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) October 13, 2003
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STANLEY FURNITURE COMPANY, INC.
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(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 12. Results of Operations and Financial Condition
On October 13, 2003, the Registrant issued a press release announcing
third 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.
October 13, 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
October 13, 2003 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
Sales Increase 6.3%
STANLEY FURNITURE ANNOUNCES
THIRD QUARTER OPERATING RESULTS
STANLEYTOWN, VA, October 13, 2003/PRNewswire/ -- Stanley Furniture Company, Inc.
(Nasdaq-NNM: STLY) today reported sales and earnings for the third quarter of
2003. Sales and operating income were at the high end of management's previous
guidance for the quarter. Earnings per share exceeded the guidance range due to
the accretion from share repurchases in the third quarter.
Net sales of $65.2 million increased 6.3% from the third quarter of last year,
marking the sixth consecutive quarter of sales growth over the comparable prior
year quarter. Earnings per share of $.59 for the third quarter of 2003 compared
to $.62 in the year ago quarter. The third quarter of last year included income
from the reversal of a prior restructuring related charge of $.02 per share.
For the first nine months of 2003, net sales of $187.9 million increased 6.7%
over the comparable prior year period. Year-to-date earnings per share improved
to $1.65 compared to $1.26 in the nine-month period of 2002. Earnings for the
first nine months of last year included restructuring and related charges of
$.34 per share.
Operating income decreased to $6.5 million, or 9.9% of net sales, in the third
quarter of 2003 compared to $7.2 million, or 11.7% of net sales, in the third
quarter of 2002. The third quarter 2003 operating margin of 9.9% of net sales
approximated the operating margin in both the first and second quarter of 2003.
For the nine-month period of 2003 operating income increased to $18.7 million,
or 10.0% of net sales, from $15.5 million, or 8.8% of net sales, a year ago.
Before restructuring and related charges of $3.5 million, operating income was
$19.1 million, or 10.8% of net sales, for the first nine months of 2002.
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 have been
mostly offset with savings from the Company's offshore sourcing initiatives and
downsizing of domestic operations.
Cash on hand combined with strong cash flow from operations in the first nine
months of 2003 was used to purchase $14.8 million of the Company's common stock
(including $12.1 million to purchase 450,000 shares of the Company's common
stock in the third quarter of 2003), reduce debt $5.5 million, and pay cash
dividends of $952,000. Total debt outstanding was $24.8 million and cash on hand
was $1.4 million at September 27, 2003.
"We are pleased to report our sixth consecutive quarter of year-over-year sales
growth," said Albert L. Prillaman, chairman. "While the overall tone of business
appears to have modestly improved since the summer months, we believe this sales
growth is due to market share gains, which we expect to continue. We enter the
final quarter of 2003 with significant sales momentum as evidenced by a 20%
increase in third quarter 2003 orders compared to the year ago quarter,"
Prillaman concluded.
"While our Young America(R) youth bedroom business continues to perform well,
most of our sales growth this year is fueled from Stanley Collections which
provides residential wood furniture for every room in the home including dining
room, bedroom, home entertainment, home office and accent tables," commented
Jeffrey R. Scheffer, president and chief executive officer. "We believe the
growth in our Collections business this year results from market share gains and
is evidence that our blended strategy is working. This strategy encompasses a
blend of our efficient domestic manufacturing capabilities in focused factories
with intelligent outsourcing of certain component parts and finished goods. 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. The start up costs from our sourcing initiatives combined with the
operational challenges of transitioning to this blended strategy has negatively
impacted our operating margins this year and will continue to do so near-term.
However, we believe this approach will create a long-term competitive advantage
providing continued sales growth and operating margin improvement going
forward," Scheffer concluded.
Management offers the following guidance:
o Net sales is expected to be in the range of $68 million to $71 million
for the fourth quarter of 2003, an increase of 7% to 12% over the prior
year quarter. For total year 2003, net sales is expected to be in the
range of $256 million to $259 million, representing an increase of 7%
to 8% over 2002.
o Operating income is expected to be in the range of $6.8 million to
$7.4 million for the fourth quarter of 2003, or $25.6 million to
$26.2 million for total year 2003.
o Earnings per share is expected to be in the range of $.62 to $.68 for
the fourth quarter of 2003 compared to $.59 in the year-ago quarter.
For total year 2003, earnings per share is expected to be in the range
of $2.27 to $2.33 compared to $1.85 for 2002. Earnings per share for
2002 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 is currently in the process of planning and budgeting for 2004 and
will provide guidance for 2004 at a later time.
Conference Call Details
The Company will host a conference call Tuesday morning, October 14, 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 October 21, 2003. The
dial-in-number for the replay is (706) 645-9291 with an access code of 3056556.
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 Nine Months Ended
Sept 27, Sept 28, Sept 27, Sept 28,
2003 2002 2003 2002
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Net sales .................................. $65,227 $61,338 $187,934 $176,180
Cost of sales .............................. 49,586 46,386 143,106 133,287
Restructuring and related charges (1) ...... (209) 3,548
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Gross profit ........................... 15,641 15,161 44,828 39,345
Selling, general and administrative expenses 9,170 7,990 26,083 23,799
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Operating income ......................... 6,471 7,171 18,745 15,546
Other income, net (61) (13) (150) (167)
Interest expense ........................... 698 767 2,069 2,347
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Income before income taxes ............... 5,834 6,417 16,826 13,366
Income taxes ............................... 2,118 2,278 6,108 4,745
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Net income ............................... $ 3,716 $ 4,139 $ 10,718 $ 8,621
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Diluted earnings per share ................. $ 0.59 $ 0.62 $ 1.65 $ 1.26
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Weighted average number of shares .......... 6,318 6,681 6,502 6,822
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Operating income:
Before restructuring and related charges $ 6,471 $ 6,962 $ 18,745 $ 19,094
Restructuring and related charges (1) .. (209) 3,548
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Reported operating income ............ $ 6,471 $ 7,171 $ 18,745 $ 15,546
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Net income:
Before restructuring and related charges $ 3,716 $ 4,004 $ 10,718 $ 10,909
Restructuring and related charges (1) .. (135) 2,288
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Reported net income .................. $ 3,716 $ 4,139 $ 10,718 $ 8,621
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(1)2002 amounts represent net restructuring and related charges (credit) 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.
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
Sept 27, Sept 28, Dec 31,
2003 2002 2002
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Assets
Current assets:
Cash ............................................. $ 1,406 $ 8,598 $ 9,227
Accounts receivable, net ......................... 33,714 31,753 27,832
Inventories ...................................... 54,395 55,595 54,158
Prepaid expenses and other current assets
774 1,035 1,311
Deferred income taxes ............................ 3,379 3,153 2,876
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Total current assets ......................... 93,668 100,134 95,404
Property, plant, and equipment, net ................... 55,945 60,522 59,539
Goodwill .............................................. 9,072 9,072 9,072
Other assets .......................................... 7,565 5,540 8,470
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Total assets ................................. $166,250 $175,268 $172,485
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Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt ............. $ 7,014 $ 6,914 $ 6,914
Accounts payable ................................. 15,214 17,818 13,386
Accrued expenses ................................. 14,452 16,191 12,160
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Total current liabilities .................... 36,680 40,923 32,460
Long-term debt ........................................ 17,818 24,129 22,700
Deferred income taxes ................................. 12,592 11,251 13,084
Other long-term liabilities ........................... 4,483 4,419 4,554
Stockholders' equity .................................. 94,677 94,546 99,687
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Total liabilities and stockholders' equity ... $166,250 $175,268 $172,485
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STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
Sept 27, Sept 28,
2003 2002
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Cash flows from operating activities:
Cash received from customers .............................. $ 181,942 $ 167,824
Cash paid to suppliers and employees ...................... (159,628) (150,676)
Interest paid ............................................. (2,078) (2,367)
Income taxes paid, net .................................... (7,786) (1,142)
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Net cash provided by operating activities ............... 12,450 13,639
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Cash flows from investing activities:
Capital expenditures ...................................... (630) (605)
Other, net ................................................ (19) 696
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Net cash (used) provided by investing activities ........ (649) 91
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Cash flows from financing activities:
Repayment of senior notes
(5,486) (5,410)
Purchase and retirement of common stock ................... (14,787) (3,066)
Dividends paid ............................................ (952)
Proceeds from (repayment of) revolving credit facility, net 704 (600)
Proceeds from insurance policy loans ...................... 888 795
Proceeds from exercise of stock options ................... 11 1,194
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Net cash used by financing activities ................... (19,622) (7,087)
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Net (decrease) increase in cash ............................. (7,821) 6,643
Cash at beginning of period ................................. 9,227 1,955
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Cash at end of period ..................................... $ 1,406 $ 8,598
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Reconciliation of net income to
net cash provided by operating activities:
Net income .............................................. $ 10,718 $ 8,621
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization ......................... 4,345 4,477
Restructuring Charge .................................. 1,755
Deferred income taxes ................................. (995)
Loss on disposal of assets 4 31
Changes in working capital ............................ (1,367) (828)
Other assets .......................................... (184) (167)
Other long-term liabilities ........................... (71) (250)
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Net cash provided by operating activities ................. $ 12,450 $ 13,639
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