Fedders' Fiscal 4th-Qtr. Net Sales Decrease 11%

Liberty Corners, N.J.— Citing efforts by air conditioner retailers and distributors to reduce inventories, as well as a slowdown in the semi-conductor capital goods market, Fedders reported decreased fiscal fourth-quarter net sales of $90.7 million. This is down about 11 percent from the $102.3 million recorded in the same three months last year.

The company also reported a net loss of $21.6 million in the fourth quarter ending Aug. 31, compared with net income of $4.3 million in the year-ago period.

In conjunction with a previously announced restructuring plan to move a majority of the company's air conditioner production to China, Fedders recorded $25 million in charges in the fourth quarter, including the elimination of about 800 U.S. employees. Production of all dehumidifiers and compressors will be moved to China, while the company continues to operate six U.S. manufacturing plants.

Excluding the $25 million in charges, fourth-quarter pro forma results show a net loss of $5 million, compared with net income of $4.3 million in the same three months in 2000.

Net sales for fiscal 2001 reached $405.7 million, down about 2.5 percent from the $416.2 million reported in 2000. Net loss for 2001 was $22.5 million, compared with net income of $20.4 million the previous year.

The pro forma net loss for fiscal 2001, excluding the $25 million in charges, reached $5.1 million. This was down from net income of $20.4 million the previous year.

Due mainly to lower selling prices and an increase in unit sales of lower margin room air conditioner products, Fedders gross profit margin decreased 620 basis points for the year, down to 19 percent, compared with 25.2 percent in 2000. Gross profit was also affected by manufacturing inefficiencies in the company's Tennessee and Maryland plants, which have ceased production.

In the fourth quarter, Fedders reported a 17.8 percent gross profit margin, down 690 basis points from the 24.7 percent recorded in the previous year.