LADD Furniture's Third Quarter Earnings Rise 35 Percent

Furniture World Magazine

LADD Furniture, Inc. reported that its net income for the third quarter of fiscal 1999 rose 35 percent, to $4.5 million, or $0.56 per share on a diluted basis, from $3.3 million, or $0.41 per diluted share, in the same period of fiscal 1998. Third quarter net sales rose 5 percent, to $150.7 million, from $142.9 million a year earlier, consisting of a 4 percent gain in residential furniture sales and a 12 percent increase in contract ("commercial") furniture sales. For the first nine months, net earnings rose 45 percent, to $12.4 million, or $1.55 per diluted share, from $8.5 million, or $1.06 per diluted share, in the same period of fiscal 1998. Net sales for the first nine months of 1999 rose 8 percent compared to the same period of 1998, with residential volume up 6 percent and contract sales rising 17 percent. LADD chairman, president and CEO Fred L. Schuermann, Jr. said he was very pleased to report another strong quarter for LADD. "Our net earnings in this year's third quarter reached their highest level since the second quarter of 1989," he said, "continuing the strong quarter-over-quarter improvement we have achieved during the last three-plus years." He continued, "Although our factories suffered little physical damage from the two major hurricanes which battered the eastern United States during the latter part of the third quarter, shipments for the quarter were definitely reduced by flooded roadways, as well as by weather-related downtime at several of our plants." Commenting on the overall tone of business, Schuermann said, "The residential furniture industry is continuing to benefit from a strong U.S. economy and robust consumer demand for a wide variety of goods and services, including home furnishings. Although July was a slow month, order rates picked up significantly later in the period. As a result, we ended the third quarter with a 9 percent jump in residential. furniture orders compared to the same period of 1998, and our residential furniture backlog increased 7 percent during the quarter." He added, "We are looking forward to the Fall International Home Furnishings Market, which continues through much of next week in High Point, NC, and believe we have another strong assortment of new products to offer our retail dealers." Referring to the recently-announced plan for LADD to be merged into La-Z-Boy Incorporated, Schuermann said, "If LADD's shareholders approve the transaction and we receive the required regulatory approval, we anticipate that the combination of our two companies will be completed sometime in late December of this year or January of next year." LADD executive vice president and CFO William S. Creekrnuir noted that despite a $2.5 million increase in net working capital during the most recent quarter and a $9.5 million increase in total assets, LADD's total debt was basically unchanged from its midyear 1999 level of $101.7 million., "Moreover," he said, "debt reduction thus far in 1999 has been a significant factor in LADD's earnings improvement for both the third quarter and first nine months of this year, as interest expense declined by 24 percent for the quarter and 22 percent for the nine months, compared to the respective periods of 1998." He noted that LADD's total debt ratio (total debt as a percentage of total debt plus shareholders' equity) was 39.4% at the end of this year's third quarter - its lowest level since 1992. Headquartered in Greensboro, NC, LADD is one of the largest residential furniture manufacturers in North America. The company markets its wide range of bedroom, dining room, occasional and upholstered furniture domestically under the major brand names American Drew, Barclay, Clayton Marcus, HickoryMark, Lea, Pennsylvania House and Pilliod, and exports these products worldwide through LADD International. LADD's contract sales group, doing business as American of Martinsville, is also one of the world's leading suppliers of guest room furniture to the hospitality industry, as well as to assisted-living (retirement) facilities and government markets. LADD also owns and operates LADD Transportation, a support company. LADD's,stock is traded on the Nasdaq Market under the symbol LADF and information on the company can be found on the Internet at www. laddfurniture.com.