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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 April 2, 1995 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 (I.R.S. Employer
incorporation or organization) Identification No.)
Route 57, Stanleytown, Virginia 24168
(Address of principal executive offices, Zip Code)
(703) 627-2000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal
year, if changed since last report)
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 the number of shares outstanding of each of the issuer's
classes of common stock as of April 15, 1995.
Class Number
Common Stock, par value $.02 per share 4,726,550 Shares
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS
(In thousands, except share data)
April
2, 1995 December
(Unaudited) 31, 1994
ASSETS
Current assets:
Cash................................. $ 223 $ 301
Accounts receivable, less allowances
of $1,085 and $933, respectively... 24,791 23,760
Inventories:
Finished goods...................... 24,137 20,893
Work-in-process..................... 5,364 5,957
Raw materials....................... 13,917 13,055
43,418 39,905
Prepaid expenses and other current
assets.............................. 810 1,446
Deferred income taxes................. 2,003 2,003
Total current assets.............. 71,245 67,415
Property, plant and equipment, at cost.. 65,441 64,827
Less accumulated depreciation......... 21,054 20,049
44,387 44,778
Excess of cost over fair value of net
assets acquired, less accumulated
amortization of $2,100 and $2,016,
respectively.......................... 11,340 11,424
Other assets............................ 846 902
$127,818 $124,519
The accompanying notes are an integral part
of the financial statements.
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STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS (CONTINUED)
(In thousands, except share data)
April
2, 1995 December
(Unaudited) 31, 1994
LIABILITIES
Current liabilities:
Accounts payable................. $ 14,355 $ 14,659
Accrued salaries, wages and
benefits....................... 7,982 7,119
Other accrued expenses........... 2,102 2,725
Total current liabilities...... 24,439 24,503
Long-term debt..................... 36,042 33,395
Deferred income taxes.............. 11,541 11,541
Other long-term liabilities........ 4,172 4,250
Total liabilities................ 76,194 73,689
STOCKHOLDERS' EQUITY
Common stock, $.02 par value,
10,000,000 shares authorized,
4,726,550 issued and
outstanding...................... 94 94
Capital in excess of par value..... 64,527 64,527
Deficit............................ (12,997) (13,791)
Total stockholders' equity....... 51,624 50,830
$127,818 $124,519
The accompanying notes are an integral part
of the financial statements.
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STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months
Ended
April March
2, 1995 27, 1994
Net sales.......................... $44,989 $44,737
Cost of sales...................... 35,888 36,060
Gross profit................... 9,101 8,677
Selling, general and administrative
expenses......................... 6,903 6,245
Operating income............... 2,198 2,432
Gain on insurance settlement....... (2,379)
Other expense, net................. 131 140
Interest expense................... 765 727
Income from continuing operations
before income taxes............ 1,302 3,944
Income tax provision............... 508 1,558
Income from continuing operations 794 2,386
Discontinued operations:
Loss on disposal of fabric divi-
sion, including an additional
provision of $1,329 for oper-
ating losses during phaseout
period (less applicable income
tax benefit of $1,736)......... (2,758)
Net income......................... $ 794 $ (372)
Earnings (loss) per common share:
Continuing operations............ $ .17 $ .49
Discontinued operations.......... (.57)
Net income.................... $ .17 $ (.08)
Weighted average number of shares.. 4,727 4,723
The accompanying notes are an integral part
of the financial statements.
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STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months
Ended
April March
2, 1995 27, 1994
Cash flows from operating activities:
Cash received from customers............ $43,810 $40,595
Cash paid to suppliers and employees.... (45,148) (43,497)
Interest paid........................... (1,238) (539)
Income taxes recovered (paid), net...... 618 (1,291)
Advances received on insurance coverage. 25
Operating activities of discontinued
operations............................ (599)
Net cash used by operating
activities.......................... (1,958) (5,306)
Cash flows from investing activities:
Capital expenditures.................... ( 756) (573)
Purchase of other assets................ (36) (198)
Proceeds from sale of assets............ 25 37
Investing activities of discontinued
operations............................ (43)
Net cash used by investing activities. ( 767) ( 777)
Cash flows from financing activities:
Issuance of senior notes................ 30,000
Repayment of term note.................. (16,569)
Proceeds from (repayment of) revolving
credit facility....................... 2,647 (7,395)
Proceeds from issuance of stock options. 66
Net cash provided by financing
activities.......................... 2,647 6,102
Net (decrease) increase in cash......... (78) 19
Cash at beginning of year............... 301 200
Cash at end of quarter.................. $ 223 $ 219
The accompanying notes are an integral part
of the financial statements.
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STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(In thousands)
1. Preparation of Interim Financial Statements
The financial statements of Stanley Furniture Company, Inc.
(referred to as "Stanley" or the "Company") have been prepared in
accordance with the rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, 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,
management believes that the disclosures made are adequate for a
fair presentation of results of operations and financial position.
It is suggested that these financial statements be read in
conjunction with the financial statements and accompanying notes
included in Stanley's latest annual report on Form 10-K.
2. Property, Plant and Equipment
April
2, 1995 December
(Unaudited) 31, 1994
Land and buildings............. $17,904 $17,853
Machinery and equipment........ 41,036 41,059
Leasehold improvements......... 4,068 3,986
Furniture, fixtures and office
equipment.................... 1,292 1,289
Construction in progress....... 1,141 640
$65,441 $64,827
3. Long-Term Debt
April
2, 1995 December
(Unaudited) 31, 1994
7.28% senior notes due March
15, 2004..................... $30,000 $30,000
Revolving credit facility...... 5,881 3,234
7% convertible subordinated
debentures due April 1, 2012. 161 161
Total $36,042 $33,395
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STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(In thousands)
4. Supplemental Cash Flow Information
Following is a reconciliation of net income (loss) to net cash
provided by operating activities for the three months ended:
April March
2, 1995 27, 1994
Net income.......................... $ 794 $ (372)
Adjustments to reconcile net income
to net cash used by operating
activities:
Depreciation and amortization... 1,182 1,070
Loss on sale of assets.......... 45 65
Loss on disposal of fabric divi-
sion.......................... 2,758
Changes in assets and liabili-
ties:
Accounts receivable........... (1,030) (4,014)
Inventories................... (3,513) (2,158)
Income taxes recoverable...... 945
Prepaid expenses and other
current assets, net......... (309) 150
Insurance claim receivable.... (2,571)
Operating assets of discon-
tinued operations........... (599)
Accounts payable.............. (304) (761)
Accrued salaries, wages and
benefits.................... 863 370
Other accrued expenses........ (623) 1,021
Deferred income taxes......... (260)
Other assets.................... 70 59
Other long-term liabilities..... (78) (64)
Net cash used by operating
activities....................... $(1,958) $(5,306)
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Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales increased slightly by $252,000 or 0.6% for the three
month period ended April 2, 1995 from the comparable 1994 period.
The increase was due principally to the addition of upholstery
sales in the current period offset by lower unit volume from wood
products.
Gross profit margin for the three month period of 1995 increased to
20.2% from 19.4% for the comparable 1994 period. The higher gross
profit margin was due primarily to increased prices, moderation in
lumber cost increases and a more favorable product mix.
Selling, general and administrative expenses as a percentage of net
sales increased to 15.3% from 14.0% in the comparable 1994 period.
This increase is due to increased selling costs associated with the
introduction of "The Saturday Evening Post/Norman Rockwell Home
Furnishings Collection" and increased expenses due to the expansion
of the High Point, NC showroom to accommodate the new upholstered
furniture.
As a result of the above, operating income decreased to $2.2
million from $2.4 million from the comparable three month period.
As a result of continued startup expense, upholstery reduced
operating income by approximately $209,000 during the three month
period of 1995. Operating income as a percentage of net sales
decreased to 4.9% from 5.4% in the comparable 1994 period.
Interest expense for the three month period ended April 2, 1995
increased slightly as a result of higher interest rates.
The Company's effective income tax rate remained at 39.0% for the
three month period ending April 2, 1995.
Financial Condition, Liquidity and Capital Resources
Long-term debt at April 2, 1995 was $36.0 million. Debt service
requirements will be $5.8 million in 1996, $161,000 in 1997 and
$4.3 million in each of 1998 through 2004. As of April 2, 1995
approximately $15.6 million of additional borrowings were available
under the revolving credit facility. The Company believes that its
financial resources are adequate to support its capital needs and
debt service requirements.
The Company used cash in operations of $2.0 million in the 1995
three month period compared to $5.3 million during the comparable
1994 period, funded in each period by net borrowings from the
revolving credit facility. Cash was required in both the 1995 and
1994 periods to support higher accounts receivable and inventory
levels as well as higher payments to suppliers and employees. In
the 1995 period cash was also required for higher interest
payments, partially offset by income taxes recovered. The 1994
period also required cash for higher tax payments offset by lower
interest payments.
Net cash flow used by investing activities was $767,000 in the 1995
period compared to $777,000 in the 1994 period. Expenditures in
each year were primarily for plant and equipment and other assets
in the normal course of business.
Net cash provided by financing activities was $2.6 million in the
1995 period compared to $6.1 million provided in the comparable
1994 period. In 1995 and 1994, borrowings from the revolving
credit facility provided cash for operations and capital
expenditures. In the 1994 period, the Company completed the
private placement of $30.0 million of 7.28% senior notes and the
refinancing of its revolving credit facility. The proceeds from
the senior notes were used to repay the existing term note and a
portion of the revolving credit facility.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11. Schedule of Computation of Earnings Per Share.*
Exhibit 27. Financial Data Schedule.*
(b) Reports on Form 8-K
None.
* Filed herewith.
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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.
STANLEY FURNITURE COMPANY, INC.
Date: April 20, 1995 By: /s/ Douglas I. Payne
Douglas I. Payne
Vice President of Finance,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Exhibit 11
STANLEY FURNITURE COMPANY, INC.
SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(In thousands, except per share data)
<TABLE>
April March
2, 1995 27, 1994
<S> <C> <C>
Net income (loss) used in calculating
primary and fully diluted earnings
(loss) per common share:
Continuing operations................. $ 794 $2,386
Discontinued operations............... (2,758)
Net income.......................... $ 794 $ (372)
Primary earnings (loss) per common
share:
Weighted average shares outstanding.... 4,727 4,723
Add shares issuable assuming excercise
of stock options..................... 100
Weighted average number of shares
used in calculating primary
earnings (loss) per common share. 4,727 4,823
Primary earnings (loss) per common
share:
Continuing operations.................. $ .17 $ .49
Discontinued operations................ (.57)
Primary earnings (loss) per common
share................................ $ .17 $ (.08)
Fully diluted earnings (loss) per
common share:
Weighted average shares outstanding.... 4,727 4,723
Add shares issuable assuming excer-
cise of stock options................ 122
Weighted average number of shares
used in calculating fully diluted
earnings (loss) per common share. 4,727 4,845
Fully diluted earnings (loss) per
common share:
Continuing operations................. $ .17 $ .49
Discontinued operations............... (.57)
Fully diluted earnings (loss) per
common share........................ $ .17 $ (.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
STANLEY FURNITURE COMPANY, INC.
FINANCIAL DATA SCHEDULE
FOR PERIOD ENDING APRIL 2, 1995
</LEGEND>
<CIK> 0000797465
<NAME> STANLEY FURNITURE COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-02-1995
<CASH> 223
<SECURITIES> 0
<RECEIVABLES> 24,791
<ALLOWANCES> 1,085
<INVENTORY> 43,418
<CURRENT-ASSETS> 71,245
<PP&E> 65,741
<DEPRECIATION> 21,054
<TOTAL-ASSETS> 127,818
<CURRENT-LIABILITIES> 24,439
<BONDS> 0
<COMMON> 94
0
0
<OTHER-SE> 51,530
<TOTAL-LIABILITY-AND-EQUITY> 127,818
<SALES> 44,989
<TOTAL-REVENUES> 44,989
<CGS> 35,888
<TOTAL-COSTS> 35,888
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90
<INTEREST-EXPENSE> 765
<INCOME-PRETAX> 1,302
<INCOME-TAX> 508
<INCOME-CONTINUING> 794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 794
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
