Falcon Products Announces an Additional $10 Million in Capital and
Reports Results for Fiscal 2004 Second Quarter ST. LOUIS, June 15
/PRNewswire-FirstCall/ -- Falcon Products, Inc. (NYSE:FCP), a
leading manufacturer of commercial furniture, today announced that
it has received an additional $10 million in capital and reported
the Company's sales and operating results for its second quarter
ended May 1, 2004. The Company has secured from a lender in its
existing bank group an additional $10 million, increasing its term
B loan to $60 million. The Company also agreed with the banks on a
waiver for non-compliance with loan covenants for the second
quarter and reset covenant levels for the third and fourth quarters
of fiscal 2004. "This capital provides the liquidity and foundation
for us to continue to implement our operating strategy, which is on
track and producing results," Franklin A. Jacobs, Chairman and
Chief Executive Officer, stated. "We're meeting key milestones in
our turnaround program and posted significant improvements in our
operating performance in the second quarter over the first." Net
sales for the second quarter of fiscal 2004 were $55.1 million, a
6% decrease from the $58.7 million for the second quarter ended May
3, 2003. The Company reported a net loss of $4.3 million, or $.46
per diluted share, in the second quarter of 2004, compared with a
net loss of $628,000, or $.07 per diluted share, in the second
quarter of 2003. Although the second quarter was an improvement
over the first quarter of fiscal 2004, the results were not
sufficient to satisfy the Company's loan covenants. "On a
consecutive quarter basis, we've increased our gross margin to
23.4% in the second quarter compared to 15.4% in the first quarter
of fiscal 2004 and returned to positive EBITDA," Jacobs said. "We
expect sales in the third quarter to be up slightly compared to
last year, which in combination with our cost reduction and process
improvement actions, is expected to again drive increases in
operating income and EBITDA on a consecutive quarter basis." In
connection with the increased loan, waiver and modified covenants,
the interest rate on the term B loan was increased to 18% with 7%
payable on a current basis. The Company issued the term B loan
holder ten-year warrants to purchase approximately 1.8 million
shares of the Company's common stock at an exercise price of $0.02
per share. In addition, the Company agreed to raise $2.5 million in
new equity or junior securities by September 30, 2004. "I am very
pleased to see our management team executing effectively and making
this immediate, positive impact in our business. The steps we
continue to take to improve our cost structure, without sacrificing
capacity, are timely as we are beginning to see improvement in the
hospitality, institutional and restaurant sectors," Jacobs noted.
"While there is a general lag in the furniture sector serving these
industries, we have seen increased order activity in recent
months." Falcon Products, Inc. will conduct a conference call to
discuss fiscal 2004 second quarter results on June 16, 2004 at
11:00 a.m. EDT. The call will be Web cast at
http://www.companyboardroom.com/ and
http://www.falconproducts.com/. Falcon Products, Inc. is the leader
in the commercial furniture markets it serves, with well-known
brands, the largest manufacturing base and the largest sales force.
Falcon and its subsidiaries design, manufacture and market products
for the hospitality and lodging, food service, office, healthcare
and education segments of the commercial furniture market. Falcon,
headquartered in St. Louis, Missouri, currently operates 8
manufacturing facilities throughout the world and has approximately
2,100 employees. Safe harbor statement under the Private Securities
Litigation Reform Act of 1995: Statements contained in this news
release which are not historical facts are forward-looking
statements which involve risks and uncertainties which could impact
future financial performance. Factors which could cause future
performance to differ from those anticipated by these
forward-looking statements include, but are not limited to, loss of
key customers or suppliers within specific industries, availability
or cost of raw materials, increased competitive pricing pressures
reflecting industry conditions, general demand for products,
general economic conditions, economic conditions in the markets
served by the Company, and the ability of the Company to service
its debt obligations and satisfy the covenants in its loan
obligations. Additional cautionary statements regarding other risk
factors that could have an effect on future performance of the
Company are described in Falcon's periodic filings with the
Securities and Exchange Commission. Although Falcon believes the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, Falcon can give no assurance that its
expectations will be attained. Any forward-looking statements
represent the best judgment of Falcon as of the date of this
release. Falcon disclaims any obligation to update any
forward-looking statements. FALCON PRODUCTS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS SECOND QUARTER AND FISCAL
YEAR 2004 RESULTS (In thousands, except per share amounts) Second
Quarter Ended Twenty-Six Weeks Ended May 1, May 3, % May 1, May 3,
% 2004 2003 Change 2004 2003 Change Net sales $55,133 $58,710 -6.1%
$105,024 $123,844 -15.2% Cost of sales 42,235 44,834 -5.8% 84,429
95,180 -11.3% Gross margin 12,898 13,876 -7.0% 20,595 28,664 -28.2%
Selling, general and administrative expenses 10,787 10,590 1.9%
21,325 21,409 -0.4% Interest expense and other 5,645 4,047 39.5%
10,697 8,180 30.8% Loss on early extinguishment of debt -- -- N/M
3,947 (a) -- N/M Restructuring charge 546 (b) -- N/M 740 (b) -- N/M
Loss before taxes (4,080) (761) N/M (16,114) (925) N/M Income tax
expense (benefit) 226 (133) N/M 422 (1) N/M Net loss $(4,306)
$(628) N/M $(16,536) $(924) N/M Basic and diluted loss per share
$(0.46) $(0.07) N/M $(1.78) $(0.10) N/M Weighted average diluted
shares outstanding 9,370 9,057 9,266 9,052 N/M Not Meaningful (a)
The Company recorded a $3.9 million loss on early extinguishment of
debt to write-off deferred debt issuance costs in connection with
the refinancing of its senior credit facility. (b) The Company
recorded a $0.5 million and $0.7 million charge during the second
quarter and twenty-six weeks ended May 1, 2004, respectively to
account for the closure of its Canton, Mississippi facility and
transfer production into the Company's other plants. FALCON
PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
Liabilities and May 1, Nov. 1, Stockholders' May 1, Nov. 1, Assets
2004 2003 Equity 2004 2003 Cash and cash equivalents $1,046 $1,356
Accounts payable $26,539 $27,612 Accounts receivable 26,718 31,877
Customer deposits 5,653 5,249 Accrued Inventories 63,794 62,525
liabilities 14,521 16,842 Other current Current maturities assets
6,218 5,344 of long-term debt 72,470 3,900 Total current Total
current assets 97,776 101,102 liabilities 119,183 53,603 Property,
plant and equipment, net 35,087 36,579 Long-term debt 105,874
161,485 Other long-term obligations 12,514 12,868 Stockholders'
Other assets 129,506 128,859 equity 24,798 38,584 $262,369 $266,540
$262,369 $266,540 DATASOURCE: Falcon Products, Inc. CONTACT:
Phillip J. Pacey, Vice President & Chief Financial Officer of
Falcon Products, Inc., +1-314-991-9200 Web site:
http://www.falconproducts.com/ http://www.companyboardroom.com/
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