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Luggage maker lost $15.6M in 1st quarter

The Associated Press

DENVER — Luggage maker Samsonite Corp. reported first-quarter losses that were 30 percent less than losses in the same quarter a year ago, partly due to the strength of the euro, the company said Wednesday.

The Denver-based company, which has a large business in Europe, lost $15.6 million or 79 cents a share in the first quarter, compared with a loss of $22.3 million or $1.12 a share in the same quarter a year ago.

A 23.7 percent increase in the strength of the euro resulted in an increase in reported sales, CEO Luc Van Nevel said.

Revenue was $161.9 million and operating income was $10.4 million in the first quarter of this year, up from revenue of $160.5 million and operating income of $2.5 million last year. Sales declined 8 percent without the rate of exchange, Van Nevel said.

Earnings before interest expense, taxes, depreciation, amortization and minority interest, or EBITDA, were $14.8 million in the first quarter of 2003, compared with $12.3 million in the same quarter a year ago.

Van Nevel said restructuring over the past few years enabled the company to improve EBITDA on lower sales, and gross margins are improving.

“They have a large business outside the U.S., so the strength of the euro is buoying reported numbers,” said Moody’s Investors Service associate analyst Kevin Ziets. “Even if you get through that, they’ve done a good job through restructuring of keeping costs in line.”

Moody’s has a B3 rating on Samsonite, indicating a high probability that the company could default, but Moody’s upgraded its outlook from negative to developing following news on Samsonite’s recapitalization plans.

The plans hinged on the company reaching an agreement with the Pension Benefit Guaranty Corp., which has a lien position. Samsonite said May 29 it reached an agreement in principle, allowing Samsonite to gain a yearlong extension on $46.5 million in loan payments coming due June 24.

Samsonite also has plans for private investors to buy a new series of preferred stock for $106 million, with shares paying a dividend rate of 8 percent. The cash would be used to repay about $90 million in bank debt.

It plans to receive about $60 million from a new lender and to issue more stock to retire an old class of preferred shares that paid investors a much higher dividend rate of 137/8 percent.

Ziets said Moody’s still wants to make sure Samsonite’s results since the Sept. 1, 2001, terrorist attacks in a difficult travel environment and amid scares of SARS are sustainable.

Samsonite shares were down 20 cents at 70 cents midday Wednesday in over-the-counter trading.