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Glenoit profits fueled by shift in sales, operations

Home fashions sales, reduced costs bring profit

NEW YORK -With sales racing ahead in its core home fashions business, and at the same time cutting costs and hacking away at interest expense, Glenoit Corp. reported that third-quarter profits shot up by 24.8 percent, to $2.3 million from $1.8 million a year ago.

Steadily improving its operations as it works its way through a pre-packaged bankruptcy, the diversified textiles producer said sales climbed higher at a double-digit pace, boosted by a pair of home fashions acquisitions, rising by 15.1 percent, to $99.0 million from $86.0. Home fashions sales soared by 22.7 percent, to $78.3 million from $63.8 million last year, boosted by the buyout of Ex-Cell Home Fashions and American Pacific.

Operating profits in the rapidly expanding home business climbed by 10.7 percent, to $8.1 million from $7.3 million.

And in more good news, Glenoit's battered apparel fabrics business, swamped by a wave of low-cost foreign imports, showed signs of stabilizing. Apparel sales declined by just 6.1 percent, to $21.4 million, a big improvement over a 21.8 percent decline recorded during the second quarter, and a 12.8 percent drop during the first quarter of the year. Operating fabrics from apparel operations were off a slender 2.5 percent, to $5.1 million, following a steep 49.1 percent drop recorded in the second quarter.

Driving the earnings improvement, in addition to the stronger sales, Glenoit pared down both overhead and interest expense. Operating costs improved by 30 basis points during the third quarter, to 17.8 percent of sales from 18.1 percent a year ago. And interest expense was shaved by 13.6 percent, to $5.7 million from $6.6 million last year, a cash savings of $901,456.

For the nine months year to date, Glenoit recorded a substantially narrowed loss of $3.9 million, compared to $9.3 million last year.

Glenoit Home Fashions Results


3 mos. '00 '99 %CHG

Sales

$78,252

$63,801

22.7

Op. income

8,129

7,340

10.7


9 mos. '00 '99 %CHG

Sales

208,556

160,521

29.9

Op. income

17,309

14,717

17.6


Source: Glenoit Corp.

GLENOIT CORP.


Qtr. 9/30 (x000) 2000 1999 %CHG

Sales

$98,979

$85,978

15.1

Oper. income (EBIT)

10,187

10,326

-1.3

Net income

2,253a

1.805a

24.8

Average gross margin

28.1%

30.1%

-

SG & A expense

17.8%

18.1%

-

NINE MONTHS

2000

1999

%CHG

Sales

260,274

222,135

17.2

Oper. income (EBIT)

17,104

17,743

-3.6

Net income

(3,929)b

(9,263)b

-

Average gross margin

26.0%

29.3%

-

SG & A expenses

19.4%

21.3%

-


( ): Denotes loss

a-Third-quarter results include amortization of deferred financing costs of $468,414, compared with $850.393 the prior year. The year-ago three month included restructuring and reorganization charges of $607,000.

b-Nine-month results include amortization of deferred financing costs of $1.2 million vs. $1.9 million last year; reorganization and restructuring charges of $13.1 million, compared with $2.0 million the preceding year; and an income-tax benefit of $5.1 million, compared with $1.6 million last year.

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