O’Sullivan Industries Holdings Announces 17.5% Sales Decrease In Period

Furniture World Magazine

O'Sullivan Industries Holdings, Inc. a leading manufacturer of ready-to- assemble furniture, announced its fiscal 2004 second quarter and year to date operating results for the period ended December 31, 2003. Net sales for the second quarter of fiscal 2004 were $65.2 million, a decrease of 17.5% from sales of $79.1 million in the comparable period a year ago. Year to date fiscal 2004 sales were $136.7 million, a decrease of 9.3% from sales of $150.7 million in the comparable period a year ago. Operating income for the second quarter of fiscal 2004 was $3.3 million, or 5.0% of net sales, down from operating income of $8.1 million, or 10.3% of net sales, in the comparable period a year ago. Year to date fiscal 2004 operating income was $7.1 million, or 5.2% of net sales, down from operating income of $16.0 million, or 10.6% of net sales, in the comparable period a year ago. The decrease in operating income was generally caused by lower sales levels, lower production levels adversely affecting our fixed cost absorption, changes in our customer mix, increasing raw material prices and increased promotional activities with several of our major retail partners. Net loss for the second quarter of fiscal 2004 was $4.9 million compared to net income of $2.0 million in the comparable period a year ago. Year to date fiscal 2004 net loss was $12.2 million, compared to net income of $3.5 million in the comparable period a year ago. The current year to date net loss reflects the reduction in operating income noted above. Net loss for this year was also impacted by the non-cash write-off of debt issuance costs related to the refinancing of our previous senior secured credit facility of $3.3 million in September offset by a gain of $616,000 on the repurchase of $4.0 million of our senior subordinated notes in December. The net loss also reflects the recent adoption of an accounting pronouncement, Statement of Financial Accounting Standard No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, that requires dividends on our mandatorily redeemable senior preferred stock to be recorded as interest expense.