EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

 



 

INFORMATION

 

FOR IMMEDIATE RELEASE

 

Furniture Brands International, Inc.

101 South Hanley Road

St. Louis, Missouri 63105

 

For Further Information Call

Dan Stone

314-863-1100

 

 

FURNITURE BRANDS INTERNATIONAL REPORTS

FIRST QUARTER 2008 FINANCIAL RESULTS

 

Quarterly Dividend Declared

 

St. Louis, Missouri, April 30, 2008 – Consistent with its April 17 preliminary announcement, Furniture Brands International (NYSE: FBN) today announced net earnings from continuing operations for the period ended March 31, 2008 of $3.7 million, or $0.08 per diluted common share compared to $1.3 million or $0.03 per diluted common share in the first quarter of 2007. A copy of the condensed financial statements for the 2008 and 2007 periods and the company’s earlier preliminary announcement are attached to this press release.

 

Quarterly Dividend Declared

The Board of Directors declared today a quarterly dividend of $0.04 per common share payable May 23, 2008 to shareholders of record at the close of business on May 12, 2008.

Upcoming Investor Events

A conference call will be held to discuss first quarter results at 7:30 a.m. (Central Time) on May 1, 2008. The call can be accessed in Upcoming Investor Events on the company’s website at furniturebrands.com under ``Investor Info’’. Access to the call and the release will be archived for one year.

The company will hold its annual meeting of stockholders at 10:00 am (Central Time) on May 1, 2008 in St. Louis. Because election of certain directors is being contested, a final reconciliation of the election will require the authentication of a special inspector of elections. The final results of the stockholder voting are expected to be announced on or before May 20, 2008.

 

About Furniture Brands

 

Furniture Brands International (NYSE: FBN) is a vertically integrated operating company that is one of the nation’s leading designers, manufacturers, and retailers of home furnishings. With annual sales in excess of $2 billion, it markets through a wide range of retail channels, from mass merchant stores to single-brand and independent dealers to specialized interior designers. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Pearson, Hickory Chair, Laneventure, and Maitland-Smith.

 


 

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this document and in our public disclosures, whether written or oral, relating to future events or our future performance, including any discussion, express or implied, of our anticipated growth, operating results, future earnings per share, plans and objectives, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the words “will,’’ “believe,’’ “positioned,’’ “estimate,’’ “project,’’ “target,’’ “continue,’’ “intend,’’ “expect,’’ “future,’’ “anticipates,’’ and similar expressions that are not statements of historical fact. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under ``Risk Factors’’ in our Annual Report on Form 10-K for the year ended December 31, 2007 and in our other public filings with the Securities and Exchange Commission. Such factors include, but are not limited to: risks associated with the execution of our strategic plan; changes in economic conditions; loss of market share due to competition; failure to forecast demand or anticipate or respond to changes in consumer tastes and fashion trends; failure to achieve projected mix of product sales; business failures of large customers; distribution and cost savings programs; manufacturing realignments; increased reliance on offshore (import) sourcing of various products; fluctuations in the cost, availability and quality of raw materials; product liability uncertainty; environmental regulations; future acquisitions; impairment of goodwill and other intangible assets; anti-takeover provisions which could result in a decreased valuation of our common stock; loss of funding sources; and our ability to open and operate new retail stores successfully. It is routine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that all forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this report or other periodic reports are made only as of the date made and may change. While we may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

 


 

FURNITURE BRANDS INTERNATIONAL REPORTS

PRELIMINARY FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2008

 

Strategic plan delivers continued strong progress and results.

 

Earnings per share from continuing operations of $0.07 to $0.08, more than double the $0.03 in 2007

 

Sales from continuing operations totaled $477 million, down 14% from prior year

 

Quarter-end cash of $188 million, long-term debt of $235 million

 

 

St. Louis, Missouri, April 17, 2008 -- Furniture Brands International (NYSE: FBN) announced today its preliminary financial results for the first quarter ended March 31, 2008. These results are from continuing operations and exclude the impact of the first quarter sale and operations of Hickory Business Furniture (“HBF”). The sale of this business was announced in the fourth quarter of 2007 and has been treated as a discontinued operation in both the 2007 and 2008 periods.

 

Net sales for the 2008 first quarter were $477 million, compared with $557 million in the first quarter of 2007. Diluted earnings per common share from continuing operations are between $0.07 to $0.08 for the first quarter of 2008 compared to $0.03 in the first quarter of 2007.

 

Ralph P. Scozzafava, the company’s Vice-Chairman of the Board and Chief Executive Officer, commented: “The strategic plan the company unveiled last fall continues to drive improved performance despite a challenging retail environment. Our plan called for 2007 activities to focus on balance sheet improvement, 2008 activities to drive improved profitability, and 2009 activities to increase profitable sales. With our first-quarter preliminary results complete, and our belief that earnings per share will increase in later quarters, we remain on track toward our 2008 earnings target of $0.40 to $0.60 per share.

 

“Our 2007 activities were very successful, as we restructured our lending facility, turned inventories into cash, and paid down debt. At the end of 2007, we had the most cash and least debt since our recapitalization in 1993.”

 

“Our current balance sheet is equally positive,” Mr. Scozzafava continued. “At the end of the quarter, cash totaled approximately $188 million and our long-term debt has been paid down to $235 million, with the ability to make additional repayments in the future. We have generated this cash through continued working capital improvements, the sale of HBF, and lower interest expense.”

 

“Our progress against our strategic plan is continuing in 2008. Despite the economic environment, earnings from ongoing operations showed solid improvement over both year-ago and prior quarter comparisons despite a reduction in sales. This improved financial performance is directly related to the changes we have executed over the past three quarters. These changes include closing 18 unprofitable stores and 10 manufacturing and storage facilities with accompanying reductions in headcount, and launching a shared services model to eliminate costs for administration of payroll, human resources, IT and travel. We expect these and other actions will ultimately deliver $40 million to $50 million in annual savings with all workstreams completed by early 2009,” Mr. Scozzafava said.

 


 

“Along with our focus on financial performance, we are equally focused at the consumer and customer levels and we are seeing signs of success. We have reduced unproductive discounts as a means of moving inventory because we are starting to sell the right products at the right price in the right categories, where consumers see and respond to the real value of our brands,” Mr. Scozzafava said. “In addition, at the beginning of the second quarter, we announced price increases across our brands that will take effect in Mid-April and May.”

 

“We have also increased our company-owned retail presence through the recent acquisition of 11 Thomasville stores. Succeeding as a Thomasville retailer is a key element of our strategic plan, and our performance to date is promising. During the first quarter, those Thomasville stores we have owned for more than a year showed a same-store sales increase of more than 2% over the prior year,” Mr. Scozzafava said.

 

“We expect improvements in profitability to continue as we complete our transition to a branded consumer products company. Broyhill is leading our initiative to incorporate consumer insight testing and market research prior to launching new products. Beginning in 2009, all major new product introductions will reflect our consumer research and testing processes. By providing our retail partners with products that we know consumers want, we can further improve product flow, reduce discounts, control inventories and improve gross margins. We also expect to realize the full benefits of FBN Asia, which will let us complement our domestic manufacturing assets with the most appropriate Asian supply chain partners,” Mr. Scozzafava said.

 

“Furniture Brands has the right strategy in place, and we now have the right team to execute it,” Mr. Scozzafava said. “Steve Rolls joined the company this month as chief financial officer, rounding out our Executive Leadership Team. Together with the recent addition of Jon Botsford as general counsel, the newly assembled team has the skill and the will to address our challenges and opportunities. The transformation of Furniture Brands to a successful branded consumer products company is well underway,” Mr. Scozzafava said.

 

Earnings Guidance

 

The company affirmed its 2008 financial performance guidance of sales revenue between $1.9 billion and $2.0 billion with earnings per share on a continuing operations basis of between $0.40 and $0.60.

 


 

FURNITURE BRANDS INTERNATIONAL

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2008

 

March 31,
2007

 

Net sales

 

$

477,200

 

$

556,959

 

Cost of sales

 

 

366,181

 

 

439,085

 

Gross profit

 

 

111,019

 

 

117,874

 

Selling, general & administrative expenses

 

 

101,981

 

 

111,029

 

Earnings from operations

 

 

9,038

 

 

6,845

 

Interest expense

 

 

4,143

 

 

5,073

 

Other income, net

 

 

2,236

 

 

432

 

Earnings from continuing operations before
income tax expense

 

 

7,131

 

 

2,204

 

Income tax expense

 

 

3,383

 

 

901

 

Net earnings from continuing operations

 

 

3,748

 

 

1,303

 

Net earnings from discontinued operations

 

 

29,868

 

 

1,574

 

Net earnings

 

$

33,616

 

$

2,877

 

 

 

 

 

 

 

 

 

Earnings per common share – Basic and Diluted:

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

0.08

 

$

0.03

 

Earnings from discontinued operations

 

$

0.62

 

$

0.03

 

Net earnings

 

$

0.69

 

$

0.06

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -
- Basic and Diluted

 

 

48,560

 

 

48,336

 

 

 

Selected Items Included in Condensed Consolidated Statement of Operations

 

The following items are included in our Condensed Consolidated Statements of Operations for the periods indicated and are the result of our strategic initiatives and other matters.

 

 

 

Three Months Ended

 

 

 

March 31,
2008

 

March 31,
2007

 

 

 

(in thousands)

 

Selected items decreasing earnings before income tax expense:
Restructuring charges (1)

 

 

 

 

 

 

 

Cost of sales

 

$

 

$

431

 

Selling, general & administrative expenses

 

 

964

 

 

748

 

Costs associated with proxy contest (2)

 

 

587

 

 

 

Total

 

$

1,551

 

$

1,179

 

 

(1)  Restructuring charges include asset impairment, severance, and other closing costs associated with the previously announced plant shutdowns and lease, severance, and idle store occupancy costs associated with the previously announced retail store closures.

 

(2)  Includes financial and legal costs for external advisors associated with the proxy contest, all of which are included in selling, general and administrative expenses.

 


 

FURNITURE BRANDS INTERNATIONAL

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

March 31,
2008
(Unaudited)

 

December 31,
2007

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

187,838

 

$

118,764

 

Cash - Restricted

 

 

 

 

20,000

 

Receivables, less allowances of $32,913
($45,467 at December 31, 2007)

 

 

283,792

 

 

292,694

 

Inventories

 

 

393,823

 

 

401,302

 

Prepaid expenses and other current assets

 

 

49,279

 

 

54,858

 

Current assets of discontinued operations

 

 

 

 

12,236

 

Total current assets

 

 

914,732

 

 

899,854

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

178,923

 

 

178,564

 

Intangible assets

 

 

329,927

 

 

329,927

 

Other assets

 

 

33,964

 

 

36,770

 

Noncurrent assets of discontinued operations

 

 

 

 

17,963

 

 

 

$

1,457,546

 

$

1,463,078

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

800

 

$

20,800

 

Accounts payable

 

 

104,400

 

 

93,557

 

Accrued expenses and other current liabilities

 

 

103,815

 

 

67,735

 

Current liabilities of discontinued operations

 

 

 

 

5,307

 

Total current liabilities

 

 

209,015

 

 

187,399

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

235,000

 

 

280,000

 

Other long-term liabilities

 

 

136,504

 

 

150,772

 

Noncurrent liabilities of discontinued operations

 

 

 

 

141

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

877,027

 

 

844,766

 

 

 

$

1,457,546

 

$

1,463,078

 

 

 


 

FURNITURE BRANDS INTERNATIONAL

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2008

 

March 31,
2007

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net earnings

 

$

33,616

 

$

2,877

 

Adjustments to reconcile net earnings to net cash
provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,289

 

 

8,242

 

Compensation expense related to stock option
grants and restricted stock awards

 

 

767

 

 

1,029

 

Provision (benefit) for deferred income taxes

 

 

893

 

 

(425

)

Gain on sale of discontinued operations

 

 

(48,059

)

 

 

Other, net

 

 

(1,033

)

 

818

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

12,732

 

 

4,655

 

Inventories

 

 

13,663

 

 

12,023

 

Prepaid expenses and other assets

 

 

1,114

 

 

5,785

 

Accounts payable and other accrued expenses

 

 

42,895

 

 

5,229

 

Other long-term liabilities

 

 

(12,534

)

 

4,922

 

Net cash provided by operating activities

 

 

50,343

 

 

45,155

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Acquisition of stores, net of cash acquired

 

 

(8,741

)

 

(4,241

)

Proceeds from the disposal of assets

 

 

76,570

 

 

2,358

 

Additions to property, plant and equipment

 

 

(2,150

)

 

(4,142

)

Net cash provided (used) by investing activities

 

 

65,679

 

 

(6,025

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Additions to long-term debt

 

 

 

 

4,000

 

Payments of long-term debt

 

 

(65,000

)

 

(14,000

)

Restricted cash used for the payment of long-term debt

 

 

20,000

 

 

 

Payments of cash dividends

 

 

(1,940

)

 

(7,734

)

Other

 

 

(8

)

 

 

Net cash used by financing activities

 

 

(46,948

)

 

(17,734

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

69,074

 

 

21,396

 

Cash and cash equivalents at beginning of period

 

 

118,764

 

 

26,565

 

Cash and cash equivalents at end of period

 

$

187,838

 

$

47,961

 

 

 

 

 

 

 

 

 

Supplemental disclosure:

 

 

 

 

 

 

 

Cash payments for income taxes, net

 

$

419

 

$

379

 

 

 

 

 

 

 

 

 

Cash payments for interest expense

 

$

5,647

 

$

2,619