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Focus on cash management helping FBI absorb its recent acquisitions

By Powell Slaughter -- Furniture Today, April 28, 2002

HIGH POINT — A strong focus on cash management at Furniture Brands International has helped the company comfortably absorb the acquisition of Drexel Heritage, Henredon and Maitland-Smith.

A "cash is king" mentality also means Furniture Brands could move quickly if and when other acquisition opportunities arise, and provide turn-on-a-dime support to operating companies when necessary.

"FBI brings (its new brands) a balance sheet that's in excellent condition, where we can provide financial support where it's needed and to whatever degree it's needed," said Chairman Mickey Holliman.

He said the company's cash-management efforts have reduced its debt load from $750 million five years ago to "just north of $300 million." Available cash helped FBI acquire the three former LifeStyle Furnishings International companies without becoming heavily leveraged.

"The cash side of that acquisition was $175 million," Holliman said. "We paid down $35 million with fourth-quarter 2001 free cash and only had to add $140 million to our debt. We should be able to remove that with free cash in shortly over a year."

Working capital management is one of the best practices FBI wants all its companies to adopt. As with other practices such as lean overhead — a corporate office of 39 people supports a company employing 24,200 — FBI wants to set an example for in its operating divisions.

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