Tandus continued...
Selling, general and administrative expenses increased to $19.8 million for the thirteen weeks ended January 28, 2006, an increase of 1.5% from $19.5 million in the thirteen weeks ended January 29, 2005.
During the period the company recorded a charge of $1.1 million related to a February 10, 2006 jury verdict in a litigation matter in Texas regarding a certain carpet-buying contract. The company also recorded professional fees of $0.1 million during the thirteen weeks ended January 28, 2006 related to the amendment of its Senior Credit Facility effective October 29, 2005 to modify certain covenants and incurred severance charges of $0.4 million as part of the company's cost cutting initiatives implemented throughout the current fiscal year. The company recorded a foreign currency transaction gain of $0.8 million for the thirteen weeks ended January 29, 2005 as compared to a minimal loss for the thirteen weeks ended January 28, 2006. In addition, the Company incurred higher professional services fees, partially offset by lower salaries, taxes and benefits. As a percentage of sales, these expenses increased to 24.8% from 24.2% in the prior year.
During the thirteen weeks ended January 28, 2006, the company purchased in the open market subordinated notes with a face value of $10.0 million for an aggregate price of $9.0 million. These notes have been classified as defeased. The company realized a $1.0 million gain on the purchase, which was partially offset by a write-off of a portion of the deferred financing fees related to the subordinated notes in the amount of $0.2 million.
Adjusted EBITDA was $8.5 million for the thirteen weeks ended January 28, 2006 as compared to $7.3 million in the thirteen weeks ended January 29, 2005.
Net sales for the fiscal year ended January 28, 2006 ("fiscal 2005") were $325.1 million, a decrease of 4.5% from the $340.5 million for the fiscal year ended January 29, 2005. Net sales of the company's Floorcoverings segment were $298.3 million for fiscal 2005 as compared to $317.2 million for fiscal 2004, a decrease of $18.9 million or 6.0%, primarily attributable to the North American operations. Within these operations, the decrease in the Floorcoverings segment's net sales was primarily attributable to a 17.6% decrease in broadloom sales combined with a 1.5% decrease in sales of structure-back carpets (six foot and carpet tile). The decrease in overall net sales was primarily related to lost broadloom sales due to complications associated with the facility maximization. During fiscal 2005, the company's delay in delivering broadloom products caused a decline in corporate end use sales. Additionally, federal budget pressures also resulted in reduced sales. The current year results reflect a decrease in both Institutional sales (healthcare, education and government) and corporate sales, including retail, principally due to the items discussed above. Net sales of the extrusion segment were $26.8 million for fiscal 2005 as compared to $23.3 million for fiscal 2004, an increase of $3.5 million or 15.0%. The increase in sales for the Extrusion segment was due to overall higher demand from the extrusion segment's external customers during fiscal 2005.
Cost of goods sold was $227.9 million, or 70.1% of sales, for fiscal 2005 as compared to $226.6 million, or 66.6% of sales, in fiscal 2004. The increase was primarily due to the inclusion in the fiscal 2005 expenses of $6.2 million related to the facility maximization, as compared to 2004 expenses of $2.6 million. Excluding the facility maximization costs, cost of goods sold for fiscal years 2005 and 2004 were $221.7 million, or 68.2% of sales, and $224.0 million, or 65.8% of sales, respectively.
