(Bassett, Va.) January 10, 2006 Bassett Furniture Industries Inc. (Nasdaq: BSET) announced today its earnings for its fiscal fourth quarter and year ended November 26, 2005.
Sales for the fourth quarter of 2005 were $88.6 million, up 10.6 percent from fourth quarter 2004 levels, led by an $8 million increase in shipments to Bassett Furniture Direct (BFD) stores. This 17% increase in BFD shipments outpaced approximately $5 million of expected attrition with traditional furniture stores. Additionally, the acquisition of 15 BFD stores in Dallas, Atlanta, and upstate New York (the "BFD acquisitions") increased net sales by approximately $5 million in the fourth quarter of 2005. For fiscal 2005, sales were $335.2 million, up 6.2 percent from 2004 levels. Wholesale shipments to the BFD channel for 2005 were up $32.5 million (18%) more than offsetting $22.6 million in expected attrition from traditional stores and other channels. The remaining increase in net sales for 2005 resulted from the BFD acquisitions.
The Bassett Furniture Direct retail store program continues to grow with 132 stores currently in operation. Licensees opened three stores during the fourth quarter of 2005. The Company expects licensees to open 18 new BFD stores in fiscal 2006, including three opened in December. BFD stores accounted for 68 percent of total wholesale shipments in 2005, compared to 60 percent in 2004. During the year, the Company acquired 15 BFD stores in Dallas, Atlanta and upstate New York bringing the total number of Company-owned stores to 27, more than one-fifth of the BFD store network.
"We are pleased with our improvement in continuing operating earnings and the solid performance posted by our upholstery division and imported products within our wood division," said Robert H. Spilman Jr., president and chief executive officer. "We remain squarely focused on retail, using our expanded Corporate store program to build a platform for providing solutions to our customers and to develop best practices which will serve the entire BFD store program." Margins for the quarter and the year are up due to both increased retail sales largely attributable to the BFD acquisitions and an increased sales mix of imported products. Additionally, margins for the quarter and year were positively impacted by lower domestic wood inventory levels which caused reductions in accompanying LIFO inventory reserves. SG & A expenses also increased due to the BFD acquisitions and greater marketing spending.
The Company reported net income for the quarter of $2.3 million or $.19 per share including restructuring and impairment charges of $2.0 million (pretax) for the previously announced closing of the Company's Mount Airy, NC wood manufacturing facility. This compares to net income of $2.9 million or $.24 per share in the fourth quarter of 2004. Excluding the fourth quarter 2005 charges, net income was $3.0 million or $.25 per share in the fourth quarter of 2005 compared to net income of $2.9 million or $.24 per share in the fourth quarter of 2004. A reconciliation to the net income and earnings per share calculations has been set forth below. For 2005, net income was $7.6 million or $.63 per diluted share including $6.2 million of pre-tax restructuring and impairment charges. This compares to $8.2 million or $.69 per diluted share including pre-tax restructuring and impaired asset charges of $4.1 million and a $3.9 million gain on the sale of property for fiscal 2004. The 2005 charges include $2.0 million for the Mount Airy closing and $4.2 million for charges related to the previously mentioned BFD acquisitions. Additionally, an unusual gain in the fourth quarter of 2005 related to an insurance recovery of $.7 million pre-tax is included in cost of sales. Excluding the respective charges and gains, 2005 net income is $10.9 million or $.92 per share which compares to $8.3 million or $.70 per share in 2004. A reconciliation to the net income and earnings per share calculations has been set forth below. The Company generated positive operating cash flow for the year through a combination of increased operating earnings and reductions in domestic wood inventories. This operating cash flow, along with dividends received from an affiliate investment were used to fund capital spending, (including BFD real estate) and to pay regular quarterly dividends to shareholders. During the fourth quarter of 2005, operating earnings were also used to repay long-term debt. In addition, the Company reclassified approximately $26 million of property from retail real estate into property, plant and equipment for real estate related to the company-owned stores.
Bassett also announced that its Board of Directors has declared a regular quarterly dividend of $.20 per share payable on March 1, 2006, to stockholders of record on February 13, 2006, and announced that at its annual meeting for stockholders has been scheduled for February 28, 2006 in Bassett, Va.
Bassett Furniture Industries, Inc. is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With over 130 Bassett Furniture Direct stores, Bassett has leveraged its strong brand name in furniture into a growing network of owned and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. The most significant growth vehicle for Bassett continues to be the Company's dedicated retail store program. Bassett's retail strategy includes providing affordable custom-built furniture that is ready for delivery in the home within 30 days. The Bassett Furniture Direct stores also feature the latest on-trend furniture styles, more than 1,000 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. For more information, visit the Company's website at www.bassettfurniture.com.
The Company has included the "as adjusted" information because it uses, and believes that others may use, such information in comparing the Company's operating results from period to period. However, the items excluded in determining the "as adjusted" information are significant components in understanding and assessing the Company's overall financial performance for the periods covered.
Certain of the statements 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 fourth quarter of 2005, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause those results to differ materially from those expressed in the forward looking statements: economic, competitive, governmental and other factors identified in Bassett's filings with the Securities and Exchange Commission, and the effects of national and global economic or other conditions and future events on the retail demand for home furnishings.