Sales Increase 4.6% and Earnings Before Charges Increase 20.7%
STANLEYTOWN, Va., July 15 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for the second
quarter of 2002.
Net sales of $55.3 million increased 4.6% compared to the second quarter
last year. Net income, excluding restructuring and unusual charges, was $3.2
million or $.45 per share compared to earnings of $2.6 million or $.38 per
share in the second quarter of 2001. Reported net income was $2.6 million or
$.37 per share compared to $835,000 or $.12 per share in the prior year second
quarter.
For the first half of 2002, net sales of $114.8 million decreased 2.6%
from $118.0 million for the six months of 2001. Net income, excluding
restructuring and unusual charges, increased to $6.9 million or $.99 per share
from $6.7 million or $.97 per share in the first half of last year. First
half reported net income was $4.5 million or $.64 per share compared to $4.9
million or $.71 per share in the six month period of 2001.
Operating income, excluding restructuring and unusual charges, as a
percent of net sales was 10.1% and 10.6% for the second quarter and first half
of 2002, respectively, compared to 9.7% and 10.7%, in the comparable prior
year periods. Second quarter operating margin improved primarily due to cost
savings resulting from the closing of the Company's former West End, North
Carolina facility, lower raw material cost and offshore sourcing initiatives.
These improvements also contributed to the sustainability of margins for the
six month period of 2002 on lower sales compared to the first half of 2001.
Strong cash flow of $13.0 million in the first six months of 2002 was used
to reduce debt by $4.9 million and increase cash by $8.1 million. The
Company's debt to total capitalization (debt plus equity) decreased from 29.8%
at December 31, 2001, to 25.6% at June 29, 2002. Inventories increased
slightly from year end levels due to normal seasonal trends.
"Orders for our day-to-day business have been weaker than previously
anticipated due to a softer retail environment for wood furniture since
Memorial Day," commented Albert L. Prillaman, chairman and chief executive
officer. "These recent trends combined with the uncertainty in the economy
cause us to be less optimistic about an improving U.S. economy in the second
half of this year and to modestly lower our sales and earnings guidance for
the balance of 2002. However, the response to our new product introductions
from the April International Home Furnishings market has been very strong.
This contributed to a 12% increase in orders for the second quarter versus the
comparable year-ago quarter and an increase in our order backlog of 20% over
June 2001. We will begin shipping these products in the third quarter. Also,
we are very pleased with the progress of our offshore sourcing initiatives and
the realignment of manufacturing facilities."
"We now expect third quarter sales to increase in the mid to high single
digits on a percentage basis over the comparable year ago quarter with
earnings of $.60 to $.65 per share. For the total year 2002 we anticipate a
sales increase in the mid single digits on a percentage basis over last year
with earnings of $2.25 to $2.40 per share excluding restructuring and related
charges," Prillaman concluded.
As previously announced, all closing activities have been completed at the
Company's former West End, North Carolina facility including the relocation of
equipment and the sale of the real estate. The Company recorded pretax
restructuring charges related to the closing of this facility of $852,000 and
$3.8 million for the three and six month periods ending June 29, 2002,
respectively. Total pretax charges related to the closing were $6.8 million
including $3.0 million recorded in 2001, and consisted of asset write-downs
(through increased depreciation), relocation cost of equipment and inventory,
operating inefficiencies and severance cost. The Company anticipates no
further charges related to the closing of this facility.
Goodwill amortization for the three and six month periods of 2001 reduced
earnings per share by $.01 and $.02, respectfully. All earnings per share
amounts are on a diluted basis.
The Company will host a conference call Tuesday morning, July 16, at 10:00
a.m. Eastern 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 July 23, 2002. The dial-
in-number for the replay is (706) 645-9291 with an access code of 4716358.
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 Six Months Ended
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
Net sales $55,268 $52,856 $114,842 $117,965
Cost of sales 41,795 40,604 86,901 90,439
Restructuring and related charges(1) 852 3,757
Gross profit 12,621 12,252 24,184 27,526
Selling, general and administrative
expenses 7,892 7,102 15,809 14,936
Unusual charge(2) 2,800 2,800
Operating income 4,729 2,350 8,375 9,790
Other expense (income), net (72) 25 (154) 17
Interest expense 746 1,016 1,580 2,085
Income before income taxes 4,055 1,309 6,949 7,688
Income taxes 1,440 474 2,467 2,786
Net income $2,615 $835 $4,482 $4,902
Net income:
Before restructuring and related
charges $3,164 $2,621 $6,905 $6,688
Restructuring and related
charges(1) 549 - 2,423 -
Unusual Charge(2) - 1,786 - 1,786
Reported net income $2,615 $835 $4,482 $4,902
Diluted earnings per share:
Before restructuring and related
charges $.45 $.38 $.99 $.97
Restructuring and related
charges(1) .08 - .35 -
Unusual Charge(2) - .26 - .26
Diluted earnings per share $.37 $.12 $.64 $.71
Weighted average number of shares 6,998 6,957 6,950 6,929
(1) To record restructuring and related charges of $852,000 pretax
($549,000 net of taxes or $.08 per diluted share) in the second
quarter and $3.8 million pretax ($2.4 million net of taxes or $.35
per diluted share) for the six month period 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)
June 29, June 30, Dec. 31,
2002 2001 2001
Assets
Current assets:
Cash $10,066 $929 $1,955
Accounts receivable, net 26,122 25,565 23,862
Inventories 53,650 58,808 49,522
Prepaid expenses and other
current assets 1,510 2,962 2,354
Deferred income taxes 3,153 2,514 3,153
Total current assets 94,501 90,778 80,846
Property, plant, and equipment, net 61,732 70,051 66,708
Goodwill 9,072 9,240 9,072
Other assets 5,738 6,574 6,377
Total assets $171,043 $176,643 $163,003
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term
debt $6,839 $6,839 $6,839
Accounts payable 17,594 15,696 11,841
Accrued expenses 12,086 10,719 10,895
Total current liabilities 36,519 33,254 29,575
Long-term debt 25,329 43,947 30,214
Deferred income taxes 11,251 10,651 11,251
Other long-term liabilities 4,506 4,598 4,669
Stockholders' equity 93,438 84,193 87,294
Total liabilities and
stockholders' equity $171,043 $176,643 $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/gh/cnoc/comp/117677.html
CONTACT:
Douglas I. Payne, Executive 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; both of Stanley
Furniture Company, Inc.
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