O'Sullivan: Sales set to stabilize
By Tom Edmonds -- Furniture Today, September 3, 2001
LAMAR, Mo. — O'Sullivan Inds. closed the book on fiscal 2001 with a fourth quarter offering a glimmer of hope that demand for ready-to-assemble furniture might be stabilizing.
For the quarter ended June 30, O'Sullivan's net sales were $87.4 million, a 6.7% decrease from the same period of 2000. However, the company's sales slide for the entire year was greater, down 11.3% to $375.7 million.
Highly leveraged since a recapitalization two years ago, the company reported a net loss of $1.8 million for the fourth quarter, compared with a $1.6 million loss in 2000. For the fiscal year, the net loss was $18.7 million, compared with a net loss of $8.7 million for fiscal 2000.
However, O'Sullivan said that its adjusted earnings before interest, taxes, depreciation and amortization — which reflects the company's operating results — were up slightly in the fourth quarter and for the year were down just 15% from 2000.
O'Sullivan, which is the third-largest producer of RTA furniture after Sauder and Bush, indicated that adjusted EBITDA for the fourth quarter improved due to cost savings from the closing of its former Utah facility, increased productivity in manufacturing operations, reduced employment and benefit costs, and raw material cost reductions.
"Our sales results, as well as those of the entire furniture industry, continue to be affected by lower consumer confidence levels and the resulting unsettled retail and business environments," said Richard Davidson, president and chief executive officer.
"Retail activity has continued to be sluggish through the June quarter and into the September quarter of fiscal 2002. However, in recent weeks we have seen some improvement in order levels from our customers. Given the visibility we have today, we believe our sales during the September quarter will be approximately the same as the prior year."
| O'Sullivan Inds. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 6/30 | 2001 | 2000 | Change |
| (a) After preferred dividends of $2.8 million in the 2001 quarter and $2.4 million in the 2000 quarter. (b) After preferred dividends of $10.7 million; includes a $10.5 million pretax restructuring charge, a $4.2 million income tax benefit and a $95,000 extraordinary charge, the cumulative effect of an accounting change. (c) After preferred dividends of $5.5 million; includes a $7.8 million pretax charge for merger-related expenses, a $3.1 million pretax charge for a transaction fee, a $10.6 million pretax charge for stock-based compensation, a $408,000 pretax loss on the settlement of interest rate swap and a $305,000 extraordinary loss on the early extinguishment of debt. | |||
| Sales | $87,427,000 | $93,724,000 | (6.7%) |
| Operating income | 8,954,000 | 9,721,000 | (7.9%) |
| Net income (a) | (1,840,000) | (1,602,000) | — |
| Year ended 6/30 | 2001 | 2000 | Change |
| Sales | $375,670,000 | $423,425,000 | (11.3%) |
| Operating income | 32,409,000 | 42,674,000 | (24.1%) |
| Net income | (b)(18,671,000) | (c)(8,700,000) | — |
