Denim Dish: Avondale Trims Loss … Antik Sees Public … Diamonds and Denim …
Avondale Trims Loss
Denim and twill maker Avondale Inc. reported a narrower loss in its second quarter, despite a 4.1 decline in sales resulting from the shutdown of its Graniteville, S.C., plant following a Jan. 6 train...
Denim and twill maker Avondale Inc. reported a narrower loss in its second quarter, despite a 4.1 decline in sales resulting from the shutdown of its Graniteville, S.C., plant following a Jan. 6 train crash.
The company posted a $3.5 million net loss in the quarter ended Feb. 25, compared with a $5.4 million loss a year earlier. Sales were down 4.1 percent to $124.3 million.
During the early morning of Jan. 6, a Norfolk Southern train hit another train parked on a siding near the Graniteville facility and derailed, releasing a cloud of chlorine gas. The gas killed nine people, including six Avondale employees, damaged equipment at the plant and led to a two-week shutdown of the mill.
The company noted in a filing with the Securities and Exchange Commission that much of its manufacturing equipment and computer hardware at the site was damaged by the corrosive chlorine. “Due to the progressive nature of damage resulting from chlorine gas exposure, further equipment failures will occur over time, with a corresponding reduction in productive efficiency and temporary loss of capacity,” Avondale said in the filing.
The firm noted that it had $2.3 million in labor costs for continuing salaries and $5.6 million in repair costs since the accident. Of that sum, $5 million has been covered through an advance from Avondale’s insurance carrier, with the balance accounted for as a receivable that will be paid later.
The company’s apparel fabrics unit swung to a loss in the quarter, reporting a $2.9 million deficit compared with $479,000 in income a year earlier. Sales were down 8.7 percent to $86.2 million. The firm noted that a 5.5 percent increase in average selling prices was more than offset by a 13.6 percent decline in the volume of fabric sold, which it blamed on the shutdown.
At the yarn unit, profits soared to $4.5 million from $470,000, as sales rose 7.6 percent to $49.5 million. The firm’s yarn plant was not affected by the accident, and Avondale noted that yarn set to be shipped to the Graniteville plant during the shutdown was sold to external customers.
Other revenues, including the firm’s trucking business, came to $6.4 million in the quarter, less than half the prior-year level. The decline primarily resulted from the firm’s shutdown of an unfinished gray goods fabric plant in May 2004.
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