Falcon Products Announces Results for Fiscal 2004 Third Quarter ST.
LOUIS, Sept. 15 /PRNewswire-FirstCall/ -- Falcon Products, Inc.
(NYSE:FCP), a leading manufacturer of commercial furniture, today
announced net sales for the third quarter of fiscal 2004 of $58.4
million, compared with $62.3 million for the third quarter ended
August 2, 2003. Excluding restructuring charges and other one time
charges, the Company's results would have been a net loss of $5.1
million or $0.52 per share in the third quarter of 2004, compared
with a net loss of $0.8 million, or $0.08 per diluted share in the
third quarter of 2003, due to lower volumes year-to-year and
increased interest cost. The charges in the third quarter of 2004
included a $9.5 million loss on early extinguishment of debt ($6.5
million relates to the non cash expense of the fair value of the
warrants issued per the June 15, 2004 senior credit facility
waiver) and a $4.9 million restructuring charge related to the
closure of manufacturing facilities. The charges in the third
quarter of 2003 included a $1.6 million loss on early
extinguishment of debt, a $1.8 million loss on curtailment of the
pension plan and a $4.3 million restructuring charge related to the
closure of the manufacturing facilities. The Company's reported
results for the third quarter of 2004 were a net loss of $19.5
million or $1.98 per share, compared with a net loss of $5.6
million or $0.62 per share in the third quarter of 2003. As a
result of its third quarter operating performance, the Company was
not in compliance with financial covenants under its credit
agreement as of July 31, 2004 and is exploring various
alternatives. Based upon discussions with several potential lending
institutions, the Company believes it will be able to refinance its
senior credit facility on terms that will give the Company the
ability to complete its planned operating improvements and position
itself to return to profitability. "Our focus on improving
operational performance is showing measurable results, but there
are significant challenges that we are aggressively addressing and
intend to resolve. We are optimistic that we can complete new
financing in the near future," Franklin A. Jacobs, Chairman and
Chief Executive Officer, stated. "As our corporate team is working
on this challenge, we want to assure our customers that we're
producing their products to the high standards they expect and
demand, and we're delivering on time and on budget." Falcon
Products, Inc. will conduct a conference call to discuss fiscal
2004 third quarter results on September 20, 2004 at 10:00 a.m. EDT.
The call will be Web cast at http://www.companyboardroom.com/ and
http://www.falconproducts.com/ . Falcon Products, Inc. is the
leader in the commercial furniture markets it serves, with
well-known brands, the largest manufacturing base and the largest
sales force. Falcon and its subsidiaries design, manufacture and
market products for the hospitality and lodging, food service,
office, healthcare and education segments of the commercial
furniture market. Falcon, headquartered in St. Louis, Missouri,
currently operates 8 manufacturing facilities throughout the world
and has approximately 2,100 employees. Safe harbor statement under
the Private Securities Litigation Reform Act of 1995: Statements
contained in this news release which are not historical facts are
forward-looking statements, which involve risks and uncertainties
which could impact future financial performance. Factors which
could cause future performance to differ from those anticipated by
these forward-looking statements include, but are not limited to,
the ability of the Company to refinance its senior credit facility
or obtain waivers of noncompliance with financial covenants on
terms reasonable to the Company, if at all, the ability of the
Company to service its debt obligations and satisfy the covenants
in its loan obligations, the loss of key customers or suppliers
within specific industries, the availability or cost of raw
materials, increased competitive pricing pressures reflecting
industry conditions, the general demand for products, general
economic conditions, economic conditions in the markets served by
the Company, and other factors. Additional cautionary statements
regarding other risk factors that could have an effect on future
performance of the Company are described in Falcon's periodic
filings with the Securities and Exchange Commission. Although
Falcon believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, Falcon can give no
assurance that its expectations will be attained. Any forward-
looking statements represent the best judgment of Falcon as of the
date of this release. Falcon disclaims any obligation to update any
forward-looking statements. FALCON PRODUCTS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS THIRD QUARTER AND FISCAL YEAR
2004 RESULTS (In thousands, except per share amounts) Third Quarter
Ended July 31, August 2, % 2004 2003 Change Net sales $58,351
$62,306 -6.3% Cost of sales, including restructuring charge 48,684
(a) 49,319 (b) -1.3% Gross margin 9,667 12,987 -25.6% Selling,
general and administrative expenses 11,194 11,193 0.0% Interest
expense and other 6,271 4,552 37.8% Loss on early extinguishment of
debt 9,454 (c) 1,564 (d) N/M Loss on curtailment of pension plan -
1,833 (e) N/M Restructuring charge 1,908 (a) 1,980 (f) N/M Loss
before taxes (19,160) (8,135) N/M Income tax expense (benefit) 351
(2,551) N/M Net loss $(19,511) $(5,584) N/M Basic and diluted loss
per share $(1.98) $(0.62) N/M Weighted average diluted shares
outstanding 9,831 9,062 N/M Not Meaningful Thirty-Nine Weeks Ended
July 31, August 2, % 2004 2003 Change Net sales $163,375 $186,150
-12.2% Cost of sales, including restructuring charge 133,113 (a)
144,499 (b) -7.9% Gross margin 30,262 41,651 -27.3% Selling,
general and administrative expenses 32,519 32,602 -0.3% Interest
expense and other 16,969 12,732 33.3% Loss on early extinguishment
of debt 13,401 (c) 1,564 (d) N/M Loss on curtailment of pension
plan 0 1,833 (e) N/M Restructuring charge 2,648 (a) 1,980 (b) N/M
Loss before taxes (35,275) (9,060) N/M Income tax expense (benefit)
773 (2,552) N/M Net loss $(36,048) $(6,508) N/M Basic and diluted
loss per share $(3.81) $(0.72) N/M Weighted average diluted shares
outstanding 9,450 9,056 N/M Not Meaningful (a) The Company recorded
a $4.3 million non-cash restructuring charge during the 3rd quarter
of 2004 to write-down the assets of the Company's Belmont,
Mississippi manufacturing facility in connection with the Company's
decision to dispose of the facility. Of the total charge, $3.0
million is included in Cost of sales in the Consolidated Statements
of Operations. The Company recorded a $0.6 million and $1.3 million
charge during the third quarter and thirty-nine weeks ended July
31, 2004, respectively to account for the cash closure costs of its
Canton, Mississippi and Belmont, Mississippi facilities and the
transfer of production into the Company's other plants. (b) The
Company recorded a $4.3 million non-cash restructuring charge
during the 3rd quarter of 2003 to write-down the assets of the
Company's Zacatecas, Mexico manufacturing facility in connection
with the Company's decision to dispose of the facility. Of the
total charge, $2.3 million is included in Cost of sales in the
Consolidated Statements of Operations. (c) In connection with the
June 15, 2004 waiver, which was a substantial modification to the
senior credit facility, the Company recorded a loss on early
extinguishment of debt of $9.5 million. The loss includes the
write-off of deferred debt issuance costs of $3.0 million and the
expense of the fair value of the warrants of $6.5 million. In
connection with the January 15, 2004 refinancing, the Company
recorded a loss on early extinguishment of debt to write-off
deferred debt issuance costs of $3.9 million. (d) The Company
recorded a $1.6 million loss on early extinguishment of debt to
write-off deferred debt issuance costs in connection with the June
3, 2003 refinancing of its senior credit facility. (e) The Company
recorded a $1.8 million non-cash charge to record the unrecognized
prior service cost in connection with the Company's amendment to
its defined benefit pension plan to freeze the accrual of pension
benefits for service after August 1, 2003. FALCON PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) July 31, Nov.
1, Assets 2004 2003 Cash and cash equivalents $ 1,564 $ 1,356
Accounts receivable 29,793 31,877 Inventories 66,072 62,525 Other
current assets 6,819 5,344 Total current assets 104,248 101,102
Property, plant and equipment, net 33,002 36,579 Other assets
126,792 128,859 $ 264,042 $ 266,540 Liabilities and July 31, Nov.
1, Stockholders' Equity 2004 2003 Accounts payable $ 24,483 $
27,612 Customer deposits 6,353 5,249 Accrued liabilities 12,334
16,842 Current maturities of long-term debt 90,835 3,900 Total
current liabilities 134,005 53,603 Long-term debt 105,838 161,485
Other long-term obligations 12,184 12,868 Stockholders' equity
12,015 38,584 $ 264,042 $ 266,540 DATASOURCE: Falcon Products, Inc.
CONTACT: Gene Fleetwood of Falcon Products, Inc., +1-314-991-9200
Web site: http://www.falconproducts.com/
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