COPPELL, Texas, Nov. 11, 2011 /PRNewswire/ -- The board of
directors of Craftmade International, Inc. (OTCQX: CRFT) today
amended and corrected certain information originally provided to
shareholders in a Supplemental Disclosure issued November 4, 2011. That Supplemental Disclosure
provided additional information related to the recent tender offer
by Litex Industries, Limited and its subsidiary, Litex Acquisition
#1, LLC, to purchase all outstanding Craftmade shares for
$4.25 per share.
In the Supplemental Disclosure, the paragraph that begins with
"Discounted Cash Flow Analysis." should be replaced with the
following paragraph:
"Discounted Cash Flow Analysis. B. Riley performed two
discounted cash flow analyses, which were designed to imply a
potential value of the Company by calculating the net present value
of estimated future cash flows of the Company. B. Riley performed
discounted cash flow analyses for each of Craftmade's operating
segments (Mass and Specialty) independently and consolidated the
resulting valuations to achieve a value of the Company in total. B.
Riley calculated ranges of implied equity values per share for
Craftmade based on discounted cash flow analyses utilizing the
projections for fiscal year 2012 through fiscal year 2015 provided
by the Company for each operating segment (see section entitled
"Financial Projections" for a summary of these projections). For
valuation purposes B. Riley then incorporated their own projections
for 2016, which were relied upon by B. Riley in performing its
discounted cash flow analysis, and calculated the net present value
of unlevered free cash flows for Craftmade for fiscal 2012 through
fiscal year 2016. B. Riley then calculated the terminal value at
the end of fiscal year 2016 by applying a range of multiples of
4.0x to 5.0x to each segment's estimated fiscal year 2016 free
cash flow from operations. In arriving at these terminal multiples,
B. Riley took into consideration the relative profitability and
expected long-term growth of the Company, as well as overall
economic factors at the time of the valuation. The determination of
such multiples is based on professional judgment, and can and does
change over time as these expectations and factors change. These
terminal values were then discounted to present values using
weighted average costs of capital ranging from 12.1% to 14.1% for
the Mass segment and 13.0% to 15.0% for the Specialty segment.
These analyses yielded enterprise values ranging from
$4.7 million to $5.6 million for the
Mass segment and $48.5 million to $62.6
million for the Specialty segment. While the Company's
debt is not specific to an operating segment, B. Riley allocated
the debt 21% to the Mass segment and 79% to the Specialty segment,
based on projected revenue for each segment, which resulted in an
implied equity value range of ($0.27) to
($0.11) per share for the Mass segment, and an implied
equity value range of $4.30 to $6.73
per share for the Specialty segment, and a combined implied equity
value range of $4.04 to $6.62 per
share for the Company as a whole. Combining both segments, B.
Riley used an average fiscal 2012 debt forecast of $29.8 million to calculate the equity value for
the Company. This debt forecast varied from the total debt reported
by the Company as of June 30, 2011
primarily due to the Company's reduction in debt in July of 2011 as
a result of the sale-leaseback of one of its facilities."
In addition to the above amendment and correction, the Company
has also made available the full presentation made by B. Riley to
Craftmade's board of directors on October 6,
2011 at a special meeting of the Board of Directors, which
includes the projections for fiscal year 2016 prepared by B. Riley
that were not included in the Supplemental Disclosure. At this
meeting the Board received an opinion from B. Riley and Co., LLC.
that the current offer of $4.25 is
fair, from a financial point of view, to the Company's stockholders
(other than Litex and its affiliates). B. Riley's presentation to
the board is available at:
http://www.b2i.us/profiles/investor/fullpage.asp?BzID=602&to=cp&ID=1508&Langid=1&SiteID=0
Craftmade's board of directors would also like to reiterate
that, as noted in its original letter to shareholders dated
October 14, 2011, under the terms of
the letter of agreement with Litex, Craftmade's board of directors
can respond to any inquiries and negotiate any alternative
transaction as part of its fiduciary duties. Please refer to
the original letter and the Offering Memorandum dated October 14, 2011 for additional information
concerning the terms and conditions of the offer.
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 or OTCQX, 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. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
SOURCE Craftmade International, Inc.