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EXHIBIT 10.1
[LADD LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
JULY 20, 1998
CONTACT: JOHN J. ONG
(336) 315-4049
E-MAIL: jong@laddnet.com
LADD SECOND QUARTER EARNINGS UP 74%
SIX-MONTH PROFITS JUMP 141%
GREENSBORO, NC -- LADD Furniture, Inc. today reported that its net
earnings for the second quarter of fiscal 1998 jumped 74 percent from the
year-earlier quarter, on a sales increase of 8 percent. For the fiscal second
quarter ended July 4, 1998, LADD earned $2.9 million, or $0.35 per share
(diluted), as compared to $1.7 million, or $0.21 per share (diluted) in last
year's second quarter. Net sales for the second quarter totaled $135.5
million, as compared to $125.6 million for last year's comparable period. For
the first six months, net sales rose 14%, to $282.9 million this year, from
$248.9 million in 1997. Profits for this year's first six months were sharply
ahead of the comparable 1997 level, as net earnings totaled $5.2 million, or
$0.65 per share (diluted), for the six months ended July 4, 1998 - compared with
$2.2 million, or $0.28 per share (diluted).
LADD chairman and CEO Fred L. Schuermann, Jr. said he was pleased with the
quarter's profit improvement. "We achieved meaningful margin progress in the
second quarter," Schuermann said, "which enabled net earnings to increase
substantially faster than our sales growth during the period." He noted, that
for the second quarter, LADD's total residential casegoods (wood furniture)
sales increased 9 percent from a year earlier, while residential upholstery
sales edged up 2 percent, and contract furniture volume gained 11 percent.
"Our order backlog remains healthy," Schuermann said, "and we are looking
forward to third quarter shipments of the exciting new products we introduced
at the April home furnishings market."
He concluded, "Although we are pleased with the 14% sales growth achieved
in the first half of 1998, incoming order rates in the second quarter were
below what we had expected at the beginning of the period, and were roughly
flat compared to a year earlier. However, we expect our industry to continue
growing over the remainder of 1998 and into 1999, and we feel strongly that LADD
is well-positioned to participate fully in this trend. Our primary operating
objectives for the company continue to be profitability improvement, debt
reduction, and solidly-grounded sales growth for our existing furniture brands."
-more-
[LADD LETTERHEAD]
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Executive vice president and chief financial officer William S. Creekmuir
reported that total debt at mid-year stood at $116.2 million and represented a
leverage ratio (total debt as a percentage of total debt plus shareholders'
equity) of 45.8%. Creekmuir noted that this was a decline of $9.2 million from
the debt level at the beginning of fiscal 1998, and a decline of $4.6 million
from the prior quarter. "We are continuing the trend of debt reduction which
began early in 1996 while simultaneously increasing shareholders' equity,"
Creekmuir said, "and, as a result, we are moving steadily toward our overall
leverage objectives." He added that, due to a combination of lower
indebtedness and reduced interest rates, LADD's interest expense declined
$348,000 or 13 percent in this year's second quarter compared to a year
earlier, and was down $769,000, also a 13 percent reduction, through the first
six months of fiscal 1998.
Headquartered in Greensboro, NC, LADD is one of the largest North American
residential furniture manufacturers. The company markets its wide range of
residential wood and upholstered furniture domestically under the major brand
names American Drew, Barclay, Clayton Marcus, Lea, Pennsylvania House and
Pilliod, and exports these products worldwide through LADD International.
LADD's contract sales group, manufactured under the American Martinsville
name, is also one of the world's leading suppliers of guest room furniture to
the hotel industry, as well as to assisted-living (retirement) facilities and
governmental markets. LADD also owns and operates LADD Transportation, a
support company. LADD's stock is traded on the Nasdaq National Market under
the symbol LADF and information on the company can be found on the Internet at
www.laddfurniture.com.
TABLE FOLLOWS
# # # # # # #
FORWARD-LOOKING STATEMENTS: This news release contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of 1934. Such statements are dependent on a number of factors which could
cause actual results to differ materially from those expressed or implied in
the forward-looking statements. Such factors include anticipated sales growth
resulting from industry growth and the company's new product introductions, in
addition to those factors set forth in the company's required filings with the
U.S. Securities and Exchange Commission.
NOTE: To receive fax copies of recent LADD news releases free of charge, just
dial 800-758-5804, extension 501325. These releases are also available via the
company's Internet site at www.laddfurniture.com ("company news").
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LADD FURNITURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (PRELIMINARY AND UNAUDITED)
- --------------------------------------------------------------------------
13 Weeks Ended
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June 28, 1997 July 4, 1998
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Net sales (1) $ 125,572,000 135,505,000
Earnings before interest and income taxes 5,424,000 7,075,000
Interest expense 2,719,000 2,371,000
Earnings before interest and income taxes 2,705,000 4,704,000
Income tax expense 1,055,000 1,835,000
Net earnings $ 1,650,000 2,869,000
Net earnings per common share - basic $ 0.21 0.37
Net earnings per common share - diluted $ 0.21 0.35
Weighted average number of
common shares outstanding 7,737,217 7,812,039
- ------------------------------------------------------------------------------------
26 Weeks Ended
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June 28, 1997 July 4, 1998
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Net sales (1) $ 248,940,000 282,914,000
Earnings before interest and income taxes 9,282,000 13,527,000
Interest expense 5,724,000 4,955,000
Earnings before interest and income taxes 3,558,000 8,572,000
Income tax expense 1,388,000 3,343,000
Net earnings $ 2,170,000 5,229,000
Net earnings per common share - basic $ 0.28 0.67
Net earnings per common share - diluted $ 0.28 0.65
Weighted average number of
common shares outstanding 7,728,392 7,785,997
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(1) Net sales by business group Second Quarter First Six Months
were as follows (000's): 1997 1998 1997 1998
-------- ------- ------- --------
Residential Casegoods $ 67,622 73,678 136,172 154,260
Residential Upholstery 29,141 29,782 60,714 63,905
Contract Sales 28,809 32,045 52,054 64,749
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Total $125,572 135,505 248,940 282,914
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