10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

Form 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2014

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to  .

Commission file number: 0-14938

STANLEY FURNITURE COMPANY, INC.

(Exact name of registrant as specified in its charter)

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

200 North Hamilton Street, High Point, North Carolina, 27260
(Address of principal executive offices, Zip Code)

(336-884-7701)

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes (x) No ( )

            Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (X) No ( )

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act, (check one):

Large accelerated filer ( )	Accelerated filer                ( )
Non-accelerated filer   ( )	Smaller reporting company (X)
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ( ) No (x)

As of October 10, 2014, 14,780,322 shares of common stock of Stanley Furniture Company, Inc., par 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)

	September 27, 2014		December 31, 2013
ASSETS
Current assets:
Cash	$	18,580	$	7,218
Restricted cash		1,190		1,737
Short-term investments		-		10,000
Accounts receivable, less allowances of $373 and $270		6,188		5,608
Inventories:
Finished goods		22,273		23,370
Work-in-process		456		249
Raw materials		28		21
Total inventories		22,757		23,640
Assets of discontinued operations		5,222		36,441
Prepaid and other current assets		3,619		3,964
Deferred income taxes		129		699
Total current assets		57,685		89,307
Property, plant and equipment, net		1,797		1,935
Other assets		4,127		3,982
Total assets	$	63,609	$	95,224
LIABILITIES
Current liabilities:
Accounts payable	$	2,668	$	5,989
Liabilities of discontinued operations		924		3,003
Accrued salaries, wages and benefits		2,921		3,260
Other accrued expenses		1,678		1,388
Total current liabilities		8,191		13,640
Deferred income taxes		129		699
Other long-term liabilities		4,852		5,244
Total liabilities		13,172		19,583
STOCKHOLDERS’ EQUITY
Common stock, $.02 par value, 25,000,000 shares authorized,14,780,322 and 14,520,083 shares issued and outstanding		283		283
Capital in excess of par value		16,366		15,732
Retained earnings		34,050		59,784
Accumulated other comprehensive loss		(262)		(158)
Total stockholders’ equity		50,437		75,641
Total liabilities and stockholders’ equity	$	63,609	$	95,224

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

2

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept. 28, 2013		Sept. 27, 2014		Sept. 28, 2013
Net sales	$	13,928	$	14,661	$	44,603	$	45,294
Cost of sales		11,012		11,200		35,368		35,247
Gross profit		2,916		3,461		9,235		10,047
Selling, general, and administrative expenses		3,294		3,693		11,757		11,837
Operating loss		(378)		(232)		(2,522)		(1,790)
Other income, net		24		33		336		51
Interest expense, net		802		698		2,259		1,955
Loss from continuing operations before taxes		(1,156)		(897)		(4,445)		(3,694)
Income tax benefit		(10)		(127)		(31)		(143)
Net loss from continuing operations		(1,146)		(770)		(4,414)		(3,551)
Net loss from discontinued operations		(1,118)		(1,700)		(21,320)		(4,542)
Net loss	$	(2,264)	$	(2,470)	$	(25,734)	$	(8,093)
Basic loss per share:
Loss from continuing operations	$	(.08)	$	(.05)	$	(.31)	$	(.25)
Loss from discontinued operations		(.08)		(.12)		(1.50)		(.32)
Net loss	$	(.16)	$	(.17)	$	(1.81)	$	(.57)
Diluted loss per share:
Loss from continuing operations	$	(.08)	$	(.05)	$	(.31)	$	(.25)
Loss from discontinued operations		(.08)		(.12)		(1.50)		(.32)
Net loss	$	(.16)	$	(.17)	$	(1.81)	$	(.57)
Weighted average shares outstanding:
Basic		14,209		14,136		14,185		14,145
Diluted		14,209		14,136		14,185		14,145

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

3

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept. 28, 2013		Sept. 27, 2014		Sept. 28, 2013
Net loss	$	(2,264)	$	(2,470)	$	(25,734)	$	(8,093)
Other comprehensive loss:
Amortization of prior service cost		39		42		115		126
Amortization of actuarial loss		(4)		(8)		(11)		(25)
Adjustments to net periodic benefit cost		35		34		104		101
Comprehensive loss	$	(2,299)	$	(2,504)	$	(25,838)	$	(8,194)

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

4

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 27, 2014		September 28, 2013
Cash flows from operating activities:
Cash received from customers	$	43,454	$	42,766
Cash paid to suppliers and employees		(50,232)		(43,982)
Interest paid, net		(2,884)		(2,514)
Income taxes paid, net		-		(156)
Net cash used by operating activities		(9,662)		(3,886)
Cash flows from investing activities:
Sale of short-term securities		10,000		15,000
Decrease in restricted cash		547		-
Capital expenditures		-		(2,232)
Purchase of other assets		(44)		(377)
Net cash provided by investing activities		10,503		12,391
Cash flows from financing activities:
Purchase and retirement of common stock		-		(358)
Proceeds from insurance policy loans		2,701		2,416
Proceeds from exercise of stock options		-		38
Net cash provided by financing activities		2,701		2,096
Cash flows from discontinued operations:
Cash provided (used) by operating activities		3,549		(8,154)
Cash provided (used) by investing activities		4,271		(2,461)
Net cash provided (used) by discontinued operations		7,820		(10,615)
Net increase in cash		11,362		(14)
Cash at beginning of period		7,218		10,930
Cash at end of period	$	18,580	$	10,916
Reconciliation of net loss to net cash used by operating activities:
Net loss	$	(25,734)	$	(8,093)
Loss from discontinued operations		21,320		4,542
Depreciation and amortization		427		299
Stock-based compensation		634		661
Changes in assets and liabilities:
Accounts receivable		(580)		(2,543)
Inventories		883		5,328
Prepaid expenses and other current assets		(2,451)		(3,428)
Accounts payable		(3,320)		(195)
Accrued salaries, wages and benefits		(107)		571
Other accrued expenses		283		(104)
Other assets		(625)		(559)
Other long-term liabilities		(392)		(365)
Net cash used by operating activities	$	(9,662)	$	(3,886)

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

5

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 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.

Results of the discontinued operations are excluded from the accompanying notes to the consolidated financial statements for all periods presented, unless otherwise noted.

2.         Property, Plant and Equipment

	September 27, 2014		December 31, 2013
Machinery and equipment	$	3,880	$	3,880
Leasehold improvements		1,589		1,589
Property, plant and equipment, at cost		5,469		5,469
Less accumulated depreciation		3,672		3,534
Property, plant and equipment, net	$	1,797	$	1,935

3.Income taxes

During the nine months of 2014, we recorded a non-cash charge to our valuation allowance of $10.5 million, increasing our valuation allowance against deferred tax assets to $19.5 million at September 27, 2014. 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 results over the most recent three-year period were heavily affected by our business restructuring 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 $129 will be realized based on the reversal of 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.

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

6

STANLEY FURNITURE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

4.Employee Benefit Plans

Components of other postretirement benefit cost:

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept. 28, 2013		Sept. 27, 2014		Sept. 28, 2013
Interest cost	$	27	$	23	$	82	$	73
Amortization of prior service benefit		(39)		(42)		(115)		(126)
Amortization of accumulated loss		4		8		11		25
Net periodic postretirement benefit income	$	(8)	$	(11)	$	(22)	$	(28)

5.Stockholders’ Equity

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

	Three Months Ended		Nine Months Ended
	Sept. 27, 2014	Sept. 28, 2013	Sept. 27, 2014	Sept. 28, 2013
Weighted average shares outstanding for basic calculation	14,209	14,136	14,185	14,145
Add: Effect of dilutive stock options	-	-	-	-
Weighted average shares outstanding, adjusted for diluted calculation	14,209	14,136	14,185	14,145

During the three and nine month periods ended September 27, 2014 and September 28, 2013, the dilutive effect of outstanding stock options is not recognized since we have a net loss for those periods.  Approximately 1.6 million shares in the three and nine month periods of 2014 were issuable upon the exercise of stock options compared to 2.0 million shares in the three and nine month periods of 2013.  Also, 544,000 shares in 2014 and 373,000 shares in 2013 of restricted stock were not included because they were anti-dilutive.

A reconciliation of the activity in Stockholders’ Equity accounts for the first nine months of 2014 is as follows:

	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss
Balance, December 31, 2013	$	283	$	15,732	$	59,784	$	(158)
Net loss		-		-		(25,734)		-
Stock-based compensation		-		634		-		-
Exercise of stock options		-		-		-		-
Adjustment to net periodic benefit cost		-		-		-		(104)
Balance, September 27, 2014	$	283	$	16,366	$	34,050	$	(262)

7

STANLEY FURNITURE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

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.  As a result, we took charges for future lease obligations in 2011 and in 2012 for the portions of the Stanleytown warehouse facility no longer used.  During the second quarter of 2014, we completely exited the facility and took a charge of $354 for the remaining lease obligation.

            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 2013, we recorded $770 in restructuring charges in selling, general and administrative expenses for severance and relocation costs associated with this move and consolidation, with $532 of that total recorded in the first nine months of the year.

Restructuring accrual activity for the nine months ending September 27, 2014 was as follows:

		Lease Obligations	Severance and other termination costs- Corporate Office		Total
Accrual at January 1, 2014	$	488	$	169	$	657
Charges (credits) to expense		354		(39)		315
Cash payments		(242)		(116)		(358)
Accrual at September 27, 2014	$	600	$	14	$	614

Restructuring accrual activity for the nine months ending September 28, 2013 was as follows:

	Lease Obligations		Severance and other termination costs		Total
Accrual at January 1, 2013	$	732	$	-	$	732
Charges to expense		-		532		532
Cash payments		(183)		(449)		(632)
Accrual at September 28, 2013	$	549	$	83	$	632

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

8

STANLEY FURNITURE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

7.Discontinued Operations

During the second quarter of 2014, we concluded that revenue on our Young America product line remained below the level needed to reach profitability and that the time frame needed to assure sustainable profitability was longer than we felt was economically justified.  Therefore, we made the decision to cease manufacturing operations at our Robbinsville, North Carolina facility and sell the related assets of this facility.  Manufacturing operations were ceased in the third quarter of 2014 and as a result this product line was reflected as a discontinued operation pursuant to the provisions of Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08) for all periods presented.

Loss from discontinued operations, net of taxes, comprised the following:

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept.28, 2013		Sept. 27, 2014		Sept. 28, 2013
Net sales	$	3,510	$	9,326	$	19,263	$	28,909
Cost of sales		4,295		10,005		36,748		30,611
Selling, general and administrative expenses		333		1,021		3,835		2,840
Loss from discontinued operations before income taxes		(1,118)		(1,700)		(21,320)		(4,542)
Income taxes		-		-		-		-
Loss from discontinued operations, net of income taxes	$	(1,118)	$	(1,700)	$	(21,320)	$	(4,542)

Loss from discontinued operations includes accelerated depreciation and amortization, write-down of inventories and other assets, severance and other termination costs and operating losses related to final manufacturing production.

Net assets for discontinued operations are as follows:

	September 27, 2014		December 31, 2013
Accounts receivable, net	$	2,361	$	6,394
Inventory		1,369		10,026
Property, plant and equipment		1,492		18,209
Other assets		-		1,812
Total assets		5,222		36,441
Accounts payable and other liabilities		924		3,003
Net assets	$	4,298	$	33,438

        The only ongoing costs for discontinued operations will be warehouse and shipping for distribution of discontinued inventory.

9

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

Overview

We have taken a number of strategic steps over the last several years to reposition our company for growth, such as purchasing and implementing a new enterprise operating system, opening new trade showrooms and consolidating corporate offices.  We believe each of these initiatives caused disruption in our business, but each is now contributing to progress in our company’s operating results. 

In addition, we have taken strategic steps to align our cost structure and operating models in response to lower sales volume and sluggish demand for upper-end wood residential case goods as a whole, but also in response to our effort to domestically manufacture our nursery and youth product line, Young America, an effort that we ultimately discontinued. We implemented a strategy to differentiate that brand in the marketplace by ensuring safety, quality, selection and service in a market place we saw as highly commoditized by imported copies of our own designs.  This led us to shift the production of imported Young America items to our domestic operation in Robbinsville, North Carolina.  After significant investment upgrading both our domestic manufacturing capabilities and our Young America product line, revenue remained below the level needed to reach profitability.  We concluded during the second quarter of 2014 that the timeframe needed to assure sustainable profitability was longer than we felt was economically justified.  Therefore, we made the decision to cease manufacturing operations at our Robbinsville, North Carolina facility.  With the completion of final production at this facility in the third quarter, financial results related to this product line are reflected as discontinued operations for all periods presented.  The loss from discontinued operations for the three and nine month periods ending September 27, 2014, were $1.1 million and $21.3 million, respectively.  The losses consisted mostly of asset impairment charges, costs of finalizing operations and severance and other termination costs.  Future expenses related to discontinued operations will result in expenses to support continued warehousing activities for the remaining finished goods inventory of this product line and any further adjustments that may be required for asset valuations.   

With these strategic steps complete, our operating strategy for continuing operations is now focused on an overseas sourcing model, and we maintain a more variable cost structure allowing us to more quickly respond to the demands of a changing marketplace.

Results of Operations – Quarterly Trends from Continuing Operations

In this section we will make comparisons between the three months ended September 27, 2014 with three months ended June 28, 2014, March 29, 2014 and December 31, 2013 for our continuing operations.  These comparisons highlight trends we believe are relevant to understanding the transition of our business.

	Three Months Ended
	Sept. 27,  2014		June 28, 2014		March 29, 2014		Dec. 31, 2013
	$	%	$	%	$	%	$	%
Net sales	13,928	100.0	16,033	100.0	14,642	100.0	13,270	100.0
Gross profit	2,916	20.9	3,166	19.7	3,153	21.5	2,868	21.6
Selling, general and administrative expenses	3,294	23.6	4,185	26.1	4,278	29.2	4,593	34.6
Operating loss	(378)	(2.7)	(1,019)	(6.4)	(1,125)	(7.7)	(1,175)	(13.0)

Net sales for the current quarter were lower than the two previous quarters and higher than the December 31, 2013 quarter.  We believe the lower sales resulted from continued sluggish retail environment for our segment of the market place and retail disruptions associated with the discontinuance of our Young America brand.  Gross profit has remained consistent over the last four quarters, excluding the second quarter of 2014 which included a restructuring charge for $354,000 for future lease commitments on a warehouse facility that is no longer utilized.  Included in selling, general and administrative expenses for the fourth quarter of 2013 was a restructuring charge of $238,000 associated with consolidating the corporate offices.    The lower selling, general and administrative expenses in the current quarter is the result of our efforts to remove costs from our corporate overhead as we believe we have properly aligned our corporate structure with our current sales volume without inhibiting our ability to support future growth.  Consequently, our operating loss has improved for three consecutive quarters.

Results of Operations for the three and nine month periods ended September 27, 2014, compared to the three and nine month periods ended September 28, 2013.

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

	Three Months Ended		Nine Months Ended
	Sept. 27, 2014	Sept. 28, 2013	Sept. 27, 2014	Sept. 28, 2013
Net sales	100.0%	100.0%	100.0%	100.0%
Cost of sales	79.1	76.4	79.3	77.8
Gross profit	20.9	23.6	20.7	22.2
Selling, general and administrative expenses	23.6	25.2	26.4	26.1
Operating loss	(2.7)	(1.6)	(5.7)	(3.9)
Other income, net	.2	.2	.8	.1
Interest expense, net	5.8	4.8	5.1	4.3
Loss from continuing operations before income taxes	(8.3)	(6.2)	(10.0)	(8.1)
Income tax (benefit)	(.1)	(.9)	(.1)	(.3)
Loss from continuing operations	(8.2)	(5.3)	(9.9)	(7.8)
Loss from discontinued operations	(8.0)	(11.6)	(47.8)	(10.1)
Net loss	(16.2)%	(16.9)%	(57.7)%	(17.9)%

10

Net sales for the three month period ended September 27, 2014 decreased $733,000, or 5.0%, from the comparable 2013 period.  For the nine month period ended September 27, 2014, net sales decreased $691,000, or 1.5% from the comparable 2013 nine month period. The decrease in both comparable periods was driven by lower unit volume.

Gross profit for the current three month period was $2.9 million, or 20.9% of net sales compared to a gross profit of $3.5 million, or 23.6% of net sales, in the prior year three month period.  Gross profit for the first nine months of 2014 was $9.2 million, or 20.7% of net sales compared to a gross profit of $10.0 million, or 22.2% of net sales, for the prior year nine month period.  The current year nine month period includes a restructuring charge of $354,000 taken in the second quarter for future lease commitments on a warehouse facility that is no longer utilized.  In both the current three and nine month periods, gross profit was negatively impacted by the lower sales volumes and a charge for slow moving and discontinued finished goods inventory. 

Selling, general and administrative expenses for the three and nine month periods of 2014 was $3.3 million and $11.8 million, or 23.6% and 26.4% of net sales, respectively, compared to $3.7 million and $11.8 million, or 25.2% and 26.1% of net sales, for the comparable 2013periods.  The prior year expenses include restructuring charges associated with consolidating the corporate offices of $10,000 for the three month period and $532,000 for the nine month period. Lower expenditures in the current year three month period were driven by our efforts to right size our organization after the elimination of the sales volume associated with the discontinued Young America brand. Excluding one-time costs, the current nine month period expenditures were higher compared to the prior year due to increased amortization for new enterprise operating systems implemented in the second half of 2013 and higher marketing costs supporting new product introductions.  These higher costs were partially offset by cost reduction initiatives taken during the current quarter to right size our corporate structure.    

As a result, operating loss as a percentage of net sales was 2.7% and 5.7% for the three and nine month periods of2014 compared to 1.6% and 3.9% for the comparable 2013 periods.

Net interest expense for the three month period of 2014 increased $104,000 from the comparable 2013 period and $304,000 for the nine month period.  Interest expense is primarily composed of interest on insurance policy loans from a legacy deferred compensation plan, which increases annually based on growth in cash surrender value.

Our effective tax rate for the current three and nine months is essentially zero since we have established a valuation allowance for our deferred tax assets in excess of our deferred tax liabilities. The benefit in both years was primarily the release of reserves due to lapse of statute of limitations.

Financial Condition, Liquidity and Capital Resources

            Sources of liquidity include cash on hand and cash generated from operations. While we believe that our business strategy and restructuring efforts will be successful, we cannot predict with certainty the ultimate impact on our revenues, operating costs and cash flow from operations.  We expect cash on hand to be adequate for ongoing operational and capital expenditures for the foreseeable future.  At September 27, 2014 we had $18.6 million in cash and $1.2 million in restricted cash.

Working capital, excluding cash, restricted cash, short-term investments and net assets of discontinued operations increased to $25.5 million at September 27, 2014 from $23.3 million on December 31, 2013.  The increase was largely the result of a decrease in accounts payable for finished goods.

Cash used by operations was $9.7 million in the nine month period of 2014 compared to cash used by operations of $3.9 million in the comparable prior year period.  The increase in cash used by operations during the first nine months of 2014 was due to an increase in spending for finished goods.  The increase in spending was partially offset by an increase in cash receipts from customers in the current nine month period. 

11

Net cash provided by investing activities was $10.5 million in the current nine month period of 2014 compared to $12.4 million in the comparable prior year period.  During the nine month period of 2014, the net cash provided was the result of $10.0 million of short term investments maturing and the release of $547,000 of restricted cash.  During the nine month period of 2013, we invested $2.2 million in capital expenditures for the consolidation of our corporate offices and High Point showroom and $377,000 as part of our continued investment in our enterprise operating system.  Offsetting these uses of cash in 2013 was the maturity of a short term investment of $15.0 million.  With the announcement of our ceasing manufacturing in our Robbinsville, NC facility, our capital expenditure requirements will be minimal for the remainder of 2014.

Net cash provided by financing activities was $2.7 million in the current nine months of 2014 compared to $2.1 million in the prior year period.  In both years, cash was provided from loans against the cash surrender value of insurance policies under a legacy deferred compensation plan.  These proceeds were used to pay interest due on outstanding policy loans which is shown as a use of cash in operating activities. Approximately $358,000 was used in the first nine months of 2013 to purchase and retire 80,077 shares of our common stock. 

Net cash provided by discontinued operations was $7.9 million in the current nine months of 2014 compared to cash used of $10.9 million in the prior year period.  In the current nine months cash was generated from the sale of property, plant and equipment along with the collection of receivables and selling of inventory, offset by production costs to complete manufacturing of this product line's backlog.   The use of cash in the prior year was driven by operating losses and the continued investment in capital equipment and ERP investments. We expect to collect an additional $3.5 million from the sale of property, plant and equipment, collection of remaining receivables and sale of remaining inventory, net of payables and further expenses to support warehousing operations.

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”) for wooden bedroom furniture imported from China. Antidumping duties for merchandise entering the U.S. after September 30, 2007 have remained 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 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 of $39.9 million in April 2012. On August 19, 2013, the Federal Circuit issued a decision affirming the dismissal of the claims of two of the four Non-Supporting Producers. On January 3, 2014, the Federal Circuit denied those Non-Supporting Producers’ petitions for rehearing en banc.  On May 2, 2014, these Non-Supporting Producers filed a petition for writ of certiorari, seeking review by the United States Supreme Court.  On October 6, 2014, the Supreme Court denied two of three of the Non-Supporting Producers’ petitions for certiorari review, and we believe it is likely the Supreme Court will deny the third petition shortly, because the third petition raises the same claims as the petitions that already have been dismissed. Accordingly, we believe that the chance Customs will seek and be entitled to obtain a return of our CDSOA distribution continues to be remote.  

In November 2012 and December 2013, Customs disclosed that it withheld $3.0 million and $6.4 million, respectively, in funds related to the antidumping duty order on wooden bedroom furniture from China that was otherwise available for distribution until the amounts at issue in the pending litigation have been resolved. Assuming our historic allocation of approximately 30%, the portion of these undistributed funds that may be allocated to us is approximately $2.8 million. Customs has not yet announced when these funds will be distributed. 

Customs also preliminarily disclosed that as of April 30, 2014, an additional $4.3 million of total collected duties was potentially available for distribution in 2014 to eligible domestic manufacturers of wooden bedroom furniture.  Customs noted that the final amounts available for distribution in 2014 could be higher or lower than the preliminary amounts due to liquidations, re-liquidations, protests, or other events affecting entries.  Based on the Supreme Court’s denial of the Non-Supporting Producers’ petitions for writ of certiorari, we believe it is possible that Customs will distribute these funds before the end of the fourth quarter of 2014, although the exact timing of the distribution is unknown.  Assuming our historic allocation of approximately 30%, the portion of these undistributed funds that may be allocated to us is approximately $1.3 million.

12

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.

New Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), which updated the guidance in ASC Topic 205,  Presentation of Financial Statements,  and ASC Topic 360,  Property, Plant and Equipment.  The amendments in ASU 2014-08 change the criteria for reporting discontinued operations for all public and nonpublic entities. The amendments also require new disclosures about discontinued operations and disposals of components of an entity that do not qualify for discontinued operations reporting. This guidance will become effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years.  We early adopted that guidance and followed such guidance for reporting of the discontinued Young America product line in the third quarter of 2014.

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 2013 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 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 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,  our ability to collect receivables from Young America customers whose businesses are negatively impacted by the cease of Young America production, our ability to manage relations with Stanley Furniture customers who have also been Young America customers,  the inability to raise prices in response to inflation and increasing costs, lower sales due to worsening of current economic conditions, the cyclical nature of the furniture industry,  business failures or loss of large customers, failure to anticipate or respond to changes in consumer tastes, fashions and perceived values in a timely manner, competition in the furniture industry,  environmental, health, and safety  compliance costs, failure or interruption of our information technology infrastructure, and the possibility that U.S. Customs 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.  Any forward looking statement speaks only as of the date of this news release 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.

13

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 September 27, 2014, the end of the period covered by this quarterly report.

(b)        Changes in internal controls over financial reporting.  There were no changes in our internal control over financial reporting that occurred during the third quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

Part II. OTHER INFORMATION

Item 1A.           Risk Factors

The following description of risk factors includes material changes to, and supersedes, the description of risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ending December 31, 2013. 

Our results of operations and financial condition can be adversely affected by numerous risks.  You should carefully consider the risk factors detailed below in conjunction with the other information contained in this document.  Should any of these risks actually materialize, our business, financial condition and future prospects could be negatively impacted.

As a result of our reliance on foreign sourcing for our Stanley Furniture product line: 

·Our ability to service customers could be adversely affected and result in lower sales, earnings and liquidity.

Our supply of goods could be interrupted for a variety of reasons. Physical damage from a natural disaster, fire or other cause to any one of our sourcing partners’ factories could interrupt production for an extended period of time.Our sourcing partners may not supply goods that meet our manufacturing, quality or safety specifications, in a timely manner and at an acceptable price.  We may reject goods that do not meet our specifications, requiring us to find alternative sourcing arrangements at a higher cost, or possibly forcing us to discontinue the product.  Also, delivery of goods from our foreign sourcing partners may be delayed for reasons not typically encountered with domestic manufacturing or sourcing, such as shipment delays caused by customs or labor issues.

·Our ability to properly forecast consumer demand on product with extended lead times could result in lower sales, earnings and liquidity.

Our use of foreign sources exposes us to risks associated with forecasting future demand on product with extended order lead times.  Extended order lead times may adversely affect our ability to respond to sudden changes in demand, resulting in the purchase of excess inventory in the face of declining demand, or lost sales due to insufficient inventory in the face of increasing demand, either of which could have an adverse effect on our sales, earnings and liquidity.

·Changes in political, economic and social conditions, as well as laws and regulations, in the countries from which we source products could adversely affect us.

Foreign sourcing is subject to political and social instability in countries where our sourcing partners are located.  This could make it more difficult for us to service our customers.  Also, significant fluctuations of foreign exchange rates against the value of the U.S. dollar could increase costs and decrease earnings.  

·International trade policies of the United States and countries from which we source products could adversely affect us. 

Imposition of trade sanctions relating to imports, taxes, import duties and other charges on imports could increase our costs and decrease our earnings.

14

As a result of our decision to cease production of our Young America product line:

·We may not be able to collect receivables from customers whose businesses are negatively impacted by the cease of Young America production.

·The Stanley product line market share could be negatively impacted by this decision due to shared resources and shared customer base.

We may not be able to maintain or to raise prices in response to inflation and increasing costs.

Future market and competitive pressures may prohibit us from successfully raising prices to offset increased costs of finished goods, freight and other inflationary items.  This could lower our earnings.

We may not be able to sustain sales, earnings and liquidity levels due to economic downturns.

The furniture industry historically has been cyclical in nature and has fluctuated with economic cycles.  During economic downturns, the furniture industry tends to experience longer periods of recession and greater declines than the general economy. We believe that the industry is significantly influenced by economic conditions generally and particularly by housing activity, consumer confidence, the level of personal discretionary spending, demographics and credit availability.  These factors not only affect the ultimate consumer, but also impact smaller independent brick-&-mortar furniture retailers, which are our primary customers.  As a result, a worsening of current conditions could lower our sales and earnings and impact our liquidity.

Business failures, or the loss, of large customers could result in a decrease in our future sales and earnings.

Although we have no single customer representing 10% or more of our total annual sales, the possibility of business failures, or the loss oflarge customers could result in a decrease of our future sales and earnings.  Lost sales may be difficult to replace and any amounts owed to us may become uncollectible.

Failure to anticipate or respond to changes in consumer tastes, fashions and perceived values in a timely manner could result in a decrease in our sales and earnings. 

Residential furniture is a fashion business based upon products styled for a changing marketplace and is sometimes subject to changing consumer trends and tastes.  If we are unable to predict or respond to changes in these trends and tastes in a timely manner, we may lose sales and have to sell excess inventory at reduced prices.  This could lower our sales and earnings.

We may not be able to sustain current sales and earnings due to the actions and strength of our competitors.

The furniture industry is very competitive and fragmented.  We compete with mostly overseas manufacturers and/or retailers who source products from overseas and/or are vertically integrated.   In addition, some competitors have greater financial resources than we have and often offer extensively advertised, highly promoted products.  As a result, we are continually subject to the risk of losing market share, which may lower our sales and earnings.

Future cost of compliance with environmental, safety and health regulations could reduce our earnings. 

We are subject to federal, state and local laws and regulations in the areas of safety, health and environmental protection.  The timing and ultimate magnitude of costs for compliance with environmental, health and safety regulations are difficult to predict and could reduce our earnings. 

Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure. 

The proper functioning of our information technology infrastructure is critical to the efficient operation and management of our business. If our information technology systems fail or are interrupted, our operations may be adversely affected and operating results could be harmed. Our information technology systems, and those of third parties providing service to us, may also be vulnerable to damage or disruption caused by circumstances beyond our control. These include catastrophic events, power anomalies or outages, natural disasters, computer system or network failures, viruses or malware, physical or electronic break-ins, unauthorized access and cyber attacks. Any material disruption, malfunction or similar challenges with our information technology infrastructure, or disruptions or challenges relating to the transition to new processes, systems or providers, could have a material adverse effect on the operation of our business and our results of operations.

We depend on key personnel and could be affected by theloss of their  services.

The success of our business depends upon the services of certain senior executives. The loss of any such person or other key personnel could have a material adverse effect on our business and results of operations.

15

Item 6. 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 to the Registrant’s Form 8-K (Commission File No. 0-14938) filed February 3, 2010).
10.1	Separation Agreement and General Release, dated August 7, 2014, between the Company and Micah S. Goldstein (incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K (Commission File No. 0-14938) filed August 8, 2014).
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 by Anita W. Wimmer, our Principal 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 of Anita W. Wimmer, our Principal 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 September 27, 2014, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) condensed consolidated statements of comprehensive loss, (iv) condensed consolidated statements of cash flows, (v) the notes to the consolidated financial statements, and (vi) document and entity information.(1)

(1)Filed herewith

16

SIGNATURE

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 14, 2014	STANLEY FURNITURE COMPANY, INC.
	By:	/s/ Anita W. Wimmer
		Anita W. Wimmer
		Vice President of Finance
		(Principal Financial and Accounting Officer)

17

EX-31.1

Exhibit 31.1

I, Glenn Prillaman, certify that:

1.         I have reviewed this quarterly report on Form 10-Q of Stanley Furniture Company, Inc.;

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods in this report.

4.         The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.         The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 14, 2014	By:	/s/  Glenn Prillaman
		Glenn Prillaman
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2  

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Stanley Furniture Company, Inc. (the “Company”) Quarterly Report on Form 10-Q for the period ended September 27, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glenn Prillaman, Chief Executive Officer of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1).       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2).       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 14, 2014	By:	/s/  Glenn Prillaman
		Glenn Prillaman
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2  

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Restructuring and Related Charges (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 28, 2014 Lease Obligations [Member]	Sep. 28, 2013 Severance And Relocation Cost [Member]	Dec. 31, 2013 Severance And Relocation Cost [Member]
Restructuring and Related Charges (Details) [Line Items]
Restructuring Charges	$ 354	$ 532	$ 770

XML

Income taxes

9 Months Ended

Sep. 27, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

3. Income taxes

During the nine months of 2014, we recorded a non-cash charge to our valuation allowance of $10.5 million, increasing our valuation allowance against deferred tax assets to $19.5 million at September 27, 2014. 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 results over the most recent three-year period were heavily affected by our business restructuring 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 $129 will be realized based on the reversal of 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.

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

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Discontinued Operations (Details) - Net assets for discontinued operations (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013
Net assets for discontinued operations [Abstract]
Accounts receivable, net	$ 2,361	$ 6,394
Inventory	1,369	10,026
Property, plant and equipment	1,492	18,209
Other assets		1,812
Total assets	5,222	36,441
Accounts payable and other liabilities	924	3,003
Net assets	$ 4,298	$ 33,438

XML

Property, Plant and Equipment

9 Months Ended

Sep. 27, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

2.         Property, Plant and Equipment

	September 27, 2014		December 31, 2013
Machinery and equipment	$	3,880	$	3,880
Leasehold improvements		1,589		1,589
Property, plant and equipment, at cost		5,469		5,469
Less accumulated depreciation		3,672		3,534
Property, plant and equipment, net	$	1,797	$	1,935

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CONSOLIDATED BALANCE SHEEETS (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013
Current assets:
Cash	$ 18,580	$ 7,218
Restricted cash	1,190	1,737
Short-term investments		10,000
Accounts receivable, less allowances of $373 and $270	6,188	5,608
Inventories:
Finished goods	22,273	23,370
Work-in-process	456	249
Raw materials	28	21
Total inventories	22,757	23,640
Assets of discontinued operations	5,222	36,441
Prepaid and other current assets	3,619	3,964
Deferred income taxes	129	699
Total current assets	57,685	89,307
Property, plant and equipment, net	1,797	1,935
Other assets	4,127	3,982
Total assets	63,609	95,224
Current liabilities:
Accounts payable	2,668	5,989
Liabilities of discontinued operations	924	3,003
Accrued salaries, wages and benefits	2,921	3,260
Other accrued expenses	1,678	1,388
Total current liabilities	8,191	13,640
Deferred income taxes	129	699
Other long-term liabilities	4,852	5,244
Total liabilities	13,172	19,583
STOCKHOLDERS’ EQUITY
Common stock, $.02 par value, 25,000,000 shares authorized,14,780,322 and 14,520,083 shares issued and outstanding	283	283
Capital in excess of par value	16,366	15,732
Retained earnings	34,050	59,784
Accumulated other comprehensive loss	(262)	(158)
Total stockholders’ equity	50,437	75,641
Total liabilities and stockholders’ equity	$ 63,609	$ 95,224

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
Cash flows from operating activities:
Cash received from customers	$ 43,454	$ 42,766
Cash paid to suppliers and employees	(50,232)	(43,982)
Interest paid, net	(2,884)	(2,514)
Income taxes paid, net		(156)
Net cash used by operating activities	(9,662)	(3,886)
Cash flows from investing activities:
Sale of short-term securities	10,000	15,000
Decrease in restricted cash	547
Capital expenditures		(2,232)
Purchase of other assets	(44)	(377)
Net cash provided by investing activities	10,503	12,391
Cash flows from financing activities:
Purchase and retirement of common stock		(358)
Proceeds from insurance policy loans	2,701	2,416
Proceeds from exercise of stock options		38
Net cash provided by financing activities	2,701	2,096
Cash flows from discontinued operations:
Cash provided (used) by operating activities	3,549	(8,154)
Cash provided (used) by investing activities	4,271	(2,461)
Net cash provided (used) by discontinued operations	7,820	(10,615)
Net increase in cash	11,362	(14)
Cash at beginning of period	7,218	10,930
Cash at end of period	18,580	10,916
Reconciliation of net loss to net cash used by operating activities:
Net loss	(25,734)	(8,093)
Loss from discontinued operations	21,320	4,542
Depreciation and amortization	427	299
Stock-based compensation	634	661
Accounts receivable	(580)	(2,543)
Inventories	883	5,328
Prepaid expenses and other current assets	(2,451)	(3,428)
Accounts payable	(3,320)	(195)
Accrued salaries, wages and benefits	(107)	571
Other accrued expenses	283	(104)
Other assets	(625)	(559)
Other long-term liabilities	(392)	(365)
Net cash used by operating activities	$ (9,662)	$ (3,886)

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Stockholders' Equity (Details)	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Equity Option [Member]
Stockholders' Equity (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,600,000	2,000,000	1,600,000	2,000,000
Restricted Stock [Member]
Stockholders' Equity (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			544,000	373,000

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Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts [Line Items]
Balance, December 31, 2013			$ 75,641
Net loss	(2,264)	(2,470)	(25,734)	(8,093)
Stock-based compensation			634	661
Adjustment to net periodic benefit cost	35	34	104	101
Balance, September 27, 2014	50,437		50,437
Common Stock [Member]
Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts [Line Items]
Balance, December 31, 2013			283
Net loss
Stock-based compensation
Exercise of stock options
Adjustment to net periodic benefit cost
Balance, September 27, 2014	283		283
Additional Paid-in Capital [Member]
Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts [Line Items]
Balance, December 31, 2013			15,732
Net loss
Stock-based compensation			634
Exercise of stock options
Adjustment to net periodic benefit cost
Balance, September 27, 2014	16,366		16,366
Retained Earnings [Member]
Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts [Line Items]
Balance, December 31, 2013			59,784
Net loss			(25,734)
Stock-based compensation
Exercise of stock options
Adjustment to net periodic benefit cost
Balance, September 27, 2014	34,050		34,050
Accumulated Other Comprehensive Income (Loss) [Member]
Stockholders' Equity (Details) - Reconciliation of the activity in Stockholders` Equity accounts [Line Items]
Balance, December 31, 2013			(158)
Net loss
Stock-based compensation
Exercise of stock options
Adjustment to net periodic benefit cost			(104)
Balance, September 27, 2014	$ (262)		$ (262)

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Preparation of Interim Unaudited Consolidated Financial Statements

9 Months Ended

Sep. 27, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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 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.

Results of the discontinued operations are excluded from the accompanying notes to the consolidated financial statements for all periods presented, unless otherwise noted.

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CONSOLIDATED BALANCE SHEEETS (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013
Allowances (in Dollars)	$ 373	$ 270
Common stock par value (in Dollars per share)	$ 0.02	$ 0.02
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	14,780,322	14,520,083
Common stock, shares outstanding	14,780,322	14,520,083

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Restructuring and Related Charges (Tables)

9 Months Ended

Sep. 27, 2014

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

		Lease Obligations	Severance and other termination costs- Corporate Office		Total
Accrual at January 1, 2014	$	488	$	169	$	657
Charges (credits) to expense		354		(39)		315
Cash payments		(242)		(116)		(358)
Accrual at September 27, 2014	$	600	$	14	$	614

	Lease Obligations		Severance and other termination costs		Total
Accrual at January 1, 2013	$	732	$	-	$	732
Charges to expense		-		532		532
Cash payments		(183)		(449)		(632)
Accrual at September 28, 2013	$	549	$	83	$	632

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Document And Entity Information	9 Months Ended
	Sep. 27, 2014	Oct. 10, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	STANLEY FURNITURE CO INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		14,780,322
Amendment Flag	false
Entity Central Index Key	0000797465
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 27, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Discontinued Operations (Tables)

9 Months Ended

Sep. 27, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement [Table Text Block]

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept.28, 2013		Sept. 27, 2014		Sept. 28, 2013
Net sales	$	3,510	$	9,326	$	19,263	$	28,909
Cost of sales		4,295		10,005		36,748		30,611
Selling, general and administrative expenses		333		1,021		3,835		2,840
Loss from discontinued operations before income taxes		(1,118)		(1,700)		(21,320)		(4,542)
Income taxes		-		-		-		-
Loss from discontinued operations, net of income taxes	$	(1,118)	$	(1,700)	$	(21,320)	$	(4,542)

Schedule of Disposal Groups, Including Discontinued Operations Balance Sheet [Table Text Block]

	September 27, 2014		December 31, 2013
Accounts receivable, net	$	2,361	$	6,394
Inventory		1,369		10,026
Property, plant and equipment		1,492		18,209
Other assets		-		1,812
Total assets		5,222		36,441
Accounts payable and other liabilities		924		3,003
Net assets	$	4,298	$	33,438

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Net sales	$ 13,928	$ 14,661	$ 44,603	$ 45,294
Cost of sales	11,012	11,200	35,368	35,247
Gross profit	2,916	3,461	9,235	10,047
Selling, general, and administrative expenses	3,294	3,693	11,757	11,837
Operating loss	(378)	(232)	(2,522)	(1,790)
Other income, net	24	33	336	51
Interest expense, net	802	698	2,259	1,955
Loss from continuing operations before taxes	(1,156)	(897)	(4,445)	(3,694)
Income tax benefit	(10)	(127)	(31)	(143)
Net loss from continuing operations	(1,146)	(770)	(4,414)	(3,551)
Net loss from discontinued operations	(1,118)	(1,700)	(21,320)	(4,542)
Net loss	$ (2,264)	$ (2,470)	$ (25,734)	$ (8,093)
Basic loss per share:
Loss from continuing operations (in Dollars per share)	$ (0.08)	$ (0.05)	$ (0.31)	$ (0.25)
Loss from discontinued operations (in Dollars per share)	$ (0.08)	$ (0.12)	$ (1.50)	$ (0.32)
Net loss (in Dollars per share)	$ (0.16)	$ (0.17)	$ (1.81)	$ (0.57)
Diluted loss per share:
Loss from continuing operations (in Dollars per share)	$ (0.08)	$ (0.05)	$ (0.31)	$ (0.25)
Loss from discontinued operations (in Dollars per share)	$ (0.08)	$ (0.12)	$ (1.50)	$ (0.32)
Net loss (in Dollars per share)	$ (0.16)	$ (0.17)	$ (1.81)	$ (0.57)
Weighted average shares outstanding:
Basic (in Shares)	14,209	14,136	14,185	14,145
Diluted (in Shares)	14,209	14,136	14,185	14,145

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Restructuring and Related Charges

9 Months Ended

Sep. 27, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

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.  As a result, we took charges for future lease obligations in 2011 and in 2012 for the portions of the Stanleytown warehouse facility no longer used.  During the second quarter of 2014, we completely exited the facility and took a charge of $354 for the remaining lease obligation.

            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 2013, we recorded $770 in restructuring charges in selling, general and administrative expenses for severance and relocation costs associated with this move and consolidation, with $532 of that total recorded in the first nine months of the year.

Restructuring accrual activity for the nine months ending September 27, 2014 was as follows:

		Lease Obligations	Severance and other termination costs- Corporate Office		Total
Accrual at January 1, 2014	$	488	$	169	$	657
Charges (credits) to expense		354		(39)		315
Cash payments		(242)		(116)		(358)
Accrual at September 27, 2014	$	600	$	14	$	614

Restructuring accrual activity for the nine months ending September 28, 2013 was as follows:

	Lease Obligations		Severance and other termination costs		Total
Accrual at January 1, 2013	$	732	$	-	$	732
Charges to expense		-		532		532
Cash payments		(183)		(449)		(632)
Accrual at September 28, 2013	$	549	$	83	$	632

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

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Stockholders' Equity

9 Months Ended

Sep. 27, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

5. Stockholders’ Equity

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

	Three Months Ended		Nine Months Ended
	Sept. 27, 2014	Sept. 28, 2013	Sept. 27, 2014	Sept. 28, 2013
Weighted average shares outstanding for basic calculation	14,209	14,136	14,185	14,145
Add: Effect of dilutive stock options	-	-	-	-
Weighted average shares outstanding, adjusted for diluted calculation	14,209	14,136	14,185	14,145

During the three and nine month periods ended September 27, 2014 and September 28, 2013, the dilutive effect of outstanding stock options is not recognized since we have a net loss for those periods.  Approximately 1.6 million shares in the three and nine month periods of 2014 were issuable upon the exercise of stock options compared to 2.0 million shares in the three and nine month periods of 2013.  Also, 544,000 shares in 2014 and 373,000 shares in 2013 of restricted stock were not included because they were anti-dilutive.

A reconciliation of the activity in Stockholders’ Equity accounts for the first nine months of 2014 is as follows:

	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss
Balance, December 31, 2013	$	283	$	15,732	$	59,784	$	(158)
Net loss		-		-		(25,734)		-
Stock-based compensation		-		634		-		-
Exercise of stock options		-		-		-		-
Adjustment to net periodic benefit cost		-		-		-		(104)
Balance, September 27, 2014	$	283	$	16,366	$	34,050	$	(262)

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Stockholders' Equity (Details) - Basic and Diluted Earnings Per Share Calculation In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Basic and Diluted Earnings Per Share Calculation [Abstract]
Weighted average shares outstanding for basic calculation	14,209	14,136	14,185	14,145
Add: Effect of dilutive stock options
Weighted average shares outstanding, adjusted for diluted calculation	14,209	14,136	14,185	14,145

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Property, Plant and Equipment (Details) - Property, Plant and Equipment (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013
Property, Plant and Equipment [Abstract]
Machinery and equipment	$ 3,880	$ 3,880
Leasehold improvements	1,589	1,589
Property, plant and equipment, at cost	5,469	5,469
Less accumulated depreciation	3,672	3,534
Property, plant and equipment, net	$ 1,797	$ 1,935

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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 27, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Costs of Retirement Plans [Table Text Block]

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept. 28, 2013		Sept. 27, 2014		Sept. 28, 2013
Interest cost	$	27	$	23	$	82	$	73
Amortization of prior service benefit		(39)		(42)		(115)		(126)
Amortization of accumulated loss		4		8		11		25
Net periodic postretirement benefit income	$	(8)	$	(11)	$	(22)	$	(28)

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Discontinued Operations

9 Months Ended

Sep. 27, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

7. Discontinued Operations

During the second quarter of 2014, we concluded that revenue on our Young America product line remained below the level needed to reach profitability and that the time frame needed to assure sustainable profitability was longer than we felt was economically justified.  Therefore, we made the decision to cease manufacturing operations at our Robbinsville, North Carolina facility and sell the related assets of this facility.  Manufacturing operations were ceased in the third quarter of 2014 and as a result this product line was reflected as a discontinued operation pursuant to the provisions of Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08) for all periods presented.

Loss from discontinued operations, net of taxes, comprised the following:

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept.28, 2013		Sept. 27, 2014		Sept. 28, 2013
Net sales	$	3,510	$	9,326	$	19,263	$	28,909
Cost of sales		4,295		10,005		36,748		30,611
Selling, general and administrative expenses		333		1,021		3,835		2,840
Loss from discontinued operations before income taxes		(1,118)		(1,700)		(21,320)		(4,542)
Income taxes		-		-		-		-
Loss from discontinued operations, net of income taxes	$	(1,118)	$	(1,700)	$	(21,320)	$	(4,542)

Loss from discontinued operations includes accelerated depreciation and amortization, write-down of inventories and other assets, severance and other termination costs and operating losses related to final manufacturing production.

Net assets for discontinued operations are as follows:

	September 27, 2014		December 31, 2013
Accounts receivable, net	$	2,361	$	6,394
Inventory		1,369		10,026
Property, plant and equipment		1,492		18,209
Other assets		-		1,812
Total assets		5,222		36,441
Accounts payable and other liabilities		924		3,003
Net assets	$	4,298	$	33,438

The only ongoing costs for discontinued operations will be warehouse and shipping for distribution of discontinued inventory.

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Property, Plant and Equipment (Tables)

9 Months Ended

Sep. 27, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	September 27, 2014		December 31, 2013
Machinery and equipment	$	3,880	$	3,880
Leasehold improvements		1,589		1,589
Property, plant and equipment, at cost		5,469		5,469
Less accumulated depreciation		3,672		3,534
Property, plant and equipment, net	$	1,797	$	1,935

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 27, 2014

Stockholders' Equity Note [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended		Nine Months Ended
	Sept. 27, 2014	Sept. 28, 2013	Sept. 27, 2014	Sept. 28, 2013
Weighted average shares outstanding for basic calculation	14,209	14,136	14,185	14,145
Add: Effect of dilutive stock options	-	-	-	-
Weighted average shares outstanding, adjusted for diluted calculation	14,209	14,136	14,185	14,145

Schedule of Stockholders Equity [Table Text Block]

	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss
Balance, December 31, 2013	$	283	$	15,732	$	59,784	$	(158)
Net loss		-		-		(25,734)		-
Stock-based compensation		-		634		-		-
Exercise of stock options		-		-		-		-
Adjustment to net periodic benefit cost		-		-		-		(104)
Balance, September 27, 2014	$	283	$	16,366	$	34,050	$	(262)

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Employee Benefit Plans (Details) - Components of other postretirement benefit cost (Other Postretirement Benefit Plan [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Other Postretirement Benefit Plan [Member]
Employee Benefit Plans (Details) - Components of other postretirement benefit cost [Line Items]
Interest cost	$ 27	$ 23	$ 82	$ 73
Amortization of prior service benefit	(39)	(42)	(115)	(126)
Amortization of accumulated loss	4	8	11	25
Net periodic postretirement benefit income	$ (8)	$ (11)	$ (22)	$ (28)

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Restructuring and Related Charges (Details) - Restructuring accrual activity (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
Restructuring and Related Charges (Details) - Restructuring accrual activity [Line Items]
Accrual	$ 657	$ 732
Charges (credits) to expense	315	532
Cash payments	(358)	(632)
Accrual	614	632
Corporate Segment [Member] | Severance And Other Termination Costs [Member]
Restructuring and Related Charges (Details) - Restructuring accrual activity [Line Items]
Accrual	169
Charges (credits) to expense	(39)
Cash payments	(116)
Accrual	14
Lease Obligations [Member]
Restructuring and Related Charges (Details) - Restructuring accrual activity [Line Items]
Accrual	488	732
Charges (credits) to expense	354
Cash payments	(242)	(183)
Accrual	600	549
Severance And Other Termination Costs [Member]
Restructuring and Related Charges (Details) - Restructuring accrual activity [Line Items]
Accrual
Charges (credits) to expense		532
Cash payments		(449)
Accrual		$ 83

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Net loss	$ (2,264)	$ (2,470)	$ (25,734)	$ (8,093)
Other comprehensive loss:
Amortization of prior service cost	39	42	115	126
Amortization of actuarial loss	(4)	(8)	(11)	(25)
Adjustments to net periodic benefit cost	35	34	104	101
Comprehensive loss	$ (2,299)	$ (2,504)	$ (25,838)	$ (8,194)

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Employee Benefit Plans

9 Months Ended

Sep. 27, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

4. Employee Benefit Plans

Components of other postretirement benefit cost:

	Three Months Ended				Nine Months Ended
	Sept. 27, 2014		Sept. 28, 2013		Sept. 27, 2014		Sept. 28, 2013
Interest cost	$	27	$	23	$	82	$	73
Amortization of prior service benefit		(39)		(42)		(115)		(126)
Amortization of accumulated loss		4		8		11		25
Net periodic postretirement benefit income	$	(8)	$	(11)	$	(22)	$	(28)

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Discontinued Operations (Details) - Loss from discontinued operations, net of taxes (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Loss from discontinued operations, net of taxes [Abstract]
Net sales	$ 3,510	$ 9,326	$ 19,263	$ 28,909
Cost of sales	4,295	10,005	36,748	30,611
Selling, general and administrative expenses	333	1,021	3,835	2,840
Loss from discontinued operations before income taxes	(1,118)	(1,700)	(21,320)	(4,542)
Income taxes
Loss from discontinued operations, net of income taxes	$ (1,118)	$ (1,700)	$ (21,320)	$ (4,542)

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Income taxes (Details) (USD $)	9 Months Ended
	Sep. 27, 2014
Income Tax Disclosure [Abstract]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ 10,500,000
Deferred Tax Assets, Valuation Allowance	19,500,000
Deferred Tax Assets, Net, Current	$ 129,000