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Dan River Inc.
P. O. Box 261
Danville, Virginia 24543
NEWS RELEASE
FOR IMMEDIATE RELEASE:
INVESTOR RELATIONS CONTACT:
Denise Laussade, Vice President-Finance
(804)799-4113
DAN RIVER INC. REPORTS PRODUCT COST ADJUSTMENT
Dan River announced today, October 12, 2000, that it expects to record
an adjustment to inventory which will reduce nine months year to date pre-tax
profits by $7.2 million ($4.4 million after-tax or $0.20 per share). The
adjustment is primarily due to a write-down in the book value of inventory
caused by the understatement of fabric usage in the production of certain home
fashions products. The Company believes approximately one half of this
adjustment will impact results for the third quarter of 2000 and the remainder
will impact prior interim periods.
This problem came to management's attention when the Company discovered
that it had improperly recorded inventory receipts from some outside sources
which, when corrected, indicated that the value of its inventory was overstated.
Since the beginning of the year certain fabric usage calculations were
understated thereby erroneously reducing manufacturing cost. The problem appears
to have begun coincidentally with the installation of the Company's Enterprise
Resource Planning System, the conversion of The Bibb Company's product
specifications to that system,
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and the subsequent conversion of The Bibb Company's cost system to Dan River's
cost system in early 2000.
Looking ahead, the Company expects fourth quarter pre-tax profits to be
negatively impacted by approximately $3.0 million due to these higher
manufacturing costs.
The Company is planning to report its third quarter results on October
26, 2000. While profit results are not yet available, the Company's net sales
for the third quarter were $175.1 million, up $19.3 million or 12.4% compared
with the Company's third quarter 1999 net sales of $155.8 million.
The Company will host a conference call on Thursday, October 12, 2000,
at 10:00 AM (ET) with respect to this announcement. The dial in number is
(800)260-0702.
NOTE: This press release contains forward-looking statements under applicable
securities laws. Risks generally associated with Dan River's business are
detailed in Dan River's Current Report on Form 8-K which was filed with the
Securities and Exchange Commission on July 20, 1998. Management believes these
forward-looking statements are reasonable; however, undue reliance should not be
placed on such statements, which are based on current expectations.
