EXHIBIT 99(a)
Kenneth F. Cook
314/982-1700
FOR IMMEDIATE RELEASE
---------------------
INTERCO REPORTS INCREASED SALES AND EARNINGS FROM
CONTINUING OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
----------------------------------------------------------
St. Louis, January 30, 1996 -- INTERCO INCORPORATED (NYSE:ISS) announced
operating results for the fourth quarter and twelve months ended December 31,
1995. For the fourth quarter and twelve months, net earnings per common share
from continuing operations, excluding nonrecurring items, were $0.18 and $0.56,
respectively. Including the results of Thomasville Furniture Industries, Inc.,
acquired on December 29, 1995, net earnings per common share on a pro forma
basis would have been $0.19 and $0.62 for the fourth quarter and twelve months
of 1995, respectively.
Net sales for both the fourth quarter and full year were slightly ahead of those
reported last year. Net earnings from continuing operations for both periods
were impacted by two nonrecurring items described below which distort
comparability between years. Excluding these nonrecurring items, net earnings
from continuing operations for the fourth quarter would have declined 7.0%
versus the prior year, while net earnings for the twelve months ended December
31, 1995 would have improved 5.5% over those reported last year. These results
were modestly ahead of expectations.
During the fourth quarter, the company recorded a $7.9 million pretax gain on
insurance settlement related to the November, 1994 explosion and fire that
destroyed a particleboard plant. The company rebuilt the particleboard plant
during
1995 using insurance proceeds. This state-of-the-art facility is currently in
its start-up phase. The after-tax impact of the gain on insurance settlement
totaled $4.7 million or $0.09 per common share on a fully diluted basis.
The acquisition of Thomasville included a refinancing of most of the company's
long-term debt. As a result, deferred financing fees and expenses related to the
company's previous long-term debt were written off. The after-tax impact of this
extraordinary item totaled $5.8 million or $0.11 per common share on a fully
diluted basis.
Net earnings per common share from continuing operations, before the
extraordinary item noted previously, were $0.27 and $0.65 for the fourth quarter
and twelve months ended December 31, 1995, respectively, versus $0.21 and $0.54
for the same periods in 1994. Excluding the gain on insurance settlement and
extraordinary item, net earnings per common share from continuing operations
would have been $0.18 and $0.56 for the fourth quarter and twelve months ended
December 31, 1995, and pro forma for the acquisition of Thomasville would have
been $0.19 and $0.62, respectively.
Each period included charges for depreciation and amortization which resulted
from an asset revaluation that occurred when the company emerged from Chapter 11
reorganization in 1992. These noncash charges, which are ongoing, reduced net
earnings per common share in the fourth quarter and twelve months by $0.06 and
$0.24, respectively, for 1995 and by $0.06 and $0.25, respectively, for 1994.
Excluding depreciation and amortization resulting from the 1992 asset
revaluation noted above, net earnings per common share from continuing
operations before the gain on insurance settlement and extraordinary item would
have been $0.24 and $0.27 for the fourth quarter, and $0.80 and $0.79 for the
twelve months, of 1995 and 1994, respectively. Pro forma for the Thomasville
acquisition, net earnings per
common share on the same basis would have been $0.25 and $0.86 for the fourth
quarter and twelve months ended December 31, 1995.
Operating results for the three and twelve months ended December 31, 1995 and
1994 are summarized as follows:
Three Months Ended Twelve Months Ended
(In millions, except per share) December 31, December 31,
------------------ ----------------------
1995 1994 1995 1994
------ ------ -------- --------
Net sales $279.0 $277.2 $1,073.9 $1,072.7
As Reported
- -----------
Earnings from operations $ 24.2 $ 25.1 $ 79.1 $ 85.1
Net earnings from continuing operations before gain
on insurance settlement and extraordinary item 10.1 10.8 29.5 27.9
Net earnings per common share (fully diluted) from
continuing operations before gain on insurance
settlement and extraordinary item $ 0.18 $ 0.21 $ 0.56 $ 0.54
Pro forma net earnings per common share (fully
diluted) from continuing operations before gain
on insurance settlement and extraordinary item (b) $ 0.19 (c) $ 0.62 $ 0.61
As Adjusted (a)
- ---------------
Earnings from operations $ 28.3 $ 29.1 $ 95.2 $ 102.0
Net earnings from continuing operations before gain
on insurance settlement and extraordinary item 13.2 13.9 41.9 41.0
Net earnings per common share (fully diluted) from
continuing operations before gain on insurance
settlement and extraordinary item $ 0.24 $ 0.27 $ 0.80 $ 0.79
Pro forma net earnings per common share (fully
diluted) from continuing operations before gain
on insurance settlement and extraordinary item (b) $ 0.25 (c) $ 0.86 $ 0.86
Average fully diluted common shares outstanding 52.3 51.5 52.3 51.5
(a) Adjusted to remove the depreciation and amortization related to the 1992
asset revaluation, net of taxes, where applicable.
(b) Pro forma for acquisition of Thomasville Furniture Industries, Inc.
(c) Not available.
INTERCO's continuing operations reflect the results of its furniture businesses,
comprised for the year ended December 31, 1995, of two operating divisions,
Broyhill Furniture Industries, Inc. and The Lane Company, Incorporated. The
company's operating results reflect the spin-off distribution of its former
footwear segment to its shareholders, effective November 17, 1994. Results of
the footwear segment for 1994 have been reflected as discontinued operations.
The pro forma results include the results of Thomasville Furniture Industries,
Inc. The assets and liabilities acquired are included in the company's December
31, 1995 balance sheet; however, since the acquisition was consummated on the
last business day of 1995, and was recorded using purchase accounting
methodology, no results of operations of Thomasville have been included in the
company's actual operating results for 1995.
OPERATING PERFORMANCE
- ---------------------
The sales performance for both the fourth quarter and full year reflected a
generally flat U.S. economy and soft industry conditions. Order rates in the
fourth quarter and backlogs at year end were both down moderately due
substantially to a change in reporting methodology at certain of the company's
operating units, as opposed to a business trend. Business trends appear to be
essentially flat with last year.
Earnings from operations were below a year ago for both the fourth quarter and
twelve months reflecting the company's desire to maintain manufacturing
utilization rates at levels necessary to balance inventories with incoming
orders. Though operating earnings were negatively impacted by unfavorable
overhead absorption rates, operating cash flow continued to be quite favorable
due to strong working capital management.
Richard B. Loynd, Chairman of the Board and Chief Executive Officer of INTERCO,
commented that he was generally pleased with the company's performance in 1995
given the soft economy and, particularly, tough retail environment. Loynd
stated, "The company's ability to produce both a modest sales increase and an
earnings increase for the year is a strong endorsement of our gross profit
management philosophy and a recognition of the outstanding operating management
throughout the corporation. This performance maintains our position as the
profit leader in the residential furniture industry." Commenting on the
company's future prospects, Loynd stated, "The acquisition of Thomasville is
another significant step forward in the transformation of INTERCO into a
growing, financially strong, pure-play furniture manufacturer. This acquisition
joins three of the most highly recognized furniture brands, Broyhill, Lane and
Thomasville, into the largest (with approximately $1.6 billion in annual sales)
and most profitable residential furniture manufacturing company in the country.
With interest rates at their current low levels, home sales, both new and
existing, should continue at good levels. This trend, coupled with a growing
population in the 35 to 65 age group, will provide an environment for continued
growth in furniture sales and we plan to expand our position in this large
consumer market."
The company has filed an S-3 registration statement with the Securities and
Exchange Commission in preparation for an equity offering to reduce long-term
debt that was increased as a result of the Thomasville acquisition. This
offering, of 8.75 million shares, is expected to be completed by the end of
February.
* * * * *
The registration statement referred to above has not yet become effective. These
securities may not be sold and offers to buy may not be accepted prior to the
time the registration statement becomes effective. This announcement does not
constitute an offer or the solicitation of an offer to sell or to buy any
security or the solicitation of any consents or approvals, which offers and
solicitations shall be made only by means of a prospectus filed with the
Securities and Exchange
Commission. There shall not be any sale of any security in any state in which
such solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
INTERCO INCORPORATED
CONSOLIDATED OPERATING RESULTS
(Dollars in thousands except per share)
Three Months Ended Twelve Months Ended
December 31, December 31,
1995 1994 1995 1994
--------- --------- ----------- ----------
Net sales....................................... $279,023 $277,244 $1,073,889 $1,072,696
Costs and expenses:
Cost of operations............................ 197,914 195,760 760,393 752,528
Selling, general and administrative
expenses.................................... 49,220 48,462 198,321 199,333
Depreciation and amortization (A)............. 7,717 7,951 36,104 35,776
-------- -------- ---------- ----------
Earnings from operations........................ 24,172 25,071 79,071 85,059
Interest expense................................ 8,436 8,934 33,845 37,886
Other income, net:
Gain on insurance settlement.................. 7,882 - 7,882 -
Other......................................... 578 768 3,930 1,668
-------- -------- ---------- ----------
Earnings before income tax expense,
discontinued operations and extraordinary
item.......................................... 24,196 16,905 57,038 48,841
Income tax expense.............................. 9,399 6,109 22,815 20,908
-------- -------- ---------- ----------
Net earnings from continuing operations......... 14,797 10,796 34,223 27,933
Net earnings (loss) from discontinued
operations (B)................................ - (11,952) - 10,339
-------- -------- ---------- ----------
Net earnings (loss) before extraordinary item... 14,797 (1,156) 34,223 38,272
Extraordinary item (C).......................... (5,815) - (5,815) -
-------- -------- ---------- ----------
Net earnings (loss)............................. $ 8,982 $ (1,156) $ 28,408 $ 38,272
======== ======== ========== ==========
Net earnings (loss) per common share
(fully diluted):
Continuing operations......................... $ 0.27 $ 0.21 $ 0.65 $ 0.54
Discontinued operations....................... - (0.23) - 0.20
Extraordinary item............................ (0.11) - (0.11) -
-------- -------- ---------- ----------
Net earnings (loss) per common share.......... $ 0.16 $ (0.02) $ 0.54 $ 0.74
======== ======== ========== ==========
Net earnings per common share (fully diluted)
from continuing operations - As Adjusted (D).. $ 0.24 $ 0.27 $ 0.80 $ 0.79
======== ======== ========== ==========
Average fully diluted common shares
outstanding (in thousands).................... 52,317 51,506 52,317 51,506
======== ======== ========== ==========
(A) Includes $4,086 and $4,064 for the three months ended December 31, 1995 and
1994, respectively, and $15,922 and $16,900 for the twelve months ended
December 31, 1995 and 1994, respectively, related to the 1992 asset
revaluation.
(B) Includes loss on spin-off distribution of The Florsheim Shoe Company and
Converse Inc., net of taxes, totaling $15,104.
(C) Early extinguishment of debt, net of tax benefit.
(D) Adjusted to remove impact of gain on insurance settlement, extraordinary
item and depreciation and amortization related to the 1992 asset
revaluation, net of taxes.
INTERCO INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, December 31,
1995 1994
------------- ------------
Assets (A)
Current assets:
Cash and cash equivalents.................... $ 26,412 $ 32,145
Receivables, net............................. 276,116 202,270
Inventories.................................. 269,677 155,031
Prepaid expenses and other current assets.... 17,888 14,325
---------- --------
Total current assets....................... 590,093 403,771
Net property, plant and equipment.............. 306,406 181,393
Intangible assets.............................. 370,307 275,767
Other assets................................... 24,933 20,804
---------- --------
$1,291,739 $881,735
========== ========
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt......... $ 18,639 $ 16,574
Accrued interest expense..................... 1,304 1,652
Accounts payable and other accrued expenses.. 115,114 77,222
---------- --------
Total current liabilities.................. 135,057 95,448
Long-term debt, less current maturities........ 705,040 409,679
Other long-term liabilities.................... 150,486 101,214
Shareholders' equity........................... 301,156 275,394
---------- --------
$1,291,739 $881,735
========== ========
(A) The consolidated balance sheet as of December 31, 1995 includes the assets
acquired and liabilities assumed by the company in the acquisition of
Thomasville Furniture Industries, Inc. as of the close of business on
December 29, 1995.