LOUD Technologies Inc. (LOUD) (NASDAQ:LTEC) today announced net income for 2006 was $0.6 million, or $0.13 per diluted share on sales of $215.0 million.

?We did not fully achieve our financial objectives for 2006,? said Chairman and CEO Jamie Engen. ?However, we did make many significant strides in our plan to improve the long-term profitability of the company. The costs of consolidating our operations, and costs incurred in the process of closing our two remaining domestic manufacturing plants, had an adverse effect on our 2006 performance. We are confident that the steps we have taken will reduce our operating costs and increase our gross margin in the future. By continuing to leverage LOUD's global distribution capability, expanding portfolio of famous-name branded products, and solid reputation for quality and innovation in the professional audio and music industries, we believe we can achieve our goal to deliver long-term value for our shareholders."

Twelve Month Results

For the twelve months ended December 31, 2006, net sales increased 5.2% to $215.0 million from $204.3 million for 2005.

Gross profit for 2006 was $71.5 million or 33.2% of net sales compared to $65.3 million or 32.0% of net sales for 2005. Reducing the 2005 gross profit was approximately $2.4 million of costs relating to the impact of recording St. Louis Music's inventories at fair value as a result of the purchase price allocation of St. Louis Music.

Operating income for 2006 was $8.8 million compared to $8.5 million for 2005. Included in 2006 are restructuring costs of $1.6 million related to reductions in workforce in the consolidation of St. Louis Music operations and service operations, and the planned closures of our domestic manufacturing plants in the first half of 2007.

Net income from continuing operations for 2006 was $0.6 million, or $0.13 per diluted share. This compares to net income from continuing operations of $0.9 million or $0.19 per diluted share in 2005. Net income in 2005 included a gain on the sale of the Company's discontinued operations in Italy of $2.8 million (net of tax), or $0.57 per diluted share.

Three Month Results

Net sales for the three months ended December 31, 2006 decreased 11.8% to $49.5 million from $56.1 million in the comparable period in 2005.

Gross profit for the three months ended December 31, 2006 was $15.8 million, or 32.0% of net sales compared to $18.1 million, or 32.3% of net sales for the comparable period in 2005.

Net loss for the three months ended December 31, 2006 was $1.6 million, or $0.33 per diluted share compared to net income of $1.7 million, or $0.35 per diluted share for the comparable period in 2005.

About LOUD Technologies Inc.

LOUD Technologies Inc. (www.loudtechinc.com) is one of the world's largest manufacturers and distributors of professional audio and music products. As the corporate parent for world-recognized brands including Alvarez, Ampeg, Crate, EAW, Knilling, Mackie, SIA and TAPCO, LOUD Technologies produces and distributes a wide range of digital recording products, loudspeakers, commercial audio systems, audio and music software, guitars, guitar and bass amplifiers, and orchestral string instruments. LOUD Technologies' brands can be found in professional and project recording studios, video and broadcast suites, post-production facilities, sound reinforcement applications including churches and nightclubs, and retail locations and on major musical tours.

Forward-Looking Statements

Certain statements contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words - "believe", "expect", "anticipate", "intend", "will" and similar expressions are examples of words that identify forward-looking statements. These forward-looking statements include statements about the anticipated success of our management initiatives in driving future profitability, and are based on current expectations and assumptions based on information currently available to us. These forward-looking statements may be affected by the risks and uncertainties associated with our business and are qualified in their entirety by the cautionary statements and risk factor disclosure contained in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2005. We do not assume, and expressly disclaim, any obligation to update these forward-looking statements to conform them to actual results or changes in the Company's expectations.

LOUD TECHNOLOGIES INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
December 31, 2006 and 2005
(In thousands, except for share amounts)
 
  2006    2005 
Assets
Current assets:
Cash $ 311  $ 468 
Accounts receivable, net of allowances of $2,258 and $2,224, respectively 26,230  28,224 
Inventories 54,844  39,290 
Prepaid expenses and other current assets   1,504    1,859 
Total current assets 82,889  69,841 
Property, plant and equipment, net 6,543  7,863 
Goodwill 2,248  2,248 
Other intangible assets, net 11,367  12,198 
Deferred financing costs, net 2,692  3,378 
Other assets   17    17 
Total assets $ 105,756  $ 95,545 
 
Liabilities and Shareholders' Equity
 
Current liabilities:
Short-term borrowings $ 14,210  $ 9,595 
Accounts payable 23,023  16,133 
Accrued liabilities 11,187  10,009 
Taxes payable 1,559  1,293 
Current portion of long-term debt 3,306  3,306 
Current portion of payable to former Italian subsidiary 700  2,200 
Other current liabilities   3,162    - 
Total current liabilities 57,147  42,536 
 
Long-term debt, excluding current portion 38,299  40,944 
Deferred tax liabilities 99  40 
Future commitment to pay -  2,938 
Other liabilities   6    - 
Total liabilities   95,551    86,458 
 
Commitments and contingencies -  - 
Shareholders' equity:
Preferred stock, no par value. Authorized 5,000,000 shares, no shares issued and outstanding
-  - 
Common stock, no par value. Authorized 40,000,000 shares, issued and outstanding 4,575,022 and 4,566,202 shares at December 31, 2006 and 2005, respectively
 
41,281  40,788 
Accumulated deficit   (31,076)   (31,701)
Total shareholders' equity   10,205    9,087 
Total liabilities and shareholders' equity $ 105,756  $ 95,545 
LOUD TECHNOLOGIES INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Years ended December 31, 2006 and 2005
(In thousands, except per share data)
 
2006  2005 
Net sales $ 215,033  $ 204,328 
Cost of sales 143,581  139,004 
Gross profit 71,452  65,324 
Operating expenses:
Selling, general, and administrative 49,313  46,561 
Research and development 11,754  10,255 
Restructuring costs 1,604  - 
Total operating expenses 62,671  56,816 
Operating income 8,781  8,508 
Other income (expense):
Interest income 147  322 
Interest expense (6,693) (5,635)
Management fee (1,048) (1,161)
Other (131) (1,057)
Total other expense (7,725) (7,531)
Income (loss) before income taxes and discontinued operations 1,056  977 
Income tax expense 431  47 
Income (loss) from continuing operations 625  930 
 
Gain on discontinued operations, net of income tax
expense of $0 and $58, respectively -  2,827 
Net income (loss) $ 625  $ 3,757 
 
Per share data
Basic net income (loss) per share:
Net income (loss) from continuing operations $ 0.13  $ 0.20 
Net income from discontinued operations -  0.59 
Basic net income (loss) per share $ 0.13  $ 0.79 
Diluted net income (loss) per share:
Net income (loss) from continuing operations $ 0.13  $ 0.19 
Net income from discontinued operations -  0.57 
Diluted net income (loss) per share $ 0.13  $ 0.76 
 
Shares outstanding
Shares used in computing basic net income (loss) per share 4,807  4,758 
Shares used in computing diluted net income (loss) per share 4,979  4,957