Falcon Prod (NYSE:FCP)
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Falcon Products Reports Results For Fiscal 2004 First Quarter
ST. LOUIS, March 11 /PRNewswire-FirstCall/ -- Falcon Products, Inc. , a leading
manufacturer of commercial furniture, today announced sales and operating
results for its first quarter ended January 31, 2004.
Net sales for the first quarter of fiscal 2004 were $49.9 million, a 23%
decrease from $65.1 million for the first quarter of 2003. The Company reported
a net loss for the quarter of $12.2 million, or $1.33 per diluted share,
compared with a net loss of $0.3 million, or $0.03 per diluted share, in the
first quarter of 2003. The first quarter 2004 results include charges related
to the closing of the Company's Canton, Mississippi facility, the write-off of
deferred debt issuancecosts and the recording of a deferred tax valuation
allowance. These charges totaled $7.1 million, or $0.78 per share.
Franklin A. Jacobs, Chairman and Chief Executive Officer, stated, "This quarter
was one of transition for the company. We closed the Canton facility and
relocated production to Morristown. Additionally, we restructured our financing
package. The changes in manufacturing facilities and dislodged production
capacity negatively impacted the company's revenues and EBITDA during the
quarter and required the company to obtain a waiver of certain covenants from
its banks and to amend certain covenants for future quarters. During this
process, the banks understood the issues facing the company and were very
cooperative and the companyfully expects to meet its revised covenants. We are
now prepared to move forward and show substantial improvements in sales and
operating results in the second quarter of this year. We expect sales in the
second quarter that are comparable to last year with improved EBITDA."
A weak hospitality market impacted sales in the quarter. This is reflective of
major purchasing decisions being postponed over the holidays waiting for the new
budget year. Orders in January and February have strengthened significantly and
will be reflected in stronger second quarter sales. The food service sales
decreased because of the successful completion of the Boston Market project in
the first quarter of 2003. The balance of the food service business continued
to grow. The contract office market was down slightly with flat orders year
over year.
David L. Morley, President and Chief Operating Officer stated, "We accomplished
several difficult tasks during the quarter. We closed the Canton facility,
staged the raw materials in Eastern Europe to fully execute the wood frame
strategy, expanded production of our outsource partners in Europe and the U.S.
and increased imports from China. In the next 90 days we expect to see the
benefits of these actions."
The company has restated its banking facility as a current liability. As our
results reflect the actions taken and profitability improves, management expects
that the banking facility should be reclassified as long term.
Furthermore, the company was preliminarily notified by the New York Stock
Exchange of a pending rule change on eligibility for continued listing. The
exchange expects to formally notify all companies impacted by the change after
March 15, 2004. In the event of such a formal notification,the company will
diligently work with the exchange on a remediation plan.
Mr. Jacobs continued, "The difficult steps have been taken at this point. The
cost reduction activities are ahead of schedule. Savings from key initiatives
are tracking with our plan. The company is totally focused on execution in the
second quarter. We will see the impact of these actions in the current
quarter."
Falcon Products, Inc. will conduct a conference call to discuss fiscal 2004
first-quarter results on March 11,2004 at 10:00 a.m. EST. 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 fact,
such as forward-looking statements, involve risks and uncertainties which could
impact future financial performance, including, but not limited to, loss of key
customers or suppliers within specific industries, availability or cost of raw
materials, increased competitive pricing pressures reflecting industry
conditions and general demand for products. Additional cautionary statements
regarding other risk factors that could have an effect on future performance of
theCompany 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 thatits expectations will be attained. Any forward-looking
statements represent the best judgment of Falcon as of the date of this release.
Falcon disclaims any intent or obligation to update any forward-looking
statements.
FALCONPRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
FIRST QUARTER 2004 RESULTS
(In thousands, except per share amounts)
(Unaudited)
First Quarter Ended
January 31, February 1, %
2004 2003 Change
Net sales $ 49,891 $ 65,134 -23.4%
Cost of sales 42,194 50,346 -16.2%
Gross margin 7,697 14,788 -48.0%
Selling, general and
administrative expenses 10,538 10,819 -2.6%
Interest expense and other 5,052 4,133 N/M
Loss on early extinguishment of
debt 3,947(a) -- N/M
Restructuring charges 194(b) -- N/M
Pre-tax loss (12,034) (164) N/M
Income tax expense 196 132 N/M
Net loss $ (12,230) $ (296) N/M
Basic and diluted loss per
share $ (1.33) $(0.03) N/M
Weighted average diluted shares
outstanding 9,164 9,048
N/M Not Meaningful
(a) The Company recorded a $3.9 million loss on early extinguishment of
debt to write-off deferred debt issuance costs in connection with
the refinancing of its senior credit facility.
(b) The Company recorded a $0.2 million pre-tax charge during the first
quarter of 2004 to account for the closure of its Canton,
Mississippi facility and the transfer of production into the
Company's other plants.
FALCON PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jan. 31, Nov. 1,
Assets 2004 2003
Cash and cash equivalents $ 1,232 $ 1,356
Accounts receivable 24,685 31,877
Inventories 62,836 62,525
Other current assets 5,863 5,344
Total current assets 94,616 101,102
Property, plant and equipment, net 36,370 36,579
Other assets 130,013 128,859
$ 260,999 $ 266,540
Liabilities and Jan. 31, Nov. 1,
Stockholders' Equity 2004 2003
Accounts payable $ 25,844 $ 27,612
Customer deposits 5,705 5,249
Accrued liabilities 11,815 16,842
Current maturities of long-term debt 72,275 3,900
Total current liabilities 115,639 53,603
Long-term debt 106,003 161,485
Other long-term obligations 12,223 12,868
Stockholders' equity 27,134 38,584
$ 260,999 $ 266,540
DATASOURCE: Falcon Products, Inc.
CONTACT: David L. Morley, President & Chief Operating Officer,
+1-314-991-9200, Falcon Products, Inc.