Sport shirts maker plans to close textile facilities Montreal & Bombay
28 Mar '07
3 min read
As a result of the completion of its textile manufacturing consolidation and the relocation of the corporate office, Gildan will incur a restructuring charge of approximately U.S. $21.5 million or U.S. $0.35 per share in fiscal 2007. Under the Company's legal entity structure, there are essentially no tax recoveries with respect to this charge.
The restructuring charge comprises U.S. $0.29 per share for severance and other cash costs, and U.S. $0.06 per share for the non-cash impact of asset write-downs related to the Montreal knitting and corporate office premises and the Mexican sewing plants. The Company expects to generate close to U.S. $15 million in cash proceeds from the disposal of buildings and surplus equipment.
After reflecting the restructuring charge of U.S. $0.35 per share, as well as the U.S. $0.06 per share of accelerated depreciation previously included in the Company's fiscal 2007 earnings guidance, the Company expects diluted EPS of approximately U.S. $2.20 for fiscal 2007. The Company continues to be comfortable with its most recent sales and earnings guidance, which calls for adjusted diluted EPS before restructuring and other charges for fiscal 2007 of approximately U.S. $2.61, on approximately U.S. $975 million of sales revenues.
As a result of the consolidation of its manufacturing operations and the continuing ramp-up of its new offshore textile facilities, the Company expects to realize further annual savings in activewear manufacturing costs and related freight and duties of approximately U.S. $45 million, starting in fiscal 2008.
The Company intends to partially utilize these manufacturing efficiencies, as well as projected efficiencies from ramping up its new sock manufacturing facility in Honduras, to continue to support its strategy to penetrate the mass-market retail channel, as well as to build on its leadership position in the wholesale screenprint channel.
marketing@alchempro.com
