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 FEBRUARY 29, 1996
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)
(540) 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 February 29, 1996, 13,580,253 shares of common stock of the Registrant were
outstanding.
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PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS - UNAUDITED
THREE MONTHS ENDED FEBRUARY 29 (28),
------------------------------------
1996 1995
---- ----
Net sales $111,951,020 $123,550,551
Costs and expenses
Cost of sales 94,183,120 102,928,562
Selling, general and administrative 15,487,133 16,016,344
------------ ------------
109,670,253 118,944,906
------------ ------------
Income from operations 2,280,767 4,605,645
Other income, net 4,043,194 2,313,201
------------ ------------
Income before income taxes 6,323,961 6,918,846
Income taxes 1,610,000 2,022,500
------------ ------------
NET INCOME 4,713,961 4,896,346
Retained earnings - beginning of period 225,718,704 221,949,817
------------ ------------
230,432,665 226,846,163
Cash dividends (2,716,550) (2,817,363)
Purchase and retirement of common stock (1,428,396) -0-
------------ ------------
Retained earnings - end of period $226,287,719 $224,028,800
============ ============
NET INCOME PER SHARE $ .35 $ .35
===== =====
DIVIDENDS PER SHARE $ .20 $ .20
===== =====
- ------------------------------------------
The accompanying note is an integral part of the condensed financial
statements.
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
ASSETS FEBRUARY 29, 1996 NOVEMBER 30, 1995
- ------ ----------------- -----------------
Current Assets
Cash and cash equivalents $ 65,344,100 $ 51,331,119
Trade accounts receivable, less allowances
for doubtful accounts and discounts 61,850,448 68,591,514
Inventories:
Finished goods 45,260,771 46,490,589
Work in process 15,569,363 16,231,269
Raw materials and supplies 42,603,793 45,305,749
------------ ------------
103,433,927 108,027,607
Less LIFO adjustment 27,201,000 26,801,000
------------ ------------
76,232,927 81,226,607
Prepaid expenses 1,259,817 1,757,658
Deferred income taxes 2,269,000 2,008,000
------------ ------------
206,956,292 204,914,898
Property, Plant and Equipment
Cost 212,540,312 211,790,217
Less allowances for depreciation 160,789,359 158,665,871
------------ ------------
51,750,953 53,124,346
Other Assets
Investment in securities 32,417,494 39,055,319
Investment in affiliated companies 41,499,243 40,398,574
Other 9,151,994 9,227,317
------------ ------------
83,068,731 88,681,210
------------ ------------
$341,775,976 $346,720,454
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 24,876,257 $ 29,710,299
Accrued compensation 3,552,168 4,778,966
Income taxes 2,295,770 902,476
------------ ------------
30,724,195 35,391,741
Deferrals
Deferred liabilities 10,513,797 10,296,244
Deferred income taxes 1,994,000 2,129,000
------------ ------------
12,507,797 12,425,244
Stockholders' Equity
Common stock 67,901,265 68,294,765
Retained earnings 226,287,719 225,718,704
Unrealized holding gains, net of tax 4,355,000 4,890,000
------------ ------------
298,543,984 298,903,469
------------ ------------
$341,775,976 $346,720,454
============ ============
- -----------------------------------------
The accompanying note is an integral part of the condensed financial
statements.
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
THREE MONTHS ENDED FEBRUARY 29 (28),
------------------------------------
1996 1995
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES $11,231,680 $ 5,874,788
INVESTING ACTIVITIES
Net change in cost of investment securities 7,886,426 (2,378,258)
Purchases of property, plant and equipment (799,458) (3,038,893)
Proceeds from sale of property, plant and equipment 70,635 40,000
Dividend from affiliated company -0- 272,376
Other 162,144 419,034
----------- -----------
7,319,747 (4,685,741)
FINANCING ACTIVITIES
Cash dividends (2,716,550) (2,817,363)
Purchase and retirement of common stock (1,821,896) -0-
----------- -----------
(4,538,446) (2,817,363)
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS 14,012,981 (1,628,316)
CASH AND CASH EQUIVALENTS - beginning of period 51,331,119 42,314,957
----------- -----------
CASH AND CASH EQUIVALENTS - end of period $65,344,100 $40,686,641
=========== ===========
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
I. Per share amounts are based on 13,614,639 and 14,086,815 weighted average
number of shares outstanding at February 29 (28), 1996 and 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:
First Quarter Ending February
------------------------------
1996 1995 1994
---- ---- ----
Cost of sales 84.13% 83.31% 83.70%
Gross profit 15.87 16.69 16.30
SG&A expenses 13.83 12.96 12.71
Income from operations 2.04 3.73 3.59
Other income, net 3.61 1.87 1.91
Income before income taxes 5.65 5.60 5.50
Income taxes 1.44 1.64 1.61
Accounting change -0- -0- .42
Net income 4.21 3.96 3.47
NET SALES
Net sales for the 1996 first quarter compared to prior years:
1996 1995 1994
---- ---- ----
Net sales (thousands) $111,951 $123,551 $121,664
Percentage change from prior year (9.4)% 1.6% 1.1%
Retail furniture sales, which showed some signs of recovery in the latter part
of last year's fourth quarter, slipped in December and January, with February
showing some improvement. The overall slowdown in retail furniture sales in
the first quarter was caused, in part, by declining consumer confidence. The
January consumer confidence index sank to its lowest level in two years. This
decline in retail furniture sales caused net sales for the quarter to fall
$11,600,000 compared to 1995. Shipments decreased in 1996 in all Divisions
except Bedding which had a small increase.
COSTS AND EXPENSES
Cost of sales increased 82 basis points in the 1996 first quarter over 1995.
This increase follows an increase of approximately 90 basis points in the full
fiscal year 1995 over 1994. This decline in margins has been caused primarily
by the inability to increase sales prices across all product lines to
compensate for incurred raw material cost increases. This is shown by a
comparison of the cost components comprising cost of sales as a percentage of
net sales:
First Quarter Ending February
-----------------------------
1996 1995 1994
---- ---- ----
Materials 50.04% 49.39% 49.66%
Labor 21.29 21.54 21.41
Overhead 12.80 12.38 12.63
------- ------- -------
84.13% 83.31% 83.70%
The deterioration in the overhead percentage was mainly due to reduced
production schedules which had to be reduced during the quarter to adjust to
the declining backlog. However, total overhead costs declined by almost
$1,000,000 in 1996 from 1995.
Selling, general and administrative expenses increased 87 basis points in the
1996 first quarter over 1995. The fixed costs in this classification were held
under control in 1996 compared to 1995 and did not increase; however, the
percentage relationship to net sales increased because of the decline in net
sales.
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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 RESULTS OF OPERATIONS - CONTINUED:
OTHER INCOME, NET
Components of other income (in thousands):
First Quarter Ending February
-----------------------------
1996 1995 1994
---- ---- ----
Equity in unremitted income of affiliated cos. $1,101 $1,021 $ 953
Dividends 438 543 543
Interest (principally tax exempt) 573 550 417
Gains from sales of investment securities 2,115 (30) 159
Other (184) 229 255
------ ------ ------
$4,043 $2,313 $2,327
====== ====== ======
INCOME TAXES
The effective income tax rate has declined in 1996 because of the decline in
operating income and the increase in not-fully-taxed other income:
First Quarter Ending February
-----------------------------
1996 1995 1994
---- ---- ----
Effective Income Tax Rate 25.5% 29.2% 29.3%
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by operating activities:
First Quarter Ending February
-------------------------------
1996 1995 1994
---- ---- ----
Cash provided by operating activities (thousands) $11,232 $5,875 $5,210
The increase in 1996 was caused by the decline in net current assets,
exclusive of cash and cash equivalents.
The Company continued its program of purchase and retirement of its Common
Stock in the first quarter of 1996 acquiring 78,700 shares at an average cost
of $23.15 for a total expenditure of $1,822,000. In fiscal years 1995 and
1994, 429,701 shares and 361,386 shares were acquired for a total cost of
$10,125,000 and $9,546,000, respectively.
The current ratio was 6.74 to 1 at February 29, 1996 and 5.79 to 1 at November
30, 1995. Working capital increased to $176 million at February 29, 1996, up
from $170 million at November 30, 1995.
Cash provided by operating activities is expected to be adequate for normal
future operating requirements.
There were no material commitments for capital expenditures at February 29,
1996. Capital expenditures that will be made in the future for normal
expansion or other operating purposes will be made from funds on hand or those
generated from operations.
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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
/s/ ROBERT H. SPILMAN
- ---------------------------------------------------------------
Robert H. Spilman, Chairman of the Board and Chief Executive Officer
Date: April 12, 1996
-----------------------------------
/s/ PHILIP E. BOOKER
- -----------------------------------------------------
Philip E. Booker, Vice President, Controller (Chief Accounting Officer)
Date: April 12, 1996
-----------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
February 29, 1996 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- --------
27 Financial Data Schedule page - 8
Page 8 of 8
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1,000
3-MOS
NOV-30-1996
DEC-1-1995
FEB-29-1996
65,344
32,417
61,850
0
76,233
206,956
212,540
160,789
341,776
30,724
0
0
0
67,901
230,643
341,776
111,951
115,994
94,183
109,670
0
182
1,452
6,324
1,610
4,714
0
0
0
4,714
.35
0
