<PAGE>
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 March 30, 1997 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.)
1641 Fairystone Park Highway, Stanleytown, Virginia 24168
(Address of principal executive offices, Zip Code)
(540) 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 10, 1997.
Class Number
Common Stock, par value $.02 per share 4,586,817 Shares
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
(Unaudited)
March 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash................................. $ 6,748 $ 8,126
Accounts receivable, less allowances
of $2,059 and $1,945............... 26,364 23,096
Inventories:
Finished goods..................... 22,902 20,953
Work-in-process.................... 6,443 6,142
Raw materials...................... 14,194 13,144
43,539 40,239
Prepaid expenses and other current
assets............................. 438 486
Deferred income taxes................ 1,802 1,886
Total current assets............... 78,891 73,833
Property, plant and equipment, at cost. 81,007 80,737
Less accumulated depreciation........ 29,270 28,024
51,737 52,713
Goodwill, less accumulated amortization
of $2,772 and $2,688................. 10,668 10,752
Other assets........................... 4,200 4,212
$145,496 $141,510
LIABILITIES
Current liabilities:
Current maturities of long-term debt. $ 5,011 $ 725
Accounts payable..................... 15,614 14,630
Accrued salaries, wages and benefits. 9,107 9,584
Other accrued expenses............... 3,498 2,669
Total current liabilities.......... 33,230 27,608
Long-term debt, exclusive of current
maturities........................... 34,339 38,625
Deferred income taxes.................. 11,446 11,673
Other long-term liabilities............ 1,987 1,987
Total liabilities.................... 81,002 79,893
STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000
shares authorized, 4,586,817 and
4,579,042 shares issued and
outstanding.......................... 91 91
Capital in excess of par value......... 62,547 62,442
Retained earnings (deficit)............ 1,856 (916)
Total stockholders' equity........... 64,494 61,617
$145,496 $141,510
</TABLE>
The accompanying notes are an integral part
of the financial statements.
<PAGE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
Three Months Ended
March 30, March 31,
1997 1996
<S> <C> <C>
Net sales............................ $49,631 $ 48,190
Cost of sales........................ 37,170 37,421
Gross profit..................... 12,461 10,769
Selling, general and administrative
expenses........................... 7,127 7,046
Operating income................. 5,334 3,723
Other expense, net................... 69 249
Interest expense..................... 756 879
Income before income taxes....... 4,509 2,595
Income taxes......................... 1,737 1,012
Net income........................ $ 2,772 $ 1,583
Primary and fully diluted earnings
per share.......................... $ .55 $ .33
Weighted average number of shares.... 5,011 4,803
</TABLE>
The accompanying notes are an integral part
of the financial statements.
<PAGE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
Three Months Ended
March 30, March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers................ $46,323 $ 44,497
Cash paid to suppliers and employees........ (45,667) (40,844)
Interest paid............................... (1,038) (1,305)
Income taxes (paid) recovered, net.......... (736) 286
Net cash (used) provided by operating
activities.............................. (1,118) 2,634
Cash flows from investing activities:
Capital expenditures........................ (270) (701)
Purchase of other assets.................... (65) (19)
Net cash used by investing activities..... (335) (720)
Cash flows from financing activities:
Repayment of revolving credit facility, net. (914)
Proceeds from exercised stock options....... 75
Net cash provided (used) by financing
activities............................. 75 (914)
Net (decrease) increase in cash............ (1,378) 1,000
Cash at beginning of year.................. 8,126 298
Cash at end of quarter..................... $ 6,748 $ 1,298
Reconciliation of net income to net cash
provided (used) by operating activities:
Net income................................. $ 2,772 $ 1,583
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......... 1,350 1,282
Loss on sale of assets................. 150
Changes in assets and liabilities:
Accounts receivable.................. (3,268) (3,634)
Inventories.......................... (3,300) 62
Prepaid expenses and other current
assets, net........................ 8 (185)
Accounts payable..................... 984 982
Accrued salaries, wages and benefits. (477) 1,278
Other accrued expenses............... 859 1,092
Other assets........................... 97 83
Other long-term liabilities............ (143) (59)
Net cash provided by operating activities.. $(1,118) $ 2,634
</TABLE>
The accompanying notes are an integral part
of the financial statements.
<PAGE>
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
<TABLE>
(Unaudited)
March 30, December 31,
1997 1996
<S> <C> <C>
Land and buildings.............. $33,694 $33,694
Machinery and equipment......... 45,136 45,120
Office fixtures and equipment... 1,794 1,794
Construction in progress........ 383 129
$81,007 $80,737
3. Long-Term Debt
</TABLE>
<TABLE> (Unaudited)
March 30, December 31,
1997 1996
<S> <C> <C>
7.28% senior notes due March
15, 2004..................... $30,000 $30,000
7.57% senior note due June
30, 2005..................... 9,350 9,350
Total 39,350 39,350
Less current maturities........ 5,011 725
$34,339 $38,625
</TABLE>
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net sales increased $1.4 million, or 3.0%, for the three month
period ended March 30, 1997, from the comparable 1996 period. The
increase was due principally to higher average selling prices.
Gross profit margin for the three month period of 1997 increased to
25.1% from 22.3% for the comparable 1996 period. The higher gross
profit margin was due primarily to stable raw material costs and
improved operating efficiencies.
Selling, general and administrative expenses as a percentage of net
sales decreased to 14.4% for the 1997 period from 14.6% in the
comparable 1996 period. The lower percentage was due principally
to higher net sales in the 1997 period.
As a result of the above, operating income increased to $5.3
million, or 10.7% of net sales, from 3.7 million, or 7.7% in the
comparable 1996 period.
Interest expense for the three month period ended March 30, 1997,
decreased due to lower debt levels.
The Company's effective income tax rate was 38.5% for the 1997
three month period and total year 1996.
Financial Condition, Liquidity and Capital Resources
At March 30, 1997, long-term debt including current maturities was
$39.4 million. Debt service requirements for the next five years
are $725,000 in 1997, $5.1 million in both 1998 and 1999, $5.2
million in 2000, and $5.3 million in 2001. As of March 30, 1997,
approximately $23.4 million of additional borrowings were available
under the Company's 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 from operations of $1.1 million in the 1997
first quarter compared to cash generated from operations of $2.6
million during the 1996 period. Cash was required in the 1997
period to fund higher payments to suppliers and employees due to
increased production days, resulting in increased inventory levels.
Cash was also required for higher tax payments. The cash generated
in 1996 was used to fund capital expenditures and reduce borrowings
under the revolving credit facility.
Net cash used by investing activities was $335,000 in the 1997
period compared to $720,000 in the 1996 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 $75,000 in the 1997
period compared to cash used in the 1996 period of $914,000 period.
Cash generated from operations in the 1996 period reduced
borrowings under the revolving credit facility.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" effective for financial statements issued for periods ending
after December 15, 1997. The new standard specifies the
computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock. Early
adoption of the standard is prohibited; however, the Company has
computed the pro forma earnings per share amounts using the new
standard as follows:
<TABLE>
Three Months Ended
March 30, March 31,
1997 1996
<S> <C> <C>
Basic earnings per share............. $.60 $.33
Diluted earnings per share........... $.55 $.33
</TABLE>
<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.
<PAGE>
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 16, 1997 By: /s/ Douglas I. Payne
Douglas I. Payne
Sr. V.P. - Finance and
Administration,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Exhibit 11
STANLEY FURNITURE COMPANY, INC.
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share data)
<TABLE> March 30, March 31,
1997 1996
<S> <C> <C>
Net income used in calculating primary
and fully diluted earnings per
common share......................... $2,772 $1,583
Primary earnings per common share:
Weighted average shares outstanding.... 4,584 4,727
Add shares issuable assuming exercise
of stock options..................... 427 76
Weighted average number of shares
used in calculating primary
earnings per common share........ 5,011 4,803
Primary earnings per common share.... $ .55 $ .33
Fully diluted earnings per common share:
Weighted average shares outstanding.... 4,584 4,727
Add shares issuable assuming excer-
cise of stock options................ 427 76
Weighted average number of shares
used in calculating fully diluted
earnings per common share........ 5,011 4,803
Fully diluted earnings per common
share............................. $ .55 $ .33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
STANLEY FURNITURE COMPANY, INC.
ARTICLE 5
FINANCIAL DATA SCHEDULE
FOR PERIOD ENDING MARCH 30, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 6748
<SECURITIES> 0
<RECEIVABLES> 26364
<ALLOWANCES> 2059
<INVENTORY> 43539
<CURRENT-ASSETS> 78891
<PP&E> 81007
<DEPRECIATION> 29270
<TOTAL-ASSETS> 145496
<CURRENT-LIABILITIES> 33230
<BONDS> 0
0
0
<COMMON> 91000
<OTHER-SE> 64403
<TOTAL-LIABILITY-AND-EQUITY> 145496
<SALES> 49631
<TOTAL-REVENUES> 49631
<CGS> 37170
<TOTAL-COSTS> 44297
<OTHER-EXPENSES> 69
<LOSS-PROVISION> 90
<INTEREST-EXPENSE> 756
<INCOME-PRETAX> 4509
<INCOME-TAX> 1737
<INCOME-CONTINUING> 2772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2772
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
