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WestPoint Stevens Inc. (NYSE: WXS) (http://www.westpointstevens.com ) today reported results for the second quarter and six months ended June 30, 2001. The Company's net sales for the second quarter of 2001 decreased 13% to $401.7 million compared with $462.0 million a year ago. On a pro forma basis, excluding sales from the acquired Chatham blankets unit, sales declined 14% in the period. Ongoing weak retail demand for home fashions products during the quarter led to continued promotional activity. As a result, sales declined in all product categories. Operating earnings for the second quarter of 2001, before charges associated with WestPoint Stevens' Eight-Point Plan, decreased to $13.7 million or 3.4% of sales, compared with $58.9 million, or 12.7% of sales for the same period in 2000. This decline reflected the negative operating leverage associated with the sales decline, a shift in sales towards lower margin products and increased raw material and energy costs. Net income for the second quarter of 2001, again excluding charges associated with the Eight-Point Plan, was a loss of $13.8 million or a loss of $0.28 per diluted share compared with net income of $17.9 million or $0.36 per diluted share for the second quarter of 2000. During the second quarter of 2001, WestPoint recognized a $3.7 million charge net of taxes for the implementation of its Eight-Point Plan compared with a charge of $107.6 million net of taxes a year ago. Including these charges, net income for the second quarter of 2001 was a loss of $17.5 million or a loss of $0.35 per diluted share compared with a net loss of $89.8 million or a loss of $1.81 per share for the second quarter of 2000. Consistent with its recently amended bank credit facility, the Company will discontinue payment of its quarterly $0.02 per share cash dividend for the foreseeable future. Given the uncertainty of the retail environment for the remainder of 2001, the Company has determined that a range of expectations for 2001 is more appropriate versus a single point estimate. It now expects sales for 2001 of roughly $1,815 million to $1,865 million, versus $1,816 million in 2000; EBITDA before charges associated with the Company's Eight-Point Plan should approximate $215 million to $225 million versus $311 million in 2000; and earnings per share for 2001, before costs associated with the Eight-Point Plan, are expected to approximate a loss of $0.25 to a loss of $0.15 in 2001 versus income of $1.34 in 2000. Holcombe T. Green, Jr., Chairman and CEO of WestPoint Stevens, said, "We continue to focus on the implementation of our Eight-Point Plan, the benefits from which will begin to be realized in the fourth quarter. Sales growth continues as our number one challenge, especially in the face of lackluster consumer demand at retail. However, new products for Ralph Lauren Home and Disney Home will enhance revenue in the latter part of 2001 and beyond. The Company enjoys excellent liquidity and will continue to focus on reducing leverage. We believe WestPoint Stevens is well positioned to take advantage of the opportunities in today's competitive retail environment. In this regard, we are encouraged by investments made by several of our directors and officers in recent weeks totaling approximately 3.1 million shares of WestPoint Stevens' common stock. These purchases, combined with the roughly 3.8 million shares held by employee retirement accounts and 14.5 million shares already held by officers and directors, demonstrate the confidence and commitment our management team has in the long-term outlook for the Company." During the first six months of 2001, sales decreased 9.9% to $820.3 million versus $909.9 million in 2000. Operating earnings before charges associated with the Eight-Point Plan for the first half of 2001 were $43.3 million or 5.3% of sales versus $112.8 million or 12.4% of sales in the comparable year ago period. Net income before charges of $9.4 million net of taxes for the first six months of 2001 was a loss of $19.0 million compared with income of $33.4 million in 2000 reflecting the impact of lower sales, a shift in sales towards lower margin product, increased promotional activity, higher raw material costs and increased borrowing costs associated with increased interest rates and higher debt levels. Fully diluted earnings per share before charges associated with the Eight-Point Plan decreased to a loss of $0.38 versus income of $0.67 a year ago. Including charges associated with the Eight-Point Plan, net income increased to a loss of $28.4 million in the first half of 2001 compared with a net loss of $74.2 million in the comparable year ago period. For the first half of 2001, fully diluted earnings, including charges associated with the Eight-Point Plan, were a loss of $0.57 per share compared with a loss of $1.50 in 2000. WestPoint Stevens Inc. is the nation's leading home fashions consumer products marketing company, with a wide range of bed linens, towels, blankets, comforters and accessories marketed under the well-known brand names of MARTEX, VELLUX, UTICA, GRAND PATRICIAN, PATRICIAN, STEVENS, LADY PEPPERELL and CHATHAM, and under licensed brands including RALPH LAUREN HOME, DISNEY HOME, SANDERSON, DESIGNERS GUILD, JOE BOXER and GLYNDA TURLEY. WestPoint Stevens is also a manufacturer of the MARTHA STEWART bed and bath lines. WestPoint Stevens can be found on the World Wide Web at http://www.westpointstevens.com . Safe Harbor Statement: Except for historical information contained herein, certain matters set forth in this press release are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties may be attributable to important factors that include but are not limited to the following: Product margins may vary from those projected; Raw material prices may vary from those assumed; Additional reserves may be required for bad debts, returns, allowances, governmental compliance costs, or litigation; There may be changes in the performance of financial markets or fluctuations in foreign currency exchange rates; Unanticipated natural disasters could have a material impact upon results of operations; There may be changes in the general economic conditions that affect customer practices or consumer spending; Competition for retail and wholesale customers, pricing and transportation of products may vary from time to time due to seasonal variations or otherwise; Customer preferences for our products can be affected by competition, or general market demand for domestic or imported goods or the quantity, quality, price or delivery time of such goods; There could be an unanticipated loss of a material customer or a material license; The availability and price of raw materials could be affected by weather, disease, energy costs or other factors. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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