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, 2010
 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
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    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 (unaudited):Consolidated Balance Sheets:
    
    
    3March 31, 2010December 31, 2009Consolidated Statements of Operations:
    
    
    4Three Months Ended March 31, 2010Three Months Ended March 31, 2009Consolidated Statements of Cash Flows:
    
    
    5Three Months Ended March 31, 2010Three Months Ended March 31, 2009Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 6. Exhibits
    
    
    27
  2




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##### 



PART I
 Item 1. Financial Statements
 FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    60,524
    
    
    $
    83,872Receivables, less allowances of $20,738 ($26,225 at December 31, 2009)
    
    
    128,908
    
    
    
    125,513Income tax refund receivable
    
    
    58,976
    
    
    
    58,976Inventories
    
    
    231,392
    
    
    
    226,078Prepaid expenses and other current assets
    
    
    9,199
    
    
    
    9,274Total current assets
    
    
    488,999
    
    
    
    503,713Property, plant, and equipment, net
    
    
    130,958
    
    
    
    134,352Trade names
    
    
    87,608
    
    
    
    87,608Other assets
    
    
    37,686
    
    
    
    32,432Total assets
    
    $
    745,251
    
    
    $
    758,105LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    78,000
    
    
    $
    17,000Accounts payable
    
    
    88,279
    
    
    
    83,813Accrued employee compensation
    
    
    22,686
    
    
    
    21,036Other accrued expenses
    
    
    51,565
    
    
    
    54,912Total current liabilities
    
    
    240,530
    
    
    
    176,761Long-term debt
    
    
    
    
    
    
    78,000Deferred income taxes
    
    
    26,359
    
    
    
    25,737Pension liability
    
    
    135,372
    
    
    
    135,557Other long-term liabilities
    
    
    74,536
    
    
    
    79,259Shareholders 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, 2010 and December 31, 2009
    
    
    56,483
    
    
    
    56,483Paid-in capital
    
    
    229,054
    
    
    
    224,133Retained earnings
    
    
    271,326
    
    
    
    267,829Accumulated other comprehensive loss
    
    
    (109,531
    )
    
    
    (111,471
    )Treasury stock at cost 8,007,486 shares at March 31, 2010 and 7,797,319
shares at December 31, 2009
    
    
    (178,878
    )
    
    
    (174,183
    )Total shareholders equity
    
    
    268,454
    
    
    
    262,791Total liabilities and shareholders equity
    
    $
    745,251
    
    
    $
    758,105
  3




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FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share information)
(unaudited)
 Three Months Ended March 31,2010
    
    
    2009Net sales
    
    $
    322,391
    
    
    $
    356,871Cost of sales
    
    
    237,942
    
    
    
    276,530Gross profit
    
    
    84,449
    
    
    
    80,341Selling, general, and administrative expenses
    
    
    79,864
    
    
    
    83,214Operating earnings (loss)
    
    
    4,585
    
    
    
    (2,873
    )Interest expense
    
    
    844
    
    
    
    1,788Other income, net
    
    
    279
    
    
    
    926Earnings (loss) before income tax expense
    
    
    4,020
    
    
    
    (3,735
    )Income tax expense
    
    
    523
    
    
    
    441Net earnings (loss)
    
    $
    3,497
    
    
    $
    (4,176
    )Net earnings (loss) per common share  basic and diluted:
    
    $
    0.07
    
    
    $
    (0.09
    )Weighted average shares of common stock outstanding  basic
    
    
    48,297
    
    
    
    48,322Weighted average shares of common stock outstanding  diluted
    
    
    48,356
    
    
    
    48,322
  4




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##### 



FURNITURE BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from operating activities:Net earnings (loss)
    
    $
    3,497
    
    
    $
    (4,176
    )Adjustments to reconcile net earnings (loss) to net
cash used in operating activities:Depreciation and amortization
    
    
    6,105
    
    
    
    6,222Compensation expense related to stock option
grants and restricted stock awards
    
    
    226
    
    
    
    1,103Provision (benefit) for deferred income taxes
    
    
    (87
    )
    
    
    40Other, net
    
    
    (1,530
    )
    
    
    (614
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,395
    )
    
    
    7,411Income tax refund receivable
    
    
    
    
    
    
    9,285Inventories
    
    
    (5,314
    )
    
    
    27,439Prepaid expenses and other assets
    
    
    (292
    )
    
    
    (3,122
    )Accounts payable and other accrued expenses
    
    
    2,769
    
    
    
    (46,046
    )Other long-term liabilities
    
    
    (2,702
    )
    
    
    (6,807
    )Net cash used in operating activities
    
    
    (723
    )
    
    
    (9,265
    )Cash flows from investing activities:Additions to property, plant, equipment, and software
    
    
    (7,494
    )
    
    
    (4,248
    )Proceeds from the disposal of assets
    
    
    1,869
    
    
    
    51Net cash used in investing activities
    
    
    (5,625
    )
    
    
    (4,197
    )Cash flows from financing activities:Payments of long-term debt
    
    
    (17,000
    )
    
    
    (45,000
    )Other
    
    
    
    
    
    
    (10
    )Net cash used in financing activities
    
    
    (17,000
    )
    
    
    (45,010
    )Net decrease in cash and cash equivalents
    
    
    (23,348
    )
    
    
    (58,472
    )Cash and cash equivalents at beginning of period
    
    
    83,872
    
    
    
    106,580Cash and cash equivalents at end of period
    
    $
    60,524
    
    
    $
    48,108Supplemental disclosure:Cash payments (refunds) for income taxes, net
    
    $
    103
    
    
    $
    (9,380
    )Cash payments for interest expense
    
    $
    866
    
    
    $
    2,329
  5




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FURNITURE BRANDS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 BASIS OF PRESENTATION
   RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
   Three Months Ended March 31,2010
    
    
    2009Restructuring charges:Contract termination costs
    
    $
    614
    
    
    $
    Termination benefits
    
    
    33
    
    
    
    418Closed store occupancy and lease costs
    
    
    932
    
    
    
    1,395Loss (gain) on the sale of assets
    
    
    (928
    )
    
    
    651
    
    
    
    1,813Impairment charges
    
    
    67
    
    
    
    $
    718
    
    
    $
    1,813Statement of Operations classification:Cost of sales
    
    $
    33
    
    
    $
    418Selling, general, and administrative expenses
    
    
    685
    
    
    
    1,395$
    718
    
    
    $
    1,813
  6




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Three Months Ended March 31,2010
    
    
    2009Accrual for closed store lease liabilities at beginning of period
    
    $
    26,645
    
    
    $
    27,918Charges to expense
    
    
    478
    
    
    
    278Less cash payments
    
    
    2,549
    
    
    
    1,527Accrual for closed store lease liabilities at end of period
    
    $
    24,574
    
    
    $
    26,669
   MinimumLeasePayments -Year
    
    Closed Stores2010
    
    $
    6,4072011
    
    
    7,8732012
    
    
    8,0462013
    
    
    7,9402014
    
    
    6,828thereafter
    
    
    5,111$
    42,205
  Three Months Ended March 31,2010
    
    
    2009Accrual for termination benefits at beginning of period
    
    $
    4,138
    
    
    $
    10,012Charges to expense
    
    
    33
    
    
    
    418Less cash payments
    
    
    2,226
    
    
    
    7,822Accrual for termination benefits at end of period
    
    $
    1,945
    
    
    $
    2,608
  7




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##### 



INVENTORIES
  March 31,
    
    
    December 31,2010
    
    
    2009Finished products
    
    $
    145,351
    
    
    $
    142,982Work-in-process
    
    
    17,268
    
    
    
    15,320Raw materials
    
    
    68,773
    
    
    
    67,776$
    231,392
    
    
    $
    226,078
 PROPERTY, PLANT, AND EQUIPMENT
  March 31,
    
    
    December 31,2010
    
    
    2009Land
    
    $
    11,375
    
    
    $
    11,442Buildings and improvements
    
    
    191,066
    
    
    
    190,760Machinery and equipment
    
    
    248,323
    
    
    
    251,046450,764
    
    
    
    453,248Less accumulated depreciation
    
    
    319,806
    
    
    
    318,896$
    130,958
    
    
    $
    134,352
  LONG-TERM DEBT
  March 31,
    
    
    December 31,2010
    
    
    2009Asset-based loan
    
    $
    78,000
    
    
    $
    95,000Less: current maturities
    
    
    78,000
    
    
    
    17,000Long-term debt
    
    $
    
    
    
    $
    78,000
     8




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LIQUIDITY
     9




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##### 



EMPLOYEE BENEFITS
  Three Months Ended March 31,2010
    
    
    2009Defined benefit plans
    
    $
    2,714
    
    
    $
    1,727Defined contribution plan (401k plan)  company match
    
    
    1,673
    
    
    
    1,981Other
    
    
    130
    
    
    
    96$
    4,517
    
    
    $
    3,804
  Three Months Ended March 31,2010
    
    
    2009Service cost
    
    $
    605
    
    
    $
    725Interest cost
    
    
    6,464
    
    
    
    6,436Expected return on plan assets
    
    
    (6,227
    )
    
    
    (6,538
    )Net amortization and deferral
    
    
    1,872
    
    
    
    1,104Net periodic pension expense
    
    $
    2,714
    
    
    $
    1,727
      10




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STOCK OPTIONS, RESTRICTED STOCK, AND RESTRICTED STOCK UNITS
  WeightedAverageExerciseShares
    
    
    PriceOutstanding at December 31, 2009
    
    
    3,072,717
    
    
    $
    18.06Granted
    
    
    271,500
    
    
    
    5.27Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (791,575
    )
    
    
    15.77Outstanding at March 31, 2010
    
    
    2,552,642
    
    
    $
    17.41The weighted average exercise price and the weighted average fair value per share for stock
options granted during the three months ended March 31, 2010 was $5.27 and $3.53, respectively. The
fair value of each stock option is estimated on the date of grant using the Black-Scholes option
pricing model. The following weighted-average assumptions were used to determine the fair value of
options granted in the three months ended March 31, 2010:Risk-free interest rate
    
    
    
    
    
    
    1.9
    %Expected dividend yield
    
    
    
    
    
    
    0
    %Expected life (in years)
    
    
    
    
    
    
    4.0Expected volatility
    
    
    
    
    
    
    94.3
    %The risk-free interest rate is based upon U.S. Treasury Securities with a term similar to the
expected life of the option grant. The dividend yield is calculated based upon the dividend rate on
the date of the grant. Expected life is equal to the average expected term from the grant date
until exercise. Expected volatility is calculated based upon the historical volatility over a
period equal to the expected life of the option grant.A summary of non-vested restricted stock activity for the three months ended March 31, 2010 is
presented below:WeightedAverageGrant-DateShares
    
    
    Fair ValueOutstanding at December 31, 2009
    
    
    197,553
    
    
    $
    9.48Granted
    
    
    
    
    
    
    Vested
    
    
    (9,163
    )
    
    
    6.55Forfeited
    
    
    (13,667
    )
    
    
    11.77Outstanding at March 31, 2010
    
    
    174,723
    
    
    $
    9.46
  11




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Units with
    
    
    Units withShare Price
    
    
    Share PriceObjective of
    
    
    Objective of$6.26
    
    
    $9.39Outstanding at December 31, 2009
    
    
    1,259,958
    
    
    
    1,259,958Granted
    
    
    
    
    
    
    15,000Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at March 31, 2010
    
    
    1,259,958
    
    
    
    1,274,958
   Risk-free interest rate
    
    
    2.0
    %Expected dividend yield
    
    
    0.0
    %Expected volatility
    
    
    92.2
    %
  EARNINGS PER SHARE
  Three Months Ended March 31,2010
    
    
    2009Weighted average shares used for basic earnings (loss) per common share
    
    
    48,297,000
    
    
    
    48,322,000Effect of dilutive stock options and restricted stock
    
    
    59,000
    
    
    
    Weighted average shares used for diluted earnings (loss) per common share
    
    
    48,356,000
    
    
    
    48,322,000
  12




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INCOME TAXES
       OTHER LONG-TERM LIABILITIES
  13




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OTHER COMPREHENSIVE INCOME (LOSS)
  Three Months Ended March 31,2010
    
    
    2009Net earnings
(loss)
    
    $
    3,497
    
    
    $
    (4,176
    )Other
comprehensive income:Pension liability
    
    
    1,870
    
    
    
    1,104Foreign currency translation
    
    
    779
    
    
    
    (671
    )2,649
    
    
    
    433Income tax expense
    
    
    (709
    )
    
    
    (27
    )Other
comprehensive income
    
    
    1,940
    
    
    
    406Total
comprehensive income (loss)
    
    $
    5,437
    
    
    $
    (3,770
     )The components of accumulated other comprehensive loss, presented net of tax, are as follows:March 31,
    
    
    December 31,2010
    
    
    2009Pension liability
    
    $
    (111,279
    )
    
    $
    (112,440
    )Foreign currency translation
    
    
    1,748
    
    
    
    969$
    (109,531
    )
    
    $
    (111,471
    )
 CONTINGENT LIABILITIES
    14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  Overview
             15




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Business Trends and Strategy
    
    
    Development of a multi-stage product development process that blends the decades of
experience of our designers, merchandisers, marketers and dealers with proven consumer
research methodologies that are new to the furniture industry.
 
    
    Supporting our retail partners with national advertising, innovative promotions and a
web presence that drives consumer traffic to their locations.
 
    
    Reducing manufacturing costs through the implementation of lean and cellular
manufacturing methods and through strategic sourcing relationships with suppliers that
leverage the companys scale.
  16




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Results of Operations
  Three Months Ended March 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of(in millions, except per share data)
    
    Dollars
    
    
    Net Sales
    
    
    Dollars
    
    
    Net SalesNet sales
    
    $
    322.4
    
    
    
    100.0
    %
    
    $
    356.9
    
    
    
    100.0
    %Cost of sales
    
    
    237.9
    
    
    
    73.8
    
    
    
    276.5
    
    
    
    77.5Gross profit
    
    
    84.4
    
    
    
    26.2
    
    
    
    80.3
    
    
    
    22.5Selling, general, and administrative expenses
    
    
    79.9
    
    
    
    24.8
    
    
    
    83.2
    
    
    
    23.3Earnings (loss) from operations
    
    
    4.6
    
    
    
    1.4
    
    
    
    (2.9
    )
    
    
    (0.8
    )Interest expense
    
    
    0.8
    
    
    
    0.3
    
    
    
    1.8
    
    
    
    0.5Other income, net
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.9
    
    
    
    0.3Earnings (loss) before income tax expense
    
    
    4.0
    
    
    
    1.2
    
    
    
    (3.7
    )
    
    
    (1.0
    )Income tax expense
    
    
    0.5
    
    
    
    0.2
    
    
    
    0.4
    
    
    
    0.1Net earnings (loss)
    
    $
    3.5
    
    
    
    1.1
    %
    
    $
    (4.2
    )
    
    
    (1.2
    )%Net earnings (loss) per common share  basic
and diluted
    
    $
    0.07
    
    
    
    
    
    
    $
    (0.09
    )
 Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
      17




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Retail Results of Operations
  Thomasville Stores (a)
    
    
    All Other Retail Locations (b)Three Months Ended March 31,
    
    
    Three Months Ended March 31,(Dollars in millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    25.6
    
    
    $
    19.5
    
    
    $
    10.0
    
    
    $
    10.3Cost of sales
    
    
    14.6
    
    
    
    11.4
    
    
    
    5.9
    
    
    
    6.5Gross profit
    
    
    11.0
    
    
    
    8.1
    
    
    
    4.1
    
    
    
    3.8Selling, general and administrative
expenses  open stores
    
    
    14.8
    
    
    
    13.7
    
    
    
    7.1
    
    
    
    7.1Operating loss  open stores (d)
    
    $
    (3.8
    )
    
    $
    (5.6
    )
    
    $
    (3.0
    )
    
    $
    (3.4
    )Selling, general and administrative
expenses  closed stores
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    1.4Operating loss (d)
    
    $
    (3.8
    )
    
    $
    (5.6
    )
    
    $
    (4.0
    )
    
    $
    (4.8
    )Number of open stores at end of period
    
    
    51
    
    
    
    45
    
    
    
    21
    
    
    
    24Number of closed locations at end of period
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    26Same-store-sales (c):Percentage increase (decrease)
    
    
    16
    %
    
    
    (22
    )%
    
    
    (e
    )
    
    
    (e
    )Number of stores
    
    
    40
    
    
    
    12
 
 a)
    
    This supplemental data includes company-owned Thomasville retail store locations that
were open during the three months ended March 31, 2010 and 2009.b)
    
    This supplemental data includes all company-owned retail locations other than open
Thomasville stores (all other retail locations). This data also includes costs of
$0.9 million in the three months ended March 31, 2010 and $1.4 million in the three months
ended March 31, 2009 associated with closed retail locations which includes occupancy
costs, lease termination costs, and costs associated with closed store lease liabilities.c)
    
    The same-store-sales percentage is based on sales from stores that have been in
operation and company-owned for at least 15 months.d)
    
    Operating loss does not include our wholesale profit on the above retail net sales.e)
    
    Same-store-sales information is not meaningful and is not presented for all other
retail locations because results include retail store locations of multiple brands,
including ten Drexel stores, two Lane stores, one Henredon store, one Broyhill store, and seven designer showrooms at
March 31, 2010; and it is not one of our long-term strategic initiatives to grow
company-owned retail store locations for these non-Thomasville brands.  18




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Financial Condition and Liquidity
 Liquidity
        19




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##### 



Financing Arrangements
  March 31,
    
    
    December 31,2010
    
    
    2009Asset-based loan
    
    $
    78.0
    
    
    $
    95.0Less: current maturities
    
    
    78.0
    
    
    
    17.0Long-term debt
    
    $
    
    
    
    $
    78.0
         20




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Funded Status of Qualified Defined Benefit Pension Plan
     Contractual Obligations and Other Commitments
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
  21




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##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  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, 2010, 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.Based on this evaluation, management, including our Chief Executive Officer and Chief
Financial Officer, has concluded that our disclosure controls and procedures were effective
as of March 31, 2010.b)
    
    Changes in Internal Control over Financial ReportingThere have not been any changes in our internal control over financial reporting during the
quarter ended March 31, 2010, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
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PART II
 Item 1. Legal Proceedings
   Item 1A. Risk Factors
 We describe the risk factors associated with our business below. This description includes any
material changes to and supersedes the description of the risk factors associated with our business
previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2009. Additional risks and uncertainties that we are unaware of or that we currently
deem immaterial also may become important factors that affect our company. You should carefully
consider the risks described below in addition to all other information provided to you in this
document, in our Annual Report on Form 10-K for the year ended December 31, 2009, and in our
subsequent filings with the Securities and Exchange Commission. Any of the following risks could
materially and adversely affect our business, results of operations, and financial condition.
 The continued economic downturn could result in a decrease in our future sales, earnings, and
liquidity.
  Depressed market returns could have a negative impact on the return on plan assets for our
qualified pension plan, which may require significant funding.
  Loss of market share and other financial or operational difficulties due to competition would
likely result in a decrease in our sales and earnings.
  23




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An inability to forecast demand or respond to changes in consumer tastes and fashion trends in a
timely manner could result in a decrease in our future sales and earnings.
  A failure to achieve our projected mix of product sales could result in a decrease in our future
earnings.
  Business failures of large dealers, a group of customers or our own retail stores could result in a
decrease in our future sales and earnings.
  Inventory write-downs or write-offs could result in a decrease in our earnings.
  Sales distribution realignments can result in a decrease in our near-term sales and earnings.
  Manufacturing realignments and cost savings programs could result in a decrease in our near-term
earnings and liquidity.
  24




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Reliance on offshore sourcing of our products subjects us to changes in local government
regulations and currency fluctuations which could result in a decrease in our earnings.
  Our operations depend on production facilities located outside the United States which are subject
to increased risks of disrupted production which could cause delays in shipments, loss of
customers, and decreases in sales and earnings.
  Fluctuations in the price, availability, and quality of raw materials could cause delays in
production and could increase the costs of materials which could result in a decrease in our sales
and earnings.
  We are subject to litigation, environmental regulations, and governmental matters that could
adversely impact our sales, earnings, and liquidity.
  We may not realize the anticipated benefits of mergers, acquisitions, or dispositions.
  Loss of key personnel or the inability to hire qualified personnel could adversely affect our
business.
  25




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Impairment of our trade name intangible assets would result in a decrease in our earnings and net
worth.
  Provisions in our certificate of incorporation and our shareholders rights plan could discourage a
takeover and could result in a decrease in a potential acquirers valuation of our common stock.
  A change in control could limit the use of our net operating loss carry forwards and decrease a
potential acquirers valuation of our businesses, both of which could decrease our liquidity and
earnings.
  If we and our dealers are not able to open new stores or effectively manage the growth of these
stores, our ability to grow sales and profitability could be adversely affected.
  We may not be able to comply with our debt agreement or secure additional financing on favorable
terms to meet our future capital needs, which could significantly adversely impact our liquidity
and our business .
   26




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Item 6. Exhibits
 Incorporated by ReferenceFiled with the Form
    
    
    
    Filing Date withExhibit Index No.
    
    Exhibit Description
    
    10-Q
    
    Form
    
    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
    
    
    3.13.3
    
    Certificate of
Designation of
Series B Junior
Participating
Preferred Stock
    
    
    
    8-K
    
    August 4, 2009
    
    
    3.14.1
    
    Amended and
Restated
Stockholders Rights
Agreement, dated as
of February 26,
2010, between the
Company and
American Stock
Transfer and Trust
Company, LLC, as
Rights Agent
    
    
    
    8-K
    
    March 1, 2010
    
    
    4.110.1*
    
    Amended and
Restated Executive
Employment
Agreement dated as
of February 4,
2010, by and
between the Company
and Ralph P.
Scozzafava
    
    
    
    8-K
    
    February 10, 2010
    
    
    10.110.2*
    
    Executive Severance
Plan, amended and
restated effective
July 1, 2010.
    
    
    
    8-K
    
    March 1, 2010
    
    
    10.131.1
    
    Certification of
Chief Executive
Officer of the
Company, Pursuant
to Rule
13a-14(a)/15d-14(a)
    
    X31.2
    
    Certification of
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to Rule
13a-14(a)/15d-14(a)
    
    X32.1
    
    Certification of
Chief Executive
Officer of the
Company, Pursuant
to 18 U.S.C.
Section 1350
    
    X32.2
    
    Certification of
Chief Financial
Officer (Principal
Financial Officer)
of the Company,
Pursuant to 18
U.S.C. Section 1350
    
    X
 
 *
    
    Exhibit is a management contract or compensatory plan, contract or arrangement. 27




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SIGNATURE
  Furniture Brands International, Inc.
(Registrant)By:
    /s/ Steven G. RollsSteven G. RollsChief Financial Officer
(On behalf of the registrant and as Principal Financial Officer)
 Date: May 7, 2010 28