Furniture Brands International Reports Fourth Quarter And Full Year 2012 Financial Results

ST. LOUIS, Feb. 13, 2013 (GLOBE NEWSWIRE) -- Furniture Brands International (NYSE:FBN) today announced financial results for the fourth quarter and full year ended December 29, 2012.
  • Net sales of $264.0 million, an increase of 3.3% as compared to the fourth quarter of 2011  
  • Gross margin of 20.7% as compared to 23.0% in the fourth quarter of 2011  
  • SG&A of $70.9 million as compared to $71.8 million in the fourth quarter of 2011

Mr. Ralph Scozzafava, Chairman and CEO stated, "Fourth quarter sales increased 3%, however much work remains to be done in order to make progress driving profitable sales growth. In 2012 we ramped up production in our Mexico and Indonesia facilities and started our Broyhill casegoods mixing program, all of which will enable us to reduce our costs and participate more in the high-volume, lower-price point segments of the market. We also increased our mix of transitional and updated product to broaden our style appeal, and we improved service to our dealers with our Broyhill casegoods mixing program and Lane and Broyhill quickship programs."

Mr. Scozzafava added, "Looking forward, our focus in 2013 continues to be on generating free cash flow, and to that end we will intensify our efforts to drive profitable sales growth through product, pricing and dealer service initiatives. We will also remain focused on manufacturing efficiencies as well as on reducing costs and improving working capital."

For the fourth quarter ended December 29, 2012:

Net sales were $264.0 million compared to $255.5 million for the three months ended December 31, 2011, an increase of $8.5 million, or 3.3%. Fourth quarter 2012 retail sales at the 48 Thomasville company-owned stores totaled $27.5 million compared with sales of $26.0 million at 48 Thomasville company-owned stores in the prior year period. Fourth quarter same-store sales at the 45 Thomasville stores that the company has owned for more than 15 months were up 4.8% compared to the fourth quarter of 2011 when same-store sales decreased by 4.0%.

Gross profit was $54.6 million and included $1.0 million in charges related to cost reduction activities, resulting in a gross margin of 20.7%. Gross profit for the fourth quarter of 2011 was $58.8 million and gross margin was 23.0%. Excluding these charges, the decrease in fourth quarter 2012 gross margin when compared to the year ago period was primarily due to increased discounts, including the additional clearance of older inventory and product that is being replaced.

Selling, general and administrative expenses (SG&A) for the fourth quarter of 2012 totaled $70.9 million and included $2.8 million in charges related to cost reduction activities. SG&A expenses for the fourth quarter of 2011 totaled $71.8 million. Excluding these charges, the decrease in SG&A was primarily due to lower expenses resulting from prior cost reduction activities and favorable legal settlements.

The Company had an operating loss of $23.9 million as compared to an operating loss of $10.2 million in the prior year quarter. The current quarter operating loss includes $11.3 million of charges, which consist of the aforementioned $3.8 million of cost reduction charges as well as $7.5 of impairment charges, comprised of $6.1 million related to assets held for sale and $1.4 million related to trade names. The prior year operating loss includes a $3.0 million gain on idle facility sales partially offset by $0.2 million in impairment related to assets held for sale, both of which are recorded in Impairments of assets, net of recoveries.

Interest expense was $2.3 million as compared to $1.0 million in the prior year period. The increase in interest expense was primarily due to the increased interest rate on higher debt and closing cost amortization related to the previously announced debt refinancing in September 2012.

Net loss for the fourth quarter of 2012 was $22.9 million, or $0.41 per diluted share, which includes a $10.8 million after-tax charge from the aforementioned items, partially offset by the reversal of a $2.4 million valuation allowance on our tax assets, which was recorded in Income tax benefit. This compares to a net loss of $9.5 million, or $0.17 per diluted share, in the fourth quarter of 2011, which includes a $2.8 million after-tax gain from the aforementioned items.

For the year ended December 29, 2012:

Total revenue for the year decreased 3.2% to $1.07 billion from $1.11 billion in 2011. Thomasville sales at the 48 company-owned Thomasville stores were $105.5 million compared to $108.5 million in 2011 and comparable store sales for the 45 stores the company has owned for more than 15 months decreased 2.1% compared to 2011 when same-store sales increased by 6.3%.

Gross profit for the year was $244.3 million, or 22.8% of sales, compared to $267.3 million, or 24.1% of sales, in 2011. Gross profit for 2012 includes $1.9 million in charges from inventory write-downs related to product rationalization and $1.0 million in cost reduction charges. Gross profit for 2011 includes $2.8 million in charges associated with cost reduction initiatives.

SG&A for the year was $279.7 million compared to $305.5 million in 2011. SG&A for 2012 includes $3.8 million of cost reduction charges and $3.4 million of environmental charges, while 2011 includes $4.7 million in charges related to cost reduction activities and $0.5 million of environmental charges.

Operating loss for 2012 was $44.1 million and includes the aforementioned $10.1 million of charges as well as $8.7 million of impairment charges. Operating loss for 2011 was $44.5 million and includes the aforementioned $8.0 million of charges as well as $6.4 million of impairment charges.

Net loss was $47.3 million, or $0.86 per diluted share, which includes an $18.3 million after-tax charge from the aforementioned items, partially offset by the reversal of a $2.4 million valuation allowance on our tax assets, compared to a net loss of $43.8 million, or $0.80 per diluted share, in 2011, which includes an $10.9 million after-tax charge from the aforementioned items.

The Company ended the year with a cash balance of $11.9 million and a debt balance of $105.0 million.
Outlook for 2013:
     
Item 2012 Actual 2013 Estimate
Capital Expenditures $7.6 million $18 to $21 million
Depreciation and Amortization $18.9 million $17 to $19 million
Pension Contribution $8.4 million $6 to $6.5 million

Upcoming Investor Event

A conference call will be held to discuss fourth quarter results at 7:30 a.m. (Central Time) on February 13, 2013. Those wishing to participate should call 1-800-573-4752 (domestic calls) or 617-224-4324 (international calls) and reference passcode 17346293. The call can also be accessed in the Upcoming Investor Events section of the company's website at furniturebrands.com under "Investor Info". Access to the call and the release will be archived for one year.

For those unable to attend the conference call, it will be available via taped replay through 11:00 p.m. (Central Time) on February 20, 2013. That replay can be accessed by dialing 888-286-8010 (617-801-6888 for international calls) and entering passcode 68228806.

About Furniture Brands

Furniture Brands International, Inc. (NYSE:FBN) is a world leader in designing, manufacturing, sourcing and retailing home furnishings. Furniture Brands markets products through a wide range of channels, including its own Thomasville retail stores and through interior designers, multi-line, independent retailers and mass merchant stores.  Furniture Brands' portfolio includes some of the best known and most respected brands in the furniture industry, including Thomasville, Broyhill, Lane, Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith, La Barge, and Creative Interiors.  To learn more about the company, visit: furniturebrands.com.

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, 2011, and in our other subsequent 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; changes in our pension funding obligations; 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; loss of key personnel; impairment of intangible assets; anti-takeover provisions which could result in a decreased valuation of our common stock; loss of funding sources or our inability to secure additional financing to meet our operating and capital needs; 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 29,   December 31,   December 29,   December 31, 
   2012   2011   2012   2011 
 Net sales   $ 263,953  $ 255,537  $ 1,072,324  $ 1,107,664
 Cost of sales   209,349  196,735  828,030  840,357
 Gross profit   54,604  58,802  244,294  267,307
 Selling, general and administrative expenses   70,935  71,793  279,660  305,499
 Impairment of assets, net of recoveries   7,536  (2,788)  8,709  6,355
 Operating loss   (23,867)  (10,203)  (44,075)  (44,547)
 Interest expense   2,293  991  5,681  3,573
 Other income, net   372  648  713  1,567
 Loss before income tax benefit   (25,788)  (10,546)  (49,043)  (46,553)
 Income tax benefit   (2,891)  (1,050)  (1,774)  (2,803)
 Net loss   $ (22,897)  $ (9,496)  $ (47,269)  $ (43,750)
         
 Net loss per common share:         
 Basic and diluted   $ (0.41)  $ (0.17)  $ (0.86)  $ (0.80)
         
 Weighted average common shares outstanding:         
 Basic and diluted   55,241  55,009  55,156  54,935
 
 
 
 
 FURNITURE BRANDS INTERNATIONAL, INC. 
 CONDENSED CONSOLIDATED BALANCE SHEETS 
 (in thousands) 
 (unaudited) 
     
   December 29,   December 31, 
   2012   2011 
 ASSETS     
     
 Current assets:     
 Cash and cash equivalents   $ 11,869  $ 25,387
 Receivables, less allowances of $11,615 ($10,413 at December 31, 2011)   125,739  107,974
 Inventories   244,333  228,155
 Prepaid expenses and other current assets   11,287  9,490
 Total current assets   393,228  371,006
     
 Property, plant and equipment, net   103,403  115,803
 Trade names   76,105  77,508
 Other assets   45,705  50,179
   $ 618,441  $ 614,496
     
 LIABILITIES AND SHAREHOLDERS' EQUITY     
     
 Current liabilities:     
 Accounts payable   $ 113,590  $ 85,603
 Accrued expenses   58,741  53,551
 Total current liabilities   172,331  139,154
     
 Long-term debt   105,000  77,000
 Deferred income taxes   18,002  19,330
 Pension liability   213,295  185,991
 Other long-term liabilities   55,015  60,740
     
 Shareholders' equity   54,798  132,281
   $ 618,441  $ 614,496
 
 
 
 FURNITURE BRANDS INTERNATIONAL, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (in thousands) 
 (unaudited) 
         
       Twelve Months Ended 
       December 29,   December 31, 
       2012   2011 
 Cash flows from operating activities:         
 Net loss       $ (47,269)  $ (43,750)
 Adjustments to reconcile net loss to net cash used by operating activities:         
 Depreciation and amortization       18,944  21,893
 Compensation expense related to stock option grants and restricted stock awards       2,230  2,548
 Impairment of assets       8,709  9,830
 Loss/(gain) on the sale of assets       228  (3,940)
 Other, net       602  (1,078)
 Changes in operating assets and liabilities:         
 Accounts receivable       (18,245)  5,852
 Income taxes receivable       480  708
 Inventories       (16,178)  21,536
 Prepaid expenses and other assets       (865)  1,566
 Accounts payable and accrued expenses       33,804  (3,096)
 Deferred income taxes       (1,956)  (2,602)
 Other long-term liabilities       (9,782)  (15,694)
 Net cash used by operating activities       (29,298)  (6,227)
         
 Cash flows from investing activities:         
 Additions to property, plant, equipment and software       (7,600)  (27,507)
 Proceeds from the disposal of assets       3,781  9,517
 Net cash used by investing activities       (3,819)  (17,990)
         
 Cash flows from financing activities:         
 Payment of long-term debt       (77,000)  -- 
 Payments for debt issuance costs       (8,498)  (2,458)
 Proceeds from issuance of the term loan       50,000  -- 
 Proceeds from issuance of long-term debt       55,000  -- 
 Other       97  98
 Net cash provided (used) by financing activities       19,599  (2,360)
         
 Net decrease in cash and cash equivalents       (13,518)  (26,577)
 Cash and cash equivalents at beginning of period       25,387  51,964
 Cash and cash equivalents at end of period       $ 11,869  $ 25,387
         
         
 Supplemental disclosure:         
 Cash refunds for income taxes, net       $ 151  $ 706
         
 Cash payments for interest expense       $ 4,082  $ 3,022
 
 
 
 FURNITURE BRANDS INTERNATIONAL, INC. 
 SUPPLEMENTAL RETAIL INFORMATION 
 (dollars in thousands) 
 (unaudited) 
         
   Thomasville Stores (a)   All Other Retail Locations (b) 
   Three Months Ended   Three Months Ended 
   December 29,   December 31,   December 29,   December 31, 
   2012   2011   2012   2011 
Net sales   $ 27,476  $ 26,028  $ 8,339  $ 8,574
Cost of sales   16,308  14,775  5,203  5,653
Gross profit   11,168  11,253  3,136  2,921
Selling, general and administrative expenses - open stores   15,404  15,345  4,172  3,843
Operating loss - open stores (c)   (4,236)  (4,092)  (1,036)  (922)
         
Selling, general and administrative expenses - closed stores (d)   --   --   1,061  2,268
Operating loss - retail operations (c)   $ (4,236)  $ (4,092)  $ (2,097)  $ (3,190)
         
         
Number of open stores and showrooms at end of period   48  48  16  16
Number of closed locations at end of period   --     20  23
         
Same-store-sales (e):         
Percentage increase/(decrease)   5 %  (4) %  (f)   (f) 
Number of stores   45  44    
         
         
   Thomasville Stores (a)   All Other Retail Locations (b) 
   Twelve Months Ended   Twelve Months Ended 
   December 29,   December 31,   December 29,   December 31, 
   2012   2011   2012   2011 
Net sales   $ 105,457  $ 108,548  $ 33,705  $ 37,395
Cost of sales   61,651  63,158  21,382  24,277
Gross profit   43,806  45,390  12,323  13,118
Selling, general and administrative expenses - open stores   60,136  62,600  16,263  18,344
Operating loss - open stores (c)   (16,330)  (17,210)  (3,940)  (5,226)
         
Selling, general and administrative expenses - closed stores (d)   --   --   3,003  7,364
Operating loss - retail operations (c)   $ (16,330)  $ (17,210)  $ (6,943)  $ (12,590)
         
         
Same-store-sales (e):         
Percentage increase/(decrease)   (2) %  6 %  (f)   (f) 
Number of stores   45  48    
         
a) This supplemental data includes company-owned Thomasville retail store locations that were open during the period. 
         
b) This supplemental data includes all company-owned retail locations other than open Thomasville stores ("all other retail locations"). 
         
c) Operating loss does not include our wholesale profit on the above retail net sales. 
         
d) SG&A - closed stores includes occupancy costs, lease termination costs, and costs associated with closed store lease liabilities. 
         
e) The Thomasville same-store-sales percentage is based on sales from stores that have been in operation and company-owned for at least 15 months, including any stores that had been open for at least 15 months, but were closed during the period. 
         
f) Same-store-sales data is not meaningful and is not presented for all other retail locations because results include retail store locations of multiple brands including six Drexel Heritage stores, one Henredon store, one Broyhill store, and eight Designer Showrooms at December 29, 2012; and it is not one of our long-term strategic initiatives to grow non-Thomasville brand company-owned retail locations.
CONTACT: Rick Isaak         Furniture Brands         VP, Controller, Treasurer & Investor         Relations         314-862-7117         or         Farah Soi         ICR         203-682-8200

Furniture Brands Logo

If you liked this article you might like

The 5 Dumbest Things on Wall Street This Week: Aug. 23

The 5 Dumbest Things on Wall Street This Week: Aug. 23

5 Dumbest Things on Wall Street

5 Dumbest Things on Wall Street

The 5 Dumbest Things on Wall Street This Week: July 26

The 5 Dumbest Things on Wall Street This Week: July 26

5 Dumbest Things on Wall Street

5 Dumbest Things on Wall Street

5 Dumbest Things on Wall Street This Week: April 5

5 Dumbest Things on Wall Street This Week: April 5