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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 3, 1995
Commission File Number 1-10226
ROWE FURNITURE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 54-0458563
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Registrant's telephone number, including area code: (540) 389-8671
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which Registered
------------------- -----------------------------------------
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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. YES [X] 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 20-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 9, 1996 (the exclusion from such amount of the market
value of the shares owned by any person shall not be deemed to be an admission
by the registrant that such person is an affiliate of the registrant) was
$35,103,338.
As of February 9, 1996, there were issued and outstanding 13,421,079 shares
of the registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
-------- ------------------
Portions of Annual Report for the year ended December 3, 1995 Parts II and IV
Portions of the Annual Proxy Statement for the year ended
December 3, 1995 Part III
PART I
ITEM 1. BUSINESS.
GENERAL
The Company is a designer and manufacturer of upholstered furniture consisting
of sofas, sleeper sofas, loveseats, chairs and motion furniture. The Company's
products are sold primarily in the middle to upper-middle price range, with
sofas customarily retailing at $599 to $1,099.
The Company sells its products nationwide through an exclusive sales force of
commissioned employees to over 1,000 national, regional and local retailers
consisting of furniture chains, independent furniture retailers, warehouse
showrooms, and 102 Rowe ShowPlace locations. Eight of the Rowe ShowPlace
locations are operated by the Company. A Rowe ShowPlace is either a dedicated
gallery area within a retail furniture store or a freestanding retail furniture
store where the Company's products are displayed on an exclusive basis. The
Company's manufacturing facilities consist of four plants, two in Missouri and
two in Virginia. In addition to manufacturing its own line of furniture, the
Company manufactures furniture frames and kiln-dries hardwood and pine lumber
for outside customers.
The Company was founded as a furniture manufacturer in June 1946, and its
original manufacturing facilities are located at Salem, Virginia. In 1968, the
Company expanded its operations to the Midwest with the addition of its first
facility in Missouri.
The Company is incorporated under the laws of Nevada. Its principal
administrative offices are located at 239 Rowan Street, Salem, Virginia 24153,
and its telephone number is (540) 389-8671. Unless the context indicates
otherwise, references herein to the "Company" include Rowe Furniture
Corporation, its predecessors, and its subsidiaries.
Effective with the start of fiscal 1996, the Company merged its four
manufacturing subsidiaries (Rowe Furniture Corporation-Virginia, Rowe Furniture
Corporation-Missouri, Salem Frame Company, Inc. and Himmelberger-Harrison
Company, Inc.) into a wholly owned subsidiary, Rowe Manufacturing, Inc. This
reorganization was effected to simplify the organizational structure and improve
internal reporting for the manufacturing process.
Management believes that recent consolidation in the retail furniture industry
has increased the importance of maintaining strong relationships with customers
and responding effectively to their demands. The Company's objective is to
provide enhanced service and value to its customers through quick delivery of
high quality furniture at competitive prices. A lifetime warranty applicable to
all the Company's products covering frames, springs, cushions and mechanisms
reflects its commitment to high quality. In recent years, the Company took a
number of steps to reduce costs
2
and improve quality while generally maintaining constant price levels. These
steps included: (i) implementing an innovative employee involvement and
compensation program, (ii) using more efficient manufacturing techniques, (iii)
accelerating deliveries, and (iv) expanding the Company's computerized
management information system.
In addition, the Company has enhanced its marketing efforts to existing
retailers, while identifying and adding new retailers in existing markets and in
regions where its products are not widely distributed. When adding retailers,
the Company targets what management believes to be financially sound retailers
committed to progressive marketing techniques. The Company also has implemented
plans to increase foreign sales and to add new Rowe ShowPlace locations.
STRATEGY
Management believes that recent consolidation in the retail furniture industry
has increased the importance of maintaining strong relationships with customers
and responding effectively to their demands. The Company's objective is to
provide enhanced service and value to its customers through quick delivery of
high quality furniture at competitive prices. The key elements of the Company's
strategy to achieve this objective include:
Product Quality and Value. The Company is committed to providing high quality,
- -------------------------
value oriented furniture products at competitive prices. Management believes
the Company adheres to strict quality standards in all aspects of design and
production, including material selection, frame design and construction,
workmanship, and appearance. Product quality improvements in recent years
include better undercarriage construction, the use of higher quality cushioning
materials and improved fabric matching. A lifetime warranty applicable to all
the Company's productions covering the frames, springs, cushions, and mechanisms
reflects the Company's commitment to high quality. The Company has been
successful in providing this quality while generally holding prices constant in
recent years.
Employee Involvement and Compensation. A critical component of the Company's
- -------------------------------------
strategy has been the implementation of what management believes to be an
innovative employee involvement program. The furniture industry has
traditionally compensated manufacturing employees on a piecework basis.
Management believes that piecework compensation, which rewards employees based
upon the number of units produced by the individual employee or production line,
emphasizes quantity. A focus on quantity is often at the expense of quality,
and does not provide incentive for employees to produce high quality products
and to generate ideas that will contribute to facility-wide efficiency
improvements. In contrast, the Company encourages all employees to participate
in decision-making, and compensates employees based on hourly rates plus monthly
bonuses for productivity improvements and cost reductions on a facility-wide
basis. Management believes that this approach provides incentives for employees
to contribute to facility-wide efficiency, quality improvements and cost
reductions, and that it has also reduced supervisory expense. Since
implementation of
3
the program in 1989, the Company has experienced a significant increase in
employee suggestions leading to quality improvements and cost reductions.
Management believes that the employee involvement and compensation program has
contributed significantly to improvements in operating efficiencies, labor
productivity, employee morale, product quality and customer service.
Dedication to Customer Service. The Company is dedicated to providing a high
- ------------------------------
level of service to all its customers. The Company maintains close contact and
communicates frequently with its customers in order to better identify,
understand and meet their needs. Management believes the utilization of
Company-employed sales persons enables it to better communicate with its
customers than the utilization of nonexclusive sales representatives, a frequent
industry practice.
Management believes that important aspects of the Company's service to certain
customers include its automated order entry, bar coding and electronic data
interchange systems. These systems give customers the ability to place orders
directly, and allow the Company to monitor the status of orders and track
inventory and sales activity. The Company is in the process of enhancing the
capabilities of these systems and increasing the number of customers who utilize
them. In addition, the Company has introduced point-of-sale computer systems
into Rowe ShowPlace and other dealer locations that allow retailers to display
for consumer's full-color pictures of various combinations of furniture styles
and fabric patterns and to enter consumer's orders directly with the Company.
The Company has established regional repair service centers to that it can
respond quickly to consumers' needs.
Another special emphasis of the Company's customer service is the prompt
delivery of its products, a significant portion of which is manufactured and
shipped within 30 days of receipt of an order. The Company's order entry,
credit approval, manufacturing and shipping systems are all designed to provide
prompt delivery to its customers.
Manufacturing Efficiencies. Management has taken a number of steps to improve
- --------------------------
the Company's manufacturing efficiencies, including the implementation of the
computerized systems in its manufacturing facilities to manage more effectively
its inventories, purchasing, labor and manufacturing processes; the development
of its employee involvement program; and the establishment of new internal
systems to control overhead and material usage. In addition, the Company has
added modern equipment, such as computerized routers utilized in its milling
operations and new computerized cover cutting machines that enhance
efficiencies. Management believes through a combination of increased
efficiencies, improved product quality, accelerated deliveries and stable
pricing, the Company will maintain a competitive advantage in marketing its
products.
Expanding Retail Distribution. Despite the recent consolidation in the retail
- -----------------------------
furniture industry, management believes there are ample opportunities to expand
the Company's retail distribution network. The Company strives to maintain
strong relationships with, and increase sales to, its existing retailers. It
also attempts to increase sales by adding
4
new retailers, particularly in geographic regions where its products currently
are not widely distributed, such as the Southwest and the West. When adding
retailers, the Company targets what it believes to be financially sound
retailers committed to progressive marketing approaches and the desire to carry
a significant portion of the Company's product line. The Company also intends to
increase the number of Rowe ShowPlace locations in selected markets. In
addition, the Company has implemented plans to increase foreign sales, and has
affiliated with nonexclusive commissioned sales representatives in Canada,
Mexico, Scandinavia, the Caribbean, the Middle East, Japan and other regions.
THE INDUSTRY
As reported by the American Furniture Manufacturers Association in December,
1995, the following table sets forth estimated factory shipments for the
domestic furniture industry in general, and the upholstered furniture segment in
particular, during each of the four years ended December 31, 1995
Year Ended December 31,
-----------------------
1992 1993 1994 1995
---- ---- ---- ----
(in billions)
Industry shipments $16.2 $17.2 $19.0 $19.5
Upholstered furniture shipments 5.8 6.2 6.9 7.2
The principal categories of furniture products include wood, upholstered and
metal furniture products. Of these categories, wood is the largest representing
approximately half of total industry sales, while upholstered furniture
represents approximately one third and metal and other products account for the
balance. Within each category, furniture manufacturers generally focus on
particular price ranges and styles. Stationary upholstery includes sofas,
sectional sofa pieces, loveseats, and stationary chairs. Motion upholstery
includes swivel chairs, rockers, reclining chairs, and other adjustable
furniture.
The furniture industry historically has been cyclical, fluctuating with the
general economy. Management believes that the industry is significantly
influenced by consumer behavior and confidence, personal disposable income,
demographics, housing activity, interest rates, and credit availability. The
upholstered segment of the furniture industry generally has followed the same
trends as the rest of the furniture industry. There can be no assurance that an
economic downturn would not have a material adverse effect on the Company.
PRODUCT LINES
The Company's products encompass a full line of upholstered furniture. The
Company's stationary furniture consists of sofas, sleeper sofas, loveseats, and
chairs, and its motion furniture includes reclining sofas and loveseats and
reclining, swivel, and
5
tilt-back chairs. The Company's products are available in approximately 500
different fabrics. Styles offered include traditional, contemporary, and
country. The Company also markets under the Rowe name a limited line of leather
furniture purchased from another manufacturer. In addition, the Company-owned
Rowe ShowPlace locations offer complementary accessory items such as lamps,
rugs, and tables from other manufacturers.
The Company's product strategy is to provide a wide choice of furniture styles
and fabrics while providing high quality at competitive prices. The Company
continually reviews and evaluates its designs, and annually adds and
discontinues designs as it deems appropriate. The Company identifies trends in
styles, colors, and patterns through independent research, contacts with the
Company's customers and the occasional use of independent designers. Management
also solicits opinions from its customers, and manufacturing and marketing
employees prior to final design selection.
MARKETING AND SALES
The Company has developed a broad and diverse national customer base. The
Company sells its products through commissioned sales personnel who are
employees of the Company dedicated to marketing the Company's products
exclusively. Management believes that this gives the Company a competitive
advantage over many of its competitors which sell their products through
independent sales representatives who represent more than one manufacturer. The
Company's products are sold to over 1,000 national, regional, and local
furniture retailers, including Levitz (including Homemakers), Leath, Jordan's
Furniture, Star Furniture and Sears Homelife. During 1995, Levitz accounted for
approximately 16% of the Company's 1995 shipments, and its ten largest customers
(including Levitz) accounted for approximately 32% of 1995 shipments. Other
than Levitz, no customer accounted for more than 3% of the 1995 shipments.
While the loss of Levitz or other large customers could have a material adverse
effect on its business, management believes that dependence on any one customer
will diminish as the Company diversifies its customer base and the markets
served.
While the Company sells its products throughout the United Sales, management
believes that there are opportunities for greater penetration in the regions
where the Company's products are not currently widely distributed. The Company
has targeted key retailers in these markets as opportunities for further growth.
The general marketing practice in the furniture industry is to exhibit products
at international and regional furniture markets. The Company displays its
product lines and introduces new products in April and October of each year at
an eight day furniture market held in High Point, North Carolina. The Company
maintains a 28,000 square foot showroom at the High Point market. In addition,
the Company has developed plans to increase sales in foreign markets. It has
affiliated with independent sales representatives in Canada, Mexico,
Scandinavia, the Caribbean, the Middle East, and
6
other regions and it plans to increase its international marketing efforts.
Approximately 3% of 1995 sales were to foreign markets.
ROWE SHOWPLACE PROGRAM
A Rowe ShowPlace is either a dedicated gallery area within an independent retail
furniture store or a freestanding retail furniture store where the Company's
products are displayed on an exclusive basis together with other manufacturers'
complementary furniture accessories. The Company has implemented the Rowe
ShowPlace program featuring the Company's furniture in order to increase its
market penetration and name recognition among customers. There are currently
102 Rowe ShowPlace locations in operation, of which 88 are dedicated galleries
located within stores operated by retailers that also sell other manufacturers'
products, six are freestanding independently owned retail locations, and eight
are freestanding Company-owned retail locations. In-store locations are
situated on a separate, generally prominent part of the sales floor dedicated to
displaying the Company's products and marketing materials. The Rowe ShowPlace
program accounted for more than 20% of the Company's fiscal 1995 shipments.
A Rowe ShowPlace offers the retail customer a choice of a wide variety of
contemporary and traditional upholstered furniture styles, as well as
approximately 500 different fabrics. By choosing various combinations of style
and fabric, the consumer is able to customize his or her selection.
Many Rowe ShowPlace locations, including all freestanding locations, have a
point of sale computer system that displays any fabric on any style, allowing
the consumer to combine fabrics and styles and have an immediate picture of the
finished product before making a selection. The computer system also is used to
enter consumers' orders directly with the Company.
The Company's emphasis will continue to be on opening additional Rowe ShowPlace
galleries in retail furniture stores and freestanding Company-owned Rowe
ShowPlace stores. The Company opened its eighth Company-owned freestanding
location in 1995 and anticipates opening additional locations during fiscal
1996. The expansion of Company-owned ShowPlace stores is supported by the
recent addition of personnel with furniture retailing experience. The Company
is expanding the program of national advertising intended to increase
recognition of the Rowe name and to complement the development of the Rowe
ShowPlace program. Certain freestanding locations not operated by the Company
have not been successful and have been closed. In 1995, one company-owned,
freestanding location was closed concurrent with the conclusion of the lease for
this property. The freestanding Rowe ShowPlace locations are subject to all of
the risks generally associated with operating a retail establishment, including
suitable site selection, competition for retail customers, and the need for
qualified management personnel. In addition, because the Rowe ShowPlace program
accounted for more than 20% of fiscal 1995 shipments, a material reduction in
sales at such stores may have an adverse effect on the Company's results.
7
MANUFACTURING AND DISTRIBUTION
The Company's manufacturing operations are conducted in four facilities, two in
Virginia and two in Missouri, comprising an aggregate of approximately one
million square feet. In addition to manufacturing its own lines of furniture,
the Company manufacturers furniture frames and kiln dries hardwood and pine
lumber for outside customers.
Manufacturing Process. The Company utilizes a vertically integrated
- ---------------------
manufacturing process which includes kiln-drying of hardwood, wood milling,
frame construction, fabric cutting and sewing, upholstery, foam cutting and
filling, and final assembly of the upholstered product. The Company
manufacturers and assembles all of the frames used in its upholstered furniture.
All mechanical parts contained in motion furniture are purchased and assembled
by the Company. The Company utilizes computer-aided design patterns and
specialized machines in the fabric cutting process which facilitate design work,
help maximize fabric yield, and increase the efficiency of the assembly process.
Upholstered furniture is assembled in manufacturing cells consisting of teams of
people including sewers, frame builders and upholsterers. The completed pieces
are then inspected and packed for shipping.
Employee Involvement and Compensation. A key aspect of the Company's
- -------------------------------------
manufacturing process is its employee involvement and compensation program.
This program involves all of the Company's workers in the improvement of the
manufacturing process by providing incentives to increase productivity, to
reduce costs, and to improve quality. The Company encourages all employees to
participate in decision-making, and compensates employees based on hourly rates
plus bonuses for productivity improvements and cost reductions on a facility-
wide basis. The Company believes that this program provides incentive for
employees to contribute to facility-wide efficiency, quality improvements and
cost reductions. Since implementation of the program, the Company has
experiences a significant increase in employee suggestions leading to such
improvements and reductions. On a facility-wide basis, 1995 incentive bonuses
ranged up to approximately 20% of employees' hourly compensation. Salaried
employees also participate in this program, however, their bonuses cannot exceed
the highest amount paid to an hourly employee.
Computer Systems. The Company makes extensive use of a computerized management
- ----------------
information system (MIS) in the manufacturing process. The MIS, which includes
software developed by the Company, helps the Company manage order entry,
purchasing, labor, inventories, receivables, and product shipping. Management
believes that its MIS is advanced by furniture industry standards, however, the
Company intends to continue to upgrade the system by developing and/or
purchasing new software to handle new applications and additional demands of
anticipated future growth.
8
Manufacturing Capacity. While the Company primarily operates its manufacturing
- ----------------------
facilities on a one-shift, five or six day per week basis, second shifts are in
operation at three facilities and plans are being made to possibly add a second
shift in the fourth facility during 1996. Management believes that the Company
could increase production without substantial capital expenditures by expanding
the number of manufacturing cells on both first and second shifts.
Backlog. The Company generally manufactures its products in response to actual
- -------
customer orders and typically ships the finished product within 30 days
following receipt of the related order, depending upon fabric availability.
Accordingly, the level of backlog at any particular time is limited, and is not
necessarily indicative of the level of future shipments. The Company's backlog
of unshipped orders was approximately $15.0 million as of December 3, 1995 as
compared to approximately $10.8 million as of November 27, 1994.
Distribution. The Company contracts with a truck leasing company to provide
- ------------
dedicated carriage services of its products. Under the agreement, the Company's
products are delivered in accordance with the Company's specifications on a
modern fleet of over-the-road tractors and trailers that prominently display the
Company's name. Management believes that the arrangement offers the Company
favorable terms, allows it to meet its delivery deadlines, and improves the
Company's name recognition. For West Coast shipments, the Company has what
management believes to be a favorable arrangement for carriage of the Company's
products with a third party motor carrier and is increasingly utilizing
intermodal freight services. Approximately 95% of the Company's fiscal year
1995 upholstered shipments were delivered under these arrangements.
RAW MATERIALS
The raw materials used by the Company include fabrics, lumber, hardwood,
plywood, polyurethane foam, metal components, mattresses and finishing
materials. Other than lumber and fabric, all raw materials used by the Company
are generally available on an "as needed" basis. The Company maintains what it
believes to be an adequate supply of raw materials in inventory.
The Company currently obtains its raw materials from a limited number of
suppliers, and in the case of hardwood plywood, a single supplier. Management
believes that its sources of supply of raw materials are adequate and that it
forms strong relationships with its suppliers and negotiates favorable prices
for its raw materials. However, management does not believe the Company is
dependent upon a single supplier for any of its materials, as substitute
suppliers are available.
To improve quality, maximize the opportunities to implement labor saving
technology, hedge against the potential of rising wood costs and free up kiln
capacity, the Company has increased the substitution of hardwood plywood for
hardwood in certain aspects of the construction of its furniture frames.
Because plywood construction is less labor-
9
intensive, and in many respects more structurally sound than hardwood
construction, this change has improved product quality while helping to reduce
overall cost.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL CONSIDERATIONS
The Company's operations are required to meet federal, state and local
regulatory standards in the areas of safety, health, and environmental pollution
controls. Historically, these standards have not had a material adverse effect
on the Company's operations. Management believes that the Company's plants are
in compliance in all material respects with applicable federal, state and local
laws and regulations concerned with safety, health, and environmental
protection.
The furniture industry currently anticipates increased federal and state
environmental and health and safety regulation, particularly regarding emissions
from paint and finishing operations and wood dust levels in the manufacturing
process. Any such additional regulations could affect the Company's wood
milling and finishing operations. The industry and its suppliers are attempting
to develop water-based finishing materials to replace commonly used organic-
based finishes which are a major source of regulated emissions. The Company
cannot at this time estimate the impact of any new regulations on the Company's
operations or the costs of compliance.
COMPETITION
The furniture industry is highly competitive and includes a large number of
manufacturers. The market in which the Company competes includes a large number
of manufacturers of upholstered furniture. Certain of the Company's competitors
have greater financial resources than the Company. Management believes that the
high quality, design, and competitive pricing of the Company's products, the
Company's reputation among retailers, and the Company's commitment to customer
service have enabled the Company to compete successfully in this market.
EMPLOYEES
As of December 3, 1995, the Company employed approximately 1,500 full-time
employees, of which 136 are in management, supervisory, and sales positions.
Approximately 105 employees at a single plant, 40 of whom are members of a labor
union, are covered by a collective bargaining agreement. No other employees are
covered by such an arrangement, and the Company considers its employee relations
to be excellent.
TRADEMARKS
The Company has registered its "Rowe", "A Whole New Way to Buy Furniture", "The
Rowe ShowPlace", "The ShowPlace Coordinated Home Furnishings by Rowe", "Rowe,
First in Fashion", "Regency Manor" and "Rowe ShowMe Machine" trademarks with the
United States Patent and Trademark Office. Management believes that its
trademark
10
position is adequately protected in all markets in which the Company does
business. Management also believes that the Company's trade names are recognized
by dealers and distributors and are associated with a high level of quality and
value. In addition, the Company holds certain design and utility patents.
INSURANCE
The Company maintains what management believes is a complete liability and
property insurance program. Additionally, the Company maintains a self-
insurance program for that portion of health care costs not covered by
insurance.
ITEM 2. PROPERTIES.
The following table sets forth certain information concerning the Company's
manufacturing facilities:
Approximate
Size in
Location Description Square Feet
- -------- ----------- -----------
Salem, Virginia Administrative Office
and Manufacturing 335,000
Salem, Virginia Manufacturing 241,000
Poplar Bluff, Missouri Manufacturing 300,000
Morehouse, Missouri Manufacturing 135,612
In addition, the Company maintains executive offices and a subsidiary office in
leased offices in Arlington and Tysons Corner, Virginia. The Company considers
its equipment and its manufacturing and office facilities to be adequate and
well-maintained.
In addition to its manufacturing and office facilities, the Company owns the
following properties that are held for investment and are leased on a net basis:
Approximate
Lease Size in
Location Expires Description Square Feet
- -------- ------- ----------- -----------
Christiansburg, Virginia 05-31-96 Industrial 79,000
Leesburg, Florida 06-30-96 Retail 15,000
Sylmar, California 03-31-04 Industrial 115,000
Jessup, Maryland Various thru
12-31-04 Industrial 180,000
The investment properties located in Christiansburg, Virginia and Sylmar,
California were originally acquired by the Company between 1972 and 1988 for
utilization as Company manufacturing facilities. The retail property located
in Leesburg, Florida was acquired in 1984. In past years, the Company ceased to
utilize these facilities for its own operations and determined that the best
return on these properties could be
11
realized by leasing them to third parties. In February, 1995, the Company
completed the sale of a 175,000 square foot warehouse in Sylmar, California. The
warehouse had been held by the Company as investment property. The after-tax
gain was approximately $3.0 million, net of lost rents during the disposition
period. In June of 1995, the Company purchased other rental income-producing
property in Jessup, Maryland to permit a "tax-deferred" exchange with the
proceeds realized from this transaction. Aggregate rental income from investment
properties, net of commissions, was $1,400,000, $1,470,000 and $1,005,000 in
1993, 1994 and 1995, respectively.
ITEM 3. LEGAL PROCEEDINGS.
The Company is, from time to time, a party to litigation which arises in the
normal course of its business. The Company was in litigation with a former
dealer who alleged breach of certain contractual and other violations which
purportedly caused the dealer damages. This case was settled in 1995 with no
significant impact on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the solicitation
of proxies, or otherwise, during the quarter ended December 3, 1995.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) "Stock Price and Dividend Data" in the Annual Report to Shareholders
for the fiscal year ended December 3, 1995 is incorporated herein by reference.
(b) Approximate Number of Equity Security Holders.
Approximate Number of Record
Title of Class Holders as of December 22, 1995
-------------- -------------------------------
Common Stock, par value 1,400
$1.00 per share
ITEM 6. SELECTED FINANCIAL DATA.
The five-year summary section of the Annual Report to Shareholders for the
fiscal year ended December 3, 1995 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The management's discussion and analysis section of the Annual Report to
Shareholders for the fiscal year ended December 3, 1995 is incorporated herein
by reference.
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following information included in the Annual Report to Shareholders of the
fiscal year ended December 3, 1995 are incorporated herein by reference:
Consolidated Balance Sheets - - December 3, 1995 and November 27, 1994
Consolidated Statements of income --
Years Ended December 3, 1995, November 27, 1994 and November 28, 1993
Consolidated Statements of Stockholders' Equity --
Years Ended December 3, 1995, November 27, 1994 and November 28, 1993
Consolidated Statements of Cash Flows --
Years Ended December 3, 1995, November 27, 1994 and November 28, 1993
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable
13
PART III
Notwithstanding anything below to the contrary, the Report of the Compensation
and Stock Option Committees and the Performance Graph contained on pages 11
through 14 of the Company's 1996 Proxy Statement are not incorporated by
reference in this Form 10-K.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
The information required by Item is 10 contained in the Company's 1996 Proxy
Statement and is incorporated herein by reference. Such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the Company's fiscal year end.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is contained in the Company's 1996 Proxy
Statement and is incorporated herein by reference. Such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the Company's fiscal year end.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is contained in the Company's 1996 Proxy
Statement and is incorporated herein by reference. Such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the Company's fiscal year end.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 is contained in the Company's 1996 Proxy
Statement and is incorporated herein by reference. Such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the Company's fiscal year end.
14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements:
The consolidated balance sheets as of December 3, 1995 and November
27, 1994 and the related consolidated statements of income,
stockholders' equity, cash flows and notes to consolidated
financial statements for each of the three years in the period
ended December 3, 1995 together with the report of BDO Seidman, LLP
dated January 5, 1996 appearing in the 1995 annual report to
shareholders are incorporated herein by reference. The following
additional financial data should be read in conjunction with the
consolidated financial statements in such 1995 Annual Report to
Shareholders.
2. Financial Statement Schedules:
Report of Independent Certified Public Accountants on Financial
Statement Schedule
II Valuation and Qualifying Accounts.
Schedules other than those listed above are omitted for the reason that they are
not required or are not applicable, or the required information is shown the
consolidated financial statements and notes thereto.
3. Exhibits:
Exhibit
Number Exhibit
- ------ -------
3.1 Articles of Incorporation of the Company (incorporated by reference
to the Company's Registration Statement on Form S-1 No. 33-74504
filed with the Securities and Exchange Commission on January 27,
1994)
3.2 By-laws of the Company (incorporated by Company's Registration
Statement on Form S-1 No. 33-74504 filed with the Securities
and Exchange Commission on January 27, 1994)
4 Specimen Stock (incorporated by reference to the Company's
Registration Statement on Form 8-A filed with the Securities
and Exchange Commission on January 5, 1994)
10.1 Rowe Furniture Corporation 1983 Stovk Option and Incentive Plan
(incorporated by reference to the Company's Registration Statement
on
15
Form S-1 No. 33-74504 filed with the Securities and Exchange
Commission on January 27, 1994)
10.2 Rowe Furniture Corporation 1993 Stock Option and Incentive Plan
(incorporated by reference to the Comapny's registration Statement
on Form S-8 filed with the Securities and Exchange Commission on
October 18, 1993)
10.3 Rowe furniture Corporation Merged 401(k) and Employee Stock
Ownership Plan dated December 1, 1991 (incorporated by referenced
to the Company's Registration Statement on Form S-1 No. 33-74504
filed with the Securities and Exchange Commission on January 27,
1994)
10. 4 Rowe Furniture Corporation Amended and Restated Supplemental
Executive Retirement Plan II (incorporated by reference to the
Company's Registration Statement on form S-1 No. 33-74504 filed
with the Securities and Exchange Commission on January 27, 1994)
10.5 Employment Agreement dated December 6, 1984 between the Company and
Mr. Harvey I. Ptashek (incorporated by reference to the Company's
Registration Statement on Form S-1 No. 33-74504 filed with the
Securities and Exchange Commission on January 27, 1994)
10.6 Employment Agreement dated December 5, 1985 between the Company and
Mr. Arthur H. Dunkin (incorporated by reference to the Company's
Registration Statement on Form S-1 No. 33-74504 filed with the
Securities and Exchange Commission on January 27, 1994)
10.7 Employment Agreement dated December 1, 1993 between the Company and
Mr. Gerald M. Birnbach (incorporated by reference to the Company's
Registration Statement on Form S-1 No. 33-74505 filed with the
Securities and Exchange Commission on January 27, 1994)
10.8 Rowe Furniture Corporation Cash-or-Defferred Non-Qualified
Executive Retirement Plan (incorporated by reference to the
Company's Form, 10-K filed with the Securities and Exchange
Commission on February 27, 1995)
13 Portions of the Annual Report for the year ended December 3, 1995
21 List of Subsidiaries
23 Consent of BDO Seidman, LLP
27 Financial Data Schedules
16
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during any of the months included in
the fourth quarter of the Company's fiscal year.
17
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.
ROWE FURNITURE CORPORATION
By: /s/ ARTHUR H. DUNKIN
---------------------------------
March 1, 1996 A. H. Dunkin, Secretary-Treasurer
Pursuant to the requirements of the Securities Act of 1933, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board
/s/ GERALD M. BIRNBACH President, Director and March 1, 1996
- ----------------------
G. M. Birnbach Principal Executive Officer
/s/ RICHARD E. CHENEY Director March 1, 1996
- -----------------------
R. E. Cheney
/s/ W. PATRICK DOLAN Director March 1, 1996
- -----------------------
W. P. Dolan
Secretary-Treasurer, Director
/s/ ARTHUR H. DUNKIN and Principal Financial and March 1, 1996
- -----------------------
A. H. Dunkin Accounting Officer
Senior Vice President and
/s/ HARVEY I. PTASHEK Director March 1, 1996
- -----------------------
H. I. Ptashek
18
/s/ CHARLES T. ROSEN Director March 1, 1996
- -----------------------
C. T. Rosen
/s/ KEITH J. ROWE Director March 1, 1996
- ------------------------
K. J. Rowe
/s/ SIDNEY J. SILVER Director March 1, 1996
- -------------------------
S. J. Silver
/s/ GERALD O. WOODLIEF Director March 1, 1996
- -------------------------
G. O. Woodlief
19
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
Rowe Furniture Corporation
Salem, Virginia
The audits referred to in our report dated January 5, 1996 relating to the
consolidated financial statements of Rowe Furniture Corporation, which is
contained in Item 8 of this Form 10-K (incorporated in Item 8 of the Form 10-K
by reference to the annual report of stockholders for the year ended December 3,
1995) included the audit of the financial statement schedules listed in the
accompanying index. These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statement schedules based upon our audits.
In our opinion such financial statement schedules present fairly, in all
material respects, the information set forth therein.
High Point, North Carolina /s/ BDO SEIDMAN, LLP
--------------------
January 5, 1996 BDO SEIDMAN, LLP
20
ROWE FURNITURE CORPORATION
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 3, 1995, NOVEMBER 27, 1994 AND NOVEMBER 28, 1993
(Thousands of Dollars)
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------------------------------------------------------------
ADDITIONS
----------------------------
(1) (2)
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS - END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- ---------------------------------------------------------------------------------------------
Allowance for doubtful
accounts - 1995 $ 300 $ 179 $ - $ 179(A) $ 300
Allowance for doubtful
accounts - 1994 $ 300 $ 68 $ - $ 68(B) $ 300
Allowance for doubtful
accounts - 1993 $ 300 $ 127 $ - $ 127(C) $ 300
(A) Accounts charged off less bad debt recoveries of $55,000.
(B) Accounts charged off less bad debt recoveries of $51,000.
(C) Accounts charged off less bad debt recoveries of $38,000.
21