Applica Incorporated Announces Sale of China Manufacturing Operations and Impairment of Goodwill
28 Luglio 2004 - 11:16PM
PR Newswire (US)
Applica Incorporated Announces Sale of China Manufacturing
Operations and Impairment of Goodwill MIAMI LAKES, Fla., July 28
/PRNewswire-FirstCall/ -- Applica Incorporated (NYSE:APN) today
announced that it has sold its Chinese manufacturing operations
through a sale of all of the outstanding shares of Applica Durable
Manufacturing Limited to an affiliate of Elec-Tech International
Co., Ltd., a leading Chinese manufacturer of kitchen appliances.
Applica does not expect to realize a material gain or loss from the
sale. As part of the transaction, Applica has entered into a
long-term supply arrangement with Elec-Tech. Harry D. Schulman,
Applica's President and Chief Executive Officer, commented, "We are
very excited to announce this expansion of our relationship with
Elec-Tech. We consider Elec-Tech to be a leading manufacturer in
China and expect that our supply partnership with them will result
in new products and improved cost for Applica and its customers."
As a result of the decision to exit its Chinese manufacturing
operations, Applica has changed its position with regard to
permanently investing certain previously undistributed foreign
earnings outside of the United States and estimates that there will
be an additional tax charge in the second quarter of approximately
$24.0 million ($1.00 per share), which reflects the U.S. taxes on
those earnings. Management believes that the cash impact of these
taxes in 2004 will be less than $2.0 million as the result of the
use of NOLs and foreign tax credits. Applica also announced that it
has made a preliminary assessment of its existing goodwill for
impairment in accordance with Statement of Financial Accounting
Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets."
Management's current estimate of the impairment is $62.8 million
($46.4 million after tax). The non-cash expense will be reported as
an impairment of goodwill and will reduce reported earnings by
$1.93 per share for the second quarter. In view of these corporate
events, the Company is re-evaluating its tax strategies and its
ability to realize deferred tax assets of approximately $64.0
million as of March 31, 2004. Applica will hold a conference call
on August 5, 2004 at 11:00 a.m., Eastern Daylight Time, to discuss
these matters, as well as its second-quarter results, and to give
guidance on future 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. The conference call is expected
to last approximately one hour. 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, August 12,
2004, at midnight. Applica Incorporated and its subsidiaries are
marketers and distributors of a broad range of branded and
private-label small electric consumer goods. 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) 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. The Company operates manufacturing facilities in
Mexico. Additional information regarding the Company is available
at http://www.applicainc.com/ . Certain matters discussed in this
news release are forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those set forth in the forward- looking
statements. These factors include uncertainties regarding the
success or failure of our growth strategy; increases in cost and
unavailability of raw materials and components; complications
resulting from our implementation of the new ERP system; our
dependence on purchases from large customers; our ability to renew
the Black & Decker(R) trademark license agreement; the strength
of the U.S. retail market; currency fluctuations in our
international operations; the potential for product recalls and
product liability claims against us; the bankruptcy or loss of a
major retail customer, distributor or supplier; the risks of our
international operations; changes in trade relations with China;
our dependence on the timely development, introduction and customer
acceptance of products; competitive products and pricing;
dependence on foreign suppliers and supply and manufacturing
constraints; cancellation or reduction of orders; and other risks
and uncertainties detailed from time to time in the Company's
Securities and Exchange Commission filings, including the Annual
Report on Form 10-K for the year ended December 31, 2003. 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. DATASOURCE: Applica Incorporated
CONTACT: Investor Relations Department of Applica Incorporated,
+1-305-362-2611, or Web site: http://www.applicainc.com/
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