AAi.FosterGrant Announces 2nd Quarter 2001 Results.Business Editors SMITHFIELD Smithfield, district, London, England Smithfield, district of the City of London, England. Beginning in the 12th cent., it was used for fairs, markets, jousts, and executions. During the reign of Queen Mary I (1553–58), Protestants were executed there. , R.I.--(BUSINESS WIRE)--Aug. 14, 2001 AAi.FosterGrant, Inc, (the "Company"), today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter ending June June: see month. 30, 2001 declined 16.3 % to $38.3 million from $45.7 million in the second quarter of fiscal 2000. Gross margin increased slightly to 44.2% from 44.1% in 2000 due to a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mix from higher priced goods. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined to $13.3 million from $16.6 million reflecting a 19.7% decrease before a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $0.3 million for the three months ended June 30, 2001. Income from operations for the quarter was $3.3 million, an 8.9% decline from $3.6 million in the second quarter of 2000. During the same period, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become declined to $6.2 million from $6.7 million reflecting a 7.5% decline excluding the restructuring charge of $0.3 million and an extraordinary gain of $4.4 million. Net income for the quarter before dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. was $0.6 million, excluding the restructuring charge of $0.3 million, as compared to $0.8 million in the second quarter of fiscal 2000. The Company reported that the net sales decrease was primarily due to the softness in the U.S. economy and unfavorable weather conditions during the critical sunglass-selling season. Other factors influencing the declines include, retailer cash flow limitations and bankruptcies, termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of unprofitable customer contracts and the closing of unprofitable watch and clock related businesses. John Ranelli, President and Chief Executive Officer commented that, "We continue to be pleased that our turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. is on track as evidenced by our operational improvements, performance of FosterGrant branded products versus competition, expense and inventory reductions and the resulting improvements in customer confidence. Unfortunately the weather during the critical parts of the sunglass sun·glass n. 1. A convex lens used to focus the sun's rays and produce heat, especially for ignition. 2. sunglasses Eyeglasses with tinted or polarizing lenses to protect the eyes from the sun's glare. selling season, the continuing softness in the U.S. economy and the weak retail environment are making 2001 a very difficult year with significantly lower sell throughs and higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. of season returns. We continue to work very hard to offset the impact of the economy by reducing expenses, workforce and inventories. During the quarter we reduced operating expenses 20% (excluding restructuring charges) and inventories by $8.9 million or 27%. We expect the remainder of 2001 to be very difficult and challenging given the current economic environment." AAi.FosterGrant, Inc., is a value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: distributor of optical products and costume jewelry costume jewelry n. Jewelry made from inexpensive metals and imitation or semiprecious stones. . This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and actual results may vary from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. herein. Factors that could affect these results include those mentioned in AAi.FosterGrant's 2000 Annual Report and its annual and quarterly filings with the Securities and Exchange Commission.
AAI.FOSTER GRANT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
July 1, December 30, June 30,
2000 2000 2001
ASSETS
Cash & cash equivalents $ 1,785 $ 578 $ 1,497
Accounts receivable, net 28,778 32,839 23,615
Inventories 38,070 33,083 24,146
Prepaid expenses & other
current assets 425 1,280 1,154
Deferred tax assets 3,743 980 980
Total current assets 72,801 68,760 51,392
Property, plant &
equipment, net 20,450 18,658 18,047
Intangible assets 13,158 12,830 12,501
Other assets 7,128 5,914 5,467
Deferred tax assets 2,286 2,009 2,009
Total assets $ 115,823 $ 108,171 $ 89,416
LIABILITIES & SHAREHOLDERS'
DEFICIT
Borrowing under revolving
note payable $ 19,564 $ 25,263 $ 19,623
Redeemable preferred stock
of a subsidiary - - -
Current portion of
long-term obligations &
deferred compensation 684 1,437 1,792
Accrued expenses & accounts
payable 47,400 41,461 32,387
Total current liabilities 67,648 68,161 53,802
10 3/4% Series B senior
notes, due 2006 64,250 51,850 51,850
Long-term obligations &
deferred compensation
less current portion 4,924 7,848 7,190
Preferred stock 33,819 36,092 38,024
Shareholders' deficit (54,818) (55,780) (61,450)
Total liabilities &
shareholders' deficit $ 115,823 $ 108,171 $ 89,416
AAi.FosterGrant, Inc. & Subsidiaries
Consolidated Statement of Operations and Calculations of Earnings
Before Interest, Taxes, Depreciation & Amortization (EBITDA)
(in thousands)
Three Months Ended Six Months Ended
July 1, June 30 July 1, June 30
STATEMENT OF OPERATIONS 2000 2001 2000 2001
Net Sales $ 45,707 $ 38,273 $ 88,235 $ 68,372
Cost of Goods Sold 25,529 21,338 49,111 39,304
Gross Profit 20,178 16,935 39,124 29,068
Selling Expenses 12,062 9,609 23,505 18,287
General & Administrative
Expenses 4,539 3,728 9,129 8,251
Restructuring Charge - 338 2,500 338
(Loss) Income from
Operations 3,577 3,260 3,990 2,192
Equity in Losses of
Investment in Affiliates - (84) - (98)
Interest Expense (2,851) (2,489) (5,448) (5,056)
Other (Expense)
Income, net 94 (59) 145 (14)
Loss before Income Tax
Expense (Benefit),
Extraordinary Gain
Dividends & Accretion
on Preferred Stock 820 628 (1,313) (2,976)
Income Tax (Expense)
Benefit (43) (380) (43) (462)
Extraordinary (Loss)
Gain, net of tax of
$6.3 million 4,429 - 4,429 -
Net (Loss) Income before
Dividends & Accretion on
Preferred Stock 5,206 248 3,073 (3,438)
Dividends & Accretion
on Preferred Stock 801 885 1,588 1,749
Net (Loss) Income
applicable to Common
Shareholders $ 4,405 $ (637) $ (1,485) $ (5,187)
CALCULATION OF EBITDA
(BEFORE EXTRAORDINARY
GAIN & RESTRUCTURING CHARGE)
Loss before Income
Tax Expense $ 820 $ 628 $ (1,313) $ (2,976)
Interest Expense 2,851 2,489 5,448 5,056
Depreciation &
Amortization Expense 2,980 2,697 6,039 5,688
Earnings before Interest,
Taxes, Depreciation &
Amortization $ 6,651 $ 5,814 $ 10,174 $ 7,768
OTHER PROFORMA
FINANCIAL INFORMATION
Operating (Loss) Income
before Restructuring
Charge $ 3,577 $ 3,598 $ 6,490 $ 2,530
EBITDA before
Extraordinary Gain &
Restructuring Charge $ 6,651 $ 6,152 $ 12,674 $ 8,106
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