<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended July 3, 1999
-----------------
Commission File No. 0-11577
-----------------
LADD FURNITURE, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1311320
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
POST OFFICE BOX 26777
4620 GRANDOVER PARKWAY
GREENSBORO, NORTH CAROLINA 27417-6777
(Address of principal executive offices) (Zip Code)
(336) 294-5233
(Registrants' telephone number, including area code)
(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 requirements for the past 90 days.
Yes x No
------ ------
As of August 6, 1999 there were 7,831,484 shares of Common Stock ($.30 par
value) of the registrant outstanding.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LADD FURNITURE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the thirteen and twenty six weeks ended July 3, 1999 and July 4, 1998
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
---------------------- -------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
---------- --------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 153,015 135,505 310,159 282,914
Cost of sales 122,043 108,173 249,016 228,906
--------- ------- -------- -------
Gross profit 30,972 27,332 61,143 54,008
Selling, general and administrative expenses 22,423 19,947 44,839 40,297
--------- ------- -------- -------
Operating income 8,549 7,385 16,304 13,711
--------- ------- -------- -------
Other deductions:
Interest expense 1,827 2,371 3,875 4,955
Other income, net (37) 310 (132) 184
--------- ------- -------- -------
1,790 2,681 3,743 5,139
--------- ------- -------- -------
Earnings before income taxes 6,759 4,704 12,561 8,572
Income tax expense 2,443 1,835 4,648 3,343
--------- ------- -------- -------
Net earnings $ 4,316 2,869 7,913 5,229
========= ======= ======== =======
Net earnings per common share - basic $ 0.55 0.37 1.01 0.67
========= ======= ======== =======
Net earnings per common share - diluted $ 0.54 0.35 0.99 0.65
========= ======= ======== =======
Weighted average number of
common shares outstanding - basic 7,830 7,812 7,835 7,786
========= ======= ======== =======
Weighted average number of
common shares outstanding - diluted 7,981 8,165 7,968 8,056
========= ======= ======== =======
</TABLE>
2
<PAGE> 3
LADD FURNITURE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 3, 1999 and January 2, 1999
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
July 3,
1999 January 2,
(Unaudited) 1999 *
----------- ----------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 196 110
Trade accounts receivable, less allowances for
doubtful receivables, discounts, returns and
allowances of $3,009 and $2,482, respectively 90,361 90,286
Inventories 105,789 98,798
Prepaid expenses and other current assets 8,999 8,771
-------- -------
Total current assets 205,345 197,965
-------- -------
Property, plant and equipment, net 64,917 66,297
Intangible and other assets, net 70,568 72,703
-------- -------
$340,830 336,965
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 6,590 6,590
Trade accounts payable 32,487 31,296
Accrued expenses and other current liabilities 41,999 37,384
-------- -------
Total current liabilities 81,076 75,270
-------- -------
Long-term debt, excluding current installments 95,110 104,585
Deferred and other liabilities 12,294 12,589
-------- -------
Total liabilities 188,480 192,444
-------- -------
Shareholders' equity:
Preferred stock of $100 par value. Authorized
500,000 shares; no shares issued -- --
Common stock of $.30 par value. Authorized
50,000,000 shares; issued 7,825,783 shares
and 7,831,080 shares, respectively 2,348 2,349
Additional paid-in capital 51,335 51,418
Retained earnings 98,667 90,754
-------- -------
152,350 144,521
-------- -------
$340,830 336,965
======== =======
</TABLE>
* Derived from the Company's 1998 audited Consolidated Financial Statements.
3
<PAGE> 4
LADD FURNITURE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the twenty-six weeks ended July 3, 1999 and July 4, 1998
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
26 Weeks Ended
-------------------------
July 3, July 4,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 7,913 5,229
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation of property, plant and equipment 5,264 5,072
Amortization 1,836 1,939
Provision for losses on trade accounts receivable 567 603
Gain on sales of assets (290) (98)
Provision for deferred income taxes (1,004) 899
Forgiveness of debt -- (217)
Increase in deferred and other liabilities 434 295
Change in assets and liabilities:
Increase in trade accounts receivable (642) (2,559)
Increase in inventories (6,991) (8,940)
Increase in prepaid expenses and other
current assets (228) (1,498)
Increase in trade accounts payable 1,191 6,829
Increase in accrued expenses and other
current liabilities 5,233 3,680
-------- -------
Total adjustments 5,370 6,005
-------- -------
Net cash provided by operating activities 13,283 11,234
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (3,911) (3,977)
Proceeds from sales of assets 1,681 39
(Additions to) reductions in intangible and other assets (1,122) 763
-------- -------
Net cash used in investing activities (3,352) (3,175)
-------- -------
Cash flows from financing activities:
Proceeds from borrowings 1,312 37
Principal payments on borrowings (10,787) (8,994)
Purchase of common stock (449) --
Other 79 912
-------- -------
Net cash used in financing activities (9,845) (8,045)
-------- -------
Net increase in cash 86 14
Cash at beginning of period 110 75
-------- -------
Cash at end of period $ 196 89
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 3,693 4,920
Cash paid (net of refunds received) during the period for income taxes 2,862 1,454
======== =======
</TABLE>
4
<PAGE> 5
LADD FURNITURE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Number Additional Total
of shares Common paid-in Retained shareholders'
issued stock capital earnings equity
---------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 3, 1998 7,759,683 $ 2,328 50,102 78,495 130,925
Shares issued in connection
with incentive stock
option plan 75,747 22 985 -- 1,007
Retirement of stock and purchase
of restricted stock (4,350) (1) (86) -- (87)
Amortization of employee
restricted stock awards -- -- 87 -- 87
Tax benefit from exercise of stock options -- -- 330 -- 330
Net earnings -- -- -- 12,259 12,259
---------- ------- ------- ------ --------
BALANCE AT JANUARY 2, 1999 7,831,080 2,349 51,418 90,754 144,521
Shares issued in connection
with incentive stock
option plan 6,037 2 77 -- 79
Shares issued in connection
with long-term incentive plan 15,666 5 250 -- 255
Purchase and retirement of stock (27,000) (8) (441) -- (449)
Amortization of employee
restricted stock awards -- -- 31 -- 31
Net earnings -- -- -- 7,913 7,913
---------- ------- ------- ------ --------
BALANCE AT JULY 3, 1999
(UNAUDITED) 7,825,783 $ 2,348 51,335 98,667 152,350
========== ======= ======= ====== ========
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
(1) QUARTERLY FINANCIAL STATEMENTS
The quarterly consolidated financial statements of LADD Furniture, Inc
and its subsidiaries (referred to as "LADD" or the "Company") are
unaudited and have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the
opinion of management, these statements include all adjustments
necessary for a fair statement of the operating results for the
interim periods indicated. All such adjustments are of a normal
recurring nature. Certain information and footnote disclosures
prepared in accordance with generally accepted accounting principles
have been either condensed or omitted pursuant to SEC rules and
regulations. However, management believes that the disclosures made
are adequate for a fair presentation of results of operations and
financial position. It is suggested that these financial statements be
read in conjunction with the financial statements and accompanying
notes thereto included in the Company's latest Annual Report.
(2) INVENTORIES
A summary of inventories follows (amounts in thousands):
<TABLE>
<CAPTION>
July 3, January 2,
1999 1999
-------- --------
<S> <C> <C>
Inventories on the FIFO cost method:
Finished goods $ 59,515 51,414
Work in process 14,848 15,708
Raw materials and supplies 41,952 42,374
-------- -------
Total inventories on the FIFO cost method 116,315 109,496
Less adjustments of certain inventories to the
LIFO cost method (10,526) (10,698)
-------- -------
$105,789 98,798
======== =======
</TABLE>
(3) PURCHASE OF COMMON STOCK
On December 10, 1998, the Company's Board of Directors authorized the
repurchase of up to 600,000 shares of the Company's common stock over
the next 24 months, not to exceed $10,000,000. During the first
quarter of 1999, the Company purchased 17,000 shares for approximately
$271,000 and immediately retired the stock. During the second quarter
of 1999, the Company purchased 10,000 shares for approximately
$178,000 and immediately retired the stock.
6
<PAGE> 7
(4) INTEREST RATE SWAP AGREEMENT
On March 30, 1999, the Company entered into a five-year interest rate
swap agreement having a notional amount of $25,000,000 in order to
reduce the impact of changes in interest rates on its floating rate
long-term debt. The swap agreement commenced on April 19, 1999 and
expires on April 19, 2004 with a fixed LIBOR rate of 5.635% per annum.
The three-month floating LIBOR rate at July 3, 1999 was 5.31%. On a
quarterly basis, the Company will pay to or receive from the
counterparty to the agreement the difference between the fixed
interest rate and the floating interest rate. The Company is exposed
to credit loss in the event of nonperformance by the other party to
the interest rate swap agreements. However, the Company does not
anticipate nonperformance by the counterparty. The effect of the swap
agreement will be to increase interest expense annually by
approximately $85,000 based upon existing floating interest rates.
(5) SEGMENT INFORMATION
The Company manufactures and markets casegoods and upholstered
furniture for two business segments-the residential furniture market
and the contract furniture market. The residential furniture segment
principally manufactures and sells to various retailers at wholesale
prices. The contract furniture segment principally manufactures and
sells to hospitality, government and assisted-living facilities at
retail prices. The products in both segments consist of casegoods,
upholstery, and accessories. The Company has no operations located
outside the United States and has no sales to foreign countries that
are individually material.
Profit by business segment represents net sales, less operating
expenses, less interest expense. A portion of corporate expenses is
included in each segment. Unallocated corporate expenses are included
in the "Corporate" column. The following tables show net sales and
profit by business segment for the thirteen and twenty-six weeks ended
July 3, 1999 and July 4, 1998:
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
--------------------------- ----------------------------
Net Sales July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998
--------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Residential $114,202 103,460 233,405 218,165
Contract 38,813 32,045 76,754 64,749
----------------------------------------------------
Consolidated 153,015 135,505 310,159 282,914
====================================================
13 Weeks Ended 26 Weeks Ended
--------------------------- ---------------------------
Profit July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998
------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Residential $ 4,368 3,016 8,852 6,398
Contract 4,000 3,037 6,683 5,098
Corporate (1,609) (1,349) (2,974) (2,924)
----------------------------------------------------
Consolidated 6,759 4,704 12,561 8,572
====================================================
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of net
sales to certain items included in the Consolidated Statements of Earnings:
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
---------------------- ----------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
---------- --------- --------- -------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 79.8 79.8 80.3 80.9
----- ----- ----- -----
Gross profit 20.2 20.2 19.7 19.1
Selling, general and administrative expenses 14.6 14.7 14.4 14.3
----- ----- ----- -----
Operating income 5.6 5.5 5.3 4.8
----- ----- ----- -----
Other deductions:
Interest expense 1.2 1.8 1.2 1.7
Other expense, net 0.0 0.2 0.0 0.1
----- ----- ----- -----
1.2 2.0 1.2 1.8
----- ----- ----- -----
Earnings before income taxes 4.4 3.5 4.1 3.0
Income tax expense 1.6 1.4 1.5 1.2
----- ----- ----- -----
Net earnings 2.8% 2.1% 2.6% 1.8%
===== ===== ===== =====
</TABLE>
Total net sales for the second quarter of 1999 increased 12.9%, to
$153.0 million, as compared to $135.5 million in the second quarter of 1998.
The following table compares second quarter net sales by segment:
<TABLE>
<CAPTION>
July 3, July 4, Percent
1999 1998 Increase Change
---------- ------- -------- --------
<S> <C> <C> <C> <C>
Residential $ 114,202 103,460 10,742 10.4%
Contract 38,813 32,045 6,768 21.1%
---------- ------- -------- ------
$ 153,015 135,505 17,510 12.9%
========== ======= ======== ======
</TABLE>
Total net sales for the first six months of 1999 increased 9.6%, to $310.2
million, as compared to $282.9 million in the same period of 1998. The
following table compares first half net sales by segment:
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<PAGE> 9
<TABLE>
<CAPTION>
July 3, July 4, Percent
1999 1998 Increase Change
--------- ------- --------- --------
<S> <C> <C> <C> <C>
Residential $233,405 218,165 15,240 7.0%
Contract 76,754 64,749 12,005 18.5%
-------- ------- --------- ------
$310,159 282,914 27,245 9.6%
======== ======= ========= ======
</TABLE>
The Company's order backlog increased 1.0% during the second quarter
and rose 3.8% for the first six months of 1999. The increased net sales of the
residential segment for the second quarter and first six months of 1999 were
due largely to the success of the recent residential product introductions, as
well as improved retail furniture sales for the industry overall. The contract
segment sales growth in the 1999 periods was due primarily to continued hotel
refurbishment and expansion and increased sales to assisted-living facilities,
trends that the Company anticipates will continue into the year 2000. The
Company believes that its capacity will be sufficient to accommodate the
contract sales growth anticipated for the foreseeable future through: (i)
existing production capacity; (ii) the addition of a new contract manufacturing
facility, which will commence operations in the second half of 1999; and (iii)
production from other LADD manufacturing plants and/or outside contractors.
Cost of sales as a percentage of net sales was 79.8% for the second
quarter of both 1999 and 1998, which resulted in a gross margin of 20.2% for
those periods. For the first six months of 1999, cost of sales as a percentage
of net sales was 80.3%, down from 80.9% for the comparable 1998 period. The
resulting increase in gross margins to 19.7% for the first six months of 1999,
from 19.1% in 1998, was due to improved manufacturing efficiencies, along with
the production and shipment of recent product introductions carrying higher
margins. In addition, improved margins were due to aggressive price discounting
in the 1998 first six months, principally for the sales of discontinued
product, which did not reoccur in 1999. Although recent reductions in hardwood
lumber prices (except for cherry species) have been beneficial to the Company,
price increases in certain other raw materials have somewhat offset those
savings.
Selling, general and administrative (SG&A) expenses decreased slightly
to 14.6% of net sales for the second quarter of 1999, from 14.7% for the same
period in 1998, while first half SG&A expenses increased slightly to 14.4% from
14.3% in 1998. The Company believes that its SG&A expense as a percentage of
net sales will be in the range of 14.0% to 14.5% for all of 1999.
Other deductions (principally interest expense) represented 1.2% of
net sales for both the 1999 second quarter and first six months, down from 2.0%
and 1.8%, respectively, in the 1998 periods. Average outstanding borrowings
were $13.9 million less for the second quarter of 1999 and $12.4 million less
for the first six months of 1999, than in the year-earlier periods, and the
overall effective interest rate was approximately 1.0% lower for both 1999
periods. As a result, interest expense in the 1999 second quarter and first
half declined by $544,000 and $1.1 million, respectively, or 22.9% and 21.8%,
as compared to the same periods of 1998. The decline in the effective interest
rate was primarily due to reductions in the Company's interest rate margin, as
provided for in the Company's bank credit facility, based upon improved
operating performance of the Company. As a result of the improved 1999 first
quarter operating results, effective April 15, 1999, the Company's interest
rate margin was further reduced 0.125% by its bank lending group. Effective
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<PAGE> 10
July 1, 1999, the Federal Reserve Board raised short-term U.S. interest rates
0.25%, which resulted in comparable increases in the Company's prime and LIBOR
bank lending rates. Based on outstanding borrowings at July 3, 1999, this rate
increase will raise the Company's interest expense by approximately $250,000 on
an annual basis.
The Company's estimated annual effective income tax rate was reduced
to 36.1% during the second quarter of 1999, resulting in a 37.0% income tax
rate for the first six months of 1999, compared to 39% for the comparable 1998
period. The decrease in the effective income tax rate resulted from the
implementation of state tax planning strategies and state tax incentive
projects, and the successful conclusion of an IRS audit covering the years
1993-1996, with no adjustments affecting book earnings. Considering these
factors, the Company anticipates that its combined effective Federal and state
income tax rate will continue to approximate 37% over the remainder of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio was 2.5 to 1 at July 3, 1999, compared to
2.6 to 1 at January 2, 1999. Net working capital totaled $124.3 million at July
3, 1999 and $122.7 million at January 2, 1999. As a result of the Company's
sales growth and increased backlog, inventories increased $7.0 million from
January 2, 1999 levels. The increase in inventories was due to production
demands in the first half of 1999 to satisfy the current order backlog. In
addition, the Company's trade accounts payable and accrued expenses also
increased during the 1999 first six months, largely due to the increased
production levels.
The Company generated $13.3 million in cash from operating activities
during the first six months of 1999, compared to $11.2 million in the 1998
period. The increase in cash provided by operations was attributable to
increased net earnings and a reduction in days sales outstanding.
During this year's first six months, capital spending totaled $3.9
million, compared to $4.0 million during the year-earlier period. Total capital
expenditures for all of 1999 are expected to approximate $10.0 million, as
compared to $9.1 million for all of 1998. The increase in the Company's
anticipated capital expenditures is due in part to capacity expansions planned
at its contract manufacturing facilities. Additionally, significant machinery
and equipment acquisitions will be financed through the Company's existing
operating lease lines.
The Company's total debt ratio (total debt as a percentage of total
debt plus shareholders' equity) was 40.0% at July 3, 1999, compared to 43.5% at
January 2, 1999. The decrease resulted from improved operating performance,
which allowed the Company to continue repaying debt while simultaneously
increasing its equity base.
On March 26, 1999, the Company purchased and retired 17,000 shares of
its common stock for approximately $271,000. In addition, on May 12, 1999, the
Company purchased and retired 10,000 shares of its common stock for
approximately $178,000. The stock purchases were authorized by the Company's
Board of Directors and financed through the Company's revolving credit line.
(See footnote (3)).
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<PAGE> 11
At July 3, 1999, $43.2 million was available for future borrowings
under the Company's revolving credit loan. Management believes that unused
credit lines available under the Company's revolving credit loan, in addition
to cash generated from operations, will be adequate to fund the Company's
future operations, planned capital expenditures and lease commitments, and any
future purchases of the Company's common stock.
On March 30, 1999, the Company entered into a five-year interest rate
swap agreement having a notional amount of $25.0 million in order to reduce the
impact of changes in interest rates on its floating rate long-term debt. The
swap agreement, which commenced April 19, 1999, effectively converts a portion
of the Company's floating rate long-term debt to a fixed rate. On a quarterly
basis, the Company pays to or receives from the bank, the difference between
the floating three-month LIBOR rate and the fixed rate of 5.635% per annum. The
effect of the swap agreement will be to increase interest expense annually by
approximately $85,000 based upon existing floating interest rates.
YEAR 2000 COMPLIANCE
The Company continues to actively address the business issues
associated with the expected impact of the Year 2000 ("Y2K") on information
technology systems and non-information technology systems (i.e., embedded
technology) both internally and in relation to the Company's external customers
and suppliers. Factors involved in assessing such business issues include the
evaluation and testing of the Company's systems; evaluation, upgrading and
certifying of automated plant machinery and equipment; and assessing the
compliance strategies of significant customers and vendors and monitoring the
status of those strategies (including electronic commerce with those
companies).
The Company has created a corporate-wide Y2K Steering Committee with
subcommittees located at each of the Company's business units for the purpose
of directing the Company's compliance efforts and identifying and addressing
the impact of non-compliance on information technology systems and
non-information technology systems. An inventory of all the Company's equipment
containing date sensitive embedded technology has been completed, and at the
present time, substantially all of this equipment has been either tested and/or
deemed to be Y2K compliant. Since the fourth quarter of 1994, the Company has
been upgrading its information systems technology with Y2K compliant software
to support its manufacturing, sales and order entry, and financial reporting
systems. As a result, a significant portion of the Company's information
technology systems were Y2K compliant prior to 1998. At the present time, the
Company believes it has completed almost all of the necessary internal software
and hardware implementation required for Y2K compliance. The Company does not
believe any material exposures or contingencies exist with respect to its
internal information systems.
The Company is currently requesting assurances from its major suppliers
and business partners that they will be Y2K compliant so that there will be no
disruption of their products or services as the new century begins. The Company
is assessing the risk of each of its significant suppliers and business
partners to determine the possible impact of their non-compliance, if that
should occur. Where appropriate, contingency plans and alternative suppliers
are being developed or investigated. Although the Company is presently not
aware of any material exposures or contingencies related to the Y2K compliance
efforts of its significant vendors and business partners, if a significant
vendor or business partner should be non-compliant there can be no assurance
such an event will not have a material adverse
11
<PAGE> 12
effect on the Company's consolidated financial position, results of operations
and cash flows. The Company believes the actions it is taking (including the
continued monitoring of third-party compliance and the development of
appropriate contingency plans) will minimize these risks and believes it is
taking responsible steps to prevent any major disruptions of its business
units.
The Company believes the actions it has taken since late 1994 with
regard to Y2K issues have minimized Y2K related capital costs and expenses
incurred to date and estimates that it has already incurred a majority of the
required Y2K compliance expenditures. These amounts exclude funds invested in
the purchase and lease of personal computers and the implementation of other
computer system upgrades. While such investments were made primarily to resolve
technological obsolescence and capacity constraints, they also resulted in the
new equipment and upgraded systems being Y2K compliant. Anticipated
expenditures and lease commitments relating the Y2K compliance are expected to
be less than $350,000 for the remainder of 1999. However, new developments may
subsequently occur that could affect the Company's estimates of the costs for
Y2K compliance.
FORWARD-LOOKING STATEMENTS
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in
nature, are intended to be, and are hereby identified as, "forward-looking
statements" for purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended. These statements can be identified
by the use of forward-looking terminology such as "believes," "expects," "may,"
"forecasts," "should," or "anticipates." The Company cautions readers that
these forward-looking statements, including without limitation, those relating
to sales, operating costs, working capital, liquidity, capital needs, interest
costs and Y2K compliance, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward-looking statements. This uncertainty is due to several important
factors herein identified, including without limitation: anticipated growth in
sales; success of new product introductions; increased cash flow from
operations; anticipated selling, general and administrative expenses; projected
capital spending including lease commitments; decreased interest expense; the
effect of the interest rate swap agreement, Y2K preparedness (particularly with
respect to third-party vendor compliance); and other risks and factors
identified from time to time in the Company's reports filed with the Securities
and Exchange Commission.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held
in Greensboro, North Carolina on April 29, 1999. Of the
7,850,746 shares of common stock outstanding on the record
date, 6,246,650 shares were present in person or by proxy.
Those shares were voted on the following matters as set
forth below:
<TABLE>
<CAPTION>
A. Election of Directors:
<S> <C> <C> <C>
Charles R. Eitel Fred L. Schuermann, Jr.
For: 5,834,776 For: 5,834,776
Abstentions: 411,874 Abstentions: 411,874
Broker Non-Votes: 0 Broker Non-Votes: 0
Zenon S. Nie L. Glenn Orr, Jr.
For: 5,834,442 For: 5,834,074
Abstentions: 412,208 Abstentions: 412,576
Broker Non-Votes: 0 Broker Non-Votes: 0
David A. Jones Thomas F. Keller
For: 5,834,442 For: 5,834,776
Abstentions: 412,208 Abstentions: 411,874
Broker Non-Votes: 0 Broker Non-Votes: 0
Ian J. McCarthy
For: 5,834,686
Abstentions: 411,964
Broker Non-Votes: 0
</TABLE>
<TABLE>
<CAPTION>
B. Proposal to ratify the election of KPMG LLP as independent auditors of the Company for 1999:
<S> <C>
For: 6,239,131
Against: 6,322
Abstentions: 1,197
Broker Non-votes: 0
</TABLE>
<TABLE>
<CAPTION>
C. Proposal to approve an amendment to the Company's 1994 Incentive Stock Option Plan:
<S> <C>
For: 4,814,835
Against: 1,404,026
Abstentions: 27,789
Broker Non-votes: 0
</TABLE>
13
<PAGE> 14
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits
27-1 (EDGAR version only)
(b)Reports on Form 8-K
On April 14, 1999, the Company filed with the Commission a
Form 8-K dated April 13, 1999 which reported under Item 5
the Press Release dated April 13, 1999 reporting the
Company's 1999 first quarter operating results.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
LADD Furniture, Inc.
Date: August 10, 1999 By: s/William S. Creekmuir
--------------------------
William S. Creekmuir
Executive Vice President
and Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LADD FURNITURE, INC. FOR THE SIX MONTHS ENDED JULY 3,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-START> JAN-02-1999
<PERIOD-END> JUL-03-1999
<CASH> 196
<SECURITIES> 0
<RECEIVABLES> 90,361
<ALLOWANCES> 3,009
<INVENTORY> 105,789
<CURRENT-ASSETS> 205,345
<PP&E> 64,917
<DEPRECIATION> 0
<TOTAL-ASSETS> 340,830
<CURRENT-LIABILITIES> 81,076
<BONDS> 95,110
0
0
<COMMON> 2,348
<OTHER-SE> 150,002
<TOTAL-LIABILITY-AND-EQUITY> 340,830
<SALES> 310,159
<TOTAL-REVENUES> 310,159
<CGS> 249,016
<TOTAL-COSTS> 249,016
<OTHER-EXPENSES> 44,707
<LOSS-PROVISION> 567
<INTEREST-EXPENSE> 3,875
<INCOME-PRETAX> 12,561
<INCOME-TAX> 4,648
<INCOME-CONTINUING> 7,913
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,913
<EPS-BASIC> 1.01
<EPS-DILUTED> 0.99
</TABLE>
