Furniture Brands International Reports 2009 Fourth Quarter and Year End Financial Results
ST. LOUIS, Feb 3, 2010 (GlobeNewswire via COMTEX) -- By Staff
Company: Furniture Brands International, Inc. (FBN)
Furniture Brands International (NYSE:FBN) announced today its financial results for the fourth quarter and year ended December 31, 2009.
Net sales from continuing operations for the 2009 fourth quarter were $285.6 million, compared with $403.4 million in the fourth quarter of 2008, a decline of 29.2%. Results from continuing operations were a loss of $1.35 per diluted share in the 2009 quarter compared to a loss of $7.25 per diluted share for the fourth quarter of 2008.
Net sales from continuing operations for the fiscal year ended December 31, 2009 were $1.2 billion, compared with $1.7 billion for the fiscal year ended December 31, 2008, a decline of 29.8%. Results from continuing operations were a loss of $2.25 per diluted share for fiscal 2009 compared to a loss of $8.53 per diluted share for fiscal 2008. Results for all periods include selected items that are detailed in Exhibit 1 attached to this press release.
The company also announced that it expects to receive a federal tax refund of $58 million to $60 million, subject to tax return filing, during 2010 with the majority of the refund expected to be received during the first half of the year. The refund stems from the Worker, Home Ownership and Business Assistance Act of 2009 that was signed into law on November 6, 2009. The Act includes a provision that allows businesses with federal net operating losses in tax years 2008 or 2009 to carry back losses from one of those years for a period of five years. Prior to this legislation, the carry back was limited to a period of two years. This additional carry back ability resulted in a reduction of income tax valuation allowance and corresponding recognition of income tax benefit in the quarter ended December 31, 2009. The company will retain net operating loss carry forwards that may be applied to future earnings.
"Furniture Brands' financial results for 2009 show the effect of the recession on consumer spending," said Ralph P. Scozzafava, Chairman of the Board and Chief Executive Officer. "The company's results also reflect decisions to right-size the company and reduce our cost basis. These actions are good for our business in the long term and also provided an opportunity for the company to capitalize on the tax refund created by recent federal tax legislation. With our strong cash flow management, Furniture Brands' balance sheet is solid and the pending tax refund will further improve our financial position. The company's balance sheet is on track to have cash exceed debt with the receipt of the tax refund later this year," Mr. Scozzafava said.
"Liquidity and a strong balance sheet are just one component of our long-term business strategy," Mr. Scozzafava continued. "During the past year, the entire Furniture Brands organization has made great strides in positioning the company for future success. These accomplishments include:
-- Increasing adjusted gross margin* by 110 basis points to 23.1%, the
highest level since 2004 on an adjusted basis,
-- Reducing adjusted SG&A expenses* by $90 million to $328 million, the
lowest level since 1996 on an adjusted basis,
-- Lowering net debt* by $72.3 million to $11.1 million, the lowest level
in Furniture Brands' history,
-- Improving new product development through proprietary consumer testing,
and
-- Implementing shared services and administrative best practices on a
company-wide basis
"All of these actions required difficult decisions and challenging implementation. While these changes will provide benefits going forward, there is much more left to accomplish. Right now, our global supply chain operates under a single leadership team working diligently on increasing our quality while streamlining our costs. We are also implementing a common technology platform to reduce costs and allow faster and more informed decision-making. These structural changes will help Furniture Brands be a better performer going forward," Mr. Scozzafava said.
"With regard to top-line sales, our order trends appear to be stabilizing and the company's upholstery business is tracking with industry patterns, especially in the medium price points. Sales in our higher end brands continue to reflect a cautious attitude on the part of the luxury consumer. Furniture Brands is working hard to drive consumer demand with the development of exciting, new consumer-tested products, enhanced brand marketing to consumers, and innovative programs for our dealers. We have the best portfolio of brands in the industry, and we believe that people want to buy quality products from brands they know and trust," Mr. Scozzafava said.
Gross margin for the 2009 fourth quarter was 7.1% compared to 8.9% in the same quarter of 2008. Gross margin for the 2009 quarter reflects the company's focused efforts to accelerate the sale of slow-moving, discontinued and obsolete inventory through non-traditional channels. These efforts resulted in sales at reduced prices in the fourth quarter as well as reserve charges on similar inventory on hand at the end of 2009. These efforts generated a $33 million inventory charge during the fourth quarter of 2009.
Financial results for all periods include selected items. Excluding the selected items, adjusted gross margin for the fourth quarter of 2009 was 21.7% compared to 17.8% in the fourth quarter of 2008. For the full year, 2009 adjusted gross margin was 23.1% compared to 22.0% for 2008.
Selling, general, and administrative costs for the 2009 fourth quarter totaled $115.2 million compared to $161.3 million in the fourth quarter of 2008. Excluding selected items, adjusted SG&A costs totaled $85.5 million and $111.9 million for the fourth quarters of 2009 and 2008, respectively, for a decrease of $26.4 million.
At December 31, 2009, the company reported net debt of $11.1 million compared to net debt of $83.4 million at December 31, 2008. During the 2009 fourth quarter and fiscal year, the company generated $12.7 million and $35.6 million, respectively, in cash flow, exclusive of changes in debt balances and the impact of tax refunds.
Upcoming Investor Event
A conference call will be held to discuss third quarter results at 7:30 a.m. (Central Time) on February 4, 2010. 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.
About Furniture Brands
Furniture Brands International (NYSE:FBN) is a global operating company that is one of the nation's leading designers, manufacturers, and retailers of home furnishings. 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.
The Furniture Brands International logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2757
* Non-U.S. GAAP Financial Measures
We use certain non-U.S. GAAP financial measures to supplement our U.S. GAAP disclosures. The company believes that these measures are helpful to investors in assessing the ongoing performance of its underlying businesses before the impact of selected items. We do not, and do not suggest investors should, consider such non-U.S. GAAP financial measures in isolation from, or as a substitute for, U.S. GAAP financial information. These non-U.S. GAAP financial measures may not be consistent with presentations made by other companies. A reconciliation of each non-U.S. GAAP measure to the most closely applicable U.S. GAAP financial measure appears at the end of this press release.
Adjusted gross margin and adjusted SG&A exclude certain costs that we believe may be significantly reduced or eliminated in the future due to specific actions taken by management. Management uses these measures to manage and evaluate our business operations and financial performance, because these costs are not characteristic of typical industry conditions and management expects that these costs may not have the same financial impact on our future financial results.
Management measures net debt and changes in net debt to assess the degree of debt held by the Company and to monitor our ability to manage our debt position. We present net debt as total long-term debt, less cash and cash equivalents. While we believe this non-U.S. GAAP information is useful, our calculation of net debt excludes other assets and liabilities which we consider, and suggest investors consider, in assessing our financial condition and liquidity position.
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, or 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, 2008, 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 realignments; manufacturing realignments and cost savings programs; 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 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, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
--------------------- ----------------------
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
--------- ---------- ---------- ----------
Net sales $285,574 $403,353 $1,224,370 $1,743,176
Cost of sales 265,285 367,309 994,370 1,428,641
--------- ---------- ---------- ----------
Gross profit 20,289 36,044 230,000 314,535
Selling, general & administrative
expenses 115,235 161,288 363,636 524,457
Impairment of intangible assets 39,050 201,951 39,050 201,951
--------- ---------- ---------- ----------
Operating loss (133,996) (327,195) (172,686) (411,873)
Interest expense 1,006 2,625 5,342 12,510
Other income, net 52 722 1,549 5,425
--------- ---------- ---------- ----------
Loss from continuing operations
before
income tax expense (benefit) (134,950) (329,098) (176,479) (418,958)
Income tax expense (benefit) (69,969) 24,734 (67,793) (3,157)
--------- ---------- ---------- ----------
Net loss from continuing operations (64,981) (353,832) (108,686) (415,801)
Net earnings from discontinued
operations -- -- -- 29,920
--------- ---------- ---------- ----------
Net loss $(64,981) $(353,832) $(108,686) $(385,881)
========= ========== ========== ==========
Earnings (loss) per common share -
Basic and Diluted:
Loss from continuing operations $(1.35) $(7.25) $(2.25) $(8.53)
Earnings from discontinued
operations $-- $-- $-- $0.61
Net loss $(1.35) $(7.25) $(2.25) $(7.92)
Weighted average common shares
outstanding 48,287 48,794 48,302 48,739
FURNITURE BRANDS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December December
31, 31,
2009 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $83,872 $106,580
Receivables, less allowances
of $26,225
($34,372 at December 31,
2008) 125,513 178,590
Income tax refund receivable 58,976 38,090
Inventories 226,078 350,026
Prepaid expenses and other
current assets 9,274 12,592
-------- --------
Total current assets 503,713 685,878
Property, plant and equipment,
net 134,352 150,864
Trade names 87,608 127,300
Other assets 32,432 35,476
-------- --------
$758,105 $999,518
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current maturities of
long-term debt $17,000 $30,000
Accounts payable 83,813 85,206
Accrued expenses and other
current liabilities 75,948 112,296
-------- --------
Total current liabilities 176,761 227,502
Long-term debt 78,000 160,000
Deferred income taxes 25,737 27,917
Pension liability 135,557 137,199
Other long-term liabilities 79,259 80,406
Shareholders' equity 262,791 366,494
-------- --------
$758,105 $999,518
======== ========
FURNITURE BRANDS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
Twelve Months Ended
----------------------
December December
31, 31,
2009 2008
---------- ----------
Cash flows from operating activities:
Net loss $(108,686) $(385,881)
Adjustments to reconcile net loss to net
cash
provided by operating activities:
Depreciation 20,738 25,307
Compensation expense (credit) related to
stock option
grants and restricted stock awards (524) 4,310
Provision (benefit) for deferred income
taxes (8,034) 41,799
Gain on sale of discontinued operations -- (48,109)
Impairment of intangible assets 39,050 201,951
Other, net 3,545 16,360
Changes in operating assets and
liabilities:
Accounts receivable 50,764 110,073
Income tax refund receivable (20,886) (31,041)
Inventories 126,944 66,548
Prepaid expenses and other assets 5,164 4,741
Accounts payable and other accrued
expenses (32,769) 24,295
Other long-term liabilities 2,293 11,029
---------- ----------
Net cash provided by operating activities 77,599 41,382
---------- ----------
Cash flows from investing activities:
Acquisition of stores, net of cash
acquired -- (14,659)
Proceeds from the sale of business, net of
cash sold -- 73,359
Proceeds from the disposal of assets 4,480 3,363
Additions to property, plant and equipment (9,777) (18,977)
---------- ----------
Net cash provided (used) by investing
activities (5,297) 43,086
---------- ----------
Cash flows from financing activities:
Payments of long-term debt (95,000) (110,800)
Restricted cash used for the payment of
long-term debt -- 20,000
Payments of cash dividends -- (5,844)
Other (10) (8)
---------- ----------
Net cash used by financing activities (95,010) (96,652)
---------- ----------
Net decrease in cash and cash equivalents (22,708) (12,184)
Cash and cash equivalents at beginning of
period 106,580 118,764
---------- ----------
Cash and cash equivalents at end of period $83,872 $106,580
========== ==========
Supplemental disclosure:
Cash payments (refunds) for income taxes,
net $(36,731) $2,039
========== ==========
Cash payments for interest expense $5,234 $13,372
========== ==========
FURNITURE BRANDS INTERNATIONAL, INC.
RECONCILIATION OF NON-U.S. GAAP ITEMS
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
-------------------- ----------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
--------- --------- ---------- ----------
Net sales $285,574 $403,353 $1,224,370 $1,743,176
Cost of sales (GAAP basis) 265,285 367,309 994,370 1,428,641
Less selected items included in
cost of sales:
Plant closure costs 1,885 1,875 1,885 2,997
Inventory charges 32,981 24,200 32,981 39,800
Severance charges 2,798 2,351 6,330 4,138
Factory downtime costs 4,124 7,480 11,286 21,435
--------- --------- ---------- ----------
41,788 35,906 52,482 68,370
--------- --------- ---------- ----------
Adjusted cost of sales
(non-GAAP) 223,497 331,403 941,888 1,360,271
--------- --------- ---------- ----------
Adjusted gross profit
(non-GAAP) 62,077 71,950 282,482 382,905
--------- --------- ---------- ----------
Adjusted gross margin
(non-GAAP) 21.7% 17.8% 23.1% 22.0%
Selling, general & administrative
expenses (GAAP basis) 115,235 161,288 363,636 524,457
Less selected items included in
selling, general and
administrative expenses:
Idle plant impairment charges 1,065 14,640 1,310 13,647
Closed store expense 10,725 16,572 16,008 39,921
Severance and other
restructuring charges 5,219 7,660 5,929 9,315
Accounts receivable charges 3,608 10,500 3,608 35,241
International trade compliance
matters 9,134 -- 9,134 --
Shared services and proxy
advisory fees -- -- -- 8,561
--------- --------- ---------- ----------
29,751 49,372 35,989 106,685
--------- --------- ---------- ----------
Adjusted selling, general and
administrative expenses
(non-GAAP) 85,484 111,916 327,647 417,772
--------- --------- ---------- ----------
Adjusted operating loss $(23,407) $(39,966) $(45,165) $(34,867)
========= ========= ========== ==========
Other Selected items:
Impairment of intangible assets $39,050 $201,951 $39,050 $201,951
========= ========= ========== ==========
Valuation allowance - tax assets
(included in
income tax expense (benefit)) $(15,821) $115,026 $(436) $118,026
========= ========= ========== ==========
December December
31, 2009 31, 2008
---------- ----------
Cash and cash equivalents $83,872 $106,580
Debt 95,000 190,000
---------- ----------
Net debt $11,128 $83,420
========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Furniture Brands International
CONTACT: Furniture Brands International John Hastings 314-863-1100
Copyright (C) 2010 GlobeNewswire. All rights reserved
News Provided by COMTEX
Company: Furniture Brands International, Inc. (FBN)
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