Alliance Laundry Holdings LLC Reports 2002 Sales and Earnings.Business Editors RIPON Ripon, town (1991 pop. 11,952), North Yorkshire, N England, on the Ure River. It is a market town with foundries, varnish and paint factories, tanneries, and breweries. Ripon is famous as an old cathedral city where monasteries have stood since the 7th cent. , Wis adv. 1. Certainly; really; indeed. v. t. 1. To think; to suppose; to imagine; - used chiefly in the first person sing. present tense, I wis. See the Note under Ywis. .--(BUSINESS WIRE)--March 13, 2003 Alliance Laundry Laundry can be:
Before industrialization Holdings LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control announced today results for the year ended December December: see month. 31, 2002. Net revenues for the full year 2002 increased $1.1 million, or 0.4%, to $255.6 million compared to $254.5 million for the full year 2001. Net income for 2002 increased $0.6 million to $1.3 million as compared to $0.7 million for the same period in 2001. Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. occurring and plant relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs for 2002 was $57.1 million compared with EBITDA before infrequently occurring and plant relocation costs of $52.0 million for 2001. Net income for 2002 included $10.9 million of transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). incurred in establishing a new asset backed facility for the sale of trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and notes receivable, $3.4 million of expense related to an abandoned Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. public offering, and a $2.0 million non-cash loss resulting from the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of certain unamortized debt issuance costs. The Company entered into an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated credit agreement dated August 2, 2002, and as such wrote-off the unamortized debt issuance costs related to its prior senior credit facility of $2.0 million. Net income for 2001 included plant relocation costs of $1.4 million. In announcing the Company's results today, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Tom L'Esperance said, "In 2002, our strong market position and continued focus on asset and cost management helped us achieve some year over year revenue growth and substantial year over year earnings growth. In addition, we are very pleased to have the new asset backed facility and senior credit facility in place as we move forward in 2003. The economy in general made certain of our markets challenging in 2002. We expect that the same economic and market issues that affected the commercial laundry industry in 2002 will persist in Verb 1. persist in - do something repeatedly and showing no intention to stop; "We continued our research into the cause of the illness"; "The landlord persists in asking us to move" continue 2003." "If we are correct and conditions remain similar to what we experienced in 2002, we will continue to de-lever and focus on marketplace execution, asset management and aggressive cost control," said L'Esperance. With the exception of the reported actual results, the information presented herein contains predictions, estimates and other 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. within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, including, without limitation, statements that include the words "growth", "expect" and "continue" or similar expressions and statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc growth or performance objectives. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to differ materially 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. by such forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include: impact of competition; continued sales to key customers; possible fluctuations in the cost of raw materials and components; possible fluctuations in currency exchange rates, which affect the competitiveness of the Company's products abroad; market acceptance of new and enhanced versions of the Company's products; the impact of substantial leverage and debt service on the Company and other risks listed from time to time in the Company's reports, including, but not limited to the Company's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2002. Alliance Laundry Holdings LLC, headquartered in Ripon, Wisconsin Ripon is a city in Fond du Lac County, Wisconsin, United States. As of the 2000 census, the city population was 6,828. The city is located within the Town of Ripon. History Founding , is a leading manufacturer of commercial laundry products and provider of services for laundromats, multi-housing laundries, on-premise laundries and drycleaners worldwide. The Company offers a full line of washers and dryers for light commercial use as well as large frontloading washers, heavy duty tumbler dryers, and presses and finishing equipment for heavy commercial use. The Company's products are sold under four well known brand names: Speed Queen, UniMac, Huebsch and Ajax. Financial information for Alliance Laundry Holdings LLC appears on the next two pages, followed by management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of financial condition and results of operations for the years ended December 31, 2002 and 2001.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
--------------------------
2002 2001
------------ ------------
Assets
Current assets:
Cash $ 7,339 $ 5,659
Cash-restricted 99 439
Accounts receivable (net of allowance for
doubtful accounts of $207 and $662 at
December 31, 2002 and 2001,
respectively) 5,834 10,440
Inventories, net 25,697 29,862
Beneficial interests in securitized
accounts receivable 19,864 6,913
Prepaid expenses and other 2,954 3,180
------------ ------------
Total current assets 61,787 56,493
Notes receivable, net 11,166 8,512
Property, plant and equipment, net 39,096 46,909
Goodwill (net of accumulated amortization
of $11,766 at December 31, 2002 and 2001) 55,414 55,414
Beneficial interests in securitized
financial assets 21,483 28,227
Debt issuance costs, net 9,654 7,863
Other assets 1,010 353
------------ ------------
Total assets $199,610 $203,771
============ ============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $ 9,971 $ 1,212
Revolving credit facility - -
Accounts payable 13,797 12,194
Other current liabilities 21,638 20,539
------------ ------------
Total current liabilities 45,406 33,945
Long-term debt:
Senior credit facility 173,266 194,018
Senior subordinated notes 110,000 110,000
Junior subordinated note 20,312 17,069
Other long-term debt 1,028 1,265
Other long-term liabilities 10,338 1,682
------------ ------------
Total liabilities 360,350 357,979
Mandatorily redeemable preferred equity 6,000 6,000
Members' deficit (166,740) (160,208)
------------ ------------
Total liabilities and members'
deficit $199,610 $203,771
============ ============
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands)
Years Ended December 31,
----------------------------------------
-------------------------- ------------
2002 2001 2000
------------ ------------ ------------
Net revenues:
Commercial laundry $ 220,114 $ 219,805 $ 230,448
Service parts 35,524 34,743 34,993
------------ ------------ ------------
255,638 254,548 265,441
Cost of sales 179,508 189,514 197,558
------------ ------------ ------------
Gross profit 76,130 65,034 67,883
------------ ------------ ------------
Selling, general and administrative
expense 30,098 28,665 36,469
Securitization and other costs 10,920 - 402
------------ ------------ ------------
Total operating expenses 41,018 28,665 36,871
------------ ------------ ------------
Operating income 35,112 36,369 31,012
Interest expense 28,341 33,538 35,947
Loss from early extinguishment
of debt 2,004 - -
Abandoned Canadian public offering
costs 3,409 - -
Other income (expense), net 33 (67) 354
------------ --------------------------
Income (loss) before taxes 1,391 2,764 (4,581)
Provision for income taxes 56 34 20
Net income (loss) before
cumulative effect of
accounting change 1,335 2,730 (4,601)
Cumulative effect of change in
accounting principle - 2,043 -
------------ ------------ ------------
Net income (loss) $ 1,335 $ 687 $ (4,601)
============ ============ ============
ALLIANCE LAUNDRY HOLDINGS LLC
OTHER OPERATING DATA
(in thousands)
Years Ended December 31,
----------------------------------------
-------------------------- ------------
2002 2001 2000
------------ ------------ ------------
(unaudited)
EBITDA (1) 40,518 50,608 46,003
EBITDA before nonrecurring and
plant relocation costs 57,066 52,022 51,456
Depreciation and amortization (2) 13,293 17,026 17,155
Non-cash interest expense included
in amortization above (2) 2,507 2,720 2,518
Nonrecurring costs 16,333 - 402
Securitization and other costs 215 1,414 5,051
Capital Expenditures 2,652 5,152 7,445
Reconciliation: EBITDA before infrequently occurring
and plant relocation costs
Income (loss) before taxes 1,391 2,764 (4,581)
add: Interest expense 28,341 33,538 35,947
add: Depreciation and
amortization 13,293 17,026 17,155
less: Non-cash interest expense
included in amortization
above 2,507 2,720 2,518
----------- ----------- -----------
EBITDA 40,518 50,608 46,003
add: Infrequently occurring
items 16,333 - 402
add: Plant relocation costs
included in administrative
expense 215 1,414 5,051
------------ ----------- -----------
EBITDA before infrequently
occurring and plant relocation
costs 57,066 52,022 51,456
============ =========== ===========
(1)"EBITDA", as presented, represents income before taxes plus
depreciation, amortization and interest expense.
(2)Depreciation and amortization amounts include amortization of
deferred financing costs included in interest expense.
(3)Infrequently occurring items in 2002 relate to $10.9 million
associated with costs incurred in establishing a new asset
backed facility for the sale of trade receivables and notes
receivable, $3.4 million associated with an abandoned Canadian
public offering and $2.0 million associated with the non-cash
loss resulting from the early extinguishment of debt on its
prior senior credit facility. In 2000 such costs relate to
additional medical benefits provided as part of a plant
closure.
Management's Discussion and Analysis of Financial Condition and Results of Operations for the Years Ended December 31, 2002 and 2001 OVERVIEW Alliance Laundry Holdings LLC (the "Company") believes it is the leading designer, manufacturer and marketer of stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." commercial laundry equipment in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and a leader worldwide. Under the well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. brand names of Speed Queen, UniMac, Huebsch and Ajax, the Company produces a full line of commercial washing machines (storage) washing machine - An old-style 14-inch hard disk in a floor-standing cabinet. So called because of the size of the cabinet and the "top-loading" access to the media packs - and, of course, they were always set on "spin cycle". and dryers with load capacities from 16 to 250 pounds as well as presses and finishing equipment. The Company's commercial products are sold to four distinct customer groups: (i) laundromats; (ii) multi-housing laundries, consisting primarily of common laundry facilities in apartment buildings, universities and military installations; (iii) on-premise laundries, consisting primarily of in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. laundry facilities of hotels, hospitals, nursing homes and prisons and (iv) drycleaners. The financial statements as of and for the years ended December 31, 2002 and 2001 represent the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial position and results of operations of the Company, including its wholly-owned direct and indirect subsidiaries, Alliance laundry Systems LLC and Alliance Laundry Corporation. This report should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the audited financial statements presented in the Company's Annual Report on Form 10-K (file no. 333-56857-02) filed with the Securities and Exchange Commission, effective March 12, 2003, which includes the audited financial statements of the Company as of and for the years ended December 31, 2002 and 2001. RESULTS OF OPERATIONS The following table sets forth the Company's historical net revenues for the periods indicated:
Years Ended December 31,
----------------------------------------------------
2002 2001 2000
------------ ----------- -----------
(dollars in millions)
Commercial laundry $ 220.1 $ 219.8 $ 230.4
Service parts 35.5 34.7 35.0
------------- ----------- -----------
$ 255.6 $ 254.5 $ 265.4
============= =========== ===========
The following table sets forth certain condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. historical financial data for the Company expressed as a percentage of net revenues for each of the periods indicated:
Years Ended December 31,
----------------------------------------------------
---------------- ---------------- ----------------
2002 2001 2000
---------------- ---------------- ----------------
Net revenues 100.0% 100.0% 100.0%
Cost of sales 70.2% 74.5% 74.4%
Gross profit 29.8% 25.5% 25.6%
Selling, general and
administrative expense 11.8% 11.2% 13.7%
Securitization and other costs 4.3% 0.0% 0.2%
Operating income 13.7% 14.3% 11.7%
Net income (loss) before cumulative
effect of accounting change 0.5% 1.1% -1.7%
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001 Net Revenues. Net revenues for the year ended December 31, 2002 increased $1.1 million, or 0.4%, to $255.6 million from $254.5 million for the year ended December 31, 2001. This increase was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to higher commercial laundry revenue of $0.3 million and higher service parts revenue of $0.8 million. The increase in commercial laundry revenue was due primarily to higher North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. equipment revenue of $2.9 million, and higher earnings from the Company's off-balance sheet equipment financing program of $0.6 million, which was partly offset by lower international revenue of $3.2 million. The increase in North American equipment revenue was primarily due to price increases of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.5 million and higher revenue from multi-housing laundries, and laundromats, partially offset by lower revenue from on-premise laundries. Revenue from international customers was lower due to the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of sales to a foreign customer under a private label contract and higher sales to the Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum government in 2001 under a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. contract. Gross Profit. Gross profit for the year ended December 31, 2002 increased $11.1 million, or 17.1%, to $76.1 million from $65.0 million for the year ended December 31, 2001. This increase was primarily attributable to the price increase and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. manufacturing efficiencies, $1.5 million of lower depreciation expense, and $2.0 million of favorable impact in 2002 resulting from a change in accounting principle whereby goodwill is no longer amortized. Gross profit as a percentage of net revenues increased to 29.8% for the year ended December 31, 2002 from 25.5% for the year ended December 31, 2001. Selling, General and Administrative Expense. Selling, general and administrative expenses for the year ended December 31, 2002 increased $1.4 million, or 5.0%, to $30.1 million from $28.7 million for the year ended December 31, 2001. The increase in selling, general and administrative expenses was primarily due to higher pension expense of $1.4 million, higher independent development expenses of $0.9 million, higher compensation expenses of $0.9 million, and higher sales and marketing expenses of $0.3 million, partially offset by lower one-time expenses related primarily to the relocation of Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. production lines to Marianna, Florida Marianna is a city in Jackson County, Florida, United States. The population was 6,230 at the 2000 census. As of 2004, the population recorded by the U.S. Census Bureau is 6,200 [1]. of $0.9 million and a lower loss on sales of qualified accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of $0.9 million. Selling, general and administrative expenses as a percentage of net revenues increased to 11.8% for the year ended December 31, 2002 from 11.3% for the year ended December 31, 2001. Securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. and Other Costs. Securitization and other costs for the year ended December 31, 2002 were $10.9 million. The 2002 costs were due to transaction fees associated with a new asset backed facility. Securitization and other costs as a percentage of net revenues were 4.3% for the year ended December 31, 2002. Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . As a result of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. , operating income for the year ended December 31, 2002 decreased $1.3 million, or 3.5%, to $35.1 million from $36.4 million for the year ended December 31, 2001. Operating income as a percentage of net revenues decreased to 13.7% for the year ended December 31, 2002 from 14.3% for the year ended December 31, 2001. Interest Expense. Interest expense for the year ended December 31, 2002 decreased $5.2 million, or 15.5%, to $28.3 million from $33.5 million for the year ended December 31, 2001. Interest expense in 2002 includes an unfavorable non-cash adjustment of $1.5 million related to new interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. agreements entered into in 2002. Interest expense in 2001 included an unfavorable non-cash adjustment of $0.9 million related to these agreements. Interest expense was also lower in 2002 as a result of lower interest rates and a reduction in total debt outstanding of $22.0 million, or 6.5% since December of 2000. Loss from Early Extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of Debt. Loss from early extinguishment of debt for the year ended December 31, 2002 was $2.0 million. The Company entered into an amended and restated credit agreement dated as of August 2, 2002. As a result, the Company recorded a loss on early extinguishment of debt of $2.0 million, to write-off unamortized debt issuance costs related to its prior term loan and revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities. Abandoned Canadian Public Offering. Abandoned Canadian public offering expense for the year ended December 31, 2002 was $3.4 million. The 2002 costs were due to the write-off of costs incurred while pursuing an initial public offering through a Canadian Income Trust. Due to market conditions, management determined that such a public offering was not advantageous to the Company at that time. Other Income (Expense), Net. Other income for the year ended December 31, 2002 was less than $0.1 million as compared to other expense of $0.1 million for the year ended December 31, 2001. The 2002 other income is comprised entirely of gains on the sale of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → . The 2001 other expense is comprised entirely of losses on the sale of fixed assets. Net Income Before Cumulative Effect of Accounting Change. As a result of the foregoing, net income before cumulative effect of accounting change for the year ended December 31, 2002 decreased $1.4 million to a net income before cumulative effect of accounting change of $1.3 million as compared to $2.7 million for the year ended December 31, 2002. Net income before cumulative effect of accounting change as a percentage of net revenues decreased to 0.5% for the year ended December 31, 2002 from 1.1% for the year ended December 31, 2001. Cumulative Effect of Accounting Change. Effective April 1, 2001, the Company adopted the provisions of Emerging Issues Task Force (EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation ) Issue No. 99-20 "Recognition of Interest Income and Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on Purchased and Retained Beneficial Interests in Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. Financial Assets Financial assets Claims on real assets. ." In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the impairment provisions of EITF 99-20, upon adoption the Company recognized a $2.0 million non-cash write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the Company's retained interests Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. in its securitization transactions. Net Income. As a result of the aforementioned, net income for the year ended December 31, 2002 increased $0.6 million to $1.3 million as compared to $0.7 million for the year ended December 31, 2001. Net income as a percentage of net revenues increased to 0.5% for the year ended December 31, 2002 from 0.3% for the year ended December 31, 2001. Year Ended December 31, 2001 Compared to Year Ended December 31, 2000 Net Revenues. Net revenues for the year ended December 31, 2001 decreased $10.9 million, or 4.1%, to $254.5 million from $265.4 million for the year ended December 31, 2000. This decrease was primarily attributable to lower commercial laundry revenue of $10.6 million. The decrease in commercial laundry revenue was due primarily to lower North American equipment revenue of $10.0 million, and lower international revenue of $3.0 million, which was partly offset by higher earnings from the Company's off-balance sheet equipment financing program of $2.3 million. The decrease in North American equipment revenue was primarily due to lower revenue from laundromats, on-premise laundries, and drycleaners resulting from a general economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. . Finance program revenue was higher primarily as a result of a $3.1 million loss recognized in connection with a securitization transaction completed during the fourth quarter of 2000. Revenue from international customers was lower as the Company's products (priced in U.S. dollars) have become less competitive due to unfavorable exchange rate movements. Gross Profit. Gross profit for the year ended December 31, 2001 decreased $2.9 million, or 4.2%, to $65.0 million from $67.9 million for the year ended December 31, 2000. This decrease was primarily attributable to the lower sales volume as discussed above and manufacturing variances which occurred as a result of efforts to reduce finished goods inventories. Gross profit as a percentage of net revenues decreased to 25.5% for the year ended December 31, 2001 from 25.6% for the year ended December 31, 2000. This decrease was primarily attributable to manufacturing volume inefficiencies related to the lower sales volume and manufacturing inefficiencies related to lower manufacturing volumes required to reduce finished goods stocking levels. These inefficiencies were partially offset by other manufacturing cost improvements implemented during 2000 and 2001. Selling, General and Administrative Expense. Selling, general and administrative expenses for the year ended December 31, 2001 decreased $7.8 million, or 21.4%, to $28.7 million from $36.5 million for the year ended December 31, 2000. The decrease in selling, general and administrative expenses was primarily due to lower sales and marketing expenses of $0.8 million, lower independent development expenses of $1.9 million, a lower loss on sales of qualified accounts receivable of $2.0 million, and lower one-time expenses of $3.4 million related to the prior year relocation of Madisonville, Kentucky Madisonville is a city in Hopkins County, Kentucky of the Western Coal Field region. The population was 19,307 at the 2000 census. It is the county seat of Hopkins CountyGR6. The city was named in honor of U.S. President James Madison. and Cincinnati, Ohio production lines to Ripon, Wisconsin and Marianna, Florida, respectively. Selling, general and administrative expenses as a percentage of net revenues decreased to 11.2% for the year ended December 31, 2001 from 13.7% for the year ended December 31, 2000. Securitization and Other Costs. There were no securitization and other costs for the year ended December 31, 2001 as compared to $0.4 million of costs for the year ended December 31, 2000. Other costs in 2000 were comprised entirely of closure costs related to the Company's Madisonville, Kentucky facility. Operating Income. As a result of the aforementioned, operating income for the year ended December 31, 2001 increased $5.4 million, or 17.3%, to $36.4 million from $31.0 million for the year ended December 31, 2000. Operating income as a percentage of net revenues increased to 14.3% for the year ended December 31, 2001 from 11.7% for the year ended December 31, 2000. Interest Expense. Interest expense for the year ended December 31, 2001 decreased $2.4 million, or 6.7%, to $33.5 million from $35.9 million for the year ended December 31, 2000. Reductions resulting from lower interest rates throughout 2001 and a one-time net interest expense in 2000 of $1.5 million associated with the Raytheon Raytheon Company (NYSE: RTN) is a major American defense contractor and industrial corporation with core manufacturing concentrations in defense systems and defense and commercial electronics. Arbitration award An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. were offset by $0.9 million of non-cash adjustments to reflect changes in the fair values of the Company's interest rate swap agreements for the year ended December 31, 2001. Other Income (Expense), Net. Other expense for the year ended December 31, 2001 was $0.1 million as compared to other income of $0.4 million for the year ended December 31, 2000. The 2001 other expense is comprised entirely of losses on the sale of fixed assets. The 2000 other income is comprised entirely of gains on the sale of fixed assets. Net Income (Loss) Before Cumulative Effect of Accounting Change. As a result of the foregoing, net income (loss) before cumulative effect of accounting change for the year ended December 31, 2001 increased $7.3 million to a net income before cumulative effect of accounting change of $2.7 million as compared to net loss before cumulative effect of accounting change of $4.6 million for the year ended December 31, 2000. Net income (loss) before cumulative effect of accounting change as a percentage of net revenues increased to 1.1% for the year ended December 31, 2001 from (1.7%) for the year ended December 31, 2000. Cumulative Effect of Accounting Change. Effective April 1, 2001, the Company adopted the provisions of Emerging Issues Task Force (EITF) Issue No. 99-20 "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets." In accordance with the impairment provisions of EITF 99-20, upon adoption the Company recognized a $2.0 million non-cash write-down of the Company's retained interests in its securitization transactions. The impairment was primarily driven by faster prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. trends than had been anticipated at the time of sale. Net Income (Loss). As a result of the aforementioned, net income for the year ended December 31, 2001 increased $5.3 million to $0.7 million as compared to a net loss of $4.6 million for the year ended December 31, 2000. Net income as a percentage of net revenues increased to 0.3% for the year ended December 31, 2001 from (1.7%) for the year ended December 31, 2000. |
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