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IHFC revenues up 8.1%, net income off 28.5%

By Jay McIntosh -- Furniture Today, March 10, 2002

HIGH POINT — HIGH POINT — Revenues rose 8.1% for the International Home Furnishings Center in fiscal 2001, but higher interest costs and a debt refinancing led to a decline in net earnings.

The High Point market showroom complex, whose financial results for the year ended Oct. 31 are included in Bassett Furniture's just-released annual report, also said it paid a $60.7 million dividend to Bassett and other IHFC owners during the year. The IHFC borrowed money to pay the dividend and to refinance existing debt.

Rental income at the 3.5 million-square-foot complex rose 9.7% to $34.7 million for the year. The report didn't say whether rental rates had changed, however, and the gain coincided with an expansion as a 12th floor addition opened for the April 2001 market.

Including income from other sources, total operating revenues increased 8.1% from the previous year to $41.7 million.

Bruce Miller, IHFC vice chairman and chief executive officer, declined to comment. Bassett reported the results in its annual statement because, as in the past several years, the IHFC accounted for a substantial portion of the furniture manufacturer's earnings.

As of last Nov. 30, Bassett owned about 41% of the High Point complex. Furniture Brands International's Lane division had a 12% stake until late last year, but sold it for a reported $5.2 million to the other owners — Bassett, Jefferson-Pilot Corp. and High Point Enterprise newspaper publisher Randall Terry.

The IHFC's net income of $9.2 million for the year was down from $12.9 million the previous year. As a percentage of revenues, net earnings declined to 22.2% from 33.5% in fiscal 2000.

Operating income rose slightly last year, but financing activities led to the decline in net income. Interest expense rose sharply to $7.9 million from $4.1 million, and the complex had a one-time net expense of $1.9 million for the early repayment of debt.

The IHFC said it borrowed $135 million, using a portion of the loan to pay off $54 million in older debt and also financing the $60.7 million dividend.

Bassett said it received $25.1 million from the dividend, "a portion of which is essentially an advance on future earnings of IHFC." Because of the accounting method used, the payment did not affect Bassett's reported earnings.

The IHFC apparently paid the dividend early in its 2001 fiscal year. Furniture Brands reported receiving $7.6 million of the dividend in the fourth quarter of calendar 2000.

Including the latest payment, the IHFC has paid out just over $200 million in dividends to its owners in five years, none in fiscal 2000 but $13.2 million in fiscal 1999, $76.3 million in 1998 and $51.4 million in 1997.

International Home Furnishings Center
Year ended 10/31	2001	2000	Change
Revenues (a)	$41,655,601	$38,542,988	8.1%
Operating income	27,743,169	26,507,165	4.7%
Net income	(b) 9,249,405	12,930,922	(28.5%)
Earnings per share (c)	17.53	24.51	(28.5%)
(a) Includes non-rental revenues of $7 million in the 2001 year and $6.9 million in the 2000 year. (b) Includes a $1.9 million extraordinary loss on the early retirement of debt. (c) Basic.

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