Exhibit 99(a)
INFORMATION
FOR IMMEDIATE RELEASE
FURNITURE BRANDS INTERNATIONAL REPORTS
SALES AND EARNINGS FOR THE FIRST QUARTER OF 2006
St. Louis, Missouri, May 3, 2006 -- Furniture Brands International (NYSE:FBN) announced today its financial results for the first quarter of 2006.
Operating Results - First Quarter
Net sales for the first quarter of 2006 were $661.4 million, compared with $641.6 million in the first quarter of 2005, an increase of 3%. Net earnings for the first quarter were $30.2 million, up from $24.8 million in the first quarter of last year. Net earnings per diluted common share were $0.61, as compared to $0.46 in the first quarter of last year ($0.45 pro forma for $1.1 million of net stock option expense).
Included in the 2006 first quarter net earnings was $5.4 million ($0.11 per diluted common share) from the recognition of an accounting gain on interest rate swaps as a result of the refinancing of the company’s revolving credit facility, which occurred early in the second quarter. Also included in the 2006 first quarter net earnings were restructuring, asset impairment and severance charges totaling $0.5 million ($0.8 million before income tax benefits) or $0.01 per diluted common share. The 2005 first quarter net earnings were negatively impacted by restructuring, asset impairment and severance charges totaling $2.5 million ($3.8 million before income tax benefits) or $0.05 per diluted common share.
Management Comments
W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: “We were generally pleased with the results of the quarter. We continue to see mixed results between our Brands, with weakness in one being offset by strength in another. As a whole, however, the stronger performing Brands - particularly Thomasville and Lane - drove meaningful year over year improvements.
“In the longer-term, we continue to pursue the strategies that will drive both growth and profitability across the company. Our senior leadership team is focused on building our Brands through aggressive service initiatives, product development and consumer research. Our logistics and supply chain, sourcing, and retail development processes are being streamlined across all our Brands to support these initiatives.
“During the first quarter we repurchased 1.0 million shares of our common stock.”
Outlook
Mr. Holliman concluded, “With respect to the second quarter, we currently expect net sales to be up in the low single digits versus the second quarter of last year and net earnings per diluted common share to be in the $0.29 to $0.33 range. This includes the effect of $0.03 in previously disclosed restructuring, asset impairment and severance charges. This also includes the effect of $0.03 in increased interest expense due to the upfront recognition of the accounting gain on a cash flow hedge. As is our practice, we will provide an update on our second quarter expectations in early June.”
A conference call will be held to discuss the first quarter results at 7:30 a.m. (Central Time) on May 4, 2006. The call can be listened to on the company’s
website - www.furniturebrands.com.
Furniture Brands International is one of America’s largest residential furniture companies. The company produces, sources and markets its products under six of the best-known brand names in the industry - Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland-Smith.
Statements in this release that are not strictly historical may be forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties, and Furniture Brands undertakes no obligation to update any such statement to reflect later developments. These include economic conditions, competitive factors, raw material pricing and restructuring efforts, among others, as set forth in the Company's most recent Form 10-K filed with the SEC.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED OPERATING RESULTS
(Dollars in thousands except per share)
(Unaudited)
| | | Three Months Ended |
| | | | March 31, | | | March 31, | |
| | | | 2006 | | | 2005 | |
| | | | | | | | |
| Net sales | | $ | 661,445 | | $ | 641,565 | |
| Cost of sales | | | 507,506 | | | 491,628 | |
| Gross profit | | | 153,939 | | | 149,937 | |
| Selling, general and administrative expenses | | | 116,564 | | | 111,416 | |
| Earnings from operations | | | 37,375 | | | 38,521 | |
| Interest expense | | | 2,961 | | | 3,102 | |
| Other income, net | | | 10,538 | | | 1,809 | |
| Earnings before income tax expense | | | 44,952 | | | 37,309 | |
| Income tax expense | | | 14,730 | | | 12,525 | |
| Net earnings | | $ | 30,222 | | $ | 24,784 | |
| | | | | | | | |
| Net earnings per common share (diluted) | | $ | 0.61 | | $ | 0.46 | |
| | | | | | | | |
| Average diluted common shares | | | | | | | |
| outstanding (in thousands) | | | 49,569 | | | 53,507 | |
Included in the above Consolidated Statements of Operations are charges for stock option compensation (beginning January 1, 2006), the accounting gain on interest rate swaps, restructuring and severance. The following reconciliation of net earnings shows the breakdown of these charges and their impact on operations. We believe this reconciliation provides a meaningful comparison of our ongoing operations.
| | Three Months Ended |
| | | March 31, | | March 31, | |
| | | 2006 | | 2005 | |
| | | | | | | | |
| Net earnings | | $ | 30,222 | | $ | 24,784 | |
| | | | | | | | |
| Adjustments: | | | | | | | |
| Stock option compensation, net | | | - | | | (1,099 | ) |
| Gain on cash flow hedge, net | | | (5,408 | ) | | - | |
| Restructuring charges (1): | | | | | | | |
| Cost of sales | | | 430 | | | 1,380 | |
| Selling, general and administrative expenses | | | 344 | | | 1,368 | |
| Severance (executive) | | | - | | | 1,100 | |
| | | | 774 | | | 3,848 | |
| Income tax expense | | | 271 | | | 1,347 | |
| Restructuring Charges, net | | | 503 | | | 2,501 | |
| | | | | | | | |
| Adjusted - net earnings | | $ | 25,317 | | $ | 26,186 | |
| | | | | | | | |
| Adjusted - earnings per share - diluted | | $ | 0.51 | | $ | 0.49 | |
(1) Restructuring charges include asset impairment charges, severance and other closing costs associated with the previously announced plant shutdowns.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
| | | March 31, | | December 31, | |
| | | 2006 | | �� 2005 | |
| Assets | | | | | | | |
| | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 90,554 | | $ | 114,322 | |
| Receivables, net | | | 393,216 | | | 349,202 | |
| Inventories | | | 439,312 | | | 432,814 | |
| Prepaid expenses and other current assets | | | 37,720 | | | 35,330 | |
| Total current assets | | | 960,802 | | | 931,668 | |
| Property, plant and equipment, net | | | 242,368 | | | 250,817 | |
| Intangible assets | | | 352,178 | | | 352,178 | |
| Other assets | | | 49,137 | | | 47,561 | |
| | | $ | 1,604,485 | | $ | 1,582,224 | |
| | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | |
| | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 110,698 | | $ | 101,860 | |
| Accrued expenses and other current liabilities | | | 113,189 | | | 111,625 | |
| Total current liabilities | | | 223,887 | | | 213,485 | |
| Long-term debt | | | 301,600 | | | 301,600 | |
| Other long-term liabilities | | | 172,585 | | | 163,187 | |
| | | | | | | | |
| Shareholders’ equity | | | 906,413 | | | 903,952 | |
| | | $ | 1,604,485 | | $ | 1,582,224 | |
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| | | Three Months Ended | |
| | | March 31, | | March 31, | |
| | | 2006 | | 2005 | |
| Cash flows from operating activities: | | | | | | | |
| Net earnings | | $ | 30,222 | | $ | 24,784 | |
| Adjustments to reconcile net earnings to net cash | | | | | | | |
| provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | 10,093 | | | 11,803 | |
| Compensation expense related to stock option | | | | | | | |
| grants and restricted stock awards | | | 1,623 | | | 87 | |
| Provision (benefit) for deferred income taxes | | | (3,339 | ) | | (2,205 | ) |
| Other, net | | | (4,699 | ) | | 1,417 | |
| Changes in operating assets and liabilities: | | | | | | | |
| Accounts receivable | | | (44,014 | ) | | (20,851 | ) |
| Inventories | | | (6,498 | ) | | 15,077 | |
| Prepaid expenses and other assets | | | (399 | ) | | (9,174 | ) |
| Accounts payable and other accrued expenses | | | 17,143 | | | 9,198 | |
| Other long-term liabilities | | | 4,059 | | | 5,557 | |
| Net cash provided by operating activities | | | 4,191 | | | 35,693 | |
| | | | | | | | |
| Cash flows from investing activities: | | | | | | | |
| Proceeds from the disposal of assets | | | 3,183 | | | 2,139 | |
| Additions to property, plant and equipment | | | (5,356 | ) | | (7,941 | ) |
| Net cash used by investing activities | | | (2,173 | ) | | (5,802 | ) |
| | | | | | | | |
| Cash flows from financing activities: | | | | | | | |
| Proceeds from the exercise of stock options | | | 6,769 | | | 572 | |
| Tax benefit from the exercise of stock options | | | 404 | | | - | |
| Payments of cash dividends | | | (7,959 | ) | | (7,986 | ) |
| Payments for the purchase of treasury stock | | | (25,000 | ) | | (5,000 | ) |
| Net cash used by financing activities | | | (25,786 | ) | | (12,414 | ) |
| | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | (23,768 | ) | | 17,477 | |
| Cash and cash equivalents at beginning of period | | | 114,322 | | | 51,248 | |
| Cash and cash equivalents at end of period | | $ | 90,554 | | $ | 68,725 | |
| | | | | | | | |
| Supplemental Disclosure: | | | | | | | |
| Cash payments for income taxes, net | | $ | 18,033 | | $ | 15,500 | |
| | | | | | | | |
| Cash payments for interest expense | | $ | 1,679 | | $ | 3,153 | |
| | | | | | | | |
