ROCKFORD CORPORATION 
By Executive Contact:
Richard Vasek
Chief Financial Officer Rockford Corporation (480) 517-3169
Tempe, Arizona, October 16, 2012--Rockford Corporation (OTC Pink: ROFO.PK) today announced financial results for the three and nine months ended September 30, 2012 and changes in the membership of its Board of Directors.
Financial Performance
Net income for the three months ended September 30, 2012, was
$1.4 million compared to $1.2 million for the same period in
2011. Net income for the nine months ended September 30,
2012, was $6.5 million compared to $4.2 million for the same
period in 2011.
Net sales for the three months ended September 30, 2012,
increased 7.4% to
$15.3 million compared to net sales of $14.2 million for the
same period in 2011. Net sales for the nine months ended
September 30, 2012, increased 14.8% to $54.9 million compared
to net sales of $47.8 million for the same period in 2011.
The increase in net sales for the three and nine month period
was primarily due to increases in Rockford's core aftermarket
and international sales channels. OEM royalty revenue for the
nine months ended September 30, 2012, was $1.0 million
compared to $2.0 million for the same period in 2011.
As a percent of net sales, gross margin for the three months
ended September 30,
2012 decreased to 37.0% compared to 37.4% for the same period
in 2011. As a percent of net sales, gross margin for the nine
months ended September 30, 2012 decreased to
38.2% compared to 38.5% for the same period in 2011. The
decreases in gross margin as a percent of sales for the three
and nine month periods are primarily due to lower royalty
revenue.
Operating expenses for the three months ended September 30,
2012, were $4.6 million compared to $4.1 million for the same
period in 2011. Operating expenses for the nine months ended
September 30, 2012, were $14.8 million compared to $14.1
million for the same period in 2011.
William R. Jackson, Rockford's Chief Executive Officer and
President, commented, "Car audio retail sales across the US
have been turbulent over the past three months. Retailers and
distributors are reporting softer than normal traffic
patterns. Our team has done a good job working with our
retail partners, both domestic and international, to maximize
sell through of our products. The Rockford brand portfolio
continues to perform well in this challenging retail
environment. Net sales were up 7.4% in the third quarter of
2012 and up 14.8% year to date."
Mr. Jackson observed: "Our OEM business continues to be
solid; however, royalty revenue was down approximately $1
million for the nine month period. This is due to reduced
production of Mitsubishi vehicles with Rockford Fosgate
branded audio systems."
Mr. Jackson noted: "In the third quarter we completed an
agreement to distribute Blaupunkt car audio products in North
America and, late in the quarter, began shipping the
Blaupunkt product line to selected partners in the US market.
We are encouraged about the initial market response and sell
through that distributors are reporting."
Mr. Jackson continued: "Our sales and marketing group has
been working with our retail partners in preparation for
holiday season. We believe our aggressive plan will help
retailers to maximize their car audio sales potential for the
season. The team is also already preparing for our 2013 New
Product Showcase which will be unveiled at the
Palms Hotel in Las Vegas on January 8th,
2103."
Mr. Jackson concluded: "In summary, I am pleased with our
third quarter and year to date 2012 results. The Rockford
team continues to be focused on building our business with
our partners and expanding the experience of premium car
audio for consumers."
Rockford's cash provided by operations was $3.6 million for
the nine months ended September 30, 2012 as compared to $1.5
million during the comparable period in
2011. Net income of $6.5 million was the primary source of
cash from operations and a decrease in accounts payable of
$1.7 million and an increase in accounts receivable of
$1.5 million were the primary use of cash from
operations.
Rockford's asset-based credit facility with Wells Fargo
Capital Financial continues to have the terms described in
Rockford's annual report for the year ended December 31,
2011. Under the agreement, pricing options based on LIBOR
rates are available to Rockford. The interest rate was
approximately 4.4% at September 30, 2012. Availability under
the credit facility at September 30, 2012 was approximately
$3.8 million in excess of the outstanding balance of $6.2
million. The increase in the credit line balance during the
third quarter reflects Rockford's use of its credit line to
complete the purchase of shares in the Dutch Auction that
closed on September 14, 2012.
Rockford anticipates, based on its operating plans and cash
flow forecast, that cash flow from operations for 2012 and
2013, and available borrowings under its credit facility,
will be adequate to meet Rockford's requirements for current
capital expenditures, working capital and interest payments
for the next twelve months.
At the completion of the recent Dutch Auction, our three
largest shareholders agreed to restructure our Board of
Directors. As a result of these changes our Board of
Directors has been reduced to 5 directors including
continuing directors Mr. Kamin, Mr.
Tim Bartol, Mr. Godfrey, and Mr. Jackson and our new director
Mr. Mark A. Riser. Mr. Nick Bartol, Mr. Goldress, and Mr.
Lloyd have retired from our Board of Directors.
Mr. Kamin has been appointed Chairman of the Board of
Directors, replacing Mr. Goldress. The Board of Directors
appointed Mr. Riser as one of Rockford's directors as a
nominee of Mr. Kamin, who is now Rockford's largest
shareholder. Mr. Riser joined Morningside Private Investors
in 2010 and has been a private investor since 1999.
Peter Kamin, Chairman of the Board of Directors, commented "I
would like to thank Jerry Goldress, Nick Bartol, and John
Lloyd for their service and commitment to Rockford
Corporation over many years. I would also like to welcome
Mark Riser to the Board and we look forward to his
contributions as a director."
Setting the standard for excellence in the mobile audio
industry, Rockford
markets and distributes high-performance audio systems for
the mobile audio aftermarket and OEM market. Headquartered in
Tempe, Arizona, Rockford Corporation distributes its products
under the brands: Rockford Fosgate®, Rockford Acoustic
Design®, Lightning Audio®, Brax™, Helix™, Renegade® and
Blaupunkt™. For more information, please visit: www.rockfordfosgate.com
, www.rockfordacousticdesign.com
, www.lightningaudio.com
, www.braxhifi.com , www.helixhifi.com,
www.renegadecaraudio.comand blaupunkt-usa.net
We make forward-looking statements in this press release
including but not limited to statements about our results of
operations. These statements may be identified by the use of
forward-looking terminology such as "may," "will," "believe,"
"expect," "anticipate," "estimate," "continue," or other
similar words.
Forward-looking statements are subject to many risks and
uncertainties. Rockford cautions you not to place undue
reliance on these forward-looking statements, which speak
only as of the date on which they are made. Actual results
may differ materially from those anticipated in our
forward-looking statements. Rockford disclaims any obligation
or undertaking to update these forward-looking statements to
reflect changes in our expectations or changes in events,
conditions, or circumstances on which our expectations are
based.
When considering our forward-looking statements, you should
keep in mind the risk factors discussed in our press releases
and earnings reports, as well as the risk factors generally
applicable to a small business such as ours. We particularly
call your attention to the risk factors and other cautionary
statements identified on our investor relations
web-site, http://www.rockfordcorp.com/RiskFactorstitled "Risk Factors That May Affect Rockford's
Operating Results, Business Prospects and Stock Price" (the
"Risk Disclosure"). We updated the Risk Disclosure as of
March 31, 2011. Our business is subject to the risk factors
noted in the Risk Disclosure, other risk factors identified
above and other risk factors we have not anticipated or
discussed. These risk factors could
cause our actual results to differ significantly from those
anticipated in our forward- looking statements.
Rockford Corporation
Condensed Consolidated Statements of Operations (unaudited)
For the Three and Nine Months Ended September 30, 2012 and 2011 ($000s omitted except per share amounts)
Three months ended
September 30,Nine months ended
September 30, 2012 2011 2012 2011Net sales $ 15,292 $ 14,237 $ 54,876 $ 47,808
Cost of goods sold | 9,633 | 8,913 | 33,908 | 29,391 | |||
Gross profit | 5,659 | 5,324 | 20,968 | 18,417 | |||
Operating expenses: | |||||||
Sales and marketing | 2,231 | 2,098 | 7,742 | 7,438 | |||
General and administrative | 1,742 | 1,545 | 5,486 | 5,244 | |||
Research and development | 643 | 488 | 1,569 | 1,446 | |||
Total operating expenses | 4,616 | 4,131 | 14,797 | 14,128 | |||
Operating income | 1,043 | 1,193 | 6,171 | 4,289 | |||
Interest and other expense, net | (347) | 35 | (333) | 77 | |||
Income before income taxes | 1,390 | 1,158 | 6,504 | 4,212 | |||
Income tax benefit | - | - | - | - | |||
Net income | $ 1,390 | $ 1,158 | $ 6,504 | $ 4,212 | |||
Net income per common share: Basic | $ 0.19 | $ 0.14 | $ 0.87 | $ 0.50 | |||
Diluted | $ 0.17 | $ 0.13 | $ 0.77 | $ 0.45 | |||
Weighted average shares: Basic | 7,270 | 8,210 | 7,470 | 8,445 |
Diluted 8,281
9,162
8,489
9,323
-more-
Rockford Corporation
Condensed Consolidated Balance Sheets (unaudited) At September 30, 2012 and December 31, 2011
(In thousands)
ASSETS
September 30, December 31,
2012 2011
Current assets:
Cash $ - $ 1,762
Accounts receivable, net 11,113 9,659
Inventories 9,078 8,031
Prepaid expenses and other current assets 489473
Total current assets 20,680 19,925
Property and equipment, net 1,455 1,370
Other assets 172220
Total assets $ 22,307$ 21,515
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,106 $ 6,800
Accrued salaries and incentives 1,442 921
Accrued warranty and returns 491 450
Accrued customer programs 816 644
Other accrued liabilities 1,358 1,549
Asset based credit facility 6,162-
Total current liabilities 15,375 10,364
Other long-term liabilities 826
Total liabilities 15,383 10,390
Shareholders' equity:
Common stock | 98 | 96 |
Additional paid-in-capital | 39,254 | 39,038 |
Retained deficit | (18,256) | (24,760) |
Treasury stock | (14,172) | (3,249) |
Total shareholders' equity | 6,924 | 11,125 |
Total liabilities and shareholders' equity | $ 22,307 | $ 21,515 |
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