Bush Industries Reports Fourth Quarter and Year End Results

Furniture World Magazine

Bush Industries, Inc. (NYSE:BSH) , a diversified global furniture manufacturer and leading supplier of surface technologies, released its fourth quarter and full year financial results for the period ended December 28, 2002. Net sales for the 2002 fourth quarter were $88.5 million representing a 4.2 percent increase over the previous year's fourth quarter. The Company reported a net loss of $1.2 million, or $0.09 per diluted share. This compares to a net loss of $5.9 million, or $0.43 per diluted share in the fourth quarter of 2001. The 2001 loss included a non-cash inventory write down of $3.0 million net of tax or $0.22 per diluted share, as well as the impact of $0.05 per share for an increased income tax expense. Excluding these items, the net loss from operations was $0.16 per diluted share. Net sales for 2002 were $340.2 million, which was 1.6 percent below last year's net sales of $345.8 million. For the year, the Company reported a loss of $1,458,000, or $0.10 per diluted share. This loss includes a non-cash charge of $2.4 million, or $0.17 per diluted share, for the cumulative effect of an accounting change for the impairment of goodwill attributed to the Company's German operations. This was the only impairment required in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". Excluding the charge for the cumulative effect of accounting change, net earnings would have been $940,000, or $0.07 per diluted share for the 2002 year. This compares to the 2001 year net earnings of $257,000, or $0.02 per diluted share, which included fourth quarter charges for inventory and income taxes of $0.27 per diluted share. As part of Bush's strategy to manage working capital more effectively, long term debt declined to $100.2 million, which was ahead of the targeted range of $105-$110 million. "Even with the challenging environment in the 2002 fourth quarter, our sales were ahead of last year," commented Paul Bush, Chairman and Chief Executive Officer of Bush Industries. "However, given the current market realities we will implement an aggressive restructuring initiative in 2003 to lower our overall cost structure, which includes rightsizing the North American furniture business. The plan includes the closing of the St. Paul, Virginia manufacturing facility, management cost reductions across the Company and the phasing out of unprofitable product lines in the Bush Technologies and Bush Furniture Europe divisions. We expect to incur a charge in the range of $16.0 to $18.0 million, the majority of which will be non-cash charges estimated to include $6.6 million for inventory and $4.7 million for buildings and equipment. The restructuring effort should generate cost savings of approximately $8 million on an annualized basis." In connection with the restructuring program and the current business environment, the Company and its lenders have amended the current bank agreement, including covenant revisions to afford greater operating flexibility through the middle of 2004. In an effort to conserve cash, fund the restructuring initiative, and facilitate the amended bank agreement, the Board of Directors has suspended the dividend for all classes of stock.