Worldtex, Inc (NYSE: WTX) today announced revenues of $67.6m in the second quarter, as compared to $73.6m for the corresponding period in 1999, a decrease of 8.2 per cent. EBITDA was $7.5m for the second quarter of 2000 as compared to $10.4m in the second quarter of 1999, a decrease of 27.9 per cent. The net loss per share for the second quarter of 2000 was $.20 as compared with net income per share of $.09 in the second quarter of 1999.

For the six months ended June 30, 2000, revenues were $141.5 million, a decrease of 6.7 per cent from the $151.6m recorded in the six months of 1999. EBITDA decreased from $21.2m to $15.5m. Net loss per share was $.27 compared with net income per share of $.15 in the prior year.

Gross profit in the second quarter was $11.6m or 17.1 per cent compared to $13.5m or 18.4 per cent in the second quarter of 1999. The decrease in margins was primarily due to reduced demand for covered yarns, an unfavorable change in product mix, increases in the costs of petroleum-based raw materials, and currency related issues. Selling and administrative expenses and goodwill amortization in the quarter were $8.2m or 12.2 per cent of sales as compared to $6.9m or 9.4 per cent of sales in the second quarter of 1999. The increase primarily relates to professional fees for management information system implementation. Operating income was $3.3m in the second quarter of 2000, compared to $6.6m in the prior year.

Gross profit for the six months was $22.2m or 15.7 per cent compared to $27m or 17.8 per cent in the first six months of 1999. The decrease in margins was due to reduced demand for covered yarns, changes in product mix for narrow elastics, increases in the costs of petroleum-based raw materials, and currency related issues. Selling and administrative expenses and goodwill amortization in the six months were $14.8m or 10.5 per cent of sales as compared to $13.6m or 8.9 per cent of sales in the first six months of 1999. Operating income was $7.3m in the first half of 2000, compared to $13.4m in 1999.

"We are disappointed with Worldtex's financial performance in the second quarter of 2000."

Barry D Setzer, chairman and chief executive officer, said: "We are disappointed with Worldtex's financial performance in the second quarter of 2000. Lower revenues, a change in product mix in our narrow elastic fabrics business, further softness in the covered yarn market due primarily to reduced demand from pantyhose customers in North America, increases in the costs of petroleum-based raw materials, and continuing currency issues reduced profit margins in the second quarter of 2000 compared to the second quarter of 1999."

Setzer continued: "Our narrow elastic fabrics sales of $31.4m met our expectations, and were equal to the second quarter of 1999. This comprised 46 per cent of our total revenues. We experienced margin improvements for narrow elastic fabrics in the second quarter as compared to the first quarter of 2000, as a result of continuing integration and improved efficiencies throughout our narrow elastic facilities."

Covered elastic yarn revenues were $36.2m in the quarter as compared to $42.2m for the second quarter of 1999, a decrease of 14.2 per cent. The decline was primarily due to reduced pantyhose demand in North America, as well as further currency weakness affecting our foreign operations. Both our European and South American operations continue to meet margin expectations in markets that have been adversely affected by reduced demand and overcapacity.

Setzer added: "We must continue to improve efficiencies through further integration and rationalization of our operations to reduce cost and improve our level of profitability. We continue to experience difficulty in completing the implementation of our management information systems, but have made significant progress during this quarter."

Setzer also noted: "The company entered into a new $47.5m credit facility with Bank of America Commercial Finance - Business Credit on July 25, 2000. The facility provides for revolving credit of up to $40m, with loan availability determined under a 'borrowing base' formula derived from Worldtex's domestic accounts receivable and inventory as most recently calculated at the time of borrowing. In addition, the facility provides for a term loan of $7.5m, $3m of which has been borrowed and $4.5m is expected to be borrowed before September 15, 2000, upon the satisfaction of certain conditions. Worldtex has used approximately $20m of new borrowings under the facility to repay its existing domestic credit facility and to pay transaction expenses. Additional availability will be used for Worldtex's working capital needs and general corporate business purposes."

Setzer added that "Worldtex had engaged the investment banking firm Houlihan Lokey Howard & Zukin Capital to study various strategic alternatives for the company."

Setzer concluded: "As we look forward, the third quarter is traditionally our seasonally weakest quarter. We continue to experience an ever changing and challenging environment for our business and the textile and apparel industry in general. Some of the factors affecting our second quarter results will continue to affect our operating results for the remainder of the year. We continue to maintain our strong market position in our two main product lines and are committed to improving our overall financial results and cash flow."

With current annual revenues of nearly $300 million, Worldtex is a market leader in the covered elastic yarn and narrow elastic fabric markets throughout the Americas and Europe. Worldtex supplies a broad range of component products to the apparel, textile, home furnishings and specialty end-use markets.