Alliance Laundry Holdings LLC Reports 3rd Quarter 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)--Nov. 13, 2000 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 quarter and nine months ended September September: see month. 30, 2000. Sales for the third quarter ended September 30, 2000 decreased $15.7 million, or 19.6%, to $64.2 million compared to $79.9 million for the quarter ended September 30, 1999. Net income for the quarter ended September 30, 2000 decreased $2.4 million to a net loss of $0.8 million as compared to net income of $1.6 million for the third quarter of 1999. 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.
a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. 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 the third quarter of 2000 was $13.4 million which was comparable with EBITDA before nonrecurring and plant relocation costs of $14.0 million for the third quarter of 1999. Sales for the nine months ended September 30, 2000 decreased $42.2 million, or 17.1%, to $205.1 million from $247.3 million for the nine months ended September 30, 1999. Net income for the nine months ended September 30, 2000 decreased $7.4 million to a net loss of $0.7 million from net income of $6.7 million for the nine months ended September 30, 1999. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) before nonrecurring and plant relocation costs for the nine months ended September 30, 2000 was $41.5 million which was comparable with EBITDA before nonrecurring and plant relocation costs of $43.6 million for the nine months ended September 30, 1999. The overall sales decline of $42.2 million for the nine months was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk 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 consumer laundry sales to Amana AMANA American Muslim Association of North America AMANA All Mach and No Azimuth Company, L.P. (Appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. Co.) as of September 17, 1999, which accounted for $54.7 million in sales for the nine months ended September 30, 1999. Partially offsetting this decrease were increased commercial laundry and service parts sales of $12.5 million. The decrease in EBITDA before nonrecurring and plant relocation costs of $2.1 million for the nine months ended September 30, 2000 was primarily attributable to the $54.7 million of reduced sales to Appliance Co. which has been largely offset by higher commercial laundry sales, modest price improvements and operational efficiencies. "We have aggressively pursued consolidation efforts to reduce costs and offset the loss of the consumer laundry sales to Amana," said Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs F. L'Esperance, Alliance's 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. . "I am pleased to announce that we have successfully completed the consolidation of our 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. operations into our 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 facilities in late July July: see month. and will be completed with the consolidation of the Ajax operations in early 2001." "These consolidation programs along with other strategic initiatives will position Alliance to profitability grow core business sales and meet its profit objectives for 2001," 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 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 Section 21E of the Securities Act of 1934, as amended, including, without limitation, statements that include the words "position" and "meet" 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 December: see month. 31, 1999. Alliance Laundry Holdings LLC, headquartered in Ripon, Wisconsin, is a leading manufacturer of commercial laundry products and provider of services for laundromats, multi-housing laundries, on-premise laundries and dry cleaners 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 pressing 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 quarter.
ALLIANCE LAUNDRY HOLDINGS LLC
STATEMENTS OF INCOME
(in thousands)
Three Months Ended Nine Months Ended
--------------------- ---------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Net sales:
Commercial laundry $ 55,784 $ 57,432 $ 178,918 $ 167,975
Appliance Co. consumer
laundry - 14,582 - 54,682
Service parts 8,382 7,836 26,142 24,626
---------- ---------- ---------- ----------
64,166 79,850 205,060 247,283
Cost of sales 44,713 59,234 143,279 183,338
---------- ---------- ---------- ----------
Gross profit 19,453 20,616 61,781 63,945
---------- ---------- ---------- ----------
Selling, general and
administrative expense 11,406 10,309 35,237 31,434
Nonrecurring costs 402 730 402 1,624
---------- ---------- ---------- ----------
Total operating expenses 11,808 11,039 35,639 33,058
---------- ---------- ---------- ----------
Operating income 7,645 9,577 26,142 30,887
Interest expense 8,920 7,898 27,165 23,945
Other income (expense), net 460 (78) 352 (222)
---------- ---------- ---------- ----------
Income before taxes (815) 1,601 (671) 6,720
Provision for income taxes - - 20 29
---------- ---------- ---------- ----------
Net income (loss) $ (815) $ 1,601 $ (691) $ 6,691
========== ========== ========== ==========
ALLIANCE LAUNDRY HOLDINGS LLC
OTHER OPERATING DATA
(in thousands)
Three Months Ended Nine Months Ended
--------------------- ---------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
EBITDA(1) $ 11,728 $ 13,013 $ 37,546 $ 41,421
EBITDA(1) before
nonrecurring and plant
relocation costs $ 13,408 $ 14,001 $ 41,535 $ 43,606
Depreciation and
amortization(2) $ 4,262 $ 4,140 $ 12,943 $ 12,692
Non-cash interest expense
included in amortization
above(2) $ 639 $ 626 $ 1,891 $ 1,936
Nonrecurring costs $ 402 $ 730 $ 402 $ 1,624
Plant relocation costs
included in administrative
expense $ 1,278 $ 258 $ 3,587 $ 561
Capital expenditures $ 1,114 $ 2,886 $ 3,622 $ 8,875
(1) "EBITDA", as presented, represents income before taxes plus
depreciation, amortization and interest expense.
(2) Depreciation and amortization amounts for 2000 and 1999 include
amortization of deferred financing costs included in interest
expense.
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
-------------- --------------
(Unaudited)
Assets
Current assets:
Cash $ 811 $ 3,028
Cash-restricted 233 956
Accounts receivable, net 27,636 33,578
Inventories, net 41,468 31,282
Prepaid expenses and other 8,449 6,160
-------------- --------------
Total current assets 78,597 75,004
Notes receivable 22,558 18,314
Property, plant and equipment, net 53,748 57,615
Goodwill, net 56,134 48,319
Debt issuance costs, net 11,210 13,064
Other assets 7,616 7,550
-------------- --------------
Total assets $ 229,863 $ 219,866
============== ==============
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $ 1,018 $ 500
Accounts payable 14,921 12,362
Finance program obligation 3,150 3,551
Revolving credit facility 14,000 -
Other current liabilities 24,569 21,805
-------------- --------------
Total current liabilities 57,658 38,218
Long-term debt:
Senior credit facility 198,750 199,500
Senior subordinated notes 110,000 110,000
Junior subordinated note 13,733 12,048
Other long-term debt 737 -
Other long-term liabilities 1,949 1,866
-------------- --------------
Total liabilities 382,827 361,632
Commitments and contingencies (See Note 6)
Manditorily redeemable preferred equity 6,000 6,000
Members' deficit (158,964) (147,766)
-------------- --------------
Total liabilities and members' deficit $ 229,863 $ 219,866
============== ==============
Management's Discussion and Analysis of Financial Condition and Results of Operations for the Quarter and Nine Months Ended September 30, 2000 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, and presses and finishers used in the dry cleaning dry cleaning, process of cleaning fabrics without water. Special solvents and soaps are used so as not to harm fabrics and dyes that will not withstand the effects of ordinary soap and water. Dry cleaning began in France about the middle of the 19th cent. market. 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) dry cleaners. In addition, during 1999, pursuant to a supply agreement with Appliance Co., the Company supplied consumer washing machines to the consumer appliance business of Appliance Co. for sale at retail. This supply agreement was completed and concluded on September 17, 1999. The unaudited financial statements as of September 30, 2000 and September 30, 1999 and for the periods ended September 30, 2000 present 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 discussion and analysis 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 Financial Statements and Notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in this report and in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in the Company's Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes the audited financial position and operating results of the Company as of and for the year ended December 31, 1999. RESULTS OF OPERATIONS Quarter Ended September 30, 2000 Compared to the Quarter Ended September 30, 1999 The following table sets forth the Company's historical 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 periods indicated:
Quarter Ended
-----------------------------
September 30, September 30,
2000 1999
-------------- --------------
(Dollars in millions)
Net sales
Commercial laundry $ 55.8 $ 57.5
Appliance Co. consumer laundry - 14.6
Service parts 8.4 7.8
-------------- --------------
$ 64.2 $ 79.9
============== ==============
The following table sets forth certain condensed historical
financial data for the Company expressed as a percentage of net sales
for each of the periods indicated:
Quarter Ended
-----------------------------
September 30, September 30,
2000 1999
-------------- --------------
Net sales 100.0% 100.0%
Cost of sales 69.7% 74.2%
Gross profit 30.3% 25.8%
Selling, general and administrative expense 17.8% 12.9%
Nonrecurring costs 0.6% 0.9%
Operating income 11.9% 12.0%
Net income (1.3%) 2.0%
Net sales. Net sales for the quarter ended September 30, 2000 decreased $15.7 million, or 19.6%, to $64.2 million from $79.9 million for the quarter ended September 30, 1999. This decrease, attributable to consumer laundry equipment sales of $14.6 million, and commercial laundry sales of $1.7 million, was partially offset by an increase in service part sales of $0.5 million. The decrease in consumer laundry sales was due to the completion and conclusion of the Appliance Co. supply agreement as of September 17, 1999. The decrease in commercial laundry sales was due primarily to lower North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. equipment sales of $0.4 million, lower international sales of $1.1 million and lower earnings from the Company's off-balance sheet equipment financing program of $0.2 million. The decrease in North American equipment sales was primarily due to a 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. in laundromat (jargon, storage) laundromat - Synonym disk farm; see washing machine. and multi-housing sales, which were partially offset by the additional sales resulting from the March 6, 2000 acquisition of the Ajax pressing and finishing equipment division. Sales to international customers, primarily in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , were lower as the Company's products (priced in U.S. dollars) have become less competitive due to the negative impact of foreign currency exchange resulting from the strengthening U.S. dollar relative to other foreign currencies. Gross profit. Gross profit for the quarter ended September 30, 2000 decreased $1.1 million, or 5.6%, to $19.5 million from $20.6 million for the quarter ended September 30, 1999. This decrease was primarily attributable to under-absorption of overhead previously applied against consumer laundry sales, which was partially offset by a modest price increase and manufacturing efficiencies implemented during 1999 and 2000. Gross profit as a percentage of net sales increased to 30.3% for the quarter ended September 30, 2000 from 25.8% for the quarter ended September 30, 1999. The increase in gross profit as a percentage of net sales is attributable to the higher margins associated with commercial laundry equipment sales as compared to low margins associated with the previous year's sales to Appliance Co., as well as from the manufacturing efficiencies noted above. Selling, general and administrative expense. Selling, general and administrative expenses for the quarter ended September 30, 2000 increased $1.1 million, or 10.6%, to $11.4 million from $10.3 million for the quarter ended September 30, 1999. The increase in selling, general and administrative expenses was primarily due to an increase of $1.0 million in one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. expenses related to the relocation of Madisonville, Kentucky and 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 Ripon, Wisconsin and 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]. , respectively, as well as incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. selling, general and administrative expenses associated with the Ajax product line. Selling, general and administrative expenses as a percentage of net sales increased to 17.8% for the quarter ended September 30, 2000 from 12.9% for the quarter ended September 30, 1999 as a result of the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of sales to Appliance Co. which had previously incurred very little selling, general and administrative expense, and as a result of the production line moves noted above. Nonrecurring costs. Nonrecurring costs for the quarter ended September 30, 2000 decreased $0.3 million, or 44.9%, to $0.4 million from $0.7 million for the quarter ended September 30, 1999. Nonrecurring costs in 2000 were comprised entirely of additional employee termination and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when benefits related to the relocation of Madisonville, Kentucky production lines to Ripon, Wisconsin. Nonrecurring costs in 1999 were comprised of employee retention costs and a one-time pension curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. charge associated with a layoff Layoff 1. When a company eliminates jobs regardless of how good the employees' performance. 2. A risk reduction, made by investment bankers, that minimizes the potential downside associated with a commitment to purchase and sell a stock issue unsubscribed by stockholders holding which occurred after the completion of the Appliance Co. supply agreement. 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 foregoing, operating income for the quarter ended September 30, 2000 decreased $2.0 million, or 20.2%, to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $7.6 million from $9.6 million for the quarter ended September 30, 1999. Operating income as a percentage of net sales decreased to 11.9% for the quarter ended September 30, 2000 from 12.0% for the quarter ended September 30, 1999. Interest expense. Interest expense for the quarter ended September 30, 2000 increased $1.0 million, or 12.9%, to $8.9 million from $7.9 million for the quarter ended September 30, 1999. The increase is primarily attributable to higher LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). based interest rates, interest expense on borrowings from the revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. resulting from the acquisition of the Ajax product line (see Note 9 of the financial statements) and from payment of 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. (see Note 6 of the financial statements). Net income/(loss). As a result of the foregoing, net income for the quarter ended September 30, 2000 decreased $2.4 million to a net loss of $0.8 million as compared to net income of $1.6 million for the quarter ended September 30, 1999. Net income/(loss) as a percentage of net sales decreased to (1.3%) for the quarter ended September 30, 2000 from 2.0% for the quarter ended September 30, 1999. Nine Months Ended September 30, 2000 Compared to the Nine Months Ended September 30, 1999 The following table sets forth the Company's historical net sales for the periods indicated:
Nine Months Ended
-----------------------------
September 30, September 30,
2000 1999
-------------- --------------
(Dollars in millions)
Net sales
Commercial laundry $ 178.9 $ 168.0
Appliance Co. consumer laundry - 54.7
Service parts 26.2 24.6
-------------- --------------
$ 205.1 $ 247.3
============== ==============
The following table sets forth certain condensed historical
financial data for the Company expressed as a percentage of net sales
for each of the periods indicated:
Nine Months Ended
-----------------------------
September 30, September 30,
2000 1999
-------------- --------------
Net sales 100.0% 100.0%
Cost of sales 69.9% 74.1%
Gross profit 30.1% 25.9%
Selling, general and administrative expense 17.2% 12.7%
Nonrecurring costs 0.2% 0.7%
Operating income 12.7% 12.5%
Net income (0.3%) 2.7%
Net sales. Net sales for the nine months ended September 30, 2000 decreased $42.2 million, or 17.1%, to $205.1 million from $247.3 million for the nine months ended September 30, 1999. This decrease, attributable to consumer laundry equipment sales of $54.7 million, was partly offset by increases in commercial laundry sales, $11.0 million, and service part sales, $1.5 million. The decrease in consumer laundry sales was due to the completion and conclusion of the Appliance Co. supply agreement as of September 17, 1999. The increase in commercial laundry sales was due primarily to higher North American equipment sales of $9.5 million, higher international sales of $1.0 million and higher earnings from the Company's off-balance sheet equipment financing program of $0.6 million. The increase in North American equipment sales was primarily due to higher sales for regional laundromats and multi-housing laundries in the first half of 2000, and due to the additional sales resulting from the March 6, 2000 acquisition of the Ajax pressing and finishing equipment division. The equipment financing program earnings were higher due to an increase in the amount of loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. in the first half of the year. Gross profit. Gross profit for the nine months ended September 30, 2000 decreased $2.1 million, or 3.4%, to $61.8 million from $63.9 million for the nine months ended September 30, 1999. This decrease was attributable to the completion of the supply agreement with Appliance Co. on September 17, 1999, which resulted in under-absorption of overhead previously applied against consumer laundry sales. This under-absorption was partially offset by a modest price increase and manufacturing efficiencies implemented during 1999 and 2000. Gross profit as a percentage of net sales increased to 30.1% for the nine months ended September 30, 2000 from 25.9% for the nine months ended September 30, 1999. The increase in gross profit as a percentage of net sales is attributable to the higher margins associated with commercial laundry equipment sales as compared to low margins associated with the previous year's sales to Appliance Co., as well as from the manufacturing efficiencies noted above. Selling, general and administrative expense. Selling, general and administrative expenses for the nine months ended September 30, 2000 increased $3.8 million, or 12.1%, to $35.2 million from $31.4 million for the nine months ended September 30, 1999. The increase in selling, general and administrative expenses was primarily due to an increase of approximately $3.0 million in one-time expenses related to the relocation of Madisonville, Kentucky and Cincinnati, Ohio production lines to Ripon, Wisconsin and Marianna, Florida, respectively, as well as incremental selling, general and administrative expenses associated with the Ajax product line. Selling, general and administrative expenses as a percentage of net sales increased to 17.2% for the nine months ended September 30, 2000 from 12.7% for the nine months ended September 30, 1999 as a result of the termination of sales to Appliance Co. which had previously incurred very little selling, general and administrative expense, and as a result of the production line moves noted above. Nonrecurring costs. Nonrecurring costs for the nine months ended September 30, 2000 decreased $1.2 million to $0.4 million from $1.6 million for the quarter ended September 30, 1999. Nonrecurring costs in 2000 were comprised entirely of employee termination and severance benefits due to the relocation of Madisonville, Kentucky production lines to Ripon, Wisconsin. Nonrecurring costs in 1999 were comprised of employee retention costs and a one-time pension curtailment charge associated with a layoff which occurred after the completion of the Appliance Co. supply agreement. Operating income. As a result of the foregoing, operating income for the nine months ended September 30, 2000 decreased $4.8 million, or 15.4%, to approximately $26.1 million from $30.9 million for the nine months ended September 30, 1999. Operating income as a percentage of net sales increased to 12.7% for the nine months ended September 30, 2000 from 12.5% for the nine months ended September 30, 1999. Interest expense. Interest expense for the nine months ended September 30, 2000 increased $3.2 million, or 13.4%, to $27.2 million from $24.0 million for the nine months ended September 30, 1999. The increase is attributable to $1.5 million of net interest expense associated with the Raytheon arbitration award, as well as borrowings from the revolving line of credit used in connection with the Raytheon arbitration award (see Note 6 of the financial statements) and the acquisition of the Ajax product line (see Note 9 of the financial statements). Net income/(loss). As a result of the foregoing, net income for the nine months ended September 30, 2000 decreased $7.4 million to a net loss of $0.7 million from net income of $6.7 million for the nine months ended September 30, 1999. Net income/(loss) as a percentage of net sales decreased to (0.3%) for the nine months ended September 30, 2000 from 2.7% for the nine months ended September 30, 1999. |
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