Rockford Corp. (ROFO, Financial) filed Quarterly Report for the period ended 2009-03-31.
Rockford Corp. designs manufactures and distributes high-performance audio systems for the car and professional audio markets. The car audio products are sold primarily in the worldwide car audio aftermarket to consumers who want to improve their existing car audio systems. The company markets the car audio products under our Rockford Fosgate and Lightning Audio brand names selling products that include digital and analog amplifiers speakers source units CD and MP3 changers and accessories. Rockford Corp. has a market cap of $3.4 million; its shares were traded at around $0.4 with and P/S ratio of 0.1.
U.S. sales decreased by $2.5 million, or 17.1%, to $12.6 million for the three months ended March 31, 2009, from $15.1 million for the three months ended March 31, 2008. International sales decreased by $1.4 million, or 42.3%, to $1.9 million for the three months ended March 31, 2009, from $3.3 million for the three months ended March 31, 2008. The decrease in international sales was primarily due to across the board reductions in sales, which were significantly aggravated by a receivership for one of Rockfords European Distributors.
Interest and Other Expense (Income), Net. Interest and other expense (income), net, primarily consists of interest expense and other gains and losses. Interest and other expense (income), net, improved by $0.6 million or 275.8%, to income of $0.4 million for the three months ended March 31, 2009 from an expense from $0.2 million for the three months ended March 31, 2008. The improvement is primarily attributable to the gain of approximately $0.5 million arising from the repurchase of $2.5 million face value of convertible notes and to lower interest expense in 2009 due to lower effective borrowing rates.
At March 31, 2009, Rockford had outstanding $5.0 million of 4.5% convertible senior subordinated secured notes due 2009 and warrants to purchase 534,073 shares of common stock at $3.73 per share. These items were outstanding under agreements effective on June 10, 2004 and as amended on November 12, 2004. The noteholders had the right to convert the notes into Rockfords common stock at any time before their redemption, which at latest would be on the scheduled maturity date of June 10, 2009. The conversion price is $4.61 per share. The noteholders also have a second priority lien on certain Rockford assets.
In January of 2009, Rockford repurchased $2.5 million of the convertible notes and 237,500 associated warrants for a total price of approximately $2.0 million. In connection with this repurchase Rockford recorded a gain to interest and other expense (income), net of approximately $0.5 million, net of fees and write-off of the related portion of unamortized debt issuance costs. The repurchase reduced the outstanding principal of the notes from $7.5 million to $5.0 million.
Investing activities used $0.1 million of cash for the three months ended March 31, 2009 and used $0.1 million of cash for the three months ended March 31, 2008. Capital expenditures, the primary use of cash from investing activities, were $0.1 million for the three months ended March 31, 2009 versus $0.2 million for the three months ended March 31, 2008. Rockfords capital spending is primarily in tooling for specific product lines, and computer hardware and software to support operations. Rockford does not anticipate significant changes in its future capital spending requirements, other than additional expenditures that may arise from future OEM development opportunities.
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Rockford Corp. designs manufactures and distributes high-performance audio systems for the car and professional audio markets. The car audio products are sold primarily in the worldwide car audio aftermarket to consumers who want to improve their existing car audio systems. The company markets the car audio products under our Rockford Fosgate and Lightning Audio brand names selling products that include digital and analog amplifiers speakers source units CD and MP3 changers and accessories. Rockford Corp. has a market cap of $3.4 million; its shares were traded at around $0.4 with and P/S ratio of 0.1.
Highlight of Business Operations:
Net Sales. Net sales decreased by $4.0 million, or 21.6%, to $14.5 million for the three months ended March 31, 2009, from $18.4 million for the three months ended March 31, 2008. The decrease in sales was primarily attributable to lower sales of Rockfords Lightning Audio branded products, lower sales to international customers, higher discounts due to end-of-life sales and lower royalty revenue. These reductions were partially offset by lower returns. Net sales for the three months ended March 31, 2009 also included sales of end-of-life product and initial pipeline shipments of Rockfords 2009 new product line. OEM royalty revenue for the three months ended March 31, 2009 and 2008 were $0.3 million and $1.7 million, respectively.U.S. sales decreased by $2.5 million, or 17.1%, to $12.6 million for the three months ended March 31, 2009, from $15.1 million for the three months ended March 31, 2008. International sales decreased by $1.4 million, or 42.3%, to $1.9 million for the three months ended March 31, 2009, from $3.3 million for the three months ended March 31, 2008. The decrease in international sales was primarily due to across the board reductions in sales, which were significantly aggravated by a receivership for one of Rockfords European Distributors.
Interest and Other Expense (Income), Net. Interest and other expense (income), net, primarily consists of interest expense and other gains and losses. Interest and other expense (income), net, improved by $0.6 million or 275.8%, to income of $0.4 million for the three months ended March 31, 2009 from an expense from $0.2 million for the three months ended March 31, 2008. The improvement is primarily attributable to the gain of approximately $0.5 million arising from the repurchase of $2.5 million face value of convertible notes and to lower interest expense in 2009 due to lower effective borrowing rates.
At March 31, 2009, Rockford had outstanding $5.0 million of 4.5% convertible senior subordinated secured notes due 2009 and warrants to purchase 534,073 shares of common stock at $3.73 per share. These items were outstanding under agreements effective on June 10, 2004 and as amended on November 12, 2004. The noteholders had the right to convert the notes into Rockfords common stock at any time before their redemption, which at latest would be on the scheduled maturity date of June 10, 2009. The conversion price is $4.61 per share. The noteholders also have a second priority lien on certain Rockford assets.
In January of 2009, Rockford repurchased $2.5 million of the convertible notes and 237,500 associated warrants for a total price of approximately $2.0 million. In connection with this repurchase Rockford recorded a gain to interest and other expense (income), net of approximately $0.5 million, net of fees and write-off of the related portion of unamortized debt issuance costs. The repurchase reduced the outstanding principal of the notes from $7.5 million to $5.0 million.
Investing activities used $0.1 million of cash for the three months ended March 31, 2009 and used $0.1 million of cash for the three months ended March 31, 2008. Capital expenditures, the primary use of cash from investing activities, were $0.1 million for the three months ended March 31, 2009 versus $0.2 million for the three months ended March 31, 2008. Rockfords capital spending is primarily in tooling for specific product lines, and computer hardware and software to support operations. Rockford does not anticipate significant changes in its future capital spending requirements, other than additional expenditures that may arise from future OEM development opportunities.
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