Second Quarter Results Impacted by Bankruptcy Filing of a Major Customer
STANLEYTOWN, Va., July 17 /PRNewswire/ --
Stanley Furniture Company, Inc. (Nasdaq: STLY) today reported sales and
earnings for the second quarter of 2001. Net sales of $52.9 million declined
26.7% compared to a record second quarter last year. Net income was
$835 thousand or $.12 per share compared to record earnings of $5.1 million or
$.67 per share in 2000. Second quarter 2001 results include an unusual charge
net of taxes of $1.8 million ($2.8 million pre-tax) or $.26 per share to
write-off the entire amount due from Homelife, the company's largest customer
that recently filed for bankruptcy protection. Excluding this unusual charge,
net income for the second quarter of 2001 was $2.6 million or $.38 per share,
within the anticipated range previously announced by the company.
For the first half of 2001, net sales of $118.0 million decreased
17.6% from $143.1 million for the six months of 2000. Net income, excluding
the previously mentioned unusual charge, declined to $6.7 million or $.97 per
share from $10.2 million or $1.33 per share in the first half of last year.
Including the unusual charge, net income was $4.9 million or $.71 per share
for the first six months of 2001.
The company reduced production during the first half of 2001 in response
to order trends primarily through selective downtime at its facilities. As a
result, total inventories of $58.8 million increased slightly from year end
levels due to normal seasonal trends. Operating income, excluding the unusual
charge, as a percent of net sales was 9.7% and 10.7% for the second quarter
and first half of 2001, respectively, compared to 12.7% in each of the
comparable prior year periods. The decrease resulted primarily from the lower
sales and production levels. Start-up costs associated with the new home
office factory, which began production in March 2000, reduced operating income
in the prior year periods. Improved operating results from this facility and
lower selling, general and administrative expenses partially offset the impact
of lower sales and production levels for the second quarter and first half of
2001, versus the comparable prior year periods.
"Obviously, we are disappointed with the revenue decline in the second
quarter," commented Albert L. Prillaman, chairman and chief executive officer.
"Compounding the overall weak retail furniture environment was reduced
shipments to Homelife, our largest customer, which has historically accounted
for about 7% of total sales. While there will be near-term disruption, we
anticipate a significant portion of this business will be absorbed by our
independent dealer base."
"A year ago we were dealing with capacity constraints and favored our
Young America(TM) and home office product categories by limiting new
introductions in our collections (dining room, bedroom, tables and
entertainment units) category. We are addressing the collections business
with increased product introductions including a refocus on certain style
categories made possible due to our sourcing strategy. This strategy allows
us to maintain the delivery and quality our customers have come to expect
while improving the value of our products by sourcing certain components and
controlling the final manufacturing process. As anticipated, our Young
America and home office sales have performed much better relative to
collections during the first half of 2001," continued Mr. Prillaman.
"Considering the sales decline, we are extremely pleased with our
operating margins and believe we have the opportunity to realize considerable
operating leverage when business conditions improve. While we look forward to
improved business conditions later this year, we will continue to closely
manage cost and inventory levels. Our estimate for the third quarter
compared to a record prior year is a sales decline in the mid-teens on a
percentage basis, and earnings per share of $.45 to $.50, compared to
$.68 last year, and, for the full year 2001, our estimate is $1.75 to $2.00,"
concluded Mr. Prillaman.
All earnings per share amounts are on a fully diluted basis.
The company will host a conference call today at 10:00 a.m. Eastern
Standard Time. The dial-in-number is (913) 981-5507. A replay will be
available through July 24, 2001. The dial-in-number for the replay is
(719) 457-0820 with an access code of 484328.
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 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,
competition in the furniture industry, 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.
STANLEY FURNITURE COMPANY, INC.
Operating Results
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
Net sales $ 52,856 $ 72,118 $ 117,965 $ 143,091
Cost of sales 40,604 54,310 90,439 107,933
Gross profit 12,252 17,808 27,526 35,158
Selling, general and
administrative
expenses 7,102 8,623 14,936 16,988
Unusual charge (1) 2,800 -- 2,800 --
Operating income 2,350 9,185 9,790 18,170
Other expense (income),
net 25 9 17 (16)
Interest expense 1,016 994 2,085 1,926
Income before income
taxes 1,309 8,182 7,688 16,260
Income taxes 474 3,071 2,786 6,100
Net income $ 835 $ 5,111 $ 4,902 $ 10,160
Earnings per share:
Basic $ 0.13 $ 0.70 $ 0.74 $ 1.41
Diluted $ 0.12 $ 0.67 $ 0.71 $ 1.33
Weighted average
number of shares:
Basic 6,607 7,346 6,611 7,230
Diluted 6,957 7,643 6,929 7,624
(1)To record an unusual charge of $2.8 million pre-tax ($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 30, July 1, Dec. 31,
2001 2000 2000
Assets
Current assets:
Cash $ 929 $ 1,323 $ 1,825
Accounts receivable, net 25,565 35,998 33,224
Inventories 58,808 54,369 54,423
Prepaid expenses and other current assets 2,962 1,525 568
Deferred income taxes 2,514 2,463 2,514
Total current assets 90,778 95,678 92,554
Property, plant, and equipment, net 70,051 71,741 70,455
Goodwill 9,240 9,576 9,408
Other assets 6,574 5,503 6,789
Total assets $176,643 $182,498 $179,206
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 6,839 $ 5,286 $ 6,714
Accounts payable 15,696 23,814 19,507
Accrued expenses 10,719 14,333 12,574
Total current liabilities 33,254 43,433 38,795
Long-term debt 43,947 37,882 45,455
Deferred income taxes 10,651 11,072 10,860
Other long-term liabilities 4,598 2,456 4,619
Stockholders' equity 84,193 87,655 79,477
Total liabilities and
stockholders' equity $176,643 $182,498 $179,206
CONTACT: DOUGLAS I. PAYNE
Exec. V.P. - Finance and Administration
(540) 627-2157
e-mail:dpayne@stanleyfurniture.com
ANITA W. WIMMER
Treasurer
(540) 627-2446
e-mail:awimmer@stanleyfurniture.com
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, Exec. V.P. - Finance and
Administration, +1-540-627-2157, or dpayne@stanleyfurniture.com,
or Anita W. Wimmer, Treasurer, +1-540-627-2446, or
awimmer@stanleyfurniture.com, both of Stanley Furniture Company,
Inc.
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