O'Sullivan operating profit up
By Furniture Today Staff -- Furniture Today, May 19, 2002
LAMAR, Mo. — Quarterly sales and operating earnings both rose nicely for O'Sullivan Inds. Holdings Inc., holding company for ready-to-assemble specialist O'Sullivan Furniture.
For the quarter ended March 31, the company reported third quarter net sales of $105.5 million, an increase of 8% from sales of $97.6 million in the comparable period a year ago.
Operating income for the third quarter was a record $15.3 million, an increase of 38.4% from operating income of $11.1 million in the comparable period a year ago.
However, due mainly to a $13.4 million deferred tax valuation allowance related to an arbitration settlement with Radio Shack, O'Sullivan's net loss for the quarter was $10.5 million.
Adjusted quarterly earnings before interest, taxes, depreciation, amortization and preferred stock dividends— a key result for this leveraged company — was $19.1 million, or 18.1% of net sales, an increase of 32% from $14.5 million, or 14.8% of net sales, for the comparable period a year ago.
"The operational results we announced today, in our opinion, represent the beginning of a reversal in the sales decline our industry recently experienced," said Richard Davidson, president and chief executive officer. "While we anticipate that the expected business recovery will be moderate in its pace, we also believe that our sales results demonstrate that we are well positioned across all our major distribution channels to benefit from improving retail point-of-sale results."
Net sales for the first nine months of fiscal 2002 were $272 million, down slightly from $274.6 million in the comparable period a year ago.
Net loss for the first nine months of fiscal 2002 was $16.8 million, even with the comparable period a year ago. The current year net loss includes tax adjustments related to the Radio Shack settlement. The prior year net loss included a $10.5 million pretax restructuring charge. On a comparable basis without these charges, the company said net income would have been $5.7 million for the nine months ended March 31, 2002, compared to a net loss of $2 million for the prior year nine months.
| Quarter ended 3/31 | 2002 | 2001 | Change |
|---|---|---|---|
| Sales | $105,467,000 | $97,636,000 | 8.0% |
| Operating income | 15,336,000 | 11,077,000 | 38.4% |
| Net income(a) | (10,531,000) | (1,812,000) | — |
| 9 months ended 3/31 | 2002 | 2001 | Change |
| Sales | $271,974,000 | $274,603,000 | (1.0%) |
| Operating income | 30,103,000 | 23,455,000 | 28.3% |
| Net income(b) | (16,835,000) | (16,831,000) | — |
| (a) After preferred dividends and accretion of $3.2 million in the 2002 quarter and $2.8 million in the 2001 quarter. (b) After preferred dividends and accretion of $9.3 million in the 2002 nine months and $7.9 million in the 2001 nine months. The 2001 nine months also includes a $10.5 million pretax restructuring charge, a $4.7 million income tax benefit and a $95,000 extraordinary charge, the cumulative effect of an accounting change. | |||
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