e10vq

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KDDaROMUeHn9y8dJs3/L31xcteDaxCBjqndCcajzePVReGQTgiO8YQkezhLXGKaM c64djaRq4JoVZWKcyZXz9g== 0000950137-09-003748.txt : 20090508 0000950137-09-003748.hdr.sgml : 20090508 20090508143414 ACCESSION NUMBER: 0000950137-09-003748 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20090331 FILED AS OF DATE: 20090508 DATE AS OF CHANGE: 20090508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FURNITURE BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000050957 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 430337683 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00091 FILM NUMBER: 09809731 BUSINESS ADDRESS: STREET 1: 1 N BRENTWOOD BLVD CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148631100 MAIL ADDRESS: STREET 1: 1 N BRENTWOOD BLVD CITY: ST LOUIS STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL SHOE CO DATE OF NAME CHANGE: 19690313 10-Q 1 c51142e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 001-00091

Furniture Brands International, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		43-0337683 (I.R.S. Employer Identification No.)


1 North Brentwood Blvd., St. Louis, Missouri (Address of principal executive offices)		63105 (Zip Code)

(314) 863-1100

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).

o Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

48,709,746 shares as of April 30, 2009

Furniture Brands International, Inc.
Table of Contents


	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Financial Statements:

Consolidated Balance Sheets:		3

March 31, 2009
December 31, 2008

Consolidated Statements of Operations:		4

Quarter Ended March 31, 2009
Quarter Ended March 31, 2008

Consolidated Statements of Cash Flows:		5

Quarter Ended March 31, 2009
Quarter Ended March 31, 2008

Notes to Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures about Market Risk		20

Item 4. Controls and Procedures		21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		22

Item 1A. Risk Factors		22

Item 5. Other Information		22

Item 6. Exhibits		23

Trademarks and trade names referred to in this filing include Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Laneventure, and Maitland-Smith, among others.

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share information)
(unaudited)


	March 31,			December 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	48,108		$	106,580
Receivables, less allowances of $33,357 ($34,372 at December 31, 2008)		170,385			178,590
Income tax refund receivable		28,805			38,090
Inventories		323,436			350,026
Prepaid expenses and other current assets		14,503			12,592

Total current assets		585,237			685,878

Property, plant, and equipment, net		150,313			150,864
Trade names		127,132			127,300
Other assets		35,012			35,476

Total assets	$	897,694		$	999,518


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	2,000		$	30,000
Accounts payable		73,952			85,206
Accrued employee compensation		21,789			49,082
Other accrued expenses		55,892			63,214

Total current liabilities		153,633			227,502

Long-term debt		143,000			160,000
Deferred income taxes		27,925			27,917
Pension liability		135,284			137,199
Other long-term liabilities		74,035			80,406

Shareholders’ equity:
Preferred stock, 10,000,000 shares authorized, no par value — none issued		—			—
Common stock, 200,000,000 shares authorized, $1.00 stated value — 56,482,541 shares issued at March 31, 2009 and December 31, 2008		56,483			56,483
Paid-in capital		225,859			224,419
Retained earnings		372,339			376,515
Accumulated other comprehensive loss		(116,582	)		(116,988	)
Treasury stock at cost, 7,724,895 shares at March 31, 2009 and 7,704,764 shares at December 31, 2008		(174,282	)		(173,935	)


Total shareholders’ equity		363,817			366,494

Total liabilities and shareholders’ equity	$	897,694		$	999,518

See accompanying notes to consolidated financial statements.

FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share information)
(unaudited)


	Quarter Ended March 31,
	2009			2008

Net sales	$	356,871		$	477,200

Cost of sales		276,530			366,181


Gross profit		80,341			111,019

Selling, general, and administrative expenses		83,214			101,981


Operating earnings (loss)		(2,873	)		9,038

Interest expense		1,788			4,143

Other income, net		926			2,236


Earnings (loss) from continuing operations before income tax expense		(3,735	)		7,131

Income tax expense		441			3,383


Net earnings (loss) from continuing operations		(4,176	)		3,748

Net earnings from discontinued operations		—			29,868


Net earnings (loss)	$	(4,176	)	$	33,616


Earnings per common share — basic and diluted:
Earnings (loss) from continuing operations	$	(0.09	)	$	0.08
Earnings from discontinued operations	$	—		$	0.62

Net earnings (loss)	$	(0.09	)	$	0.69


Weighted average shares of common stock outstanding — basic and diluted		48,766			48,560

See accompanying notes to consolidated financial statements.

FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)


	Quarter Ended March 31,
	2009			2008
Cash flows from operating activities:
Net earnings (loss)	$	(4,176	)	$	33,616
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Depreciation		5,291			6,662
Compensation expense related to stock option grants and restricted stock awards		1,103			767
Provision (benefit) for deferred income taxes		40			893
Gain on sale of discontinued operations		—			(48,059	)
Other, net		(614	)		(1,406	)
Changes in operating assets and liabilities:
Accounts receivable		7,411			12,732
Income tax refund receivable		9,285			—
Inventories		27,439			13,663
Prepaid expenses and other assets		(2,191	)		1,114
Accounts payable and other accrued expenses		(46,046	)		42,895
Other long-term liabilities		(6,807	)		(12,534	)

Net cash provided by (used in) operating activities		(9,265	)		50,343


Cash flows from investing activities:
Acquisition of stores, net of cash acquired		—			(8,741	)
Proceeds from the sale of business, net of cash sold		—			73,309
Proceeds from the disposal of assets		51			3,261
Additions to property, plant, and equipment		(4,248	)		(2,150	)

Net cash provided by (used in) investing activities		(4,197	)		65,679


Cash flows from financing activities:
Payments of long-term debt		(45,000	)		(65,000	)
Restricted cash used for payment of long-term debt		—			20,000
Payments of cash dividends		—			(1,940	)
Other		(10	)		(8	)

Net cash used by financing activities		(45,010	)		(46,948	)


Net increase (decrease) in cash and cash equivalents		(58,472	)		69,074
Cash and cash equivalents at beginning of period		106,580			118,764

Cash and cash equivalents at end of period	$	48,108		$	187,838


Supplemental disclosure:

Cash payments (refunds) for income taxes, net	$	(9,380	)	$	419
Cash payments for interest expense	$	2,329		$	5,647

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except per share information)
(unaudited)

(1)		BASIS OF PRESENTATION

		The accompanying unaudited consolidated financial statements of Furniture Brands International, Inc. and its subsidiaries (the “Company”) have been prepared in accordance with accounting principals generally accepted in the United States (“U.S. GAAP”) and such principals are applied on a basis consistent with those reflected in our 2008 Annual Report on Form-10K, filed with the Securities and Exchange Commission. The year end balance sheet data was derived from audited financial statements. The accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) which management considers necessary for a fair presentation of the results of the period. These consolidated financial statements do not include all information and footnotes normally included in financial statements prepared in accordance with U.S. GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2008. The consolidated financial statements consist of the accounts of our company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results for the quarter ended March 31, 2009 are not necessarily indicative of the results which will occur for the full fiscal year ending December 31, 2009.

		The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates, judgments, and assumptions, which we believe to be reasonable, based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

		In the first quarter of 2008, we sold Hickory Business Furniture, a wholly owned subsidiary that designs and manufactures business furniture. As a result, this business unit has been reflected as a discontinued operation in all periods presented, pursuant to the provisions of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

(2)		RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

		In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS 157”), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in U. S. GAAP, and expands the disclosure requirements regarding fair value measurements. The rule does not introduce new requirements mandating the use of fair value. SFAS 157 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The required transition date for SFAS 157 was delayed until fiscal years beginning after November 15, 2008 for non-financial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption on January 1, 2008 of the portion of SFAS 157 that was not delayed until fiscal years beginning after November 15, 2008 did not have a material effect on our financial position or results of operations. The adoption of the remaining provisions of SFAS 157 on January 1, 2009 did not have a material effect on our financial position or results of operations.

		In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised 2007) (“SFAS 141R”), Business Combinations. SFAS 141R requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the provisions of SFAS 141R on January 1, 2009. The adoption of this statement did not have a material effect on our financial position or results of operations.

		In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (“SFAS 160”), Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51. SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of SFAS 160 on January 1, 2009 did not affect our financial position or results of operations.

		In December 2008, the FASB issued FASB Staff Position No. FAS 132R-1 (FSP FAS 132R-1), Employers’ Disclosures about Postretirement Benefit Plan Assets. FSP 132R-1 enhances the required disclosures related to postretirement benefit plan assets including disclosures concerning a company’s investment policies for benefit plan assets, categories of plan assets, fair value measurements of plan assets, and concentrations of risk within plan assets. The adoption of this statement will not effect our financial position or results of operations as it will only impact the disclosures in our annual report for the fiscal year ended December 31, 2009.

(3)		ACQUISITIONS

		During the quarter ended March 31, 2008, we acquired 15 stores and a warehouse from five of our dealers for total consideration of $8,741. The acquisitions were asset purchases consisting mainly of inventories and fixed assets and the assumption of certain liabilities, primarily customer deposits.

		The Consolidated Statement of Operations includes the results of operations of the acquired stores from the date of their acquisition. The pro forma impact of the acquisitions on prior periods is not presented as the impact is not material to operations.

(4)		RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

		We have been executing plans to reduce our domestic manufacturing capacity. Qualifying assets related to restructuring are included in assets held for sale in Other Assets in the Consolidated Balance Sheets until sold. Total assets held for sale were $10,043 at March 31, 2009 and $10,017 at December 31, 2008. Included in the restructuring charges for the quarter ended March 31, 2009 are expenses associated with our 26 closed retail store locations and severance costs which are primarily associated with our manufacturing operations.

		Restructuring and asset impairment charges were as follows:


	Quarter Ended March 31,
	2009		2008
Restructuring charges (benefits):
Termination benefits	$	418	$	—
Closed store occupancy and lease cost		1,395		2,207

		1,813		2,207
Gain on sale of assets		—		(1,243	)

	$	1,813	$	964


Statement of Operations classification:
Cost of sales	$	418	$	—
Selling, general and administration expenses		1,395		964

	$	1,813	$	964

		Asset impairment charges were recorded to reduce the carrying value of all idle facilities and related machinery and equipment to their net realizable value. The determination of the impairment charges were 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.

		Closed store occupancy and lease costs include occupancy costs associated with closed retail locations, early contract termination settlements for retail leases during the period, and closed store lease liabilities representing the present value of the remaining lease rentals reduced by the current market rate for sublease rentals of similar properties. This liability is reviewed quarterly and adjusted as necessary to reflect changes in estimated sublease rentals.

		Activity in the accrual for closed store lease liabilities during the quarter ended March 31, 2009 was as follows:


Accrual for closed store lease liabilities at January 1	$	27,918
Cash payments		(1,527	)
Charges to expense		278

Accrual for closed store lease liabilities at March 31	$	26,669

		At March 31, 2009, $5,219 of the accrual for lease termination costs is classified as current accrued expenses, with the remaining balance in other long-term liabilities.

		Activity in the accrual for termination benefits during the quarter ended March 31, 2009 was as follows:


Accrual for termination benefits at January 1	$	10,012
Charges to expense		418
Cash payments		(7,822	)

Accrual for termination benefits at March 31	$	2,608

		The accrual for termination benefits at March 31, 2009 is classified as current accrued expenses.

(5)		INVENTORIES

		Inventories are summarized as follows:


	March 31,		December 31,
	2009		2008
Raw materials	$	87,137	$	89,713
Work-in-process		21,112		21,405
Finished products		215,187		238,908

	$	323,436	$	350,026

(6)		PROPERTY, PLANT AND EQUIPMENT

		Major classes of property, plant and equipment consist of the following:


	March 31,		December 31,
	2009		2008
Land	$	15,894	$	16,027
Buildings and improvements		202,493		198,836
Machinery and equipment		271,366		270,597

		489,753		485,460
Less: accumulated depreciation		339,440		334,596

	$	150,313	$	150,864

		Depreciation expense was $5,291 and $6,662 for the quarter ended March 31, 2009 and March 31, 2008, respectively.

(7)		LONG-TERM DEBT

		Long-term debt consists of the following:


	March 31,		December 31,
	2009		2008
Asset-based loan	$	145,000	$	190,000
Less: current maturities		2,000		30,000

Long-term debt	$	143,000	$	160,000

		On August 9, 2007 we refinanced our revolving credit facility with a group of financial institutions. The facility is a five-year asset-based loan (“ABL”) with commitments to lend up to $450,000. The facility is secured by all of our accounts receivable, inventory and cash and is guaranteed by all of our domestic subsidiaries.

		The ABL provides for the issuance of letters of credit and cash borrowings. The issuance of letters of credit and cash borrowings are limited by the level of a borrowing base consisting of eligible accounts receivable and inventory. As of March 31, 2009 there were $145,000 of cash borrowings and $22,224 in letters of credit outstanding.

		The excess of the borrowing base over the current level of letters of credit and cash borrowings outstanding represents the additional borrowing availability under the ABL. Certain covenants and restrictions, including cash dominion, weekly borrowing base reporting, and a fixed charge coverage ratio, would become effective if excess availability fell below various thresholds. The threshold related to cash dominion and weekly borrowing base reporting is $75,000 and the threshold related to the fixed charge coverage ratio is $62,500. As of March 31, 2009 excess availability was $77,609. Of this, $2,609 represents the additional amount we could borrow without going below any of the covenant thresholds.

		As we currently would not be able to comply with the fixed charge coverage covenant, we manage our excess availability to remain above the covenant threshold. We do not expect to be below the threshold in 2009. In addition to our $2,609 additional borrowing capacity, we had $48,108 of cash and cash equivalents at March 31, 2009.

		We voluntarily repaid $2,000 of debt in April 2009 which was classified as current at March 31, 2009. If we had not made this payment, we still would have remained above the covenant threshold in April 2009.

		The borrowing base is reported on the 25th day of each month based on our financial position for the previous month end. Our borrowing base calculations are subject to periodic examinations by the financial institutions which can result in adjustments to the borrowing base and our availability under the ABL. These examinations have not resulted in significant adjustments to our borrowing base or availability in the past and are not expected to result in material adjustments in the future.

		Cash borrowings under the ABL will be at either (i) a base rate (the greater of the prime rate or the Federal Funds Effective Rate plus 1/2%) or (ii) an adjusted Eurodollar rate plus an applicable margin, depending upon the type of loan selected. The applicable margin over the adjusted Eurodollar rate is 1.25% for the first six months of the facility and thereafter will fluctuate with excess availability. As of March 31, 2009, loans outstanding under the ABL consisted of $50,000 based on the adjusted Eurodollar rate at an interest rate of 3.375% and $95,000 based on the adjusted prime rate at an interest rate of 3.25%. The weighted average interest rate for all loans outstanding as of March 31, 2009 was 3.29%.

(8)		LIQUIDITY

		The primary items impacting our liquidity in the future are cash from operations, capital expenditures, acquisition of stores, sale of surplus assets, borrowings and payments under our ABL, pension funding requirements, and, in 2009, the receipt of income tax refunds.

		We had $48,108 of cash and cash equivalents, $145,000 of debt outstanding, and excess availability to borrow an additional $2,609 under our ABL at March 31, 2009. In order to maintain these borrowings, we have to comply with various provisions of our ABL agreement (see Note 7. Long-Term Debt). Should we not comply with certain of the provisions of our ABL agreement, the lenders can call the debt, which could have a significantly adverse impact to our liquidity and our business. While we expect to comply with the provisions of the agreement throughout 2009, further deterioration in the economy and our results could cause us to not be in compliance with our ABL agreement. While we would attempt to obtain waivers for noncompliance, we may not be able to obtain waivers, which could have a significantly adverse impact to our liquidity and our business.

		In light of the recent deterioration of the global economy and uncertainty about these conditions in the foreseeable future, we are focused on effective cash management, controlling costs, and preserving cash related to capital expenditures and acquisition of stores. For example, we review all capital projects and are committed to execute only on those projects that are either necessary for business operations or have an adequate expected rate of return. Also, we will acquire stores only if we are required as the prime tenant or guarantor on the lease or if we expect an adequate return on our investment. However, if we do not have sufficient cash flow from our operations or our borrowing capacity under our ABL is insufficient, we may need to raise additional funds through equity or debt financings in the future in order to meet our operating and capital needs. Nevertheless, we may not be able to secure adequate debt or equity financing on favorable terms, or at all, at the time when we need such funding. In the event that we are unable to raise additional funds, our liquidity will be adversely impacted and our business could suffer. If we are able to secure additional financing, these funds could be costly to secure and maintain, which could significantly impact our earnings and our liquidity.

(9)		RETIREMENT PLANS

		The components of net periodic pension expense for Company-sponsored defined benefit plans are as follows:


	Quarter Ended March 31,
	2009			2008
Service cost	$	725		$	1,157
Interest cost		6,436			6,584
Expected return on plan assets		(6,538	)		(6,895	)
Net amortization and deferral		1,104			1,011

Net periodic pension expense	$	1,727		$	1,857

		We amended the defined benefit plans, freezing and ceasing future benefits as of December 31, 2005. Certain transitional benefits are being provided to participants who had attained age 50 and had completed 10 years of service as of December 31, 2005.

		The projected benefit obligation of our defined benefit plans exceeded the fair value of plan assets by $137,281 at December 31, 2008, the measurement date for our pension liability. In December 2008, the federal government passed legislation that provides for temporary relief from the funding requirements under the Pension Protection Act of 2006 due to the widespread nature of disruption in financial markets. Due to this legislation, our expected cash pension contributions for 2009 are not significant and are expected to range from $0 to $2,200 in 2009. However, if the relief provided by the federal government is no longer applicable to our pension plans, if there is continued downward pressure on the asset values of these plans, or if the assets fail to recover in value, it would necessitate significantly increased funding of our plans in the future.

		We currently provide retirement benefits to our employees through a defined contribution plan. Our total costs of the defined benefit and defined contribution plans for the quarter ended March 31, 2009 were $3,708 compared to $4,141 for the quarter ended March 31, 2008.

(10)		STOCK OPTIONS, RESTRICTED STOCK, AND RESTRICTED STOCK UNITS

		A summary of option activity for the quarter ended March 31, 2009 is presented below:


				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at December 31, 2008		3,610,692		$	20.54
Granted		—			—
Exercised		—			—
Forfeited or expired		(305,525	)		22.98

Outstanding at March 31, 2009		3,305,167		$	20.32

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. We had no stock option grants during the quarter ended March 31, 2009.

Non-vested restricted stock activity is presented below:


				Weighted
				Average
				Grant-Date
	Shares			Fair Value
Outstanding at December 31, 2008		451,501		$	12.61
Granted		—			—
Vested		—			—
Forfeited		(14,953	)		12.42

Outstanding at March 31, 2009		436,548		$	12.62

		Included in the tables above are 487,000 shares of stock options and 243,500 shares of restricted stock which have performance criteria upon which vesting is dependent. These shares were granted on March 14, 2008 and vest on December 31, 2009 if we achieve our 2009 performance measures for net earnings.

		In December 2008, we awarded restricted stock units to certain executive officers. The awards are contingent on the achievement of both the Company’s share price objectives and service-based retention periods. If the trailing 10 day average of our common stock reaches $6.26 per share, then fifty percent of the units will vest, and the executive will be entitled to receive a cash payment of $6.26 per vested unit on the second anniversary of the grant date, or if the vesting date occurs after the second anniversary of the grant date, on the vesting date. The other fifty percent of the units will vest if the trailing 10 day average of our common stock reaches $9.39 per share, and following vesting, the executive will be entitled to receive a cash payment of $9.39 per vested unit on the third anniversary of the grant date, or if the vesting date occurs after the third anniversary of the grant date, on the vesting date. The awards expire 5 years from the grant date and are designed to reward executives for increases in share price as well as encouraging the long-term employment of the executive officers.

		A summary of restricted stock unit activity for the quarter ended March 31, 2009 is presented below:


	Units with			Units with
	Share Price			Share Price
	Objective of			Objective of
	$6.26			$9.39
Outstanding at December 31, 2008		1,425,710			1,425,710
Granted		—			—
Vested		—			—
Forfeited		(127,795	)		(127,795	)

Outstanding at March 31, 2009		1,297,915			1,297,915

		A benefit of $100 was recorded in the first quarter of 2009 for restricted stock unit awards due to forfeitures and changes in the estimated fair value of the awards in the first quarter of 2009.

		The fair value of the restricted stock unit awards is estimated each quarter using binomial pricing models. The fair value of the awards is recognized as compensation expense ratably over the derived service periods. The derived service periods are 2.7 and 3.3 years for the awards with $6.26 and $9.39 share price objectives, respectively. The following assumptions were used to determine the fair value of the restricted stock units as of March 31, 2009:


Risk-free interest rate	1.6	%
Expected volatility	71.5	%
Expected dividend yield	0.0	%

The risk-free interest rate is based upon U.S. Treasury Securities with a term similar to that of the remaining term of the grant. Expected volatility is calculated based upon the historical volatility over a period equal to the remaining term of the grant. The dividend yield is calculated based upon the dividend rate at March 31, 2009.

(11)		COMPREHENSIVE INCOME (LOSS)

		Comprehensive income (loss) consists of the following:


	Quarter Ended March 31,
	2009			2008
Net earnings (loss)	$	(4,176	)	$	33,616
Other comprehensive income, net of tax:
Pension liability		1,077			576
Foreign currency translation		(671	)		(259	)

Other comprehensive income		406			317

Total comprehensive income (loss)	$	(3,770	)	$	33,933

The components of accumulated other comprehensive loss, each presented net of tax, are as follows:


	March 31,			December 31,
	2009			2008
Pension liability	$	(115,693	)	$	(116,770	)
Foreign currency translation		(889	)		(218	)

Accumulated other comprehensive loss	$	(116,582	)	$	(116,988	)

(12)		EARNINGS PER SHARE

		Stock options have been excluded from the computation of diluted earnings per common share because their inclusion would be antidilutive. Excluded stock options were as follows:


	Quarter Ended March 31,
	2009		2008
Stock options		3,305,167		3,871,092
Average exercise price	$	20.32	$	20.62

(13)		INCOME TAXES

		We or one of our subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. With few exceptions, we are no longer subject to United States federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. The Internal Revenue Service (“IRS”) commenced an examination of our United States income tax return for 2005 in the first quarter of 2007 and limited scope examinations of our United States income tax returns for 2006 and 2007 in the first quarter of 2009.

		As of March 31, 2009 and December 31, 2008, the total amount of unrecognized tax benefits was $10,254 and $10,297, respectively. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of March 31, 2009 and December 31, 2008, the liability for unrecognized tax benefits included accrued interest of $3,526 and $3,182 and accrued penalties of $967 and $804, respectively. We recognized interest expense of $344 and $267 and penalty expense of $163 and $206 related to unrecognized tax benefits in the statement of operations for the quarters ended March 31, 2009 and 2008, respectfully. The total amount of unrecognized tax benefits at March 31, 2009 that, if recognized, would affect our effective tax rate is $8,064.

		At December 31, 2008, we evaluated all significant available positive and negative evidence, including the existence of losses in recent years and our forecast of future taxable income, and, as a result, determined it was more likely than not that our federal and certain state deferred tax assets, including benefits related to net operating loss carryforwards, would not be realized based on the measurement standards required under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Therefore, we established a valuation allowance of $156,572. At March 31, 2009, the valuation allowance was increased $717 to $162,143 due to additional net operating losses during the first quarter, partially offset by a reduction in net deferred tax assets requiring a valuation allowance.

		The amount of the valuation allowance charged to income tax expense was $1,103 and $529 in the quarters ended March 31, 2009 and 2008, respectively. At March 31, 2009, the value of the federal and state net operating loss carryforward available for future tax benefit is $20,327 and $14,747, respectively, before the valuation allowance. The federal losses expire in the year 2028. The state losses generally start to expire in the year 2021. While we have no other limitations on the use of our net operating loss carryforwards, we are potentially subject to limitations if a change in control occurs pursuant to applicable statutory regulations.

(14)		CONTINGENT LIABILITIES

		We are involved, from time to time, in litigation and other legal proceedings incidental to our business. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon our results of operations or financial condition. However, management’s assessment of our current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against us not presently known to us or determinations by judges, juries or other finders of fact which are not in accordance with management’s evaluation of the probable liability or outcome of such litigation or proceedings.

		We are also involved in various claims relating to environmental matters at a number of current and former plant sites. We engage or participate in remedial and other environmental compliance activities at certain of these sites. At other sites, we have been named as a potentially responsible party under federal and state environmental laws for site remediation. Management analyzes each individual site, considering the number of parties involved, the level of our potential liability or contribution relative to the other parties, the nature and magnitude of the hazardous wastes involved, the method and extent of remediation, the potential insurance coverage, the estimated legal and consulting expense with respect to each site and the time period over which any costs would likely be incurred. Based on the above analysis, management believes at the present time that any claims, penalties or costs incurred in connection with known environmental matters will not reasonably likely have a material adverse effect upon our consolidated financial position or results of operations. However, management’s assessment of our current claims could change in light of the discovery of facts with respect to environmental sites, which are not in accordance with management’s evaluation of the probable liability or outcome of such claims.

		We are the prime tenant for operating leases and have subleased the premises to independent furniture dealers. In addition, we guarantee certain leases of company-brand stores operated by independent furniture dealers. These leases and guarantees have remaining terms ranging from one to twelve years and generally require us to make lease payments in the event of default by the dealer. In the event of default, we have the right to assign or assume the lease. Total future payments applicable to subleases and lease guarantees were $53,297 as of March 31, 2009. At March 31, 2009, we considered certain of these dealers with subleases and lease guarantees to be at risk of default and have recorded a lease termination liability of $702 to cover estimated losses.

(15)		DISCONTINUED OPERATIONS

		On October 16, 2007, we announced our intent to divest Hickory Business Furniture (“HBF”), a wholly-owned subsidiary that designs and manufactures business furniture. This business unit was reflected as a discontinued operation pursuant to the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets

		On March 29, 2008, we closed the sale of HBF for $75,000 and recorded a gain of $28,816, which is net of income tax expense of $19,243.

		The following table presents a condensed statement of operations for the discontinued operation for the quarter ended March 31, 2008:


Net sales	$	15,348
Earnings before income tax expense	$	1,734
Net earnings	$	1,052


Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. The various sections of this MD&A contain a number of forward-looking statements. Words such as “expects,” “goals,” “plans,” “believes,” “continues,” “may,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this and previous filings and particularly in the “Risk Factors” in Part I, Item 1A of our Form 10-K for the year ended December 31, 2008.

OVERVIEW

We are one of the nation’s leading designers, manufacturers, sourcers, and retailers of home furnishings. We market through a wide range of retail channels, from mass merchant stores to single-branded and independent dealers to specialized interior designers. We serve our customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Laneventure, and Maitland-Smith.

Through these brands, we design, manufacture, source, market, and distribute (i) case goods, consisting of bedroom, dining room, and living room furniture, (ii) stationary upholstery products, consisting of sofas, loveseats, sectionals, and chairs, (iii) motion upholstered furniture, consisting of recliners and sleep sofas, (iv) occasional furniture, consisting of wood, metal and glass tables, accent pieces, home entertainment centers, and home office furniture, and (v) decorative accessories and accent pieces. Our brands are featured in nearly every price and product category in the residential furniture industry.

Each of our brands designs, manufactures, sources, and markets home furnishings, targeting specific customers in relation to style and price point.

	•		Broyhill has collections of mid-priced furniture, including both wood furniture and upholstered products, in a wide range of styles and product categories including bedroom, dining room, living room, occasional, youth, home office, and home entertainment.

	•		Lane focuses primarily on mid-priced upholstered furniture, including motion and stationary furniture with an emphasis on home entertainment and family rooms.

	•		Thomasville has both wood furniture and upholstered products in the mid- to upper-price ranges and also manufactures and markets promotional-priced case goods and ready-to-assemble furniture.

	•		Drexel Heritage markets both case goods and upholstered furniture under the brand names Heritage, Drexel, and dh, in categories ranging from mid- to premium-priced.

	•		Henredon specializes in both wood furniture and upholstered products in the premium-price category.

	•		Hickory Chair manufactures a premium-priced brand of wood and upholstered furniture, offering traditional and modern styles.

	•		Pearson offers contemporary and traditional styles of finely tailored upholstered furniture in the premium-price category.

	•		Laneventure markets a premium-priced outdoor line of wicker, rattan, bamboo, exposed aluminum, and teak furniture.

	•		Maitland-Smith designs and manufactures premium hand crafted, antique-inspired furniture, accessories, and lighting, utilizing a wide range of unique materials. Maitland-Smith markets under both the Maitland-Smith and LaBarge brand names.

In the first quarter of 2008, we sold Hickory Business Furniture, a wholly owned subsidiary that designs and manufactures business furniture. As a result, this business unit has been reflected as a discontinued operation in all periods presented in this Form 10-Q.

BUSINESS TRENDS AND STRATEGY

In the first quarter of 2009, we continued to experience declining sales. We believe that the decline in sales was primarily caused by a number of ongoing factors in the global economies that have negatively impacted consumers’ discretionary spending. These economic factors included lower home values, increased foreclosure activity throughout the country,

rising levels of unemployment and personal debt, and reduced access to consumer credit. These developments combined with recent and ongoing unprecedented shocks to the global financial system and capital markets have all added to declines in consumer confidence and curtailed consumer spending.

In order to offset the impact of these economic conditions, we took several steps in 2008 and continue to take steps in 2009 to control costs and preserve cash, while also looking forward and investing in opportunities for future growth. The more significant actions taken by us include:

	•		Closing four domestic manufacturing facilities in 2008 and consolidating or reconfiguring other facilities in 2008 and 2009.

	•		Reducing our domestic workforce by approximately 1,400 employees in December 2008;

	•		Consolidating our administrative and support functions and implementing a shared services organization in 2008 and 2009;

	•		Exiting unprofitable retail stores in 2008 and 2009;

	•		Investing in pre-market product consumer testing, innovative product development, consumer insights, and more effective marketing to increase sales in order to assist us in regaining market share in the future; and

	•		Creating a wholly-owned subsidiary in Asia in 2008 to gain full control of our overseas manufacturing, sourcing and logistics activities.

As a result of the continuing weak economy and our initiatives to counteract this environment, the following charges and costs are included in our results of operations:

	•		We incurred costs of $2.3 million in the first quarter of 2009 and $2.3 million in the first quarter of 2008 related to unproductive downtime in our factories.

	•		We incurred charges of $0.4 million in the first quarter of 2009 associated with severance actions, which related primarily to reductions in our manufacturing operations.

	•		We incurred expense of $1.4 million in the first quarter of 2009 and $2.2 million in the first quarter of 2008 associated with closed retail store locations, which related primarily to occupancy costs, lease termination costs, and lease liabilities.

These charges and costs contributed to our loss from continuing operations of $4.2 million for the first quarter of 2009.

While we continue to look forward and invest in growth initiatives, we remain cautious about future sales. We expect a weak consumer retail environment to continue in 2009 and, as a company that is dependent upon consumer discretionary spending, we expect to face a challenging year. In anticipation of this, we continue to focus on the following key areas in 2009:

	•		Continuing to leverage the power of our brands through innovative marketing;

	•		Increasing our e-commerce initiatives to help drive more consumer interest in our products and create more demand for our retail partners;

	•		Continuing to leverage our size and scale by offering products that are differentiated from our competition through pre-launch testing that helps predict end-market acceptance, by conducting consumer segmentation analysis to assist retailers in allocating marketing resources, and by growing a global supply chain that minimizes dealer inventory requirements;

	•		Continuing to manage our working capital through improved product development that will reduce the number of products that we bring to market; and

	•		Continuing to improve our operational efficiency through centralized management of our global manufacturing, planning, sourcing, and logistics functions.

CONSOLIDATED RESULTS OF OPERATIONS

The following table has been prepared to set forth certain statement of operations and other data for continuing operations for the quarter ended March 31, 2009 and March 31, 2008:


	Quarter Ended March 31,
	2009						2008
				% of					% of
(in millions except share and per share data)	Dollars			Net Sales			Dollars		Net Sales
Net sales	$	356.9			100.0	%	$	477.2		100.0	%
Cost of sales		276.5			77.5			366.2		76.7

Gross profit		80.3			22.5			111.0		23.3
Selling, general, and administrative expenses		83.2			23.3			102.0		21.4

Earnings (loss) from operations		(2.9	)		(1.0	)		9.0		1.9
Interest expense		1.8			0.5			4.1		0.9
Other income, net		0.9			0.3			2.2		0.5

Earnings (loss) from continuing operations before income tax expense		(3.7	)		(1.0	)		7.1		1.5
Income tax expense		0.4			0.1			3.4		0.7

Net earnings (loss) from continuing operations	$	(4.2	)		(1.2)	%	$	3.7		0.8	%


Net earnings (loss) from continuing operations per common share — basic and diluted	$	(0.09	)				$	0.08

Net sales for the quarter ended March 31, 2009 were $356.9 million, compared to $477.2 million in the quarter ended March 31, 2008, a decrease of $120.3 million or 25.2%. The decrease in net sales was driven by weak retail conditions, decisions to abandon unprofitable products, customers, and programs, and higher price discounts, resulting in lower sales volume.

Gross profit for the quarter ended March 31, 2009 was $80.3 million compared to $111.0 million for the quarter ended March 31, 2008. The decline in gross profit is primarily attributable to lower sales volume and higher price discounts. We expect to realize improved margins in the future due to increased production efficiency driven by our recent restructuring activities, lower materials cost, and lower transportation cost.

Selling, general, and administrative expenses for the quarter ended March 31, 2009 were $83.2 million compared to $102.0 million in the quarter ended March 31, 2008. The decrease in selling, general, and administrative costs was primarily due to lower compensation and incentive plan costs, advertising expenses, bad debt expense, and professional fees, partially offset by higher occupancy expense which was primarily related to the addition of 22 Thomasville retail stores since the first quarter of 2008.

Interest expense totaled $1.8 million for the quarter ended March 31, 2009 compared to $4.1 million for the quarter ended March 31, 2008. The decrease in interest expense resulted from reduced long-term debt and lower interest rates.

Other income, net consists of the following:


	Quarter Ended March 31,
	2009		2008
Interest Income	$	0.7	$	1.7
Other		0.2		0.5

	$	0.9	$	2.2

Interest income includes interest received on short-term investments, notes receivable, and past due accounts receivable.

The effective income tax rate was (11.8)% for the quarter ended March 31, 2009 and 47.4% for the quarter ended March 31, 2008. The reduced effective tax rate resulted from losses for which the income tax benefit was offset by valuation allowances recorded during the period.

Earnings (loss) per common share from continuing operations was $(0.09) for the quarter ended March 31, 2009 compared to $0.08 for the quarter ended March 31, 2008. Weighted average common shares outstanding used in the calculation of net earnings per common share were 48.8 million for the quarter ended March 31, 2009 and 48.6 million for the quarter ended March 31, 2008.

Net earnings from discontinued operations, including the gain on the sale of Hickory Business Furniture of $28.9 million, were $29.9 million in the quarter ended March 31, 2008.

RETAIL RESULTS OF OPERATIONS

As a supplement to the information required in this Form 10-Q, we have summarized the following results of our company-owned Thomasville Home Furnishings Stores and all other company-owned retail stores:


	Thomasville Stores (a)						All Other Retail Stores(b)
	Quarter Ended March 31,						Quarter Ended March 31,
(Dollars in millions)	2009			2008			2009			2008

Net sales	$	19.5		$	10.9		$	10.3		$	15.6

Cost of sales		11.4			6.2			6.5			9.6


Gross profit		8.1			4.7			3.8			6.0

Selling, general, and administrative expenses		13.7			6.2			8.5			11.3


Operating loss(e)	$	(5.6	)	$	(1.5	)	$	(4.7	)	$	(5.3	)


Number of stores at end of period		45			23			17			21
Number of closed locations at end of period		—			—			26			21
Same-store-sales(c):
Quarterly percentage		(22	)%		(d	)		(d	)		(d	)
Number of stores		12			(d	)		(d	)		(d	)


a)		This supplemental data includes only Thomasville retail store locations that were open at the end of the quarter ended March 31, 2009 and March 31, 2008.

b)		This supplemental data includes all retail stores other than open Thomasville stores. This data also includes costs of $1.4 million and $2.2 million in the first quarter of 2009 and 2008, respectively, associated with closed retail locations which includes occupancy costs, lease termination costs, and costs associated with closed store lease liabilities.

c)		Quarterly same-store-sales percentage is based on sales from stores that have been in operation and company-owned for at least 15 months.

d)		Not meaningful due to the small number of open stores in the same-store calculation.

e)		Operating loss does not include our wholesale profit on the above retail net sales.

In addition to the above company-owned stores, there were 91 and 125 Thomasville dealer-owned stores at March 31, 2009 and March 31, 2008, respectively.

FINANCIAL CONDITION

Liquidity

Cash and cash equivalents at March 31, 2009 totaled $48.1 million, compared to $106.6 million at December 31, 2008. Net cash used in operating activities for the quarter ended March 31, 2009 totaled $9.3 million compared with net cash provided by operating activities of $50.3 million for the quarter ended March 31, 2008. This decrease in cash flow from operations is primarily attributable to lower operating earnings and the payment of accrued compensation and severance costs in the first quarter of 2009, partially offset by a higher reduction of inventories and income tax refund receivable as compared to the first quarter of 2008. Net cash used in investing activities for the first quarter totaled $4.2 million in 2009 compared with net cash provided by investing activities of $65.7 million in the first quarter of 2008. The decrease in cash provided by investing activities is primarily the result of a reduction of proceeds from the sale of business and assets in the first quarter of 2009 as compared to the first quarter of 2008, partially offset by fewer acquisitions of stores. Net cash used in financing activities for the first quarter totaled $45.0 million in 2009 compared with $46.9 million in 2008. Net cash used in financing activities in the first quarter of 2009 consisted of payment of long-term debt. Net cash used in financing activities in the first quarter of 2008 consisted of payment of long-term debt ($45.0 million, net of restricted cash) and cash dividends ($1.9 million).

We received federal income tax refunds of $26.5 million in April 2009 and expect to receive state and other income tax refunds of $2.3 million later this year.

Working capital was $431.6 million at March 31, 2009, compared to $458.4 million at December 31, 2008. The current ratio was 3.8-to-1 at March 31, 2009, compared to 3.0-to-1 at December 31, 2008. The decrease in working capital primarily resulted from reductions in cash and cash equivalents and inventories, partially offset by reductions in current maturities of long-term debt and accrued compensation costs. As described in the next section on “Financing Arrangements,” our borrowings under our asset-based loan (“ABL”) are limited by the amount of our eligible accounts receivable and inventory. Therefore, as our accounts receivable and inventory decrease in total, the amount we can borrow under our ABL decreases. In the first quarter of 2009, $45.0 million of cash was used in the payment of long-term debt, the payment of which was driven primarily by the decrease in our accounts receivable and inventory.

The primary items impacting our liquidity in the future are cash from operations, capital expenditures, acquisition of stores, sale of surplus assets, borrowings and payments under our ABL, pension funding requirements, and, in 2009, the receipt of income tax refunds.

We had $145.0 million of debt outstanding and excess availability to borrow an additional $2.6 million under our ABL at March 31, 2009. In order to maintain these borrowings, we have to comply with various provisions of our ABL agreement (see “Financing Arrangements”). Should we not comply with certain of the provisions of our ABL agreement, the lenders can call the debt, which could have a significantly adverse impact to our liquidity and our business. While we expect to comply with the provisions of the agreement throughout 2009, further deterioration in the economy and our results could cause us to not be in compliance with our ABL agreement. While we would attempt to obtain waivers for noncompliance, we may not be able to obtain waivers, which could have a significantly adverse impact to our liquidity and our business.

In light of the recent deterioration of the global economy and uncertainty about these conditions in the foreseeable future, we are focused on effective cash management, controlling costs, and preserving cash related to capital expenditures and acquisition of stores. For example, we reviewed all capital projects for 2009 and are committed to execute only on those projects that are either necessary for business operations or have an adequate expected rate of return. Also, we will acquire stores only if we are required as the prime tenant on the lease or if we expect an adequate return on our investment. However, if we do not have sufficient cash flow from our operations or our borrowing capacity under our ABL is insufficient, we may need to raise additional funds through equity or debt financings in the future in order to meet our operating and capital needs. Nevertheless, we may not be able to secure adequate debt or equity financing on favorable terms, or at all, at the time when we need such funding. In the event that we are unable to raise additional funds, our liquidity will be adversely impacted and our business could suffer. If we are able to secure additional financing, these funds could be costly to secure and maintain, which could significantly impact our earnings and our liquidity.

Financing Arrangements

Long-term debt consists of the following (in millions):


	March 31,		December 31,
	2009		2008
Asset-based loan	$	145.0	$	190.0
Less: current maturities		2.0		30.0

Long-term debt	$	143.0	$	160.0

On August 9, 2007 we refinanced our revolving credit facility with a group of financial institutions. The facility is a five-year asset-based loan (“ABL”) with commitments to lend up to $450.0 million. The facility is secured by all of our accounts receivable, inventory and cash and is guaranteed by all of our domestic subsidiaries.

The ABL provides for the issuance of letters of credit and cash borrowings. The issuance of letters of credit and cash borrowings are limited by the level of a borrowing base consisting of eligible accounts receivable and inventory. As of March 31, 2009 there were $145.0 million of cash borrowings and $22.2 million in letters of credit outstanding.

The excess of the borrowing base over the current level of letters of credit and cash borrowings outstanding represents the additional borrowing availability under the ABL. Certain covenants and restrictions, including cash dominion, weekly borrowing base reporting, and a fixed charge coverage ratio, would become effective if excess availability fell below various thresholds. The threshold related to cash dominion and weekly borrowing base reporting is $75.0 million and the threshold related to the fixed charge coverage ratio is $62.5 million. As of March 31, 2009 excess availability was $77.6 million. Of this, $2.6 million represents the additional amount we could borrow without going below any of the covenant thresholds.

As we currently would not be able to comply with the fixed charge coverage covenant, we manage our excess availability to remain above the covenant threshold. We do not expect to be below the threshold in 2009. In addition to our $2.6 million additional borrowing capacity, we had $48.1 million of cash and cash equivalents at March 31, 2009.

We voluntarily repaid $2.0 million of debt in April 2009 which was classified as current at March 31, 2009. If we had not made this payment, we still would have remained above the covenant threshold in April 2009.

The borrowing base is reported on the 25th day of each month based on our financial position for the previous month end. Our borrowing base calculations are subject to periodic examinations by the financial institutions which can result in adjustments to the borrowing base and our availability under the ABL. These examinations have not resulted in significant adjustments to our borrowing base or availability in the past and are not expected to result in material adjustments in the future.

Cash borrowings under the ABL will be at either (i) a base rate (the greater of the prime rate or the Federal Funds Effective Rate plus 1/2%) or (ii) an adjusted Eurodollar rate plus an applicable margin, depending upon the type of loan selected. The applicable margin over the adjusted Eurodollar rate is 1.25% for the first six months of the facility and thereafter will fluctuate with excess availability. As of March 31, 2009, loans outstanding under the ABL consisted of $50.0 million based on the adjusted Eurodollar rate at an interest rate of 3.375% and $95.0 million based on the adjusted prime rate at an interest rate of 3.25%. The weighted average interest rate for all loans outstanding as of March 31, 2009 was 3.29%.

We believe our current cash position along with our cash flow from operations, tax refunds, sale of surplus assets, and ABL availability will be sufficient to fund our liquidity requirements for the foreseeable future.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

Off-Balance Sheet Arrangements

We are the prime tenant for operating leases and have subleased the premises to independent furniture dealers. In addition, we guarantee many leases of company-brand stores operated by independent furniture dealers. These subleases and guarantees have remaining terms ranging from one to twelve years and generally require us to make lease payments in the event of default by the dealer. In the event of default, we have the right to assign or assume the lease. Total future payments applicable to subleases and lease guarantees were $53.3 million as of March 31, 2009. At March 31, 2009, we considered certain of these dealers with subleases and lease guarantees to be at risk of default and have recorded a lease termination liability of $0.7 million to cover estimated losses.

Funded Status of the Defined Benefit Pension Plan

The projected benefit obligation of our defined benefit plans exceeded the fair value of plan assets by $137.3 million at December 31, 2008, the measurement date for our pension liability. In December 2008, the federal government passed legislation that provides for temporary relief from the funding requirements under the Pension Protection Act of 2006 due to the widespread nature of disruption in financial markets. Due to this legislation, our expected cash pension contributions for 2009 are not significant and are expected to range from $0 to $2.2 million in 2009. However, if the relief provided by the federal government is no longer applicable to our pension plans, if there is continued downward pressure on the asset values of these plans, or if the assets fail to recover in value, it would necessitate significantly increased funding of our plans in the future.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations is based upon the Consolidated Financial Statements and Notes to the Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates, judgments, and assumptions, which we believe to be reasonable, based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and resulting estimates to make adjustments we consider appropriate under the facts and circumstances.

We have chosen accounting policies we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Accounting policies we consider most critical are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2008.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS 157”), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in U. S. GAAP, and expands the disclosure requirements regarding fair value measurements. The rule does not introduce new requirements mandating the use of fair value. SFAS 157 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The required transition date for SFAS 157 was delayed until fiscal years beginning after November 15, 2008 for non-financial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption on January 1, 2008 of the portion of SFAS 157 that was not delayed until fiscal years beginning after November 15, 2008 did not have a material effect on our financial position or results of operations. The adoption of the remaining provisions of SFAS 157 on January 1, 2009 did not have a material effect on our financial position or results of operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised 2007) (“SFAS 141R”), Business Combinations. SFAS 141R requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the provisions of SFAS 141R on January 1, 2009. The adoption of this statement did not have a material effect on our financial position or results of operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (“SFAS 160”), Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51. SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of SFAS 160 on January 1, 2009 did not affect our financial position or results of operations.

In December 2008, the FASB issued FASB Staff Position No. FAS 132R-1 (FSP FAS 132R-1), Employers’ Disclosures about Postretirement Benefit Plan Assets. FSP 132R-1 enhances the required disclosures related to postretirement benefit plan assets including disclosures concerning a company’s investment policies for benefit plan assets, categories of plan assets, fair value measurements of plan assets, and concentrations of risk within plan assets. The adoption of this statement will not effect our financial position or results of operations as it will only impact the disclosures in our annual report for the fiscal year ended December 31, 2009.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk from changes in interest rates. Our exposure to interest rate risk consists of interest expense on our asset-based loan and interest income on our cash equivalents. A 10% interest rate increase would result in additional interest expense of $0.3 million annually.

Item 4. CONTROLS AND PROCEDURES

(a)		Evaluation of Disclosure Controls and Procedures

		Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such terms are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), as of March 31, 2009, the end of the period covered by this Quarterly Report on Form 10-Q.

		Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

		As previously reported in our Annual Report on Form 10-K filed with the SEC on March 2, 2009, management concluded that our company did not maintain effective internal control over financial reporting as of December 31, 2008, based on the criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO’s”) Internal Control — Integrated Framework as a result of a material weakness in our accounting for income taxes. Specifically, management determined that our controls and procedures were inadequate to ensure that the necessary information, including a complete listing of all deferred income tax assets subject to a valuation allowance, was captured and communicated to those responsible for evaluating the accounting implications. Solely as a result of this material weakness, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of March 31, 2009. We have designed and begun implementation of procedures we believe will remediate the material weakness described above. The more significant procedures include capturing a complete list, segregated by U.S. and foreign tax jurisdictions, of all gross deferred income tax assets subject to a valuation allowance and providing this list to those responsible for evaluating the accounting implications. Certain of these procedures are performed on a quarterly basis while others are performed only on an annual basis. The quarterly procedures will be fully implemented in the second quarter of fiscal 2009 and the annual procedures by the end of fiscal 2009. In order to evaluate whether the material weakness has been remediated, we must successfully test the effectiveness of the new procedures over this period of time. Therefore, we expect the material weakness will be remediated by the end of fiscal 2009.

		Notwithstanding the material weakness described above, our management has concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States for each of the periods presented herein.

(b)		Changes in Internal Control over Financial Reporting

		Other than the changes discussed in (a) above, there have not been any other changes in our internal control over financial reporting during the first quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In April 2009, a purported derivative suit was filed in the Circuit Court of St. Louis County, Missouri against Furniture Brands International, Inc. (as a nominal defendant) and against current directors and certain current and former officers of the company. The complaint purports to allege corporate waste and a breach of fiduciary duty by the directors with respect to the approval of certain compensation payments made to executive officers of the company. The complaint also purports to allege unjust enrichment claims against certain executive officers. The complaint seeks, among other things, unspecified damages based on the purported breach of fiduciary duties and the return of certain compensation paid to certain executive officers.

It is too early for the company to reach a conclusion as to the ultimate outcome of this action. However, we believe that the lawsuit is without merit.

Refer to Part 1, Note 14 to the Consolidated Financial Statements in this form 10-Q, which is incorporated herein by reference.

Item 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Item 5. OTHER INFORMATION

On May 6, 2009, our company’s Human Resources Committee approved the forms of restricted stock award agreement, nonqualified stock option agreement, and performance based restricted stock award agreement to be used in connection with awards made under the Furniture Brands International, Inc. 2008 Incentive Plan. Copies of these agreements are attached hereto as Exhibits 10.4, 10.5, and 10.6 and are incorporated herein by reference.

Item 6. EXHIBITS

Exhibit

Filed

Incorporated by Reference

Index

with this

Filing Date

No.

Exhibit Description

Form 10-Q

Form

with the SEC

Exhibit No.

3.1

Restated Certificate of Incorporation of the Company, as amended

10-Q

May 14, 2002

3.2

By-Laws of the Company, as amended effective as of August 7, 2008

8-K

August 13, 2008

3.1

10.1

First Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective December 31, 2005

10.2

Second Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective January 1, 2005

10.3

Third Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective March 14, 2008

10.4

Form of Restricted Stock Award Agreement under 2008 Incentive Plan

10.5

Form of Nonqualified Stock Option Agreement under 2008 Incentive Plan

10.6

Form of Performance Based Restricted Stock Award Agreement under 2008 Incentive Plan

31.1

Certification of Ralph P. Scozzafava, Chairman of the Board and Chief Executive Officer of the Company, Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Steven G. Rolls, Chief Financial Officer (Principal Financial Officer) of the Company, Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Ralph P. Scozzafava, Chairman of the Board and Chief Executive Officer of the Company, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Steven G. Rolls, Chief Financial Officer (Principal Financial Officer) of the Company, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Furniture Brands International, Inc. (Registrant)
	By:	/s/ Steven G. Rolls
		Steven G. Rolls
		Chief Financial Officer (On behalf of the registrant and as principal Principal Financial Officer) Date: May 8, 2009

EXHIBIT INDEX

Exhibit

Filed

Incorporated by Reference

Index

with this

Filing Date

No.

Exhibit Description

Form 10-Q

Form

with the SEC

Exhibit No.

3.1

Restated Certificate of Incorporation of the Company, as amended

10-Q

May 14, 2002

3.2

By-Laws of the Company, as amended effective as of August 7, 2008

8-K

August 13, 2008

3.1

10.1

First Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective December 31, 2005

10.2

Second Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective January 1, 2005

10.3

Third Amendment to the Furniture Brands Supplemental Executive Retirement Plan, effective March 14, 2008

10.4

Form of Restricted Stock Award Agreement under 2008 Incentive Plan

10.5

Form of Nonqualified Stock Option Agreement under 2008 Incentive Plan

10.6

Form of Performance Based Restricted Stock Award Agreement under 2008 Incentive Plan

31.1

31.2

32.1

32.2

EX-10.1 2 c51142exv10w1.htm EX-10.1 exv10w1

Exhibit 10.1

FIRST AMENDMENT TO THE
FURNITURE BRANDS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, Furniture Brands International, Inc. (“Company”) previously adopted the Furniture Brands Supplemental Executive Retirement Plan (Plan”); and

WHEREAS, the Company reserved the right to amend the Plan pursuant to Section 7.1; and

WHEREAS, effective December 31, 2005, the Company desires to amend the Plan to freeze the Plan and cease benefit accruals thereunder, except for certain transition benefits provided to participants who have attained age 50 and completed 10 years of service;

NOW, THEREFORE, effective December 31, 2005, the Plan is amended as follows:

1. Section 1.9 is amended by adding the following sentence at the end of the Section:

Effective December 31, 2005, no additional employees shall become Participants under this Plan.

2. The Plan is amended by adding the following Section VIII at the end of the Plan:

SECTION VIII

Benefit Freeze

8.1 Except as otherwise specifically provided in Section 8.2 of this Plan, a Participant’s retirement benefit (whether payable at Normal Retirement Date, an Early Retirement Date or a Postponed Retirement Date) payable under Section III of this Plan, death benefit payable under Section IV of this Plan and disability benefit payable under Section V of this Plan shall be frozen at the amount of each such benefit determined as of December 31, 2005, based on the Participant’s years of Service and average compensation or other factors taken into account under the Basic Plan as of such date, and no additional retirement, death or disability benefits under this Plan shall be accrued after December 31, 2005.

8.2 Notwithstanding Section 8.1 of this Plan, in the case of a Participant who has attained age 50 and completed 10 or more years of Service as of December 31, 2005, and who is actively employed by the Company or an Affiliate and is actively participating in this Plan on such date, in determining such Participant’s retirement, death or disability benefits under this Plan:

	(a)		such Participant’s years of Service earned after December 31, 2005, up to a maximum of five such years of Service and subject to any limit set forth in the Basic Plan, shall be taken into account; and

	(b)		such retirement, death or disability benefits shall be based on such Participant’s average compensation or other factors taken into account under the Basic Plan as of the date such Participant ceases to be credited with Service under Section 8.2(a) of this Plan. Notwithstanding anything herein or the Basic Plan to the contrary, any amounts deferred from taxable income by any such Participant under the Furniture Brands International, Inc. Deferred Compensation Plan after December 31, 2005 shall be taken into account in determining such Participant’s retirement, death or disability benefits pursuant to this Section 8.2 to the extent such amounts would have been taken into account as compensation under the Basic Plan absent such deferral and the limitations of Code Section 401(a)(17).

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer this 15th day of December, 2005.


	FURNITURE BRANDS INTERNATIONAL, INC.
	By:	/s/ Lynn Chipperfield
		Title: SVP — CAO

EX-10.2 3 c51142exv10w2.htm EX-10.2 exv10w2

Exhibit 10.2

SECOND AMENDMENT TO THE
FURNITURE BRANDS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, Furniture Brands International, Inc. (“Company”) previously adopted the Furniture Brands Supplemental Executive Retirement Plan (Plan”); and

WHEREAS, the Company reserved the right to amend the Plan pursuant to Section 7.1 therein; and

WHEREAS, the Company desires to amend the Plan in order to comply with certain requirements under Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and other guidance issued thereunder.

NOW, THEREFORE, effective January 1, 2005, the Plan is amended as follows:

1. A new Section 1.15 is added as follows;

“1.15 “Specified Employee” means any individual that the Company determines is a specified employee within the meaning of Section 409A of the Code. Company shall determine whether an employee is a Specified Employee by applying reasonable, objectively determinable identification procedures set forth in a resolution of the Company’s Board of Directors,”

2. The following is added to the end of Section 5.3

“Notwithstanding anything in this Plan to the contrary, in no event will disability benefits commence under either Section 5.1 or 5.2 of this Plan unless, as of the date of commencement of such benefits, the participant is disabled within the meaning of Section 409A of the Code.”

3. Section 6.1 is deleted in its entirety and replaced with the following:

“6.1 Benefits payable in accordance with Section III, IV, and V of this Plan will be payable monthly, and will be made or commence, as appropriate, (1) on the first day of the month following the date on which the Participant ceases to be an employee of the Company for benefits payable under Section III, (2) on the first day of the month following the date of the Participant’s death for benefits payable under Section IV, or (3) on the first day of the month following the date of the Participant becomes totally disabled for benefits payable under Section V. Notwithstanding the foregoing, if a Participant is determined to be a Specified Employee on the date the Participant retires or otherwise separates from service within the meaning of Section 409A of the Code, payment(s) under Section III shall not be made or begin, as applicable, until the first payroll date that is more than six months following the date of retirement or other separation from service to the extent required to avoid adverse tax consequences under Section 409A of the Code. All amounts that would have been paid during this six month period but for this Section 6.1 shall instead be paid on the earlier of the Participant’s death of the first payroll

date that is more than six months following the date of retirement or other separation from service.”

4. A new Section 6.3 is added as follows:

“6.3 Transitional Election. Notwithstanding the foregoing, a Participant shall make an irrevocable election among forms of benefits available under this Plan during 2008. Such election must be made by December 31, 2008 and shall apply only to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008. In the event a Participant elects a joint and survivor annuity distribution option and the beneficiary dies before commencement of benefits pursuant to Section 6.1, benefits shall be paid in a single life annuity.”

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer this 24^th day of December, 2008.


	FURNITURE BRANDS INTERNATIONAL, INC.
	By:	/s/ Beth Sweetman
		Title: SVP — Human Resources

EX-10.3 4 c51142exv10w3.htm EX-10.3 exv10w3

Exhibit 10.3

THIRD AMENDMENT TO THE
FURNITURE BRANDS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, Furniture Brands International, Inc. (“Company”) previously adopted the Furniture Brands Supplemental Executive Retirement Plan (Plan”); and

WHEREAS, the Company reserved the right to amend the Plan pursuant to Section 7.1 therein; and

WHEREAS, on March 14, 2008, the Compensation Committee of the Board approved amending the Plan to provide for both immediate vesting of accrued benefits and lump sum payments to Plan participants in the event of a Change in Control, as defined in the Plan.

NOW, THEREFORE, effective March 14, 2008, the Plan is amended as follows:

1. A new Section 1.16 is added as follows:

1.16 “Change in Control” means (i) an acquisition by the individual or entity of 35% of the outstanding common stock or voting power of the Company, (ii) a contested change in a majority of the non-employee directors of the Company, (iii) a merger, sale, acquisition, or other such transaction where the shareholders of the Company immediately prior to such transaction do not own 60% of the outstanding common stock of the Company immediately following such transaction, or (iv) a complete dissolution of the Company (excluding bankruptcy).

2. Section 6.2 of the Plan is deleted in its entirety and replaced with the following:

6.2 Except as provided for a Participant under Sections 3.7 or 9.1 of this Plan, no benefits are payable under this Plan if a participant terminates employment for any reason prior to a Retirement Date, excluding terminations due to death or disability,

3. A new Section 8.3 is added as follows:

8.3 Notwithstanding anything herein to the contrary, only the years of Service earned by the Participant after December 31, 2005 and before a Change in Control (or in the case of a complete dissolution of the Company, the years of Service earned before shareholder approval of the dissolution) shall be taken into account pursuant to this Section 8.3 in determining the Participant’s retirement, death or disability under the Plan.

4. A new Section IX is added as follows:

SECTION IX

Change in Control

9.1 Notwithstanding any provision in the Plan to the contrary, each Participant shall become fully vested in his or her accrued benefits on the date a Change in Control occurs; however, if the Change in Control event is the complete dissolution of the Company (excluding bankruptcy), the Participant’s accrued benefits shall become fully vested on the date shareholders duly approve the dissolution. No future benefits shall accrue under the Plan after the vesting date specified in this Section 9.1. Provided that the Change in Control event constitutes a change in the ownership of effective control of the Company, or a change in the ownership of a substantial portion of the assets of a Company, as defined under Code Section 409 A and the regulations promulgated thereunder, each Participant shall receive a lump sum payment on the date of the Change in Control in the amount equal to the actuarial present value his or her accrued benefits. Payment of such amount shall constitute a complete distribution of the Participant’s entire accrued benefits and no additional amounts shall accrue to, or be due or owing to, the Participant under this Plan.

In all cases under the Plan in which amounts are payable upon a fixed date, payment shall be deemed to be made upon the fixed date if the payment is made on such date or a later date within the same calendar year or, if later, by the 15^th day of the third calendar month following the specified date (provided the Participant is not permitted, directly or indirectly, to designate the taxable year of payment). In addition, a payment shall be treated as made upon the date specified under the Plan if the payment is made no earlier than 30 days before the designated payment date and the Participant is not permitted, directly or indirectly, to designate the taxable year of payment.

9.2 Notwithstanding anything herein to the contrary, to the extent necessary to preclude triggering adverse tax consequences under Code Section 409A in the case of a Participant who is a Specified Employee, such Participant’s benefits shall be distributed under this Section IX, on the date that is six months after the date of the Change in Control, or, if later, the date specified in Section 9.3. In the event of such a delay in payment, the amount payable to the Participant shall be increased to reflect earnings at a reasonable rate of interest.

9.3 Notwithstanding any provision in this Section IX to the contrary, in the event a Change in Control occurs during the 2008 calendar year, distribution of Participants’ accrued benefits pursuant to Section 9.1 herein shall be delayed until January 1, 2009. In the event of such a delay in payment, the amount payable to the Participant shall be increased to reflect earnings at a reasonable rate of interest.

9.4 Notwithstanding the preceding, the immediate distribution described in this Section 9.1 shall apply to a retired Participant or a Surviving Spouse or Beneficiary who is receiving benefits under this Plan at the time of the Change in Control only if he or she has timely filed, on a form proscribed by the Company, a written consent to such distribution. Such consent must be filed

with the Company on or before the earlier of December 31, 2008, or the date of the Change in Control.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer this 24^th day of December, 2008.


	FURNITURE BRANDS INTERNATIONAL, INC.
	By:	/s/ Beth Sweetman
		Title: SVP — Human Resources

EX-10.4 5 c51142exv10w4.htm EX-10.4 exv10w4

Exhibit 10.4

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT

Furniture Brands International, Inc., a Delaware corporation (the “Company”), hereby grants stock relating to shares of its common stock, no par value (the “Common Stock”), to the individual named below as the Grantee. The terms and conditions of the grant are set forth in this Agreement and in the Furniture Brands International, Inc. 2008 Incentive Plan (the “Plan”).

Grant Date:                                         , 20___ (the “Grant Date”)

Name of Grantee:

Grantee’s Social Security Number:

Number of Shares of Stock Covered by Grant:

By signing this cover sheet, you agree to all of the terms and conditions described in this Agreement and in the Plan, a copy of which is being provided with this Agreement. You acknowledge that you have carefully reviewed the Plan and agree that the Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.


GRANTEE:


[Name]

COMPANY:

By:


Title:

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT


Restricted Stock		This grant is an award of Common Stock in the number of shares set forth on the cover sheet (the “Shares”), subject to the vesting conditions described below (“Restricted Stock”). To the extent not yet vested, your Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process.

Definitions		“Cause,” “Change in Control,” “Disability,” “Retirement,” and “Service” shall have the meaning assigned to such terms in Appendix A to this Agreement.

Vesting		Your right to the shares of Common Stock under this Restricted Stock grant vests as follows: [Insert Vesting Schedule].

Forfeiture of Stock		In the event that your Service with the Company terminates for any reason other than your death, Disability or Retirement, you will forfeit to the Company all of the Shares subject to this grant that have not yet vested. Any Shares of Restricted Stock that are forfeited shall be returned to the Company and cancelled, and all of your rights to those shares will terminate, without any payment of consideration by the Company.

		In the event that your Service with the Company terminates due to your death, Disability or Retirement, any unvested shares of Restricted Stock will vest pro-rata. The pro rata portion of the Restricted Stock that will become fully vested will be determined by multiplying the additional number of shares of Restricted Stock that would have become vested (but for the termination) on the next vesting date following the date your Service terminates by a fraction, the numerator of which shall be the number of full months that have elapsed from the last vesting date immediately preceding the termination of Service and the denominator of which shall be the number of full months in the period from the last vesting date to the next vesting date.

Ownership of Restricted Stock		The Company will issue Shares of Restricted Stock in your name in the form of an entry into a share memo account with the Company’s stock transfer agent on the Grant Date. The account will show that the Shares are subject to the restrictions described herein. Subject to the terms and conditions described herein, you shall be entitled to all the rights of beneficial ownership of the Shares while they are held in the share memo account, including the right to vote the Shares and to receive dividends, subject to the requirements set forth herein, if, as and when declared by the Company’s Board of Directors.


		Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. The Company may in its sole discretion require any dividends paid on the Restricted Stock to be reinvested in shares of Stock, which the Company may in its sole discretion deem to be a part of the shares of Restricted Stock and subject to the same conditions and restrictions applicable thereto.

		Until the restrictions have lapsed or the Shares are forfeited and cancelled, the Shares shall be held in the share memo account and you shall not be entitled to receive certificates representing the Shares. After the Restrictions have lapsed with respect to Shares, you (or, in the case of your death or Disability, your legal representatives, legatees, distributees or guardian) shall have the right to have such Shares certificated and transferred in accordance with the transfer agent’s procedures generally applicable to all stockholders.

		In order to facilitate the transfer back to the Company of any Shares of Restricted Stock that are forfeited and cancelled as described herein, you must sign and deliver the stock power, attached hereto as Exhibit A, for the Shares to the Company’s Compensation Director. Upon the forfeiture of Shares, such Shares of Restricted Stock will be transferred back to the Company pursuant to such stock power and cancelled.

Change in Control		Notwithstanding anything herein to the contrary, upon the occurrence of a Change in Control, all Shares of Restricted Stock that (but for the application of this clause) have not vested at the time of the occurrence of such Change in Control event shall vest immediately.

Withholding		You must pay any taxes that are required to be withheld by the Company. You may pay such amounts in cash or make other arrangements satisfactory to the Company for the payment of such amounts. You agree that if you do not pay, or make arrangements for the payment of, such amounts, the Company, to the fullest extent permitted by law, shall have the right to deduct such amounts from any payments of any kind otherwise due to you and shall have the right to withhold from Shares of Restricted Stock for which restrictions have lapsed the number of Shares having an aggregate market value at that time equal to the amount you owe.

Section 83(b) Election		Under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the difference between the purchase price paid for the Shares of Restricted Stock and their fair market value on the date any forfeiture restrictions applicable to such Shares lapse will be reportable as ordinary income at that time. For this purpose, “forfeiture restrictions” include the forfeiture of unvested Shares of Restricted Stock that is described above. You may elect to be taxed at the time the Shares are acquired, rather than when such Shares cease to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date. You will have to make a tax payment to the extent the


		purchase price is less than the fair market value of the Shares on the Grant Date. No tax payment will have to be made to the extent the purchase price is at least equal to the fair market value of the Shares on the Grant Date. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the shares as of the vesting date exceeds the purchase price) as the forfeiture restrictions lapse.

		YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION.

Right of Recapture		If, at any time, within one year after the date that the Shares vest (the “Realization Event”), the Committee (as defined in the Plan) determines in its discretion that the Company has been materially harmed by you, whether such harm (a) results in your termination or deemed termination of Service for Cause or (b) results from any activity of yours determined by the Committee to be in competition with any activity of the Company, or otherwise prejudicial, contrary or harmful to the interests of the Company (including, but not limited to, accepting employment with or serving as a consultant, adviser or in any other capacity to an entity that is in competition with or acting against the interests of the Company), then any gain realized by you from the Shares of Restricted Stock shall be paid by you to the Company upon notice from the Company. Such gain shall be determined as of the date of the Realization Event, without regard to any subsequent change in the Fair Market Value of shares of the Company’s Common Stock. To the extent allowed by applicable law, the Company shall have the right to offset such gain against any amounts otherwise owed to you by the Company (whether as wages, vacation pay, or pursuant to any benefit plan or other compensatory arrangement).

Retention Rights		This Agreement does not give you the right to be retained by the Company (or any subsidiaries) in any capacity. The Company (and any subsidiaries) reserves the right to terminate your Service at any time and for any reason.

Adjustments		In the event of any stock dividend, stock split, combination or exchange of shares, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), recapitalization or other change in the capital structure of the Company, or other corporate transaction, the number of Shares of Restricted Stock covered by this grant will be adjusted by the Committee in accordance with the terms of the Plan.


Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

Consent to Electronic Delivery		The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant you agree that the Company may deliver the Plan prospectus and the Company’s annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to receive, the Company would be pleased to provide copies. Please contact the Plan Administrator to request paper copies of these documents.

Amendments		No amendment to this Agreement may impair your rights under this Agreement without your consent.

The Plan		The text of the Plan is incorporated in this Agreement by reference. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant of Restricted Stock. Any prior agreements, commitments or negotiations concerning this grant are superseded. The Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

Appendix A

1. For the purpose of this Agreement, “Cause” shall mean (a) your conviction of any crime (whether or not involving the Company) constituting a felony in the jurisdiction involved; (b) your conduct related to your Service for which either criminal or civil penalties against you or the Company may be sought; (c) material violation of the Company’s policies, including the disclosure or misuse of confidential information, or those set forth in Company manuals or statements of policy; or (d) serious neglect or misconduct in the performance of your duties for the Company or willful or repeated failure or refusal to perform such duties. Any rights the Company may have in respect of the events giving rise to Cause shall be in addition to the rights the Company may have under any other agreement with you or at law or in equity. Any determination of whether your Service is (or is deemed to have been) terminated for Cause shall be made by the Committee in its sole discretion, which determination shall be final and binding on all parties. If, subsequent to your termination of Service (whether voluntary or involuntary) without Cause, it is discovered that your Service could have been terminated for Cause, your Service shall be deemed to have been terminated for Cause. Your termination of Service for Cause shall be effective as of the date of the occurrence of the event giving rise to Cause, regardless of when the determination of Cause is made.

2. For the purpose of this Agreement, “Change in Control” means the first to occur of any of the following events:

	i.		any person (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 35% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

	ii.		the majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

	iii.		the consummation of a merger or consolidation of the Company with any other entity, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, 60% or more of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

iv.

the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, 60% or more of the combined voting power of the voting securities of which is owned by persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

For purposes of this definition, “beneficial ownership” shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

4. For the purpose of this Agreement, “Disability” shall mean you are permanently and totally disabled and unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of twelve months. The existence of a Disability shall be determined by the Committee in its sole discretion.

5. For the purpose of this Agreement, “Retirement” shall mean your termination of Service on or after attaining age 55 and completing 5 years of service with the Company.

6. For the purpose of this Agreement, “Service” shall mean service as an employee, officer or director of the Company or any subsidiary of the Company.

EXHIBIT A

STOCK POWER

FOR VALUE RECEIVED, sells, assigns and transfers to Furniture Brands International, Inc., a Delaware corporation (the “Company”), ( ) shares of common stock of the Company represented by Certificate No. and does hereby irrevocable constitute and appoint , Attorney to transfer the said stock on the books of the Company with full power of substitution in the premises.

Dated: , 20____


		Print Name

		Signature

Spouse Consent (if applicable)

(spouse) indicates by the execution of this Assignment his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the shares of common stock of the Company.


		Signature

INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO FACILITATE THE TRANSFER BACK TO THE COMPANY OF ANY SHARES OF RESTRICTED STOCK THAT ARE FORFEITED AND CANCELLED AS SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON YOUR PART.

EXHIBIT B

ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:

1. The name, address and social security number of the undersigned:


		Name:
		Address:


		Social Security No.:

2. Description of property with respect to which the election is being made: shares of common stock, no par value per share, Furniture Brands International, Inc., a Delaware corporation, (the “Company”).

3. The date on which the property was transferred is , 20 ___.

4. The taxable year to which this election relates is calendar year 20___.

5. Nature of restrictions to which the property is subject: The shares of stock are subject to the provisions of a Restricted Stock Agreement between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement.

6. The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $ per share, for a total of $ .

7. The amount paid by taxpayer for the property was $ 0.

8. A copy of this statement has been furnished to the Company.

Dated: , 20___.


		Print Name

		Signature

PROCEDURES FOR MAKING ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b):

The following procedures must be followed with respect to this form for making an election under Internal Revenue Code section 83(b) in order for the election to be effective:

1. You must file one copy of the completed election form with the IRS Service Center where you file your federal income tax returns within 30 days after the Grant Date of your Restricted Stock.

2. At the same time you file the election form with the IRS, you must also give a copy of the election form to the Secretary of the Company.

3. You must file another copy of the election form with your federal income tax return (generally, Form 1040) for the taxable year in which the stock is transferred to you.

EX-10.5 6 c51142exv10w5.htm EX-10.5 exv10w5

Exhibit 10.5

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT

Furniture Brands International, Inc., a Delaware corporation (the “Company”), hereby grants to the individual named below as the “Participant,” Nonqualified Stock Options to purchase all or any part of the number of shares of Common Stock of the Company, no par value per share (“Common Stock”), set forth below. This grant is made on the Grant Date set forth below (the “Grant Date”) and is being made pursuant to the Furniture Brands International, Inc. 2008 Incentive Plan. The terms and conditions of the grant are set forth in this Agreement and in the Furniture Brands International, Inc. 2008 Incentive Plan (the “Plan”).

Grant Date:                     , 20___

Name of Participant:

Participant’s Social Security Number:

Number of Options Granted:

Option Price per share:

PARTICIPANT:



[Name]

COMPANY:

By:

Title:

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT


Grant of Option		This Agreement evidences the grant by the Company on the Grant Date to the Participant, of an option to purchase, in whole or in part, on the terms provided herein and in the Plan, [___] shares (the “Option”) of Common Stock at [$___] per share (the “Option Price”). Unless earlier terminated, this Option shall expire on [this date will be seven years from the grant date] (the “Expiration Date”).

		It is intended that the Option evidenced by this Agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant,” as used in this Option, shall be deemed to include any person who acquires the right to exercise this Option validly under its terms.

Definitions		“Cause,” “Change in Control,” “Disability,” “Fair Market Value” and “Retirement” shall have the meaning assigned to such terms in Appendix A to this Agreement.

Vesting		This Option will vest [Insert Vesting Terms].

Exercise of Option		Each election to exercise this Option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this Agreement, and payment in full of the Option Price. A Participant may pay the Option Price:

		(i) in cash or by check, payable to the order of the Company;

		(ii) if the Common Stock is registered under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), in Common Stock which, if acquired from the Company, has been held for at least six months including by deemed or constructive transfers of shares in lieu of actual transfer and physical delivery of certificates; or

		(iii) if the Common Stock is registered under the Exchange Act, payment in full of the Option Price need not accompany the written notice of exercise provided that the notice of exercise directs that the certificate or certificates for the shares of Common Stock for which the Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Option and, at the time such certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the shares of Common Stock purchased pursuant to the exercise of the Option plus the amount (if any) of required withholding taxes. Executive Officers and Directors of the


		Company will not be permitted to use the cashless method of exercise described in this paragraph without the express prior consent of the Company.

		The date of exercise shall be the date the written notice and the Option Price actually are received by the Company or its designee, regardless of the means of delivery.

		The right of exercise shall be cumulative so that to the extent the Option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares underlying the Option which have vested until the earlier of the Expiration Date or the termination of this Option under this Agreement or the Plan.

Change in Control		Notwithstanding the vesting set forth above, upon the occurrence of a Change in Control of the Company, all of the Shares that (but for the application of this clause) are not vested at the time of the occurrence of such Change in Control event shall vest and shall become immediately exercisable.

Transferability		This Option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this Option shall be exercisable only by the Participant.

Termination of Employment		(a) In the event that the Participant’s employment terminates due to the Participant’s death, Disability or Retirement, the unvested portion of the Option will terminate and be forfeited, and the vested portion may be exercised until the earlier of (i) the third anniversary of the Participant’s death, Disability or Retirement, and (ii) the Expiration Date.

		(b) In the event that the Company terminates the Participant’s employment for Cause at any time, this Option will automatically terminate and all unexercised vested and unvested shares underlying the Option will be forfeited and will not be exercisable as of the date of such termination.

		(c) If the Participant’s employment with the Company is terminated for any other reason, this Option will automatically terminate, any unvested shares underlying the Option will be forfeited and any vested shares may be exercised no later than the earlier of (i) the 90 days after the date of termination of the Participant’s employment, and (ii) the Expiration Date.

Right of Recapture		If, at any time, within one year after the Participant exercises the Option (the “Realization Event”), the Committee (as defined in the Plan) determines in its discretion that the Company has been materially harmed by the Participant, whether such harm (a) results in the Participant’s termination or deemed termination of employment for


		Cause or (b) results from any activity of the Participant determined by the Committee to be in competition with any activity of the Company, or otherwise prejudicial, contrary or harmful to the interests of the Company (including, but not limited to, accepting employment with or serving as a consultant, adviser or in any other capacity to an entity that is in competition with or acting against the interests of the Company), then any gain realized by the Participant from the exercise of the Options pursuant to this Agreement shall be paid by the Participant to the Company upon notice from the Company. Such gain shall be determined as of the date of the Realization Event, without regard to any subsequent change in the Fair Market Value of shares of the Company’s Common Stock. To the extent allowed by applicable law, the Company shall have the right to offset such gain against any amounts otherwise owed to the Participant by the Company (whether as wages, vacation pay, or pursuant to any benefit plan or other compensatory arrangement).

No Rights as Stockholder		The Participant does not have any of the rights of a stockholder with respect to shares of Common Stock covered by the Option until shares of Common Stock are issued to him or her upon exercise of the Option.

Withholding		No shares will be issued pursuant to the exercise of this Option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

Retention Rights		This Agreement does not give the Participant the right to be retained or employed by the Company or any subsidiaries in any capacity.

Adjustments		In the event of any stock dividend, stock split, combination or exchange of shares, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), recapitalization or other change in the capital structure of the Company, or other corporate transaction, the number of shares covered by this Option will be adjusted by the Committee in accordance with the terms of the Plan.

		Notwithstanding the foregoing, any adjustment, substitution or assumption pursuant to this section shall be made in such a manner as to ensure that the Options will not be subject to Section 409A of the Code.

Beneficiaries		The Participant may designate one or more beneficiaries to receive all or part of this Option in case of the Participant’s death, and the Participant may change or revoke such designation at any time. In the event of the Participant’s death, any portion of this Option that is subject to such a designation will be distributed to such beneficiary or beneficiaries in accordance with this Agreement. Any other portion of this Option not designated by the Participant shall be distributable to the Participant’s estate. If there is any question as to the legal right of any


		beneficiary to receive a distribution hereunder, the Option shares in question may be purchased by and distributed to the Participant’s estate, in which event the Company shall have no further liability to anyone with respect to such Option.

Amendments		This Agreement may be amended in writing by the Company and the Participant, provided that the Company may amend this Agreement unilaterally if the amendment does not adversely affect or impair the rights of the Participant. The Company shall give notice to the Participant of any such unilateral amendment either before or promptly after the effective date of such amendment.

Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

Consent to Electronic Delivery		The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant the Participant agrees that the Company may deliver the Plan prospectus and the Company’s annual report to the Participant in an electronic format. If at any time the Participant would prefer to receive paper copies of these documents, the Company would be pleased to provide copies. Please contact the Plan Administrator to request paper copies of these documents.

The Plan		The text of the Plan is incorporated in this Agreement by reference. This Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding this grant of Options. Any prior agreements, commitments or negotiations concerning this grant are superseded. The Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

Appendix A

1. For the purpose of this Agreement, “Cause” shall mean (a) the Participant’s conviction of any crime (whether or not involving the Company) constituting a felony in the jurisdiction involved; (b) the Participant’s conduct related to the Participant’s employment for which either criminal or civil penalties against the Participant or the Company may be sought; (c) material violation of the Company’s policies, including the disclosure or misuse of confidential information, or those set forth in Company manuals or statements of policy; or (d) serious neglect or misconduct in the performance of the Participant’s duties for the Company or willful or repeated failure or refusal to perform such duties. Any rights the Company may have in respect of the events giving rise to Cause shall be in addition to the rights the Company may have under any other agreement with the Participant or at law or in equity. Any determination of whether the Participant’s employment is (or is deemed to have been) terminated for Cause shall be made by the Committee in its sole discretion, which determination shall be final and binding on all parties. If, subsequent to the Participant’s termination of employment (whether voluntary or involuntary) without Cause, it is discovered that the Participant’s employment could have been terminated for Cause, the Participant’s employment shall be deemed to have been terminated for Cause. The Participant’s termination of employment for Cause shall be effective as of the date of the occurrence of the event giving rise to Cause, regardless of when the determination of Cause is made.

2. For the purpose of this Agreement, “Change in Control” means the first to occur of any of the following events:

	i.		any person (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 35% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

	ii.		the majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

	iii.		the consummation of a merger or consolidation of the Company with any other entity, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, 60% or more of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of either the then outstanding shares

of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

iv.

For purposes of this definition, “beneficial ownership” shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

3. For the purpose of this Agreement, “Disability” shall mean the Participant is permanently and totally disabled and unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of twelve months. The existence of a Disability shall be determined by the Committee in its sole discretion.

4. For purposes of this Agreement, “Fair Market Value” shall mean the closing price for the shares of the Company’s common stock, no par value, reported on the New York Stock Exchange for the relevant date, or if there were no sales on such date, the closing price for the nearest following date.

5. For the purpose of this Agreement, “Retirement” shall mean the Participant’s termination of employment on or after attaining age 55 and completing 5 years of service with the Company.

EX-10.6 7 c51142exv10w6.htm EX-10.6 exv10w6

Exhibit 10.6

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
PERFORMANCE BASED
RESTRICTED STOCK AWARD AGREEMENT

Grant Date:                     , 20___ (the “Grant Date”)

Name of Grantee:

Grantee’s Social Security Number:

Number of Shares of Stock Covered by Grant:


GRANTEE:


[Name]

COMPANY:

By:


Title:

FURNITURE BRANDS INTERNATIONAL, INC.
2008 INCENTIVE PLAN
PERFORMANCE BASED RESTRICTED STOCK AWARD AGREEMENT


Restricted Stock		This grant is an award of Common Stock in the number of shares set forth on the cover sheet (the “Shares”), subject to the vesting conditions described below (“Restricted Stock”). To the extent not yet vested, your Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process.

Definitions		“Cause,” “Change in Control,” “Disability,” “Retirement,” and “Service” shall have the meaning assigned to such terms in Appendix A to this Agreement.

Performance Condition and Vesting		The grant of Shares of Restricted Stock is contingent on the Company’s achievement of [Insert Performance Condition] (the “Performance Condition(s)”) for the period [Insert Performance Period] (the “Performance Period”).

		If the Performance Condition(s) are satisfied, then the Shares of Restricted Stock shall vest as follows: [Insert Vesting].

		If the Performance Condition(s) are not satisfied, then the Restricted Stock shall be forfeited to the Company.

Forfeiture of Stock		In the event that your Service with the Company terminates for any reason other than your death, Disability or Retirement, you will forfeit to the Company all unvested Shares subject to this grant. Any Shares of Restricted Stock that are forfeited shall be returned to the Company and cancelled, and all of your rights to those shares will terminate, without any payment of consideration by the Company. In the event that your Service with the Company terminates due to your death, Disability or Retirement, any Shares of Restricted Stock will vest pro-rata if the Performance Conditions are satisfied and will be distributed following achievement of the Performance Conditions. The pro rata portion of the Restricted Stock that will become fully vested will be determined by multiplying the Shares of Restricted Stock that would have become vested (but for the termination) by a fraction, the numerator of which shall be the number of full months that have elapsed in the Performance Period preceding the termination of Service and the denominator of which shall be the number of full months in the Performance Period.

Ownership of Restricted Stock		The Company will issue Shares of Restricted Stock in your name in the form of an entry into a share memo account with the Company’s stock transfer agent on the Grant Date. The account will show that the Shares are subject to the restrictions described herein. Subject to the terms and


		conditions described herein, you shall be entitled to all the rights of beneficial ownership of the Shares while they are held in the share memo account, including the right to vote the Shares and to receive dividends, subject to the requirements set forth herein, if, as and when declared by the Company’s Board of Directors.

		Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. The Company may in its sole discretion require any dividends paid on the Restricted Stock to be reinvested in shares of Stock, which the Company may in its sole discretion deem to be a part of the shares of Restricted Stock and subject to the same conditions and restrictions applicable thereto.

		Until the restrictions have lapsed or the Shares are forfeited and cancelled, the Shares shall be held in the share memo account and you shall not be entitled to receive certificates representing the Shares. After the Restrictions have lapsed with respect to Shares, you (or, in the case of your death or Disability, your legal representatives, legatees, distributees or guardian) shall have the right to have such Shares certificated and transferred in accordance with the transfer agent’s procedures generally applicable to all stockholders.

		In order to facilitate the transfer back to the Company of any Shares of Restricted Stock that are forfeited and cancelled as described herein, you must sign and deliver the stock power, attached hereto as Exhibit A, for the Shares to the Company’s Compensation Director. Upon the forfeiture of Shares, such Shares of Restricted Stock will be transferred back to the Company pursuant to such stock power and cancelled.

Change in Control		Notwithstanding anything herein to the contrary, upon the occurrence of a Change in Control, all Shares of Restricted Stock that (but for the application of this clause) have not vested at the time of the occurrence of such Change in Control event shall vest pro rata based on the actual achievement of the Performance Conditions to the date of the Change in Control. The pro rata portion of the Restricted Stock that will become fully vested will be determined by multiplying the Shares of Restricted Stock that would have become vested (but for the Change in Control) based on the actual achievement of the Performance Conditions to the date of the Change in Control by a fraction, the numerator of which shall be the number of full months that have elapsed in the Performance Period preceding the Change in Control and the denominator of which shall be the number of full months in the Performance Period.

Withholding		You must pay any taxes that are required to be withheld by the Company. You may pay such amounts in cash or make other arrangements satisfactory to the Company for the payment of such amounts. You agree that if you do not pay, or make arrangements for the payment of, such amounts, the Company, to the fullest extent permitted by law, shall have the right to deduct such amounts from any


		payments of any kind otherwise due to you and shall have the right to withhold from Shares of Restricted Stock for which restrictions have lapsed the number of Shares having an aggregate market value at that time equal to the amount you owe.

Section 83(b) Election		Under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the difference between the purchase price paid for the Shares of Restricted Stock and their fair market value on the date any forfeiture restrictions applicable to such Shares lapse will be reportable as ordinary income at that time. For this purpose, “forfeiture restrictions” include the forfeiture of unvested Shares of Restricted Stock that is described above. You may elect to be taxed at the time the Shares are acquired, rather than when such Shares cease to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date. You will have to make a tax payment to the extent the purchase price is less than the fair market value of the Shares on the Grant Date. No tax payment will have to be made to the extent the purchase price is at least equal to the fair market value of the Shares on the Grant Date. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the shares as of the vesting date exceeds the purchase price) as the forfeiture restrictions lapse.

		YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION.

Right of Recapture		If, at any time, within one year after the date that the Shares vest (the “Realization Event”), the Committee (as defined in the Plan) determines in its discretion that the Company has been materially harmed by you, whether such harm (a) results in your termination or deemed termination of Service for Cause or (b) results from any activity of yours determined by the Committee to be in competition with any activity of the Company, or otherwise prejudicial, contrary or harmful to the interests of the Company (including, but not limited to, accepting employment with or serving as a consultant, adviser or in any other capacity to an entity that is in competition with or acting against the interests of the Company), then any gain realized by you from the Shares of Restricted Stock shall be paid by you to the Company upon notice from the Company. Such gain shall be determined as of the date of the Realization Event, without regard to any subsequent change in the Fair Market Value of shares of the Company’s Common Stock. To the extent allowed by applicable law, the Company shall have the right to offset such gain against any amounts otherwise owed to you by the


		Company (whether as wages, vacation pay, or pursuant to any benefit plan or other compensatory arrangement).

Retention Rights		This Agreement does not give you the right to be retained by the Company (or any subsidiaries) in any capacity. The Company (and any subsidiaries) reserves the right to terminate your Service at any time and for any reason.

Adjustments		In the event of any stock dividend, stock split, combination or exchange of shares, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), recapitalization or other change in the capital structure of the Company, or other corporate transaction, the number of Shares of Restricted Stock covered by this grant will be adjusted by the Committee in accordance with the terms of the Plan.

Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

Consent to Electronic Delivery		The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant you agree that the Company may deliver the Plan prospectus and the Company’s annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to receive, the Company would be pleased to provide copies. Please contact the Plan Administrator to request paper copies of these documents.

Amendments		No amendment to this Agreement may impair your rights under this Agreement without your consent.

The Plan		The text of the Plan is incorporated in this Agreement by reference. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant of Restricted Stock. Any prior agreements, commitments or negotiations concerning this grant are superseded. The Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

Appendix A

2. For the purpose of this Agreement, “Change in Control” means the first to occur of any of the following events:

	i.		any person (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 35% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

	ii.		the majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

	iii.		the consummation of a merger or consolidation of the Company with any other entity, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, 60% or more of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such person or any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

iv.

For purposes of this definition, “beneficial ownership” shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

5. For the purpose of this Agreement, “Retirement” shall mean your termination of Service on or after attaining age 55 and completing 5 years of service with the Company.

6. For the purpose of this Agreement, “Service” shall mean service as an employee, officer or director of the Company or any subsidiary of the Company.

EXHIBIT A

STOCK POWER

FOR VALUE RECEIVED, sells, assigns and transfers to Furniture Brands International, Inc., a Delaware corporation (the “Company”), ( ___) shares of common stock of the Company represented by Certificate No. and does hereby irrevocable constitute and appoint , Attorney to transfer the said stock on the books of the Company with full power of substitution in the premises.

Dated: , 20___



		Print Name


		Signature

Spouse Consent (if applicable)



		Signature

EXHIBIT B

ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE

The name, address and social security number of the undersigned:


		Name:

		Address:


		Social Security No.:

3. The date on which the property was transferred is , 20 .

4. The taxable year to which this election relates is calendar year 20___.

6. The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $ per share, for a total of $ .

7. The amount paid by taxpayer for the property was $ 0.

8. A copy of this statement has been furnished to the Company.

Dated: , 20___.



		Print Name


		Signature

PROCEDURES FOR MAKING ELECTION
UNDER INTERNAL REVENUE CODE SECTION 83(b):
The following procedures must be followed with respect to this form for making an election under Internal Revenue Code section 83(b) in order for the election to be effective: 1. You must file one copy of the completed election form with the IRS Service Center where you file your federal income tax returns within 30 days after the Grant Date of your Restricted Stock. 2. At the same time you file the election form with the IRS, you must also give a copy of the election form to the Secretary of the Company.

3. You must file another copy of the election form with your federal income tax return (generally, Form 1040) for the taxable year in which the stock is transferred to you.

EX-31.1 8 c51142exv31w1.htm EX-31.1 exv31w1

Exhibit 31.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ralph P. Scozzafava, certify that:

(1)		I have reviewed this quarterly report on Form 10-Q of Furniture Brands International, Inc.;

(2)		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


		Signature:		/s/ Ralph P. Scozzafava

				Ralph P. Scozzafava
				Chief Executive Officer
				(Principal Executive Officer)
		Date:		May 8, 2009

EX-31.2 9 c51142exv31w2.htm EX-31.2 exv31w2

Exhibit 31.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven G. Rolls, certify that:

(1)		I have reviewed this quarterly report on Form 10-Q of Furniture Brands International, Inc.;

(2)		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


		Signature:		/s/ Steven G. Rolls

				Steven G. Rolls
				Chief Financial Officer
				(Principal Financial Officer)
		Date:		May 8, 2009

EX-32.1 10 c51142exv32w1.htm EX-32.1 exv32w1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Furniture Brands International, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ralph P. Scozzafava Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Exchange Act Rule 13a-14 (b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		Signature:		/s/ Ralph P. Scozzafava

				Ralph P. Scozzafava
				Chief Executive Officer
				(Principal Executive Officer)
		Date:		May 8, 2009

EX-32.2 11 c51142exv32w2.htm EX-32.2 exv32w2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Furniture Brands International, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven G. Rolls, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to Exchange Act Rule 13a-14(b)) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		Signature:		/s/ Steven G. Rolls

				Steven G. Rolls
				Chief Financial Officer
				(Principal Financial Officer)
		Date:		May 8, 2009

-----END PRIVACY-ENHANCED MESSAGE-----