8-K 1 pr041503.txt 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) April 15, 2003 STANLEY FURNITURE COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 0-14938 54-1272589 -------- ------- ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 1641 Fairystone Park Highway, Stanleytown, Virginia 24168 --------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (276) 627-2000 -------------- ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) ITEM 7. Financial Statements and Exhibits (c) Exhibits The following exhibit is furnished as a part of this report. 99.1 Press release dated April 15, 2003. ITEM 9. Regulation FD Disclosure (Information provided pursuant to Item 12) On April 15, 2003, the Registrant issued a press release announcing first quarter 2003 operating results. The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. STANLEY FURNITURE COMPANY, INC. April 15, 2003 By: /s/Jeffrey R. Scheffer -------------- -------------------------- Date Jeffrey R. Scheffer President and Chief Executive Officer EXHIBIT 99.1 FOR IMMEDIATE RELEASE: CONTACT: DOUGLAS I. PAYNE April 15, 2003 Executive V.P. - Finance and Administration (276) 627-2157 e-mail: dpayne@stanleyfurniture.com ANITA W. WIMMER Treasurer (276) 627-2446 e-mail: awimmer@stanleyfurniture.com Sales Increase 2.9% STANLEY FURNITURE ANNOUNCES INCREASED SALES AND EARNINGS FOR THE FIRST QUARTER OF 2003 STANLEYTOWN, VA, April 15, 2003/PRNewswire/ -- Stanley Furniture Company, Inc. (Nasdaq-NNM: STLY) today reported increased sales and earnings for the first quarter of 2003. Both sales and earnings were at the high end of management's previous guidance for the quarter. Net sales of $61.3 million increased 2.9% from the first quarter of last year. This marks the fourth consecutive quarter of sales growth over the comparable prior year period. Earnings per share improved to $.52 for the first quarter of 2003 from $.27 in the prior year quarter. The first quarter of last year included restructuring and related charges of $.27 per share from closing a factory to realign the Company's manufacturing facilities. Operating income increased to $6.1 million, or 10.0% of net sales, in the first quarter of 2003 from $3.6 million, or 6.1% of net sales, in the first quarter of 2002. As anticipated, after excluding restructuring and related charges of $2.9 million in the prior year quarter, operating income decreased due to transition costs from ramping up sourcing initiatives and increases in certain marketing and product development costs. Strong cash flow of $6.6 million in the first quarter of 2003 was used to reduce debt $4.3 million, increase cash $1.4 million, purchase $566,000 of the Company's common stock and pay cash dividends of $328,000. Approximately $4.4 million remains authorized by the Company's Board of Directors to repurchase shares of the Company's common stock. Total debt outstanding was $25.3 million and cash on hand was $10.6 million at March 29, 2003. "We are pleased to report solid operating performance including the fourth consecutive quarter of year-over-year sales growth despite a sluggish economy and very difficult business conditions in the wood segment of the furniture industry," said Albert L. Prillaman, chairman. "We continue to implement our strategy of blending efficient domestic manufacturing capabilities in focused facilities with intelligent outsourcing of certain component parts and finished goods," commented Jeffrey R. Scheffer, president and chief executive officer. "This combination allows us to offer higher value, well-styled product without sacrificing our culture of high quality and quick delivery. Customers are responding favorably to our strategy as evidenced by recent results and the continued positive response to the products introduced at the just completed semi-annual International Home Furnishings Market." "Approximately 20% of 2003 sales will come from sourced items. Transition costs from ramping up sourcing activities along with increases in certain marketing and product development costs will continue to impact near-term earnings. Accordingly, we have modestly lowered our earnings guidance for 2003. However, we remain confident in our blended strategy and view this as an investment in the Company's future growth," Scheffer continued. "We expect recent market share gains to continue and believe we are well positioned to capture pent-up demand created by recent exceptionally strong housing activity once consumer confidence levels improve. However, we anticipate sluggish economic conditions and the competitive pressures of lower cost imported product to continue throughout 2003. Accordingly, any sales increase achieved in 2003 will result from market share gains," Scheffer concluded. Management offers the following guidance for total year 2003: o Net sales is expected to be in the range of $242 million to $252 million, an increase of 1% to 5% over 2002. o Operating income is expected to be in the range of $25.6 million to $26.7 million. o Earnings per share is expected to be in the range of $2.20 to $2.30 compared to $2.19, excluding restructuring and related charges of $.34, for 2002. o The Company's effective tax rate is expected to increase to 36.3% in 2003 from 35.5% in 2002 due to higher state taxes. Management offers the following guidance for the quarter ending June 28, 2003: o Net sales is expected to be in the range of $57 million to $60 million, an increase of 3% to 9% over the prior year quarter. o Operating income is expected to be in the range of $5.4 million to $5.9 million. o Earnings per share is expected to be in the range of $.45 to $.50 compared to $.45, excluding restructuring and related charges of $.08, in the year-ago quarter. Conference Call Details The Company will host a conference call Wednesday morning, April 16, 2003 at 9:30 a.m. Eastern Time. The call will also be web cast live and archived on the Company's web site at www.stanleyfurniture.com. The dial-in-number is (706) 679-8542. A replay will be available through April 23, 2003. The dial-in-number for the replay is (706) 645-9291 with an access code of 9474054. Forward-Looking Statements Certain statements made in this release are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as "believes," "estimates," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect the Company's reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include competition in the furniture industry including competition from lower-cost foreign manufacturers, the Company's success in implementing its blended strategy of expanded offshore sourcing and domestic manufacturing, disruptions in offshore sourcing including those arising from supply or distribution disruptions or changes in political or economic conditions affecting the countries from which the Company obtains offshore sourcing, the cyclical nature of the furniture industry, fluctuations in the price for lumber which is the most significant raw material used by the Company, credit exposure to customers in the current economic climate, capital costs and general economic conditions. Any forward-looking statement speaks only as of the date of this press release, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. All earnings per share amounts are on a diluted basis. Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer of wood furniture targeted at the upper-medium price range of the residential market. Manufacturing facilities are located in Stanleytown and Martinsville, VA and Robbinsville and Lexington, NC. Its common stock is traded on the Nasdaq stock market under the symbol STLY. TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC. Consolidated Operating Results (in thousands, except per share data) (unaudited) Three Months Ended March 29, March 30, 2003 2002 -------- ------- Net sales ............................................ $61,298 $59,574 Cost of sales ........................................ 46,676 45,106 Restructuring and related charges (1) ................ 2,905 ------- ------- Gross profit ..................................... 14,622 11,563 Selling, general and administrative expenses ......... 8,513 7,917 ------- ------- Operating income ................................... 6,109 3,646 Other income, net .................................... 42 82 Interest expense ..................................... 711 834 ------- ------- Income before income taxes ........................ 5,440 2,894 Income taxes ......................................... 1,974 1,027 ------- ------- Net income ........................................... $ 3,466 $ 1,867 ======= ======= Operating income: Before restructuring and related charges ......... $ 6,109 $ 6,551 Restructuring and related charges (1) ............ 2,905 ------- ------- Reported operating income ...................... $ 6,109 $ 3,646 ======= ======= Net income: Before restructuring and related charges ......... $ 3,466 $ 3,741 Restructuring and related charges (1) ............ 1,874 ------- ------- Reported net income ............................ $ 3,466 $ 1,867 ======= ======= Diluted earnings per share: Before restructuring and related charges ......... $ 0.52 $ 0.54 Restructuring and related charges (1) ............ 0.27 ------- ------- Diluted earnings per share ..................... $ 0.52 $ 0.27 ======= ======= Weighted average number of shares ................. 6,679 6,902 ======= ======= (1)2002 amount represents restructuring and related charges for realignment of the Company's manufacturing facilities.
STANLEY FURNITURE COMPANY, INC. Consolidated Condensed Balance Sheets (in thousands) (unaudited) Mar.29, Mar.30, Dec.31, 2003 2002 2002 -------- --------- --------- Assets Current assets: Cash ......................................... $ 10,583 $ 2,308 $ 9,227 Accounts receivable, net ..................... 31,563 29,999 27,832 Inventories .................................. 52,629 48,343 54,158 Prepaid expenses and other current assets .... 1,060 1,213 1,311 Deferred income taxes ........................ 2,876 3,153 2,876 -------- -------- -------- Total current assets ..................... 98,711 85,016 95,404 Property, plant, and equipment, net ............... 58,171 63,284 59,539 Goodwill .......................................... 9,072 9,072 9,072 Other assets ...................................... 8,230 6,215 8,470 -------- -------- -------- Total assets ............................. $174,184 $163,587 $172,485 ======== ======== ======== Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt ......... $ 6,914 $ 6,839 $ 6,914 Accounts payable ............................. 15,267 14,701 13,386 Accrued expenses ............................. 13,775 10,549 12,160 -------- -------- -------- Total current liabilities ................ 35,956 32,089 32,460 Long-term debt .................................... 18,414 25,329 22,700 Deferred income taxes ............................. 13,084 11,251 13,084 Other long-term liabilities ....................... 4,471 4,588 4,554 Stockholders' equity .............................. 102,259 90,330 99,687 -------- -------- -------- Total liabilities and stockholders' equity $174,184 $163,587 $172,485 ======== ======== ========
STANLEY FURNITURE COMPANY, INC. Consolidated Condensed Statements of Cash Flows (in thousands) (unaudited) Three Months Ended March 29, March 30, 2003 2002 -------- -------- Cash flows from operating activities: Cash received from customers ...................................... $ 57,523 $ 53,233 Cash paid to suppliers and employees .............................. (49,357) (48,512) Interest paid, net ................................................ (300) (472) Income taxes paid, net ............................................ (1,293) 277 -------- -------- Net cash provided by operating activities ....................... 6,573 4,526 -------- -------- Cash flows from investing activities: Capital expenditures............................................... (37) (67) Proceeds from sale of assets ...................................... 14 -------- -------- Net cash used by investing activities (37) (53) -------- -------- Cash flows from financing activities: Repayment of senior notes ......................................... (4,286) (4,286) Purchase and retirement of common stock ........................... (566) Dividends paid .................................................... (328) Repayment of revolving credit facility, net ....................... (600) Proceeds from exercise of stock options ........................... 766 -------- -------- Net cash used by financing activities ........................... (5,180) (4,120) -------- -------- Net increase in cash ............................................... 1,356 353 Cash at beginning of period ......................................... 9,227 1,955 -------- -------- Cash at end of period ............................................. $ 10,583 $ 2,308 ======== ======== Reconciliation of net income to net cash provided by operating activities: Net income ...................................................... $ 3,466 $ 1,867 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization ................................. 1,450 1,553 Restructuring Charge .......................................... 1,967 Loss on disposal of assets .................................... 14 Changes in working capital .................................... 1,528 (982) Other assets .................................................. 212 187 Other long-term liabilities.................................... (83) (80) -------- -------- Net cash provided by operating activities ......................... $ 6,573 $ 4,526 ======== ========