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 AUGUST 31, 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 August 31, 1996, 13,142,895 shares of common stock of the
Registrant were outstanding.
Page 1 of 8
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PART I - FINANCIAL INFORMATION
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS - UNAUDITED
NINE MONTHS ENDED AUGUST 31, THREE MONTHS ENDED AUGUST 31,
---------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
Net sales $332,231,880 $361,752,321 $109,007,706 $ 119,183,765
Costs and expenses
Cost of sales 278,966,630 301,097,044 91,225,424 98,472,087
Selling, general and administrative 46,139,446 48,839,196 14,816,183 16,332,759
------------ ------------ ------------ -------------
325,106,076 349,936,240 106,041,607 114,804,846
------------ ------------ ------------ -------------
Income from operations 7,125,804 11,816,081 2,966,099 4,378,919
Other income, net 11,546,097 10,295,806 3,224,632 3,796,872
------------ ------------ ------------ -------------
Income before income taxes 18,671,901 22,111,887 6,190,731 8,175,791
Income taxes (4,140,000) (6,457,500) (1,365,000) (2,394,500)
------------ ------------ ------------ -------------
NET INCOME 14,531,901 15,654,387 4,825,731 5,781,291
Retained earnings - beginning of period 225,718,704 221,949,817 223,672,342 226,188,020
------------ ------------ ------------ -------------
240,250,605 237,604,204 228,498,073 231,969,311
Cash dividends ( 8,021,311) (8,444,424) ( 2,626,753) (2,809,531)
Purchase and retirement of common stock ( 10,005,208) (777,743) ( 3,647,234) (777,743)
------------ ------------ ------------- -------------
Retained earnings - end of period $222,224,086 $228,382,037 $ 222,224,086 $ 228,382,037
============ ============ ============= =============
NET INCOME PER SHARE $ 1.08 $ 1.11 $ .36 $ .41
====== ====== ====== =====
DIVIDENDS PER SHARE $ .60 $ .60 $ .20 $ .20
====== ====== ====== =====
- ---------------------------------------------------
The accompanying note is an integral part of the condensed consolidated
financial statements.
Page 2 of 8
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PART I - FINANCIAL INFORMATION - CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
ASSETS AUGUST 31, 1996 NOVEMBER 30, 1995
- ------ --------------- -----------------
Current Assets
Cash and cash equivalents $ 58,380,561 $ 51,331,119
Trade accounts receivable, less allowance
for doubtful accounts 64,375,558 68,591,514
Inventories:
Finished goods 46,689,718 46,490,589
Work in process 15,321,383 16,231,269
Raw materials and supplies 38,540,788 45,305,749
------------ ------------
100,551,889 108,027,607
Less LIFO adjustment 28,001,000 26,801,000
------------ ------------
72,550,889 81,226,607
Prepaid expenses 2,184,567 1,757,658
Deferred income taxes 1,988,000 2,008,000
------------ ------------
199,479,575 204,914,898
Property, Plant and Equipment
Cost 217,630,416 211,790,217
Less allowances for depreciation 164,801,755 158,665,871
------------ ------------
52,828,661 53,124,346
Other Assets
Investment in securities 27,487,801 39,055,319
Investment in affiliated companies 44,173,184 40,398,574
Other 11,139,533 9,227,317
------------ ------------
82,800,518 88,681,210
------------ ------------
$335,108,754 $346,720,454
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities
Accounts payable $ 28,491,559 $ 29,710,299
Accrued compensation 3,717,724 4,778,966
Income taxes 789,703 902,476
------------ ------------
32,998,986 35,391,741
Deferrals
Deferred liabilities 10,669,207 10,296,244
Deferred income taxes 1,082,000 2,129,000
------------ ------------
11,751,207 12,425,244
Stockholders' Equity
Common stock 65,714,475 68,294,765
Retained earnings 222,224,086 225,718,704
Unrealized holding gains, net of tax 2,420,000 4,890,000
------------ ------------
290,358,561 298,903,469
------------ ------------
$335,108,754 $346,720,454
============ ============
- --------------------------
The accompanying note is 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 STATEMENT OF CASH FLOWS - UNAUDITED
NINE MONTHS ENDED AUGUST 31,
-----------------------------------
1996 1995
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES $22,858,665 $25,808,844
INVESTING ACTIVITIES
Net change in cost of investment securities 12,952,008 7,155,646
Purchases of property, plant and equipment (6,192,249) (6,523,427)
Proceeds from sale of property, plant and equipment 83,635 59,000
Dividends from affiliated company -0- 817,129
Increase in cash surrender value of life insurance (1,915,038) (2,838,284)
Other (130,770) 131,616
------------- -------------
4,797,586 (1,198,320)
FINANCING ACTIVITIES
Issuance of common stock 25,364 48,733
Purchase and retirement of common stock (12,610,862) (1,022,286)
Cash dividends (8,021,311) (8,444,424)
------------- -------------
(20,606,809) (9,417,977)
------------- -------------
CHANGE IN CASH AND CASH EQUIVALENTS 7,049,442 15,192,547
CASH AND CASH EQUIVALENTS - beginning of period 51,331,119 42,314,957
------------- -------------
CASH AND CASH EQUIVALENTS - end of period $58,380,561 $57,507,504
============= =============
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Per share amounts are based on 13,431,163 and 14,082,213 weighted average
number of shares outstanding at August 31, 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:
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- ------------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Cost of sales 83.97% 83.23% 82.39% 83.69% 82.62% 82.79%
Selling, general and admin. 13.89 13.50 12.95 13.59 13.70 13.39
Income from operations 2.14 3.27 4.66 2.72 3.68 3.82
Other income, net 3.48 2.84 1.74 2.96 3.18 1.57
Income before income taxes 5.62 6.11 6.40 5.68 6.86 5.39
Income taxes 1.25 1.78 1.94 1.25 2.01 1.72
Accounting change -0- -0- .13 -0- -0- -0-
Net income 4.37 4.33 4.33 4.43 4.85 3.67
NET SALES
Net sales for the current two periods compared to prior years:
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- -----------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Net sales (thousands) $332,232 $361,752 $381,271 $109,008 $119,184 $124,968
% change from prior year (8.2)% (5.1)% 2.9% (8.5)% (4.6)% 3.1%
Net sales in the Casegoods Division in the third quarter reflect an increase
over the same quarter in 1995; other Divisions were flat or down in comparison
to the prior year. For the nine month period, the Motion and Upholstery
Divisions accounted for the majority of decreased sales.
COSTS AND EXPENSES
Cost of sales for the 1996 third quarter (83.69%) improved over the second
(84.08%) and first (84.13%) quarters. The gross profit margin for the nine
month period has fallen 74 basis points compared to 1995. The decrease in
gross profit margin follows a decrease of approximately 90 basis points for the
full fiscal year 1995 from 1994. This decline in margins is the result of the
continuing inability to increase sales prices 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:
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- -----------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Materials 49.96% 49.51% 48.81% 50.22% 49.82% 49.36%
Labor 21.23 21.33 21.57 20.96 20.83 21.49
Overhead 12.78 12.39 12.01 12.51 11.97 11.94
------- ------- ------- ------- ------- -------
83.97% 83.23% 82.39% 83.69% 82.62% 82.79%
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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 component percentage is a result of decreased
sales volume. Total overhead costs declined approximately $2.4 million in the
1996 nine month period and $625 thousand in the 1996 third quarter, compared to
1995 periods.
The increase in SG&A expenses as a percentage of net sales is also a result of
the decline in net sales. Total dollars, including variable costs (primarily
sales commissions), decreased in each period; and, in addition, the fixed cost
components of SG&A also declined during the periods reported.
OTHER INCOME, NET
Components of other income (in thousands):
Nine Months Ended August 31, Three Months Ended August 31,
----------------------------- -----------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Equity in unremitted income
of affiliated companies $3,775 $3,566 $3,078 $1,256 $1,125 $1,011
Interest (principally tax exempt) 1,755 1,756 1,231 637 633 419
Dividends 1,219 1,736 1,700 318 526 533
Gains from sales of investment securities 5,370 2,676 357 1,221 1,312 (5)
Other (573) 562 241 (207) 201 5
------- ------- ------ ------ ------ ------
$11,546 $10,296 $6,607 $3,225 $3,797 $1,963
INCOME TAXES
The effective income tax rate has declined in 1996 due to the decline in
operating income and the increase in tax-exempt other income.
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by operating activities:
Nine Months Ended August 31,
----------------------------
1996 1995 1994
---- ---- ----
Cash provided by operating activities (thousands) $22,859 $25,809 $12,268
The Company continued to purchase and retire its Common Stock during the first
nine months of 1996, acquiring 517,043 shares at an average cost of $24.39, for
a total expenditure of $12,611,000. 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 6.05 to 1 at August 31, 1996 and 5.79 to 1 at November
30, 1995. Working capital was $166 million at August 31, 1996, compared to
$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 August 31, 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
- ----------------------------------------------------------------------------
Robert H. Spilman, Chairman of the Board, and Chief Executive Officer
DATE:
-------------------------------
- ------------------------------------------------------------------------
Philip E. Booker, Vice President, Controller (Chief Accounting Officer)
DATE:
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
August 31, 1996 0-209
BASSETT FURNITURE INDUSTRIES, INCORPORATED
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
------------ ------------------- --------
27 Financial Data Schedule
Page 8 of 8
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1,000
9-MOS
NOV-30-1996
DEC-01-1995
AUG-31-1996
58,381
27,488
64,376
0
72,551
199,480
217,630
164,802
335,109
32,999
0
0
0
65,714
224,644
335,109
332,232
343,778
278,967
325,106
0
378
4,350
18,672
4,140
14,532
0
0
0
14,532
1.08
0
