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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 13, 1998
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LADD FURNITURE, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 0-11577 56-1311320
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
4620 Grandover Parkway, P.O. Box 26777, Greensboro, North Carolina 27417-6777
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (336) 294-5233
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(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable.
ITEM 5. OTHER EVENTS.
On October 13, 1998, the Registrant issued a press release
reporting its 1998 third quarter and nine month results of operations. The press
release is attached hereto as Exhibit 10.1 and the supplemental financial data
submitted to stock analysts is attached as Exhibit 10.2.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a) Exhibits
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10.1 Press Release dated October 13, 1998.
10.2 Supplemental Financial Data submitted to stock
analysts dated October 13, 1998.
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2
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ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
3
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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 hereunto duly authorized.
LADD FURNITURE, INC.
Date: October 14, 1998 By: /s/William S. Creekmuir
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William S. Creekmuir
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
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EXHIBIT 10.1
[LADD LOGO] NEWS RELEASE
FOR IMMEDIATE RELEASE
Oct. 13, 1998
Contact: John J. Ong
4620 Grandover Parkway - Box 26777 (336) 315-4049
Greensboro, NC 27417-6777 E-mail: [email protected]
LADD THIRD QUARTER EARNINGS UP 91% ON 10% SALES GAIN
GREENSBORO, NC - LADD Furniture, Inc. today reported that its fiscal 1998
third quarter net earnings jumped 91 percent from the year-earlier quarter, on a
sales increase of 10 percent. For the fiscal third quarter ended October 3,
1998, LADD earned $3.3 million, or $0.41 per share (diluted), versus $1.7
million, or $0.22 per share (diluted) in the comparable 1997 quarter. Third
quarter net sales this year totaled $142.9 million, up from $129.9 million in
the same period of 1997. For the first nine months, net sales rose 12%, to
$425.8 million this year, from $378.9 million in 1997. Net earnings for this
year's first nine months more than doubled from a year earlier, rising to $8.5
million, or $1.06 per share (diluted), for the nine months ended October 3, 1998
- - from $3.9 million, or $0.50 per share (diluted) a year earlier.
LADD chairman and CEO Fred L. Schuermann, Jr. said he was pleased with the
quarter's continued profitability improvement, pointing out that the third
quarter net earnings of $3.3 million represented LADD's highest third quarter
profit since 1988. "We again recorded substantial year-over-year margin
improvement in the third quarter," Schuermann said, "with the operating margin
for the period rising a full 1.3 percentage points over the third quarter of
last year."
Schuermann noted that LADD's management group was very satisfied that the
company's total third quarter residential casegoods (wood furniture) sales
increased 11 percent from a year earlier, while its residential upholstery sales
rose 12 percent. "That kind of solid top line progress in our residential
business is most encouraging," he said, "and I consider it a real indication of
the success our casegoods and upholstery product development teams have achieved
in a relatively short span of time." He added, "In total, our order backlog
increased 11 percent during the third quarter, and we are eagerly looking
forward to the start of the October International Home Furnishings Market this
week in High Point."
Schuermann said that, as has been anticipated following the sharp gains of
the past several years, LADD's contract furniture volume growth slowed on a
year-over-year comparative basis, with contract sales rising 4 percent in the
third quarter. "The contract business continues to experience strong demand,"
Schuermann said, "but as sales have
-over-
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grown and we've approached current capacity constraints, we have been more
selective in accepting orders." He pointed out that LADD's contract capacity is
slated to increase modestly during 1999, with the expansion of its Chilhowie,
VA production facility.
Commenting on the overall business climate, he said, "The
widely-publicized weakness experienced by many global markets for the better
part of the past year finally washed over onto the U.S. markets during this
year's third quarter, and this domestic uncertainty has prompted a number of
economic experts, including Federal Reserve Chairman Alan Greenspan, to
conclude that a slowdown in the U.S. economy at this point would not be
unexpected. We believe LADD is solidly positioned to prosper and continue
improving its financial position in the quarters just ahead, even should the
domestic economy weaken from current levels."
Schuermann noted that, traditionally, the furniture manufacturing industry
tends to become more cash flow positive when business turns down, due to
reduced working capital requirements. "Most of the public furniture companies'
stocks have come under extreme selling pressure in recent weeks and, in the
opinion of a number of industry analysts, the current prices of many of these
stocks seemingly discount all but the severest of recessions. Despite the
recent volatility of the U.S. stock market and the growing gloom emanating from
Wall Street, we continue to be very confident in the future. Our primary
objectives for LADD continue to be profitability improvement, debt reduction,
and solidly-grounded sales growth for our existing furniture brands."
Headquartered in Greensboro, NC, LADD is one of the largest North American
residential furniture manufacturers. The company markets its wide range of
residential wood and upholstered furniture domestically under the major brand
names American Drew, Barclay, Clayton Marcus, Lea, Pennsylvania House and
Pilliod, and exports these products worldwide through LADD International.
LADD's contract sales group, manufactured under the American of Martinsville
name, is also one of the world's leading suppliers of guest room furniture to
the hotel industry, as well as to assisted-living (retirement) facilities and
governmental markets. LADD also owns and operates LADD Transportation, a
support company. LADD's stock is traded on the Nasdaq National Market under the
symbol LADF and information on the company can be found on the Internet at
www.laddfurniture.com.
# # # # # # #
TABLE FOLLOWS
-more-
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FORWARD-LOOKING STATEMENTS: This news release contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. Such statements are dependent on a number of factors which could cause
actual results to differ materially from those expressed or implied in the
forward-looking statements. Such factors include anticipated profitability and
cash flow levels within the context of a weaker U.S. economy, in addition to
those factors set forth in the company's required filings with the U.S.
Securities and Exchange Commission.
NOTE: To receive fax copies of recent LADD news releases free of charge, just
dial 800-758-5804, extension 501325. These releases are also available via the
company's Internet site at www.laddfurniture.com ("company news").
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LADD FURNITURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (PRELIMINARY AND UNAUDITED)
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<CAPTION>
13 Weeks Ended
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Sept. 27, 1997 Oct. 3, 1998
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Net sales (1) $ 129,935,000 142,896,000
Earnings before interest and income taxes 5,549,000 7,656,000
Interest expense 2,701,000 2,220,000
Earnings before income taxes 2,848,000 5,436,000
Income tax expense 1,110,000 2,117,000
Net earnings $ 1,738,000 3,319,000
Net earnings per common share - basic $ 0.22 0.42
Net earnings per common share - diluted $ 0.22 0.41
Weighted average number of common shares
outstanding - diluted 7,866,753 8,033,934
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<CAPTION>
39 Weeks Ended
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Sept. 27, 1997 Oct. 3, 1998
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Net sales (1) $ 378,875,000 425,810,000
Earnings before interest and income taxes 14,831,000 21,183,000
Interest expense 8,425,000 7,175,000
Earnings before income taxes 6,406,000 14,008,000
Income tax expense 2,498,000 5,460,000
Net earnings $ 3,908,000 8,548,000
Net earnings per common share - basic $ 0.50 1.10
Net earnings per common share - diluted $ 0.50 1.06
Weighted average number of common shares
outstanding - diluted 7,825,836 8,074,229
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<CAPTION>
(1) Net sales by business group Third Quarter First Nine Months
were as follows (000's): 1997 1998 1997 1998
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<S> <C> <C> <C> <C>
Residential Casegoods $ 72,068 80,348 208,240 234,608
Residential Upholstery 28,017 31,483 88,731 95,388
Contract Sales 29,850 31,065 81,904 95,814
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Total $129,935 142,896 378,875 425,810
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EXHIBIT 10.2
LADD FURNITURE, INC. AND SUBSIDIARIES -- SUPPLEMENTAL FINANCIAL DATA
OCTOBER 13, 1998 CONTACT: JOHN J. ONG, CFA (336) 315-4049
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (PRELIMINARY AND UNAUDITED)
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<CAPTION>
Quarters Ended
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In thousands, except per share data 3/29/97 6/28/97 9/27/97 1/3/98 4/4/98 7/4/98 10/3/98
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Net sales $123,368 125,572 129,935 146,625 147,409 135,505 142,896
Cost of sales 101,437 101,393 106,791 119,429 120,733 108,173 115,160
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Gross profit 21,931 24,179 23,144 27,196 26,676 27,332 27,736
Selling, general and administrative expenses 17,552 18,561 17,794 20,328 20,350 19,947 19,932
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Operating income 4,379 5,618 5,350 6,868 6,326 7,385 7,804
Other deductions:
Interest expense 3,005 2,719 2,701 2,817 2,584 2,371 2,220
Other expense (income), net 521 194 (199) 276 (126) 310 148
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3,526 2,913 2,502 3,093 2,458 2,681 2,368
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Earnings before income taxes 853 2,705 2,848 3,775 3,868 4,704 5,436
Income tax expense 333 1,055 1,110 1,371 1,508 1,835 2,117
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Net earnings $ 520 1,650 1,738 2,404 2,360 2,869 3,319
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Net earnings per common share-basic $ 0.07 0.21 0.22 0.31 0.30 0.37 0.42
Net earnings per common share-diluted $ 0.07 0.21 0.22 0.31 0.30 0.35 0.41
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Weighted average number of common
shares outstanding-actual 7,720 7,737 7,758 7,760 7,760 7,812 7,831
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CONDENSED CONSOLIDATED BALANCE SHEETS (PRELIMINARY AND UNAUDITED)
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<CAPTION>
Dollar amounts in thousands 3/29/97 6/28/97 9/27/97 1/3/98 4/4/98 7/4/98 10/3/98
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ASSETS
Current assets:
Cash $ 151 191 659 75 114 89 156
Trade accounts receivable 72,786 71,016 83,865 83,297 91,709 85,253 94,861
Inventories 89,260 97,091 94,819 93,189 95,101 102,129 103,353
Prepaid expenses and other current assets 6,831 7,536 6,923 8,106 8,646 9,514 7,124
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Total current assets 169,028 175,834 186,266 184,577 195,570 196,985 205,494
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Property, plant and equipment 68,580 67,648 66,708 67,530 66,255 66,406 66,189
Intangible and other assets 80,551 79,668 77,796 77,083 76,333 74,431 73,836
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$318,159 323,150 330,770 329,190 338,158 337,822 345,519
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 6,676 6,633 4,965 6,807 11,476 6,590 6,590
Trade accounts payable 25,120 26,807 27,080 29,488 37,217 36,317 36,982
Accrued expenses and other current liabilities 33,552 30,030 36,203 31,952 33,925 35,252 38,617
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Total current liabilities 65,348 63,470 68,248 68,247 82,618 78,159 82,189
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Long-term debt, excluding current installments 122,694 121,231 123,565 118,586 109,390 109,629 109,540
Deferred and other liabilities 5,639 12,027 10,481 11,432 12,826 12,657 13,067
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Total liabilities 193,681 196,728 202,294 198,265 204,834 200,445 204,796
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Total shareholders' equity 124,478 126,422 128,476 130,925 133,324 137,377 140,723
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$318,159 323,150 330,770 329,190 338,158 337,822 345,519
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