Applica Incorporated Announces New Term Loan and Provides Liquidity Update and 2006 Earnings Guidance
21 Ottobre 2005 - 10:01PM
Business Wire
Applica Incorporated (NYSE:APN) today announced that it has entered
into a secured term loan agreement with Mast Credit Opportunities
I, (Master) Ltd. to borrow $20 million. The term loan is
subordinate to Applica's senior revolving credit facility and
matures in November 2009. Applica will use the proceeds from the
term loan to repurchase from Mast $5 million of its 10% senior
subordinated notes due 2008 at 98% of par value. The balance of the
proceeds will be used to pay down its senior revolving credit
facility. Mast currently owns approximately 5.8% of the outstanding
common stock of Applica. "The funds we received from Mast will
provide Applica with further flexibility to more effectively
address strategic initiatives as we enter 2006," stated Harry D.
Schulman, Applica's President and Chief Executive Officer. "We have
maintained a sufficient level of borrowing availability under our
senior revolving credit facility to fund our seasonal peak in
working capital and we have never experienced any interruption in
the supply of products to our customers as a result of liquidity
issues. In fact, throughout 2005 we have maintained an average
monthly availability of at least $30 million. Today, including the
loan from Mast, we have approximately $44 million in availability,"
added Schulman. Currently, Applica must maintain an average monthly
availability of $20 million under its senior credit facility and
has a daily availability block of $15 million. In connection with
the new term loan, Applica provided Mast with limited financial
projections for 2006. Management currently expects that sales for
the year ended December 31, 2006 will total approximately $580
million and gross margins will be approximately 30.5%. Management
anticipates that selling, general and administrative operating
expenses for 2006 will be approximately 27.0% and operating income
will be 3.5% of sales. Depreciation and amortization for 2006 is
expected to be approximately $12 million, interest expense is
expected to be approximately $11.5 million and the average debt
outstanding is expected to be approximately $135 million.
Management expects to record net earnings of approximately $7.7
million for the year ended December 31, 2006. As previously
announced, due to the unpredictable nature of restructuring and
other charges that may be incurred as a result of its strategic
initiatives, Applica has not updated its outlook for earnings
guidance for 2005. The guidance for 2006 is limited to the summary
outlined above and Applica does not intend to update this guidance
at any time. As the process of strategically repositioning the
Company is expected to conclude near the end of 2005, Applica will
re-evaluate this policy next year. The term loan from Mast bears
interest at LIBOR plus 6.25% (currently 10.4%) In connection with
the repayment of the term loan, after June 30, 2006 Applica is
required to pay Mast an exit fee that increases on a periodic basis
beginning with 1% to a maximum of 4% of the principal amount of the
loan. In consideration of the loan transaction, Applica paid Mast
commitment and closing fees totaling $225,000. Applica will hold a
conference call on Thursday, November 3, 2005 at 11:00 a.m.,
Eastern Standard Time, to discuss its third-quarter results and
trends in operations. Live audio of the conference call will be
simultaneously broadcast over the Internet and will be available to
members of the news media, investors and the general public.
Broadcast of the event can be accessed on the Company's website,
http://www.applicainc.com, by clicking on the Investor Relations
page. You may also access the call via CCBN at
http://www.streetevents.com. The event will be archived and
available for replay through Thursday, November 10, 2005. Applica
Incorporated and its subsidiaries are marketers and distributors of
a broad range of branded small household appliances. Applica
markets and distributes kitchen products, home products, pest
control products, pet care products and personal care products.
Applica markets products under licensed brand names, such as Black
& Decker(R), its own brand names, such as Windmere(R),
LitterMaid(R), Belson(R) and Applica(R), and other private-label
brand names. Applica's customers include mass merchandisers,
specialty retailers and appliance distributors primarily in North
America, Latin America and the Caribbean. Additional information
regarding the Company is available at http://www.applicainc.com.
Certain matters discussed in this news release are forward-looking
statements. Such statements are indicated by words or phrases such
as "anticipates," "projects," "management believes," "Applica
believes," "intends," "expects," and similar words or phrases. Such
forward-looking statements are subject to certain risks,
uncertainties or assumptions and may be affected by certain other
factors, including the specific factors set forth below: -- Applica
purchases a large number of products from one supplier. Transition
issues and production-related risks with this supplier could
jeopardize its ability to realize anticipated sales and profits. --
Applica depends on third party suppliers for the manufacturing of
most of its products, which subjects it to additional risks that
could adversely affect its business. -- Increases in costs of raw
materials, such as plastics, steel, aluminum and copper, could
result in increases in the costs of Applica's products, which will
reduce its profitability. -- Applica's debt agreements contain
covenants that restrict its ability to take certain actions.
Applica would face liquidity and working capital constraints if it
violates any of these covenants. -- Applica's business could be
adversely affected by retailer inventory management. -- Applica
depends on purchases from several large customers and any
significant decline in these purchases or pressure from these
customers to reduce prices could have a negative effect on its
business. -- Applica's business could be adversely affected by
currency fluctuations in its international operations, particularly
in light of the decision of the Chinese government to de-peg the
value of the yuan to the U.S. dollar. -- Applica's business could
be adversely affected by changes in trade relations with China.
Other risks and uncertainties are detailed in Applica's Securities
and Exchange Commission filings, including the Annual Report on
Form 10-K for the year ended December 31, 2004. Should one or more
of these risks, uncertainties or other factors materialize, or
should underlying assumptions prove incorrect, actual results,
performance, or achievements of Applica may vary materially from
any future results, performance or achievements expressed or
implied by the forward-looking statements. Readers are cautioned
not to place undue reliance on forward-looking statements. Applica
undertakes no obligation to publicly revise any forward-looking
statements to reflect events or circumstances that arise after the
date hereof.
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