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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 April 2, 2011
 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- 2010
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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. ExhibitsSIGNATUREEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 STANLEY FURNITURE COMPANY, INC.
 
   April 2,
    
    
    December 31,2011
    
    
    2010ASSETSCurrent assets:Cash
    
    $
    22,314
    
    
    $
    25,532Accounts receivable, less allowances of $900 and $1,240
    
    
    12,280
    
    
    
    9,888Inventories:Finished goods
    
    
    18,904
    
    
    
    20,855Work-in-process
    
    
    1,669
    
    
    
    1,709Raw materials
    
    
    2,191
    
    
    
    3,131Total inventories
    
    
    22,764
    
    
    
    25,695Income tax receivable
    
    
    4,020
    
    
    
    3,952Prepaid expenses and other current assets
    
    
    4,231
    
    
    
    5,883Deferred income taxes
    
    
    704
    
    
    
    1,021Total current assets
    
    
    66,313
    
    
    
    71,971Property, plant and equipment, net
    
    
    16,004
    
    
    
    15,980Other assets
    
    
    
    
    
    
    445Total assets
    
    $
    82,317
    
    
    $
    88,396LIABILITIESCurrent liabilities:Accounts payable
    
    
    7,412
    
    
    $
    9,116Accrued salaries, wages and benefits
    
    
    5,212
    
    
    
    4,805Other accrued expenses
    
    
    2,476
    
    
    
    2,921Lease related obligation
    
    
    2,389
    
    
    
    2,360Total current liabilities
    
    
    17,489
    
    
    
    19,202Deferred income taxes
    
    
    704
    
    
    
    1,021Other long-term liabilities
    
    
    6,326
    
    
    
    6,378Total liabilities
    
    
    24,519
    
    
    
    26,601STOCKHOLDERS EQUITYCommon stock, $.02 par value, 25,000,000 shares authorized
and 14,344,679 shares issued and
outstanding
    
    
    287
    
    
    
    287Capital in excess of par value
    
    
    14,399
    
    
    
    14,433Retained earnings
    
    
    43,133
    
    
    
    47,062Accumulated other comprehensive (loss) income
    
    
    (21
    )
    
    
    13Total stockholders equity
    
    
    57,798
    
    
    
    61,795Total liabilities and stockholders equity
    
    $
    82,317
    
    
    $
    88,396
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STANLEY FURNITURE COMPANY, INC.
 
   Three MonthsEndedApril 2,
    
    
    April 3,2011
    
    
    2010Net sales
    
    $
    26,571
    
    
    $
    36,524Cost of sales
    
    
    24,886
    
    
    
    39,563Gross profit (loss)
    
    
    1,685
    
    
    
    (3,039
    )Selling, general and administrative expenses
    
    
    5,121
    
    
    
    5,470Goodwill impairment charge
    
    
    
    
    
    
    9,072Operating loss
    
    
    (3,436
    )
    
    
    (17,581
    )Other income, net
    
    
    29
    
    
    
    15Interest income
    
    
    
    
    
    
    2Interest expense
    
    
    538
    
    
    
    1,058Loss before income taxes
    
    
    (3,945
    )
    
    
    (18,622
    )Income tax (benefit) expense
    
    
    (16
    )
    
    
    451Net loss
    
    $
    (3,929
    )
    
    $
    (19,073
    )Loss per share:Basic
    
    $
    (.27
    )
    
    $
    (1.85
    )Diluted
    
    $
    (.27
    )
    
    $
    (1.85
    )Weighted average shares outstanding:Basic
    
    
    14,345
    
    
    
    10,335Diluted
    
    
    14,345
    
    
    
    10,335
   3




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STANLEY FURNITURE COMPANY, INC.
 
   Three Months EndedApril 2,
    
    
    April 3,2011
    
    
    2010Cash flows from operating activities:Cash received from customers
    
    $
    24,139
    
    
    $
    35,594Cash paid to suppliers and employees
    
    
    (28,330
    )
    
    
    (43,748
    )Interest paid, net
    
    
    
    
    
    
    (1
    )Income taxes (paid) received, net
    
    
    (52
    )
    
    
    3Net cash used by operating activities
    
    
    (4,243
    )
    
    
    (8,152
    )Cash flows from investing activities:Capital expenditures
    
    
    (409
    )
    
    
    (2
    )Purchase of other assets
    
    
    (38
    )
    
    
    (146
    )Proceeds from sale of assets
    
    
    1,472Net cash provided (used) by investing activities
    
    
    1,025
    
    
    
    (148
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    119Net cash provided by financing activities
    
    
    
    
    
    
    119Net decrease in cash
    
    
    (3,218
    )
    
    
    (8,181
    )Cash at beginning of period
    
    
    25,532
    
    
    
    41,827Cash at end of period
    
    $
    22,314
    
    
    $
    33,646Reconciliation of net loss to net cash used
by operating activities:Net loss
    
    $
    (3,929
    )
    
    $
    (19,073
    )Goodwill impairment charge
    
    
    
    
    
    
    9,072Depreciation and amortization
    
    
    387
    
    
    
    1,042Deferred income taxes
    
    
    
    
    
    
    1,307Stock-based compensation
    
    
    8
    
    
    
    181Changes in assets and liabilities:Accounts receivable
    
    
    (2,392
    )
    
    
    (826
    )Inventories
    
    
    2,931
    
    
    
    1,735Income tax receivable
    
    
    (68
    )
    
    
    (861
    )Prepaid expenses and other current assets
    
    
    179
    
    
    
    192Accounts payable
    
    
    (1,704
    )
    
    
    (394
    )Accrued salaries, wages and benefits
    
    
    331
    
    
    
    (1,124
    )Other accrued expenses
    
    
    (444
    )
    
    
    175Other assets
    
    
    510
    
    
    
    482Other long-term liabilities
    
    
    (52
    )
    
    
    (60
    )Net cash used by operating activities
    
    $
    (4,243
    )
    
    $
    (8,152
    )
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STANLEY FURNITURE COMPANY, INC.
 
   Preparation of Interim Unaudited Consolidated Financial Statements
   Property, Plant and Equipment
 April 2,
    
    
    December 31,2011
    
    
    2010Land and buildings
    
    $
    19,096
    
    
    $
    19,096Machinery and equipment
    
    
    25,828
    
    
    
    24,780Office furniture and equipment
    
    
    1,168
    
    
    
    1,168Construction in process
    
    
    500
    
    
    
    1,139Property, plant and equipment, at cost
    
    
    46,592
    
    
    
    46,183Less accumulated depreciation
    
    
    30,588
    
    
    
    30,203Property, plant and equipment, net
    
    $
    16,004
    
    
    $
    15,980
 Income taxes
   5




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Employee Benefits Plans
  Three Months EndedApril 2,
    
    
    April 3,2011
    
    
    2010Interest cost
    
    $
    40
    
    
    $
    47Amortization of prior service cost
    
    
    (42
    )
    
    
    (38
    )Amortization of accumulated loss
    
    
    8
    
    
    
    18Net periodic postretirement benefit cost
    
    $
    6
    
    
    $
    27
 Stockholders Equity
  Three Months EndedApril 2,
    
    
    April 3,2011
    
    
    2010Weighted average shares outstanding
for basic calculation
    
    
    14,345
    
    
    
    10,335Add: Effect of dilutive stock optionsWeighted average shares outstanding,
adjusted for diluted calculation
    
    
    14,345
    
    
    
    10,335
   AccumulatedCapital in
    
    
    
    
    
    
    OtherCommon
    
    
    Excess of
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Par Value
    
    
    Earnings
    
    
    LossBalance, December 31, 2010
    
    $
    287
    
    
    $
    14,433
    
    
    $
    47,062
    
    
    $
    13Net loss
    
    
    
    
    
    
    
    
    
    
    (3,929
    )Fees related to issuance of stock
    
    
    
    
    
    
    (40
    )Stock-based compensation
    
    
    
    
    
    
    6Adjustment to net periodic benefit cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34
    )Balance, April 2, 2011
    
    $
    287
    
    
    $
    14,399
    
    
    $
    43,133
    
    
    $
    (21
    )
  Three Months EndedApril 2,
    
    
    April 3,2011
    
    
    2010Net loss
    
    $
    (3,929
    )
    
    $
    (19,073
    )Adjustment to net periodic benefit cost
    
    
    34
    
    
    
    (13
    )Comprehensive loss
    
    $
    (3,895
    )
    
    $
    (19,086
    )
 Restructuring and Related Charges
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Severance and othertermination costs
    
    
    Other Cost
    
    
    TotalAccrual at January 1, 2011
    
    $
    1,239
    
    
    $
    730
    
    
    $
    1,969Charges and adjustments to expense
    
    
    5
    
    
    
    (36
    )
    
    
    (31
    )Cash payments
    
    
    (368
    )
    
    
    (152
    )
    
    
    (520
    )Accrual at April 2, 2011
    
    $
    876
    
    
    $
    542
    
    
    $
    1,418
  Severance and othertermination costs
    
    
    Other Cost
    
    
    TotalAccrual at January 1, 2010
    
    $
    1,070
    
    
    
    
    
    
    $
    1,070Charges to expense
    
    
    
    
    
    $
    24
    
    
    
    24Cash payments
    
    
    (532
    )
    
    
    (24
    )
    
    
    (556
    )Accrual at April 3, 2010
    
    $
    538
    
    
    $
    
    
    
    $
    538
  
 ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    The current quarter ended April 2, 2011 in comparison to the comparable quarter of the
prior year (comparable quarter) ended April 3, 2010.
 
    
    Certain comparisons with the three months ended December 31, 2010 (previous quarter) are
provided where we believe it is useful to understand current trends.
 Results of Operations
  Three Months EndedApril 2, 2011
    
    
    Dec 31, 2010
    
    
    April 3, 2010(current quarter)
    
    
    (previous quarter)
    
    
    (comparable quarter)Net sales
    
    $
    26,571
    
    
    
    100.0
    %
    
    
    27,689
    
    
    
    100.0
    %
    
    $
    36,524
    
    
    
    100.0
    %Cost of sales
    
    
    24,886
    
    
    
    93.7
    %
    
    
    33,711
    
    
    
    121.7
    %
    
    
    39,563
    
    
    
    108.3
    %Gross Profit
    
    
    1,685
    
    
    
    6.3
    %
    
    
    (6,022
    )
    
    
    -21.7
    %
    
    
    (3,039
    )
    
    
    -8.3
    %Selling, general and administrative costs
    
    
    5,121
    
    
    
    19.3
    %
    
    
    4,363
    
    
    
    15.8
    %
    
    
    5,470
    
    
    
    15.0
    %Goodwill impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,072
    
    
    
    24.8
    %Operating income
    
    
    (3,436
    )
    
    
    -12.9
    %
    
    
    (10,385
    )
    
    
    -37.5
    %
    
    
    (17,581
    )
    
    
    -48.1
    %Other income, net
    
    
    (29
    )
    
    
    -0.1
    %
    
    
    (1,562
    )
    
    
    -5.6
    %
    
    
    (15
    )
    
    
    -0.0
    %Interest expense, net
    
    
    538
    
    
    
    2.0
    %
    
    
    707
    
    
    
    2.6
    %
    
    
    1,056
    
    
    
    2.9
    %Loss before income taxes
    
    
    (3,945
    )
    
    
    -14.8
    %
    
    
    (9,530
    )
    
    
    -34.4
    %
    
    
    (18,622
    )
    
    
    -51.0
    %Income taxes
    
    
    (16
    )
    
    
    0.1
    %
    
    
    (1,206
    )
    
    
    -4.4
    %
    
    
    451
    
    
    
    1.2
    %Net loss
    
    $
    (3,929
    )
    
    
    -14.8
    %
    
    
    (8,324
    )
    
    
    -30.1
    %
    
    $
    (19,073
    )
    
    
    -52.2
    %
  7




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Financial Condition, Liquidity and Capital Resources
     8




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Continued Dumping and Subsidy Offset Act (CDSOA)
     Critical Accounting Policies
  Forward-Looking Statements
   9




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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.
 
  
 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 3.1 to the Registrants Form 8-K (Commission File No.
0-14938) filed February 3, 2010).31.1
    
    
    Certification by Glenn 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 Micah S. Goldstein, 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 Glenn 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 Micah S. Goldstein, 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 26, 2011
    STANLEY FURNITURE COMPANY, INC.By:
    /s/ Micah S. GoldsteinMicah S. GoldsteinChief Financial Officer
(Principal Financial and Accounting Officer)  11