CONFORMED
Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant To Rule 13a-16 Or 15d-16
Of The
Securities Exchange Act of 1934
For the month of May 2004 Commission File Number 1-11854
NATUZZI S.p.A.
(Translation of Registrant's name into English)
Via Iazzitiello 47
70029 Santeramo, Italy
(Address of principal office)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F x Form 40-F
---- ----
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
(Check One) Yes No X
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b). 82- .)
Natuzzi Announces First Quarter 2004 Financial Results
and New Incentive Plan for Management
SANTERAMO IN COLLE, BARI, Italy--(BUSINESS WIRE)--May 24,
2004--Natuzzi S.p.A. (NYSE:NTZ)
-- Net Sales Increased 4.5% over First Quarter 2003
-- Units Sold Grew 9.6% over the Prior Year's Quarter
-- Net Profit Margin Declined to 4.9% from 8.1% over the Prior
Year's Quarter
-- New Incentive Plan for Group Management Proposed for Approval
to the Next Shareholders' Meeting
Natuzzi S.p.A.
FIRST QUARTER 2004
FINANCIAL RESULTS TELECONFERENCE
Senior management will review first-quarter 2004 financial results.
The review will be followed by a question and answer session.
Pasquale Natuzzi
Chairman of the Board and Chief Executive Officer
Giuseppe Desantis
Vice Chairman of the Board
Nicola Dell'Edera
Finance Director
and
Fred Starr
President and Chief Executive Officer, Natuzzi Americas
Tuesday, May 25, 2004
---------------------
10:00 a.m. (New York time)
3:00 p.m. (London time)
4:00 p.m. (Italian time)
Replay of this event will be available on our web-site
www.natuzzi.com
starting from 12:00 a.m. Italian time on May 26, 2004.
The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) ("Natuzzi" or
"the Company"), the world's leading manufacturer of
leather-upholstered furniture, today announces the approval of the
financial results for the first quarter ended March 31, 2004.
NET SALES
Natuzzi's first-quarter 2004 net sales increased 4.5 percent to
EUR 191.8 million or $ 240.0 million compared to EUR 183.5 million or
$ 196.9 million in the first quarter 2003. Seats sold increased 9.6%
quarter over quarter.
In the first quarter of 2004, net upholstery sales increased 3.0
percent to EUR 169.5 million or $ 212.1 million compared to the first
quarter of 2003. Other sales (principally living-room accessories and
raw materials produced by the Company and sold to third parties)
increased 18.0 percent to EUR 22.3 million, or $ 27.9 million.
In the first quarter of 2004, upholstery sales in the Americas
increased marginally by 0.4 percent to EUR 79.5 million, or $ 99.5
million, notwithstanding a conversion rate 14.2 percent lower than
first-quarter 2003. In Europe, upholstery sales increased 4.7 percent
to EUR 80.3 million, or $ 100.5 million as a consequence of the higher
penetration of Italsofa upholstery and the inclusion in consolidated
revenues of Kingdom of Leather, the British furniture chain bought in
May 2003. In the Rest of the World upholstery sales increased 11.5
percent over the first quarter of 2003 to EUR 9.7 million, or $ 12.1
million.
Total net sales to Divani & Divani by Natuzzi and Natuzzi Stores
increased 9.4 percent to EUR 27.8 million, or $ 34.8 million,
considering EUR 3.1 million of sales to Kingdom of Leather that was
not included in the first quarter 2003. During the quarter the total
number of stores increased to 137 in Italy and 116 abroad, while one
year before there were 126 in Italy and 71 outside Italy.
In the first quarter of 2004, leather-upholstered furniture sales
increased 3.8 percent to EUR 138.0 million, or $ 172.7 million, while
fabric-upholstered sales decreased 0.3 percent over last year's
quarter to EUR 31.5 million, or $ 39.4 million.
First quarter 2004 net sales of Natuzzi-branded upholstery were
EUR 131.6 million, or $ 164.7 million, 2.4 percent lower than sales in
last year's quarter. Net sales of Italsofa upholstery were EUR 37.9
million, or $ 47.4 million, 27.2 percent higher than first quarter of
2003.
Pasquale Natuzzi, Chairman and Chief Executive Officer, commented:
"We are pleased with the growth in revenues and units sold reported in
the first quarter of 2004 notwithstanding a global economic scenario
still dominated by uncertainty, strong appreciation of the Euro
against the US Dollar and pricing pressure coming from low cost
competitors. The dual branding strategy, Italsofa for the promotional
market and Natuzzi for the medium-high end, represented an effective
answer to these difficult market conditions."
GROSS PROFIT & OPERATING INCOME
Gross profit in the first quarter of 2004 increased 16.6 percent
to EUR 68.0 million, or $ 85.1 million, compared to the same quarter
in 2003. Gross profit margin increased to 35.5 percent from 31.8
percent.
First quarter 2004 operating income was EUR 13.8 million while the
operating margin rose from 7.0 percent in the first quarter of 2003 to
7.2 percent in the first quarter of 2004.
FOREX & TAXES
In the first quarter of 2004 Natuzzi reported a foreign exchange
loss of EUR 0.4 million, or $ 0.5 million, versus a net forex gain of
EUR 6.0 million reported in the first quarter of 2003.
Income taxes for first quarter 2004 were EUR 4.0 million, or $ 5.0
million, representing an effective tax rate of 29.6 percent versus a
20.6 percent rate in the prior year's period. The increase was mainly
due to the expiration at the end of 2003 of the last exemption from
corporate income tax Natuzzi had in Italy.
NET INCOME & EARNINGS PER SHARE
Natuzzi first-quarter 2004 net income decreased 36.5 percent to
EUR 9.4 million, or $ 11.8 million. Net profit margin was 4.9 percent.
Earnings per share (ADR) decreased 36.5 percent to EUR 0.17, or $
0.21, from EUR 0.27 or $ 0.29.
Pasquale Natuzzi said, "In the first-quarter of 2004, the
Company's profitability was eroded by the appreciation of the Euro
against the US Dollar and the investments made in marketing to support
the strengthening of the Natuzzi brand. However, we were in line with
the outlook of a net profit margin in the region of 5 percent for
2004."
CASH FLOW
In the first quarter of 2004 the Company generated EUR 11.5
million of cash from operations, or $ 14.4 million, versus EUR 5.8
million, or $ 6.2 million, reported in the same period of 2003. On a
per ADR basis, net operating cash flow was EUR 0.21, or $ 0.26.
OUTLOOK
Concluded Mr. Natuzzi: "After an encouraging growth in orders
reported in the first quarter of 2004 compared to a weak 2003 first
quarter, in the recent few weeks the Company received mixed signals
from the market accompanied by lower orders. As we have often
underlined, the unstable economic, currency and competitive scenario
in which the Company operates creates short-term volatility in
furniture demand.
In this challenging and unstable scenario, we believe that the
most effective way to reduce volatility in sales and earnings is to
continue to invest in marketing to increase the Natuzzi brand
awareness and reduce costs to increase efficiency. The diligent
execution of these strategies should allow the Company to recover
orders in the next months and achieve the outlook for 2004 both in
terms of units sold which should increase by almost 5 percent, and net
profit margin which we expect to be in the region of 5 percent,
assuming no further deterioration of the global economic scenario and
appreciation of the Euro."
NEW INCENTIVE PLAN
The Board will propose to the next Shareholders' meeting the
approval of a new incentive plan designed to further align
management's and shareholders' interest, to strengthen the
relationship between the managers and the Company, and to encourage
management to invest in the Company's shares. The plan will cover the
period 2004-2009. During this period the Company will assign
performance stock grants and options related to the achievement of
pre- determined levels of individual and company goals and share price
targets. The plan will be extended to the management of the entire
Group with the issue of almost 3,000,000 new shares, representing 5.2
percent of total outstanding shares if completely vested and
exercised.
ADDITIONAL INFORMATION
In compliance with Sarbanes-Oxley Act, the Board of Directors
determined that the members of the Board of Internal Auditors acting
as Audit Committee under SEC Audit Committee Rule 303 A.06, have all
the attributes required to act as Audit Committee Financial Experts of
Natuzzi S.p.A.
CONVERSION RATES
The first quarter 2004 and 2003 dollar figures presented in this
announcement were converted at an average noon buying rate of $ 1.2513
per EUR and $ 1.0732 per EUR, respectively.
ABOUT NATUZZI S.P.A.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and
manufactures a broad collection of leather-upholstered residential
furniture.
Italy's largest furniture manufacturer, Natuzzi is the global
leader in the leather segment, exporting its innovative, high-quality
sofas and armchairs to 123 markets on 5 continents. Cutting-edge
design, superior Italian craftsmanship, and advanced,
vertically-integrated manufacturing operations underpin the Company's
market leadership.
Since 1990, Natuzzi has sold its furnishings in Italy through the
popular Divani & Divani by Natuzzi chain of 137 stores, which it
licenses to qualified furniture dealers. Outside Italy, the Company
sells to various furniture retailers, as well as through 117 licensed
Divani & Divani by Natuzzi and Natuzzi Stores.
Natuzzi S.p.A. was listed on the New York Stock Exchange on May
13, 1993. The Company is ISO 9001 and 14001 certified.
Statements in this press release other than statements of
historical fact are "forward-looking statements". Forward-looking
statements are based on management's current expectations and beliefs
and therefore you should not place undue reliance on them. These
statements are subject to a number of risks and uncertainties,
including risks that may not be subject to the Company's control, that
could cause actual results to differ materially from those contained
in any forward-looking statement. These risks include, but are not
limited to, fluctuations in exchange rates, economic and weather
factors affecting consumer spending, competitive and regulatory
environment, as well as other political, economical and technological
factors, and other risks identified from time to time in the Company's
filings with the Securities and Exchange Commission, particularly in
the Company's annual report on Form 20-F. Forward-looking statements
speak as of the date they were made, and the Company undertakes no
obligation to update publicly any of them in light of new information
or future events.
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statement of Earnings
for the first quarter ended March 31, 2004 and 2003 on the basis of
Italian GAAP
(Expressed in millions of EUR except per share data)
1st Quarter % 1st Quarter % %
----------- - ----------- - -
2004 Sales 2003 Sales Change
---- ----- ---- ----- ------
Upholstery net sales 169.5 164.6 3.0%
Other sales 22.3 18.9 18.0%
----------- -----------
Net Sales 191.8 100% 183.5 100% 4.5%
Purchases (86.0) (84.3) 2.0%
Labor (27.7) (27.0) 2.6%
Third-party Manufacturers (8.5) (7.7) 10.4%
Manufacturing Costs (7.5) (7.5) 0.0%
Inventories, net 5.9 1.3 353.8%
----------- -----------
Cost of Sales (123.8) (125.2) -1.1%
----------- -----------
Gross Profit 68.0 35.5% 58.3 31.8% 16.6%
Selling Expenses (44.7) (36.7) 21.8%
General and
Administrative
Expenses (9.5) (8.7) 9.2%
----------- -----------
Operating Income 13.8 7.2% 12.9 7.0% 7.0%
Interest Income, net 0.0 0.4
Foreign Exchange, net (0.4) 6.0
Other Income, net 0.1 (0.7)
----------- -----------
Earnings before taxes and
minority interest 13.5 18.6 -27.4%
Income taxes (4.0) (3.8) 5.3%
----------- -----------
Earnings before minority
interest 9.5 14.8 -35.8%
Minority Interest (0.1) 0.0
----------- -----------
Net Earnings 9.4 4.9% 14.8 8.1% -36.5%
=========== ===========
Earnings per Share 0.1719 0.2707 -36.5%
=============================
Average Number of Shares
Outstandings* 54,681,628 54,681,628
(*) Net of shares repurchased 1 EUR = 1,936.27 ITL
======================================================================
KEY FIGURES IN U.S. DOLLARS (millions)
--------------------------------------
1st Quarter 1st Quarter
----------- -----------
2004 2003
---- ----
Net Sales 240.0 196.9
Gross Profit 85.1 62.6
Operating Income 17.3 13.8
Net Earnings 11.8 15.9
Earnings per Share in U.S. dollars 0.21 0.29
Average exchange rate (U.S. dollar per Euro) 1.2513 1.0732
======================================================================
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in millions
of EUR)
1st 1st 1st 1st
Quarter Quarter % Quarter Quarter %
------- ------- - ------- ------- -
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Americas 79.5 79.2 0.4% 450,283 401,353 12.2%
% of total 46.9% 48.1% 55.6% 54.3%
Europe 80.3 76.7 4.7% 316,488 299,835 5.6%
% of total 47.4% 46.6% 39.1% 40.6%
Rest of world 9.7 8.7 11.5% 43,352 38,216 13.4%
% of total 5.7% 5.3% 5.4% 5.2%
TOTAL 169.5 164.6 3.0% 810,123 739,404 9.6%
----- ----- ----- ---- ------- ------- ----
======================================================================
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in millions
of EUR)
1st 1st 1st 1st
Quarter Quarter % Quarter Quarter %
------- ------- - ------- ------- -
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Leather 138.0 133.0 3.8% 613,075 546,764 12.1%
% of total 81.4% 80.8% 75.7% 73.9%
Fabric 31.5 31.6 -0.3% 197,048 192,640 2.3%
% of total 18.6% 19.2% 24.3% 26.1%
TOTAL 169.5 164.6 3.0% 810,123 739,404 9.6%
----- ----- ----- ---- ------- ------- ----
======================================================================
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in millions
of EUR)
1st 1st 1st 1st
Quarter Quarter % Quarter Quarter %
------- ------- - ------- ------- -
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Natuzzi 131.6 134.8 -2.4% 548,405 544,853 0.7%
% of total 77.6% 81.9% 67.7% 73.7%
Italsofa 37.9 29.8 27.2% 261,718 194,551 34.5%
% of total 22.4% 18.1% 32.3% 26.3%
TOTAL 169.5 164.6 3.0% 810,123 739,404 9.6%
----- ----- ----- ---- ------- ------- ----
======================================================================
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
as of March 31, 2004 and December 31, 2003
(Expressed in millions of EUR)
March 31, December 31,
--------- ------------
2004 2003
---- ----
Current Assets:
Cash and cash equivalents 74.5 63.6
Marketable debt securities 0.2 0
Trade receivables, net 164.2 154.5
Other receivables 51.0 58.1
Inventories 103.4 97.5
Unrealized foreign exchange gain 0.4 6.3
Prepaid expenses and accrued income 4.0 2.1
Deferred income taxes 3.3 1.0
Total current assets 401.0 383.1
--------- ------------
Non-Current Assets:
Net property, plant and equipment 250.2 254.2
Treasury shares 0.0 37.8
Other assets 16.3 17.1
Deferred income taxes 0.2 0.2
--------- ------------
Total Assets 667.7 692.4
========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings 6.6 4.8
Current portion of long-term debt 0.7 1.3
Accounts payable-trade 83.2 80.9
Accounts payable-shareholders for dividends 0.0 0.0
Accounts payable-other 20.3 17.8
Allowance for unrealized foreign exchange
losses 0.0 0.0
Income taxes 2.7 4.3
Salaries, wages and related liabilities 15.5 16.1
Total current liabilities 129.0 125.2
--------- ------------
Long-Term Liabilities:
Employees' termination indemnity 27.9 27.6
Long-term debt 4.3 4.2
Deferred income taxes 0.4 0.4
Deferred income for capital grants 13.1 13.4
Other liabilities 5.3 5.7
Minority Interest 1.0 0.9
Shareholders' Equity:
Share capital 54.7 57.5
Reserves 42.4 80.2
Additional paid-in capital 8.3 8.3
Retained earnings 381.3 369.0
Total shareholders' equity 486.7 515.0
--------- ------------
Total Liabilities and Shareholders' Equity 667.7 692.4
--------- ------------
======================================================================
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
as of March 31, 2004 and 2003
(Expressed in millions of EUR)
March 31, March 31,
2004 2003
--------- ---------
Cash flows from operating activities:
Net earnings 9.4 14.8
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 6.7 4.5
Employees' termination indemnity 0.3 0.2
Deferred income taxes (2.3) 0.3
Minority interest 0.1 0.0
(Gain) loss on disposal of assets 0.0 0.3
Change in provision for unrealized foreign
exchange (losses)/gain 5.9 (12.9)
Change in assets and liabilities:
Receivables, net (9.6) 4.6
Inventories (5.9) (1.3)
Prepaid expenses and accrued income (1.8) (2.0)
Other assets 7.1 10.4
Accounts payable 2.3 (9.3)
Income taxes (1.5) (1.1)
Salaries, wages and related liabilities (0.6) (0.1)
Other liabilities 1.4 (2.6)
--------- ---------
Total adjustments 2.1 (9.0)
--------- ---------
Net cash provided by operating activities 11.5 5.8
--------- ---------
Cash flows from investing activities:
Property, plant and equipment:
Additions (8.7) (8.3)
Disposals 6.6 0.0
Government grants received 0.0 0.0
Marketable debt securities:
Purchases 0.0 0.0
Proceeds from maturities 0.0 0.0
Proceeds from sales 0.0 0.0
Purchase of business, net of cash acquired (0.1) 0.0
Purchase of minority interest (0.0) 0.0
--------- ---------
Net cash used in investing activities (2.2) (8.3)
--------- ---------
Cash flows from financing activities:
Long term debt:
Proceeds 0.0 0.0
Repayments (0.5) (0.8)
Short-term borrowings 1.8 9.3
Exercise of stock options 0.0 0.0
Treasury shares 0.0 0.0
Dividends paid 0.0 0.0
Dividends paid to minority shareholders 0.0 0.0
--------- ---------
Net cash used in financing activities 1.3 8.5
--------- ---------
Effect of translation adjustments on cash 0.3 (0.8)
--------- ---------
Increase (decrease) in cash and cash
equivalents 10.9 5.2
Cash and cash equivalents, beginning of the
year 63.6 96.7
--------- ---------
Cash and cash equivalents, end of the period 74.5 101.9
========= =========
CONTACT: Investor Relations Dept., +39-080-8820-412
Fax: +39-080-8820-241
investor_relations@natuzzi.com
OR
Corporate Press Office, +39-080-8820-124
Fax: +39-080-8820-508
relazioni.esterne@natuzzi.com
CONFORMED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATUZZI S.p.A.
(Registrant)
Date: May 24, 2004 By: /s/ GIUSEPPE DESANTIS
------------------------
Giuseppe Desantis