Bush Industries Reports Earnings For The Fourth Quarter And Full Year 2001 In Line With Company Guidance

Furniture World Magazine

Bush Industries (NYSE:BSH), a diversified global furniture manufacturer and leading supplier of surface technologies, reported results for the fourth quarter and full year ended December 29, 2001. In line with Company guidance issued on December 20, 2001, net loss for the fourth quarter was $5.9 million, or $0.42 per diluted share, compared with net earnings for the fourth quarter of 2000 of $9.1 million, or $0.65 per diluted share. The results for the current quarter include a non-cash inventory write-down of $3.0 million, net of tax, or $0.22 per diluted share, in order to expedite the sale of slower moving products. In addition, the fourth quarter loss impacted income taxes by $0.05 per diluted share. Excluding these items, the loss from operations was $0.15 per diluted share, which is in line with the previously projected range for the quarter of $0.13 to $0.18 per diluted share. For the full year 2001, net earnings were $0.3 million, or $0.02 per diluted share, compared with net earnings of $22.8 million, or $1.60 per diluted share for the full year 2000. Of note, as previously reported, net earnings for the fourth quarter of 2000 included an after-tax gain of approximately $2.3 million, or $0.16 per diluted share, on the sale of assets of a subsidiary. Net sales for the fourth quarter of 2001 were $85.0 million, compared with $118.0 million for the same quarter in the prior year, a decrease of approximately 28 percent. The shortfall can be primarily attributed to lower furniture sales to the North American office superstores and customer delays in new product launches at Bush Technologies. Net sales for the full year 2001 were $345.8 million, compared with sales of $451.2 million for the full year 2000. 2001 Comments: Paul Bush, Chairman and Chief Executive Officer of Bush Industries said, "In the last two quarters, management’s focus has been on improving working capital management, reducing overhead costs, further streamlining operations, and aggressively implementing our strategic marketing plans for each division in order to capitalize on the anticipated economic recovery later this year." A key goal over the last six months of 2001 was to reduce long-term debt by $10 million to $15 million for each of the two quarters (or $20 million to $30 million total). Bush achieved a long-term debt reduction of $18.1 million during the fourth quarter and a total debt reduction of $29.3 million for the last six months of 2001. This reduction was achieved through improved working capital management, primarily in the area of inventory reduction, lower capital expenditures and cost containment efforts. The reduction in manufacturing output to a level below shipments impacted profits negatively in both quarters. In the fourth quarter alone, Bush reduced inventories by $8.3 million, excluding the $5.2 million pre-tax non-cash inventory adjustment. Capital expenditures of $9.4 million were slightly below prior guidance of $10 million for full year 2001. Total long-term debt was $121.1 million as of December 29, 2001, which is the lowest quarter end level since December 1998. Cost containment efforts during the last year included the following: personnel reduction of approximately 30%; elimination of two leased facilities; implementation of lower cost telecommunications contracts; and a reduction in both employee performance bonuses and benefits. In addition, Bush integrated manufacturing work that had been outsourced, significantly increased its ability to cost effectively produce lower lot sizes and technically advanced its ability to manufacture commercial office products. In addition, the Company took a major step to focus its sales and marketing efforts through the divisionalization of Bush into four strategic business units, reflecting the natural alignment of the Company’s customers, markets and products. The Company also extended its agreement with its banking partners resulting in improved covenants reflecting both the current economy and the Company’s reduced need for working capital. The newly negotiated terms also include granting its lenders a security interest in certain of the Company's assets, and extends the relationship with the Company’s banking partners through June 30, 2004. The Company has adopted FASB No. 142, "Goodwill and Other Intangible Assets" in 2002, and is in the process of reviewing the impact of the new ruling on its financial statements. Paul Bush stated, "The year 2001 was one of the most challenging in the history of the Company, with the recession, events of September 11, and a difficult market. Through it all, we have strengthened the Company in four critical areas (strategically, cost effectiveness, debt reduction and technical capability) thereby positioning the Company for the anticipated economic recovery. Looking Forward: Paul Bush continued, "Although there is still uncertainty surrounding the timing of the economic recovery, we believe that many of the programs launched during the latter part of 2001 in both our technology and core furniture businesses will begin to have a positive impact on our results. In particular, we are starting to see improvement in our retail partners’ point of sale activity for our core furniture business, both in North America and Europe. In addition, we anticipate that Bush Technologies will continue to show sales growth of approximately 40 percent in the first quarter of 2002 over fourth quarter of 2001. However, we still continue to take a conservative outlook for the first half of 2002 reflecting our view that major retailers will continue to reduce inventories in the supply chain, and likewise, we continue to plan manufacturing output below shipments during this period. That said, we are expecting to generate EPS in a range of $0.03 to $0.07 per diluted share for the first quarter of 2002 on sales of $80 to $85 million."