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Furniture Brands International Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 5, 2011 01:44PM

Furniture Brands International Inc. (FBN) filed Quarterly Report for the period ended 2011-06-30. Furniture Brands International Inc. has a market cap of $199.7 million; its shares were traded at around $3.61 with and P/S ratio of 0.2.



Highlight of Business Operations:

Gross profit for the three months ended June 30, 2011 was $73.4 million compared to $74.4 million in the three months ended June 30, 2010. The decrease in gross profit is primarily attributable to higher material costs relative to sales price ($3.5 million)and higher inventory charges ($2.5 million), partially offset by lower employee benefit and welfare costs ($2.7 million) and higher sales ($1.7 million). Gross margin for the three months ended June 30, 2011 decreased to 24.8% compared to 25.7% in the three months ended June 30, 2010.

Selling, general, and administrative expenses increased to $79.3 million in the three months ended June 30, 2011 compared to $75.2 million in the three months ended June 30, 2010 primarily due to increased investments in advertising ($3.1 million) and favorable settlements in 2010 related to certain international tax and trade compliance matters ($3.7 million), partially offset by lower incentive compensation ($5.4 million) due to changes in forecasted earnings in the second quarter of 2011.

Gross profit for the six months ended June 30, 2011 was $151.0 million compared to $158.9 million in the six months ended June 30, 2010. The decrease in gross profit is primarily attributable to higher material costs relative to sales price ($5.7 million), lower sales ($4.6 million), and higher inventory charges ($3.9), partially offset by lower employee benefit and welfare costs ($6.5 million). Gross margin for the six months ended June 30, 2011 decreased to 25.4% compared to 26.0% in the six months ended June 30, 2010.

Selling, general, and administrative expenses increased to $158.9 million in the six months ended June 30, 2011 compared to $155.0 million in the six months ended June 30, 2010 primarily due to increased investments in advertising ($5.5 million), favorable settlements in 2010 related to certain international tax and trade compliance matters ($3.3 million), and lower gain on the disposal of assets ($1.2 million), partially offset by lower incentive compensation ($8.6 million) due to changes in forecasted earnings in the second quarter of 2011.

Cash and cash equivalents at June 30, 2011 totaled $35.4 million, compared to $52.0 million at December 31, 2010. Net cash provided by operating activities totaled $0.9 million in the six months ended June 30, 2011 compared with $46.3 million in the six months ended June 30, 2010. The decrease in cash flow from operations was primarily driven by decreased earnings from operations in the six months ended June 30, 2011 compared to the six months ended June 30, 2010 and decreased cash generated from income taxes receivable, partially offset by increased cash generated from working capital. Net cash used in investing activities for the six months ended June 30, 2011 totaled $15.1 million compared with $9.3 million in the six months ended June 30, 2010. The increase in cash used in investing activities is primarily the result of greater additions to property, plant, equipment, and software. Net cash used in financing activities totaled $2.4 million in the six months ended June 30, 2011 and $18.1 million in the six months ended June 30, 2010. The decrease in cash used in financing activities is primarily the result of decreased payments of long-term debt. Working capital was $270.0 million at June 30, 2011, compared to $286.4 million at December 31, 2010.

The excess of the borrowing base over the current level of letters of credit and cash borrowings outstanding represents the additional borrowing availability under the ABL. Certain covenants and restrictions, including cash dominion, weekly borrowing base reporting, and a fixed charge coverage ratio, would become effective if excess availability fell below various thresholds. If we fall below $42.0 million of excess availability, we are subject to cash dominion and weekly borrowing base reporting. If we fall below $35.0 million of excess availability, we are also subject to the fixed charge coverage ratio, which we currently do not meet. As of June 30, 2011, excess availability was $89.4 million. Therefore, as of June 30, 2011, we have $47.4 million of availability without being subject to the cash dominion and weekly reporting covenants of the agreement and $54.4 million of availability before we would be subject to the fixed charge coverage ratio.

Read the The complete Report



Stocks Discussed: FBN,
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