UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20599
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) June 24, 2004
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) |
(Comission 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
Item 12. Results of Operations and Financial Condition
On June 24, 2004, Bassett Furniture Industries issued a news release relating to, among other things, the second quarter financial results for fiscal year 2004. A copy of the news release announcing this information is attached to this report as Exhibit 99.
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: June 25, 2004 |
By: | /s/ Barry C. Safrit | ||
| Barry C. Safrit | ||||
| Title: | Vice President, Chief Financial Officer | |||
EXHIBIT INDEX
The exhibit listed in this index is being furnished pursuant to Item 12 of Form 8-K and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any document filed under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Exhibit No. |
Description | |
| 99 | News release issued by Bassett Furniture Industries on June 24, 2004. |
Exhibit 99
| Bassett Furniture Industries, Inc. |
Barry C. Safrit, V.P., CFO | |
| P.O. Box 626 |
(276) 629-6757 – Investors | |
| Bassett, VA 24055 |
(276) 629-6332 – Fax | |
| Jay S. Moore, Dir. of Communications | ||
| For Immediate Release |
(276) 629-6450 – Media | |
| (276) 629-6418 – Fax | ||
Bassett Furniture News Release
Bassett Announces Second Quarter 2004 Earnings
(Bassett, Va.) – June 24, 2004 – Bassett Furniture Industries Inc. (Nasdaq: BSET) announced today its earnings for its second fiscal quarter ended May 29, 2004.
Sales for the second quarter of 2004 were $80.4 million, up 4.5% from second quarter 2003 levels. The growth in the Company’s ongoing distribution channels, fueled by increased shipments to Bassett Furniture Direct stores (BFDs) and greater demand for juvenile products, accounted for the sales increase. Year-to-date shipments into the BFD channel were up 11% over 2003.
The Bassett Furniture Direct retail store program continues to grow with 104 stores currently in operation. The Company expects licensees to open six stores in the third quarter and eight in the fourth quarter ending fiscal year 2004 with 118 stores. Sales to BFD stores were 57% of total wholesale shipments in the first half of 2004 compared to 52% in the first half of 2003.
The Company reported net income for the quarter of $1.9 million or $.16 per share as compared to $1.2 million or $.10 per share for the second quarter of 2003. On a year-to-date basis, the Company recorded net income of $4.2 million or $.36 per share, after both realizing a $3.9 million gain on the sale of its former California upholstery facility and recognizing a $2.8 million restructuring and impaired asset charge in the first quarter of 2004, compared to a $5.2 million net loss in the first half of 2003. Excluding the gain and charge, net income for the first six months was $3.4 million or $.30 per share compared to $1.9 million or $.17 per share in the first six months of 2003 (excluding restructuring and impaired asset charges and cumulative effect of accounting change).* A reconciliation to the net income and earnings per share has been set forth below. The 2004 earnings improvement resulted from a combination of sales growth and a reduction in selling, general, and administrative expenses.
The approximately one and a half percentage point reduction in selling, general and administrative expenses for both the quarter and six month results as compared to 2003 was primarily due to actions taken in 2003 which lowered the expense structure of the Company-owned retail stores.
The Company generated $1.9 million of operating cash flows during the first half of 2004 primarily through operating earnings. This cash flow along with the proceeds from the sale of the former California facility (received in the first quarter) and a dividend from an affiliate were used to fund capital spending, pay dividends, and purchase $6.5 million of net investments. Real estate purchases in the quarter included assuming $7.2 million of real estate debt on two BFD store properties.
“We are pleased with our year-over-year sales growth and improved operating earnings,” said Robert H. Spilman Jr., president and chief executive officer. “However, we continue efforts to improve operating margins with a primary focus on the profitability of our Wood Division. Our Upholstery and Import Divisions both experienced encouraging results for the quarter. Additionally, our Company-owned retail stores in Texas (LRG) continued their positive results from the first quarter to the second quarter.”
The recent U.S. Department of Commerce preliminary ruling imposing anti-dumping duties on imports of Chinese wood bedroom furniture would result in an assessment of duties in the range of 8 to 11% on product sourced by the Company from Chinese vendors. Mr. Spilman said, “We were fairly satisfied with the preliminary ruling by the Department of Commerce and do not believe this ruling will have a significant impact on our overall results. We do hope the ruling will help deter further price deflation in our industry.”
Bassett also announced that its Board of Directors has declared a regular quarterly dividend of $.20 per share payable on September 1, 2004, to shareholders of record on August 17, 2004.
Bassett Furniture Industries, Inc. is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With over 100 Bassett Furniture Direct stores, Bassett has leveraged its strong brand name in furniture into a growing network of licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. While the Company continues to sell its products to other retailers, the most significant growth vehicle for Bassett continues to be the Company’s dedicated retail store program. Bassett’s retail strategy encompasses 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 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 the immediately preceding paragraphs, 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 first quarter of fiscal year 2004, 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.
###
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income - Unaudited
(In thousands, except for per share data)
| 13 Weeks Ended May 29, 2004 |
13 Weeks Ended May 31, 2003 |
|||||||||||||
| Amount |
Percent of Net Sales |
Amount |
Percent of Net Sales |
|||||||||||
| Net sales |
$ | 80,355 | 100.0 | % | $ | 76,866 | 100.0 | % | ||||||
| Cost of sales |
59,936 | 74.6 | % | 57,318 | 74.6 | % | ||||||||
| Gross profit |
20,419 | 25.4 | % | 19,548 | 25.4 | % | ||||||||
| Selling, general and administrative |
19,783 | 24.6 | % | 19,990 | 26.0 | % | ||||||||
| Income (loss) from operations |
636 | 0.8 | % | (442 | ) | -0.6 | % | |||||||
| Other income, net |
1,901 | 2.3 | % | 1,821 | 2.4 | % | ||||||||
| Income before income taxes |
2,537 | 3.1 | % | 1,379 | 1.8 | % | ||||||||
| Income tax provision |
(652 | ) | -0.8 | % | (186 | ) | -0.2 | % | ||||||
| Net income |
$ | 1,885 | 2.3 | % | $ | 1,193 | 1.6 | % | ||||||
| Basic earnings per share: |
$ | 0.16 | $ | 0.10 | ||||||||||
| Diluted earnings per share: |
$ | 0.16 | $ | 0.10 | ||||||||||
Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 second quarter amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income - Unaudited
(In thousands, except for per share data)
| 26 Weeks Ended May 29, 2004 |
26 Weeks Ended May 31, 2003 |
|||||||||||||
| Amount |
Percent of Net Sales |
Amount |
Percent of Net Sales |
|||||||||||
| Net sales |
$ | 156,923 | 100.0 | % | $ | 154,480 | 100.0 | % | ||||||
| Cost of sales |
116,837 | 74.5 | % | 114,728 | 74.3 | % | ||||||||
| Gross profit |
40,086 | 25.5 | % | 39,752 | 25.7 | % | ||||||||
| Selling, general and administrative |
38,280 | 24.4 | % | 40,288 | 26.1 | % | ||||||||
| Gain on sale of property |
(3,890 | ) | -2.5 | % | — | 0.0 | % | |||||||
| Restructuring and impaired asset charges |
2,840 | 1.8 | % | 3,200 | 2.1 | % | ||||||||
| 37,230 | 23.7 | % | 43,488 | 28.2 | % | |||||||||
| Income (loss) from operations |
2,856 | 1.8 | % | (3,736 | ) | -2.4 | % | |||||||
| Other income, net |
2,914 | 1.9 | % | 2,963 | 1.9 | % | ||||||||
| Income (loss) before income taxes and cumulative effect of accounting change |
5,770 | 3.7 | % | (773 | ) | -0.5 | % | |||||||
| Income tax (provision) benefit |
(1,557 | ) | -1.0 | % | 416 | 0.3 | % | |||||||
| Income (loss) before cumulative effect of accounting change |
4,213 | 2.7 | % | (357 | ) | -0.2 | % | |||||||
| Cumulative effect of accounting change, net of income tax of $3,200 |
— | 0.0 | % | (4,875 | ) | -3.2 | % | |||||||
| Net income (loss) |
$ | 4,213 | 2.7 | % | $ | (5,232 | ) | -3.4 | % | |||||
| Basic earnings (loss) per share: |
$ | 0.36 | $ | (0.45 | ) | |||||||||
| Diluted earnings (loss) per share: |
$ | 0.36 | $ | (0.45 | ) | |||||||||
Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Reconciliation of Net Income (Loss) as Reported
to Net Income as Adjusted (Unaudited)
(In thousands, except for per share data)
| 26 Weeks Ended May 29, 2004 |
26 Weeks Ended May 31, 2003 |
|||||||
| Net income (loss) as reported |
$ | 4,213 | $ | (5,232 | ) | |||
| Gain on sale of property, net of income taxes |
(2,840 | ) | — | |||||
| Restructuring and impaired asset charge, net of income taxes |
2,073 | 2,304 | ||||||
| Cumulative effect of accounting change, net of income taxes |
— | 4,875 | ||||||
| Net income as adjusted |
$ | 3,446 | $ | 1,947 | ||||
Reconciliation of Earnings (Loss) Per Share as Reported
to Earnings Per Share as Adjusted (Unaudited)
| 26 Weeks Ended May 29, 2004 |
26 Weeks Ended May 31, 2003 |
|||||||
| Diluted earnings (loss) per share |
$ | 0.36 | $ | (0.45 | ) | |||
| Gain on sale of property, net of income taxes |
(0.24 | ) | — | |||||
| Restructuring and impaired asset charge, net of income taxes |
0.18 | 0.20 | ||||||
| Cumulative effect of accounting change, net of income taxes |
— | 0.42 | ||||||
| Diluted earnings per share as adjusted |
$ | 0.30 | $ | 0.17 | ||||
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
| (Unaudited) May 29, 2004 |
November 29, 2003 | |||||
| Assets |
||||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 12,982 | $ | 15,181 | ||
| Accounts receivable, net |
40,184 | 39,230 | ||||
| Inventories |
35,634 | 36,454 | ||||
| Deferred income taxes |
4,600 | 5,307 | ||||
| Assets held for sale |
831 | 1,881 | ||||
| Other current assets |
2,438 | 4,525 | ||||
| Total current assets |
96,669 | 102,578 | ||||
| Property and equipment, net |
44,406 | 48,800 | ||||
| Investments |
74,699 | 65,151 | ||||
| Retail real estate, net |
41,758 | 32,930 | ||||
| Notes receivable, net |
14,886 | 15,399 | ||||
| Other, net |
14,286 | 15,522 | ||||
| 145,629 | 129,002 | |||||
| Total assets |
$ | 286,704 | $ | 280,380 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Current liabilities |
||||||
| Accounts payable |
$ | 13,625 | $ | 15,127 | ||
| Accrued liabilities |
23,024 | 22,341 | ||||
| Total current liabilities |
36,649 | 37,468 | ||||
| Long-term liabilities |
||||||
| Employee benefits |
9,598 | 9,824 | ||||
| Real estate notes payable |
7,219 | — | ||||
| Distributions in excess of affiliate earnings |
12,565 | 13,070 | ||||
| 29,382 | 22,894 | |||||
| Commitments and Contingencies |
||||||
| Stockholders’ equity |
||||||
| Common stock, par value $5 a share, 50,000,000 shares authorized, issued and outstanding - 11,681,792 in 2004 and 11,599,936 in 2003 |
58,409 | 58,000 | ||||
| Retained earnings |
159,610 | 159,487 | ||||
| Accumulated other comprehensive income - unrealized holding gains, net of income tax |
2,654 | 2,531 | ||||
| Total stockholders’ equity |
220,673 | 220,018 | ||||
| Total liabilities and stockholders’ equity |
$ | 286,704 | $ | 280,380 | ||
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - Unaudited
(In thousands)
| 26 Weeks Ended May 29, 2004 |
26 Weeks Ended May 31, 2003 |
|||||||
| Operating Activities |
||||||||
| Net income (loss) |
$ | 4,213 | $ | (5,232 | ) | |||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
4,959 | 5,441 | ||||||
| Equity in undistributed income of investments |
(5,061 | ) | (4,237 | ) | ||||
| Provision for write-down of property and equipment |
2,103 | 1,530 | ||||||
| Cumulative effect of accounting change, net |
— | 4,875 | ||||||
| Provision for losses on trade accounts receivable |
550 | 256 | ||||||
| Net gain from sales of investments |
— | (14 | ) | |||||
| Net gain from sales of property and equipment |
(3,890 | ) | — | |||||
| Deferred income taxes |
707 | (416 | ) | |||||
| Changes in employee benefit liabilities |
(226 | ) | (113 | ) | ||||
| Changes in operating assets and liabilities, exclusive of assets and liabilities acquired in a business combination: |
||||||||
| Trade accounts receivable |
(1,504 | ) | (723 | ) | ||||
| Inventories |
820 | (2,221 | ) | |||||
| Refundable income taxes |
— | 3,511 | ||||||
| Other current assets |
60 | 156 | ||||||
| Accounts payable and accrued liabilities |
(819 | ) | (1,962 | ) | ||||
| Net cash provided by operating activities |
1,912 | 851 | ||||||
| Investing Activities |
||||||||
| Purchases of property and equipment |
(5,356 | ) | (3,326 | ) | ||||
| Proceeds from sales of property and equipment |
8,081 | 372 | ||||||
| Proceeds from sales of investments |
10,482 | 17,000 | ||||||
| Purchases of investments |
(16,982 | ) | (12,000 | ) | ||||
| Dividends from an affiliate |
2,343 | 1,874 | ||||||
| Other, net |
1,002 | 362 | ||||||
| Net cash (used in) provided by investing activities |
(430 | ) | 4,282 | |||||
| Financing Activities |
||||||||
| Borrowings under revolving credit arrangement |
— | 4,000 | ||||||
| Issuance of common stock, net |
1,761 | 110 | ||||||
| Repurchases of common stock |
(772 | ) | (924 | ) | ||||
| Cash dividends |
(4,670 | ) | (4,634 | ) | ||||
| Net cash used in financing activities |
(3,681 | ) | (1,448 | ) | ||||
| Net change in cash and cash equivalents |
(2,199 | ) | 3,685 | |||||
| Cash and cash equivalents, beginning of period |
15,181 | 2,892 | ||||||
| Cash and cash equivalents, end of period |
$ | 12,982 | $ | 6,577 | ||||
Note - As reflected and explained in the Company’s 2003 Annual Report, 2003 amounts were adjusted to reflect the adoption of FIN 46R for LRG which required consolidation of LRG as of the beginning of 2003.