UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 20, 2000
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GALEY & LORD, INC.
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Exact name of registrant as specified in its charter
DELAWARE 56-1593207
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State or other jurisdiction of IRS Employer Identification No.
incorporation or organization
980 Avenue of the Americas, New York, New York 10018
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Address of principal executive offices Zip Code
212/465-3000
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Registrant's telephone number, including area code
Not Applicable
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Former name, former address and former
fiscal year, if changed since last report.
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Item 5. Other Events.
Incorporated by reference herein and attached as an exhibit hereto is the press
release of Galey & Lord, Inc. (the "Company") dated September 20, 2000,
announcing a series of strategic initiatives aimed at increasing the Company's
competitiveness and profitability by reducing costs.
Forward-Looking Statements
This Form 8-K contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Those statements
include statements regarding the intent, belief or current expectations of the
Company and its management team. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements. Such risks and
uncertainties include, among other things, competitive and economic factors in
the textile, apparel and home furnishings markets, raw material and other costs,
weather-related delays, general economic conditions and other risks and
uncertainties that may be detailed herein or from time to time in the Company's
other reports filed with the Securities and Exchange Commission.
Exhibits
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1. Press Release dated September 20, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Galey & Lord, Inc.
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(Registrant)
/s/ Michael R. Harmon
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Michael R. Harmon
Executive Vice-President,
Chief Financial Officer
(Principal Financial and
Accounting Officer),
Treasurer and Secretary
September 21, 2000
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Date
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[GRAPHIC OMITTED]
Contact: Michael R. Harmon
(336) 665-3037
GALEY & LORD ANNOUNCES MAJOR STRATEGIC INITIATIVES
GREENSBORO, NC, SEPTEMBER 20, 2000/PRNewswire - Galey & Lord, Inc. today
announced a series of strategic initiatives aimed at increasing the Company's
competitiveness and profitability by reducing costs. This action involves the
closing of two of its facilities, consolidating some operations and outsourcing
certain yarn production.
The Company is taking the following actions:
1. The Company's denim manufacturing facility at Erwin, North Carolina will be
closed. This facility is the highest cost manufacturing operation of Swift
Denim's manufacturing facilities. Some of the value added styling will be
moved to the Company's Columbus, Georgia facility which will be expanded.
Additionally, the Company's recently announced denim joint venture in
Mexico will commence shipping the Swift Denim brand fabric early in the new
year and will be expanded over the next 12 months to accommodate growing
demand in this hemisphere. The closing of the Erwin facility, which has
approximately 740 wage and salary employees, will be completed in December
2000.
2. The Galey & Lord Apparel Fabrics Division will close its yarn spinning
facility at the Brighton Plant/Shannon, Georgia. The Brighton Plant will
continue to be the Company's largest weaving operation. The planned weaving
modernization at this plant will continue. The yarn plant closure will
impact approximately 600 wage and salary employees and should be completed
by December 2000.
3. The Company has entered into a long-term strategic partnership with
Parkdale Mills, Inc., the world's largest supplier of sales yarn. Parkdale
is a highly modernized, state of the art yarn spinner who has the
capability to supply the Company with high quality, cost competitive, ring
and open end yarns. The benefit to the Company will be quality yarns at
lower costs, as well as reduced working capital needs.
A charge estimated to be $60-$65 million pre-tax for asset write-offs, severance
expense and the write-off of certain leases will be taken in the September 2000
quarter. Additionally, the Company expects to incur run-out expenses related to
plant closings of $6-$9 million before taxes. These expenses will be charged to
operations as incurred primarily in December quarter 2000 and continuing to a
lesser extent in March quarter 2001. Of the total closing and run-out costs,
approximately $21 million will be cash. Excluding closing and run-out
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cost, management believes the Company's operations will be profitable in both
September and December quarter 2000.
Arthur C. Wiener, Chairman and CEO, commented, "For quite some time we have
examined all of the initiatives that could make our Company more profitable in
difficult times. We sincerely regret the impact on the lives of the employees
that are involved, but these changes are necessary to assure the long-term
profitability of our Company.
"Our yarn manufacturing at the Brighton Plant needed capital expenditures of
$25-$30 million to modernize and make it cost competitive. Additionally, labor
turnover in the spinning area is extremely high and trending worse. Parkdale
Mills, from whom we have been purchasing yarns for many years, offers us a
source of lower cost, high quality yarn. This partnership for American made yarn
will benefit both companies. The Company anticipates that the capital it would
have spent in yarn manufacturing will now be used to purchase the newest, state
of the art looms for the Brighton weaving operation. We expect to complete such
modernization in approximately 3-4 years.
"Denim made at Swift's Erwin, North Carolina facility is the highest cost denim
of all the Company's manufacturing facilities. The competitive nature of
world-wide production of denim results in the yardage produced at the factory
contributing negative margins to the Company. The Company's overall denim
business is significantly more profitable without this production.
"As difficult as the actions are, management believes that the cost improvements
and margin enhancement that they represent, along with the contribution from our
recently announced Mexican denim joint venture, will position the Company to
show greater profitability in the future. Additionally, these actions will
reduce the Company's working capital needs, therefore lowering its debt at a
quicker pace."
In addition to the above strategic initiatives, the Company plans to transfer or
refinance $50 million to $70 million of its senior secured debt to Canada and
Italy to better utilize cash flows from its foreign operations.
The Company has received approval from its bank group to exclude all of the
closing costs, asset writedowns, run-out costs and one time charges associated
with the above actions from its bank covenant calculations. Accordingly, the
Company fully expects to be in compliance with all of its lenders' covenants.
Galey & Lord is a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim and corduroy, as well as a major international
manufacturer of workwear fabrics. In order to offer sportswear customers a
complete package of fabrics and garments from one source, the Company provides
garment manufacturing from its owned and operated garment facilities. The
Company also is a manufacturer of dyed and printed fabrics for use in home
fashions.
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This press release contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Those statements include statements regarding the intent, belief of current
expectations of the Company and its management team. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, among other things, competitive and economic
factors in the textile, apparel and home furnishings markets, raw materials and
other costs, weather-related delays, general economic conditions and other risks
and uncertainties that may be detailed, from time-to time, in Galey & Lord's
reports filed with the Securities and Exchange Commission.
