This quarter the weakness was most pronounced at Broyhill. Several of our Brands, including Thomasville, saw year over year increases in sales, but those increases were not in sufficient amount to offset the weakness at the middle-end
W. G. (Mickey) Holliman, Chairman and Chief Executive Officer

Furniture Brands International (FBN) announced net sales for the second quarter of 2005 were $593.8 million, compared with $593.1 million in the second quarter of 2004, an increase of 0.1%. Net earnings for the second quarter were $9.6 million, down from $16.6 million reported for the second quarter of last year.

W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: "Business conditions remained challenging during the quarter. We saw strength at one Brand offset by weakness at another. This quarter the weakness was most pronounced at Broyhill. Several of our Brands, including Thomasville, saw year over year increases in sales, but those increases were not in sufficient amount to offset the weakness at the middle-end.

"We will continue to drive sales by differentiating our Brands from the competition and by focusing on improving the consumers' furniture shopping experience. We will also seek to improve our earnings performance by identifying the best balance between lower cost sourcing opportunities and domestic manufacturing efficiencies, and by optimizing our logistic efforts. And we will continue to leverage our size and reduce costs by consolidating back-office functions and by pursuing shared services across the Brands."

Mr. Holliman continued, "The Company continues to generate strong cash flow from operations. Since the start of the year the Company has repurchased 1.4 million shares of our common stock at an average cost of $21.18. This brings to 4.8 million the number of shares repurchased since the first quarter of 2004. We expect to remain in the market buying stock on an opportunistic basis using available free cash flow. Our long-term debt, at about $300 million, remains at its target level."

Outlook

Mr. Holliman concluded, "Business conditions generally remain weak and inconsistent. We are dealing with a number of transitional issues that will, in the near term, be a drag on our earnings. And we see nothing in the marketplace that indicates a meaningful turnaround in business this year. Specifically, with reference to the third quarter we expect net sales to be off in the low single digits against the third quarter of last year and diluted net earnings per common share to be in the 14 to 18 cent range, which includes the effect of 6 cents in previously announced restructuring, asset impairment and severance charges. As is our practice, we will provide an update on our third quarter expectations in early September."