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 November 2003 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 Third Quarter 2003 Financial Results
SANTERAMO IN COLLE, Bari, Italy--(BUSINESS WIRE)--Nov. 12,
2003--Natuzzi (NYSE: NTZ)--
-- Quarter's highlights:
-- Net sales increased 1.2% to EUR 173.9 million
-- Unit sales up 1.7%
-- Net profit margin declined from 10.4% to 4.0%
Natuzzi S.p.A. (NYSE: NTZ) ('Natuzzi' or 'the Company'), the
world's leading manufacturer of leather-upholstered furniture, today
announced financial results for the third quarter ended September 30,
2003.
NET SALES
In the third quarter of 2003, net sales increased 1.2 percent from
EUR 171.9 million or $ 169.2 million in the third quarter of 2002 to
EUR 173.9 million or $ 195.9 million. In the nine-month period, net
sales decreased 7.1 percent to EUR 560.0 million or $ 622.9 from EUR
602.5 million or $ 558.8 million in the prior-year period.
Natuzzi's third quarter 2003 net upholstery sales were EUR 147.7
million or $ 166.4 million, down 6.3 percent over the previous year's
quarter and other sales (principally living-room accessories, raw
materials and other) increased 83.2 percent to EUR 26.2 million or $
29.5 million.
Third quarter 2003 net upholstery sales decreased 2.2 percent in
the Americas to EUR 81.9 million or $ 92.3 million and decreased 13.1
percent in Europe to EUR 54.5 million or $ 61.4 million. In the rest
of the world, net upholstery sales increased 0.9 percent to EUR 11.3
million or $ 12.7 million.
In the third quarter of 2003, total net sales to "Divani & Divani
by Natuzzi", "Natuzzi Store" and "Kingdom of Leather" stores increased
32.1 percent to EUR 21.4 million, or $ 24.1 million. During the
quarter 12 new stores were opened in Italy, France, USA, United
Kingdom, Switzerland and Malta bringing the total number of stores to
133 in Italy and 97 outside Italy.
Leather-upholstered furniture sales in the third quarter of 2003
decreased 11.3 percent from last year's quarter to EUR 120.4 million,
or $ 135.6 million. Fabric upholstered furniture sales were EUR 27.3
million, or $ 30.8 million, up 25.2 percent compared to the third
quarter 2002.
Sales of Natuzzi-branded furniture, which accounted for 76.6
percent of third quarter total net upholstery sales, were EUR 113.2
million, or $ 127.5 million, down 11.7 percent compared to last year's
quarter sales of EUR 128.2 million, or $ 126.2 million. In the same
period, net sales of Italsofa branded furniture increased 17.3 percent
to EUR 34.5 million, or $ 38.9 million, from EUR 29.4 million, or $
28.9 million.
Pasquale Natuzzi, Chairman and Chief Executive Officer, said
"While unit sales increased 1.7 percent in the quarter compared to the
same period of 2002, despite the weak economic conditions reported in
Europe in the period, the appreciation of the Euro against the US
dollar and other currencies in which we export had a negative effect
on Natuzzi's upholstery sales performance."
GROSS PROFIT & OPERATING INCOME
Third quarter 2003 gross profit was EUR 60.7 million, or $ 68.4
million, up 5.4 percent over the last year's quarter. Over the same
period, Natuzzi's gross profit margin increased to 34.9 percent from
33.5.
Natuzzi's third quarter 2003 operating income decreased 39.9
percent to EUR 10.7 million or $ 12.1 million. Operating margins for
each year's comparable quarter were 6.2 percent in 2003 and 10.4
percent in 2002.
FOREX & TAXES
In the third quarter 2003, Natuzzi had a net foreign exchange loss
of EUR 2.3 million, or $ 2.6 million, versus a gain of EUR 3.2 million
or $ 3.1 million reported in the third quarter 2002.
Income taxes for third quarter 2003 were EUR 2.6 million, or $ 2.9
million. The effective tax rate was 27.1 percent versus a 19.5 percent
in the prior year's period.
NET INCOME & EARNINGS PER SHARE
Third quarter 2003 net income was EUR 7.0 million or $ 7.9
million, down 60.9 percent from EUR 17.9 million or $ 17.6 million in
the same period last year, while third quarter earnings per share
(ADR) were EUR 0.13, or $ 0.15. In the nine month period net income
decreased 53.8 percent to EUR 33.7 million, or $ 37.5 million, from
EUR 73.0 million or $ 67.7 million in the prior year's comparable
period.
Pasquale Natuzzi commented "In third quarter 2003, the Company's
profitability continued to be affected by the same factors reported in
the previous two quarters: Strong appreciation of the Euro, higher
advertising expenses, costs incurred to open new stores and galleries,
and the persistent pressure on price coming from low cost countries."
CASH FLOW
In the first nine months of 2003, net cash flow from operations
totaled EUR 24.3 million or $ 27.0 million, down 69.0 percent from EUR
78.4 million, or $ 72.7 million generated in the comparable period in
2002. On a per ADR basis, nine months 2003 net operating cash flow was
EUR 0.44, or $ 0.49, compared to EUR 1.43 or $ 1.33 in 2002.
INVESTMENTS
In order to support the increasing demand of Italsofa, the Company
is expanding production capacity in China and Brazil. Total investment
in Brazil is almost EUR 15.0 million, including the recent acquisition
of Minuano Nordeste, a company that benefits from local government
subsidies for the development of manufacturing facilities. In China,
Natuzzi expects to invest approximately EUR 20 million.
OUTLOOK
Based on the results achieved in the first nine months of the
year, the continuing investments in the Natuzzi brand strategy and the
current cost structure, which will be rationalized in 2004, we expect
to report unit sales that are about flat with last year's and a net
profit margin of approximately 6% for the full year 2003.
CONVERSION RATES
The third quarter 2003 and 2002 dollar figures presented in this
announcement were converted at an average noon buying rate of $ 1.1266
per EUR and $ 0.9843 per EUR, respectively. The nine months figures
for 2003 and 2002 were converted at an average noon buying rate of $
1.1124 per EUR and $ 0.9274 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 132 stores, which it
licenses to qualified furniture dealers. Outside Italy, the Company
sells to various furniture retailers, as well as through 88 licensed
Divani & Divani by Natuzzi and Natuzzi stores and 13 Kingdom of
Leather 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 third quarter ended September 30, 2003 and 2002 on the
basis of Italian GAAP
(Expressed in millions of EUR except per share data)
3rd Quarter % 3rd Quarter % %
2003 Sales 2002 Sales Change
Upholstery net sales 147.7 157.6 -6.3%
Other sales 26.2 14.3 83.2%
Net Sales 173.9 100% 171.9 100% 1.2%
Purchases (83.7) (81.3) 3.0%
Labor (23.4) (23.2) 0.9%
Third-party Manufacturers (6.8) (7.9) -13.9%
Manufacturing Costs (6.8) (7.2) -5.6%
Inventories, net 7.5 5.3 41.5%
Cost of Sales (113.2) (114.3) -1.0%
Gross Profit 60.7 34.9% 57.6 33.5% 5.4%
Selling Expenses (40.9) (31.2) 31.1%
General and Administrative
Expenses (9.1) (8.6) 5.8%
Operating Income 10.7 6.2% 17.8 10.4% -39.9%
Interest Income, net 0.1 0.5
Foreign Exchange, net (2.3) 3.2
Other Income, net 1.1 0.6
Earnings before taxes and
minority interest 9.6 22.1 -56.6%
Income taxes (2.6) (4.3) -39.5%
Earnings before minority
interest 7.0 17.8 -60.7%
Minority Interest 0.0 (0.1)
Net Earnings 7.0 4.0% 17.9 10.4% -60.9%
============ ============
Earnings per Share 0.13 0.33
============ ============
Average Number of Shares
Outstanding* 54,681,628 54,681,628
(*) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
3rd Quarter 3rd Quarter
2003 2002
---- ----
Net Sales 195.9 169.2
Gross Profit 68.4 56.7
Operating Profit 12.1 17.5
Net Earnings 7.9 17.6
Earnings per Share in U.S. dollars 0.15 0.32
Average exchange rate (U.S. dollar per Euro) 1.1266 0.9843
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statement of Earnings
for nine months ended September 30, 2003 and 2002 on
the basis of Italian GAAP
(Expressed in millions of EUR except per share data)
September 30 % September 30 % %
2003 Sales 2002 Sales Change
Upholstery net sales 491.5 551.5 -10.9%
Other sales 68.5 51.0 34.3%
Net Sales 560.0 100% 602.5 100% -7.1%
Purchases (273.1) (260.7) 4.8%
Labor (77.4) (81.7) -5.3%
Third-party Manufacturers (24.5) (29.0) -15.5%
Manufacturing Costs (21.3) (22.0) -3.2%
Inventories, net 24.9 5.8 329.3%
Cost of Sales (371.4) (387.6) -4.2%
Gross Profit 188.6 33.7% 214.9 35.7% -12.2%
Selling Expenses (129.2) (105.0) 23.0%
General and
Administrative Expenses (27.5) (28.1) -2.1%
Operating Income 31.9 5.7% 81.8 13.6% -61.0%
Interest Income, net 0.7 0.9
Foreign Exchange, net 7.8 9.0
Other Income, net 2.3 0.8
Earnings before taxes and
minority interest 42.7 92.5 -53.8%
Income taxes (9.1) (19.6) -53.6%
Earnings before minority
interest 33.6 72.9 -53.9%
Minority Interest (0.1) (0.1)
Net Earnings 33.7 6.0% 73.0 12.1% -53.8%
============= =============
Earnings per Share 0.62 1.34
============= =============
Average Number of Shares
Outstanding* 54,681,628 54,681,628
(*) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
September 30 September 30
2003 2002
Net Sales 622.9 558.8
Gross Profit 209.8 199.3
Operating Profit 35.5 75.9
Net Earnings 37.5 67.7
Earnings per Share in U.S. dollars 0.69 1.24
Average exchange rate (U.S. dollar per Euro) 1.1124 0.9274
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
2003 2002 Change 2003 2002 Change
Americas 81.9 83.7 -2.2% 414,624 371,507 11.6%
% of total 55.5% 53.1% 61.3% 55.9%
Europe 54.5 62.7 -13.1% 215,207 246,428 -12.7%
% of total 36.9% 39.8% 31.8% 37.0%
Rest of world 11.3 11.2 0.9% 46,263 47,166 -1.9%
% of total 7.6% 7.1% 6.9% 7.1%
TOTAL 147.7 157.6 -6.3% 676,094 665,101 1.7%
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
2003 2002 Change 2003 2002 Change
Leather 120.4 135.8 -11.3% 511,023 546,612 -6.5%
% of total 81.5% 86.2% 75.6% 82.2%
Fabric 27.3 21.8 25.2% 165,071 118,489 39.3%
% of total 18.5% 13.8% 24.4% 17.8%
TOTAL 147.7 157.6 -6.3% 676,094 665,101 1.7%
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
2003 2002 Change 2003 2002 Change
Natuzzi 113.2 128.2 -11.7% 457,045 490,912 -6.9%
% of total 76.6% 81.3% 67.6% 73.8%
Italsofa 34.5 29.4 17.3% 219,049 174,189 25.8%
% of total 23.4% 18.7% 32.4% 26.2%
TOTAL 147.7 157.6 -6.3% 676,094 665,101 1.7%
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in millions of EUR)
Sept. 30 Sept. 30 % Sept. 30 Sept. 30 %
2003 2002 Change 2003 2002 Change
Americas 240.7 281.5 -14.5% 1,258,395 1,176,454 7.0%
% of total 49.0% 51.0% 56.6% 52.5%
Europe 221.8 237.4 -6.6% 835,267 926,290 -9.8%
% of total 45.1% 43.1% 37.6% 41.4%
Rest of world 29.0 32.6 -11.0% 127,805 136,126 -6.1%
% of total 5.9% 5.9% 5.8% 6.1%
TOTAL 491.5 551.5 -10.9% 2,221,467 2,238,870 -0.8%
----------------------------------------------------------------------
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in millions of EUR)
Sept. 30 Sept. 30 % Sept. 30 Sept. 30 %
2003 2002 Change 2003 2002 Change
Leather 400.6 469.7 -14.7% 1,673,646 1,809,105 -7.5%
% of total 81.5% 85.2% 75.3% 80.8%
Fabric 90.9 81.8 11.1% 547,821 429,765 27.5%
% of total 18.5% 14.8% 24.7% 19.2%
TOTAL 491.5 551.5 -10.9% 2,221,467 2,238,870 -0.8%
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in millions of EUR)
Sept. 30 Sept. 30 % Sept.30 Sept. 30 %
2003 2002 Change 2003 2002 Change
Natuzzi 390.3 459.6 -15.1% 1,551,946 1,728,369 -10.2%
% of total 79.4% 83.3% 69.9% 77.2%
Italsofa 101.2 91.9 10.1% 669,521 510,501 31.1%
% of total 20.6% 16.7% 30.1% 22.8%
TOTAL 491.5 551.5 -10.9% 2,221,467 2,238,870 -0.8%
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
as of September 30, 2003 and December 31, 2002
(Expressed in millions of EUR)
ASSETS Sept. 30, Dec. 31,
2003 2002
Current Assets:
Cash and cash equivalents 68.2 96.7
Marketable debt securities - -
Trade receivables, net 134.6 158.4
Other receivables 51.8 58.3
Inventories 109.0 84.1
Unrealized foreign exchange gain 9.2 2.0
Prepaid expenses and accrued income 4.0 1.3
Deferred income taxes 1.0 1.8
Total current assets 377.8 402.6
--------- --------
Non-Current Assets:
Net property, plant and equipment 253.6 228.9
Treasury shares 37.8 37.8
Other assets 14.1 5.1
Deferred income taxes 0.1 0.1
--------- --------
Total Assets 683.4 674.5
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings 9.4 0.2
Current portion of long-term debt 2.9 1.4
Accounts payable-trade 69.3 87.5
Accounts payable-shareholders for dividends - -
Accounts payable-other 17.8 15.7
Allowance for unrealized foreign exchange losses - -
Income taxes 5.6 9.2
Salaries, wages and related liabilities 16.6 14.7
Total current liabilities 121.6 128.7
--------- --------
Long-Term Liabilities:
Employees' termination indemnity 27.4 25.6
Long-term debt 4.0 3.6
Deferred income taxes 0.4 0.4
Accrued expenses and deferred income 13.6 14.2
Other liabilities 4.5 5.7
Minority Interest 0.5 0.5
Shareholders' Equity:
Share capital 57.5 57.5
Reserves 80.4 73.1
Additional paid-in capital 8.3 8.3
Retained earnings 365.2 356.9
Total shareholders' equity 511.4 495.8
--------- --------
Total Liabilities and Shareholders' Equity 683.4 674.5
========= ========
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
as of September 30, 2003 and 2002
(Expressed in millions of EUR)
Sept. 30, Sept. 30,
-------------------
2003 2002
-------------------
Cash flows from operating activities:
Net earnings 33.7 73.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 17.1 13.0
Employees' termination indemnity 1.8 2.6
Deferred income taxes 0.9 (0.2)
Minority interest - (0.1)
(Gain) loss on disposal of assets 0.2 -
Change in provision for unrealized foreign
exchange (losses) / gain (7.2) (4.2)
Change in assets and liabilities:
Receivables, net 24.7 (8.4)
Inventories (19.1) (5.8)
Prepaid expenses and accrued income (2.8) (0.8)
Other assets 9.4 (4.2)
Accounts payable (20.8) (7.7)
Income taxes (3.5) 7.3
Salaries, wages and related liabilities 1.8 3.0
Other liabilities (11.9) 10.9
--------- --------
Total adjustments (9.4) 5.4
--------- --------
Net cash provided by operating activities 24.3 78.4
--------- --------
Cash flows from investing activities:
Property, plant and equipment:
Additions (38.5) (48.4)
Disposals 0.4 0.4
Government grants received 3.1 2.4
Marketable debt securities:
Purchases - -
Proceeds from maturities - -
Proceeds from sales - -
Purchase of business, net of cash acquired (4.3) -
Purchase of minority interest - -
--------- --------
Net cash used in investing activities (39.3) (45.6)
Cash flows from financing activities:
Long term debt:
Proceeds 1.0 -
Repayments (1.6) (1.3)
Short-term borrowings 7.3 (132.6)
Exercise of stock options - -
Treasury shares - -
Dividends paid (18.0) (15.7)
Dividends paid to minority shareholders - -
--------- --------
Net cash used in financing activities (11.3) (149.6)
--------- --------
Effect of translation adjustments on cash (2.2) (1.5)
--------- --------
Increase (decrease) in cash and cash equivalents (28.5) (118.3)
Cash and cash equivalents, beginning of the year 96.7 208.2
Cash and cash equivalents, end of the period 68.2 89.9
Natuzzi S.p.A.
THIRD QUARTER 2003
FINANCIAL RESULTS TELECONFERENCE
Senior management will review third quarter 2003 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
Thursday, November 13, 2003
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 3:00 p.m. Italian time on November 14, 2003.
CONTACT: Natuzzi
Investor Relations Dept.
Tel.: +39-080-8820-412
Fax: +39-080-8820-241
investor_relations@natuzzi.com
or Corporate Press Office
Tel.: +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: 12th November 2003 By: /s/ GIUSEPPE DESANTIS
----------------------------
Giuseppe Desantis