-----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, DaSz1j5UOvM5/Ytf8giRff/eLkBFEQ+yvIjseYCl/l/SypdF2occ8r0IsuYJBXSS H5Z0qvxq6VOHBLXE/xDnAg== 0001157523-06-003841.txt : 20060420 0001157523-06-003841.hdr.sgml : 20060420 20060419185428 ACCESSION NUMBER: 0001157523-06-003841 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060419 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060420 DATE AS OF CHANGE: 20060419 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: 06768289 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 a5127968.txt QUAKER FABRIC CORP. 8K - -------------------------------------------------------------------------------- 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 19, 2006 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)) 1 Item 2.02 Results of Operations and Financial Condition On April 19, 2006, Quaker Fabric Corporation issued a press release announcing its first quarter financial results for the period ended April 1, 2006. 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 (d) Exhibits 99.1 Registrant's Press Release dated April 19, 2006. 2 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 19, 2006 /s/ Paul J. Kelly ---------------------------- Paul J. Kelly Vice President - Finance and Treasurer 3 EXHIBIT INDEX 99.1 99.1 Registrant's Press Release dated April 19, 2006. 4 EX-99.1 2 a5127968ex991.txt EXHIBIT 99.1 Exhibit 99.1 Quaker Fabric Reports First Quarter Financial Results FALL RIVER, Mass.--(BUSINESS WIRE)--April 19, 2006--QUAKER FABRIC CORPORATION (NASDAQ Symbol: QFAB) today reported net sales of $46.3 million, a net loss of ($4.1 million), and diluted and basic losses per share of ($0.25) for the three-month period ended April 1, 2006; compared to 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 corresponding period of fiscal 2005. Quaker's financial results for the first quarter of fiscal year 2006 include after-tax restructuring and related charges of $0.5 million and $0.1 million of plant relocation expenses. Excluding these charges and expenses, net loss for the first fiscal quarter of 2006 was ($3.5 million) or ($0.21) per diluted share. "Although our first quarter performance is still a long way away from what we are determined to achieve over the long-term, we are encouraged by the sequential improvement in our margins. Our biggest problem continues to be sales volume. Competition from imported leather, faux suede and woven fabric products remains intense and resulted in a 21.8% drop in our total revenues versus the comparable period of last year - with domestic and international net fabric sales for the quarter of $38.1 million and $6.6 million, down 17.6% and 8.2%, respectively. Net yarn sales, at $1.5 million, were down 73.1%," commented Larry A. Liebenow, Quaker's President and CEO. "We have an ongoing restructuring effort underway that is intended to restore the Company to profitability. The key elements of our plan include: (i) stabilizing revenues from our U.S.-based residential fabric business by focusing on those markets least sensitive to imported products; (ii) reducing our operating costs to compensate for the drop we have experienced in our revenues over the past few years; (iii) selling excess assets; (iv) developing strategically important commercial relationships with a limited number of carefully chosen offshore fabric mills so that we can recapture the share of the domestic residential market that we have lost over the past few years to foreign imports; and (v) generating additional profitable sales by penetrating the outdoor and contract fabric markets and expanding our specialty yarns business," Mr. Liebenow added. "So far this year, while we have not yet been able to stabilize revenues from our U.S.-based residential fabric business, we have made considerable headway on several fronts. More specifically, we entered into purchase and sale agreements with respect to two of our idled Fall River area manufacturing facilities, with both of these deals expected to close by the end of July. We signed a commercial cooperation deal with Hangzhou Zhongwang, one of China's most important upholstery fabric manufacturers, in January - and a sourcing and distribution agreement with Daewoo International, a Korean manufacturer of velvet and microdenier sueded fabrics for the furniture industry in February - with both of these offshore sourcing arrangements expected to begin to generate incremental revenues for us by the end of this year. And we added several new clients to our contract market customer list and launched our new line of outdoor fabrics, the introduction of which was met with a very enthusiastic response" Mr. Liebenow said. "We also took another $10.0 million out of our cost structure on an annualized basis, consisting of further significant reductions in our salaried and hourly staffing levels as well as $2.3 million of non-staffing related cost cuts. We are continuing to work with our lenders and the financial consultants we have retained to execute a plan to meet our long-term financing needs. And we are grateful for the ongoing support of our workforce, our suppliers, our customers, our lenders and our shareholders," Mr. Liebenow added. "Looking ahead, we are determined to restore the company to profitability. To that end, we will be continuing to execute our restructuring plan, including the aggressive marketing of our initial collections of outsourced fabrics. We will also be very focused on the equally aggressive development of other products that, for both strategic and economic reasons, are best produced in our U.S. plants, including our outdoor and contract fabric lines - and fabrics for those domestic customers needing a US-based fabric mill they can count on to provide reliable delivery, design leadership and world-class quality. On the cost reduction front, we will be continuing to consolidate our Fall River manufacturing operations into fewer facilities, actively marketing our excess real estate and implementing additional cost reduction programs," 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. 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, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED. FOR A FURTHER DISCUSSION OF THESE FACTORS, SEE THE COMPANY'S 2005 FORM 10-K. QUAKER FABRIC CORPORATION CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share data) STATEMENTS OF OPERATIONS First Quarter Ended April 1, April 2, 2006 2005 ------------- ------------- Net sales $ 46,280 $ 59,215 Cost of products sold 40,839 51,534 ------------- ------------- Gross profit 5,441 7,681 Selling, general and admin. expenses 10,332 12,149 Restructuring charges 296 0 ------------- ------------- Operating loss (5,187) (4,468) Other expenses Interest expense 769 748 Other expenses 406 88 ------------- ------------- Loss before provision for income taxes (6,362) (5,304) Provision (benefit) for income taxes (2,227) (2,214) ------------- ------------- Net loss $ (4,135) $ (3,090) ============= ============= Loss per common share - basic $ (0.25) $ (0.18) ============= ============= Weighted average shares outstanding - basic 16,843 16,826 ============= ============= Loss per common share - diluted $ (0.25) $ (0.18) ============= ============= Weighted average shares outstanding - diluted 16,843 16,826 ============= ============= Ratio analysis: - ----------------------------------------- Gross profit margin 11.8% 13.0% S.G. & A. as a percentage of net sales 22.3% 20.5% Operating margin -11.2% -7.5% Net margin -8.9% -5.2% Order backlog $ 13,142 $ 27,969 - ----------------------------------------- ============= ============= QUAKER FABRIC CORPORATION Reconciliation of Operating Income (loss) as Reported to Pro Forma Operating Income (loss) First Quarter First Quarter Ended Ended April 1, April 2, 2006 2005 ------------- ------------ Operating loss, as reported $ (5,187) $ (4,468) Restructuring charges 296 0 Plant relocation and moving costs 162 0 ------------- ------------ Pro forma operating loss $ (4,729) $ (4,468) ============= ============ QUAKER FABRIC CORPORATION Reconciliation of Net Loss as Reported to Pro Forma Net Loss First Quarter First Quarter Ended Ended April 1, April 2, 2006 2005 ------------- ------------ Net loss, as reported $ (4,135) $ (3,090) Restructuring charges, net of income taxes 192 0 Plant relocation and moving costs, net of income taxes 105 0 Write off of deferred financing costs 296 0 ------------- ------------ Pro forma net loss $ (3,542) $ (3,090) ============= ============ Pro forma net loss, per share $ (0.21) $ (0.18) ============= ============ CONDENSED BALANCE SHEETS April 1, December 31, 2006 2005 ------------- ------------ Assets Current assets: Cash and cash equivalents $ 870 $ 725 Accounts receivable 30,112 31,822 Inventories 37,536 37,827 Prepaid expenses and other current assets 7,746 8,070 ------------- ------------ Total current assets 76,264 78,444 Property, plant and equipment, net 127,611 131,177 Assets held for sale 6,483 6,483 Other assets 3,452 3,758 ------------- ------------ $ 213,810 $ 219,862 ============= ============ Liabilities and Stockholders' Equity Current maturities of debt $ 37,404 $ 37,880 Current portion of capital lease obligations $ 145 $ 143 Accounts payable and accrued expenses 22,544 21,760 ------------- ------------ Total current liabilities 60,093 59,783 Capital lease obligations, less current portion 592 629 Deferred income taxes and other long- term liabilities 15,876 18,286 Stockholders' equity 137,249 141,164 ------------- ------------ $ 213,810 $ 219,862 ============= ============ 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 2005 10-K. CONTACT: QUAKER FABRIC CORPORATION Larry A. Liebenow, 508-646-2264 Paul J. Kelly, 508-646-2251 Cynthia L. Gordan, 508-646-2261 -----END PRIVACY-ENHANCED MESSAGE-----