-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NRNffS/pubBvKEca5+qL1mYVMxVEbuPx4DJIt8jrVqEJX1AM1C/68Pxv5SBvnXyf 48WdFntg0fvMsJCjqph2qQ== 0000050957-97-000009.txt : 19970514 0000050957-97-000009.hdr.sgml : 19970514 ACCESSION NUMBER: 0000050957-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FURNITURE BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000050957 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 430337683 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00091 FILM NUMBER: 97601782 BUSINESS ADDRESS: STREET 1: 101 S HANLEY RD STE 1900 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148631100 MAIL ADDRESS: STREET 1: 101 SOUTH HANLEY RD CITY: ST LOUIS STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL SHOE CO DATE OF NAME CHANGE: 19690313 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- --------. Commission file number I-91 ---- Furniture Brands International, Inc. --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 43-0337683 -------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 South Hanley Road, St. Louis, Missouri 63105 ------------------------------------------ ------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 863-1100 ----------------- ---------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes X No --------- --------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No --------- ---------- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 61,511,031 Shares as of April 30, 1997 -------------------------------------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Financial Statements for the quarter ended March 31, 1997. Consolidated Balance Sheets Consolidated Statements of Operations: Three Months Ended March 31, 1997 Three Months Ended March 31, 1996 Consolidated Statements of Cash Flows: Three Months Ended March 31, 1997 Three Months Ended March 31, 1996 Notes to Consolidated Financial Statements Separate financial statements and other disclosures with respect to the Company's subsidiaries are omitted as such separate financial statements and other disclosures are not deemed material to investors. The financial statements are unaudited, but include all adjustments (consisting of normal recurring adjustments) which the management of the Company considers necessary for a fair presentation of the results of the period. The results for the three months ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year.
FURNITURE BRANDS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) March 31, December 31, 1997 1996 ASSETS ----------- ----------- Current assets: Cash and cash equivalents....................... $ 18,663 $ 19,365 Receivables, less allowances of $19,276 ($19,124 at December 31, 1996)................ 300,864 283,417 Inventories...........................(Note 1).. 288,052 281,107 Prepaid expenses and other current assets....... 25,378 23,378 ----------- ----------- Total current assets.......................... 632,957 607,267 ----------- ----------- Property, plant and equipment..................... 433,894 425,729 Less accumulated depreciation................... 135,288 123,767 ----------- ----------- Net property, plant and equipment............. 298,606 301,962 ----------- ----------- Intangible assets................................. 340,713 344,101 Other assets...................................... 16,355 15,874 ----------- ----------- $ 1,288,631 $ 1,269,204 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accrued interest expense........................ $ 6,103 $ 6,579 Accounts payable and other accrued expenses..... 147,572 138,027 ----------- ----------- Total current liabilities..................... 153,675 144,606 ----------- ----------- Long-term debt.................................... 567,800 572,600 Other long-term liabilities....................... 132,919 132,341 Shareholders' equity: Preferred stock, authorized 10,000,000 shares, no par value - issued none............ - - Common stock, authorized 100,000,000 shares, $1.00 stated value - issued 61,467,066 shares at March 31, 1997 and 61,432,181 shares at December 31, 1996................... 61,467 61,432 Paid-in capital................................. 276,040 278,554 Retained earnings............................... 96,730 79,671 ----------- ----------- Total shareholders' equity.................... 434,237 419,657 ----------- ----------- $ 1,288,631 $ 1,269,204 =========== ============ See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands except per share data) (Unaudited) Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------ ------------ Net sales...................................... $ 449,861 $ 423,947 Costs and expenses: Cost of operations........................... 326,187 308,883 Selling, general and administrative expenses. 73,511 70,204 Depreciation and amortization................ 14,596 14,178 ------------ ------------ Earnings from operations....................... 35,567 30,682 Interest expense............................... 9,089 13,715 Other income, net.............................. 872 747 ------------ ------------ Earnings before income tax expense............. 27,350 17,714 Income tax expense............................. 10,291 6,867 ------------ ------------ Net earnings................................... $ 17,059 $ 10,847 ============ ============ Net earnings per common share: Primary...................................... $ 0.27 $ 0.19 ====== ====== Fully diluted................................ $ 0.27 $ 0.19 ====== ====== Weighted average common and common equivalent shares outstanding: Primary...................................... 63,715,915 55,794,225 ========== ========== Fully diluted................................ 63,731,955 55,982,283 ========== ========== See accompanying notes to consolidated financial statements.
FURNITURE BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------ ------------ Cash Flows from Operating Activities: Net earnings.........................................$ 17,059 $ 10,847 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of property, plant and equipment.... 11,581 11,084 Amortization of intangible and other assets...... 3,015 3,094 Noncash interest expense......................... 276 617 Increase in receivables.......................... (17,447) (8,011) (Increase) decrease in inventories............... (6,945) 198 Increase in prepaid expenses and other assets.... (2,501) (4,672) Increase in accounts payable, accrued interest expense and other accrued expenses............. 9,069 21,496 Increase (decrease) in net deferred tax liabilities.................................... (1,253) 1,740 Increase in other long-term liabilities.......... 1,948 892 ------------ ------------ Net cash provided by operating activities............ 14,802 37,285 ------------ ------------ Cash Flows from Investing Activities: Proceeds from the disposal of assets................. 20 1,836 Additions to property, plant and equipment........... (8,245) (7,298) ------------ ------------ Net cash used by investing activities................ (8,225) (5,462) ------------ ----------- Cash Flows from Financing Activities: Addition to long-term debt........................... 10,000 - Payments of long-term debt........................... (14,800) (109,004) Proceeds from the issuance of common stock........... 274 6 Payments for the repurchase of common stock warrants. (2,753) - Proceeds from the sale of common stock............... - 81 335 ------------ ----------- Net cash used by financing activities................ (7,279) (27,663) ------------ ----------- Net increase (decrease) in cash and cash equivalents... (702) 4,160 Cash and cash equivalents at beginning of period....... 19,365 26,412 ------------ ------------ Cash and cash equivalents at end of period............. $ 18,663 $ 30,572 ============ ============ Supplemental Disclosure: Cash payments for income taxes, net.................. $ 5,454 $ 231 ============ ============ Cash payments for interest........................... $ 9,274 $ 11,243 ============ ============ See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Inventories are summarized as follows, in thousands: March 31, December 31, 1997 1996 ----------- ----------- Finished products $ 133,878 $ 127,292 Work-in-process 54,385 51,587 Raw materials 99,789 102,228 ----------- ----------- $ 288,052 $ 281,107 =========== =========== (2) In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128) "Earnings Per Share" (EPS). SFAS No. 128 establishes standards for computing and presenting earnings per share. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS No. 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997, and early application is not permitted. The Company believes the adoption of this accounting standard will not have a material impact on earnings per share. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS Furniture Brands International, Inc. (the "Company") is the largest manufacturer of residential furniture in the United States. The Company has three primary operating subsidiaries: Broyhill Furniture Industries, Inc.; The Lane Company, Incorporated; and Thomasville Furniture Industries, Inc. Comparison of Three Months Ended March 31, 1997 and 1996 -------------------------------------------------------- Selected financial information for the three months ended March 31, 1997 and 1996 is presented below: ($ in millions except per share data)
Three Months Ended March 31, 1997 March 31, 1996 -------------- -------------- % of % of Dollars Net Sales Dollars Net Sales ------- --------- ------- --------- Net sales $449.9 100.0% $423.9 100.0% Cost of operations 326.2 72.5 308.9 72.9 Selling, general and administrative expenses 73.5 16.3 70.2 16.6 Depreciation and amortization 14.6 3.3 14.1 3.3 ------ ----- ------ ------ Earnings from operations 35.6 7.9 30.7 7.2 Interest expense 9.1 2.0 13.7 3.2 Other income, net 0.9 0.2 0.7 0.2 ------ ----- ------ ------ Earnings before income tax expense 27.4 6.1 17.7 4.2 Income tax expense 10.3 2.3 6.9 1.6 ------ ----- ------ ------ Net earnings $ 17.1 3.8% $ 10.8 2.6% ====== ===== ====== ====== Gross profit (1) $113.4 25.2% $105.3 24.8% ====== ===== ====== ======
(1) The Company believes that gross profit provides useful information regarding a company's financial performance. Gross profit has been calculated by subtracting cost of operations and the portion of depreciation associated with cost of goods sold from net sales. Three Months Ended March 31, -------------------- 1997 1996 ------ ------ Net sales $449.9 $423.9 Cost of operations 326.2 308.9 Depreciation (associated with cost 10.3 9.7 of goods sold) ------ ------ Gross profit $113.4 $105.3 Net sales for the three months ended March 31, 1997 were $449.9 million, compared to $423.9 million in the three months ended March 31, 1996, an increase of $26.0 million or 6.1%. The improved sales performance occurred at each operating company and ranged, in varying degrees, across all product lines. The increase in net sales was achieved through continued introductions of new products and execution of marketing and advertising programs emphasizing the Company's brand names. Cost of operations for the three months ended March 31, 1997 was $326.2 million compared to $308.9 million for the comparable prior year period. Cost of operations as a percentage of net sales decreased from 72.9% for the three months ended March 31, 1996 to 72.5% for the three months ended March 31, 1997. The decrease in cost of operations as a percentage of net sales resulted from increased manufacturing efficiencies and continued efforts to improve gross profit margins. Selling, general and administrative expenses for the three months ended March 31, 1997 were $73.5 million compared with $70.2 million in the prior year. As a percentage of net sales, selling, general and administrative expenses were 16.3% and 16.6% for the three months ended March 31, 1997 and 1996, respectively. The decrease reflects continuing success in the implementation of the Company's cost reduction programs. Interest expense totaled $9.1 million for the three months ended March 31, 1997 compared to $13.7 million in the prior year comparable period. The decrease in interest expense resulted from lower long- term debt and reduced interest rates. The effective income tax rates were 37.6% and 38.8% for the three months ended March 31, 1997 and March 31, 1996, respectively. The effective tax rates for each period were adversely impacted by certain nondeductible expenses incurred and provisions for state and local taxes. The effective tax rate for the three months ended March 31, 1997 was favorably impacted by the reduced effect of the nondeductible expenses as a percentage of pretax earnings. Net earnings per common share on both a primary and fully diluted basis were $0.27 for the three months ended March 31, 1997, compared with $0.19 for the same period last year. Average common and common equivalent shares outstanding used in the calculation of net earnings per common share on a primary and fully diluted basis were 63,716,000 and 63,732,000, respectively, for the three months ended March 31, 1997 and 55,794,000 and 55,982,000, respectively, for the three months ended March 31, 1996. FINANCIAL CONDITION Working Capital --------------- Cash and cash equivalents at March 31, 1997 amounted to $18.7 million, compared with $19.4 million at December 31, 1996. During the three months ended March 31, 1997, net cash provided by operating activities totaled $14.8 million, net cash used by investing activities totaled $8.2 million and net cash used by financing activities totaled $7.3 million. Working capital was $479.3 at March 31, 1997, compared with $462.7 million at December 31, 1996. The current ratio was 4.1 to 1 at March 31, 1997, compared to 4.2 to 1 at December 31, 1996. Financing Arrangements ---------------------- As of March 31, 1997, long-term debt consisted of the following, in millions: Secured credit agreement $345.0 Receivables securitization facility 210.0 Other 12.8 ------ $567.8 ====== To meet working capital and other financial requirements, the Company maintains a $475.0 million revolving credit facility (the Secured Credit Agreement) with a group of financial institutions. The revolving credit facility allows for both issuance of letters of credit and cash borrowings. Letter of credit outstandings are limited to no more than $60.0 million. Cash borrowings are limited only by the facility's maximum availability less letters of credit outstanding. At March 31, 1997, there were $345.0 million of cash borrowings outstanding under the revolving credit facility and $26.5 million in letters of credit outstanding, leaving an excess of $103.5 million available under the revolving credit facility. In addition to the Secured Credit Agreement, the Company also had $13.4 million of excess availability as of March 31, 1997 under its Receivables Securitization Facility. The Company believes its Secured Credit Agreement and Receivables Securitization Facility, together with cash generated from operations, will be adequate to meet liquidity requirements for the foreseeable future. PART II OTHER INFORMATION ------------------------- Item 6. Exhibits and Reports on Form 8-K (a) 10(a). Furniture Brands 1992 Stock Option Plan, as amended. 10(b). Furniture Brands Executive Incentive Plan 10(c). Employment Agreement, dated April 30, 1997, between the Company and Richard B. Loynd. 10(d). Employment Agreement, dated April 29, 1997, between Action Industries, Inc. and John T. Foy 11. Statement re Computation of Net Earnings Per Common Share. 27. Financial Data Schedule. (b) A Form 8-K was not required to be filed during the quarter ended March 31, 1997. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Furniture Brands International, Inc. (Registrant) By Steven W. Alstadt ----------------------------------- Steven W. Alstadt Controller and Chief Accounting Officer Date: May 12, 1997 EX-10 2 Exhibit 10(a) FURNITURE BRANDS 1992 STOCK OPTION PLAN 1. Objectives of the Plan The Furniture Brands 1992 Stock Option Plan (the "Plan") of Furniture Brands International, Inc. (the "Corporation") is intended to encourage and provide opportunities for ownership of the Corporation's Common Stock by such key employees (including officers) of the Corporation and any subsidiaries of the Corporation as the Board of Directors of the Corporation (the "Board") or a committee thereof constituted for this purpose may from time to time determine. The Plan is also intended to provide incentives for such employees to put forth maximum efforts for the successful operation of the Corporation and its subsidiaries. By extending to such key employees the opportunity to acquire proprietary interests in the Corporation and to participate in its success, the Plan may be expected to benefit the Corporation and its shareholders by making it possible for the Corporation and its subsidiaries to attract and retain the best available talent and by providing such key employees with added incentives to increase the value of the Corporation's stock. 2. Stock Subject to the Plan There are reserved for issue under the Plan 5,500,000 shares of the Common Stock, without nominal or par value, of the Corporation (the "Shares"). Such Shares may be, in whole or in part, as the Board shall from time to time determine, authorized but unissued Shares, or issued Shares which shall have been reacquired by the Corporation. 3. Administration Subject to the express provisions of the Plan, the Plan shall be administered by the Executive Compensation and Stock Option Committee of the Board (the "Committee"), and the Committee shall have plenary authority, in its discretion, to determine the individuals to whom, and the time or times at which, options, if any, shall be granted, the type of option to be granted (e.g., qualified or nonqualified) and the number of Shares to be subject to an option. Subject to the express provisions of the Plan, the Committee shall also have plenary authority to interpret the Plan, to prescribe, amend and rescind rules and regulations regarding it, and to take whatever action is necessary to carry out the purposes of the Plan. The Committee's determinations on matters referred to in this Section 3 shall be conclusive. 4. The Committee The Committee shall consist of three or more members of the Board. The Committee shall be appointed by the Board, which may from time to time designate the number to serve on the Committee, appoint members of the Committee in substitution for members previously appointed and fill vacancies, however caused, in the Committee. No member of the Board while a member of the Committee shall be eligible to receive an option under the Plan. The Committee shall elect one of its members as its Chairman and shall hold its meetings at such times and places as it may determine. A majority of the members shall constitute a quorum. Any determination reduced to writing and signed by all the members of the Committee shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary, shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 5. Eligibility Options may be granted only to key employees (which term as used herein includes officers) of the Corporation and of its subsidiary corporations (the "subsidiaries") as the term "subsidiary corporation" is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, (the "Code"). For the purposes of the Plan the term "employee" shall be an individual with an "employment relationship" as defined in Section 421 (Regs. Section 1.421-7(h)) of the Code. A member of the Board or of the board of directors of a subsidiary who is not also an employee of the Corporation or of one of its subsidiaries shall not be eligible to receive an option. Nothing contained in the Plan shall be construed to limit the right of the Corporation to grant options otherwise than under the Plan in connection with (i) the employment of any person,(ii) the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of another corporation, firm or association, including grants to employees thereof who become employees of the Corporation or a subsidiary, or (iii) other proper corporate purposes. 6. Nonqualified Stock Options Unless it is designated a qualified option by the Committee, any option granted under the Plan shall be nonqualified and shall be in such form as the Committee may from time to time approve. Any such nonqualified option shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable: (a) Option Price. The per share purchase price of Shares purchasable under an option shall be determined by the Committee in accordance with procedures established by the Committee; provided however, that except for options granted to replace pre-existing compensation or benefit programs, in no event shall more than 10% of the shares reserved for issue under the Plan be the subject of (i) options granted at less than fair market value on the date of grant, and (ii) new options substituted for previously granted options having higher option prices as provided for in Section 9 hereof. (b) Option Period. The term of option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted. (c) Exercisability. Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant; no option shall be exercisable during the year ending on the day before the first anniversary date of the granting of the option. The proceeds of sale of Shares subject to option are to be added to the general funds of the Corporation. Except as provided in Subsections (f), (g) and (h) of this Section 6, no option may be exercised at any time unless the holder is then a regular employee of the Corporation or a subsidiary and has continuously remained an employee at all times since the date of granting of the option. If any option granted under the Plan shall expire or terminate for any reason without ever having been exercised in full, the unissued shares subject thereto shall again be available for the purposes of the Plan. (d) Method of Exercise. Options which are exercisable may be exercised in whole or in part at any time during the option period, by completing and delivering to the Corporation an option exercise form provided by the Corporation specifying the number of Shares to be purchased. Such form shall be accompanied by payment in full of the purchase price in cash. No Shares shall be issued until full payment therefor has been made. (e) Nontransferability of Options. No option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such options shall be exercisable, during the optionee's lifetime, only by the optionee. (f) Termination by Reason of Death. If an optionee's employment by the Corporation or any subsidiary terminates by reason of death, as to those Shares with respect to which the option had become exercisable (under the provisions of the particular option) on the date of death, the stock option may thereafter be exercised by the legal representative of the estate or by the legatee of the optionee under the will of the optionee, during a period of six months from the date of such death or until the expiration of the stated period of the option, whichever period is the shorter. (g) Termination by Reason of Retirement or Permanent Disability. If an optionee's employment by the Corporation or any subsidiary terminates by reason of retirement or permanent disability, as to those Shares with respect to which the option had become exercisable (under the provisions of the particular option) on the date of termination of employment, any stock option held by such optionee may thereafter be exercised during a period of three months from the date of such termination of employment or the expiration of the stated period of the option, whichever period is the shorter; provided, however, that if the optionee dies within such three-month period, any unexercised stock option held by such optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of six months from the date of such death or for the stated period of the option, whichever period is the shorter. (h) Other Termination. If an optionee's employment terminates for any reason other than death, permanent disability, or retirement, as to those Shares with respect to which the option had become exercisable (under the provisions of the particular option) on the date of termination of employment, any option held by such optionee may thereafter be exercised during a period of one month from the date of such termination of employment or the expiration of the stated period of the option, whichever period is shorter; provided, however, that if the optionee dies within such one-month period, any unexercised option held by such optionee shall thereafter be exercisable to the extent to which is was exercisable at the time of death for a period of six months from the date of such death or for the stated period of the option, whichever period is the shorter. (i) Option Buyout. The Committee may at any time offer to repurchase an option (other than an option which has been held for less than six months by an optionee who is subject to Section 16(b) of the Securities Exchange Act of 1934) based on such terms and conditions as the Committee shall establish and communicate to the optionee at the time that such offer is made. 7. Qualified Stock Options Any option granted under the Plan shall, at the discretion of the Committee, qualify as an incentive stock option as defined in Section 422(b) of the Code and shall be in such form as the Committee may from time to time approve. Any such qualified option shall be subject to the following terms and conditions in addition to those set forth in Section 6 and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable: (a) Eligibility. Incentive stock options shall not be granted to any individual who, at the time the option is granted,owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Corporation or its parent corporation (as the term "parent corporation" is defined in Section 424(e) of the Code) or the subsidiaries unless: l) the option price is at least 110% of the fair market value of the stock subject to the option and 2) the option states that it is not exercisable after the expiration of five years from the date of its grant. (b) Limitation on Exercise of Options. The maximum aggregate fair market value (determined at the time an option is granted) of the Shares with respect to which qualified options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its parent corporation and subsidiaries) shall not exceed $100,000. If the provisions of this Section limit the exercisability of certain qualified options which would otherwise become exercisable on account of termination of employment or a change of control, the Committee, in its sole discretion, shall determine the times at which such qualified options become exercisable so that the provisions of this Section 7(b) are not violated; provided that in no event shall any qualified option be exercisable more than ten (10) years from the date of granting thereof (five (5) years in the case of qualified options granted to ten percent shareholders (described in Section 7(a)). 8. Adjustment Upon Changes in Capitalization, Etc. The aggregate number and class of shares reserved under the Plan, the number and class of shares subject to each option granted pursuant to the Plan and/or the option price per share payable under each such option shall be appropriately and equitably adjusted in the event of: any reclassification or increase or decrease in the number of the issued Shares of the Corporation by reason of a split-up or consolidation of Shares; the payment of a stock dividend; a recapitalization; a combination or exchange of Shares; a spin-off; or any like capital adjustment. If the Corporation shall be reorganized or shall be merged into or consolidated with any other corporation, each option, if any, then outstanding under the Plan shall thereafter apply to such number and kind of securities as would have been issuable by reason of such reorganization, merger or consolidation to a holder of the number of Shares which were subject to the option, if any, immediately prior to such reorganization, merger or consolidation. In the event of the proposed dissolution or liquidation of the Corporation or in the event of a proposed sale of substantially all of the assets of the Corporation, each option, if any, outstanding under the Plan shall terminate as of a date to be fixed by the Committee and approved by the Board upon not less than thirty days' written notice to the optionee; provided, however, that any option granted at least six months prior to such event, if any, of any optionee who has been an employee for one year or more prior to the date of such notice shall be accelerated and such optionee shall be entitled to exercise such option, in whole or in part, without regard to any installment provision of the option, and provided further that said exercise shall be made prior to the termination date fixed in said notice. All adjustments under this Section 8 shall be made by the Committee, subject to the approval of the Board, which action shall be final and conclusive. Anything to the contrary notwithstanding, upon a Change of Control(as hereinafter defined) which occurs after the first anniversary of the Effective Date (as defined in Section 12), each option granted at least six months prior to such Change of Control shall become immediately exercisable in full. As used herein, "Change of Control" shall mean any of the following events which occur more than one year after the first anniversary of the Effective Date: (a) The acquisition (other than from the Corporation) by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"), excluding, for this purpose, the Corporation or its subsidiaries, or any employee benefit plan of the Corporation or its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either the then outstanding Shares or the combined voting power of the Corporation's then outstanding voting securities entitled to vote generally in the election of directors; or (b) Individuals who, as of the first anniversary of the Effective Date, constitute the Board (as of such date, the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the first anniversary of the Effective Date whose election, or nomination for election by the Corporation's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation, as such terms are used in Rule 14 all of Regulation 14A promulgated under the Exchange Act) shall be considered as though such person were a member of the Incumbent Board; or (c) Approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were the stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities, or a liquidation or dissolution of the Corporation or the sale of all or substantially all of the assets of the Corporation. 9. Amendments and Termination The Board may amend, alter, or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made which would impair the rights of an optionee under an option without the optionee's consent, or which without the approval of the stockholders would: except as is provided in Section 8 of the Plan, increase the total number of Shares reserved for the purpose of the Plan; decrease the option price of any option to less than 100% of the fair market value on the date of the granting of the option; change the employees or class of employees eligible to participate in the Plan; or extend the maximum option period under Section 6(b) of the Plan. The Committee may amend the terms of any option theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any optionee without the consent of the optionee. The Committee may also substitute new options for previously granted options, including substitution for previously granted options having higher option prices, subject to the limitation set forth in Section 6(a) hereof. 10. General Provisions (a) The Committee may require each person purchasing Shares pursuant to an option under the Plan to represent to and agree with the Corporation in writing that the optionee is acquiring the Shares without a view to distribution thereof. The certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. (b) All certificates for Shares delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (c) Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. 11. Taxes Following exercise of an option, the optionee shall, no later than the date as of which an amount related to the option exercise first becomes includable in the gross income of the optionee for federal income tax purposes, pay to the Corporation, or make arrangements satisfactory to the Corporation regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to such amount and the Corporation and its subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the optionee. 12. Effective Date of Plan This Plan shall be effective on the effective date of the Joint Plan of Reorganization of the Corporation and its subsidiaries ("Effective Date"). However, no option granted under this Plan may be exercised in whole or in part until this Plan is approved by the holders of a majority of the outstanding stock of the Corporation entitled to vote on the issue, which approval must occur within the twelve-month period after the Effective Date. In the event such approval is not forthcoming within the time specified, this Plan and any options granted pursuant to it shall be null and void. 13. Term of Plan No option shall be granted pursuant to the Plan more than 10 years after the Plan is approved by the Board of Directors of the Corporation, but options theretofore granted may extend beyond and be exercised after that date. Adopted by the Board of Directors on January 20, 1992. Amended by the Board of Directors on January 26, 1993. Approved by stockholders on May 5, 1993. Amended by the Board of Directors on October 19, 1994. Amended by the Board of Directors on April 23, 1996 and approved by the stockholders on April 23, 1996. Amended by the Board of Directors on January 28, 1997 and approved by the stockholders on April 29, 1997 EX-10 3 Exhibit 10(b) FURNITURE BRANDS EXECUTIVE INCENTIVE PLAN February 1995 Amended March 1, 1996 Amended September 26, 1996 Amended February 24, 1997 TABLE OF CONTENTS ----------------- INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . 1 OBJECTIVES OF PLAN. . . . . . . . . . . . . . . . . . . . . 1 Objectives . . . . . . . . . . . . . . . . . . . . . . . 1 Award Achievement. . . . . . . . . . . . . . . . . . . . 1 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . 2 Eligibility. . . . . . . . . . . . . . . . . . . . . . . 2 Participation. . . . . . . . . . . . . . . . . . . . . . 2 Non-Eligibility. . . . . . . . . . . . . . . . . . . . . 3 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . 3 HOW THE PLAN WORKS. . . . . . . . . . . . . . . . . . . . . 3 0Plan Factors. . . . . . . . . . . . . . . . . . . . . . 3 Setting Furniture Brands Goals . . . . . . . . . . . . . 3 Notification of Participation. . . . . . . . . . . . . . 3 MECHANICS OF DETERMINING AWARDS . . . . . . . . . . . . . . 4 Definitions of Terms . . . . . . . . . . . . . . . . . . 4 Mechanics of Determining Awards. . . . . . . . . . . . . 4 DISCRETIONARY AWARDS PROGRAM. . . . . . . . . . . . . . . . 5 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . 6 PAYMENT OF AWARDS . . . . . . . . . . . . . . . . . . . . . 6 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . 6 MANNER OF EXERCISE OF COMMITTEE AUTHORITY. . . . . . . . . 6 CERTAIN PERFORMANCE BASED AWARDS . . . . . . . . . . . . . 6 NO CONTRACT OF EMPLOYMENT. . . . . . . . . . . . . . . . . 6 ASSIGNMENTS AND TRANSFERS. . . . . . . . . . . . . . . . . 6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 6 AMENDMENT AND TERMINATION OF PLAN AND AWARDS . . . . . . . 6 EFFECTIVE DATE OF THE PLAN. . . . . . . . . . . . . . . . . 7 FURNITURE BRANDS CORPORATE EXECUTIVE INCENTIVE PLAN ------------------------ 1. INTRODUCTION ------------ This Executive Incentive Plan (the "Plan") has been designed for those management persons at the corporate offices of Furniture Brands International, Inc. ("FBI") who directly and substantially influence achievement of certain corporate goals. The Plan provides monetary awards for the achievement of those goals. In select cases, the Plan provides for additional special discretionary awards. FBI believes that the total annual income of key employees should be influenced by their individual and collective effort, and that rewards should directly relate to the achievement of planned, meaningful results. The Plan is in addition to and assumes the existence of a base salary which is competitive, equitable, and subject to periodic performance-related adjustments. The overall administration and control of the Plan, including final determination of annual bonus awards to each participant, is the responsibility of the Executive Compensation and Stock Option Committee of the FBI Board of Directors (the "Committee"). The Committee (or a subcommittee thereof which has been designated by the Committee to administer the Plan) shall consist solely of three or more members of the FBI Board of Directors who are "outside directors" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder. Members of the Committee are not eligible to participate in the Plan. 2. OBJECTIVES OF PLAN ------------------ A. Objectives. The Plan has been created with several objectives in mind: (1) to emphasize achievement of planned strategic objectives; (2) to reinforce the importance of annual growth; and (3) to motivate and challenge participating executives through meaningful compensation opportunities. B. Award Achievement. To achieve these objectives, the Plan is designed to: (1) provide for monetary awards of significant value related directly to measurable FBI results; (2) motivate participating individuals to achieve results beyond the routine of position responsibilities; and (3) be appropriate for both the level of responsibility and total compensation for the position. Total compensation, resulting from the combination of base salary and monetary awards under the Plan, is designed to be competitive with total compensation for similar positions in American industry. 3. PARTICIPATION ------------- A. Eligibility. Only management persons whose performance directly and substantially influences the annual results of FBI will be considered for participation in the Plan. Ordinarily the extent of such influence will be reflected in the Bonus Percentage (as herein defined). B. Participation ------------- (1) At the start of each Plan Year (as herein defined) FBI management will submit a list of proposed participants and Bonus Percentages for review and approval by the Committee. The Committee may in its discretion change the participants and Bonus Percentages, provided, however, that the Committee shall, within the first 90 days of each Plan Year, set forth in writing, a final approved list of participants and Bonus Percentages for such Plan Year. Such final list of participants and Bonus Percentages may not thereafter be modified except as provided in this Plan. With respect to persons who have been determined to be "covered employees" within the meaning of Code Section 162(m)(3) for such Plan Year (a "Covered Employee"), additional participation in the Plan during a Plan Year shall be permitted only in the event of an unusual circumstance, such as a new hire. Executive officers of the Company may be participants in the Plan to the extent approved by the Committee. (2) To earn an award, an individual must be designated a participant for the Plan Year and must participate effectively for a minimum of eight full months of the Plan Year. (3) A participant who has lost time due to illness, or dies, retires or becomes totally disabled during the Plan Year, will be considered for an award under the Plan provided that his/her influence on goal achievement can be identified and that achievement of results can be measured. C. Non-Eligibility --------------- (1) Any individual whose employment is terminated at any time during the Plan Year by reason of voluntary or encouraged resignation, or who is discharged, will not receive an award. (2) Any individual who has been demoted at any time during the Plan Year to a position not included in the Plan will not receive an award. D. Plan Year. The Plan Year will correspond with the FBI fiscal year. 4. HOW THE PLAN WORKS ------------------ A. Plan Factors. There are two factors which will be measured in order to determine an award: opportunity and FBI performance. (1) Opportunity is the potential impact that a participant may have on the achievement of goals. This is expressed by the Bonus Percentage. (2) FBI Performance is the result of achievement. This is measured by the percentage of attainment of FBI's goals. B. Setting FBI Goals. At or prior to the beginning of each Plan Year, FBI management will recommend to the Committee for approval, one or more objective measurable performance goals for FBI (the "Goals") for such year, and the weighting to be assigned to each Goal. The Goals will be based upon one or more of the following criteria: sales; earnings; earnings per share; pre-tax earnings; net profits; return on equity; cash flow; debt reduction; asset management; stock price; market share; costs; or selling, general and administrative ("SG&A") expenses. The Goals will be realistic, yet rigorous. They will be attainable, but attainment will require above average performance. The Committee may, in its discretion, approve management's recommendations or change the Goals and/or weightings, provided, however, that the Company shall, within the first 90 days of the year (or, in the case of a new hire added to the Plan during the year, before 25% of such individual's services for the Company for the year has elapsed), set forth in writing the final approved Goals, the Minimum Percentages (as herein defined) for such year and the weighting to be assigned to such Goals. C. Notification of Participation. Each participant's target Bonus Percentage will be communicated each Plan Year by delivery of the Participation Form. 5. MECHANICS OF DETERMINING AWARDS ------------------------------- A. Definitions of Terms -------------------- (1) Bonus Percentage. The Bonus Percentage will be expressed as a percentage (not less than 10% and not more than 50%) of the participant's base salary. That percentage will be higher for a position with significantly greater responsibilities, thus recognizing the direct relationship between position responsibility and influence on FBI results. Participants who are promoted during a Plan Year to a position with a higher Bonus Percentage will receive a prorated award based on the percentage of the Plan Year spent in each position. (2) Aggregate Target Amount. The Aggregate Target Amount will be expressed as a dollar amount, calculated by multiplying the participant's base annual salary rate, as in effect on March 1 of the Plan Year, which has been established at or before the time of the setting of the Aggregate Target Amount, by the Bonus Percentage. The result will be the total award to which the participant will be entitled if FBI achieves 100% of all Goals for that Plan Year. (3) Weighted Target Amounts. For each Goal a Weighted Target Amount will be calculated by multiplying the Aggregate Target Amount by the weighted percentage applicable to the Goal. The result for each Goal will be the portion of the total award to which the participant will be entitled if FBI achieves 100% of that Goal for that Plan Year. The sum of the Weighted Target Amounts will equal the Aggregate Target Amount. B. Mechanics of Determining Awards. -------------------------------- (1) FBI Performance. FBI's performancegainst the Goals will be measured by the percentage of achievement of each Goal. FBI's performance with respect to each Goal will be based upon audited results. (2) Achievement of Target. The Plan is designed to provide the participant with 100% of his/her Weighted Target Amount with respect to each Goal if FBI achieves 100% satisfaction of that Goal. (3) Minimum FBI Performance. Each Plan Year the Committee will establish a minimum percentage (the "Minimum Percentage") with respect to each Goal. Achievement below the Minimum Percentage will result in no award with respect to that Goal. Under certain circumstances, the Committee may establish Goals the achievement of which contemplate reducing rather than increasing an amount, such as a reduced debt level or reduced SG&A expenses. In any such case, the percentage which will be applied to the Weighted Target Amount for such Goal will be inversely proportional to the performance against the Goal. For example, if a Goal is a year-end debt amount and the actual year -end debt is 105% of the Goal, the percentage of Weighted Target Amount to be paid with respect to that Goal would be 95%. In these circumstances, the Minimum Percentage will be expressed in terms of a figure greater than 100%. (4) Calculation of Award. The percentage of FBI's achievement of each Goal will be applied to the Weighted Target Amount for that Goal to determine the amount of the award payable with respect to that Goal. Awards will be calculated separately for each Goal, but will be aggregated and paid as one award check. (5) Discretion to Increase Award. The Committee shall, under no circumstances, increase an award granted under this Section 5 except to the extent permitted under Treasury Regulation Section 1.162- 27(e)(2)(iii). 6. DISCRETIONARY AWARDS PROGRAM. ----------------------------- (1) To recognize special needs, a discretionary awards program is part of this Plan. Its objective is to recognize the performance of FBI through a more qualitative evaluation, rather than a quantitative evaluation. This could occur, for example, if FBI does not achieve one or more Goals due to business or economic reasons beyond its control but, given these adverse circumstances, nonetheless performed well. Under such circumstances, a special award may be granted at the discretion of the Committee. (2) To the extent all or any portion of an award is not immediately deductible as compensation expense by FBI for federal income tax purposes, payment of such award or portion thereof, as the case may be, will be deferred until following termination of employment of the participant or until such earlier date as the Committee shall, in its discretion, determine, either at the time of deferral or thereafter, whereupon such award or any portion thereof, as the case may be, less appropriate withholdings, will be paid by check provided that the same shall then have become immediately deductible as compensation expense by FBI for federal income tax purposes. Simple interest shall be paid annually on the deferred compensation at FBI's effective borrowing rate. (3) Nothing contained in this Section 6 shall be deemed to permit or provide for discretionary increases in awards payable to Covered Employees under Section 5 hereof. 7. CERTIFICATION. Before any payments are made under this Plan, the Committee must certify in writing that the Goals justifying the payment of an award have been met. 8. PAYMENT OF AWARDS. Except as provided in Section 6 hereof, awards, to the extent immediately deductible as compensation expense by FBI for federal income tax purposes, less appropriate withholdings, will be paid by check as soon as practical after the audited close of a fiscal year. 9. ADMINISTRATION. Subject to the limitations as herein set forth, the Committee is authorized and empowered to administer the Plan; interpret the Plan; establish, modify and grant waivers of award restrictions; prescribe, amend and rescind rules relating to the Plan; and determine the rights and obligations of participants under the Plan. All decisions of the Committee shall be final and binding upon all parties including the Company, its stockholders, and its participants. 10. MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The express grant of any specific power to the Committee and the taking of any action by the Committee, shall not be construed, as limiting any power or authority of the Committee. All designations of participation, bonus percentages, goals, minimum percentages, aggregate amounts, and certifications of performance shall be in writing. A writing signed by all members of the Committee shall constitute the act of the Committee without the necessity, in such event, to hold a meeting. The Committee may delegate the authority, subject to such terms as the Committee shall determine, to perform administrative functions (excluding those described in the second sentence of this Section 10) under the Plan. 11. CERTAIN PERFORMANCE BASED AWARD. Any awards under Section 5 hereof are intended to be "qualified performance-based compensation" within the meaning of Section 162(m) of the Code and shall be paid solely on account of the attainment of one or more preestablished, objective performance goals within the meaning of Section 162(m). If any provision of this Plan does not comply with the requirements of Section 162(m) of the Code as then applicable to any employee, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements with respect to such employee. 12. NO CONTRACT OF EMPLOYMENT. Participation in the Plan shall not be considered an agreement to employ a participant for any period of time or in any position. 13. ASSIGNMENTS AND TRANSFERS. With the exception of transfer by will or by the laws of descent and distribution, rights under the Plan may not be transferred or assigned. 14. GOVERNING LAW. The Plan shall be construed, administered and governed in all respects under and by the applicable internal laws of the State of Missouri, without giving effect to the principles of conflicts of law thereof. 15. AMENDMENT AND TERMINATION OF PLAN AND AWARDS. The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of stockholders or participants, except as is required by any federal or state law or regulation or the rules of any stock exchange on which the shares of FBI ("Shares") are listed, or if the Board in its discretion determines that obtaining such stockholder approval is for any reason advisable, provided, however, that (i) without the consent of an affected participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may impair the rights of such participant under any award theretofore granted to such participant, and (ii) the Plan may not be amended without the consent of the stockholders of a majority of the Shares then outstanding to (a) materially modify the requirements as to eligibility for participation in the Plan, (b) change the specified performance objectives for payment of awards under Section 5, (c) increase the maximum award payable under Section 5, (d) withdraw administration of the Plan from the Committee or (e) extend the period during which awards may be granted. 16. EFFECTIVE DATE OF THE PLAN. The Plan, as amended, shall become effective on January 1, 1997 provided that the Plan is approved by the affirmative vote of the holders of a majority of the Shares present or represented and entitled to vote at the 1997 annual meeting of the stockholders of FBI. The terms of the Plan shall be perpetual; subject to earlier termination by the Board pursuant to Section 15, after which no awards may be made under the Plan, but any such termination shall not affect awards then outstanding or the authority of the Committee to continue to administer the Plan. EX-10 4 Exhibit 10(c) EMPLOYMENT AGREEMENT This Employment Agreement is made and entered into as of April 30, 1997 by and between Furniture Brands International, Inc., a Delaware corporation ("Furniture Brands") and Richard B. Loynd ("Loynd"). In accordance with the authority granted by the Executive Compensation and Stock Option Committee and the Executive Committee of the Board of Directors of Furniture Brands on December 17, 1996, and for good and valuable consideration the parties covenant and agree as follows: 1. Employment. Furniture Brands agrees to employ Loynd during the period beginning January 1, 1997 and ending December 31, 1999 (the "Employment Period"), and Loynd agrees to serve Furniture Brands as an employee during the Employment Period, subject to the direction and control of the Board of Directors of Furniture Brands, all upon the following terms and conditions: a. during the Employment Period, Loynd will receive a salary of $1 million per year, which amounts will be payable to his wife or otherwise to his beneficiaries or to his estate should he die before the expiration of the Employment Period; b. during the Employment Period, Loynd will also be entitled to participate in all benefit programs in which he is participating on the date hereof (except any bonus or other annual incentive plans), or which might otherwise be made available generally to employees of Furniture Brands, and to be reimbursed all expenses in accordance with past practice; c. the authorization given by the Furniture Brands Board of Directors on January 26, 1993 to reimburse Loynd $50,000 per year for a second-to-die life insurance policy will be continued for the three- year Employment Period; d. Furniture Brands will continue to maintain and pay the expenses of Furniture Brands' office in New Jersey for a five-year period after January 1, 1997, and Loynd will continue to have the use of that office; and e. any amounts being carried by Furniture Brands as deferred compensation for Loynd for past years of service will be paid to Loynd as soon as they become immediately deductible by Furniture Brands as compensation expense. The failure of Furniture Brands, without Loynd's consent, to comply with the terms and conditions of employment as set forth in this Section 1 shall constitute "Good Reason" for Loynd's termination of his employment with Furniture Brands. 2. Duties. Loynd agrees during the Employment Period to perform such executive duties for Furniture Brands and for Furniture Brands' subsidiaries relating to its business as the Furniture Brands Board of Directors may reasonably direct from time to time. 3. Term. If Loynd's employment with Furniture Brands is terminated by Furniture Brands prior to December 31, 1999, or if during such period Loynd terminates his employment with Furniture Brands for Good Reason, then Furniture Brands will, for the period ending December 31, 1999 continue all payments and benefits called for in Section 1 hereof. 4. Miscellaneous. This Employment Agreement shall be binding upon and shall inure to the benefit of Loynd's heirs, executors, administrators and legal representatives, and shall be binding upon and inure to the benefit of Furniture Brands and its successors and assigns. This Agreement shall supersede and stand in place of any and all other employment agreements between Loynd and Furniture Brands or any of its subsidiaries. This Employment Agreement shall take effect as of the day and year first above set forth, and its validity, interpretation, construction and performance shall be governed by the laws of the State of Missouri. 5. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to its subject matter, and no waiver, modification or change of any of its provisions shall be valid unless in writing and signed by the party against whom such claimed waiver, modification or change is sought to be enforced. IN WITNESS WHEREOF, the parties hereto have each executed this Agreement the date set forth below. FURNITURE BRANDS INTERNATIONAL, INC. By: Wilbert G. Holliman --------------------------------------- President and Chief Executive Officer RICHARD B. LOYND By: Richard B. Loynd ---------------------------------------- EX-10 5 Exhibit 10(d) EMPLOYMENT AGREEMENT This Employment Agreement is made and entered into on April 29, 1997 (the "Effective Date") by and between Action Industries, Inc., a Virginia corporation ("Action") and John T. Foy ("Executive"). WHEREAS, Executive is now and has been employed by Action in senior management executive positions and is broadly experienced in all facets of Action's operations; and WHEREAS, it is in the best interests of Action to assure that it will have the continued dedication of Executive; NOW THEREFORE, for good and valuable consideration and in order to induce Executive to remain in the employ of Action, the parties covenant and agree as follows: 1. Definitions. The following terms shall have the following meanings for purposes of this Agreement. a. "Cause" means (i) an act or acts of personal dishonesty taken by Executive and intended to result in substantial personal enrichment of Executive at the expense of Action, (ii) violations by Executive of this Agreement or Executive's employment obligations to Action which are demonstrably willful on Executive's part and which are not remedied within a reasonable period of time after receipt of written notice from Action, or (iii) the conviction of Executive of a felony involving moral turpitude. b. "Disability" means the incapacity to attend to and perform effectively one's duties and responsibilities which continues for at least 26 weeks after its commencement, as determined by a physician selected by Action. c. "Employment Period" that period beginning on the Effective Date and ending upon Executive's retirement or earlier termination of employment. 2. Employment. Action agrees to employ Executive, and Executive agrees to serve Action in an executive, managerial and supervisory capacity, subject to the direction and control of the Board of Directors of Action, all upon the terms and conditions hereinafter set forth. During the Employment Period: a. Executive's position (including, without limitation, status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date, b. Executive's services shall be performed at the location where the Executive is employed on the Effective Date, or at any office or location not more than thirty-five (35) miles from such location, c. Executive shall continue to receive an annual base salary at least equal to the annual base salary payable to the Executive by Action on the Effective Date ("Base Salary"), d. Executive shall continue to have an annual cash bonus potential, either pursuant to the Lane Profit Sharing Plan in effect on the Effective Date or pursuant to a similar incentive compensation plan of Action, at least equal to the level in existence on the Effective Date ("Annual Bonus"), and e. Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable to other key executive employees of Action ("Benefit Plans"). The failure of Action, without Executive's consent, to comply with the terms and conditions of employment as set forth in this Section 2 shall constitute "Good Reason" for Executive's termination of his employment with Action. 3. Best Efforts. Executive agrees during the Employment Period to devote his best efforts and substantially all of his business time and attention to the business of Action, it being agreed that the Executive will have complied with this obligation if he devotes to the business of Action his same best efforts and the same time and attention to the business of Action that he has devoted to the business of Action during the twelve months next preceding the Effective Date. Executive agrees that he will perform such other executive duties for Action and for Action's subsidiaries relating to its business as the Board of Directors of Action may reasonably direct. 4 Term. Subject to the provisions of Sections 4 and 5 of this Agreement, either party shall have the right to terminate the Employment Period at any time. If Executive's employment with Action is terminated by Action, other than for Cause or as a result of his death or Disability, or if Executive terminates his employment with Action for Good Reason, then Action will, for a period of one year after the termination date (or, if shorter, until Executive reaches "Normal Retirement Age" (as such concept is used in the primary retirement plan in which Executive is a participant on the Effective Date)), (i) pay to Executive as and when normally payable his Base Salary as in effect on the date of termination and an amount equal to the average Annual Bonus received by such Executive for the past three years prior to termination (or a pro-rated portion of such average Annual Bonus) and (ii) subject to program eligibility requirements and continuation of programs by Action, continue his participation in the Benefit Plans in which he was participating on the date of termination of employment. 5. Split Dollar Insurance Policy. If Executive's employment with Action is terminated by Action other than for Cause or as a result of his death or Disability, or if during such period Executive terminates his employment with Action for Good Reason, then Action will continue to make premium payments for so long as Action is making payments to Executive under Section 4 hereof under any and all split dollar life insurance programs in effect on the life of the Executive as of the Effective Date, after which the Executive will be entitled to ownership of the policy and Action will be entitled to premium retrieval, all in accordance with the terms of the program, but only to the extent of the cash value of the policy, and without recourse to the Executive for the balance of any such premium retrieval. 6. Non-Competition. During the period commencing on the Effective Date and while employed by Action, and for a period of one year after termination of employment, Executive shall not, without the prior written consent of Action, directly or indirectly, own, control, finance, manage, operate, join or participate in the ownership, control, financing, management or operation of, or be connected as an employee, consultant or in any other capacity with, any business engaged in the manufacture or distribution of residential furniture in the United States. Nothing in this Section 6 shall, however, restrict Executive from making investments in other ventures which are not competitive with Action, or restrict Executive from owning less than one percent (1%) of the outstanding securities of companies listed on a national stock exchange or actively traded in the "over-the-counter" market. In addition, if the Employment Period is terminated by Action (other than for Cause) and the Executive elects to forego the payments called for in Sections 4 and 5 hereof, the provisions of this Section 6 shall not apply. Should any of the terms of this Section 6 be found to be unenforceable because they are over-broad in any respects then they shall be deemed amended to the extent, and only to the extent, necessary to render them enforceable. Both parties stipulate that money damages would be inadequate to compensate for any breaches of the terms of this Section 6, and that such terms shall be enforceable through appropriate equitable relief, without the necessity of proving actual damages and to an equitable accounting of all earnings, profits, and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights and remedies to which Action may be entitled. 7. Confidentiality. During the Employment Period and at all times thereafter, Executive shall maintain the confidentiality of, and shall not disclose to any person (except as his duties as an employee of Action may require) any non-public information concerning Action or its business. 8. Miscellaneous. This Employment Agreement shall be binding upon and shall inure to the benefit of Executive's heirs, executors, administrators and legal representatives, and shall be binding upon and inure to the benefit of Action and its successors and assigns. This Agreement shall supersede and stand in place of any and all other agreements between Executive and Action regarding severance pay and/or any and all severance pay benefits pursuant to any plan or practice of Action. This Employment Agreement shall take effect as of the day and year first above set forth, and its validity, interpretation, construction and performance shall be governed by the laws of the State of Mississippi. 9. Indemnification. In the event that either party hereto is required to pursue litigation against the other party to enforce his or its rights hereunder, the prevailing party in any such litigation shall be entitled to reimbursement of the costs and expenses of such litigation, including attorney's fees. 10. Waivers. In consideration of the undertakings of Action set forth in this Agreement, Executive hereby irrevocably waives and forever releases any and all claims and causes of action of any nature whatsoever that Executive has or may have against Action or any of its officers, directors, employees or agents arising out of the negotiation, execution, delivery or terms of this Agreement, including, without limitation, any claims arising under the Age Discrimination in Employment Act, 29 U.S.C. Subsection 21 et seq., and any state or local law relating to age discrimination. 11. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to its subject matter, and no waiver, modification or change of any of its provisions shall be valid unless in writing and signed by the party against whom such claimed waiver, modification or change is sought to be enforced. IN WITNESS WHEREOF, the parties hereto have each executed this Agreement the date set forth below. ACTION INDUSTRIES, INC. By: Lynn Chipperfield ------------------------ Vice-President Agreed to and Approved: FURNITURE BRANDS JOHN T. FOY INTERNATIONAL, INC. By: W.G. Holliman By: John T. Foy ------------------------- ------------------------ President EX-11 6
EXHIBIT 11 FURNITURE BRANDS INTERNATIONAL, INC. STATEMENT RE COMPUTATION OF NET EARNINGS PER COMMON SHARE --------------------------------------------------------- Three Months Three Months Ended Ended March 31, March 31, 1997 1996 Primary: ------------ ------------ Weighted average common shares outstanding during the period... 61,447,735 53,526,719 Common shares issuable on exercise of stock options (1)........ 1,368,368 842,656 Common shares issuable on exercise of warrants (2)............. 899,812 1,424,850 ------------ ------------ Weighted average common and common equivalent shares outstanding for primary calculation...................................... 63,715,915 55,794,225 ============ ============ Fully diluted: Weighted average common and common equivalent shares outstanding for primary calculation....................................... 63,715,915 55,794,225 Common shares issuable on exercise of stock options (3)........ 9,249 29,828 Common shares issuable on exercise of warrants (4)............. 6,791 158,230 ------------ ------------ Weighted average common and common equivalent shares outstanding for fully diluted calculation................................. 63,731,955 55,982,283 ============ ============
EXHIBIT 11 (CONTINUED) FURNITURE BRANDS INTERNATIONAL, INC. NOTES TO STATEMENT RE COMPUTATION OF NET EARNINGS PER COMMON SHARE (1) Includes common stock options, the exercise of which would result in dilution of net earnings per common share. Such common stock options have been considered as exercised and the proceeds therefrom were used to purchase common stock at the average common stock market price, if the average common stock market price was higher than the common stock option exercise price during the period. (2) Includes common stock warrants, the exercise of which would result in dilution of net earnings per common share. Such common stock warrants have been considered as exercised and the proceeds therefrom were used to purchase common stock at the average common stock market price, if the average common stock market price was higher than the common stock warrant exercise price during the period. (3) Additional common shares issuable resulting from the application of the same principles described in Note (1), except that the proceeds from assumed common stock options exercised were used to purchase common stock at the month end common stock market price, if the month end common stock market price was higher than the average common stock market price during the period. (4) Additional common shares issuable resulting from the application of the same principles described in Note (2), except that the proceeds from assumed common stock warrants exercised were used to purchase common stock at the month end common stock market price, if the month end common stock market price was higher than the average common stock market price during the period.
EX-27 7 ART. 5 FDS FOR 1997 QTR-1 10-Q
5 1,000 DEC-31-1997 JAN-01-1997 MAR-31-1997 3-MOS 18,663 0 320,140 19,276 288,052 632,957 433,894 135,288 1,288,631 153,675 567,800 0 0 61,467 276,040 1,288,631 449,861 449,861 326,187 326,187 0 1,530 9,089 27,350 10,291 17,059 0 0 0 17,059 0.27 0.27
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