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8-K - FORM 8-K - HG Holdings, Inc. | c07788e8vk.htm |
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE:
|
Stanley Furniture Company, Inc. | |
November 3, 2010
|
Investor Contact: Douglas I. Payne | |
(276) 627-2157 |
STANLEY FURNITURE ANNOUNCES
THIRD QUARTER 2010 OPERATING RESULTS
THIRD QUARTER 2010 OPERATING RESULTS
STANLEYTOWN, VA, November 3, 2010/Businesswire/ Stanley Furniture Company, Inc.
(Nasdaq-NGS: STLY) today reported sales and operating results for the third quarter of 2010.
Net sales of $34.9 million declined 9.3% from the third quarter of 2009. Net loss for the quarter
was $4.9 million, or $.48 per share, compared to a net loss of $5.1 million, or $.49 per share, in
the third quarter of 2009.
Operating loss for the third quarter of 2010 amounted to $6.4 million, compared to operating loss
of $7.5 million in the third quarter of 2009. The 2010 third quarter loss includes accelerated
depreciation and charges related to the Companys restructuring plan announced in May 2010 totaling
$2.3 million. The 2009 third quarter loss included restructuring expenses of $1.1 million.
Cash on hand was $16.9 million and total debt was $15.0 million on October 2, 2010. Working
capital, excluding cash and current maturities of long-term debt, decreased $5.8 million (13%) from
the third quarter of 2009 primarily due to lower inventories and accounts receivable in response to
lower sales.
In May of this year, we set our path towards profitability by announcing a comprehensive
restructuring plan, said Glenn Prillaman, President and Chief Executive Officer. We are pleased
with the progress we have made to date, as evidenced by a smaller operating loss and less use of
cash in the third quarter compared to the first and second quarters of this year.
We continue to transition our two major product lines in opposite operational directions to better
align them with the factors that drive demand for each product line, said Prillaman. As
previously reported, the majority of our Young America product line transition has been completed
and all of those products are now domestically made. The increased prices on this product line and
improved operating efficiencies at our Robbinsville, NC plant drove the improvement in our
operating results for the third quarter. In addition, we continue to move as planned through our
transition related to the movement of our Stanley Furniture adult product line from a partially
domestic to a completely globally sourced model. We are on schedule to cease manufacturing at our
Stanleytown, VA factory in December 2010. We anticipate operating inefficiencies stemming from the
wind-down of this plant and the disruption created by this move may reduce sales and increase our
operating loss in the fourth quarter compared to the third quarter of 2010. However, our partner
factories overseas are already making a significant portion of this product line, and we anticipate
a smooth operational transition as we shift our remaining domestic production to these suppliers,
he added.
Other Information
All earnings per share amounts are on a diluted basis.
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. Its common stock is traded on
the Nasdaq stock market under the symbol STLY.
Conference Call Details
The Company will host a conference call Thursday morning, November 4, 2010 at 9:00 a.m. Eastern
Time. The dial-in-number is (877) 407-8029. The call will also be web cast and archived on the
Companys web site at www.stanleyfurniture.com. The dial-in-number for the replay (available
through November 11, 2010) is (877) 660-6853, the account reference number is 275 and the
conference number is 359329.
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 our success in transitioning our
adult product line to offshore vendors, costs relating to the transitioning of the Stanleytown
facility to a warehouse and distribution center, our success in transitioning certain Young America
products to our domestic manufacturing facilities, the cyclical nature of the furniture industry,
lower sales due to worsening of current economic conditions, business failures or loss of large
customers, competition in the furniture industry including 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 countries from which we source products, international trade policies of
the United States and countries from which we source products, prepayment of our debt in the event
we are not able to renegotiate financial covenants that become effective in the third quarter of
2011, the inability to obtain sufficient quantities of quality raw materials in a timely manner,
the inability to raise prices in response to inflation and increasing costs, failure to anticipate
or respond to changes in consumer tastes and fashions in a timely manner, environmental, health,
and safety compliance costs, extended business interruption at manufacturing facilities and
changes in credit market conditions. Any forward-looking statement speaks only as of the date of
this press release, and we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new developments or otherwise.
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
Consolidated Operating Results
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
Oct. 2, | Sept. 26, | Oct. 2, | Sept 26, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 34,897 | $ | 38,455 | $ | 109,323 | $ | 120,545 | ||||||||
Cost of sales |
35,586 | 39,056 | 117,494 | 112,829 | ||||||||||||
Gross profit (loss) |
(689 | ) | (601 | ) | (8,171 | ) | 7,716 | |||||||||
Selling, general and
administrative expenses |
5,756 | 6,875 | 18,172 | 22,345 | ||||||||||||
Goodwill impairment charge |
9,072 | |||||||||||||||
Operating loss |
(6,445 | ) | (7,476 | ) | (35,415 | ) | (14,629 | ) | ||||||||
Other (income)/expense, net |
17 | (45 | ) | (19 | ) | (133 | ) | |||||||||
Interest income |
3 | 3 | 44 | |||||||||||||
Interest expense |
857 | 953 | 2,830 | 2,809 | ||||||||||||
Loss before income taxes |
(7,319 | ) | (8,381 | ) | (38,223 | ) | (17,261 | ) | ||||||||
Income tax benefit |
(2,385 | ) | (3,308 | ) | (2,757 | ) | (6,789 | ) | ||||||||
Net loss |
$ | (4,934 | ) | $ | (5,073 | ) | $ | (35,466 | ) | $ | (10,472 | ) | ||||
Diluted loss per share |
$ | (0.48 | ) | $ | (0.49 | ) | $ | (3.43 | ) | $ | (1.01 | ) | ||||
Weighted average number of shares |
10,345 | 10,332 | 10,341 | 10,332 | ||||||||||||
STANLEY FURNITURE COMPANY, INC.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
Three Months Ended | Nine Months Ended | |||||||||||||||
Oct. 2, | Sept. 26, | Oct. 2, | Sept. 26, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Reconciliation of
operating loss as
reported to operating
loss adjusted: |
||||||||||||||||
Operating loss as reported |
$ | (6,445 | ) | $ | (7,476 | ) | $ | (35,415 | ) | $ | (14,629 | ) | ||||
Goodwill impairment charge |
9,072 | |||||||||||||||
Accelerated depreciation |
1,686 | 1,023 | 3,773 | 1,023 | ||||||||||||
Restructuring charge |
579 | 33 | 1,762 | 198 | ||||||||||||
Operating loss as adjusted |
$ | (4,180 | ) | $ | (6,420 | ) | $ | (20,808 | ) | $ | (13,408 | ) | ||||
Reconciliation of net
loss as
reported to net
loss adjusted: |
||||||||||||||||
Net loss as reported |
$ | (4,934 | ) | $ | (5,073 | ) | $ | (35,466 | ) | $ | (10,472 | ) | ||||
Goodwill impairment charge |
9,072 | |||||||||||||||
Accelerated depreciation |
1,137 | 621 | 3,501 | 621 | ||||||||||||
Restructuring charge |
390 | 20 | 1,635 | 120 | ||||||||||||
Net loss as adjusted |
$ | (3,407 | ) | $ | (4,432 | ) | $ | (21,258 | ) | $ | (9,731 | ) | ||||
Reconciliation of loss
per share (EPS)
as reported to loss
per share adjusted: |
||||||||||||||||
EPS as reported |
$ | (0.48 | ) | $ | (0.49 | ) | $ | (3.43 | ) | $ | (1.01 | ) | ||||
Goodwill impairment charge |
0.88 | |||||||||||||||
Accelerated depreciation |
0.11 | .06 | 0.34 | 0.06 | ||||||||||||
Restructuring charge |
0.04 | 0.16 | 0.01 | |||||||||||||
EPS as adjusted |
$ | (0.33 | ) | $ | (0.43 | ) | $ | (2.05 | ) | $ | (0.94 | ) | ||||
STANLEY
FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
Consolidated Condensed Balance Sheets
(in thousands)
Oct. 2, | Sept. 26, | Dec. 31, | ||||||||||
2010 | 2009 | 2009 | ||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash |
$ | 16,889 | $ | 42,430 | $ | 41,827 | ||||||
Accounts receivable, net |
16,076 | 18,052 | 15,297 | |||||||||
Inventories |
30,673 | 35,374 | 37,225 | |||||||||
Prepaid expenses and other current assets |
8,846 | 9,023 | 11,780 | |||||||||
Deferred income taxes |
3,763 | 3,726 | 3,433 | |||||||||
Total current assets |
76,247 | 108,605 | 109,562 | |||||||||
Property, plant and equipment, net |
25,641 | 33,255 | 31,375 | |||||||||
Goodwill |
9,072 | 9,072 | ||||||||||
Other assets |
1,027 | 1,013 | 453 | |||||||||
Total assets |
$ | 102,915 | $ | 151,945 | $ | 150,462 | ||||||
Liabilities and Stockholders Equity |
||||||||||||
Current liabilities: |
||||||||||||
Current maturities of long-term debt |
$ | 15,000 | $ | 1,429 | $ | 1,429 | ||||||
Accounts payable |
9,387 | 10,157 | 11,633 | |||||||||
Accrued expenses |
9,708 | 9,939 | 9,223 | |||||||||
Total current liabilities |
34,095 | 21,525 | 22,285 | |||||||||
Long-term debt |
26,428 | 26,428 | ||||||||||
Deferred income taxes |
3,868 | 2,406 | 2,128 | |||||||||
Other long-term liabilities |
6,942 | 8,192 | 6,774 | |||||||||
Stockholders equity |
58,010 | 93,394 | 92,847 | |||||||||
Total liabilities and stockholders equity |
$ | 102,915 | $ | 151,945 | $ | 150,462 | ||||||
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
Consolidated Condensed Statements of Cash Flows
(in thousands)
Nine Months Ended | ||||||||
Oct. 2, | Sept. 26, | |||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Cash received from customers |
$ | 108,151 | $ | 124,071 | ||||
Cash paid to suppliers and employees |
(125,495 | ) | (120,262 | ) | ||||
Interest paid |
(3,046 | ) | (2,725 | ) | ||||
Income taxes received (paid) |
6,429 | (2,531 | ) | |||||
Net cash used by operating activities |
(13,961 | ) | (1,447 | ) | ||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(1,203 | ) | (1,702 | ) | ||||
Purchase of other assets |
(28 | ) | (55 | ) | ||||
Proceeds from sale of assets held for sale, net |
1,147 | 1,303 | ||||||
Net cash used by investing activities |
(84 | ) | (454 | ) | ||||
Cash flows from financing activities: |
||||||||
Repayment of senior notes |
(12,857 | ) | (1,429 | ) | ||||
Proceeds from exercise of stock options |
119 | |||||||
Proceeds from insurance policy loans |
1,845 | 1,651 | ||||||
Other |
96 | |||||||
Net cash provided (used) by financing activities |
(10,893 | ) | 318 | |||||
Net decrease in cash |
(24,938 | ) | (1,583 | ) | ||||
Cash at beginning of period |
41,827 | 44,013 | ||||||
Cash at end of period |
$ | 16,889 | $ | 42,430 | ||||
Reconciliation of net loss to
net cash used by operating activities: |
||||||||
Net loss |
$ | (35,466 | ) | $ | (10,472 | ) | ||
Goodwill impairment |
9,072 | |||||||
Depreciation and amortization |
6,815 | 4,291 | ||||||
Deferred income taxes |
1,410 | (192 | ) | |||||
Stock-based compensation |
549 | 692 | ||||||
Other |
30 | |||||||
Changes in working capital |
3,885 | 4,739 | ||||||
Other assets |
(424 | ) | (404 | ) | ||||
Other long-term liabilities |
168 | (101 | ) | |||||
Net cash used by operating activities |
$ | (13,961 | ) | $ | (1,447 | ) | ||