SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 26, 2002 (July 24, 2002)
Furniture Brands International, Inc.
(Exact name of Registrant as specified in charter)
Delaware I-91 43-0337683
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
101 South Hanley Road, St. Louis, Missouri 63105
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(Address of principal executive offices)
(314) 863-1100
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(Registrant's telephone number)
Item 5. Other Matters
On July 24, 2002, the Company announced operating results for the second
quarter and first half of 2002.
Net sales for the second quarter of 2002 were $604.5 million, compared with
$459.6 million in the second quarter of 2001, an increase of 31.5%. Net sales
for the first half of 2002 were $1,239.0 million, compared with $965.8 million
in the first half of 2001, an increase of 28.3%. Excluding the impact of
Henredon, Drexel Heritage and Maitland-Smith, which the Company acquired as of
the close of business on December 28, 2001, the Company's sales (Broyhill, Lane
and Thomasville) showed year-over-year growth of 10.6% in the quarter and 7.7%
in the first half.
Net earnings for the second quarter were $32.1 million as compared to $1.6
million in the second quarter of last year. Diluted net earnings per common
share were $0.57 as compared to $0.03 in the second quarter of 2001. Excluding
all asset impairment and other restructuring charges recorded in the second
quarter of 2001, the Company's diluted net earnings per common share in that
quarter would have been $0.27. Effective January 1, 2002, the Company adopted
FAS #142, which eliminated the amortization of goodwill and other intangible
assets with indefinite lives. Had FAS #142 been effective in the second quarter
of 2001, and excluding the asset impairment and restructuring charges mentioned
above, net earnings per common share in the quarter would have been $0.33,
indicating a 72.7% increase in 2002 earnings versus the comparable period in
2001.
Net earnings for the first half of 2002 were $64.9 million or $1.15 per
diluted common share as compared to $21.3 million or $0.42 per diluted common
share in the first half of 2001. Had FAS #142 been effective in the first half
of 2001, and excluding the asset impairment and restructuring charges mentioned
above, net earnings per common share in that half would have been $0.78, and net
earnings per common share in the half just ended would have represented a 47.4%
increase.
The Company also announced that its current projections for earnings per
share in the third quarter is 48 to 52 cents and for the full year 2002 is in
the $2.25 to $2.32 range.
Item 7. Financial Statements and Exhibits
(c) Exhibit
99 Press Release, dated July 24, 2002
SIGNATURE
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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.
By: /s/Steven W. Alstadt
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Steven W. Alstadt
Controller and Chief Accounting Officer
Dated: July 26, 2002
<page>
INFORMATION
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101 South Hanley Road
St. Louis, Missouri 63105
314-863-1100
FOR IMMEDIATE RELEASE
FURNITURE BRANDS INTERNATIONAL REPORTS $0.57 EARNINGS PER SHARE
FOR THE SECOND QUARTER OF 2002
COMPANY REPAYS $49 MILLION OF LONG-TERM DEBT IN FIRST HALF
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St. Louis, Missouri, July 24, 2002 -- Furniture Brands International (NYSE:FBN)
announced today its financial results for the second quarter and first half of
2002.
Net Sales
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Net sales for the second quarter of 2002 were $604.5 million, compared with
$459.6 million in the second quarter of 2001, an increase of 31.5%. Net sales
for the first half of 2002 were $1,239.0 million, compared with $965.8 million
in the first half of 2001, an increase of 28.3%. Excluding the impact of
Henredon, Drexel Heritage and Maitland-Smith, which the company acquired as of
the close of business on December 28, 2001, the company's sales (Broyhill, Lane
and Thomasville) showed year-over-year growth of 10.6% in the quarter and 7.7%
in the first half.
Net Earnings
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Net earnings for the second quarter were $32.1 million as compared to $1.6
million in the second quarter of last year. Diluted net earnings per common
share were $0.57 as compared to $0.03 in the second quarter of 2001. Excluding
all asset impairment and other restructuring charges recorded in the second
quarter of 2001, the company's diluted net earnings per common share in that
quarter would have been $0.27. Effective January 1, 2002, the company adopted
FAS #142, which eliminated the amortization of goodwill and other intangible
assets with indefinite lives. Had FAS #142 been effective in the second quarter
of 2001, and excluding the asset impairment and restructuring charges mentioned
above, net earnings per common share in the quarter would have been $0.33,
indicating a 72.7% increase in 2002 earnings versus the comparable period in
2001.
Net earnings for the first half of 2002 were $64.9 million or $1.15 per diluted
common share as compared to $21.3 million or $0.42 per diluted common share in
the first half of 2001. Had FAS #142 been effective in the first half of 2001,
and excluding the asset impairment and restructuring charges mentioned above,
diluted net earnings per common share in that half would have been $0.78, and
net earnings per common share in the half just ended would have represented a
47.4% increase.
Management Comments
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"We are pleased to report excellent quarterly results, both in sales and in net
earnings," stated W. G. (Mickey) Holliman, Chairman, President and Chief
Executive Officer. "With only half our businesses showing favorable sales gains,
we have again been able to post an attractive year-over-year increase in our net
earnings and earnings per share, a result of the aggressive cost-control
programs we have undertaken and the beneficial effects of our offshore sourcing
initiatives. Assuming no favorable change in business conditions in the second
half, we should continue to see meaningful year-over-year increases in net
earnings and net earnings per common share.
"Additionally, we had another good quarter in terms of operating cash flow.
Despite significant income tax payments and over $20 million in capital
expenditures, we were able to reduce our long-term debt by $18.2 million during
the quarter and by $49 million in the year's first half. At the end of the
quarter, our debt-to-book capitalization was 32.4%, modestly over our targeted
objective of 30%. We continue to be encouraged by the company's ability to
generate substantial cash flow from operations.
"Finally, a divergence continues to exist between the strength of business in
our middle-price product offerings and those at the higher-end," Mr. Holliman
continued. "Order trends and shipments at Broyhill and Lane have been and
continue to be strong since the start of the year, driven by good business and
the capture of market share by both companies in a consolidating industry. At
the upper-end, however, which includes Thomasville, Henredon, Drexel Heritage
and Maitland-Smith, incoming orders are flat to slightly positive compared with
last year. To date, we have seen no sustained increase in those orders which
would lead us to conclude that the upper-end business will improve in the third
quarter."
Outlook
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Mr. Holliman concluded, "In April and again in early June, we expressed our
belief that the soft business environment at the high-end would continue until
the second half of this year, at which point we expected to see strengthened
business through the end of the year. Our previous assumptions included second
half growth in the high-end sector of our business. Based upon current
information, we now anticipate further delay in a recovery at the high-end.
Accordingly, we are revising our second half expectations to contemplate a
continued flat business environment at the high-end throughout the balance of
the year. Meanwhile, the pent-up demand in this market sector accumulates.
"We believe our third quarter net sales, seasonally the year's weakest, should
be up 25% (4% to 6% excluding the acquisitions) from the same quarter last year
and expect our third quarter earnings per share to be in the $0.48 to $0.52
range. We are revising our full-year expectation to a range from $2.25 to $2.32.
As has been our practice, we will provide an update on our third quarter and
full-year expectations in early September."
Furniture Brands International is America's largest home furnishings
manufacturer, manufacturing and sourcing its products under six of the
best-known brand names in the industry - Broyhill, Lane, Thomasville, Henredon,
Drexel Heritage and Maitland-Smith. The company markets its products across a
broad spectrum of price categories and distributes its products through an
extensive system of independently owned national, regional and local retailers.
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 the company's expected earnings per
share, the prospects for the overall business environment, and other 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
public releases and SEC reports, including but not limited to the most recent
reports on Forms 10-Q and 10-K. The company also cautions investors that our
forecast for the third quarter and the year 2002 represents our outlook only as
of this date, and we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new developments or
otherwise.
Mr. Holliman will be interviewed with respect to this earnings release on CNBC's
"Wake Up Call" at 5:40 a.m. (Central Time) on Thursday, July 25, 2002. A
conference call will be held to discuss the second quarter results at 7:30 a.m.
(Central Time) on July 25, 2002. The call can be accessed at
www.streetevents.com, or on the company's website at www.furniturebrands.com.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED OPERATING RESULTS
(Dollars in thousands except per share)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
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Net sales.................................................... $604,511 $459,648 $1,238,972 $ 965,830
Costs and expenses:
Cost of operations......................................... 429,577 335,034 885,828 705,450
Selling, general and administrative expenses............... 108,470 84,866 218,768 169,277
Depreciation and amortization ............................. 12,266 14,765 24,822 30,023
Asset impairment charges................................... - 18,000 - 18,000
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Earnings from operations..................................... 54,198 6,983 109,554 43,080
Interest expense............................................. 5,492 5,539 11,094 12,308
Other income, net............................................ 996 610 2,070 1,419
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Earnings before income tax expense........................... 49,702 2,054 100,530 32,191
Income tax expense........................................... 17,617 407 35,674 10,863
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Net earnings................................................. $ 32,085 $ 1,647 $ 64,856 $ 21,328
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Net earnings per common share (diluted)...................... $ 0.57 $ 0.03 $ 1.15 $ 0.42
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Average diluted common shares
outstanding (in thousands)................................. 56,698 51,214 56,570 51,149
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Note:Effective January 1, 2002, the company adopted FAS 142 regarding
amortization of goodwill and other intangible assets. If this accounting
change had occurred effective January 1, 2001, the company would have
reported diluted net earnings per common share of $0.09 and $0.53 for the
three-month and six-month periods ended June 30, 2001, respectively.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 30, December 31,
2002 2001
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Assets
Current assets:
Cash and cash equivalents......................................... $ 14,606 $ 15,707
Receivables, net.................................................. 394,804 359,493
Inventories....................................................... 393,295 369,773
Prepaid expenses and other current assets......................... 31,292 33,742
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Total current assets............................................ 833,997 778,715
Net property, plant and equipment .................................. 333,082 321,640
Intangible assets................................................... 359,043 367,305
Other assets........................................................ 40,195 35,829
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$1,566,317 $1,503,489
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Liabilities and Shareholders' Equity
Current liabilities:
Accrued interest expense ......................................... $ 3,216 $ 2,805
Accounts payable and other accrued expenses ...................... 194,595 172,490
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Total current liabilities....................................... 197,811 175,295
Long-term debt ..................................................... 405,400 454,400
Other long-term liabilities......................................... 118,506 114,135
Shareholders' equity ............................................... 844,600 759,659
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$1,566,317 $1,503,489
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