FTL TO TAKE NET CHARGE OF $240M-PLUS
NEW YORK — Fruit of the Loom said it will take after-tax charges of $240 million to $260 million in the fourth quarter, resulting in a loss for the quarter and the full year.
The writedown of all goodwill related to the acquisitions of its Salem and Gitano businesses approximates $135 million of the charge, with the remaining $115 million the result of previously announced plant closings, job cuts and charges related to foreign operations and other corporate issues, FTL said.
The net cash outflow of these charges, including tax benefits, approximates $30 million over 1995 and 1996. The writedown for Gitano, the jeanswear company, amounted to $38 million, and the writedown for Salem, which makes licensed sportswear, amounted to $97 million.
The estimated after-tax cost savings from the restructuring will be $40 million to $50 million a year, William Farley, chairman, said in a statement.
“Also, we are anticipating reduced working capital needs as well as reduced levels of capital spending of approximately $75 million,” Farley added.
Despite the charge, Fruit of the Loom closed up 2 1/2 to 22 5/8 Wednesday on the New York Stock Exchange. Lorraine Miller, an analyst at Atlanta-based Robinson-Humphrey, said the rise resulted from the firm saying initiatives are in place to generate about $1 billion in cash over the next three years for paying down debt. — Fairchild News Service