O'Sullivan sales drop 17.6%; net loss cut
By Furniture Today Staff -- Furniture Today, August 11, 2003
Lamar, Mo. — O'Sullivan Inds. Holdings, parent of ready-to-assemble furniture major O'Sullivan Furniture, said sales in its third quarter ended March 31 continued to decline, dropping 17.6% to $86.9 million.
The net loss, after preferred dividends, was $1.1 million compared to a net loss of $95 million in the comparable quarter a year ago, which reflected increased income tax expenses from a revised tax-sharing agreement with Radio Shack.
Year-to-date sales were $237.5 million, a decrease of 12.7% from sales of $272 million in last year's nine months. The year-to-date net loss was $4.5 million compared to a net loss of $101.3 million a year ago.
The company said third-quarter earnings before interest, taxes, depreciation and amortization, a key benchmark for a highly leveraged company like O'Sullivan, was $12.4 million, down 35.3% from EBITDA of $19.1 million in the comparable period a year ago. Year-to-date EBITDA was $35 million, a decrease of 14.5% from EBITDA of $40.9 million last year.
The company's filing was delayed three months following a letter from the Securities and Exchange Commission that raised questions about deferred tax assets in connection with O'Sullivan's nine-year-old tax sharing agreement with Radio Shack.
O'Sullivan said it intends to recalculate its balance sheets back to February 1994, when the RTA furniture specialist was spun off in a public offering by Tandy Corp., now Radio Shack. The company also intends to restate income reports since June 2002.
"This restatement reflects a change in the timing of when certain tax expenses are recognized for accounting purposes and has no effect on the timing of our cash flow, now or in the future," said Phil Pacey, O'Sullivan senior vice president and chief financial officer.
| O'Sullivan Inds. | |||
|---|---|---|---|
| All figures in parentheses are loses or declines. | |||
| Quarter ended 3/31 | 2003 | 2002(a) | Change |
| (a) Restated. (b) After preferred dividends of $3.7 million in the 2003 quarter and $10.7 million in the 2003 nine months; includes a $540,000 pretax restructuring charge in both periods. (c) After preferred dividends of $3.2 million in the 2002 quarter and $9.3 million in the 2002 nine months. | |||
| Sales | $86,866,000 | $105,467,000 | (17.6%) |
| Operating income | 9,190,000 | 15,336,000 | (40.1%) |
| Net income | (b)(1,063,000) | (c)(95,001,000) | — |
| 9 months ended 3/31 | 2003 | 2002(a) | Change |
| Sales | $237,534,000 | $271,974,000 | (12.7%) |
| Operating income | 25,213,000 | 30,103,000 | (16.2%) |
| Net income | (b)(4,522,000) | (c)(101,305,000) | — |
