Graham-Field Health Products Reports Financial Results For The Quarter Ended September 30, 1999
BAY SHORE, N.Y., Nov. 16 /PRNewswire/ -- Graham-Field Health Products,
Inc. (OTC Bulletin Board: GFIH), a manufacturer and supplier of healthcare
products, reported financial results for the third quarter ended September 30,
1999.
For the quarter ended September 30, 1999, the Company reported revenues of
$67.9 million and a net loss of $13.4 million. The Company reported revenues
of $228.1 million for the nine months ended September 30, 1999, and a net loss
of $41.1 million, which includes a $10 million charge for the proposed
settlement of securities class action litigation reached in August 1999. For
the quarter and nine months ended September 30, 1998, the Company reported
revenues of $93.8 million and $289.9 million, respectively, a net loss of
$4.4 million and $8.4 million, respectively. The decrease in revenue in 1999
is primarily attributable to the implementation of more stringent credit
policies, intense competition in the healthcare industry, the effect of
product rationalization programs, reduced vendor credit support on certain
distributed products, the negative impact of certain customers experiencing
financial difficulty and general market concerns regarding the Company's
future.
The Company's gross margin was 26.9% and 29.0% for the three and nine
months ended September 30, 1999, as compared to 30.9% and 31.0% for the same
periods in the prior year. The gross margin decline is the result of
competitive industry pressures and lower factory utilization.
The Company's selling, general and administrative expenses for the three
and nine months ended September 30, 1999 were $3.0 million and $2.5 million
lower than the corresponding periods of the prior year. Cost savings
initiatives from distribution center closures earlier this year and lower
personnel costs as well as reduced variable costs (principally outbound
freight and sales commissions) due to lower sales volume were partially offset
by costs such as severance, facility exit, professional and advisory fees and
higher bad debt expense.
On October 25, 1999, the Company advised the court and plaintiffs in the
securities class action litigation that it would not be in a position to
proceed with the proposed settlement announced in August 1999 because, due to
changed circumstances, the sale of the Company contemplated thereby would
likely not occur and the Company lacks the funds to pay its portion of the
proposed settlement.
The Company is presently not in compliance with the net cash flow covenant
contained in its credit facility at September 30, 1999 and also does not
expect to be in compliance with the December 31, 1999 covenants. Amounts
outstanding under the credit facility as of November 12, 1999 and September
30, 1999 were $19.7 million and $23.8 million, respectively. As of November
12, 1999, the Company had unused borrowing availability under the credit
facility of $3.6 million. The Company is currently seeking a waiver of the
covenant default from its lenders as well as pursuing alternative financing
sources, however there can be no assurance that the Company will be successful
in these efforts. Under the terms of the credit facility, the lenders have
the right to require immediate repayment of all amounts borrowed or limit
future advances, however, the lenders have not exercised such rights at the
present time. Should a demand for repayment of the credit facility be made by
the lenders, such demand would provide for a cross default under the Company's
$100 million Senior Subordinated Notes. Should the Company's lenders begin to
exercise their rights under the agreements described above or if the Company
makes a determination that it will not be able to fund its operations outside
a bankruptcy, the Company would likely seek protection pursuant to Chapter 11
of the United States Bankruptcy Code. |
