O'Sullivan Industries Announces Fiscal Year 2003 Fourth Quarter and Year End Results

Furniture World Magazine

O'Sullivan Industries Holdings, Inc., a leading manufacturer of ready-to- assemble furniture, announced its fourth quarter and fiscal year end results for the period ending June 30, 2003. Net sales for the fourth quarter of fiscal 2003 were $51.6 million, a decrease of 33.1% from sales of $77.1 million in the comparable period a year ago. Fiscal 2003 net sales were $289.2 million, a decrease of 17.2% from net sales of $349.1 million in the comparable period a year ago. Richard Davidson, president and chief executive officer stated, "While in line with previously announced expectations, the fourth quarter of fiscal 2003 was very disappointing. Sales declined in all of our major distribution channels during the quarter compared to the comparable period a year ago. However, we are beginning to see some improvements in most of our major distribution channels." Operating income for the fourth quarter of fiscal 2003 was $1.6 million, or 3.1% of net sales, a decrease of 83% from operating income of $9.7 million, or 12.6% of net sales, in the comparable period a year ago. Our operating income was lower compared to the prior quarter and year due to the lower sales and related gross margin and the lower production levels that affected our overhead expense absorption in our manufacturing operations. In addition, we incurred a $1.5 million restructuring charge related to the capacity rationalization in our Virginia manufacturing facility and a reduction ofpersonnel at our corporate headquarters during the fourth quarter of fiscal 2003. Excluding the restructuring charge operating income for the fourth quarter of fiscal 2003 would have been $3.1 million, or 6.0% of net sales. Fiscal 2003 operating income was $26.3 million, or 9.1% of net sales, a decrease of 34% from operating income of $39.9 million, or 11.4% of net sales, in the comparable period a year ago. The $1.5 million restructuring charge noted above and a $540,000 restructuring charge related to the sale of our former manufacturing facility in Utah were recorded during the year ending June 30, 2003. Excluding these restructuring charges operating income for the fiscal year 2003 would have been $28.3 million, or 9.8% of net sales. Net loss for the fourth quarter of fiscal 2003 was $4.6 million compared to a net income of $2.8 million in the comparable period a year ago. Income before income taxes for fiscal 2003 was $1.6 million compared to $11.7 million for fiscal 2002. Net income for fiscal 2003 was $1.6 million compared to a net loss of $89.2 million in the comparable period a year ago. The net loss in the prior year period reflects increased income tax expense from the revised accounting for the tax sharing agreement with RadioShack.