Chromcraft Revington, Inc. Exhibit 99.1
1330 Win Hentschel Blvd. Suite 250
West Lafayette, IN 47906
Phone 765-807-2640
Fax 765-807-2660
For Immediate Release For more information contact:
Friday, September 1, 2006 Frank T. Kane, Vice President-Finance & CFO
Chromcraft Revington, Inc.
Announces Corporate Restructuring
West Lafayette, Indiana, September 1, 2006 -- Chromcraft Revington,
Inc. (AMEX:CRC) announced today that, on August 29, 2006, its board of directors
approved the restructuring of certain of the Company's operations. This action
is consistent with the Company's stated strategy of improving the utilization of
a global supply chain to enhance customer selection and service, as well as
reduce fixed costs and improve overall asset utilization. This strategic
transformation of the Company's business model involves a significant expansion
of global sourcing activities, as well as a conversion of U.S. operations
towards an increased focus on distribution and logistics of imported products
and a shift in its manufacturing operations towards use of demand flow and value
added mass customization techniques.
As part of the restructuring program, the Company will begin to
outsource globally its Sumter brand bedroom and dining room furniture currently
produced at its Sumter, South Carolina facilities to contract manufacturers
located primarily in Asia. Furniture manufacturing operations in Sumter, South
Carolina will cease on October 31, 2006. In addition, the Company will begin
distributing the Sumter brand furniture consolidated with other products from
its existing Lincolnton, North Carolina distribution facilities, by January 1,
2007. The Company believes this will provide its customers with improved
customer service and speed of delivery. The Company plans to sell its 521,000
square foot facilities in Sumter, South Carolina, as well as related equipment,
and layoff approximately 200 Associates at this site. This represents
approximately 17% of the Company's total workforce. Jeff Faw, President of
Sumter, will continue to provide overall leadership of the Sumter brand product
line.
The restructuring program also includes closing the Company's warehouse
and distribution center in Knoxville, Tennessee, which distributes Silver brand
occasional furniture, by December 31, 2006. The Company intends to combine its
Silver and Peters-Revington occasional furniture product lines to provide
greater selection, consolidated shipments and improved delivery speed to its
customers by distributing these products from its existing facilities in Delphi,
Indiana. The Company plans to sell its 160,000 square foot building in
Knoxville, Tennessee and layoff approximately 16 Associates at that location.
Bill Massengill, President of Peters-Revington Furniture, will lead the
integrated product line. Bobby Ivins, President of Silver Furniture, will
transition his role to President of CR Global Services and lead
the expansion of the Company's global product development, sourcing, quality
control and logistics activities including direct container programs.
The final component of this restructuring program involves relocating
the Company's upholstered furniture operations to another one of its buildings
located nearby in Lincolnton, North Carolina by November 30, 2006. This move
will consolidate operations and reduce overhead expenses, while improving the
overall manufacturing process and customer service for this growing product
line. The Company plans to sell its 152,000 square foot upholstery plant, but
few Associate layoffs are anticipated in connection with this relocation. The
Company's other facilities are not impacted by this restructuring program.
The Company expects to incur total restructuring costs and related
asset impairment charges of $6.0 million to $7.5 million pretax to write-down
buildings, equipment and inventories and to record severance benefits to
terminated Associates and relocation costs. Most of these charges will be
recorded in the third quarter of 2006. A portion of these charges and expenses
are expected to result in cash expenditures of approximately $1.2 million, which
includes approximately $0.2 million for capital expenditures associated with the
relocated upholstery manufacturing site. These cash expenditures do not include
expected cash proceeds from the sale of the buildings and equipment ranging from
$3.5 million to $4.5 million. General, administrative and relocation costs
associated with the wind down of these operations will be recorded as incurred.
The restructuring charges associated with the asset impairment of
buildings and equipment are expected to range from $2.5 million to $3.0 million
pretax. In connection with the restructuring, an inventory write-down of
approximately $2.5 million to $3.5 million pretax is expected to be recognized
to reflect the anticipated net realizable value of certain inventories. In
addition, severance for terminated Associates and relocation costs are expected
to total approximately $1.0 million.
In connection with the restructuring of its operations in Sumter, South
Carolina, the Company has determined it is unlikely that certain state net
operating loss carry-forwards will be utilized. As a result, the Company expects
to recognize a non-cash income tax charge of approximately $0.3 million related
to establishing a valuation allowance for a deferred tax asset during the third
quarter of 2006.
After the restructuring, the Company will employ approximately 975
Associates and operate approximately 1.8 million square feet of manufacturing
and distribution facilities, in addition to its corporate headquarters in West
Lafayette, Indiana and showroom space in High Point, North Carolina; Chicago,
Illinois; and Las Vegas, Nevada. The Company expects to improve its ability to
deliver domestically produced and imported furniture because of the
restructuring. The Company continues to be committed to leveraging a hybrid
strategy utilizing significantly greater global sourcing combined with value
added U.S. assembly and distribution operations.
Ben Anderson-Ray, the Company's Chairman and Chief Executive Officer,
stated, "We believe this restructuring is an important step in repositioning the
Company in the global
furniture marketplace and in strengthening our ability to remain competitive.
Importantly, we believe that these actions will enable us to provide our
customers with better value, broader product selection and improved delivery
services. Our overall strategy is to position the Company to be market focused
utilizing a best-in-class hybrid of the global industry supply chain and
value-added domestic operations to provide customers with great product value,
superior product selection in the market niches we serve and exceptional
delivery services. The restructuring program we are announcing today is a
necessary step in implementing this strategy."
As the Company continues to adapt to the global furniture marketplace
and integrate functions common to its various products, additional restructuring
charges, asset impairments, transition costs and/or increased operating expenses
may be necessary in the future.
Chromcraft Revington businesses design, manufacture and market
residential and commercial furniture throughout the United States. The Company
wholesales its products under the "Chromcraft," "Peters-Revington," "Silver
Furniture," "Cochrane Furniture" and "Sumter" brand names.
This release contains forward-looking statements that are based on
current expectations and assumptions. These forward-looking statements can be
generally identified as such because they include future tense or dates, or are
not historical or current facts, or include words such as "believes," "expects,"
"intends," "plans," or words of similar import. Forward-looking statements are
not guarantees of performance or outcomes and are subject to certain risks and
uncertainties that could cause actual results or outcomes to differ materially
from those reported, expected or anticipated as of the date of this release.
Among such risks and uncertainties that could cause actual results or
outcomes to differ materially from those reported, expected or anticipated are
the ability of the Company to complete the restructuring actions referenced in
this press release at estimated costs; general economic conditions; import and
domestic competition in the furniture industry; execution of business
strategies; market interest rates; consumer confidence levels; cyclical nature
of the furniture industry; consumer and business spending; changes in
relationships with customers; customer acceptance of existing and new products;
new home and existing home sales; and other factors that generally affect
business. An additional list of risks relating to the Company's business is
located in the Company's Form 10-K for the fiscal year ended December 31, 2005.
The Company does not undertake any obligation to update or revise
publicly any forward-looking statements to reflect information, events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events or circumstances.
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