Bassett Announces Fourth Quarter and Fiscal 2006 Earnings.BASSETT, Va. -- Bassett Furniture Bassett Furniture is a furniture manufacturer located in Virginia, USA. Bassett Furniture is one of the oldest furniture manufacturers in Virginia and has been producing hand crafted furniture for over 100 years. Industries Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BSET BSET Bachelor of Science in Engineering Technology BSET Building Systems Engineering Technology BSET Berhampur School of Engineering and Technology ) announced today its earnings for its fourth quarter and fiscal year ended November 25, 2006. Sales for the fourth quarter of 2006 were $76.5 million, down 13% from fourth quarter 2005 levels. The Company reported net income of $0.4 million or $.03 per share as compared to net income of $2.1 million or $.18 per share in the fourth quarter of 2005. Year-to-date, sales were $328.2 million, down 2% from the prior year. The Company reported net income of $5.4 million or $.46 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as compared to the Company's restated net income of $9.8 million or $.82 per diluted share in 2005. 2006 earnings were impacted by two unusual items, a fourth quarter goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $1.4 million and $1.5 million of income related to subsidies received in connection with the Continued Dumping and Subsidy Offset Act (CDSOA CDSOA Continued Dumping and Subsidy Offset Act of 2000 ). The decline in sales along with retail segment operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the Company-owned BFD BFD Big Freakin' Deal (polite form) BFD Bidirectional Forwarding Detection (IP networking) BFD Binary File Descriptor (computer programming) stores were the primary factors in the quarter over quarter and year over year decrease in earnings from 2005 to 2006. See below and the attached chart for a discussion of the Company's results by segment. A reconciliation of reported to adjusted net income and earnings per share has also been set forth below for the fourth quarter and the year 2006 compared to 2005. "The fourth quarter was tough for our industry and Bassett was no exception," said Robert H. Spilman, Jr., President and Chief Executive Officer. "Although retail conditions continue to be challenging, we are committed to investing in the future of the Bassett store program and the Bassett brand. Examples are the ongoing addition of new retail talent and a commitment to increased distribution of our consumer catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. . Furthermore, we are in the process of preparing to unveil a new store prototype later in 2007. We will, however, continue to examine our cost structure in light of the cost of our new initiatives and the current retail environment." 2005 and 2006 Restatements and Other Unusual Items As previously announced, the Company has restated its financial statements as of and for the year ended November 26, 2005 and will provide amended quarterly information for fiscal 2005 and 2006 as part of its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended November 25, 2006. The Company's 2005 Annual Report on Form 10-K was reviewed by the Staff of the Securities and Exchange Commission (SEC) as part of its normal review process. The Staff recommended changes to the Company's accounting treatment associated with its acquisitions of three retail licensee operations in fiscal 2005. Upon further review, the Company concurred with the accounting treatment recommended by the Staff. In connection with the Company's acquisitions of the three retail licensee operations in 2005, the Company recognized pre-tax charges of $4.2 million to (1) eliminate the gross profit on inventories previously sold to the licensees by Bassett and subsequently acquired in the acquisitions and (2) reduce goodwill associated with the acquisitions to a value the Company believed was appropriate. Upon further review, the Company has concluded that no charges should have been recognized with the acquisitions. A reconciliation detailing the effects on net income and earnings per share due to the restatements has been included. The Continued Dumping and Subsidy Offset Act of 2000 (CDSOA) provides for the distribution of monies collected by U.S. Customs and Border Protection U.S. Customs and Border Protection (CBP), a bureau of the United States Department of Homeland Security, is charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. trade laws. from antidumping an·ti·dump·ing adj. Intended to discourage importation and sale of foreign-made goods at prices substantially below domestic prices for the same items. cases to qualified domestic producers, in cases where domestic producers have continued to invest in their technology, equipment and people. For the year ended November 25, 2006, the Company recorded approximately $1.5 million in CDSOA subsidies, in connection with the case involving wooden bedroom furniture imported from China. Subsidies recorded in fiscal 2005 were insignificant. In the fourth quarter of 2006, the Company recorded a $1.4 million impairment charge to write-off the goodwill associated with its retail segment. While the Company is improving and refining its BFD store program, the retail segment continues to experience operating losses coupled with a soft furniture retail environment, particularly for the company-owned store locations. The Company, however, remains confident that recent and planned initiatives and long-term improvement in the retail environment will result in a profitable retail operation. Wholesale Segment On a wholesale basis, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $65.9 million for the fourth quarter of 2006, 14% below the $77.1 million sales level attained in the fourth quarter of 2005. For the year, wholesale sales were $284.8 million, 5% below sales levels attained in 2005. For 2006, 72% of wholesale shipments were to BFDs compared to 67% in 2005. Approximately 44% of wholesale shipments were imported products as compared to 35% in the fourth quarter of 2005. Overall, the segment's gross margins increased one percentage point in 2006 compared to 2005 and year-over-year operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before increased $2.5 million. This improvement was primarily driven by an improved mix of imported products and the performance of the upholstery upholstery, general term for household fittings, hangings, curtains, cushions, and covers. It refers to stuffed, padded, and spring-cushioned furniture, such as chairs and sofas, or to the usually decorative materials and fabrics that cover them. division. Upholstery shipments and operating earnings continued to improve due to the retail acceptance of our custom programs and the new imported leather products introduced over the past several years. The Bassett Furniture Direct retail store program had 134 stores (107 licensed and 27 corporately owned) in operation at the end of the fourth quarter. The Company opened one store and two licensed stores were closed during the fourth quarter. Overall retail conditions and the Company's initiative to develop a new store prototype have temporarily slowed store count growth. The Company expects licensees to open four to six stores in fiscal 2007. Retail Segment Retail sales for the fourth quarter of 2006 were $21.5 million, 10% below fourth quarter of 2005 levels. For the year, sales were $84.4 million, up $13.9 million from 2005. The increase in sales for 2006 is due to the stores the Company acquired during 2005. Bassett's 27 corporate stores continued to experience relatively soft conditions at retail and incurred an operating loss of $3.4 million for the fourth quarter of 2006, compared to loss of $1.6 million in the fourth quarter of 2005. Net sales and margins were lower than planned primarily due to the overall soft retail conditions, selling of selected products at clearance prices in order to prepare for the arrival of new products and featured catalog products, and promotions geared to respond to the overall soft market conditions. As previously discussed, changes being made to drive more traffic, improve staffing, and streamline operations are taking longer than anticipated to implement. The Company has made additional changes in both the leadership and pricing structure of the Company-owned stores which it believes will lead to better performance in 2007. Balance Sheet and Cash Flow The Company used cash in its operating activities in 2007 to fund retail segment losses, an increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , and a reduction in payables and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. . The reduction in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. related in part to payments of prior year restructuring related obligations and a reduction in payables related to the mix shift from domestic to imported purchases. To fund this $5.1 million of operating cash usage, a net $3.9 million in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , and the payment of over $9.4 million in dividend payments to our shareholders, the Company received approximately $6.6 million in dividends from an affiliate, liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. approximately $6.9 million from its investment portfolio and borrowed approximately $4.4 million under real estate notes payable. The Company's balance sheet remains strong with over $80 million of cash and investments, $38 million of accounts receivable, $49 million of inventories and total long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. including real estate mortgages of $23.5 million. The Company has not included its complete consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. in this release as it is still in the process of verifying its postretirement long-term liability balance. The Company does not expect any potential adjustment to materially impact its current year operating results. Accounts receivable have increased $1.2 million for the year, due to the slower pace of collections from certain BFD licensees related in part to the overall retail environment. Inventories have decreased for the year, due largely to a significant decrease in domestic wood inventories that more than offset an increase in the amount of imported products. Inventories did, however, decrease $2 million during the fourth quarter largely in response to the lower business levels. Bassett also announced that its Board of Directors has declared a regular quarterly dividend of $.20 per share payable on March 1, 2007, to shareholders of record on February 12, 2007. Bassett Furniture Industries, Inc. is a leading manufacturer and marketer of high quality, mid-priced home furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. . With over 130 Bassett Furniture Direct stores, Bassett has leveraged its brand name in furniture with a network of licensed and Company-owned stores that focus on providing consumers with a friendly and professional environment for buying furniture and accessories. The Company continues to sell its products to other retailers, in addition to the Company's dedicated retail store program. Bassett's retail strategy promotes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature the latest on-trend furniture styles, more than 1,000 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. For more information, visit the Company's website at www.bassettfurniture.com. [BSET-E] The Company has included the "as adjusted" information because it uses, and believes that others may use, such information in comparing the Company's operating results from period to period. However, the items excluded in determining the "as adjusted" information are significant components in understanding and assessing the Company's overall financial performance for the periods covered. Certain of the statements in the immediately preceding paragraphs, particularly those preceded by, followed by or including the words "believes," "expects," "anticipates," "intends," "should," "estimates," or similar expressions, or those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc or anticipating financial results for the fourth quarter of 2006 and periods beyond, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward looking statements contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause those results to differ materially from those expressed in the forward looking statements: economic, competitive, governmental and other factors identified in Bassett's filings with the Securities and Exchange Commission, and the effects of national and global economic or other conditions and future events on the retail demand for home furnishings. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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