La-Z-Boy Had Higher Sales, Lower Profits
in First Quarter
MONROE, Mich., Aug. 5, 1997 - La-Z-Boy Incorporated (NYSE:
LZB) continued reaching record levels of quarterly sales but
reported a drop in profits due primarily to its largest customer,
Montgomery Ward,
declaring bankruptcy.
Financial Details
For the first quarter ended 7/26/97, sales reached $212.3
million, up 5% from last year's first quarter of $202.2 million.
Operating profit was $2.8 million vs. $8.0 million. Net income
was $1.7 million vs. $4.6 million, and net income per share was
$0.10 vs. $0.25.
Chairman Comments
La-Z-Boy Chairman and President Charles T. Knabusch said the
continuing rise in sales "reflects our introduction of new
products, aggressive marketing efforts and an improved economic
climate."
He said first quarter profits were "significantly
impacted" by Montgomery Ward's recent filing for Chapter 11
bankruptcy protection. For many years, this chain was La-Z-Boy's
largest single retail account. He noted however, that Sears
HomeLife stores have started carrying La-Z-Boy furniture, and
that major regional furniture chains also feature the company's
products. Profits were also adversely affected by costs to
improve manufacturing systems as well as a decision to retain
more skilled employees during the slow summer sales period in
order to better meet strong fall sales demands.
Sales Orders
The rate of sales increases over the prior year for August and
September are expected to be higher than the 5% first quarter
rate based on actual orders in house and more optimism than 90
days ago. Sales have been increasing with backlogs up slightly,
reflecting an improvement over the trend of the last couple of
years. (All sales increases were internally generated.)
Marketing
The Residential Division's June "La-Z-Boy Great Room
Giveaway Sweepstakes," promoted nationally in USA Weekend
and Parade magazines, generated store traffic exceeding
expectations, according toLa-Z-Boy retailers. This highly
successful program is expected to be repeated in coming months.
In September and October, La-Z-Boy's popular "Wendall and
Al" television advertising campaign will air again during
leading prime time TV programs including "Caroline in the
City", "ER," "Frasier," "Home
Improvement" and "The Drew Carey Show." These ads
position La-Z-Boy as America's producer of furniture for the
entire home.
From September through April of next year, the Residential
Division will advertise continuously in the nation's most widely
read women's magazines and "shelter" magazines with a
program targeted to reach close to 100 million purchasers of home
furnishings. La-Z-Boy has created a CD ROM library of retail
advertising materials to help dealers tie their local promotional
efforts to the company's national campaigns.
More Information
La-Z-Boy's first quarter 10-Q filing including a full income
statement, balance sheet, cash flow statement and additional
management discussion is available now at La-Z-Boy's worldwide
web site (www.lazboy.com). About 24 to 48 hours after this
release the first quarter 10-Q information should be available on
the SEC's web site in their EDGAR databases (www.sec.gov). The
SEC's site also contains additional La-Z-Boy financial
information, including 8-K and other filings, going back about
two years.
LA-Z-BOY
INCORPORATED
EARNINGS
(Dollars in thousands,
except per share data)
(UNAUDITED)
July 26,
July 27,
FIRST QUARTER ENDED 1997
1996 Sales $212,326
$202,227
Net income $1,726
$4,598
Net Income per share $0.10
$0.25
SOURCE La-Z-Boy Incorporated/CONTACT: Gene Hardy of La-Z-Boy,
313-241-4306/
LAMAR, Mo., Aug. 5, 1997 - O'Sullivan Industries Holdings,
Inc. (NYSE: OSU), a leading manufacturer of ready-to- assemble
furniture, today announced estimated financial results for the
fiscal 1997 fourth quarter and full year ended June 30. Final
results are expected to be released on August 19th.
For the fourth quarter of fiscal 1997, net income is estimated
to exceed $0.23 per share, compared with net income of $0.09 per
share for the prior year's fourth quarter. Net sales were up over
14 percent to approximately $80 million for the fourth quarter,
compared with net sales of $70.0 million for the comparable
quarter last year.
Net income for fiscal 1997 is estimated to exceed $0.92 per
share fully diluted, compared with 1996 net income of $0.02 per
share, including an after- tax restructuring charge of $0.19 per
share incurred in the fiscal 1996 third quarter. Net sales for
fiscal 1997 were up around 10 percent to approximately $321.0
million from $291.8 million for fiscal 1996.
"Fourth quarter sales showed strong gains, in part due to
purchases by a major mass merchant." said Daniel F.
O'Sullivan, chairman and chief executive officer. "As in our
prior quarters, O'Sullivan's gross margin for the fourth quarter
was stronger than in the comparable quarter a year ago,"
O'Sullivan added. "We also continued to enjoy lower raw
material costs and higher capacity utilization in our three
plants, as well as solid success in controlling factory overhead
and related expenses."
O'Sullivan noted that fiscal 1997 fourth quarter results could
have been stronger if not for the Chapter 11 bankruptcy filing of
[Montgomery Ward,] a
large department store chain. The filing resulted in an after-tax
charge for bad debt of around $0.04 per share in the fourth
quarter.
"Looking to the first quarter of fiscal 1998 ending this
September 30, we estimate our net sales to be flat to slightly
lower than the prior year's first quarter net sales of $83.1
million due to the volatility and timing of orders from a major
mass merchant, the bankruptcy filing of the department store
chain and the loss of $5.5 million in sales in last year's first
quarter from a now-liquidated catalog retailer.
"Looking at all of fiscal 1998, we expect another year of
strong earnings growth with continued sales increases and further
margin improvements," O'Sullivan continued.
The forward looking statements in this release involve risks
and uncertainties and are dependent upon a number of factors such
as sales levels, product mix, customer acceptance of existing and
new products, material cost increases, loss of significant
customers, and other factors, all of which are difficult to
predict and most of which are beyond the control of the company.
Please review the company's 10-K and most recent 10-Q reports
filed with the Securities and Exchange Commission.
As a leading manufacturer of ready-to-assemble furniture,
O'Sullivan's products are sold primarily through office
superstores, mass merchants, catalog showrooms, department
stores, home improvement centers and many other quality
retailers. SOURCE O'Sullivan Industries Holdings, Inc.
/CONTACT: Terry L. Crump, Executive Vice President and CFO,
417-682-8379 or Phillip J. Pacey, Treasurer, 417-682-8312, both
of O'Sullivan Industries Holdings, Inc./
ROSS Technology Reports Financial Results
for 1998 First Fiscal Quarter
AUSTIN, Texas, Aug. 5, 1997 - ROSS Technology, Inc. (Nasdaq:
RTEC) today announced results for the 1998 first fiscal quarter,
ended June 30, 1997.
For the first quarter of fiscal 1998, the Company reported a
net loss of $5.2 million, or $0.22 per share, on revenue of $11.8
million. This compares to net income of $4.0 million, or $0.17
per share, on revenue of $30.9 million for the 1997 first fiscal
quarter, the most recent profitable quarter of Company
operations. Revenue for the 1998 first fiscal quarter was $11.8
million, compared to $11.6 million for the fourth quarter of
fiscal year 1997. The financial statements for the first quarter
of fiscal 1998 do not reflect any new write-offs.
"The management team at ROSS Technology is implementing a
turn-around plan for the Company," said Jack W. Simpson,
Sr., president and chief executive officer of ROSS Technology.
"We are encouraged to see movement in the right direction,
with significant improvement in reducing our losses from
operations. This is reflected in the first quarter results, which
show the Company's lowest operating expenses and operating loss
in four quarters, at $5.1 million and $4.5 million, respectively,
primarily as a result of receiving the first payment from Fujitsu
on our "Viper" 64-bit development project, but also
from progress in controlling costs. Significantly, even without
the Fujitsu payment, our operating expenses and operating loss
would still be the lowest in four quarters. The gross margin
remains unacceptable, but is improved from the third and fourth
quarters of fiscal 1997," he said.
"The short-term turnaround for ROSS is a matter of paying
attention to 'the basics,'" Simpson continued. "We have
competitive technology and well-defined product offerings, and
must address the issues of increasing our sales, decreasing
'non-central costs,' and getting significant cost reductions in
manufacturing operations to improve gross margins. It will take
some time to see the combined effects of these initiatives."
"While addressing these issues," Simpson said,
"we are taking steps to ensure that our efforts in
next-generation, 64-bit high-performance microprocessor
development are successful. We are adding significant staff in
both engineering and sales, and a few people in marketing. We are
very focused on critical marketing issues, such as finding those
market segments with the most opportunity, developing targeted
marketing programs, ensuring pricing is correct and increasing
the size of our sales channels. Beyond that, we will continue to
review all parts of the Company for expense management, product
cost reductions and revenue growth opportunities."
"We believe there are significant opportunities for ROSS
Technology in providing high-performance processor upgrades, in
OEM design wins for our 32-bit and 64-bit processors, and in
providing small-footprint components and systems in many industry
segments - beyond the established markets for workstations and
servers. Exploring these product offerings and implementing the
marketing and sales strategies is a process that we expect will
take much of this fiscal year," Simpson said.
Further discussion of liquidity and important additional
information concerning the Company's financial condition and
results of operations for the quarter ended June 30, 1997 are
contained in its Quarterly Report on Form 10-Q, which will be
filed on or about August 8, 1997, with the Securities and
Exchange Commission. The text of the Form 10-Q will be available
on the World Wide Web at http://www.sec.govor in hard copy by
request to the Company's Investor Relations office.
Safe Harbor Statement Under Private Securities Litigation
Reform Act of 1995:
To the extent that this release contains forward-looking
statements with respect to the financial condition, results of
operations and business of the Company, such statements are
subject to certain risks and uncertainties that could cause
actual results to differ materially and adversely from those set
forth in the forward-looking statements, including without
limitation, the availability of financial resources adequate to
the Company's short-, medium- and long-term needs, the Company's
dependence on the timely development, pre-production
qualification, manufacture, introduction and customer acceptance
of new higher-speed, higher- margin products, the ability of the
Company to successfully implement its strategy of expanding into
the system products business, the various effects on revenue,
margins, inventories and operating expenses of repositioning the
Company's product lines and overall business, the effects of
building and maintaining product inventories in the Company's
hands and in its distribution channels, product return and credit
risks with distributors, resellers and customers, the Company's
dependence on distributors and resellers for certain product
sales to end-users, the impact on revenue, margins and
inventories of rapidly changing technology, competition, downward
pricing pressures and allocations of product among different
distribution channels, the effects of routine price degradation
over time in each of the Company's product lines, varying
customer demand for the Company's products, supply and
manufacturing constraints and costs, the Company's dependence on
outside suppliers for wafer fabrication and raw materials,
components and certain manufacturing services, changes in plans,
programs or expenses for research, development, sales or
marketing, the Company's ability to build and maintain adequate
staff infrastructures in the areas of microprocessor design,
product engineering and development, sales and marketing,
finance, accounting, and administration, supplier disputes,
customer warranty claims, general economic conditions, and the
other risks and uncertainties described from time to time in the
Company's public announcements and Securities and Exchange
Commission filings, including without limitation the Form S-1 and
Final Prospectus filed in November 1995 and the Company's
Current, Quarterly and Annual Reports on Forms 8-K, 10-Q and
10-K, respectively. The Company cautions that the foregoing list
of important factors is not exclusive. The Company does not
undertake to update any written or oral forward-looking statement
that may be made from time to time by or on behalf of the
Company.
ROSS TECHNOLOGY, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In Thousands)
June 30, 1997
March 31, 1997
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $7,591
$2,811
Trade accounts receivable, net
allowance of $1,675 and $1,555,
respectively 7,439
11,297
Receivable from Fujitsu 1,937
3,320
Inventory 15,285
16,308
Prepaid expenses and other assets 4,142
3,331
Total current assets 36,394
37,067
Property and equipment, net 14,184
17,752
Total assets $50,578
$54,819
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Trade accounts payable $15,247
$19,194
Accrued liabilities 4,238
8,307
Payable to Fujitsu 6,477
4,043
Notes payable 50,000
43,500
Total current liabilities 75,962
75,044
Stockholders' deficit
Common stock 23
23
Additional paid-in capital 82,564
82,564
Accumulated deficit (106,720)
(101,561)
(24,133)
(18,974)
Less: treasury stock (1,251)
(1,251)
Total stockholders' deficit (25,384)
(20,225)
Total liabilities and
stockholders' deficit $50,578
$54,819
ROSS TECHNOLOGY, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended
June 30, 1997 July
1, 1996
(Unaudited)
(Unaudited)
Net sales $11,813
$30,912
Cost of sales 11,175
16,730
Gross profit 638
14,182
Operating expenses:
Research and development, net 1,546
4,399
Selling, general and administrative 3,600
3,490
Amortization of goodwill
-- 272
Total operating expenses 5,146
8,161
Income (loss) from operations (4,508)
6,021
Interest income (expense), net (651)
107
Income (loss) before income taxes (5,159)
6,128
Income tax expense (benefit)
-- 2,145
Net income (loss) $(5,159)
$3,983
Net income (loss) applicable to
common shareholders $(5,159)
$3,983
Net income (loss) per share $(0.22)
$0.17
Weighted average common and common
equivalent shares outstanding 23,525
23,396
Comments on selected financial information
Net Sales
Net sales in the three-month period ended June 30, 1997 (the
"first quarter") of the fiscal year ending March 30,
1998 ("fiscal 1998") decreased 62% to $11.8 million
from $30.9 million in the corresponding period of the fiscal year
ended March 31, 1997 ("fiscal 1997"). This was due
primarily to a significant decline in sales to the Company's
primary OEM microprocessor chip customers, reflecting movement by
those customers to competitors' 64-bit products as compared to
the Company's 32-bit products. Upgrade and systems sales also
declined in the first quarter of fiscal 1998 as compared to the
first quarter of fiscal 1997. Upgrade sales during the first
quarter of fiscal 1997 were affected positively by the
introduction of the Company's 150 MHz upgrade product.
Gross Profit
Gross profit as a percentage of net sales for the quarter ended
June 30, 1997, decreased to 5.4% as compared with 47.0% of net
sales for the comparable period in fiscal 1997. This decrease is
primarily attributable to the Company's relatively high cost of
production, which in turn is primarily attributable to overhead
distributed over fewer units in the first quarter of fiscal 1998
compared to the similar period in fiscal 1997, and the usual
erosion in price of the Company's products over their life
cycles. In addition, gross profit was adversely affected by the
Company's lack of new, higher-margin microprocessor and upgrade
subsystem module products.
Research and Development Expense
Research and development ("R&D") expenses were
13.1% of net sales for the quarter ended June 30, 1997, compared
with 14.2% of net sales for the comparable period in fiscal 1997.
Absolute R&D expenses decreased $2.9 million in the quarter
ended June 30, 1997, from the comparable period in the prior
fiscal year. This decrease was primarily attributable to
reimbursement by Fujitsu Ltd. (Fujitsu) of $4.5 million in
expenses relating to the development of the Company's 64-bit
"Viper" project pursuant to a Development Agreement
between Fujitsu and the Company. This decrease was partially
offset by increases due to the addition of new personnel and
related overhead and outside contractor expenses in the areas of
new product design and new product development related to the
Company's "Colorado 4" and "Colorado 5"
hyperSPARC(TM), and next- generation "Viper"
microprocessor designs.
Selling, General and Administrative Expense
Selling, general and administrative ("SG&A")
expenses were 30.5% of net sales for the quarter ended June 30,
1997, compared with 11.3% of net sales for the comparable period
in fiscal 1997. Absolute SG&A expenses increased $0.1 million
in the quarter ended June 30, 1997, from the comparable period in
the prior year. The increase in SG&A expense is primarily
attributable to an increase in sales expenses as the Company has
added sales-related personnel and overhead, and by compensation
expenses related to the engagement of the Company's newly hired
President and Chief Executive Officer, partially offset by a
decrease in marketing and advertising-related expenses.
Net Interest Expense
The Company had net interest expense of $0.7 million for the
quarter ended June 30, 1997, versus interest income of $0.1
million in the quarter ended July 1, 1996, reflecting the costs
of the Company's $50 million credit facility with The Dai-Ichi
Kangyo Bank, Limited ("DKB").
Income Tax Expense
The Company has established a 100% reserve against its deferred
income tax asset and will not record income tax expense or
benefit until such time as the Company achieves profitability.
Future Operating Results
The Company's financial condition deteriorated significantly
during fiscal 1997, and at the end of the first quarter of fiscal
1998, the Company was continuing to experience significant losses
from operations. Subsequent to the end of fiscal 1997, the
Company made significant changes to the senior management team to
assess the Company's business and to implement changes necessary
to restore the Company to a sound financial condition. The
Company depends solely upon its parent, Fujitsu Limited, for
additions to capital necessary to continue its operations. While
Fujitsu has stated that, "In accordance with our plan for
ROSS Technology, we (Fujitsu) are ready to provide the necessary
funding through debt guarantees or other types of financing for
ROSS Technology not to incur cash flow shortages through April 1,
1998," there can be no assurances that the Company will not
in the future require financing in addition to that committed by
Fujitsu.
The Company intends to emphasize its upgrade business, in
which the Company's modules and motherboards are used to provide
enhanced performance for existing systems. In addition the
Company will focus on sales to OEM customers, which incorporate
the Company's products into their products. The Company intends
to continue to explore the systems business in selling
workstation and server components, together with SPARCplug(TM)
systems which provide customers with a unique small form-factor
solution to their systems requirements.
Although the Company is taking specific actions to improve
gross profit margins, it is anticipated that gross profit will
continue to remain under pressure for the foreseeable future.
The Company experienced negative cash flows during the first
quarter of fiscal 1998 and at the end of the quarter had negative
working capital and negative stockholders' equity. At present,
the Company is dependent on its parent company, Fujitsu, for its
capital requirements. In November 1996 the Company established a
"New Credit Facility" with DKB for a maximum principal
amount of $25 million; in February 1997 such New Credit Facility
was increased to a maximum of $50 million. The New Credit
Facility expires on March 31, 1998, and is guaranteed by Fujitsu.
At June 30, 1997, the amount outstanding under the New Credit
Facility was $50.0 million, pursuant to a promissory note due
December 31, 1997. On June 18, 1997, the Company received a
commitment from Fujitsu that, "In accordance with our plan
for ROSS Technology, we (Fujitsu) are ready to provide the
necessary funding through debt guarantees or other types of
financing for ROSS Technology not to incur cash flow shortages
through April 1, 1998." Accordingly, the Company believes
that it will have adequate capital for its business through April
1, 1998, and the Company is holding discussions with Fujitsu
regarding its capital requirements. However, there can be no
assurance that the Company will not experience negative cash flow
from operations and the Company may in the future be required to
seek additional external sources of financing for its operating
needs. There can be no assurance that additional capital,
including capital from bank borrowings, will be available on
terms favorable to the Company, if at all, or that Fujitsu would
be willing to provide additional loan guarantees, equity
infusions or other financial assistance to the Company in the
future. To the extent that additional capital is raised through
the sale of additional equity or convertible debt securities, the
issuance of such securities would likely result in substantial
dilution to the Company's then existing stockholders. In view of
its position as the Company's controlling stockholder, Fujitsu's
concurrence is necessary for the issuance of any additional debt
or equity financing by the Company. The Company's failure to
obtain sufficient additional financing could make it impossible
for it to continue operations, force the Company to seek
protection under Federal bankruptcy law and/or affect the
Company's listing on the Nasdaq National Market.
The Company's principal source of liquidity as of June 30,
1997 consisted of $7.6 million of cash and cash equivalents. As
of June 30, 1997, the Company had negative working capital of
$39.6 million, an accumulated deficit of $106.7 million, and
stockholders' deficit of $25.4 million.
During fiscal 1997 and during the first quarter of fiscal
1998, the Company extended payment terms with many suppliers in
order to increase the availability of on-hand cash. As a result
the Company experienced difficulty in procuring inventory and
subcontract manufacturing services from some suppliers. At the
present time the Company is not in compliance with the agreed
payment terms with many of its suppliers and there can be no
assurance that such suppliers will continue to ship supplies to
the Company if the Company does not comply with such terms.
The Company has received notification from the Nasdaq Stock
Market, Inc. ("Nasdaq") that the Company does not
comply with the net tangible asset requirement for continued
listing on the Nasdaq National Market. Nasdaq has requested that
the Company provide it with plans for complying with the net
tangible asset requirement ($4 million in the Company's case). In
the event the Company cannot meet the net tangible asset
requirement or make alternative arrangements satisfactory to
Nasdaq, the Company's stock will likely be delisted from the
Nasdaq National Market. The Company is pursuing alternatives to
comply with the requirement; however, there can be no assurance
that it can achieve compliance or that the Company's common stock
will not be delisted from the Nasdaq National Market.
ROSS Overview
ROSS Technology, founded in 1988, is a majority-owned subsidiary
of Fujitsu Limited. A minority position in ROSS is held by Sun
Microsystems, Inc. As of June 30, 1997, the Company's outstanding
Common Stock was held 60 percent by Fujitsu, 5 percent by Sun,
and 35 percent by employees and the public. The Company's
objective is to produce extremely high SPARC performance in a
very compact space, leading the industry in delivering the most
SPARC computing power per cubic inch. ROSS is one of the
industry's most prominent suppliers of SPARC microprocessors and
SPARC system products to both the OEM and end-user markets.
ROSS and the ROSS logo are registered trademarks of ROSS
Technology, Inc. All SPARC trademarks are trademarks or
registered trademarks of SPARC International. Products bearing
SPARC trademarks are based upon an architecture developed by Sun
Microsystems, Inc.
SOURCE ROSS Technology, Inc. /CONTACT: Press: John C. Rasco,
Marketing Director, 512-436-2121, or fax, 512-436-2199, or
johnross.com, or Investor - Analyst: F. S. - Kit - Webster III,
Chief Financial Officer, 512-436-2578, or fax, 512-892- 3402, or
kwebsterross.com, both of ROSS Technology, or Company
Information: http://www.ross.com,or 800-ROSS-YES, or Int'l,
512-349-3108/