Furniture Brands International Reports First Quarter Net Sales Down 5.3%

Furniture World Magazine

Net sales for the first quarter of 2005 were $641.6 million, compared with a record high $677.6 million in the first quarter of 2004, a decrease of 5.3%. Net earnings for the first quarter were $24.8 million, down from $33.2 million reported for the first quarter of last year. Diluted net earnings per common share were $0.46 as compared to $0.58 in the first quarter of last year. Included in the 2005 first quarter net earnings were restructuring, asset impairment, and severance charges totaling $2.5 million ($3.8 million before income tax benefits) or $0.05 per diluted common share. The 2004 first quarter net earnings were negatively impacted by restructuring and asset impairment charges totaling $1.0 million ($1.6 million before income tax benefits) or $0.02 per diluted common share. Management Comments W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: "We continue to see a challenging and inconsistent business environment in the furniture industry. Many of our smaller companies such as Hickory Chair, Pearson, Laneventure and Hickory Business Furniture are doing well, and revenues at both Henredon and Drexel Heritage were positive against the first quarter of 2004. However, business across our other primary business units remains soft, with our companies in the middle-price points generally showing less favorable results than those at the upper-price levels. "We continue to drive the revenue side of our business by promoting our brand names, by offering innovative and stylish products, and by pursuing our single branded stores development program. With respect to earnings, raw material price increases continue to put pressure on margins, but we are seeking earnings improvement by addressing the cost structure across all of our companies." Mr. Holliman continued, "The Company continues to generate strong cash flow from operations. Since the start of the year the Company has repurchased 439,204 shares of our common stock at an average cost of $22.77. This brings to 3.9 million the number of shares repurchased since the first quarter of 2004. 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 Mr. Holliman concluded, "Our written business for the first quarter was off 6.4 percent from the first quarter of last year, but for the first three weeks of the second quarter our orders are tracking up against the second quarter of last year. We currently expect net sales to be up in the low single digits in the second quarter against the second quarter of 2004, and we expect diluted net earnings per common share in the second quarter to be in the range of 35 to 39 cents, net of about 2 cents in restructuring and severance charges. As is our practice, we will provide an update on our second quarter expectations in early June." 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.