STANLEYTOWN, VA -- Stanley Furniture Company, Inc. reported sales and operating results for 2011. The Company continued its trend of improved operating performance during the fourth quarter of 2011. Net loss for the fourth quarter was $1.7 million excluding $2.9 million in CDSOA income and a small restructuring credit. Both operating and net losses, excluding CDSOA income, were comparable to the third quarter despite a 5.5% sequential sales decline to $24.6 million.
Net loss for the year improved to $8.6 million from $26.6 million in 2010, after making adjustments for CDSOA income and restructuring charges. Net sales for the year decreased by 23.6% to $104.6 million. “Last year was transformational for our company as we and our customers dealt with the challenges associated with product line and operational restructuring. We are very pleased with our improvements over the previous year as our financial results reflect the impact of our strategic decisions to align operations with customer demand for differentiated product. Sales results reflect both the lack of dependable service to our customers caused by each product line transitioning into new operating models, as well as the sluggish retail environment for case goods furniture in the premium segment," said Glenn Prillaman, President and Chief Executive Officer.
Cash on hand at Dec. 31, 2011 was $17.3 million, including $1.6 million in restricted cash. Working capital, excluding cash and restricted cash, increased from $27.2 million on December 31, 2010 to $28.8 million at year-end due mostly to a build in finished goods inventory to support the Stanley Furniture product line which is now completely sourced overseas. "Protecting the strength of our balance sheet remains a top priority as we invest in our business to improve in three main areas: modernizing our Young America manufacturing facility in North Carolina; servicing customers and supporting the growth of the Stanley Furniture product line with sufficient investment in finished goods inventory; and initiating customer care efforts to communicate timely and accurate information," added Prillaman.
The Company detailed further the capital investments associated with its initiatives to modernize its domestic manufacturing facility and to better care for its customers. “We are committed to completing our efforts to reinvent a manufacturing process in Robbinsville, NC to compete globally and occupy a meaningful space in the children’s furniture marketplace. Our capital investments last year and those we will make in 2012 show this commitment. In 2011, we invested $4.2 million in new machinery and equipment and in 2012 we are planning an additional investment of approximately $4 million to sufficiently automate this plant,” said Micah Goldstein, chief operating and financial officer. “In addition, our customers currently require better information supporting the sale and delivery of our products. We are excited about our plan to invest approximately $3 million over the next two years in new systems that will make doing business with our company more desirable as we enter 2013,” said Goldstein.
"Our Stanley Furniture product line is now profitable, operating on an exclusively overseas manufacturing platform. The Stanley Furniture product line now represents a strong value alternative to the luxury segment of the wood residential home furnishings market and we are beginning to see an increase in order activity," said Prillaman. "However, we have not completed the transition of our Young America product line and have not yet become a profitable domestic manufacturer. We believe we are roughly half of the way through this journey and, when completed, we will have an Internet-age brand ready for the younger consumer supported by a product offering difficult to duplicate from Asia. As a domestic operation, we are in control of our effort to create a flexible manufacturing footprint that enables a more favorable cost structure, shorter lead times and higher inventory turns. Significant improvements in our Robbinsville facility have been made to date and will continue throughout the coming year," concluded Prillaman.
Consolidated O
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STANLEY FURNITURE COMPANY, INC. |
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Consolidated Operating Results |
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(in thousands, except per share data) |
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|
|
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Three Months Ended |
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Dec. 31, |
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Oct. 1, |
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Jul. 2, |
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Apr. 2, |
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2011 |
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2011 |
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2011 |
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2011 |
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Net sales |
|
$ |
24,631 |
|
|
$ |
26,051 |
|
|
$ |
27,393 |
|
|
$ |
26,571 |
|
|
|
|
|
|
|
|
|
|
|
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Cost of sales |
|
|
21,302 |
|
|
|
22,227 |
|
|
|
23,760 |
|
|
|
24,886 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
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Gross profit (loss) |
|
|
3,329 |
|
|
|
3,824 |
|
|
|
3,633 |
|
|
|
1,685 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
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Selling, general and administrative expenses |
|
|
4,429 |
|
|
|
4,952 |
|
|
|
4,748 |
|
|
|
5,121 |
|
|
Operating loss |
|
|
(1,100 |
) |
|
|
(1,128 |
) |
|
|
(1,115 |
) |
|
|
(3,436 |
) |
|
|
|
|
|
|
|
|
|
|
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Income from Continued Dumping and Subsidy Offset Act |
|
|
2,856 |
|
|
|
|
|
1,117 |
|
|
|
||||
|
Other income, net |
|
|
37 |
|
|
|
25 |
|
|
|
21 |
|
|
|
29 |
|
|
Interest income |
|
|
13 |
|
|
|
9 |
|
|
|
3 |
|
|
|
||
|
Interest expense |
|
|
608 |
|
|
|
623 |
|
|
|
586 |
|
|
|
538 |
|
|
Income (loss) before income taxes |
|
|
1,198 |
|
|
|
(1,717 |
) |
|
|
(560 |
) |
|
|
(3,945 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income tax (benefit) expense |
|
|
8 |
|
|
|
(26 |
) |
|
|
35 |
|
|
|
(16 |
) |
|
Net income (loss) |
|
$ |
1,190 |
|
|
$ |
(1,691 |
) |
|
$ |
(595 |
) |
|
$ |
(3,929 |
) |
|
|
|
|
|
|
|
|
|
|
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Diluted income (loss) per share |
|
$ |
.08 |
|
|
$ |
(.12 |
) |
|
$ |
(.04 |
) |
|
$ |
(.27 |
) |
|
|
|
|
|
|
|
|
|
|
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Weighted average number of shares |
|
|
14,345 |
|
|
|
14,345 |
|
|
|
14,345 |
|
|
|
14,345 |
|
|
|
|
|
|
|
|
|
|
|
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STANLEY FURNITURE COMPANY, INC. |
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Supplemental Information |
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Reconciliation of GAAP to Non-GAAP Operating Results |
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Three Months Ended |
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Dec. 31, |
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Oct. 1, |
|
Jul. 2, |
|
Apr. 2, |
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|
|
2011 |
|
2011 |
|
2011 |
|
2011 |
||||||||
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|
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|
|
|
|
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Reconciliation of operating loss as reported to operating loss adjusted: |
|
|
|
|
|
|
|
|
||||||||
|
Operating loss as reported |
|
$ |
(1,100 |
) |
|
$ |
(1,128 |
) |
|
$ |
(1,115 |
) |
|
$ |
(3,436 |
) |
|
Plus restructuring charge (credit) |
|
|
(75 |
) |
|
|
|
|
(277 |
) |
|
|
768 |
|
||
|
Operating loss as adjusted |
|
$ |
(1,175 |
) |
|
$ |
(1,128 |
) |
|
$ |
(1,392 |
) |
|
$ |
(2,668 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Reconciliation of net income (loss) as reported to net income (loss) adjusted: |
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) as reported |
|
$ |
1,190 |
|
|
$ |
(1,691 |
) |
|
$ |
(595 |
) |
|
$ |
(3,929 |
) |
|
Less income from CDSOA |
|
|
(2,856 |
) |
|
|
|
|
(1,117 |
) |
|
|
||||
|
Plus restructuring charge (credit) |
|
|
(75 |
) |
|
|
|
|
(277 |
) |
|
|
768 |
|
||
|
Net income (loss) as adjusted |
|
$ |
(1,741 |
) |
|
$ |
(1,691 |
) |
|
$ |
(1,989 |
) |
|
$ |
(3,161 |
) |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
STANLEY FURNITURE COMPANY, INC. |
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|
Consolidated Operating Results |
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|
(in thousands, except per share data) |
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|
|
|
|
|
|
|
|
||||||||
|
|
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|
|
||||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
Twelve Months Ended |
||||||
|
|
|
December 31, |
|
December 31, |
||||
|
|
|
2011 |
|
2010 |
||||
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
104,646 |
|
|
$ |
137,012 |
|
|
|
|
|
|
|
||||
|
Cost of sales |
|
|
92,175 |
|
|
|
153,115 |
|
|
|
|
|
|
|
||||
|
Gross profit (loss) |
|
|
12,471 |
|
|
|
(16,103 |
) |
|
|
|
|
|
|
||||
|
Selling, general and administrative expenses |
|
|
19,250 |
|
|
|
20,625 |
|
|
Goodwill impairment charge |
|
|
|
|
9,072 |
|
||
|
Operating loss |
|
|
(6,779 |
) |
|
|
(45,800 |
) |
|
|
|
|
|
|
||||
|
Income from Continued Dumping and Subsidy Offset Act |
|
|
3,973 |
|
|
|
1,556 |
|
|
Other income, net |
|
|
112 |
|
|
|
25 |
|
|
Interest income |
|
|
25 |
|
|
|
3 |
|
|
Interest expense |
|
|
2,355 |
|
|
|
3,537 |
|
|
Loss before income taxes |
|
|
(5,024 |
) |
|
|
(47,753 |
) |
|
|
|
|
|
|
||||
|
Income tax (benefit) expense |
|
|
1 |
|
|
|
(3,963 |
) |
|
Net loss |
|
$ |
(5,025 |
) |
|
$ |
(43,790 |
) |
|
|
|
|
|
|
||||
|
Diluted loss per share |
|
$ |
(.35 |
) |
|
$ |
(4.11 |
) |
|
|
|
|
|
|
||||
|
Weighted average number of shares |
|
|
14,345 |
|
|
|
10,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
STANLEY FURNITURE COMPANY, INC. |
||||||||
|
Supplemental Information |
||||||||
|
Reconciliation of GAAP to Non-GAAP Operating Results |
||||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
Twelve Months Ended |
||||||
|
|
|
December 31, |
|
December 31, |
||||
|
|
|
2011 |
|
2010 |
||||
|
Reconciliation of operating loss as reported to operating loss adjusted: |
|
|
|
|
||||
|
Operating loss as reported |
|
$ |
(6,779 |
) |
|
$ |
(45,800 |
) |
|
Plus goodwill impairment charge |
|
|
|
|
9,072 |
|
||
|
Plus accelerated depreciation |
|
|
|
|
6,177 |
|
||
|
Plus restructuring charge |
|
|
416 |
|
|
|
4,272 |
|
|
Operating loss as adjusted |
|
$ |
(6,363 |
) |
|
$ |
(26,279 |
) |
|
|
|
|
|
|
||||
|
Reconciliation of net loss as reported to net loss adjusted: |
|
|
|
|
||||
|
Net loss as reported |
|
$ |
(5,025 |
) |
|
$ |
(43,790 |
) |
|
Plus goodwill impairment charge |
|
|
|
|
9,072 |
|
||
|
Less income from CDSOA |
|
|
(3,973 |
) |
|
|
(1,427 |
) |
|
Plus accelerated depreciation |
|
|
|
|
5,664 |
|
||
|
Plus restructuring charge |
|
|
416 |
|
|
|
3,918 |
|
|
Net loss as adjusted |
|
$ |
(8,582 |
) |
|
$ |
(26,563 |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
||
|
STANLEY FURNITURE COMPANY, INC. |
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|
Consolidated Condensed Balance Sheets |
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|
(in thousands) |
||||||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
December 31, |
|
December 31, |
||
|
|
|
2011 |
|
2010 |
||
|
|
|
|
|
|
||
|
Assets |
|
|
|
|
||
|
Current assets: |
|
|
|
|
||
|
Cash |
|
$ |
15,700 |
|
$ |
25,532 |
|
Restricted cash |
|
|
1,587 |
|
|
|
|
Accounts receivable, net |
|
|
10,252 |
|
|
9,888 |
|
Inventories |
|
|
31,084 |
|
|
25,695 |
|
Prepaid expenses and other current assets |
|
|
3,380 |
|
|
5,883 |
|
Income tax receivable |
|
|
|
|
3,952 |
|
|
Deferred income taxes |
|
|
519 |
|
|
1,021 |
|
|
|
|
|
|
||
|
Total current assets |
|
|
62,522 |
|
|
71,971 |
|
|
|
|
|
|
||
|
Property, plant and equipment, net |
|
|
17,590 |
|
|
15,980 |
|
Other assets |
|
|
496 |
|
|
445 |
|
|
|
|
|
|
||
|
Total assets |
|
$ |
80,608 |
|
$ |
88,396 |
|
|
|
|
|
|
||
|
Liabilities and Stockholders' Equity |
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
||
|
Accounts payable |
|
$ |
9,963 |
|
$ |
9,116 |
|
Accrued expenses |
|
|
6,493 |
|
|
10,086 |
|
|
|
|
|
|
||
|
Total current liabilities |
|
|
16,456 |
|
|
19,202 |
|
|
|
|
|
|
||
|
Deferred income taxes |
|
|
519 |
|
|
1,021 |
|
Other long-term liabilities |
|
|
6,593 |
|
|
6,378 |
|
|
|
|
|
|
||
|
Stockholders' equity |
|
|
57,040 |
|
|
61,795 |
|
|
|
|
|
|
||
|
Total liabilities and stockholders' equity |
|
$ |
80,608 |
|
$ |
88,396 |
|
|
|
|
|
|
||
|
|
|
|
|
|
||||
|
STANLEY FURNITURE COMPANY, INC. |
||||||||
|
Consolidated Condensed Statements of Cash Flows |
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|
(in thousands) |
||||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
Twelve Months Ended |
||||||
|
|
|
December 31, |
|
December 31, |
||||
|
|
|
2011 |
|
2010 |
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Cash received from customers |
|
$ |
103,295 |
|
|
$ |
142,481 |
|
|
Cash paid to suppliers and employees |
|
|
(116,763 |
) |
|
|
(158,560 |
) |
|
Cash from Continued Dumping and Subsidy |
|
|
|
|
||||
|
Offset Act |
|
|
4,615 |
|
|
|
2,232 |
|
|
Interest paid |
|
|
(2,094 |
) |
|
|
(3,750 |
) |
|
Income taxes received, net |
|
|
3,640 |
|
|
|
8,195 |
|
|
Net cash used by operating activities |
|
|
(7,307 |
) |
|
|
(9,402 |
) |
|
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Restricted cash increase |
|
|
(1,587 |
) |
|
|
||
|
Capital expenditures |
|
|
(4,352 |
) |
|
|
(857 |
) |
|
Purchase of other assets |
|
|
(38 |
) |
|
|
(28 |
) |
|
Proceeds from sale of assets |
|
|
1,570 |
|
|
|
5,731 |
|
|
Net cash provided (used) by investing activities |
|
|
(4,407 |
) |
|
|
4,846 |
|
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Repayment of senior notes |
|
|
|
|
(27,857 |
) |
||
|
Proceeds from lease related obligation |
|
|
|
|
2,360 |
|
||
|
Proceeds from rights offering |
|
|
|
|
11,797 |
|
||
|
Proceeds from exercise of stock options |
|
|
|
|
116 |
|
||
|
Proceeds from insurance policy loans |
|
|
2,003 |
|
|
|
1,845 |
|
|
Capital lease payments |
|
|
(121 |
) |
|
|
||
|
Net cash provided (used) by financing activities |
|
|
1,882 |
|
|
|
(11,739 |
) |
|
|
|
|
|
|
||||
|
Net decrease in cash |
|
|
(9,832 |
) |
|
|
(16,295 |
) |
|
Cash at beginning of period |
|
|
25,532 |
|
|
|
41,827 |
|
|
|
|
|
|
|
||||
|
Cash at end of period |
|
$ |
15,700 |
|
|
$ |
25,532 |
|
|
|
|
|
|
|
||||
|
Reconciliation of net loss to net cash used by operating activities: |
|
|
|
|
||||
|
Net loss |
|
$ |
(5,025 |
) |
|
$ |
(43,790 |
) |
|
|
|
|
|
|
||||
|
Goodwill impairment |
|
|
|
|
9,072 |
|
||
|
Depreciation and amortization |
|
|
1,643 |
|
|
|
9,405 |
|
|
Deferred income taxes |
|
|
|
|
1,305 |
|
||
|
Stock-based compensation |
|
|
505 |
|
|
|
703 |
|
|
Changes in working capital |
|
|
(4,524 |
) |
|
|
13,555 |
|
|
Other assets |
|
|
130 |
|
|
|
87 |
|
|
Other long-term liabilities |
|
|
(504 |
) |
|
|
(396 |
) |
|
Other |
|
|
468 |
|
|
|
657 |
|
|
Net cash used by operating activities |
|
$ |
(7,307 |
) |
|
$ |
(9,402 |
) |
|
|
|
|
|
|
||||
Source: Stanley Furniture Co., Inc.
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