On Oct. 25, furniture designer and distributor Furniture Brands International (NYSE:FBN) released Q3 2006 earnings for the period ended Sept. 30, 2006.

  • Management called this a challenging quarter, and saw the 2% sales growth as an achievement. Discounting $0.11 per share for expenses for restructuring, settling litigation, and interest rate swaps, the company exceeded last year's earnings, but those expenses are all too real.
  • The precipitous decrease in cash flow stems largely from about $63 million of unfavorable changes in inventories and accounts receivable, as compared with the year-ago period.
  • The single most shareholder-friendly item on the report is the significant reduction in shares outstanding. Share buybacks totaling $40 million this year have paid some dividends -- no pun intended.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$562,040

$568,917

$557,927

2.0%

Net Profit

--

$5,797

$9,919

(41.6%)

EPS

$0.22

$0.12

$0.19

(36.8%)

Diluted Shares

 --

48,322

51,707.9

(6.5%)



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

21.58%

21.47%

0.11

Operating Margin

2.28%

3.01%

(0.73)

Net Margin

1.02%

1.78%

(0.76)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$43,777

$118,489

(63.1%)

Accounts Rec.

$360,206

$343,502

4.9%

Inventory

$516,837

$434,814

18.9%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$113,767

$96,600

17.8%

Long-Term Debt

$300,800

$301,600

(0.3%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

($2,721)

$68,919

N/A

Capital Expenditures

$5,182

$5,679

(8.8%)

Free Cash Flow

($7,903)

$63,240

N/A



Find out why Fools always follow the money.

Related companies:

  • La-Z-Boy (NYSE:LZB)
  • Ethan Allen Interiors (NYSE:ETH)
  • Kimball International (NASDAQ:KBALB)

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had positions in none of these companies. Fool rules are here.