[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
54-1272589
|
||||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
September 27,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 36,739 | $ | 31,648 | ||||
Accounts receivable, less
allowances of $2,105 and $1,482
|
25,127 | 25,393 | ||||||
Inventories:
|
||||||||
Finished
goods
|
38,426 | 46,250 | ||||||
Work-in-process
|
3,345 | 4,432 | ||||||
Raw
materials
|
5,775 | 7,404 | ||||||
Total
inventories
|
47,546 | 58,086 | ||||||
Prepaid
expenses and other current
assets
|
3,457 | 1,767 | ||||||
Deferred
income
taxes
|
3,656 | 3,381 | ||||||
Total current
assets
|
116,525 | 120,275 | ||||||
Property,
plant and equipment,
net
|
37,525 | 43,898 | ||||||
Goodwill
|
9,072 | 9,072 | ||||||
Other
assets
|
1,058 | 486 | ||||||
Total
assets
|
$ | 164,180 | $ | 173,731 | ||||
LIABILITIES
|
||||||||
Current
liabilities:
|
||||||||
Current maturities of long-term
debt
|
$ | 1,429 | $ | 1,428 | ||||
Accounts
payable
|
12,103 | 16,106 | ||||||
Accrued salaries, wages and
benefits
|
9,319 | 7,108 | ||||||
Other accrued
expenses
|
4,531 | 3,781 | ||||||
Total current
liabilities
|
27,382 | 28,423 | ||||||
Long-term
debt, exclusive of current
maturities
|
27,857 | 29,286 | ||||||
Deferred
income
taxes
|
3,078 | 4,824 | ||||||
Other
long-term
liabilities
|
8,220 | 8,347 | ||||||
Total
liabilities
|
66,537 | 70,880 | ||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Common
stock, $.02 par value, 25,000,000 shares authorized
10,332,179 shares issued and
outstanding
|
207 | 207 | ||||||
Capital
in excess of par
value
|
920 | 591 | ||||||
Retained
earnings
|
97,391 | 102,999 | ||||||
Accumulated
other comprehensive
loss
|
(875 | ) | (946 | ) | ||||
Total stockholders’
equity
|
97,643 | 102,851 | ||||||
Total liabilities and
stockholders’
equity
|
$ | 164,180 | $ | 173,731 | ||||
Three
Months
|
Nine Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
|
September
|
September
|
September
|
|||||||||||||
27, 2008 |
29, 2007
|
27, 2008 | 29, 2007 | |||||||||||||
Net
sales
|
$ | 54,483 | $ | 73,181 | $ | 176,165 | $ | 216,011 | ||||||||
Cost
of sales
|
49,493 | 60,432 | 150,394 | 176,128 | ||||||||||||
Gross profit
|
4,990 | 12,749 | 25,771 | 39,883 | ||||||||||||
Selling,
general and administrative expenses
|
10,606 | 9,608 | 28,358 | 30,116 | ||||||||||||
Pension
plan termination charge
|
6,605 | |||||||||||||||
Operating income
(loss)
|
(5,616 | ) | 3,141 | (2,587 | ) | 3,162 | ||||||||||
Other
income, net
|
(22 | ) | 79 | 215 | 187 | |||||||||||
Interest
income
|
158 | 139 | 516 | 325 | ||||||||||||
Interest
expense
|
957 | 955 | 2,807 | 2,299 | ||||||||||||
Income (loss) before income
taxes
|
(6,437 | ) | 2,404 | (4,663 | ) | 1,375 | ||||||||||
Income
taxes
|
(2,948 | ) | 769 | (2,154 | ) | 440 | ||||||||||
Net income
(loss)
|
$ | (3,489 | ) | $ | 1,635 | $ | (2,509 | ) | $ | 935 | ||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | (0.34 | ) | $ | .16 | $ | (0.24 | ) | $ | .09 | ||||||
Diluted
|
$ | (0.34 | ) | $ | .16 | $ | (0.24 | ) | $ | .09 | ||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
10,332 | 10,312 | 10,332 | 10,521 | ||||||||||||
Diluted
|
10,332 | 10,503 | 10,332 | 10,744 | ||||||||||||
Cash
dividend declared and paid per common share
|
$ | .10 | $ | .10 | $ | .30 | $ | .30 | ||||||||
Nine Months
Ended
|
||||||||
September
|
September
|
|||||||
27, 2008 | 29, 2007 | |||||||
Cash
flows from operating activities:
|
||||||||
Cash
received from
customers
|
$ | 176,259 | $ | 212,857 | ||||
Cash
paid to suppliers and
employees
|
(160,516 | ) | (204,407 | ) | ||||
Interest
paid,
net
|
(2,143 | ) | (1,488 | ) | ||||
Income
taxes paid,
net
|
(4,046 | ) | (3,537 | ) | ||||
Net cash provided by operating
activities
|
9,554 | 3,425 | ||||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures
|
(1,485 | ) | (3,206 | ) | ||||
Other,
net
|
(28 | ) | ||||||
Net cash used by investing
activities
|
(1,485 | ) | (3,234 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Issuance
of senior
notes
|
25,000 | |||||||
Repayment
of senior
notes
|
(1,429 | ) | (1,428 | ) | ||||
Purchase
and retirement of common
stock
|
(13,557 | ) | ||||||
Proceeds
from insurance policy
loans
|
1,550 | 1,386 | ||||||
Dividends
paid
|
(3,099 | ) | (3,161 | ) | ||||
Proceeds
from exercised stock
options
|
532 | |||||||
Tax
benefit from exercise of stock
options
|
32 | |||||||
Net cash provided (used) by
financing activities
|
(2,978 | ) | 8,804 | |||||
Net
increase in
cash
|
5,091 | 8,995 | ||||||
Cash
at beginning of
period
|
31,648 | 6,269 | ||||||
Cash at end of
period
|
$ | 36,739 | $ | 15,264 | ||||
Net
income
(loss)
|
$ | (2,509 | ) | $ | 935 | |||
Depreciation and
amortization
|
7,517 | 4,562 | ||||||
Pension
termination
|
5,002 | |||||||
Deferred income
taxes
|
(2,021 | ) | (2,290 | ) | ||||
Tax benefit from exercise of
stock
options
|
(32 | ) | ||||||
Stock-based
compensation
|
329 | 492 | ||||||
Other,
net
|
27 | 194 | ||||||
Changes in assets and
liabilities:
|
||||||||
Accounts
receivable
|
266 | (3,010 | ) | |||||
Inventories
|
10,540 | (2,974 | ) | |||||
Prepaid expenses and other
current
assets
|
(3,164 | ) | (959 | ) | ||||
Accounts
payable
|
(4,003 | ) | (457 | ) | ||||
Accrued salaries, wages and
benefits
|
2,351 | 481 | ||||||
Other accrued
expenses
|
698 | 1,384 | ||||||
Other
assets
|
(334 | ) | (308 | ) | ||||
Other long-term
liabilities
|
(143 | ) | 405 | |||||
Net cash provided by operating
activities
|
$ | 9,554 | $ | 3,425 |
1.
|
Preparation of Interim
Unaudited Consolidated Financial
Statements
|
September
|
December
|
||
27,
2008
|
31, 2007
|
||
Land
and
buildings
|
$
41,874
|
$
41,874
|
|
Machinery
and
equipment
|
75,971
|
80,589
|
|
Office
furniture and
equipment
|
1,377
|
1,377
|
|
Construction
in
process
|
1,130
|
61
|
|
Property, plant and equipment,
at
cost
|
120,352
|
123,901
|
|
Less
accumulated
depreciation
|
82,827
|
80,003
|
|
Property, plant and equipment,
net
|
$ 37,525
|
$
43,898
|
3.
|
Debt
|
September
|
December
|
|||||||
27, 2008 | 31, 2007 | |||||||
6.94%
senior notes due through May 3,
2011
|
$ | 4,286 | $ | 5,714 | ||||
6.73%
senior notes due through May 3,
2017
|
25,000 | 25,000 | ||||||
Total
|
29,286 | 30,714 | ||||||
Less
current
maturities
|
1,429 | 1,428 | ||||||
Long-term debt, exclusive of
current maturities
|
$ | 27,857 | $ | 29,286 |
Three
Months
|
Nine
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
|
September
|
September
|
September
|
|||||||||||||
27, 2008 | 29, 2007 | 27, 2008 | 29, 2007 | |||||||||||||
Service
cost
|
$ | 22 | $ | 20 | $ | 66 | $ | 62 | ||||||||
Interest
cost
|
71 | 40 | 214 | 119 | ||||||||||||
Amortization
of transition obligation
|
32 | 32 | 97 | 97 | ||||||||||||
Amortization
of prior service cost
|
(2 | ) | (2 | ) | (6 | ) | (6 | ) | ||||||||
Amortization
of accumulated loss
|
8 | 6 | 24 | 17 | ||||||||||||
Net periodic postretirement
benefit cost
|
$ | 131 | $ | 96 | $ | 395 | $ | 289 |
Three
Months
|
Nine
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
|
September
|
September
|
September
|
|||||||||||||
27, 2008 | 29, 2007 | 27, 2008 | 29, 2007 | |||||||||||||
Weighted
average shares outstanding
for basic
calculation
|
10,332 | 10,312 | 10,332 | 10,521 | ||||||||||||
Add:
Effect of dilutive stock options (1)
|
191 | 223 | ||||||||||||||
Weighted
average shares outstanding
Adjusted for diluted
calculation
|
10,332 | 10,503 | 10,332 | 10,744 |
(1)
|
The
dilutive effect of stock options is not recognized in periods in which a
net loss has occurred.
|
Accumulated
|
||||||||||||||||
Capital in
|
Other
|
|||||||||||||||
Common
|
Excess of
|
Retained
|
Comprehensive
|
|||||||||||||
Stock
|
Par Value
|
Earnings
|
Loss
|
|||||||||||||
Balance,
December 31,
2007
|
$ | 207 | $ | 591 | $ | 102,999 | $ | (946 | ) | |||||||
Net
Income
|
(2,509 | ) | ||||||||||||||
Stock-based
compensation
|
329 | |||||||||||||||
Cash dividends paid, $.30 per
share
|
(3,099 | ) | ||||||||||||||
Adjustment to net periodic benefit
cost
|
71 | |||||||||||||||
Balance,
September 27,
2008
|
$ | 207 | $ | 920 | $ | 97,391 | $ | (875 | ) |
Three
Months
|
Nine
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
|
September
|
September
|
September
|
|||||||||||||
27, 2008 | 29, 2007 | 27, 2008 | 29, 2007 | |||||||||||||
Net
income (loss)
|
$ | (3,489 | ) | $ | 1,635 | $ | (2,509 | ) | $ | 935 | ||||||
Pension
termination
|
3,739 | |||||||||||||||
Adjustment
to net periodic benefit cost
|
(5 | ) | 22 | 71 | 181 | |||||||||||
Comprehensive
income (loss)
|
$ | (3,494 | ) | $ | 1,657 | $ | (2,438 | ) | $ | 4,855 |
Restructuring
Charges
|
Cash
Payments
|
Restructuring
Accrual
September 27, 2008
|
||||||||||
Severance
and other
employee
termination cost
|
$ | 1,714 | $ | 167 | $ | 1,547 |
Three
Months
|
Nine
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
|
September
|
September
|
September
|
|||||||||||||
27, 2008 | 29, 2007 | 27, 2008 | 29, 2007 | |||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
90.8 | 82.6 | 85.4 | 81.5 | ||||||||||||
Gross profit
|
9.2 | 17.4 | 14.6 | 18.5 | ||||||||||||
Selling,
general and administrative expenses
|
19.5 | 13.1 | 16.1 | 13.9 | ||||||||||||
Pension
plan termination charge
|
|
|
|
3.1 | ||||||||||||
Operating income
(loss)
|
(10.3 | ) | 4.3 | (1.5 | ) | 1.5 | ||||||||||
Other
income, net
|
.1 | .1 | .1 | |||||||||||||
Interest
income
|
.2 | .2 | .4 | .1 | ||||||||||||
Interest
expense
|
1.7 | 1.3 | 1.6 | 1.1 | ||||||||||||
Income (loss) before income
taxes
|
(11.8 | ) | 3.3 | (2.6 | ) | .6 | ||||||||||
Income
taxes (benefit)
|
(5.4 | ) | 1.1 | (1.2 | ) | .2 | ||||||||||
Net income
(loss)
|
(6.4 | )% | 2.2 | % | (1.4 | )% | .4 | % |
ITEM
3.
|
Quantitative and
Qualitative Disclosures about Market
Risk
|
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 third quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
|
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 8-K (Commission File No. 0-14938 filed on September
25, 2008).
|
|
10.1
|
Sixth
Amendment, to the revolving credit facility dated August 29, 2003, between
the Registrant and Wachovia Bank (incorporated by reference to Exhibit
10.1 to the Registrant’s Form 8-K (Commission File No. 0-14938) filed on
August 20, 2008).
|
|
10.2
|
Form
of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to
the Registrant’s Form 8-K (Commission File No. 0-14938) filed on September
25, 2008).
|
|
10.3
|
Voluntary
Separation Agreement and General Release by and between Jeffrey R.
Scheffer and Stanley Furniture Company, Inc. dated September 23, 2008
(incorporated by reference to Exhibit 10.2 to the Registrants Form 8-K
(Commission File No. 0-14938) filed on September 25,
2008).
|
|
31.1
|
Certification
by Albert L. Prillaman, our Chairman and 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 Albert L. Prillaman, our Chairman and 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)
|
Date:
October 14, 2008
|
STANLEY
FURNITURE COMPANY, INC.
|
|
By:
/s/ Douglas I.
Payne
|
||
Douglas
I. Payne
|
||
Executive
V.P. – Finance & Administration
And
Secretary
|
||
(Principal
Financial and Accounting Officer)
|