Issued Real World News

[Georgia Bard]

(OTC Bulletin Board: FTLAQ)07/27 12:37 Fruit of the Loom Reports Continued Improvement


CHICAGO, July 27 /PRNewswire/ -- Fruit of the Loom, Ltd. , one of the world's leading manufacturers and marketers
of...
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Fruit of the Loom Reports Continued Improvement
CHICAGO, July 27 /PRNewswire/ -- Fruit of the Loom, Ltd. (OTC Bulletin Board: FTLAQ), one of the world's leading manufacturers and marketers of basic family apparel, reported operating results for its second quarter which reflect continuing improvement. Operating results for the second quarter significantly improved compared to the second quarter of 2000 as the Company continued to reduce operating costs and focus its efforts on core profitable products.

Operating earnings before interest and other expenses, excluding consolidation costs of $34.0 million, were $31.9 million in the second quarter of 2001, a $43.3 million improvement from a loss of $11.4 million in the second quarter of 2000. Operating earnings before interest and other expenses, excluding consolidation costs of $40.7 million, were $29.1 million in the first six months of 2001, an $88.5 million improvement from a loss of $59.4 million in the six-month period ended July 1, 2000.

The improvement in operating earnings in both the second quarter and six- month periods reflects reductions in production costs and lower selling, general and administrative expenses. Excluding consolidation costs, selling, general and administrative expenses decreased $20.8 million to $84.7 million for the six-month period ended June 30, 2001 compared to the corresponding period of 2000. These cost improvements more than offset the impact of volume and price reductions. Consolidation costs aggregated $40.7 million in the six-month period ended June 30, 2001, of which $35.8 million were non-cash costs. Consolidation costs primarily relate to the closure of manufacturing facilities as a result of increased efficiencies, reduced capacity requirements and the Company's continuing focus on low-cost production.

For the six months ended June 30, 2001, the Company reported sales of $661.9 million compared to $823.0 million for the corresponding period in 2000. The lower sales volume was principally due to lower Activewear sales, which were affected by weakness in the overall Activewear market combined with competitively lower pricing. For the six-month period ended June 30, 2001, dozens in the overall Activewear market declined 8% when compared to the corresponding period of 2000. Higher sales volume in the comparable period of 2000 also included sales of discontinued non-core Retail and Activewear product lines, and the Gitano jeanswear business. The Company continued its leadership position in mass merchant sales of Men's and Boys' underwear as the Company's market share increased by 1.0 share points to 44.9% in the twelve months ended May 2001 over the same period of the preceding year.

Net operating cash flows before reorganization items improved $23.7 million to $7.1 million in the six-month period ended June 30, 2001. The Company continues to focus on reducing inventories, achieving its lowest level in over eight years. Inventory at June 30, 2001 was $492.0 million, a reduction of $73.4 million from July 1, 2000.

As of July 25, 2001, the borrowing availability under the Company's debtor-in-possession credit facility (DIP) was $260.9 million. During the first six months of the year, normally the seasonal peak for the Company's working capital needs, there were no borrowings under the revolver component of the DIP. In addition, the Company's cash and cash equivalents decreased by $10.4 million which was approximately equal to the overall reduction in the Company's indebtedness during the period. Management believes that the size of the DIP and cash and cash equivalents exceeding $100 million provide the Company with adequate financial flexibility and liquidity to pay its suppliers and meet customer expectations.

Chief Executive Officer Dennis Bookshester commented, "As a result of our recent manufacturing consolidation efforts, we have aligned our production capacity and cost structure with our long-term strategy. Our focus on quality, service and profitability continues to position us for success. Our customer service measures remain excellent. The Company continues to be well positioned to emerge from bankruptcy."

Fruit of the Loom filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code on December 29, 1999 and is currently working through its restructuring in bankruptcy proceedings. On March 15, 2001 the Company filed a Joint Plan of Reorganization with the United States Bankruptcy Court for the District of Delaware. At this time it is not possible to predict the outcome of the reorganization cases, in general, or the effects of the reorganization cases on the business of the Company or on the interests of creditors. There can be no assurance that the Joint Plan of Reorganization will be approved or that the Company will emerge from bankruptcy.

Except for historical information contained herein, information set forth in this news release may contain forward-looking statements and information, which describe or reflect the Company's beliefs concerning future business conditions and the outlook for the Company. These forward looking statements are subject to risks, uncertainties and other factors that could cause the Company's actual results or performance to differ materially from those expressed in, or implied by, these statements. These risks, uncertainties and other factors include, but are not limited to, the following: the ability of the Company to continue operating as a going concern and successfully emerge from Chapter 11 protection pursuant to the approval of a reorganization plan that provides for the Company to remain substantially intact, the Company's ability to successfully execute its corporate strategy in a competitive marketplace, the financial strength of the retail industry, particularly the mass merchant channel, the level of consumer spending for apparel, the amount of sales of the Company's activewear screenprint products, the competitive pricing environment within the basic apparel segment of the apparel industry, the Company's ability to develop, market and sell new products, the Company's successful planning and execution of production necessary to maintain inventories at levels sufficient to meet customer demand, the Company's effective income tax rate, the success of planned advertising, marketing and promotional campaigns, political and regulatory uncertainty that could influence international activities, the resolution of legal proceedings and other contingent liabilities, and weather conditions in the locations in which the Company manufactures and sells its products. Please refer to the Company's documents on file with the Securities and Exchange Commission and the U.S. Bankruptcy Court in Delaware for other risks and uncertainties and for additional information that the Company is required to report to the U.S. Bankruptcy Court on a monthly basis. The Company assumes no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.

Fruit of the Loom is a leading, international vertically integrated basic apparel company, emphasizing branded products for consumers of all ages. The Company is one of the world's largest manufacturers and marketers of men's and boys' underwear, women's and girls' underwear, printable T-shirts and fleece for the activewear industry, casualwear and childrenswear. Fruit of the Loom employs approximately 23,000 people in more than 50 locations worldwide. The Company sells its products principally under the FRUIT OF THE LOOM(R) and BVD(R) brands. For more information about the Company and its products, visit http://www.fruit.com . The contents of the Company's web site are not a part of this release.


FRUIT OF THE LOOM, LTD. AND SUBSIDIARIES

(Debtor in Possession)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share data)


Three Months Ended Six Months Ended

June 30, July 1, June
30, July 1,

2001
2000
2001 2000

Net
sales
$347,700 $447,400
$661,900 $823,000
Cost of
sales
269,400 402,000
535,800 764,600
Gross
earnings
78,300 45,400
126,100 58,400
Selling, general and
administrative expenses:

Operating
40,300
50,700 84,700 105,500
Consolidation
costs
34,000
---
40,700 ---

Total
74,300 50,700
125,400 105,500
Goodwill
amortization
6,100
6,100 12,300
12,300
Operating
loss
(2,100) (11,400)
(11,600) (59,400)
Interest
expense
(26,200) (31,300)
(55,000) (60,600)
Other income (expense) -

net
(1,800)
(3,000)
900 5,300
Loss from continuing
operations before
reorganization items
and income tax

provision
(30,100) (45,700)
(65,700) (114,700)
Reorganization
items
(5,600) (9,500)
(16,200) (19,000)
Loss from continuing
operations before
income tax
provision (35,700)
(55,200) (81,900) (133,700)
Income tax
provision
500
700
1,000 1,400
Loss from continuing

operations
(36,200) (55,900)
(82,900) (135,100)
Discontinued operations -
Sports & Licensing:
Loss from
operations
---
---
--- (2,600)
Net
loss
$(36,200) $(55,900) $(82,900)
$(137,700)
Loss per common share:
Continuing
operations $ (0.54) $
(0.83) $ (1.24) $ (2.02)
Discontinued
operations - Sports
&

Licensing:
Loss from
operations
---
---
--- (0.04)
Net
loss
$ (0.54) $ (0.83) $
(1.24) $ (2.06)
Loss per common share -
assuming dilution:
Continuing
operations $ (0.54) $
(0.83) $ (1.24) $ (2.02)
Discontinued
operations - Sports
&

Licensing:
Loss from
operations
---
---
--- (0.04)
Net
loss
$ (0.54) $ (0.83) $
(1.24) $ (2.06)
Average common
shares
67,000
67,000 67,000
67,000
Average common shares -
assuming
dilution
67,000
67,000 67,000
67,000


FRUIT OF THE LOOM, LTD. AND SUBSIDIARIES

(Debtor in Possession)

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands of dollars)


June 30, December 30,

ASSETS
2001
2000
Current
Assets
(Unaudited)
Cash and cash equivalents
(including restricted
cash)
$123,600 $134,000
Notes and accounts
receivable
(less allowance for
possible
losses of $40,400 and
$44,800,

respectively)
197,700
143,400
Inventories
Finished
goods
383,700
417,900
Work in
process
82,500
102,400
Materials
and
supplies
25,800
45,100

492,000
565,400

Other
35,200
26,100

Total current
assets
848,500
868,900

Property, Plant and
Equipment
965,200 1,117,700
Less accumulated
depreciation
750,900
841,100

Net property, plant and

equipment
214,300
276,600
Other Assets
Goodwill (less accumulated
amortization
of $389,000 and
$376,700, respectively)
594,300
606,600

Other
61,900
77,300

Total other
assets
656,200
683,900

$1,719,000 $1,829,400

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Current maturities of
long-term debt
$741,700 $746,400
Trade accounts
payable
36,100
33,500
Net liabilities of
discontinued

operations
5,600
5,100
Other accounts payable and
accrued

expenses
226,300
236,600

Total current
liabilities
1,009,700 1,021,600
Noncurrent Liabilities
Long-term
debt
408,900
410,300
Net liabilities of
discontinued

operations
11,700
11,900

Other
20,300
11,500

Total noncurrent
liabilities
440,900
433,700
Liabilities Subject to
Compromise
536,100
540,700
Minority
Interest
71,700
71,700
Common Stockholders'
Deficit
(339,400) (238,300)

$1,719,000 $1,829,400


FRUIT OF THE LOOM, LTD. AND SUBSIDIARIES

(Debtor in Possession)
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands of dollars)


Six Months Ended

June 30, July 1,

2001
2000
Cash Flows from Operating Activities
Loss from continuing
operations
$(82,900) $(135,100)
Adjustments to reconcile
to net
operating cash
flows:

Depreciation and
amortization
45,400
60,700

Decrease in working
capital
13,200
66,000

Cash flows of discontinued

operations
300
20,300

Gains on marketable equity

securities
(4,900) (15,800)

Consolidation of operations --

writedowns and
reserves
39,900
---

Other --
net
(3,900) (12,700)

Net operating cash flows

before reorganization items
7,100
(16,600)

Net cash used for

reorganization
items
(12,200)
(9,100)

Net operating cash
flows
(5,100) (25,700)

Cash Flows from Investing Activities
Capital
expenditures
(13,100)
(5,500)
Proceeds from sale of
property,
plant &
equipment
7,600
2,000
Proceeds from sale of
marketable
equity
securities
7,100
14,100
Other -
net
(900)
(1,000)

Net investing cash
flows
700
9,600

Cash Flows from Financing Activities
DIP financing
proceeds
500,100
703,400
DIP financing
payments
(505,800) (680,800)
Principal payments on
long-term
debt and capital
leases
(300)
(300)

Net financing cash
flows
(6,000)
22,300

Net increase in Cash and cash equivalents
(including restricted
cash)
(10,400)
6,200
Cash and cash equivalents (including
restricted cash) at beginning of
period
134,000
44,500
Cash and cash equivalents (including
restricted cash) at end of
period
$123,600
$50,700


CONTACT: George McCane of Richards/Gravelle, [phone], or [e-mail], for Fruit of the Loom, Ltd.

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SOURCE Fruit of the Loom, Ltd.

/CONTACT: George McCane of Richards/Gravelle, [phone], or
[e-mail], for Fruit of the Loom, Ltd./

/Web site: http://www.fruit.com /

(FTLAQ)




FRUIT OF THE LOOM 'A' - FTLAQ
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:=) Gary Swancey