Microsoft Word 11.0.5604;
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) January 28, 2004
STANLEY FURNITURE COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-14938 54-1272589
-------- ------- ----------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1641 Fairystone Park Highway, Stanleytown, Virginia 24168
- --------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (276) 627-2000
--------------
- -----------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
ITEM 12. Results of Operations and Financial Condition
On January 28, 2004, the Registrant issued a press release announcing
fourth quarter and total year 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.
January 28, 2004 By: /s/Jeffrey R. Scheffer
---------------- ------------------------------
Date Jeffrey R. Scheffer
President and Chief Executive
Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE: CONTACT: DOUGLAS I. PAYNE
January 28, 2004 Executive Vice President - Finance and
Administration
(276) 627-2157
e-mail: dpayne@stanleyfurniture.com
ANITA W. WIMMER
Treasurer
(276) 627-2446
e-mail: awimmer@stanleyfurniture.com
STANLEY FURNITURE ANNOUNCES
FOURTH QUARTER AND TOTAL YEAR
2003 OPERATING RESULTS
Record Fourth Quarter Sales; Company Doubles Quarterly Cash Dividend
STANLEYTOWN, VA, January 28, 2004/PRNewswire/ -- Stanley Furniture Company, Inc.
(Nasdaq-NNM: STLY) today reported higher sales and earnings for the fourth
quarter and year ended December 31, 2003. The Company also announced today that
its Board of Directors doubled the amount of its quarterly cash dividend to
stockholders.
Net sales of $72.7 million increased 14.9% from the fourth quarter of last year
setting a new sales record from any previous quarter in the Company's history.
This was also the seventh consecutive quarter of sales growth over the
comparable prior year quarter. Earnings per share grew 18.6% to $.70 compared to
$.59 in the fourth quarter of 2002.
Sales and operating income slightly exceeded the high end of management's
previous guidance for the quarter. Earnings per share exceeded the guidance
range due to the higher operating income and a lower effective tax rate.
Net sales of $260.6 million for total year 2003 increased 8.8% from the prior
year. Earnings per share improved 26.5% to $2.34 in 2003 compared to $1.85 in
2002. Earnings in 2002 included restructuring and related charges of $.34 per
share.
Operating income for 2003 improved to $26.2 million, or 10.1% of net sales, from
$22.4 million, or 9.3% of net sales, for the prior year. Prior year operating
income included restructuring and related charges of $3.5 million. In 2003
increased sales, savings from the Company's offshore sourcing initiatives and
downsizing of domestic operations offset the transition and start up costs from
increased global sourcing including lower production levels at the Company's
domestic factories, increases in certain marketing and product development costs
and other inflationary costs.
Cash on hand combined with strong cash flow from operations for 2003 were used
to repurchase $14.8 million of the Company's common stock, reduce debt $6.9
million and pay cash dividends of $1.3 million. Approximately $10.2 million
remains authorized by the Company's Board of Directors to repurchase shares of
the Company's common stock. Total debt outstanding was $22.7 million and cash on
hand was $2.5 million at December 31, 2003.
Increase in Cash Dividend
The Company announced today that its Board of Directors approved a 100% increase
in its quarterly dividend to ten cents per share payable on March 1, 2004, to
shareholders of record on February 13, 2004. "Doubling the amount of the cash
dividend further demonstrates the Board's confidence in the Company's strategy,
growth opportunities and financial strength," noted Albert L. Prillaman,
chairman.
Business Outlook
"We are pleased to report our seventh consecutive quarter of year-over-year
sales growth," commented Jeffrey R. Scheffer, president and chief executive
officer. "Business conditions continued to improve in the fourth quarter;
however, we believe our sales growth continues to come primarily from market
share gains. We enter 2004 with significant sales momentum as evidenced by the
15% increase in fourth quarter sales compared to the year-ago quarter.
Our focus is to create exciting designs, produce high-quality product and
provide excellent service," Scheffer continued. "Best product is determined by
both design and price. Blending efficient domestic manufacturing in highly
focused facilities with intelligent outsourcing of certain component parts and
finished goods allows us to offer a compelling value proposition. This
combination gives Stanley a competitive advantage by offering higher value and
well-styled product, without sacrificing our culture of high quality and fast
delivery. Our market share gains in the past year provide encouraging evidence
that our customers are responding favorably and that we are executing the
strategy well.
Approximately 20% of 2003 sales came from sourced items, which we anticipate
will level off at approximately 30% of sales in 2004. Transition costs from
increased global sourcing and its associated effect on domestic capacity
utilization negatively impacted 2003 operating margins. Going forward, operating
margins may be tempered by capacity utilization rates which are not expected to
increase in direct proportion to sales growth. We remain confident in our
blended operating strategy and view this as an investment in the Company's
future growth," Scheffer concluded.
Management offers the following guidance for total year 2004:
o Net sales are expected to be in the range of $276 million to $287
million, an increase of 6% to 10% over the prior year.
o Operating income is expected to be in the range of $27.6 million to
$29.6 million.
o The Company's effective tax rate is expected to be in the range of
36.0% to 36.5% for 2004 compared to 36.0% in 2003.
o Earnings per share are expected to be in the range of $2.50 to $2.70
compared to $2.34 for 2003.
Management offers the following guidance for the quarter ending March 27, 2004:
o Net sales are expected to be in the range of $65.6 million to $68.0
million, an increase of 7% to 11% over the first quarter of 2003.
o Operating income is expected to be in the range of $6.6 million to
$7.1 million.
o Earnings per share are expected to be in the range of $.58 to $.63
compared to $.52 in the year-ago quarter.
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.
Conference Call Details
The Company will host a conference call Thursday morning, January 29, 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 February 5, 2004. The
dial-in-number for the replay is (706) 645-9291 with an access code of 5078031.
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, international trade policies of the United States and 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, fluctuations in foreign freight
cost, credit exposure to customers, capital costs and general economic
conditions. Future dividend payments will depend upon the financial condition,
capital requirements and earnings of the Company, as well as other factors that
the Board of Directors may deem relevant. 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.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
------- ------- -------- --------
Net sales ....................................... $72,707 $63,305 $260,641 $239,485
Cost of sales ................................... 55,682 47,618 198,788 180,905
Restructuring and related charges (1) ........... 3,548
------- ------- -------- --------
Gross profit ................................ 17,025 15,687 61,853 55,032
Selling, general and administrative expenses .... 9,554 8,872 35,637 32,671
------- ------- -------- --------
Operating income .............................. 7,471 6,815 26,216 22,361
Other income, net ............................... (53) (52) (203) (219)
Interest expense ................................ 679 743 2,748 3,090
------- ------- -------- --------
Income before income taxes ................... 6,845 6,124 23,671 19,490
Income taxes .................................... 2,413 2,174 8,521 6,919
------- ------- -------- --------
Net income .................................... $ 4,432 $ 3,950 $ 15,150 $ 12,571
======= ======= ======== ========
Diluted earnings per share ...................... $ 0.70 $ 0.59 $ 2.34 $ 1.85
======= ======= ======== ========
Weighted average number of shares ............... 6,322 6,661 6,462 6,782
======= ======= ======== ========
Operating income:
Before restructuring and related charges .... $ 7,471 $ 6,815 $ 26,216 $ 25,909
Restructuring and related charges (1) ....... 3,548
------- ------- -------- --------
Reported operating income ................. $ 7,471 $ 6,815 $ 26,216 $ 22,361
======= ======= ======== ========
Net income:
Before restructuring and related charges .... $ 4,432 $ 3,950 $ 15,150 $ 14,859
Restructuring and related charges (1) ....... 2,288
------- ------- -------- --------
Reported net income ....................... $ 4,432 $ 3,950 $ 15,150 $ 12,571
======= ======= ======== ========
<FN>
(1)2002 amounts represent net 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 compae 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)
Dec 31, Dec 31,
2003 2002
-------- ---------
Assets
Current assets:
Cash ............................................. $ 2,509 $ 9,227
Accounts receivable, net ......................... 30,120 27,832
Inventories ...................................... 54,638 54,158
Prepaid expenses and other current assets ........ 2,855 1,311
Deferred income taxes ............................ 2,855 2,876
-------- --------
Total current assets ......................... 92,977 95,404
Property, plant, and equipment, net ................... 55,154 59,539
Goodwill .............................................. 9,072 9,072
Other assets .......................................... 7,000 8,470
-------- --------
Total assets ................................. $164,203 $172,485
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt ............. $ 7,014 $ 6,914
Accounts payable ................................. 10,595 13,386
Accrued expenses ................................. 10,913 12,160
-------- --------
Total current liabilities .................... 28,522 32,460
Long-term debt ........................................ 15,686 22,700
Deferred income taxes ................................. 12,560 13,084
Other long-term liabilities ........................... 4,877 4,554
Stockholders' equity .................................. 102,558 99,687
-------- --------
Total liabilities and stockholders' equity ... $164,203 $172,485
======== ========
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Twelve Months Ended
Dec 31, Dec 31,
2003 2002
---------- ---------
Cash flows from operating activities:
Cash received from customers .......................... $ 258,589 $ 235,017
Cash paid to suppliers and employees .................. (231,712) (213,794)
Interest paid ......................................... (2,793) (3,155)
Income taxes paid ..................................... (9,740) (1,949)
--------- ---------
Net cash provided by operating activities ........... 14,344 16,119
--------- ---------
Cash flows from investing activities:
Capital expenditures .................................. (1,243) (1,037)
Other ................................................. (104) 695
--------- ---------
Net cash (used) provided by investing activities .... (1,347) (342)
--------- ---------
Cash flows from financing activities:
Repayment of senior notes ............................. (6,914) (6,839)
Purchase and retirement of common stock ............... (14,788) (3,066)
Dividends paid ........................................ (1,261)
Repayment of revolving credit facility ................ (600)
Proceeds from insurance policy loans .................. 888 795
Proceeds from exercise of stock options................ 2,360 1,205
--------- ---------
Net cash used by financing activities ............... (19,715) (8,505)
--------- ---------
Net (decrease) increase in cash ......................... (6,718) 7,272
Cash at beginning of period ............................. 9,227 1,955
--------- ---------
Cash at end of period ................................. $ 2,509 $ 9,227
========= =========
Reconciliation of net income to
net cash provided by operating activities:
Net income .......................................... $ 15,150 $ 12,571
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization ..................... 5,783 5,938
Restructuring Charge .............................. 1,755
Deferred income taxes ............................. (463) 2,110
Loss on disposal of assets ........................ 2 34
Changes in working capital ........................ (6,403) (6,214)
Other assets ...................................... 57 40
Other long-term liabilities ....................... 218 (115)
--------- ---------
Net cash provided by operating activities ............. $ 14,344 $ 16,119
========= =========