UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended May 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of Registrant as specified in its charter)
| Virginia | 54-0135270 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 3525 Fairystone Park Highway Bassett, Virginia | 24055 | |
| (Address of principal executive offices) | (Zip code) |
(276) 629-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
At July 11, 2003, 11,604,691 shares of common stock of the Registrant were outstanding.
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
| ITEM |
PAGE | |||
| PART I - FINANCIAL INFORMATION |
||||
| 1. |
Financial Statements as of May 31, 2003 (unaudited) and November 30, 2002 and for the three and six months ended May 31, 2003 (unaudited) and June 1, 2002 (unaudited) | |||
| Condensed Consolidated Statements of Operations and Retained Earnings |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
| 3. |
21 | |||
| 4. |
22 | |||
| PART II - OTHER INFORMATION |
||||
| 4. |
24 | |||
| 5. |
24 | |||
| 6. |
24 | |||
| 25 | ||||
| Certification of Principal Executive Officer and Principal Financial Officer as Required by Section 302 of the Sarbanes-Oxley Act of 2002 | 26 | |||
2 of 29
PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE PERIODS ENDED MAY 31, 2003, AND JUNE 1, 2002 – UNAUDITED
(In thousands except per share data)
| Item 1. | Financial Statements |
| Six Months Ended |
Quarter Ended |
|||||||||||||||
| 26 Weeks |
27 Weeks |
13 Weeks |
13 Weeks |
|||||||||||||
| May 31, 2003 |
June 1, 2002 |
May 31, 2003 |
June 1, 2002 |
|||||||||||||
| Net sales |
$ | 144,811 | $ | 165,692 | $ | 71,529 | $ | 80,904 | ||||||||
| Cost of sales |
113,842 | 130,515 | 56,398 | 62,455 | ||||||||||||
| Gross profit |
30,969 | 35,177 | 15,131 | 18,449 | ||||||||||||
| Selling, general and administrative |
30,720 | 29,548 | 15,409 | 15,820 | ||||||||||||
| Restructuring and impaired fixed asset charges |
3,200 | — | — | — | ||||||||||||
| Operating income (loss) |
(2,951 | ) | 5,629 | (278 | ) | 2,629 | ||||||||||
| Other income, net |
2,483 | 2,765 | 1,657 | 1,544 | ||||||||||||
| Income (loss) before income taxes |
(468 | ) | 8,394 | 1,379 | 4,173 | |||||||||||
| Benefit (provision) for income taxes |
331 | (2,602 | ) | (186 | ) | (1,293 | ) | |||||||||
| Net income (loss) |
$ | (137 | ) | $ | 5,792 | $ | 1,193 | $ | 2,880 | |||||||
| Retained earnings-beginning of period |
169,789 | 173,011 | 165,590 | 173,601 | ||||||||||||
| Cash dividends |
(4,634 | ) | (4,689 | ) | (2,316 | ) | (2,346 | ) | ||||||||
| Share repurchases, net |
(522 | ) | 160 | 29 | 139 | |||||||||||
| Retained earnings-end of period |
$ | 164,496 | $ | 174,274 | $ | 164,496 | $ | 174,274 | ||||||||
| Basic earnings (loss) per share |
$ | (0.01 | ) | $ | 0.50 | $ | 0.10 | $ | 0.25 | |||||||
| Diluted earnings (loss) per share |
$ | (0.01 | ) | $ | 0.49 | $ | 0.10 | $ | 0.24 | |||||||
| Dividends per share |
$ | 0.40 | $ | 0.40 | $ | 0.20 | $ | 0.20 | ||||||||
The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.
3 of 29
PART I – FINANCIAL INFORMATION – CONTINUED
BASSETT FURNITURE INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MAY 31, 2003 AND NOVEMBER 30, 2002
(In thousands)
| (Unaudited) | ||||||
| May 31, 2003 |
November 30, 2002 | |||||
| Assets |
||||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 4,989 | $ | 1,371 | ||
| Accounts receivable, net |
45,037 | 44,806 | ||||
| Inventories |
45,166 | 43,449 | ||||
| Refundable income taxes |
767 | 2,924 | ||||
| Deferred income taxes |
3,600 | 3,600 | ||||
| Other current assets |
6,797 | 6,816 | ||||
| Total current assets |
106,356 | 102,966 | ||||
| Property and equipment |
||||||
| Cost |
214,407 | 227,385 | ||||
| Less accumulated depreciation |
127,693 | 136,843 | ||||
| Total property and equipment |
86,714 | 90,542 | ||||
| Other assets |
||||||
| Investments |
60,881 | 63,248 | ||||
| Investments in unconsolidated affiliated companies |
4,200 | 4,383 | ||||
| Deferred income taxes |
2,244 | 3,454 | ||||
| Notes receivable, net |
17,992 | 18,761 | ||||
| Other, net |
7,048 | 7,526 | ||||
| Total other assets |
92,365 | 97,372 | ||||
| Total assets |
$ | 285,435 | $ | 290,880 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Current liabilities |
||||||
| Accounts payable |
$ | 11,981 | $ | 17,738 | ||
| Accrued liabilities |
18,881 | 16,406 | ||||
| Total current liabilities |
30,862 | 34,144 | ||||
| Long-term liabilities |
||||||
| Employee benefits |
10,039 | 10,152 | ||||
| Long-term debt |
7,000 | 3,000 | ||||
| Distributions in excess of affiliate earnings |
13,142 | 13,941 | ||||
| Total long-term liabilities |
30,181 | 27,093 | ||||
| Stockholders’ Equity |
||||||
| Common stock |
58,011 | 58,303 | ||||
| Retained earnings |
164,496 | 169,789 | ||||
| Accumulated other comprehensive income - unrealized holding gains, net of income tax effect |
1,885 | 1,551 | ||||
| Total stockholders’ equity |
224,392 | 229,643 | ||||
| Total liabilities and stockholders’ equity |
$ | 285,435 | $ | 290,880 | ||
The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.
4 of 29
PART I – FINANCIAL INFORMATION – CONTINUED
BASSETT FURNITURE INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED MAY 31, 2003 AND JUNE 1, 2002 – UNAUDITED
(In thousands)
| May 31, 2003 26 Weeks |
June 1, 2002 27 Weeks |
|||||||
| Net income (loss) |
$ | (137 | ) | $ | 5,792 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
5,301 | 5,085 | ||||||
| Equity in undistributed income of investments |
(3,723 | ) | (4,096 | ) | ||||
| Provision for writedown of property and equipment |
1,530 | — | ||||||
| Net gain from sales of property and equipment |
(106 | ) | — | |||||
| Net gain from sales of investment securtities |
(14 | ) | (302 | ) | ||||
| Compensation earned under restricted stock plan |
— | 90 | ||||||
| Deferred income taxes |
(331 | ) | 2,602 | |||||
| Changes in employee benefit liabilities |
(113 | ) | (115 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(231 | ) | 6,305 | |||||
| Inventories |
(1,697 | ) | (2,382 | ) | ||||
| Refundable income taxes |
3,511 | — | ||||||
| Other current assets |
19 | 6,550 | ||||||
| Accounts payable and accrued liabilities |
(3,282 | ) | (5,308 | ) | ||||
| Net cash provided by operating activities |
727 | 14,221 | ||||||
| Investing activities: |
||||||||
| Purchases of property and equipment |
(3,269 | ) | (4,346 | ) | ||||
| Proceeds from sales of property and equipment |
372 | — | ||||||
| Proceeds from sales of investment securities |
17,000 | 654 | ||||||
| Purchases of investment securities |
(12,000 | ) | — | |||||
| Dividends from affiliated companies |
1,875 | 5,343 | ||||||
| Investments in unconsolidated affiliated companies |
— | (2,118 | ) | |||||
| Other, net |
361 | (665 | ) | |||||
| Net cash provided by (used in) investing activities |
4,339 | (1,132 | ) | |||||
| Financing activities: |
||||||||
| Borrowings (repayments) of long-term debt |
4,000 | (8,671 | ) | |||||
| Issuance of common stock |
110 | 249 | ||||||
| Repurchases of common stock |
(924 | ) | — | |||||
| Cash dividends |
(4,634 | ) | (4,689 | ) | ||||
| Net cash used in financing activities |
(1,448 | ) | (13,111 | ) | ||||
| Net change in cash and cash equivalents |
3,618 | (22 | ) | |||||
| Cash and cash equivalents, beginning of period |
1,371 | 5,347 | ||||||
| Cash and cash equivalents, end of period |
$ | 4,989 | $ | 5,325 | ||||
5 of 29
BASSETT FURNITURE INDUSTRIES INCORPORATED. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
MAY 31, 2003
(Dollars in thousands except share and per share data)
Note A. Basis of Presentation: