EX-99 3 dex99.htm PRESS RELEASE Press release

Exhibit 99

 

LOGO

 

Bassett Furniture Industries, Inc.

   

Barry C. Safrit, V.P., CFO

P.O. Box 626

   

(276) 629-6757 – Investors

Bassett, VA 24055

   

(276) 629-6332 – Fax

    

Jay S. Moore, Dir. of

Communications

     

For Immediate Release

   

(276) 629-6450 – Media

    

(276) 629-6418 – Fax

 

Bassett Furniture News Release

Bassett Announces Third Quarter 2004 Earnings

 

(Bassett, Va.) – September 28, 2004 – Bassett Furniture Industries Inc. (NASDAQ: BSET) announced today its earnings for its third fiscal quarter ended August 28, 2004.

 

Sales for the third quarter of 2004 were $78.6 million, down 1% from third quarter 2003 levels. The growth in the Company’s ongoing distribution channels, fueled by increased shipments to Bassett Furniture Direct stores (BFDs) and greater demand for juvenile products, were again offset by attrition with JCPenney and independent furniture stores. Year-to-date shipments into the BFD channel were up $14.6 million or 13% over 2003, offsetting attrition in other channels (including an $8.7 million decrease with JCPenney and a $4.1 million decrease with smaller independent furniture stores).

 

The Bassett Furniture Direct retail store program continues to grow with 109 stores currently in operation. The Company expects licensees to open 11 additional stores in the fourth quarter and end fiscal year 2004 with 120 BFD stores. Sales to BFD stores were 58% of total wholesale shipments in the first nine months of 2004 compared to 52% in the first nine months of 2003.

 

The Company reported net income for the quarter of $1.1 million or $.10 per share as compared to $1.6 million or $.13 per share for the third quarter of 2003. Excluding the previously announced $1.2 million restructuring charge for closing the Macon, Ga., wood manufacturing facility, net income would have been $2.0 million or $.17 per share. On a year-to-date basis, the Company has recorded net income of $5.3 million or $.45 per diluted share, after both realizing a $3.9 million gain on the sale of its former California upholstery facility and recognizing $4.1 million in restructuring and impaired asset charges in 2004. This compares to a $3.7 million net loss in the first nine months of 2003. Excluding restructuring and impaired asset charges and, in 2003, the cumulative effect of an accounting change, net income for the first nine months of 2004 was $5.5 million or $.46 per diluted share compared to $3.5 million or $.30 per share in the first nine months of 2003.* A reconciliation to the net income and earnings per share for such periods has been set forth below.

 

The 2004 year-to-date earnings improvement resulted from a combination of sales growth, an increased mix of imported product and improved performance from LRG and the Company-owned BFD stores. This improvement was primarily due to a reduction in selling, general, and administrative expenses, resulting from the actions taken in 2003 that lowered the expense structure of these BFD stores.

“We continue to be pleased with the growth of our BFD store program, the success of new product introductions such as Continental Sketchbook and the improvement in our pre-charge operating earnings,” said Robert H. Spilman Jr., president and chief executive officer. “We expect to see better sales and earnings in the fourth quarter through a combination of the new BFD stores that will open, the seasonally strong September/October retail buying period, and the efficiencies gained by the consolidation of the Macon production into other facilities. We are also very excited about our new John Elway home entertainment collection making its debut at the upcoming October Furniture Market in High Point.”

 

The Company increased inventories $8.6 million during the quarter to support the introduction of new collections and provide better service levels for key imported items. For the year, the Company has utilized nearly $9 million in cash, reflecting in part the increased inventories and the Company’s continued payment of its quarterly dividend. Additionally, the proceeds of selling property has been reinvested primarily in retail real estate and the Company has increased its investment portfolio by $6.3 million.

 

Bassett also announced that its Board of Directors has declared a regular quarterly dividend of $.20 per share payable on December 1, 2004, to shareholders of record on November 15, 2004.

 

Bassett Furniture Industries, Inc. is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With over 100 Bassett Furniture Direct stores, Bassett has leveraged its strong brand name in furniture into a growing network of licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. While the Company continues to sell its products to other retailers, the most significant growth vehicle for Bassett continues to be the Company’s dedicated retail store program. Bassett’s retail strategy includes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature the latest on-trend furniture styles, more than 1,000 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. For more information, visit the Company’s website at www.bassettfurniture.com.

* The Company has included the “as adjusted” information because it uses, and believes that others may use, such information in comparing the Company’s operating results from period to period. However, the items excluded in determining the “as adjusted” information are significant components in understanding and assessing the Company’s overall financial performance for the periods covered.

 

Certain of the statements contained in this release, particularly those preceded by, followed by or including the words “believes,” “expects,” “anticipates,” “intends,” “should,” “estimates,” or similar expressions, or those relating to or anticipating financial results for periods beyond the third quarter of fiscal year 2004, constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause those results to differ materially from those expressed in the forward looking statements: economic, competitive, governmental and other factors identified in Bassett’s filings with the Securities and Exchange Commission, and the effects of national and global economic or other conditions and future events on the retail demand for home furnishings.

 

###

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - Unaudited

(In thousands, except for per share data)

 

    

13 Weeks Ended

August 28, 2004

    

13 Weeks Ended

August 30, 2003

  
     Amount
     Percent of
Net Sales
     Amount
     Percent of
Net Sales
  

Net sales

    $ 78,585     100.0 %   $ 79,433     100.0 %

Cost of sales

      58,495     74.4 %     59,598     75.0 %
    
 
 
 

Gross profit

      20,090     25.6 %     19,835     25.0 %
    
 
 
 

Selling, general and administrative

      19,009     24.2 %     19,713     24.8 %

Restructuring and impaired asset charge

      1,220     1.6 %     —       0.0 %
    
 
 
 

Income (loss) from operations

      (139 )   -0.2 %     122     0.2 %

Other income, net

      1,585     2.0 %     1,767     2.2 %
    
 
 
 

Income before income taxes

      1,446     1.8 %     1,889     2.4 %

Income tax provision

      (318 )   -0.4 %     (332 )   -0.4 %
    
 
 
 

Net income

    $ 1,128     1.4 %   $ 1,557     2.0 %
    
 
 
 

Basic earnings per share:

    $ 0.10           $ 0.13        
    
       
     

Diluted earnings per share:

    $ 0.10           $ 0.13        
    
       
     

 

Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 third quarter amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - Unaudited

(In thousands, except for per share data)

 

    

39 Weeks Ended

August 28, 2004

    

39 Weeks Ended

August 30, 2003

  
     Amount
     Percent of
Net Sales
     Amount
     Percent of
Net Sales
  

Net sales

    $ 235,508     100.0 %   $ 233,913     100.0 %

Cost of sales

      175,332     74.4 %     174,326     74.5 %
    
 
 
 

Gross profit

      60,176     25.6 %     59,587     25.5 %
    
 
 
 

Selling, general and administrative

      57,289     24.3 %     60,001     25.7 %

Gain on sale of property

      (3,890 )   -1.7 %     —       0.0 %

Restructuring and impaired asset charges

      4,060     1.7 %     3,200     1.4 %
    
 
 
 
       57,459     24.4 %     63,201     27.0 %
    
 
 
 

Income (loss) from operations

      2,717     1.2 %     (3,614 )   -1.5 %

Other income, net

      4,499     1.9 %     4,730     2.0 %
    
 
 
 

Income before income taxes and cumulative effect of accounting change

      7,216     3.1 %     1,116     0.5 %

Income tax (provision) benefit

      (1,876 )   -0.8 %     84     0.0 %
    
 
 
 

Income before cumulative effect of accounting change

      5,340     2.3 %     1,200     0.5 %
    
 
 
 

Cumulative effect of accounting change, net of income tax of $3,200

      —       0.0 %     (4,875 )   -2.1 %
    
 
 
 

Net income (loss)

    $ 5,340     2.3 %   $ (3,675 )   -1.6 %
    
 
 
 

Basic earnings (loss) per share:

    $ 0.46           $ (0.32 )      
    
       
     

Diluted earnings (loss) per share:

    $ 0.45           $ (0.32 )      
    
       
     

 

Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

 

Reconciliation of Net Income (Loss) as Reported

to Net Income as Adjusted (Unaudited)

(In thousands, except for per share data)

 

    

39 Weeks Ended

August 28, 2004

    

39 Weeks Ended

August 30, 2003

  

Net income (loss) as reported

    $ 5,340     $ (3,675 )

Gain on sale of property, net of income taxes

      (2,840 )     —    

Restructuring and impaired asset charges, net of income taxes

      3,004       2,304  

Cumulative effect of accounting change, net of income taxes

      —         4,875  
    
 

Net income as adjusted

    $ 5,504     $ 3,504  
    
 

Reconciliation of Earnings (Loss) Per Share as Reported

to Earnings Per Share as Adjusted (Unaudited)

 

 

 

    

39 Weeks Ended

August 28, 2004

     39 Weeks Ended
August 30, 2003
  

Diluted earnings (loss) per share

    $ 0.45     $ (0.32 )

Gain on sale of property, net of income taxes

      (0.24 )     —    

Restructuring and impaired asset charge, net of income taxes

      0.25       0.20  

Cumulative effect of accounting change, net of income taxes

      —         0.42  
    
 

Diluted earnings per share as adjusted

    $ 0.46     $ 0.30  
    
 

 

Reconciliation of Net Income as Reported

to Net Income as Adjusted (Unaudited)

(In thousands, except for per share data)

 

 

 

 

    

13 Weeks Ended

August 28, 2004

     13 Weeks Ended
August 30, 2003
  

Net income as reported

    $ 1,128     $ 1,557  

Restructuring and impaired asset charges, net of income taxes

      903       —    
    
 

Net income as adjusted

    $ 2,031     $ 1,557  
    
 

 

Reconciliation of Earnings Per Share as Reported

to Earnings Per Share as Adjusted (Unaudited)

 

 

 

    

13 Weeks Ended

August 28, 2004

     13 Weeks Ended
August 30, 2003
  

Diluted earnings per share

    $ 0.10     $ 0.13  

Restructuring and impaired asset charge, net of income taxes

      0.07       —    
    
 

Diluted earnings per share as adjusted

    $ 0.17     $ 0.13  
    
 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

     (Unaudited)
August 28, 2004
    November 29, 2003

Assets

              

Current assets

              

Cash and cash equivalents

    $ 6,327    $ 15,181

Accounts receivable, net

      39,962      39,230

Inventories

      44,276      36,454

Deferred income taxes

      4,947      5,307

Assets held for sale

      2,748      1,881

Other current assets

      2,852      4,525
    
  

Total current assets

      101,112      102,578
    
  

Property and equipment, net

      41,569      48,800
    
  

Investments

      75,743      65,151

Retail real estate, net

      52,710      32,930

Notes receivable, net

      15,504      15,399

Other, net

      13,197      15,522
    
  
       157,154      129,002
    
  

Total assets

    $ 299,835    $ 280,380
    
  

Liabilities and Stockholders’ Equity

              

Current liabilities

              

Accounts payable

    $ 18,494    $ 15,127

Accrued liabilities

      22,208      22,341
    
  

Total current liabilities

      40,702      37,468
    
  

Long-term liabilities

              

Employee benefits

      9,529      9,824

Real estate notes payable

      15,768      —  

Distributions in excess of affiliate earnings

      14,541      13,070
    
  
       39,838      22,894
    
  

Commitments and Contingencies

              

Stockholders’ equity

              

Common stock, par value $5 a share, 50,000,000 shares authorized, issued and outstanding - 11,688,170 in 2004 and 11,599,936 in 2003

      58,441      58,000

Retained earnings

      158,465      159,487

Accumulated other comprehensive income - unrealized holding gains, net of income tax

      2,389      2,531
    
  

Total stockholders’ equity

      219,295      220,018
    
  

Total liabilities and stockholders’ equity

    $ 299,835    $ 280,380
    
  

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows - Unaudited

(In thousands)

 

    

39 Weeks Ended

August 28, 2004

    

39 Weeks Ended

August 30, 2003

  

Operating Activities

                 

Net income (loss)

    $ 5,340     $ (3,675 )

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

                 

Depreciation and amortization

      7,534       7,942  

Equity in undistributed income of investments

      (6,817 )     (7,542 )

Provision for write-down of property and equipment

      2,353       1,530  

Cumulative effect of accounting change, net

      —         4,875  

Provision for losses on trade accounts receivable

      900       475  

Net gain from sales of investments

      (1,215 )     (14 )

Net gain from sales of property and equipment

      (3,890 )     (154 )

Deferred income taxes

      360       (84 )

Changes in employee benefit liabilities

      (295 )     (169 )

Changes in operating assets and liabilities, exclusive of assets

                 

and liabilities acquired in a business combination:

                 

Trade accounts receivable

      (1,632 )     (2,818 )

Inventories

      (7,822 )     6,162  

Refundable income taxes

      —         3,536  

Other current assets

      (341 )     3,667  

Accounts payable and accrued liabilities

      3,234       (195 )
    
 

Net cash (used in) provided by operating activities

      (2,291 )     13,536  
    
 

Investing Activities

                 

Purchases of property and equipment, net

      (9,200 )     (4,576 )

Proceeds from sales of property and equipment

      8,342       477  

Proceeds from sales of investments

      10,726       17,000  

Purchases of investments

      (17,021 )     (12,000 )

Dividends from an affiliate

      5,623       5,154  

Other, net

      994       (441 )
    
 

Net cash (used in) provided by investing activities

      (536 )     5,614  
    
 

Financing Activities

                 

Repayments under revolving credit arrangement

      —         (3,000 )

Repayments of real estate notes payable

      (105 )     —    

Issuance of common stock, net

      1,857       178  

Repurchases of common stock

      (772 )     (1,191 )

Cash dividends

      (7,007 )     (6,947 )
    
 

Net cash used in financing activities

      (6,027 )     (10,960 )
    
 

Net change in cash and cash equivalents

      (8,854 )     8,190  
    
 

Cash and cash equivalents, beginning of period

      15,181       2,892  
    
 

Cash and cash equivalents, end of period

    $ 6,327     $ 11,082  
    
 

 

Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.