Amisco Posts Sales Decline For First Half

Furniture World Magazine

Amisco Industries Ltd.'s net sales fell to $9.2 million during the quarter ended June 3, 2006, down 14.8% from $10.8 million in the second quarter of 2005. The Company's sales and profit margins were affected by the decline in the exchange rate used to convert its U.S. sales and the Asian competition. Amisco therefore incurred a net loss of $159,442, whereas it had posted net earnings of $424,227 in the second quarter the previous year. The Company recorded net sales of $18.1 million during the first half of current fiscal year, compared with $20.9 million in the first six months of 2005. It incurred a net loss of $56,375 for the six-month period, as opposed to net earnings of $818,408 in the first half of 2005. Sales in Canada decreased from $3.8 million in the second quarter last year to $3.4 million in the second quarter of the current fiscal year as a result of the decline in orders from a few large-sized customers. Sales in the United States went from $7.0 million to $5.9 million due to the reduction in the U.S. dollar/Canadian dollar conversion rate. Such sales were reported at an average conversion rate of 1.1960 in the second quarter of 2006, compared with a rate of 1.5209 in the second quarter of 2005. Amisco achieved a gross profit of $1.9 million for the quarter ended June 3, 2006, compared with $2.8 million in the second quarter of 2005. The gross profit margin thus fell to 20.6% from 25.8% in the quarter ended May 28, 2005. Selling expenses decreased by 20.9% and administrative expenses increased by 5.9%. Selling expenses were down as a result primarily of the lower commission fees associated with the decline in sales. Administrative expenses were up by only $52,291, of which $30,411 was attributable to the stock-based compensation expense arising from the recognition of stock options. The net loss thus amounted to $159,442 or $0.04 per share, as opposed to net earnings of $424,227 or $0.10 per share in the second quarter last year. First Half Net sales totalled $18.1 million for the first six months of the current fiscal year, down 13.4% from $20.9 million in the first half of 2005. Sales in Canada stood at $6.1 million and $7.1 million for the first half of fiscal 2006 and 2005 respectively. Sales in the United States amounted to $12.0 million, compared with $13.8 million in the first six months of 2005. All in all, sales in Canada decreased by 13.9%, as opposed to a 13.1% decline south of the border. However, it should be pointed out that sales in the United States reported in U.S. dollars were up by $174,000 or the equivalent of 2%. The exchange rate applied to sales in U.S. dollars was 1.2690 for the first half of 2006, compared with 1.5107 for the same period a year earlier. The Company achieved a gross profit of $3.9 million for the six-month period ended June 3, 2006, compared with $5.4 million for the first half of the previous fiscal year. The gross profit margin slipped to 21.4%, from 25.7% in the six months ended May 28, 2005. Tight control over selling and administrative expenses lowered them by 16.0% and 3.0% respectively in the first half in comparison with the first six months a year earlier. Amisco incurred a net loss of $56,375 or $0.01 per share, as opposed to net earnings of $818,408 or $0.20 per share in the first half of 2005. This sharp decline in net profitability is due primarily to the reduction in the average exchange rate on U.S. sales. Financial Position Amisco posted a solid financial position as at June 3, 2006, with a current ratio of 2.11:1, and a balance sheet free of long-term debt. Shareholders' equity totalled $16.1 million or $3.95 per share. Amisco Industries Ltd. is a North American leader in the design and manufacture of composite painted tubular and steel sheet residential furniture. Founded in 1954, the Company manufactures beds, tables, chairs and stools. Each of its products can be personalized: finishes, colours, fabrics and dimensions. Recognized for its innovative design and good quality/price value, Amisco furniture is available throughout North America. Amisco records about 65% of its sales in the United States.