Furniture Brands International Inc
Furniture Brands International — Proxy Contest (April 2008)
17 slides from Furniture Brands International's proxy contest presentation, Apr 29, 2008
Slide 1: Sun Capital Partners' Nominees for the Board of Furniture Brands International, Inc.
Sun Capital Partners’ Nominees for the Board of Furniture Brands International, Inc. April 16, 2008
Slide 2: Disclaimer
1 Disclaimer This presentation is for general informational purposes only. It does not have regard to the specific investment objective, financial situation, suitability, or the particular need of any specific person who may receive this presentation, and should not be taken as advice on the merits
Slide 3: Disclaimer
2 Disclaimer This presentation does not recommend the purchase or sale of any security. Under no circumstances is this presentation to be used or considered an offer to sell or a solicitation of an offer to buy any security. The members of the SC Group and their affiliates currently hold a substanti
Slide 4: Who is Sun Capital Partners?
3 Who is Sun Capital Partners? • Private investment firm focused on turnarounds, underperformers and special situations • Manage four Private Equity Funds and Sun Capital Securities Fund (a hybrid hedge fund) • $10 billion of equity capital: $8.5 billion Private Equity and $1.5 billion Securities Fu
Slide 5: Why Sun Capital Is Nominating New Directors
4 Why Sun Capital Is Nominating New Directors • Shareholder since January 2007 with approximately 9.45% ownership position; management and Board have a stake of less than 1.0% (excluding stock options and restricted stock) • We are very concerned about Furniture Brands’ ability to implement effectiv
Slide 6: Current Board Does Not Inspire Confidence
5 Current Board Does Not Inspire Confidence • Average Board membership is ten years; range is four to 21 years (excluding new CEO) • We believe the precipitous decline in earnings since 2002 despite relatively stable sales evidences operational deficiency to properly restructure the Company and effe
Slide 7: Sun Capital's Three Board Nominees
6 Sun Capital’s Three Board Nominees Alan Schwartz • Sterling Professor at Yale since 1987; Yale Law School and Yale School of Management • Renowned expert in corporate governance, mergers and acquisitions and commercial transactions • Director of Cleveland-Cliffs, Inc.; Finance, Governance and Stra
Slide 8: Inadequate Response to Serious Global Competitive Threats
7 Inadequate Response to Serious Global Competitive Threats • Slow rationalizing high cost infrastructure = erosion of market share and profitability • Unable to leverage scale in global sourcing = disadvantageous product cost position • Failure to implement efficient supply chain = surplus working
Slide 9: Absolute and Relative Price Performance
8 • Furniture Brands’ stock price fell 56% over the five years preceding Samson Holding revealing a 14.9% equity position and business combination interest on October 1, 2007; stock began to trade on prospect of a transaction, as well as fundamental performance from this point • From a peak in May 2
Slide 10: Disappointing Relative Financial Results
9 • Ethan Allen and Stanley Furniture have been more profitable and have achieved higher margins than Furniture Brands in each of past five years, and particularly in 2007 • This has occurred despite smaller scale and less diversified brand portfolios of peers • Peers also impacted by industry trans
Slide 11: Deficient Operational Execution Is To Blame
10 $2,459 $2,447 $2,387 $2,418 $2,146 $2,434 $2,000 $2,200 $2,400 $2,600 2002A 2003A 2004A 2005A 2006A 2007A $2.11 $1.86 $1.37 $1.13 $1.88 ($0.48) ($1.00) $0.00 $1.00 $2.00 $3.00 2002A 2003A 2004A 2005A 2006A 2007A $252 $214 $166 $134 $12 $234 $0 $50 $100 $150 $200 $250 $300 2002A 2003A 2004A 2005A
Slide 12: Balance Sheet And Liquidity Deterioration
11 1.6x 1.1x 1.3x 1.2x 7.9x 2.2x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 2002 2003 2004 2005 2006 2007 Net Debt to Adjusted EBITDA(1)(2) • Balance sheet is now highly levered relative to cash flow with net debt at 7.9x 2007 EBITDA • Fixed charge covenant issue led banks to reduce availability by $75 million
Slide 13: Latest Turnaround Plan is More of the Same
12 Latest Turnaround Plan is More of the Same • Numerous aspects of the “new” turnaround plan presented in October 2007 and reiterated in April 2008 were also communicated to investors in June 2005; no significant benefits realized to date given poor execution • Three years later, the Company has st
Slide 14: Board Dismissed Two Credible Acquisition Proposals
13 Board Dismissed Two Credible Acquisition Proposals • The Board appears to have given very little consideration to at least two credible proposals to acquire the Company at premium prices to the stock at that time • We believe the Board’s failure to properly evaluate the immediate and certain valu
Slide 15: What Is Furniture Brands' Unaffected Stock Price?
14 50 75 100 125 150 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 What Is Furniture Brands’ Unaffected Stock Price? Relative Performance Since Trading Day Prior to Samson’s Announced Position and Strategic Interest on 10/1/07 (9/28/07 to date) Note: Market data as of April 15, 2008 (1) Co
Slide 16: Shareholders Now Have a Choice
15 Shareholders Now Have a Choice Elect Sun Capital’s nominees to the Board in order to protect and maximize value for all shareholders • Our three nominees are highly qualified and will bring corporate governance, as well as financial and operational resources to the Company • Our slate is committe
Slide 17: Sun Capital Partners' Nominees for the Board of Furniture Brands International, Inc.
16 April 16, 2008 Sun Capital Partners’ Nominees for the Board of Furniture Brands International, Inc.
Furniture Brands International — Proxy Contest (April 2008) on 6ix