Applica Inc. Announces New Banking Facility (1/17)
Applica Incorporated (NYSE: APN) today announced that, on December 28, 2001, it replaced its current revolving credit and term debt facilities with a new $205 million four-year asset-based senior secured revolving credit facility.
David M. Friedson, Applica's Chairman of the Board and Chief Executive Officer, commented, "We are very pleased with the flexibility that this new facility will provide us over the next four years. As we have stated before, we continue to be focused on our balance sheet management. As a result, at December 31, 2001, our total outstanding debt was approximately $226 million, down approximately $66 million from December 2000. Today, our total debt is $216 million. We have been able to continue our focus on inventory management and at December 31st, our inventory levels were approximately $105 million compared to $161 million last December."
As previously announced, Applica will take charges of approximately $15 million (after-tax), primarily in connection with the cost cutting initiatives taken in the fourth quarter and the debt refinancing. As part of its cost cutting measures, Applica will close its offices in Shelton, Connecticut. Critical functions will be consolidated at the Miami Lakes location by July 2002. This closing, along with its other cost cutting measures, including reduction of North American employees by over 10%, should result in annual cost savings of $4 to $5 million. The Company may also take additional charges of up to $2 million (after-tax) relating to the pending devaluation of the Argentinean peso and $10 million (after-tax) relating to a pending product recall issue. Also, in December, the Company repatriated $31 million from its Hong Kong manufacturing operation, which will result in an additional non-cash tax expense of approximately $10 million.
Applica anticipates that the sales for the quarter ending December 31, 2001 will fall short of management's earlier estimates. Management now expects sales to be approximately $210 million for the fourth quarter. The lower sales volume was primarily the result of the continued softness in the economy, which lasted through the holiday season.
Commenting further Mr. Friedson stated, "Although we were disappointed with the softness in our sales, excluding all of the one-time issues, we believe that we will meet the middle of our earnings range of $0.08 to $0.21 per share for the fourth quarter. Despite the lower sales volume, we had a better-than-anticipated product mix."
Applica will hold a conference call tomorrow at 9:00 a.m., eastern standard time, to discuss these matters. 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 Tuesday, January 22, 2002 at midnight.
Applica Incorporated and its subsidiaries are manufacturers, marketers and distributors of a broad range of branded and private-label small electric consumer goods. In 1998, Applica acquired the Black & Decker Household Products Group and became a leading supplier of brand name small household appliances in the United States. The Company also manufactures and distributes professional personal care products, home environment products and pet care products, including the LitterMaid(R) self-cleaning cat litter box. Applica manufactures and markets products under licensed brand names, such as Black & Decker(R), its own brand names, such as Windmere(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 China and Mexico. In addition, Applica manufactures products for other consumer products companies.