-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GE7B8WcL1GCHKMWAN2IXZAiPEuZLORRE5eJnWp4cDZvmiyYFgYMDQhuqk8T5MT62 1gMaptV+Dh6lP7F4SiLxkg== 0000928385-02-001517.txt : 20020417 0000928385-02-001517.hdr.sgml : 20020417 ACCESSION NUMBER: 0000928385-02-001517 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020303 FILED AS OF DATE: 20020417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROWE COMPANIES CENTRAL INDEX KEY: 0000085417 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 540458563 STATE OF INCORPORATION: NV FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10226 FILM NUMBER: 02613397 BUSINESS ADDRESS: STREET 1: 1650 TYSONS BLVD STREET 2: SUITE 710 CITY: MCLEAN STATE: VA ZIP: 22102 BUSINESS PHONE: 7038478670 MAIL ADDRESS: STREET 1: 239 ROWAN STREET CITY: SALEM STATE: VA ZIP: 24152 FORMER COMPANY: FORMER CONFORMED NAME: ROWE FURNITURE CORP DATE OF NAME CHANGE: 19920703 10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 3, 2002 Commission File Number 1-10226 ---------------- ----------------- THE ROWE COMPANIES - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEVADA 54-0458563 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1650 Tysons Boulevard, Suite 710, McLean, Virginia 22102 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 703-847-8670 - -------------------------------------------------------------------------------- None - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X No _____ ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Class Outstanding at March 3, 2002 - --------------------------------------- ---------------------------- Common stock, par value $1.00 per share 13,133,922 shares THE ROWE COMPANIES INDEX Part I. Financial Information Page ---- Consolidated Balance Sheets - March 3, 2002 and December 2, 2001 3 Consolidated Statements of Operations - Three Months Ended March 3, 2002 and March 4, 2001 4 Consolidated Statements of Cash Flows - Three Months Ended March 3, 2002 and March 4, 2001 5 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Quantitative and Qualitative Disclosures about Market Risk 13 Forward Looking Statements 13 Part II. Other Information 14 2 PART I - FINANCIAL INFORMATION - -------------------------------------------------------------------------------- THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ================================================================================
March 3, December 2, 2002 2001 --------------- ---------------- (Unaudited) (Audited) ($ in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 14,020 $ 9,457 Accounts receivable, net 24,758 23,525 Notes receivable 325 325 Tax refunds receivable, net 1,946 2,514 Inventories (Note 4) 36,825 41,070 Deferred income taxes 2,366 2,371 Prepaid expenses and other 2,096 1,949 ----------- ---------- Total current assets 82,336 81,211 PROPERTY AND EQUIPMENT, net 30,133 31,452 GOODWILL, net 28,735 29,061 OTHER NONCURRENT ASSETS 13,284 13,391 ----------- ---------- $ 154,488 $ 155,115 =========== ========== LIABILITIES CURRENT LIABILITIES Current maturities of long-term debt $ 7,537 $ 7,006 Short term bank borrowings 9,418 9,368 Accounts payable and accrued liabilities 22,892 25,599 Customer deposits 8,494 7,112 ----------- ---------- Total current liabilities 48,341 49,085 LONG-TERM DEBT 51,564 52,096 DEFERRED LIABILITIES 7,111 7,238 ----------- ---------- Total liabilities 107,016 108,419 ----------- ---------- STOCKHOLDERS' EQUITY COMMON STOCK, par value $1 per share: 50,000,000 shares authorized; issued shares 16,550,215 and 16,547,715, respectively; outstanding shares 13,133,922 and 13,135,025, respectively 16,550 16,548 CAPITAL IN EXCESS OF PAR VALUE 23,082 23,082 OTHER COMPREHENSIVE INCOME (1,116) (1,201) RETAINED EARNINGS 30,903 30,204 Less treasury stock, 3,416,293 shares in 2002 and 3,412,690 shares in 2001, at cost (21,947) (21,937) ----------- ---------- Total stockholders' equity 47,472 46,696 ----------- ---------- $ 154,488 $ 155,115 =========== ==========
See notes to consolidated financial statements. 3 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 3, 2002 AND MARCH 4, 2001 UNAUDITED ================================================================================
Three Months Ended March 3, March 4, 2002 2001 -------- -------- ($ in thousands - except per share amounts) Net shipments $ 81,623 $ 80,428 Cost of shipments 54,120 53,991 --------- --------- Gross profit 27,503 26,437 Selling and administrative expenses 25,429 26,672 --------- --------- Operating income (loss) 2,074 (235) Interest expense (1,295) (1,260) Other income 482 393 --------- --------- Earnings (loss) before taxes 1,261 (1,102) Tax expense (benefit) 562 (296) --------- --------- Net earnings (loss) $ 699 $ (806) ========= ========= Net earnings (loss) per common share $ 0.05 ($0.06) Weighted average common shares 13,135 13,133 ========= ========= Net earnings (loss) per common share assuming dilution $ 0.05 ($0.06) Weighted average common shares and equivalents 13,175 13,133 ========= ========= Dividends declared and paid per share $ - $ 0.035 ========= =========
See notes to consolidated financial statements. 4 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 3, 2002 AND MARCH 4, 2001 UNAUDITED ================================================================================
2002 2001 ----------- ---------- ($ in thousands) INCREASE (DECREASE) IN CASH: Cash flows from operating activities: Cash received from customers $ 81,480 $ 82,758 Cash paid to suppliers and employees (75,989) (84,655) Income taxes paid, net of refunds 5 (86) Interest paid (1,295) (1,260) Interest received 194 111 Other receipts - net 390 335 --------- --------- Net cash and cash equivalents provided by (used in) operating activities 4,785 (2,797) --------- --------- Cash flows from investing activities: Proceeds from sales of property and equipment - 819 Capital expenditures (264) (1,147) --------- --------- Net cash used in investing activities (264) (328) --------- --------- Cash flows from financing activities: Net borrowings (payments) under line of credit 50 (2,292) Proceeds from issuance of long-term debt - 2,796 Payments to reduce long-term debt (1) (285) Proceeds from issuance of common stock 3 22 Dividends paid - (463) Purchase of treasury stock (10) (3) --------- --------- Net cash provided by (used in) financing activities 42 (225) --------- --------- Net increase (decrease) in cash and cash equivalents 4,563 (3,350) Cash and cash equivalents at beginning of period 9,457 3,393 --------- --------- Cash and cash equivalents at end of period $ 14,020 $ 43 ========= =========
See notes to consolidated financial statements. 5 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 3, 2002 AND MARCH 4, 2001 UNAUDITED ================================================================================ Reconciliation of Net Earnings (Loss) to Net Cash Provided By (Used In) Operating Activities:
2002 2001 -------- --------- ($ in thousands) Net earnings (loss) $ 699 $ (806) ------- -------- Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,982 2,078 Provision for deferred compensation 170 (150) Payments made for deferred compensation (220) (384) Provision for losses on accounts receivable 293 156 Loss (gain) on disposition of assets 102 53 Change in operating assets and liabilities: Decrease (increase) in accounts receivable (1,526) 3,447 Decrease (increase) in inventories 4,245 1,620 Decrease (increase) in prepaid expenses and other (223) 464 Decrease (increase) in other assets 10 58 Increase (decrease) in accounts payable (2,581) (6,693) Increase (decrease) in accrued expenses (116) (1,142) Increase (decrease) in income taxes payable 567 (381) Increase (decrease) in customer deposits 1,383 (1,117) ------- -------- Total adjustments 4,086 (1,991) ------- -------- Net cash provided by (used in) operating activities $ 4,785 $ (2,797) ======= ========
See notes to consolidated financial statements. 6 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED - -------------------------------------------------------------------------------- Note 1 - The Rowe Companies is comprised primarily of Rowe Furniture, Inc., its core upholstered furniture subsidiary; The Mitchell Gold Co., a producer of upholstered and leather furniture; Home Elements, Inc., a chain of 19 retail specialty home furnishings stores; and Storehouse, Inc., a 41 store retail furniture chain. Note 2 - In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position as of March 3, 2002 and the results of operations and cash flows for the three months ended March 3, 2002 and March 4, 2001. Selling and administrative expenses include $1,042,000 and $1,164,000 of retail delivery expenses for the three months ended March 3, 2002 and March 4, 2001, respectively. Note 3 - The results of operations for the three months ended March 3, 2002 and March 4, 2001 are not necessarily indicative of the results to be expected for the full year. Note 4 - Inventory components are as follows: March 3, December 2, 2002 2001 ----------- ---------- ($ in thousands) Retail merchandise $16,754 $17,982 Finished goods 2,647 3,192 Work-in-process 4,120 4,213 Raw materials 13,304 15,683 ------- ------- $36,825 $41,070 ======= ======= Note 5 - As previously reported, on March 5, 2002, the Company entered into commitment agreements with its existing lenders, as well as a syndicate of new lenders, for the purpose of refinancing the Company's bank and other debt. Amounts expected to be repaid during 2002 are included in current liabilities as short-term borrowings and current maturities of long-term debt. The debentures were repaid in March 2002. The Company anticipates that the new lending agreements will be executed by the end of April 2002. Note 6 - The following table shows the components of the earnings per share computations shown in the Consolidated Statements of Operations. For the three months ended March 4, 2001, stock options and convertible debentures were anti-dilutive and excluded from the earnings per share computation. Effective November 1, 2001, the debentures were no longer convertible into common stock of the Company. 7 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED - -------------------------------------------------------------------------------- Three Months Ended --------------------------- March 3, March 4, 2002 2001 ----------- ---------- (in thousands) Net earnings (loss) available to basic shares $ 699 $ (806) Add interest expense on assumed conversion of convertible debentures, net of tax - - -------- --------- Net earnings available to diluted shares $ 699 $ (806) ======== ========= Weighted average common shares outstanding (Basic) 13,135 13,133 Effect of dilutive stock options and convertible debentures 40 - -------- --------- Weighted average common shares and equivalents outstanding (Diluted) 13,175 13,133 ======== ========= The dilutive share base for 2002 and 2001 excludes incremental shares of 1,824,880 and 2,115,675, respectively. These shares are excluded due to their anti-dilutive effect. Note 7 - The Company's operations are classified into two business segments: wholesale and retail home furnishings. The wholesale home furnishings segment manufactures upholstered furniture. Upholstered furniture includes sofas, loveseats, occasional chairs and sleep sofas, covered with fabric or leather. The retail home furnishings segment sells home furnishings and accessories to customers through Company-owned stores. These products consist of upholstered furniture (primarily obtained from related companies), case goods and home accessories. The other category is comprised of additional subsidiaries reviewed by management including parent company expenses. 8
Wholesale Retail Home Home Inter- Furnishings Furnishings Segment Segment Segment Other Eliminations Consolidated ------- ------- ----- ------------ ------------ ($ in thousands) 2002 ---- Net shipments $ 59,654 $ 27,418 $ - $ (5,449) $ 81,623 Pre-tax net earnings(loss) from continuing operations 3,384 (2,015) (187) 79 1,261 Total assets 124,976 44,135 101,765 (116,628) 154,248 2001 ---- Net shipments $ 58,044 $ 28,327 $ - $ (5,943) $ 80,428 Pre-tax net earnings(loss) 1,429 (2,607) 17 59 (1,102) Total assets 105,898 47,373 104,504 (106,218) 151,557
The consolidated total assets exclude amounts for the discontinued Wexford segment. Total assets at Wexford were $240,000 and $2,173,000 for 2002 and 2001, respectively. Note 8 - The components of comprehensive income (loss) are shown below. Three Months Three Months Ended Ended March 3, 2002 March 4, 2001 --------------- ------------- ($ in thousands) Net earnings (loss) $ 699 $ (806) Other comprehensive income (loss), net of tax: Unrealized loss on derivatives (91) (622) Payments transferred to expense 176 14 -------------- ------------- Comprehensive income (loss) $ 784 $ (1,414) ============== ============= 9 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS UNAUDITED - -------------------------------------------------------------------------------- Results of Operations - --------------------- Three Months Ended March 3, 2002 Compared to Three Months Ended March 4, 2001 Net shipments during the first three months of 2002 increased by $1,195,000, or 1.5%, to $81,623,000 from $80,428,000 in 2001. This growth was achieved despite the loss of three customers to whom the Company shipped approximately $5.8 million in the first three months of 2001. Wholesale segment shipments increased $1,610,000, or 2.8%, to $59,654,000, including shipments to the retail segment, in spite of the loss of the three customers referred to above. The increase in shipments was achieved primarily by increased shipments to existing customers, augmented by the addition of several new customers. Wholesale segment sales to the retail segment, included in the numbers above, declined from $6.3 million for 2001 to $5.4 million for 2002, a decline of 13%. Retail segment sales declined by $909,000, or 3.2%, to $27,418,000 from $28,327,000 in 2001. The absence of print advertising in late January and early February 2002, due to the reallocation of advertising dollars to late February television ads, resulted in the shortfall in delivered sales. Gross profit in 2002 increased by $1,066,000, or 4.0%, to $27,503,000 from $26,437,000 in 2001, on a consolidated basis. Gross profit as a percentage of shipments ("gross margin") in 2002 increased to 33.7% from 32.9% in 2001. For the wholesale segment, gross profit increased by $1,620,000, or 13.3%, to $13,797,000 from $12,177,000 in 2001. Gross margin improved from 21.0% to 23.1%. Of the increase in gross profit, approximately $338,000 resulted from the increase in shipments, while the remainder resulted from improvements in labor and overhead utilization. Direct labor costs were essentially unchanged from the 2001 period, and overhead costs decreased despite the increase in volume. Rowe's overhead costs have improved due to a major reduction in service costs and significant improvements in trucking programs. These improvements are expected to continue to positively impact wholesale segment margins. For the retail segment, gross profit declined by $574,000, or 4.0%, from $14,201,000 in 2001 to $13,627,000 in 2002. Gross margins declined slightly, from 50.1% to 49.7% in 2002. Of the decline in gross profit, $453,000 resulted from the reduction in volume; the remainder resulted from continued discounting to stimulate sales. Selling and administrative expenses in 2002 decreased by $1,243,000, or 4.7%, to $25,429,000 from $26,672,000 in 2001. Of this decrease, $1.0 million represents reduced advertising expenditures by the retail segment; the remainder is primarily reduced costs in the wholesale segment due to cost cuts and head count reductions taken during 2001. In the wholesale segment, selling and administrative expenses decreased $236,000, or 2.6%, from $9,097,000 in 2001 to $8,861,000 in 2002. Cost-cutting measures initiated during 2001 have reduced selling and administrative expenses in the wholesale segment in 2002. In the retail segment, selling and administrative expenses decreased by $1,161,000, or 7.2%, to $14,945,000 in 2002, from $16,106,000 in 2001. Improvements in delivery costs and the benefit of cost cutting measures 10 initiated in 2001 were partially offset by increased costs of new stores opened in 2001. The major source of the reduced costs, however, was the reduction in advertising costs, just over $1 million. This reduction was planned to reflect the elimination of television advertising; instead, it reflects the reallocation of planned print spending to television. The Company has also initiated the consolidation of its two retail subsidiaries, beginning with the administrative functions. Through the first quarter, approximately $90,000 in primarily travel costs have been incurred for this effort, and approximately $80,000 has been disbursed for systems conversion costs. Additional costs for systems conversions, travel, training, severance and relocation costs for certain employees and new signage will be incurred primarily through the second and third fiscal quarters. The substantial benefits of reduced head count overall in the administrative areas, efficiencies in advertising and delivery networks, and improved purchasing power with various vendors for the combined operations, is expected to be realized in 2003 and future years. Parent company administrative expenses increased approximately $55,000, primarily due to legal and other fees incurred in connection with negotiations with our lending institutions. Operating income in 2002 increased by $2,309,000 to income of $2,074,000 from a loss of $235,000 in 2001. Increased sales, improved margins and reductions in advertising costs as well as other selling and administrative expenses, generated the improved results. Interest expense in 2002 increased by $35,000 to $1,295,000 from $1,260,000 in 2001 due to increased borrowings used to fund the operations of the Company and the change during 2001 on the Company's bank debt from LIBOR based rates to the Prime rate plus a spread, in return for the lending institutions' forbearance with the Company's covenant defaults during 2001. Declining market interest rates during 2001 mitigated the impact of these other factors. Net other income increased by $89,000 from $393,000 in 2001 to $482,000 in 2002, due to certain non-recurring transactions. The Company's effective tax rate increased from 26.9% during 2001 to 44.6% in 2002. This change is primarily attributable to the impact of non-deductible goodwill charges on the calculation of taxable income (loss) for the two years. Net earnings increased in 2002 by $1,505,000, from a loss of $806,000 in 2001 to income of $699,000. Increased shipments, improved gross margins and reductions in advertising and other selling and administrative expenses accounted for the improvement. Liquidity and Capital Resources - ------------------------------- Net cash provided by (used in) operating activities was $4,785,000 and $(2,797,000) in 2002 and 2001, respectively. Fluctuations in net cash provided by operating activities are the result of changes in net income and changes in working capital accounts, primarily decreases in inventory levels. Net cash used in investing activities was $264,000 and $328,000 for 2002 and 2001, respectively. Capital expenditures were $264,000 and $1,147,000 for 2002 and 2001, respectively. Expenditures in 2001 included costs for the production planning and scheduling system started in 2000, as well as several new retail stores and remodeling of several older stores. Expenditures in 2002 were made for systems conversion costs associated with the retail consolidation, some store remodeling costs, and other routine expenditures. In 2001, proceeds were realized from the sale of Wexford assets. Additional expenditures for the systems conversion will be made during 2002, as well as expenditures to convert signage at current Home Elements stores to reflect the consolidation to the Storehouse name. Such costs are currently estimated to be approximately $1,000,000. 11 Financing activities provided (utilized) net cash of $42,000 and ($225,000) in 2002 and 2001, respectively. These amounts primarily reflect changes in outstanding balances under the Company's bank lending arrangements. The Company did not pay common stock dividends during the three months ended March 3, 2002. The amount outstanding under the Company's lines of credit was $9,419,000 at March 3, 2002. The Company had lines of credit totaling $10,000,000 at March 3, 2002. On March 5, 2002, the Company entered into commitment agreements with its existing lenders, as well as a syndicate of new lenders, for the purpose of refinancing the Company's bank and other debt. Amounts expected to be repaid during 2002 are included in current liabilities as short-term borrowings and current maturities of long-term debt. The convertible debentures were repaid in March 2002. The Company anticipates that the new lending agreements will be executed by the end of April 2002. The Company believes that net cash provided by operating activities, and availability under the new lending arrangements, will be adequate to fund the Company's foreseeable capital and debt service requirements and operating needs through 2002. New Accounting Standards - ------------------------ During 2001, the Financial Accounting Standards Board finalized Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the Company reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141. SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142. As of March 3, 2002, the net carrying amount of goodwill is $28,735,000. Amortization expense during the three months ended March 3, 2002, was $326,000. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 is effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Currently, the Company is assessing but has not yet determined how the adoptions of SFAS 141, 142 and 144 will impact its financial position and results of operations. 12 Interest Risk Disclosures - ------------------------- Because the Company's obligations under its term loans, revolving loans, lines of credit and industrial revenue bonds bear interest at variable rates, the Company is sensitive to changes in prevailing interest rates. A 10% fluctuation in market interest rates would result in a change of approximately $430,000 in interest expense during the 2002 fiscal year. Forward Looking Statements - -------------------------- Certain portions of this report, particularly the Notes to the Consolidated Financial Statements and the Management's Discussion and Analysis of Financial Condition and Results of Operations, contain forward looking statements. These statements can be identified by the use of future tense or dates or terms such as "believe," "expect," "anticipate," or "plan." Important factors could cause actual results to differ materially from those anticipated by some of the statements made in this report. Some of the factors include, among other things, changes from anticipated levels of sales, whether due to future national or regional economic and competitive conditions, customer acceptance of existing and new products, or otherwise; pending or future litigation; pricing pressures due to excess capacity; raw material cost increases; transportation cost increases; the inability of a major customer to meet its obligations; loss of significant customers in connection with a merger or acquisition, bankruptcy or otherwise; actions of current or new competitors; increased advertising costs associated with promotional efforts; change of tax rates; change of interest rates; future business decisions and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the Company. 13 PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- Item 1. Legal Proceedings. - -------------------------- None Item 2. Changes in Securities. - ------------------------------ None Item 3. Defaults Upon Senior Securities. - ---------------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------ None Item 5. Other Information. - -------------------------- None Item 6. Exhibits and Reports on Form 8-K. - ----------------------------------------- a. Exhibits: None b. Reports on Form 8-K: None 14 SIGNATURES 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 hereunto duly authorized. THE ROWE COMPANIES ------------------ Registrant Date: ___________________ __________________________ Michael M. Thurmond Chief Financial Officer, Secretary-Treasurer 15 -----END PRIVACY-ENHANCED MESSAGE-----