ST. LOUIS, May 4, 2011 (GLOBE NEWSWIRE) -- Furniture Brands International (NYSE:FBN) today announced its financial results for the first quarter ended March 31, 2011.
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Sales for the first quarter of 2011 were $297.9 million, a decrease of 7.6% versus the first quarter of last year and an increase of 7.9% from the prior quarter
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Gross margin was 26.0%, roughly flat to last year's 26.2%, and SG&A was $79.6 million, also relatively flat to last year's $79.9 million
- Quarter end cash balance was $40.8 million, and borrowing availability increased by $33 million to a total availability currently estimated at $51.5 million, reflecting the refinancing of our asset-based loan facility
Net sales of $297.9 million for the first quarter of 2011 declined 7.6% versus net sales of $322.4 million in the first quarter of 2010. On a sequential basis net sales increased 7.9% from the fourth quarter of 2010. First quarter 2011 retail sales at the 65 company-owned stores and showrooms totaled $39.0 million compared with first quarter 2010 sales of $35.6 million at 72 stores and showrooms. First quarter 2011 same-store sales at the 46 Thomasville stores that the company has owned for more than 15 months showed an increase of 17% from the first quarter of 2010, the 5th consecutive quarter of double-digit same-store sales increases.
"Our monthly sales trend improved each month as we progressed through the quarter," said Mr. Ralph Scozzafava, Chairman and CEO. "Our newer product introductions are being received positively in the marketplace as we secure added distribution at retail and consumers respond favorably to our tested product and brand building initiatives."
Furniture Brands' gross margin for the first quarter of 2011 was 26.0% compared with 26.2% in the first quarter of 2010. Selling, general and administrative expenses (SG&A) for the first quarter of 2011 totaled $79.6 million, essentially flat with the $79.9 million reported in the first quarter of 2010.
The Company reported an operating loss of $2.1 million in the first quarter of 2011 as compared to an operating profit of $4.6 million in the first quarter of 2010. For the first quarter of 2011, Furniture Brands reported a net loss of $3.1 million, or $0.06 per diluted share, compared to net income of $3.5 million, or $0.07 per diluted share, in the first quarter of 2010.
"We remain focused on controlling costs, while prudently investing in profitably growing our business, and increasing the efficiency of our manufacturing and sourcing operations," Mr. Scozzafava said. "The cost discipline that has driven the improvement in our expense structure the last few years remains ingrained within the organization, and is helping fund the increases in brand building investments, that are beginning to yield the intended results," he added.
Mr. Scozzafava further noted, "We remain on track for the completion of our Indonesian manufacturing plant expansion by the third quarter of this year. In addition, in the last week of March, our Mexico cut and sew operation shipped its first container, well ahead of schedule. As these two projects ramp up to their full potential, we expect to achieve annual pre-tax savings of $10 to $12 million in 2014."
In a recent post-quarter development, the Company refinanced its secured asset-based revolving credit facility on April 27, 2011. The new $250 million amended and restated facility has a five-year term and is secured by the Company's accounts receivable, inventory and cash. It has increased borrowing availability by $33 million versus the former facility to a total availability currently estimated at $51.5 million, and the current interest rate is LIBOR plus 2.75% (additional information is available in a recently filed Form 8-K).
"The refinancing, right-sizing and extension of our asset-based loan in advance of its 2012 maturity was just the right thing to do in the current improved credit environment," Mr. Scozzafava said. "The new facility gives us significantly more current borrowing capacity, as well as sufficient funding for the future, with a manageable increase in cost," he pointed out.
Upcoming Investor Event
A conference call will be held to discuss first quarter results at 7:30 a.m. (Central Time) on May 5, 2011. The call can be accessed in the Upcoming Investor Events section of the company's 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 nation's 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.
The Furniture Brands International logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2757
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, 2010, 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.
| FURNITURE BRANDS INTERNATIONAL, INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (in thousands except per share data) | ||
| (unaudited) | ||
| Three Months Ended | ||
|
March 31, 2011 |
March 31, 2010 |
|
| Net sales | $ 297,856 | $ 322,391 |
| Cost of sales | 220,312 | 237,942 |
| Gross profit | 77,544 | 84,449 |
| Selling, general & administrative expenses | 79,598 | 79,864 |
| Earnings (loss) from operations | (2,054) | 4,585 |
| Interest expense | 761 | 844 |
| Other income, net | 511 | 279 |
| Earnings (loss) before income tax expense | (2,304) | 4,020 |
| Income tax expense | 754 | 523 |
| Net earnings (loss) | $ (3,058) | $ 3,497 |
| Net earnings (loss) per common share: | ||
| Basic and diluted | $ (0.06) | $ 0.07 |
| Weighted average common shares outstanding: | ||
| Basic | 54,818 | 48,297 |
| Diluted | 54,818 | 48,356 |
| FURNITURE BRANDS INTERNATIONAL, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands) | ||
| (unaudited) | ||
|
March 31, 2011 |
December 31, 2010 |
|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 40,846 | $ 51,964 |
| Receivables, less allowances of $16,594 ($18,076 at December 31, 2010) | 123,655 | 114,535 |
| Inventories | 255,511 | 249,691 |
| Prepaid expenses and other current assets | 13,850 | 11,242 |
| Total current assets | 433,862 | 427,432 |
| Property, plant and equipment, net | 120,066 | 124,866 |
| Trade names | 86,508 | 86,508 |
| Other assets | 46,572 | 37,607 |
| $ 687,008 | $ 676,413 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 96,590 | $ 79,846 |
| Accrued expenses | 56,071 | 61,223 |
| Total current liabilities | 152,661 | 141,069 |
| Long-term debt | 77,000 | 77,000 |
| Deferred income taxes | 22,180 | 23,114 |
| Pension liability | 103,558 | 104,736 |
| Other long-term liabilities | 72,305 | 70,927 |
| Shareholders' equity | 259,304 | 259,567 |
| $ 687,008 | $ 676,413 | |
| FURNITURE BRANDS INTERNATIONAL, INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in thousands) | ||
| (unaudited) | ||
| Three Months Ended | ||
|
March 31, 2011 |
March 31, 2010 |
|
| Cash flows from operating activities: | ||
| Net earnings (loss) | $ (3,058) | $ 3,497 |
| Adjustments to reconcile net earnings (loss) to net cash used in operating activities: | ||
| Depreciation and amortization | 6,114 | 6,105 |
| Compensation expense related to stock option grants and restricted stock awards | 974 | 226 |
| Other, net | (791) | (1,530) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (9,120) | (3,395) |
| Inventories | (5,820) | (5,314) |
| Prepaid expenses and other assets | (2,515) | (292) |
| Accounts payable and other accrued expenses | 10,663 | 2,769 |
| Deferred income taxes | (6) | (87) |
| Other long-term liabilities | (1,452) | (2,702) |
| Net cash used in operating activities | (5,011) | (723) |
| Cash flows from investing activities: | ||
| Proceeds from the disposal of assets | 2,212 | 1,869 |
| Additions to property, plant, equipment and software | (8,340) | (7,494) |
| Net cash used in investing activities | (6,128) | (5,625) |
| Cash flows from financing activities: | ||
| Payments of long-term debt | -- | (17,000) |
| Other | 21 | -- |
| Net cash provided (used) by financing activities | 21 | (17,000) |
| Net decrease in cash and cash equivalents | (11,118) | (23,348) |
| Cash and cash equivalents at beginning of period | 51,964 | 83,872 |
| Cash and cash equivalents at end of period | $ 40,846 | $ 60,524 |
| Supplemental disclosure: | ||
| Cash payments (refunds) for income taxes, net | $ (606) | $ 103 |
| Cash payments for interest expense | $ 652 | $ 866 |
| FURNITURE BRANDS INTERNATIONAL, INC. | |||||
| SUPPLEMENTAL RETAIL INFORMATION | |||||
| (dollars in thousands) | |||||
| (unaudited) | |||||
| Thomasville Stores (a) | All Other Retail Locations (b) | ||||
| Three Months Ended | Three Months Ended | ||||
|
March 31, 2011 |
March 31, 2010 |
March 31, 2011 |
March 31, 2010 |
||
| Net sales | $ 28,980 | $ 25,636 | $ 10,015 | $ 9,983 | |
| Cost of sales | 17,628 | 14,632 | 6,691 | 5,930 | |
| Gross profit | 11,352 | 11,004 | 3,324 | 4,053 | |
| Selling, general & administrative expenses - open stores | 15,914 | 15,265 | 4,978 | 5,828 | |
| Loss from operations - open stores (c) | (4,562) | (4,261) | (1,654) | (1,775) | |
| Selling, general & administrative expenses - closed stores | -- | -- | 1,422 | 932 | |
| Loss from operations - retail operations (c) | $ (4,562) | $ (4,261) | $ (3,076) | $ (2,707) | |
| Number of open stores and showrooms at end of period | 47 | 51 | 18 | 21 | |
| Number of closed locations at end of period | -- | -- | 27 | 28 | |
| Same-store-sales (d): | |||||
| Percentage increase | 17% | 16% | (e) | (e) | |
| Number of stores | 46 | 40 | |||
| 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 above 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 seven Drexel Heritage stores, two Lane stores, one Henredon store, one Broyhill store, and seven Designer Showrooms at March 31, 2011; and it is not one of our long-term strategic initiatives to grow non-Thomasville brand company-owned retail locations. | |||||