Salton Reports First Quarter Results.LAKE FOREST, Ill. -- Salton, Inc. (NYSE NYSE See: New York Stock Exchange : SFP SFP Small Form-factor Pluggable (optical transceiver module) SFP Société Française de Physique (French Physics Society; Paris) Sfp Svenska Folkpartiet (Finnish: Swedish People~s Party) ) announced today fiscal results for its first quarter ended October 1, 2005. The Company 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 of $148.4 million for its fiscal 2006 first quarter compared to net sales of $204.7 million for the fiscal 2005 first quarter. Salton reported net income of $29.7 million, or $2.43 per share or $1.83 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus a loss of $(3.2) million, or ($0.28) per share for the same period in fiscal 2005. Net sales decreased domestically by $47.0 million as a result of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and the uncertainty it created among one of our large suppliers and a few customers. This uncertainty impacted product availability and demand for the first quarter. The Company has now concluded a major portion of its restructuring efforts. Foreign sales declined by $9.2 million. The foreign sales were impacted by weak consumer demand and some product shortages in the United Kingdom. As a result of the sale of Amalgamated a·mal·ga·mate v. a·mal·ga·mat·ed, a·mal·ga·mat·ing, a·mal·ga·mates v.tr. 1. To combine into a unified or integrated whole; unite. See Synonyms at mix. 2. Appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. Holdings Limited (AMAP AMAP Arctic Monitoring and Assessment Programme AMAP As Much As Possible AMAP As Many As Possible AMAP American Medical Accreditation Program AMAP Army Medical Action Plan AMAP Automotive and Manufacturing Advanced Practice ) on September 29, 2005, the results of AMAP have been included in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the first quarter of fiscal 2006 and 2005. The Company's gross margin was 27.0% for the first quarter of fiscal 2006, compared to 32.6% for the year earlier period. Gross margins decreased as a result of an inventory shortage of higher margin products and increased closeouts in the domestic market. In addition, Salton's business and its margins continue to be affected by the high cost of steel, corrugated cor·ru·gate v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates v.tr. To shape into folds or parallel and alternating ridges and grooves. v.intr. and oil-based raw materials. Despite these challenges, 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. , including distribution costs distribution costs distribute npl → Vertriebskosten pl , declined $8.8 million in the first quarter of fiscal 2006 compared to fiscal 2005. This was primarily a result of $7.8 million in domestic cost improvements. Net income increased by $32.9 million primarily as a result of a $27.8 million gain from the sale of the Company's 52.6% ownership interest in AMAP and a pre-tax gain of $21.7 million from the early retirement of debt associated with the Company's Exchange Offer. The Company had a loss from operations of $(11.0) million compared to 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. of $6.2 million in the year-earlier period. The Company had approximately $301.8 million in indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , net of cash and restructuring interest on senior secured notes of $28.5 million at the end of the fiscal 2006 first quarter, compared to $429.3 million as of July 2, 2005. As a result of lower than expected sales, the Company was not in compliance with its financial covenants as of the end of the first quarter of fiscal 2006 and does not expect to be in compliance as of November 5, 2005. Salton sought and received The Sixth Amendment and waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. from its senior lenders, who also agreed to provide additional availability of $5.0 million for seasonal build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of inventory. "During the last 18 months, Salton has taken significant steps to make the Company less leveraged and more competitive. Our goal remains to return the Company to profitability," said William Rue rue, common name for various members of the family Rutaceae, a large group of plants distributed throughout temperate and tropical regions and most abundant in S Africa and Australia. Most species are woody shrubs or small trees; many are evergreen and bear spines. , President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "Recently, we completed the sale of AMAP and our Tabletop Division which improved our balance sheet and will allow us to focus on sales initiatives and our business. Through our cost reduction programs, we have reduced our annual domestic expenses by more than $55.0 million. We will continue to seek ways to make our business more cost effective and profitable, while looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. new ways to grow." Business Outlook: "As we had indicated previously, our sales for the first quarter were weak due to the impact of our restructuring efforts, delays in customer orders, product shortages and the effects of the hurricanes," said Leonhard Dreimann, Chief Executive Officer. "However, we are encouraged by recent reactions from customers and suppliers. Incoming orders indicate customers are excited about our new products such as the George Foreman George Edward Foreman (born January 10, 1949) is an American two-time World Heavyweight Boxing Champion. He is the oldest man ever to win the heavyweight title, and also has been named one of the 25 greatest fighters of all time by Ring magazine. (R) "G5" Next Grilleration, the latest in a line of removable plate grills developed by the Company and George Foreman. We expect a much stronger second quarter" The conference call will take place at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on November 10, 2005. Leonhard Dreimann, Chief Executive Officer, William Rue, President and Chief Operating Officer and David Mulder, Executive Vice President, Chief Administrative Officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive and Senior Financial Officer will host the call. Interested participants should call (800) 968-9265 when calling from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or (706) 679-3061 when calling internationally. Please reference Conference I.D. Number 2140676. There will be a playback Playback could mean:
This call is also being webcast and can be accessed at Salton's web site at www.saltoninc.com until December 10, 2005. The conference call can be found under the subheadings, "Stock Quotes" and then "Audio Archives." About Salton, Inc. Salton, Inc. is a leading designer, marketer and distributor of branded, high quality small appliances Small appliance refers to a class of home appliances that are semi-portable or which are used on tabletops, countertops, or other platforms. Such items are contrasted with major appliances, which are typically fixtures that cannot be easily moved. , electronics, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. The Company sells its products under a portfolio of well recognized brand names such as Salton(R), George Foreman(R), Westinghouse(TM), Toastmaster toast·mas·ter n. A man who proposes the toasts and introduces the speakers at a banquet. toastmaster Noun a person who introduces speakers and proposes toasts at public dinners Noun 1. (R), Mellitta(R), Russell Hobbs Russell Hobbs is a British manufacturer of household appliances in Failsworth, Oldham, Greater Manchester. History After working with REME in World War II and leaving in 1947 as a Major, Bill Russell (1920-2006) joined Morphy Richards and helped to design the pop-up (R), Farberware(R), Ingraham(R) and Stiffel(R). It believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with its customer base and its focused outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. strategy. Certain matters discussed in this press release are 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. that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These factors include: Salton's ability to repay the outstanding 10-3/4% Subordinated Notes due December 15, 2005; Salton's ability to realize the benefits it expects from its U.S. restructuring plan; Salton's substantial indebtedness and restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. in Salton's debt instruments; Salton's ability to access the capital markets on attractive terms or at all; Salton's relationship and contractual arrangements with key customers, suppliers and licensors; pending legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; cancellation or reduction of orders; the timely development, introduction and customer acceptance of Salton's products; dependence on foreign suppliers and supply and manufacturing constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. ; competitive products and pricing; economic conditions and the retail environment; international business activities; the risks related to intellectual property rights; the risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc regulatory matters and other risks and uncertainties detailed from time to time in Salton's Securities and Exchange Commission Filings.
SALTON, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
UNAUDITED
ASSETS 10/1/05 7/2/05
------
CURRENT ASSETS:
---------------
Cash $10,310 $14,857
Compensating balances on deposit 38,779 34,355
Restricted cash 81,664 -
Accounts Receivable, less allowance: 146,213 140,179
2006 - $7,581; 2005 - $10,130
Inventories 188,319 195,065
Asset held for sale - 998
Prepaid expenses and other current assets 15,424 16,048
Deferred income taxes 6,402 5,524
Current assets of discontinued operations - 101,927
--------- ---------
Total current assets 487,111 508,953
Net Property, Plant and Equipment 47,287 50,227
Tradenames 179,941 180,041
Non-current deferred tax asset 27,239 49,275
Other assets 11,522 11,555
Non-current assets of discontinued operations - 7,737
--------- ---------
TOTAL ASSETS $753,100 $807,788
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
--------------------
Revolving line of credit and other current
debt, including an adjustment of $9,713 and $0
for accrued interest on the senior secured
notes, respectively $87,485 $70,730
Senior subordinated notes-current 45,990 45,990
Accounts payable 113,075 86,254
Accrued expenses 36,638 48,391
Income Taxes Payable 4,378 4,375
Current liabilities of discontinued operations - 47,331
--------- ---------
Total current liabilities 287,566 303,071
Non-current deferred income taxes 3,040 3,334
Term loan and other notes payable 100,050 100,050
Senior subordinated notes due 2005 - 79,010
Senior subordinated notes due 2008, including an
adjustment of $2,578 and $7,082 to the carrying
value related to interest rate swap agreements,
respectively 62,206 156,387
Second lien notes, including an adjustment of
$18,756 and $0 to the carrying value for accrued
interest, respectively 121,933 -
Series C preferred stock 8,087 -
Other long term liabilities 20,134 20,283
Non-current liabilities of discontinued operations - 1,462
--------- ---------
TOTAL LIABILITIES 603,016 663,597
Minority interest in discontinued operations - 24,263
Convertible Preferred Stock, $.01 par value:
authorized, 2,000,000 shares, 40,000 shares
issued 40,000 40,000
STOCKHOLDERS' EQUITY:
---------------------
Common stock, $.01 par value; authorized
40,000,000 shares; issued and outstanding
2006-13,520,761 shares, 2005-11,376,292
shares 170 148
Treasury stock - at cost (65,793) (65,793)
Additional paid-in capital 62,356 55,441
Accumulated other comprehensive income 5,068 11,513
Retained Earnings 108,283 78,619
--------- ---------
Total stockholders' equity 110,084 79,928
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER EQUITY $753,100 $807,788
========= =========
SALTON, INC
CONSOLIDATED INCOME STATEMENTS
(Dollars in Thousands)
UNAUDITED
13 Weeks Ended
Oct 1, 2005 Oct 2, 2004
----------- -----------
Net Sales $148,416 $204,684
Cost of Sales 108,371 137,986
Total Distribution Expense 10,548 12,935
----------- -----------
Gross Profit 29,497 53,763
Total Selling, General & Administrative 40,418 46,854
Restructuring Costs 117 672
----------- -----------
Operating (Loss) Income (11,038) 6,237
Interest Expense 11,049 12,879
Gain-Early settlement of debt (21,655) 0
----------- -----------
(Loss) Income from Continuing Operations
Before Income Taxes (432) (6,642)
Income Taxes (545) (2,197)
----------- -----------
Net (Loss) Income from Continuing Operations 113 (4,445)
Income (Loss) from Discontinued Operations,
net of Tax 1,735 1,258
Gain on Sale of Discontinued Operations, net
of Tax 27,816 -
----------- -----------
Net Income (Loss) $29,664 $(3,187)
=========== ===========
Weighted avg common shares outstanding 12,215,911 11,370,946
Weighted avg common & common equiv share 16,249,880 11,370,946
Net income(loss) per common share: Basic
Income(loss) from continuing operations $0.01 $(0.39)
Income from discontinued operations, net of
tax 0.14 0.11
Gain on sale of discontinued operations 2.28 -
----------- -----------
Net income(loss) per common share: Basic $2.43 $(0.28)
=========== ===========
Net income(loss) per common share: Diluted
Income(loss) from continuing operations $0.01 $(0.39)
Income from discontinued operations, net of
tax $0.11 $0.11
Gain on sale of discontinued operations $1.71 $-
----------- -----------
Net income(loss) per common share: Diluted $1.83 $(0.28)
=========== ===========
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