SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 14, 2003
STANLEY FURNITURE COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-14938 54-1272589
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1641 Fairystone Park Highway, Stanleytown, Virginia 24168
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (276) 627-2000
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(Former name or former address, if changed
since last report.)
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
The following exhibit is furnished as a part of this report.
99.1 Press release dated July 14, 2003.
ITEM 9. Regulation FD Disclosure (Information provided pursuant to Item 12)
On July 14, 2003, the Registrant issued a press release announcing
second quarter 2003 operating results. The press release is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
SIGNATURE
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 hereunto duly authorized.
STANLEY FURNITURE COMPANY, INC.
July 14, 2003 By: /s/Jeffrey R. Scheffer
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Date Jeffrey R. Scheffer
President and Chief Executive
Officer
EXHIBIT 99.1
FOR IMMEDIATE RELEASE: CONTACT: DOUGLAS I. PAYNE
July 14, 2003 Executive V.P. - Finance and Administration
(276) 627-2157
e-mail: dpayne@stanleyfurniture.com
ANITA W. WIMMER
Treasurer
(276) 627-2446
e-mail: awimmer@stanleyfurniture.com
Sales Increase 11%
STANLEY FURNITURE ANNOUNCES IMPROVED SALES AND EARNINGS
FOR THE SECOND QUARTER OF 2003
STANLEYTOWN, VA, July 14, 2003/PRNewswire/ -- Stanley Furniture Company, Inc.
(Nasdaq-NNM: STLY) today reported improved sales and earnings for the second
quarter of 2003. Both sales and earnings modestly exceeded management's previous
guidance for the quarter.
Net sales of $61.4 million increased 11.1% from the second quarter of last year.
This marks the fifth consecutive quarter of sales growth over the comparable
prior year period. Earnings per share improved to $.53 for the second quarter of
2003 from $.37 in the prior year quarter. The second quarter of last year
included restructuring and related charges of $.08 per share from closing a
factory to realign the Company's manufacturing facilities.
For the first half of 2003, net sales of $122.7 million increased 6.8% over the
prior year. First half earnings per share improved to $1.05 compared to $.64 in
the six-month period of 2002. Earnings for the first half of last year included
restructuring and related charges of $.35 per share.
Operating income increased to $6.2 million, or 10.0% of net sales, in the second
quarter of 2003 from $4.7 million, or 8.6% of net sales, in the second quarter
of 2002. The second quarter 2003 operating margin of 10.0% of net sales
approximates the operating margin for both the first quarter of 2003 and the
prior year quarter, after excluding restructuring and related charges of
$852,000 in the second quarter of 2002. As anticipated for the first half of
2003, savings from the Company's offshore sourcing initiatives and downsizing of
domestic operations have been offset with transition costs from increased
sourcing including lower production levels at the Company's domestic facilities,
increases in certain marketing and product development costs, and other
inflationary costs.
Cash flow in the first half of 2003 was used to reduce debt $4.3 million,
purchase $2.7 million of the Company's common stock and pay cash dividends of
$652,000. Approximately $12.2 million remains authorized by the Company's Board
of Directors to repurchase shares of the Company's common stock. Total debt
outstanding was $25.3 million and cash on hand was $7.5 million at June 28,
2003.
"We are gratified by the favorable response to our blended strategy as evidenced
by the fifth consecutive quarter of year-over-year sales growth despite
continued difficult business conditions in the wood segment of the furniture
industry," said Albert L. Prillaman, chairman. "We believe this sales growth is
due to market share gains. We expect these market share gains to continue and
believe we are well positioned for an eventual upturn in demand for residential
wood furniture," Prillaman continued.
"We continue to implement our strategy of blending efficient domestic
manufacturing capabilities in focused facilities with intelligent outsourcing of
certain component parts and finished goods," commented Jeffrey R. Scheffer,
president and chief executive officer. "This combination allows us to offer
higher value, well-styled product without sacrificing our culture of high
quality and quick delivery."
"As previously noted, approximately 20% of 2003 sales will come from sourced
items. As expected, transition expense of pursuing our blended strategy will
continue into the second half of 2003. Consequently, our earnings guidance for
2003 remains unchanged," Scheffer concluded.
Management offers the following guidance for total year 2003:
o Net sales is expected to be in the range of $247 million to $255
million, an increase of 3% to 6% over 2002.
o Operating income is expected to be in the range of $25.5 million to
$26.5 million.
o Earnings per share is expected to be in the range of $2.20 to $2.30
compared to $1.85 for 2002. Prior year earnings per share included
restructuring and related charges of $.34.
o The Company's effective tax rate is expected to increase to 36.3% in
2003 from 35.5% in 2002 due to higher state taxes.
Management offers the following guidance for the quarter ending September 27,
2003:
o Net sales is expected to be in the range of $62 million to $65 million,
an increase of 1% to 6% over the prior year quarter.
o Operating income is expected to be in the range of $6.1 million to
$6.6 million.
o Earnings per share is expected to be in the range of $.52 to $.57
compared to $.62 in the year-ago quarter. Earnings per share for
the third quarter of 2002 included a restructuring credit of $.02.
Conference Call Details
The Company will host a conference call Tuesday morning, July 15, 2003 at 10:00
a.m. Eastern Time. The call will also be web cast live and archived on the
Company's web site at www.stanleyfurniture.com. The dial-in-number is (706)
679-8542. A replay will be available through July 22, 2003. The dial-in-number
for the replay is (706) 645-9291 with an access code of 1554718.
Forward-Looking Statements
Certain statements made in this release are not based on historical facts, but
are forward-looking statements. These statements can be identified by the use of
forward-looking terminology such as "believes," "estimates," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy. These
statements reflect the Company's reasonable judgment with respect to future
events and are subject to risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. Such
risks and uncertainties include competition in the furniture industry including
competition from lower-cost foreign manufacturers, the Company's success in
implementing its blended strategy of expanded offshore sourcing and domestic
manufacturing, disruptions in offshore sourcing including those arising from
supply or distribution disruptions or changes in political or economic
conditions affecting the countries from which the Company obtains offshore
sourcing, the cyclical nature of the furniture industry, fluctuations in the
price for lumber which is the most significant raw material used by the Company,
credit exposure to customers in the current economic climate, capital costs and
general economic conditions. Any forward-looking statement speaks only as of the
date of this press release, and the Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of new
developments or otherwise.
All earnings per share amounts are on a diluted basis.
Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer
of wood furniture targeted at the upper-medium price range of the residential
market. Manufacturing facilities are located in Stanleytown and Martinsville, VA
and Robbinsville and Lexington, NC. Its common stock is traded on the Nasdaq
stock market under the symbol STLY.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
------- ------- -------- --------
Net sales ....................................... $61,409 $55,268 $122,707 $114,842
Cost of sales ................................... 46,844 41,795 93,520 86,901
Restructuring and related charges (1) ........... 852 3,757
------- ------- -------- --------
Gross profit ................................ 14,565 12,621 29,187 24,184
Selling, general and administrative expenses .... 8,400 7,892 16,913 15,809
------- ------- -------- --------
Operating income .............................. 6,165 4,729 12,274 8,375
Other income, net ............................... (47) (72) (89) (154)
Interest expense ................................ 660 746 1,371 1,580
------- ------- -------- --------
Income before income taxes ................... 5,552 4,055 10,992 6,949
Income taxes .................................... 2,016 1,440 3,990 2,467
------- ------- -------- --------
Net income .................................... $ 3,536 $ 2,615 $ 7,002 $ 4,482
======= ======= ======== ========
Diluted earnings per share ...................... $ 0.53 $ 0.37 $ 1.05 $ 0.64
======= ======= ======== ========
Weighted average number of shares ............... 6,628 6,998 6,652 6,950
======= ======= ======== ========
Operating income:
Before restructuring and related charges .... $ 6,165 $ 5,581 $ 12,274 $ 12,132
Restructuring and related charges (1) ....... 852 3,757
------- ------- -------- --------
Reported operating income ................. $ 6,165 $ 4,729 $ 12,274 $ 8,375
======= ======= ======== ========
Net income:
Before restructuring and related charges .... $ 3,536 $ 3,164 $ 7,002 $ 6,905
Restructuring and related charges (1) ....... 549 2,423
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Reported net income ....................... $ 3,536 $ 2,615 $ 7,002 $ 4,482
======= ======= ======== ========
<FN>
(1)2002 amounts represent restructuring and related charges for
realignment of the Company's manufacturing facilities.
Management believes that providing financial measures before
restructuring and related charges provides useful information
on underlying business trends and operations in order to allow
investors to more easily compare and evaluate the Company's
financial performance relative to prior periods and industry
comparables.
</FN>
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
June 28, June 29, Dec. 31,
2003 2002 2002
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Assets
Current assets:
Cash ............................................. $ 7,479 $ 10,066 $ 9,227
Accounts receivable, net ......................... 31,559 26,122 27,832
Inventories ...................................... 55,563 53,650 54,158
Prepaid expenses and other current assets ........ 1,051 1,510 1,311
Deferred income taxes ............................ 3,196 3,153 2,876
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Total current assets ......................... 98,848 94,501 95,404
Property, plant, and equipment, net ................... 57,083 61,732 59,539
Goodwill .............................................. 9,072 9,072 9,072
Other assets .......................................... 8,103 5,738 8,470
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Total assets ................................. $173,106 $171,043 $172,485
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt ............. $ 6,914 $ 6,839 $ 6,914
Accounts payable ................................. 14,306 17,594 13,386
Accrued expenses ................................. 12,762 12,086 12,160
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Total current liabilities .................... 33,982 36,519 32,460
Long-term debt ........................................ 18,414 25,329 22,700
Deferred income taxes ................................. 12,874 11,251 13,084
Other long-term liabilities ........................... 4,497 4,506 4,554
Stockholders' equity .................................. 103,339 93,438 99,687
-------- -------- --------
Total liabilities and stockholders' equity ... $173,106 $171,043 $172,485
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STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 28, June 29,
2003 2002
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Cash flows from operating activities:
Cash received from customers ........................................... $118,895 $112,264
Cash paid to suppliers and employees ................................... (106,210) (98,860)
Interest paid .......................................................... (1,754) (1,872)
Income taxes paid, net ................................................. (5,552) (780)
-------- --------
Net cash provided by operating activities ............................ 5,379 10,752
-------- --------
Cash flows from investing activities:
Capital expenditures ................................................... (360) (406)
Other, net
(19) 696
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Net cash used by investing activities ................................ (379) 290
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Cash flows from financing activities:
Repayment of senior notes .............................................. (4,286) (4,286)
Purchase and retirement of common stock ................................ (2,709)
Dividends paid ......................................................... (652)
Repayment of revolving credit facility, net ............................ (600)
Proceeds from insurance policy loans ................................... 888 795
Proceeds from exercise of stock options ................................ 1,160
Other, net ............................................................. 11
-------- --------
Net cash used by financing activities ................................ (6,748) (2,931)
-------- --------
Net increase in cash .................................................... (1,748) 8,111
Cash at beginning of period .............................................. 9,227 1,955
-------- --------
Cash at end of period .................................................. $ 7,479 $ 10,066
======== ========
Reconciliation of net income to
net cash provided by operating activities:
Net income ........................................................... $ 7,002 $ 4,482
Adjustments to reconcile net income to net cash used by operating
activities:
Depreciation and amortization ...................................... 2,897 3,013
Restructuring Charge ............................................... 1,755
Deferred income taxes .............................................. (530)
Loss on disposal of assets ......................................... 5 31
Changes in working capital ......................................... (3,511) 2,013
Other assets ....................................................... (427) (380)
Other long-term liabilities......................................... (57) (162)
-------- --------
Net cash provided by operating activities ............................ $ 5,379 $ 10,752
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