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FBI sales decline 9.2% in 3Q

By Larry Thomas -- Furniture Today, November 4, 2007

St. Louis — Furniture Brands International, the No. 2 furniture producer and importer, said its third-quarter sales fell 9.2% and the company incurred a net loss of $13.7 million.

Meanwhile, the company said it will take a fourth-quarter charge of 18 to 22 cents per share to close an undisclosed number of company-owned stores.

In a conference call with analysts last week, Ralph Scozzafava, vice chairman and CEO-designate, declined to say which stores would close. However, he indicated the number would be somewhere around half of the 44 stores FBI now owns.

About 20 of the company-owned stores are Lane and Broyhill units, and based on the direction laid out at a Furniture Brands investor conference two weeks ago, it's likely that many of the closings will be in that group.

The company also owns some of its Thomasville and Drexel Heritage stores, but Scozzafava said in the conference call that FBI is more likely to keep those stores open, even if their financials are weak, to maintain distribution in certain metro areas.

"The one-time charges resulting from these closings are investments, in our view, in our profitability for 2008 and beyond," he said.

Furniture Brands blamed the third-quarter net loss largely on one-time restructuring and asset impairment charges, and said it would have eked out a $807,000 profit without them.

Sales in the quarter ended Sept. 30 totaled $516.3 million, compared with $568.9 million in the third quarter of 2006.

The most recent quarterly loss, which equaled 28 cents per share, compared with net earnings of $5.8 million, or 12 cents per share, in last year's third quarter.

"Our financial results for the third quarter were as expected, as the home furnishings industry continues to show the effects of cautious consumer spending," said Mickey Holliman, chairman and CEO.

The company also said it sold its corporate airplane in the quarter for a $9 million cash benefit, a move that added $3 million to pretax earnings.

Sales for the first nine months totaled $1.63 billion, an 11.3% drop from $1.83 billion in sales in the first nine months of 2006.

The nine-month net loss came to $4.97 million, or 10 cents per share. In the comparable period last year, Furniture Brands had net income of $53 million, or $1.08 per share.

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 9/30	2007	2006	Change
(a) Includes pretax charges for debt refinancing of $14.6 million in the 2007 quarter and $11.1 million in the 2007 nine months, and a gain arising from debt refinancing of $8.5 million in the 2006 nine months. Also includes a pretax asset impairment charge of $7.1 million in the 2007 quarter and nine months, a $1.3 million pretax litigation reserve in the 2006 quarter and nine months, and pretax restructuring charges of $1.2 million in the 2007 quarter, $4.6 million in the 2006 quarter, $3.8 million in the 2007 quarter and $6.2 million in the 2006 nine months.
Sales	$516,337,000	$568,917,000	(9.2%)
Operating income	(1,746,000)	12,979,000	—
Net income (a)	(13,656,000)	5,797,000	—
Earnings per share	(0.28)	0.12	—
9 months ended 9/30	2007	2006	Change
Sales	$1,625,307,000	$1,831,637,000	(11.3%)
Operating income	17,612,000	80,489,000	(78.1%)
Net income (a)	(4,971,000)	52,997,000	—
Earnings per share	(0.10)	1.08	—

Acknowledgements
News Editor Jay McIntosh contributed to this story.

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FBI sales drop 9.2% in third quarter

Nov 1, 2007

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