FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001 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 number I-91
----
Furniture Brands International, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0337683
- ---------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 South Hanley Road, St. Louis, Missouri 63105
- -------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-1100
-------------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
Yes X No
-------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
50,403,355 Shares as of July 31, 2001
-------------------------------------
PART I FINANCIAL INFORMATION
----------------------------
Item 1. Financial Statements
Consolidated Financial Statements for the quarter ended June 30, 2001.
Consolidated Balance Sheets
Consolidated Statements of Operations:
Three Months Ended June 30, 2001
Three Months Ended June 30, 2000
Six Months Ended June 30, 2001
Six Months Ended June 30, 2000
Consolidated Statements of Cash Flows:
Six Months Ended June 30, 2001
Six Months Ended June 30, 2000
Notes to Consolidated Financial Statements
The financial statements are unaudited, but include all adjustments (consisting
of normal recurring adjustments) which the management of the Company considers
necessary for a fair presentation of the results of the period. The results for
the three months and six months ended June 30, 2001 are not necessarily
indicative of the results to be expected for the full year.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 30, December 31,
2001 2000
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents....................... $ 8,737 $ 14,606
Receivables, less allowances of $23,698
($23,075 at December 31, 2000)................ 320,450 351,804
Inventories.........................(Note 1).... 288,687 294,454
Prepaid expenses and other current assets....... 30,970 30,717
----------- -----------
Total current assets.......................... 648,844 691,581
----------- -----------
Property, plant and equipment..................... 598,151 590,342
Less accumulated depreciation................... 327,164 287,107
----------- -----------
Net property, plant and equipment............. 270,987 303,235
----------- -----------
Intangible assets................................. 283,119 289,895
Other assets...................................... 24,498 20,127
----------- -----------
$ 1,227,448 $ 1,304,838
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued interest expense........................ $ 3,773 $ 7,646
Accounts payable and other accrued expenses..... 127,559 135,472
----------- -----------
Total current liabilities..................... 131,332 143,118
----------- -----------
Long-term debt.................................... 374,000 462,000
Other long-term liabilities....................... 105,410 115,815
Shareholders' equity:
Preferred stock, authorized 10,000,000
shares, no par value - issued, none........... - -
Common stock, authorized 100,000,000 shares,
$1.00 stated value - issued 52,277,066
shares at June 30, 2001 and
December 31, 2000............................. 52,277 52,277
Paid-in capital................................. 113,903 118,360
Retained earnings............................... 483,801 462,473
Accumulated other comprehensive income.(Note 3). 3,103 -
Treasury stock at cost (1,923,520 shares at
June 30, 2001 and 2,601,759 shares at
December 31, 2000)............................ (36,378) (49,205)
----------- -----------
Total shareholders' equity.................... 616,706 583,905
----------- -----------
$ 1,227,448 $ 1,304,838
=========== ===========
See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
2001 2000
------------ ------------
Net sales...................................... $ 459,648 $ 533,079
Costs and expenses:
Cost of operations........................... 335,034 380,989
Selling, general and administrative expenses. 84,866 81,331
Depreciation and amortization................ 14,765 15,298
Asset impairment charges........(Note 5)..... 18,000 -
------------ ------------
Earnings from operations....................... 6,983 55,461
Interest expense............................... 5,539 9,308
Other income, net.............................. 610 959
------------ ------------
Earnings before income tax expense and
extraordinary item........................... 2,054 47,112
Income tax expense............................. 407 16,969
------------ ------------
Earnings before extraordinary item............. 1,647 30,143
Extraordinary item - early extinguishment of
debt, net of income tax benefit.............. - (2,522)
------------ ------------
Net earnings................................... $ 1,647 $ 27,621
============ ============
Net earnings per common share - basic:
Earnings before extraordinary item........... $ 0.03 $ 0.61
Extraordinary item - early extinguishment
of debt.................................... - (0.05)
------ ------
Net earnings per common share - basic.......... $ 0.03 $ 0.56
====== ======
Net earnings per common share - diluted:
Earnings before extraordinary item........... $ 0.03 $ 0.60
Extraordinary item - early extinguishment
of debt.................................... - (0.05)
------ ------
Net earnings per common share - diluted........ $ 0.03 $ 0.55
====== ======
Weighted average common and common equivalent shares outstanding (Note 2):
Basic........................................ 50,295,895 49,463,669
============ ============
Diluted...................................... 51,214,184 50,460,912
============ ============
See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
2001 2000
---------- ----------
Net sales...................................... $ 965,830 $1,097,026
Costs and expenses:
Cost of operations........................... 705,450 785,708
Selling, general and administrative expenses. 169,277 168,294
Depreciation and amortization................ 30,023 30,847
Asset impairment charges........(Note 5)..... 18,000 -
---------- ----------
Earnings from operations....................... 43,080 112,177
Interest expense............................... 12,308 18,917
Other income, net.............................. 1,419 1,694
---------- ----------
Earnings before income tax expense and
extraordinary item........................... 32,191 94,954
Income tax expense............................. 10,863 34,211
---------- ----------
Earnings before extraordinary item............. 21,328 60,743
Extraordinary item - early extinguishment of
debt, net of income tax benefit.............. - (2,522)
---------- ----------
Net earnings................................... $ 21,328 $ 58,221
========== ==========
Net earnings per common share - basic:
Earnings before extraordinary item........... $ 0.43 $ 1.23
Extraordinary item - early extinguishment
of debt.................................... - (0.05)
------ ------
Net earnings per common share - basic.......... $ 0.43 $ 1.18
====== ======
Net earnings per common share - diluted:
Earnings before extraordinary item........... $ 0.42 $ 1.21
Extraordinary item - early extinguishment
of debt.................................... - (0.05)
------ ------
Net earnings per common share - diluted........ $ 0.42 $ 1.16
====== ======
Weighted average common and common equivalent shares outstanding (Note 2):
Basic........................................ 50,159,494 49,418,712
========== ==========
Diluted...................................... 51,148,911 50,405,810
========== ==========
See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
2001 2000
---------- ----------
Cash flows from operating activities:
Net earnings......................................... $ 21,328 $ 58,221
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Net loss on early extinguishment of debt......... - 2,522
Depreciation of property, plant and equipment.... 23,993 24,817
Amortization of intangible and other assets...... 6,030 6,030
Asset impairment charges......................... 18,000 -
Noncash interest and other expense............... 707 888
(Increase) decrease in receivables............... 31,354 (15,345)
(Increase) decrease in inventories............... 5,767 (25,546)
(Increase) decrease in prepaid expenses and
other assets................................... (1,799) 43
Increase (decrease) in accounts payable, accrued
interest expense and other accrued expenses.... (7,193) 7,488
Decrease in net deferred tax liabilities......... (8,622) (2,038)
Increase (decrease) in other long-term
liabilities.................................... 395 (1,869)
---------- ----------
Net cash provided by operating activities............ 89,960 55,211
---------- ----------
Cash flows from investing activities:
Proceeds from the disposal of assets................. 65 26
Additions to property, plant and equipment........... (11,386) (19,574)
---------- ----------
Net cash used by investing activities................ (11,321) (19,548)
---------- ----------
Cash flows from financing activities:
Payments for debt issuance costs..................... - (2,089)
Additions to long-term debt.......................... - 486,500
Payments of long-term debt........................... (88,000) (519,100)
Proceeds from the issuance of treasury stock......... 3,492 2,856
----------- ----------
Net cash used by financing activities................ (84,508) (31,833)
---------- ----------
Net increase (decrease) in cash and cash equivalents... (5,869) 3,830
Cash and cash equivalents at beginning of period....... 14,606 7,409
---------- ----------
Cash and cash equivalents at end of period............. $ 8,737 $ 11,239
========== ==========
Supplemental Disclosure:
Cash payments for income taxes, net.................. $ 12,067 $ 36,631
========== ==========
Cash payments for interest........................... $ 17,239 $ 17,565
========== ==========
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(Unaudited)
(1) Inventories are summarized as follows:
June 30, December 31,
2001 2000
----------- -----------
Finished products $ 130,713 $ 125,491
Work-in-process 52,621 61,932
Raw materials 105,353 107,031
----------- -----------
$ 288,687 $ 294,454
=========== ===========
(2) Weighted average shares used in the computation of basic and diluted net
earnings per common share are as follows:
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
------------- ------------- ------------- -------------
Weighted average shares used
for basic net earnings per
common share 50,295,895 49,463,669 50,159,494 49,418,712
Effect of dilutive securities:
Stock options 918,289 997,243 989,417 987,098
---------- ---------- ---------- ----------
Weighted average shares used
for diluted net earnings
per common share 51,214,184 50,460,912 51,148,911 50,405,810
========== ========== ========== ==========
(3) Comprehensive income, net of tax is as follows:
Six Months Ended
----------------------------
June 30, 2001 June 30, 2000
------------- -------------
Net earnings $21,328 $58,221
Other comprehensive income
Cumulative effect of adopting SFAS
No. 133 2,960 -
Effect of financial instruments
accounted for as hedges 143 -
------- -------
3,103 -
------- -------
Comprehensive income $24,431 $58,221
======= =======
(4) In May 2001, in order to reduce the impact of changes in interest rates on
its floating rate long-term debt, the Company entered into three interest
rate swap agreements each having a notional amount of $100.0 million and a
termination date in May 2004. The Company pays the counterparties a blended
fixed rate of 4.93% per annum and receives payment based upon the floating
three-month LIBOR rate.
(5) In the second quarter and six months ended June 30, 2001, the Company
recorded asset impairment and other restructuring charges of $18.9 million
and $20.0 million, respectively ($12.3 million and $13.0 million,
respectively, net of taxes). The charges related to the realignment of
selected domestic manufacturing operations and consisted of $18.0 million
for the write down of property, plant and equipment to realizable value,
with the balance of the charges for severance and benefit related costs. It
is anticipated that additional charges of approximately $2.0 million will
be incurred during the remaining six months of 2001 to complete the
restructuring.
(6) On July 16, 2001, a large customer of the Company filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. This customer owed the
Company approximately $7.3 million as of the filing date. While the
bankruptcy filing was a third quarter event, at June 30, 2001 the Company
believes it was adequately reserved; however, the reserve position will be
reassessed at the end of the third quarter.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
- ---------------------
Furniture Brands International, Inc. (referred to herein as the "Company") is
one of the largest home furniture manufacturers in the United States. The
Company has three primary operating subsidiaries: Broyhill Furniture Industries,
Inc.; Lane Furniture Industries, Inc.; and Thomasville Furniture Industries,
Inc.
Comparison of Three Months and Six Months Ended June 30, 2001 and 2000
- ----------------------------------------------------------------------
Selected financial information for the three months and six months ended June
30, 2001 and June 30, 2000 is presented below:
(Dollars in millions except per share data)
Three Months Ended
-----------------------------------------
June 30, 2001 June 30, 2000
-------------------- -------------------
%of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
Net sales $459.6 100.0% $533.1 100.0%
Earnings from operations 7.0 1.5% 55.5 10.4%
Interest expense 5.5 1.2% 9.3 1.7%
Income tax expense 0.5 0.1% 17.0 3.2%
Net earnings before extraordinary item 1.6 0.4% 30.1 5.7%
Net earnings per common share before
extraordinary item - diluted 0.03 - 0.60 -
Gross profit (1) $114.8 25.0% $141.6 26.6%
Six Months Ended
-----------------------------------------
June 30, 2001 June 30, 2000
-------------------- -------------------
%of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
Net sales $965.8 100.0% $1,097.0 100.0%
Earnings from operations 43.1 4.5% 112.2 10.2%
Interest expense 12.3 1.3% 18.9 1.7%
Income tax expense 10.9 1.1% 34.2 3.1%
Net earnings before extraordinary item 21.3 2.2% 60.7 5.5%
Net earnings per common share before
extraordinary item - diluted 0.42 - 1.21 -
Gross profit (1) $240.1 24.9% $290.0 26.4%
(1) The Company believes that gross profit provides useful information
regarding a company's financial performance. Gross profit has been
calculated by subtracting cost of operations and the portion of
depreciation associated with cost of goods sold from net sales.
Three Months Ended Six Months Ended
June 30, June 30,
------------------ --------------
2001 2000 2001 2000
-------- -------- -------- ------
Net sales $459.6 $533.1 $965.8 $1,097.0
Cost of operations 335.0 381.0 705.4 785.7
Depreciation (associated with
cost of goods sold) 9.8 10.5 20.3 21.3
------ ------ ------ --------
Gross profit $114.8 $141.6 $240.1 $ 290.0
====== ====== ====== ========
Net sales for the three months ended June 30, 2001 were $459.6 million, compared
to $533.1 million in the three months ended June 30, 2000, a decrease of $73.5
million or 13.8%. For the six months ended June 30, 2001, net sales decreased
$131.2 million or 12.0% to $965.8 million from $1,097.0 million for the six
months ended June 30, 2000. The decrease in sales arose primarily from an
overall softness in order trends, the impact of the continuation of retailer
bankruptcy filings, and the Company's ongoing program to focus sales efforts
away from doubtful and unprofitable accounts. Sales decreases were realized at
each operating company.
Earnings from operations for the three months ended June 30, 2001 and June 30,
2000 were $7.0 million and $55.5 million, respectively. As a percentage of net
sales, earnings from operations for the three months ended June 30, 2001 and
June 30, 2000 were 1.5% and 10.4%, respectively. For the six months ended June
30, 2001 and June 30, 2000, earnings from operations were $43.1 million and
$112.2 million, respectively. Earnings from operations for the six months ended
June 30, 2001 and June 30, 2000 were 4.5% and 10.2% of net sales, respectively.
Earnings from operations in the three and six months ended June 30, 2001 were
adversely impacted by asset impairment and other restructuring charges related
to the realignment of selected domestic manufacturing operations totaling $18.9
million and $20.0 million, respectively, as well as by decreased plant
utilization resulting both from the sales volume shortfall and increased focus
on imported products.
Interest expense totaled $5.5 million and $12.3 million for the three months and
six months ended June 30, 2001, respectively, compared to $9.3 million and $18.9
million for the prior year comparable periods. The decrease in interest expense
during the periods resulted both from lower long-term debt levels and lower
interest rates.
The effective income tax rates were 19.8% and 36.0% for the three months ended
June 30, 2001 and June 30, 2000, respectively, and 33.7% and 36.0% for the six
months ended June 30, 2001 and June 30, 2000, respectively. The effective tax
rate for the three months ended June 30, 2001 was more favorably impacted than
the comparable prior year period due in part to nontaxable income and income tax
credits. The effective tax rate for the six months ended June 30, 2001 was less
adversely impacted than the comparable prior year period due in part to a lower
provision for state and local taxes.
Net earnings per common share before extraordinary item for basic and diluted
were $0.03 and $0.03 for the three months ended June 30, 2001, respectively,
compared with $0.61 and $0.60 for the same period last year, respectively. For
the six months ended June 30, 2001 and June 30, 2000, net earnings per common
share before extraordinary item for basic and diluted were $0.43 and $0.42,
respectively, and $1.23 and $1.21, respectively. Average common and common
equivalent shares outstanding used in the calculation of net earnings per common
share on a basic and diluted basis were 50,296,000 and 51,214,000, respectively,
for the three months ended June 30, 2001, and 49,464,000 and 50,461,000,
respectively, for the three months ended June 30, 2000. For the six months ended
June 30, 2001 and June 30, 2000, average common and common equivalent shares
outstanding used in the calculation of net earnings per common share on a basic
and diluted basis were 50,159,000 and 51,149,000, respectively, and 49,419,000
and 50,406,000, respectively.
FINANCIAL CONDITION
Working Capital
- ---------------
Cash and cash equivalents at June 30, 2001 amounted to $8.7 million, compared
with $14.6 million at December 31, 2000. During the six months ended June 30,
2001, net cash provided by operating activities totaled $89.9 million, net cash
used by investing activities totaled $11.3 million and net cash used by
financing activities totaled $84.5 million.
Working capital was $517.5 million at June 30, 2001, compared with $548.5
million at December 31, 2000. The current ratio was 4.9-to-1 at June 30, 2001,
compared to 4.8-to-1 at December 31, 2000.
Financing Arrangements
- ----------------------
As of June 30, 2001, long-term debt consisted of the following, in millions:
Revolving credit facility $359.6
Other 14.4
------
$374.0
======
To meet short-term capital and other financial requirements, the Company
maintains a $630.0 million revolving credit facility with a group of financial
institutions. The revolving credit facility allows for the issuance of letters
of credit and cash borrowings. Letter of credit outstandings are limited to no
more than $150.0 million, with cash borrowings limited only by the facility's
maximum availability less letters of credit outstanding. On June 30, 2001 there
were $359.6 million in cash borrowings and $30.1 million in letters of credit
outstanding, leaving an excess of $240.3 million available under the facility.
Cash borrowings under the revolving credit facility bear interest at a base rate
or at an adjusted Eurodollar rate plus an applicable margin which varies,
depending upon the type of loan the Company executes. The applicable margin over
the base rate and Eurodollar rate is subject to adjustment based upon achieving
certain credit ratings. At June 30, 2001, loans outstanding under the revolving
credit facility consisted of $345.0 million based on the adjusted Eurodollar
rate and $14.6 million based upon the base rate, for a weighted average interest
rate of 4.89%.
The Company believes that its revolving credit facility, together with cash
generated from operations, will be adequate to meet liquidity requirements for
the foreseeable future.
Recently Issued Statements of Financial Accounting Standards
- ------------------------------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS No. 133) "Accounting for Derivative
Instruments and Hedging Activities." This statement standardizes the accounting
for derivative instruments by requiring that an entity recognize the items as
assets and liabilities in the statement of financial position and measure them
at fair value. SFAS No. 133, as amended, is effective for fiscal years beginning
after June 15, 2000. The Company adopted SFAS No. 133 effective January 1, 2001.
The adoption of this standard has not had a material impact on the consolidated
financial position, results of operations or cash flows of the Company.
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 (SFAS No. 141), "Business Combinations"
and No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets." SFAS No. 141
requires that the purchase method of accounting be used for all business
combinations subsequent to June 30, 2001 and specifies criteria for recognizing
intangible assets acquired in a business combination. SFAS No. 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually. Intangible
assets with definite useful lives will continue to be amortized over their
respective estimated useful lives. The Company will adopt SFAS No. 142 effective
January 1, 2002. The Company believes the effect of SFAS No. 142 will be to
increase annual earnings per common share by approximately $0.20.
OUTLOOK
- -------
Incoming order activity may have bottomed, but the Company has not seen any
evidence of sustained improvement in the business climate. This economic
environment, coupled with recent retailer failures and the Company's ongoing
strategy for realigning its customer base to focus on long-term, profitable
sales growth, suggests that third quarter sales should be down in the 8% - 10%
range from those reported for the same period last year with a recovery toward
the end of the second half of the year; however, the recovery clearly will not
be soon enough, or strong enough, to offset the first half weakness. Assuming
that level of sales activity and excluding all restructuring charges, third
quarter earnings per common share are projected to be $0.25 to $0.27 compared to
$0.46 last year. For the full year ending December 31, 2001, earnings per common
share are projected to be $1.35 to $1.45 versus last year's $2.15 excluding all
impairment and restructuring charges and the extraordinary item.
Capital expenditures are forecasted at $25.0 - $30.0 million for the year.
Depreciation and amortization are anticipated to be $58.0 to $60.0 million for
the year. Selling, general and administrative expenses for the year are expected
to be in the range of 17.00% to 17.25% of net sales. Based upon current interest
rates, interest expense is expected to be approximately $23.0 million. The
Company should generate upwards of $125 million in cash flow this year, which is
currently expected to be used primarily for repayment of long-term debt.
Earnings before interest expense, income taxes, depreciation and amortization,
and asset impairment and other restructuring charges as a percent of net sales
is expected to be in the 9.75% to 10.25% range for the full year.
The percentage of the Company's product lines represented by imports will
continue to increase. Also, the Company continues to pursue its dedicated
distribution strategy. The Thomasville Home Furnishings Stores development
program is on schedule to add approximately 25 new stores per year with a goal
of 250 stores. Finally, The Home Depot completed the rollout to all of its
stores of kitchen and bath cabinetry marketed using the "Thomasville" name in
accordance with the previously reported licensing agreement.
FORWARD-LOOKING STATEMENTS
- --------------------------
The Company herein has made forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include statements containing the words
"expects," "anticipates," "estimates," "believes," and words of similar import.
The Company cautions investors that any such forward-looking statements are not
guarantees of future performance and that certain factors may cause actual
results to differ materially from those in the forward-looking statements. Such
factors may include: overall business and economic conditions and growth in the
furniture industry; changes in customer spending patterns and demand for home
furnishings; competitive factors, such as design and marketing efforts by other
furniture manufacturers; pricing pressures; success of the marketing efforts of
retailers and the prospects for further customer failures; the Company's success
in furniture design and manufacture; the effects of manufacturing realignments
and cost savings programs; and other risk factors listed from time to time in
the Company's future public releases and SEC reports.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to market risk from changes in interest rates. The
Company's exposure to interest rate risk consists of its floating rate revolving
credit facility. In May 2001, in order to reduce the impact of changes in
interest rates on its floating rate long-term debt, the Company entered into
three interest rate swap agreements each having a notional amount of $100.0
million and a termination date in May 2004. The swap agreements effectively
convert $300.0 million of the Company's floating rate long-term debt to a fixed
rate. The Company pays the counterparties a blended fixed rate of 4.93% per
annum and receives payment based upon the floating three-month LIBOR rate. As of
June 30, 2001, the unhedged portion of the revolving credit facility was $59.6
million and a hypothetical one percent increase in interest rates would result
in increased interest expense of $0.6 million on an annualized basis.
PART II OTHER INFORMATION
-------------------------
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on April 26, 2001. The
directors listed in the Notice of Annual Meeting of Stockholders dated
March 16, 2001 were elected for terms of one year ending 2002 with
voting for each as follows:
Director For Withheld
-------- --- --------
K. B. Bell 44,433,858 409,306
W. G. Holliman 37,825,120 7,018,044
B. A. Karsh 44,439,782 403,382
D. E. Lasater 44,425,400 417,764
L. M. Liberman 44,428,000 415,164
R. B. Loynd 38,773,148 6,070,016
M. Portera 44,434,751 408,413
A. E. Suter 43,883,327 959,837
To vote to ratify the selection of KPMG LLP as independent auditors:
Affirmative votes 44,336,600
Negative votes 493,072
Abstentions 13,491
Broker non-votes 0
Item 6. Exhibits and Reports on Form 8 -K
(b) A Form 8-K was filed on April 27, 2001 announcing first quarter
operating results and projections of second quarter and full year
sales and earnings. A Form 8-K was filed on June 5, 2001
announcing the consolidation of Action Industries, Inc. and The
Lane Company, Incorporated into their parent company, Lane
Furniture Industries, Inc. and projections of second quarter
sales and earnings. A Form 8-K was filed on July 26, 2001
announcing second quarter and first half of 2001 operating
results and projections for third quarter and full year sales and
earnings.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Furniture Brands International, Inc.
(Registrant)
By /s/ Steven W. Alstadt
---------------------------------
Steven W. Alstadt
Controller and
Chief Accounting Officer
Date: August 13, 2001