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Quaker posts larger 4Q loss as sales sink 26.3%

By Furniture Today Staff -- Furniture Today, February 19, 2006

Fall River, Mass. — Hurt by declining sales, Quaker Fabric posted a loss of $4.8 million, or 28 cents per share, in the fourth quarter and $25.4 million, or $1.51 per share, for the year.

The upholstery fabric supplier reported sales of $50.1 million in the fourth quarter, down 26.3% from the comparable quarter in 2004.

For the year, sales of $224.7 million were down 22.3%.

Quaker took one-time restructuring charges amounting to $13.9 million after taxes during the year. Excluding those charges, and a $1.2 million tax credit in the second quarter, the net loss for 2005 was $12.6 million, the company said.

In 2004, the company had net losses of $1.9 million, or 11 cents per share, in the fourth quarter and $2 million, or 12 cents per share, for the year.

"Last year was a major disappointment for Quaker," said President and CEO Larry Liebenow "The continued strength of leather, faux suede and woven fabric products in the U.S. market led to a 22.3% falloff in our total revenues, with domestic and international fabric sales for the year of $173.6 million and $29.3 million, down 25.4% and 18.4%, respectively."

Yarn sales, however, were up 6.7% to $21.8 million, he said.

"We did achieve a number of important objectives last year," Liebenow said, including reducing the company's cost structure by $40 million a year, consolidating operations, putting a new credit facility in place, and reducing debt by $2.1 million.

But the sales decline outpaced the savings, he said.

"We are determined that 2006 will see a significant improvement in our financial results — and we believe that the steps we took during 2005 and so far this year have set the stage for that," Liebenow said.

Among other steps, the company will look to build sales with its first collections of outsourced fabrics.

Quaker also plans to develop products best produced at its domestic plants, including outdoor and contract fabrics, according to Liebenow.

Quaker Fabric
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 12/31	2005	2004	Change
(a) Includes a $165,000 pretax restructuring and impairment charge, and a $2.1 million income tax benefit. (b) Includes a $3.6 million income tax benefit. (c) Includes pretax charges of $5.4 million for goodwill impairment and $9.8 million for restructuring and asset impairment, and a $12.5 million income tax benefit. (d) Includes a $3.7 million income tax benefit.
Sales	$50,127,000	$68,044,000	(26.3%)
Operating income	(5,833,000)	(4,658,000)	25.2%
Net income	(a) (4,768,000)	(b) (1,870,000)	155.0%
Earnings per share	0.28	0.11	154.5%
Year ended 12/31	2005	2004	Change
Sales	$224,684,000	$289,145,000	(22.3%)
Operating income	(17,191,000)	(2,440,000)	604.5%
Net income	(c) (25,355,000)	(d) (2,042,000)	1141.7%
Earnings per share	1.51	0.12	1158.3%

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