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EXHIBIT 10.1
[LADD LOGO] NEWS RELEASE
FOR IMMEDIATE RELEASE
Oct. 13, 1998
Contact: John J. Ong
4620 Grandover Parkway - Box 26777 (336) 315-4049
Greensboro, NC 27417-6777 E-mail: jong@laddnet.com
LADD THIRD QUARTER EARNINGS UP 91% ON 10% SALES GAIN
GREENSBORO, NC - LADD Furniture, Inc. today reported that its fiscal 1998
third quarter net earnings jumped 91 percent from the year-earlier quarter, on a
sales increase of 10 percent. For the fiscal third quarter ended October 3,
1998, LADD earned $3.3 million, or $0.41 per share (diluted), versus $1.7
million, or $0.22 per share (diluted) in the comparable 1997 quarter. Third
quarter net sales this year totaled $142.9 million, up from $129.9 million in
the same period of 1997. For the first nine months, net sales rose 12%, to
$425.8 million this year, from $378.9 million in 1997. Net earnings for this
year's first nine months more than doubled from a year earlier, rising to $8.5
million, or $1.06 per share (diluted), for the nine months ended October 3, 1998
- - from $3.9 million, or $0.50 per share (diluted) a year earlier.
LADD chairman and CEO Fred L. Schuermann, Jr. said he was pleased with the
quarter's continued profitability improvement, pointing out that the third
quarter net earnings of $3.3 million represented LADD's highest third quarter
profit since 1988. "We again recorded substantial year-over-year margin
improvement in the third quarter," Schuermann said, "with the operating margin
for the period rising a full 1.3 percentage points over the third quarter of
last year."
Schuermann noted that LADD's management group was very satisfied that the
company's total third quarter residential casegoods (wood furniture) sales
increased 11 percent from a year earlier, while its residential upholstery sales
rose 12 percent. "That kind of solid top line progress in our residential
business is most encouraging," he said, "and I consider it a real indication of
the success our casegoods and upholstery product development teams have achieved
in a relatively short span of time." He added, "In total, our order backlog
increased 11 percent during the third quarter, and we are eagerly looking
forward to the start of the October International Home Furnishings Market this
week in High Point."
Schuermann said that, as has been anticipated following the sharp gains of
the past several years, LADD's contract furniture volume growth slowed on a
year-over-year comparative basis, with contract sales rising 4 percent in the
third quarter. "The contract business continues to experience strong demand,"
Schuermann said, "but as sales have
-over-
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grown and we've approached current capacity constraints, we have been more
selective in accepting orders." He pointed out that LADD's contract capacity is
slated to increase modestly during 1999, with the expansion of its Chilhowie,
VA production facility.
Commenting on the overall business climate, he said, "The
widely-publicized weakness experienced by many global markets for the better
part of the past year finally washed over onto the U.S. markets during this
year's third quarter, and this domestic uncertainty has prompted a number of
economic experts, including Federal Reserve Chairman Alan Greenspan, to
conclude that a slowdown in the U.S. economy at this point would not be
unexpected. We believe LADD is solidly positioned to prosper and continue
improving its financial position in the quarters just ahead, even should the
domestic economy weaken from current levels."
Schuermann noted that, traditionally, the furniture manufacturing industry
tends to become more cash flow positive when business turns down, due to
reduced working capital requirements. "Most of the public furniture companies'
stocks have come under extreme selling pressure in recent weeks and, in the
opinion of a number of industry analysts, the current prices of many of these
stocks seemingly discount all but the severest of recessions. Despite the
recent volatility of the U.S. stock market and the growing gloom emanating from
Wall Street, we continue to be very confident in the future. Our primary
objectives for LADD continue to be profitability improvement, debt reduction,
and solidly-grounded sales growth for our existing furniture brands."
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 of 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.
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TABLE FOLLOWS
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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 profitability and
cash flow levels within the context of a weaker U.S. economy, 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)
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13 Weeks Ended
-----------------------------
Sept. 27, 1997 Oct. 3, 1998
-------------- ------------
Net sales (1) $ 129,935,000 142,896,000
Earnings before interest and income taxes 5,549,000 7,656,000
Interest expense 2,701,000 2,220,000
Earnings before income taxes 2,848,000 5,436,000
Income tax expense 1,110,000 2,117,000
Net earnings $ 1,738,000 3,319,000
Net earnings per common share - basic $ 0.22 0.42
Net earnings per common share - diluted $ 0.22 0.41
Weighted average number of common shares
outstanding - diluted 7,866,753 8,033,934
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39 Weeks Ended
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Sept. 27, 1997 Oct. 3, 1998
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Net sales (1) $ 378,875,000 425,810,000
Earnings before interest and income taxes 14,831,000 21,183,000
Interest expense 8,425,000 7,175,000
Earnings before income taxes 6,406,000 14,008,000
Income tax expense 2,498,000 5,460,000
Net earnings $ 3,908,000 8,548,000
Net earnings per common share - basic $ 0.50 1.10
Net earnings per common share - diluted $ 0.50 1.06
Weighted average number of common shares
outstanding - diluted 7,825,836 8,074,229
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(1) Net sales by business group Third Quarter First Nine Months
were as follows (000's): 1997 1998 1997 1998
-------- -------- -------- --------
Residential Casegoods $ 72,068 80,348 208,240 234,608
Residential Upholstery 28,017 31,483 88,731 95,388
Contract Sales 29,850 31,065 81,904 95,814
-------- -------- -------- --------
Total $129,935 142,896 378,875 425,810
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