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 June 27, 1998 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 July 10, 1998.
Class Number
Common Stock, par value $.02 per share 7,054,768 Shares
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
(Unaudited)
June 27, December31,
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash..................................................................... $ 1,532 $ 756
Accounts receivable, less allowances of $2,229 and $1,895................ 31,128 27,427
Inventories:
Finished goods........................................................ 24,251 21,220
Work-in-process....................................................... 7,108 6,997
Raw materials......................................................... 19,394 17,513
------ ------
50,753 45,730
Prepaid expenses and other current assets................................ 1,625 1,571
Deferred income taxes.................................................... 1,184 770
----- ---
Total current assets........................................... 86,222 76,254
Property, plant and equipment, net........................................... 51,532 51,714
Goodwill, less accumulated amortization of $3,192 and $3,024................. 10,248 10,416
Other assets................................................................. 4,283 4,841
----- -----
$152,285 $143,225
======== ========
LIABILITIES
Current liabilities:
Current maturities of long-term debt.................................... $ 5,086 $ 5,086
Accounts payable........................................................ 19,964 18,164
Accrued salaries, wages and benefits.................................... 9,708 9,687
Other accrued expenses.................................................. 2,352 1,877
----- -----
Total current liabilities........................................... 37,110 34,814
Long-term debt, exclusive of current maturities.............................. 45,270 47,491
Deferred income taxes........................................................ 10,357 10,448
Other long-term liabilities.................................................. 2,225 2,225
----- -----
Total liabilities........................................................ 94,962 94,978
------ ------
STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000 shares authorized, 7,054,768
and 6,865,518 shares issued and outstanding............................. 140 137
Capital in excess of par value............................................... 39,662 37,439
Retained earnings ........................................................... 17,521 10,671
------ ------
Total stockholders' equity............................................... 57,323 48,247
------ ------
$152,285 $143,225
======== ========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
<TABLE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Six Months
Ended Ended
June 27, June 29, June 27, June 29,
1998 1997 1998 1997
---------- --------- ---------- --------
<S> <C> <C> <C> <C>
Net sales......................................................... $61,863 $49,469 $119,554 $99,100
Cost of sales..................................................... 46,590 36,981 90,136 74,150
------ ------ ------ ------
Gross profit.............................................. 15,273 12,488 29,418 24,950
Selling, general and administrative expenses...................... 8,350 7,199 16,102 14,327
----- ----- ------ ------
Operating income........................................... 6,923 5,289 13,316 10,623
Other expense, net................................................ 48 65 82 134
Interest expense.................................................. 1,102 744 2,186 1,500
----- --- ----- -----
Income before income taxes.................................... 5,773 4,480 11,048 8,989
Income taxes...................................................... 2,193 1,724 4,198 3,461
----- ----- ----- -----
Net income........................................................ $ 3,580 $ 2,756 $ 6,850 $ 5,528
======= ======== ======= =======
Earnings per share:
Basic........................................................... $ .51 $ .30 $ .99 $ .60
========= ========== ========== ==========
Diluted......................................................... $ .45 $ .28 $ .86 $ .55
========= ========== ========== ==========
Weighted average shares outstanding:
Basic........................................................... 6,978 9,174 6,932 9,172
===== ===== ===== =====
Diluted......................................................... 8,016 9,942 7,968 9,986
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
<TABLE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Six Months Ended
June 27, June 29,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers.................................................. $ 115,643 $98,443
Cash paid to suppliers and employees.......................................... (105,969) (92,047)
Interest paid................................................................. (1,725) (968)
Income taxes paid, net........................................................ (3,388) (4,520)
--------- --------
Net cash provided by operating activities................................... 4,561 908
--------- --------
Cash flows from investing activities:
Capital expenditures.......................................................... (2,460) (696)
Purchase of other assets...................................................... (41) (88)
--------- --------
Net cash used by investing activities....................................... (2,501) (784)
--------- --------
Cash flows from financing activities:
Proceeds from revolving credit facility....................................... 2,065
Repayment of Senior Notes..................................................... (4,286)
Proceeds from exercised stock options......................................... 937 80
--------- --------
Net cash (used) provided by financing activities............................ (1,284) 80
--------- --------
Net increase in cash.......................................................... 776 204
Cash at beginning of year..................................................... 756 8,126
--------- --------
Cash at end of quarter...................................................... $ 1,532 $ 8,330
========== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income................................................................. $ 6,850 $ 5,528
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......................................... 2,854 2,704
Loss on sale of assets................................................. 8 75
Changes in assets and liabilities:
Accounts receivable.................................................. (3,701) (631)
Inventories.......................................................... (5,023) (7,725)
Prepaid expenses and other current assets............................ 263 (88)
Accounts payable..................................................... 1,800 1,520
Accrued salaries, wages and benefits................................. 21 (137)
Other accrued expenses............................................... 1,764 (143)
Deferred income taxes................................................ (505) (389)
Other assets........................................................... 230 194
--- ---
Net cash provided by operating activities.................................. $ 4,561 $ 908
========= =========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(In thousands, except share and per share data)
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. Operating results
for the interim periods reported herein may not be indicative of the results
expected for the year. 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)
June 27, December 31,
1998 1997
<S> <C> <C>
Land and buildings............................................... $34,150 $33,941
Machinery and equipment.......................................... 50,123 48,180
Office fixtures and equipment.................................... 1,836 1,836
Construction in progress......................................... 879 588
------- -------
Property, plant and equipment, at cost...................... 86,988 84,545
Less accumulated depreciation.................................... 35,456 32,831
------- -------
$51,532 $51,714
======= =======
3. Long-Term Debt
(Unaudited)
June 27, December 31,
1998 1997
7.28% senior notes due March 15, 2004............................ $25,714 $30,000
7.57% senior note due June 30, 2005.............................. 8,625 8,625
7.43% senior notes due November 18, 2007......................... 10,000 10,000
Revolving credit facility........................................ 6,017 3,952
------- -------
Total.......................................................... 50,356 52,577
Less current maturities.......................................... 5,086 5,086
------- -------
$45,270 $47,491
======= =======
</TABLE>
<PAGE>
4. Earnings Per Common Share and Stock Split
Basic earnings per common share are based upon the weighted average shares
outstanding. Outstanding stock options are treated as common stock equivalents
for purposes of computing diluted earnings per share and represent the
difference between basic and diluted weighted average shares outstanding.
On April 7, 1998, the Board of Directors approved a two-for-one stock split to
be distributed in the form of a stock dividend, which was distributed on May 15,
1998 to stockholders of record on May 1, 1998. Accordingly, 3,478,462 shares
were issued, and approximately $70,000 was transferred to common stock from
capital in excess of par value, representing the aggregate par value ($.02 per
share) of the shares issued. All related amounts have been retroactively
adjusted to reflect the stock split.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales increased $12.4 million, or 25.1%, for the three month period ended
June 27, 1998 from the comparable 1997 period. For the six month period, net
sales increased $20.5 million, or 20.6%, from the comparable 1997 period. The
increase was due primarily to higher unit volume.
Gross profit margin for the three and six month periods of 1998 decreased to
24.7% and 24.6%, respectively, from 25.2% for the comparable 1997 periods. The
decrease resulted from higher raw material costs, primarily lumber, partially
offset by improved operating efficiencies.
Selling, general and administrative expenses for both the three and six month
periods of 1998 as a percentage of net sales decreased to 13.5% from 14.6% and
14.5%, respectively, for the comparable 1997 periods. The lower percentages in
1998 were due principally to higher net sales. The majority of the increased
expenditures in 1998 were selling expenses directly attributable to the sales
increase.
As a result of the above, operating income for the three and six month periods
of 1998 increased to $6.9 million, or 11.2% of net sales, and $13.3 million, or
11.1% of net sales, respectively, from $5.3 million, or 10.7% of net sales, and
$10.6 million, or 10.7% of net sales, for the comparable 1997 periods.
Interest expense for the 1998 three and six month periods increased due
primarily to higher average debt levels resulting from the Company's June and
November 1997 repurchases of its common stock.
The Company's effective income tax rate was 38.0% for the 1998 six month period
and total year 1997.
Financial Condition, Liquidity and Capital Resources
At June 27, 1998, long-term debt including current maturities was $50.4 million.
Debt service requirements are $800,000 in 1998, $11.2 million in 1999, $5.2
million in 2000, $6.7 million in 2001, and $6.8 million in 2002. As of June 27,
1998, approximately $18.0 million of additional borrowings were available under
the Company's revolving credit facility. The Company believes that cash flows
from operations and funds available under existing credit facilities will be
sufficient to fund capital expenditures and debt service requirements.
Cash generated from operations increased to $4.6 million in the 1998 period
compared to $908,000 during the 1997 period, due primarily to increased sales.
Cash provided in the 1998 period was used to fund capital expenditures and
reduce borrowings. The cash generated in the 1997 period was used to fund
capital expenditures.
Net cash used by investing activities was $2.5 million in the 1998 period
compared to $784,000 in the 1997 period. Expenditures in each year were
primarily for plant and equipment and other assets in the normal course of
business.
Net cash used by financing activities was $1.3 million in the 1998 period
compared to net cash provided by financing activities of $80,000 in the 1997
period. In the 1998 period, cash generated from operations and proceeds from the
revolving credit facility were used to fund senior note payments.
Year 2000
The Company recognizes that the year 2000 presents many challenges for
information systems. The Company has established a cross-functional team to
identify and address any internal hardware and software compliance issues. All
critical applications are expected to be compliant prior to the end of calendar
year 1999. The cost of updating systems is believed to be incrementally
immaterial because the Company has been upgrading information systems technology
since 1996 to support the Company's sales, manufacturing and administrative
functions. In addition, the Company is communicating with customers, suppliers
and others with whom it does business to determine Year 2000 compliance.
However, there can be no assurance that the systems of other companies will be
timely converted and will not have an adverse effect on the Company.
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," "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 the cyclical nature of the furniture industry,
fluctuations in the price for lumber which is the most significant raw material
used by the Company, competition in the furniture industry, capital costs and
general economic conditions.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
At the 1998 annual meeting, the holders of the Company's Common Stock,
par value $.02 per share, approved an amendment to the Company's
Certificate of Incorporation to require unanimous written consent for
action taken without a meeting of stockholders. A Certificate of
Amendment was filed on May 26, 1998.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the Company's stockholders was held on April 30,
1998, adjourned to and completed on May 20. 1998. The record date for
the Company's annual meeting occurred prior to the two-for-one stock
split, distributed in the form of a stock dividend, and accordingly the
votes reported below do not reflect this stock split.
(c)(i) The stockholders of the Company elected two directors for three-year
terms expiring at the Annual Meeting of Stockholders to be held in
2001. The elections were approved by the following vote:
For Withheld
Edward J. Mack 2,704,031 288,170
Thomas L. Millner 2,704,258 287,943
(ii) The stockholders approved the proposal to amend the Company's
Certificate of Incorporation to require unanimous written consent for
stockholder action taken without a meeting. The proposal received the
following vote:
FOR 1,823,345
AGAINST 995,764
ABSTAIN 18,988
BROKER NON-VOTES 211,985
(iii) The stockholders did not approve the proposal to amend the Company's
Certificate of Incorporation to increase the percentage of shares of
common stock required to approve mergers and certain other corporate
transactions to two-thirds of the shares of common stock then
outstanding. The proposal received the following vote:
FOR 1,365,437
AGAINST 1,456,205
ABSTAIN 16,455
BROKER NON-VOTES 211,985
(iv) The stockholders approved the ratification of the selection of Coopers
& Lybrand L.L.P. as the independent public accountants for the Company
for the current fiscal year. The ratification was approved by the
following vote:
FOR 2,975,457
AGAINST 888
ABSTAIN 15,856
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 2. Certificate of Incorporation as amended.*
Exhibit 11. Schedule of Computation of Earnings Per Share.*
Exhibit 27.1 Financial Data Schedule for the quarters ended June 27,
1998 and restated March 28, 1998.*
27.2 Restated financial data schedule for the quarters
ended March 30, 1997, June 29, 1997, September 28,
1997 and December 31, 1997.*
27.3 Restated financial data schedule for the quarters
ended March 31, 1996, June 30, 1996, September 29,
1996 and December 31, 1996.*
27.4 Restated financial data schedule for the year ended
December 31, 1995.*
(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: July 14 , 1998 By: /s/Douglas I. Payne
Douglas I. Payne
Sr. V.P. - Finance and
Administration,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Exhibit 2
CERTIFICATE OF INCORPORATION
OF
STANLEY FURNITURE COMPANY, INC.
(as amended as of May 26, 1998)
FIRST: The name of the Corporation is Stanley Furniture Company, Inc.
SECOND: The registered office of the corporation is located at 1013
Centre Road, in the City of Wilmington, in the County of New Castle, in the
State of Delaware.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
Without limiting in any manner the scope and generality of the
foregoing, it is hereby provided that the corporation shall have the power to do
all and everything necessary, suitable and proper for the accomplishment of any
of the purposes or the attainment of any of the objects or the furtherance of
any of the powers of which a corporation may be organized under the General
Corporation Law of the State of Delaware, either alone or in association with
other corporations, firms or individuals, and to do every other act or acts,
thing or things incidental or appurtenant to or growing out of or connected with
the corporation's business or powers or any part or parts thereof, provided the
same be not inconsistent with said General Corporation Law; and it shall have
the power to conduct and carry on its business, or any part thereof, and to have
one or more offices, and to exercise any or all of its corporate powers and
rights, in the State of Delaware, and in the various other states, territories,
colonies and dependencies of the United States, in the District of Columbia, and
in all or any foreign countries.
FOURTH: The total number of shares of all classes of capital
stock which this Corporation is authorized to issue is 11,000,000 shares which
are divided into two classes as follows:
Ten Million (10,000,000) shares of Common Stock, $.02 par value per share; and
One Million (1,000,000) shares of Blank Check Preferred Stock,
$.01 par value per share.
<PAGE>
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article FOURTH, to provide for the
issuance of the shares of Blank Check Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences, and rights of the
shares of each such series and the qualifications, limitations, or restrictions
thereof.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(1) The number of shares constituting that series and the distinctive
designation of that series;
(2) The dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so,
from which date or dates, and the relative rights of priority,
if any, of payment of dividends on shares of that series;
(3) Whether that series shall have voting
rights, in addition to the voting rights provided by law, and,
if so, the terms of such voting rights;
(4) Whether that series shall have
conversion privileges, and, if so, the terms and conditions of
such conversion, including provision for adjustment of the
conversion rate in such events as the Board of Directors shall
determine;
(5) Whether or not the shares of that series
shall be redeemable, and, if so, the terms and conditions of
such redemption, including the date or date upon or after
which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(6) Whether that series shall have a sinking
fund for the redemption or purchase of shares of that series,
and, if so, the terms and amount of such sinking fund;
(7) The rights of the shares of that series
in the event of voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of
that series; and
(8) Any other relative rights, preferences, and limitations of that
series.
<PAGE>
Effective on the date of the filing with the Secretary of
State of Delaware of a Certificate of Amendment to the Certificate of
Incorporation of the Company with respect hereto [July 1, 1993] ("Effective
Date"), every two shares of the Company's Common Stock outstanding immediately
prior to such time shall be reclassified into one share of Common Stock.
Stockholders who, as a result of the reverse stock split, own a fraction of a
whole share of Common Stock, shall be entitled to receive from the Company in
lieu of a fractional share, cash in the amount equal to $4.25 upon the surrender
of certificates representing Common Shares owned prior to the Effective Date.
FIFTH: The name and address of the sole incorporator is as follows:
Name Address
Marilynn K. Beatty 488 Madison Avenue
New York, New York 10022
SIXTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
corporation, and for further definition, limitation and regulation of the powers
of the corporation and its directors and stockholders:
1. The number of directors of the Corporation shall
be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution adopted by the Board of Directors. Election of
directors need not be by ballot unless the by-laws so provide.
Commencing with the 1994 Annual Meeting of Stockholders, the Board of
Directors shall be divided into three classes, denominated as Class I,
Class II and Class III, each as nearly equal in number to the other two
as possible. At the 1994 Annual Meeting of Stockholders, directors of
Class I shall be elected to hold office for a term expiring at the 1995
Annual Meeting of Stockholders; directors of Class II shall be elected
to hold office for a term expiring at the 1996 Annual Meeting of
Stockholders; and directors of Class III shall be elected to hold
office for a term expiring at the 1997 Annual Meeting of Stockholders.
At each Annual Meeting of Stockholders after 1994, the successors to
the class of directors whose terms shall then expire shall be
identified as being of the same class of directors they succeed and
shall be elected to hold office for a term expiring at the third
succeeding Annual Meeting of Stockholders. When the number of directors
is changed, any newly-created directorships or any decrease in
directorship shall be so apportioned among the classes by the Board of
Directors as to make all classes as nearly equal in number as possible.
Directors need not be stockholders.
2. The Board of Directors shall have the power
without the assent or vote of the stockholders:
<PAGE>
(1) To make, alter, amend, change, add or
repeal the by-laws of the corporation; to fix and vary the
amount to be reserved for any proper purpose; to authorize and
cause to be executed mortgages and liens upon all or any part
of the property of the corporation; to determine the use and
disposition of any surplus or net profits; and to declare
dividends; to fix the record date and the date for the payment
of any dividends; and
(2) To determine from time to time whether
and to what extent, and at what times and places, and under
what conditions and regulations, the accounts and books of the
corporation (other than the stock ledger) or any of them,
shall be open to the inspection of the stockholders.
3. The directors in their discretion may submit any
contract or act for approval or ratification by the written consent of
the stockholders, or at any annual meeting of the stockholders or at
any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any contract or act that
shall be approved or ratified by the written consent or vote of the
holders of a majority of the stock of the corporation (which in the
case of a meeting is represented in person or by proxy at such meeting,
provided a lawful quorum of stockholders be there represented in person
or by proxy) shall be as valid and as binding upon the corporation and
upon all the stockholders as though it had been approved or ratified by
every stockholder of the corporation, whether or not the contract or
act would otherwise be open to legal attack because of the directors'
interest, or for any other reason.
4. In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon them, the directors
are hereby empowered to exercise all such powers and do all such acts
and things as may be exercised or done by the corporation; subject,
nevertheless, to the provisions of the statutes of Delaware, of this
certificate, and to any by-laws from time to time made by the
stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid
if such by-laws had not been made.
<PAGE>
5. No director of the Corporation shall be liable to
the Corporation or its stockholders for monetary damages for any breach
of fiduciary duty as a director occurring on or after July 1, 1986,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
6. Any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any action which
may be taken at an annual or special meeting of such stockholders, may
be taken without a meeting, without prior notice and without a vote, if
a consent or consents in writing, setting forth the action so taken,
shall be signed by all the stockholders entitled to vote thereon.
SEVENTH: The Corporation shall, to the full extent permitted
by Section 145 of the General Corporation Law of the State of Delaware, as
amended from time to time, indemnify all persons whom it may indemnify pursuant
thereto.
EIGHTH: Whenever a compromise or arrangement is proposed
between the corporation and its creditors or any class of them and/or between
the corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the corporation or any creditor or stockholders thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and the said reorganization
of the corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
NINTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of incorporation in
the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to this
reserved power.
<TABLE>
Exhibit 11
STANLEY FURNITURE COMPANY, INC.
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net income used in calculating basic and diluted
earnings per common share............................ $3,580 $2,756 $6,850 $5,528
====== ====== ====== ======
Basic earnings per common share:
Weighted average shares outstanding.................... 6,978 9,174 6,932 9,172
======= ======= ======= =======
Basic earnings per common share........................ $ .51 $ .30 $ .99 $ .60
======== ======== ======= ========
Diluted earnings per common share:
Weighted average shares outstanding.................... 6,978 9,174 6,932 9,172
Add shares issuable assuming exercise of stock
options ........................................... 1,038 768 1,036 814
------- -------- ------- --------
Weighted average shares outstanding
used in calculating diluted
earnings per common share........................ 8,016 9,942 7,968 9,986
======= ======= ======= =======
Diluted earnings per common share.................... $ .45 $ .28 $ .86 $ .55
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THESE NUMBERS PERTAIN TO 1998
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-28-1998 JUN-27-1998
<CASH> 1717 1,532
<SECURITIES> 0 0
<RECEIVABLES> 31,295 31,128
<ALLOWANCES> 1,943 2,229
<INVENTORY> 48,442 50,753
<CURRENT-ASSETS> 82,877 86,222
<PP&E> 85,557 86,988
<DEPRECIATION> 34,138 35,456
<TOTAL-ASSETS> 149,357 152,285
<CURRENT-LIABILITIES> 36,754 37,110
<BONDS> 0 0
0 0
0 0
<COMMON> 137 140
<OTHER-SE> 51,490 57,183
<TOTAL-LIABILITY-AND-EQUITY> 149,357 152,285
<SALES> 57,691 119,554
<TOTAL-REVENUES> 57,691 119,554
<CGS> 43,546 90,136
<TOTAL-COSTS> 51,298 106,238
<OTHER-EXPENSES> 34 82
<LOSS-PROVISION> 75 385
<INTEREST-EXPENSE> 1,084 2,186
<INCOME-PRETAX> 5,275 11,048
<INCOME-TAX> 2,005 4,198
<INCOME-CONTINUING> 3,270 6,850
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,270 6,850
<EPS-PRIMARY> .48 .99
<EPS-DILUTED> .41 .86
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These numbers pertain to 1997
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-mos 6-mos 9-mos Year
<FISCAL-YEAR-END> Dec-31-1997 Dec-31-1997 Dec-31-1997 Dec-31-1997
<PERIOD-END> Mar-30-1997 Jun-29-1997 Sep-28-1997 Dec-31-1997
<CASH> 6,748 8,330 1,299 756
<SECURITIES> 0 0 0 0
<RECEIVABLES> 26,364 23,727 30,308 27,427
<ALLOWANCES> 2,059 2,131 1,928 1,895
<INVENTORY> 43,539 47,964 45,868 45,730
<CURRENT-ASSETS> 78,891 82,563 80,104 76,254
<PP&E> 81,007 81,176 81,837 84,545
<DEPRECIATION> 29,270 30,337 31,578 32,831
<TOTAL-ASSETS> 145,496 147,801 145,070 143,225
<CURRENT-LIABILITIES> 33,230 33,901 33,242 34,814
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 183 183 153 137
<OTHER-SE> 64,311 67,075 55,166 48,110
<TOTAL-LIABILITY-AND-EQUITY> 145,496 147,801 145,070 143,225
<SALES> 49,631 99,100 153,370 211,905
<TOTAL-REVENUES> 49,631 99,100 153,370 211,905
<CGS> 37,170 74,150 115,133 159,453
<TOTAL-COSTS> 44,297 88,477 136,961 189,402
<OTHER-EXPENSES> 69 134 227 276
<LOSS-PROVISION> 90 180 270 20
<INTEREST-EXPENSE> 756 1,500 2,493 3,538
<INCOME-PRETAX> 4,509 8,989 13,689 18,689
<INCOME-TAX> 1,737 3,461 5,227 7,102
<INCOME-CONTINUING> 2,772 5,528 8,462 11,587
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 2,772 5,528 8,462 11,587
<EPS-PRIMARY> 0.30 0.60 0.97 1.38
<EPS-DILUTED> 0.28 0.55 0.88 1.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These numbers pertain to 1996
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-mos 6-mos 9-mos Year
<FISCAL-YEAR-END> Dec-31-1996 Dec-31-1996 Dec-31-1996 Dec-31-1996
<PERIOD-END> Mar-31-1996 Jun-30-1996 Sep-29-1996 Dec-31-1996
<CASH> 1,298 1,433 3,705 8,126
<SECURITIES> 0 0 0 0
<RECEIVABLES> 26,366 23,709 28,173 23,096
<ALLOWANCES> 1,206 1,389 1,961 1,945
<INVENTORY> 40,105 42,636 38,805 40,239
<CURRENT-ASSETS> 70,696 71,200 73,713 73,833
<PP&E> 78,719 79,658 80,054 80,737
<DEPRECIATION> 25,118 25,753 26,946 28,024
<TOTAL-ASSETS> 138,439 139,121 141,632 141,510
<CURRENT-LIABILITIES> 26,982 26,344 26,892 24,608
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 189 189 189 185
<OTHER-SE> 56,133 57,836 60,721 61,432
<TOTAL-LIABILITY-AND-EQUITY> 138,439 139,121 141,632 141,510
<SALES> 48,190 95,472 148,023 201,905
<TOTAL-REVENUES> 48,190 95,472 148,023 201,905
<CGS> 37,421 73,617 113,389 153,332
<TOTAL-COSTS> 44,467 87,971 135,362 183,735
<OTHER-EXPENSES> 249 393 485 616
<LOSS-PROVISION> 90 230 770 860
<INTEREST-EXPENSE> 879 1,717 2,569 3,344
<INCOME-PRETAX> 2,595 5,391 9,607 14,210
<INCOME-TAX> 1,012 2,104 3,706 5,470
<INCOME-CONTINUING> 1,583 3,287 5,901 8,740
<DISCONTINUED> 0 0 246 246
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,583 3,287 6,147 8,986
<EPS-PRIMARY> 0.17 0.35 0.65 0.95
<EPS-DILUTED> 0.16 0.34 0.63 0.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These numbers pertain to 1995
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Dec-31-1995
<CASH> 298
<SECURITIES> 0
<RECEIVABLES> 22732
<ALLOWANCES> 1157
<INVENTORY> 40167
<CURRENT-ASSETS> 66052
<PP&E> 78399
<DEPRECIATION> 24168
<TOTAL-ASSETS> 134551
<CURRENT-LIABILITIES> 23630
<BONDS> 0
0
0
<COMMON> 189
<OTHER-SE> 54550
<TOTAL-LIABILITY-AND-EQUITY> 134551
<SALES> 174179
<TOTAL-REVENUES> 174179
<CGS> 137621
<TOTAL-COSTS> 163939
<OTHER-EXPENSES> 433
<LOSS-PROVISION> 302
<INTEREST-EXPENSE> 3534
<INCOME-PRETAX> 6273
<INCOME-TAX> 2384
<INCOME-CONTINUING> 3889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3889
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
