Corporate News Releases
Fedders Files 10-K for 2004 and 2003 Transition Period
CONTACT:
Robert Laurent, Jr.
(908) 604-8686
investorrelations@fedders.com
LIBERTY CORNER, New Jersey -- September 30, 2005 -- Fedders Corporation (NYSE: FJC), a leading global manufacturer of air treatment products, including air conditioners, air cleaners, dehumidifiers and humidifiers, today announced that it has filed its Annual Report on Form 10-K for the year ended December 31, 2004 and for the four-month transition period ended December 31, 2003.
Fiscal 2004 Results
Net sales for the year ended December 31, 2004 of $413.0 million decreased 3.5% from sales of $428.0 million for the 12 months ended December 31, 2003.
Net sales in the HVACR segment of $372.0 million in 2004 decreased 5.8% from $394.8 million in 2003 as a result of much cooler than normal summer weather in key North American markets, causing a poor retail sales environment, which not only prevented in-season sales re-orders but also resulted in customer returns. Partially offsetting the lower sales of room air conditioners in North America was the sales growth of residential air conditioner products globally and sales of all air conditioner products in Asia. Sales in the Engineered Products segment increased by 23.5% to $41.0 million in 2004, compared to $33.2 million in 2003, due to growth in industrial air cleaners in Asia and North America.
Gross profit declined to $60.2 million, or 14.6% of net sales, in the year ended December 31, 2004 compared to $91.2 million, or 21.3% of net sales in 2003. Gross profit and margin percentage were adversely affected by higher component and raw material costs due to increases in commodity prices, the decrease of value-added tax (VAT) rebates of approximately $9.2 million, and by unabsorbed manufacturing costs of $5.0 million associated with the transfer of production from several U.S. factories to China.
Operating loss in 2004 was $13.7 million, or 3.3% of net sales, compared to operating profit of $25.2 million, or 5.9% of net sales, in 2003. The loss reflects lower sales of room air conditioners in North America, higher material costs, unabsorbed overhead and higher selling and warehousing expenses. A loss on debt extinguishment of $8.1 million was recorded during the period to account for the early retirement of the Company's ten-year notes and the issuance of new ten-year notes due March 2014.
Net loss applicable to common stockholders in 2004 was $30.1 million, or 99 cents per diluted common share. Net income applicable to common stockholders in the 12 months ended December 31, 2003 was $3.2 million, or 11 cents per fully diluted common share.
Fiscal 2004 Fourth Quarter Results
Sales in the 2004 fourth quarter of $46.4 million increased 18.4% from $39.2 million in the prior-year quarter as a result of higher sales of commercial HVACR equipment and engineered products.
Gross profit in the 2004 fourth quarter was $2.0 million, or 4.3% of net sales, compared to $3.7 million, or 9.4% of net sales, in the prior-year period. Operating loss for the quarter was $17.7 million compared to a loss of $12.9 million in the prior year. Net loss applicable to common stockholders during the quarter was $14.5 million, compared to a loss of $12.8 million in the prior-year quarter.
On August 26, 2003, the Company changed its fiscal year from August 31 to December 31. Results for the fourth quarter and fiscal year ended December 31, 2003 are unaudited and are presented for comparison purposes.
FEDDERS CORPORATION
RESULTS FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED
DECEMBER 31, 2004 AND DECEMBER 31, 2003
(amounts in thousands, except per share data)
FISCAL YEAR 2004 2003
Net sales $413,016 $427,954
Costs and expenses:
Cost of sales 352,761 336,756
Selling, general and administrative expense 74,822 66,758
Restructuring and other (income) (842) (753)
Total costs and expenses 426,741 402,761
Operating income (13,725) 25,193
Interest expense, net (20,124) (18,585)
Loss on debt extinguishment (8,075) -
Partners' net interest in joint venture results (220) (843)
Other income 1,932 665
Net (loss) income before income taxes (40,212) 6,430
Provision for income taxes (14,105) 2,085
Net (loss) income (26,107) 4,345
Preferred stock dividends (4,020) (1,102)
Net (loss) income applicable to common
stockholders (30,127) 3,243
Net (loss) income per common share:
Basic ($0.99) $0.11
Diluted ($0.99) $0.11
Weighted average shares outstanding:
Basic 30,466 29,938
Diluted 30,466 30,287
FOURTH QUARTER 2004 2003
Net sales $46,438 $39,184
Costs and expenses:
Cost of sales 44,397 35,487
Selling, general and administrative expense 19,858 17,188
Restructuring (income) (132) (638)
Total costs and expenses 64,123 52,037
Operating loss (17,685) (12,853)
Interest expense, net (5,187) (4,516)
Partners' net interest in joint venture results (50) (1,229)
Other income 1,432 239
Net loss before income taxes (21,490) (18,359)
Provision for income taxes (8,008) (5,927)
Net loss (13,482) (12,432)
Preferred stock dividend (1,005) (363)
Net loss applicable to common stockholders (14,487) (12,795)
Net loss per common share:
Basic ($0.48) ($0.42)
Diluted ($0.48) ($0.42)
Weighted average shares outstanding:
Basic 30,499 30,336
Diluted 30,499 30,336
Selected balance sheet items as of
December 31, 2004 and 2003 2004 2003
Cash and cash equivalents $22,783 $22,043
Accounts receivable, net 28,673 29,718
Inventories, net 132,920 145,486
Accounts payable 48,563 86,313
Short-term notes 57,571 30,446
Long-term debt, including current portion 162,539 161,744
This news release includes forward-looking statements that are covered under the "Safe-Harbor" clause of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations and assumptions. Actual results could differ materially from those currently anticipated as a result of known and unknown risks and uncertainties including, but not limited to, weather and economic, political, market and industry conditions and reliance on key customers. Such factors are described in Fedders' SEC filings, including its most recently filed annual report on Form 10-K. The company disclaims any obligation to update any forward-looking statements to incorporate developments occurring after release of announcement. Visit the Fedders investor information website at http://www.fedders.com to access additional information on Fedders.
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