Earnings Per Share Increases 28% on a Sales Increase of 2.2%
STANLEYTOWN, Va., Oct. 14 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for the third
quarter of 2002.
Net sales of $61.3 million increased 2.2% compared to the third quarter of
last year. Earnings per share, excluding restructuring and related credit, of
$.60 increased 28% compared to earnings per share of $.47 in the third quarter
of 2001. Reported earnings per share of $.62 for the third quarter of 2002
included a restructuring credit of $.02 per share resulting from a favorable
disposition of inventory from the closing of the Company's former West End,
North Carolina facility.
For the first nine months of 2002, net sales of $176.2 million decreased
1.0% from $178.0 million for the nine months of 2001. Net income, excluding
restructuring and unusual charges, increased to $10.9 million or $1.60 per
share from $9.9 million or $1.44 per share in the first nine months of last
year. Year-to-date reported net income was $8.6 million or $1.26 per share
compared to $8.1 million or $1.18 per share for the year-to-date period of
2001.
Operating income, excluding restructuring and unusual charges, as a
percent of net sales was 11.4% and 10.8% for the third quarter and first nine
months of 2002, respectively, compared to 9.9% and 10.4%, in the comparable
prior year periods. Operating margins continued to improve 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.
Strong cash flow of $15.7 million in the first nine months of 2002 was
used to reduce debt by $6.0 million, increase cash by $6.6 million and
purchase $3.1 million of the Company's common stock. Approximately $4.9
million remains authorized by the Company's Board of Directors to repurchase
shares of the Company's common stock. The Company's debt to total
capitalization (debt plus equity) decreased from 29.8% at December 31, 2001,
to 24.7% at September 28, 2002. Inventories increased $6.1 million from year-
end levels due primarily to normal seasonal trends.
"We continue to deliver solid operating performance despite the continued
inconsistent retail environment for residential wood furniture," commented
Albert L. Prillaman, chairman and chief executive officer. "Our blended
strategy which combines focused, efficient domestic manufacturing facilities
with offshore sourcing capabilities provides design flexibility and better
value to the consumer. The progress of our offshore sourcing initiatives and
realignment of manufacturing facilities is positively impacting our
performance."
"While it is early in the fourth quarter, we are not experiencing the
normal seasonal increase in order activity. Accordingly, we now anticipate
fourth quarter sales to approximate third quarter 2002, resulting in a sales
increase in the high single digits on a percentage basis over the comparable
year ago quarter. We expect earnings of $.52 to $.57 per share for the fourth
quarter of 2002 compared to $.32 per share, before restructuring and related
charges, in the fourth quarter of 2001. We are currently in the midst of our
planning and budgeting process for 2003, and will provide guidance for 2003 at
a later time," 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 $3.5 million
for the nine month period ending September 28, 2002. Total pretax charges
related to the closing were $6.6 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 nine month periods of 2001 reduced
earnings per share by $.01 and $.03, respectively. In accordance with new
accounting requirements goodwill was not amortized in 2002.
All earnings per share amounts are on a diluted basis.
The Company will host a conference call Tuesday morning, October 15th, 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 October 22, 2002.
The dial-in-number for the replay is 706-645-9291 with an access code of
5978852.
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," "estimates," "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 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 for 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 Nine Months Ended
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2002 2001 2002 2001
Net sales $61,338 $60,007 $176,180 $177,972
Cost of sales 46,386 46,195 133,287 136,635
Restructuring and related
charges (credit) (1) (209) 3,548
Gross profit 15,161 13,812 39,345 41,337
Selling, general and
administrative expenses 7,990 7,856 23,799 22,791
Unusual charge(2) 2,800
Operating income 7,171 5,956 15,546 15,746
Other expense (income),
net (13) 6 (167) 24
Interest expense 767 1,010 2,347 3,095
Income before
income taxes 6,417 4,940 13,366 12,627
Income taxes 2,278 1,704 4,745 4,490
Net income $4,139 $3,236 $8,621 $8,137
Net income:
Before restructuring
and unusual charges $4,004 $3,236 $10,909 $9,942
Restructuring and
related charges
(credit) (1) (135) 2,288
Unusual charge(2) 1,805
Reported net income $4,139 $3,236 $8,621 $8,137
Diluted earnings per share:
Before restructuring
and unusual charges $0.60 $0.47 $1.60 $1.44
Restructuring and
related charges
(credit) (1) (0.02) 0.34
Unusual charge(2) 0.26
Diluted earnings
per share $0.62 $0.47 $1.26 $1.18
Weighted average number
of shares 6,681 6,884 6,822 6,914
(1) Third quarter 2002 credit represents the reversal of certain
restructuring related inventory reserves. The nine month 2002 amount
represents net restructuring and related charges for realignment of
the Company's manufacturing facilities.
(2) To write-off receivables due to the liquidation of a former customer.
STANLEY FURNITURE COMPANY, INC.
Condensed Balance Sheets
(in thousands)
(unaudited)
Sept. 28, Sept 29, Dec. 31,
2002 2001 2001
Assets
Current assets:
Cash $8,598 $1,948 $1,955
Accounts receivable, net 31,753 31,174 23,862
Inventories 55,595 55,250 49,522
Prepaid expenses and other
current assets 1,035 1,285 2,354
Deferred income taxes 3,153 2,514 3,153
Total current assets 100,134 92,171 80,846
Property, plant, and equipment, net 60,522 69,919 66,708
Goodwill 9,072 9,156 9,072
Other assets 5,540 6,377 6,377
Total assets $175,268 $177,623 $163,003
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term
debt $6,914 $6,839 $6,839
Accounts payable 17,818 16,586 11,841
Accrued expenses 16,191 12,494 10,895
Total current liabilities 40,923 35,919 29,575
Long-term debt 24,129 40,043 30,214
Deferred income taxes 11,251 10,651 11,251
Other long-term liabilities 4,419 4,584 4,669
Stockholders' equity 94,546 86,426 87,294
Total liabilities and
stockholders' equity $175,268 $177,623 $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, 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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