O'Sullivan reports 1Q results

O'Sullivan Industries Holdings Inc., a manufacturer of ready-to-assemble furniture based in Lamar, announced its fiscal 2004 first-quarter operating results for the period ended Sept. 30, 2003.

Its subsidiary, O'Sullivan Industries Inc., previously announced the completion of a $100 million senior secured notes offering and a new $40 million senior secured revolving credit facility.

The proceeds were used to repay O'Sullivan's existing $88.3 million senior credit facility and related fees and expenses.

"This transaction solidifies our capital structure and improved our financial flexibility by eliminating our debt amortization until 2008 and removing the quarterly financial covenant requirements," said Richard Davidson, president and chief executive officer of O'Sullivan Furniture, in a news release.

First-quarter results

Net sales for the first quarter of fiscal 2004 were $71.5 million, about the same as sales of $71.6 million in the comparable period a year ago. Operating income for the first quarter of fiscal 2004 was $3.8 million, or 5.4 percent of net sales, a decrease of 51.6 percent from operating income of $7.9 million, or 11.1 percent of net sales, in the comparable period a year ago.

The decrease in operating income was generally caused by lower production levels adversely affecting fixed-cost absorption, as well as increased promotional activities.

Net loss for the first quarter of fiscal 2004 was $7.3 million compared to net income of $1.5 million in the comparable period a year ago. The net loss for the current year period reflects the reduction in operating income noted previously, as well as the write-off of debt issuance costs related to the previous senior secured credit facility.

Earnings before interest, taxes, depreciation and amortization for the first quarter of fiscal 2004 was $3.9 million, or 5.4 percent of net sales, compared to EBITDA of $11.2 million, or 15.6 percent of net sales in the comparable period a year ago.

Second-quarter expectations

Davidson said, "We have seen an improvement in point-of-sale trends versus the depressed levels of the first two quarters of this calendar year, and we have begun to benefit from the sales of products from our new Coleman garage storage and Intelligent Designs commercial office furniture initiatives.

"Based on this, we currently expect sales in the second quarter of fiscal 2004 to be about $70 to $75 million. Further, we anticipate operating income in the second quarter of fiscal 2004 to be approximately $5.5 (million) to $6 million."