Quaker posts sales dip, loss
By Furniture Today Staff -- Furniture Today, March 19, 2007
Fall River, Mass. — With hefty charges for restructuring and other moves, Quaker Fabric reported losses of $12.9 million in the fourth quarter and $37.6 million for 2006.
Sales were down 35.8% in the fourth quarter, to $32.2 million, and down 32.5% for the year, to $151.7 million.
Excluding one-time charges, mainly for restructuring and writing down the value of assets, the company said it lost $5.5 million in the fourth quarter and $17.4 million for the year.
In 2005, the company reported losses of $5.7 million in the fourth quarter and $26.3 million for the year.
"The market for upholstery fabric in the United States is continuing to experience unprecedented change, with imports, in a variety of forms, now representing a very large percentage of total consumption," said Larry Liebenow, Quaker's president and CEO. "For us, this meant a 29% drop in last year's domestic fabric sales and an 18% drop in export fabric sales.
"This fall-off in our sales outpaced the speed with which we were able to take costs out of our operations. Continued implementation of our restructuring plan is intended to bring our cost structure in line with projected revenues, and we believe that the steps we took last year to reshape and restructure the company represent progress toward returning the company to profitability," he added.
Liebenow said the company continues to pursue its strategy of selling in segments that are less vulnerable to Chinese imports, including the outdoor, jobber and contract markets in addition to the company's core line of products for the residential market.
The company also continues to blend its domestic production with global sourcing, he said.
He noted that the company sold two plants and $5 million worth of machinery in 2006, and reduced costs, inventory and senior debt.
"While we believe that much of our consolidation effort and the related asset impairment charges are now behind us, this year's primary focus will be on rebuilding our sales line and aligning our costs with our sales expectations," Liebenow said. "The strategic alliance we put in place with our China-based partner in January of last year is on its way to becoming the strong and effective outsourcing arrangement we had hoped it would be, with the products we have designed for production at their plant in China achieving widespread market acceptance."
While the company also continues to manufacture in its Fall River plants, it will continue to market facilities and equipment it no longer needs, he said.
"This is a very important transition year for us, with much work behind us, a clear, focused strategy in place for the future, and much work still to be done," said Liebenow.
| Quaker Fabric | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/30 | 2006 | 2005 | Change |
| (a) Includes pretax charges for restructuring and asset impairment of $7.7 million in the 2006 quarter, $1.6 million in the 2005 quarter, $26.5 million in the 2006 year and $11.2 million in the 2005 year. Includes pretax charges for early extinguishment of debt of $628,000 in the 2006 quarter and year and $2.2 million in the 2005 year. | |||
| Sales | $32,193,000 | $50,127,000 | (35.8%) |
| Operating income | (6,521,000) | (5,798,000) | |
| Net income (a) | (12,929,000) | (5,669,000) | |
| Earnings per share | (0.77) | (0.34) | |
| Year ended 12/30 | 2006 | 2005 | Change |
| Sales | $151,664,000 | $224,684,000 | (32.5%) |
| Operating income | (22,198,000) | (17,156,000) | |
| Net income (a) | (37,632,000) | (26,256,000) | |
| Earnings per share | (2.23) | (1.56) | |
