Mr. Butler continued, “We were not in compliance with a financial covenant under our revolving credit facility with Gibraltar at the end of the second quarter of 2012 because our net loss for the six month period ended June 30, 2012 exceeded the limit set for the covenant for that same period. However, following our discussions with Gibraltar, they have agreed to waive this covenant for this period.
Management has continued its efforts to reduce its net losses to be in compliance with the financial and other covenants in our credit facility for the third and fourth quarters of 2012. These efforts focus on increasing sales volume in both the residential and commercial product markets. Management’s anticipation of future growth is not contingent solely upon a significant improvement in the economic conditions for the furniture industry, but instead on identifying key opportunities in the residential and commercial product segments and providing the product and strong service to exceed our customers’ expectations. These efforts also focus on gross margin improvement, primarily by implementing identified cost reductions and improving efficiencies in our operating facilities and supply chain process, as well as exploring pricing opportunities. In addition, the Company will continue to closely monitor and control its selling, general and administrative expenses to be in line with its revenues.”
Chromcraft Revington® businesses design, manufacture and import residential and commercial furniture marketed primarily in the U.S. The Company wholesales its residential furniture products under Chromcraft®, Cochrane®, Peters-Revington®, Southern Living®, and CR Kids & Beyond® primary brands. It sells commercial furniture under the Chromcraft® and Executive Office Concepts brands. The Company sources furniture from overseas suppliers, with domestic contract specialty facilities, and operates a U.S. manufacturing facility for its commercial furniture and motion based casual dining furniture in Mississippi and a manufacturing facility for office suites and other commercial furniture lines in California.