ECRU, MS - We purchased a controlling interest in American Furniture in August 2007. Results of OperationsThe table below summarizes the income (loss) from operations data for American Furniture for the three and six month periods ended June 30, 2014 and June 30, 2013. 

Three months ended June 30, 2014 compared to the three months ended June 30, 2013.
Net salesNet sales for the three months ended June 30, 2014 increased approximately $10.4 million, or 46.9% over the corresponding three months ended June 30, 2013. During the three months ended June 30, 2014, stationary product gross sales increased approximately $3.4 million and motion and recliner product gross sales increased approximately $7.0 million compared to the same period in 2013. This increase in sales for both product lines is principally attributable to a combination of increases in average unit price and the number of products shipped to American Furniture’s top twenty-five customers. In addition, a large sales promotion at one of American Furniture’s major customers completed during the quarter contributed to the increase in motion product sales.
Cost of salesCost of sales increased approximately $9.0 million in the three months ended June 30, 2014 compared to the same period of 2013. Gross profit as a percentage of sales was 9.0% in the three months ended June 30, 2014 compared to 7.1% for the same period in 2013. A favorable sales mix and increases in units manufactured in the three months ended June 30, 2014 resulted in positive manufacturing variances resulting in lower per unit costs compared to the same period in 2013. In addition, cost saving initiatives with respect to freight costs resulted in additional cost savings.
Selling, general and administrative expenseSelling, general and administrative expense for the three months ended June 30, 2014, increased approximately $0.1 million compared to the same period of 2013 primarily due to higher trade show costs and increased sales commissions incurred during the three months ended June 30, 2014 compared to the same period in 2013. Selling, general and administrative costs as a percentage of sales were 5.9% in the second quarter of 2014 compared to 8.0% in 2013. Income from operationsIncome from operations was $1.0 million for the three months ended June 30, 2014 compared to a loss from operations of $0.2 million in the three months ended June 30, 2013, an increase of $1.2 million, principally due to the factors described above.
40

Table of Contents


Six months ended June 30, 2014 compared to the six months ended June 30, 2013.
Net salesNet sales for the six months ended June 30, 2014 increased approximately $14.5 million, or 27.2% over the corresponding six months ended June 30, 2013. During the six months ended June 30, 2014, stationary product gross sales increased approximately $5.5 million and motion and recliner product gross sales increased approximately $8.8 million compared to the same period in 2013. This increase in sales for both product lines is principally attributable to a combination of increases in average unit price and the number of products shipped to American Furniture’s top twenty-five customers. In addition, a large sales promotion at one of American Furniture’s major customers completed during the second quarter of 2014 contributed to the increase in motion product sales.
Cost of salesCost of sales increased approximately $12.3 million in the six months ended June 30, 2014 compared to the same period of 2013. Gross profit as a percentage of sales was 9.5% in the six months ended June 30, 2014 compared to 8.0% for the same period in 2013. A favorable sales mix and increases in units manufactured in the six months ended June 30, 2014 resulted in lower per unit costs compared to the same period in 2013. In addition, cost saving initiatives with respect to freight costs resulted in cost savings.
Selling, general and administrative expenseSelling, general and administrative expense for the six months ended June 30, 2014, increased approximately $0.4 million compared to the same period of 2013 primarily due to higher trade show costs and increased sales commissions incurred during the six months ended June 30, 2014 compared to the same period in 2013. Selling, general and administrative costs as a percentage of sales were 6.3% in the first half of 2014 compared to 7.3% in 2013. Income from operationsIncome from operations was $2.1 million for the six months ended June 30, 2014 compared to $0.4 million in the six months ended June 30, 2013, an increase of $1.8 million, principally due to the factors described above.