INFORMATION
101 South Hanley Road
St. Louis, Missouri 63105
314-863-1100
FOR IMMEDIATE RELEASE
FURNITURE BRANDS INTERNATIONAL ANNOUNCES PROPOSED
ACQUISITION OF HENREDON, DREXEL HERITAGE AND MAITLAND-SMITH
FROM LIFESTYLE FURNISHINGS INTERNATIONAL
ESTABLISHES INDUSTRY LEADING PRESENCE IN PREMIUM PRICE CATEGORY
St. Louis, Missouri, December 5, 2001 - Furniture Brands International (NYSE:
FBN) today announced the signing of a definitive agreement with LifeStyle
Furnishings International for the purchase by Furniture Brands International of
substantially all of the assets of Henredon Furniture Industries, Drexel
Heritage Furnishings, and Maitland-Smith for $275 million in cash and common
stock.
The proposed acquisition will establish an industry-leading presence for
Furniture Brands International as the furniture industry's only full-line,
whole-home resource in all middle and upper price categories, as Henredon,
Drexel Heritage and Maitland-Smith are aligned with the company's other top
brand names -- Broyhill, Lane and Thomasville.
Henredon Furniture Industries, headquartered in Morganton, North Carolina,
designs and manufactures wood, upholstered and occasional furniture for the
bedroom, dining room, living room, family room, and home office. Its products
are in the high "premium" category, and the Henredon name is considered to be
one of the premier brands in the industry. Since 1993, Henredon has manufactured
and marketed a line of products for the Ralph Lauren Home Collection under an
exclusive licensing arrangement. Henredon's products are offered through
independent furniture stores, department stores, specialty retailers and
designer showrooms.
Drexel Heritage Furnishings, headquartered in Drexel, North Carolina, designs
and manufactures wood, upholstered, motion and occasional furniture for the
bedroom, dining room, living room, family room and home office in the "premium"
price category. Drexel Heritage licenses two branded collections -- the
Pinehurst Collection and Lillian August -- and has an exclusive endorsement
agreement with Golden Bear Golf, Inc. to furnish all country club and resort
developments associated with Nicklaus design. Drexel Heritage's products are
sold through independently owned Drexel Heritage stores and galleries and other
retailers, department stores, specialty stores and designer showrooms.
Maitland-Smith, with its domestic headquarters in High Point, North Carolina, is
a leading designer and manufacturer of "best" and "premium" hand-crafted,
antique-inspired furniture, accessories, and lighting, utilizing a wide range of
unique materials, including distinctive leather, fancy faced veneer, stone, and
hand-painted metal. Maitland-Smith products are distributed internationally
through select high-end retail furniture stores, designer showrooms, antique
dealers and specialty gift stores.
W.G. (Mickey) Holliman, Chairman, President and Chief Executive Officer of
Furniture Brands International, said, "With Broyhill, Lane and Thomasville,
Furniture Brands International already has a strong position in the middle and
upper-middle price points of residential furniture. The acquisition of Henredon,
Drexel Heritage and Maitland-Smith will give us an industry-leading presence in
the "premium" category as well, and will establish us as the furniture
industry's only full-line, whole-home resource in all middle and upper price
categories.
"We have been very patient over the past several years as we have considered and
rejected a number of acquisition possibilities, electing instead to focus our
substantial cash flow on debt reduction and improving our capital structure,"
Mr. Holliman continued. "Our patience has been rewarded. Henredon, Drexel
Heritage and Maitland-Smith satisfy all our acquisition criteria and represent a
significant strategic advance for us."
Mr. Holliman concluded, "Our financial condition will remain strong after the
acquisition. Based on results for the latest twelve months, a very weak economic
period, these companies would add approximately $425 million to our 2002
revenues and over $35 million in operating earnings. After the acquisition, our
debt to book capitalization ratio will still be under 40%, approximately where
we were at the end of the first quarter of this year. Pro forma against
Furniture Brands International's 2000 year-end earnings per share of $2.15, this
transaction would have been accretive in the 10% range."
For the net assets of the three companies, Furniture Brands will pay $275
million. $175 million will be in cash and will be funded through the company's
existing credit facility. $100 million will be paid in the form of Furniture
Brands International common stock, based on the average of the daily high and
low in the ten trading days before closing, but with the condition that no more
than 5 million shares nor less than 4 million shares will be issued. The
transaction is subject to regulatory approval and is scheduled to close at or
near year-end 2001.
Commenting on its current operations, the Company reaffirmed its earlier
projection for earnings per share in the fourth quarter in the $0.34 to $0.39
range, and $1.30 to $1.35 for the full year 2001, excluding all restructuring
charges. The Company also reiterated its belief that sales in the first half of
2002 will be flat to modestly down, with a recovery beginning mid-year and
accelerating through the second half.
Furniture Brands International is an industry-leading branded consumer products
company manufacturing home furnishings under three of the most recognizable
brand names in the furniture industry -- Broyhill, Lane and Thomasville. The
company's products cover a broad spectrum of style and price categories and are
distributed through an extensive network of independently owned national,
regional and local retailers.
Furniture Brands International will hold a conference call to discuss the
transaction at 4:00 p.m. (Central Time) on December 5, 2001. The call can be
accessed at www.streetevents.com, or on the company's website at
www.furniturebrands.com.
This release contains 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 expected earnings per share, profit
margins, and cash flow, the effects of certain business strategies, the
prospects for the overall business environment, and other statements containing
the words "expects," "anticipates," "estimates," "believes," and words of
similar import. Furniture Brands International 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; 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 Furniture Brands International's public
releases and SEC reports, including but not limited to the report on Form 10-Q
for the quarter ended September 30, 2001. Furniture Brands International also
cautions investors that its forecast for earnings per share represents their
outlook only as of this date, and they undertake no obligation to update or
revise any forward-looking statements, whether as a result of new developments
or otherwise.