COPPELL, Texas, Oct. 7, 2011 /PRNewswire/ -- Craftmade
International, Inc. (OTCQX: CRFT) today reported the following
results for its fourth quarter and fiscal year ended June 30, 2011:
Fiscal Year 2011 Consolidated Results
Net loss for the current fiscal year was $9,579,000, compared to net income of
$61,000 for the 2010 fiscal year, a
decrease of $9,640,000. The most
significant driver in the year over year change was a pre-tax
goodwill impairment charge of $9,045,000 that the company recorded in the
quarter ended June 30, 2011. On a
fully diluted basis, net loss per share was $1.68 for the 2011 fiscal year, compared to a net
income of $0.01 for the 2010 fiscal
year, a decrease of $1.69. Weighted
average diluted shares outstanding for the current fiscal year were
5,705,000 versus 5,729,000 for the 2010 fiscal year.
Net sales for the fiscal year decreased $26,957,000, or 17.5%, to $126,963,000 compared to $153,920,000 reported in the last fiscal
year. This decrease was primarily due to a decline in Mass
segment sales, primarily outdoor furniture sales. The
decrease is partially offset by an increase Specialty segment
sales.
Goodwill Impairment
The Company learned during the fourth quarter of fiscal 2011
that it will have significantly lower sales to the Mass segment in
fiscal 2012 than it had in fiscal 2011. The Company continues to
review its strategy for participation in the Mass segment. The
Company will continue to participate in key line reviews for Mass
product, and may pick up additional sales in the future, however
current trends make it difficult to project future gains.
Given this uncertainty, the Company has chosen to revise its
long-term projections for revenues and earnings in this segment as
part of its annual testing for impairment of goodwill. The
resulting valuation implies a deficit of equity value compared to
book value. Given the implied deficit the Company has determined
that it is appropriate to fully impair the goodwill of $9,045,000 associated with the Mass reporting
unit as of June 30, 2011.
Gross Profit; Selling, General and Administrative ("SG&A")
Expense and Interest Expense
Gross profit of the Company as a percentage of net sales
increased 1.5% to 20.7% for fiscal year 2011 compared to 19.2% in
fiscal year 2010. This was primarily due to a favorable
increase in margins for the Company's Specialty segment, as well as
a favorable change in the mix between the higher margin Specialty
business and the lower-margin Mass business.
Total selling, general and administrative ("SG&A") expenses
of the Company decreased $955,000 to
$25,116,000 or 19.8% of net sales for
the fiscal year ended June 30, 2011,
compared to $26,071,000 or 16.9% of
net sales for the same period last year. This decrease in expenses
was partially driven by a reduction in accounting, legal and
consulting expenditures which were high in the prior year related
to a tender offer by a third party.
Net interest expense of the Company increased $167,000 to $1,922,000 for the fiscal year ended June 30, 2011, compared to $1,755,000 for the fiscal year ended June 30, 2010, due to higher average balances
versus the prior year.
Net income attributable to noncontrolling interest was
$244,000 for the year ended
June 30, 2011, down from $773,000 for the same period in the previous
year. The decrease in net income attributable to noncontrolling
interest resulted from lower profits at Design Trends.
Fiscal 2011 Fourth Quarter Results
Net loss for the quarter ended June 30,
2011 was $8,162,000, compared
to net income of $145,000 for the
quarter ended June 30, 2010, a
decrease of $8,307,000. On a fully
diluted basis, net loss per share was $1.43 for the current quarter, compared to net
income of $.03 for the 2010 fourth
quarter, a decrease of $1.46. The
primary driver in the year over year change was a pre-tax goodwill
impairment charge of $9,045,000 that
the company recorded in the fourth quarter.
Net sales for the quarter ended June 30,
2011 were $31,405,000,
compared to $41,295,000 in the prior
year quarter, a decrease of $9,890,000 or 24%. This decrease was
primarily due to a decline in Mass segment sales, primarily outdoor
furniture sales. The decrease is partially offset by an
increase Specialty segment sales.
Gross profit as a percentage of net sales increased by 2.7% to
22.7%, compared to 20.0% for the same quarter last year. This was
primarily due to a favorable increase in margins for the Company's
Specialty segment, as well as a favorable change in the mix between
the higher margin Specialty business and the lower-margin Mass
business.
Total SG&A expenses for the fourth quarter decreased by
$245,000 to $6,906,000 for the quarter, compared to
$7,151,000 in the prior year
quarter.
Net interest expense of the Company increased $13,000 to $557,000
for the quarter ended June 30, 2011,
compared to $544,000 for the quarter
ended June 30, 2010. Net loss
attributable to noncontrolling interest was $160,000 for the quarter ended June 30, 2011, down from net income attributable
to noncontrolling interest of $125,000 for the same period in the previous
year.
Pending Tender Offer
On October 3, 2011 Craftmade's
Board of Directors (the "Board") received a letter from Litex
Industries, Limited ("Litex"), announcing that it intends to
initiate a cash tender offer in which Litex's subsidiary, Litex
Acquisition #1, LLC, will offer to purchase all outstanding shares
of Craftmade's common stock for a price of $4.25 per share. The offer is expected to
be initiated on or about October 11,
2011, and the offer and withdrawal rights are scheduled to
expire at 5:00 P.M., New York
City time, on or about November, 6, 2011, unless the offer
is extended. The Board expects to issue a letter to Craftmade
stockholders on or about October 11
recommending that stockholders accept this tender offer. The
Board's favorable recommendation is subject to certain conditions.
For additional details please refer to the tender offer
materials and the Board's recommendation to stockholders which will
be filed on OTCQX.com as soon as they are available.
Founded in 1985, Craftmade International, Inc. is engaged in the
design, manufacturing, distribution and marketing of a broad range
of home decor products, including proprietary ceiling fans,
lighting products and outdoor furniture. The Company
distributes its premium products through a network of independent
showrooms and mass retail customers through its headquarters and
distribution facility in Coppell,
Texas and manufacturing plant in Owosso, Michigan.
More information about Craftmade International, Inc. can be
found at www.craftmade.com.
Various statements in this Press Release or incorporated by
reference herein, in future filings with the SEC, in press
releases, and in oral statements made by or with the approval of
authorized personnel constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based on current expectations
and are indicated by words or phrases such as "may," "will,"
"should," "could," "might," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "forecasts,"
"intends," "potential," "continue," and similar words or phrases
and involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements
to be materially different from the future results, performance or
achievements expressed in or implied by such forward-looking
statements. These forward-looking statements include
statements or predictions regarding among other items: revenues and
profits; gross margin; customer concentration; customer buying
patterns; sales and marketing expenses; general and administrative
expenses; pricing and cost reduction activities; income tax
provision and effective tax rate; realization of deferred tax
assets; liquidity and sufficiency of existing cash, cash
equivalents, and investments for near-term requirements; purchase
commitments; product development and transitions; competition and
competing technology; outcomes of pending or threatened litigation;
and financial condition and results of operations as a result of
recent accounting pronouncements. These forward-looking
statements are based largely on expectations and judgments and are
subject to a number of risks and uncertainties, many of which are
beyond our control. Significant factors that cause our actual
results to differ materially from our expectations are described in
our Form 10-K under the heading of "Risk Factors." We
undertake no obligation to publicly update or revise these Risk
Factors or any forward-looking statements, whether as a result of
new information, future events or otherwise.
CRAFTMADE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share data)
|
|
|
Fiscal Year
Ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Net sales
|
$ 126,963
|
|
$ 153,920
|
|
$ 149,692
|
|
Cost of goods sold
|
(100,642)
|
|
(124,294)
|
|
(117,472)
|
|
|
|
|
|
|
|
|
Gross profit
|
26,321
|
|
29,626
|
|
32,220
|
|
Gross profit as a
percentage of net sales
|
20.7%
|
|
19.2%
|
|
21.5%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(25,116)
|
|
(26,071)
|
|
(30,340)
|
|
Goodwill impairment
|
(9,045)
|
|
-
|
|
-
|
|
Depreciation and
amortization
|
(888)
|
|
(907)
|
|
(1,076)
|
|
Total operating
expenses
|
(35,049)
|
|
(26,978)
|
|
(31,416)
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(8,728)
|
|
2,648
|
|
804
|
|
|
|
|
|
|
|
|
Interest expense, net
|
(1,922)
|
|
(1,755)
|
|
(1,438)
|
|
Other expense
|
(667)
|
|
-
|
|
(142)
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
(11,317)
|
|
893
|
|
(776)
|
|
Income tax (expense)
benefit
|
1,982
|
|
(59)
|
|
409
|
|
|
|
|
|
|
|
|
Net income (loss)
|
(9,335)
|
|
834
|
|
(367)
|
|
|
|
|
|
|
|
|
Less: Net income attributable to
noncontrolling interest
|
(244)
|
|
(773)
|
|
(721)
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to Craftmade International
|
$ (9,579)
|
|
$
61
|
|
$ (1,088)
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
common shares outstanding
|
5,705
|
|
5,705
|
|
5,705
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding
|
5,705
|
|
5,729
|
|
5,705
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
share
|
$
(1.68)
|
|
$
0.01
|
|
$
(0.19)
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share
|
$
(1.68)
|
|
$
0.01
|
|
$
(0.19)
|
|
|
|
|
|
|
|
CRAFTMADE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2011
|
|
2010
|
|
ASSETS
|
|
Current assets
|
|
|
|
|
|
Cash
|
$
-
|
|
$
171
|
|
|
Accounts receivable,
net
|
24,776
|
|
32,172
|
|
|
Inventories, net
|
24,953
|
|
17,995
|
|
|
Income taxes
receivable
|
633
|
|
236
|
|
|
Deferred income taxes
|
2,718
|
|
1,238
|
|
|
Prepaid expenses and other
current assets
|
3,128
|
|
2,448
|
|
|
|
Total current assets
|
56,208
|
|
54,260
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
10,084
|
|
10,574
|
|
Goodwill
|
6,744
|
|
15,568
|
|
Other intangibles,
net
|
625
|
|
763
|
|
Other assets
|
1,809
|
|
2,045
|
|
|
|
Total non-current
assets
|
19,262
|
|
28,950
|
|
|
|
|
|
|
|
|
Total assets
|
$ 75,470
|
|
$ 83,210
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
5,625
|
|
10,398
|
|
|
Other accrued
expenses
|
2,067
|
|
2,128
|
|
|
Current portion of long-term
obligations
|
888
|
|
834
|
|
|
|
Total current
liabilities
|
8,580
|
|
13,360
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term obligations
|
35,922
|
|
29,134
|
|
|
Deferred income taxes
|
1,012
|
|
1,121
|
|
|
|
Total non-current
liabilities
|
36,934
|
|
30,255
|
|
|
|
|
|
|
|
|
Total liabilities
|
45,514
|
|
43,615
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
Craftmade International
stockholders' equity:
|
|
|
|
|
|
|
Common stock, $0.01 par value,
15,000,000 shares authorized;
|
|
|
|
|
|
|
10,254,420 and shares
issued
|
103
|
|
103
|
|
|
|
Additional paid-in
capital
|
22,480
|
|
22,434
|
|
|
|
Retained earnings
|
42,296
|
|
51,875
|
|
|
|
Less: treasury stock,
4,499,920 common shares at cost
|
(38,126)
|
|
(38,126)
|
|
|
|
Total Craftmade
International stockholders' equity
|
26,753
|
|
36,286
|
|
|
Noncontrolling
interest
|
3,203
|
|
3,309
|
|
|
|
Total equity
|
29,956
|
|
39,595
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 75,470
|
|
$ 83,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Craftmade International, Inc.