FBI 2Q earnings drop 65.8%
By Furniture Today Staff -- Furniture Today, August 5, 2007
St. Louis — Furniture Brands International's second-quarter earnings tumbled 65.8% from the comparable period last year as sales slid 11%, the big manufacturer and importer reported.
Mickey Holliman, chairman and CEO of the conglomerate, said the operating environment for the industry was still difficult, with demand dampened by sluggish consumer discretionary spending.
Sales for the quarter came to $535.2 million, and earnings were $5.8 million, or 12 cents per share, compared with $17 million, or 35 cents per share, in 2006's second quarter.
Excluding the effects of several special items and restructuring charges in both quarters, EPS was 9 cents in the 2007 quarter and 36 cents last year, the company said.
Holliman also said the company's management team has completed a months-long review of how Furniture Brands can best deliver value to its shareholders.
"This broad-reaching review touches on every aspect of how we do business, from raw material supply chain to manufacturing to how we engage the customer," he said. He added that Ralph Scozzafava, the vice chairman and CEO-designate hired earlier this year, will present the team's plan to the board this week.
"We plan to share more information on this process in the coming months," Holliman said.
Meanwhile, he said the company intends to enter into a new financing arrangement with its lenders by Aug. 14, with an asset-backed lending facility. The financial changes will result in a third-quarter charge of 17 cents per share, on top of charges of 4 cents per share for restructuring, asset impairment and severance.
With those charges, Holliman said the company expects to post a loss of 9 cents to 15 cents per share in the third quarter. Excluding the charges, expected earnings would be 2 cents to 6 cents per share, compared with a profit of 12 cents per share in the 2006 third quarter.
Furniture Brands is the parent of Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland-Smith.
| Furniture Brands International | |||
|---|---|---|---|
| Owns Broyhill, Drexel Heritage, Henredon, Lane, Maitland-Smith and Thomasville | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 6/30 | 2007 | 2006 | Change |
| (a) The 2007 quarter includes the effects of a discontinued hedge accounting treatment on a treasury lock agreement resulting in a gain of $4.1 million, an interest expense of $0.6 million resulting from the amortization of a make-whole payment, and $1.4 million from pretax restructuring, asset impairment and severance charges. The 2006 quarter includes $0.8 million in pretax restructuring, asset impairment and severance charges. The 2007 six months includes a gain of $4.1 million due to the effects of a discontinued hedge accounting treatment, $2.6 million in pretax restructuring, asset impairment and severance charges, and $1.9 million in increased interest expense for a previous gain on interest rate swaps. The 2006 six months includes a previous gain of $8.5 million due to a discontinued hedge accounting treatment on an interest rate swap during a revolving credit facility refinance, and pretax restructuring, asset impairment and severance charges totaling $1.6 million. (b) Based on average shares outstanding of 48.4 million in the 2007 quarter, 48.9 million in the 2006 quarter, 48.4 million in the 2007 six months, and 49.2 million in the 2006 six months. | |||
| Sales | $535,221,000 | $601,275,000 | (11.0%) |
| Operating income | 9,953,000 | 30,135,000 | (67.0%) |
| Net income (a) | 5,808,000 | 16,978,000 | (65.8%) |
| Earnings per share (b) | 0.12 | 0.35 | (65.7%) |
| 6 months ended 6/30 | 2007 | 2006 | Change |
| Sales | $1,108,970,000 | $1,262,720,000 | (12.2%) |
| Operating income | 19,358,000 | 67,510,000 | (71.3%) |
| Net income (a) | 8,685,000 | 47,200,000 | (81.6%) |
| Earnings per share (b) | 0.18 | 0.96 | (81.3%) |
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