SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 1996
Furniture Brands International, Inc.
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(Exact name of Registrant as specified in charter)
Delaware I-91 43-0337683
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification Number)
101 South Hanley Road, St. Louis, Missouri 63105
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(Address of principal executive offices)
(314) 863-1100
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(Registrant's telephone number)<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
99(a) Press release dated October 18, 1996.<PAGE>
SIGNATURE
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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.
Furniture Brands International, Inc.
BY: Steven W. Alstadt
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Steven W. Alstadt
Controller and Chief
Accounting Officer
October 18, 1996<PAGE>
FOR IMMEDIATE RELEASE
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FURNITURE BRANDS INTERNATIONAL REPORTS STRONG
THIRD QUARTER EARNINGS PER SHARE OF $0.22 VERSUS $0.12 IN 1995
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St. Louis, Missouri, October 18, 1996 - - Furniture Brands
International (NYSE:FBN) announced operating results for the third
quarter and nine months ended
September 30, 1996.
Net sales for the third quarter were $417.9 million, compared to
$258.6 million reported last year. For the nine months, net sales
were $1,262.6 million, versus $794.8 million for the same period a
year ago. The 1996 net sales include those of Thomasville Furniture
Industries, Inc., acquired by the company on December 29, 1995. Had
Thomasville been acquired at the beginning of 1995, net sales for the
1996 third quarter and nine months ended September 30, 1996 would have
increased 6.7% and 4.9%, respectively, over those for the comparable
periods in 1995 on a pro forma basis.
Net earnings and fully diluted net earnings per common share, before
an extraordinary item, for the third quarter ended September 30, 1996
were $14.3 million and $0.22, respectively, an increase of 131.2% and
83.3%, respectively, over the results reported last year. For the
nine months, net earnings and fully diluted net earnings per common
share, before an extraordinary item, were $36.8 million and $0.59,
respectively, representing increases of 89.4% and 55.3%, respectively,
from the comparable period in 1995. The 1996 net earnings per common
share include the impact of the company's ten million share common
stock offering completed on March 1, 1996.
The results for the third quarter and nine months ended September 30,
1996 include an extraordinary charge of $7.4 million, net of tax
benefit, related to the previously reported September 1996 refinancing
of the company's secured credit agreement. The refinancing will
result in a substantial reduction in interest expense, which, at
current debt levels, will favorably impact annual results of
operations by $0.05 - $0.06 per common share.
Each period included charges for depreciation and amortization which
resulted from an asset revaluation that occurred when the company
emerged from Chapter 11 reorganization in 1992. These noncash
charges, which are ongoing, reduced fully diluted net earnings per
common share in the third quarter and nine months by $0.05 and $0.15,
respectively, for 1996 and by $0.05 and $0.18, respectively, for the
comparable periods in 1995. Excluding depreciation and amortization
resulting from the 1992 asset revaluation noted above, fully diluted
net earnings per common share, before extraordinary item, would have
been $0.27 and $0.17 for the third quarter, and $0.74 and $0.56 for
the nine months, of 1996 and 1995, respectively.<PAGE>
Operating results for the three and nine months ended September 30,
1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
(In millions, except per share) September 30, September 30,
------------------- -----------------
1996 1995 1996 1995
---- ----- ---- ----
Net sales $417.9 $258.6 $1,262.6 $794.8
As Reported
Earnings from operations $33.6 $17.5 $93.9 $54.9
Net earnings before extraordinary item 14.3 6.2 36.8 19.4
Net earnings per common share
(fully diluted) before extraordinary item $0.22 $0.12 $0.59 $0.38
As Adjusted (a)
Earnings from operations $37.6 $21.3 $106.3 $66.9
Net earnings before extraordinary item 17.4 9.2 46.3 28.7
Net earnings per common share
(fully diluted) before extraordinary item $0.27 $0.17 $0.74 $0.56
Average fully diluted common shares
outstanding 64.8 51.4 62.8 51.4
(a) Adjusted to remove the depreciation and amortization related to the 1992
asset revaluation, net of taxes, where applicable.
</TABLE>
Operating Performance
---------------------
The improved sales performance for the third quarter was impacted by
the Thomasville acquisition, which was completed at the end of
December, 1995. However, as previously noted, had Thomasville been
acquired at the beginning of 1995, net sales for this year's third
quarter would have increased 6.7% on a pro forma basis. Third quarter
shipments reflected a strong order backlog at the beginning of the
period as well as good order flow during the quarter. September was a
record shipment and order month with order backlogs up at all
operating companies. Total order backlog at the end of the third
quarter was $213.5 million, representing a 9.4% increase over the
previous year, pro forma for the acquisition of Thomasville.
Earnings from operations increased due to the Thomasville acquisition
and improved operating performance by the company's other divisions.
The favorable order backlog and order flow throughout the quarter
allowed the company's manufacturing plants to continue to run
efficiently. Operating profit margin improvement reflected the
efficient manufacturing activity as well as the company's continuing
efforts to increase gross profit margins on its various product lines.<PAGE>
During the third quarter, the company began to see some impact from
its gross profit management initiatives at Thomasville. This,
combined with good performance at the company's other divisions,
resulted in earnings before interest expense, income taxes and
depreciation and amortization (EBITDA) for the third quarter
increasing 26.7% over the previous year, pro forma for the acquisition
of Thomasville. As a percent of net sales, EBITDA was 11.2% versus
10.3% reported for the same period in 1995 and 9.5%, pro forma for the
Thomasville acquisition.
Net earnings for the quarter were positively impacted by reduced
interest rates on the company's long-term debt as well as a lower
effective income tax rate.
Operating cash flow continued to be very favorable during the third
quarter due to strong earnings and working capital management. As a
result, the company was able to repurchase, under its previously
announced equity repurchase program, 3.2 million of its Series 1
warrants for approximately $18.7 million without having to increase
its long-term debt. During the nine months ended September 30, 1996,
the company, using the net cash proceeds from its March 1, 1996 equity
offering as well as cash flow from operations, reduced its long-term
debt by approximately $144 million.
W. G. (Mickey) Holliman, Jr., President and Chief Executive Officer of
Furniture Brands International, commented that he was pleased with the
company's performance during the third quarter, particularly the
improvement in operating profit margin. Holliman stated, "The
company's sales and earnings performance during the third quarter
reflects a modestly improved retail environment as well as the
favorable impact of our gross profit management programs." Holliman
added, "The company will continue to focus on driving its brands,
Broyhill, Lane and Thomasville, through integrated marketing and
advertising programs to achieve profitable sales and market share
growth. I believe that coordination of marketing strategies between
our operating companies, coupled with strong advertising programs
focused on product and directed at consumers, will produce increased
sales and earnings growth." Holliman further added, "With an order
backlog at September 30, 1996 approaching 10% higher than last year,
we are positioned to achieve worthwhile sales and earnings increases
over 1995 pro forma results for the fourth quarter."
<PAGE>
<TABLE>
<CAPTION>
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED OPERATING RESULTS
(Dollars in thousands except per share)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- ------- ---------- --------
Net sales . . . . . . . . . . . $417,921 $258,626 $1,262,610 $794,866
Costs and expenses:
Cost of operations . . . . . 301,667 182,349 913,207 562,479
Selling, general and
administrative expenses . . 69,266 49,721 214,038 149,101
Depreciation and amortization (A) 13,353 9,049 41,411 28,387
-------- -------- --------- --------
Earnings from operations . . . 33,635 17,507 93,954 54,899
Interest expense . . . . . . . 10,592 8,212 35,672 25,409
Other income, net . . . . . . . 566 1,081 1,978 3,352
-------- -------- --------- --------
Earnings before income tax
expense and extraordinary
item . . . . . . . . . . . . 23,609 10,376 60,260 32,842
Income tax expense . . . . . . 9,284 4,180 23,467 13,416
-------- -------- --------- -------
Net earnings before extraordinary
item . . . . . . . . . . . . 14,325 6,196 36,793 19,426
Extraordinary item (B) . . . . (7,417) - (7,417) -
-------- ------- --------- -------
Net earnings . . . . . . . . . $ 6,908 $ 6,196 $ 29,376 $ 19,426
======== ======== ========= ========
Net earnings per common share
(fully diluted):
As reported -
Before extraordinary item $0.22 $0.12 $0.59 $0.38
Extraordinary item . . . (0.11) - (0.12) -
----- ----- ----- -----
Total . . . . . . . . . $0.11 $0.12 $0.47 $0.38
===== ===== ===== =====
As adjusted - (C)
Before extraordinary item $0.27 $0.17 $0.74 $0.56
Extraordinary item . . . (0.11) - (0.12) -
----- ----- ----- -----
Total . . . . . . . . . $0.16 $0.17 $0.62 $0.56
===== ===== ===== =====
Average fully diluted common
shares outstanding (in
thousands) . . . . . . . . . 64,754 51,404 62,765 51,404
====== ====== ====== ======
(A) Includes $3,939 and $3,748 for the three months ended September 30, 1996 and 1995,
respectively, and $12,277 and $11,836 for the nine months ended September 30, 1996 and
1995, respectively, related to the 1992 asset revaluation.
(B) Early extinguishment of debt, net of tax benefit.
(C) Adjusted to remove the depreciation and amortization related to the 1992 asset
revaluation, net of taxes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FURNITURE BRANDS INTERNATIONAL
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
<C> <C>
September 30, December 31,
1996 1995
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Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . $ 21,456 $ 26,412
Receivables, net . . . . . . . . . . . . . . . . 292,669 276,116
Inventories . . . . . . . . . . . . . . . . . . . 280,977 269,677
Prepaid expenses and other current assets . . . . 17,608 17,888
---------- ----------
Total current assets . . . . . . . . . . . . . 612,710 590,093
Net property, plant and equipment . . . . . . . . . 295,790 306,406
Intangible assets . . . . . . . . . . . . . . . . . 345,383 370,307
Other assets . . . . . . . . . . . . . . . . . . . 14,682 24,933
---------- ----------
$1,268,565 $1,291,739
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt . . . . . . $ - $ 18,639
Accrued interest expense . . . . . . . . . . . . 2,461 1,304
Accounts payable and other accrued expenses . . . 150,937 115,114
---------- ----------
Total current liabilities . . . . . . . . . . . 153,398 135,057
Long-term debt, less current maturities . . . . . . 578,600 705,040
Other long-term liabilities . . . . . . . . . . . . 133,626 150,486
Shareholders' equity . . . . . . . . . . . . . . . 402,941 301,156
---------- ----------
$1,268,565 $1,291,739
========== ==========
</TABLE>
