounts receivable           153,065          99,191       115,479
       Inventories                   405,907         407,332       479,226
       Prepaid expenses and other
        current assets                46,344          42,247        12,247
     Total current assets            605,836         548,937       607,492
 
     Property, Plant and
      Equipment, net                 765,367         772,020       834,190
 
     Other Assets
       Deferred financing fees        22,018          18,497        18,624
       Prepaid pension and other
        assets                        72,929          72,829        69,647
       Goodwill                       45,857          46,166        68,977
                                  $1,512,007      $1,458,449    $1,598,930
 
 
     Liabilities and Stockholders' Equity (Deficit)
     Current Liabilities
       Senior Credit Facility       $223,050        $152,849      $185,195
       Accrued interest payable       24,359           4,734        24,432
       Trade accounts payable         74,894          75,883        69,874
       Other accounts payable and
        accrued liabilities          139,002         135,404       123,153
     Total current liabilities       461,305         368,870       402,654
 
     Long-Term Debt                1,475,000       1,475,000     1,375,000
 
     Noncurrent Liabilities
       Deferred income taxes         251,668         265,812       291,680
       Other liabilities              61,142          61,588        63,655
     Total noncurrent liabilities    312,810         327,400       355,335
 
     Stockholders' Equity
      (Deficit)                     (737,108)       (712,821)     (534,059)
                                  $1,512,007      $1,458,449    $1,598,930
 
 
 
 
 
                               WESTPOINT STEVENS INC.
 
            Condensed Consolidated Statements of Cash Flows (Unaudited)
                                   (In thousands)
 
 
                                                          Three Months Ended
                                                              March 31,
 
                                                         2001           2000
 
     Cash flows from operating activities:
       Net income (loss)                             $(10,900)       $15,550
       Adjustments to reconcile net income (loss)
        to net cash provided by (used for)
        operating activities:
          Depreciation and other amortization          20,475         21,143
          Deferred income taxes                        (6,405)         7,781
          Changes in working capital                  (40,555)      (62,219)
          Other-net                                    (3,286)       (6,446)
          Restructuring and impairment charge           5,008            ---
     Net cash used for operating activities           (35,663)       (24,191)
 
 
     Cash flows from investing activities:
       Capital expenditures                           (13,727)       (14,492)
       Net proceeds from sale of assets                   212            371
       Purchase of business                            (8,363)           ---
     Net cash used for investing activities           (21,878)       (14,121)
 
 
     Cash flows from financing activities:
       Senior Credit Facility:
         Borrowings                                   269,500        371,500
         Repayments                                  (199,299)      (276,108)
       Net proceeds from Trade Receivables Program    (11,300)           ---
       Purchase of common stock for treasury               ---       (61,203)
       Proceeds from issuance of stock                    ---          5,501
       Cash dividends paid                             (1,007)        (1,000)
 
     Net cash provided by financing activities         57,894         38,690
 
     Net increase in cash and cash equivalents            353            378
 
     Cash and cash equivalents at beginning of period     167            162
 
     Cash and cash equivalents at end of period          $520           $540
 
     CONTACT:  Lorraine D. Miller, CFA, Senior Vice President - Investor
               Relations of WestPoint Stevens Inc., 404-760-7180
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X77454709
 
 

SOURCE WestPoint Stevens Inc.
    WEST POINT, Ga., April 26 /PRNewswire/ -- WestPoint Stevens Inc.
 (NYSE:   WXS) (www.westpointstevens.com ) today reported results for the first
 quarter and three months ended March 31, 2001.
     The Company's net sales for the first quarter of 2001 decreased 6.5% or
 $29.2 million to $418.6 million compared with $447.8 million a year ago.
 Excluding sales from the recently acquired Chatham blankets unit and sales of
 the newly acquired Disney Home license, sales declined 8% in the period.
 Continued weak retail demand for home fashions products during the quarter led
 to an increase in promotional activity.  As a result, sales declined in all
 product categories except for basic bedding products, which experienced strong
 double-digit growth in the quarter, as well as towels and the Company's retail
 stores division, which experienced modest increases in sales.
     Operating earnings for the first quarter of 2001, before charges
 associated with WestPoint Stevens' Eight-Point Plan, decreased 45.0% to $29.6
 million or 7.1% of sales, compared with operating earnings of $53.9 million,
 or 12.0% of sales for the same period in 2000.  This decline reflected the
 sales decline, promotional product mix, increased raw material and energy
 costs and under-absorption of overhead due to additional downtime taken in the
 quarter to reduce inventories.  The Company also recorded an unusual charge
 for cotton derivatives of $0.03 per share in accordance with FASB 133,
 Accounting for Derivative Instruments and Hedging Activities, which will be
 recovered in subsequent quarters.
     Net income for the first quarter of 2001, again excluding charges
 associated with the Eight-Point Plan, was a loss of $5.1 million or a loss of
 $0.10 per diluted share compared with net income of $15.6 million or $0.31 per
 diluted share for the first quarter of 2000.
     During the first quarter of 2001, WestPoint recognized a $5.8 million
 charge net of taxes for the implementation of its Eight-Point Plan.  Including
 this charge, net income for the first quarter of 2001 was a loss of $10.9
 million or a loss of $0.22 per diluted share compared with net income of $15.6
 million or $0.31 per diluted share for the first quarter of 2000.
     Holcombe T. Green, Jr., Chairman and CEO of WestPoint Stevens, said, "We
 are keenly disappointed with our first-quarter earnings -- well below our
 expectations of $0.10 per share despite achieving the low end of our sales
 target of a decline of 5%-7%.  Inventory imbalances have created enormous
 challenges for WestPoint Stevens and the entire home fashions industry.  We
 continue to maintain strict inventory controls and believe we are well ahead
 of the industry in this regard.  Faced with very weak sales in January and
 February 2001, we curtailed manufacturing operations approximately one week in
 the first quarter and also continued to liquidate excess inventories in
 several categories.  In the quarter, we incurred a net margin loss of $10.1
 million as a result of promotional sales and $3.5 million in fixed costs as a
 result of curtailed operations.  These aggressive actions, while costly in the
 short term, will lead to a more rapid and sustainable recovery as sales
 improve.  We are pleased that total inventories declined $6.0 million in the
 quarter after adjusting for $4.5 million in inventory assumed with the Chatham
 blanket acquisition in January.  In a normal year, WestPoint would have a
 seasonal build in inventories in the first quarter in excess of $30 million;
 thus, this inventory decline is far more significant."
     Mr. Green concluded, "Given the shortfall in our first-quarter results and
 the lack of visibility of the economy and the retail market, we are
 substantially altering our EPS guidance for 2001 before charges associated
 with the Eight-Point Plan from $1.50 - $1.55 to a much wider range of $0.90 -
 $1.20. The low end of the range assumes a continued decline in core sales for
 the remainder of the year and a continuation of the weak economic environment
 that existed in the first quarter and overall sales growth of 4%.  The high
 end of the range assumes a modest improvement in the economy and in core sales
 with single-digit growth in the second half of 2001 and overall sales growth
 of 8%. For the second quarter of 2001, we anticipate sales to be flat to
 slightly down versus a year ago and EPS before charges associated with our
 Eight-Point Plan to exceed results in the first quarter, but to approximate
 breakeven.  Although we do not expect the economy or retail sales to improve
 until the second half of 2001, we believe that WestPoint has made substantial
 changes during the past year that have strengthened the Company and will pay
 significant rewards in the future.  Our new management team has been in place
 only a short time, but we already see progress with our retail customers. Our
 new designs and product introductions were well received in the April home
 fashions market and we will be aggressive in seeking new markets and
 opportunities."
     As of March 31, 2001, the Company had not purchased any shares during the
 year under various stock repurchase programs and as such approximately 3.8
 million shares are still authorized to be purchased under these programs.
     WestPoint Stevens Inc. is the nation's leading 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 of GRAND
 PATRICIAN, PATRICIAN, MARTEX, UTICA, STEVENS, LADY PEPPERELL, VELLUX and
 CHATHAM, and under licensed brands including RALPH LAUREN HOME, DISNEY HOME,
 SANDERSON, DESIGNERS GUILD, JOE BOXER, GLYNDA TURLEY and SERTA PERFECT
 SLEEPER.  WestPoint Stevens is also a manufacturer of the MARTHA STEWART bed
 and bath lines. WestPoint Stevens can be found on the World Wide Web at
 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 Company assumes no obligation to update
 publicly any forward-looking statements, whether as a result of new
 information, future events or otherwise.
 
 
                               WESTPOINT STEVENS INC.
 
              Condensed Consolidated Statements of Income (Unaudited)
                       (In thousands, except per share data)
 
                                     Three Months Ended March 31,
                                          2001                      2000
                         ProForma     Restructuring
                          Before        And Other
                       Restructuring     Items        Actual        Actual
 
 
 
     Net Sales             $418,613          $---     $418,613      $447,815
     Cost of goods sold     324,916         3,991      328,907       331,385
       Gross earnings
        (loss)               93,697        (3,991)      89,706       116,430
     Selling, general and
      administrative
      expenses               64,075           ---       64,075        62,549
     Restructuring and
      impairment charge         ---         5,008        5,008           ---
       Operating earnings
       (loss)                29,622        (8,999)      20,623        53,881
     Interest expense        34,230           ---       34,230        29,027
     Other expense, net       3,388           ---        3,388           529
       Income (loss) before
        income tax expense
        (benefit)            (7,996)       (8,999)      (16,995)      24,325
     Income tax expense
      (benefit)              (2,855)       (3,240)       (6,095)       8,775
       Net income (loss)    $(5,141)     $ (5,759)     $(10,900)    $ 15,550
 
 
     Basic net income (loss)
      per common share       $ (.10)           ---       $ (.22)       $ .31
     Diluted net income (loss)
      per common share       $ (.10)          ---        $ (.22)       $ .31
 
     Basic average common
      shares outstanding     49,559           ---       49,559        49,633
       Dilutive effect of
       stock options
       and stock bonus plan     ---           ---          ---           488
     Diluted average common
      shares outstanding     49,559           ---       49,559        50,121
 
 
     EBITDA                 $50,097           ---          ---       $75,024
 
 
                               WESTPOINT STEVENS INC.
 
                       Condensed Consolidated Balance Sheets
                                   (In thousands)
 
 
                                   March 31,    December 31,     March 31,
                                     2001          2000            2000
                                 (Unaudited)                   (Unaudited)
     Assets
     Current Assets
       Cash and cash equivalents        $520            $167          $540
       Accounts receivable           153,065          99,191       115,479
       Inventories                   405,907         407,332       479,226
       Prepaid expenses and other
        current assets                46,344          42,247        12,247
     Total current assets            605,836         548,937       607,492
 
     Property, Plant and
      Equipment, net                 765,367         772,020       834,190
 
     Other Assets
       Deferred financing fees        22,018          18,497        18,624
       Prepaid pension and other
        assets                        72,929          72,829        69,647
       Goodwill                       45,857          46,166        68,977
                                  $1,512,007      $1,458,449    $1,598,930
 
 
     Liabilities and Stockholders' Equity (Deficit)
     Current Liabilities
       Senior Credit Facility       $223,050        $152,849      $185,195
       Accrued interest payable       24,359           4,734        24,432
       Trade accounts payable         74,894          75,883        69,874
       Other accounts payable and
        accrued liabilities          139,002         135,404       123,153
     Total current liabilities       461,305         368,870       402,654
 
     Long-Term Debt                1,475,000       1,475,000     1,375,000
 
     Noncurrent Liabilities
       Deferred income taxes         251,668         265,812       291,680
       Other liabilities              61,142          61,588        63,655
     Total noncurrent liabilities    312,810         327,400       355,335
 
     Stockholders' Equity
      (Deficit)                     (737,108)       (712,821)     (534,059)
                                  $1,512,007      $1,458,449    $1,598,930
 
 
 
 
 
                               WESTPOINT STEVENS INC.
 
            Condensed Consolidated Statements of Cash Flows (Unaudited)
                                   (In thousands)
 
 
                                                          Three Months Ended
                                                              March 31,
 
                                                         2001           2000
 
     Cash flows from operating activities:
       Net income (loss)                             $(10,900)       $15,550
       Adjustments to reconcile net income (loss)
        to net cash provided by (used for)
        operating activities:
          Depreciation and other amortization          20,475         21,143
          Deferred income taxes                        (6,405)         7,781
          Changes in working capital                  (40,555)      (62,219)
          Other-net                                    (3,286)       (6,446)
          Restructuring and impairment charge           5,008            ---
     Net cash used for operating activities           (35,663)       (24,191)
 
 
     Cash flows from investing activities:
       Capital expenditures                           (13,727)       (14,492)
       Net proceeds from sale of assets                   212            371
       Purchase of business                            (8,363)           ---
     Net cash used for investing activities           (21,878)       (14,121)
 
 
     Cash flows from financing activities:
       Senior Credit Facility:
         Borrowings                                   269,500        371,500
         Repayments                                  (199,299)      (276,108)
       Net proceeds from Trade Receivables Program    (11,300)           ---
       Purchase of common stock for treasury               ---       (61,203)
       Proceeds from issuance of stock                    ---          5,501
       Cash dividends paid                             (1,007)        (1,000)
 
     Net cash provided by financing activities         57,894         38,690
 
     Net increase in cash and cash equivalents            353            378
 
     Cash and cash equivalents at beginning of period     167            162
 
     Cash and cash equivalents at end of period          $520           $540
 
     CONTACT:  Lorraine D. Miller, CFA, Senior Vice President - Investor
               Relations of WestPoint Stevens Inc., 404-760-7180
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X77454709
 
 SOURCE  WestPoint Stevens Inc.