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 MAY 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)
(703) 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 May 31, 1995, 14,087,654 shares of common stock of the Registrant
were outstanding.
Page 1 of 9
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PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS - UNAUDITED
SIX MONTHS ENDED MAY 31, THREE MONTHS ENDED MAY 31,
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
Net sales $242,568,556 $256,303,646 $119,018,005 $134,639,355
Costs and expenses
Cost of sales 202,624,957 210,669,159 99,696,395 108,841,705
Selling, general and administrative 32,506,437 32,627,185 16,490,093 17,156,766
------------ ------------ ------------ ------------
235,131,394 243,296,344 116,186,488 125,998,471
------------ ------------ ------------ ------------
Income from operations 7,437,162 13,007,302 2,831,517 8,640,884
Other income, net 6,498,934 4,643,509 4,185,733 2,316,514
------------ ------------ ------------ ------------
Income before income taxes and cumulative
effect of a change in accounting principle 13,936,096 17,650,811 7,017,250 10,957,398
Income taxes (4,063,000) (5,241,000) (2,040,500) (3,278,000)
------------ ------------ ------------ ------------
Income before cumulative effect of
a change in accounting principle 9,873,096 12,409,811 4,976,750 7,679,398
Cumulative effect of a change in accounting principle -0- (510,200) -0- -0-
------------ ------------ ------------ ------------
NET INCOME 9,873,096 11,899,611 4,976,750 7,679,398
Retained earnings - beginning of period 221,949,817 216,211,676 224,028,800 217,542,249
------------ ------------ ------------ ------------
231,822,913 228,111,287 229,005,550 225,221,647
Cash dividends (5,634,893) (5,756,080) (2,817,530) (2,866,440)
Retirement of purchased common stock -0- (2,340,298) -0- (2,340,298)
------------ ------------ ------------ ------------
Retained earnings - end of period $226,188,020 $220,014,909 $226,188,020 $220,014,909
============ ============ ============ ============
EARNINGS PER SHARE:
Income before cumulative effect
of a change in accounting principle $ .70 $ .86 $ .35 $ .53
Cumulative effect of a change
in accounting principle -0- (.04) -0- -0-
----- ------- ----- -----
NET INCOME PER SHARE $ .70 $ .82 $ .35 $ .53
===== ====== ===== =====
DIVIDENDS PER SHARE $ .40 $ .40 $ .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 May 31, 1995 November 30, 1994
- ------ ------------ -----------------
Current Assets
Cash and cash equivalents $ 50,355,811 $ 42,314,957
Trade accounts receivable, less allowances
for doubtful accounts and discounts 63,880,769 71,936,750
Inventories:
Finished goods 47,102,902 45,243,596
Work in process 15,300,067 15,588,696
Raw materials and supplies 44,327,012 44,588,519
------------- -------------
106,729,981 105,420,811
Less LIFO adjustment 26,246,000 25,346,000
------------- -------------
80,483,981 80,074,811
Prepaid expenses 291,328 2,206,736
Prepaid income taxes -0- 274,675
Deferred income taxes 1,883,000 1,823,000
------------- -------------
196,894,889 198,630,929
Property, Plant and Equipment
Cost 212,440,583 207,227,241
Less allowances for depreciation 157,352,365 152,673,335
------------- -------------
55,088,218 54,553,906
Other Assets
Investment in securities 47,222,805 43,638,983
Investment in affiliated companies 37,298,655 35,080,525
Other 7,329,214 8,593,887
------------- -------------
91,850,674 87,313,395
------------- -------------
$343,833,781 $340,498,230
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities
Accounts payable $ 23,379,736 $ 29,786,395
Accrued compensation 6,102,782 5,215,159
Income taxes 1,041,794 -0-
------------- -------------
30,524,312 35,001,554
Deferrals
Deferred liabilities 9,844,181 9,529,784
Deferred income taxes 2,008,000 774,000
------------- -------------
11,852,181 10,303,784
Stockholders' Equity
Common stock 70,438,270 70,434,075
Additional capital 18,539 -0-
Retained earnings 226,188,020 221,949,817
Unrealized holding gains, net of tax 4,812,459 2,809,000
------------- -------------
301,457,288 295,192,892
------------- -------------
$343,833,781 $340,498,230
============= =============
- -----------------------------------------
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 3 of 9
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
Six Months Ended May 31,
------------------------
1995 1994
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES $16,920,923 $ 6,624,090
INVESTING ACTIVITIES
Changes (net) in investment securities 1,010,153 (1,002,511)
Purchases of property, plant and equipment (5,323,407) (4,587,558)
Proceeds from sale of property, plant and equipment 50,000 164,622
Dividends from affiliated company 544,753 544,753
Other 450,592 209,538
----------- -----------
(3,267,909) (4,671,156)
FINANCING ACTIVITIES
Exercise of stock options 48,733 -0-
Purchase of common stock (26,000) (3,423,177)
Cash dividends (5,634,893) (5,756,080)
----------- -----------
(5,612,160) (9,179,257)
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS 8,040,854 (7,226,323)
CASH AND CASH EQUIVALENTS - beginning of period 42,314,957 52,957,556
----------- -----------
CASH AND CASH EQUIVALENTS - end of period $50,355,811 $45,731,233
=========== ===========
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Per share amounts are based on 14,087,540 and 14,432,751 weighted
average number of shares outstanding at May 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
prior years 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
$47.2 million and $39.5 million at May 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:
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
Cost of sales 83.53% 82.20% 83.76% 80.84%
Selling, general and admin. 13.40 12.73 13.86 12.74
Income from operations 3.07 5.07 2.38 6.42
Other income, net 2.67 1.81 3.51 1.72
Income before income taxes 5.74 6.88 5.89 8.14
Income taxes 1.67 2.04 1.71 2.44
Accounting change -0- .20 -0- -0-
Net income 4.07 4.64 4.18 5.70
NET SALES
The rate of incoming orders fell during the 1995 second quarter leading to
reductions in both shipments and production schedules. Net sales in the second
quarter decreased 12% from 1994 levels, from $135 million to $119 million; net
sales in the six months period decreased 5% from 1994, from $256 million to
$243 million. The fall off in net sales was pronounced in all Divisions.
The retail household furniture industry, as a whole, has suffered a slowdown in
the first half of 1995, both at the retail and manufacturing levels.
COSTS AND EXPENSES
Cost of sales, as a percentage of net sales, increased to 83.76% in the second
quarter of 1995 up from 80.84% in 1994 and 83.31% in the 1995 first quarter.
The deterioration in the second quarter brought about an increase in the
percentage to 83.53% for the six months period up from 82.20% in 1994.
The components of cost of sales, expressed as a percentage of net sales, are
reflected below:
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
Materials 49.36% 48.55% 49.33% 47.54%
Labor 21.56 21.60 21.60 21.78
Overhead 12.61 12.05 12.83 11.52
----- ----- ----- -----
83.53% 82.20% 83.76% 80.84%
The increase in the material cost component percentage was due to (i) inability
to raise selling prices to cover increased raw material costs (ii)
inefficiencies caused by small cutting (job order) sizes and (iii) increased
costs related to new market introductions.
Page 5 of 9
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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
The increase in the overhead cost component percentage is due to the fact that
a significant portion of the overhead costs are fixed.
Selling, general and administration expenses, expressed as a percentage of net
sales, increased to 13.86% in the 1995 second quarter from 12.74% in 1994,
causing a rise to 13.40% for six months in 1995, compared to 12.73% in 1994.
The cost elements included in SG&A expenses that are considered to be fixed
costs remained level during the 1995 periods presented and those costs elements
that are considered to be variable decreased during the 1995 periods presented,
compared to the same periods in 1994.
OTHER INCOME, NET
Major sources of other income are shown below (in thousands):
Six Months Ended May 31, Three Months Ended May 31,
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
Equity in unremitted income
of affiliated companies $2,441 $2,067 $1,420 $1,114
Interest (principally tax exempt) 1,123 812 573 395
Dividends 1,210 1,167 667 624
Gain from sales of securities 1,364 362 1,394 203
Other 361 236 132 (19)
------ ------ ------ ------
$6,499 $4,644 $4,186 $2,317
====== ====== ====== ======
INCOME TAXES
The effective income tax rate remained approximately the same in the periods
presented : 1995 - 29.15% (6 months), 29.08% (second quarter); 1994 - 29.69% (6
months), 29.92% (second quarter).
LIQUIDITY AND CAPITAL RESOURCES:
The current ratio was 6.5 to 1 at May 31, 1995, 5.9 to 1 at February 28, 1995
and 5.7 to 1 at November 30, 1994. Working capital has remained stable in the
past year; varying between $169 million at May 31, 1994, to $163 million at
February 28, 1995 ($166 million at May 31, 1995). Cash provided by operations
increased to $17 million for the six months of 1995 compared to $7 million in
the same period of 1994; this compares favorably to $11 million provided in the
1995 second quarter compared to $2 million in the 1994 second 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 May 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
- -------------------------------------------------------------------------
Robert H. Spilman, Chairman of the Board, and Chief Executive Officer
DATE: _______________________________
- -------------------------------------------------------------------------
Philip E. Booker, Vice President, Controller (Chief Accounting Officer)
DATE:________________________________
Page 7 of 9
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
May 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
1000
6-MOS
NOV-30-1995
DEC-01-1994
MAY-31-1995
50,356
47,223
63,881
0
80,484
196,895
212,440
157,352
343,834
30,524
0
70,438
0
0
231,019
343,834
242,569
249,067
202,625
235,131
0
367
0
13,936
4,063
9,873
0
0
0
9,873
.70
0
