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
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Net sales $ 46,280 $ 59,215
Cost of products sold 40,839 51,534
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Gross profit 5,441 7,681
Selling, general and admin. expenses 10,332 12,149
Restructuring charges 296 0
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Operating loss (5,187) (4,468)
Other expenses
Interest expense 769 748
Other expenses 406 88
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Loss before provision for income taxes (6,362) (5,304)
Provision (benefit) for income taxes (2,227) (2,214)
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Net loss $ (4,135) $ (3,090)
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Loss per common share - basic $ (0.25) $ (0.18)
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Weighted average shares
outstanding - basic 16,843 16,826
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Loss per common share - diluted $ (0.25) $ (0.18)
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Weighted average shares
outstanding - diluted 16,843 16,826
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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
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Pro forma operating loss $ (4,729) $ (4,468)
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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
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Pro forma net loss $ (3,542) $ (3,090)
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Pro forma net loss, per share $ (0.21) $ (0.18)
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CONDENSED BALANCE SHEETS
April 1, December 31,
2006 2005
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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
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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
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$ 213,810 $ 219,862
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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
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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
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$ 213,810 $ 219,862
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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