EXHIBIT 99.1
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[LETTERHEAD OF GUILFORD MILLS, INC.]
July 27, 2000
Contact: Terrence E. Geremski
Chief Financial Officer
(336) 316-4136
http://www.guilfordmills.com
GUILFORD MILLS ANNOUNCES THIRD QUARTER EARNINGS
BOARD VOTES TO SUSPEND DIVIDEND
GREENSBORO, NC (July 27, 2000) - Guilford Mills, Inc. (NYSE: GFD) today
announced operating results for the Company's third quarter ended July 2, 2000
and other developments referred to below.
Third quarter sales of $211,678,000 were lower than the $217,923,000 reported
for the third quarter of the prior year. The Company incurred a net loss of
$2,597,000 or $0.14 per diluted share compared to net income of $931,000 or
$0.04 per diluted share for the comparable quarter for the prior year.
Apparel segment sales were down 14.1% from the third quarter of the prior year
and continued to be impacted by low-cost imports. This decline in the apparel
segment more than offset continued growth in the automotive and home fashions
segments. Automotive sales were $99.3 million, up 5.8% from last year. The home
fashions segment generated a moderate increase over last year with sales of
$26.3 million, a 3.5% increase. The specialty segment was down overall with
sales of $11.7 million, which represents a 2.5% decrease from fiscal third
quarter 1999.
John Emrich, President and Chief Executive Officer, said, "We are continuing to
see pressure on our margins in the apparel segment. Results have been negatively
impacted by low-cost imports and changes in product mix. Furthermore, we have
reduced production levels at some of our operations that were built for large
runs resulting in higher unit costs. This combination resulted in a pretax
operating loss of $3.5 million for the apparel segment for the quarter, and a
$6.9 million apparel pretax operating loss for the nine months year-to-date.
"Our automotive segment is strong and growing. The segment's decline in
profitability for the quarter was a result of especially strong product demand
at the time we were still integrating operations and expanding capacity. We are
returning to more normalized operations and our profitability should reflect
these improvements by the end of our fiscal year."
Guilford's UK automotive operations also reported lower revenues and operating
income resulting from adverse currency exchange rates and market weakness in
certain models. Guilford Mills will continue to take proactive steps through its
hedging strategies to attempt to decrease its vulnerability to currency
conditions. In Mexico, the Company's automotive operations continued to show
growth in both revenue and operating income. The Company's Brazilian operations
performed at levels similar to last year and they are expected to be profitable
in the first fiscal quarter of 2001.
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NY2:\951956\01
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Mr. Emrich continued, "Success in the Industrial and Specialty Fabrics segment
will continue to be driven by Guilford Mills' innovation, technological advances
and patented products. This segment has the potential for considerable growth
going forward.
"Through our strategically positioned global operations, diverse product mix,
solid customer relationships, technological innovation and strong corporate
culture, we believe Guilford Mills is on the right track for increased growth
and profitability," Mr. Emrich concluded.
(Earnings Summary Below)
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GUILFORD MILLS, INC.
THIRD QUARTER EARNINGS SUMMARY
THIRD FISCAL Comparable
QUARTER ENDED Quarter Ended
JULY 2, 2000 July 4, 1999
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THREE MONTHS ENDED
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SALES
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APPAREL $74,296,000 $86,547,000
AUTOMOTIVE 99,312,000 93,875,000
HOME FASHIONS 26,349,000 25,547,000
INDUSTRIAL/SPECIALTY 11,721,000 11,954,000
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TOTAL SALES $211,678,000 $217,923,000
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NET INCOME/(LOSS) ($2,597,000) $931,000
NET INCOME /(LOSS) PER SHARE:
BASIC ($.14) $.04
DILUTED (.14) .04
EQUIVALENT SHARES OUTSTANDING:
BASIC 18,899,000 22,059,000
DILUTED 18,939,000 22,059,000
NINE MONTHS ENDED
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SALES
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APPAREL $220,940,000 $252,785,000
AUTOMOTIVE 298,348,000 272,451,000
HOME FASHIONS 75,176,000 90,726,000
INDUSTRIAL/SPECIALTY 34,805,000 35,144,000
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TOTAL SALES $629,269,000 $651,106,000
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NET INCOME $3,197,000 $8,049,000
NET INCOME PER SHARE:
BASIC $ .17 $ .36
DILUTED .17 .36
EQUIVALENT SHARES OUTSTANDING:
BASIC 18,899,000 22,456,000
DILUTED 18,958,000 22,467,000
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OTHER ITEMS
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Guilford Mills, Inc. separately announced today a strategic realignment of its
apparel operations designed to provide a more competitive cost structure and to
increase profitability. In connection with the realignment, Guilford Mills will
discontinue the dyeing and finishing operations at its Fishman plant once
current production is completed and will reduce its dyeing and finishing
capacity at its Greenberg plant as circular knit dyeing and finishing is
transitioned to the Company's soon to be completed manufacturing facility in
Tampico, Mexico.
Total costs associated with the restructuring are expected to be approximately
$35 million to $40 million. These costs will be incurred during the fourth
quarter of fiscal 2000 and throughout fiscal year 2001. The Company will take a
restructuring charge in the fourth quarter of fiscal 2000 of $16 million to $19
million and expects to incur an additional $6 million in related costs for an
estimated after-tax impact on fourth quarter earnings of $0.75 to $0.85 per
share. The remaining $13 million to $15 million period costs will be incurred in
fiscal year 2001 and, when netted against expected savings for the period, are
expected to result in a positive estimated after-tax impact on EPS of $0.27 to
$0.34 for fiscal year 2001. The Company expects the net savings, and therefore
positive impact on EPS, to be greater in future periods. These restructuring
charges include both the impact of the realignment related to the Fishman
facility and the Company's plans with respect to the Greenberg facility. As a
result of the restructuring, the Company anticipates that it will not be in
compliance, as of the end of fiscal 2000, with certain covenants in its loan
agreements and has commenced discussions with its lenders to obtain appropriate
amendments or waivers.
Guilford Mills also announced today that, in light of the current business
conditions, the Board of Directors has voted to suspend the quarterly dividend.
Additionally, the Company announced that its Board of Directors adopted a
Stockholder Rights Plan ("Rights Plan") designed to protect Company stockholders
in the event of takeover activity that might deny them the full value of their
investment. The Rights Plan was not adopted in response to any specific takeover
threat and replaces the Company's existing rights plan, which expires on August
23, 2000. In adopting the new Rights Plan, which will expire on July 26, 2010,
the Board declared a dividend distribution of one preferred stock purchase right
for each outstanding share of common stock of the Company, payable to
stockholders of record at the close of business on August 23, 2000. The rights
will become exercisable only in the event, with certain exceptions, a person
either acquires 15% or more of the Company's voting stock or commences a tender
or exchange offer, which if successfully consummated, would result in such
person owning 15% or more of the Company's voting stock. Details of the
replacement Rights Plan will be outlined in a letter to be mailed to
stockholders on or about the record date of August 23, 2000.
Additionally, the Company has consented to the entry of a cease and desist
order, issued by the Securities and Exchange Commission on July 24, 2000,
relating to the previously announced, and now concluded, SEC investigation into
accounting irregularities at the Company's Hofmann Laces unit. No monetary fines
or penalties were imposed against the Company, which neither admitted nor denied
the findings of the order.
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Guilford Mills is an integrated designer and producer of value-added fabrics
using a broad range of technologies. The company is the largest warp knitter in
the world and is a leader in technological advances in textiles, including
microdenier warp knits and wide width circular knits of cotton blended with
LYCRA(R). Guilford Mills serves a diversified customer base in the home
furnishings, apparel, automotive and industrial markets. Through its Guilford
Home Fashions subsidiary, the company produces bedding products, window
treatments and shower curtains for the retail market.
From time to time, the Company may publish forward-looking statements relative
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.
This press release may be deemed to contain forward-looking statements with
respect to fiscal year 2000 and other projections within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. Such statements
could be subject to risk and uncertainty that exist in the operations of the
Company and the business environment that could render actual outcomes and
results materially different from those predicted. A description of these risks
and uncertainties are discussed more fully in the Company's annual report on
Form 10-K for the year ended October 3, 1999 and the Company's other filings
with the Securities and Exchange Commission. The Company assumes no obligations
to update or revise any such forward-looking statements.
INVESTOR RELATIONS CONTACT:
Terrence E. Geremski
Chief Financial Officer
336-316-4136
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