ROW Rowe

The Rowe Companies Announces Second Quarter Operating Results MCLEAN, Va., June 23 /PRNewswire-FirstCall/ -- The Rowe Companies (AMEX:ROW), a leading furniture manufacturer and home furnishings retailer, today reported operating results for the second quarter ended May 30, 2004. Led by strong sales and gross margin in its Storehouse retail unit, net earnings from continuing operations for the second quarter totaled $715,000, or $0.05 per diluted share, compared to a loss of $(642,000) or $(0.05) per diluted share, for the comparable 2003 period. Net shipments increased 11.6% to $75.9 million, compared to $68.1 million for the comparable prior year period. Gross profit increased to 36.1% of net shipments, compared to 35.2% of net shipments for the second quarter of 2003. The 2004 second quarter included an after-tax non-cash charge of $(148,000) or $(0.01) per share to complete the depreciation of certain legacy systems being replaced by the Company's new ERP system. Sales and administrative expenses for the quarter were $25.8 million, compared to $24.4 million in the prior year quarter, principally due to higher retail selling expenses associated with higher volume and increased store occupancy expense from new store growth. During the second quarter of last year, the Company completed the sale of a subsidiary, the Mitchell Gold Co. Gain on the sale, as well as operating results for such subsidiary during the period through the closing, added to net earnings for the 2003 second quarter. For the six months ended May 30, 2004, sales increased 11.3% overall to $146.7 million from $131.8 million in the prior year, led by an 18.6% increase in retail sales. Gross profit improved to 35.8% of net shipments, from 35.1% for the 2003 comparable period, driven by growth in retail sales as a percentage of total sales, as well as improvements in retail sales margins. Selling and administrative expenses increased from $47.1 million in the first half of 2003 to $50.1 million in 2004, principally due to higher retail selling expenses and store occupancy costs associated with higher volume. Net earnings from continuing operations improved to $864,000, or $0.06 per diluted share, in 2004 compared to a loss of $(1,454,000), or $(0.11) per diluted share in 2003. Net earnings improved to $759,000, or $0.06 per diluted share, in 2004 from $92,000, or $0.01 per diluted share. The 2003 results included discontinued operations and gain on the Mitchell Gold sale. "We are encouraged by the continuing strength in our retail sales and the positive response to Rowe's new products at the April furniture market where we had some important new customer wins," said Gerald M. Birnbach, Chairman and President. "Same store sales growth at our Storehouse unit for the quarter was 8%. Total sales increased 13.8% in our retail unit, and 9.7% in our manufacturing unit." The Rowe Companies operates two subsidiaries in the home furnishings industry: Rowe Furniture, Inc., a major manufacturer of quality upholstered furniture serving the middle and upper middle market throughout the U.S.; and Storehouse, Inc., a multi-channel, lifestyle home furnishings business including 61 retail home furnishings stores. Storehouse makes good design accessible by selling an edited assortment of casual, contemporary home furnishings through its stores located in the Southeast, Southwest and Mid- Atlantic markets, its catalog and over the Internet. Statements in this press release concerning Rowe's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items; together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under Federal Securities Laws. "Forward-looking statements" are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, industry cyclicality, fluctuations in customer demand and order patterns, the seasonal nature of the business, changes in pricing, and general economic conditions, as well as other risks detailed in Rowe's filings with the Securities and Exchange Commission. THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MAY 30, 2004 AND JUNE 1, 2003 UNAUDITED Three Months Ended Six Months Ended May 30, June 1, May 30, June 1, 2004 2003 2004 2003 (in thousands - except per share amounts) Net shipments $75,922 $68,059 $146,668 $131,778 Cost of shipments 48,507 44,096 94,151 85,472 Gross profit 27,415 23,963 52,517 46,306 Selling and administrative expenses 25,828 24,270 50,052 46,954 Retail restructuring and other charges - 125 - 125 Operating income (loss) 1,587 (432) 2,465 (773) Interest expense (935) (1,036) (1,829) (2,372) Other income 408 411 755 806 Earnings (loss) from continuing operations before taxes 1,060 (1,057) 1,391 (2,339) Tax expense (benefit) 345 (415) 527 (885) Net earnings (loss) from continuing operations 715 (642) 864 (1,454) Earnings (loss) from discontinued operations, net of tax expense (benefit) of $0, $165, $(65) and $664, respectively - 269 (105) 1,084 Gain on sale of Mitchell Gold, net of tax benefit of $1,473 - 462 - 462 Net earnings $ 715 $ 89 $ 759 $ 92 Net earnings (loss) from continuing operations per common share $ 0.05 $ (0.05) $ 0.07 $ (0.11) Net earnings per common share $ 0.05 $ 0.01 $ 0.06 $ 0.01 Weighted average common shares 13,188 13,167 13,182 13,166 Net earnings (loss) from continuing operations per common share assuming dilution $ 0.05 $ (0.05) $ 0.06 $ (0.11) Net earnings per common share assuming dilution $ 0.05 $0.01 $ 0.06 $ 0.01 Weighted average common shares and equivalents 13,527 13,188 13,501 13,200 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS May 30, November 30, 2004 2003 (Unaudited) (Audited) ($ in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 4,088 $ 3,708 Restricted cash 4,214 4,034 Accounts receivable, net 19,978 19,529 Notes receivable 25 100 Inventories 34,081 32,387 Deferred income tax asset 653 880 Prepaid expenses and other 2,263 2,711 Total current assets 65,302 63,349 PROPERTY AND EQUIPMENT, net 39,889 41,624 GOODWILL, net 14,224 14,224 OTHER NONCURRENT ASSETS 11,147 10,871 $ 130,562 $ 130,068 LIABILITIES CURRENT LIABILITIES Current maturities of long-term debt $ 2,014 $ 3,314 Accounts payable and accrued liabilities 21,297 21,683 Income taxes payable 927 1,061 Customer deposits 13,812 13,512 Total current liabilities 38,050 39,570 LONG-TERM DEBT 35,175 34,312 DEFERRED LIABILITIES 4,242 4,269 Total liabilities 77,467 78,151 Total stockholders' equity 53,095 51,917 $ 130,562 $ 130,068 DATASOURCE: The Rowe Companies CONTACT: Gene Morphis, Chief Financial Officer of The Rowe Companies, +1-703-847-8670 Web site: http://www.therowecompanies.com/

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