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Original Source: FD (FAIR DISCLOSURE) WIRE
. Lynn Chipperfield, Furniture Brands International Inc., VP, IR . Mickey Holliman, Furniture Brands International Inc., Chairman,
President & CEO . David Howard, Furniture Brands International Inc., VP, Treasurer & CFO
FBN's 4Q03 sales were up 3.6% from 4Q02. The co. expects 1Q04 EPS to be $0.50-0.53 per share. Q&A Focus: Guidance, retail strategy, store closures, and Progress Lighting program.
A. Key Data From Call 1. 1Q04 EPS guidance = $0.50-0.53 per share.
S1. Operational Highlights (M.H.) 1. 4Q03 Results: 1. 4Q03 sales were up 3.6% from 4Q02. 2. Sequentially, through the year 2003, FBN's sales were down YoverY in 1H03 and up YoverY in 2H03.
1. 2H03 performance was not enough to get the co.'s full-year
sales to break even with 2002. 2. The co. is pleased that it has ended the year moving in a positive direction. 3. 4Q03 net earnings and net earnings per diluted common share were off from 4Q02. 1. This was directly attributable to the significant
restructuring charges and asset write downs that the co. took in 4Q03. 2. Included in 4Q03 net earnings were restructuring and asset impairment charges totaling $0.15 per diluted common share. 1. Excluding those charges, the co. would have exceeded 4Q02 EPS by $0.03. 4. Full-year 2003 earnings reflected restructuring and asset impairment charges totaling $0.20 per diluted common share.
1. All of these charges arose out of plant closings or manufacturing realignments at Broyhill, Thomasville, Highland House, Hickory Chair, Drexel Heritage, and Maitland-Smith, as well as asset impairment charges related to the write down of facilities that have been closed and that the co. has accelerated the disposal of. 5. Income and orders companywide have been trending generally positive on a YoverY basis, since the beginning of August of last year.
6. More recent order strength has been across substantially all
product lines, both middle price and upper end and involves
both the co.'s upholstery and case goods businesses. 7. While Broyhill and Lane began to see a turnaround in business
in 2002, the co. has been anxiously awaiting an indication of
sustainable positive trends at the upper end of the business;
Thomasville, Drexel Heritage, Henredon, and Maitland-Smith.
1. The development of those trends appears to be underway and
has continued into the new year. 2. The co. believes that these positive order trends are sustainable. 2. Facility Closures:
1. There were six manufacturing facilities that were restructured, closed, or announced of closing during 2H03. 2. In the two preceding years, the co. closed 17 other manufacturing facilities and absorbed the cost and inefficiencies associated with those as well. 3. FBN estimates that in the 2001-2003 time period, the co.
incurred over $44m in restructuring and asset impairment
charges. 4. In addition, the recovery period post plant closures has a negative impact upon employee performance and consequently,
cost to nearby sister operations, until such time as the
emotional effects have run their course. 5. The bottom line is that massive closures such as those that the co. has experienced have a huge impact upon earnings performance over a sustained period of time. 6. The co. has no plans for any other closures this year. 3. Deleveraging Program: 1. At the end of 3Q03, the co. completed the deleveraging program. 2. In less than six years, the co. has retired some $615m in long-term debt.
4. Balance Sheet: 1. Since the end of 3Q03, the co. has been accumulating cash. 2. Balance sheet ended the year with $72m in cash and cash equivalents. 3. The co. expects to generate over $100m in cash from operations going forward after CAPEX, which will be largely maintenance in nature. 4. In 3Q03, the co. declared a dividend in the amount of $0.50 per share, which will absorb about $28m per year. 5. At the Board Meeting on 01/29/04, the co. will recommend to the Board that the second quarterly dividend be declared. 6. The co. also has $100m in authority from the Board to repurchase common stock. 5. Distribution Channel: 1. At the end of 2003, the Furniture Brands Companies had 11.5m sq. ft. of retail space exclusively dedicated to the sale of the co.'s products. 2. Substantially, all FBN companies have gallery space at retailers around the country. 3. A store within a store concept gives the consumer the chance to see FBN products displayed in room settings. 1. This side of the business continues to grow, because of …