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): October 25, 2002
(October 23, 2002)
Furniture Brands International, Inc.
(Exact name of Registrant as specified in charter)
Delaware I-91 43-0337683
- -------------------------- ------------------- ----------------------
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
101 South Hanley Road, St. Louis, Missouri 63105
(Address of principal executive offices)
(314) 863-1100
(Registrant's telephone number)
Item 5. Other Matters
On October 23, 2002, the Company announced operating results for the third
quarter and first nine months of 2002.
Net sales for the third quarter of 2002 were $563.2 million, compared with
$448.7 million in the third quarter of 2001, an increase of 25.5%. For the nine
months net sales were $1,802.2 million, compared with $1,414.5 million in the
same period of 2001, an increase of 27.4%. 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 4.5% in the quarter and 6.7% in the
nine months.
Net earnings for the third quarter were $24.6 million as compared to $13.9
million in the third quarter of last year. Diluted net earnings per common share
were $0.44 as compared to $0.27 in the third quarter of 2001. Excluding all
restructuring charges recorded in the third quarter of 2001, the Company's
diluted net earnings per common share in that quarter would have been $0.29.
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 third quarter of 2001, and excluding the
restructuring charges mentioned above, net earnings per common share in the
quarter would have been $0.34, indicating a 29.4% increase in 2002 earnings
versus the comparable period in 2001.
Net earnings for the nine months of 2002 were $89.5 million or $1.59 per
diluted common share as compared to $35.2 million or $0.69 per diluted common
share in the same period of 2001. Had FAS #142 been effective in the nine months
of 2001, and excluding the asset impairment and restructuring charges, net
earnings per common share would have been $1.12.
The Company also announced that its current projections for earnings per
share in the third quarter is $0.50 to $0.55 and for the full year 2002 is in
the $2.09 to $2.14 range.
Item 7. Financial Statements and Exhibits
(c) Exhibit
99 Press Release, dated October 23, 2002
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.
By: /s/Steven W. Alstadt
-------------------------------
Steven W. Alstadt
Controller and Chief Accounting Officer
Dated: October 25, 2002
<page>
INFORMATION
FOR IMMEDIATE RELEASE
FURNITURE BRANDS INTERNATIONAL ANNOUNCES
THIRD QUARTER 2002 FINANCIAL RESULTS
St. Louis, Missouri, October 23, 2002 - Furniture Brands International (NYSE:
FBN) announced today its financial results for the third quarter and first nine
months of 2002.
Net Sales
Net sales for the third quarter of 2002 were $563.2 million, compared with
$448.7 million in the third quarter of 2001, an increase of 25.5%. For the nine
months, net sales were $1,802.2 million, compared with $1,414.5 million in the
same period of 2001, an increase of 27.4%. 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 4.5% in the quarter and 6.7% in the
nine months.
Net Earnings
Net earnings for the third quarter were $24.6 million as compared to $13.9
million in the third quarter of last year. Diluted net earnings per common share
were $0.44 as compared to $0.27 in the third quarter of 2001. Excluding all
restructuring charges recorded in the third quarter of 2001, the company's
diluted net earnings per common share in that quarter would have been $0.29.
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 third quarter of 2001, and excluding the
restructuring charges mentioned above, net earnings per common share in the
quarter would have been $0.34, indicating a 29.4% increase in 2002 earnings
versus the comparable period in 2001. Net earnings for the nine months were
$89.5 million or $1.59 per diluted common share as compared to $35.2 million or
$0.69 per diluted common share in the same period of 2001. Had FAS#142 been
effective in the first nine months of 2001, and excluding asset impairment and
other restructuring charges, diluted net earnings per common share would have
been $1.12.
Management Comments
"In the current difficult business environment, we are pleased to report these
year over year increases in sales," stated W. G. (Mickey) Holliman, Chairman,
President and Chief Executive Officer. "Though only half our businesses continue
to show favorable gains, and even those have moderated somewhat from their highs
earlier in the year, we have been able to post a meaningful increase in net
earnings and earnings per share.
"While business remains comparatively strong at Broyhill and Lane, the companies
at the higher-end of our product line -- Thomasville, Henredon, Drexel Heritage
and Maitland-Smith - continue to show flat to slightly down orders year over
year. We see nothing to date that would indicate a turnaround in business at the
high-end anytime before the end of this year.
"With respect to operating earnings and margin performance, the third quarter is
seasonally the weakest due to slower retail activity and plant vacation
shutdowns," Mr. Holliman continued. "Additionally, the quarter was negatively
impacted by two plant closures, some discount programs designed to stimulate
sales, and our ongoing transition to a higher level of offshore sourcing.
"The good news is that, despite a buildup in inventories caused by seasonal
needs and the rapidly expanding import program, we had another strong quarter in
terms of operating cash flow. We reduced our long-term debt by $30.6 million
during the quarter and we have now achieved our long-stated target of 30%
debt-to-book capitalization. Our ability to generate substantial cash flow from
operations, even in a challenging business environment, along with a strong
balance sheet gives us the flexibility to invest wisely as growth opportunities
are presented."
Outlook
Mr. Holliman concluded, "Having just completed the fall International Home
Furnishings Market, we are excited about retailer response to our product
offerings and business strategy, and we expect continued market share expansion
as a result.
"We believe our fourth quarter sales growth - excluding the acquisitions - will
be essentially flat with the same period last year and we expect our earnings
per share for the quarter to be in the $0.50 to $0.55 range. This would indicate
a full-year expectation in the range of $2.09 to $2.14. As has been our
practice, we will provide an update on our fourth quarter expectation in early
December."
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 fourth 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 5:20 a.m. (Central Time) on Thursday, October 24, 2002. A
conference call will be held to discuss the third quarter results at 7:30 a.m.
(Central Time) on October 24, 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 Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------------ ------------ -------------- -------------
Net sales...................................................... $563,246 $448,682 $1,802,218 $1,414,512
Costs and expenses:
Cost of operations........................................... 404,899 327,787 1,290,727 1,033,237
Selling, general and administrative expenses................. 103,552 82,115 322,320 251,392
Depreciation and amortization ............................... 12,018 13,507 36,840 43,530
Asset impairment charges..................................... - - - 18,000
------------- ------------- ------------- ------------
Earnings from operations....................................... 42,777 25,273 152,331 68,353
Interest expense............................................... 5,388 5,197 16,482 17,505
Other income, net.............................................. 911 790 2,981 2,209
------------- ------------ ------------- ------------
Earnings before income tax expense............................. 38,300 20,866 138,830 53,057
Income tax expense............................................. 13,642 6,995 49,316 17,858
------------- ----------- ------------- ------------
Net earnings................................................... $ 24,658 $ 13,871 $ 89,514 $ 35,199
============= =========== ============= ============
Net earnings per common share (diluted)........................ $ 0.44 $ 0.27 $ 1.59 $ 0.69
====== ====== ====== ======
Average diluted common shares
outstanding (in thousands)................................... 56,176 51,466 56,458 51,255
====== ====== ====== ======
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 $0.32 and $0.85 for the
three-month and nine-month periods ended September 30, 2001, respectively.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
September 30, December 31,
2002 2001
----------------- -----------------
Assets
Current assets:
Cash and cash equivalents......................................... $ 18,181 $ 15,707
Receivables, net.................................................. 383,102 359,493
Inventories....................................................... 420,275 369,773
Prepaid expenses and other current assets......................... 28,387 33,742
------------- -------------
Total current assets............................................ 849,945 778,715
Net property, plant and equipment .................................. 329,616 321,640
Intangible assets................................................... 359,043 367,305
Other assets........................................................ 38,551 35,829
------------- -------------
$1,577,155 $1,503,489
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accrued interest expense ......................................... $ 3,087 $ 2,805
Accounts payable and other accrued expenses ...................... 212,610 172,490
------------ -----------
Total current liabilities....................................... 215,697 175,295
Long-term debt ..................................................... 374,800 454,400
Other long-term liabilities......................................... 120,799 114,135
Shareholders' equity ............................................... 865,859 759,659
------------ ------------
$1,577,155 $1,503,489
============ ============