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Furniture Brands International Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Furniture Brands International Inc. (FBN) filed Quarterly Report for the period ended 2010-09-30.

Furniture Brands International Inc. has a market cap of $304.5 million; its shares were traded at around $5.36 with and P/S ratio of 0.2. FBN is in the portfolios of Chuck Royce of Royce& Associates, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Gross profit for the three months ended September 30, 2010 decreased $0.3 million to $67.4 million compared to $67.7 million in the three months ended September 30, 2009. The decrease in gross profit is primarily attributable to lower sales ($5.0 million), partially offset by increased efficiencies in our supply chain ($4.7 million). Gross profit as a percentage of net sales for the three months ended September 30, 2010 increased to 24.8% compared to 23.1% in the three months ended September 30, 2009.

Selling, general, and administrative expenses decreased to $70.7 million in the three months ended September 30, 2010 from $89.2 million in the three months ended September 30, 2009. The decrease in selling, general, and administrative expenses was primarily due to lower incentive compensation costs ($4.5 million), lower headcount and benefit costs ($5.8 million), lower bad debt expenses ($2.3 million), lower rent expense ($1.8 million), lower professional fees ($1.4 million), and reduced exposure to certain international trade compliance matters ($1.1 million).

Gross profit for the nine months ended September 30, 2010 increased to $226.2 million compared to $209.7 million in the nine months ended September 30, 2009. The increase in gross profit is primarily attributable to increased efficiencies in our supply chain ($28.8 million), partially offset by lower sales ($12.3 million). Gross profit as a percentage of net sales for the nine months ended September 30, 2010 increased to 25.6% compared to 22.3% in the nine months ended September 30, 2009.

Selling, general, and administrative expenses decreased to $225.8 million in the nine months ended September 30, 2010 from $248.4 million in the nine months ended September 30, 2009. The decrease in selling, general, and administrative expenses was primarily due to lower headcount and benefit costs ($13.1 million), lower bad debt expenses ($7.2 million), reduced exposure to certain international trade compliance matters ($5.2 million), lower advertising expense ($2.0 million), and lower rent expense ($1.9 million), partially offset by higher incentive compensation costs ($9.7 million) and professional fees ($1.4 million). The reduction in advertising expense is attributable to a shift in our promotional efforts from direct advertising to other cooperative arrangements with our customers.

Interest expense for the nine months ended September 30, 2010 totaled $2.4 million compared to $4.3 million in the nine months ended September 30, 2009. The decrease in interest expense resulted from a reduction in outstanding debt ($1.5 million) and lower interest rates ($0.4 million).

Cash and cash equivalents at September 30, 2010 totaled $70.2 million, compared to $83.9 million at December 31, 2009. Net cash provided by operating activities totaled $18.2 million in the nine months ended September 30, 2010 compared with $61.8 million in the nine months ended September 30, 2009. Lower cash generated from inventory, accounts receivable, and other working capital led to decreased cash flow from operations in the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009, partially offset by increased earnings from operations, higher receipt of income tax refunds receivable, and lower payments of long-term incentive compensation. In the nine months ended September 30, 2010, we elected to increase stocks of essential raw materials and finished products to protect against any potential disruptions in the Asian supply chain, to meet current consumer demand for recently introduced products as well as support our commitments to dealers at the October High Point Market. Net cash used in investing activities for the nine months ended September 30, 2010 totaled $13.9 million compared with $3.9 million in the nine months ended September 30, 2009. The increase in cash used in investing activities is primarily the result of greater additions to software and lower proceeds from the disposition of assets, partially offset by fewer additions to property, plant, and equipment. Net cash used in financing activities totaled $18.1 million in the nine months ended September 30, 2010 compared with $88.0 million in the nine months ended September 30, 2009. Net cash used in financing activities in both periods consisted of payment of long-term debt.

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