<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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Page 1 of 24
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended November 30, 1994 Commission File No. 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
VIRGINIA 54-0135270
-------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BASSETT, VIRGINIA 24055
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 703/629-6000
---------------------------
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class: on which registered
- -------------------- ---------------------
<S> <C>
Common Stock ($5.00 par value) NASDAQ
----------------------------- ---------------------
</TABLE>
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, and (2) has been subject to such filing
requirements for at least the past 90 days.
/X/ Yes / / No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / X /
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of December 9, 1994.
Common Stock, $5.00 par value -- $361,360,000
----------------------------- ------------
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Common Stock, $5.00 par value -- 14,086,815 at the close of the period covered
----------------------------- ----------
by this report.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Bassett Furniture Industries, Incorporated Annual
Report to Stockholders for the year ended November 30, 1994 (the
"Annual Report") are incorporated by reference into Parts I and II of
this Form 10-K.
(2) Portions of the Bassett Furniture Industries, Incorporated definitive
Proxy Statement for its 1995 Annual Meeting of Stockholders held
February 15, 1995, filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934
(the "Proxy Statement") are incorporated by reference into Part III of
this Form 10-K.
<PAGE> 2
Page 2 of 24
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Bassett Furniture Industries, Incorporated was
incorporated under the laws of the Commonwealth of
Virginia in 1930. The executive offices are located in
Bassett, Virginia.
Capital expenditures totaled $10 million in 1994. Major
projects included new material handling systems in two
Wood Products plants. These "rough-end" systems are
designed to improve lumber yield and labor efficiency.
There have been no material changes in the mode of
conducting business in the fiscal year beginning December
1, 1993.
INDUSTRY SEGMENT
In accordance with the instructions for this item,
Bassett Furniture Industries, Incorporated and its
subsidiaries, all of which are wholly-owned (Company), is
deemed to have been engaged in only one business segment,
manufacture and sale of furniture, for the three years
ended November 30, 1994.
DESCRIPTION OF BUSINESS
The Company manufactures and sells a full line of
furniture for the home: bedroom and dining suites and
accent pieces; occasional tables, wall and entertainment
units; upholstered sofas, chairs and love seats (motion
and stationary); recliners; and mattresses and box
springs. The Company's products are distributed through
a large number of retailers, principally in the United
States. The retailers selling the Company's products
include mass merchandisers, department stores,
independent furniture stores, chain furniture stores,
decorator showrooms, warehouse showrooms, specialty
stores and rent-to-own stores.
Because of the dramatic changes that have taken place in
recent years in the retail home furnishings distribution
network, including consolidation and elimination of many
small retail stores, Bassett developed the Bassett
Gallery Program. At November 30, 1994, 256 galleries are
operational with 33 more being added.
In October of 1994, the Company announced a new program
that was developed in conjunction with several of the
Bassett Gallery retail dealers. The new concept is
called The Bassett Direct Plus Dealership Program. A
Bassett Direct Plus Dealership is a free standing
exclusive Bassett store, between 15,000 and 20,000 square
feet, which displays in gallerized settings all Bassett
product groups. The cornerstone of this program is the
alliance between Bassett and the retail dealer designed
to create the closest possible working relationship
between the two. This is accomplished by the use of the
very latest computer technologies such as EDI and
BassNet, which are part of a streamlined management
system for the retail dealer.
In 1994, the Company became the first furniture
manufacturer to take advantage of the "Information
Superhighway" through the Company's new Electronic
Showroom on CompuServe (the nation's largest computer
information service). Consumers have the ability to tour
the on-line showroom, learn about the
<PAGE> 3
Page 3 of 24
Company and its products and, at their request, be
referred to the Bassett retail dealer nearest them.
In addition, in 1994 the Company signed three licensing
agreements: Bassett Divisions for the "Bassett - J.G.
Hook Home Fashions Collection"; National/Mt. Airy
Division for the "Carson Prairie Collection"; and Weiman
Division for designs by the Japanese designer, Yoshiharu
Hatano.
Raw materials used by the Company are generally available
from numerous sources and are obtained principally from
domestic sources. The cost pressures on lumber and
lumber related products (which increased significantly in
1993) eased off somewhat in 1994; however, cost increases
in other raw materials were experienced in 1994.
Further, it continued to be very difficult to pass
through the incurred cost increases to retail dealers in
the form of increased sales prices.
The Company's trademark "Bassett" and the names of its
marketing divisions and product collections are
significant to the conduct of its business. This
importance is due to consumer recognition of the names
and identification with the Company's broad range of
products. The Company owns certain patents and licenses
that are important in the conduct of the Company's
business.
The furniture industry is not considered to be a seasonal
industry.
There are no special practices in the furniture industry,
or applicable to the Company, that would have a
significant effect on working capital items.
The Company is not dependent upon a single customer, the
loss of which would have a material adverse effect on the
Company. Sales to one customer (J. C. Penney Company)
amounted to approximately 13% of gross sales in 1994, 12%
in 1993 and 13% in 1992.
The Company's backlog of orders believed to be firm was
$66,500,000 at November 30, 1994 and $67,400,000 at
November 30, 1993. It is expected that the November 30,
1994 backlog will be filled within the 1995 fiscal year.
None of the Company's business involves government
contracts.
The furniture industry is very competitive as there are a
large number of manufacturers both within the United
States and offshore who compete in the marketplace on the
basis of quality of the product, price, delivery and
service. Based on annual sales revenue, the Company is
one of the largest furniture manufacturers in the United
States. The Company has been successful in this
competitive environment because its products represent
excellent values combining price and superior quality and
styling; prompt delivery; and quality, courteous service.
Competition from foreign manufacturers is not any more
significant in the marketplace today than competition
from domestic manufacturers.
The furniture industry is considered to be a "fashion"
industry subject to constant change to meet the changing
consumer preferences and tastes. As such, the Company is
continuously involved in the development of new products
and designs. Due to the nature of these efforts and the
close relationship to the manufacturing operations, the
costs thereof are considered normal operating costs and
are not segregated.
The Company is not involved in "traditional" research and
development activities. Neither are there any customer -
sponsored research and development activities involving
the Company.
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Page 4 of 24
In management's view, the Company has complied with all
federal, state and local standards in the area of safety,
health and pollution and environmental controls.
Compliance with these standards has not had a material
adverse effect on past earnings, capital expenditures or
competitive position.
The Company anticipates increased regulation on the
furniture industry from federal and state agencies
particularly in the areas of emission of fumes from the
furniture finishing processes and emission of
particulates into the atmosphere (saw dust and boiler
ash). The Company cannot at this time estimate the
impact of compliance with these new, more stringent
standards on the Company's operations or costs of
compliance.
The Company had approximately 7,800 employees at November
30, 1994.
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company has no foreign operations, and its export
sales are insignificant.
ITEM 2. PROPERTIES
The Company owns the following facilities:
<TABLE>
<CAPTION>
Plant Name Location Construction
-------------------------------- ---------------------- --------------------
<S> <C> <C>
Bassett Furniture Bassett, VA Brick, frame and concrete
Company (*)
J. D. Bassett Bassett, VA (2
Manufacturing Company plants) Brick, frame and concrete
Bassett Superior Lines Bassett, VA Brick, frame, concrete and steel
Bassett Chair Company Bassett, VA Brick, frame, concrete and steel
Bassett Table Company Bassett, VA Brick and frame
W. M. Bassett Furniture Martinsville, VA Brick, frame, concrete and steel
Company
Bassett Fiberboard Bassett, VA Brick, concrete and steel
Bassett Upholstery Newton, NC (4
Division plants) Brick, concrete and steel
Taylorsville, NC Brick, concrete and steel
Dumas, AR Brick, concrete and steel
Bassett Furniture Industries Statesville, NC Brick, frame, concrete and steel
of North Carolina, Inc.
Bassett of NC - Dublin Dublin, GA Concrete block and steel
Bassett of NC - Macon Macon, GA Brick, concrete and steel
Bassett Wood Products Dumas, AR Brick, concrete and steel
Burkeville Veneer Burkeville, VA Brick and frame
National/Mt. Airy Mt. Airy, NC Brick, concrete and steel
Weiman Division Ramseur, NC Concrete block and steel
Christiansburg, VA Metal frame
</TABLE>
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Page 5 of 24
<TABLE>
<S> <C> <C>
E. B. Malone Corporation Lake Wales, FL
(2 plants) Concrete block and frame
Jacksonville, FL Concrete block and frame
Pottstown, PA Metal frame
West Palm Beach, FL Concrete block and steel
Walworth, WI Concrete block and steel
Fredricksburg, VA Brick and frame
Chehalis, WA Concrete block and metal frame
Los Angeles, CA Concrete block and metal frame
Los Angeles, CA Brick, concrete and steel
Tipton, MO Concrete block and steel
Impact Furniture Hickory, NC (2
plants and
warehouse) Brick, concrete and steel
Bassett Motion Division Saltillo, MS Metal frame
Booneville, MS (2
plants) Metal frame
</TABLE>
The Company also owns its general office building in Bassett,
Virginia (brick, concrete and steel), two warehouses in Bassett,
Virginia (brick and concrete) and a showroom in High Point,
North Carolina (brick, concrete and steel).
In general, these facilities are suitable and are considered to
be adequate for the continuing operations involved. All
facilities are in regular use, except the plant noted below.
(*) Plant closed as part of the restructuring program announced
in 1990.
ITEM 3. LEGAL PROCEEDINGS
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information contained in the Annual Report under the caption
"Other Business Data" - "Market and Dividend Information" with
respect to number of stockholders, market prices and dividends
paid is incorporated herein by reference thereto.
ITEM 6. SELECTED FINANCIAL DATA
The information for the five years ended November 30, 1994,
contained in the "Other Business Data" in the Annual Report is
incorporated herein by reference thereto.
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Page 6 of 24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in "Other Business Data" in the Annual
Report is incorporated herein by reference thereto.
The change in the level of the Company's net sales has
historically been principally due to the change in the volume of
units sold, as contrasted to changes in unit prices. The level
of the Company's net sales has fluctuated with the level of
consumer confidence and housing starts.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the
registrant and its subsidiaries, together with the independent
auditors' report thereon of KPMG Peat Marwick LLP dated December
17, 1994, included in the annual report of the registrant to its
stockholders for the year ended November 30, 1994 are
incorporated herein by reference thereto:
Consolidated Balance Sheet--November 30, 1994 and 1993
Consolidated Statement of Income--Years Ended November 30,
1994, 1993 and 1992
Consolidated Statement of Stockholders' Equity - Years
Ended November 30, 1994, 1993 and 1992
Consolidated Statement of Cash Flows--Years Ended November
30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
The information contained in "Other Business Data" for
"Quarterly Results of Operations" in the Annual Report is
incorporated herein by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF
THE REGISTRANT
The information contained on pages 2 through 5 of the Proxy
Statement under the captions "Principal Stockholders and
Holdings of Management" and "Election of Directors" is
incorporated herein by reference thereto.
ITEM 11. EXECUTIVE COMPENSATION
The information contained on page 6 through 12 of the Proxy
Statement under the captions "Organization and Compensation
Committee Report", "Stockholder Return Performance Graph",
"Executive Compensation", and "Supplemental Retirement Income
Plan" is incorporated herein by reference thereto.
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Page 7 of 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained on page 2 of the Proxy Statement under
the heading "Principal Stockholders and Holdings of Management"
is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained on page 6 of the Proxy statement under
the heading "Organization and Compensation Committee Interlocks
and Insider Participation" is incorporated herein by reference
thereto.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) (1) The response to this portion of Item 14 is submitted
as a separate section of this report.
(2) All financial statement schedules for which provision
is made in the applicable accounting regulations of
the Securities and Exchange Commission are not
required under the related instructions or are
inapplicable and, therefore, have been omitted.
(3) Listing of Exhibits
3. Articles of Incorporation as amended and By
Laws are incorporated herein by reference to
Form 10-Q for the fiscal quarter ended
February 28, 1994.
13. The registrant's Annual Report to Stockholders
for the year ended November 30, 1994.*
21. List of subsidiaries of the registrant
23. Consent of experts and counsel
27. Financial Data Schedule (EDGAR filing only)
*With the exception of the information incorporated in
this Form 10-K by reference thereto, the Annual Report
shall not be deemed "filed" as a part of this Form 10-K.
(b) No reports on Form 8-K have been filed during the last
quarter of the registrant's 1994 fiscal year.
(c) Exhibits: The response to this portion of Item 14. is
submitted as a separate section of this report.
(d) Financial Statement Schedules: All financial statement
schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under the related instructions
or are inapplicable and, therefore, have been omitted.
<PAGE> 8
Page 8 of 24
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (c)
LIST OF FINANCIAL STATEMENTS
CERTAIN EXHIBITS
YEAR ENDED NOVEMBER 30, 1994
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
BASSETT, VIRGINIA
<PAGE> 9
Page 9 of 24
ITEM 14(a)(1)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The following consolidated financial statements of the registrant and its
subsidiaries, included in the annual report of the registrant to its
stockholders for the year ended November 30, 1994 are incorporated herein by
reference:
Consolidated Balance Sheet--November 30, 1994 and 1993
Consolidated Statement of Income--Years Ended November 30, 1994, 1993
and 1992
Consolidated Statement of Stockholders' Equity - Years Ended November
30, 1994, 1993 and 1992
Consolidated Statement of Cash Flows--Years Ended November 30, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
<PAGE> 10
Page 10 of 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BASSETT FURNITURE INDUSTRIES, INCORPORATED (Registrant)
<TABLE>
<S> <C> <C> <C>
By: /s/Robert H. Spilman Date: February 15, 1995
-------------------------------------------- -----------------
Robert H. Spilman
Chairman of the Board of Directors and
Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C> <C>
By: /s/Peter W. Brown Date: February 15, 1995
-------------------------------------------- -----------------
Peter W. Brown
Director
By: /s/Thomas E. Capps Date: February 15, 1995
-------------------------------------------- -----------------
Thomas E. Capps
Director
By: Date: February 15, 1995
-------------------------------------------- -----------------
Alan T. Dickson
Director
By: Date: February 15, 1995
-------------------------------------------- -----------------
Paul Fulton
Director
By: /s/William H. Goodwin, Jr. Date: February 15, 1995
-------------------------------------------- -----------------
William H. Goodwin, Jr.
Director
By: /s/Glenn A. Hunsucker Date: February 15, 1995
-------------------------------------------- -----------------
Glenn A. Hunsucker
President and Chief Operating Officer
and Director
By: /s/George W. Lyles, Jr. Date: February 15, 1995
-------------------------------------------- -----------------
George W. Lyles, Jr.
Director
By: Date: February 15, 1995
-------------------------------------------- -----------------
James W. McGlothlin
Director
</TABLE>
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SIGNATURES -- CONTINUED
<TABLE>
<S> <C> <C> <C>
By: Date: February 15, 1995
-------------------------------------------- -----------------
Albert F. Sloan
Director
By: /s/John W. Snow Date: February 15, 1995
-------------------------------------------- -----------------
John W. Snow
Director
By: /s/Philip E. Booker Date: February 15, 1995
-------------------------------------------- -----------------
Philip E. Booker
Vice President and Controller
</TABLE>
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Page 12 of 24
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Page No.
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<S> <C> <C>
3. Articles of Incorporation as amended and Bylaws -
incorporated by reference to Form 10-Q for the fiscal
quarter ended February 28, 1994 N/A
13. Bassett Furniture Industries, Inc. Annual Report to
Stockholders for the year ended November 30, 1994 13 - 21
21. List of subsidiaries of registrant 22
23. Consent of Independent Auditors 23
27. Financial Data Schedule (EDGAR filing only) 24
</TABLE>
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13 of 24
CONSOLIDATED BALANCE SHEET
Bassett Furniture Industries, Incorporated and Subsidiaries
<TABLE>
<CAPTION>
ASSETS
November 30,
----------------------------------
1994 1993
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 42,314,957 $ 52,957,556
Trade accounts receivable, less allowances for doubtful
accounts (1994 - $1,115,000; 1993 - $1,200,000) and discounts . . . 71,936,750 74,965,301
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,074,811 69,793,369
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 2,206,736 2,656,073
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . 274,675 -0-
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,823,000 1,213,000
------------- -------------
198,630,929 201,585,299
PROPERTY, PLANT AND EQUIPMENT
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,859,549 70,342,990
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . 130,218,793 127,043,322
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745,477 745,477
------------- -------------
202,823,819 198,131,789
Less allowances for depreciation . . . . . . . . . . . . . . . . . . 152,673,335 148,993,327
------------- -------------
50,150,484 49,138,462
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,403,422 4,310,931
------------- -------------
54,553,906 53,449,393
OTHER ASSETS
Investment in securities . . . . . . . . . . . . . . . . . . . . . . 43,638,983 36,291,645
Investment in affiliated companies . . . . . . . . . . . . . . . . . 35,080,525 31,706,347
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . -0- 1,701,200
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,593,887 5,943,995
------------- -------------
87,313,395 75,643,187
------------- -------------
$340,498,230 $330,677,879
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,786,395 $ 26,405,963
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . 5,215,159 5,722,837
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0- 1,061,036
------------- -------------
35,001,554 33,189,836
DEFERRALS
Deferred liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9,529,784 8,612,578
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 774,000 -0-
------------- -------------
10,303,784 8,612,578
STOCKHOLDERS' EQUITY
Common stock, par value $5 a share, 50,000,000 shares authorized . . 70,434,075 72,241,005
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . -0- 422,784
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 221,949,817 216,211,676
Unrealized holding gains, net of tax . . . . . . . . . . . . . . . . 2,809,000 -0-
------------- -------------
295,192,892 288,875,465
------------- -------------
$340,498,230 $330,677,879
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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CONSOLIDATED STATEMENT OF INCOME
Bassett Furniture Industries, Incorporated and Subsidiaries
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 510,560,858 $ 503,770,060 $ 473,401,341
COSTS AND EXPENSES
COST OF SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,393,531 413,055,371 385,294,583
SELLING, GENERAL AND ADMINISTRATIVE . . . . . . . . . . . . . . . . . 66,044,399 63,472,078 59,852,470
------------- ------------- -------------
485,437,930 476,527,449 445,147,053
------------- ------------- -------------
INCOME FROM OPERATIONS 25,122,928 27,242,611 28,254,288
OTHER INCOME, NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,657,476 9,270,219 9,787,614
NET UNREALIZED GAIN ON INVESTMENT SECURITIES . . . . . . . . . . . . . . . -0- -0- 1,224,796
------------- ------------- -------------
Income before income taxes and cumulative
Effect of a change in accounting principle 34,780,404 36,512,830 39,266,698
INCOME TAXES
FEDERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,521,000 9,223,000 10,187,000
STATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,361,000 1,077,000 1,449,000
DEFERRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78,000) 344,000 138,000
------------- ------------- -------------
9,804,000 10,644,000 11,774,000
------------- ------------- -------------
Income before cumulative effect of a change in accounting principle 24,976,404 25,868,830 27,492,698
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE . . . . . . . (510,200) -0- -0-
------------- ------------- -------------
NET INCOME $ 24,466,204 $ 25,868,830 $ 27,492,698
============= ============= =============
EARNINGS PER SHARE:
Income before cumulative effect of a change in accounting principle . $1.75 $1.79 $1.91
Cumulative effect of a change in accounting principle . . . . . . . (.04) -0- -0-
------------- ------------- -------------
NET INCOME PER SHARE $1.71 $1.79 $1.91
============= ============= =============
</TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Bassett Furniture Industries, Incorporated and Subsidiaries
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK AT COST
------------------------- ADDITIONAL RETAINED ------------------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
---------- ----------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 1, 1991 . . . . . . . . . 9,572,968 $47,864,840 $7,993,618 $250,798,846 1,894,944 $51,551,707
Net income . . . . . . . . . . . . . - - - 27,492,698 - -
Cash dividends . . . . . . . . . . . - - - (9,205,978) - -
Purchase of common stock . . . . . . - - - - 3 92
Contribution of treasury stock to
Employee Savings/Retirement Plan . - - 232,780 - (10,929) (148,369)
Exercise of stock options . . . . . . - - 38,837 - (1,642) (9,233)
Retire treasury stock . . . . . . . . (1,882,376) (9,411,880) (8,265,235) (33,717,082 (1,882,376) (51,394,197)
3 for 2 stock split distributed
April, 1992 . . . . . . . . . . . . 3,844,750 19,223,750 - (19,223,750) - -
---------- ----------- ---------- ------------ --------- -----------
BALANCE, NOVEMBER 30, 1992 . . . . . . . . 11,535,342 57,676,710 -0- 216,144,734 -0- -0-
Net income . . . . . . . . . . . . . - - - 25,868,830 - -
Cash dividends . . . . . . . . . . . - - - (11,358,213) - -
Exercise of stock options . . . . . . 24,124 120,620 422,784 - - -
5 for 4 stock split distributed
May, 1993 . . . . . . . . . . . . . 2,888,735 14,443,675 - (14,443,675) - -
---------- ----------- ---------- ------------ --------- -----------
BALANCE, NOVEMBER 30, 1993 . . . . . . . . 14,448,201 72,241,005 422,784 216,211,676 -0- -0-
Net income . . . . . . . . . . . . . - - - 24,466,204 - -
Cash dividends . . . . . . . . . . . - - - (11,411,357) - -
Purchase and retirement of common
stock . . . . . . . . . . . . . . . (361,386) (1,806,930) (422,784) (7,316,706) _ _
---------- ----------- ---------- ------------ --------- -----------
BALANCE, NOVEMBER 30, 1994 . . . . . . . . 14,086,815 $70,434,075 $ -0- $221,949,817 -0- $ -0-
========== =========== ========== ============ ========= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 3
15 of 24
CONSOLIDATED STATEMENT OF CASH FLOWS
Bassett Furniture Industries, Incorporated and Subsidiaries
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,466,204 $25,868,830 $27,492,698
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . 8,799,199 8,984,279 8,482,547
Equity in unremitted income of affiliated companies . . . . . . . (4,463,683) (3,945,899) (3,642,938)
Contribution of treasury stock to Employee
Savings/Retirement Plan . . . . . . . . . . . . . . . . . . . -0- -0- 381,149
Provision for losses on trade accounts receivable . . . . . . . . 844,483 434,450 1,635,517
Net realized gain from sales of investment securities . . . . . (518,851) (695,247) (1,111,623)
Net unrealized gain on investment securities . . . . . . . . . . -0- -0- (1,224,796)
Net gain from sales of property,
plant and equipment . . . . . . . . . . . . . . . . . . . . . (25,683) (317,964) (483,991)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 432,200 344,000 138,000
Changes in deferred liabilities . . . . . . . . . . . . . . . . . 917,206 744,216 703,023
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . . . . . 2,184,068 (1,041,227) (8,316,380)
Other receivables . . . . . . . . . . . . . . . . . . . . . . (362,506) 1,610,931 752,666
Inventories and prepaid expenses . . . . . . . . . . . . . . . (9,832,105) (5,707,633) (8,972,534)
Accounts payable and accrued compensation . . . . . . . . . . 2,872,754 (2,547,243) 7,087,396
Income taxes payable . . . . . . . . . . . . . . . . . . . . . (1,624,711) (1,300,760) 219,079
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,688,575 22,430,733 23,139,813
INVESTING ACTIVITIES
Purchases of property, plant and equipment . . . . . . . . . . . (9,999,040) (6,235,233) (9,898,098)
Proceeds from sales of property, plant and equipment . . . . . . 121,011 382,833 753,359
Purchases of investment securities . . . . . . . . . . . . . . . (9,893,116) (9,866,962) (9,677,517)
Proceeds from sales of investment securities . . . . . . . . . . 7,595,629 7,522,647 10,140,808
Dividends from affiliated company . . . . . . . . . . . . . . . . 1,089,505 272,376 -0-
Investment in corporate owned life insurance . . . . . . . . . . (2,598,314) (731,672) (178,202)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,928 (187,425) 440,876
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (13,373,397) (8,843,436) (8,418,774)
FINANCING ACTIVITIES
Exercise of stock options . . . . . . . . . . . . . . . . . . . . -0- 543,404 48,070
Purchase of common stock . . . . . . . . . . . . . . . . . . . . (9,546,420) -0- (92)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . (11,411,357) (11,358,213) (9,205,978)
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (20,957,777) (10,814,809) (9,158,000)
----------- ----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . (10,642,599) 2,772,488 5,563,039
CASH AND CASH EQUIVALENTS-beginning of year . . . . . . . . . . . . . . 52,957,556 50,185,068 44,622,029
----------- ----------- -----------
CASH AND CASH EQUIVALENTS-end of year . . . . . . . . . . . . . . . . . $42,314,957 $52,957,556 $50,185,068
=========== =========== ===========
- -------------------
Income tax payments . . . . . . . . . . . . . . . . . . . . . . . . . . $11,506,711 $11,600,760 $11,416,921
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
16 of 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bassett Furniture Industries, Incorporated and Subsidiaries
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant intercompany
balances and transactions are eliminated in consolidation.
Cash Equivalents
The Company considers all temporary, highly liquid investments with a maturity
of three months or less to be cash equivalents. The carrying amount
approximates fair value because of the short maturity of these investments.
Trade Accounts Receivable
The Company has only one business segment, the manufacture and sale of
household furniture. Substantially all of the Company's trade accounts
receivable are due from retailers in this market. The Company performs on-going
evaluations of its customers' credit worthiness and, generally, requires no
collateral.
Inventories
All inventories are valued at last-in, first-out (LIFO) cost which is not in
excess of market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed
generally by accelerated methods.
Investment in Securities
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (Statement 115). Under Statement 115, the Company
classifies its investment in securities as available-for-sale, which are
reported at fair value. Unrealized holding gains and losses, net of the related
tax effect, on available-for-sale securities are excluded from income and are
reported as a separate component of stockholders' equity. Realized gains and
losses from securities classified as available-for-sale are included in income
and are determined using the specific identification method for ascertaining
the cost of securities sold.
The investment in securities at November 30, 1993, is reported at the lower of
aggregate portfolio cost or market.
Investment in Affiliated Companies
The equity method of accounting is used for the investment in affiliated
companies. The carrying amounts approximate the Company's equity in their
underlying net assets.
Investment in Corporate Owned Life Insurance
Investment in corporate owned life insurance policies is recorded net of policy
loans and is included in other assets. The net life insurance expense, which
includes premiums and interest on cash surrender borrowings, net of increases
in cash surrender values, is included in other income.
Revenue Recognition
Revenue from sales is recognized when the goods are shipped to the customer.
Sales to one customer, as a percent of gross sales, amounted to 13% in 1994,
12% in 1993 and 13% in 1992.
Income Taxes
For 1994, deferred income taxes were determined based on the difference between
the financial statement and income tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. The Company had previously determined income tax expense under the
deferred method, whereby timing differences were recorded at the tax rates in
effect for the year in which the differences arose and were not adjusted for
tax rate changes.
Earnings Per Share
Earnings per share is calculated using the weighted average number of shares
outstanding. All share and per share data has been adjusted to reflect the 5
for 4 stock split in 1993 and the 3 for 2 stock split in 1992.
B. INVENTORIES (in millions)
<TABLE>
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Finished goods $45.2 $40.9
Work in process 15.6 14.7
Raw materials and supplies 44.6 37.3
----- -----
Total inventories on FIFO cost method 105.4 92.9
LIFO adjustment 25.3 23.1
----- -----
$80.1 $69.8
===== =====
</TABLE>
C. INVESTMENT IN SECURITIES
Information on investment in securities by major security type at November 30,
1994, follows: (in millions)
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Holding Holding Fair
Cost Gains Losses Value
----- ---------- ---------- -----
<S> <C> <C> <C> <C>
Equity securities $26.5 $6.6 $2.2 $30.9
Mutual funds 5.6 0.4 0.1 5.9
Municipal securities 5.0 -0- 0.1 4.9
Other 2.0 -0- 0.1 1.9
----- ---- ---- -----
$39.1 $7.0 $2.5 $43.6
===== ==== ==== =====
</TABLE>
Maturities of the municipal securities are due within five years.
At November 30, 1993, the portfolio had an aggregate market value of $43.7
million and an adjusted cost basis of $36.3 million.
<PAGE> 5
17 of 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Bassett Furniture Industries, Incorporated and Subsidiaries
D. INVESTMENT IN AFFILIATED COMPANIES
The Company has an equity interest in a company which leases exhibition space
to furniture and accessory manufacturers and an equity interest in a
manufacturer of particleboard for use principally in the furniture industry.
The Company's share of income from operations and net income from these
affiliates is as follows: (in millions)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income from operations $7.3 $7.0 $6.6
Net income 4.5 3.9 3.6
</TABLE>
E. INCOME TAXES
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, and has
reported the cumulative effect of the change in the method of accounting for
income taxes in the financial statements for 1994, in the amount of $510,200.
The principal cause of this adjustment was due to the basis difference of an
acquisition made in prior years which was accounted for as a purchase
transaction.
A reconciliation of the statutory federal income tax rate and the effective tax
rate, as a percentage of pretax income, is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 34.0%
Dividends received exclusion (1.6) (1.5) (1.5)
Tax exempt interest (1.7) (1.5) (1.3)
Targeted jobs tax credit (0.8) (1.1) (0.9)
Unremitted affiliate income (3.4) (2.9) (2.5)
State income tax, net of
federal benefit 2.5 2.0 2.5
Corporate owned life insurance (1.3) -0- -0-
Other (0.5) (0.8) (0.3)
----- ----- -----
Effective tax rate 28.2% 29.2% 30.0%
===== ===== =====
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at November 30, 1994,
are presented below:(in thousands)
<TABLE>
<CAPTION>
1994
------
<S> <C>
Deferred tax assets:
Accrued retirement benefits $3,584
Provision for doubtful accounts 518
Insurance claims and reserves 1,141
Excess of tax over financial statement
basis of investment securities 647
Other 756
------
Total gross deferred tax assets 6,646
Less valuation allowance -0-
------
Net deferred tax assets 6,646
Deferred tax liabilities:
Unremitted affiliate income $1,917
Excess of financial statement over tax
basis of property, plant and equipment 1,534
Unrealized holding gains and losses 1,722
Other 424
------
Total gross deferred tax liabilities 5,597
------
Net deferred tax asset $1,049
======
</TABLE>
Based upon the level of historical taxable income and projections for future
taxable income over the periods which the deferred tax assets are deductible,
management believes it is more likely than not the Company will realize the
benefits of the deferred tax assets.
The provision for deferred income taxes is comprised of the following:
<TABLE>
<CAPTION>
(in thousands)
1993 1992
---- ----
<S> <C> <C>
Special credits $190 $497
Unremitted affiliate income 331 300
Accrued retirement benefits (280) (220)
Depreciation (114) (184)
Other 217 (255)
---- ----
$344 $138
==== ====
</TABLE>
F. RETIREMENT PLANS
The Company has a qualified defined contribution plan (Employee
Savings/Retirement Plan) which covers all employees, with over one year
service, who elect to participate and have fulfilled the necessary service
requirements. Employee contributions to the Plan are matched by the Company at
the rate of 115% of the first 2% through 5% of the employee's contribution,
based on seniority. The Plan incorporates provisions of Section 401(k) of the
Internal Revenue Code. The expense for the Plan for 1994, 1993 and 1992,
amounted to approximately $2,444,000, $2,337,000 and $2,250,000, respectively.
The Company has a supplemental retirement Income Plan that covers certain
senior executives and provides additional retirement and death benefits. Also,
the Company has a Deferred Compensation Plan for certain senior executives
which provides for voluntary deferral of compensation, otherwise payable. The
unfunded future liability of the Company under these Plans is included in
deferred liabilities.
G. STOCK OPTION PLANS
In 1994, the stockholders approved the 1993 Long Term Incentive Plan for key
employees of the Company. The Company has reserved for issuance 450,000 shares
of common stock pursuant to the Plan. Options granted under the Plan may be for
such terms and exercised at such times as determined at the time of grant by
the Organization and Compensation Committee of the Board of Directors. Under
terms of the Plan, options to purchase 68,650 shares of Common Stock were
granted in 1994 at $26.25 per share, the fair market value at date of grant. No
options were exercised in 1994. Additionally, the Plan includes provisions for
the granting of stock appreciation rights and certain restricted awards. At
November 30, 1994, no such grants had been issued.
<PAGE> 6
18 of 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Bassett Furniture Industries, Incorporated and Subsidiaries
G. STOCK OPTION PLANS - CONTINUED
Also in 1994, the stockholders approved the 1993 Stock Plan for Non-Employee
Directors. Pursuant to this Plan, 75,000 shares of Common Stock have been
reserved. Under terms of the Plan, each non-employee director will
automatically be granted an option to purchase 500 shares of Common Stock on
April 1 of each year beginning on April 1, 1994. Options to purchase 4,500
shares of Common Stock were granted in 1994 at $27.75 per share, the fair
market value at date of grant. No options were exercised in 1994.
The Company's 1982 Stock Option Plan terminated in 1993. Stock option activity
during 1994, 1993 and 1992 follows: (adjusted for stock splits in 1993 and
1992)
<TABLE>
<CAPTION>
Number of Option price
shares per share
--------- --------------
<S> <C> <C>
Outstanding at December 1, 1991 3,954 $17.07
Granted in 1992 165,937 $28.00
Exercised in 1992 (3,954) $17.07
Cancelled in 1992 -0- -
-------
Outstanding at November 30, 1992 165,937 $28.00
Granted in 1993 174,063 $37.40
Exercised in 1993 (51,783) $28.00
Cancelled in 1993 -0- -
-------
Outstanding at November 30, 1993 288,217 $28.00 - $37.40
Granted in 1994 73,150 $26.25 - $27.75
Exercised in 1994 0 - -
Cancelled in 1994 (16,150) $26.25 - $37.40
-------
Outstanding at November 30, 1994 345,217 $26.25 - $37.40
=======
Exercisable at November 30, 1994 200,128 $26.25 - $37.40
Exercisable at November 30, 1993 93,743 $28.00 - $37.40
Exercisable at November 30, 1992 0 - -
</TABLE>
H. OTHER INCOME, NET (in millions)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Equity in unremitted income
of affiliated companies $4.5 $3.9 $3.6
Dividends 2.3 2.2 2.4
Interest (principally tax exempt) 1.7 1.6 1.6
Gains from sales of investment
securities 0.5 0.7 1.4
Losses from sales of investment
securities -0- -0- (0.3)
Net gain from sales of property,
plant and equipment -0- 0.3 0.5
Corporate owned life insurance,
net of interest expense (0.2) (0.4) (0.2)
Contributions (0.2) (0.6) (0.3)
Other 1.1 1.6 1.1
---- ---- ----
$9.7 $9.3 $9.8
==== ==== ====
</TABLE>
Interest expense on corporate owned life insurance policy loans was $1.4
million in 1994, $.6 million in 1993 and 1992.
<PAGE> 7
19 of 24
INDEPENDENT AUDITORS' REPORT
Board of Directors
Bassett Furniture Industries, Incorporated
We have audited the accompanying consolidated balance sheets of Bassett
Furniture Industries, Incorporated and subsidiaries as of November 30, 1994 and
1993, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the years in the three-year period ended
November 30, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bassett Furniture
Industries, Incorporated and subsidiaries as of November 30, 1994 and 1993, and
the results of their operations and their cash flows for each of the years in
the three-year period ended November 30, 1994 in conformity with generally
accepted accounting principles.
As discussed in notes A, C and E, the Company adopted the provisions of the
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes," and Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," in 1994.
KPMG PEAT MARWICK LLP
Greensboro, North Carolina
December 17, 1994
<PAGE> 8
20 of 24
OTHER BUSINESS DATA
Bassett Furniture Industries, Incorporated and Subsidiaries
(All market information and per share data has
been restated to reflect the 5 for 4 stock split in
1993 and the 3 for 2 stock split in 1992)
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . $510,560,858 $503,770,060 $473,401,341 $401,616,062 $435,660,901
Cost of Sales . . . . . . . . . . . . . . . . . . . . 419,393,531 413,055,371 385,294,583 331,139,815 359,995,572
Income Before Income Taxes . . . . . . . . . . . . . 34,780,404 36,512,830 39,266,698 26,873,028 6,867,589
Income Taxes . . . . . . . . . . . . . . . . . . . . 9,804,000 10,644,000 11,774,000 7,030,000 1,722,000
Net Income . . . . . . . . . . . . . . . . . . . . . 24,466,204 25,868,830 27,492,698 19,843,028 5,145,589
Net Income Per Share . . . . . . . . . . . . . . . . 1.71 1.79 1.91 1.37 .35
Cash Dividends Declared . . . . . . . . . . . . . . . 11,411,357 11,358,213 9,205,978 7,705,563 9,787,901
Cash Dividends Per Share . . . . . . . . . . . . . . .80 .78 .64 .53 .67
Total Assets . . . . . . . . . . . . . . . . . . . . 340,498,230 330,677,879 318,583,145 291,259,296 271,116,337
Current Ratio . . . . . . . . . . . . . . . . . . . . 5.67 to 1 6.07 to 1 5.22 to 1 6.95 to 1 9.12 to 1
Book Value Per Share . . . . . . . . . . . . . . . . 20.96 19.99 18.99 17.72 16.89
Weighted Average Number of Shares . . . . . . . . . . 14,294,803 14,440,341 14,416,534 14,450,385 14,810,100
</TABLE>
QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
1994
----------------------------------------------------------
FIRST SECOND THIRD FOURTH
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $121,664,291 $134,639,355 $124,967,415 $129,289,797
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,836,837 25,797,650 21,507,700 24,025,140
Income Before Cumulative Effect of Accounting Change . . . . . . . 4,730,413 7,679,398 4,589,051 7,977,542
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,220,213 7,679,398 4,589,051 7,977,542
Per Share
Before Cumulative Effect of Accounting Change . . . . . . . . .33 .53 .32 .57
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . .29 .53 .32 .57
</TABLE>
<TABLE>
<CAPTION>
1993
----------------------------------------------------------
FIRST SECOND THIRD FOURTH
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,308,196 $128,888,668 $121,176,195 $133,397,001
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,224,666 24,291,032 19,851,521 24,347,470
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,181,920 7,055,482 4,650,277 7,981,151
Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 .49 .32 .55
</TABLE>
MARKET AND DIVIDEND INFORMATION
The Company's common stock is traded on the over-the-counter market and is
listed on the NASDAQ National Market System. The Company had approximately
2,200 stockholders at November 30, 1994. The range of high and low market
prices and dividends declared for the last two fiscal years are listed below:
<TABLE>
<CAPTION>
MARKET PRICES OF COMMON STOCK DIVIDENDS DECLARED
---------------------------------------------- ------------------
QUARTER 1994 1993 1994 1993
------- ---------------- ---------------- ---- ----
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C> <C> <C>
First $36.75 $28.75 $41.60 $30.00 $.20 $.18
Second 29.50 25.50 43.80 36.40 .20 .20
Third 29.75 26.63 37.25 28.50 .20 .20
Fourth 30.25 26.06 36.00 28.75 .20 .20
</TABLE>
<PAGE> 9
21 of 24
OTHER BUSINESS DATA - CONTINUED
Bassett Furniture Industries, Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
Major components of net income expressed as a percentage of net sales were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cost of sales 82.2% 82.0% 81.4%
Gross profit 17.8 18.0 18.6
S G & A expenses 12.9 12.6 12.6
Income from operations 4.9 5.4 6.0
Other income, net 1.9 1.8 2.1
Net unrealized gain -0- -0- 0.2
Income before income taxes 6.8 7.2 8.3
Income taxes 1.9 2.1 2.5
Accounting change 0.1 -0- -0-
Net income 4.8 5.1 5.8
</TABLE>
NET SALES
Net sales for 1994 compared to 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net sales (in millions) $510.6 $503.8 $473.4
Percentage increase over prior year 1.3% 6.4% 17.9%
</TABLE>
The majority of the increase in net sales from 1993 to 1994 came from the Table
Division, with other Divisions reporting relatively flat sales. The net sales
increase from 1992 to 1993 was evenly spread throughout all Divisions. The
significant increase between 1991 and 1992 came from the Upholstery and Bedding
Divisions.
COSTS AND EXPENSES
Cost of sales remained level in 1994 and 1993, at 82.2% and 82.0%,
respectively. The negative effect on cost of sales caused by increases in the
cost of lumber and lumber related products which occurred in 1993, moderated in
1994; however, cost increases in other major raw materials restricted
improvement in the cost of sales percentage in 1994. During each of the three
years ending in 1994, the relationship of each cost component comprising cost
of sales remained constant (materials 49%, labor 21%, overhead 12%).
There was no material change in the percentage of selling, general and
administrative expenses to net sales in the three years ending in 1994.
OTHER INCOME, NET
Note H in the Notes to Consolidated Financial Statements discloses the
components of other income.
INCOME TAXES
The effective tax rate for 1994 was 28.2%, down from 29.2% and 30.0% in 1993
and 1992, respectively. The Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," in 1994
and reported the cumulative effect of the change in accounting for income taxes
in the amount of $510,200 in the 1994 financial statements. Note E in the Notes
to Consolidated Financial Statements contains complete disclosure of the
Company's income tax status.
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by operating activities has remained constant in the last three
years ($23.7 million in 1994, $22.4 million in 1993 and $23.1 million in 1992).
The growth in inventories in each of these years has barred additional
generation of cash. The increasing inventory levels are closely monitored and
controlled by senior management.
Traditionally, the Company has purchased (rather than leased) its capital
equipment requirements. During 1994, $10,000,000 was expended for new equipment
and facilities. A comparison of purchases of property, plant and equipment and
depreciation charges follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Purchases of property, plant and
equipment (in millions) $10.0 $6.2 $9.9
Depreciation charges (in millions) 8.8 9.0 8.5
</TABLE>
The Company instituted and completed a program to repurchase its Common Stock
in 1994, purchasing 361,386 shares at an average cost of $26.42 or a total
expenditure of $9.5 million.
The current ratio was 5.67 to 1 and 6.07 to 1 at November 30, 1994 and 1993,
respectively. Working capital was $164 million and $168 million at November 30,
1994 and 1993, respectively.
Cash provided by operating activities is expected to be adequate for normal
future cash requirements.
There were no material commitments for capital expenditures at November 30,
1994. Capital expenditures made in the future for normal expansion are
anticipated to be made from funds generated by operating activities.
The Company has never used the debt or equity markets as sources of funds or
capital.
The Company's consolidated financial statements are prepared on the basis of
historical dollars and are not intended to show the impact of inflation or
changing prices. Neither inflation nor changing prices has had a material
effect on the Company's consolidated financial position and results of
operations in prior years.
<PAGE> 1
Page 22 of 24
EXHIBIT 21 - LIST OF SUBSIDIARIES
(a) Bassett Furniture Industries of North Carolina Inc.
(North Carolina corporation)
(b) E.B. Malone Corporation (Delaware corporation)
<PAGE> 1
Page 23 of 24
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Bassett Furniture Industries, Incorporated
Bassett, Virginia
We consent to incorporation by reference in the Registration Statements (Nos.
33-52405 and 33-52407) on Form S-8 of Bassett Furniture Industries,
Incorporated and subsidiaries of our report dated December 17, 1994, relating
to the consolidated balance sheets of Bassett Furniture Industries,
Incorporated and subsidiaries as of November 30, 1994 and 1993 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended November 30, 1994 which report is
incorporated by reference in the November 30, 1994 annual report on the Form
10-K of Bassett Furniture Industries, Incorporated and subsidiaries.
As discussed in notes A, C and E to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement No. 109, "Accounting for Income Taxes," and Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994.
KPMG Peat Marwick LLP
Greensboro, North Carolina
February 23, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Nov-30-1994 10K
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> NOV-30-1994
<CASH> 42,314,957
<SECURITIES> 43,638,983
<RECEIVABLES> 73,051,750
<ALLOWANCES> 1,115,000
<INVENTORY> 80,074,811
<CURRENT-ASSETS> 198,630,929
<PP&E> 207,227,241
<DEPRECIATION> 152,673,335
<TOTAL-ASSETS> 340,498,230
<CURRENT-LIABILITIES> 35,001,554
<BONDS> 0
<COMMON> 70,434,075
0
0
<OTHER-SE> 224,758,817
<TOTAL-LIABILITY-AND-EQUITY> 340,498,230
<SALES> 510,560,858
<TOTAL-REVENUES> 520,218,334
<CGS> 419,393,531
<TOTAL-COSTS> 485,437,930
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 844,483
<INTEREST-EXPENSE> 1,400,000
<INCOME-PRETAX> 34,780,404
<INCOME-TAX> 9,804,000
<INCOME-CONTINUING> 24,976,404
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (510,200)
<NET-INCOME> 24,466,204
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 0
</TABLE>
