1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1995
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 No. 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of Registrant as specified in its charter)
Virginia 54-0135270
----------------------------------------- ---------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Bassett, Virginia 24055
-----------------------------
(Address of principal executive offices)
(Zip Code)
(540) 629-6000
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--------- ---------
At August 31, 1995, 14,047,653 shares of common stock of the Registrant were
outstanding.
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PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS - UNAUDITED
NINE MONTHS ENDED AUGUST 31, THREE MONTHS ENDED AUGUST 31,
---------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
Net sales $361,752,321 $381,271,061 $119,183,765 $124,967,415
Costs and expenses
Cost of sales 301,097,044 314,128,874 98,472,087 103,459,715
Selling, general and administrative 48,839,196 49,360,201 16,332,759 16,733,016
------------ ------------ ------------ ------------
349,936,240 363,489,075 114,804,846 120,192,731
------------ ------------ ------------ ------------
Income from operations 11,816,081 17,781,986 4,378,919 4,774,684
Other income, net 10,295,806 6,606,876 3,796,872 1,963,367
------------ ------------ ------------ ------------
Income before income taxes and cumulative
effect of a change in accounting principle 22,111,887 24,388,862 8,175,791 6,738,051
Income taxes (6,457,500) (7,390,000) (2,394,500) (2,149,000)
------------ ------------ ------------- ------------
Income before cumulative effect of
a change in accounting principle 15,654,387 16,998,862 5,781,291 4,589,051
Cumulative effect of a change in accounting principle -0- (510,200) -0- -0-
------------ ------------ ------------ ------------
NET INCOME 15,654,387 16,488,662 5,781,291 4,589,051
Retained earnings - beginning of period 221,949,817 216,211,676 226,188,020 220,014,909
------------ ------------ ------------ ------------
237,604,204 232,700,338 231,969,311 224,603,960
Cash dividends (8,444,424) (8,593,977) (2,809,531) (2,837,897)
Retirement of purchased common stock (777,743) (5,135,861) (777,743) (2,795,563)
------------ ------------ ------------ ------------
Retained earnings - end of period $228,382,037 $218,970,500 $228,382,037 $218,970,500
============ ============ ============ ============
EARNINGS PER SHARE:
Income before cumulative effect
of a change in accounting principle $1.11 $ 1.18 $.41 $ .32
Cumulative effect of a change
in accounting principle -0- (.04) -0- -0-
------ ------ ----- -----
NET INCOME PER SHARE $ 1.11 $ 1.14 $ .41 $ .32
====== ====== ===== =====
DIVIDENDS PER SHARE $ .60 $ .60 $ .20 $ .20
====== ====== ===== =====
- --------------------------------
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
ASSETS AUGUST 31, 1995 NOVEMBER 30, 1994
- ------ ----------------- -----------------
Current Assets
Cash and cash equivalents $ 57,507,504 $ 42,314,957
Trade accounts receivable, less allowances
for doubtful accounts and discounts 66,180,271 71,936,750
Inventories:
Finished goods 47,100,731 45,243,596
Work in process 15,484,490 15,588,696
Raw materials and supplies 44,047,255 44,588,519
------------ ------------
106,632,476 105,420,811
Less LIFO adjustment 26,646,000 25,346,000
------------ ------------
79,986,476 80,074,811
Prepaid expenses 2,354,976 2,206,736
Prepaid income taxes -0- 274,675
Deferred income taxes 1,891,000 1,823,000
------------ ------------
207,920,227 198,630,929
Property, Plant and Equipment
Cost 212,659,126 207,227,241
Less allowances for depreciation 158,642,057 152,673,335
------------ ------------
54,017,069 54,553,906
Other Assets
Investment in securities 41,614,463 43,638,983
Investment in affiliated companies 38,150,587 35,080,525
Other 10,439,413 8,593,887
------------ ------------
90,204,463 87,313,395
------------ ------------
$352,141,759 $340,498,230
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities
Accounts payable $ 30,306,148 $ 29,786,395
Accrued compensation 4,864,902 5,215,159
Income taxes 2,222,893 -0-
------------ ------------
37,393,943 35,001,554
Deferrals
Deferred liabilities 10,073,078 9,529,784
Deferred income taxes 1,723,500 774,000
------------ ------------
11,796,578 10,303,784
Stockholders' Equity
Common stock 70,238,265 70,434,075
Retained earnings 228,382,037 221,949,817
Unrealized holding gains, net of tax 4,330,936 2,809,000
------------ ------------
302,951,238 295,192,892
------------ ------------
$352,141,759 $340,498,230
============ ============
- --------------------------------
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
NINE MONTHS ENDED AUGUST 31,
-------------------------------------------
1995 1994
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES $25,808,844 $12,268,484
INVESTING ACTIVITIES
Changes in investment securities 7,155,646 (2,709,344)
Purchases of property, plant and equipment (6,523,427) (6,920,480)
Proceeds from sale of property, plant and equipment 59,000 224,616
Dividends from affiliated company 817,129 817,129
Increase in cash surrender value of life insurance (2,838,284) (2,277,400)
Other 131,616 306,908
----------- -----------
(1,198,320) (10,558,571)
FINANCING ACTIVITIES
Exercise of stock options 48,733 -0-
Purchase of common stock (1,022,286) (6,857,240)
Cash dividends (8,444,424) (8,593,976)
------------ ------------
(9,417,977) (15,451,216)
------------ ------------
CHANGE IN CASH AND CASH EQUIVALENTS 15,192,547 (13,741,303)
CASH AND CASH EQUIVALENTS - beginning of period 42,314,957 52,957,556
----------- -----------
CASH AND CASH EQUIVALENTS - end of period $57,507,504 $39,216,253
=========== ===========
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Per share amounts are based on 14,082,213 and 14,349,932 weighted average
number of shares outstanding at August 31, 1995 and 1994, respectively.
B. Effective December 1, 1993, the Company adopted the provisions of FASB
Statement No. 109 and reported the cumulative effect of the change in the
method of accounting for income taxes in the financial statements for 1994
in the amount of $510,200. The principal cause of this adjustment was due
to the basis difference of an acquisition made in a prior year which was
accounted for as a purchase transaction.
C. Effective December 1, 1993, the Company adopted the provisions of FASB
Statement No. 115 "Accounting for Certain Investments in Debt and Equity
Securities" and initially reported the effects thereof in the 1994
financial statements. Under Statement No. 115 the Company classifies its
investment in securities as available-for-sale, which is reported at fair
value. Unrealized holding gains and losses (net of tax effect) are
reported as a separate component of stockholders' equity. The fair value
and cost of the investment in securities was $41.6 million and $34.6
million at August 31, 1995, respectively.
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
Major components of net income, expressed as a percentage of net sales, are
reflected below:
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- ------------------------------
1995 1994 1995 1994
---- ---- ---- ----
Cost of sales 83.23% 82.39% 82.62% 82.79%
Selling, general and admin. 13.50 12.95 13.70 13.39
Income from operations 3.27 4.66 3.68 3.82
Other income, net 2.84 1.74 3.18 1.57
Income before income taxes 6.11 6.40 6.86 5.39
Income taxes 1.78 1.94 2.01 1.72
Accounting change -0- .13 -0- -0-
Net income 4.33 4.33 4.85 3.67
NET SALES
Net sales for the third quarter were up slightly over second quarter ($119.2
million vs. $119.0 million). Moreover, the year to year decline in net sales
in the third quarter was approximately one third the decline experienced in the
second quarter. Net sales for the 1995 third quarter were $119.2 million, a
decrease of $5.8 million from $125 million in 1994. This compares to the $15.6
million decline experienced in the second quarter of 1995 compared to 1994.
The order backlog improved in the third quarter from the low levels reached in
the second quarter, reflecting an improved incoming order rate. This
improvement has generally been across all the Company's Divisions.
COSTS AND EXPENSES
Cost of sales, as a percentage of net sales, was 82.62% for the 1995 third
quarter, down from 82.79% in 1994 and also, down from 83.76% in the second
quarter of 1995.
The components of cost of sales, expressed as a percentage of net sales, are
reflected below:
Nine Months Ended August 31, Three Months Ended August 31,
----------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
Materials 49.51% 48.81% 49.82% 49.36%
Labor 21.33 21.57 20.83 21.49
Overhead 12.39 12.01 11.97 11.94
----- ----- ----- -----
83.23% 82.39% 82.62% 82.79%
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
COSTS AND EXPENSES - continued
Raw material costs continued to escalate in the third quarter without the
Company being able to pass the increases through to the retail sector. This is
exemplified by the fact that the Consumer Price Index for household furnishings
has remained flat in 1995 compared to 1994. Overhead costs decreased in the
third quarter to 11.97% from 12.83% in the second quarter. Third quarter of
1995 was flat compared to 1994, despite a decrease in net sales of $5.8 million
from 1994 to 1995. This reflects the progress made to reduce and control
production overhead costs.
Selling, general and administrative expenses, expressed as a percentage of net
sales, were 13.70% in the 1995 third quarter, down from 13.86% in the second
quarter. However, after nine months in 1995, these expenses are at 13.50% up
from 12.95% in 1994. Through nine months of 1995, variable costs have
maintained their relationship to net sales, but some fixed costs, primarily
those associated with the marketing and merchandising efforts, have not
decreased in proportion to the decrease in net sales.
OTHER INCOME, NET
Major sources of other income are shown below (in thousands):
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
Equity in unremitted income
of affiliated companies $3,566 $3,078 $1,125 $1,011
Interest (principally tax exempt) 1,756 1,231 633 419
Dividends 1,736 1,700 526 533
Gain from sales of securities 2,676 357 1,312 (5)
Other 562 241 201 5
------- ------ ------ ------
$10,296 $6,607 $3,797 $1,963
======= ====== ====== ======
INCOME TAXES
The effective income tax rate reflects the federal rate of 35% plus an
effective state rate of approximately 3%. This combined rate is next subject
to reduction due primarily to the effects of: (i) dividends received
exclusion; (ii) tax exempt interest, (iii) unremitted affiliate income, and
(iv) corporate owned life insurance.
LIQUIDITY AND CAPITAL RESOURCES:
The current ratio was 5.6 to 1 at August 31, 1995, 6.5 to 1 at May 31, 1995 and
5.7 to 1 at November 30, 1994. Working capital has remained stable in the past
year; varying between $171 million at August 31, 1995 and $164 million at
November 30, 1994. Cash provided by operations increased to $26 million for the
nine months of 1995 compared to $12 million in the same period of 1994; $9
million of this amount was generated in the 1995 third quarter compared to $6
million in the 1994 third quarter. Cash provided by operating activities is
expected to be adequate for normal future cash requirements. There were no
significant commitments for capital expenditures at August 31, 1995. Capital
expenditures that will be made in the future for normal requirements are
expected to be made from funds generated by operating activities.
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PART II - OTHER INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(27) Financial Data Schedule
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 thereunto duly authorized.
BASSETT FURNITURE INDUSTRIES, INCORPORATED
/s/ ROBERT H. SPILMAN
- -----------------------------------------------------------------------
Robert H. Spilman, Chairman of the Board, and Chief Executive Officer
DATE: 10/6/95
-------------------------------
/s/ PHILIP E. BOOKER
- -----------------------------------------------------------------------
Philip E. Booker, Vice President, Controller (Chief Accounting Officer)
DATE: 10/6/95
-------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
August 31, 1995 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
------------ ------------------- --------
27 Financial Data Schedule page - 9
Page 8 of 9
5
1,000
9-MOS
NOV-30-1995
DEC-1-1994
AUG-31-1995
57,508
41,614
66,180
0
79,986
207,920
212,659
158,642
352,142
37,394
0
70,238
0
0
232,713
352,142
361,752
372,048
301,097
349,936
0
471
0
22,112
6,458
15,654
0
0
0
15,654
1.11
0
