As of ~~April~~July 12, 2013, ~~14,486,022~~14,513,204 shares of common stock of Stanley Furniture Company, Inc., par ~~value $.02~~value$.02 per share, were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

March 30,

December 31,

2013

2012
ASSETS

Current assets:

Cash
$
6,605

$
10,930
Restricted cash

1,737

1,737
Short-term investments

20,000

25,000
Accounts receivable, less allowances of $779 and $654

12,071

10,028
Inventories:

Finished goods

31,113

30,980
Work-in-process

2,107

1,845
Raw materials

2,127

2,235
Total inventories

35,347

35,060

Prepaid and other current assets

3,526

3,438
Deferred taxes

846

962
Total current assets

80,132

87,155

Property, plant and equipment, net

20,423

19,870
Other assets

3,815

3,691
Total assets
$
104,370

$
110,716

LIABILITIES

Current liabilities:

Accounts payable

5,552

8,667
Accrued salaries, wages and benefits

3,115

3,826
Other accrued expenses

2,380

2,421
Total current liabilities

11,047

14,914

Deferred income taxes

846

962
Other long-term liabilities

7,471

7,601
Total liabilities

19,364

23,477

STOCKHOLDERS’ EQUITY

Common stock, $.02 par value, 25,000,000 shares authorized,14,487,111 and 14,566,099 shares issued and outstanding

282

284
Capital in excess of par value

14,914

15,018
Retained earnings

70,327

72,421
Accumulated other comprehensive loss

(517)

(484)
Total stockholders’ equity

85,006

87,239
Total liabilities and stockholders’ equity
$
104,370

$
110,716

	June 29, 2013		December 31, 2012
	June 29, 2013		December 31, 2012
ASSETS
Current assets:
Cash	$	12,778	$	10,930
Restricted cash		1,737		1,737
Short-term investments		10,000		25,000
Accounts receivable, less allowances of $867 and $654		12,744		10,028
Inventories:
Finished goods		28,112		30,980
Work-in-process		1,688		1,845
Raw materials		1,940		2,235
Total inventories		31,740		35,060

Prepaid and other current assets		4,111		3,438
Deferred taxes		724		962
Total current assets		73,834		87,155

Property, plant and equipment, net		21,517		19,870
Other assets		6,700		3,691
Total assets	$	102,051	$	110,716

LIABILITIES
Current liabilities:
Accounts payable	$	5,054	$	8,667
Accrued salaries, wages and benefits		4,969		3,826
Other accrued expenses		2,290		2,421
Total current liabilities		12,313		14,914

Deferred income taxes		724		962
Other long-term liabilities		7,347		7,601
Total liabilities		20,384		23,477

STOCKHOLDERS’ EQUITY
Common stock, $.02 par value, 25,000,000 shares authorized,14,513,204 and 14,566,099 shares issued and outstanding		283		284
Capital in excess of par value		15,137		15,018
Retained earnings		66,798		72,421
Accumulated other comprehensive loss		(551)		(484)
Total stockholders’ equity		81,667		87,239
Total liabilities and stockholders’ equity	$	102,051	$	110,716

The accompanying notes are an integral part of the consolidated financial statements.

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

~~(in~~ (in thousands, except per share data)

(unaudited)

	Three Months				Three Months Ended				Six Months Ended
	Ended				Three Months Ended				Six Months Ended
	March 30,		March 31,			June 29,		June 30,		June 29,		June 30,
	2013		2012			2013		2012		2013		2012

Net sales	$	26,052	$	26,781	$	24,166	$	24,428	$	50,218	$	51,209

Cost of sales		22,667		23,184		21,986		21,350		44,653		44,534

Gross profit		3,385		3,597		2,180		3,078		5,565		6,675

Selling, general and administrative expenses		4,857		4,581
Selling, general, and administrative expenses						5,108		4,484		9,965		9,065

Operating loss		(1,472)		(984)		(2,928)		(1,406)		(4,400)		(2,390)

Income from Continued Dumping and Subsidy Offset Act,net						-		39,361		-		39,361
Other income, net		2		21		16		20		18		41
Interest income		21		6		22		19		43		25
Interest expense		652		602		648		518		1,300		1,120

Loss before income taxes		(2,101)		(1,559)
(Loss) income before taxes						(3,538)		37,476		(5,639)		35,917

Income tax expense (benefit)		(7)		4
Income tax (benefit) expense						(9)		616		(16)		620

Net loss	$	(2,094)	$	(1,563)
Net (loss) income					$	(3,529)	$	36,860	$	(5,623)	$	35,297

Loss per share:

(Loss) income per share:
Basic	$	(.15)	$	(.11)	$	(.25)	$	2.57	$	(.40)	$	2.46
Diluted	$	(.15)	$	(.11)	$	(.25)	$	2.54	$	(.40)	$	2.44

Weighted average shares outstanding:

Basic		14,162		14,345		14,127		14,345		14,148		14,345
Diluted		14,162		14,345		14,127		14,493		14,148		14,444

The accompanying notes are an integral part of the consolidated financial statements.

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

~~(in thousands, except per share data)~~

Three MonthsEnded

March 30,

March 31,

2013

2012

Net loss
$
(2,094)

$
(1,563)
Other comprehensive loss:

Amortization of prior service benefit

(41)

(45)
Amortization of actuarial loss

8

7
Adjustments to net periodic benefit cost

(33)

(38)
Comprehensive loss
$
(2,127)

$
(1,601)

The accompanying notes are an integral part of the consolidated financial statements.

~~STANLEY FURNITURE COMPANY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOW~~ (LOSS)

(in thousands)

(unaudited)

Three Months Ended

March 30,

March 31,

2013

2012
Cash flows from operating activities:

Cash received from customers
$
23,960

$
26,097
Cash paid to suppliers and employees

(30,909)

(29,234)
Interest received, net

18

3
Income taxes paid, net

(96)

(68)
Net cash used by operating activities

(7,027)

(3,202)

Cash flows from investing activities:

Sale of short-term securities

5,000

Capital expenditures

(1,151)

(1,835)
Purchase of other assets

(761)

(401)
Net cash provided (used) by investing activities

3,088

(2,236)

Cash flows from financing activities:

Purchase and retirement of common stock

(353)

Capital lease payments

(33)

(33)
Net cash used by financing activities

(386)

(33)

Net decrease in cash

(4,325)

(5,471)
Cash at beginning of period

10,930

15,700
Cash at end of period
$
6,605

$
10,229

Reconciliation of net loss to net cash used by operating activities:

Net loss
$
(2,094)

$
(1,563)
Depreciation and amortization

448

415
Stock-based compensation

247

187

Changes in assets and liabilities:

Accounts receivable

(2,043)

(633)
Inventories

(287)

(648)
Prepaid expenses and other current assets

(88)

235
Accounts payable

(2,962)

(778)
Accrued salaries, wages and benefits

(721)

(951)
Other accrued expenses

(79)

19
Other assets

649

599
Other long-term liabilities

(97)

(84)
Net cash used by operating activities
$
(7,027)

$
(3,202)

	Three Months Ended				Six Months Ended
	Three Months Ended				Six Months Ended
		June 29,		June 30,		June 29,		June 30,
		2013		2012		2013		2012

Net (loss) income	$	(3,529)	$	36,860	$	(5,623)	$	35,297
Other comprehensive loss:
Amortization of prior service benefit		(42)		(44)		(84)		(89)
Amortization of actuarial loss		8		7		17		14
Adjustments to net periodic benefit cost		(34)		(37)		(67)		(75)
Comprehensive (loss) income	$	(3,563)	$	36,823	$	(5,690)	$	35,222

The accompanying notes are an integral part of the consolidated financial statements.

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended
		June 29,		June 30,
		2013		2012
Cash flows from operating activities:
Cash received from customers	$	47,430	$	50,995
Cash paid to suppliers and employees		(55,712)		(56,080)
Cash from Continued Dumping and Subsidy Offset Act		-		39,856
Interest paid, net		(2,378)		(2,265)
Income taxes paid, net		(124)		(728)
Net cash (used) provided by operating activities		(10,784)		31,778

Cash flows from investing activities:
Sale of short-term securities		15,000		-
Purchase of short-term securities		-		(20,000)
Capital expenditures		(2,715)		(2,635)
Purchase of other assets		(1,670)		(1,266)
Proceeds from sale of assets		-		47
Net cash provided (used) by investing activities		10,615		(23,854)

Cash flows from financing activities:
Purchase and retirement of common stock		(358)		-
Proceeds from insurance policy loans		2,416		2,283
Proceeds from exercise of stock options		25		-
Capital lease payments		(66)		(66)
Net cash provided by financing activities		2,017		2,217

Net increase in cash		1,848		10,141
Cash at beginning of period		10,930		15,700
Cash at end of period	$	12,778	$	25,841

Reconciliation of net (loss) income to net cash used by operating activities:

Net (loss) income	$	(5,623)	$	35,297
Depreciation and amortization		991		884
Stock-based compensation		450		388
Gain on disposal of assets		-		(43)

Changes in assets and liabilities:
Accounts receivable		(2,716)		(176)
Inventories		3,320		1,543
Prepaid expenses and other current assets		(2,938)		(2,422)
Accounts payable		(3,738)		(3,915)
Accrued salaries, wages and benefits		1,139		411
Other accrued expenses		(209)		449
Other assets		(1,272)		(1,170)
Other long-term liabilities		(188)		532
Net cash (used) provided by operating activities	$	(10,784)	$	31,778

The accompanying notes are an integral part of the consolidated financial statements.

STANLEY FURNITURE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)
(unaudited)

1. Preparation of Interim Unaudited Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. All such adjustments are of a normal recurring ~~nature.Certain~~nature. Certain information and footnote disclosures prepared in accordance with generally accepted accounting principles have been either condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of results of operations and financial position. Operating results for the interim periods reported herein may not be indicative of the results expected for the year. We suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and accompanying notes included in our latest Annual Report on Form 10-K.

~~Revision of 2012 Comprehensive Income~~

A correction of an immaterialpresentation error was made in the Consolidated Statements of Comprehensive Income for the prior year ~~quarter.~~

three and six month periods.

2. Property, Plant and Equipment

	March 30,		December 31,		June 29, 2013		December 31, 2012
	2013		2012		June 29, 2013		December 31, 2012
Land and buildings	$	13,896	$	13,896	$	13,896	$	13,896
Machinery and equipment		28,406		28,406		28,406		28,406
Office furniture and equipment		1,153		1,153		1,153		1,153
Construction in process		1,520		522		3,084		522
Property, plant and equipment, at cost		44,975		43,977		46,539		43,977
Less accumulated depreciation		24,552		24,107		25,022		24,107
Property, plant and equipment, net	$	20,423	$	19,870	$	21,517	$	19,870

3. Income taxes

During the ~~three~~six months of 2013, we recorded a non-cash charge to our valuation allowance of ~~$973,000~~$2.5 million, increasing our valuation allowance against deferred tax assets to ~~$4.5~~$6.0 million at ~~March 30, 2013.The~~June 29, 2013. The primary assets covered by this valuation allowance are net operating losses. The valuation allowance was calculated in accordance with the provisions of ASC 740, Income Taxes, which requires an assessment of both positive and negative evidence when measuring the need for a valuation ~~allowance.Our~~allowance. Our results over the most recent three-year period were heavily affected by our business restructuring ~~activities.Our~~activities. Our cumulative operating loss in the most recent three-year period, in our view, represented sufficient negative evidence to require a valuation allowance under the provisions of ASC 740, Income Taxes. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal. Although realization is not assured, we have concluded that the remaining net deferred tax asset in the amount of ~~$846,000~~$724 will be realized based on the reversal of ~~existingdeferred~~existing deferred tax liabilities. The amount of the deferred tax assets actually realized, however, could vary if there are differences in the timing or amount of future reversals of existing deferred tax liabilities. Should we determine that we will not be able to realize all or part of our deferred tax asset in the future, an adjustment to the deferred tax asset will be charged to income in the period such determination is made.

During the six months of 2012, we utilized $39.4 million of our net operating loss carry forwards against the income recognized by proceeds from the Continued Dumping and Subsidy Offset Act distributed by U.S. Customs and Border Protection in April of 2012. The income tax expense recognized during the three and six month periods was primarily generated from the federal alternative minimum tax. The alternative minimum tax limited our ability to offset income generated during the period with net operating loss carry forwards.

The major reconciling items between our effective income tax rate and the federal statutory rate are the ~~increase~~changes in our valuation allowance and the cash surrender value on life insurance policies.

Basic earnings per common share are based upon the weighted average shares ~~outstanding.Outstanding~~outstanding. Outstanding stock options and restricted stock are treated as potential common stock for purposes of computing diluted earnings per ~~share.Basic~~share. Basic and diluted earnings per share are calculated using the following share data:

InDuring the ~~2013~~three and ~~2012 first quarter~~six month periods ended June 29, 2013, the dilutive effect of outstanding stock options and restricted stock is not recognized since we have a net ~~loss.~~loss for those periods. Approximately 2.1 million shares in 2013 ~~and 1.8 million shares in 2012 are~~were issuable upon the exercise of stock options. During the three and six month periods ended June 30, 2012, approximately 700,000 stock options ~~which~~ were ~~not included in~~excluded from the diluted per share calculation ~~because~~as they ~~were~~would be anti-dilutive. Also, ~~367,000~~381,000 shares ~~in 2013 and 179,000 shares in 2012~~ of restricted stock in 2013 were not included because they were anti-dilutive.

A reconciliation of the activity in Stockholders’ Equity accounts for the ~~quarter ended March 30,~~first half of 2013 is as follows:

6. Restructuring and Related Charges

In 2011, we evaluated our overall warehousing and distribution requirements for our Stanley Furniture product line and concluded only a portion of the leased warehouse space in Stanleytown, Virginia would be required. Therefore, a restructuring charge for future lease obligations of $499,000 was taken in 2011, and an additional charge of $418,000 was taken in the 2^nd ~~quarter of 2012 for the portions of the Stanleytown warehouse facility no longer used.~~

In 2012, we made the strategic decision to consolidate our corporate office and High Point showroom into a single multi-purpose facility in High Point, North Carolina.During the current ~~quarter,~~ six month period, we recorded ~~$260,000~~$522 in restructuring charges in selling, general and administrative expenses for severance and relocation costs associated with this move and consolidation.

Restructuring accrual activity for the ~~three~~six months ending ~~March 30,~~June 29, 2013 was as follows:

	Lease Obligations		Severance and other termination costs		Total
Accrual at January 1, 2013	$	732	$	-	$	732
Charges to expense		-		522		522
Cash payments		(122)		(235)		(357)
Accrual at June 29, 2013	$	610	$	287	$	897

Lease
Obligations

Severance and other
termination costs

Total
Accrual at January 1, 2013
$
732

$
732
Charges to expense

$
260

260
Cash payments

(61)

(54)

(115)
Accrual at March 30, 2013
$
671

$
206

$
877

Restructuring accrual activity for the ~~three~~six months ending ~~March 31,~~June 30, 2012 was as follows:

	Lease Obligations		Severance and other termination costs
	Lease Obligations		Severance and other termination costs		Other Cost		Total		Lease Obligations		Severance and other termination costs		Other Cost		Total
Accrual at January 1, 2012	$	499	$	57	$	50	$	606	$	499	$	57	$	50	$	606
Charges and adjustments to expense				49		(40)		9		418		17		(40)		395
Cash payments		(31)		(52)		(10)		(93)		(63)		(74)		(10)		(147)
Accrual at March 31, 2012	$	468	$	54	$	-	$	522
Accrual at June 30, 2012									$	854	$	-	$	-	$	854

The restructuring accrual is classified as “Other accrued expenses”.

ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth the percentage relationship to net sales of certain items included in the Consolidated Statements of Income:

	Three Months Ended				Three Months Ended		Six Months Ended
	March 30,		March 31,		June 29,	June 30,	June 29,	June 30,
	2013		2012		2013	2012	2013	2012
Net sales	100.0	%	100.0	%	100.0%	100.0%	100.0%	100.0%
Cost of sales	87.0		86.6		91.0	87.4	88.9	87.0
Gross profit	13.0		13.4		9.0	12.6	11.1	13.0
Selling, general and administrative expenses	18.6		17.1		21.1	18.4	19.8	17.7
Operating loss	(5.6)		(3.7)		(12.1)	(5.8)	(8.7)	(4.7)
CDSOA income, net					-	161.1	-	76.9
Other income, net			.1		.1	.1	-	.1
Interest expense, net	2.4		2.2		2.6	2.0	2.5	2.2
Loss before income taxes	(8.0)		(5.8)
Income tax (benefit)
Net loss	(8.0)	%	(5.8)	%

(Loss) income before income taxes					(14.6)	153.4	(11.2)	70.1
Income tax					-	2.5	-	1.2
Net (loss) income					(14.6)%	150.9%	(11.2)%	68.9%

Net sales ~~decreased $729,000, or 2.7%,~~ for the three month period ended ~~March 30,~~June 29, 2013 decreased $262,000, or 1.1%, from the comparable 2012 period. For the six month period ~~which was our strongest quarter in 2012.~~ended June 29, 2013, net sales decreased $991,000, or 1.9% from the comparable 2012 six month period. The decrease was due primarily to lower ~~average selling prices~~unit volume and, to a lesser extent, lower ~~unit volume.~~average selling prices. The lower average selling prices are primarily related to ~~promotions and~~discounting of existing designs from the Stanley Furniture product line as part of a sales growth initiative to gain retail floor sample placements, but also are related to the discounting of obsolete inventory on the Young America product line.

Gross profit for the current three month period was $2.2 million, or 9.0% of net sales. Gross profit decreased from $3.1 million, or 12.6% of net sales, from the comparable three month period of 2012. Gross profit for the first ~~three months~~half of 2013 decreased to ~~$3.4~~$5.6 million, or 11.1% of net sales, from $6.7 million, or 13.0% of net sales, ~~from $3.6 million, or 13.4% of net sales,~~ for the comparable ~~three~~six months of 2012. The ~~slight~~comparable prior year three and six month periods include restructuring related charges associated with the consolidation of our Virginia warehousing operations of $474,000. The reduction in gross profit for both periods was driven mostly by ~~the increased~~ discounting~~on our Young America product line~~and inflation on ~~imported product most of which was offset by continued~~the Stanley Furniture line. Continued operating improvements at ~~our~~the Young America manufacturing facility in Robbinsville, ~~NC.~~NC have provided some offset to these increased costs.

Net cash provided by investing activities was ~~$3.1~~$10.6 million in the current ~~quarter~~six month period of 2013 compared to a use of ~~$2.2~~$23.9 million in the comparable prior year quarter. During the ~~first quarter~~six month period of 2013, we invested ~~$750,000~~$2.1 million in capital expenditures for the consolidation of our corporate offices and High Point showroom and ~~$400,000~~$640,000 in ~~final~~ equipment purchases as part of the modernization of our Young America manufacturing operation in Robbinsville, North Carolina that started in early 2011. We spent ~~$760,000~~$1.7 million as part of our continued investment in ~~improved information systems.~~our Enterprise Resource Planning (ERP) system. Offsetting these uses of cash was the maturity of a short term investment of ~~$5.0~~$15.0 million. ~~Cash used~~During the first six months of 2012, we invested $20.0 million of our CDSOA proceeds in ~~the prior year quarter was for the investment of $1.8~~short-term investments. In addition, we invested $2.6 million in capital expenditures ~~for~~as part of the modernization of our Young America manufacturing operation in Robbinsville, North Carolina and ~~$401,000 invested~~$1.3 million as part of our investment in improved ~~information~~ systems.We expect to spend approximately ~~$1.5 million~~$500,000 in capital for the remainder of the year for completion of our corporate office and showroom and in normal capital ~~expenditures, with $900,000 of that coming in the second quarter.~~expenditures. We plan to spend ~~$1.3 million~~$400,000 on our ~~information systems~~ERP system improvements for the remainder of ~~2013, with the majority of that amount occurring in the second quarter as well.~~2013.

Net cash ~~used~~provided by financing activities was ~~$386,000~~$2.0 million in the ~~first quarter~~current six months of 2013 compared to ~~$33,000~~$2.2 million in the ~~comparable~~ prior year ~~quarter.~~period. Approximately ~~$353,000~~$358,000 was used in the first ~~quarter~~six months of 2013 to purchase and retire ~~78,988~~80,077 shares of our common stock. ~~The remaining~~In both years, cash was provided from loans against the cash surrender value of insurance policies. These proceeds were used to pay interest due on outstanding policy loans which is shown as a use of ~~$33,000 during the current and prior periods was to fund our capital lease obligation.~~cash in operating activities.

Continued Dumping and Subsidy Offset Act (“CDSOA”)

The CDSOA provides for distribution of monies collected by U.S. Customs and Border Protection (“Customs”) for imports covered by antidumping duty orders entering the United States through September 30, 2007 to eligible domestic producers that supported a successful antidumping petition (“Supporting Producers”) ~~concerning~~for wooden bedroom furniture imported from China. Antidumping duties for merchandise entering the U.S. after September 30, 2007 ~~have remained~~remain with the U.S. Treasury.

Certain manufacturers who did not support the antidumping petition (“Non-Supporting Producers”) filed actions in the United States Court of International Trade, challenging the CDSOA’s “support requirement” and seeking to share in the distributions. As a result, Customs held back a portion of those distributions (the “Holdback”) pending resolution of the Non-Supporting Producers’ claims. The Court of International Trade dismissed all ~~ofthe~~of the actions of the Non-Supporting Producers, who appealed to the United States Court of Appeals for the Federal Circuit. Customs advised that it expected to distribute the Holdback to the Supporting Producers after March 9, 2012. The Non-Supporting Producers sought injunctions first from the Court of International Trade and, when those efforts were unsuccessful, from the Federal Circuit directing Customs to retain the Holdback until the Non-Supporting Producers’ appeals were resolved.

On March 5, 2012, the Federal Circuit denied the motions for injunction, “without prejudicing the ultimate disposition of these cases.” As a result, we received a CDSOA distribution ~~in the amount~~ of $39.9 million in April ~~2012.If~~2012. If the Federal Circuit were to reverse the decisions of the Court of International Trade and determine that the Non-Supporting Producers were entitled to CDSOA distributions, it is possible that Customs may seek to have us return all or a portion of our company’s share of that ~~distribution.The~~recent distribution. The Federal Circuit held oral arguments on March 8, 2013 concerning the appeals of two of the Non-Supporting Producers. Based on what we know today, we believe that the chance Customs will seek and be entitled to obtain a return is remote. We ~~therefore~~ recorded income, net of expenses, of $39.4 million in April 2012 as a result of the receipt of these funds.

In addition, according to Customs, as of October 1, 2012, approximately $8.9 million in duties had been secured by cash deposits and bonds on unliquidated entries of wooden bedroom furniture that are subject to the CDSOA, and this amount is potentially available for distribution under the CDSOA to eligible domestic producers in connection with the case involving wooden bedroom furniture imported from China. The amount ultimately distributed will be impacted by appeals concerning the results of the annual administrative review process, which can retroactively increase or decrease the actual duties owed on entries secured by cash deposits and bonds, by collection efforts concerning duties that may be owed, and by any applicable legislation and ~~Custom~~s’Custom’s interpretation of that legislation. Assuming that such funds are distributed and that our percentage allocation in future years is the same as it was for the 2011 distribution (approximately 30% of the funds distributed) and the $8.9 million ~~in estimated antidumping duties~~ secured by ~~antidumping duty cash deposits and bonds~~the government does not change as a result of appeals from the annual administrative review process or otherwise, we could receive approximately $2.7 million ~~more~~ in CDSOA funds.

In November 2012, Customs disclosed that it ~~has again~~ withheld ~~funds from any available distribution associated with any cases involved in ongoing litigation until the amounts at issue in the pending litigation have been resolved.Customs withheld a total of $3.0~~$3.0 million in funds related to the antidumping duty order on wooden bedroom furniture from China ~~which is in addition to~~that was otherwise available for distribution until the amounts ~~secured by cash deposits and bonds discussed~~at issue in the ~~previous paragraph.~~ pending litigation have been resolved. It is expected that Customs will continue withholding such funds until a final decision is reached in the pending ~~litigation. Therefore,~~litigation.Therefore, no distributions were made in December 2012 for the case involving wooden bedroom furniture ~~imported~~ from China.

Recently, Customs also disclosed that as of April 30, 2013, an additional $1.1 million of total collected duties was potentially available for distribution in 2013 to eligible domestic manufacturers of wooden bedroom furniture. Customs noted that the final amounts available for distribution in 2013 could be higher or lower than the preliminary amounts due to liquidations, re-liquidations, protests, or other events affecting entries. This amount, at least in part, may have come from the security held by Customs as of October 1, 2012, but Customs has not updated the amount of duties that remain secured by cash deposits and bonds on un-liquidated entries of wooden bedroom furniture. We expect Customs to withhold these funds from distribution if a final decision is not reached in the pending litigation before the end of the fourth quarter of 2013.

Due to the uncertainty of the various legal and administrative processes, we cannot provide assurances as to the amount of additional CDSOA funds that ultimately will be received, if any, and we cannot predict when we may receive any additional CDSOA funds.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our 2012 Annual Report on Form 10-K.

Forward-Looking Statements

Certain statements made in this report 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,” “could”, or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of ~~strategy.These~~strategy. These statements reflect our 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 our success in profitably producing Young America products in our domestic manufacturing facility, ~~a failure or interruption of our information technology infrastructure,~~ disruptions in foreign sourcing including those arising from supply or distribution disruptions or those arising from changes in political, economic and social conditions, as well as laws and regulations, in countries from which we source products, international trade policies of the United States and countries from which we source products, lower sales due to worsening of current ~~economicconditions,~~economic conditions, the cyclical nature of the furniture industry, business failures or loss of large customers, the inability to raise prices in response to inflation and increasing costs,a failure or interruption of our information technology infrastructure, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, competition in the furniture industry including competition from lower-cost foreign manufacturers, the inability to obtain sufficient quantities of quality raw materials in a timely manner, environmental, health, and safety compliance costs, limited use of operating loss carry forwards due to ownership change, extended business interruption at our manufacturing facility, and the possibility that U.S. Customs and Border Protection may seek to reclaim all or a portion of the $39.9 million of Continued Dumping and Subsidy Offset Act (CDSOA) proceeds received in the second quarter of 2012. In addition, we have made certain forward looking statements with respect to payments we expect to receive under the CDSOA, which are subject to the risks and uncertainties described in our discussion of those payments that may cause the actual payments to be subject to claims for recovery or to differ materially from those in the forward looking statements. Any forward-looking statement speaks only as of the date of this filing, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

None of our foreign sales or purchases are denominated in foreign currency and we do not have any foreign currency hedging transactions. While our foreign purchases are denominated in U.S. dollars, a relative decline in the value of the U.S. dollar could result in an increase in the cost of our products obtained from offshore sourcing and reduce our earnings or increase our losses, unless we are able to increase our prices for these items to reflect any such increased cost.

ITEM 4.Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

(b) Changes in internal controls over financial reporting. ~~There~~We implemented our new enterprise resource planning system in the second quarter of 2013. This system change was undertaken to improve our ability to support and enhance our business and customer base. Our core processes did not change with the implementation, but were enhanced to a more automated platform. As such, the implementation did not result in material changes to our internal control over financial reporting. Consequently, there were no changes in our internal control over financial reporting that occurred during the ~~first~~second quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 2.Unregistered Sales of Equity Securities and UseofProceeds

The following table summarizes the repurchases of our equity securities during the 3-month period ended ~~March 30,~~June 29, 2013:

Period			Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs⁽¹⁾

	January 1 to February 2, 2013		-		-	4,339,172
	February 3 to March 2, 2013		68,438	4.46	68,438	4,033,988
	March 3 to March 30, 2013		10,550	4.53	10,550	3,986,203
Three months ended March 30, 2013			78,988		78,988
	March 31 to May 4, 2013		1,089	4.53	1,089	3,981,271
	May 5 to June 1, 2013		-		-	3,981,271
	June 2 to June 29, 2013		-		-	3,981,271
Three months ended June 29, 2013			1,089		1,089
Six months ended June 29, 2013			80,077		80,077

⁽¹⁾		In July 2012, the Board of Directors authorized the purchase of up to $5.0 million of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, at prices the company deems appropriate.

Period

Total
Number of
Shares
Purchased

Average
Price
Paid per
Share

Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs⁽¹⁾

Approximate
Dollar Value
of Shares
that MayYet
be Purchased
under the
Plans or
Programs⁽¹⁾

January 1 to February 2, 2013

4,339,172

February 3 to March 2, 2013

68,438

4.46

68,438

4,033,988

March 3 to March 30, 2013

10,550

4.53

10,550

3,986,203
Three months ended March 30, 2013

78,988

78,988

⁽¹⁾
In July 2012, the Board of Directors authorized the purchase of up to $5.0 million of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, at prices the company deems appropriate.

~~Item6.~~ Item 6. Exhibits~~Exhibits~~

3.1	Restated Certificate of Incorporation of the Registrant as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended July 2, 2005).

3.2	By-laws of the Registrant as amended (incorporated by reference to Exhibit ~~3.1~~3 to the Registrant’s Form 8-K (Commission File No. 0-14938) filed February 3, 2010).

31.1	Certification by Glenn Prillaman, our Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)

31.2	Certification byMicah S. Goldstein, our Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)

32.1	Certification of Glenn Prillaman, our Chief Executive Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)

32.2	Certification ofMicah S. Goldstein, our Chief Financial Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)

101	The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~March 31, 2012,~~June 29, 2013, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flow, (v) the notes to the consolidated financial statements, and (vi) document and entity information.(1) ~~(2)~~

(1)Filed herewith

(2) Under Rule 406T of Regulation S-T, this exhibit is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.

	Delaware	54-1272589
~~(State~~(State or other jurisdiction of incorporation or organization)			~~(I.R.S.~~(I.R.S. Employer Identification No.)

Large accelerated filer ¨o			Accelerated filer ¨o

Non-accelerated filer x		Smaller reporting company o
	(Do not check if a smaller reporting company)	~~Smaller reporting company~~ ¨

	Three MonthsEnded
	March 30,		March 31,
	2013		2012

Net loss	$	(2,094)	$	(1,563)
Other comprehensive loss:
Amortization of prior service benefit		(41)		(45)
Amortization of actuarial loss		8		7
Adjustments to net periodic benefit cost		(33)		(38)
Comprehensive loss	$	(2,127)	$	(1,601)

The accompanying notes are an integral part of the consolidated financial statements.

	Three Months		Six Months
	Ended		Ended
	June 29,	June 30,	June 29,	June 30,
	2013	2012	2013	2012
Weighted average shares outstanding for basic calculation	14,127	14,345	14,148	14,345
Add: Effect of dilutive stock options and restricted stock	-	148	-	99
Weighted average shares outstanding adjusted for diluted calculation	14,127	14,493	14,148	14,444

	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss
Balance, December 31, 2012	$	284	$	15,018	$	72,421	$	(484)
Net loss		-		-		(5,623)		-
Stock repurchased		(1)		(356)		-		-
Stock-based compensation		-		450		-		-
Exercise of stock options		-		25		-		-
Adjustment to net periodic benefit cost		-		-		-		(67)
Balance, June 29,2013	$	283	$	15,137	$	66,798	$	(551)

Period		Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾	Approximate Dollar Value of Shares that MayYet be Purchased under the Plans or Programs⁽¹⁾

	January 1 to February 2, 2013				4,339,172
	February 3 to March 2, 2013	68,438	4.46	68,438	4,033,988
	March 3 to March 30, 2013	10,550	4.53	10,550	3,986,203
Three months ended March 30, 2013		78,988		78,988


⁽¹⁾	In July 2012, the Board of Directors authorized the purchase of up to $5.0 million of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, at prices the company deems appropriate.

Date: ~~April~~July 15, 2013		STANLEY FURNITURE COMPANY, INC.
		By:/s/ Micah S. Goldstein
		Micah S. Goldstein
		Chief Financial Officer
		(Principal Financial and Accounting Officer)