Offshore Sourcing Initiatives and Realignment of Manufacturing
Facilities Progressing as Planned
STANLEYTOWN, Va., Jan. 28 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for 2001.
Net sales of $234.3 million in 2001 decreased 17.2% from the previous
year. Net income, excluding restructuring and unusual charges, was $12.2
million or $1.76 per share compared to record earnings of $19.5 million or
$2.63 per share in 2000. Fourth quarter 2001 results were better than
previously anticipated due primarily to lower income tax expense. Net sales
and operating expenses were within the expected range. Fourth quarter sales
of $56.4 million decreased 17.8% from the prior year quarter. Net income,
excluding restructuring charges, was $2.2 million or $.32 per share compared
to $4.3 million or $.61 per share in the fourth quarter of 2000. Total
inventories decreased $5.7 million from third quarter 2001 levels and $4.9
million from December 2000 as the Company adjusted production to reflect
reduced demand levels.
Operating income (excluding the unusual and restructuring charges) as a
percent of net sales was 9.6% for total year 2001 and 7.0% for the fourth
quarter of 2001. Operating income decreased from the prior year due to lower
sales and production levels partially offset by efficiency improvements at the
home office factory (which began production in March 2000) and lower selling,
general and administrative expenses. Fourth quarter 2001 results also
benefited from lower raw material costs, primarily lumber. The Company
expects this trend of lower raw material costs to continue at least through
the first half of 2002.
"Profitability remains at healthy levels, our cash flow and balance sheet
are strong and our market position is solid," said Albert L. Prillaman,
chairman and chief executive officer. "However, performance last year was
adversely impacted by the economic recession, the financial failure and
subsequent liquidation of our largest customer, and competitive pressure from
imported products. Our offshore sourcing initiatives and the realignment of
manufacturing facilities is progressing as planned. We have been very
deliberate in our approach to offshore sourcing because of our commitment to
service continuity and high quality standards. We believe a blend of focused,
efficient domestic manufacturing facilities combined with lower cost offshore
manufacturing maximizes design flexibility and value to the consumer."
"We continue to believe the U.S. economy will gradually improve throughout
this year resulting in a steady increase in sales and earnings. First quarter
sales are expected to be in a range of $56 to $58 million with earnings of
$.47 to $.52 per share excluding restructuring charges. We continue to expect
a sales increase of 5 to 8% and earnings of $2.30 to $2.60 per share excluding
restructuring charges for 2002," Prillaman concluded.
The Company announced a plan to expand offshore sourcing, realign
manufacturing capacity and significantly lower operating costs in December
2001. Integration of selected imported component parts and finished items
in its product line will lower costs, provide design flexibility, and offer a
better value to customers. This initiative will create excess capacity in the
Company's manufacturing facilities. Accordingly, the Company decided to close
its West End, North Carolina factory and consolidate production from this
facility into other Company facilities without disrupting the supply of
product to customers. As a result of this initiative, asset writedowns
(through increased depreciation) and other restructuring charges of $2.0
million ($3.0 million pretax) or $.29 per share were recorded in the fourth
quarter of 2001.
Closing the West End facility is expected to reduce the Company's costs by
$4 to $5 million annually and will affect approximately 13%, or 400, of the
Company's employees. This action combined with normal employee attrition
over the past year will result in a 20% reduction in the Company's workforce
from December 2000. Production at the West End facility will be phased out
during the first quarter of 2002 with certain warehousing and other activities
continuing until mid-year 2002. As a result, the Company expects to record
additional restructuring charges consisting of increased depreciation,
severance and operating inefficiencies in 2002 of $4 to $6 million pretax, or
$.38 to $.56 per share, predominantly in the first quarter.
Capital expenditures were $4.2 million in 2001. The Company anticipates
reduced capital expenditures for the next two years as a significant portion
of the West End machinery and equipment will be relocated to other Company
facilities. Accordingly, the Company expects capital expenditures of $2 to $3
million in 2002.
Cash provided from operations increased to $19.8 million in 2001 compared
to $11.8 million in 2000. As a result, debt to total capitalization (debt
plus equity) was reduced to 29.8% at December 31, 2001, from 39.6% a year ago.
Cash generated from operations in 2001 was used to reduce debt $15.1 million
and $2.0 million was used to purchase 86,000 shares of the Company's common
stock at an average price of $22.94. Approximately $8.0 million remains
authorized by the Company's Board of Directors to repurchase the Company's
shares.
An unusual charge of $1.8 million ($2.8 million pretax) or $.26 per share
was recorded in the second quarter of 2001 to write off amounts due from
Homelife, which declared bankruptcy and closed its stores. Homelife was the
Company's largest customer representing 7% of sales in 2000.
All earnings per share amounts are on a fully diluted basis.
The Company will host a conference call Tuesday morning, January 29, at
10:00 a.m. Eastern Standard Time. The dial-in-number is 719-457-2617. A
replay will be available through February 5, 2002. The dial-in-number for the
replay is 719-457-0820 with an access code of 465722.
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, Lexington, and West End, NC. Its common
stock is traded on the Nasdaq stock market under the symbol STLY.
For more information, visit our web site at
http://www.stanleyfurniture.com .
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," "expects," "estimates,"
"may," "will," "should," or "anticipates" or the negative thereof or other
variations thereon or comparable terminology. 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, successful implementation of expanded
offshore sourcing, the cyclical nature of the furniture industry, fluctuations
in the price of 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 condition. 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.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Operating Results
(In thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Net sales $56,350 $68,561 $234,322 $283,092
Cost of sales 44,721 52,618 181,356 214,499
Restructuring charge(1) 2,290 2,290
Gross profit 9,339 15,943 50,676 68,593
Selling, general and administrative
expenses 7,691 8,239 30,482 33,656
Restructuring charge (1) 733 733
Unusual charge (2) 2,800
Operating income 915 7,704 16,661 34,937
Other expense (income), net 23 (27) 47 (82)
Interest expense 912 1,079 4,007 4,003
Income before income taxes (20) 6,652 12,607 31,016
Income taxes (204) 2,339 4,286 11,476
Net income $184 $4,313 $8,321 $19,540
Net Income:
Before restructuring and unusual
charges $2,179 $4,313 $12,164 $19,540
Restructuring charge(1) 1,995 - 1,995 -
Unusual charge(2) - - 1,848 -
Reported net income $184 $4,313 $8,321 $19,540
Diluted earnings per share:
Before restructuring and unusual
charges $0.32 $0.61 $1.76 $2.63
Restructuring charge(1) 0.29 - 0.29 -
Unusual charge(2) - - 0.26 -
Diluted earnings per share $0.03 $0.61 $1.21 $2.63
Weighted average number of shares 6,852 7,071 6,900 7,429
(1) To record restructuring charges of $3.0 million pretax ($2.0 million
net of taxes or $.29 per diluted share) for realignment of the
company's manufacturing facilities.
(2) To record an unusual charge of $2.8 million pretax ($1.8 million net
of taxes or $.26 per diluted share) to write-off amounts due from a
major customer.
STANLEY FURNITURE COMPANY, INC.
Condensed Balance Sheets
(In thousands)
(unaudited)
December 31,
2001 2000
Assets
Current assets:
Cash $1,955 $1,825
Accounts receivable, net 23,862 33,224
Inventories 49,522 54,423
Prepaid expenses and other current
assets 2,354 568
Deferred income taxes 3,153 2,514
Total current assets 80,846 92,554
Property, plant, and equipment, net 66,708 70,455
Goodwill 9,072 9,408
Other assets 6,377 6,789
Total assets $163,003 $179,206
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $6,839 $6,714
Accounts payable 11,841 19,507
Accrued expenses 10,895 12,574
Total current liabilities 29,575 38,795
Long-term debt 30,214 45,455
Deferred income taxes 11,251 10,860
Other long-term liabilities 4,669 4,619
Stockholders' equity 87,294 79,477
Total liabilities and
stockholders' equity $163,003 $179,206
SOURCE Stanley Furniture Company
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Related links:
http://www.stanleyfurniture.com
Company News On-Call:
http://www.prnewswire.com/comp/117677.html
CONTACT:
Douglas I. Payne, Exec. V.P. - Finance and
Administration, +1-276-627-2157, or dpayne@stanleyfurniture.com;
or Anita W. Wimmer, Treasurer, +1-276-627-2446, or
awimmer@stanleyfurniture.com
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