ROCKFORD CORPORATION 
By Net loss for the three months ended
Net sales for the three months ended
As a percent of net sales, gross margin for the three months ended
Operating expenses for the three months ended
Mr. Jackson continued: "The OEM business continues to be difficult. Our OEM partners have seen reduced retail floor traffic and slow vehicle sales. The lack of consumer financing and disappearance of aggressive lease programs has hurt their business. Our OEM customers are experiencing higher than normal levels of inventory and reducing their vehicle production dramatically. As a result, their purchases of premium audio systems have been reduced."
Mr. Jackson stated: "After the September results, we responded quickly and went through a significant re-structuring. We reduced our workforce by approximately 20% and made significant reductions in SG&A. The results of the fourth quarter were very disappointing, but they included significant costs associated with shutting down facilities and reducing the workforce. These changes will reduce our costs in 2009. We believe these changes have structured Rockford to operate in this difficult environment and further reduce our break-even point while maintaining the service level our customers require."
Mr. Jackson observed: "Operationally, we made significant headway in the fourth quarter. We completed our outsourcing process, so that all speaker and amplifier manufacturing is now out-sourced to suppliers and we have no more internal manufacturing. This allowed us to consolidate from four buildings to two buildings at our
Mr. Jackson concluded: "We are working hard to bring our retailers the right tools to promote their business and satisfy the customers that come into their stores. Recently we launched an in-house sales department to improve our dealer communication and increase our service level to the specialist retailer. This is helping us stay connected with our retailers and provide better overall service. Even in these uncertain times, there are opportunities. Our focus remains on maximizing our sales channels, driving consumer traffic and building our brands."
Convertible Debt Paid and Refinanced
Rockford also announced today that it has entered into amendments affecting its 4.5% Convertible Senior Subordinated Secured Notes and Warrants. The Notes had a maturity date of
As announced in
In April of 2009 Rockford agreed with the holder of the remaining
About Rockford Corporation (www.rockfordcorp.com)
Rockford is a designer, marketer and distributor of high-performance audio systems for the mobile audio aftermarket and for the OEM market. Rockford's mobile audio products are marketed primarily under the Rockford Fosgate, Rockford Acoustic Design and Lightning Audio brand names.
Rockford's primary brand websites include: www.rockfordfosgate.com, www.rockfordacousticdesign.com, and www.lightningaudio.com and www.installedge.com.
Forward-looking Statement Disclosure
We make forward-looking statements in this press release including but not limited to statements about our results of operations. These statements may be identified by the use of forward-looking terminology such as "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words.
Forward-looking statements are subject to many risks and uncertainties. We caution you not to place undue reliance on these forward-looking statements, which speak only as at the date on which they are made. Actual results may differ materially from those anticipated in our forward-looking statements. We disclaim any obligation or undertaking to update forward-looking statements to reflect changes in our expectations or changes in events, conditions, or circumstances on which our expectations are based.
Our revenues continued to decline in 2008, primarily attributable to continued weakness in the mobile audio market and to the elimination in 2008 of end-of-life and new product load in sales that increased sales in 2007. In addition, the financial meltdown at the end of 2008 reduced our sales in all of our sales channels. The U.S. retail environment for mobile audio continued to become more difficult in the fourth quarter of 2008, with many retailers reporting decreases in customer traffic. The financial meltdown at the end of 2008 has clearly contributed to an already difficult environment and deepened the current recession. We anticipate this will lead consumers and retailers to become even more conservative in their spending. We are reducing our operating expenses in order to reduce our working capital needs and break-even sales level.
If sales erode further than we expect, we may not be able to achieve our business objectives and our current financing might not prove adequate to maintain our current business. In this event, we might have to consider changes that might include reductions in employee compensation and benefits, reevaluation of our status as a public company in order to reduce costs, reductions in our working capital needs, changes in our distribution strategies, and potential exit strategies. We also might need to consider additional borrowings or equity financing. There is no assurance that we could implement operational changes or raise adequate new financing in the current economic environment. If we failed to do so, we could suffer setbacks in our competitive position, ability to improve our aftermarket and OEM businesses, and overall financial performance.
Our business swung to a loss in 2008 (with almost all of the loss in the fourth quarter). We cannot be certain when, if ever, we will be able to return our business to profitability. If our current financing proves inadequate we may be forced to seek alternative sources of financing to maintain our business. In the current financial environment, we can give no assurance that we will be able to secure such financing on acceptable terms. In the worst case, we may not be able to continue our business as we currently anticipate.
When considering our forward-looking statements, you should keep in mind the risk factors and other cautionary statements identified in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on
Rockford Corporation
Condensed Consolidated Statements of Operations (unaudited)
For the Three and Twelve Months Ended December 31, 2007 and 2008
($000s omitted except per share amounts)
Three months Twelve months
ended ended
December 31, December 31,
------------ ------------
2007 2008 2007 2008
---- ---- ---- ----
Net sales $16,938 $10,456 $88,745 $68,874
Cost of goods sold 10,617 8,309 59,868 47,670
------ ----- ------ ------
Gross profit 6,321 2,147 28,877 21,204
Operating expenses:
Sales and marketing 2,806 2,249 13,273 11,805
General and administrative 2,588 3,382 11,215 11,201
Research and development 617 644 2,817 2,646
--- --- ----- -----
Total operating expenses 6,011 6,275 27,305 25,652
----- ----- ------ ------
Operating income (loss) 310 (4,128) 1,572 (4,448)
Interest and other expense, net (182) 187 886 3
----- --- --- ---
Income (loss) from operations
before income taxes 492 (4,315) 686 (4,451)
Income tax expense - 24 - 24
--- --- --- ---
Net income (loss) $492 $(4,339) $686 $(4,475)
==== ======== ==== ========
Net income (loss) per common
share:
Basic $0.05 $(0.51) $0.07 $(0.51)
===== ======= ===== =======
Diluted $0.05 $(0.51) $0.07 $(0.51)
===== ======= ===== =======
Weighted average shares:
Basic 9,101 8,581 9,325 8,697
===== ===== ===== =====
Diluted 9,101 8,581 9,342 8,697
===== ===== ===== =====
Rockford Corporation
Condensed Consolidated Balance Sheets (unaudited)
At December 31, 2007 and 2008
(In thousands)
December 31, December 31,
2007 2008
ASSETS
Current assets:
Cash $- $-
Accounts receivable, net 15,885 12,856
Inventories 14,352 13,043
Prepaid expenses and other current
assets 1,224 551
----- ---
Total current assets 31,461 26,450
Property and equipment, net 1,905 1,743
Other assets 646 332
--- ---
Total assets $34,012 $28,525
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $5,794 $3,980
Accrued salaries and incentives 1,415 1,367
Accrued warranty and returns 1,267 700
Other accrued liabilities 1,640 1,838
Current portion of other long-term
liabilities 760 161
Notes payable - 4,980
Asset based credit facility 3,475 7,547
----- -----
Total current liabilities 14,351 20,573
Notes payable 9,582 2,593
Other long-term liabilities 133 66
--- --
Total liabilities 24,066 23,232
Shareholders' equity:
Common stock 94 94
Additional paid-in-capital 38,319 38,554
Retained deficit (27,569) (32,044)
Treasury stock (898) (1,311)
----- -------
Total shareholders' equity 9,946 5,293
----- -----
Total liabilities and shareholders'
equity $34,012 $28,525
======== ========
SOURCE Rockford Corporation
