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): January 27, 2003
(January 22, 2003)
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 January 22, 2003, the Company announced operating results for the fourth
quarter and full year ended December 31, 2002.
Net sales for the fourth quarter of 2002 were $595.5 million, compared with
$476.8 million in the fourth quarter of 2001, an increase of 24.9%. For the full
year, net sales were $2,397.7 million, compared with $1,891.3 million for the
full year 2001, an increase of 26.8%. 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 5.6% in the quarter and 6.4% for
the full year.
Net earnings for the fourth quarter were $29.3 million as compared to $22.8
million in the fourth quarter of last year. Diluted net earnings per common
share were $0.52 as compared to $0.44 in the fourth quarter of 2001, an increase
of 18.2%. Excluding all restructuring charges and certain non-operating income
(accounted for within "Other income, net") recorded in the fourth quarter of
2001, the Company's diluted net earnings per common share in that quarter would
have been $0.40. 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 fourth quarter of 2001, and
excluding the restructuring charges and non-operating income mentioned above,
diluted net earnings per common share in the quarter would have been $0.46,
indicating a 13.0% increase in 2002 diluted net earnings per common share versus
the comparable period in 2001.
Net earnings for the full year 2002 were $118.8 million or $2.11 per
diluted common share as compared to $58.0 million, or $1.13 per diluted common
share for 2001. Had FAS #142 been effective for all of 2001, and excluding asset
impairment and other restructuring charges as well as non-operating income,
diluted net earnings per common share would have been $1.58, indicating a 33.5%
increase for the full year 2002 versus 2001.
The Company also announced that its current projections expect sales to be
flat and earnings per share in the first quarter of 2003 to be in the $0.55 to
$0.60 range as compared to $0.58 in the first quarter of 2002. Sales growth in
the mid-single digits and earnings per share in the $2.40 to $2.50 range is
expected for the full year 2003.
Item 7. Financial Statements and Exhibits
(c) Exhibit
99 Press Release, dated January 22, 2003
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: January 27, 2003
<page>
INFORMATION
FOR IMMEDIATE RELEASE
FURNITURE BRANDS INTERNATIONAL REPORTS
SALES AND EARNINGS FOR THE FOURTH QUARTER AND FULL YEAR 2002
St. Louis, Missouri, January 22, 2003 -- Furniture Brands International
(NYSE:FBN) announced today its financial results for the fourth quarter and full
year ended December 31, 2002.
Net Sales
Net sales for the fourth quarter of 2002 were $595.5 million, compared with
$476.8 million in the fourth quarter of 2001, an increase of 24.9%. For the full
year, net sales were $2,397.7 million, compared with $1,891.3 million for the
full year 2001, an increase of 26.8%. 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 5.6% in the quarter and 6.4% for
the full year.
Net Earnings
Net earnings for the fourth quarter were $29.3 million, as compared to $22.8
million in the fourth quarter of last year. Diluted net earnings per common
share were $0.52 as compared to $0.44 for the fourth quarter of 2001, an
increase of 18.2%. Excluding all restructuring charges and certain non-operating
income (accounted for within "Other income, net") recorded in the fourth quarter
of 2001, the company's diluted net earnings per common share in that quarter
would have been $0.40. 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 fourth quarter of 2001, and
excluding the restructuring charges and non-operating income mentioned above,
diluted net earnings per common share in the quarter would have been $0.46,
indicating a 13.0% increase in 2002 diluted net earnings per common share versus
the comparable period in 2001.
Net earnings for the full year 2002 were $118.8 million or $2.11 per diluted
common share as compared to $58.0 million, or $1.13 per diluted common share for
2001. Had FAS #142 been effective for all of 2001, and excluding asset
impairment and other restructuring charges as well as non-operating income,
diluted net earnings per common share would have been $1.58, indicating a 33.5%
increase for the full year 2002 versus 2001.
Management Comments
W.G. (Mickey) Holliman, Chairman, President and Chief Executive Officer of
Furniture Brands International, stated: "Despite a difficult business
environment, 2002 was a successful year for Furniture Brands. Record sales
volume was achieved in our middle-price companies - Broyhill and Lane. Both
companies demonstrated sustained strength throughout the year with Lane
recording extraordinary performance. By comparison, however, our companies at
the upper-end -- Thomasville, Drexel Heritage, Henredon and Maitland-Smith --
reported sales essentially flat or down from 2001, tracking the softness that
has affected the upper-end throughout our industry for nearly two years.
"During 2002, Furniture Brands continued its aggressive cost reduction program
at each operating company. As a result, we expect operating profit margin
improvement to continue in 2003, even in a flat sales environment."
Mr. Holliman continued, "During the year, we solidified our position as the
industry leader in off-shore sourcing by partnering, through strategic
alliances, with a limited number of the best manufacturers producing exceptional
products at significant values to the consumer. Our quality control
infrastructure in the Far East, represented by Furniture Brands Import Services
Organization (FBISO), gives us a distinct competitive advantage over those
manufacturers and retailers who import products without adequate quality control
oversight. At the same time, on the distribution side, we continued to expand
our dedicated retail space -- currently representing 13 million-plus square feet
- -- through free-standing stores and galleries across the country and beyond our
borders, further solidifying our relationships with the best retailers in the
industry. This 'locked-in' retail floor space provides us with a secure base of
distribution, as other domestic competitors seek to replicate our sourcing
programs and as Far East manufacturers may seek to sell directly into the
domestic retail market. Our strategic initiatives in sourcing and distribution,
along with our powerful brands, leverage our competitive advantage to expand
market share penetration."
Outlook for 2003
Mr. Holliman continued, "Based on incoming order trends and discussions with our
retail partners, we see no improvement in the current business climate for the
near term. We will, therefore, grow our earnings by capturing market share with
innovative, quality products, which will be a value to consumers across all the
price points our operating companies serve. We will also continue our relentless
pursuit to drive non-value added costs out of our various operations, whether in
manufacturing, sales or administrative functions.
"At present, due to the continuing soft business environment at the upper-end
and difficult year-over-year comparisons in our middle-price businesses, we
foresee flat sales for the first quarter of 2003. We expect earnings per share
in the first quarter to be in the $0.55 to $0.60 range as compared to $0.58 in
the first quarter of 2002. Our expectation for the full year 2003 is for sales
growth in the mid-single digits and for earnings per share in the $2.40 to $2.50
range. We will update this guidance, as is our usual custom, in early March."
Mr. Holliman concluded, "Without question, the last two years have been
challenging for our company and our industry. However, Furniture Brands enjoys a
solid financial position and a clear strategic vision. I am proud of our
outstanding management team - the strongest in our industry - for their
dedication to the company, its products, its customers and its shareholders. We
will continue to build on our position as the furniture industry's undisputed
leader."
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 first quarter and the full year 2003 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.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED OPERATING RESULTS
(Dollars in thousands except per share)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
------------ ------------ -------------- -----------
Net sales...................................................... $595,491 $476,801 $2,397,709 $1,891,313
Costs and expenses:
Cost of operations........................................... 430,987 354,395 1,721,714 1,387,632
Selling, general and administrative expenses................. 102,009 79,443 424,329 330,835
Depreciation and amortization ............................... 12,426 12,237 49,266 55,767
Asset impairment charges..................................... - _- - 18,000
------------ ------------- ------------- -----------
Earnings from operations....................................... 50,069 30,726 202,400 99,079
Interest expense............................................... 5,250 4,479 21,732 21,984
Other income, net.............................................. 775 8,390 3,756 10,599
------------ ------------- -------------- -----------
Earnings before income tax expense............................. 45,594 34,637 184,424 87,694
Income tax expense............................................. 16,277 11,806 65,593 29,664
------------ ------------ ------------- -----------
Net earnings................................................... $ 29,317 $ 22,831 $ 118,831 $ 58,030
=========== ============ ============ ===========
Net earnings per common share (diluted)........................ $ 0.52 $ 0.44 $ 2.11 $ 1.13
====== ====== ====== ======
Average diluted common shares
outstanding (in thousands)................................... 56,108 51,526 56,387 51,325
====== ====== ====== ======
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 $0.50 and $1.35 for the
three-month and twelve-month periods ended December 31, 2001, respectively.
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2002 2001
----------------- -----------------
Assets
Current assets:
Cash and cash equivalents......................................... $ 15,074 $ 15,707
Receivables, net.................................................. 375,050 359,493
Inventories....................................................... 432,104 369,773
Prepaid expenses and other current assets......................... 27,231 33,742
------------- -------------
Total current assets............................................ 849,459 778,715
Net property, plant and equipment .................................. 333,371 321,640
Intangible assets................................................... 355,488 367,305
Other assets........................................................ 29,084 35,829
------------- -------------
$1,567,402 $1,503,489
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accrued interest expense ......................................... $ 3,018 $ 2,805
Accounts payable and other accrued expenses ...................... 194,346 172,490
------------ -----------
Total current liabilities....................................... 197,364 175,295
Long-term debt ..................................................... 374,800 454,400
Other long-term liabilities......................................... 125,723 114,135
Shareholders' equity ............................................... 869,515 759,659
------------ ------------
$1,567,402 $1,503,489
========== ==========