Form 8-K STANLEY FURNITURE CO For: Feb 25

Item 2.02         Results of Operations and Financial Condition.

             On February 25, 2015, Stanley Furniture Company, Inc. (the “Company”) issued a press release announcing the 2014 operating results.  The press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

Item 9.01                  Financial Statements and Exhibits.

(d) Exhibits

99.1      Press Release of the Company dated February 25, 2015, announcing the Company’s 2014 operating results.

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SIGNATURES

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

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Exhibit 99.1

STANLEY FURNITURE ANNOUNCES

2014 OPERATING RESULTS

Company exits year with strong sales growth and operating profit

2015 plan for sales and earnings growth underway

High Point, NC February 25, 2015/Businesswire/ -- Stanley Furniture Company, Inc. (Nasdaq-NGS:STLY) today reported sales and operating results for the fourth quarter and total year ending December 31, 2014. 

Sales for Stanley Furniture’s fourth quarter were up just over 20% year-over-year and up 3.5% for total year 2014. The company grew sales of continuing operations despite disruptions from the discontinuation of its Young America brand announced in April. The quarter represented improved operating results with gross margins improving to 23.3% and SG&A improving to 19.5%, within the company’s previously guided range of $3-$3.5 million. Operating income for the quarter was $599,000 compared to a loss of $1.7 million in the prior year quarter, excluding restructuring charges.

“We were pleased with our momentum exiting the year.  The distractions from discontinued operations subsided and we are fully focused on profitable growth.  In 2015 we look forward to growing sales, leveraging our cost structure and creating value for our shareholders,” stated Glenn Prillaman, President and Chief Executive Officer. “Our multi-year effort to operate competitively and grow in our industry’s changing marketplace has not been without missteps. However, the opportunity that lies ahead for our company is now showing through sales gains." 

Fourth Quarter:

·       Net sales increased 20.8% to $16.0 million compared to $13.3 million in the fourth quarter of 2013.

·       Gross margin improved to 23.3% compared to 19.3% in the fourth quarter of 2013.

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·       Selling, general and administrative expenses decreased to $3.1 million (19.5% of net sales) compared to $4.2 million (31.9% of net sales) in the fourth quarter of 2013, excluding a restructuring charge of $238,000 included in the prior year quarter expenses for consolidation and relocation of the corporate office.

·       Operating income was $599,000 (3.7% of net sales) compared to a loss of $1.7 million in the prior year quarter, excluding restructuring charges.

·       Other expenses includes an impairment charge of $2.5 million for an asset funded by settlements collected by the American Furniture Manufacturers Committee of Legal Trade and set aside for future legal expenses incurred by the committee.

·       Net loss from continuing operations was $6,000 compared to a net loss in the prior year quarter of $2.4 million, excluding asset impairment and restructuring charges.

·       Cash surrender value increased $15.0 million as cash was used to pay down loans and accrued interest taken against cash surrender value on life insurance policies used to fund a legacy deferred compensation plan.  The loan pay-down will reduce annual interest expense to approximately $1.4 million to $1.5 million and the company’s liquidity remains unchanged as access to these funds remains readily available.

·       As of December 31, 2014, the company’s financial position reflected $21.9 million in cash, restricted cash and cash surrender value from life insurance policies.

Total Year 2014:

·       Net sales increased 3.5% to $60.6 million compared to $58.6 million in 2013.

·       Gross margin declined slightly to 20.4% compared to 21.5% in 2013, excluding a $354,000 charge taken in second quarter of 2014 for a lease obligation related to a warehouse that was no longer being utilized.

·       Selling, general and administrative expenses decreased to $14.9 million (24.6% of net sales) compared to $15.5 million (26.5% of net sales) in 2013, excluding a restructuring charge of $770,000 included in the 2013 expenses for consolidation and relocation of the corporate office.

·       Operating loss was $2.5 million compared to a loss of $2.9 million in 2013, excluding restructuring charges.

·       Net loss from continuing operations was $5.0 million compared to a net loss of $5.4 million in 2013, excluding asset impairment and restructuring charges.

Discontinued Operations

Loss from discontinued operations for the fourth quarter was $682,000 and consisted mostly of ongoing warehouse and shipping cost, facility clean-up and exit cost and additional asset impairment charges.   Total year loss from discontinued operations was $22 million and consisted of accelerated depreciation and asset impairments, losses from final operations and salary continuation costs.  Overall cash generated from discontinued operations during the fourth quarter was $2.3 million and $10 million for the total year. The estimated cash remaining to collect on sale of inventory and customer receivables, net of liabilities and ongoing expenses is expected to be approximately $1.1 million.

About the Company

Established in 1924, Stanley Furniture Company, Inc. is a leading design, marketing and sourcing resource in the upscale segment of the wood residential market.The company offers a diversified product line supported by an overseas sourcing model. The company distributes and markets its Stanley Furniture brand through a network of carefully chosen retailers and interior designers worldwide. The company’s common stock is traded on the NASDAQ stock market under the symbol STLY.

The Company will host a conference call Thursday morning, February 26, 2015 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 Company’s web site at www.stanleyfurniture.com.  The dial-in-number for the replay (available through March 26, 2015) is (877) 660-6853, the conference number is 13598923.

Forward-Looking Statements

Certain statements made in this news 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,” “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 disruptions in foreign 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, the inability to raise prices in response to inflation and increasing costs, lower sales due to worsening of current economic conditions, the cyclical nature of the furniture industry,  business failures or loss of large customers, failure to anticipate or respond to changes in consumer tastes, fashions and perceived value in a timely manner, competition in the furniture industry, environmental, health, and safety  compliance costs,  failure or interruption of our information technology infrastructure. Any forward looking statement speaks only as of the date of this news release and we undertake no obligation to update or revise any forward looking statements, whether as a result of new developments or otherwise.

All earnings per share amounts are shown on a diluted basis.

All prior periods have been restated to disclose discontinued operations and revised numbers related to prior year errors.

TABLES FOLLOW

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Note:

We have included the above reconciliation of reported financial measures according to GAAP to non-GAAP financial measures because we believe that this reconciliation provides useful information that allows investors to compare operating results to those of other periods by excluding asset impairment and restructuring related charges. These measures should be considered in addition to results prepared in accordance with GAAP and should not be considered a substitute for or superior to GAAP results.