<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 FEBRUARY 27, 1999
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.)
3525 Fairystone Park Highway
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 April 5, 1999, 12,671,156 shares of common stock of the Registrant were
outstanding.
1 of 14
<PAGE> 2
PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE 13 WEEKS ENDED FEBRUARY 27, 1999 AND FEBRUARY 28, 1998 - UNAUDITED
(in thousands except per share data)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net Sales $ 99,809 $ 98,333
Cost of sales 80,233 80,751
--------- ---------
Gross profit 19,576 17,582
Selling, general and administrative 16,530 15,779
--------- ---------
Income from operations 3,046 1,803
Other income, net 3,352 2,747
--------- ---------
Income before income taxes 6,398 4,550
Income taxes 1,983 1,115
--------- ---------
Net income 4,415 3,435
Retained earnings-beginning of period 193,130 188,761
Cash dividends (2,551) (2,610)
Purchase and retirement of
common stock (2,892) 0
--------- ---------
Retained earnings-end of period $ 192,102 $ 189,586
========= =========
Basic earnings per share $ 0.34 $ 0.26
========= =========
Diluted earnings per share $ 0.34 $ 0.26
========= =========
Dividends per share $ 0.20 $ 0.20
========= =========
</TABLE>
- ----------------------------------------
The accompanying notes to condensed consolidated financial statements are an
integral part of the condensed consolidated financial statements.
2 of 14
<PAGE> 3
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 27, 1999 AND NOVEMBER 28, 1998
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Assets February 27, 1999 November 28, 1998
- ------ ----------------- -----------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,880 $ 5,499
Short term investments 4,523 8,923
Trade accounts receivable, net 64,209 59,203
Inventories, net 45,779 47,285
Prepaid expenses 2,438 2,038
Refundable income taxes 7,198 8,018
Deferred income taxes 11,479 12,682
--------- ---------
Total current assets 138,506 143,648
--------- ---------
Property & equipment
Cost 190,529 185,392
Less allowances for depreciation 131,617 129,005
--------- ---------
Total property & equipment 58,912 56,387
--------- ---------
Other long-term assets
Investment securities 41,425 50,739
Investment in affiliated companies 61,007 52,769
Assets held for sale 401 1,023
Other 16,619 16,948
--------- ---------
Total other long-term assets 119,452 121,479
--------- ---------
Total assets $ 316,870 $ 321,514
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 19,570 $ 20,221
Accrued liabilities 22,805 24,514
--------- ---------
Total current liabilities 42,375 44,735
--------- ---------
Long-term liabilities
Employee benefits 11,155 11,272
Deferred income taxes 461 595
--------- ---------
Total long-term liabilities 11,616 11,867
--------- ---------
Commitments and Contingencies (Note E)
Stockholders' Equity
Common stock 63,553 64,425
Additional paid in capital 0 0
Retained earnings 192,102 193,130
Unrealized holding gains, net of tax 8,093 8,286
Unamorized stock compensation (869) (929)
--------- ---------
Total stockholders' equity 262,879 264,912
--------- ---------
Total liabilities and stockholders' equity $ 316,870 $ 321,514
========= =========
</TABLE>
- ----------------------------------------
The accompanying notes to condensed consolidated financial statements are an
integral part of the condensed consolidated financial statements.
3 of 14
<PAGE> 4
PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 13 WEEKS
ENDED FEBRUARY 27, 1999 AND FEBRUARY 28, 1998 - UNAUDITED
(in thousands)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Net income $ 4,415 $ 3,435
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,161 1,611
Equity in undistributed income of affiliated companies (2,288) (1,165)
Provision for losses on trade accounts receivable -- 61
Provision for deferred income taxes 1,202 1,425
Net gain from sales of investment securities (391) (35)
Net gain from sales of property and equipment -- (178)
Compensation earned under restricted stock plan 60 44
Changes in operating assets and liabilities:
Trade accounts receivable (5,006) 3,848
Inventory 1,506 577
Prepaid expenses and other (400) (32)
Income taxes 820 121
Accounts payable and accrued liabilities (2,360) (7,555)
Long-term liabilities (117) 178
-------- --------
Net cash provided by (used in) operating activities (398) 2,335
-------- --------
Investing activities:
Purchases of property and equipment (5,411) (2,416)
Proceeds from sales of property and equipment 970 1,114
Purchases of investment securities -- (414)
Proceeds from sale of investment securities 14,076 1,603
Investment in affiliated companies (5,850) --
Other 308 --
-------- --------
Net cash provided by (used in) investing activities 4,093 (113)
-------- --------
Financing activities:
Issuance of common stock 15 90
Purchases of common stock (3,778) --
Cash dividends (2,551) --
-------- --------
Net cash provided by (used in) financing activities (6,314) 90
-------- --------
Net change in cash and cash equivalents (2,619) 2,312
Cash and cash equivalents, beginning of period 5,499 29,552
-------- --------
Cash and cash equivalents, end of period $ 2,880 $ 31,864
======== ========
</TABLE>
- ----------------------------------------
The accompanying notes to condensed consolidated financial statements are an
integral part of the condensed consolidated financial statements.
4 of 14
<PAGE> 5
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
FEBRUARY 27, 1999 (in thousands except share and per share data)
Note A. 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.
Note B. Inventories:
Inventories are carried at last-in, first-out (LIFO) cost which is not in excess
of market. Inventories at February 27, 1999 and November 28, 1998 consisted of
the following:
<TABLE>
<CAPTION>
February 27, November 28,
1999 1998
---- ----
<S> <C> <C>
Finished goods $ 36,736 $ 37,430
Work in process 8,990 9,169
Raw materials and supplies 26,023 26,506
-------- --------
Total inventories valued at first-in, first-out (FIFO) cost 71,749 73,105
LIFO adjustment (25,970) (25,820)
-------- --------
Total inventories $ 45,779 $ 47,285
======== ========
</TABLE>
Note C. Investment in affiliated companies:
Summarized combined income statement information for the Company's equity method
investments for the thirteen weeks ended February 27,1999 and February 28, 1998
are as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Revenues $9,420 $7,841
Income from operations 6,333 4,660
Net income 3,808 2,870
</TABLE>
Note D. Comprehensive income:
The Company adopted the Statement of Financial Accounting Standards No. 130
"Comprehensive Income" ("SFAS No. 130") during the first quarter of fiscal 1999.
Provisions of SFAS No. 130 require companies to display comprehensive income and
its components in their financial statements. Comprehensive income is the total
of net income and all other non owner changes in equity. The components of
comprehensive income, net of related tax effects, for the thirteen weeks ended
February 27, 1999 and February 28, 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net Income $ 4,415 $ 3,435
Unrealized holding gains
(losses), net of tax (193) 670
------- -------
Comprehensive income $ 4,222 $ 4,105
======= =======
</TABLE>
5 of 14
<PAGE> 6
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
FEBRUARY 27, 1999 (in thousands except share and per share data)
Note E. Contingencies:
A suit was filed in June, 1997, in the Superior Court of the State of California
for the County of Los Angeles (the "Superior Court") against the Company, two
major retailers and certain current and former employees of the Company. The
suit sought certification of a class consisting of all consumers who purchased
certain mattresses and box springs from the major retailers that were
manufactured by a subsidiary of the Company, E.B. Malone Corporation, with
different specifications than those originally manufactured for sale by these
retailers. The suit alleged various causes of action, including negligent
misrepresentation, breach of warranty, violations of deceptive practices laws
and fraud. Plaintiffs sought compensatory damages of $100 million and punitive
damages. In 1997, the Superior Court twice sustained the Company's demurrers to
several of plaintiffs' causes of action, but granted the plaintiffs leave to
amend. In February, 1998, the Superior Court sustained the Company's demurrers
to many of the individual claims, this time without granting plaintiffs leave to
amend. The Superior Court also sustained the Company's demurrer to the class
action allegations in plaintiffs' Third Amended Complaint, without granting
leave to amend, and transferred the entire action out of the class action
department. Plaintiffs have filed a notice of appeal from the class action
ruling. Plaintiffs also filed a petition for a writ of mandamus or other
extraordinary relief seeking immediate review of the other demurrer rulings,
which petition was denied. The suit was subsequently transferred from the
Superior Court for the County of Los Angeles to the Superior Court for Orange
County. After the case was transferred to Orange County, the plaintiffs
stipulated to a dismissal with prejudice of all individual defendants.
Additionally, all remaining claims against the Company were stayed by the Court
pending Plaintiffs' appeal of the dismissal of their class action allegations.
Although it is impossible to predict the ultimate outcome of this litigation,
the Company intends to vigorously defend this suit because it believes that the
damages sought are unjustified and because this case is inappropriate for class
action treatment. Because the Company believes that the two major retailers were
unaware of the changes in specifications, the Company has agreed to indemnify
the two major retailers with respect to the above.
Legislation will phase out interest deductions on certain policy loans related
to Company owned life insurance (COLI) as of January 1, 1999. The Company
recorded cumulative reductions to income tax expenses of approximately $8,000 as
the result of COLI interest deductions through November 28, 1998. The Internal
Revenue Service, on a national level, is evaluating its position regarding the
deductibility of COLI policy loan interest for years prior to January 1, 1999.
In 1998 and 1999, the IRS issued several Technical Advice Memoranda regarding
the deductibility of certain aspects of COLI for taxpayers unrelated to the
Company. Management understands that the adverse position taken by the IRS will
be subjected to extensive challenges in court. In the event that the IRS
prevails, the outcome could result in a material impact upon the Company's
future income taxes and results of operations.
The Company is also involved in various other claims and actions, including
environmental matters at certain of its plant facilities, which arise in the
normal course of business. Although the final outcome of these legal and
environmental matters cannot be determined, based on the facts presently known,
it is management's opinion that the final resolution of these matters will not
have a material adverse effect on the Company's financial position or future
results of operations.
Note F
In the first quarter of 1999, the Company entered into a series of equity index
collars in order to manage equity risk exposures related to its approximate $24
million portfolio of equity securities. The collars expire quarterly over a
period of three years commencing December 1998. Management's estimate of the
fair value of the equity index collars at February 27, 1999 is $0.
6 of 14
<PAGE> 7
PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
FEBRUARY 27, 1999 (in thousands except share and per share data)
Note G. Earnings per share:
The following reconciles basic and diluted earnings per share.
<TABLE>
<CAPTION>
Income Shares Earnings per
share
-----------------------------------------
<S> <C> <C> <C>
For the thirteen weeks ended February 27, 1999
- ----------------------------------------------
Net income available to common stockholders $ 4,415 12,800,832 $0.34
Effect of dilutive securities:
Options issued to directors and employees -- 1,117 --
Restricted stock issued to employees -- 1,976 --
---------- ---------- -----
Diluted earnings per share $ 4,415 12,803,925 $0.34
========== ========== =====
For the thirteen weeks ended February 28, 1998
- ----------------------------------------------
Net income available to common stockholders $ 3,435 13,022,883 $0.26
Effect of dilutive securities:
Options issued to directors and employees -- 88,988 --
Restricted stock issued to employees -- 1,661 --
---------- ---------- -----
Diluted earnings per share $ 3,435 13,113,532 $0.26
========== ========== =====
</TABLE>
Options to purchase 1,349,288 shares of common stock at prices ranging from
$22.50 to $37.40 per share were outstanding during the first quarter of 1999 but
were not included in the computation of diluted EPS because the options'
exercise prices were greater than the average market price of the common shares.
In 1998, 149,067 shares at a price of $37.40 were similarly excluded.
Note H. Subsequent Event
Subsequent to the end of the first quarter of 1999, the Company entered into a
definitive agreement to sell its Mattress Division to Premier Bedding Group LLC
(PBG), a new company formed by LIS Corporation. The Company expects to close
the sale during the second quarter of 1999. Net sales and operating income for
the mattress division were $7,200 and $31 in the first quarter of 1999, and
$10,100 and $277 in the first quarter of 1998. Net assets for the division
approximated $10 million as of February 27, 1999, and $11 million as of
November 28, 1998.
7 of 14
<PAGE> 8
PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
February 27,1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Operating Results - First quarter 1999 compared with first quarter 1998
Net sales increased 2% to $99.8 million in 1999, from $98.3 million in 1998. The
sales increase was led by sales to our Bassett Furniture Direct (BFD) stores
which nearly doubled from $9 million in the first quarter of 1998 to $17 million
in the first quarter of 1999. There are currently 38 BFD stores across the
country, including our first two corporate-owned stores which opened in
Greenville, SC in November 1998, and in Charlotte, NC in January 1999. Wood
Division sales increased 12% for the quarter due to BFD expansion and improved
product offerings, however, this was offset by a 28% decline in Mattress
Division sales due to the loss of two major customers in the second quarter of
1998.
The gross profit margin was 19.6% in the first quarter of 1999, compared with
17.9% in the first quarter of 1998. Non-recurring charges of $2.1 million were
recorded to cost of sales in the first quarter of 1998. On a continuing
operations basis, margins improved from 19.3% to 19.6% due entirely to our
Upholstery Division, where the impact of new management, cell manufacturing, and
product mix have improved gross margin by approximately three percentage points
for this division.
The operating margin was 3.1% in the first quarter of 1999 compared to 1.8% in
the first quarter of 1998. Nonrecurring charges totaling $1.5 million were
recorded in the first quarter of 1998. On a continuing operations basis,
operating margin actually decreased from 3.4% to 3.1 % as we continue to invest
in the Bassett brand and our organization infrastructure. Start up costs of
approximately $.5 million were recorded in the first quarter of 1999 related to
a new dining room table plant and our expanding retail operations.
Other income increased from $2.7 million in the first quarter of 1998 to $3.4
million in the first quarter of 1999 due to improved investment earnings and a
more strategic investment of our excess capital.
The effective tax rate was 31% in the first quarter of 1999 compared to 25% in
the first quarter of 1998. This increase is the result of the phase out of
interest deductions on certain policy loans related to Company owned life
insurance (COLI). The 1999 effective tax rate was lower than the statutory
federal income tax rate due to exclusions for tax exempt and undistributed
affiliate income.
8 of 14
<PAGE> 9
PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
FEBRUARY 27,1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
Liquidity and Capital Resources
Cash used in operating activities in 1999 was $.4 million compared to $2.3
million provided by operating activities in the first quarter 1998. This change
was due entirely to a $5 million increase in accounts receivable for the
quarter. The increase in receivables reflects the extended terms given to
opening orders for new BFD stores.
The Company invested $5.4 million in property and equipment in the first quarter
of 1999 for wood manufacturing machinery to improve productivity, new enterprise
wide information systems, and its new dining room table plant. Cash proceeds of
$14.1 million were received from municipal bonds which were sold or matured
during the first quarter. These funds were invested in property and equipment as
discussed above, and selected strategic investment opportunities, linked to the
Company's marketing and distribution strategies. The proceeds were also used to
fund quarterly dividends of $2.5 million and to repurchase Company stock.
The Company purchased and retired 175,000 shares of its Common Stock during the
first quarter of 1999. These purchases were part of the Company's stock
repurchase program, approved in 1998, which allows the Company to repurchase up
to 1.3 million shares for an aggregate purchase price not to exceed $40 million.
The average cost of the shares purchased was $21.59, resulting in a total
expenditure of $3.8 million.
The Company plans to invest approximately $50 to $60 million per year over the
next few years to aggressively execute its BFD expansion and upgrade its
manufacturing capabilities. The Company's solid financial position with
significant liquidity and no debt affords it many options. Management intends
to examine opportunities to strengthen its balance sheet and increase
shareholder value which may require debt financing. The Company has not
typically used the debt or equity markets as sources of funds or capital.
The current ratio as of February 27, 1999 and November 28, 1998, respectively,
was 3.27 to 1 and 3.21 to 1. Working capital at February 27, 1999 was $96,131
compared to $98,913 at November 28, 1998. 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 have had a material effect on the Company's consolidated
financial position and results of operations in prior years.
Contingencies
The Company is involved in various claims and litigation, including a lawsuit
concerning a subsidiary, E. B. Malone Corporation, as well as environmental
matters at certain plant facilities, which arise in the normal course of
business. The details of these matters are described in Note E in the Notes to
Condensed Consolidated Financial Statements. Although the final outcome of these
legal and environmental matters cannot be determined, based on the facts
presently known, it is management's opinion that the final resolution of these
matters will not have a material adverse effect on the Company's financial
position or future results of operations.
9 of 14
<PAGE> 10
PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
FEBRUARY 27,1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
Year 2000
Over the past few years, the Company has been steadily reengineering its
business processes and information systems to prepare for the conversion to year
2000. This effort has incorporated an analysis of Year 2000 issues, and
management believes that appropriate and timely actions are being taken. The
Year 2000 issue results from the inability of many computer systems and
applications to recognize the year 2000 as the year following 1999. This could
cause systems to process critical information incorrectly. The Company plans to
implement new systems and technologies in 1999 that will provide solutions to
these issues. In addition, the Company purchased an enterprise system in 1998,
which will be implemented prior to year 2000, which will be in compliance with
Year 2000 issues. The most significant step in accomplishing this goal was
completed in the first quarter of 1998 when a comprehensive enterprise system
(which had been installed in over 4,400 companies and is Year 2000 compliant)
was purchased; implementation began immediately and should be completed in the
fourth quarter of 1999. In 1998, the Company engaged a consultant, knowledgeable
of the enterprise system being installed, to advise and assist in the
installation and implementation of the system. The Company has made a thorough
survey to identify all microcontrollers that are embedded within equipment to
determine compliance in this area. All microcontrollers that were identified as
non-compliant were or will be replaced. The Company now has a verification
program to insure that all microcontrollers have been properly identified and
replaced.
The Company continues to work with its customers, suppliers and third-party
service providers to identify external weaknesses and provide solutions which
will prevent the disruption of business activities at that time; it does not
believe that it will be significantly affected by direct suppliers of raw
materials or supplies that will be non-compliant. However, the Company cannot
guarantee that Year 2000 related systems or hardware issues of its business
partners will be corrected in a timely manner or that the failure of its
business partners to correct these issues would not have a material adverse
effect on its future results of operations or financial condition.
Management believes that the most likely "worst case scenario" will involve the
failure of service providers to be compliant, thereby potentially causing
business interruptions in the Company's normal channels of supply and
distribution. The Company does not believe that it will be significantly
affected by non-compliance by countries outside of the United States.
The Company is developing a contingency plan in the event that a business
interruption caused by Year 2000 problems should occur. Contingency plans are in
place for all information technology systems. The Company is preparing to
upgrade its existing computer systems in order to ensure compliance. Management
is researching key raw materials markets to ensure that the Company is
adequately supplied in the event that a key supplier is not compliant.
The Company does not expect the cost of implementation to have a material
adverse effect on its future results of operations, liquidity or capital
resources. The total cost of the new enterprise system is estimated at $8
million. This total includes the Year 2000 project. The new system was not
purchased to solely achieve Year 2000 compliance in the Company's information
systems. Instead it was purchased to provide management with the information and
tools that it needs to better manage the Company. The Year 2000 problem has
slightly accelerated the timetable for implementation, however. Of the total
project cost, $7 million represents the purchase of new software, new hardware,
and related implementation costs which will be capitalized. The remaining will
be expensed as incurred during 1999 and 2000. As of the end of the first
quarter, the Company has spent approximately $3 million on the project.
10 of 14
<PAGE> 11
PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
FEBRUARY 27,1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
Market Risk
The company has significant investments in both equity securities and municipal
securities. The Company does not use these securities for trading purposes and
is not a party to any leveraged derivatives. For securities held, the Company
utilizes a sensitivity analysis technique to evaluate the effect that
hypothetical changes in market prices will have on the Company's investment
securities. In the first quarter of 1999, the Company entered into a series of
equity index collars in order to manage risk exposures related to its portfolio
of equity securities. In the opinion of management, market changes in the
Company's equity securities portfolio are highly correlated to the equity index
collars. At February 27, 1999, the potential change in fair value of investment
securities and the equity index collars, assuming a 10% change in market prices
was approximately $4 million and $2 million, respectively. This amount is not
significant compared with the overall financial position of the Company.
In addition, the Company has investments in affiliated companies accounted for
under the equity method of accounting.
Safe-harbor forward-looking statements
This discussion contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 with respect to the
financial condition, results of operations and business of Bassett Furniture
Industries, Incorporated. These forward-looking statements involve certain risks
and uncertainties. No assurance can be given that any such matters will be
realized. Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities: (I) competitive conditions in the industry in which the
Company operates; (II) demand for the Company's products and acceptance of new
products; (III) fluctuations in raw material prices; and (IV) general economic
conditions that are less favorable than expected.
11 of 14
<PAGE> 12
PART II - OTHER INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
FEBRUARY 27, 1999
Item 4. Submission of matters to a vote of security holders
The stockholders were asked to vote on three proposals at the Annual Meeting of
Stockholders held on March 30, 1999; (1) nomination of eleven directors, (2)
increase in the number of shares reserved for issuance under the Company's 1997
Employee Stock Plan, and (3) ratification of selection of Arthur Andersen LLP as
independent public accountant .
The results of the votes by the stockholders were as follows:
(1) Election of Directors:
<TABLE>
<CAPTION>
Voted For Withheld
--------- --------
<S> <C> <C>
Paul Fulton 9,228,079 1,067,717
Amy W. Brinkley 9,228,300 1,007,496
Peter W. Brown M.D. 9,255,424 1,040,372
Thomas E. Capps 9,297,347 998,449
Willie D. Davis 9,287,550 1,008,246
Alan T. Dickson 9,286,656 1,009,140
William H. Goodwin, Jr. 9,297,249 998,547
Howard H. Haworth 9,288,300 1,007,496
Michael E Murphy 9,288,300 1,007,496
Albert F. Sloan 9,286,654 1,009,142
Robert H. Spilman Jr. 9,289,002 1,006,794
</TABLE>
(2) Increase in the number of shares reserved for issuance under the Company's
1997 Employee Stock Plan: Voted for - 7,643,753; against - 2,043,573;
abstained and broker non votes - 617,470
(3) Ratification of Arthur Andersen LLP as independent public accountants: Voted
for - 10,138,150; against - 126,122; abstained and broker non votes - 31,524
Item 6.
a. Exhibits
(27) Financial Data Schedule
b. Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter.
12 of 14
<PAGE> 13
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/ Barry C. Safrit
- ---------------------------------------------------------
Barry C. Safrit, Vice President, Chief Accounting Officer
April 13, 1999
13 of 14
<PAGE> 14
BASSETT FURNITURE INDUSTRIES, INCORPORATED
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- --------
<S> <C> <C>
27 Financial Data Schedule page 9
</TABLE>
14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-27-1999
<PERIOD-START> NOV-29-1998
<PERIOD-END> FEB-27-1999
<CASH> 2,880
<SECURITIES> 4,523
<RECEIVABLES> 66,609
<ALLOWANCES> 2,400
<INVENTORY> 45,779
<CURRENT-ASSETS> 138,506
<PP&E> 190,529
<DEPRECIATION> 131,617
<TOTAL-ASSETS> 316,870
<CURRENT-LIABILITIES> 42,375
<BONDS> 0
0
0
<COMMON> 63,553
<OTHER-SE> 199,326
<TOTAL-LIABILITY-AND-EQUITY> 316,870
<SALES> 99,809
<TOTAL-REVENUES> 103,161
<CGS> 80,233
<TOTAL-COSTS> 96,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,398
<INCOME-TAX> 1,983
<INCOME-CONTINUING> 4,415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,415
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
