Furniture Brands International Net Sales For Year Constant, Net Earnings Decline Slightly

Furniture World Magazine

Furniture Brands International announced its financial results for the fourth quarter and full year ended December 31, 2004. Operating Results – Fourth Quarter: Net sales for the fourth quarter of 2004 were $583.3 million, compared with $616.8 million in the fourth quarter of 2003, a decrease of 5.4%. Net earnings for the fourth quarter were $22.3 million, essentially unchanged from the $22.6 million reported for the fourth quarter of last year. Diluted net earnings per common share were $0.42 as compared to $0.40 in the fourth quarter of last year, resulting from a decrease in average diluted common shares outstanding arising out of the Company's share repurchase program. Included in the 2004 fourth quarter net earnings were restructuring and asset impairment charges totaling $1.5 million ($2.3 million before income tax benefits) or $0.03 per diluted common share. The 2003 fourth quarter net earnings were negatively impacted by restructuring and asset impairment charges totaling $8.2 million ($13.0 million before income tax benefits) or $0.15 per diluted common share. Operating Results – Full Year 2004: For the full year 2004, net sales were $2,375.3 million, essentially unchanged from the $2,367.7 million reported for all of 2003. Net earnings for the full year 2004 were $91.6 million or $1.66 per diluted common share as compared to $94.6 million or $1.68 per diluted common share for 2003. Included in the 2004 full year net earnings were restructuring and asset impairment charges totaling $5.9 million ($9.2 million before income tax benefits) or $0.11 per diluted common share, as well as a $0.09 charge related to the loss of collectibility of the receivable due from Breuners Home Furnishings Corporation, which filed for bankruptcy protection in July of 2004. The 2003 full year net earnings included $0.20 per diluted common share in restructuring and asset impairment charges. Management Comments W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: “Throughout the first half of the year we saw positive order trends at our upper-end companies (Thomasville, Henredon, Drexel Heritage and Maitland-Smith) and negative trends at our middle-price companies (Broyhill and Lane). Toward the end of the third quarter the upper-end strength moderated and that softness continued through the fourth quarter. We were also hurt by the loss of a major customer (Breuners) at midyear which removed over $40 million in annual sales volume. However, as the Company moves forward in achieving greater control over its distribution channels and consumer discretionary spending picks up as a result of an improving domestic economy, we believe we can realize meaningful sales growth.” Mr. Holliman continued, “The Company continues to generate strong cash flow from operations. As a result, in the fourth quarter the Company repurchased 500,000 shares of our common stock at an average cost of $24.10. For the full year the Company repurchased 3.4 million shares of our common stock at an average cost of $25.88 per share. We expect to remain in the market buying stock on an opportunistic basis using available free cash flow. Our long-term debt, at about $300 million, remains at its target level. Outlook: "Our sales expectations for the first quarter reflect the current weakness in incoming orders compared to a strong year-ago period,” Mr. Holliman concluded. “We expect first quarter sales to be down in the 4-5% range from last year’s record performance, and diluted net earnings per common share to be in the $0.45 to $0.49 range, which includes an estimated $0.03 per share of restructuring and asset impairment charges. As is our practice, we will provide an update on our first quarter expectations in early March.” Furniture Brands International is America’s largest home furnishings manufacturer, manufacturing and sourcing its products under six of the best-known brand names in the industry – Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland- Smith. The company markets its products across a broad spectrum of price categories and distributes its products through an extensive system of independently owned national, regional and local retailers.