8-K 1 form8kq305.htm FORM8K305 form8k305

UNITED STATES
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 17, 2005


STANLEY FURNITURE COMPANY, INC.
(Exact name of registrant as specified in its charter)


Delaware
  
0-14938
  
54-1272589
(State or other jurisdiction of incorporation or organization)
  
(Commission File Number)
  
(I.R.S. Employer Identification No.)

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.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 
 



ITEM 2.02. Results of Operations and Financial Condition


On October 17, 2005, the Registrant issued a press release (the “Press Release”) announcing third quarter 2005 operating results. The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.


ITEM 9.01. Financial Statements and Exhibits


(d) Exhibits.
 
    Exhibit 99.1 - Press release by Stanley Furniture Company, Inc. on October 17, 2005.

 
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 17, 2005
By: /s/Jeffrey R. Scheffer
Date
Jeffrey R. Scheffer
 
Chairman, President and Chief Executive Officer


 
                                                                                    Exhibit 99.1




FOR IMMEDIATE RELEASE:
CONTACT:
    DOUGLAS I. PAYNE
October 17, 2005 
  
    Executive Vice President -
   
    Finance and Administration
   
    (276) 627-2157
   
    e-mail:dpayne@stanleyfurniture.com
     
   
    ANITA W. WIMMER
   
    Vice President - Controller and
   
    Treasurer
           
    (276) 627-2446
   
    e-mail:awimmer@stanleyfurniture.com


STANLEY FURNITURE ANNOUNCES RECORD
SALES AND EARNINGS FOR THE THIRD QUARTER OF 2005

Earnings per share increase 10.0% on 8.6% sales gain

STANLEYTOWN, VA, October 17, 2005/PRNewswire/ -- Stanley Furniture Company, Inc. (Nasdaq-NNM:STLY) today reported record sales and earnings for the third quarter of 2005. Sales and earnings were within management’s previous guidance range provided in mid July 2005.

Net sales of $85.6 million increased 8.6% from the third quarter of 2004, marking the fourteenth consecutive quarter of sales growth over the comparable prior year quarter. Earnings per share grew 10.0% to $.44 compared to $.40 in the third quarter of last year.

For the first nine months of 2005, net sales of $252.2 million rose 13.3% over the comparable prior year period. Year-to-date earnings per share grew 12.9% to $1.31 from $1.16 in the comparable 2004 period.

Third quarter operating income rose to $9.4 million, or 11.0% of net sales. Operating income for the first nine months of 2005 increased to $28.2 million, or 11.2% of net sales, from $25.3 million, or 11.4% of net sales, in the comparable year-ago period. Operating margins have remained consistently strong, ranging from 11.0% to 11.3% of net sales, in each of the last four quarters. Higher raw material costs, compensation costs, energy costs, freight costs, increased warehouse expense and tariffs imposed on wooden bedroom furniture imported from China are negatively impacting operating income. For the first nine months of 2005, higher sales and increased production levels are helping to offset these higher costs. Operational inefficiencies and lower production levels in the third quarter of 2005 compared to the year ago period also negatively impacted operating margins. While the operating efficiencies are expected to improve, lower production levels are anticipated in the fourth quarter of 2005 versus the comparable prior year period.
 
Working capital, excluding cash and current maturities of long-term debt, decreased $1.9 million during the first nine months of 2005 to $83.3 million from $85.2 million at year end. Total inventories of $72.8 million have decreased approximately $0.9 million since December 31, 2004. Strong cash flow in the first nine months of 2005 was used to purchase $10.0 million of the Company’s common stock, reduce debt $2.8 million, pay cash dividends of $2.3 million and increase the Company’s cash on hand $11.7 million. Approximately $20.2 million is currently authorized by the Company’s Board of Directors to repurchase shares of the Company’s common stock. At October 1, 2005, the Company was in a net cash position with total debt outstanding of $12.9 million and cash on hand of $19.3 million.

Business Outlook

“We are pleased to report another quarter of significant market share gains and strong operating margins,” commented Jeffrey R. Scheffer, chairman, president and chief executive officer. “For the most recent four quarters our sales have increased 13.1% from the previous four quarter period. We believe the consistent execution of our strategy has resulted in market share gains that continue to drive most of our sales growth. We believe industry sales growth slowed during the third quarter and is in an uncertain period due to a sharp decline in consumer confidence levels. Near term we are focusing on keeping our inventories at appropriate levels while remaining hopeful that this will prove to be a short term disruption in demand. Accordingly, we have lowered our fourth quarter 2005 sales and earnings guidance as detailed below,” concluded Scheffer.

Management offers the following guidance:

·  
Fourth quarter 2005 net sales are expected to be in the range of $81.5 million to $84.5 million, ranging from a decrease of 2.1% to an increase of 1.5% over the fourth quarter of 2004. For total year 2005, net sales are expected to be in the range of $334 million to $337 million, an increase of 9% to 10% over the prior year.
·  
Operating income is expected to be in the range of $8.4 million to $8.9 million for the fourth quarter of 2005, or $36.6 million to $37.1 million for total year 2005.
·  
The Company’s effective tax rate is expected to be in the range of 35.1% to 35.5% for 2005.
·  
Fourth quarter 2005 earnings per share are expected to be in the range of $.39 to $.42 compared to $.43 per share in the year-ago quarter. For total year 2005, earnings per share are expected to be in the range of $1.70 to $1.73 compared to $1.59 for 2004.

Management is currently in the process of planning and budgeting for 2006 and will provide guidance for 2006 at a later time.

Other Information

All earnings per share amounts are on a diluted basis and adjusted for the two-for-one stock split distributed on June 6, 2005.

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, N.C. Its common stock is traded on the Nasdaq stock market under the symbol STLY.

Conference Call Details

The Company will host a conference call Tuesday morning, October 18, 2005 at 9:00 a.m. Eastern Time. The dial-in-number is (877) 407-8029. The call will also be web cast and archived on the Company’s web site at www.stanleyfurniture.com. The dial-in-number for the replay (available through October 25, 2005) is (877) 660-6853, the account reference number is 275 and the conference number is 171581.

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 executing its blended strategy of combining 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. 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
  
Nine Months Ended
  
   
Oct 1,
  
Sept 25,
  
Oct 1,
  
Sept 25,
  
   
2005
 
2004
 
2005
 
2004
 
                   
Net sales
  
$
85,615
  
$
78,803
  
$
252,200
  
$
222,546
  
                           
Cost of sales
    
65,131
   
59,389
   
190,619
   
167,665
 
                       
Gross profit
    
20,484
   
19,414
   
61,581
   
54,881
 
                           
Selling, general and administrative expenses
    
11,106
    
10,636
   
33,396
   
29,592
 
                           
Operating income
    
9,378
   
8,778
   
28,185
   
25,289
 
                           
Other income, net
    
71
    
50
    
190
    
145
  
Interest Income
    
96
    
4
   
250
    
21
  
Interest expense
    
548
   
588
   
1,663
    
1,808
 
Income before income taxes
    
8,997
   
8,244
   
26,962
   
23,647
 
                           
Income taxes
    
3,195
   
2,959
   
9,573
   
8,544
 
Net income
  
$
5,802
  
$
5,285
  
$
17,389
  
$
15,103
  
                           
Diluted earnings per share
  
$
0.44
  
$
0.40
  
$
1.31
  
$
1.16
  
                           
Weighted average number of shares
    
13,198
   
13,100
   
13,294
   
13,019
 
 
STANLEY FURNITURE COMPANY, INC.
  
Consolidated Condensed Balance Sheets
  
(in thousands)
  
(unaudited)
  
               
   
Oct 1,
  
Sept 25,
  
Dec 31,
 
   
2005
  
2004
  
2004
  
               
Assets
              
Current assets:
                    
Cash
 
$
19,313
  
$
2,171
  
$
7,632
  
Accounts receivable, net
    
41,098
   
40,178
   
36,036
 
Inventories
    
72,776
   
72,365
   
73,658
 
Prepaid expenses and other current assets
    
1,007
   
2,109
   
1,585
 
Deferred income taxes
    
2,521
   
2,930
   
2,414
 
                     
Total current assets
    
136,715
   
119,753
   
121,325
 
                     
Property, plant, and equipment, net
    
50,970
   
51,394
   
51,342
 
Goodwill
    
9,072
   
9,072
   
9,072
 
Other assets
    
7,726
   
6,425
   
7,149
 
                     
Total assets
  
$
204,483
  
$
186,644
  
$
188,888
  
                     
Liabilities and Stockholders' Equity
                    
Current liabilities:
                    
Current maturities of long-term debt
  
$
2,857
  
$
4,257
  
$
4,257
  
Accounts payable
    
18,963
   
17,552
   
16,056
 
Accrued expenses
    
15,108
   
16,870
   
12,445
 
                     
Total current liabilities
    
36,928
   
38,679
   
32,758
 
                     
Long-term debt
    
10,000
   
12,857
   
11,428
 
Deferred income taxes
    
10,325
   
10,813
   
10,742
 
Other long-term liabilities
    
6,580
   
5,890
   
6,695
 
                     
Stockholders' equity
    
140,650
   
118,405
   
127,265
 
                     
Total liabilities and stockholders' equity
  
$
204,483
  
$
186,644
  
$
188,888
  
 
 
STANLEY FURNITURE COMPANY, INC.
  
Consolidated Condensed Statements of Cash Flows
  
(in thousands)
  
(unaudited)
  
           
   
Nine Months Ended
  
   
Oct 1,
  
Sept 25,
  
   
2005
  
2004
  
Cash flows from operating activities:
          
Cash received from customers
  
$
247,093
  
$
212,934
  
Cash paid to suppliers and employees
    
(214,001
)
  
(198,687
)
Interest paid, net
    
(1,431
)
  
(1,791
)
Income taxes paid, net
    
(8,447
)
  
(7,748
)
Net cash provided by operating activities
    
23,214
   
4,708
 
               
Cash flows from investing activities:
              
Capital expenditures
    
(3,791
)
  
(402
)
Other, net
    
(33
)
  
(119
)
Net cash used by investing activities
    
(3,824
)
  
(521
)
               
Cash flows from financing activities:
              
Repayment of senior notes
    
(2,828
)
  
(5,586
)
Purchase and retirement of common stock
    
(9,996
)
  
-
 
Dividends paid
    
(2,330
)
  
(1,876
)
Proceeds from insurance policy loans
    
1,110
    
993
  
Proceeds from exercise of stock options
    
6,335
   
1,944
 
Net cash used by financing activities
    
(7,709
)
  
(4,525
)
               
Net increase (decrease) in cash
    
11,681
   
(338
)
Cash at beginning of period
    
7,632
   
2,509
 
               
Cash at end of period
  
$
19,313
  
$
2,171
  
               
Reconciliation of net income to
              
net cash provided by operating activities:
              
Net income
  
$
17,389
  
$
15,103
  
               
Adjustments to reconcile net income
              
to net cash provided by operating activities:
              
Depreciation and amortization
    
4,228
   
4,230
 
Deferred income taxes
    
(524
)
  
(1,822
)
Changes in working capital
    
2,292
    
(13,611
)
Other assets
    
(56
)
  
(205
)
Other long-term liabilities
    
(115
)
  
1,013
 
Net cash provided by operating activities
  
$
23,214
  
$
4,708