Exhibit 99.1
Quaker Fabric Reports Second Quarter Results and Declares Dividend
FALL RIVER, Mass.--(BUSINESS WIRE)--July 23, 2003--QUAKER FABRIC
CORPORATION (NASDAQ Symbol: QFAB) today reported net sales of $73.9
million, net income of $165,000, and diluted earnings per share of
$0.01 for the three-month period ended July 5, 2003; compared to net
sales of $101.9 million, net income of $4.5 million, and diluted
earnings per share of $0.26 for the corresponding period of fiscal
2002. Basic earnings per share for the second quarters of 2003 and
2002 were $0.01 and $0.28, respectively.
Results of operations for the first six months of fiscal year 2003
were net sales of $164.1 million, net income of $2.5 million, and
diluted earnings per share of $0.15; compared to net sales of $202.0
million, net income of $8.9 million, and diluted earnings per share of
$0.53 for the corresponding period of fiscal 2002. Basic earnings per
share for the first six months of 2003 and 2002 were $0.15 and $0.56,
respectively.
"Consistent with the outlook we expressed when we announced our
results last quarter, Quaker's overall financial performance during
the second quarter reflected continued weakness in both the domestic
and international markets as a result of the difficult global
macroeconomic environment. Additionally, this year's second quarter
represented only twelve weeks of full operations - rather than last
year's thirteen weeks - due to the timing of the company's annual
shutdown period for planned maintenance. Quaker felt the impact of
these factors most directly on our top line, where our revenues
declined nearly 28% from last year's second quarter. Domestic fabric
sales for the second quarter were down $21.7 million - and export
sales were down $3.6 million. The volume of our export business was
essentially unchanged from this year's first quarter, however, and
demonstrates that Quaker's commitment to growing its business
internationally has allowed us to remain competitive in that arena
even in the face of difficult conditions," commented Larry Liebenow,
Quaker's President and CEO.
"Significantly, Quaker's balance sheet remains a source of
strength and we made additional improvements in that area during this
period, including a reduction in total debt of $7.7 million.
Substantial reductions were realized in inventory levels and our debt
to total capital ratio continues to improve," Mr. Liebenow commented.
"Looking ahead, our backlog position was about $24.5 million at
the end of the second quarter and that was down about $14.1 million
from last year which, in part, reflects our reduced delivery lead
times. The average price point in our backlog was essentially
unchanged from last year and increased slightly from the first
quarter. It remains absolutely critical that we build volume at the
top line and we will remain focused on that core piece of our
strategy. This approach has a proven track record for Quaker, and has
allowed us to increase our market share. We are always cognizant of
maintaining a sound cost structure and we continue to believe that we
should be careful to avoid any weakening of the important competitive
advantages we have developed through our targeted investments and hard
work over the years and that our approach of growing sales volume will
best serve the interests of the Company and our shareholders. We are
poised to accomplish that growth when economic conditions improve, and
we observed modest improvement in our incoming order rate in early
July, as compared to the comparable post-shutdown period of last year.
We believe that our products continue to be the industry's best and
the reception to our new fabric line at the recently completed
semi-annual Showtime Fabric Fair in High Point, North Carolina was
outstanding. And with exciting new products like our line of Quaker
Ultra(TM) finished fabrics, we also remain the market leader for new
product innovation. In addition, the successful introduction of our
new simulated suede product will help us address some of the inroads
that leather and simulated suede fabrics have made in the market. Our
program to invigorate Quaker's contract market presence continues to
be successful and our new Crypton (R) Super Fabrics by Quaker Fabric
line pursuant to a licensing agreement with Hi-Tex, Inc. for its
patented Crypton(R) product has received a strong initial reaction by
the market," Mr. Liebenow added.
"While business conditions across the board are quite difficult,
everyone at Quaker remains optimistic about the fundamental strength
of our company and about the soundness of our strategy. We will
continue to operate our business with the discipline necessary to deal
with current economic conditions and to really excel when these
conditions improve," Mr. Liebenow concluded.
Quaker also today announced the declaration of a cash dividend in
an amount equal to $0.025 per common share payable on August 22, 2003
to shareholders of record on August 8, 2003.
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 4, 2003, the Company had net sales
of $365.4 million, net income of $11.6 million, and diluted and basic
earnings per share of $0.69 and $0.72, respectively.
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 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 2002 FORM 10-K.
QUAKER FABRIC CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
STATEMENTS OF INCOME
Second Quarter Ended Six Months Ended
(Unaudited) (Unaudited)
(12 Weeks) (13 Weeks) (25 Weeks)(26 Weeks)
July 5, June 29,Percent July 5, June 29,Percent
2003 2002 Change 2003 2002 Change
Net sales $73,886 $101,931 (27.5)% $164,111 $201,963 (18.7)%
Cost of products
sold 59,401 78,803 130,659 156,235
Gross profit 14,485 23,128 (37.4)% 33,452 45,728 (26.8)%
Selling, general
and admin.
expenses 13,298 14,887 27,549 29,384
Operating income 1,187 8,241 (85.6)% 5,903 16,344 (63.9)%
Other expenses
Interest
expense 991 1,139 2,060 2,208
Other, net 113 (11) 89 (6)
Income before
provision for
income taxes 83 7,113 (98.8)% 3,754 14,142 (73.5)%
Provision for
income taxes (82) 2,632 1,276 5,233
Net income $165 $4,481 (96.3)% $2,478 $8,909 (72.2)%
Earnings per
common share -
basic $0.01 $0.28 (96.4)% $0.15 $0.56 (73.2)%
Weighted average
shares
outstanding -
basic 16,724 15,972 16,570 15,915
Earnings per
common share -
diluted $0.01 $0.26 (96.2)% $0.15 $0.53 (71.7)%
Weighted average
shares
outstanding -
diluted 16,950 17,063 16,857 16,904
Note: Earnings per common share amounts for the quarters and for the
six month periods presented have each been calculated separately.
Accordingly, quarterly amounts may not add to the six month period
amounts.
Ratio analysis:
Gross profit
margin 19.6% 22.7% 20.4% 22.6%
S.G. & A. as a
percentage of
net sales 18.0% 14.6% 16.8% 14.5%
Operating margin 1.6% 8.1% 3.6% 8.1%
Net margin 0.2% 4.4% 1.5% 4.4%
Order backlog $24,510 $38,592
CONDENSED BALANCE SHEETS
July 5, January 4,
2003 2003
(Unaudited) (Audited)
Assets
Current assets:
Cash $1,022 $1,098
Accounts receivable 40,538 42,346
Inventories 43,898 50,407
Prepaid expenses and other current assets 12,558 14,094
Total current assets 98,016 107,945
Property, plant and equipment, net 168,062 173,790
Goodwill, net of amortization 5,432 5,432
Other assets 1,537 1,519
$273,047 $288,686
Liabilities and Stockholders' Equity
Current liabilities $27,130 $33,137
Long-term debt and capital leases 47,500 61,200
Deferred income taxes and other
liabilities 33,684 32,544
Stockholders' equity 164,733 161,805
$273,047 $288,686
CONTACT: Quaker Fabric Corporation
Larry A. Liebenow, 508/646-2264
or
Paul J. Kelly, 508/646-2251