FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997 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 number I-91
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Furniture Brands International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 43-0337683
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 South Hanley Road, St. Louis, Missouri 63105
------------------------------------------ ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-1100
-----------------
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Former name, former address and former fiscal year, if changed since
last report
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 (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirement for the past 90
days.
Yes X No
--------- ---------<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes X No
--------- ----------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
61,511,031 Shares as of April 30, 1997
--------------------------------------<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Financial Statements for the quarter ended March 31,
1997.
Consolidated Balance Sheets
Consolidated Statements of Operations:
Three Months Ended March 31, 1997
Three Months Ended March 31, 1996
Consolidated Statements of Cash Flows:
Three Months Ended March 31, 1997
Three Months Ended March 31, 1996
Notes to Consolidated Financial Statements
Separate financial statements and other disclosures with respect to
the Company's subsidiaries are omitted as such separate financial
statements and other disclosures are not deemed material to investors.
The financial statements are unaudited, but include all adjustments
(consisting of normal recurring adjustments) which the management of
the Company considers necessary for a fair presentation of the results
of the period. The results for the three months ended March 31, 1997
are not necessarily indicative of the results to be expected for the
full year.<PAGE>
<TABLE>
<CAPTION>
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<C> <C>
<S>
March 31, December 31,
1997 1996
ASSETS ----------- -----------
Current assets:
Cash and cash equivalents....................... $ 18,663 $ 19,365
Receivables, less allowances of $19,276
($19,124 at December 31, 1996)................ 300,864 283,417
Inventories...........................(Note 1).. 288,052 281,107
Prepaid expenses and other current assets....... 25,378 23,378
----------- -----------
Total current assets.......................... 632,957 607,267
----------- -----------
Property, plant and equipment..................... 433,894 425,729
Less accumulated depreciation................... 135,288 123,767
----------- -----------
Net property, plant and equipment............. 298,606 301,962
----------- -----------
Intangible assets................................. 340,713 344,101
Other assets...................................... 16,355 15,874
----------- -----------
$ 1,288,631 $ 1,269,204
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued interest expense........................ $ 6,103 $ 6,579
Accounts payable and other accrued expenses..... 147,572 138,027
----------- -----------
Total current liabilities..................... 153,675 144,606
----------- -----------
Long-term debt.................................... 567,800 572,600
Other long-term liabilities....................... 132,919 132,341
Shareholders' equity:
Preferred stock, authorized 10,000,000
shares, no par value - issued none............ - -
Common stock, authorized 100,000,000 shares,
$1.00 stated value - issued 61,467,066
shares at March 31, 1997 and 61,432,181
shares at December 31, 1996................... 61,467 61,432
Paid-in capital................................. 276,040 278,554
Retained earnings............................... 96,730 79,671
----------- -----------
Total shareholders' equity.................... 434,237 419,657
----------- -----------
$ 1,288,631 $ 1,269,204
=========== ============
See accompanying notes to consolidated financial statements.<PAGE>
</TABLE>
<TABLE>
<CAPTION>
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
<S> <C> <C> <C>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
Net sales...................................... $ 449,861 $ 423,947
Costs and expenses:
Cost of operations........................... 326,187 308,883
Selling, general and administrative expenses. 73,511 70,204
Depreciation and amortization................ 14,596 14,178
------------ ------------
Earnings from operations....................... 35,567 30,682
Interest expense............................... 9,089 13,715
Other income, net.............................. 872 747
------------ ------------
Earnings before income tax expense............. 27,350 17,714
Income tax expense............................. 10,291 6,867
------------ ------------
Net earnings................................... $ 17,059 $ 10,847
============ ============
Net earnings per common share:
Primary...................................... $ 0.27 $ 0.19
====== ======
Fully diluted................................ $ 0.27 $ 0.19
====== ======
Weighted average common and common
equivalent shares outstanding:
Primary...................................... 63,715,915 55,794,225
========== ==========
Fully diluted................................ 63,731,955 55,982,283
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
Cash Flows from Operating Activities:
Net earnings.........................................$ 17,059 $ 10,847
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation of property, plant and equipment.... 11,581 11,084
Amortization of intangible and other assets...... 3,015 3,094
Noncash interest expense......................... 276 617
Increase in receivables.......................... (17,447) (8,011)
(Increase) decrease in inventories............... (6,945) 198
Increase in prepaid expenses and other assets.... (2,501) (4,672)
Increase in accounts payable, accrued interest
expense and other accrued expenses............. 9,069 21,496
Increase (decrease) in net deferred tax
liabilities.................................... (1,253) 1,740
Increase in other long-term liabilities.......... 1,948 892
------------ ------------
Net cash provided by operating activities............ 14,802 37,285
------------ ------------
Cash Flows from Investing Activities:
Proceeds from the disposal of assets................. 20 1,836
Additions to property, plant and equipment........... (8,245) (7,298)
------------ ------------
Net cash used by investing activities................ (8,225) (5,462)
------------ -----------
Cash Flows from Financing Activities:
Addition to long-term debt........................... 10,000 -
Payments of long-term debt........................... (14,800) (109,004)
Proceeds from the issuance of common stock........... 274 6
Payments for the repurchase of common stock warrants. (2,753) -
Proceeds from the sale of common stock............... - 81 335
------------ -----------
Net cash used by financing activities................ (7,279) (27,663)
------------ -----------
Net increase (decrease) in cash and cash equivalents... (702) 4,160
Cash and cash equivalents at beginning of period....... 19,365 26,412
------------ ------------
Cash and cash equivalents at end of period............. $ 18,663 $ 30,572
============ ============
Supplemental Disclosure:
Cash payments for income taxes, net.................. $ 5,454 $ 231
============ ============
Cash payments for interest........................... $ 9,274 $ 11,243
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Inventories are summarized as follows, in thousands:
March 31, December 31,
1997 1996
----------- -----------
Finished products $ 133,878 $ 127,292
Work-in-process 54,385 51,587
Raw materials 99,789 102,228
----------- -----------
$ 288,052 $ 281,107
=========== ===========
(2) In February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
No. 128 (SFAS No. 128) "Earnings Per Share" (EPS). SFAS
No. 128 establishes standards for computing and presenting
earnings per share. It also requires dual presentation of
basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. SFAS No. 128
is effective for financial statements for both interim and
annual periods ending after December 15, 1997, and early
application is not permitted. The Company believes the
adoption of this accounting standard will not have a
material impact on earnings per share.<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
RESULTS OF OPERATIONS
Furniture Brands International, Inc. (the "Company") is the largest
manufacturer of residential furniture in the United States. The
Company has three primary operating subsidiaries: Broyhill Furniture
Industries, Inc.; The Lane Company, Incorporated; and Thomasville
Furniture Industries, Inc.
Comparison of Three Months Ended March 31, 1997 and 1996
--------------------------------------------------------
Selected financial information for the three months ended March 31,
1997 and 1996 is presented below:
($ in millions except per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
% of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
Net sales $449.9 100.0% $423.9 100.0%
Cost of operations 326.2 72.5 308.9 72.9
Selling, general and
administrative expenses 73.5 16.3 70.2 16.6
Depreciation and amortization 14.6 3.3 14.1 3.3
------ ----- ------ ------
Earnings from operations 35.6 7.9 30.7 7.2
Interest expense 9.1 2.0 13.7 3.2
Other income, net 0.9 0.2 0.7 0.2
------ ----- ------ ------
Earnings before income
tax expense 27.4 6.1 17.7 4.2
Income tax expense 10.3 2.3 6.9 1.6
------ ----- ------ ------
Net earnings $ 17.1 3.8% $ 10.8 2.6%
====== ===== ====== ======
Gross profit (1) $113.4 25.2% $105.3 24.8%
====== ===== ====== ======
</TABLE>
(1) The Company believes that gross profit provides useful information
regarding a company's financial performance. Gross profit has been
calculated by subtracting cost of operations and the portion of
depreciation associated with cost of goods sold from net sales.<PAGE>
Three Months Ended
March 31,
--------------------
1997 1996
------ ------
Net sales $449.9 $423.9
Cost of operations 326.2 308.9
Depreciation (associated with cost 10.3 9.7
of goods sold) ------ ------
Gross profit $113.4 $105.3
Net sales for the three months ended March 31, 1997 were $449.9
million, compared to $423.9 million in the three months ended March
31, 1996, an increase of $26.0 million or 6.1%. The improved sales
performance occurred at each operating company and ranged, in varying
degrees, across all product lines. The increase in net sales was
achieved through continued introductions of new products and execution
of marketing and advertising programs emphasizing the Company's brand
names.
Cost of operations for the three months ended March 31, 1997 was
$326.2 million compared to $308.9 million for the comparable prior
year period. Cost of operations as a percentage of net sales
decreased from 72.9% for the three months ended March 31, 1996 to
72.5% for the three months ended March 31, 1997. The decrease in cost
of operations as a percentage of net sales resulted from increased
manufacturing efficiencies and continued efforts to improve gross
profit margins.
Selling, general and administrative expenses for the three months
ended March 31, 1997 were $73.5 million compared with $70.2 million in
the prior year. As a percentage of net sales, selling, general and
administrative expenses were 16.3% and 16.6% for the three months
ended March 31, 1997 and 1996, respectively. The decrease reflects
continuing success in the implementation of the Company's cost
reduction programs.
Interest expense totaled $9.1 million for the three months ended March
31, 1997 compared to $13.7 million in the prior year comparable
period. The decrease in interest expense resulted from lower long-
term debt and reduced interest rates.
The effective income tax rates were 37.6% and 38.8% for the three
months ended March 31, 1997 and March 31, 1996, respectively. The
effective tax rates for each period were adversely impacted by certain
nondeductible expenses incurred and provisions for state and local
taxes. The effective tax rate for the three months ended March 31,
1997 was favorably impacted by the reduced effect of the nondeductible
expenses as a percentage of pretax earnings.
Net earnings per common share on both a primary and fully diluted
basis were $0.27 for the three months ended March 31, 1997, compared
with $0.19 for the same period last year. Average common and common<PAGE>
equivalent shares outstanding used in the calculation of net earnings
per common share on a primary and fully diluted basis were 63,716,000
and 63,732,000, respectively, for the three months ended March 31,
1997 and 55,794,000 and 55,982,000, respectively, for the three months
ended March 31, 1996.
FINANCIAL CONDITION
Working Capital
---------------
Cash and cash equivalents at March 31, 1997 amounted to $18.7 million,
compared with $19.4 million at December 31, 1996. During the three
months ended March 31, 1997, net cash provided by operating activities
totaled $14.8 million, net cash used by investing activities totaled
$8.2 million and net cash used by financing activities totaled $7.3
million.
Working capital was $479.3 at March 31, 1997, compared with $462.7
million at December 31, 1996. The current ratio was 4.1 to 1 at March
31, 1997, compared to 4.2 to 1 at December 31, 1996.
Financing Arrangements
----------------------
As of March 31, 1997, long-term debt consisted of the following, in
millions:
Secured credit agreement $345.0
Receivables securitization facility 210.0
Other 12.8
------
$567.8
======
To meet working capital and other financial requirements, the Company
maintains a $475.0 million revolving credit facility (the Secured
Credit Agreement) with a group of financial institutions. The
revolving credit facility allows for both issuance of letters of
credit and cash borrowings. Letter of credit outstandings are limited
to no more than $60.0 million. Cash borrowings are limited only by
the facility's maximum availability less letters of credit
outstanding. At March 31, 1997, there were $345.0 million of cash
borrowings outstanding under the revolving credit facility and $26.5
million in letters of credit outstanding, leaving an excess of $103.5
million available under the revolving credit facility.
In addition to the Secured Credit Agreement, the Company also had
$13.4 million of excess availability as of March 31, 1997 under its
Receivables Securitization Facility.
The Company believes its Secured Credit Agreement and Receivables
Securitization Facility, together with cash generated from operations,
will be adequate to meet liquidity requirements for the foreseeable
future.<PAGE>
PART II OTHER INFORMATION
-------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) 10(a). Furniture Brands 1992 Stock Option Plan, as
amended.
10(b). Furniture Brands Executive Incentive Plan
10(c). Employment Agreement, dated April 30, 1997, between
the Company and Richard B. Loynd.
10(d). Employment Agreement, dated April 29, 1997, between
Action Industries, Inc. and John T. Foy
11. Statement re Computation of Net Earnings Per Common
Share.
27. Financial Data Schedule.
(b) A Form 8-K was not required to be filed during the quarter
ended March 31, 1997.<PAGE>
SIGNATURE
---------
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.
(Registrant)
By Steven W. Alstadt
-----------------------------------
Steven W. Alstadt
Controller and
Chief Accounting Officer
Date: May 12, 1997<PAGE>
Exhibit 10(a)
FURNITURE BRANDS
1992 STOCK OPTION PLAN
1. Objectives of the Plan
The Furniture Brands 1992 Stock Option Plan (the "Plan") of
Furniture Brands International, Inc. (the "Corporation") is intended
to encourage and provide opportunities for ownership of the
Corporation's Common Stock by such key employees (including officers)
of the Corporation and any subsidiaries of the Corporation as the
Board of Directors of the Corporation (the "Board") or a committee
thereof constituted for this purpose may from time to time determine.
The Plan is also intended to provide incentives for such employees to
put forth maximum efforts for the successful operation of the
Corporation and its subsidiaries. By extending to such key employees
the opportunity to acquire proprietary interests in the Corporation
and to participate in its success, the Plan may be expected to benefit
the Corporation and its shareholders by making it possible for the
Corporation and its subsidiaries to attract and retain the best
available talent and by providing such key employees with added
incentives to increase the value of the Corporation's stock.
2. Stock Subject to the Plan
There are reserved for issue under the Plan 5,500,000 shares of
the Common Stock, without nominal or par value, of the Corporation
(the "Shares"). Such Shares may be, in whole or in part, as the Board
shall from time to time determine, authorized but unissued Shares, or
issued Shares which shall have been reacquired by the Corporation.
3. Administration
Subject to the express provisions of the Plan, the Plan shall be
administered by the Executive Compensation and Stock Option Committee
of the Board (the "Committee"), and the Committee shall have plenary
authority, in its discretion, to determine the individuals to whom,
and the time or times at which, options, if any, shall be granted, the
type of option to be granted (e.g., qualified or nonqualified) and the
number of Shares to be subject to an option. Subject to the express
provisions of the Plan, the Committee shall also have plenary
authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations regarding it, and to take whatever action is necessary
to carry out the purposes of the Plan. The Committee's determinations
on matters referred to in this Section 3 shall be conclusive.
4. The Committee
The Committee shall consist of three or more members of the
Board. The Committee shall be appointed by the Board, which may from
time to time designate the number to serve on the Committee, appoint<PAGE>
members of the Committee in substitution for members previously
appointed and fill vacancies, however caused, in the Committee. No
member of the Board while a member of the Committee shall be eligible
to receive an option under the Plan. The Committee shall elect one of
its members as its Chairman and shall hold its meetings at such times
and places as it may determine. A majority of the members shall
constitute a quorum. Any determination reduced to writing and signed
by all the members of the Committee shall be fully as effective as if
it had been made by a majority vote at a meeting duly called and held.
The Committee may appoint a secretary, shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of
its business as it shall deem advisable.
5. Eligibility
Options may be granted only to key employees (which term as used
herein includes officers) of the Corporation and of its subsidiary
corporations (the "subsidiaries") as the term "subsidiary corporation"
is defined in Section 424(f) of the Internal Revenue Code of 1986, as
amended, (the "Code"). For the purposes of the Plan the term
"employee" shall be an individual with an "employment relationship" as
defined in Section 421 (Regs. Section 1.421-7(h)) of the Code. A
member of the Board or of the board of directors of a subsidiary who
is not also an employee of the Corporation or of one of its
subsidiaries shall not be eligible to receive an option. Nothing
contained in the Plan shall be construed to limit the right of the
Corporation to grant options otherwise than under the Plan in
connection with (i) the employment of any person,(ii) the acquisition,
by purchase, lease, merger, consolidation or otherwise, of the
business or assets of another corporation, firm or association,
including grants to employees thereof who become employees of the
Corporation or a subsidiary, or (iii) other proper corporate purposes.
6. Nonqualified Stock Options
Unless it is designated a qualified option by the Committee, any
option granted under the Plan shall be nonqualified and shall be in
such form as the Committee may from time to time approve. Any such
nonqualified option shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
deem desirable:
(a) Option Price. The per share purchase price of Shares
purchasable under an option shall be determined by the Committee in
accordance with procedures established by the Committee; provided
however, that except for options granted to replace pre-existing
compensation or benefit programs, in no event shall more than 10% of
the shares reserved for issue under the Plan be the subject of (i)
options granted at less than fair market value on the date of grant,
and (ii) new options substituted for previously granted options having
higher option prices as provided for in Section 9 hereof.
(b) Option Period. The term of option shall be fixed by
the Committee, but no option shall be exercisable after the expiration
of ten years from the date the option is granted.
(c) Exercisability. Options shall be exercisable at such
time or times as determined by the Committee at or subsequent to
grant; no option shall be exercisable during the year ending on the
day before the first anniversary date of the granting of the option.
The proceeds of sale of Shares subject to option are to be added to
the general funds of the Corporation. Except as provided in
Subsections (f), (g) and (h) of this Section 6, no option may be
exercised at any time unless the holder is then a regular employee of
the Corporation or a subsidiary and has continuously remained an
employee at all times since the date of granting of the option. If any
option granted under the Plan shall expire or terminate for any reason
without ever having been exercised in full, the unissued shares
subject thereto shall again be available for the purposes of the Plan.
(d) Method of Exercise. Options which are exercisable may
be exercised in whole or in part at any time during the option period,
by completing and delivering to the Corporation an option exercise
form provided by the Corporation specifying the number of Shares to be
purchased. Such form shall be accompanied by payment in full of the
purchase price in cash. No Shares shall be issued until full payment
therefor has been made.
(e) Nontransferability of Options. No option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and such options shall be exercisable,
during the optionee's lifetime, only by the optionee.
(f) Termination by Reason of Death. If an optionee's
employment by the Corporation or any subsidiary terminates by reason
of death, as to those Shares with respect to which the option had
become exercisable (under the provisions of the particular option) on
the date of death, the stock option may thereafter be exercised by the
legal representative of the estate or by the legatee of the optionee
under the will of the optionee, during a period of six months from the
date of such death or until the expiration of the stated period of the
option, whichever period is the shorter.
(g) Termination by Reason of Retirement or Permanent
Disability. If an optionee's employment by the Corporation or any
subsidiary terminates by reason of retirement or permanent disability,
as to those Shares with respect to which the option had become
exercisable (under the provisions of the particular option) on the
date of termination of employment, any stock option held by such
optionee may thereafter be exercised during a period of three months
from the date of such termination of employment or the expiration of
the stated period of the option, whichever period is the shorter;
provided, however, that if the optionee dies within such three-month
period, any unexercised stock option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at
the time of death for a period of six months from the date of such
death or for the stated period of the option, whichever period is the
shorter.
(h) Other Termination. If an optionee's employment
terminates for any reason other than death, permanent disability, or
retirement, as to those Shares with respect to which the option had
become exercisable (under the provisions of the particular option) on
the date of termination of employment, any option held by such
optionee may thereafter be exercised during a period of one month from
the date of such termination of employment or the expiration of the
stated period of the option, whichever period is shorter; provided,
however, that if the optionee dies within such one-month period, any
unexercised option held by such optionee shall thereafter be
exercisable to the extent to which is was exercisable at the time of
death for a period of six months from the date of such death or for
the stated period of the option, whichever period is the shorter.
(i) Option Buyout. The Committee may at any time offer to
repurchase an option (other than an option which has been held for
less than six months by an optionee who is subject to Section 16(b) of
the Securities Exchange Act of 1934) based on such terms and
conditions as the Committee shall establish and communicate to the
optionee at the time that such offer is made.
7. Qualified Stock Options
Any option granted under the Plan shall, at the discretion of the
Committee, qualify as an incentive stock option as defined in Section
422(b) of the Code and shall be in such form as the Committee may from
time to time approve. Any such qualified option shall be subject to
the following terms and conditions in addition to those set forth in
Section 6 and shall contain such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
deem desirable:
(a) Eligibility. Incentive stock options shall not be
granted to any individual who, at the time the option is granted,owns
stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Corporation or its parent
corporation (as the term "parent corporation" is defined in Section
424(e) of the Code) or the subsidiaries unless: l) the option price is
at least 110% of the fair market value of the stock subject to the
option and 2) the option states that it is not exercisable after the
expiration of five years from the date of its grant.
(b) Limitation on Exercise of Options. The maximum
aggregate fair market value (determined at the time an option is
<PAGE>
granted) of the Shares with respect to which qualified options are
exercisable for the first time by any Participant during any calendar
year (under all plans of the Company and its parent corporation and
subsidiaries) shall not exceed $100,000. If the provisions of this
Section limit the exercisability of certain qualified options which
would otherwise become exercisable on account of termination of
employment or a change of control, the Committee, in its sole
discretion, shall determine the times at which such qualified options
become exercisable so that the provisions of this Section 7(b) are not
violated; provided that in no event shall any qualified option be
exercisable more than ten (10) years from the date of granting thereof
(five (5) years in the case of qualified options granted to ten
percent shareholders (described in Section 7(a)).
8. Adjustment Upon Changes in Capitalization, Etc.
The aggregate number and class of shares reserved under the Plan,
the number and class of shares subject to each option granted pursuant
to the Plan and/or the option price per share payable under each such
option shall be appropriately and equitably adjusted in the event of:
any reclassification or increase or decrease in the number of the
issued Shares of the Corporation by reason of a split-up or
consolidation of Shares; the payment of a stock dividend; a
recapitalization; a combination or exchange of Shares; a spin-off; or
any like capital adjustment.
If the Corporation shall be reorganized or shall be merged into
or consolidated with any other corporation, each option, if any, then
outstanding under the Plan shall thereafter apply to such number and
kind of securities as would have been issuable by reason of such
reorganization, merger or consolidation to a holder of the number of
Shares which were subject to the option, if any, immediately prior to
such reorganization, merger or consolidation.
In the event of the proposed dissolution or liquidation of the
Corporation or in the event of a proposed sale of substantially all of
the assets of the Corporation, each option, if any, outstanding under
the Plan shall terminate as of a date to be fixed by the Committee and
approved by the Board upon not less than thirty days' written notice
to the optionee; provided, however, that any option granted at least
six months prior to such event, if any, of any optionee who has been
an employee for one year or more prior to the date of such notice
shall be accelerated and such optionee shall be entitled to exercise
such option, in whole or in part, without regard to any installment
provision of the option, and provided further that said exercise shall
be made prior to the termination date fixed in said notice.
All adjustments under this Section 8 shall be made by the
Committee, subject to the approval of the Board, which action shall be
final and conclusive.
Anything to the contrary notwithstanding, upon a Change of
Control(as hereinafter defined) which occurs after the first
anniversary of the Effective Date (as defined in Section 12), each
option granted at least six months prior to such Change of Control
shall become immediately exercisable in full. As used herein, "Change
of Control" shall mean any of the following events which occur more
than one year after the first anniversary of the Effective Date:
(a) The acquisition (other than from the Corporation) by any
person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"),
excluding, for this purpose, the Corporation or its subsidiaries, or
any employee benefit plan of the Corporation or its subsidiaries, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either the then outstanding
Shares or the combined voting power of the Corporation's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(b) Individuals who, as of the first anniversary of the
Effective Date, constitute the Board (as of such date, the "Incumbent
Board"), cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the
first anniversary of the Effective Date whose election, or nomination
for election by the Corporation's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors
of the Corporation, as such terms are used in Rule 14 all of
Regulation 14A promulgated under the Exchange Act) shall be considered
as though such person were a member of the Incumbent Board; or
(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to
which persons who were the stockholders of the Corporation immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own, directly or indirectly, more than 50% of
the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the
Corporation or the sale of all or substantially all of the assets of
the Corporation.
9. Amendments and Termination
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would
impair the rights of an optionee under an option without the
optionee's consent, or which without the approval of the stockholders
would: except as is provided in Section 8 of the Plan, increase the
total number of Shares reserved for the purpose of the Plan; decrease
the option price of any option to less than 100% of the fair market
<PAGE>
value on the date of the granting of the option; change the employees
or class of employees eligible to participate in the Plan; or extend
the maximum option period under Section 6(b) of the Plan.
The Committee may amend the terms of any option theretofore
granted, prospectively or retroactively, but no such amendment shall
impair the rights of any optionee without the consent of the optionee.
The Committee may also substitute new options for previously granted
options, including substitution for previously granted options having
higher option prices, subject to the limitation set forth in Section
6(a) hereof.
10. General Provisions
(a) The Committee may require each person purchasing Shares
pursuant to an option under the Plan to represent to and agree with
the Corporation in writing that the optionee is acquiring the Shares
without a view to distribution thereof. The certificates for such
Shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
(b) All certificates for Shares delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any
stock exchange upon which the Shares are then listed, and any
applicable federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(c) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject
to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
11. Taxes
Following exercise of an option, the optionee shall, no later
than the date as of which an amount related to the option exercise
first becomes includable in the gross income of the optionee for
federal income tax purposes, pay to the Corporation, or make
arrangements satisfactory to the Corporation regarding payment of, any
federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount and the Corporation and its
subsidiaries shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to
the optionee.
12. Effective Date of Plan
This Plan shall be effective on the effective date of the Joint
Plan of Reorganization of the Corporation and its subsidiaries
("Effective Date"). However, no option granted under this Plan may be
exercised in whole or in part until this Plan is approved by the
holders of a majority of the outstanding stock of the Corporation
entitled to vote on the issue, which approval must occur within the
twelve-month period after the Effective Date. In the event such
approval is not forthcoming within the time specified, this Plan and
any options granted pursuant to it shall be null and void.
13. Term of Plan
No option shall be granted pursuant to the Plan more than 10
years after the Plan is approved by the Board of Directors of the
Corporation, but options theretofore granted may extend beyond and be
exercised after that date.
Adopted by the Board of Directors on January 20, 1992.
Amended by the Board of Directors on January 26, 1993.
Approved by stockholders on May 5, 1993.
Amended by the Board of Directors on October 19, 1994.
Amended by the Board of Directors on April 23, 1996
and approved by the stockholders on April 23, 1996.
Amended by the Board of Directors on January 28, 1997
and approved by the stockholders on April 29, 1997
Exhibit 10(b)
FURNITURE BRANDS
EXECUTIVE INCENTIVE PLAN
February 1995
Amended March 1, 1996
Amended September 26, 1996
Amended February 24, 1997<PAGE>
TABLE OF CONTENTS
-----------------
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . 1
OBJECTIVES OF PLAN. . . . . . . . . . . . . . . . . . . . . 1
Objectives . . . . . . . . . . . . . . . . . . . . . . . 1
Award Achievement. . . . . . . . . . . . . . . . . . . . 1
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . 2
Eligibility. . . . . . . . . . . . . . . . . . . . . . . 2
Participation. . . . . . . . . . . . . . . . . . . . . . 2
Non-Eligibility. . . . . . . . . . . . . . . . . . . . . 3
Plan Year. . . . . . . . . . . . . . . . . . . . . . . . 3
HOW THE PLAN WORKS. . . . . . . . . . . . . . . . . . . . . 3
0Plan Factors. . . . . . . . . . . . . . . . . . . . . . 3
Setting Furniture Brands Goals . . . . . . . . . . . . . 3
Notification of Participation. . . . . . . . . . . . . . 3
MECHANICS OF DETERMINING AWARDS . . . . . . . . . . . . . . 4
Definitions of Terms . . . . . . . . . . . . . . . . . . 4
Mechanics of Determining Awards. . . . . . . . . . . . . 4
DISCRETIONARY AWARDS PROGRAM. . . . . . . . . . . . . . . . 5
CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . 6
PAYMENT OF AWARDS . . . . . . . . . . . . . . . . . . . . . 6
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . 6
MANNER OF EXERCISE OF COMMITTEE AUTHORITY. . . . . . . . . 6
CERTAIN PERFORMANCE BASED AWARDS . . . . . . . . . . . . . 6
NO CONTRACT OF EMPLOYMENT. . . . . . . . . . . . . . . . . 6
ASSIGNMENTS AND TRANSFERS. . . . . . . . . . . . . . . . . 6
GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 6
AMENDMENT AND TERMINATION OF PLAN AND AWARDS . . . . . . . 6
EFFECTIVE DATE OF THE PLAN. . . . . . . . . . . . . . . . . 7<PAGE>
FURNITURE BRANDS
CORPORATE
EXECUTIVE INCENTIVE PLAN
------------------------
1. INTRODUCTION
------------
This Executive Incentive Plan (the "Plan") has been designed for
those management persons at the corporate offices of Furniture Brands
International, Inc. ("FBI") who directly and substantially influence
achievement of certain corporate goals. The Plan provides monetary
awards for the achievement of those goals. In select cases, the Plan
provides for additional special discretionary awards.
FBI believes that the total annual income of key employees should
be influenced by their individual and collective effort, and that
rewards should directly relate to the achievement of planned,
meaningful results. The Plan is in addition to and assumes the
existence of a base salary which is competitive, equitable, and
subject to periodic performance-related adjustments.
The overall administration and control of the Plan, including
final determination of annual bonus awards to each participant, is the
responsibility of the Executive Compensation and Stock Option
Committee of the FBI Board of Directors (the "Committee"). The
Committee (or a subcommittee thereof which has been designated by the
Committee to administer the Plan) shall consist solely of three or
more members of the FBI Board of Directors who are "outside directors"
as defined in Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder. Members of the
Committee are not eligible to participate in the Plan.
2. OBJECTIVES OF PLAN
------------------
A. Objectives. The Plan has been created with several
objectives in mind:
(1) to emphasize achievement of planned strategic
objectives;
(2) to reinforce the importance of annual growth; and
(3) to motivate and challenge participating executives
through meaningful compensation opportunities.<PAGE>
B. Award Achievement. To achieve these objectives, the Plan
is designed to:
(1) provide for monetary awards of significant value
related directly to measurable FBI results;
(2) motivate participating individuals to achieve results
beyond the routine of position responsibilities; and
(3) be appropriate for both the level of responsibility
and total compensation for the position.
Total compensation, resulting from the combination of base
salary and monetary awards under the Plan, is designed to
be competitive with total compensation for similar
positions in American industry.
3. PARTICIPATION
-------------
A. Eligibility. Only management persons whose performance
directly and substantially influences the annual results
of FBI will be considered for participation in the Plan.
Ordinarily the extent of such influence will be
reflected in the Bonus Percentage (as herein defined).
B. Participation
-------------
(1) At the start of each Plan Year (as herein defined)
FBI management will submit a list of proposed
participants and Bonus Percentages for review and
approval by the Committee. The Committee may in
its discretion change the participants and Bonus
Percentages, provided, however, that the Committee
shall, within the first 90 days of each Plan Year,
set forth in writing, a final approved list of
participants and Bonus Percentages for such Plan
Year. Such final list of participants and Bonus
Percentages may not thereafter be modified except
as provided in this Plan. With respect to persons
who have been determined to be "covered employees"
within the meaning of Code Section 162(m)(3) for
such Plan Year (a "Covered Employee"), additional
participation in the Plan during a Plan Year shall
be permitted only in the event of an unusual
circumstance, such as a new hire. Executive
officers of the Company may be participants in the
Plan to the extent approved by the Committee.
(2) To earn an award, an individual must be designated
a participant for the Plan Year and must
participate effectively for a minimum of eight full
months of the Plan Year.<PAGE>
(3) A participant who has lost time due to illness, or
dies, retires or becomes totally disabled during
the Plan Year, will be considered for an award
under the Plan provided that his/her influence on
goal achievement can be identified and that
achievement of results can be measured.
C. Non-Eligibility
---------------
(1) Any individual whose employment is terminated at
any time during the Plan Year by reason of
voluntary or encouraged resignation, or who is
discharged, will not receive an award.
(2) Any individual who has been demoted at any time
during the Plan Year to a position not included in
the Plan will not receive an award.
D. Plan Year. The Plan Year will correspond with the FBI
fiscal year.
4. HOW THE PLAN WORKS
------------------
A. Plan Factors. There are two factors which will be
measured in order to determine an award: opportunity
and FBI performance.
(1) Opportunity is the potential impact that a
participant may have on the achievement of goals.
This is expressed by the Bonus Percentage.
(2) FBI Performance is the result of achievement. This
is measured by the percentage of attainment of
FBI's goals.
B. Setting FBI Goals. At or prior to the beginning of each
Plan Year, FBI management will recommend to the
Committee for approval, one or more objective measurable
performance goals for FBI (the "Goals") for such year,
and the weighting to be assigned to each Goal. The
Goals will be based upon one or more of the following
criteria: sales; earnings; earnings per share; pre-tax
earnings; net profits; return on equity; cash flow; debt
reduction; asset management; stock price; market share;
costs; or selling, general and administrative ("SG&A")
expenses. The Goals will be realistic, yet rigorous.
They will be attainable, but attainment will require
above average performance. The Committee may, in its
discretion, approve management's recommendations or
change the Goals and/or weightings, provided, however,
that the Company shall, within the first 90 days of the
year (or, in the case of a new hire added to the Plan<PAGE>
during the year, before 25% of such individual's
services for the Company for the year has elapsed), set
forth in writing the final approved Goals, the Minimum
Percentages (as herein defined) for such year and the
weighting to be assigned to such Goals.
C. Notification of Participation. Each participant's
target Bonus Percentage will be communicated each Plan
Year by delivery of the Participation Form.
5. MECHANICS OF DETERMINING AWARDS
-------------------------------
A. Definitions of Terms
--------------------
(1) Bonus Percentage. The Bonus Percentage will be
expressed as a percentage (not less than 10% and
not more than 50%) of the participant's base
salary. That percentage will be higher for a
position with significantly greater
responsibilities, thus recognizing the direct
relationship between position responsibility and
influence on FBI results. Participants who are
promoted during a Plan Year to a position with a
higher Bonus Percentage will receive a prorated
award based on the percentage of the Plan Year
spent in each position.
(2) Aggregate Target Amount. The Aggregate Target
Amount will be expressed as a dollar amount,
calculated by multiplying the participant's base
annual salary rate, as in effect on March 1 of the
Plan Year, which has been established at or before
the time of the setting of the Aggregate Target
Amount, by the Bonus Percentage. The result will
be the total award to which the participant will be
entitled if FBI achieves 100% of all Goals for that
Plan Year.
(3) Weighted Target Amounts. For each Goal a Weighted
Target Amount will be calculated by multiplying the
Aggregate Target Amount by the weighted percentage
applicable to the Goal. The result for each Goal
will be the portion of the total award to which the
participant will be entitled if FBI achieves 100%
of that Goal for that Plan Year. The sum of the
Weighted Target Amounts will equal the Aggregate
Target Amount.
B. Mechanics of Determining Awards.
--------------------------------
(1) FBI Performance. FBI's performancegainst the Goals<PAGE>
will be measured by the percentage of achievement
of each Goal. FBI's performance with respect to
each Goal will be based upon audited results.
(2) Achievement of Target. The Plan is designed to
provide the participant with 100% of his/her
Weighted Target Amount with respect to each Goal if
FBI achieves 100% satisfaction of that Goal.
(3) Minimum FBI Performance. Each Plan Year the
Committee will establish a minimum percentage (the
"Minimum Percentage") with respect to each Goal.
Achievement below the Minimum Percentage will
result in no award with respect to that Goal.
Under certain circumstances, the Committee may
establish Goals the achievement of which
contemplate reducing rather than increasing an
amount, such as a reduced debt level or reduced
SG&A expenses. In any such case, the percentage
which will be applied to the Weighted Target Amount
for such Goal will be inversely proportional to the
performance against the Goal. For example, if a
Goal is a year-end debt amount and the actual year
-end debt is 105% of the Goal, the percentage of
Weighted Target Amount to be paid with respect to
that Goal would be 95%. In these circumstances,
the Minimum Percentage will be expressed in terms
of a figure greater than 100%.
(4) Calculation of Award. The percentage of FBI's
achievement of each Goal will be applied to the
Weighted Target Amount for that Goal to determine
the amount of the award payable with respect to
that Goal. Awards will be calculated separately
for each Goal, but will be aggregated and paid as
one award check.
(5) Discretion to Increase Award. The Committee shall,
under no circumstances, increase an award granted
under this Section 5 except to the extent permitted
under Treasury Regulation Section 1.162-
27(e)(2)(iii).
6. DISCRETIONARY AWARDS PROGRAM.
-----------------------------
(1) To recognize special needs, a discretionary awards
program is part of this Plan. Its objective is to
recognize the performance of FBI through a more
qualitative evaluation, rather than a quantitative
evaluation. This could occur, for example, if FBI
does not achieve one or more Goals due to business
or economic reasons beyond its control but, given<PAGE>
these adverse circumstances, nonetheless performed
well. Under such circumstances, a special award
may be granted at the discretion of the Committee.
(2) To the extent all or any portion of an award is not
immediately deductible as compensation expense by
FBI for federal income tax purposes, payment of
such award or portion thereof, as the case may be,
will be deferred until following termination of
employment of the participant or until such earlier
date as the Committee shall, in its discretion,
determine, either at the time of deferral or
thereafter, whereupon such award or any portion
thereof, as the case may be, less appropriate
withholdings, will be paid by check provided that
the same shall then have become immediately
deductible as compensation expense by FBI for
federal income tax purposes. Simple interest shall
be paid annually on the deferred compensation at
FBI's effective borrowing rate.
(3) Nothing contained in this Section 6 shall be deemed
to permit or provide for discretionary increases in
awards payable to Covered Employees under Section 5
hereof.
7. CERTIFICATION. Before any payments are made under this Plan,
the Committee must certify in writing that the Goals justifying the
payment of an award have been met.
8. PAYMENT OF AWARDS. Except as provided in Section 6 hereof,
awards, to the extent immediately deductible as compensation expense
by FBI for federal income tax purposes, less appropriate withholdings,
will be paid by check as soon as practical after the audited close of
a fiscal year.
9. ADMINISTRATION. Subject to the limitations as herein set
forth, the Committee is authorized and empowered to administer the
Plan; interpret the Plan; establish, modify and grant waivers of award
restrictions; prescribe, amend and rescind rules relating to the Plan;
and determine the rights and obligations of participants under the
Plan. All decisions of the Committee shall be final and binding upon
all parties including the Company, its stockholders, and its
participants.
10. MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The express grant
of any specific power to the Committee and the taking of any action by
the Committee, shall not be construed, as limiting any power or
authority of the Committee. All designations of participation, bonus
percentages, goals, minimum percentages, aggregate amounts, and
certifications of performance shall be in writing. A writing signed
by all members of the Committee shall constitute the act of the
Committee without the necessity, in such event, to hold a meeting.
The Committee may delegate the authority, subject to such terms as the<PAGE>
Committee shall determine, to perform administrative functions
(excluding those described in the second sentence of this Section 10)
under the Plan.
11. CERTAIN PERFORMANCE BASED AWARD. Any awards under Section 5
hereof are intended to be "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code and shall be paid
solely on account of the attainment of one or more preestablished,
objective performance goals within the meaning of Section 162(m). If
any provision of this Plan does not comply with the requirements of
Section 162(m) of the Code as then applicable to any employee, such
provision shall be construed or deemed amended to the extent necessary
to conform to such requirements with respect to such employee.
12. NO CONTRACT OF EMPLOYMENT. Participation in the Plan shall not
be considered an agreement to employ a participant for any period of
time or in any position.
13. ASSIGNMENTS AND TRANSFERS. With the exception of transfer by
will or by the laws of descent and distribution, rights under the Plan
may not be transferred or assigned.
14. GOVERNING LAW. The Plan shall be construed, administered and
governed in all respects under and by the applicable internal laws of
the State of Missouri, without giving effect to the principles of
conflicts of law thereof.
15. AMENDMENT AND TERMINATION OF PLAN AND AWARDS. The Board may
amend, alter, suspend, discontinue or terminate the Plan without the
consent of stockholders or participants, except as is required by any
federal or state law or regulation or the rules of any stock exchange
on which the shares of FBI ("Shares") are listed, or if the Board in
its discretion determines that obtaining such stockholder approval is
for any reason advisable, provided, however, that (i) without the
consent of an affected participant, no amendment, alteration,
suspension, discontinuation, or termination of the Plan may impair the
rights of such participant under any award theretofore granted to such
participant, and (ii) the Plan may not be amended without the consent
of the stockholders of a majority of the Shares then outstanding to
(a) materially modify the requirements as to eligibility for
participation in the Plan, (b) change the specified performance
objectives for payment of awards under Section 5, (c) increase the
maximum award payable under Section 5, (d) withdraw administration of
the Plan from the Committee or (e) extend the period during which
awards may be granted.
16. EFFECTIVE DATE OF THE PLAN. The Plan, as amended, shall become
effective on January 1, 1997 provided that the Plan is approved by the
affirmative vote of the holders of a majority of the Shares present or
represented and entitled to vote at the 1997 annual meeting of the
stockholders of FBI. The terms of the Plan shall be perpetual;
subject to earlier termination by the Board pursuant to Section 15,
after which no awards may be made under the Plan, but any such
termination shall not affect awards then outstanding or the authority
of the Committee to continue to administer the Plan.<PAGE>
Exhibit 10(c)
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of April
30, 1997 by and between Furniture Brands International, Inc., a
Delaware corporation ("Furniture Brands") and Richard B. Loynd
("Loynd").
In accordance with the authority granted by the Executive
Compensation and Stock Option Committee and the Executive Committee of
the Board of Directors of Furniture Brands on December 17, 1996, and
for good and valuable consideration the parties covenant and agree as
follows:
1. Employment. Furniture Brands agrees to employ Loynd during
the period beginning January 1, 1997 and ending December 31, 1999 (the
"Employment Period"), and Loynd agrees to serve Furniture Brands as an
employee during the Employment Period, subject to the direction and
control of the Board of Directors of Furniture Brands, all upon the
following terms and conditions:
a. during the Employment Period, Loynd will receive a salary
of $1 million per year, which amounts will be payable to his wife or
otherwise to his beneficiaries or to his estate should he die before
the expiration of the Employment Period;
b. during the Employment Period, Loynd will also be entitled
to participate in all benefit programs in which he is participating on
the date hereof (except any bonus or other annual incentive plans), or
which might otherwise be made available generally to employees of
Furniture Brands, and to be reimbursed all expenses in accordance with
past practice;
c. the authorization given by the Furniture Brands Board of
Directors on January 26, 1993 to reimburse Loynd $50,000 per year for
a second-to-die life insurance policy will be continued for the three-
year Employment Period;
d. Furniture Brands will continue to maintain and pay the
expenses of Furniture Brands' office in New Jersey for a five-year
period after January 1, 1997, and Loynd will continue to have the use
of that office; and
e. any amounts being carried by Furniture Brands as deferred
compensation for Loynd for past years of service will be paid to Loynd
as soon as they become immediately deductible by Furniture Brands as
compensation expense.
The failure of Furniture Brands, without Loynd's consent, to comply
with the terms and conditions of employment as set forth in this
Section 1 shall constitute "Good Reason" for Loynd's termination of
his employment with Furniture Brands.<PAGE>
2. Duties. Loynd agrees during the Employment Period to
perform such executive duties for Furniture Brands and for Furniture
Brands' subsidiaries relating to its business as the Furniture Brands
Board of Directors may reasonably direct from time to time.
3. Term. If Loynd's employment with Furniture Brands is
terminated by Furniture Brands prior to December 31, 1999, or if
during such period Loynd terminates his employment with Furniture
Brands for Good Reason, then Furniture Brands will, for the period
ending December 31, 1999 continue all payments and benefits called for
in Section 1 hereof.
4. Miscellaneous. This Employment Agreement shall be binding
upon and shall inure to the benefit of Loynd's heirs, executors,
administrators and legal representatives, and shall be binding upon
and inure to the benefit of Furniture Brands and its successors and
assigns. This Agreement shall supersede and stand in place of any and
all other employment agreements between Loynd and Furniture Brands or
any of its subsidiaries. This Employment Agreement shall take
effect as of the day and year first above set forth, and its validity,
interpretation, construction and performance shall be governed by the
laws of the State of Missouri.
5. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to its subject matter, and no
waiver, modification or change of any of its provisions shall be valid
unless in writing and signed by the party against whom such claimed
waiver, modification or change is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have each executed this
Agreement the date set forth below.
FURNITURE BRANDS INTERNATIONAL, INC.
By: Wilbert G. Holliman
---------------------------------------
President and Chief Executive Officer
RICHARD B. LOYND
By: Richard B. Loynd
----------------------------------------<PAGE>
Exhibit 10(d)
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into on April 29,
1997 (the "Effective Date") by and between Action Industries, Inc., a
Virginia corporation ("Action") and John T. Foy ("Executive").
WHEREAS, Executive is now and has been employed by Action in
senior management executive positions and is broadly experienced in
all facets of Action's operations; and
WHEREAS, it is in the best interests of Action to assure
that it will have the continued dedication of Executive;
NOW THEREFORE, for good and valuable consideration and in
order to induce Executive to remain in the employ of Action, the
parties covenant and agree as follows:
1. Definitions. The following terms shall have the
following meanings for purposes of this Agreement.
a. "Cause" means (i) an act or acts of personal
dishonesty taken by Executive and intended to result in substantial
personal enrichment of Executive at the expense of Action, (ii)
violations by Executive of this Agreement or Executive's employment
obligations to Action which are demonstrably willful on Executive's
part and which are not remedied within a reasonable period of time
after receipt of written notice from Action, or (iii) the conviction
of Executive of a felony involving moral turpitude.
b. "Disability" means the incapacity to attend to and
perform effectively one's duties and responsibilities which continues
for at least 26 weeks after its commencement, as determined by a
physician selected by Action.
c. "Employment Period" that period beginning on the
Effective Date and ending upon Executive's retirement or earlier
termination of employment.
2. Employment. Action agrees to employ Executive, and
Executive agrees to serve Action in an executive, managerial and
supervisory capacity, subject to the direction and control of the
Board of Directors of Action, all upon the terms and conditions
hereinafter set forth. During the Employment Period:
a. Executive's position (including, without limitation,
status, offices, titles and reporting requirements), authority, duties
and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding
the Effective Date,
b. Executive's services shall be performed at the<PAGE>
location where the Executive is employed on the Effective Date, or at
any office or location not more than thirty-five (35) miles from such
location,
c. Executive shall continue to receive an annual base
salary at least equal to the annual base salary payable to the
Executive by Action on the Effective Date ("Base Salary"),
d. Executive shall continue to have an annual cash bonus
potential, either pursuant to the Lane Profit Sharing Plan in effect
on the Effective Date or pursuant to a similar incentive compensation
plan of Action, at least equal to the level in existence on the
Effective Date ("Annual Bonus"), and
e. Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and
programs applicable to other key executive employees of Action
("Benefit Plans").
The failure of Action, without Executive's consent, to comply with the
terms and conditions of employment as set forth in this Section 2
shall constitute "Good Reason" for Executive's termination of his
employment with Action.
3. Best Efforts. Executive agrees during the Employment
Period to devote his best efforts and substantially all of his
business time and attention to the business of Action, it being agreed
that the Executive will have complied with this obligation if he
devotes to the business of Action his same best efforts and the same
time and attention to the business of Action that he has devoted to
the business of Action during the twelve months next preceding the
Effective Date. Executive agrees that he will perform such other
executive duties for Action and for Action's subsidiaries relating to
its business as the Board of Directors of Action may reasonably
direct.
4 Term. Subject to the provisions of Sections 4 and 5
of this Agreement, either party shall have the right to terminate the
Employment Period at any time. If Executive's employment with Action
is terminated by Action, other than for Cause or as a result of his
death or Disability, or if Executive terminates his employment with
Action for Good Reason, then Action will, for a period of one year
after the termination date (or, if shorter, until Executive reaches
"Normal Retirement Age" (as such concept is used in the primary
retirement plan in which Executive is a participant on the Effective
Date)), (i) pay to Executive as and when normally payable his Base
Salary as in effect on the date of termination and an amount equal to
the average Annual Bonus received by such Executive for the past three
years prior to termination (or a pro-rated portion of such average
Annual Bonus) and (ii) subject to program eligibility requirements and
continuation of programs by Action, continue his participation in the
Benefit Plans in which he was participating on the date of termination
of employment.<PAGE>
5. Split Dollar Insurance Policy. If Executive's
employment with Action is terminated by Action other than for Cause or
as a result of his death or Disability, or if during such period
Executive terminates his employment with Action for Good Reason, then
Action will continue to make premium payments for so long as Action is
making payments to Executive under Section 4 hereof under any and all
split dollar life insurance programs in effect on the life of the
Executive as of the Effective Date, after which the Executive will be
entitled to ownership of the policy and Action will be entitled to
premium retrieval, all in accordance with the terms of the program,
but only to the extent of the cash value of the policy, and without
recourse to the Executive for the balance of any such premium
retrieval.
6. Non-Competition. During the period commencing on the
Effective Date and while employed by Action, and for a period of one
year after termination of employment, Executive shall not, without the
prior written consent of Action, directly or indirectly, own, control,
finance, manage, operate, join or participate in the ownership,
control, financing, management or operation of, or be connected as an
employee, consultant or in any other capacity with, any business
engaged in the manufacture or distribution of residential furniture in
the United States. Nothing in this Section 6 shall, however, restrict
Executive from making investments in other ventures which are not
competitive with Action, or restrict Executive from owning less than
one percent (1%) of the outstanding securities of companies listed on
a national stock exchange or actively traded in the "over-the-counter"
market. In addition, if the Employment Period is terminated by Action
(other than for Cause) and the Executive elects to forego the payments
called for in Sections 4 and 5 hereof, the provisions of this Section
6 shall not apply. Should any of the terms of this Section 6 be found
to be unenforceable because they are over-broad in any respects then
they shall be deemed amended to the extent, and only to the extent,
necessary to render them enforceable. Both parties stipulate that
money damages would be inadequate to compensate for any breaches of
the terms of this Section 6, and that such terms shall be enforceable
through appropriate equitable relief, without the necessity of proving
actual damages and to an equitable accounting of all earnings,
profits, and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other rights and remedies
to which Action may be entitled.
7. Confidentiality. During the Employment Period and at
all times thereafter, Executive shall maintain the confidentiality of,
and shall not disclose to any person (except as his duties as an
employee of Action may require) any non-public information concerning
Action or its business.
8. Miscellaneous. This Employment Agreement shall be
binding upon and shall inure to the benefit of Executive's heirs,
executors, administrators and legal representatives, and shall be
binding upon and inure to the benefit of Action and its successors and
assigns. This Agreement shall supersede and stand in place of any and
all other agreements between Executive and Action regarding severance<PAGE>
pay and/or any and all severance pay benefits pursuant to any plan or
practice of Action. This Employment Agreement shall take effect as of
the day and year first above set forth, and its validity,
interpretation, construction and performance shall be governed by the
laws of the State of Mississippi.
9. Indemnification. In the event that either party
hereto is required to pursue litigation against the other party to
enforce his or its rights hereunder, the prevailing party in any such
litigation shall be entitled to reimbursement of the costs and
expenses of such litigation, including attorney's fees.
10. Waivers. In consideration of the undertakings of
Action set forth in this Agreement, Executive hereby irrevocably
waives and forever releases any and all claims and causes of action of
any nature whatsoever that Executive has or may have against Action or
any of its officers, directors, employees or agents arising out of the
negotiation, execution, delivery or terms of this Agreement,
including, without limitation, any claims arising under the Age
Discrimination in Employment Act, 29 U.S.C. Subsection 21 et seq., and
any state or local law relating to age discrimination.
11. Entire Agreement. This Agreement contains the
entire agreement of the parties with respect to its subject matter,
and no waiver, modification or change of any of its provisions shall
be valid unless in writing and signed by the party against whom such
claimed waiver, modification or change is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have each executed
this Agreement the date set forth below.
ACTION INDUSTRIES, INC.
By: Lynn Chipperfield
------------------------
Vice-President
Agreed to and Approved:
FURNITURE BRANDS JOHN T. FOY
INTERNATIONAL, INC.
By: W.G. Holliman By: John T. Foy
------------------------- ------------------------
President<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
FURNITURE BRANDS INTERNATIONAL, INC.
STATEMENT RE COMPUTATION OF NET EARNINGS PER COMMON SHARE
---------------------------------------------------------
<S> <C> <C> <C>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
Primary: ------------ ------------
Weighted average common shares outstanding during the period... 61,447,735 53,526,719
Common shares issuable on exercise of stock options (1)........ 1,368,368 842,656
Common shares issuable on exercise of warrants (2)............. 899,812 1,424,850
------------ ------------
Weighted average common and common equivalent shares outstanding
for primary calculation...................................... 63,715,915 55,794,225
============ ============
Fully diluted:
Weighted average common and common equivalent shares outstanding
for primary calculation....................................... 63,715,915 55,794,225
Common shares issuable on exercise of stock options (3)........ 9,249 29,828
Common shares issuable on exercise of warrants (4)............. 6,791 158,230
------------ ------------
Weighted average common and common equivalent shares outstanding
for fully diluted calculation................................. 63,731,955 55,982,283
============ ============<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <S> <C> <S>
EXHIBIT 11 (CONTINUED)
FURNITURE BRANDS INTERNATIONAL, INC.
NOTES TO STATEMENT RE COMPUTATION OF NET EARNINGS PER COMMON SHARE
(1) Includes common stock options, the exercise of which would result in dilution of net earnings
per common share. Such common stock options have been considered as exercised and the proceeds
therefrom were used to purchase common stock at the average common stock market price, if the
average common stock market price was higher than the common stock option exercise price during
the period.
(2) Includes common stock warrants, the exercise of which would result in dilution of net earnings
per common share. Such common stock warrants have been considered as exercised and the proceeds
therefrom were used to purchase common stock at the average common stock market price, if the
average common stock market price was higher than the common stock warrant exercise price during
the period.
(3) Additional common shares issuable resulting from the application of the same principles
described in Note (1), except that the proceeds from assumed common stock options exercised were
used to purchase common stock at the month end common stock market price, if the month end
common stock market price was higher than the average common stock market price during the
period.
(4) Additional common shares issuable resulting from the application of the same principles
described in Note (2), except that the proceeds from assumed common stock warrants exercised
were used to purchase common stock at the month end common stock market price, if the month end
common stock market price was higher than the average common stock market price during the
period.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 18,663
<SECURITIES> 0
<RECEIVABLES> 320,140
<ALLOWANCES> 19,276
<INVENTORY> 288,052
<CURRENT-ASSETS> 632,957
<PP&E> 433,894
<DEPRECIATION> 135,288
<TOTAL-ASSETS> 1,288,631
<CURRENT-LIABILITIES> 153,675
<BONDS> 567,800
0
0
<COMMON> 61,467
<OTHER-SE> 276,040
<TOTAL-LIABILITY-AND-EQUITY> 1,288,631
<SALES> 449,861
<TOTAL-REVENUES> 449,861
<CGS> 326,187
<TOTAL-COSTS> 326,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,530
<INTEREST-EXPENSE> 9,089
<INCOME-PRETAX> 27,350
<INCOME-TAX> 10,291
<INCOME-CONTINUING> 17,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,059
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
