Q1-07 Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q


(Mark One)

[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from   to  .

Commission file number: 0-14938


STANLEY FURNITURE COMPANY, INC.
(Exact name of registrant as specified in its charter)



 
Delaware
  
54-1272589
  
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)


1641 Fairystone Park Highway, Stanleytown, Virginia 24168
(Address of principal executive offices, Zip Code)


(276) 627- 2000
(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes (x) No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one);
Large accelerated filer ( ) Accelerated filer (x) Non-accelerated filer ( )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (x)

As of April 13, 2007, 10,592,879 shares of common stock of Stanley Furniture Company, Inc., par value $.02 per share were outstanding.
 

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

STANLEY FURNITURE COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
   
 (unaudited)
      
   
 March 31,
  
 December 31,
  
   
 2007
  
 2006
  
ASSETS
          
Current assets:
              
Cash
  
$
2,332
  
$
6,269
  
Accounts receivable, less allowances of $1,783 and $1,554
    
35,314
    
32,260
  
Inventories:
              
 Finished goods
    
42,213
    
45,172
  
 Work-in-process
    
4,559
    
5,183
  
 Raw materials
    
9,495
    
9,009
  
  Total inventories
    
56,267
    
59,364
  
               
Prepaid expenses and other current assets 
    
925
    
2,085
  
Deferred income taxes
    
3,817
    
3,928
  
Total current assets
    
98,655
    
103,906
  
               
Property, plant and equipment, net
    
48,571
    
49,159
  
Goodwill
    
9,072
    
9,072
  
Other assets
    
223
    
541
  
Total assets
  
$
156,521
  
$
162,678
  
               
LIABILITIES
              
Current liabilities:
              
Current maturities of long-term debt
  
$
2,857
  
$
2,857
  
Accounts payable
    
17,053
    
17,789
  
Accrued salaries, wages and benefits
    
10,237
    
9,868
  
Other accrued expenses
    
2,194
    
1,356
  
Total current liabilities
    
32,341
    
31,870
  
               
Long-term debt, exclusive of current maturities
    
5,714
    
5,714
  
Deferred income taxes
    
7,257
    
7,422
  
Other long-term liabilities
    
7,976
    
8,025
  
Total liabilities
    
53,288
    
53,031
  
               
STOCKHOLDERS’ EQUITY
              
Common stock, $.02 par value, 25,000,000 shares authorized
10,592,879 and 10,928,610 shares issued and outstanding
    
212
    
219
  
Capital in excess of par value
    
114
    
59
  
Retained earnings
    
107,624
    
114,189
  
Accumulated other comprehensive loss
    
(4,717
)
  
( 4,820
)
Total stockholders’ equity
    
103,233
    
109,647
  
Total liabilities and stockholders’ equity
  
$
156,521
  
$
162,678
  
 
The accompanying notes are an integral part of the consolidated financial statements.

 

STANLEY FURNITURE COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)


   
Three Months
  
   
Ended 
  
   
March 31,
 
April 1,
 
   
2007 
  
2006 
  
               
Net sales
  
$
75,108
  
$
83,524
  
               
Cost of sales
    
61,614
    
63,766
  
               
Gross profit
    
13,494
    
19,758
  
               
Selling, general and administrative expenses
    
10,415
    
11,128
  
               
Operating income
    
3,079
    
8,630
  
               
Other income (expense), net
    
(68
)
  
93
  
Interest income
    
27
    
110
  
Interest expense
    
517
    
524
  
               
Income before income taxes
    
2,521
    
8,309
  
               
Income taxes
    
845
    
2,917
  
               
Net income
  
$
1,676
  
$
5,392
  
               
Earnings per share:
              
               
Basic
  
$
.16
  
$
.44
  
Diluted
  
$
.15
  
$
.43
  
               
Weighted average shares outstanding:
              
               
Basic
    
10,761
    
12,264
  
Diluted
    
10,994
    
12,567
  
               
Cash dividend declared and paid per common share
  
$
.10
  
$
.08
  
               


The accompanying notes are an integral part of the consolidated financial statements.



STANLEY FURNITURE COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
(in thousands)
 
Three Months Ended 
  
   
March 31,
  
April 30, 
  
   
   2007
  
              2006 
  
Cash flows from operating activities:
              
Cash received from customers
  
$
72,016
  
$
80,251
  
Cash paid to suppliers and employees
    
(66,003
)
  
(68,651
)
Interest paid, net
    
16
 
  
110
 
Income taxes paid, net
    
(511
)
  
(495
)
Net cash provided by operating activities
    
5,518
    
11,215
  
               
Cash flows from investing activities:
              
Capital expenditures
    
(1,126
)
  
(216
)
Purchase of other assets
    
 
 
  
(17
)
Net cash used by investing activities
    
(1,126
)
  
(233
)
               
Cash flows from financing activities:
              
Purchase and retirement of common stock
    
(7,252
)
  
(1,252
)
Dividends paid
    
(1,077
 )   
(982
 ) 
Proceeds from exercised stock options
    
 
    
453
  
Tax benefit from exercise of stock options
    
 
        161  
Net cash used by financing activities
    
(8,329
)
  
(1,620
)
               
Net increase (decrease) in cash
    
(3,937
)
  
9,362
  
Cash at beginning of period
    
6,269
    
12,556
  
Cash at end of period
  
$
2,332
  
$
21,918
  
           
Reconciliation of net income to net cash provided by operating activities:
          
Net income
  
$
1,676
  
$
5,392
  
Depreciation
    
1,532
    
1,464
  
Deferred income taxes
    
(55
)
  
(210
)
Tax benefit from exercise of stock options
    
 
 
    (161 ) 
Stock-based compensation
    
114
     72   
       Other, net                    194     6   
Changes in assets and liabilities:
              
Accounts receivable
    
(3,054
)
  
(3,277
)
Inventories
    
3,097
    
4,844
  
Prepaid expenses and other current assets
    
1,116
 
  
478
 
Accounts payable
    
(736
 )   
58
  
Accrued salaries, wages and benefits
    
531
 
  
(994
 ) 
Other accrued expenses
    
801
    
3,270
  
Other assets
    
351
 
  
312
 
Other long-term liabilities 
    
(49
)
  
(39
)
Net cash provided by operating activities
  
$
5,518
  
$
11,215
  
 
The accompanying notes are an integral part of the consolidated financial statements.
 

STANLEY FURNITURE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)


1.
Preparation of Interim Unaudited Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with generally accepted accounting principles have been either condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of results of operations and financial position. Operating results for the interim periods reported herein may not be indicative of the results expected for the year. We suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and accompanying notes included in our latest Annual Report on Form 10-K.

2.
Property, Plant and Equipment

   
March 31, 
  
December 31, 
  
   
2007 
  
2006 
  
Land and buildings
  
$
41,225
  
$
40,887
  
Machinery and equipment
    
79,841
    
79,051
  
Office furniture and equipment
    
1,452
    
1,452
  
Construction in process 
    
1,829
    
2,071
  
Property, plant and equipment, at cost
    
124,347
    
123,461
  
Less accumulated depreciation
    
75,776
    
74,302
  
Property, plant and equipment, net
  
$
48,571
  
$
49,159
  


3.
Debt
 

   
March 31,  
   December 31,   
   
2007  
  
2006  
  
7.43% senior notes due through November 18, 2007
  
$
1,428
  
$
1,428
  
6.94% senior notes due through May 3, 2011
    
7,143
    
7,143
  
Total
    
8,571
    
8,571
  
Less current maturities
    
2,857
    
2,857
  
Long-term debt, exclusive of current maturities
  
$
5,714
  
$
5,714
  

On January 26, 2007, we entered into a definitive agreement to borrow $25 million in a private note placement. Funding occurred on April 17, 2007. The note bears interest at 6.73% per annum and is payable in seven equal annual principal payments starting in May 2011, with the final payment due in May 2017. Proceeds from the loan will be used for general corporate purposes, including our stock repurchase program.





4. Employee Benefits Plans

Components of pension cost:
   
Three Months Ended 
  
   
March 31,
  
April 1,
  
   
2007 
  
2006 
  
Interest cost
  
$
123
  
$
237
  
Expected return on plan assets
    
(113
)
  
(244
)
Amortization of accumulated loss
    
130
    
130
  
Net cost
    
140
    
123
  
Settlement expense
          
216
  
Total expense
  
$
140
  
$
339
  

Components of other postretirement benefit cost:
   
Three Months Ended 
  
   
March 31,
  
April 1,
  
   
2007 
  
2006 
  
Service cost
  
$
21
  
$
24
  
Interest cost
    
39
    
44
  
Amortization of transition obligation
    
32
    
33
  
Amortization of prior service cost
    
(2
)
      
Amortization of accumulated loss 
    
6
    
11
  
Net periodic postretirement benefit cost
  
$
96
  
$
112
  

On July 17, 2006, we announced the decision to terminate our defined benefit pension plan. Having received all necessary regulatory approvals, distribution of assets will occur in the second quarter of 2007, resulting in a final cash contribution of $1.0 million to $1.5 million. In addition, we expect to record in the second quarter a pre-tax charge to earnings of $6.0 million to $6.5 million, or $4.0 million to $4.3 million, net of taxes.

5.
Stockholders’ Equity

Basic earnings per common share are based upon the weighted average shares outstanding. Outstanding stock options are treated as potential common stock for purposes of computing diluted earnings per share. Basic and diluted earnings per share are calculated using the following share data:

 
Three Months Ended 
 
March 31,
  
April 1,
 
2007 
  
2006 
Weighted average shares outstanding
for basic calculation
 
10,761
  
 
12,264
Add: Effect of dilutive stock options
233
  
303
Weighted average shares outstanding,
adjusted for diluted calculation
 
10,994
  
 
12,567




A reconciliation of the activity in Stockholders’ Equity accounts for the quarter ended March 31, 2007 is as follows:

               
Accumulated
  
       
Capital in
      
Other
  
   
Common
  
Excess of
  
Retained
  
Comprehensive
  
   
Stock 
  
Par Value
  
Earnings
  
Loss
  
Balance, December 31, 2006
  
$
219
  
$
59
  
$
114,189
  
$
(4,820
)
Cumulative effect of adoption of FIN 48
                
22
        
Adjusted balance, December 31, 2006
    
219
    
59
    
114,211
    
(4,820
)
Net income
                
1,676
    
 
Stock repurchases
    
(7
)
  
(59
)
  
(7,186
)
      
Stock-based compensation
          
114
              
Cash dividends paid, $.10 per share
                
(1,077
)
      
Adjustment to net periodic benefit cost
    
 
                
103
  
Balance, March 31, 2007
  
$
212
  
$
114
  
$
107,624
  
$
(4,717
)

6. Income Taxes

We adopted the provisions of Financial Standards Accounting Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109 (“SFAS 109”) on January 1, 2007. As a result of the implementation of FIN 48, we recognized no material adjustment in the liability for unrecognized income tax benefits. At the adoption date of January 1, 2007, we had $923,000 of unrecognized tax benefits, all of which would affect our effective tax rate if recognized. At March 31, 2007, we have $949,000 of unrecognized tax benefits.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of March 31, 2007, we have approximately $264,000 of accrued interest related to uncertain tax positions.

The tax years 2003-2006 remain open to examination by the major taxing jurisdictions to which we are subject.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Over the past few years the residential wood furniture industry has experienced a surge in low cost imported products, primarily from China. Imports have grown dramatically in the past few years and now account for most residential wood furniture sold in the United States.

In response to this trend, we developed a blended strategy of combining our domestic manufacturing capabilities with an offshore sourcing program and realigned our manufacturing capacity. We incorporate selected imported finished items in our product line to lower cost, provide design flexibility and offer a better value to our customers. Sourced product represented approximately 33% of sales during the first three months of 2007 compared to 34% for total year 2006. We anticipate this percentage will remain about the same for the remainder of 2007.

In 2005, we began reinvigorating our continuous improvement efforts using lean business principles to improve processes and efficiencies. In 2006, these efforts allowed us to significantly reduce inventories by shortening manufacturing lead times, which lowered production levels and operating margins. The reduction in manufacturing lead times has resulted in smaller batch sizes and more frequent production runs, requiring more change over and machine set up times. We are currently focusing our efforts on reducing change over and machine set up times to improve our operating efficiencies before any further reduction of manufacturing lead times. Consequently, for the near term we do not anticipate significant changes in inventory levels. While these renewed efforts have shown positive results, it is difficult to project the speed and extent to which we will be able to lower costs, improve quality and reduce inventories.
 
We will continue to evaluate our manufacturing capacity needs considering offshore sourcing opportunities, current and anticipated demand for our products, overall market conditions and other factors we consider relevant. Should further capacity reductions become necessary, this could cause asset impairment or other restructuring charges in the future.
 
The following table sets forth the percentage relationship to net sales of certain items included in the Consolidated Statements of Income:

   
Three Months Ended 
  
   
March 31,
  
April 1,
  
   
2007 
  
2006 
  
Net sales
    
100.0
%
  
100.0
%
Cost of sales
    
82.0
    
76.3
  
Gross profit
    
18.0
    
23.7
  
Selling, general and administrative expenses
    
13.9
    
13.3
  
Operating income
    
4.1
    
10.3
  
Other (expense) income, net
    
(.1
)
  
.1
  
Interest income
          
.1
  
Interest expense
    
.6
    
.6
  
Income before income taxes
    
3.4
    
9.9
  
Income taxes
    
1.1
    
3.5
  
Net income
    
2.2
%
  
6.5
%

Net sales decreased $8.4 million, or 10.1%, for the three month period ended March 31, 2007, from the comparable 2006 period. This was primarily due to lower unit volume, resulting from continued weakness in demand, which we believe is due to current industry conditions.

Gross profit margins for the three month period of 2007 were 18.0% compared to 23.7% for the 2006 period. Lower margins resulted from lower sales and production levels, operating inefficiencies, raw material inflation and increased compensation costs. The lower sales and production levels led to lower margins due to the under absorption of factory overhead costs. Operating inefficiencies primarily resulted from additional change overs and machine set ups (as discussed above) and costs associated with the transition to lower staffing and output levels at one of our factories, which was completed late in the first quarter of 2007. We expect improvements in change over and machine set up times and lower staffing levels to favorably impact gross profit margins for the balance of 2007.

Selling, general and administrative expenses as a percentage of net sales were 13.9% for the three month period of 2007 compared to 13.3% for the 2006 period. The higher percentage for 2007 is primarily due to lower sales. Selling, general and administrative expenses decreased $713,000 during the three month period of 2007 compared to the 2006 period, due to lower selling expenses resulting from decreased sales and lower performance based compensation expense.

As a result of the above, operating income as a percentage of net sales was 4.1% for the three month period of 2007 compared to 10.3% for the comparable 2006 period.

Interest expense for the three month period of 2007 decreased primarily due to lower average debt levels. Interest income decreased during the 2007 period due to a decrease in cash.

The effective tax rate for 2007 is expected to be 33.5%, compared to 34.8% for total year 2006. The lower rate for 2007 is due primarily to lower income resulting from the anticipated charge related to the termination of our defined pension plan and the continued phase in of the qualified domestic production deduction.
 
Financial Condition, Liquidity and Capital Resources

Our sources of liquidity include cash on hand, cash from operations and amounts available under a $25.0 million credit facility. These sources have been adequate for day-to-day expenditures, debt payments, purchases of our stock, capital expenditures and payment of cash dividends to stockholders. We expect these sources of liquidity to continue to be adequate for the future.

On January 26, 2007, we entered into a definitive agreement to borrow $25 million in a private note placement. Funding occurred on April 17, 2007. The note bears interest at 6.73% per annum and is payable in seven equal annual principal payments starting in May 2011, with the final payment due in May 2017. Proceeds from the loan will be used for general corporate purposes, including our stock repurchase program.

Working capital, excluding cash and current maturities of long-term debt, decreased $1.8 million during the first three months of 2007 to $66.8 million from $68.6 million at year end. The decrease was primarily due to lower inventories.

Cash generated from operations was $5.5 million in the first three months of 2007 compared to $11.2 million in the 2006 period. The decrease was primarily due to lower receipts from customers due to lower sales.

Net cash used by investing activities was $1.1 million in the 2007 period compared to $233,000 in 2006 and consisted of normal capital expenditures. Capital expenditures for 2007 are anticipated to be in the range of $5.0 million to $6.0 million.

Net cash used by financing activities was $8.3 million in the 2007 period compared to $1.6 million in the 2006 period. In the 2007 period, cash from operations and cash on hand provided funds for the purchase and retirement of our common stock and cash dividends. During the first three months of 2007, $7.3 million was used to purchase 335,731 shares of our common stock in the open market at an average price of $21.60. Approximately $25.3 million is currently authorized by our Board of Directors to repurchase shares of our common stock. In the 2006 period, cash from operations and proceeds from the exercise of stock options provided funds for the purchase and retirement of our common stock and cash dividends.

At March 31, 2007, long-term debt including current maturities was $8.6 million. Debt service requirements are $2.9 million in 2007 and $1.4 million each in 2008 through 2011. As of March 31, 2007, approximately $25 million of additional borrowings were available under the revolving credit facility and cash on hand was $2.3 million.

Pension Plan Termination

On July 17, 2006, we announced the decision to terminate our defined benefit pension plan. Having received all necessary regulatory approvals, distribution of assets will occur in the second quarter of 2007 resulting in a final cash contribution of $1.0 million to $1.5 million. In addition, we expect to record in the second quarter a pre-tax charge to earnings of $6.0 million to $6.5 million, or $4.0 million to $4.3 million, net of taxes. Pension expense related to this Plan for the first three months of 2007 was approximately $111,000, pre-tax.



Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our 10-K for the fiscal year ended December 31, 2006, except as follows:

FIN 48 - We account for uncertain tax positions in accordance with FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109 (“SFAS 109”). The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of income. See note 6 to the consolidated financial statements, “Income Taxes”, for additional detail on our uncertain tax positions.

Forward-Looking Statements

Certain statements made in this report 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 our 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 the cyclical nature of the furniture industry, competition from lower-cost foreign manufacturers, disruptions in offshore sourcing including those arising from supply or distribution disruptions or those arising from changes in political, economic and social conditions, as well as laws and regulations, in China or countries from which we source products, international trade policies of the United States and countries from which we source products, manufacturing realignment, the inability to raise prices in response to inflation and increasing costs, the inability to obtain sufficient quantities of quality raw materials in a timely manner, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, business failures or loss of large customers, environmental compliance costs, and extended business interruption at manufacturing facilities. Any forward-looking statement speaks only as of the date of this filing, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.



ITEM 3.
 Quantitative and Qualitative Disclosures about Market Risk

Our revolving credit facility bears interest at a variable rate; therefore, changes in prevailing interest rates impact our borrowing costs. A one-percentage point fluctuation in market interest rates would not have a material impact on earnings during the first three months of 2007.

None of our foreign sales or purchases are denominated in foreign currency and we do not have any foreign currency hedging transactions. While our foreign purchases are denominated in U.S. dollars, a relative decline in the value of the U.S. dollar could result in an increase in the cost of our products obtained from offshore sourcing and reduce our earnings, unless we are able to increase our prices for these items to reflect any such increased cost.

ITEM 4.
Controls and Procedures

(a)
Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

(b)
Changes in internal controls over financial reporting. There were no changes in our internal control over financial reporting that occurred during the first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:
 
       
Maximum number (or
     
Total number of
approximate dollar
 
Total
  
Shares purchased
value) of shares that
 
number of
Average
as part of publicly
may yet be purchased
 
Shares
price paid
announced plans
under the plans or
Period
Purchased
per share
or programs
programs (a)
         
January 1 to February 3, 2007
54,000
$21.65
54,000
$31,430,118
February 4 to March 3, 2007
281,731
$21.59
281,731
$25,347,647
March 4 to March 31, 2007
 
 
 
$25,347,647
         
Total
335,731
 $21.60
335,731

 
(a)  
On July 17, 2006, we announced that our Board of Directors increased our stock repurchase authorization to $50 million. Consequently, we may purchase our common stock, from time to time, either directly or through agents, in the open market, through negotiated purchases or otherwise, at prices and on terms satisfactory to us.



Item 6.
Exhibits

3.1
Restated Certificate of Incorporation of the Registrant as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended July 2, 2005).
  
     
3.2
By-laws of the Registrant as amended (incorporated by reference to Exhibit 3 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended September 27, 2003).
  
     
4.1
Amended and Restated Note Purchase and Private Shelf Agreement dated January 26, 2007, among the Registrant, The Prudential Insurance Company of America, the other purchasers named therein and the affiliates of Prudential who became purchasers as defined therein (incorporated by reference to Exhibit 4.01 to the Registrant’s Form 8-K (Commission File No. 0-14938) filed February 1, 2007).
  
     
31.1
Certification by Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
  
     
31.2
Certification by Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
  
     
32.1
Certification of Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)
  
     
32.2
Certification of Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)
  


 
(1) Filed herewith


SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: April 18, 2007
  
STANLEY FURNITURE COMPANY, INC.
   
By: /s/ Douglas I. Payne
   
Douglas I. Payne
   
Executive V.P. - Finance & Administration
and Secretary
   
(Principal Financial and Accounting Officer)