UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______________ to ______________
 Commission file number 001-00091
 Furniture Brands International, Inc.
 
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    43-0337683(I.R.S. Employer
Identification No.)
 1 North Brentwood Blvd., St. Louis, Missouri(Address of principal executive offices)
    
    63105(Zip Code)
 
 
  þ o
  þ o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o  o þ




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Furniture Brands International, Inc.
Table of Contents
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Financial Statements:Consolidated Balance Sheets:
    
    
    3March 31, 2009December 31, 2008Consolidated Statements of Operations:
    
    
    4Quarter Ended March 31, 2009Quarter Ended March 31, 2008Consolidated Statements of Cash Flows:
    
    
    5Quarter Ended March 31, 2009Quarter Ended March 31, 2008Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1.
Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 5.
Other Information
    
    
    22Item 6. Exhibits
    
    
    23
  2




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    48,108
    
    
    $
    106,580Receivables, less allowances of $33,357 ($34,372 at December 31, 2008)
    
    
    170,385
    
    
    
    178,590Income tax refund receivable
    
    
    28,805
    
    
    
    38,090Inventories
    
    
    323,436
    
    
    
    350,026Prepaid expenses and other current assets
    
    
    14,503
    
    
    
    12,592Total current assets
    
    
    585,237
    
    
    
    685,878Property, plant, and equipment, net
    
    
    150,313
    
    
    
    150,864Trade names
    
    
    127,132
    
    
    
    127,300Other assets
    
    
    35,012
    
    
    
    35,476Total assets
    
    $
    897,694
    
    
    $
    999,518LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    2,000
    
    
    $
    30,000Accounts payable
    
    
    73,952
    
    
    
    85,206Accrued employee compensation
    
    
    21,789
    
    
    
    49,082Other accrued expenses
    
    
    55,892
    
    
    
    63,214Total current liabilities
    
    
    153,633
    
    
    
    227,502Long-term debt
    
    
    143,000
    
    
    
    160,000Deferred income taxes
    
    
    27,925
    
    
    
    27,917Pension liability
    
    
    135,284
    
    
    
    137,199Other long-term liabilities
    
    
    74,035
    
    
    
    80,406Shareholders equity:Preferred stock, 10,000,000 shares authorized, no par value  none issued
    
    
    
    
    
    
    Common stock, 200,000,000 shares authorized, $1.00 stated value 
56,482,541 shares issued at March 31, 2009 and December 31, 2008
    
    
    56,483
    
    
    
    56,483Paid-in capital
    
    
    225,859
    
    
    
    224,419Retained earnings
    
    
    372,339
    
    
    
    376,515Accumulated other comprehensive loss
    
    
    (116,582
    )
    
    
    (116,988
    )Treasury stock at cost, 7,724,895 shares at March 31, 2009 and 7,704,764
shares at December 31, 2008
    
    
    (174,282
    )
    
    
    (173,935
    )Total shareholders equity
    
    
    363,817
    
    
    
    366,494Total liabilities and shareholders equity
    
    $
    897,694
    
    
    $
    999,518
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##### 



Quarter Ended March 31,2009
    
    
    2008Net sales
    
    $
    356,871
    
    
    $
    477,200Cost of sales
    
    
    276,530
    
    
    
    366,181Gross profit
    
    
    80,341
    
    
    
    111,019Selling, general, and administrative expenses
    
    
    83,214
    
    
    
    101,981Operating earnings (loss)
    
    
    (2,873
    )
    
    
    9,038Interest expense
    
    
    1,788
    
    
    
    4,143Other income, net
    
    
    926
    
    
    
    2,236Earnings (loss) from continuing operations before income tax expense
    
    
    (3,735
    )
    
    
    7,131Income tax expense
    
    
    441
    
    
    
    3,383Net earnings (loss) from continuing operations
    
    
    (4,176
    )
    
    
    3,748Net earnings from discontinued operations
    
    
    
    
    
    
    29,868Net earnings (loss)
    
    $
    (4,176
    )
    
    $
    33,616Earnings per common share  basic and diluted:Earnings (loss) from continuing operations
    
    $
    (0.09
    )
    
    $
    0.08Earnings from discontinued operations
    
    $
    
    
    
    $
    0.62Net earnings (loss)
    
    $
    (0.09
    )
    
    $
    0.69Weighted average shares of common stock outstanding  basic and diluted
    
    
    48,766
    
    
    
    48,560
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##### 



Quarter Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net earnings (loss)
    
    $
    (4,176
    )
    
    $
    33,616Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:Depreciation
    
    
    5,291
    
    
    
    6,662Compensation expense related to stock option grants and restricted stock awards
    
    
    1,103
    
    
    
    767Provision (benefit) for deferred income taxes
    
    
    40
    
    
    
    893Gain on sale of discontinued operations
    
    
    
    
    
    
    (48,059
    )Other, net
    
    
    (614
    )
    
    
    (1,406
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    7,411
    
    
    
    12,732Income tax refund receivable
    
    
    9,285
    
    
    
    Inventories
    
    
    27,439
    
    
    
    13,663Prepaid expenses and other assets
    
    
    (2,191
    )
    
    
    1,114Accounts payable and other accrued expenses
    
    
    (46,046
    )
    
    
    42,895Other long-term liabilities
    
    
    (6,807
    )
    
    
    (12,534
    )Net cash provided by (used in) operating activities
    
    
    (9,265
    )
    
    
    50,343Cash flows from investing activities:Acquisition of stores, net of cash acquired
    
    
    
    
    
    
    (8,741
    )Proceeds from the sale of business, net of cash sold
    
    
    
    
    
    
    73,309Proceeds from the disposal of assets
    
    
    51
    
    
    
    3,261Additions to property, plant, and equipment
    
    
    (4,248
    )
    
    
    (2,150
    )Net cash provided by (used in) investing activities
    
    
    (4,197
    )
    
    
    65,679Cash flows from financing activities:Payments of long-term debt
    
    
    (45,000
    )
    
    
    (65,000
    )Restricted cash used for payment of long-term debt
    
    
    
    
    
    
    20,000Payments of cash dividends
    
    
    
    
    
    
    (1,940
    )Other
    
    
    (10
    )
    
    
    (8
    )Net cash used by financing activities
    
    
    (45,010
    )
    
    
    (46,948
    )Net increase (decrease) in cash and cash equivalents
    
    
    (58,472
    )
    
    
    69,074Cash and cash equivalents at beginning of period
    
    
    106,580
    
    
    
    118,764Cash and cash equivalents at end of period
    
    $
    48,108
    
    
    $
    187,838Supplemental disclosure:Cash payments (refunds) for income taxes, net
    
    $
    (9,380
    )
    
    $
    419Cash payments for interest expense
    
    $
    2,329
    
    
    $
    5,647
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except per share information)
(unaudited)
 (1)
    
    BASIS OF PRESENTATIONThe accompanying unaudited consolidated financial statements of Furniture Brands
International, Inc. and its subsidiaries (the Company) have been prepared in accordance
with accounting principals generally accepted in the United States (U.S. GAAP) and such
principals are applied on a basis consistent with those reflected in our 2008 Annual Report
on Form-10K, filed with the Securities and Exchange Commission. The year end balance sheet
data was derived from audited financial statements. The accompanying unaudited consolidated
financial statements include all adjustments (consisting of normal recurring adjustments and
accruals) which management considers necessary for a fair presentation of the results of the
period. These consolidated financial statements do not include all information and footnotes
normally included in financial statements prepared in accordance with U.S. GAAP. These
consolidated financial statements should be read in conjunction with the consolidated
financial statements and accompanying notes included in our Annual Report on Form 10-K for
the year ended December 31, 2008. The consolidated financial statements consist of the
accounts of our company and its subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation. The results for the quarter ended March 31, 2009 are
not necessarily indicative of the results which will occur for the full fiscal year ending
December 31, 2009.The preparation of financial statements in accordance with U.S. GAAP requires us to make
estimates, judgments, and assumptions, which we believe to be reasonable, based on the
information available. These estimates and assumptions affect the reported amounts of
assets, liabilities, revenues, expenses, and related disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.In the first quarter of 2008, we sold Hickory Business Furniture, a wholly owned subsidiary
that designs and manufactures business furniture. As a result, this business unit has been
reflected as a discontinued operation in all periods presented, pursuant to the provisions
of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.(2)
    
    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSIn September 2006, the FASB issued Statement of Financial Accounting Standards No. 157
(SFAS 157), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework
for measuring fair value in U. S. GAAP, and expands the disclosure requirements regarding
fair value measurements. The rule does not introduce new requirements mandating the use of
fair value. SFAS 157 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The definition is based on an exit price rather than an entry
price, regardless of whether the entity plans to hold or sell the asset. SFAS 157 is
effective for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The required transition date for SFAS
157 was delayed until fiscal years beginning after November 15, 2008 for non-financial
assets and liabilities, except for those that are recognized or disclosed at fair value in
the financial statements on a recurring basis. The adoption on January 1, 2008 of the
portion of SFAS 157 that was not delayed until fiscal years beginning after November 15,
2008 did not have a material effect on our financial position or results of operations. The
adoption of the remaining provisions of SFAS 157 on January 1, 2009 did not have a material
effect on our financial position or results of operations.In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141
(Revised 2007) (SFAS 141R), Business Combinations. SFAS 141R requires an acquiring entity
to recognize all the assets acquired and liabilities assumed in a transaction at the
acquisition-date fair value with limited exceptions. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. We adopted the
provisions of SFAS 141R on January 1, 2009. The adoption of this statement did not have a
material effect on our financial position or results of operations.In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (SFAS
160), Noncontrolling Interests in Consolidated Financial Statements  An Amendment of ARB
No. 51. SFAS 160 establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective
for fiscal years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The adoption of SFAS 160 on January 1, 2009 did not affect our financial
position or results of operations.
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In December 2008, the FASB issued FASB Staff Position No. FAS 132R-1 (FSP FAS 132R-1),
Employers Disclosures about Postretirement Benefit Plan Assets. FSP 132R-1 enhances the
required disclosures related to postretirement benefit plan assets including disclosures
concerning a companys investment policies for benefit plan assets, categories of plan
assets, fair value measurements of plan assets, and concentrations of risk within plan
assets. The adoption of this statement will not effect our financial position or results of
operations as it will only impact the disclosures in our annual report for the fiscal year
ended December 31, 2009.(3)
    
    ACQUISITIONSDuring the quarter ended March 31, 2008, we acquired 15 stores and a warehouse from five of
our dealers for total consideration of $8,741. The acquisitions were asset purchases
consisting mainly of inventories and fixed assets and the assumption of certain liabilities,
primarily customer deposits.The Consolidated Statement of Operations includes the results of operations of the acquired
stores from the date of their acquisition. The pro forma impact of the acquisitions on prior
periods is not presented as the impact is not material to operations.(4)
    
    RESTRUCTURING AND ASSET IMPAIRMENT CHARGESWe have been executing plans to reduce our domestic manufacturing capacity. Qualifying
assets related to restructuring are included in assets held for sale in Other Assets in the
Consolidated Balance Sheets until sold. Total assets held for sale were $10,043 at March 31,
2009 and $10,017 at December 31, 2008. Included in the restructuring charges for the quarter
ended March 31, 2009 are expenses associated with our 26 closed retail store locations and
severance costs which are primarily associated with our manufacturing operations.Restructuring and asset impairment charges were as follows:
 Quarter Ended March 31,2009
    
    
    2008Restructuring charges (benefits):Termination benefits
    
    $
    418
    
    
    $
    Closed store occupancy and lease cost
    
    
    1,395
    
    
    
    2,2071,813
    
    
    
    2,207Gain on sale of assets
    
    
    
    
    
    
    (1,243
    )$
    1,813
    
    
    $
    964Statement of Operations classification:Cost of sales
    
    $
    418
    
    
    $
    Selling, general and administration expenses
    
    
    1,395
    
    
    
    964$
    1,813
    
    
    $
    964
 Asset impairment charges were recorded to reduce the carrying value of all idle facilities
and related machinery and equipment to their net realizable value. The determination of the
impairment charges were based primarily upon (i) consultations with real estate brokers,
(ii) proceeds from recent sales of company facilities, and (iii) the market prices being
obtained for similar long-lived assets.Closed store occupancy and lease costs include occupancy costs associated with closed retail
locations, early contract termination settlements for retail leases during the period, and
closed store lease liabilities representing the present value of the remaining lease rentals
reduced by the current market rate for sublease rentals of similar properties. This
liability is reviewed quarterly and adjusted as necessary to reflect changes in estimated
sublease rentals.Activity in the accrual for closed store lease liabilities during the quarter ended March
31, 2009 was as follows:
 Accrual for closed store lease liabilities at January 1
    
    $
    27,918Cash payments
    
    
    (1,527
    )Charges to expense
    
    
    278Accrual for closed store lease liabilities at March 31
    
    $
    26,669
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At March 31, 2009, $5,219 of the accrual for lease termination costs is classified as
current accrued expenses,
with the remaining balance in other long-term liabilities.Activity in the accrual for termination benefits during the quarter ended March 31, 2009 was
as follows:
 Accrual for termination benefits at January 1
    
    $
    10,012Charges to expense
    
    
    418Cash payments
    
    
    (7,822
    )Accrual for termination benefits at March 31
    
    $
    2,608
 The accrual for termination benefits at March 31, 2009 is classified as current accrued
expenses.(5)
    
    INVENTORIESInventories are summarized as follows:
 March 31,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    87,137
    
    
    $
    89,713Work-in-process
    
    
    21,112
    
    
    
    21,405Finished products
    
    
    215,187
    
    
    
    238,908$
    323,436
    
    
    $
    350,026
 (6)
    
    PROPERTY, PLANT AND EQUIPMENTMajor classes of property, plant and equipment consist of the following:
 March 31,
    
    
    December 31,2009
    
    
    2008Land
    
    $
    15,894
    
    
    $
    16,027Buildings and improvements
    
    
    202,493
    
    
    
    198,836Machinery and equipment
    
    
    271,366
    
    
    
    270,597489,753
    
    
    
    485,460Less: accumulated depreciation
    
    
    339,440
    
    
    
    334,596$
    150,313
    
    
    $
    150,864
 Depreciation expense was $5,291 and $6,662 for the quarter ended March 31, 2009 and March
31, 2008, respectively.(7)
    
    LONG-TERM DEBTLong-term debt consists of the following:
 March 31,
    
    
    December 31,2009
    
    
    2008Asset-based loan
    
    $
    145,000
    
    
    $
    190,000Less: current maturities
    
    
    2,000
    
    
    
    30,000Long-term debt
    
    $
    143,000
    
    
    $
    160,000
 On August 9, 2007 we refinanced our revolving credit facility with a group of financial
institutions. The facility is a five-year asset-based loan (ABL) with commitments to lend
up to $450,000. The facility is secured by all of our accounts receivable, inventory and
cash and is guaranteed by all of our domestic subsidiaries.The ABL provides for the issuance of letters of credit and cash borrowings. The issuance of
letters of credit and cash borrowings are limited by the level of a borrowing base
consisting of eligible accounts receivable and inventory. As of March 31, 2009 there were
$145,000 of cash borrowings and $22,224 in letters of credit outstanding.
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##### 



The excess of the borrowing base over the current level of letters of credit and cash
borrowings outstanding represents the additional borrowing availability under the ABL.
Certain covenants and restrictions, including cash dominion, weekly borrowing base
reporting, and a fixed charge coverage ratio, would become effective if excess availability
fell below various thresholds. The threshold related to cash dominion and weekly borrowing
base reporting is $75,000 and the threshold related to the fixed charge coverage ratio is
$62,500. As of March 31, 2009 excess availability was $77,609. Of this, $2,609 represents
the additional amount we could borrow without going below any of the covenant thresholds.As we currently would not be able to comply with the fixed charge coverage covenant, we
manage our excess availability to remain above the covenant threshold. We do not expect to
be below the threshold in 2009. In addition to our $2,609 additional borrowing capacity, we
had $48,108 of cash and cash equivalents at March 31, 2009.We voluntarily repaid $2,000 of debt in April 2009 which was classified as current at March
31, 2009. If we had not made this payment, we still would have remained above the covenant
threshold in April 2009.The borrowing base is reported on the 25th day of each month based on our financial position
for the previous month end. Our borrowing base calculations are subject to periodic
examinations by the financial institutions which can result in adjustments to the borrowing
base and our availability under the ABL. These examinations have not resulted in significant
adjustments to our borrowing base or availability in the past and are not expected to result
in material adjustments in the future.Cash borrowings under the ABL will be at either (i) a base rate (the greater of the prime
rate or the Federal Funds Effective Rate plus 1/2%) or (ii) an adjusted Eurodollar rate plus
an applicable margin, depending upon the type of loan selected. The applicable margin over
the adjusted Eurodollar rate is 1.25% for the first six months of the facility and
thereafter will fluctuate with excess availability. As of March 31, 2009, loans outstanding
under the ABL consisted of $50,000 based on the adjusted Eurodollar rate at an interest rate
of 3.375% and $95,000 based on the adjusted prime rate at an interest rate of 3.25%. The
weighted average interest rate for all loans outstanding as of March 31, 2009 was 3.29%.(8)
    
    LIQUIDITYThe primary items impacting our liquidity in the future are cash from operations, capital
expenditures, acquisition of stores, sale of surplus assets, borrowings and payments under
our ABL, pension funding requirements, and, in 2009, the receipt of income tax refunds.We had $48,108 of cash and cash equivalents, $145,000 of debt outstanding, and excess
availability to borrow an additional $2,609 under our ABL at March 31, 2009. In order to
maintain these borrowings, we have to comply with various provisions of our ABL agreement
(see Note 7. Long-Term Debt). Should we not comply with certain of the provisions of our ABL
agreement, the lenders can call the debt, which could have a significantly adverse impact to
our liquidity and our business. While we expect to comply with the provisions of the
agreement throughout 2009, further deterioration in the economy and our results could cause
us to not be in compliance with our ABL agreement. While we would attempt to obtain waivers
for noncompliance, we may not be able to obtain waivers, which could have a significantly
adverse impact to our liquidity and our business.In light of the recent deterioration of the global economy and uncertainty about these
conditions in the foreseeable future, we are focused on effective cash management,
controlling costs, and preserving cash related to capital expenditures and acquisition of
stores. For example, we review all capital projects and are committed to execute only on
those projects that are either necessary for business operations or have an adequate
expected rate of return. Also, we will acquire stores only if we are required as the prime
tenant or guarantor on the lease or if we expect an adequate return on our investment.
However, if we do not have sufficient cash flow from our operations or our borrowing
capacity under our ABL is insufficient, we may need to raise additional funds through equity
or debt financings in the future in order to meet our operating and capital needs.
Nevertheless, we may not be able to secure adequate debt or equity financing on favorable
terms, or at all, at the time when we need such funding. In the event that we are unable to
raise additional funds, our liquidity will be adversely impacted and our business could
suffer. If we are able to secure additional financing, these funds could be costly to secure
and maintain, which could significantly impact our earnings and our liquidity.
 9




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##### 



(9)
    
    RETIREMENT PLANSThe components of net periodic pension expense for Company-sponsored defined benefit plans
are as follows:
 Quarter Ended March 31,2009
    
    
    2008Service cost
    
    $
    725
    
    
    $
    1,157Interest cost
    
    
    6,436
    
    
    
    6,584Expected return on plan assets
    
    
    (6,538
    )
    
    
    (6,895
    )Net amortization and deferral
    
    
    1,104
    
    
    
    1,011Net periodic pension expense
    
    $
    1,727
    
    
    $
    1,857
 We amended the defined benefit plans, freezing and ceasing future benefits as of December
31, 2005. Certain transitional benefits are being provided to participants who had attained
age 50 and had completed 10 years of service as of December 31, 2005.The projected benefit obligation of our defined benefit plans exceeded the fair value of
plan assets by $137,281 at December 31, 2008, the measurement date for our pension
liability. In December 2008, the federal government passed legislation that provides for
temporary relief from the funding requirements under the Pension Protection Act of 2006 due
to the widespread nature of disruption in financial markets. Due to this legislation, our
expected cash pension contributions for 2009 are not significant and are expected to range
from $0 to $2,200 in 2009. However, if the relief provided by the federal government is no
longer applicable to our pension plans, if there is continued downward pressure on the asset
values of these plans, or if the assets fail to recover in value, it would necessitate
significantly increased funding of our plans in the future.We currently provide retirement benefits to our employees through a defined contribution
plan. Our total costs of the defined benefit and defined contribution plans for the quarter
ended March 31, 2009 were $3,708 compared to $4,141 for the quarter ended March 31, 2008.(10)
    
    STOCK OPTIONS, RESTRICTED STOCK, AND RESTRICTED STOCK UNITSA summary of option activity for the quarter ended March 31, 2009 is presented below:
 WeightedAverageExerciseShares
    
    
    PriceOutstanding at December 31, 2008
    
    
    3,610,692
    
    
    $
    20.54Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (305,525
    )
    
    
    22.98Outstanding at March 31, 2009
    
    
    3,305,167
    
    
    $
    20.32
 The fair value of each stock option is estimated on the date of grant using the
Black-Scholes option pricing model. We had no stock option grants during the quarter ended
March 31, 2009.
 10




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##### 



Non-vested restricted stock activity is presented below:
 WeightedAverageGrant-DateShares
    
    
    Fair ValueOutstanding at December 31, 2008
    
    
    451,501
    
    
    $
    12.61Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    (14,953
    )
    
    
    12.42Outstanding at March 31, 2009
    
    
    436,548
    
    
    $
    12.62
 Included in the tables above are 487,000 shares of stock options and 243,500 shares of
restricted stock which have performance criteria upon which vesting is dependent. These
shares were granted on March 14, 2008 and vest on December 31, 2009 if we achieve our 2009
performance measures for net earnings.In December 2008, we awarded restricted stock units to certain executive officers. The
awards are contingent on the achievement of both the Companys share price objectives and
service-based retention periods. If the trailing 10 day average of our common stock reaches
$6.26 per share, then fifty percent of the units will vest, and the executive will be
entitled to receive a cash payment of $6.26 per vested unit on the second anniversary of the
grant date, or if the vesting date occurs after the second anniversary of the grant date, on
the vesting date. The other fifty percent of the units will vest if the trailing 10 day
average of our common stock reaches $9.39 per share, and following vesting, the executive
will be entitled to receive a cash payment of $9.39 per vested unit on the third anniversary
of the grant date, or if the vesting date occurs after the third anniversary of the grant
date, on the vesting date. The awards expire 5 years from the grant date and are designed to
reward executives for increases in share price as well as encouraging the long-term
employment of the executive officers.A summary of restricted stock unit activity for the quarter ended March 31, 2009 is
presented below:
 Units with
    
    
    Units withShare Price
    
    
    Share PriceObjective of
    
    
    Objective of$6.26
    
    
    $9.39Outstanding at December 31, 2008
    
    
    1,425,710
    
    
    
    1,425,710Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    (127,795
    )
    
    
    (127,795
    )Outstanding at March 31, 2009
    
    
    1,297,915
    
    
    
    1,297,915
 A benefit of $100 was recorded in the first quarter of 2009 for restricted stock unit awards
due to forfeitures and changes in the estimated fair value of the awards in the first
quarter of 2009.The fair value of the restricted stock unit awards is estimated each quarter using binomial
pricing models. The fair value of the awards is recognized as compensation expense ratably
over the derived service periods. The derived service periods are 2.7 and 3.3 years for the
awards with $6.26 and $9.39 share price objectives, respectively. The following assumptions
were used to determine the fair value of the restricted stock units as of March 31, 2009:
 Risk-free interest rate
    
    
    1.6
    %Expected volatility
    
    
    71.5
    %Expected dividend yield
    
    
    0.0
    %
 The risk-free interest rate is based upon U.S. Treasury Securities with a term similar to
that of the remaining term of the grant. Expected volatility is calculated based upon the
historical volatility over a period equal to the remaining term of the grant. The dividend
yield is calculated based upon the dividend rate at March 31, 2009.
 11




---



##### 



(11)
    
    COMPREHENSIVE INCOME (LOSS)Comprehensive income (loss) consists of the following:
 Quarter Ended March 31,2009
    
    
    2008Net earnings (loss)
    
    $
    (4,176
    )
    
    $
    33,616Other comprehensive income, net of tax:Pension liability
    
    
    1,077
    
    
    
    576Foreign currency translation
    
    
    (671
    )
    
    
    (259
    )Other comprehensive income
    
    
    406
    
    
    
    317Total comprehensive income (loss)
    
    $
    (3,770
    )
    
    $
    33,933
 The components of accumulated other comprehensive loss, each presented net of tax, are as
follows:
 March 31,
    
    
    December 31,2009
    
    
    2008Pension liability
    
    $
    (115,693
    )
    
    $
    (116,770
    )Foreign currency translation
    
    
    (889
    )
    
    
    (218
    )Accumulated other comprehensive loss
    
    $
    (116,582
    )
    
    $
    (116,988
    )
 (12)
    
    EARNINGS PER SHAREStock options have been excluded from the computation of diluted earnings per common share
because their inclusion would be antidilutive. Excluded stock options were as follows:
 Quarter Ended March 31,2009
    
    
    2008Stock options
    
    
    3,305,167
    
    
    
    3,871,092Average exercise price
    
    $
    20.32
    
    
    $
    20.62
 (13)
    
    INCOME TAXESWe or one of our subsidiaries files income tax returns in the United States federal
jurisdiction and various state and foreign jurisdictions. With few exceptions, we are no
longer subject to United States federal, state and local, or non-U.S. income tax
examinations by tax authorities for years before 2004. The Internal Revenue Service (IRS)
commenced an examination of our United States income tax return for 2005 in the first
quarter of 2007 and limited scope examinations of our United States income tax returns for
2006 and 2007 in the first quarter of 2009.As of March 31, 2009 and December 31, 2008, the total amount of unrecognized tax benefits
was $10,254 and $10,297, respectively. We recognize interest and penalties related to
unrecognized tax benefits as a component of income tax expense. As of March 31, 2009 and
December 31, 2008, the liability for unrecognized tax benefits included accrued interest of
$3,526 and $3,182 and accrued penalties of $967 and $804, respectively. We recognized
interest expense of $344 and $267 and penalty expense of $163 and $206 related to
unrecognized tax benefits in the statement of operations for the quarters ended March 31,
2009 and 2008, respectfully. The total amount of unrecognized tax benefits at March 31, 2009
that, if recognized, would affect our effective tax rate is $8,064.At December 31, 2008, we evaluated all significant available positive and negative evidence,
including the existence of losses in recent years and our forecast of future taxable income,
and, as a result, determined it was more likely than not that our federal and certain state
deferred tax assets, including benefits related to net operating loss carryforwards, would
not be realized based on the measurement standards required under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. Therefore, we established a
valuation allowance of $156,572. At March 31, 2009, the valuation allowance was increased
$717 to $162,143 due to additional net operating losses during the first quarter, partially
offset by a reduction in net deferred tax assets requiring a valuation allowance.
 12




---



##### 



The amount of the valuation allowance charged to income tax expense was $1,103 and $529 in
the quarters ended March 31, 2009 and 2008, respectively. At March 31, 2009, the value of
the federal and state net operating loss carryforward available for future tax benefit is
$20,327 and $14,747, respectively, before the valuation allowance. The federal losses expire
in the year 2028. The state losses generally start to expire in the year 2021. While we have
no other limitations on the use of our net operating loss carryforwards, we are potentially
subject to limitations if a change in control occurs pursuant to applicable statutory
regulations.(14)
    
    CONTINGENT LIABILITIESWe are involved, from time to time, in litigation and other legal proceedings incidental to
our business. Management believes that the outcome of current litigation and legal
proceedings will not have a material adverse effect upon our results of operations or
financial condition. However, managements assessment of our current litigation and other
legal proceedings could change in light of the discovery of facts with respect to legal
actions or other proceedings pending against us not presently known to us or determinations
by judges, juries or other finders of fact which are not in accordance with managements
evaluation of the probable liability or outcome of such litigation or proceedings.We are also involved in various claims relating to environmental matters at a number of
current and former plant sites. We engage or participate in remedial and other environmental
compliance activities at certain of these sites. At other sites, we have been named as a
potentially responsible party under federal and state environmental laws for site
remediation. Management analyzes each individual site, considering the number of parties
involved, the level of our potential liability or contribution relative to the other
parties, the nature and magnitude of the hazardous wastes involved, the method and extent of
remediation, the potential insurance coverage, the estimated legal and consulting expense
with respect to each site and the time period over which any costs would likely be incurred.
Based on the above analysis, management believes at the present time that any claims,
penalties or costs incurred in connection with known environmental matters will not
reasonably likely have a material adverse effect upon our consolidated financial position or
results of operations. However, managements assessment of our current claims could change
in light of the discovery of facts with respect to environmental sites, which are not in
accordance with managements evaluation of the probable liability or outcome of such claims.We are the prime tenant for operating leases and have subleased the premises to independent
furniture dealers. In addition, we guarantee certain leases of company-brand stores operated
by independent furniture dealers. These leases and guarantees have remaining terms ranging
from one to twelve years and generally require us to make lease payments in the event of
default by the dealer. In the event of default, we have the right to assign or assume the
lease. Total future payments applicable to subleases and lease guarantees were $53,297 as of
March 31, 2009. At March 31, 2009, we considered certain of these dealers with subleases and
lease guarantees to be at risk of default and have recorded a lease termination liability of
$702 to cover estimated losses.(15)
    
    DISCONTINUED OPERATIONSOn October 16, 2007, we announced our intent to divest Hickory Business Furniture (HBF), a
wholly-owned subsidiary that designs and manufactures business furniture. This business unit
was reflected as a discontinued operation pursuant to the provisions of Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived AssetsOn March 29, 2008, we closed the sale of HBF for $75,000 and recorded a gain of $28,816,
which is net of income tax expense of $19,243.The following table presents a condensed statement of operations for the discontinued
operation for the quarter ended March 31, 2008:
 Net sales
    
    $
    15,348Earnings before income tax expense
    
    $
    1,734Net earnings
    
    $
    1,052
 13




---



##### 



Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
  OVERVIEW
    
    
    Broyhill has collections of mid-priced furniture, including both wood furniture
and upholstered products, in a wide range of styles and product categories
including bedroom, dining room, living room, occasional, youth, home office, and
home entertainment.
    
    Lane focuses primarily on mid-priced upholstered furniture, including motion and
stationary furniture with an emphasis on home entertainment and family rooms.
    
    Thomasville has both wood furniture and upholstered products in the mid- to
upper-price ranges and also manufactures and markets promotional-priced case goods
and ready-to-assemble furniture.
    
    Drexel Heritage markets both case goods and upholstered furniture under the
brand names Heritage, Drexel, and dh, in categories ranging from mid- to
premium-priced.
    
    Henredon specializes in both wood furniture and upholstered products in the
premium-price category.
    
    Hickory Chair manufactures a premium-priced brand of wood and upholstered
furniture, offering traditional and modern styles.
    
    Pearson offers contemporary and traditional styles of finely tailored
upholstered furniture in the premium-price category.
    
    Laneventure markets a premium-priced outdoor line of wicker, rattan, bamboo,
exposed aluminum, and teak furniture.
    
    Maitland-Smith designs and manufactures premium hand crafted, antique-inspired
furniture, accessories, and lighting, utilizing a wide range of unique materials.
Maitland-Smith markets under both the Maitland-Smith and LaBarge brand names.
  BUSINESS TRENDS AND STRATEGY
  14




---



##### 




    
    Closing four domestic manufacturing facilities in 2008 and
consolidating or reconfiguring other facilities in 2008 and 2009.
    
    Reducing our domestic workforce by approximately 1,400 employees in December 2008;
    
    Consolidating our administrative and support functions and
implementing a shared services organization in 2008 and 2009;
    
    Exiting unprofitable retail stores in 2008 and 2009;
    
    Investing in pre-market product consumer testing, innovative product
development, consumer insights, and more effective marketing to
increase sales in order to assist us in regaining market share in the
future; and
    
    Creating a wholly-owned subsidiary in Asia in 2008 to gain full
control of our overseas manufacturing, sourcing and logistics
activities.
  
    
    We incurred costs of $2.3 million in the first quarter of 2009 and
$2.3 million in the first quarter of 2008 related to unproductive
downtime in our factories.
    
    We incurred charges of $0.4 million in the first quarter of 2009
associated with severance actions, which related primarily to
reductions in our manufacturing operations.
    
    We incurred expense of $1.4 million in the first quarter of 2009 and
$2.2 million in the first quarter of 2008 associated with closed
retail store locations, which related primarily to occupancy costs,
lease termination costs, and lease liabilities.
   
    
    Continuing to leverage the power of our brands through innovative marketing;
    
    Increasing our e-commerce initiatives to help drive more consumer interest
in our products and create more demand for our retail partners;
    
    Continuing to leverage our size and scale by offering products that are
differentiated from our competition through pre-launch testing that helps
predict end-market acceptance, by conducting consumer segmentation analysis
to assist retailers in allocating marketing resources, and by growing a
global supply chain that minimizes dealer inventory requirements;
    
    Continuing to manage our working capital through improved product
development that will reduce the number of products that we bring to
market; and
    
    Continuing to improve our operational efficiency through centralized
management of our global manufacturing, planning, sourcing, and
logistics functions.
 15




---



##### 



CONSOLIDATED RESULTS OF OPERATIONS
  Quarter Ended March 31,2009
    
    
    2008% of
    
    
    
    
    
    
    % of(in millions except share and per share data)
    
    Dollars
    
    
    Net Sales
    
    
    Dollars
    
    
    Net SalesNet sales
    
    $
    356.9
    
    
    
    100.0
    %
    
    $
    477.2
    
    
    
    100.0
    %Cost of sales
    
    
    276.5
    
    
    
    77.5
    
    
    
    366.2
    
    
    
    76.7Gross profit
    
    
    80.3
    
    
    
    22.5
    
    
    
    111.0
    
    
    
    23.3Selling, general, and administrative expenses
    
    
    83.2
    
    
    
    23.3
    
    
    
    102.0
    
    
    
    21.4Earnings (loss) from operations
    
    
    (2.9
    )
    
    
    (1.0
    )
    
    
    9.0
    
    
    
    1.9Interest expense
    
    
    1.8
    
    
    
    0.5
    
    
    
    4.1
    
    
    
    0.9Other income, net
    
    
    0.9
    
    
    
    0.3
    
    
    
    2.2
    
    
    
    0.5Earnings (loss) from continuing operations before
income tax expense
    
    
    (3.7
    )
    
    
    (1.0
    )
    
    
    7.1
    
    
    
    1.5Income tax expense
    
    
    0.4
    
    
    
    0.1
    
    
    
    3.4
    
    
    
    0.7Net earnings (loss) from continuing operations
    
    $
    (4.2
    )
    
    
    (1.2)
    %
    
    $
    3.7
    
    
    
    0.8
    %Net earnings (loss) from continuing operations
per common share  basic and diluted
    
    $
    (0.09
    )
    
    
    
    
    
    $
    0.08
      Quarter Ended March 31,2009
    
    
    2008Interest Income
    
    $
    0.7
    
    
    $
    1.7Other
    
    
    0.2
    
    
    
    0.5$
    0.9
    
    
    $
    2.2
    16




---



##### 



RETAIL RESULTS OF OPERATIONS
  Thomasville Stores (a)
    
    
    All Other Retail Stores(b)Quarter Ended March 31,
    
    
    Quarter Ended March 31,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    19.5
    
    
    $
    10.9
    
    
    $
    10.3
    
    
    $
    15.6Cost of sales
    
    
    11.4
    
    
    
    6.2
    
    
    
    6.5
    
    
    
    9.6Gross profit
    
    
    8.1
    
    
    
    4.7
    
    
    
    3.8
    
    
    
    6.0Selling, general, and administrative
expenses
    
    
    13.7
    
    
    
    6.2
    
    
    
    8.5
    
    
    
    11.3Operating
loss(e)
    
    $
    (5.6
    )
    
    $
    (1.5
    )
    
    $
    (4.7
    )
    
    $
    (5.3
    )Number of stores at end of period
    
    
    45
    
    
    
    23
    
    
    
    17
    
    
    
    21Number of closed locations at end of
period
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    21Same-store-sales(c):Quarterly percentage
    
    
    (22
    )%
    
    
    (d
    )
    
    
    (d
    )
    
    
    (d
    )Number of stores
    
    
    12
    
    
    
    (d
    )
    
    
    (d
    )
    
    
    (d
    )
 
 a)
    
    This supplemental data includes only Thomasville retail store locations that were open at the end of the quarter ended March 31, 2009 and March
31, 2008.b)
    
    This supplemental data includes all retail stores other than open Thomasville stores. This data also includes costs of $1.4 million and $2.2
million in the first quarter of 2009 and 2008, respectively, associated with closed retail locations which includes occupancy costs, lease
termination costs, and costs associated with closed store lease liabilities.c)
    
    Quarterly same-store-sales percentage is based on sales from stores that have been in operation and company-owned for at least 15 months.d)
    
    Not meaningful due to the small number of open stores in the same-store calculation.e)
    
    Operating loss does not include our wholesale profit on the
above retail net sales.  FINANCIAL CONDITION
 Liquidity
  17




---



##### 



Financing Arrangements
  March 31,
    
    
    December 31,2009
    
    
    2008Asset-based loan
    
    $
    145.0
    
    
    $
    190.0Less: current maturities
    
    
    2.0
    
    
    
    30.0Long-term debt
    
    $
    143.0
    
    
    $
    160.0
    18




---



##### 



CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
 Off-Balance Sheet Arrangements
  Funded Status of the Defined Benefit Pension Plan
  CRITICAL ACCOUNTING POLICIES
  19




---



##### 



RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  An Amendment of ARB No. 51. SFAS
160
 Employers
Disclosures about Postretirement Benefit Plan Assets
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  20




---



##### 



Item 4 CONTROLS AND PROCEDURES
 (a)
    
    Evaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of our disclosure
controls and procedures, as such terms are defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934
(the Exchange Act), as of March 31, 2009, the end of the period
covered by this Quarterly Report on Form 10-Q.Disclosure controls and procedures are controls and procedures
designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act, such as this report, is
recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms. Disclosure controls are also
designed to ensure that such information is accumulated and
communicated to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.As previously reported in our Annual Report on Form 10-K filed with
the SEC on March 2, 2009, management concluded that our company did
not maintain effective internal control over financial reporting as of
December 31, 2008, based on the criteria established in the Committee
of Sponsoring Organizations of the Treadway Commission (COSOs)
Internal Control  Integrated Framework as a result of a material
weakness in our accounting for income taxes. Specifically, management
determined that our controls and procedures were inadequate to ensure
that the necessary information, including a complete listing of all
deferred income tax assets subject to a valuation allowance, was
captured and communicated to those responsible for evaluating the
accounting implications. Solely as a result of this material weakness,
our management, including our Chief Executive Officer and  Chief
Financial Officer, concluded that our disclosure controls and
procedures were not effective as of March 31, 2009.

We have designed and begun implementation of procedures we believe will
 remediate the material weakness described above. The more
significant procedures include capturing
 a
 complete list, segregated by U.S. and   foreign tax jurisdictions, of all gross deferred
income tax
 assets subject to a valuation allowance and providing this list to those responsible for
evaluating the accounting implications.
Certain  of these procedures are performed on a
quarterly basis while others are performed only on an annual basis.
 The quarterly  procedures will be fully implemented in the second
quarter of fiscal
2009 and the annual procedures by the end of fiscal 2009.
In order to evaluate whether the material weakness has been remediated,
we must successfully test the effectiveness of the
new procedures over this period of time. Therefore, we expect the material weakness will be
remediated by the end of fiscal 2009.Notwithstanding the material weakness described above, our management
has concluded that our consolidated financial statements for the
periods covered by and included in this Quarterly Report on Form 10-Q
are fairly stated in all material respects in accordance with
accounting principles generally accepted in the United States for each
of the periods presented herein.(b)
    
    Changes in Internal Control over Financial ReportingOther than the changes discussed in (a) above, there have not been any
other changes in our internal control over financial reporting during
the first quarter ended March 31, 2009 that has materially affected,
or is reasonably likely to materially affect, our internal control
over financial reporting.
 21




---



##### 



PART II  OTHER INFORMATION
 Item 1. LEGAL PROCEEDINGS
    
 Item 1A. RISK FACTORS
  
 Item 5. OTHER INFORMATION
  22




---



##### 



Item 6. EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceIndex
    
    
    
    with this
    
    
    
    Filing DateNo.
    
    Exhibit Description
    
    Form 10-Q
    
    Form
    
    with the SEC
    
    Exhibit No.3.1
    
    Restated
Certificate of
Incorporation of
the Company, as
amended
    
    
    
    10-Q
    
    May 14, 2002
    
    
    33.2
    
    By-Laws of the
Company, as amended
effective as of
August 7, 2008
    
    
    
    8-K
    
    August 13, 2008
    
    
    3.110.1
    
    First Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective December
31, 2005
    
    X10.2
    
    Second Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective January
1, 2005
    
    X10.3
    
    Third Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective March 14,
2008
    
    X10.4
    
    Form of Restricted Stock Award
Agreement under 2008 Incentive Plan
    
    X10.5
    
    Form of Nonqualified  Stock Option
Agreement under 2008 Incentive Plan
    
    X10.6
    
    Form of Performance Based Restricted Stock
Award
Agreement under 2008 Incentive Plan
    
    X31.1
    
    Certification of
Ralph P.
Scozzafava,
Chairman of the
Board and Chief
Executive Officer
of the Company,
Pursuant to Rule
13a-14(a)/15d-14(a),
as Adopted
Pursuant to Section
302 of the
Sarbanes-Oxley Act
of 2002
    
    X31.2
    
    Certification of
Steven G. Rolls,
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to Rule
13a-14(a)/15d-14(a),
as Adopted
Pursuant to Section
302 of the
Sarbanes-Oxley Act
of 2002
    
    X32.1
    
    Certification of
Ralph P.
Scozzafava,
Chairman of the
Board and Chief
Executive Officer
of the Company,
Pursuant to 18
U.S.C. Section
1350, as Adopted
Pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
    
    X32.2
    
    Certification of
Steven G. Rolls,
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to 18
U.S.C. Section
1350, as Adopted
Pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
    
    X
 23




---



##### 



Furniture Brands International, Inc.
(Registrant)By:
    /s/ Steven G. RollsSteven G. RollsChief Financial Officer
(On behalf of the registrant and as principal
Principal Financial Officer)

Date: May 8, 2009 24




---



##### 



Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceIndex
    
    
    
    with this
    
    
    
    Filing DateNo.
    
    Exhibit Description
    
    Form 10-Q
    
    Form
    
    with the SEC
    
    Exhibit No.3.1
    
    Restated
Certificate of
Incorporation of
the Company, as
amended
    
    
    
    10-Q
    
    May 14, 2002
    
    
    33.2
    
    By-Laws of the
Company, as amended
effective as of
August 7, 2008
    
    
    
    8-K
    
    August 13, 2008
    
    
    3.110.1
    
    First Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective December
31, 2005
    
    X10.2
    
    Second Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective January
1, 2005
    
    X10.3
    
    Third Amendment to
the Furniture
Brands Supplemental
Executive
Retirement Plan,
effective March 14,
2008
    
    X10.4
    
    Form of Restricted Stock Award
Agreement under 2008 Incentive Plan
    
    X10.5
    
    Form of Nonqualified  Stock Option
Agreement under 2008 Incentive Plan
    
    X10.6
    
    Form of Performance  Based Restricted Stock
Award
Agreement under 2008 Incentive Plan
    
    X31.1
    
    Certification of
Ralph P.
Scozzafava,
Chairman of the
Board and Chief
Executive Officer
of the Company,
Pursuant to Rule
13a-14(a)/15d-14(a),
as Adopted
Pursuant to Section
302 of the
Sarbanes-Oxley Act
of 2002
    
    X31.2
    
    Certification of
Steven G. Rolls,
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to Rule
13a-14(a)/15d-14(a),
as Adopted
Pursuant to Section
302 of the
Sarbanes-Oxley Act
of 2002
    
    X32.1
    
    Certification of
Ralph P.
Scozzafava,
Chairman of the
Board and Chief
Executive Officer
of the Company,
Pursuant to 18
U.S.C. Section
1350, as Adopted
Pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
    
    X32.2
    
    Certification of
Steven G. Rolls,
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to 18
U.S.C. Section
1350, as Adopted
Pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
    
    X
 25