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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 28, 2009
 or
 o
    
    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.
  Delaware
    
    54-1272589(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1641 Fairystone Park Highway, Stanleytown, Virginia 24168
 (276) 627- 2000
 þ o
  o þ  o o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF CASH FLOWNOTES TO CONSOLIDATED FINANCIAL STATEMENTSITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 3. Quantitative and Qualitative Disclosures about Market RiskITEM 4. Controls and ProceduresPART II. OTHER INFORMATIONITEM 6. ExhibitsSIGNATUREEXHIBIT INDEXExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2    Table of Contents  
 
 PART I. FINANCIAL INFORMATION
 
 
 ITEM 1. Financial Statements
 STANLEY FURNITURE COMPANY, INC.
 
 
   March 28,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash
    
    $
    41,109
    
    
    $
    44,013Accounts receivable, less allowances of $1,841 and $1,644
    
    
    21,283
    
    
    
    21,873Inventories:Finished goods
    
    
    34,120
    
    
    
    36,803Work-in-process
    
    
    5,931
    
    
    
    3,493Raw materials
    
    
    5,906
    
    
    
    7,048Total inventories
    
    
    45,957
    
    
    
    47,344Prepaid expenses and other current assets
    
    
    4,188
    
    
    
    3,758Deferred income taxes
    
    
    3,873
    
    
    
    3,906Total current assets
    
    
    116,410
    
    
    
    120,894Property, plant and equipment, net
    
    
    35,206
    
    
    
    35,445Goodwill
    
    
    9,072
    
    
    
    9,072Other assets
    
    
    16
    
    
    
    460Total assets
    
    $
    160,704
    
    
    $
    165,871LIABILITIESCurrent liabilities:Current maturities of long-term debt
    
    $
    1,429
    
    
    $
    1,429Accounts payable
    
    
    9,830
    
    
    
    11,236Accrued salaries, wages and benefits
    
    
    6,477
    
    
    
    6,280Other accrued expenses
    
    
    3,339
    
    
    
    4,890Total current liabilities
    
    
    21,075
    
    
    
    23,835Long-term debt, exclusive of current maturities
    
    
    27,857
    
    
    
    27,857Deferred income taxes
    
    
    2,630
    
    
    
    2,778Other long-term liabilities
    
    
    8,235
    
    
    
    8,293Total liabilities
    
    
    59,797
    
    
    
    62,763STOCKHOLDERS EQUITYCommon stock, $.02 par value, 25,000,000 shares authorized
and 10,332,179 shares issued and outstanding
    
    
    207
    
    
    
    207Capital in excess of par value
    
    
    1,211
    
    
    
    1,058Retained earnings
    
    
    100,227
    
    
    
    102,603Accumulated other comprehensive loss
    
    
    (738
    )
    
    
    (760
    )Total stockholders equity
    
    
    100,907
    
    
    
    103,108Total liabilities and stockholders equity
    
    $
    160,704
    
    
    $
    165,871
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STANLEY FURNITURE COMPANY, INC.
 
 
   Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Net sales
    
    $
    39,764
    
    
    $
    62,534Cost of sales
    
    
    35,022
    
    
    
    51,714Gross profit
    
    
    4,742
    
    
    
    10,820Selling, general and administrative expenses
    
    
    7,817
    
    
    
    8,770Operating income (loss)
    
    
    (3,075
    )
    
    
    2,050Other income, net
    
    
    45
    
    
    
    72Interest income
    
    
    36
    
    
    
    205Interest expense
    
    
    950
    
    
    
    919Income (loss) before income taxes
    
    
    (3,944
    )
    
    
    1,408Income tax (benefit) expense
    
    
    (1,568
    )
    
    
    359Net income (loss)
    
    $
    (2,376
    )
    
    $
    1,049Earnings (loss) per share:Basic
    
    $
    (.23
    )
    
    $
    .10Diluted
    
    $
    (.23
    )
    
    $
    .10Weighted average shares outstanding:Basic
    
    
    10,332
    
    
    
    10,332Diluted
    
    
    10,332
    
    
    
    10,354Cash dividend declared and paid per common share
    
    $
    
    
    
    $
    .10
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STANLEY FURNITURE COMPANY, INC.
 
 
   Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Cash flows from operating activities:Cash received from customers
    
    $
    40,254
    
    
    $
    59,335Cash paid to suppliers and employees
    
    
    (41,596
    )
    
    
    (55,300
    )Interest received, net
    
    
    20
    
    
    
    196Income taxes paid, net
    
    
    (2,414
    )
    
    
    (2,595
    )Net cash provided by operating activities
    
    
    (3,736
    )
    
    
    1,636Cash flows from investing activities:Capital expenditures
    
    
    (471
    )
    
    
    (82
    )Proceeds from sale of assets held for sale, net
    
    
    1,303Net cash used by investing activities
    
    
    832
    
    
    
    (82
    )Cash flows from financing activities:Dividends paid
    
    
    
    
    
    
    (1,033
    )Net cash used by financing activities
    
    
    
    
    
    
    (1,033
    )Net increase (decrease) in cash
    
    
    (2,904
    )
    
    
    521Cash at beginning of period
    
    
    44,013
    
    
    
    31,648Cash at end of period
    
    $
    41,109
    
    
    $
    32,169Reconciliation of net income (loss) to net cash
provided by operating activities:Net income (loss)
    
    $
    (2,376
    )
    
    $
    1,049Depreciation and Amortization
    
    
    1,102
    
    
    
    1,379Deferred income taxes
    
    
    (115
    )
    
    
    (222
    )Stock-based compensation
    
    
    153
    
    
    
    124Changes in assets and liabilities:Accounts receivable
    
    
    590
    
    
    
    (3,152
    )Inventories
    
    
    1,387
    
    
    
    4,800Prepaid expenses and other current assets
    
    
    (2,131
    )
    
    
    188Accounts payable
    
    
    (1,406
    )
    
    
    (2,535
    )Accrued salaries, wages and benefits
    
    
    232
    
    
    
    993Other accrued expenses
    
    
    (1,582
    )
    
    
    (1,351
    )Other assets
    
    
    450
    
    
    
    390Other long-term liabilities
    
    
    (40
    )
    
    
    (27
    )Net cash provided by operating activities
    
    $
    (3,736
    )
    
    $
    1,636
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STANLEY FURNITURE COMPANY, INC.
 
 
   Preparation of Interim Unaudited Consolidated Financial Statements
  Property, Plant and Equipment
 March 28,
    
    
    December 31,2009
    
    
    2008Land and buildings
    
    $
    38,851
    
    
    $
    41,615Machinery and equipment
    
    
    63,432
    
    
    
    76,451Office furniture and equipment
    
    
    1,284
    
    
    
    1,384Construction in process
    
    
    591
    
    
    
    120Property, plant and equipment, at cost
    
    
    104,158
    
    
    
    119,570Less accumulated depreciation
    
    
    68,952
    
    
    
    84,125Property, plant and equipment, net
    
    $
    35,206
    
    
    $
    35,445
 Debt
 March 28,
    
    
    December 31,2009
    
    
    20086.73% senior notes due through May 3, 2017
    
    $
    25,000
    
    
    $
    25,0006.94% senior notes due through May 3, 2011
    
    
    4,286
    
    
    
    4,286Total
    
    
    29,286
    
    
    
    29,286Less current maturities
    
    
    1,429
    
    
    
    1,429Long-term debt, exclusive of current maturities
    
    $
    27,857
    
    
    $
    27,857
 Employee Benefits Plans
  Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Service cost
    
    $
    19
    
    
    $
    22Interest cost
    
    
    71
    
    
    
    71Amortization of transition obligation
    
    
    33
    
    
    
    33Amortization of prior service cost
    
    
    (2
    )
    
    
    (2
    )Amortization of accumulated loss
    
    
    5
    
    
    
    7Net periodic postretirement benefit cost
    
    $
    126
    
    
    $
    131
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Stockholders Equity
  Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Weighted average shares outstanding
for basic calculation
    
    
    10,332
    
    
    
    10,332Add: Effect of dilutive stock options
    
    
    
    
    
    
    22Weighted average shares outstanding,
adjusted for diluted calculation
    
    
    10,332
    
    
    
    10,354
   AccumulatedCapital in
    
    
    
    
    
    
    OtherCommon
    
    
    Excess of
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Par Value
    
    
    Earnings
    
    
    LossBalance, December 31, 2008
    
    $
    207
    
    
    $
    1,058
    
    
    $
    102,603
    
    
    $
    (760
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (2,376
    )Stock-based compensation
    
    
    
    
    
    
    153Adjustment to net periodic benefit cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Balance, March 28, 2009
    
    $
    207
    
    
    $
    1,211
    
    
    $
    100,227
    
    
    $
    (738
    )
  Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Net income (loss)
    
    $
    (2,376
    )
    
    $
    1,049Adjustment to net periodic benefit cost
    
    
    22
    
    
    
    38Comprehensive income (loss)
    
    $
    (2,354
    )
    
    $
    1,087
 Restructuring and Related Charges
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Severance and othertermination costs
    
    
    Other Cost
    
    
    TotalAccrual at January 1, 2009
    
    $
    1,446
    
    
    
    
    
    
    $
    1,446Charges to expense
    
    
    83
    
    
    $
    82
    
    
    
    165Cash payments
    
    
    263
    
    
    
    82
    
    
    
    345Accrual at March 28, 2009
    
    $
    1,266
    
    
    $
    0
    
    
    $
    1,266
  
 ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Results of Operations
  Three Months EndedMarch 28,
    
    
    March 29,2009
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    88.1
    
    
    
    82.7Gross profit
    
    
    11.9
    
    
    
    17.3Selling, general and administrative expenses
    
    
    19.6
    
    
    
    14.0Operating income (loss)
    
    
    (7.7
    )
    
    
    3.3Other income, net
    
    
    .1
    
    
    
    .1Interest income
    
    
    .1
    
    
    
    .3Interest expense
    
    
    2.4
    
    
    
    1.4Income (loss) before income taxes
    
    
    (9.9
    )
    
    
    2.3Income taxes
    
    
    3.9
    
    
    
    .6Net income (loss)
    
    
    (6.0
    )%
    
    
    1.7
    %
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Financial Condition, Liquidity and Capital Resources
       Twelve Months EndingMarch 28, 2009Income (loss) before income taxes
    
    $
    (589
    )Interest expense, net
    
    
    3,411Restructuring charge
    
    
    7,050Earnings before interest and taxes
(as defined in our note agreement)
    
    $
    9,872
 Critical Accounting Policies
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Forward-Looking Statements
  
 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 first quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
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PART
II. OTHER INFORMATION
 
 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 December 7, 2007).31.1
    
    
    Certification by Albert L. Prillaman, 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 Albert L. Prillaman, 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  10




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SIGNATURE
  Date: April 15, 2009
    STANLEY FURNITURE COMPANY, INC.By:
    /s/ Douglas I. PayneDouglas I. PayneExecutive V.P.  Finance
&
Administration and Secretary
(Principal Financial and Accounting Officer)  11




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EXHIBIT INDEX
 ExhibitNo.
    
    Description3.1
    
    
    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 December 7, 2007).31.1
    
    
    Certification by Albert L. Prillaman, 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 Albert L. Prillaman, 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)
  12