<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- -----------------
Commission File No. 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of Registrant as specified in its charter)
Virginia 54-0135270
- -------------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Bassett, Virginia 24055
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(540) 629-6000
(Registrant's telephone number, including area code)
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 the past 90 days. Yes X No
----- -----
At May 31, 1996, 13,337,538 shares of common stock of the Registrant were
outstanding.
Page 1 of 8
<PAGE> 2
PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND
RETAINED EARNINGS - UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, THREE MONTHS ENDED MAY 31,
-------------------------------- -----------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $223,224,174 $242,568,556 $111,273,154 $119,018,005
Costs and expenses
Cost of sales 187,741,206 202,624,957 93,558,086 99,696,395
Selling, general and administrative 31,323,263 32,506,437 15,836,130 16,490,093
------------- ------------ ------------ ------------
219,064,469 235,131,394 109,394,216 116,186,488
------------- ------------ ------------ ------------
Income from operations 4,159,705 7,437,162 1,878,938 2,831,517
Other income, net 8,321,465 6,498,934 4,278,271 4,185,733
------------- ------------ ------------ ------------
Income before income taxes 12,481,170 13,936,096 6,157,209 7,017,250
Income taxes (2,775,000) (4,063,000) (1,165,000) (2,040,500)
------------- ------------ ------------ ------------
NET INCOME 9,706,170 9,873,096 4,992,209 4,976,750
Retained earnings - beginning of period 225,718,704 221,949,817 226,287,719 224,028,800
------------- ------------ ------------ ------------
235,424,874 231,822,913 231,279,928 229,005,550
Cash dividends (5,394,558) (5,634,893) (2,678,008) (2,817,530)
Purchase and retirement of common stock (6,357,974) -0- (4,929,578) -0-
------------- ------------ ------------ ------------
Retained earnings - end of period $223,672,342 $226,188,020 $223,672,342 $226,188,020
============= ============ ============ ============
NET INCOME PER SHARE $ .72 $ .70 $ .37 $ .35
===== ====== ===== =====
DIVIDENDS PER SHARE $ .40 $ .40 $ .20 $ .20
===== ===== ===== =====
</TABLE>
- ------------------------
The accompanying note is an integral part of the condensed consolidated
financial statements.
Page 2 of 8
<PAGE> 3
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
<TABLE>
<CAPTION>
ASSETS MAY 31, 1996 NOVEMBER 30, 1995
- ------ ------------- -----------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 69,686,579 $ 51,331,119
Trade accounts receivable, less allowances
for doubtful accounts 58,376,422 68,591,514
Inventories:
Finished goods 47,808,655 46,490,589
Work in process 14,831,977 16,231,269
Raw materials and supplies 39,188,822 45,305,749
------------ ------------
101,829,454 108,027,607
Less LIFO adjustment 27,601,000 26,801,000
------------ ------------
74,228,454 81,226,607
Prepaid expenses 508,243 1,757,658
Deferred income taxes 1,804,000 2,008,000
------------ ------------
204,603,698 204,914,898
Property, Plant and Equipment
Cost 214,581,336 211,790,217
Less allowances for depreciation 162,724,380 158,665,871
------------ ------------
51,856,956 53,124,346
Other Assets
Investment in securities 28,939,889 39,055,319
Investment in affiliated companies 42,917,981 40,398,574
Other 8,206,292 9,227,317
------------ ------------
80,064,162 88,681,210
------------ ------------
$336,524,816 $346,720,454
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities
Accounts payable $ 26,239,086 $ 29,710,299
Accrued compensation 4,509,949 4,778,966
Income taxes 64,247 902,476
------------ ------------
30,813,282 35,391,741
Deferrals
Deferred liabilities 10,591,502 10,296,244
Deferred income taxes 1,509,000 2,129,000
------------ ------------
12,100,502 12,425,244
Stockholders' Equity
Common stock 66,687,690 68,294,765
Retained earnings 223,672,342 225,718,704
Unrealized holding gains, net of tax 3,251,000 4,890,000
------------ ------------
293,611,032 298,903,469
------------ ------------
$336,524,816 $346,720,454
============ ============
</TABLE>
- -------------------------
The accompanying note is an integral part of the condensed consolidated
financial statements.
Page 3 of 8
<PAGE> 4
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31,
-----------------------------
1996 1995
---- ----
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $22,885,290 $16,920,923
INVESTING ACTIVITIES
Net change in cost of investment securities 11,618,801 1,010,153
Purchases of property, plant and equipment (3,084,172) (5,323,407)
Proceeds from sale of property, plant and equipment 76,635 50,000
Dividends from affiliated company -0- 544,753
Other 218,513 450,592
------------ -----------
8,829,777 (3,267,909)
FINANCING ACTIVITIES
Issuance of common stock 25,364 48,733
Purchase and retirement of common stock (7,990,413) (26,000)
Cash dividends (5,394,558) (5,634,893)
------------ -----------
(13,359,607) (5,612,160)
------------ -----------
CHANGE IN CASH AND CASH EQUIVALENTS 18,355,460 8,040,854
CASH AND CASH EQUIVALENTS - beginning of period 51,331,119 42,314,957
------------ -----------
CASH AND CASH EQUIVALENTS - end of period $69,686,579 $50,355,811
============ ===========
</TABLE>
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
I. Per share amounts are based on 13,519,393 and 14,087,540 weighted average
number of shares outstanding at May 31, 1996 and 1995, respectively.
Page 4 of 8
<PAGE> 5
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
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:
<TABLE>
<CAPTION>
Six Months Ended May 31, Three Months Ended May 31,
------------------------ ---------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cost of sales 84.11% 83.53% 82.20% 84.08% 83.76% 80.84%
Selling, general and admin. 14.03 13.40 12.73 14.23 13.86 12.74
Income from operations 1.86 3.07 5.07 1.69 2.38 6.42
Other income, net 3.73 2.67 1.81 3.84 3.51 1.72
Income before income taxes 5.59 5.74 6.88 5.53 5.89 8.14
Income taxes 1.24 1.67 2.04 1.05 1.71 2.44
Accounting change -0- -0- .20 -0- -0- -0-
Net income 4.35 4.07 4.64 4.48 4.18 5.70
</TABLE>
NET SALES
Net sales for the current two periods compared to prior years:
<TABLE>
<CAPTION>
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales (thousands) $223,224 $242,569 $256,304 $111,273 $119,018 $134,639
% change from prior year (8.0)% (5.4)% 2.9% (6.5)% (11.6)% 4.5%
</TABLE>
In the 1996 six month period, net sales increased in the Bedding Division, but
were flat or decreased at other Divisions of the Company. The percentage
change in net sales for the Company in the second quarter of 1996 ( (6.5%) )
improved over the change in the first quarter ( (9.4%) ).
COSTS AND EXPENSES
Cost of sales for the second quarter (84.08%) remained even with the 1996 first
quarter (84.13%), however this is still up from the 1995 second quarter
(83.76%). The gross profit margin for the six month period has fallen 58 basis
points compared to 1995. The decrease in gross profit margins follows a
decrease of approximately 90 basis points for the full fiscal year 1995 from
1994. The decline in margins has been caused primarily by the inability to
increase sales prices across all product lines to compensate for incurred raw
material cost increases. This is shown by a comparison of the cost components
comprising cost of sales as a percentage of net sales:
<TABLE>
<CAPTION>
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Materials 49.83% 49.36% 48.55% 49.61% 49.34% 47.54%
Labor 21.36 21.57 21.60 21.44 21.59 21.78
Overhead 12.92 12.60 12.05 13.03 12.83 11.52
------- ------- ------- ------- ------- -------
84.11% 83.53% 82.20% 84.08% 83.76% 80.84%
</TABLE>
Page 5 of 8
<PAGE> 6
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
COSTS AND EXPENSES - continued
The increase in the overhead component percentage is a result of decreased
sales volume. Total overhead costs declined approximately $2 million in the
1996 six month period from 1995.
The increase in SG&A expenses as a percentage of net sales is also a result of
the decline in net sales. Total dollars, including variable costs (primarily
sales commissions), decreased in each period; and, in addition, the fixed
costs also declined during the periods reported.
OTHER INCOME, NET
Components of other income (in thousands):
<TABLE>
<CAPTION>
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Equity in unremitted income
of affiliated companies $2,519 $2,441 $2,067 $1,418 $1,420 $1,114
Interest (principally tax exempt) 1,118 1,123 812 545 573 395
Dividends 901 1,210 1,167 463 667 624
Gains from sales of investment
securities 4,149 1,364 362 2,034 1,394 203
Other (366) 361 236 (182) 132 (19)
------ ------ ------ ------ ------ ------
$8,321 $6,499 $4,644 $4,278 $4,186 $2,317
====== ====== ====== ====== ====== ======
</TABLE>
INCOME TAXES
The effective income tax rate has declined in 1996 due to the decline in
operating income and the increase in tax-exempt other income.
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by operating activities:
<TABLE>
<CAPTION>
Six Months Ended May 31,
------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash provided by operating activities (thousands) $22,885 $16,921 $6,624
</TABLE>
The increase in 1996 was due to the decline in net current assets, exclusive of
cash and cash equivalents.
The Company continued to purchase and retire its Common Stock in the first six
months of 1996, acquiring 322,400 shares at an average cost of $24.78, for a
total expenditure of $7,990,000. In fiscal years 1995 and 1994, 429,701 shares
and 361,386 shares were acquired for a total cost of $10,125,000 and $9,546,000
respectively.
The current ratio was 6.64 to 1 at May 31, 1996 and 5.79 to 1 at November 30,
1995. Working capital increased to $174 million at May 31, 1996, up from $170
million at November 30, 1995.
Cash provided by operating activities is expected to be adequate for normal
future operating requirements.
There were no material commitments for capital expenditures at May 31, 1996.
Capital expenditures that will be made in the future for normal expansion or
other operating purposes will be made from funds on hand or those generated
from operations.
Page 6 of 8
<PAGE> 7
PART II - OTHER INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(27) Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BASSETT FURNITURE INDUSTRIES, INCORPORATED
/s/ ROBERT H. SPILMAN
- ------------------------------------------------------------------------
Robert H. Spilman, Chairman of the Board, and Chief Executive Officer
DATE: 7/3/96
-------------------------
/s/ PHILIP E. BOOKER
- ------------------------------------------------------------------------
Philip E. Booker, Vice President, Controller (Chief Accounting Officer)
DATE: 7/3/96
-------------------------
Page 7 of 8
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
May 31, 1996 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
- ---------- ------------------- -------
27 Financial Data Schedule
Page 8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 69,687
<SECURITIES> 28,940
<RECEIVABLES> 58,376
<ALLOWANCES> 0
<INVENTORY> 74,228
<CURRENT-ASSETS> 204,604
<PP&E> 214,581
<DEPRECIATION> 162,724
<TOTAL-ASSETS> 336,525
<CURRENT-LIABILITIES> 30,813
<BONDS> 0
0
0
<COMMON> 66,688
<OTHER-SE> 226,923
<TOTAL-LIABILITY-AND-EQUITY> 336,525
<SALES> 223,224
<TOTAL-REVENUES> 231,546
<CGS> 187,741
<TOTAL-COSTS> 219,064
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 330
<INTEREST-EXPENSE> 2,900
<INCOME-PRETAX> 12,481
<INCOME-TAX> 2,775
<INCOME-CONTINUING> 9,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,706
<EPS-PRIMARY> .72
<EPS-DILUTED> 0
</TABLE>
