Message #4 From:
Stock News Bot Date: August 15, 2005 09:37:00 AM
KHLM News Kuhlman Company Reports On-Plan Second Quarter Results; Sales Increase 38.0% with Growth in Both Retail and Wholesale; Private Financings Position Company for Continued Growth
MINNEAPOLIS--(BUSINESS WIRE)--Aug. 15, 2005--Kuhlman Company, Inc. (OTCBB: KHLM) today reported it's fiscal second quarter results. Sales for the quarter, driven by four new stores increased 38.0% to $1.3 million versus $965,000 in the year-ago quarter. The Company's reported loss per diluted share was $(0.08) on 15.0 million shares outstanding versus a loss per diluted share of $(0.06) on 6.3 million shares outstanding in the prior year's second quarter.
Scott Kuhlman, Chief Executive Officer, commented, "We are very pleased with the progress we made during the second quarter. We saw a continued strong performance from both new and existing stores, which we believe validates our operating model. Just prior and post the closing of the quarter, we closed two successful rounds of private financing, through which we raised $9.7 million and properly capitalized the business for its next growth phase. These securities sold were not registered under the Securities Act of 1933 and may not be offered or sold absent registration or an applicable exemption from the registration requirements. We are looking forward to an acceleration of our store opening schedule and leveraging the investments we have made in our infrastructure to reach profitability as we expand."
During the quarter, the Company opened new stores in Rockefeller Center in New York City, the Citicorp Center in Chicago, the West Village in New York City, and in One Pacific Place in Omaha, Nebraska. The Company continues to target both fill-in locations under a clustering strategy for existing markets and to strategically place new stores in new markets for continued geographic expansion.
Gross profit during the second quarter was 36.5% of sales compared to 39.3% of sales in the prior year's period. The shift in gross profit was due entirely to a decrease in margins associated with the Company's wholesale business. By contrast, gross margin in the Company's retail operations increased significantly. SG&A expenses for the quarter rose to $1.6 million versus $690,000 in the year ago period. This increase reflects both costs associated with becoming a public company as well as continued investment in infrastructure to support the Company's growth plans. As a result of the above factors, the Company's operating loss for the period was $(1.1) million versus $(311,000) in the year-ago quarter.
Mr. Kuhlman continued, "We are excited about the enhancements we've been able to make to our operational capability, including a more robust design and sourcing infrastructure, improving systems, and, more generally, in the strong human resources effort we are making. We continue to strengthen as an organization and we are confident that we are in an excellent position to aggressively fill a void in the specialty retail market for affordable, stylish, tailored clothing. It is our belief that the Kuhlman concept will support a national presence and we are working diligently toward capitalizing on that opportunity."
The Company currently plans to open approximately twenty five new stores during the remaining second half of fiscal 2005. Over that time period, the Company also plans to continue to build it's infrastructure through investments in both personnel and systems so as to further accelerate the pace of it's new store roll-out and to grow its wholesaling operations. As such, while the company has not issued earnings guidance for any specific quarter, it does expect to reach only marginal levels of profitability over this period of time.
Mr. Kuhlman concluded, "We believe that our competitive position is excellent. There is a clear need for our concept and we believe that we have a highly proprietary brand that is built off of a reputation for excellence in design, superior fabrics, and accessible prices. The Kuhlman brand continues to grow in recognition and acceptance and we believe that our opportunity for growth is extremely compelling. Everyone here at Kuhlman, would like to thank all of our new shareholders for their support and shared vision. We remain dedicated to building this business to both serve our consumers and to benefit our shareholders."
Kuhlman Company, Inc.
Condensed Consolidated Statements of Operations
For the Three Months and Six Months Ended
July 2, 2005 and June 30, 2004
(UNAUDITED)
Three Months Ended Six Months Ended
July 2, 2005 June 30, 2004 July 2, 2005 June 30, 2004
------------- ------------- ------------ -------------
Sales $ 1,331,530 $ 964,991 $ 2,691,717 $ 1,906,427
Cost of sales 845,813 585,300 1,723,806 1,033,087
------------ ------------ ----------- ------------
Gross profit 485,717 379,691 967,911 873,340
Selling,
general and
administrative 1,577,026 690,354 2,934,637 970,252
------------ ------------ ----------- ------------
Income from
operations (1,091,309) (310,663) (1,966,726) (96,912)
Other income
(expense):
Interest
expense (54,351) (49,577) (74,608) (91,256)
Other income
(expense) 162 1,045 162 1,045
------------ ------------ ----------- ------------
Pre-tax net
loss (1,145,498) (359,195) (2,041,172) (187,123)
Income tax
(benefit)
expense - 2,000 - (4,800)
------------ ------------ ----------- ------------
Net loss $ (1,145,498) $ (361,195) $(2,041,172) $ (182,323)
============ ============ =========== ============
Basic and
diluted loss
per share $ (0.08) $ (0.06) $ (0.16) $ (0.03)
============ ============ =========== ============
Weighted
average number
of shares
Outstanding -
Basic and
diluted 15,019,939 6,300,000 12,623,395 6,300,000
============ ============ =========== ============
Kuhlman Company, Inc.
Condensed Consolidated Balance Sheets
July 2, 2005 December 31, 2004
(Unaudited) (Audited)
----------------- -----------------
Assets
------
Current assets:
Cash $ 2,531,735 $ 518,919
Accounts receivable - net of
allowance for doubtful accounts
of $2,000 and $2,000,
respectively 223,926 50,074
Inventories 2,602,988 1,514,591
Prepaid expenses 522,611 20,808
Other current assets - 44,057
---------------- ----------------
Total current assets 5,881,260 2,148,449
---------------- ----------------
Furniture, fixtures and leasehold
improvements 813,570 323,131
Less accumulated depreciation and
amortization (169,116) (64,610)
---------------- ----------------
Furniture, fixtures and leasehold
improvements - net 644,454 258,521
---------------- ----------------
Other assets:
Long-term lease deposits 145,154 28,022
---------------- ----------------
Total other assets 145,154 28,022
---------------- ----------------
Total assets $ 6,670,868 $ 2,434,992
================ ================
Liabilities And Shareholders'
Equity
-----------------------------
Current liabilities:
Accounts payable $ 485,399 $ 587,712
Note payable 701,846 621,570
Other accrued liabilities 765,635 224,748
---------------- ----------------
Total current liabilities 1,952,880 1,434,030
---------------- ----------------
Shareholders' equity:
Common Stock ($.001 par value;
50,000,000 shares authorized;
1,302,885 and 0 shares,
respectively, issued and
outstanding) and Preferred Stock
($.001 par value; 22,000,000
shares authorized; 17,064,596 and
10,013,228, respectively, issued
and outstanding) 20,255 10,013
Additional paid-in capital 9,513,060 3,765,104
Accumulated deficit (4,815,327) (2,774,155)
---------------- ----------------
Total shareholders' equity 4,717,988 1,000,962
---------------- ----------------
Total liabilities and
shareholders' equity $ 6,670,868 $ 2,434,992
================ ================
About Kuhlman Company, Inc.
Kuhlman is a specialty retailer and wholesale provider of both men's and women's apparel, offered under the Kuhlman brand through company-owned retail stores and under private labels through other large retailers. Kuhlman opened its first retail store in July 2003 and now operates thirty four (34) retail stores in 16 states. At present, six of the company's stores are a woman's specialty boutique format. Kuhlman has approximately 150 employees and its corporate office is located in Minneapolis, MN. Additional information regarding Kuhlman and its apparel, and store locations can be found at http://www.kuhlmancompany.com.
Forward-Looking Statements
Some of the statements made in this release are forward-looking statements. These forward-looking statements are based upon our current expectations and projections about future events and generally relate to our plans, objectives and expectations for our business. Although our management believes that the plans and objectives expressed in these forward-looking statements are reasonable, the outcome of such plans, objectives and expectations involve risks and uncertainties and our actual future results may be materially different from the plans, objectives and expectations expressed in these forward-looking statements. Specific factors that might cause actual results to differ from our current expectations include, but are not limited to:
-- our ability to anticipate and identify style trends
-- our ability to identify and secure favorable retail locations
-- our ability to establish successful vendor relationships and obtain quality products on a timely basis
-- our ability to hire and develop successful retail salespeople and managers
-- our ability to identify and develop additional wholesale relationships
-- our ability to compete successfully against other retailers and market our styles in a profitable manner, and
-- other factors expressed in our periodic filings with the United States Securities and Exchange Commission, specifically including those risk factors contained in the Company's current report on Form 8-K filed on June 16, 2005.
For the foregoing reasons, readers and investors are cautioned that there also can be no assurance that the outcomes expressed in our forward-looking statements included in release will prove to be accurate. In light of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by the Company or any other person that the Company's objectives and plans will be achieved in any specified time frame, if at all. The Company does not undertake any obligation to update any forward-looking statements or to announce revisions to any forward-looking statements.
