STANLEYTOWN, Va., April 15 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for the first
quarter of 2002.
Net sales of $59.6 million exceeded the anticipated range of $56 to $58
million and represented an 8.5% decline compared to the first quarter of last
year. Net income, excluding restructuring and related charges, was $3.7
million or $.54 per share compared to earnings of $4.1 million or $.59 per
share in the first quarter of 2001. First quarter 2002 earnings exceeded
expectations due primarily to stronger sales.
Operating income, excluding restructuring and related charges, as a
percent of net sales was 11.0% in the first quarter of 2002 compared to 11.4%
for the prior year first quarter and 7.0% for the fourth quarter of 2001.
Operating income decreased from the prior year first quarter due to lower
sales and production levels partially offset by lower raw material costs and
margin improvement from sourcing initiatives. Operating income increased from
the fourth quarter of 2001 due primarily to higher sales and production
levels.
Strong cash flow of $5.2 million in the first quarter of 2002 was used to
reduce debt by $4.9 million and increase cash $353,000. As a result the
Company's debt to total capitalization (debt plus equity) decreased from 29.8%
at December 31, 2001 to 26.3% at March 30, 2002. The Company continued to
manage inventory levels through adjusted production schedules, contributing to
a decrease in total inventories of $1.2 million in the first quarter.
"We are pleased with the progress achieved in our first quarter operating
results especially considering an inconsistent retail environment for
residential wood furniture," said Albert L. Prillaman, chairman and chief
executive officer. "Our offshore sourcing initiatives and the realignment of
manufacturing facilities continue to progress as planned."
"We are encouraged by the early response to our new product introductions
and a more upbeat attitude from retailers as we prepare for this week's semi-
annual International Home Furnishings market. With the improving U.S.
economy, our lower cost structure and the initial acceptance of new product
introductions, we expect total sales for 2002 to increase 5% to 8% with
earnings of $2.40 to $2.60 per share excluding restructuring and related
charges. Second quarter sales are expected to increase 10% to 14% compared to
the second quarter of 2001, with earnings of $.52 to $.57 per share excluding
restructuring and related charges," 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 created excess capacity at its
domestic manufacturing facilities resulting in the closure of the West End,
North Carolina factory. Production at this plant ceased during the first
quarter of 2002 with certain warehousing and other activities continuing into
the second quarter.
As a result of closing the West End facility, the Company expects to
record total restructuring and related charges of approximately $7.0 million
(compared to a previously anticipated range of $7 to $9 million) consisting of
asset write-downs (through increased depreciation) and other plant closing
costs. To-date the Company has recorded $5.9 million of these charges
including $2.9 million in the first quarter of 2002.
Closing the West End facility is expected to reduce the Company's costs by
$4 to $5 million annually and lower capital expenditures for the next two
years. A significant portion of the West End machinery and equipment is being
relocated to other Company facilities. Accordingly, the Company expects
capital expenditures of $2 to $3 million in 2002.
All earnings per share amounts are on a diluted basis.
The Company will host a conference call Tuesday morning, April 16, at
10:00 a.m. Eastern Standard Time. The call will also be web cast live and
archived on the Company's web site at http://www.stanleyfurniture.com . The
dial-in-number is 706-679-8542. A replay will be available through April 23,
2002. The dial-in-number for the replay is 706-645-9291 with an access code
of 3675946.
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.
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 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.
STANLEY FURNITURE COMPANY, INC.
Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 30, March 31,
2002 2001
Net sales $59,574 $65,109
Cost of sales 45,106 49,836
Restructuring and related charges(1) 2,905 -
Gross profit 11,563 15,273
Selling, general and administrative expenses 7,917 7,833
Operating income 3,646 7,440
Other income 82 7
Interest expense 834 1,069
Income before income taxes 2,894 6,378
Income taxes 1,027 2,312
Net income $1,867 $4,066
Net income:
Before restructuring and related charges $3,741 $4,066
Restructuring and related charges(1) 1,874 -
Reported net income $1,867 $4,066
Diluted earnings per share:
Before restructuring and related charges $0.54 $0.59
Restructuring and related charges(1) 0.27 -
Diluted earnings per share $0.27 $0.59
Weighted average number of shares 6,902 6,906
(1) To record restructuring and related charges of $2.9 million pretax
($1.9 million net of taxes or $.27 per diluted share) for realignment
of the Company's manufacturing facilities.
STANLEY FURNITURE COMPANY, INC.
Condensed Balance Sheets
(in thousands)
(unaudited)
Mar. 30, Mar. 31, Dec. 31,
2002 2001 2001
Assets
Current assets:
Cash $2,308 $787 $1,955
Accounts receivable, net 29,999 34,214 23,862
Inventories 48,343 55,902 49,522
Prepaid expenses and other
current assets 1,213 912 2,354
Deferred income taxes 3,153 2,514 3,153
Total current assets 85,016 94,329 80,846
Property, plant, and equipment, net 63,284 69,663 66,708
Goodwill 9,072 9,324 9,072
Other assets 6,215 6,648 6,377
Total assets $163,587 $179,964 $163,003
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term
debt $6,839 $6,714 $6,839
Accounts payable 14,701 18,118 11,841
Accrued expenses 10,549 14,172 10,895
Total current liabilities 32,089 39,004 29,575
Long-term debt 25,329 42,640 30,214
Deferred income taxes 11,251 10,651 11,251
Other long-term liabilities 4,588 4,612 4,669
Stockholders' equity 90,330 83,057 87,294
Total liabilities and
stockholders' equity $163,587 $179,964 $163,003
SOURCE Stanley Furniture Company, Inc.
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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, dpayne@stanleyfurniture.com, or
Anita W. Wimmer, Treasurer, +1-276-627-2446,
awimmer@stanleyfurniture.com, both of Stanley Furniture Company,
Inc.
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