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Guilford loses $5.2 million in 1Q

Don Hogsett -- Home Textiles Today, February 12, 2001

GREENSBORO, NC -With sales falling off in all of its key business segments, and squeezed by plant closing and restructuring costs, Guilford Mills Inc. recorded a first-quarter loss of $5.2 million, compared with a year-before profit of $5.1 million.

Sales dropped off by 16 percent at the diversified textiles producer, to $173.6 million from $206.5 million last year, a shortfall of $32.9 million.

Acting as a drag on the top line, sales in the once high-flying home fashions business fell by more than one-third, declining by 34.2 percent, to $16.8 million from $25.5 million the preceding year. Sales in the core automotive fabric business were off by 9.3 percent, to $86.7 million from $95.5 million; and apparel sales fell off by 18.9 percent, to $60.6 million from $74.7 million.

The declines, according to the company, were driven by "continued fierce foreign competition, a particularly poor retail market for apparel and home fashions customers and a worse than anticipated drop in domestic vehicle sales."

Weighing down the bottom line, in addition to the falling sales, Guilford recorded a $3.9 million restructuring charge, including costs and run-out inefficiencies associated with previously announced plant closings and consolidations.

Taking another bite out of the bottom line, interest costs jumped up by more than one-third, to $6.0 million from $4.5 million last year.

With sales falling off, average gross margin contracted by 370 basis points, to 11.3 percent from 15.0 percent a year ago. Gross margin dollars declined by 36.7 percent, to $19.6 million from $30.9 million. On the plus side, Guilford continued to hack away at costs, reducing its expenses by 50 basis points in the quarter despite the shortfall in sales, to 12.0 percent from 12.5 percent. Measured in real dollars, costs were cut by 19.0 percent, to $20.9 million from $25.8 million, a cash savings of $4.9 million.

Guilford Mills Inc


Qtr. 12/31 (x000) 2000 1999 %CHG

Sales

$173,558

$206,502

-16.0

Oper. Income (EBIT)

(1,318)

5,131

-

Net income

(7,652)a

3,027a

-

Per share (diluted)

(0.40)

0.16

-

Average gross margin

11.3%

15.0%

-

SG & A expenses

12.0%

12.5%

-


( ): Denotes loss

a-First-quarter results include a plant restructuring charge of $3.9 million; miscellaneous income of $90,000, compared with $4.1 million the previous year; and an income-tax benefit of $3.4 million, compared with a prior-year tax payment of $1.7 million.

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