Pillowtex review leaves possible deals in doubt

By Staff -- Home Textiles Today, 5/19/2003 2:40:00 PM

New York — Accounting issues at Pillowtex have added another layer of uncertainty to Springs Industries' proposed buyout of the mill, which remains on hold after earlier hitting a snag involving the nation's largest textile union.

Adding an unexpected complication, Pillowtex said its audit committee has ordered a review of the company's financial results for all of last year, a move that will likely force the company to restate its earnings, adding an extra $2 million to its losses before one-time items related to its bankruptcy, the firm said.

Under scrutiny, Pillowtex said, is the way it accounted for trade allowances, including discounts, rebates and co-op advertising. For all of 2002, Pillowtex recorded a loss before one-time bankruptcy items of $96.8 million.

Raising an additional caution flag, Pillowtex said the review could unearth more issues. The company said "additional and material revisions to its previously reported results of operations may arise as a result of the pending review."

Because of the review, Pillowtex said it's delaying the filing of its first-quarter financial results until its auditor, KPMG, can review the financial statements. Pillowtex said it "alerted KPMG of the issues being reviewed as soon as it became aware of them."