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8-K - FORM 8-K - FBI WIND DOWN, INC. | c62784e8vk.htm |
Exhibit 99.1
INFORMATION
FOR IMMEDIATE RELEASE
Furniture Brands International, Inc.
1 North Brentwood Blvd.
St. Louis, Missouri 63105
1 North Brentwood Blvd.
St. Louis, Missouri 63105
For Further Information Call
John Hastings
314-863-1100
John Hastings
314-863-1100
FURNITURE BRANDS INTERNATIONAL REPORTS
2010 FOURTH QUARTER FINANCIAL RESULTS
2010 FOURTH QUARTER FINANCIAL RESULTS
St. Louis, Missouri, February 2, 2011 Furniture Brands International (NYSE: FBN) announced
today its financial results for the fourth quarter and fiscal year ended December 31, 2010.
Net sales of $276.1 million for the 2010 fourth quarter declined 3.3% versus net sales of $285.6
million in the fourth quarter of 2009. Fourth-quarter 2010 retail sales at the 67 company-owned
stores and showrooms totaled $38.8 million compared with fourth-quarter 2009 sales of $35.6 million
at the companys 71 stores and showrooms. Fourth-quarter 2010 same-store sales at the 45
Thomasville stores that the company has owned for more than 15 months showed an increase of 15%
from the fourth quarter of 2009. For the fiscal year, Thomasville same-store sales increased by
19% in 2010 compared to fiscal 2009.
For the 2010 fourth quarter, Furniture Brands reported a net loss of $44.7 million, or $0.82 per
diluted share, compared to a net loss of $65 million, or $1.35 per diluted share, in the fourth
quarter of 2009. Furniture Brands gross margin for the fourth quarter of 2010 was 18.1% compared
with 7.1% in the fourth quarter of 2009. Results for all periods include selected items that are
detailed in a table attached to this press release. On an adjusted basis*, gross margin for the
fourth quarters of 2010 and 2009 was 22.1% and 21.7%, respectively.
For the fiscal year ended December 31, 2010, the company reported net sales of $1.16 billion and a
net loss of $39 million, or $0.76 per diluted share, compared to net sales of $1.22 billion and a
net loss of $108.7 million, or $2.25 per diluted share, for the fiscal year ended December 31,
2009. Gross margin for the 2010 fiscal year was 23.8% compared to 18.8% for fiscal 2009. Adjusted
gross margin* for fiscal 2010 was 25.5% compared with 23.1% for fiscal 2009.
At December 31, 2010, the company had a net debt* position of $25 million compared to net debt of
$11.1 million at December 31, 2009. The companys cash position at year-end 2010 reflects the
companys continued focus on expense control while supporting long-term investments in best-cost
manufacturing capabilities in Indonesia and Mexico along with enhancements in information
technology.
In late 2007, Furniture Brands launched a strategic plan to better leverage the companys many
strengths and to position it for improved financial performance, said Chairman and Chief Executive
Officer Ralph P. Scozzafava. The entire Furniture Brands team has produced meaningful progress in
the midst of the most severe economic downturn of our lifetimes. The work has been challenging,
and the results are impressive: gross margin has reached the
1
highest level since 2004, SG&A expense is the lowest in more than a decade, and our balance sheet
remains solid. Furniture Brands is a much different company today than in 2007, and one that is
much better positioned to meet the demands of todays furniture customer. Significant operating
leverage has been created as a result of the actions of the past three years and our balance sheet
is strengthened.
Mr. Scozzafava concluded, Tapping the real potential of Furniture Brands is simple grow
profitable sales. We are doing the right things to grow our sales, and in 2011 we will do more of
them. We reinvigorated the Lane brand in late 2010 through a national TV and print ad campaign and
through the launch of Laneology our name for the bundle of features and benefits that make
Lane products among the very best in reclining furniture and also make Lane a great partner for our
dealers. Broyhill continues to refresh its product line and bring more stylish, contemporary looks
to the marketplace. The Perspectives collection launched last year is a great example of this
trend, and its on the way to surpass Broyhills Attic Heirlooms as one of the industrys most
successful casegoods collections. Thomasville is ramping up its new product pipeline and will
build on the momentum that drove the 19% same-store-sales increase in 2010. We are excited to
announce a new, more expansive Thomasville TV campaign that will launch in mid-2011. Last, but not
least, the high-end consumer is back in the market for furniture and our industry-leading portfolio
of designer brands are in high demand by the design trade.
Upcoming Investor Event
A conference call will be held to discuss fourth quarter results at 7:30 a.m. (Central Time) on
February 3, 2011. The call can be accessed in Upcoming Investor Events on the companys website at
furniturebrands.com under Investor Info. Access to the call and the release will be archived
for one year.
About Furniture Brands
Furniture Brands International (NYSE: FBN) is a global operating company that is one of the
nations leading designers, manufacturers, and retailers of home furnishings. It markets through a
wide range of retail channels, from mass merchant stores to single-brand and independent dealers to
specialized interior designers. Furniture Brands serves its customers through some of the best
known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville,
Drexel Heritage, Henredon, Pearson, Hickory Chair, Laneventure, Maitland-Smith, and Creative
Interiors.
* Non-U.S. GAAP Financial Measures
We provide certain non-U.S. GAAP financial measures to supplement our U.S. GAAP disclosures. The
company believes that these measures are helpful to investors in assessing the ongoing performance
of its underlying businesses before the impact of selected items. We do not, and do not suggest
investors should, consider such non-U.S. GAAP financial measures in isolation from, or as a
substitute for, U.S. GAAP financial information. These non-U.S. GAAP financial measures may not be
consistent with presentations made by other companies. A reconciliation of each non-U.S. GAAP
measure to the most closely applicable U.S. GAAP financial measure appears at the end of this press
release.
2
The costs and charges listed in the tables attached to this Press Release to compute Adjusted Gross
Margin and Adjusted SG&A are items management believes are helpful in evaluating the companys
results of operations. Management uses Adjusted Gross Margin and Adjusted SG&A, which exclude these
costs and charges, to manage and evaluate our business operations and financial performance as
these costs are not characteristic of typical industry conditions and may not have the same
financial impact on our future financial results. Due to specific actions taken by management,
these costs have been reduced and may be further reduced or eliminated in future years. The company
intends to continue to provide these non-U.S. GAAP measures and will refer to them in future press
releases when their use will assist the reader in better understanding our business operations and
financial performance.
Management measures net debt and net cash and changes in net debt and net cash to assess the degree
of debt held by the Company and to monitor our ability to manage our debt position. We present net
debt and net cash as debt, less cash and cash equivalents. While we believe this non-U.S. GAAP
information is useful, our calculation of net debt excludes other assets and liabilities which we
consider, and suggest investors consider, in assessing our financial condition and liquidity
position.
Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this document and in our public disclosures, whether written or oral, relating
to future events or our future performance, including any discussion, express or implied, of our
anticipated growth, operating results, future earnings per share, or plans and objectives, contain
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the
words will, believe, positioned, estimate, project, target, continue,
intend, expect, future, anticipates, and similar expressions that are not
statements of historical fact. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult to predict. Our actual
results and timing of certain events could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not limited to, those set
forth under Risk Factors in our Annual Report on Form 10-K for the year ended December 31,
2009, and in our other subsequent public filings with the Securities and Exchange Commission. Such
factors include, but are not limited to: risks associated with the execution of our strategic plan;
changes in economic conditions; loss of market share due to competition; failure to forecast demand
or anticipate or respond to changes in consumer tastes and fashion trends; failure to achieve
projected mix of product sales; business failures of large customers; distribution realignments;
manufacturing realignments and cost savings programs; increased reliance on offshore (import)
sourcing of various products; fluctuations in the cost, availability and quality of raw materials;
product liability uncertainty; environmental regulations; future acquisitions; impairment of
intangible assets; anti-takeover provisions which could result in a decreased valuation of our
common stock; loss of funding sources; and our ability to open and operate new retail stores
successfully. It is routine for internal projections and expectations to change as the year or each
quarter in the year progresses, and therefore it should be clearly understood that all
forward-looking statements and the internal projections and beliefs upon which we base our
expectations included in this report or other periodic reports are made only as of the date made
and may change. While we may elect to update forward-looking statements at some point in the
future, we do not undertake any obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
3
FURNITURE BRANDS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 276,093 | $ | 285,574 | $ | 1,159,934 | $ | 1,224,370 | ||||||||
Cost of sales |
226,014 | 265,285 | 883,620 | 994,370 | ||||||||||||
Gross profit |
50,079 | 20,289 | 276,314 | 230,000 | ||||||||||||
Selling, general & administrative expenses |
94,475 | 115,235 | 320,226 | 363,636 | ||||||||||||
Impairment of intangible assets |
1,100 | 39,050 | 1,100 | 39,050 | ||||||||||||
Loss from operations |
(45,496 | ) | (133,996 | ) | (45,012 | ) | (172,686 | ) | ||||||||
Interest expense |
805 | 1,006 | 3,172 | 5,342 | ||||||||||||
Other income (expense), net |
(82 | ) | 52 | 264 | 1,549 | |||||||||||
Loss before income tax benefit |
(46,383 | ) | (134,950 | ) | (47,920 | ) | (176,479 | ) | ||||||||
Income tax benefit |
(1,706 | ) | (69,969 | ) | (8,894 | ) | (67,793 | ) | ||||||||
Net loss |
$ | (44,677 | ) | $ | (64,981 | ) | $ | (39,026 | ) | $ | (108,686 | ) | ||||
Net loss per common share: |
||||||||||||||||
Basic and diluted |
$ | (0.82 | ) | $ | (1.35 | ) | $ | (0.76 | ) | $ | (2.25 | ) | ||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic and diluted |
54,808 | 48,287 | 51,116 | 48,302 |
FURNITURE BRANDS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 51,964 | $ | 83,872 | ||||
Receivables, less allowances of $18,076
($26,225 at December 31, 2009) |
112,939 | 125,513 | ||||||
Income tax refunds receivable |
1,596 | 58,976 | ||||||
Inventories |
249,691 | 226,078 | ||||||
Prepaid expenses and other current assets |
11,242 | 9,274 | ||||||
Total current assets |
427,432 | 503,713 | ||||||
Property, plant and equipment, net |
124,866 | 134,352 | ||||||
Trade names |
86,508 | 87,608 | ||||||
Other assets |
37,607 | 32,432 | ||||||
$ | 676,413 | $ | 758,105 | |||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | | $ | 17,000 | ||||
Accounts payable |
79,846 | 83,813 | ||||||
Accrued expenses |
61,223 | 75,948 | ||||||
Total current liabilities |
141,069 | 176,761 | ||||||
Long-term debt |
77,000 | 78,000 | ||||||
Deferred income taxes |
23,114 | 25,737 | ||||||
Pension liability |
104,736 | 135,557 | ||||||
Other long-term liabilities |
70,927 | 79,259 | ||||||
Shareholders equity |
259,567 | 262,791 | ||||||
$ | 676,413 | $ | 758,105 | |||||
FURNITURE BRANDS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twelve Months Ended | ||||||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (39,026 | ) | $ | (108,686 | ) | ||
Adjustments to reconcile net loss to net cash
provided by operating activities: |
||||||||
Depreciation and amortization |
23,851 | 20,738 | ||||||
Compensation expense related to stock option
grants and restricted stock awards |
2,512 | (524 | ) | |||||
Deferred income taxes |
(2,560 | ) | (8,034 | ) | ||||
Impairment of intangible assets |
1,100 | 39,050 | ||||||
Other, net |
(691 | ) | 3,545 | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
12,573 | 50,764 | ||||||
Income tax refunds receivable |
57,381 | (20,886 | ) | |||||
Inventories |
(23,613 | ) | 126,944 | |||||
Prepaid expenses and other assets |
(1,565 | ) | 5,164 | |||||
Accounts payable and other accrued expenses |
(18,756 | ) | (32,769 | ) | ||||
Other long-term liabilities |
(5,905 | ) | 2,293 | |||||
Net cash provided by operating activities |
5,301 | 77,599 | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from the disposal of assets |
2,779 | 4,480 | ||||||
Additions to property, plant, equipment and software |
(21,930 | ) | (9,777 | ) | ||||
Net cash used in investing activities |
(19,151 | ) | (5,297 | ) | ||||
Cash flows from financing activities: |
||||||||
Payments of debt |
(18,000 | ) | (95,000 | ) | ||||
Other |
(58 | ) | (10 | ) | ||||
Net cash used in financing activities |
(18,058 | ) | (95,010 | ) | ||||
Net decrease in cash and cash equivalents |
(31,908 | ) | (22,708 | ) | ||||
Cash and cash equivalents at beginning of period |
83,872 | 106,580 | ||||||
Cash and cash equivalents at end of period |
$ | 51,964 | $ | 83,872 | ||||
Supplemental disclosure: |
||||||||
Cash refunds for income taxes, net |
$ | (63,294 | ) | $ | (36,731 | ) | ||
Cash payments for interest expense |
$ | 2,780 | $ | 5,234 | ||||
FURNITURE BRANDS INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP ITEMS AND SUPPLEMENTAL INFORMATION
(in thousands)
(unaudited)
RECONCILIATION OF NON-GAAP ITEMS AND SUPPLEMENTAL INFORMATION
(in thousands)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 276,093 | $ | 285,574 | $ | 1,159,934 | $ | 1,224,370 | ||||||||
Cost of sales (GAAP basis) |
226,014 | 265,285 | 883,620 | 994,370 | ||||||||||||
Less selected items included in cost of sales: |
||||||||||||||||
Property dispositions and other restructuring charges |
2,158 | 4,683 | 4,472 | 8,215 | ||||||||||||
Factory downtime costs |
2,162 | 4,124 | 8,323 | 11,286 | ||||||||||||
Inventory charges |
6,734 | 32,981 | 6,734 | 32,981 | ||||||||||||
11,054 | 41,788 | 19,529 | 52,482 | |||||||||||||
Adjusted cost of sales (non-GAAP) |
214,960 | 223,497 | 864,091 | 941,888 | ||||||||||||
Adjusted gross profit (non-GAAP) |
61,133 | 62,077 | 295,843 | 282,482 | ||||||||||||
Adjusted gross margin (non-GAAP) |
22.1 | % | 21.7 | % | 25.5 | % | 23.1 | % | ||||||||
Selling, general & administrative expenses (GAAP basis) |
94,475 | 115,235 | 320,226 | 363,636 | ||||||||||||
Less selected items included in selling, general and administrative expenses: |
||||||||||||||||
Property dispositions and other restructuring charges |
3,555 | 6,284 | 7,744 | 7,239 | ||||||||||||
Closed store expense |
3,252 | 10,725 | 6,782 | 16,008 | ||||||||||||
International trade compliance matters |
(702 | ) | 9,134 | (5,937 | ) | 9,134 | ||||||||||
Accounts receivable charges |
3,686 | 3,608 | 3,686 | 3,608 | ||||||||||||
9,791 | 29,751 | 12,275 | 35,989 | |||||||||||||
Adjusted selling, general and administrative
expenses (non-GAAP) |
84,684 | 85,484 | 307,951 | 327,647 | ||||||||||||
Adjusted loss from operations (non-GAAP) |
$ | (23,551 | ) | $ | (23,407 | ) | $ | (12,108 | ) | $ | (45,165 | ) | ||||
Other Selected Items: |
||||||||||||||||
Impairment of intangible assets |
$ | 1,100 | $ | 39,050 | $ | 1,100 | $ | 39,050 | ||||||||
Income tax benefit: The effective tax rate in the Companys statements of operations does not
reflect the federal statutory tax rate as the Company records a full valuation allowance on its
income tax benefit.
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Cash and cash equivalents |
$ | 51,964 | $ | 83,872 | ||||
Debt |
77,000 | 95,000 | ||||||
Net debt |
$ | (25,036 | ) | $ | (11,128 | ) | ||
FURNITURE BRANDS INTERNATIONAL, INC.
SUPPLEMENTAL RETAIL INFORMATION
(in thousands)
(unaudited)
SUPPLEMENTAL RETAIL INFORMATION
(in thousands)
(unaudited)
Thomasville Stores (a) | All Other Retail Locations (b) | |||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2010 (f) | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 28,813 | $ | 24,660 | $ | 9,978 | $ | 10,938 | ||||||||
Cost of sales |
17,915 | 14,448 | 6,290 | 7,311 | ||||||||||||
Gross profit |
10,898 | 10,212 | 3,688 | 3,627 | ||||||||||||
Selling, general & administrative expenses open stores |
15,787 | 14,637 | 5,627 | 7,315 | ||||||||||||
Loss from operations open stores (c) (f) |
(4,889 | ) | (4,425 | ) | (1,939 | ) | (3,688 | ) | ||||||||
Selling, general & administrative expenses closed stores |
| | 3,252 | 10,725 | ||||||||||||
Loss from operations retail operations (c) (f) |
$ | (4,889 | ) | $ | (4,425 | ) | $ | (5,191 | ) | $ | (14,413 | ) | ||||
Number of open stores and showrooms at end of period |
48 | 49 | 19 | 22 | ||||||||||||
Number of closed locations at end of period |
| | 27 | 31 | ||||||||||||
Same-store-sales for the three months ended December 31 (d): |
||||||||||||||||
Percentage increase (decrease) |
15 | % | (13 | )% | (e | ) | (e | ) | ||||||||
Number of stores |
45 | 25 | ||||||||||||||
Same-store-sales for the twelve months ended December 31 (d): |
||||||||||||||||
Percentage increase (decrease) |
19 | % | (20 | )% | (e | ) | (e | ) | ||||||||
Number of stores |
46 | 25 |
a) | This supplemental data includes company-owned Thomasville retail store locations that were open during the period. | |
b) | This supplemental data includes all company-owned retail locations other than open Thomasville stores (all other retail locations). SG&A closed stores includes occupancy costs, lease termination costs, and costs associated with closed store lease liabilities. | |
c) | Loss from operations does not include our wholesale profit on the retail net sales. | |
d) | The same-store-sales percentage is based on sales from stores that have been in operation and company-owned for at least 15 months. | |
e) | Same-store-sales data is not meaningful and is not presented for all other retail locations because results include retail store locations of multiple brands including eight Drexel Heritage stores, two Lane stores, one Henredon store, one Broyhill store, and seven Designer Showrooms at December 31, 2010; and it is not one of our long-term strategic initiatives to grow company-owned retail locations for these non-Thomasville brands. | |
f) | The Thomasville Retail loss from operations of $4.9 million for the three months ended December 31, 2010 includes losses of $0.9 million related to the liquidation of inventory during the closing of three Thomasville stores. |