ST. LOUIS - Furniture Brands International's (FBN: NYSE) equity in storied lines - including Thomasville, Drexel, Lane and Broyhill brands - may not preserve the business, which lost $59 million in the first half of 2013. Furniture Brands is looking at restructuring options, reports the Wall St. Journal.
Meanwhile shareholders filed suit in Eastern District Court in Missouri on August 16 over the company's declining stock value. Furniture Brands has been delisted from the New York Stock Exchange once, then reinstated, and now faces delisting again as its share prices continues to fall. It is currently trading at 61 cents a share, down 14% so far today.
Furniture Brands latest SEC filing reports an $11 million impairment charge against its equity in its famous furniture trade names, and millions in write offs for closed factories and the abandonment of a comany-wide computer management system, described in its filing.
"Asset impairment charges were recorded to reflect the abandonment of certain capitalized costs related to a company-wide software implementation and to reduce the carrying value of closed facilities and related assets to their net realizable value. The determination of impairment charges for closed facilities is based primarily upon (i) consultations with real estate brokers, (ii) proceeds from recent sales of Company facilities, and (iii) the market prices being obtained for similar long-lived assets.
"During the quarter ended June 29, 2013, the Company made the decision to abandon its plan to implement certain software programs across the entire organization. As a result, certain assets related to the company-wide software implementation were abandoned and the related book value was written off."
In the most recent quarter ended June 30, Furniture Brands International lost $48 million, and it has not been profitable since 2006.
In the shareholder lawsuit filed August 16, plaintiff Keith Carter provides Exhibit A, showing 400 shares of stock he purchased June 3, 2013 valued at $5.68 per share, plummeted to $1.24 on August 7. Carter layed out his complaints in the filing:
"Plaintiff alleges that Defendants [Furniture Brands International] have fraudulently inflated FBN’s stock price during the Class Period by disseminating materially false and misleading statements, and failing to disclose material information known or reck lessly disregarded by Defendants, concerning the Company’s true financial condition, operation and business prospects. 4. Specifically, throughout the Class Period, Defendants made false and misleading statements and/or failed to disclose that: (a ) the Company was experiencing weaknesses in its wholesale business; (b) the Company’s trade names were being carried at inflated values that would require material impairments; (c) the Company was experiencing severe liquidity issues."
Furniture Brands spokesperson Lisa Hanly told WoodworkingNetwork, "We believe these allegations are without merit and we plan to vigorously defend ourselves.”
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