Bassett Furniture Industries
Jan 27, 2010
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Bassett Announces Profit for Fourth Quarter of 2009

BASSETT, Va., Jan 27, 2010 (GlobeNewswire via COMTEX News Network) -- Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal quarter ended November 28, 2009.

Sales for the quarter ended November 28, 2009 were $59.5 million as compared to $61.7 million for the quarter ended November 29, 2008, a decrease of 3.5%. Gross margins for the fourth quarter of 2009 and 2008 were 46.5% and 40.0%, respectively. The margin increase over 2008 was primarily from a greater mix of the Company's sales through the retail segment, as well as improved margins in both the wholesale and retail segments. Selling, general and administrative expenses, excluding bad debt and notes receivable valuation charges, decreased $2.3 million for the fourth quarter of 2009 as compared to the comparable quarter of 2008 primarily due to lower spending. The Company also recorded $2.2 million of bad debt and notes receivable valuation charges during the fourth quarter of 2009 as compared to $5.8 million for the fourth quarter of 2008, a $3.6 million decrease. The Company reported net income of $2.6 million, or $0.22 per share, for the quarter ended November 28, 2009, as compared to a net loss of $37.8 million, or $3.24 per share, for the quarter ended November 29, 2008.

The results for the quarter ended November 28, 2009 included a $1.7 million tax benefit associated with a one-time carryback of net operating losses due to a recent change in tax law and $1.6 million of proceeds from the Continued Dumping & Subsidy Offset Act (CDSOA) and unusual pretax charges of $1.1 million associated with the closure of the Company's fiberboard manufacturing facility in Bassett, Va., $0.5 million associated with the impairment of remaining goodwill and $0.4 million associated with the update to certain assumptions around existing lease termination accruals. The results for the quarter ended November 29, 2008 included $2.1 million of proceeds from the CDSOA, a $23.4 million charge to write-off substantially all of the Company's deferred tax assets, a $3.8 million pretax charge to write-off goodwill and other intangibles and a $3.1 million pretax charge associated with other than temporary impairments of the marketable securities portfolio. Excluding these items, net income for the quarter ended November 28, 2009 would have been $1.2 million as compared to a net loss of $9.7 million for the quarter ended November 29, 2008. See the attached Reconciliation of Net Income (Loss) as Reported to Net Income (Loss) as Adjusted to compare quarter over quarter results without these items.

"The Company's ongoing focus on expense reduction and working capital management began to bear fruit in the fourth quarter as we were able to post a modest profit," said Robert H. Spilman Jr., president and chief executive officer. "More importantly, perhaps, we produced $6.1 million of operating cash flow for the quarter. This marks the Company's third consecutive quarter generating positive operating cash.

"Our industry remains in the grasp of a brutal sales slump," Mr. Spilman continued. "Until consumers begin to feel significantly better about the state of the economy and the safety of their jobs, we must continue to concentrate on finding ways to successfully operate at reduced sales levels. Consequently, we will once again make positive cash flow the key benchmark for 2010 as we fight for all of the market share we can garner."

Wholesale Segment

Net sales for the wholesale segment were $44.8 million for the fourth quarter of 2009 as compared to $51.3 million for the fourth quarter of 2008, a decrease of 12.7%. Approximately 50% of wholesale shipments during the fourth quarter of 2009 were imported products compared to 53% for the fourth quarter of 2008. Gross margins for the wholesale segment were 32.5% for the fourth quarter of 2009 as compared to 27.7% for the fourth quarter of 2008. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, decreased $3.1 million during the fourth quarter of 2009 as compared to the fourth quarter of 2008 due primarily to lower sales and continued cost cutting measures. The Company recorded $2.2 million of bad debt and notes receivable valuation charges for the fourth quarter of 2009 as compared to $5.7 million for the fourth quarter of 2008. This significant decrease in charges is primarily due to the Company working diligently with its licensees to control increases in accounts receivable exposure.

"Once again, we have made progress in reducing the expense structure of our wholesale operations," Mr. Spilman added. "Furthermore, we were able to improve our wholesale margins during the second half of 2009 by streamlining our product assortment, reducing wholesale inventory markdowns, aggressively managing labor costs, and experiencing lower ocean freight expenses. The previously announced closing of our fiberboard operations will also strengthen our overall wholesale margins going forward and will mitigate some of the inflationary pressure that we are beginning to feel in the early part of 2010.

"Nevertheless, our near term objective in the wholesale division is to slow top-line attrition and ultimately return to growing the business," continued Mr. Spilman. "We believe that wholesale growth is key to the long-term success of the Company. While difficult, we believe that the emphasis on our custom upholstery and dining programs, our home entertainment offerings, and achieving greater penetration within our targeted channels of distribution will enable us to accomplish our internal goals in 2010."

Retail Segment

During the year ended November 28, 2009, the Company acquired nine stores from licensees, one of which was acquired during the fourth quarter of 2009. In addition, the Company closed four under-performing stores. The total Company-owned store count as of November 28, 2009 was 36, of which 26 were comparable stores (stores owned and operated by the Company longer than one year).



                      November 29,  Stores    Stores    November 28,
                          2008     Acquired   Closed        2009
                      ----------------------------------------------

 Corporate store count     31         9          4           36

The total Company-owned store network had net sales of $27.5 million for the fourth quarter of 2009, as compared to $22.6 million in the fourth quarter of 2008, an increase of 21.4%. The increase was comprised of a $7.7 million increase from stores acquired in 2009, offset by a $1.8 million decrease from stores closed in 2009 and a $1.0 million decrease from a decline in comparable store sales of 4.8%.

Gross margins for the Company-owned store network were 48.8% for the fourth quarter of 2009 as compared to 45.9% for the fourth quarter of 2008. Gross margins as compared to the third quarter of 2009 increased by 3.7 percentage points as the Company performed a network-wide inventory reduction sale in the third quarter which resulted in lower gross margins. Margins for the fourth quarter have also increased due to improved pricing and promotional strategies. As a percentage of sales, SG&A decreased 6.1 percentage points to 51.6% due to continued cost containment efforts during the quarter. Total retail operating losses decreased $1.9 million from the fourth quarter of 2008 to $0.8 million for the fourth quarter of 2009. On a comparable store basis, retail operating losses were reduced by 69% to $0.5 million.

"Our corporate retail team continued to improve the operations of the Company-owned stores," said Mr. Spilman. "They reduced the network's loss by 70% or $1.9 million for the quarter when compared to the prior year quarter. This was accomplished primarily through new pricing strategies that improved gross margins by 290 basis points and continued cost containment efforts that lowered SG&A by 610 basis points. Looking forward, the Company will continue to acquire licensee stores when that course of action represents the most sensible business outcome. The performance in the fourth quarter gives us more confidence that these acquisitions can ultimately be accomplished without significant damage to the operating performance of the Company."

Balance Sheet and Cash Flow

The Company generated $6.1 million in operating cash flow during the fourth quarter of 2009 through improved inventory management and continued cost cutting efforts. Cash flow from operations for the year ended November 28, 2009 was $4.2 million, as compared to $19.0 million operating cash used for the year ended November 29, 2008. The Company increased its overall cash position for the year ended November 28, 2009 by $19.4 million primarily through $19.3 million of net investment redemptions, $4.2 million of operating cash flow and $3.7 million in dividends from the investment in the International Home Furnishings Center (IHFC), partially offset by dividend payments of $1.1 million and net payments on the Company's revolving credit facility of $4.0 million.

In addition to the $23.2 million of cash on-hand, the Company has investments of $14.9 million, consisting of $13.9 million in marketable securities and $1.0 million in the Alternative Asset Fund. In anticipation of a debt refinancing for IHFC, it is likely that dividend distributions will decrease or be eliminated for 2010. The Company does not believe that this will be materially detrimental to its overall liquidity. With the current level of cash on-hand coupled with the investment holdings and the $4.7 million of availability on the revolver, the Company believes it has sufficient liquidity to fund operations for the foreseeable future.

Subsequent to November 28, 2009, the Company extended the maturity date of two store mortgages by one year to December 2010. In connection with these extensions, the lenders required the Company to make $1.1 million of additional principal payments in January 2010. There were no other significant modifications to the mortgages. The Company also has another $2.4 million store mortgage that currently matures in March of 2010. Although there can be no assurance, the Company plans to refinance or obtain an extension prior to the maturity date.

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 approximately 105 Bassett 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 fiscal 2009, 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; the delays or difficulties in converting some of Bassett's non-operating assets to cash; 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)

                                  13 Weeks Ended    13 Weeks Ended
                                 November 28, 2009 November 29, 2008
                                 -----------------------------------
                                          Percent            Percent
                                           of Net             of Net
                                  Amount    Sales    Amount    Sales
                                 ----------------   ----------------

 Net sales                       $ 59,523   100.0%  $ 61,678   100.0%

 Cost of sales                     31,845    53.5%    36,978    60.0%
                                 ----------------   ----------------

 Gross profit                      27,678    46.5%    24,700    40.0%
                                 ----------------   ----------------

 Selling, general and
  administrative expense
  excluding bad debt and
  notes receivable valuation
  charges                          24,850    41.7%    27,080    43.9%
 Bad debt and notes receivable
  valuation charges                 2,241     3.8%     5,757     9.3%
 Income for Continued
  Dumping & Subsidy
  Offset Act                       (1,627)   -2.7%    (2,122)   -3.4%
 Restructuring, asset impairment
  charges and unusual gain, net     1,599     2.7%     3,790     6.1%
 Lease exit costs                     372     0.6%        --     0.0%
 Proxy defense costs                   --     0.0%        --     0.0%
                                 ----------------   ----------------

 Income (loss) from operations        243     0.4%   (9,805)   -15.9%

 Other income (loss), net             825     1.4%   (6,496)   -10.5%
                                 ----------------   ----------------

 Income (loss) before income
  taxes                             1,068     1.8%   (16,301)  -26.4%
 Income tax benefit (provision)     1,498     2.5%   (21,527)  -34.9%
                                 ----------------   ----------------
 Net income (loss)               $  2,566     4.3%  $(37,828)  -61.3%
                                 ================   ================

 Basic earnings (loss)
  per share:                     $   0.22           $  (3.24)
                                 ========           ========

 Diluted earnings (loss) per
  share:                         $   0.22           $  (3.24)
                                 ========           ========


                                  52 Weeks Ended    53 Weeks Ended
                                 November 28, 2009 November 29, 2008
                                 -----------------------------------
                                          Percent            Percent
                                           of Net             of Net
                                  Amount    Sales    Amount    Sales
                                 ----------------   ----------------

 Net sales                       $232,722   100.0%  $288,298   100.0%

 Cost of sales                    129,882    55.8%   173,399    60.1%
                                 ----------------   ----------------

 Gross profit                     102,840    44.2%   114,899    39.9%
                                 ----------------   ----------------

 Selling, general and
  administrative expense
  excluding bad debt and notes
  receivable valuation charges    103,789    44.6%   116,576    40.4%
 Bad debt and notes receivable
  valuation charges                15,205     6.5%    11,769     4.1%
 Income for Continued Dumping &
  Subsidy Offset Act               (1,627)   -0.7%    (2,122)   -0.7%
 Restructuring, asset impairment
  charges and unusual gain, net     2,987     1.3%     3,070     1.1%
 Lease exit costs                   2,434     1.0%       642     0.2%
 Proxy defense costs                   --     0.0%     1,418     0.5%
                                 ----------------   ----------------

 Income (loss) from operations    (19,948)   -8.6%   (16,454)   -5.7%

 Other income (loss), net          (4,505)   -1.9%    (6,956)   -2.4%
                                 ----------------   ----------------

 Income (loss) before income
  taxes                           (24,453)  -10.5%   (23,410)   -8.1%
 Income tax benefit (provision)     1,754     0.8%   (16,945)   -5.9%
                                 ----------------   ----------------
 Net income (loss)               $(22,699)   -9.8%  $(40,355)  -14.0%
                                 ================   ================

 Basic earnings (loss) per
  share:                         $  (1.99)          $  (3.46)
                                 ========           ========

 Diluted earnings (loss) per
  share:                         $  (1.99)          $  (3.46)
                                 ========           ========

         BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                Condensed Consolidated Balance Sheets
                          (In thousands)

                                                (Unaudited)
                                                 November    November
 Assets                                          28, 2009    29, 2008
 ------                                          ---------   ---------
 Current assets
   Cash and cash equivalents                     $  23,221   $   3,777
   Accounts receivable, net                         34,605      40,793
   Inventories                                      33,388      42,293
   Other current assets                             13,312      13,628
                                                 ---------   ---------
 Total current assets                              104,526     100,491
                                                 ---------   ---------

 Property and equipment
   Cost                                            152,153     156,068
   Less accumulated depreciation                   101,517      98,913
                                                 ---------   ---------
 Property and equipment, net                        50,636      57,155
                                                 ---------   ---------

 Investments                                        14,931      35,060
 Retail real estate                                 28,793      29,588
 Notes receivable, net                               8,309      13,608
 Other                                               9,034       9,140
                                                 ---------   ---------
                                                    61,067      87,396
                                                 ---------   ---------
 Total assets                                    $ 216,229   $ 245,042
                                                 =========   =========

 Liabilities and Stockholders' Equity
 ------------------------------------
 Current liabilities
   Accounts payable                              $  14,711   $  18,747
   Accrued compensation and benefits                 6,490       4,618
   Customer deposits                                 5,946       6,725
   Dividends payable                                    --       1,142
   Other accrued liabilities                        11,730      10,977
   Current portion of real estate notes payable      4,393         812
                                                 ---------   ---------
 Total current liabilities                          43,270      43,021
                                                 ---------   ---------

 Long-term liabilities
   Post employment benefit obligations              10,841      12,829
   Bank debt                                        15,000      19,000
   Real estate notes payable                        16,953      21,346
   Distributions in excess of affiliate earnings    10,954      11,910
  Other long-term liabilities                        8,877       6,757
                                                 ---------   ---------
                                                    62,625      71,842
                                                 ---------   ---------

 Commitments and Contingencies

 Stockholders' equity
   Common stock                                     57,274      57,102
   Retained earnings                                50,461      73,160
   Additional paid-in-capital                          481         346
   Accumulated other comprehensive income (loss)     2,118        (429)
                                                 ---------   ---------
 Total stockholders' equity                        110,334     130,179
                                                 ---------   ---------
 Total liabilities and stockholders' equity      $ 216,229   $ 245,042
                                                 =========   =========

        BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
         Consolidated Statements of Cash Flows - Unaudited
                        (In thousands)

                                                  52 Weeks  53 Weeks
                                                    Ended     Ended
                                                  November  November
                                                  28, 2009  29, 2008
                                                  --------  --------
 Operating activities:
 Net loss                                         $(22,699) $(40,355)
 Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
  Depreciation and amortization                      6,604     8,089
  Equity in undistributed income of investments
   and unconsolidated affiliated companies          (2,319)     (890)
  Provision for restructuring, asset impairment
   charges and unusual gain, net                     2,987     3,070
  Impairment of retail real estate                      --       748
  Lease exit costs                                   2,434       642
  Provision for lease and loan guarantees            2,834       292
  Provision for losses on accounts and notes
   receivable                                       15,205    11,769
  Other than temporary impairment of investments     1,255     3,296
  Realized income from investments                    (764)   (1,447)
  Deferred income taxes                                 --    17,403
  Payment to terminate lease                          (400)       --
  Other, net                                        (2,236)       99
  Changes in operating assets and liabilities
   Accounts receivable                              (6,744)  (13,161)
   Inventories                                      11,704     7,199
   Other current assets                              3,451    (1,047)
   Accounts payable and accrued liabilities         (7,064)  (14,662)
                                                  --------  --------
 Net cash provided by (used in) operating
  activities                                         4,248   (18,955)
                                                  --------  --------

 Investing activities:
 Purchases of property and equipment                (1,094)   (4,702)
 Purchases of retail real estate                        (2)     (858)
 Proceeds from sales of property and equipment         129     2,862
 Acquisition of retail licensee stores, net of
  cash acquired                                       (481)     (216)
 Proceeds from sales of investments                 26,234    35,817
 Purchases of investments                           (6,939)   (6,185)
 Dividends from affiliates                           3,846     6,091
 Net cash received on licensee notes                   645       896
 Other, net                                           (127)      (18)
                                                  --------  --------

   Net cash provided by investing activities        22,211    33,687
                                                  --------  --------

 Financing activities:
 Net (repayments) borrowings under revolving
  credit facility                                   (4,000)    9,000
 Repayments of real estate notes payable              (797)     (792)
 Issuance of common stock                               95       296
 Repurchases of common stock                           (75)   (4,313)
 Cash dividends                                     (1,142)  (18,684)
 Other                                              (1,096)       --
                                                  --------  --------
   Net cash used in financing activities            (7,015)  (14,493)
                                                  --------  --------
 Change in cash and cash equivalents                19,444       239
 Cash and cash equivalents - beginning of period     3,777     3,538
                                                  --------  --------
 Cash and cash equivalents - end of period        $ 23,221  $  3,777
                                                  ========  ========

         BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                  Segment Information - Unaudited
                           (In thousands)

                   13 Weeks   13 Weeks     52 Weeks     53 Weeks
                    Ended      Ended        Ended         Ended
                   November   November     November     November
                   28, 2009   29, 2008     28, 2009     29, 2008
                   -------------------     ---------------------
 Net Sales
 Wholesale         $44,803(a)  $51,327(a)  $179,534(a)  $242,094(a)
 Retail             27,501      22,648      105,378       97,176
 Inter-
  company
  elimination      (12,781)    (12,297)     (52,190)     (50,972)
                   -------------------     ---------------------
 Consolidated      $59,523     $61,678     $232,722     $288,298
                   ===================     =====================

 Operating
  Income
  (loss)
 Wholesale         $ 1,340(b)  $(5,656)(b) $ (9,100)(b) $(3,105)(b)
 Retail               (799)     (2,679)      (8,131)     (10,345)
 Inter-
  company
  elimination           46         198        1,077            4
 Income from
  CDSOA              1,627       2,122        1,627        2,122
 Restructuring,
  asset
  impairment
  charges
  and unusual
  gain, net         (1,599)     (3,790)      (2,987)      (3,070)
 Lease exit
  costs               (372)         --       (2,434)        (642)
 Proxy defense
  costs                 --          --           --       (1,418)
                   -------------------     ---------------------
 Consolidated      $   243     $(9,805)    $(19,948)    $(16,454)
                   ===================     =====================


 (a) Excludes wholesale shipments of $174 and $7,149 for the 13 and
     52 weeks ended November 28, 2009 and $2,216 for the 13 and 53
     weeks ended November 29, 2008, respectively, for dealers where
     collectibility is not reasonably assured at time of shipment.

 (b) Includes bad debt and notes receivable valuation charges as
     follows:
                   November    November
                   28, 2009    29, 2008
                   -------------------
 Quarter ended     $ 2,241     $ 5,757
 Year ended         15,205      11,769


         BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
         Reconciliation of Net Income (Loss) as Reported to
             Net Income (Loss) as Adjusted (Unaudited)
             (In thousands, except for per share data)

                                   13 Weeks           13 Weeks
                                    Ended              Ended
                                   November   Per     November    Per
                                   28, 2009  Share    29, 2008   Share
                                   -----------------------------------

 Net income (loss) as reported      $2,566  $ 0.22    $(37,828) $(3.24)
 One-time tax benefit for net
  operating loss carryback          (1,672)  (0.15)         --      --
 Income from CDSOA                  (1,627)  (0.14)     (2,122)  (0.18)
 Restructuring, asset impairment
  charges and unusual gains, net     1,599    0.14       3,790    0.32
 Lease exit costs                      372    0.03          --      --
 Proxy defense cost                     --      --          --      --
 Other than temporary impairment
  of securities                         --      --       3,098    0.27
 Deferred tax impairment charge(a)      --      --      23,383    2.00
                                   -----------------------------------
 Net income (loss) as adjusted      $1,238  $ 0.10    $ (9,679) $(0.83)
                                   ===================================

                                  52 Weeks            53 Weeks
                                    Ended               Ended
                                  November   Per      November    Per
                                  28, 2009  Share     29, 2008   Share
                                  ------------------------------------
 Net income (loss) as reported    $(22,699) $(1.99)   $(40,355) $(3.46)
 One-time tax benefit for net
  operating loss carryback          (1,672)  (0.15)         --      --
 Income from CDSOA                  (1,627)  (0.14)     (2,122)  (0.18)
 Restructuring, asset impairment
  charges and unusual gains, net     2,987    0.26       3,070    0.26
 Lease exit costs                    2,434    0.21         642    0.06
 Proxy defense cost                     --      --       1,418    0.12
 Other than temporary impairment
  of securities                      1,255    0.11       3,296    0.28
 Deferred tax impairment charge(a)      --      --      23,383    2.00
                                  ------------------------------------
 Net income (loss) as adjusted    $(19,322) $(1.69)   $(10,668) $(0.91)
                                  ====================================

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.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Bassett Furniture Industries, Inc.

CONTACT:  Bassett Furniture Industries, Inc.
Investors
J. Michael Daniel
(276) 629-6614
Media
Jay S. Moore
(276) 629-6450

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