Furniture Brands International announced its financial results for the first quarter ended March 31, 2007.
Operating Results - First Quarter
Net sales for the first quarter of 2007 were $573.7 million, compared with $661.4 million in the first quarter of 2006, a decrease of 13%. Net earnings for the first quarter were $2.9 million, down from $30.2 million in the first quarter of last year. Diluted net earnings per common share were $0.06 as compared to $0.61 in the first quarter of last year.
Included in the 2007 first quarter net earnings were restructuring, asset impairment and severance charges totaling $0.02 per diluted common share and the effect of $0.02 in increased expense due to the upfront recognition of the gain on interest rate swaps at the end of the first quarter of last year, as previously announced. That gain amounted to $0.11 per diluted common share and is included in the 2006 first quarter reported net earnings. Negatively impacting the 2006 first quarter net earnings were restructuring, asset impairment and severance charges totaling $0.01 per diluted common share.
W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: ``Business conditions in the first quarter were difficult across all our companies. Already soft retail conditions worsened as the quarter progressed. The earnings shortfall was largely attributable to the soft business environment. We were pleased to report strong cash flow in the quarter, and we are pleased our balance sheet now shows a cash balance more in line with historical trends.
"Recently we announced a major headcount reduction and manufacturing realignment. These were difficult but necessary decisions designed to eliminate costs and keep the business appropriately sized in the face of challenging conditions. We will continue to pursue opportunities to reduce costs as we move forward.''
Mr. Holliman continued, "Concerning our debt, we disclosed in our 10-K filing last March we were negotiating a temporary amendment to our borrowings with our banks and senior note holders. We are pleased to report we have completed those negotiations. The amendment allows us until the end of June to put in place more permanent financing arrangements. We expect this will be achieved in that timeframe. While we are operating under this temporary amendment, our outstanding debt has been reclassified as a current liability on the balance sheet.''
Mr. Holliman concluded, "With respect to the second quarter, we do not see an improving marketplace, and as a result we expect net sales to be down around 15 percent versus the second quarter of last year. We expect net earnings per diluted common share to reflect a loss in the $0.11 to $0.07 range. This includes the effect of $0.02 in restructuring, asset impairment and severance charges. The company will no longer call out the increased interest expense as a special item as the expense will be on a comparable basis with the prior year. As is our practice, we will provide an update on our second quarter expectations in early June.''
Furniture Brands International is one of America's largest residential furniture companies. The company produces, sources and markets its products under six of the best-known brand names in the industry - Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland-Smith.
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