New York – Rockford announced that it reached a tentative agreement to sell the assets of Q-Logic and reported continued, though narrower losses for 2005.
Rockford said it will sell the Q-Logic speaker enclosure business, with assets of about $3 million, to members of Q-Logic’s current management team. The deal is expected to be completed by early in the second quarter, if not before.
President/CEO Gary Suttle said Rockford will continue to purchase speaker enclosures from Q-Logic. “We expect to maintain a close working relationship with Q logic. We do not believe we need to own Q-Logic to achieve our product needs.”
The sale of Q-Logic is part of an overall plan to reduce overhead to stem recent losses, Rockford said.
In an earnings call on March 23, Rockford reported a loss of $254,000, for the year ended Dec. 31, compared with an operating loss of $26.6 million the previous year. For the fourth quarter of 2005, sales declined 19 percent to $27.9 million, compared with $34.5 million for the quarter in 2004. Net sales for the year decreased 15.7 percent to $135.7 million, compared with $160.9 million for the same period in 2004.
Suttle said Rockford is moving to outsource more of its products and noted that it ceased selling head units. The company is now outsourcing its highest volume speakers, the P1, and has initiated the outsourcing of its amplifiers, he said. Rockford has also boosted its OEM sales, which now represent more than 10 percent of its business.
The company, however, expects sales declines through 2006, said Suttle.
Rockford said operating expenses for the fourth quarter of 2005 decreased 16 percent to $9.3 million and decreased 30.5 percent for the year, to $40.5 million.
Operating loss for the fourth quarter was $1.5 million, compared with $3.8 million for the same period in 2004.