Applica Reports Q3 Loss
Nov 3, 2005
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Applica Incorporated announced third-quarter sales for 2005 were U.S. $139.6 million, compared to sales of $182.9 million in the same period in 2004. For the 9 months ended Sept. 30, 2005, sales were $368.5 million, compared to sales of $466.1 million in the same period in 2004.

Applica reported a net loss for the third quarter of 2005 of $8.2 million, or $0.34 per diluted share, compared to a net loss of $9.9 million, or $0.41 per diluted share, for the 2004 third quarter. Included in the quarter was a $4.8-million loss related to the closing of its plant in Mexico. A tax expense of $3.0 million due to an increase in the allowance for deferred tax assets related to the closing was also included. For the 9-month period, Applica reported a net loss of $49.6 million, or $2.06 per diluted share, compared to a net loss of $138.2 million, or $5.78 per diluted share, for the same period in 2004.

As previously announced, beginning in 2004, Applica has undertaken a number of strategic initiatives, including the following: the sale of its Hong Kong-based manufacturing operations; the closure of the manufacturing operations in Mexico;
the establishment of strategic sourcing partners; and selling products that do not meet a minimum target contribution margin.

Applica said the actions have resulted in restructuring and transition costs and lower sales in 2004 and 2005, which are expected to improve in 2006 and beyond.

"Our transition from manufacturing to sourcing is almost complete. We ceased production at our Mexican manufacturing facility and have transitioned all of the products previously made there to third parties," Harry D. Schulman, president and CEO, said. "We expect to see improved margins from the sale of these products in 2006 as a result of these actions. Also, as previously announced, we secured additional financing of $20 million in October, which will provide us with further operating flexibility to address our strategic initiatives as we enter 2006."

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