Berkline to go public
IPO to raise as much as $138M
By Larry Thomas -- Furniture Today, April 24, 2005
Morristown, Tenn. — Upholstery major Berkline/Bench-Craft is set to go public this year with a common stock offering that could raise as much as $138 million.
Proceeds from the initial public offering, disclosed in an April 11 filing with the Securities and Exchange Commission, will be used to repay debt, repurchase preferred stock, and make a cash payment to the company's current majority owner, the investment firm of Code Hennessy & Simmons.
The firm has been the majority owner since the company was formed in March 2002, when Berkline and BenchCraft were spun off from LifeStyle Furnishings International.
Code Hennessy would retain a minority stake in Berkline/BenchCraft after completion of the IPO, but filing didn't disclose the exact ownership. Several of the company's senior managers also will retain a stake.
Executives of Berkline/BenchCraft declined comment on the pending IPO because they are in a regulatory "quiet period" after the SEC filing.
According to the filing, known as an S-1 registration statement, the company had sales of $499.7 million in 2004, a 9.5% increase over 2003. Operating income rose 18.6% to $33.2 million, but the company recorded a net loss of $18.8 million last year. The loss was largely due to one-time expenses from a debt refinancing in November.
In 2003, operating income was $28 million, and net income totaled $6.86 million after preferred stock dividends.
Berkline/BenchCraft also reported a pro forma adjustment that reduced earnings by the amount of preferred dividends, and by the income taxes that would have been paid if the company were organized as a corporation. (It has been a limited liability company, where the partners, not the corporation, pay income taxes.)
That computation resulted in pro forma net losses of $21.2 million in 2004 and $722,000 in 2003.
The company ranked No.8 on Furniture/Today's most recent list of furniture sources for the U.S. market, which was based on 2003 revenues.
In the SEC filing, the company says it is the industry's largest manufacturer of motion furniture and the third-largest recliner producer.
Berkline specializes in motion upholstery, recliners and home theater seating, while BenchCraft's product line consists largely of stationary fabric and leather upholstery.
A third company brand, Natural Elements, offers wicker and rattan upholstery, casual dining and bedroom furniture.
According to the regulatory filing, the company intends to pay a dividend on its common stock once the IPO is completed. The amount of the initial dividend wasn't disclosed, but the company said it intends "to distribute a substantial portion of the cash generated by our business in excess of operating needs, interest and principal payments and capital expenditures."
The stock will be traded on the Nasdaq market with the ticker symbol BLBC.
Years ago, when they were separate entities, Berkline and BenchCraft were both public companies. Berkline, founded in 1937, was publicly traded until a 1988 leveraged buyout. BenchCraft, founded in 1976, was publicly traded from 1983 until its acquisition by Universal Furniture in 1987.
Universal and Berkline were later acquired by Masco, which eventually spun off its home furnishings interests into a company called LifeStyle Furnishings International.
LifeStyle subsequently liquidated its holdings, and senior management of Berkline teamed with Code Hennessy to buy the assets of Berkline and BenchCraft in March 2002. The new entity became known as Berkline/BenchCraft Holdings.
The IPO is being underwritten by BB&T Capital Markets, Morgan Keegan & Co., SunTrust Robinson Humphrey, and Legg Mason Wood Walker.
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Berkline/BenchCraft IPO
May 1, 2005
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