We are managing around unprecedented raw material price increases, particularly with reference to polyurethane foam, a situation that will likely continue through the fourth quarter
W. G. (Mickey) Holliman, Chairman and CEO

Furniture Brands International (FBN) announced net sales for the third quarter of 2005 were $557.9 million, compared with $574.8 million in the third quarter of 2004, a decrease of 2.9%. Net earnings for the third quarter were $9.9 million, down from $19.4 million reported for the third quarter of last year. Diluted net earnings per common share were $0.19 as compared to $0.36 in the third quarter of last year.

W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: "As has been the case for some time, we continue to see a difference in both revenues and in operating performance across our Brands. Relatively strong business at higher-end Brands like Thomasville has been offset by continuing weakness in the middle-price Brands, Broyhill and Lane. In the near-term, we are aggressively addressing raw material and other costs to bring more value to our product line and to improve the competitive position of all of our Brands.

"In the longer-term, we continue to pursue the key strategic imperatives that will drive both growth and profitability across the company. The consolidation of the back office and manufacturing functions of our high-end brands is on plan and our logistics and supply chain processes are being streamlined, so that our senior management team can remain focused on building our Brands through product development, marketing and consumer research."

Mr. Holliman continued, "We continue to generate strong cash flow from operations. During the third quarter we repurchased 1.4 million shares of our common stock at an average cost of $19.44. This represents the largest number of shares repurchased in a single quarter since we began the repurchase program in January of 2004, doubling what was repurchased in the first half of the year. We expect to remain in the market buying stock on an opportunistic basis using available free cash flow."

Mr. Holliman concluded, "Business conditions in the middle-price points remain challenging, and we see nothing in the marketplace to indicate improvement in this segment in the near term. Additionally, we are managing around unprecedented raw material price increases, particularly with reference to polyurethane foam, a situation that will likely continue through the fourth quarter. With respect to the fourth quarter, we expect net sales to be off low single digits versus the year ago period and net earnings to be in the 19 to 23 cent range, which includes the effect of 4 cents in restructuring, asset impairment and severance charges. As is our practice, we will provide an update on our fourth quarter expectations in early December."