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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 1, 1996
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 10-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 14, 1997 (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 $72,181,576.
As of February 14, 1997, there were issued and outstanding 13,166,189
shares of the registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
-------- ------------------
Portions of Annual Report for the year ended Parts II and IV
December 1, 1996
Portions of the Annual Proxy Statement for the year Part III
ended December 1, 1996
PART I
ITEM 1. BUSINESS.
GENERAL
The Company is a designer and manufacturer of upholstered furniture, consisting
of sofas, sleeper sofas, loveseats and chairs. The Company's products are sold
primarily in the middle to upper-middle price range, with sofas customarily
retailing between $600 and $1,400.
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. Ten 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 of which are
located in Missouri and two of which are located 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 December 3, 1995, 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 upholstered furniture at competitive prices. A lifetime limited
warranty applicable to all the Company's products covering frames, springs,
mechanisms and selected cushions reflects its commitment to high quality. In
recent years, the Company took a number of steps to
2
reduce costs 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 in 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 upholstered 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 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 limited warranty applicable to all the
Company's products covering the frames, springs, mechanisms and selected
cushions, 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
3
reductions, and that it has also reduced supervisory expense. 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 allows 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 consumers full-color pictures of various combinations of furniture styles
and fabric patterns and to enter consumers' orders directly with the Company.
The Company has established regional repair service centers so 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 are 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 implementation of
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, the Far East, Australia and
other regions.
THE INDUSTRY
As reported by the American Furniture Manufacturers Association in December,
1996, 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, 1996.
Year Ended December 31,
-----------------------
1993 1994 1995 1996
---- ---- ---- ----
(in billions)
Industry shipments $17.2 $18.6 $19.0 $20.0
Upholstered furniture shipments 6.2 7.1 7.4 7.8
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 39% and metal and other products account for the
balance. Within each category, furniture manufacturers generally focus on
particular price ranges and styles.
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 including
sofas, sleeper sofas, loveseats, and 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
5
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, Leath, Jordan's Furniture, Star Furniture
and Sears Homelife. During 1996, Levitz accounted for approximately 17% of the
Company's 1996 shipments, and its ten largest customers (including Levitz)
accounted for approximately 35% of 1996 shipments. Other than Levitz, no
customer accounted for more than 3% of the 1996 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.
Approximately 5% of 1996 sales were to customers located outside of the United
States.
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
6
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 86 are dedicated galleries located within
stores operated by retailers that also sell other manufacturers' products, six
are freestanding independently owned retail locations, and ten 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 1996 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 expanded in 1996 its owned locations to ten free-
standing stores. The expansion of Company-owned ShowPlace stores is supported
by the 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. 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 and sales personnel. In addition, because the
Rowe ShowPlace program accounted for more than 20% of fiscal 1996 shipments, a
material reduction in sales at such stores may have an adverse effect on the
Company's results.
MANUFACTURING AND DISTRIBUTION
The Company's manufacturing operations are conducted in four facilities, two
located in Virginia and two located 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.
7
Manufacturing Process. The Company utilizes a vertically integrated
- ---------------------
manufacturing process which includes kiln-drying of hardwood, wood milling,
frame construction, fabric cutting and sewing, foam cutting and filling,
upholstery and final assembly of the upholstered product. The Company
manufactures and assembles all of the frames used in its upholstered furniture.
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
experienced a significant increase in employee suggestions leading to such
improvements and reductions. On a facility-wide basis, 1996 incentive bonuses
ranged up to approximately 20% of 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.
Manufacturing Capacity. While the Company primarily operates its manufacturing
- ----------------------
facilities on a one-shift, five or six day per week basis, partial second shifts
are in operation at all its facilities. Management believes that the Company
could increase production without substantial capital expenditures by expanding
the number of personnel 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
8
future shipments. The Company's backlog of unshipped orders was approximately
$10.4 million as of December 1, 1996 as compared to $15.0 million as of December
3, 1995. The Company anticipates that 100% of the backlog as of December 1, 1996
will be shipped in 1997.
Distribution. The Company has contracted 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 third party motor carriers. For international shipments,
upholstered furniture is shipped primarily in full containers utilizing third-
party freight forwarders. Approximately 90% of the Company's fiscal year 1996
upholstered shipments were delivered under these arrangements.
RAW MATERIALS
The raw materials used by the Company include fabrics, hardwood lumber, 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-intensive, and in many respects more
structurally sound than hardwood construction, this method 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, compliance with these standards has not had a material
adverse effect on the Company's operations. Management believes that the
Company's plants are in
9
compliance in all material respects with applicable federal, state and local
laws and regulations concerned with safety, health, and environmental
protection.
The Company currently anticipates increased federal and state environmental and
health and safety regulation affecting the furniture industry, 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 1, 1996, the Company employed approximately 1,525 full-time
employees, of which 125 are in management, supervisory, and sales positions.
Approximately 105 employees employed at a single plant, 17 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", "The Rowe ShowMe Machine", "Limited
Editions" and "The ShowPlace" trademarks with the United States Patent and
Trademark Office. Management believes that its trademark 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.
10
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 in leased offices in
McLean, 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 02-28-00* Industrial 79,000
Jessup, Maryland Various thru Office/
12-31-04 Industrial 180,000
Leesburg, Florida 06-30-99 Retail 15,000
Sylmar, California 03-31-04 Industrial 115,000
*Lease covers 6,000 sq. ft.
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. 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 realized by leasing them to third
parties. In February, 1995, the Company
11
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. The retail property located in
Leesburg, Florida was acquired in 1984. Aggregate rental income from investment
properties, net of commissions, was $1,470,000, $1,005,000 and $1,442,000 in
1994, 1995 and 1996, respectively.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings, other than routine litigation incidental
to the business of the Company. While the outcome of these routine legal
proceedings cannot be predicted with certainty, it is the opinion of management
that the resolution of these legal proceeds should not have a material adverse
effect on the Company's financial position.
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 1, 1996.
12
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) The information contained under the caption "Stock Price and Dividend
Data" in the Annual Report to Stockholders for the fiscal year ended December 1,
1996 is included in Exhibit 13 hereto and incorporated herein by reference.
(b) Approximate Number of Equity Security Holders.
Approximate Number of Record
Title of Class Holders as of December 20, 1996
-------------- -------------------------------
Common Stock, par value 1,200
$1.00 per share
ITEM 6. SELECTED FINANCIAL DATA.
The information contained under the caption "Five-year Summary" in the Annual
Report to Stockholders for the fiscal year ended December 1, 1996 is included in
Exhibit 13 hereto and incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The management's discussion and analysis of financial condition and results of
operations section of the Annual Report to Stockholders for the fiscal year
ended December 1, 1996 is included in Exhibit 13 hereto and incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following information in the Annual Report to Stockholders of the fiscal
year ended December 1, 1996 is included in Exhibit 13 hereto and incorporated
herein by reference:
Consolidated Balance Sheets - - December 1, 1996 and December 3, 1995
Consolidated Statements of Income --
Years Ended December 1, 1996, December 3, 1995, and November 27, 1994
Consolidated Statements of Stockholders' Equity --
Years Ended December 1, 1996, December 3, 1995 and November 27, 1994
Consolidated Statements of Cash Flows --
13
Years Ended December 1, 1996, December 3, 1995 and November 27, 1994
Notes to Consolidated Financial Statements (includes selected quarterly
financial data)
Report of Independent Certified Public Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable
14
PART III
Notwithstanding anything below to the contrary, the Report of the Compensation
and Stock Option Committees and the Performance Graph contained on pages 12
through 14 of the Company's 1997 Annual Meeting Proxy Statement are not
incorporated by reference in this Form 10-K.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
The information required by Item 10 is contained in the Company's 1997 Annual
Meeting 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 1997 Annual
Meeting 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 1997 Annual
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 1997 Annual
Meeting 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.
15
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 1, 1996 and December
3, 1995 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
1, 1996 together with the report of BDO Seidman, LLP dated January
8, 1997 appearing in the 1996 Annual Report to Stockholders are
incorporated herein by reference. The following additional financial
data should be read in conjunction with the consolidated financial
statements in such 1996 Annual Report to Stockholders.
2. Financial Statement Schedule:
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 in the
consolidated financial statements and notes thereto.
3. Exhibits:
Exhibit
Number Exhibit
- ------- -------
3.1 Articles of Incorporation of the Company (incorporate 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 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)
4 Specimen Stock Certificate (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 Stock Option and Incentive Plan
(incorporated by reference to the Company's Registration Statement
on
16
10.2 Form S-1 No. 33-74504 filed with the Securities and Exchange
Commission on January 27, 1994)
10.3 Rowe Furniture Corporation Merged 401(k) and Employee Stock
Ownership Plan dated December 1, 1991 (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)
10.4 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 field
with the Securities and Exchange Commission on January 27, 1994)
10.6 Employment Agreement dated December 5, 185 between the Company and
Mr. Arthur H. Dunkin (incorporated by reference to the Company's
Registration Statement on Form S-1 No. 33-74504 field 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. 33-74504 filed
with the Securities and Exchange Commission on January 27, 1994)
10.8 Rowe Furniture Corporation Cash-or-Deferred 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 1, 1996
21 List of Subsidiaries
23 Consent of BDO Seidman, LLP
27 Financial Data Schedule
17
(b) Reports on Form 8-K.
One report on Form 8-K was filed in the fourth quarter of the Company's
fiscal year. On November 11, 1996 a Form 8-K was filed reporting that (i) on
October 24, 1996, Rowe Furniture Corporation announced the completion of the
500,000 share buy-back program which was approved by the Board of Directors on
January 12, 1995 and (ii) on November 6, 1996, Rowe Furniture Corporation
announced that the Board of Directors approved the purchase of an additional
500,000 shares of its common stock in open market transactions.
18
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
---------------------------------
February 28, 1997 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 February 28, 1997
- ----------------------- (Principal Executive Officer)
G. M. Birnbach
/s/ RICHARD E. CHENEY Director February 28, 1997
- -----------------------
R. E. Cheney
/s/ W. PATRICK DOLAN Director February 28, 1997
- -----------------------
W. P. Dolan
Secretary-Treasurer, Director
/s/ ARTHUR H. DUNKIN (Principal Financial and February 28, 1997
- ----------------------- Accounting Officer)
A. H. Dunkin
Senior Vice President and
/s/ HARVEY I. PTASHEK Director February 28, 1997
- -----------------------
H. I. Ptashek
19
/s/ CHARLES T. ROSEN Director February 28, 1997
- -----------------------
C. T. Rosen
/s/ KEITH J. ROWE Director February 28, 1997
- -----------------------
K. J. Rowe
/s/ SIDNEY J. SILVER Director February 28, 1997
- -----------------------
S. J. Silver
/s/ GERALD O. WOODLIEF Director February 28, 1997
- -----------------------
G. O. Woodlief
20
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
Rowe Furniture Corporation
Salem, Virginia
The audits referred to in our report dated January 8, 1997 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 1,
1996) included the audit of the financial statement schedule listed in the
accompanying index. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based upon our audits.
In our opinion such financial statement schedule presents fairly, in all
material respects, the information set forth therein.
High Point, North Carolina /s/ BDO SEIDMAN, LLP
January 8, 1997 --------------------
BDO SEIDMAN, LLP
21
ROWE FURNITURE CORPORATION
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 1, 1996, DECEMBER 3, 1995 AND NOVEMBER 27, 1994
(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 - 1996 $ 300 $ 490 $ - $ 490(A) $ 300
Allowance for doubtful
accounts - 1995 $ 300 $ 179 $ - $ 179(B) $ 300
Allowance for doubtful
accounts - 1994 $ 300 $ 68 $ - $ 68(C) $ 300
(A) Accounts charged off less bad debt recoveries of $69,000
(B) Accounts charged off less bad debt recoveries of $55,000
(C) Accounts charged off less bad debt recoveries of $51,000