-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S624ObAro8jPPf4x/j+qOdJZURCJBh6p2fQnQb/H416g/H0SbYqF4xBFzZp5Og1I ERrpkidOOUK4w1APgZbsSg== 0001157523-05-003561.txt : 20050420 0001157523-05-003561.hdr.sgml : 20050420 20050420171225 ACCESSION NUMBER: 0001157523-05-003561 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050420 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050420 DATE AS OF CHANGE: 20050420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER FABRIC CORP /DE/ CENTRAL INDEX KEY: 0000103341 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221] IRS NUMBER: 041933106 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07023 FILM NUMBER: 05762592 BUSINESS ADDRESS: STREET 1: 941 GRINNELL ST. CITY: FALL RIVER STATE: MA ZIP: 02721 BUSINESS PHONE: 5086781951 MAIL ADDRESS: STREET 1: 941 GRINNELL ST CITY: FALL RIVER STATE: MA ZIP: 02721 FORMER COMPANY: FORMER CONFORMED NAME: VERTIPILE INC DATE OF NAME CHANGE: 19870811 8-K 1 a4869368.txt QUAKER FABRIC CORPORATION 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 April 20, 2005 Date of Report (Date of earliest event reported) QUAKER FABRIC CORPORATION (Exact name of registrant as specified in its charter) Delaware 1 7023 04-1933106 (State of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 941 Grinnell Street, Fall River, Massachusetts 02721 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 678-1951 (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On April 20, 2005, Quaker Fabric Corporation issued a press release announcing its first quarter financial results for the period ended April 2, 2005. A copy of the press release is attached to this Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference. Item 9.01 Financial Statements and Exhibits (c) Exhibits 99.1 Registrant's Press Release dated April 20, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUAKER FABRIC CORPORATION (Registrant) Date: April 20, 2005 /s/ Paul J. Kelly -------------------------------------------- Paul J. Kelly Vice President - Finance and Treasurer EXHIBIT INDEX 99.1 Registrant's Press Release dated April 20, 2005 EX-99.1 2 a4869368ex991.txt EXHIBIT 99.1 Exhibit 99.1 QUAKER FABRIC Reports First Quarter Financial Results FALL RIVER, Mass.--(BUSINESS WIRE)--April 20, 2005--QUAKER FABRIC CORPORATION (NASDAQ Symbol: QFAB) today reported net sales of $59.2 million, a net loss of ($3.1 million), and diluted and basic losses per share of ($0.18) for the three-month period ended April 2, 2005; compared to net sales of $84.4 million, net income of $2.4 million, and diluted and basic earnings per share of $0.14 and $0.15, respectively, for the corresponding period of fiscal 2004. "Weakness at the revenue line continues to be our biggest issue, with net sales for the quarter down 29.8%. Domestic and international fabric sales of $46.3 million and $7.2 million, respectively, were off 33.2% and 21.1%, respectively, versus last year - largely because of the continued strength of imported leather and faux suede products in the U.S. market, which has reduced demand for the woven fabrics we make, and general economic weakness in a number of the export markets we serve, particularly Europe and Mexico. Yarn sales, primarily into the craft yarn segment, remained very strong, however, with first quarter sales of $5.7 million," commented Larry Liebenow, Quaker's President and CEO. "We have been working diligently to reduce our costs, and our monthly financial performance so far this year reflects sequential improvement, however, most of the benefits associated with our cost-cutting efforts are not yet evident in our financials. Indeed, a number of non-recurring factors put substantial pressure on our first quarter margin performance, including significant increases in our raw material, overtime and inventory carrying costs related to Solutia's decision to exit the acrylic fiber business and the liquidation of Du-Re, both of which have historically been important suppliers for us. In addition, a number of other expenses related to our overall cost reduction and refinancing efforts also hit the P&L during the first quarter, including various banking and professional fees, as well as certain one-time charges associated with the reduction in force we completed during the quarter. Moving our numbers in the other direction was an adjustment in certain assumptions used to value benefits due Quaker's executives under the terms of our non-qualified deferred compensation plan, as well as a waiver of certain accrued plan benefits by four senior officers of the company, including me, that together reduced the company's first quarter net loss by approximately $337,000 or $0.02 per share, but that are not expected to have a material effect on the company's financial results going forward," Mr. Liebenow continued. "New orders during the first quarter were down 15.2%, however, we ended the quarter with an order backlog valued at approximately $28.0 million, compared to $14.6 million at year-end 2004 and $25.8 million at the end of last year's first quarter," added Mr. Liebenow. "Because of our disappointing financial performance over the past several quarters, we are currently operating with the benefit of waivers from our two principal lenders with respect to certain of the financial covenants in our loan documents. We have been working to put new financing arrangements in place, and the commitment letter from Bank of America, N.A. that we executed earlier this week reflects the achievement of an important milestone in this process," Mr. Liebenow said. Mr. Liebenow continued, "We are continuing to focus on building volume in all of the markets we have traditionally served, including the development and introduction of new sueded products for the residential market intended to compete with the faux suede products coming into the U.S. - and a program to further expand our residential business by distributing certain imported fabrics that we don't have the equipment to make ourselves. We are also moving forward with a brand-new and very aggressive program to penetrate the outdoor furniture segment. We are using the results of the market study we commissioned late last year to refine our market-facing strategies and are generally encouraged by the response our newest product introductions received at this month's High Point Furniture Market which is just now winding down." "Looking ahead, we anticipate that our margin performance should begin to benefit shortly from the effects of the price increase we announced last month and the aggressive cost-cutting measures we implemented during the first quarter. We also believe that the raw material sourcing issues that affected our costs and service levels during the first quarter are largely behind us, that our cost structure is now consistent with current demand and that the additional product/market initiatives needed to achieve our longer-term objectives are in place. We look forward to tackling the challenges that lie ahead as we continue to do our very best to serve our customers, shareholders, employees and other stakeholders well," Mr. Liebenow concluded. Quaker Fabric Corporation is a leading manufacturer of woven upholstery fabrics for furniture markets in the United States and abroad, and the largest producer of Jacquard upholstery fabric in the world. For the year ended January 1, 2005, the Company had net sales of $289.1 million, a net loss of ($2.0 million), and diluted and basic losses per share of ($0.12). THIS PRESS RELEASE CONTAINS "FORWARD LOOKING STATEMENTS," AS THAT TERM IS DEFINED IN THE FEDERAL SECURITIES LAWS. THE READER IS CAUTIONED THAT SUCH STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND THAT, AS A RESULT OF VARIOUS FACTORS, INCLUDING, BUT NOT LIMITED TO, THE LEVEL OF CUSTOMER DEMAND FOR THE COMPANY'S PRODUCTS, HIGHER THAN ANTICIPATED COSTS, ANY INTERRUPTION IN THE SUPPLY OF RAW MATERIALS USED BY THE COMPANY AND LOWER THAN ANTICIPATED PRODUCTION RATES, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED. FOR A FURTHER DISCUSSION OF THESE FACTORS, SEE THE COMPANY'S 2004 FORM 10-K. QUAKER FABRIC CORPORATION CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share data) STATEMENTS OF INCOME First Quarter Ended April 2, April 3, Percent 2005 2004 Change --------- --------- -------- Net sales $59,215 $84,384 (29.8)% Cost of products sold 51,534 65,689 --------- --------- Gross margin 7,681 18,695 (58.9)% Selling, general and admin. expenses 12,149 14,025 --------- --------- Operating income (loss) (4,468) 4,670 (195.7)% Other expenses Interest expense 748 847 Other expenses (income) 88 (16) --------- --------- Income (loss) before provision for income taxes (5,304) 3,839 (238.2)% Provision (benefit) for income taxes (2,214) 1,401 --------- --------- Net income (loss) ($3,090) $2,438 (226.7)% ========= ========= Earnings (loss) per common share - basic ($0.18) $0.15 (220.0)% ========= ========= Weighted average shares outstanding - basic 16,826 16,810 ========= ========= Earnings (loss) per common share - diluted ($0.18) $0.14 (228.6)% ========= ========= Weighted average shares outstanding - diluted 16,826 17,307 ========= ========= Other data: - ------------------------------------ Gross profit margin 13.0% 22.2% S.G. & A. as a percentage of net sales 20.5% 16.6% Operating margin -7.5% 5.5% Net margin -5.2% 2.9% Order backlog $27,969 $25,829 CONDENSED BALANCE SHEETS April 2, Jan. 1, 2005 2005 --------- --------- Assets Current assets: Cash and cash equivalents $1,588 $4,134 Accounts receivable 39,682 40,708 Inventories 49,591 43,533 Prepaid expenses and other current assets 12,031 12,130 --------- --------- Total current assets 102,892 100,505 Property, plant and equipment, net 154,962 158,480 Goodwill, net of amortization 5,432 5,432 Other assets 2,383 2,088 --------- --------- $265,669 $266,505 ========= ========= Liabilities and Stockholders' Equity Current liabilities $71,152 $67,197 Deferred income taxes and other liabilities 31,077 32,816 Stockholders' equity 163,440 166,492 --------- --------- $265,669 $266,505 ========= ========= This document contains "forward looking statements," as that term is defined in the federal securities laws. The reader is cautioned that such statements are not guarantees of future performance and that, as a result of various factors, including, but not limited to, the level of customer demand for the Company's products, higher than anticipated costs and lower than anticipated production rates, actual results may differ materially from those projected. For a further discussion of these factors, see the Company's 2004 10-K. CONTACT: QUAKER FABRIC CORPORATION Larry A. Liebenow, 508-646-2264 or Paul J. Kelly, 508-646-2251 or Cynthia L. Gordan, 508-646-2261 -----END PRIVACY-ENHANCED MESSAGE-----