1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION ---------------------------------- WASHINGTON, D.C. FORM 10-K --------- Page 1 of 27 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended November 30, 1996 Commision File No. 0-209 BASSETT FURNITURE INDUSTRIES, INCORPORATED ------------------------------------------ (Exact name of registrant as specified in its charter) VIRGINIA 54-0135270 ------------------------------------------ -------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) BASSETT, VIRGINIA 24055 ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 540/629-6000 ---------------------- Securities registered pursuant to Section 12(g) of the Act: Name of each exchange Title of each class: on which registered -------------------- ----------------------- Common stock ($5.00 par value) NASDAQ ------------------------------ ------ 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, and (2) has been subject to such filing requirements for at least the past 90 days. [X] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by non-affiliates of the registrant as of December 13, 1996. Common Stock, $5.00 par value -- $270,250,000 --------------------------------------------- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Common Stock, $5.00 par value -- 13,075,595 at the close of the period covered by this report. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of the Bassett Furniture Industries, Incorporated Annual Report to Stockholders for the year ended November 30, 1996 (the "Annual Report") are incorporated by reference into Parts I and II of this Form 10-K. (2) Portions of the Bassett Furniture Industries, Incorporated definitive Proxy Statement for its 1997 Annual Meeting of Stockholders held February 19, 1997, filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the "Proxy Statement") are incorporated by reference into Part III of this Form 10-K.
2 Page 2 of 27 PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS Bassett Furniture Industries, Incorporated was incorporated under the laws of the Commonwealth of Virginia in 1930. The executive offices are located in Bassett, Virginia. In 1996, the Company recorded a one-time, pre-tax charge of approximately $2.7 million to recognize the effect on costs and expenses related to the consolidation of operations in the Motion Division, a write-down of certain inventories and adjustment in fixed asset carrying values. The charge amounted to an after-tax cost of $.12 per share. The consolidation of the operations in the Motion Division will have no material effect on net sales in the future and should improve operating margins in that Division. There have been no material changes in the mode of conducting business in the fiscal year beginning December 1, 1995. INDUSTRY SEGMENT In accordance with the instructions for this item, Bassett Furniture Industries, Incorporated and its subsidiaries, all of which are wholly-owned (Company), is deemed to have been engaged in only one business segment, manufacture and sale of furniture, for the three years ended November 30, 1996. DESCRIPTION OF BUSINESS The Company manufactures and sells a full line of furniture for the home: bedroom and dining suites and accent pieces; occasional tables, wall and entertainment units; home office systems and computer work stations; upholstered sofas, chairs and love seats (motion and stationary); recliners; and mattresses and box springs. The Company's products are distributed through a large number of retailers, principally in the United States. The retailers selling the Company's products include mass merchandisers, department stores, independent furniture stores, chain furniture stores, decorator showrooms, warehouse showrooms, specialty stores and rent-to-own stores. Raw materials used by the Company are generally available from numerous sources and are obtained principally from domestic sources. The cost pressures on raw materials continued to be experienced in 1996. The Company's trademark "Bassett" and the names of its marketing divisions and product collections are significant to the conduct of its business. This importance is due to consumer recognition of the names and identification with the Company's broad range of products. The Company owns certain patents and licenses that are important in the conduct of the Company's business. The furniture industry is not considered to be a seasonal industry. There are no special practices in the furniture industry, or applicable to the Company, that would have a significant effect on working capital items. The Company is not dependent upon a single customer, the loss of which would have a material adverse effect on the Company. Sales to one customer (J. C. Penney Company) amounted to approximately 15% of gross sales in 1996, 14% in 1995 and 13% in 1994.
3 Page 3 of 27 The Company's backlog of orders believed to be firm was $48,000,000 at November 30, 1996 and $56,000,000 at November 30, 1995. It is expected that the November 30, 1996 backlog will be filled within the 1997 fiscal year. None of the Company's business involves government contracts. The furniture industry is very competitive as there are a large number of manufacturers both within the United States and offshore who compete in the marketplace on the basis of quality of the product, price, delivery and service. Based on annual sales revenue, the Company is one of the largest furniture manufacturers in the United States. The Company has been successful in this competitive environment because its products represent excellent values combining price and superior quality and styling; prompt delivery; and quality, courteous service. Competition from foreign manufacturers is not any more significant in the marketplace today than competition from domestic manufacturers. The furniture industry is considered to be a "fashion" industry subject to constant change to meet the changing consumer preferences and tastes. As such, the Company is continuously involved in the development of new designs and products. Due to the nature of these efforts and the close relationship to the manufacturing operations, the costs thereof are considered normal operating costs and are not segregated. The Company is not involved in "traditional" research and development activities. Neither are there any customer sponsored research and development activities involving the Company. In management's view, the Company has complied with all federal, state and local standards in the area of safety, health and pollution and environmental controls. Compliance with these standards has not had a material adverse effect on past earnings, capital expenditures or competitive position. The Company anticipates increased regulation on the furniture industry from federal and state agencies particularly in the areas of emission of fumes from the furniture finishing processes and emission of particulates into the atmosphere (saw dust and boiler ash). It is not possible at this time to estimate the impact of compliance with these new, more stringent standards on the Company's operations or costs. The Company had approximately 6,900 employees at November 30, 1996. FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES The Company has no foreign operations, and its export sales are insignificant. ITEM 2. PROPERTIES The Company owns the following operating facilities: <TABLE> <CAPTION> Plant Name Location Construction ---------- -------- ------------ <S> <C> <C> J. D. Bassett Manufacturing Company Bassett, VA (2 plants) Brick, frame and concrete Bassett Superior Lines Bassett, VA Brick, frame, concrete and steel Bassett Chair Company Bassett, VA Brick, frame, concrete and steel Bassett Table Company Bassett, VA Brick and frame W. M. Bassett Furniture Company Martinsville, VA Brick, frame, concrete and steel Bassett Fiberboard Bassett, VA Brick, concrete and steel Bassett Upholstery Division Newton, NC (4 plants) Brick, concrete and steel </TABLE>
4 Page 4 of 27 <TABLE> <S> <C> <C> Taylorsville, NC Brick, concrete and steel Dumas, AR Brick, concrete and steel Bassett Furniture Industries of North Statesville, NC Brick, frame, concrete and steel Carolina, Inc. Bassett of NC - Dublin Dublin, GA Concrete block and steel Bassett of NC - Macon Macon, GA Brick, concrete and steel Bassett Wood Products Dumas, AR Brick, concrete and steel Burkeville Veneer Burkeville, VA Brick and frame National/Mt. Airy Mt. Airy, NC Brick, concrete and steel Weiman Division Christiansburg, VA Metal frame E. B. Malone Corporation Lake Wales, FL Concrete block and frame (2 plants) Pottstown, PA Metal frame West Palm Beach, FL Concrete block and steel Walworth, WI Concrete block and steel Fredericksburg, VA Brick and frame Chehalis, WA Concrete block and metal frame Los Angeles, CA Concrete block and metal frame Los Angeles, CA Brick, concrete and steel Tipton, MO Concrete block and steel Impact Furniture Hickory, NC (1 plant Brick, concrete and steel and warehouse) Bassett Motion Division Booneville, MS Metal frame (2 plants) </TABLE> The Company also owns its general office building in Bassett, Virginia (brick, concrete and steel), two warehouses in Bassett, Virginia (brick and concrete) and a showroom in High Point, North Carolina (brick, concrete and steel). In general, these facilities are suitable and are considered to be adequate for the continuing operations involved. All facilities are in regular use. ITEM 3. LEGAL PROCEEDINGS Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None
5 Page 5 of 27 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The information contained in the Annual Report under the caption "Other Business Data" - "Market and Dividend Information" with respect to number of stockholders, market prices and dividends paid is incorporated herein by reference thereto. ITEM 6. SELECTED FINANCIAL DATA The information for the five years ended November 30, 1996, contained in the "Other Business Data" in the Annual Report is incorporated herein by reference thereto. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information contained in "Other Business Data" in the Annual Report is incorporated herein by reference thereto. The change in the level of the Company's net sales has historically been principally due to the change in the volume of units sold, as contrasted to changes in unit prices. The Company's net sales have fluctuated in recent years owing to the discretionary spending habits of consumers and the consumer confidence level. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following consolidated financial statements of the registrant and its subsidiaries, together with the independent auditors' report thereon of KPMG Peat Marwick LLP dated December 17, 1996, included in the annual report of the registrant to its stockholders for the year ended November 30, 1996 are incorporated herein by reference thereto: Consolidated Balance Sheet--November 30, 1996 and 1995 Consolidated Statement of Income--Years Ended November 30, 1996, 1995 and 1994 Consolidated Statement of Stockholders' Equity--Years Ended November 30, 1996, 1995 and 1994 Consolidated Statement of Cash Flows--Years Ended November 30, 1996, 1995 and 1994 Notes to Consolidated Financial Statements The information contained in "Other Business Data" for "Quarterly Results of Operations" in the Annual Report is incorporated herein by reference thereto. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None
6 Page 6 of 27 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT The information contained on pages 2 through 6 of the Proxy Statement under the captions "Principal Stockholders and Holdings of Management" and "Election of Directors" is incorporated herein by reference thereto. ITEM 11. EXECUTIVE COMPENSATION The information contained on pages 7 through 14 of the Proxy Statement under the captions "Organization, Compensation and Nominating Committee Report", "Stockholder Return Performance Graph", "Executive Compensation", and "Supplemental Retirement Income Plan" is incorporated herein by reference thereto. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information contained on pages 2 and 3 of the Proxy Statement under the heading "Principal Stockholders and Holdings of Management" is incorporated herein by reference thereto. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information contained on page 7 of the Proxy statement under the heading "Organization and Compensation Committee Interlocks and Insider Participation" is incorporated herein by reference thereto. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K (a) (1) The response to this portion of Item 14 is submitted as a separate section of this report. (2) All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. (3) Listing of Exhibits 3. Articles of Incorporation as amended and By Laws are incorporated herein by reference to Form 10-Q for the fiscal quarter ended February 28, 1994. 13. The registrant's Annual Report to Stockholders for the year ended November 30, 1996.* 21. List of subsidiaries of the registrant 23. Consent of experts and counsel 27. Financial Data Schedule (EDGAR filing only) *With the exception of the information incorporated in this Form 10-K by reference thereto, the Annual Report shall not be deemed "filed" as a part of this Form 10-K.
7 Page 7 of 27 (b) No reports on Form 8-K have been filed during the last quarter of the registrant's 1996 fiscal year. (c) Exhibits: The response to this portion of Item 14. is submitted as a separate section of this report. (d) Financial Statement Schedules: All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
8 Page 8 of 27 ANNUAL REPORT ON FORM 10-K ITEM 14(a)(1) AND (c) LIST OF FINANCIAL STATEMENTS CERTAIN EXHIBITS YEAR ENDED NOVEMBER 30, 1996 BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES BASSETT, VIRGINIA
9 Page 9 of 27 ITEM 14(a)(1) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE The following consolidated financial statements of the registrant and its subsidiaries, included in the annual report of the registrant to its stockholders for the year ended November 30, 1996 are incorporated herein by reference: Consolidated Balance Sheet--November 30, 1996 and 1995 Consolidated Statement of Income--Years Ended November 30, 1996, 1995 and 1994 Consolidated Statement of Stockholders' Equity--Years Ended November 30, 1996, 1995 and 1994 Consolidated Statement of Cash Flows--Years Ended November 30, 1996, 1995 and 1994 Notes to Consolidated Financial Statements
10 Page 10 of 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. BASSETT FURNITURE INDUSTRIES, INCORPORATED (Registrant) <TABLE> <S> <C> By: /s/ROBERT H. SPILMAN Date: February 19, 1997 -------------------------------------------- ----------------- Robert H. Spilman Chairman of the Board of Directors and Chief Executive Officer </TABLE> Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <S> <C> By: /s/PETER W. BROWN Date: February 19, 1997 -------------------------------------------- ----------------- Peter W. Brown Director By: /s/THOMAS E. CAPPS Date: February 19, 1997 -------------------------------------------- ----------------- Thomas E. Capps Director By: /s/ALAN T. DICKSON Date: February 19, 1997 -------------------------------------------- ----------------- Alan T. Dickson Director By: /s/PAUL FULTON Date: February 19, 1997 -------------------------------------------- ----------------- Paul Fulton Director By: /s/WILLIAM H. GOODWIN, JR. Date: February 19, 1997 -------------------------------------------- ----------------- William H. Goodwin, Jr. Director By: /s/GLENN A. HUNSUCKER Date: February 19, 1997 -------------------------------------------- ----------------- Glenn A. Hunsucker President and Chief Operating Officer and Director By: /s/JAMES W. MCGLOTHLIN Date: February 19, 1997 -------------------------------------------- ----------------- James W. McGlothlin Director </TABLE>
11 Page 11 of 27 SIGNATURES, Continued <TABLE> <S> <C> By: Date: -------------------------------------------- ----------------- Thomas W. Moss, Jr. Director By: /s/ALBERT F. SLOAN Date: February 19, 1997 -------------------------------------------- ----------------- Albert F. Sloan Director By: /s/JOHN W. SNOW Date: February 19, 1997 -------------------------------------------- ----------------- John W. Snow Director By: /s/PHILIP E. BOOKER Date: February 19, 1997 -------------------------------------------- ----------------- Philip E. Booker Vice President and Controller </TABLE>
12 Page 12 of 27 INDEX TO EXHIBITS <TABLE> <CAPTION> Exhibit No. Page No. - ----------- -------- <S> <C> 3 Articles of Incorporation as amended and Bylaws - incorporated by reference to Form 10-Q for the fiscal quarter ended February 28, 1994 13 Bassett Furniture Industries, Inc. Annual Report to Stockholders for the year ended November 30, 1996 21 List of subsidiaries of registrant 23 Consent of Independent Auditors 27 Financial Data Schedule (EDGAR filing only) </TABLE>