Will Incur Plant Consolidation Charge and Revises Earnings Outlook
STANLEYTOWN, Va., Dec. 13 /PRNewswire/ --
Stanley Furniture Company, Inc. (Nasdaq: STLY) today announced a plan to
expand offshore sourcing, realign manufacturing capacity and significantly
lower operating costs.
As a result of a successful offshore sourcing initiative that began over
two years ago, the Company is integrating the importing of selected component
parts and finished items in its product line that 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 has decided to close its West End, North Carolina
factory and consolidate the production from this facility into other company
facilities without disrupting the supply of product to customers.
Closing of the West End facility is expected to reduce the Company's costs
by $4-5 million annually and will affect approximately 13%, or 400, of the
Company's 3,100 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 2002 with certain warehousing and other
activities continuing until mid year 2002.
The Company anticipates asset writedowns (through accelerated
depreciation) and other restructuring charges, including severance and plant
inefficiencies, totaling $7-9 million pretax, equal to approximately $.65 to
$.85 per share. The charge will include cash costs of approximately
$3-4 million. However, a significant portion of the machinery and equipment
will be relocated from West End to other Company facilities and will reduce
future capital expenditures by approximately $3-4 million.
Current accounting guidelines require that assets held for use be
depreciated over the remaining useful lives, which is through the anticipated
closure date in the first quarter of 2002. Therefore, the Company expects a
fourth quarter 2001 charge of approximately $3-4 million pretax, or $.30 to
$.40 per share with the remainder of the cost occurring in 2002, predominantly
in the first quarter.
The Company also announced its revised outlook for fourth quarter 2001
sales and earnings. The Company now expects a sales decline of 15-19% in the
fourth quarter of 2001 compared to last year and earnings per share of
$.26-$.31 for the fourth quarter and $1.70-$1.75 for total year 2001,
excluding asset writedowns, restructuring and unusual charges.
"Profitability remains at healthy levels, our cash flow and balance sheet
are strong and our market position is solid, yet performance this year has
been adversely impacted by the economic recession, the financial failure and
subsequent liquidation of our largest customer, and competitive pressure from
imported products," said Albert L. Prillaman, chairman and chief executive
officer. "We continue to believe the U.S. economy will rebound next year from
the current recession and therefore, we continue to expect a sales increase of
5-8% and earnings per share of $2.30-$2.60 excluding restructuring charges for
2002."
"We deeply regret the need to close the West End plant and eliminate these
jobs. However, we believe this realignment of our manufacturing operations is
absolutely essential for Stanley Furniture to remain a highly competitive
manufacturer and an industry leader. The realignment of our manufacturing
facilities will be painful short-term but significantly improves our cost
structure in the future. 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," Prillaman concluded.
All earnings per share amounts are on a fully diluted basis.
The company will host a conference call Thursday morning, December 13, at
11:00 a.m. Eastern Standard Time. The dial-in-number is (719) 457-2652. A
replay will be available through December 20, 2001. The dial-in-number for
the replay is (719) 457-0820 with an access code of 615254.
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
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.
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, +1-276-627-2157, or dpayne@stanleyfurniture.com,
or Robin W. Campbell, Manager-Advertising and Marketing Services,
+1-276-627-2245, or rcampbell@stanleyfurniture.com, both of
Stanley Furniture Company, Inc.
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