Bassett Furniture Industries
BASSETT FURNITURE INDUSTRIES INC (Form: 8-K, Received: 01/24/2012 17:25:26)


 
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) January 24, 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 January 24, 2012 Bassett Furniture Industries issued a news release relating to, among other things, the fourth quarter financial results for the fiscal year ending November 26, 2011 and the declaration of a regular quarterly dividend of $0.05 per share payable on March 1, 2012, to shareholders of record at the close of business February 15, 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 January 24, 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:  January 24, 2012 By:            /s/ J. Michael Daniel
  J. Michael Daniel
  Title:   Vice President – Chief Accounting Officer
 
 
 

 
                                                                  
EXHIBIT INDEX

 
Description

Exhibit No. 99         News release issued by Bassett Furniture Industries on January 24, 2012.
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 Net Income for the fiscal Fourth Quarter and Increased Dividend
 
(Bassett, Va.) – January 24, 2012 – Bassett Furniture Industries, Inc. (Nasdaq:  BSET) announced today its results of operations for its fiscal quarter ended November 26, 2011.
 
Fiscal 2011 Fourth Quarter
 
 
·
Consolidated sales for the fourth quarter decreased 4.1% to $63.3 million as compared to the fourth quarter of 2010.
 
·
Company-owned store delivered sales increased 13% to $39.4 million with a 4.9% comparable store increase (locations that have been open and operated for all of each comparable reporting period).
 
·
Wholesale sales declined 11% to $43.7 million.
 
·
Gross margins increased to 52.6% of sales for Q4 2011 from 48.3% for Q4 2010.
 
·
Operating profit increased by $0.6 million to 3% of sales.
 
·
Pretax income decreased by $0.4 million as Q4 2010 included $1.4 million of income from our previous investment in the International Home Furnishings Center.
 
·
Net income declined to $0.6 million from $1.9 million partly attributable to a $0.9 million increase in income tax expense.
 
·
Generated $6.9 million of cash from operations during the quarter.
 
·
Repurchased 112,500 shares using $0.9 million and paid $0.4 million in dividends during the quarter.
 
“As the Company grappled with the negative effects of the housing related downturn over the past several years, management’s focus has been largely concentrated on stabilizing the health of its store network and on limiting balance sheet exposure,” said Robert H. Spilman, Jr. President and Chief Executive Officer.  “The emphasis has now squarely shifted to fine tuning the Company’s operating performance.  We made progress this quarter by improving corporate retail results, increasing wholesale margins, and reducing bad debt charges.  The improvement in operating results was tempered by increased SG&A spending primarily related to next fall’s launch of the new HGTV Home Division and restructuring charges related to closed plant demolition and store closure and relocation costs.”
 
 
 

 
 
Wholesale Segment
 
Fiscal 2011 Fourth Quarter
 
 
·
Wholesale shipments declined 11% to $43.7 million as compared to the fourth quarter of 2010 due primarily to fewer stores in the dedicated retail network in 2011 and shipping in the fourth quarter of 2010 of a backlog built in the second and third quarters of 2010.  This decline was partially offset by increased shipments in the traditional and export channels in 2011.
 
·
Wholesale operating margins increased to 4.8% from 3.2% 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 Division.
 
·
Both wood and upholstery sales down 12% for the quarter; both essentially flat for the year.
 
·
Traditional and export sales channels increased 8.4% for the quarter, resulting from increased market share.

“In order to reduce accounts receivable exposure from underperforming retail licensees, the Company ultimately ended 2011 with 15 fewer licensed stores than at year end 2010,” commented Mr. Spilman.  “This reduction in store count was responsible for 97% of the quarter’s decline in wholesale sales.  Conversely, the wholesale volume derived from corporate retail stores and from independent retail furniture store sales grew by 9%.  Despite the reduced volume, wholesale operating margins increased by 50% in 2011.  For several years we have been dealing with the business challenges presented by the deteriorating health of our weaker licensed store operations.  We made the decision to aggressively deal with most of the remaining delinquent licensee exposure in 2011, primarily through closures or takeovers.  Although we definitely believe that this was the right decision for the Company, we are now dealing with the decline in wholesale sales that is a by-product of this process.  Nevertheless, we were pleased that we were able to post improved wholesale margins for the quarter.  We are focused on increasing our wholesale market share through our remaining store operations and with independent furniture retailers in both the Bassett and soon to be introduced HGTV Home Furniture Collection product assortments.”
 
Retail Segment
 
Fiscal 2011 Fourth Quarter
 
 
·
Company-owned store delivered sales increased 13% to $39.4 million with a 4.9% comparable store sales increase.
 
·
Written sales for comparable stores increased 7.2% compared to Q4 2010.
 
·
Operating margins improved from a 2.5% loss in Q4 2010 to a 1.5% loss in Q4 2011 due to increasing leverage of fixed costs from higher comparable store sales and greater operating efficiencies.
 
·
Comparable stores generated $0.1 million operating profit.
 
·
Opened a new store in Torrance, California on December 26, 2011.
 
 
2

 
 
The following table summarizes the changes in store count during the year ended November 26, 2011:
 
   
November 27,
   
New
   
Stores
   
Stores
   
November 26,
 
   
2010
   
Stores
   
Acquired
   
Closed
   
2011
 
                               
Company-owned stores
    47       -       9       (7 )     49  
Licensee-owned stores
    54       -       (9 )     (6 )     39  
                                         
Total
    101       -       -       (13 )     88  
 
“The year over year improvement in operating performance accomplished by the Company’s retail division continued in 2011, marking the fifth consecutive year of improved results,” Spilman continued.  “Once again, there was tremendous activity in our corporate retail division in 2011 as we acquired nine licensee stores and closed seven of our own.  Against that backdrop, the 39% improvement in year over year operating results was impressive.  Our team continues to streamline costs, upgrade the caliber of our design staff, and offer a high level of service to our consumers.  We are excited about our new Torrance, California location and look forward to opening a repositioned store in Richmond, Virginia in February.”
 
Increased Dividend
The Company also announced today that its Board of Directors has declared a regular quarterly dividend of $0.05 per share on outstanding common stock payable on March 1, 2012, to shareholders of record at the close of business February 15, 2012.  This represents an increase of $0.015 over the regular dividend paid on December 1, 2011.

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 fourth fiscal quarter of 2011, 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.
 
###
 
 
3

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - unaudited
(In thousands, except for per share data)
                                                 
                                                 
   
Quarter Ended
   
Quarter Ended
   
Year Ended
   
Year Ended
 
   
November 26, 2011
   
November 27, 2010
   
November 26, 2011
   
November 27, 2010
 
         
Percent of
         
Percent of
         
Percent of
         
Percent of
 
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
 
                                                 
Net sales
  $ 63,266       100.0 %   $ 65,991       100.0 %   $ 253,208       100.0 %   $ 235,254       100.0 %
                                                                 
Cost of sales
    29,996       47.4 %     34,097       51.7 %     125,642       49.6 %     122,566       52.1 %
                                                                 
  Gross profit
    33,270       52.6 %     31,894       48.3 %     127,566       50.4 %     112,688       47.9 %
                                                                 
Selling, general and administrative expense excluding bad debt and notes receivable valuation charges
    31,370       49.6 %     29,660       44.9 %     122,023       48.2 %     110,808       47.1 %
Bad debt and notes receivable valuation charges
    374       0.6 %     1,431       2.2 %     13,490       5.3 %     6,567       2.8 %
Licensee debt cancellation charges
    -       0.0 %     -       0.0 %     6,447       2.5 %     -       0.0 %
Income from Continued Dumping & Subsidy Offset Act
    (765 )     -1.2 %     (488 )     -0.7 %     (765 )     -0.3 %     (488 )     -0.2 %
Restructuring and asset impairment charges
    418       0.7 %     -       0.0 %     2,500       1.0 %     -       0.0 %
Lease exit costs
    -       0.0 %     -       0.0 %     3,728       1.5 %     -       0.0 %
                                                                 
   Operating income (loss)
    1,873       3.0 %     1,291       2.0 %     (19,857 )     -7.8 %     (4,199 )     -1.8 %
                                                                 
Gain on sale of affiliate
    -       0.0 %     -       0.0 %     85,542       33.8 %     -       0.0 %
Other income (loss), net
    (464 )     -0.7 %     556       0.8 %     (5,934 )     -2.3 %     1,991       0.8 %
                                                                 
Income (loss) before income taxes
    1,409       2.2 %     1,847       2.8 %     59,751       23.6 %     (2,208 )     -0.9 %
                                                                 
Income tax (expense) benefit
    (776 )     -1.2 %     94       0.1 %     (4,409 )     -1.7 %     206       0.1 %
Net income (loss)
  $ 633       1.0 %   $ 1,941       2.9 %   $ 55,342       21.9 %   $ (2,002 )     -0.9 %
                                                                 
Basic income (loss) per share
  $ 0.06             $ 0.17             $ 4.84             $ (0.17 )        
                                                                 
Diluted income (loss) per share
  $ 0.06             $ 0.17             $ 4.79             $ (0.17 )        
 
 
4

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets - unaudited
 
(In thousands)
 
             
Assets
 
November 26, 2011
   
November 27, 2010
 
Current assets
           
    Cash and cash equivalents
  $ 69,601     $ 11,071  
    Accounts receivable, net
    14,756       31,621  
    Marketable securities
    2,939       -  
    Inventories
    45,129       41,810  
    Other current assets
    7,778       6,969  
Total current assets
    140,203       91,471  
                 
Property and equipment
               
    Cost
    143,824       142,362  
    Less accumulated depreciation
    93,878       96,112  
Property and equipment, net
    49,946       46,250  
                 
Investments
    806       15,111  
Retail real estate
    16,257       27,513  
Notes receivable, net
    1,802       7,508  
Other
    14,160       9,464  
Total long-term assets
    33,025       59,596  
Total assets
  $ 223,174     $ 197,317  
                 
Liabilities and Stockholders’ Equity
               
Current liabilities
               
    Accounts payable
  $ 18,821     $ 24,893  
    Accrued compensation and benefits
    7,201       6,652  
Customer deposits
    9,238       9,171  
Dividends payable
    6,063       -  
Other accrued liabilities
    10,302       11,594  
Current portion of real estate notes payable
    202       9,521  
Total current liabilities
    51,827       61,831  
                 
Long-term liabilities
               
    Post employment benefit obligations
    11,226       11,004  
    Real estate notes payable
    3,662       4,295  
    Distributions in excess of affiliate earnings
    -       7,356  
Other long-term liabilities
    4,024       6,526  
Total long-term liabilities
    18,912       29,181  
                 
Commitments and Contingencies
               
                 
Stockholders’ equity
               
     Common stock
    56,712       57,795  
     Retained earnings
    96,331       48,459  
     Additional paid-in-capital
    -       478  
     Accumulated other comprehensive loss
    (608 )     (427 )
Total stockholders' equity
    152,435       106,305  
Total liabilities and stockholders’ equity
  $ 223,174     $ 197,317  
 
 
5

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Consolidated Statements of Cash Flows - unaudited
 
(In thousands)
 
             
   
Year Ended
   
Year Ended
 
   
November 26, 2011
   
November 27, 2010
 
Operating activities:
           
Net income (loss)
  $ 55,342     $ (2,002 )
Adjustments to reconcile net income (loss) to net cash  provided by (used in) operating activities:
               
Depreciation and amortization
    5,514       5,966  
Equity in undistributed income of investments and unconsolidated affiliated companies
    (1,840 )     (4,737 )
Provision for restructuring and asset impairment charges
    2,500       -  
Licensee debt cancellation charges
    6,447       -  
Lease exit costs
    2,228       -  
Provision for lease and loan guarantees
    1,283       1,407  
Provision for losses on accounts and notes receivable
    13,490       6,567  
Gain on mortgage settlement
    (1,305 )     -  
Gain on sale of affiliate
    (85,542 )     -  
Gain on sale of equity securities
    -       (2,024 )
Impairment and lease exit charges on retail real estate
    4,790       -  
Other, net
    450       256  
Changes in operating assets and liabilities
               
             Accounts receivable
    1,034       (4,467 )
             Inventories
    299       (5,443 )
             Other current assets
    2,300       5,262  
             Accounts payable and accrued liabilities
    (12,421 )     7,003  
          Net cash provided by (used in) operating activities
    (5,431 )     7,788  
                 
Investing activities:
               
Purchases of property and equipment
    (4,168 )     (2,013 )
Proceeds from sales of property and equipment
    211       4,247  
Acquisition of retail licensee stores, net of cash acquired
    -       (378 )
Proceeds from sale of affiliate
    69,152       -  
Release of collateral restrictions on cash equivalents
    11,240       -  
Proceeds from sales of investments
    3,297       9,101  
Purchases of investments
    (3,132 )     (8,851 )
Dividends from affiliates
    3,756       937  
Equity contribution to affiliate
    (980 )     -  
Net cash received on licensee notes
    127       494  
           Net cash provided by investing activities
    79,503       3,537  
                 
Financing activities:
               
Net repayments under revolving credit facility
    -       (15,000 )
Repayments of real estate notes payable
    (8,647 )     (7,530 )
Issuance of common stock
    170       142  
Repurchases of common stock
    (2,964 )     -  
Cash dividends
    (695 )     -  
Payments on other notes
    (3,406 )     (1,087 )
            Net cash used in financing activities
    (15,542 )     (23,475 )
Change in cash and cash equivalents
    58,530       (12,150 )
Cash and cash equivalents - beginning of period
    11,071       23,221  
                 
Cash and cash equivalents - end of period
  $ 69,601     $ 11,071  
 
 
6

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Segment Information - unaudited
 
(In thousands)
 
                               
   
Quarter ended
     
Quarter ended
     
Year Ended
     
Year Ended
 
   
November 26, 2011
     
November 27, 2010
     
November 26, 2011
     
November 27, 2010
 
Net Sales
                             
Wholesale
  $ 43,746  
 (a)
  $ 49,322  
 (a)
  $ 177,372  
 (a)
  $ 176,255  
Retail
    39,363         34,842         147,961         122,241  
Inter-company elimination
    (19,843 )       (18,173 )       (72,125 )       (63,242 )
Consolidated
  $ 63,266       $ 65,991       $ 253,208       $ 235,254  
                                       
Operating Income (Loss)
                                     
Wholesale
  $ 2,111  
 (b)
  $ 1,561  
 (b)
  $ (4,392 )
 (b)
  $ 2,431  
Retail
    (584 )       (863 )       (4,495 )       (7,387 )
Inter-company elimination
    (1 )       105         940         269  
Licensee debt cancellation charge
    -         -         (6,447 )       -  
Income from CDSOA
    765         488         765         488  
Restructuring and asset impairment charges
    (418 )       -         (2,500 )       -  
Lease exit costs
              -         (3,728 )       -  
Consolidated
  $ 1,873       $ 1,291       $ (19,857 )     $ (4,199 )
 
(a) Excludes wholesale shipments for dealers where collectibility is not reasonably assured at time of shipment as follows:
           
   
November 26, 2011
     
November 27, 2010
                     
              Quarter ended
  $ -       $ 85                      
              Year ended
    1,678         947                      
                                       
(b) Includes bad debt and notes receivable valuation charges as follows:
                               
   
November 26, 2011
     
November 27, 2010
                     
              Quarter ended
  $ 374       $ 1,431                      
              Year ended
    13,490       $ 6,567                      
 
 
7

 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
 
Supplemental Retail Information--unaudited
 
(In thousands)
 
                                                 
   
40 Comparable Stores
   
32 Comparable Stores
 
   
Quarter Ended
   
Quarter Ended
   
Year Ended
   
Year Ended
 
   
November 26, 2011
   
November 27, 2010
   
November 26, 2011
   
November 27, 2010
 
         
Percent of
         
Percent of
         
Percent of
         
Percent of
 
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
 
                                                 
Net sales
  $ 32,797       100.0 %   $ 31,277       100.0 %   $ 99,924       100.0 %   $ 95,342       100.0 %
                                                                 
Cost of sales
    16,981       51.8 %     16,030       51.3 %     51,558       51.6 %     48,775       51.2 %
                                                                 
  Gross profit
    15,816       48.2 %     15,247       48.7 %     48,366       48.4 %     46,567       48.8 %
                                                                 
Selling, general and administrative expense*
    15,670       47.8 %     15,530       49.7 %     50,429       50.5 %     49,993       52.3 %
                                                                 
  Loss from operations
  $ 146       0.4 %   $ (283 )     -0.9 %   $ (2,063 )     -2.1 %   $ (3,426 )     -3.6 %
                                                                 
                                                                 
   
All Other Stores
   
All Other Stores
 
   
Quarter Ended
   
Quarter Ended
   
Year Ended
   
Year Ended
 
   
November 26, 2011
   
November 27, 2010
   
November 26, 2011
   
November 27, 2010
 
           
Percent of
           
Percent of
           
Percent of
           
Percent of
 
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
   
Amount
   
Net Sales
 
                                                                 
Net sales
  $ 6,566       100.0 %   $ 3,565       100.0 %   $ 48,037       100.0 %   $ 26,899       100.0 %
                                                                 
Cost of sales
    3,536       53.9 %     2,070       58.1 %     26,541       55.3 %     14,838       55.2 %
                                                                 
  Gross profit
    3,030       46.1 %     1,495       41.9 %     21,496       44.7 %     12,061       44.8 %
                                                                 
Selling, general and administrative expense
    3,760       57.4 %     2,075       58.2 %     23,928       49.7 %     16,022       59.6 %
                                                                 
  Loss from operations
  $ (730 )     -11.1 %   $ (580 )     -16.3 %   $ (2,432 )     -5.1 %   $ (3,961 )     -14.7 %
 
*Comparable store SG&A includes retail corporate overhead and administrative costs.
 
 
8