Contract

by Ladd Furniture Inc
February 5th, 1999
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                                                               EXHIBIT 10.1


                                                        NEWS RELEASE

                                                        FOR IMMEDIATE RELEASE
[LADD FURNITURE, INC. LOGO]                             February 4, 1999

                                                        Contact John: J. Ong
4620 Grandover Parkway - Box 2677                        (336) 315-4049
Greensboro, NC 27417-6777                               e-mail: [email protected]

             LADD REPORTS 54 PERCENT GAIN IN FOURTH QUARTER EARNINGS

         GREENSBORO, NC - LADD Furniture, Inc. reported today that its net
earnings for the fourth quarter of fiscal 1998 rose 54 percent, to $3.7 million,
from $2.4 million in the final quarter of fiscal 1997. Fourth quarter net
earnings per share (fully diluted) rose 52 percent, to $0.47 in 1998, from $0.31
per share in 1997's fourth quarter. For the full year 1998, net earnings
increased 94 percent, to $12.3 million, from the prior year's $6.3 million.
Earnings per share (fully diluted) rose 89 percent in fiscal 1998, to $1.53,
from the prior year's $0.81.

         Total net sales for fiscal 1998 rose 9 percent. However, fiscal 1998
contained the normal 52 weeks, whereas the prior fiscal year contained 53 weeks
- - a peculiarity of LADD's fiscal calendar year which occurs once every five or
six years. Adjusting for this weekly differential, the 1998 sales gain was 11
percent. Total residential furniture sales for the year increased 8 percent,
adjusted for the weekly differential, while contract furniture sales rose 19
percent on the same basis.

         LADD chairman, president and CEO Fred L. Schuermann, Jr. said the
company's gross profit margin for the year rose to 19.3% from fiscal 1997's
18.4%, and the operating margin increased to 5.2% of net sales, from 4.2% the
year before. Total debt was reduced by a little over $14 million, or 11 percent,
during the year, and interest expense declined 17 percent

         Schuermann said, "I am pleased with the financial progress LADD
achieved last year. Our 1998 operating margin was the best since 1989. Earnings
before interest, taxes, depreciation and amortization ("EBITDA") increased 22
percent last year, to $43.4 million. This represented 7.6% of net sales which,
although still below our objective of 10%, was LADD's highest EBITDA return
since 1990. The 1998 net earnings to sales ratio was its highest of any year in
the 1990's, and total debt outstanding at year-end 1998 reached its lowest
dollar level in five years."


                                     -more-

                                  [Letterhead]
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         Schuermann continued, "The LADD management team believes that these
encouraging signs of the company's recent financial progress provide conclusive
proof that are on the right track. We also believe that considerable room
remains for further improvement in all these financial measures from current
levels." Commenting on the outlook for the furniture industry in 1999,
Schuermann said, "Most forecasters are expecting 1999 to show a moderating trend
for our industry, as compared to the very strong growth experienced in 1998. But
we would not be at all surprised to see the industry enjoy a better than
currently expected year in 1999, in view of all the positive external forces
presently influencing American homeowners and consumers. We are extremely
excited with LADD's outlook for the coming year, in terms of continued sales
growth and further profitability improvement."

         Headquartered in Greensboro, NC, LADD is one of the largest
residential furniture manufacturers in North America. The company markets its
wide range of wood and upholstered furniture domestically under the major brand
names American Drew, Barclay, Clayton Marcus, Lea, Pennsylvania House and
Pilliod, and exports these products worldwide through LADD International. LADD's
contract sales group, doing business as American of Martinsville, is also one of
the world's leading suppliers of guest room furniture to the hospitality
industry, as well as to assisted-living (retirement) facilities and governmental
markets. LADD also owns and operates LADD Transportation, a support company.
LADD's stock is traded on the Nasdaq Market under the symbol LADF and
information on the company can be found on the Internet at
www.laddfurniture.com.

                                 # # # # # # #

         FORWARD-LOOKING STATEMENTS: This news release contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. Such statements are dependent on a number of factors which could cause
actual results to differ materially from those expressed or implied in the
forward-looking statements. Such factors include the company's ability to
continue its sales growth and further improve its profitability, in addition to
those factors set forth in the company's required filings with the U.S.
Securities and Exchange Commission.

         TABLE FOLLOWS
    
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                                                                    EXHIBIT 10.1

                     LADD FURNITURE, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (PRELIMINARY AND UNAUDITED)

13 Wks. Ended 14 Wks. Ended Jan. 2, 1999 Jan. 3, 1998 ------------ ------------ Net sales(1) $145,253,000 146,625,000 Earnings before interest and income taxes 8,211,000 6,592,000 Interest expense 2,123,000 2,817,000 Earnings before income taxes 6,088,000 3,775,000 Income tax expense 2,377,000 1,371,000 Net earnings $ 3,711,000 2,404,000 Net earnings per common share - basic $ 0.47 0.31 Net earnings per common share - diluted 0.47 0.31 Weighted average number of common shares outstanding - diluted 7,922,300 7,872,100
52 Wks. Ended 53 Wks. Ended Jan. 2, 1999 Jan. 3, 1998 ------------ ------------ Net sales(1) $571,063,000 525,500,000 Earnings before interest and income taxes 29,394,000 21,423,000 Interest expense 9,298,000 11,242,000 Earnings before income taxes 20,096,000 10,181,000 Income tax expense 7,837,000 3,869,000 Net earnings $ 12,259,000 6,312,000 Net earnings per common share - basic $ 1.57 0.81 Net earnings per common share - diluted 1.53 0.81 Weighted average number of common shares outstanding - diluted 8,017,304 7,838,747
(1) Net sales by segment 13 Wks. 14 Wks. 52 Wks. 53 Wks. were as follows (000's): 1/2/99 1/3/98 1/2/99 1/3/98 ------ ------ ------ ------ Residential $105,370 112,054 435,366 409,025 Contract 39,883 34,571 135,697 116,475 -------- ------- ------- ------- Total $145,253 146,625 571,063 525,500 ======== ======= ======= =======