FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission file number 1-11438
WORLDTEX, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1789271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
915 Tate Boulevard, S.E., Suite 106, Hickory, North Carolina 28602
(Address of principal executive offices) (Zip Code)
(828) 322-2242
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Date Class Shares Outstanding
---- ----- ------------------
<S> <C> <C>
May 12, 1999 Common Stock 14,271,171
</TABLE>
<PAGE>
WORLDTEX, INC.
INDEX
-----
PAGE NUMBER
-----------
PART II - Financial Information
Consolidated Statements of Operations (Unaudited) for
the Three Months Ended March 31, 1999 and 1998 1
Consolidated Statements of Comprehensive Loss
(Unaudited) for the Three Months Ended March 31, 1999 1
and 1998
Consolidated Balance Sheets at March 31, 1999
(Unaudited) and December 31, 1998 2
Consolidated Statements of Cash Flows (Unaudited) for
the Three Months Ended March 31, 1999 and 1998 3
Notes to Consolidated Condensed Financial Statements
(Unaudited) 4 - 10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11 - 15
PART II - Other Information 16
<PAGE>
WORLDTEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 78,017 69,229
Cost of goods sold 64,489 55,177
-------- --------
Gross profit 13,528 14,052
Selling and administration expense 5,852 5,813
Goodwill amortization 841 584
-------- --------
Operating profit 6,835 7,655
Interest expense 4,906 4,547
Other income (expense) - net (509) 236
-------- --------
Income before income taxes 1,420 3,344
Provision for income taxes 605 1,193
-------- --------
Net income $ 815 2,151
======== ========
Net income per share:
Basic $ 0.06 0.15
======== ========
Diluted $ 0.06 0.15
======== ========
Weighted average shares outstanding:
Basic 14,271 14,429
======= =======
Diluted 14,271 14,782
======= =======
</TABLE>
WORLDTEX, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Net income $ 815 2,151
Other comprehensive loss:
Foreign translation adjustment (4,757) (2,574)
-------- --------
Comprehensive loss $ (3,942) ( 423)
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,374 6,715
Accounts and notes receivable, less allowance 51,737 42,885
for doubtful accounts of $1,992 in 1999 and
$2,041 in 1998
Inventories 55,119 58,515
Prepaid expenses and other current assets 3,623 3,982
--------- --------
Total current assets 119,853 112,097
Property, plant and equipment - net 110,514 113,652
Other assets 13,431 12,850
Cost in excess of net assets of acquired
businesses, net of accumulated amortization
of $9,682 in 1999 and $9,146 in 1998 83,367 85,521
--------- --------
$ 327,165 324,120
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 7,231 7,308
Current installments of long-term debt 502 525
Accounts payable - trade and other liabilities 38,217 29,412
Income taxes payable 2,518 1,700
--------- --------
Total current liabilities 48,468 38,945
Long-term debt 197,839 198,246
Other long-term liabilities 534 569
Deferred income taxes 10,785 12,878
--------- --------
Total liabilities 257,626 250,638
--------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock (shares issued of 14,701 in 1999 147 147
and 1998)
Paid-in capital 30,084 30,084
Retained earnings 56,983 56,169
Accumulated other comprehensive loss (15,326) (10,569)
Treasury stock, at cost (shares purchased of (2,349) (2,349)
430 in 1999 and 1998) --------- --------
Total stockholders' equity 69,539 73,482
--------- --------
$ 327,165 324,120
========= ========
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 815 2,151
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,092 1,787
Amortization 841 584
Provision for losses on accounts receivable 121 132
Deferred income taxes (1,169) (422)
Change in assets and liabilities:
Accounts and notes receivable (10,232) (4,221)
Inventories 1,931 (532)
Prepaid expenses and other current assets 301 (101)
Accounts payable - trade and other liabilities 9,327 7,493
Income taxes payable 997 499
------- ------
Net cash provided by operating activities 6,024 7,370
------- ------
Cash flows from investing activities:
Capital expenditures (3,036) (3,323)
Other investing activities (745) (315)
------- ------
Net cash used in investing activities (3,781) (3,638)
------- ------
Cash flows from financing activities:
Borrowings under line of credit arrangements - 925
Payments under line of credit arrangements (118) (506)
Borrowings under revolving credit facility 2,000 -
Payments under revolving credit facility - -
Other financing activities (1,822) (310)
------- ------
Net cash provided by financing activities 60 109
------- ------
Effects of exchange rate changes on cash 356 69
------- ------
Net increase in cash 2,659 3,910
Cash at beginning of year 6,715 14,872
------- ------
Cash at end of period $ 9,374 18,782
======= ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 655 453
======= ======
Income taxes $ 6,511 3,662
======= ======
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
(Dollars in thousands)
Note 1 - Basis of Presentation
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position and results of operations for the interim periods reported
hereon. It is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's annual report for the fiscal year ended December 31,
1998. The December 31, 1998 amounts included in these financial statements are
derived from December 31, 1998 audited financial statements and notes thereto.
Note 2 - Summary of Significant Accounting Policies
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market. As of March 31, 1999 and December 31, 1998, the
major classes of inventory were:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 13,939 16,032
Work-in-process 14,844 14,749
Finished goods 26,336 27,734
-------- ------
Total inventories $ 55,119 58,515
======== ======
</TABLE>
Property, plant and equipment are recorded at cost and depreciated
primarily using the straight-line method over the estimated useful lives of the
related assets. Repairs and maintenance costs are charged to expense as
incurred. As of March 31, 1999 and December 31, 1998, property, plant and
equipment consisted of:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Land $ 3,110 3,255
Buildings and leasehold improvements 38,130 39,246
Machinery and equipment 111,456 111,417
--------- -------
152,696 153,918
Less accumulated depreciation and amortization 42,182 40,266
--------- -------
$ 110,514 113,652
========= =======
</TABLE>
Note 3 - Supplemental Consolidating Financial Information
Long-term debt includes $175,000 of senior notes which are guaranteed by
each of the U.S. subsidiaries of the Company. The guarantor subsidiaries are
wholly-owned subsidiaries of the Company and the guarantees are full,
unconditional and joint and several. There are no restrictions on the ability of
the guarantor subsidiaries to make distributions to the Company, except those
generally applicable under relevant corporation laws. Separate financial
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
(Dollars in thousands)
statements of each guarantor subsidiary have not been presented because
management has determined that they are not material to investors. The following
pages include summarized consolidating financial information for the Company,
segregating the parent, the guarantor subsidiaries and nonguarantor
subsidiaries.
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
Note 3 - Supplemental Consolidating Financial Information
(Dollars in thousands)
Consolidating Statements of Income
March 31, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - 53,444 31,062 (6,489) 78,017
Cost of goods sold - 45,804 25,174 (6,489) 64,489
---------- -------- -------- -------- --------
Gross profit - 7,640 5,888 - 13,528
Selling and administrative expense 718 3,635 2,340 - 6,693
---------- -------- -------- -------- --------
Operating profit (loss) (718) 4,005 3,548 - 6,835
Interest expense 4,529 93 284 - 4,906
Intercompany interest expense (income) (2,701) 2,469 232 - -
Intercompany administrative charges (654) 404 250 - -
Other income (expense) - net 53 25 (587) - (509)
---------- -------- -------- -------- --------
Income (loss) before income taxes (1,839) 1,064 2,195 - 1,420
Provision for income taxes (744) 552 797 - 605
Undistributed earnings of subsidiaries 1,910 - - (1,910) -
Net income $ 815 512 1,398 (1,910) 815
========== ======== ======== ======== ========
Consolidating Statements of Income
March 31, 1998
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - 38,691 33,577 (3,039) 69,229
Cost of goods sold - 31,553 26,663 (3,039) 55,177
---------- -------- -------- -------- --------
Gross profit - 7,138 6,914 - 14,052
Selling and administrative expense 729 3,195 2,473 - 6,397
---------- -------- -------- -------- --------
Operating profit (loss) (729) 3,943 4,441 - 7,655
Interest expense 4,153 138 256 - 4,547
Intercompany interest expense (income) (2,239) 1,889 350 - -
Intercompany administrative charges (727) 477 250 - -
Other income (expense) - net 209 16 11 - 236
---------- -------- -------- -------- --------
Income (loss) before income taxes (1,707) 1,455 3,596 - 3,344
Provision for income taxes (575) 505 1,263 - 1,193
Undistributed earnings of subsidiaries 3,283 - - (3,283) -
---------- -------- -------- -------- --------
Net income $ 2,151 950 2,333 (3,283) 2,151
========== ======== ======== ======== ========
</TABLE>
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
Note 3 - Supplemental Consolidating Financial Information
(Dollars in thousands)
Consolidating Balance Sheet
March 31, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Current Assets
Cash $ 1,279 560 7,535 - 9,374
Accounts and notes receivable, net - 28,271 23,466 - 51,737
Inventories - 33,072 22,047 - 55,119
Prepaid expenses and other current
assets 2,792 106 725 - 3,623
---------- -------- -------- -------- --------
Total current assets 4,071 62,009 53,773 - 119,853
Property, plant and equipment, net 387 58,873 51,254 - 110,514
Other assets 8,972 3,315 1,144 - 13,431
Cost in excess of net assets of
acquired businesses, net (192) 67,335 16,224 - 83,367
Intercompany investments 102,727 - - (102,727) -
Intercompany advances 158,785 14,798 - (173,583) -
---------- -------- -------- -------- --------
$ 274,750 206,330 122,395 (276,310) 327,165
========== ======== ======== ======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Short-term borrowings $ - - 7,231 - 7,231
Current installments of long-term
debt - - 502 - 502
Accounts payable-trade and
other liabilities 8,510 13,655 16,052 - 38,217
Income taxes payable 1,696 (1,249) 2,071 - 2,518
---------- -------- -------- -------- --------
Total current liabilities 10,206 12,406 25,856 - 48,468
Long-term debt 187,000 6,000 4,839 - 197,839
Other long-term liabilities - - 534 - 534
Deferred income taxes (6,793) 7,037 10,541 - 10,785
Intercompany payables 14,798 147,793 10,992 (173,583) -
---------- -------- -------- -------- --------
Total liabilities 205,211 173,236 52,762 (173,583) 257,626
---------- -------- -------- -------- --------
Stockholders' equity
Preferred stock - - - - -
Common stock 147 49 31,778 (31,827) 147
Paid-in capital 30,084 15,822 - (15,822) 30,084
Retained earnings 56,983 17,223 53,181 (70,404) 56,983
Accumulated other comprehensive loss (15,326) - (15,326) 15,326 (15,326)
Less-Treasury stock, at cost (2,349) - - - (2,349)
---------- -------- -------- -------- --------
Total stockholders' equity 69,539 33,094 69,633 (102,727) 69,539
---------- -------- -------- -------- --------
$ 274,750 206,330 122,395 (276,310) 327,165
========== ======== ======== ======== ========
</TABLE>
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
Note 3 - Supplemental Consolidating Financial Information
(Dollars in thousands)
Consolidating Balance Sheets
December 31, 1998
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 2,596 14 4,105 - 6,715
Accounts and notes receivable, net - 19,486 23,399 - 42,885
Inventories - 33,815 24,700 - 58,515
Prepaid expenses and other current
assets 2,594 183 1,205 - 3,982
---------- -------- -------- -------- --------
Total current assets 5,190 53,498 53,409 - 112,097
Property, plant and equipment, net 337 58,710 54,605 - 113,652
Other assets 9,240 2,456 1,154 - 12,850
Cost in excess of net assets
of acquired businesses, net - 68,048 17,473 - 85,521
Intercompany investments 105,572 - - (105,572) -
Intercompany advances 155,820 14,798 - (170,618) -
---------- -------- -------- -------- --------
$ 276,159 197,510 126,641 (276,190) 324,120
========== ======== ======== ======== ========
Liabilities and Stockholders' equity
Current Liabilities
Short-term borrowings $ - - 7,308 - 7,308
Current installments of long-term
debt - - 525 - 525
Accounts payable-trade and
other liabilities 5,216 9,440 14,756 - 29,412
Income taxes payable 1,091 (1,641) 2,250 - 1,700
---------- -------- -------- -------- --------
Total current liabilities 6,307 7,799 24,839 - 38,945
Long-term debt 187,000 6,000 5,246 - 198,246
Other long-term liabilities - - 569 - 569
Deferred income taxes (5,428) 6,870 11,436 - 12,878
Intercompany payables 14,798 144,260 11,560 (170,618) -
---------- -------- -------- -------- --------
Total liabilities 202,677 164,929 53,650 (170,618) 250,638
---------- -------- -------- -------- --------
Stockholders' equity
Common stock 147 49 31,778 (31,827) 147
Paid-in capital 30,084 15,822 - (15,822) 30,084
Retained earnings 56,169 16,710 51,782 (68,492) 56,169
Accumulated other comprehensive loss (10,569) - (10,569) 10,569 (10,569)
Less-Treasury stock, at cost (2,349) - - - (2,349)
---------- -------- -------- -------- --------
Total stockholders' equity 73,482 32,581 72,991 (105,572) 73,482
---------- -------- -------- -------- --------
$ 276,159 197,510 126,641 (276,190) 324,120
========== ======== ======== ======== ========
</TABLE>
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
Note 3 - Supplemental Consolidating Financial Information
(Dollars in thousands)
Consolidating Statements of Cash Flows
March 31, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 815 512 1,398 (1,910) 815
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Undistributed earnings of
subsidiaries (1,910) - - 1,910 -
Depreciation and amortization 5 2,489 1,439 - 3,933
Provision for losses on accounts
receivable - 16 105 - 121
Deferred income taxes (1,366) 167 30 - (1,169)
Change in assets and liabilities net
of effects of acquisitions:
Accounts and notes receivable - (8,800) (1,432) - (10,232)
Inventories - 743 1,188 - 1,931
Prepaid expenses and other
current assets (198) 75 424 - 301
Accounts payable - trade and
other current liabilities 3,294 4,215 1,818 - 9,327
Income taxes payable 605 392 - - 997
---------- -------- -------- -------- --------
Net cash provided by (used
in) operating activities 1,245 (191) 4,970 - 6,024
---------- -------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures (56) (1,937) (1,043) - (3,036)
Acquisitions, net of cash acquired 4,985 - - (4,985) -
Other investing activities 205 (859) (91) - (745)
---------- -------- -------- -------- --------
Net cash (used in) provided
by investing activities 5,134 (2,796) (1,134) (4,985) (3,781)
---------- -------- -------- -------- --------
Cash flows from financing activities:
Borrowings under line of credit
arrangements - - - - -
Payments under line of credit
arrangements - - (118) - (118)
Borrowings under revolving credit
facility 2,000 - - - 2,000
Payments under revolving credit
facility - - - - -
Advances - affiliated companies (2,966) 3,533 259 (826) -
Other financing activities (1,974) - (83) 235 (1,822)
---------- -------- -------- -------- --------
Net cash provided by (used
in) financing activities (2,940) 3,533 58 (591) 60
---------- -------- -------- -------- --------
Effects of exchange rate changes in
cash (4,756) - (464) 5,576 356
---------- -------- -------- -------- --------
Net increase in cash (1,317) 546 3,430 - 2,659
Cash at beginning of year 2,596 14 4,105 - 6,715
---------- -------- -------- -------- --------
Cash at end of period $ 1,279 560 7,535 - 9,374
========== ======== ======== ======== ========
</TABLE>
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
Note 3 - Supplemental Consolidating Financial Information
(Dollars in thousands)
Consolidating Statements of Cash Flows
March 31, 1998
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Worldtex, Domestic Foreign
Inc. Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,151 950 2,333 (3,283) 2,151
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Undistributed earnings of
subsidiaries (3,283) - - 3,283 -
Depreciation and amortization 10 1,351 1,010 - 2,371
Provision for losses on accounts
receivable - 76 56 - 132
Deferred income taxes (989) 458 109 - (422)
Change in assets and liabilities net
of effects of acquisitions:
Accounts and notes receivable (94) (1,977) (2,150) - (4,221)
Inventories 1 (1,713) 1,180 - (532)
Prepaid expenses and other
current assets (253) (15) 167 - (101)
Accounts payable - trade and
other current liabilities 3,256 3,410 827 - 7,493
Income taxes payable 443 5 51 - 499
---------- -------- -------- -------- --------
Net cash provided by
operating activities 1,242 2,545 3,583 - 7,370
---------- -------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures (1) (1,871) (1,451) - (3,323)
Acquisitions, net of cash acquired 2,517 - - (2,517) -
Other investing activities 25 (329) (11) - (315)
---------- -------- -------- -------- --------
Net cash (used in) provided
by investing activities 2,541 (2,200) (1,462) (2,517) (3,638)
---------- -------- -------- -------- --------
Cash flows from financing activities:
Borrowings under line of credit
arrangements - - 925 - 925
Payments under line of credit
arrangements - - (506) - (506)
Borrowings under revolving credit
facility - - - - -
Payments under revolving credit
facility - - - - -
Advances - affiliated companies 983 (576) (366) (41) -
Other financing activities (31) - (43) (236) (310)
---------- -------- -------- -------- --------
Net cash provided by (used
in) financing activities 952 (576) 10 (277) 109
---------- -------- -------- -------- --------
Effects of exchange rate changes in
cash (2,574) - (151) 2,794 69
---------- -------- -------- -------- --------
Net increase (decrease) in
cash 2,161 (231) 1,980 - 3,910
Cash at beginning of year 10,058 321 4,493 - 14,872
---------- -------- -------- -------- --------
Cash at end of period $ 12,219 90 6,473 - 18,782
========== ======== ======== ======== ========
</TABLE>
Notes to consolidated condensed financial statements
<PAGE>
WORLDTEX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the three months ended March 31, 1999 were $78.0 million and earnings
were $.8 million compared with sales of $69.2 million and earnings of $2.2
million for the comparable period in 1998. Operating profit plus depreciation
and amortization ("EBITDA") for the three months ended March 31, 1999 and 1998
was $10.8 million and $10.0 million, respectively. Earnings per share were $.06
in the first quarter of 1999 compared to $.15 in the first quarter of 1998.
The following table sets forth the percentages which certain income and expense
items bear to net sales:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
------ ------
<S> <C> <C>
Net sales 100.0% 100.0%
------ ------
Gross margin 17.3 20.3
Selling and administrative expense 7.5 8.4
Goodwill amortization 1.1 .8
------ ------
Operating profit 8.7 11.1
Interest expense 6.3 6.6
Other income (expense) - net (.6) .3
------ ------
Income before income taxes 1.8% 4.8%
====== ======
</TABLE>
Quarterly revenues benefited from the acquisition of a manufacturing facility
from Fruit of the Loom in December 1998. That acquisition, as well as organic
growth of approximately 5% in narrow elastic fabrics as compared to the first
quarter of 1998, led to total sales of narrow elastic fabrics of approximately
$32 million in the quarter. This comprised 41% of total revenues, which is in
line with the Company's 1999 target of 40% of total revenue. Covered elastic
yarn revenues were approximately $46 million in the quarter, which were
approximately 3% below the first quarter of 1998. The decline was due to
continued demand and currency issues in Europe, which offset quarter over
quarter growth in the Americas of 5%.
<PAGE>
WORLDTEX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Gross profit in the quarter was $13.5 million or 17.3% compared to $14.1 million
or 20.3% in the first quarter of 1998. The decrease was due to higher
depreciation and changes in product mix. Selling and administrative expenses and
goodwill amortization in the quarter were $6.7 million or 8.7% of sales as
compared to $6.4 million or 9.2% of sales in the first quarter of 1998. As a
result, operating income was $6.8 million in the first quarter, compared to $7.7
million in the first quarter of 1998.
Interest expense for the three months ended March 31, 1999 increased from the
corresponding period in 1998 by $.4 million due to additional debt associated
with the Fruit of the Loom acquisition in December 1998.
The Company had an effective income tax rate of 42.6% for the three months ended
March 31, 1999 compared to 35.7% for the same period in 1998. This increase
resulted primarily because of lower taxable income in relation to non-deductible
differences and a reduced state tax benefit for certain state net operating loss
carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company meets both its long-term and short-term liquidity needs through
internally generated funds and outside borrowings.
Cash totaled $9.4 million at March 31, 1999, representing a net increase of $2.7
million for the three months then ended. Cash flows from operating activities
and from financing activities are the principal indicators of the Company's
liquidity. During the first three months of 1999, $6.0 million was generated
from operating activities as a result of net income, adjusted for the effects of
depreciation and amortization and changes in the balances of receivables,
payables, inventories and prepaid expenses and other current assets. During the
first three months of 1999, $3.0 million was utilized for the purchase and
upgrading of equipment and facilities. The Company anticipates that its capital
expenditures during 1999 will approximate $15 million, primarily for the
purchase of equipment. In addition, the Company anticipates $3 to $5 million of
the total will be spent for management information systems (see "Year 2000
Compliance" below).
EBITDA represents operating profit plus depreciation and amortization and is
provided as additional information relating to the Company's debt service
capacity. EBITDA for the three months ended March 31, 1999 and 1998 was $10.8
million and $10.0 million, respectively. Depreciation and amortization for the
three months ended March 31, 1999 and 1998 was $3.9 million and $2.4 million,
respectively. The Company had previously announced that, effective October 1,
1998, it shortened the asset lives on certain manufacturing equipment associated
with its covered elastic yarn business. Asset lives for existing equipment were
shortened to approximately 10 to 14 years, on average, as compared to 14 to 20
years in the past. The new policy also applies to all new capital expenditures.
Annual depreciation expense for 1999 will be in an estimated range of $12 to $13
million, with the increased depreciation having no effect on EBITDA. During the
first quarter, depreciation expense was $3.1 million, an increase of $1.3
<PAGE>
WORLDTEX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
million or 73% from the first quarter of 1998. Approximately $1.0 million of the
increase resulted from the change in lives, which affected 1999 first quarter
earnings per share by $.04.
Working capital was $71.3 million at March 31, 1999 and $73.1 million at
December 31, 1998, reflecting a decrease of $1.8 million and current ratios of
2.5 and 2.9 respectively, at March 31, 1999 and December 31, 1998.
The Company has a domestic revolving credit facility that provides for revolving
credit borrowings in an aggregate principal amount of up to $25.0 million. The
revolving credit facility terminates and all amounts borrowed thereunder will be
due December 1, 2002. Loans under the revolving credit facility bear interest at
rates based upon a base rate (the higher of the NationsBank, N.A. prime rate or
the Federal Funds rate), certificates of deposit rates or Eurodollar rates, in
each case plus an applicable margin. Loans under the revolving credit facility
are guaranteed by all U.S. subsidiaries of the Company and are required to be
secured by liens on the accounts receivable and inventory of the Company and its
U.S. subsidiaries, 100% of the outstanding capital stock of the Company's U.S.
subsidiaries and 65% of the outstanding capital stock of each of the non-U.S.
subsidiaries.
At March 31, 1999, the Company had total indebtedness of $205.6 million and
$13.0 million was available for future borrowings under the domestic credit
facility. In addition, at such date the Company's foreign subsidiaries had $22.7
million of U.S. dollar equivalent credit availability under bank lines of
credit. Amounts outstanding as of March 31, 1999 were $7.2 million. The
Company's most restrictive loan covenant limits short-term borrowings by the
Company's foreign subsidiaries to a total of $15.0 million. Worldtex believes
that these lines of credit, together with internally generated funds and access
to other financing sources, will provide sufficient liquidity for the Company's
expected short-term and long-term cash requirements.
YEAR 2000 COMPLIANCE
Many existing computer programs in use around the world use only the last two
digits to define a year rather than four digits and do not take account of the
change in century that will occur in the year 2000. If this problem is not
corrected, computer applications could fail or create mistakes. Worldtex
established a Year 2000 project team in 1998 and retained an independent
consulting group to provide assistance in assessing Year 2000 risks and to
provide recommendations for remediation. The project scope includes both
information technology and computer based embedded technology. The project team
has focused its efforts on information systems software and hardware,
manufacturing equipment and facilities, and third-party relationships.
The Company adopted a multi-step approach in conducting the Year 2000 project
consisting of: (1) identification, (2) assessment and prioritizing, (3)
remediation (including upgrading and replacement) and testing, and (4)
contingency planning. The identification step was completed in April, 1998. Step
two was completed in August, 1998. The Company has begun a worldwide business
system replacement project that uses programs primarily from one vendor. The new
systems are expected to make approximately 80 percent of the Company's business
<PAGE>
WORLDTEX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
computer systems Year 2000 compliant and are scheduled to be complete during the
third quarter of 1999. Remediation for other information systems and computer
based embedded technology systems is scheduled to be complete by December 31,
1999. The Company has initiated formal communications with its significant
suppliers, customers, and other business partners to determine the extent the
Company may be vulnerable in the event those parties fail to properly remediate
their own Year 2000 issues. Monitoring and testing of critical system interfaces
will be performed as the Year 2000 approaches.
The estimated cost for the Year 2000 project, including worldwide business
system replacement, is approximately $5 to $7 million. The Company estimates
that $3 to $5 million will be capitalized as hardware and software purchases.
The remaining cost will be expensed as incurred during the remediation period.
The Company had incurred approximately $1.8 million in costs as of March 31,
1999, primarily for the purchase of software and hardware.
The Company believes, although it cannot assure, that its internal systems and
equipment will be Year 2000 compliant in a timely manner. In addition, the
Company cannot predict whether systems of third parties will be Year 2000
compliant in a timely manner. The implementation of new business systems and
completion of the Year 2000 project as scheduled will reduce the possibility of
significant interruptions of normal operations. The Company believes its most
likely worst case scenario is the disruption of the distribution system (product
delays from suppliers and/or delayed orders from customers) which could result
in the reduction or suspension of the Company's operations. The Company has not
developed a specific Year 2000 contingency plan. Contingency plans will be
addressed as additional information is available regarding the Company's
remediation and testing steps and the status of third-party Year 2000 readiness.
EUROPEAN MONETARY UNION - EURO
The Company conducts business in multiple currencies, including the currencies
of various European countries in the European Union which are participating in
the single European currency by adopting the Euro as their common currency on
January 1, 1999, the date that the Euro began trading on currency exchanges. The
legal currencies of the participating countries will remain legal tender for a
transition period between January 1, 1999 and January 1, 2002. During the
transition period, wire transfers can be made in the Euro with payment for goods
and services in either the Euro or the legacy currency. Between January 1, 2002
and July 1, 2002, the participating countries will introduce Euro notes and
coins and eventually withdraw all legacy currencies. Currency rates during the
transition period will no longer be computed from one legacy to another but
instead will first be converted into the Euro. The Company is addressing the
issues involved with the introduction of the Euro and the impact on its
business, both strategically and operationally. Based on current information,
the Company does not expect the Euro conversion to have a material adverse
effect on the financial position or results of operations of the Company.
<PAGE>
WORLDTEX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations which are other than historical facts are
intended to be "forward-looking statements" within the meaning of federal
securities laws. Words such as "expects", "believes", "anticipates", "projects",
"estimates", "plan", variations of such words and other similar expressions are
intended to identify such forward-looking statements. These statements are
subject to various risks and uncertainties, many of which are outside the
control of the Company. Risks and uncertainties include, but are not limited to,
the financial strength of the apparel industry, the level of consumer spending
for apparel, changing consumer preferences, the competitive pricing environment
within the hosiery market segment of the apparel industry, foreign currency
translation, success of new product introductions, and other risk factors.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in, or implied by, such forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company does
not intend to update publicly this information to reflect new information,
future events or otherwise
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in market risk during the first quarter of
1999 from that which was reported in the Company's annual report on Form 10-K
for 1998 filed March 30, 1999.
<PAGE>
WORLDTEX, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION
10.1 First Amendment To Credit Agreement,
dated as of March 29, 1999, among
Worldtex, the Guarantors, the Lenders
and Nationsbank, N.A. as Agent - filed
herewith.
11.1 Computation of earnings per share -
filed herewith
27.1 Financial Data Schedule (filed with
EDGAR only)
(b) Reports on Form 8-K
During the quarter ended March 31, 1999, the Company did not file any
reports on Form 8-K.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
WORLDTEX, INC.
(Registrant)
Date: May 14, 1999 By: /S/ MARTY R. KITTRELL
--------------------------------
Marty R. Kittrell
Senior Vice President
and Chief Financial Officer
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of March 29, 1999 (the
"Agreement") is entered into among Worldtex, Inc., a Delaware corporation (the
"Borrower"), the Domestic Subsidiaries of the Borrower, as Guarantors, the
Lenders party thereto and NationsBank, N.A., as Agent. All capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement (as defined below).
RECITALS
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent entered
into that certain Credit Agreement dated as of December 1, 1997 (as amended and
modified from time to time, the "CREDIT AGREEMENT");
WHEREAS, the Borrower has requested and the Lenders have agreed to amend
certain terms of the Credit Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDED DEFINITIONS.
(a) The pricing grid in the definition of "APPLICABLE PERCENTAGE"
set forth in Section 1.1 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
<TABLE>
<CAPTION>
Applicable
Percentage
For
Eurodollar Applicable Applicable
Loans and Percentage Percentage Applicable
CD Rate For For Percentage
Loans and Base Letter of For
Pricing Leverage Swingline Rate Credit Unused
Level Ratio Loans Loans Fees Fees
----- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
I greater than 2.50% 1.25% 2.50% .50%
6.25 to 1.0
II less than or equal 2.25% 1.0% 2.25% .50%
to 6.25 to 1.0
but greater than
5.25 to 1.0
III less than or equal 1.75% .75% 1.75% .375%
to 5.25 to 1.0 but
but greater than
4.25 to 1.0
<PAGE>
IV less than or equal 1.50% .50% 1.50% .30%
to 4.25 to 1.0 but
greater than 3.0
to 1.0
V less than or equal 1.25% .25% 1.25% .25%
to 3.0 to 1.0 but
greater than 2.0
to 1.0
VI less than or equal 1.0% 0% 1.0% .20%
to 2.0 to 1.0
</TABLE>
(b) The definition of "REQUIRED LENDERS" is hereby amended and
restated in its entirety to read as follows:
"REQUIRED LENDERS" means (i) until such time as there are three (3)
Lenders party to the Credit Agreement, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate 100% of (a) the Commitments and (b) if the
Commitments have been terminated, the outstanding Loans and Participation
Interests (including the Participation Interests of the Issuing Lender in
any Letters of Credit) and (ii) at such time as there are at least three
(3) Lenders party to the Credit Agreement, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate at least 67% of (a) the Commitments and (b)
if the Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit). For purposes of this definition,
NationsBank, N.A. and Bank of America National Trust and Savings
Association will be considered one Lender.
(c) A definition of "YEAR 2000 COMPLIANT" is hereby added to Section
1.1 of the Credit Agreement and shall read as follows:
"YEAR 2000 COMPLIANT" shall have the meaning assigned to such term
in Section 6.18.
2. YEAR 2000 COMPLIANCE. A new Section 6.18 is hereby added to the Credit
Agreement and shall read as follows:
6.18 YEAR 2000 COMPLIANCE.
Each of the Credit Parties has (i) initiated a review and assessment
of all areas within its and each of its Subsidiaries' businesses and
operations (including those affected by suppliers, vendors and customers)
that could be adversely affected by the "Year 2000 Problem" (that is, the
risk that computer applications may not be able to recognize and properly
perform date-sensitive functions after December 31, 1999), (ii) developed
a plan and timeline for addressing the Year 2000 Problem on a timely
basis, and (iii) to date, implemented that plan in accordance with that
timetable. Based on the foregoing, each Credit Party believes that all
computer applications (including those of its suppliers, vendors and
customers) that are material to its or any of its Subsidiaries' business
and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
<PAGE>
3. LEVERAGE RATIO. Section 7.9(a) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
(a) LEVERAGE RATIO.
There shall be maintained with respect to the Borrower and its
Subsidiaries as of the end of each fiscal quarter to occur during the
periods shown, a Leverage Ratio less than:
(i) From March 31, 1999 to and including June 29, 1999, 7.65 to
1.0;
(ii) From June 30, 1999 to and including September 29, 1999, 6.85
to 1.0;
(iii) From September 30, 1999 to and including December 30, 1999,
6.50 to 1.0;
(iv) From December 31, 1999 to and including March 30, 2000, 5.60
to 1.0;
(v) From March 31, 2000 to and including June 29, 2000, 4.0 to
1.0;
(vi) From June 30, 2000 to and including December 30, 2000, 3.75
to 1.0; and
(vii) From December 31, 2000 and thereafter, 3.6 to 1.0.
4. INTEREST COVERAGE RATIO. Section 7.9(b) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
(b) INTEREST COVERAGE RATIO.
There shall be maintained with respect to the Borrower and its
Subsidiaries as of the end of each fiscal quarter to occur during the
periods shown, an Interest Coverage Ratio greater than:
(i) From March 31, 1999 to and including June 29, 1999, 1.35 to
1.0;
(ii) From June 30, 1999 to and including September 29, 1999, 1.50
to 1.0;
(iii) From September 30, 1999 to and including December 30, 1999,
1.60 to 1.0;
(iv) From December 31, 1999 to and including March 30, 2000, 1.80
to 1.0;
(v) From March 31, 2000 to and including September 29, 2000, 2.5
to 1.0; and
(vi) From September 30, 2000 and thereafter, 2.6 to 1.0.
<PAGE>
5. NET WORTH. Section 7.9(d) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(d) NET WORTH. At all times Net Worth shall be no less than
$82,000,000 increased on a cumulative basis by an amount equal to, (i)
commencing with the fiscal quarter ending March 31, 1999, as of the last
day of each fiscal quarter, 50% of Net Income for the fiscal quarter then
ended (without deductions for losses) PLUS (ii) 100% of the Net Cash
Proceeds from any Equity Transaction subsequent to the Closing Date.
6. SCHEDULE 6.17. Schedule 6.17 of the Credit Agreement is hereby amended
to delete therefrom the reference to Elastex, Inc. and the information relating
to it.
7. YEAR 2000 COMPLIANCE. A new Section 7.12 is hereby added to the Credit
Agreement and shall read as follows:
7.12 YEAR 2000 COMPLIANCE.
The Credit Parties will promptly notify the Agent in the event any
Credit Party discovers or determines that any computer application
(including those of its suppliers, vendors and customers) that is material
to its or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.
8. SECURITY AGREEMENT. The Security Agreement is hereby amended in the
following respects:
(a) Section 5(d) of the Security Agreement is hereby amended and
restated in its entirety to read as follows:
(d) CHANGE IN LOCATION OR NAME. Not, without providing 30 days
prior written notice to the Agent and without filing such amendments
to any previously filed financing statements as the Agent may
require, (i) change the location of its chief executive office and
chief place of business (as well as its books and records) from the
locations set forth on SCHEDULE 4(B) attached hereto, (ii) change
the location of its Collateral from the locations set forth on
SCHEDULE 4(A) attached hereto, and (iii) change its legal name or
begin using a tradename other than as set forth on SCHEDULE 4(C)
attached hereto.
9. CONDITIONS PRECEDENT. The effectiveness of this Agreement is subject to
the satisfaction of each of the following conditions:
(a) The Agent shall have received original counterparts of this
Agreement duly executed by the Borrower, the Guarantors and the Required
Lenders;
<PAGE>
(b) The Agent shall have received an opinion from the counsel to the
Credit Parties as to authority, enforceability and such other matters as
may be required by the Agent; and
(c) Payment by the Borrower to each of the Lenders of an amendment
fee in an amount equal to 0.25% of the Revolving Commitment of such
Lender.
10. MISCELLANEOUS.
(a) The term "Credit Agreement" as used in each of the Credit
Documents shall hereafter mean the Credit Agreement as amended by this
Agreement. Except as herein specifically agreed, the Credit Agreement, and
the obligations of the Credit Parties thereunder and under the other
Credit Documents, are hereby ratified and confirmed and shall remain in
full force and effect according to their terms.
(b) The Borrower and the Guarantors, as applicable, affirm the liens
and security interests created and granted in the Credit Agreement and the
Credit Documents and agree that this Agreement shall in no manner
adversely affect or impair such liens and security interests.
(c) The Borrower and the Guarantors hereby represent and warrant as
follows:
(i) Each Credit Party has taken all necessary action to
authorize the execution, delivery and performance of this Agreement.
(ii) This Agreement has been duly executed and delivered by
the Credit Parties and constitutes each of the Credit Parties' legal,
valid and binding obligations, enforceable in accordance with its terms,
except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium
or similar laws affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or third party is required in connection with the execution,
delivery or performance by any Credit Party of this Agreement.
(d) The Credit Parties represent and warrant to the Lenders that (i)
the representations and warranties of the Credit Parties set forth in
Section 6 of the Credit Agreement and in each other Credit Document are
true and correct as of the date hereof with the same effect as if made on
and as of the date hereof, except to the extent such representations and
warranties expressly relate solely to an earlier date and (ii) no unwaived
event has occurred and is continuing which constitutes a Default or an
Event of Default.
<PAGE>
(e) The Guarantors (i) acknowledge and consent to all of the terms
and conditions of this Agreement, (ii) affirm all of their obligations
under the Credit Documents and (iii) agree that this Agreement and all
documents executed in connection herewith do not operate to reduce or
discharge the Guarantors' obligations under the Credit Agreement or the
other Credit Documents.
(f) This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all
of which shall constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement by telecopy shall be effective as
an original and shall constitute a representation that an executed
original shall be delivered.
(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
[remainder of page intentionally left blank]
<PAGE>
Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
WORLDTEX, INC., a Delaware corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
REGAL MANUFACTURING COMPANY, INC., a
Delaware corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
ELASTIC CORPORATION OF AMERICA, INC., a
Delaware corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
WTX COLOMBIA II, INC., a Delaware
corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
WTX COLOMBIA I, INC., a Delaware
corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
[SIGNATURES CONTINUE]
<PAGE>
WILLCOX & GIBBS FILIX OF DELAWARE, INC.,
a Delaware corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
REGAL YARNS OF ARGENTINA, INC., a North
Carolina corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
NATIONSBANK, N.A., individually in its
capacity as a Lender and in its capacity
as the Agent
By: ________________________________
Name: ______________________________
Title: _____________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: ________________________________
Name: ______________________________
Title: _____________________________
BANQUE NATIONALE DE PARIS
By: ________________________________
Name: ______________________________
Title: _____________________________
EXHIBIT 11.1
WORLDTEX, INC.
COMPUTATION OF EARNINGS PER SHARE
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
<S> <C> <C>
Net income $ 815 2,151
====== ======
Shares:
Weighted average number of
shares outstanding 14,271 14,429
====== ======
Basic earnings per share <F1> $ .06 .15
====== ======
Shares:
Weighted average number of
shares outstanding 14,271 14,429
Assumed exercise of options - 353
------ ------
Total average number of common and
common equivalent shares used for
diluted computation 14,271 14,782
====== ======
Diluted earnings per share <F2> $ .06 .15
====== ======
- -------------------
<F1> Basic earnings per share are calculated based upon the weighted average
number of common shares outstanding during the year.
<F2> Diluted earnings per share are calculated based upon the weighted average
number of common shares and common equivalent shares outstanding during the
year. Common stock equivalents for the three months ended March 31, 1999
are anti-dilutive and therefore excluded from the computation.
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
Worldtex, Inc.
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WORLDTEX,
INC. FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 9,374
<SECURITIES> 0
<RECEIVABLES> 53,729
<ALLOWANCES> 1,992
<INVENTORY> 55,119
<CURRENT-ASSETS> 119,853
<PP&E> 152,696
<DEPRECIATION> 42,182
<TOTAL-ASSETS> 327,165
<CURRENT-LIABILITIES> 48,468
<BONDS> 197,839
0
0
<COMMON> 147
<OTHER-SE> 69,392
<TOTAL-LIABILITY-AND-EQUITY> 327,165
<SALES> 78,017
<TOTAL-REVENUES> 78,017
<CGS> 64,489
<TOTAL-COSTS> 64,489
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 121
<INTEREST-EXPENSE> 4,906
<INCOME-PRETAX> 1,420
<INCOME-TAX> 605
<INCOME-CONTINUING> 815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 815
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
