bfi_8k-040512.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported) April 5, 2012
 

 
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of registrant as specified in its charter)
 

 
VIRGINIA
 
0-209
 
54-0135270
(State or other jurisdiction of
incorporation or organization)
 
(Commission File No.)
 
(I.R.S. Employer
Identification No.)
 
3525 FAIRYSTONE PARK HIGHWAY
BASSETT, VIRGINIA
 
24055
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code 276/629-6000
  
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


 
 
 

 
 
Item 2.02.
Results of Operations and Financial Condition.
 
On April 5, 2012 Bassett Furniture Industries issued a news release relating to, among other things, the first quarter financial results for the fiscal year ending November 24, 2012.  A copy of the news release announcing this information is attached to this report as Exhibit 99.
 
Item 9.01.
Financial Statements and Exhibits
 
Exhibit 99
  
News release issued by Bassett Furniture Industries, Inc. on April 5, 2012.
 
 
 
 

 

Signatures

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 hereunto duly authorized.
 
 
BASSETT FURNITURE INDUSTRIES, INCORPORATED
 
       
Date:  April 5, 2012
By:
/s/ J. Michael Daniel  
   
J. Michael Daniel
Title: Vice President – Chief Accounting Officer
 
       
       
 
 
 
 

 

EXHIBIT INDEX

Description
     
Exhibit 99
  
News release issued by Bassett Furniture Industries, Inc. on April 5, 2012.

 
ex99.htm
Exhibit 99

 

 
Bassett Furniture Industries, Inc.  J. Michael Daniel, Vice-President
P.O. Box 626
and Chief Accounting Officer
Bassett, VA 24055
(276) 629-6614 – Investors
   
 
Jay S. Moore, Director of Communications
For Immediate Release (276) 629-6450 – Media
 

Bassett Furniture News Release
Bassett Announces First Quarter Results

 
(Bassett, Va.) – April 5, 2012 – Bassett Furniture Industries, Inc. (Nasdaq:  BSET) announced today its results of operations for its fiscal quarter ended February 25, 2012.
 
Fiscal 2012 First Quarter
 
 
·
Consolidated sales for the first quarter decreased 5.1% to $61.0 million as compared to the first quarter 2011 due to strategic store closings during and subsequent to first quarter 2011.
 
·
Company-owned store delivered sales increased 5.0% to $38.8 million.
 
·
Wholesale sales declined 7.3% to $42.6 million.
 
·
Gross margins increased to 51.9% of sales for first quarter 2012 from 49.6% for first quarter 2011 attributable to a higher mix of retail sales in consolidated sales.
 
·
Operating profit for first quarter 2012 was $0.2 million versus a $7.2 million loss for first quarter last year.
 
·
Bad debt and notes receivable charges, restructuring and asset impairment charges and lease exit costs were $0.5 million in first quarter 2012 versus $8.5 million in first quarter 2011.
 
·
Repurchased 82,545 shares using $0.6 million and paid $6.1 million in dividends during the quarter.
 
“The Company’s underlying performance improved in the first quarter despite our overall decline in sales and three distinct items that adversely affected our financial results," said Robert H. Spilman Jr., President and Chief Executive Officer.  “As previously noted, we will experience difficult consolidated top line comparisons year over year until we can make up the volume we lost from closing 13 underperforming stores in 2011.  Our remaining network of Bassett Home Furnishings (BHF) corporate stores, however, turned in a strong 5.0% overall sales increase that included a 6.5% increase by comparable stores.  We believe that continued improvement in our store sales coupled with the execution of several growth initiatives currently underway will allow us to recapture the sales that were lost in last year’s store closings and begin to generate sales growth as a result.    We recorded in the quarter restructuring costs of $0.5 million in conjunction with relocating an existing store in Richmond, Virginia to a better retail site, and demolishing a manufacturing facility in Bassett, Virginia that closed in 2007.  Also in the quarter, the Company recorded a $0.8 million impairment of a financial investment that we have held since 2005. This followed a write-down taken by the fund manager, who recently advised us of an adverse court ruling in Delaware affecting certain insurance-related investments in the fund.  These losses were partially offset by tax benefits of approximately $0.5 million recognized for the quarter.  Also in the quarter, the Company paid a special dividend to shareholders of $.50/share amounting to $5.7 million and announced an increase to our quarterly dividend from $.035/share to $.05/share.  Subsequently, the Company paid the dividend at the new rate on March 1, 2012.  And, finally, the Company acquired 82,545 shares of its common stock during the quarter for approximately $0.6 million.”
 
 
 

 

Wholesale Segment
 
Fiscal 2012 First Quarter
 
 
·
Wholesale shipments declined 7.3% to $42.6 million as compared to the first quarter of 2011 due primarily to fewer stores in the dedicated retail network in 2012.  This decline was partially offset by increased shipments in the traditional and export channels in 2012.
 
·
Wholesale operating margins increased to 4.3% from a loss of 8.5% primarily from improved wood margins and lower bad debt charges, partially offset by higher SG&A expenditures, primarily in preparation for the launch of the new HGTV Home platform.

“Once again, the 7.3% decline in wholesale shipments for the quarter was attributable to fewer shipments to BHF licensees,” commented Mr. Spilman.  “On the other hand, wholesale shipments to furniture retailers outside of the Bassett store network grew by 11%.  Future wholesale growth should result from continued improvement in comparable corporate retail performance, new store openings, and from the introduction of the HGTV Design Studio and HGTV Home Furniture Collection lines this fall.  The strategic partnership with Home & Garden Television that was announced last September is an exciting opportunity for the Company.  A tremendous amount of preparation has been underway for the past nine months as the Company has incurred the expense of opening a new HGTV dedicated showroom in High Point, additional sample costs, and added payroll expense to manage the HGTV opportunity.  Additionally, the Company opened a new wholesale showroom at the World Market Center in Las Vegas.  Even with the added costs of these investments in operations, wholesale operating income improved to $1.8 million.  More significantly, bad debt expense was reduced by $6.8 million.  After many quarters of significant bad debt expense, the Company has returned to a normalized level of delinquent account charges.”

Retail Segment
 
Fiscal 2012 First Quarter
 
 
·
Company-owned store delivered sales increased 5.0% to $38.8 million with a 6.5% comparable store increase.
 
·
Written sales for comparable stores increased 9.4% compared to first quarter 2011.
 
·
Operating margins improved from a 4.8% loss in first quarter 2011 to a 2.6% loss in first quarter 2012 due to increasing leverage of fixed costs from higher comparable store sales and greater operating efficiencies.
 
·
Comparable stores generated $0.2 million operating profit.
 
·
Opened a new store in Torrance (Los Angeles), California on December 26, 2011 and repositioned the Richmond, Virginia market with a new store opening on February 16, 2012.
 
 
 

 
 
The following table summarizes the changes in store count during the quarter ended February 25, 2012:
 
   
November 26,
   
New
 
Stores
 
Stores
   
February 25,
 
   
2011
   
Stores
 
Acquired
 
Closed
   
2012
 
                           
Licensee-owned stores
    39                     39  
Company-owned stores
    49       2         (1 )     50  
                                   
Total
    88       2  
          -
    (1 )     89  
 
Our corporate retail division continued to turn in improved operating results once again this quarter,” Spilman continued.  “This marks four consecutive quarters that corporate retail has been able to post better year over year performance.  The visual merchandising in our corporate stores has markedly improved, our e-training platform is bearing fruit, and we are consistently attracting a higher caliber of design associate to sell our products.  Furthermore, our investment in the 16 stores that we have remodeled over the past 4 years is producing solid returns as this group of stores is significantly more profitable than the remainder of the fleet.  Also noteworthy is the fact that 30% of our operating loss was attributable to new store opening costs.  We plan to open two more stores in 2012 – one in Paramus, New Jersey around Memorial Day and one in Dallas, Texas this fall.  We continue to analyze all of our existing markets to assess the quality of our locations.  As a result, we are closing a store on the south side of Austin, Texas later this month.”

 
 

 

About Bassett Furniture Industries, Inc.
Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 89 company- and licensee- owned stores, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. The most significant growth opportunity 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 750 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. For more information, visit the Company’s website at bassettfurniture.com. (BSET-E)
 
Certain of the statements 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 end of the first fiscal quarter of 2012, 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 actual results to differ materially from those indicated in the forward looking statements:  the effects of national and global economic or other conditions and future events on the retail demand for home furnishings and the ability of Bassett’s customers and consumers to obtain credit; and the economic, competitive, governmental and other factors identified in Bassett’s filings with the Securities and Exchange Commission.  Any forward-looking statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.  Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.
 
###
 
 
 

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Operations - unaudited
 
(In thousands, except for per share data)
 
   
                         
   
Quarter Ended
   
Quarter Ended
 
   
February 25, 2012
   
February 26, 2011
 
   
Amount
   
Percent of
Net Sales
   
Amount
   
Percent of
Net Sales
 
                         
Net sales
  $ 60,968       100.0 %   $ 64,264       100.0 %
                                 
Cost of sales
    29,297       48.1 %     32,416       50.4 %
                                 
Gross profit
    31,671       51.9 %     31,848       49.6 %
                                 
Selling, general and administrative expense excluding bad debt and notes receivable valuation charges
    30,996       50.8 %     30,508       47.5 %
Bad debt and notes receivable valuation charges
    32       0.1 %     6,826       10.6 %
Restructuring and asset impairment charges
    236       0.4 %     879       1.4 %
Lease exit costs
    228       0.4 %     884       1.4 %
                                 
Operating income (loss)
    179       0.3 %     (7,249 )     -11.3 %
                                 
Other loss, net
    (1,247 )     -2.0 %     (959 )     -1.5 %
                                 
Loss before income taxes
    (1,068 )     -1.8 %     (8,208 )     -12.8 %
                                 
Income tax (expense) benefit
    472       0.8 %     (47 )     -0.1 %
Net loss
  $ (596 )     -1.0 %   $ (8,255 )     -12.8 %
                                 
Basic and diluted loss per share
  $ (0.05 )           $ (0.72 )        
 
 
 
 

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
 
(In thousands)
 
   
(unaudited)
       
Assets
 
February 25, 2012
   
November 27, 2011
 
Current assets
           
Cash and cash equivalents
  $ 61,089     $ 69,601  
Accounts receivable, net
    13,830       14,756  
Marketable securities
    3,010       2,939  
Inventories
    46,059       45,129  
Other current assets
    6,808       7,778  
Total current assets
    130,796       140,203  
                 
Property and equipment
               
Cost
    142,549       143,824  
Less accumulated depreciation
    92,046       93,878  
Property and equipment, net
    50,503       49,946  
                 
Investments
    -       806  
Retail real estate
    16,128       16,257  
Notes receivable, net
    1,792       1,802  
Other
    13,992       14,160  
Total long-term assets
    31,912       33,025  
Total assets
  $ 213,211     $ 223,174  
                 
Liabilities and Stockholders’ Equity
               
Current liabilities
               
Accounts payable
  $ 15,763     $ 18,821  
Accrued compensation and benefits
    6,972       7,201  
Customer deposits
    10,776       9,238  
Dividends payable
    563       6,063  
Other accrued liabilities
    10,210       10,302  
Current portion of real estate notes payable
    205       202  
Total current liabilities
    44,489       51,827  
                 
Long-term liabilities
               
Post employment benefit obligations
    11,118       11,226  
Real estate notes payable
    3,610       3,662  
Other long-term liabilities
    3,625       4,024  
Total long-term liabilities
    18,353       18,912  
                 
Commitments and Contingencies
               
                 
Stockholders’ equity
               
Common stock
    56,332       56,712  
Retained earnings
    95,094       96,331  
Accumulated other comprehensive loss
    (1,057 )     (608 )
Total stockholders' equity
    150,369       152,435  
Total liabilities and stockholders’ equity
  $ 213,211     $ 223,174  
 
 
 

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - unaudited
(In thousands)
             
   
Three Months Ended
February 25, 2012
   
Three Months Ended
February 26, 2011
 
Operating activities:
           
Net loss
  $ (596 )   $ (8,255 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
    1,316       1,465  
Equity in undistributed income of investments and unconsolidated affiliated companies
    (16 )     (940 )
Provision for restructuring and asset impairment charges
    236       879  
Lease exit costs
    228       884  
Provision for lease and loan guarantees
    (13 )     1,282  
Provision for losses on accounts and notes receivable
    32       6,826  
Gain on mortgage settlement
    -       (436 )
Other than temporary impairment on investments
    806       -  
Other, net
    (342 )     322  
Changes in operating assets and liabilities
               
Accounts receivable
    894       370  
Inventories
    (930 )     1,988  
Other current assets
    (439 )     760  
Accounts payable and accrued liabilities
    (2,470 )     (8,905 )
Net cash used in operating activities
    (1,294 )     (3,760 )
                 
Investing activities:
               
Purchases of property and equipment
    (1,918 )     (486 )
Proceeds from sales of property and equipment
    5       26  
Proceeds from sale of interest in affiliate, IHFC
    1,410       -  
Proceeds from sales of investments
    398       1,369  
Purchases of investments
    (396 )     (1,369 )
Net cash received on notes
    2       40  
Net cash provided by investing activities
    (499 )     (420 )
                 
Financing activities:
               
Repayments of real estate notes payable
    (49 )     (223 )
Issuance of common stock
    39       35  
Repurchases of common stock
    (646 )     -  
Cash dividends
    (6,063 )     -  
Payments on other notes
    -       (362 )
Net cash used in financing activities
    (6,719 )     (550 )
Change in cash and cash equivalents
    (8,512 )     (4,730 )
Cash and cash equivalents - beginning of period
    69,601       11,071  
Cash and cash equivalents - end of period
  $ 61,089     $ 6,341  
 
 
 

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Segment Information - unaudited
(In thousands)
                 
   
Quarter ended
     
Quarter ended
   
   
February 25, 2012
     
February 26, 2011
   
Net Sales
               
Wholesale
  $ 42,611  
(a)
  $ 45,969  
(a)
Retail
    38,816         36,980    
Inter-company elimination
    (20,459 )       (18,685 )  
Consolidated
  $ 60,968       $ 64,264    
                     
Operating Income (Loss)
                   
Wholesale
  $ 1,831  
(b)
  $ (3,891 )
(b)
Retail
    (999 )       (1,792 )  
Inter-company elimination
    (189 )       197    
Restructuring and asset impairment charges
    (236 )       (879 )  
Lease exit costs
    (228 )       (884 )  
Consolidated
  $ 179       $ (7,249 )  
                     
                     
(a) Excludes wholesale shipments for dealers where collectibility is not reasonably assured at time of shipment as follows:
   
February 25, 2012
     
February 26, 2011
   
              Quarter ended
  $ -       $ 1,257    
                     
(b) Includes bad debt and notes receivable valuation charges as follows:
             
   
February 25, 2012
     
February 26, 2011
   
              Quarter ended
  $ 32       $ 6,826    
 
 
 

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Supplemental Retail Information--unaudited
 
(In thousands)
 
   
   
40 Comparable Stores
 
   
Quarter Ended
   
Quarter Ended
 
   
February 25, 2012
   
February 26, 2011
 
   
Amount
   
Percent of
Net Sales
   
Amount
   
Percent of
Net Sales
 
                         
Net sales
  $ 32,774       100.0 %   $ 30,764       100.0 %
                                 
Cost of sales
    16,665       50.8 %     15,786       51.3 %
                                 
Gross profit
    16,109       49.2 %     14,978       48.7 %
                                 
Selling, general and administrative expense*
    15,890       48.5 %     15,764       51.2 %
                                 
Income (loss) from operations
  $ 219       0.7 %   $ (786 )     -2.6 %
                                 
                                 
   
All Other Stores
 
   
Quarter Ended
February 25, 2012
   
Quarter Ended
February 26, 2011
 
   
Amount
   
Percent of
Net Sales
   
Amount
   
Percent of
Net Sales
 
                                 
Net sales
  $ 6,042       100.0 %   $ 6,216       100.0 %
                                 
Cost of sales
    3,481       57.6 %     4,058       65.3 %
                                 
Gross profit
    2,561       42.4 %     2,158       34.7 %
                                 
Selling, general and administrative expense
    3,779       62.6 %     3,164       50.9 %
                                 
Loss from operations
  $ (1,218 )     -20.2 %   $ (1,006 )     -16.2 %
                                 
*Comparable store SG&A includes retail corporate overhead and administrative costs.