EXHIBIT 99.1
PRESS RELEASE
[Falcon logo]
FOR FURTHER INFORMATION
AT THE COMPANY:
Gene Fleetwood
9387 Dielman Industrial Drive
St. Louis, MO 63132 (314) 991-9200
FOR IMMEDIATE RELEASE Wednesday, September 15, 2004
FALCON PRODUCTS ANNOUNCES RESULTS FOR
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FISCAL 2004 THIRD QUARTER
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ST. LOUIS, MISSOURI, SEPTEMBER 15, 2004 -- Falcon Products, Inc.
(NYSE: FCP), a leading manufacturer of commercial furniture, today announced
net sales for the third quarter of fiscal 2004 of $58.4 million, compared
with $62.3 million for the third quarter ended August 2, 2003.
Excluding restructuring charges and other one time charges, the
Company's results would have been a net loss of $5.1 million or $0.52 per
share in the third quarter of 2004, compared with a net loss of $0.8
million, or $0.08 per diluted share in the third quarter of 2003, due to
lower volumes year-to-year and increased interest cost. The charges in the
third quarter of 2004 included a $9.5 million loss on early extinguishment
of debt ($6.5 million relates to the non cash expense of the fair value of
the warrants issued per the June 15, 2004 senior credit facility waiver) and
a $4.9 million restructuring charge related to the closure of manufacturing
facilities. The charges in the third quarter of 2003 included a $1.6 million
loss on early extinguishment of debt, a $1.8 million loss on curtailment of
the pension plan and a $4.3 million restructuring charge related to the
closure of the manufacturing facilities. The Company's reported results for
the third quarter of 2004 were a net loss of $19.5 million or $1.98 per
share, compared with a net loss of $5.6 million or $0.62 per share in the
third quarter of 2003.
As a result of its third quarter operating performance, the Company
was not in compliance with financial covenants under its credit agreement as
of July 31, 2004 and is exploring various alternatives. Based upon
discussions with several potential lending institutions, the Company
believes it will be able to refinance its senior credit facility on
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terms that will give the Company the ability to complete its planned operating
improvements and position itself to return to profitability.
"Our focus on improving operational performance is showing
measurable results, but there are significant challenges that we are
aggressively addressing and intend to resolve. We are optimistic that we can
complete new financing in the near future," Franklin A. Jacobs, Chairman and
Chief Executive Officer, stated. "As our corporate team is working on this
challenge, we want to assure our customers that we're producing their
products to the high standards they expect and demand, and we're delivering
on time and on budget."
Falcon Products, Inc. will conduct a conference call to discuss
fiscal 2004 third quarter results on September 20, 2004 at 10:00 a.m. EDT.
The call will be Web cast at www.companyboardroom.com and
www.falconproducts.com.
Falcon Products, Inc. is the leader in the commercial furniture
markets it serves, with well-known brands, the largest manufacturing base
and the largest sales force. Falcon and its subsidiaries design, manufacture
and market products for the hospitality and lodging, food service, office,
healthcare and education segments of the commercial furniture market.
Falcon, headquartered in St. Louis, Missouri, currently operates 8
manufacturing facilities throughout the world and has approximately 2,100
employees.
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: Statements contained in this news release which are not
historical facts are forward-looking statements, which involve risks and
uncertainties which could impact future financial performance. Factors which
could cause future performance to differ from those anticipated by these
forward-looking statements include, but are not limited to, the ability of
the Company to refinance its senior credit facility or obtain waivers of
noncompliance with financial covenants on terms reasonable to the Company,
if at all, the ability of the Company to service its debt obligations and
satisfy the covenants in its loan obligations, the loss of key customers or
suppliers within specific industries, the
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availability or cost of raw materials, increased competitive pricing
pressures reflecting industry conditions, the general demand for products,
general economic conditions, economic conditions in the markets served by
the Company, and other factors. Additional cautionary statements regarding
other risk factors that could have an effect on future performance of the
Company are described in Falcon's periodic filings with the Securities and
Exchange Commission. Although Falcon believes the expectations reflected in
any forward-looking statements are based on reasonable assumptions, Falcon
can give no assurance that its expectations will be attained. Any
forward-looking statements represent the best judgment of Falcon as of the
date of this release. Falcon disclaims any obligation to update any
forward-looking statements.
###
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FALCON PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER AND FISCAL YEAR 2004 RESULTS
(In thousands, except per share amounts)
Third Quarter Ended Thirty-Nine Weeks Ended
--------------------------------- ----------------------------------
July 31, August 2, % July 31, August 2, %
2004 2003 Change 2004 2003 Change
--------- --------- ------ -------- --------- ------
Net sales $ 58,351 $62,306 -6.3% $163,375 $186,150 -12.2%
Cost of sales, including restructuring charge 48,684 (a) 49,319 (b) -1.3% 133,113 (a) 144,499 (b) -7.9%
-------- ------- -------- --------
Gross margin 9,667 12,987 -25.6% 30,262 41,651 -27.3%
Selling, general and administrative expenses 11,194 11,193 0.0% 32,519 32,602 -0.3%
Interest expense and other 6,271 4,552 37.8% 16,969 12,732 33.3%
Loss on early extinguishment of debt 9,454 (c) 1,564 (d) N/M 13,401 (c) 1,564 (d) N/M
Loss on curtailment of pension plan - 1,833 (e) N/M 0 1,833 (e) N/M
Restructuring charge 1,908 (a) 1,980 (f) N/M 2,648 (a) 1,980 (b) N/M
-------- ------- -------- --------
Loss before taxes (19,160) (8,135) N/M (35,275) (9,060) N/M
Income tax expense (benefit) 351 (2,551) N/M 773 (2,552) N/M
-------- ------- -------- --------
Net loss $(19,511) $(5,584) N/M $(36,048) $ (6,508) N/M
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Basic and diluted loss per share $ (1.98) $ (0.62) N/M $ (3.81) $ (0.72) N/M
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Weighted average diluted shares outstanding 9,831 9,062 9,450 9,056
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<FN>
N/M Not Meaningful
(a) The Company recorded a $4.3 million non-cash restructuring charge
during the 3rd quarter of 2004 to write-down the assets of the
Company's Belmont, Mississippi manufacturing facility in connection
with the Company's decision to dispose of the facility. Of the total
charge, $3.0 million is included in Cost of sales in the Consolidated
Statements of Operations. The Company recorded a $0.6 million and
$1.3 million charge during the third quarter and thirty-nine weeks ended
July 31, 2004, respectively to account for the cash closure costs of
its Canton, Mississippi and Belmont, Mississippi facilities and the
transfer of production into the Company's other plants.
(b) The Company recorded a $4.3 million non-cash restructuring charge
during the 3rd quarter of 2003 to write-down the assets of the
Company's Zacatecas, Mexico manufacturing facility in connection with
the Company's decision to dispose of the facility. Of the total charge,
$2.3 million is included in Cost of sales in the Consolidated
Statements of Operations.
(c) In connection with the June 15, 2004 waiver, which was a substantial
modification to the senior credit facility, the Company recorded a loss
on early extinguishment of debt of $9.5 million. The loss includes the
write-off of deferred debt issuance costs of $3.0 million and the
expense of the fair value of the warrants of $6.5 million. In
connection with the January 15, 2004 refinancing, the Company recorded
a loss on early extinguishment of debt to write-off deferred debt
issuance costs of $3.9 million.
(d) The Company recorded a $1.6 million loss on early extinguishment of
debt to write-off deferred debt issuance costs in connection with the
June 3, 2003 refinancing of its senior credit facility.
(e) The Company recorded a $1.8 million non-cash charge to record the
unrecognized prior service cost in connection with the Company's
amendment to its defined benefit pension plan to freeze the accrual of
pension benefits for service after August 1, 2003.
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FALCON PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, Nov. 1, Liabilities and July 31, Nov. 1,
Assets 2004 2003 Stockholders' Equity 2004 2003
- ------ -------- -------- -------------------- -------- --------
Cash and cash equivalents $ 1,564 $ 1,356 Accounts payable $ 24,483 $ 27,612
Accounts receivable 29,793 31,877 Customer deposits 6,353 5,249
Inventories 66,072 62,525 Accrued liabilities 12,334 16,842
Other current assets 6,819 5,344 Current maturities of
long-term debt 90,835 3,900
-------- -------- -------- --------
Total current assets 104,248 101,102 Total current liabilities 134,005 53,603
Property, plant and Long-term debt 105,838 161,485
equipment, net 33,002 36,579
Other long-term obligations 12,184 12,868
Other assets 126,792 128,859 Stockholders' equity 12,015 38,584
-------- -------- ------- -------
$264,042 $266,540 $264,042 $266,540
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