UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                         Commission file number 0-14938

                         STANLEY FURNITURE COMPANY, INC.
             (Exact name of Registrant as specified in its Charter)

                     Delaware                      54-1272589
        -------------------------------      ---------------------
        (State or other jurisdiction of         (I.R.S. Employer
        incorporation or organization)       Identification Number)

               1641 Fairystone Park Highway, Stanleytown, VA 24168
               (Address of principal executive offices, Zip Code)

Registrant's  telephone number,  including area code: (540) 627-2000
Securities registered  pursuant to Section  12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.02 per share
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes (x) No ( )

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be  contained,  to the best of  Registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]

Aggregate market value of the voting stock held by non-affiliates of the
Registrant based on the closing price on January 31, 2001:  $153 million

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of January 31, 2001:

Common Stock, par value $.02 per share                             6,596,436
--------------------------------------                          ----------------
       (Class of Common Stock)                                  Number of Shares

Documents  incorporated  by  reference:   Portions  of  the  Registrant's  Proxy
Statement for its Annual  Meeting of  Stockholders  scheduled for April 25, 2001
are incorporated by reference into Part III.







<PAGE>


                                TABLE OF CONTENTS


Part I                                                                      Page


  Item 1    Business........................................................   3
  Item 2    Properties......................................................   6
  Item 3    Legal Proceedings...............................................   6
  Item 4    Submission of Matters to a Vote of Security Holders.............   6



Part II


  Item 5    Market for Registrant's Common Equity and Related Stockholder
            Matters.........................................................   8
  Item 6    Selected Financial Data.........................................   9
  Item 7    Management's Discussion and Analysis of Financial Condition and
            Results of Operations...........................................  10
  Item 7A   Quantitative and Qualitative Disclosures about Market Risks.....  12
  Item 8    Financial Statements and Supplementary Data.....................  13
  Item 9    Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure............................................  13



Part III


  Items 10 through 13.......................................................  13



Part IV


  Item 14   Exhibits, Financial Statement Schedule and Reports on Form 8-K..  13

  Signatures  ..............................................................  18

  Index to Financial Statements and Schedule................................ F-1


<PAGE>


                         Stanley Furniture Company, Inc.

                                     PART I

Item 1.     Business

General

      The Company is a leading  designer and  manufacturer  of residential  wood
furniture  exclusively  targeted at the  upper-medium  price range.  The Company
offers  diversified  product lines across all major style and product categories
within this price range.  Its product depth and extensive style  selections make
the Company a complete wood furniture  resource for retailers in its price range
and allow the Company to respond more quickly to shifting consumer  preferences.
The  Company  has  established  a  broad  distribution   network  that  includes
independent  furniture  stores,  department  stores,  and  national and regional
furniture  chains.  To produce its products  and support its broad  distribution
network,  the  Company  has  developed  efficient  and  flexible   manufacturing
processes  that it believes are unique in the  furniture  industry.  The Company
emphasizes continuous improvement in its manufacturing processes to enable it to
continue  providing  competitive  advantages  to its  customers,  such as  quick
delivery, reduced inventory investment, high quality, and value.

Products and Styles

      The Company's product lines cover all major design categories, and include
collections  (dining  room,  bedroom,  tables and  entertainment  units),  youth
bedroom (Young AmericaTM) and home office  furniture.  The Company believes that
the diversity of its product lines enables it to anticipate and respond  quickly
to  changing  consumer  preferences  and  provides  retailers  a  complete  wood
furniture  resource in the  upper-medium  price  range.  The Company  intends to
continue  developing its product styles with particular  emphasis on home office
and youth bedroom.  The Company believes that its products  represent good value
and that the  quality and style of its  furniture  compare  favorably  with more
premium-priced products.

      The  Company  provides  products  in a  variety  of  woods,  veneers,  and
finishes. The number of styles by product line currently marketed by the Company
is set forth in the following table:

                                     Number of Styles
                                     ----------------
      Collections:
         Dining room.....................................................     17
         Bedroom.........................................................     17
         Tables..........................................................     12
         Entertainment units.............................................      9
        Youth bedroom (Young America(TM))................................     14
        Home office......................................................      8

      These  product lines cover all major design categories  including European
traditional, contemporary/transitional, American traditional, and country/casual
designs.

      The  Company  designs and develops new product styles each year to replace
discontinued  items or styles and,  if desired,  to expand  product  lines.  The
Company's  product design process  begins with marketing  personnel  identifying
customer needs and  conceptualizing  product ideas, which generally consist of a
group of related furniture  pieces. A variety of sketches are produced,  usually
by Company  designers,  from which  prototype  furniture  pieces are built.  The
Company's  engineering   department  then  prepares  the  prototype  for  actual
full-scale production.  The Company consults with its marketing personnel, sales
representatives,  and selected customers  throughout this process and introduces
its new product styles at the fall and spring international furniture markets.


Distribution

      The Company has developed a broad domestic and international customer base
and  sells  its   furniture   through   approximately   70   independent   sales
representatives  to  independent  furniture  retailers,  department  stores  and
regional chain stores.  Representative  customers include Homelife, Rooms To Go,
Furnitureland  South,  Breuners  Home  Furnishings,  Jordan's,  Robb  &  Stucky,
Nebraska  Furniture  Mart and Wickes.  The Company  believes  this broad network
reduces its  exposure to regional  recessions,  and allows it to  capitalize  on
emerging  channels  of  distribution.  The  Company  offers  tailored  marketing
programs to address each channel of distribution.

      The  general marketing  practice followed in the furniture  industry is to
exhibit products at international and regional furniture markets.  In the spring
and fall of each year,  an  eight-day  furniture  market is held in High  Point,
North Carolina, which is attended by most buyers and is regarded by the industry
as the international  market. The Company utilizes  approximately  60,000 square
feet of  showroom  space at the High Point  market to  introduce  new  products,
increase sales of its existing products, and test ideas for future products.

      The  Company has sold to  approximately  3,200 customers  during 2000, and
approximately 6% of the Company's sales in 2000 were to international customers.
No single customer accounted for more than ten percent of the Company's sales in
2000.  No material  part of the  Company's  business is dependent  upon a single
customer,  the loss of which would have a material effect on the business of the
Company.  The loss of  several of the  Company's  major  customers  could have a
material impact on the business of the Company.

Manufacturing

      The  Company's   manufacturing   operations  complement  its  product  and
distribution  strategy  by  emphasizing  continuous  improvement  in quality and
customer  responsiveness  while  reducing  costs.  The  Company's  manufacturing
processes produce smaller,  more frequent and  cost-effective  runs. The Company
focuses on identifying  and  eliminating  manufacturing  bottlenecks  and waste,
employing  statistical  process  control and, in turn,  adjusting  manufacturing
schedules on a daily basis,  using cellular  manufacturing  in the production of
components,  and  improving its  relationships  with  suppliers by  establishing
primary  supplier  relationships.  In addition,  a key element of the  Company's
manufacturing  processes  is to  involve  all  Company  personnel,  from  hourly
associates to management,  in the improvement of the manufacturing  processes by
encouraging   and  responding  to  ideas  to  improve   quality  and  to  reduce
manufacturing lead times.

      The  Company  operates  manufacturing  facilities  in North  Carolina  and
Virginia  consisting of an aggregate of more than 3.6 million  square feet.  The
Company  considers its present  equipment to be generally  modern,  adequate and
well maintained.

      The Company  schedules  production of its various styles based upon actual
and anticipated orders. The Company's  manufacturing processes enable it to fill
orders through  manufacturing  rather than inventory.  As a result,  the Company
shipped  customer  orders  within 24 days on average  during  2000 with  average
finished goods  inventory  turns of 7.6. Since the Company ships customer orders
on  average  in about  three  weeks,  management  believes  that the size of its
backlog  is not  necessarily  indicative  of its  long-term  operations.  During
December  2000,  the  Company  shipped  customer  orders  in 17 days on  average
compared  to 30 days in December  1999.  As a result,  the backlog of  unshipped
orders was $15.1  million at  December  31, 2000  compared  to $28.6  million at
December 31, 1999.








Raw Materials

      The  principal materials used by the Company in manufacturing its products
include lumber,  veneers,  plywood,  particle board,  hardware,  glue, finishing
materials,  glass products,  laminates,  fabrics and metals.  The Company uses a
variety of species of lumber,  including  cherry,  oak,  ash,  poplar,  pine and
maple. The Company's five largest  suppliers  accounted for approximately 16% of
its purchases in 2000. The Company believes that its sources of supply for these
materials are adequate and that it is not dependent on any one supplier.

Competition

      The  Company is the fourteenth  largest  furniture  manufacturer  in North
America based on 1999 sales, according to Furniture/Today,  a trade publication.
The  furniture  industry is highly  competitive  and  includes a large number of
foreign and  domestic  manufacturers,  none of which  dominates  the market.  In
addition, competition has increased from foreign manufacturers in countries such
as China with lower production  costs. The markets in which the Company competes
include a large  number of  relatively  small  manufacturers;  however,  certain
competitors  of  the  Company  have  substantially  greater  sales  volumes  and
financial  resources than the Company.  Competitive  factors in the upper-medium
price range include  style,  price,  quality,  delivery,  design,  service,  and
durability.   The  Company  believes  that  its  manufacturing   processes,  its
long-standing customer relationships and customer responsiveness, its consistent
support of existing  diverse product lines that are high quality and good value,
and its experienced management are competitive advantages.

Associates

      At December 31, 2000, the Company employed approximately 3,350 associates.
None of the Company's  associates is represented  by a labor union.  The Company
considers its relations with its associates to be good.

Trademarks

      The trade names of the Company represent many years of continued business,
and the Company  believes such names are well  recognized  and  associated  with
quality in the furniture industry. The Company owns a number of trademarks, none
of which is considered to be material to the Company.

Governmental Regulations

      The  Company is subject to federal,  state, and local laws and regulations
in the areas of safety, health, and environmental pollution controls. Compliance
with these laws and  regulations  has not in the past had any material effect on
the Company's earnings, capital expenditures,  or competitive position; however,
the effect of such  compliance  in the future  cannot be  predicted.  Management
believes that the Company is in material  compliance  with  applicable  federal,
state, and local safety, health and environmental regulations.

Forward-Looking Statements

      Certain  statements  made in this Annual Report on Form 10-K 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,"
"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 the  Company's  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 the  cyclical  nature of the
furniture  industry,  fluctuations  in the  price for  lumber  which is the most
significant  raw material  used by the  Company,  competition  in the  furniture
industry, capital costs and general economic conditions.



Item 2.    Properties

      Set  forth  below is certain  information  with  respect to the  Company's
principal  properties.  The Company  believes that all these properties are well
maintained and in good condition. All Company plants are equipped with automatic
sprinkler  systems  and  modern  fire  protection  equipment,  which  management
believes  are  adequate.   All   facilities  set  forth  below  are  active  and
operational.  The  Company  believes  its  manufacturing  facilities  are  being
efficiently  utilized and each facility is focused on specific  product lines to
optimize  efficiency.  The Company estimates that its facilities,  excluding the
Martinsville,  Virginia  factory,  are  presently  operating  at  90%  capacity,
principally  on a one-shift  basis.  The  Martinsville,  Virginia  factory began
production  in early 2000 and is operating at 50-60% of its  anticipated  annual
sales capacity of $50-60 million.
<TABLE>
<CAPTION>

                                                     Approximate      Owned
                                                    Facility Size       or
      Location                Primary Use           (Square Feet)     Leased
      --------                -----------           -------------     ------
<S>                         <C>                       <C>             <C>
    Stanleytown, VA          Manufacturing            1,721,000        Owned
                             and Corporate
                             Headquarters
    Martinsville, VA         Manufacturing              300,000        Owned
    West End, NC             Manufacturing              470,000        Owned(1)
    Lexington, NC            Manufacturing              635,000        Owned
    Robbinsville, NC         Manufacturing              540,000        Owned
    High Point, NC           Showroom                    63,000        Leased(2)
------------------------------------
(1)  This plant leases its lumber yard; lease expires May 31, 2007.
(2)  Lease expires October 31, 2004.
</TABLE>

Item 3.    Legal Proceedings

     None.

Item 4.    Submission of Matters to a Vote of Security Holders

     None.






Executive Officers of the Registrant

      The  Company's executive officers and their ages as of January 1, 2001 are
as follows:
<TABLE>
<CAPTION>

Name                                  Age    Position
<S>                                   <C>    <C>
Albert L. Prillaman...........        55     Chairman, President and Chief
                                               Executive Officer
John W. Johnson   ............        56     Senior Vice President-Manufacturing
Douglas I. Payne  ............        42     Senior Vice President -
                                               Finance and Administration,
                                               and Secretary
William A. Sibbick............        44     Senior Vice President -Sales
Kelly S. Cain  ...............        46     Senior Vice President -
                                               Product Development
                                               and Merchandising
</TABLE>


      Albert L. Prillaman has been President and Chief Executive  Officer of the
Company  since  December  1985 and  Chairman  of the  Board of  Directors  since
September 1988.  Prior to that time, Mr. Prillaman served as a Vice President of
the Company and  President of the Stanley  Furniture  division of the  Company's
predecessor  since 1983, and in various  executive and other capacities with the
Stanley  Furniture  division of the  predecessors of the Company since 1969. Mr.
Prillaman is a director of American Woodmark Corporation.

      John  W.  Johnson  has  been  Senior  Vice  President-Manufacturing  since
December 1998. He was Vice President of  Manufacturing  from November 1984 until
December 1998. Prior to that time, Mr. Johnson held various management positions
related to manufacturing since his employment by the Company in 1966.

      Douglas I. Payne has been Senior Vice President-Finance and Administration
since  December  1996.  He was Vice  President  of Finance and  Treasurer of the
Company from September 1993 to December 1996. Prior to that time, Mr. Payne held
various  financial  management  positions since his employment by the Company in
1983. Mr. Payne has been Secretary of the Company since 1988.

      William A.  Sibbick has been Senior Vice  President-Sales  since  December
1997. He was Vice President-Product  Development and  Merchandising-Dining  Room
and  Occasional  from  December 1996 to December  1997. He was Vice  President -
Product Development and Merchandising from April 1995 until December 1996. Prior
to that time, Mr. Sibbick held various  management  positions related to product
development since his employment by the Company in 1989.

      Kelly S.  Cain has been  Senior  Vice  President-Product  Development  and
Merchandising since December 1997. He was Vice President-Product Development and
Merchandising  for bedroom product lines from December 1996 to December 1997. He
was Vice  President-Sales  National  Accounts from April 1993 to December  1996.
Prior to that time,  Mr. Cain held  various  management  positions  in sales and
marketing since his employment by the Company in 1985.




<PAGE>



PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters
           ---------------------------------------------------------------------

      The Company's common stock is quoted on The Nasdaq Stock Market ("Nasdaq")
under the symbol STLY.  The table below sets forth the high and low sales prices
per share, for the periods indicated, as reported by Nasdaq.
<TABLE>
<CAPTION>

                                                      High              Low
          2000
<S>                                                  <C>              <C>
          First Quarter.............                 $20.25           $15.13
          Second Quarter............                  24.00            18.88
          Third Quarter.............                  28.50            21.25
          Fourth Quarter............                  25.88            20.19



          1999
          First Quarter.............                 $22.63           $16.50
          Second Quarter............                  23.63            19.00
          Third Quarter.............                  24.50            18.75
          Fourth Quarter............                  22.25            17.00


</TABLE>




As of January 31, 2001, there were approximately 2,500 beneficial  stockholders.
To date the  Company  has  retained  all  earnings  to  finance  the  growth and
development of its business.  However, the Company will continue to evaluate its
dividend  policy,  and any  future  payments  will  depend  upon  the  financial
condition,  capital  requirements and earnings of the Company,  as well as other
factors that the Board of Directors may deem relevant.  The Company's ability to
pay dividends is  restricted  under  certain loan  covenants.  See Note 3 of the
Notes to Financial Statements.



<PAGE>



Item 6.     Selected Financial Data

 <TABLE>
<CAPTION>
                                                                      Years Ended December 31,

                                                   2000          1999          1998         1997          1996
                                                   ----          ----          ----         ----          ----
                                                                (in thousands, except per share data)
Income Statement Data:
<S>                                              <C>           <C>           <C>           <C>           <C>
Net sales..................................      $283,092      $264,717      $247,371      $211,905      $201,905
Cost of sales..............................       214,499       196,631       186,931       159,453       153,332
                                                 --------      --------      --------      --------      --------
  Gross profit.............................        68,593        68,086        60,440        52,452        48,573
Selling, general and administrative
  expenses.................................        33,656        33,796        32,496        29,949        30,403
                                                 --------      --------      --------      --------      --------
Operating income...........................        34,937        34,290        27,944        22,503        18,170
Other expense (income), net ...............           (82)          388           411           276           616
Interest expense...........................         4,003         3,478         4,164         3,538         3,344
                                                 --------      --------      --------      --------      --------
  Income from continuing operations
    before income taxes....................        31,016        30,424        23,369        18,689        14,210
Income taxes...............................        11,476        11,211         8,886         7,102         5,470
                                                 --------      --------      --------      --------      --------
  Income from continuing operations........      $ 19,540      $ 19,213      $ 14,483      $ 11,587      $  8,740
                                                 ========      ========      ========      ========      ========

Basic Earnings Per Share:(1)
Income from continuing operations..........      $   2.76      $   2.70      $   2.07      $   1.38      $    .92
                                                 ========      ========      ========      ========      ========
Weighted average shares(2).................         7,076         7,119         7,008         8,394         9,444
                                                 ========      ========      ========      ========      ========

Diluted Earnings Per Share:(1)
Income from continuing operations..........      $   2.63      $   2.47      $   1.82      $   1.25      $    .88
                                                 ========      ========      ========      ========      ========
Weighted average shares(2).................         7,429         7,770         7,963         9,278         9,890
                                                 ========      ========      ========      ========      ========

Balance Sheet and Other Data:
Cash.......................................      $  1,825      $  3,597      $  6,791      $    756      $  8,126
Inventories................................        54,423        43,580        46,514        45,730        40,239
Working capital............................        53,759        38,531        44,408        41,440        46,225
Total assets...............................       179,206       170,522       154,374       143,225       141,510
Long-term debt including
  current maturities (2) ..................        52,169        38,404        43,539        52,577        39,350
Stockholders' equity (2)(3)................        79,477        79,573        62,368        48,247        61,617
Capital expenditures(4)....................         6,068        25,566         6,680         4,076         3,599


(1)   Amounts have been  retroactively  adjusted to reflect a two-for-one  stock
      split, distributed in the form of a stock dividend, on May 15, 1998.

(2)   The Company purchased  869,400,  226,750,  315,000 and 2,326,402 shares of
      its common stock for a total consideration of $19.8 million, $4.7 million,
      $5.6 million and $25.3 million in 2000, 1999, 1998 and 1997, respectively.
      In 1998, the Company issued 103,400 shares to the Stanley Retirement Plan.

(3)   No dividends have been paid on the Company's common stock during any of
      the years presented.

(4)   In 1999, the Company spent $10 million on expansion projects at existing
      facilities and $15 million to purchase and equip a new facility.

</TABLE>


Item 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations

      The following  discussion  should be read in conjunction with the Selected
Financial  Data  and  the  Financial  Statements  and  Notes  thereto  contained
elsewhere herein.

Results of Operations

      The following table sets forth the percentage relationship to net sales of
certain items included in the Statements of Income:

<TABLE>
<CAPTION>
                                                     For the Years Ended
                                                         December 31,
                                              ----------------------------------
                                               2000          1999          1998
                                               ----          ----          ----
<S>                                           <C>           <C>           <C>
Net sales...............................      100.0%        100.0%        100.0%
Cost of sales...........................       75.8          74.3          75.6
                                              -----         -----         -----
  Gross profit..........................       24.2          25.7          24.4
Selling, general and administrative
  expenses..............................       11.9          12.7          13.1
                                              -----         -----         -----
    Operating income.....................      12.3          13.0          11.3
Other expense (income), net..............       (.1)           .2            .1
Interest expense.........................       1.4           1.3           1.7
                                              -----         -----         -----
  Income before income taxes.............      11.0          11.5           9.5
Income taxes.............................       4.1           4.2           3.6
                                              -----         -----         -----
  Net income.............................       6.9%          7.3%          5.9%
                                              =====         =====         =====
</TABLE>

2000 Compared to 1999

      Net sales increased $18.4 million, or 6.9%, for 2000 compared to 1999. The
increase was due to higher unit volume in the Company's  Young  AmericaTM  youth
bedroom  and home  office  product  categories,  and to a lesser  extent  higher
average  selling  prices.  Due  to  the  softening  U.S.  economy,  the  Company
experienced a 5.2% decline in net sales for the fourth  quarter of 2000 compared
to an  exceptionally  strong prior year  quarter.  The Company  anticipates  the
current  economic  slowdown  to  continue  through  the first  half of 2001 and;
therefore,  expects any sales growth to be modest to slightly  below  comparable
prior year periods.

      Capacity  constraints  limited  shipments  during 1999.  As a result,  the
Company  completed  expansion  projects  during 1999 to increase  production  in
response to the  growing  demand for its  bedroom  and Young  America(TM)  youth
bedroom  products.  During the first  quarter  of 2000,  the  Company  commenced
operations at its new  manufacturing  facility in response to the growing demand
for home office furniture.  The Company  experienced  consistent  improvement in
operating  performance  at the new facility as production  levels were increased
throughout 2000 and expects continued improvement in 2001.

      Gross profit margin for 2000  decreased to 24.2% from 25.7% for 1999.  The
decrease resulted primarily from start-up expenses at the new factory along with
operating  inefficiencies  created by a change in product  mix at several  other
factories as product was moved to the new facility, higher raw material cost and
increased labor cost.

      Selling,  general and administrative expenses as a percentage of net sales
decreased to 11.9% in 2000 from 12.7% for 1999. The lower percentage in 2000 was
due  principally to higher net sales.  Expenditures  in 2000 were slightly lower
due primarily to reduced selling expenses.

      As a result,  operating  income  increased  to $34.9  million,  from $34.3
million  in 1999.  However,  due to the  above  factors,  operating  income as a
percentage of net sales declined to 12.3% from 13.0% in 1999.

      Interest  expense for 2000  increased  due to higher  average  debt levels
resulting from the Company's purchase of its stock and increased working capital
levels.

      The Company's  effective  income tax rate was 37.0% and 36.9% for 2000 and
1999, respectively.

1999 Compared to 1998

      Net sales increased $17.3 million, or 7.0%, for 1999 compared to 1998. The
Company ceased its upholstery  operations in the second half of 1998.  Excluding
upholstered product sales in 1998, wood furniture sales increased 9.1% for 1999.
The increase was due to higher unit volume and to a lesser extent higher average
selling prices. Capacity constraints limited shipments during 1999.

      Gross profit margin for 1999  increased to 25.7% from 24.4% for 1998.  The
increase  resulted  primarily  from  improved  operating  efficiencies  and  the
favorable impact in 1999 from the phase out of upholstered products in the prior
year.

      Selling,  general and administrative expenses as a percentage of net sales
were 12.7% and 13.1% for 1999 and 1998,  respectively.  The lower  percentage in
1999 was due  principally to higher net sales.  Expenditures in 1999 were higher
due principally to selling  expenses  directly  attributable to increased sales.
However,  the  majority  of  the  increase  was  offset  by the  elimination  of
expenditures related to upholstered products.

      As a result of the above,  operating income increased to $34.3 million, or
13.0% of net sales, from $27.9 million, or 11.3% of net sales, in 1998.

      Interest expense for 1999 decreased due to lower average debt levels.

      The  Company's  effective  income tax rate declined to 36.9% for 1999 from
38.0% in 1998, due to state income tax credits related to expansion projects.


Financial Condition, Liquidity and Capital Resources

      The  Company  generated  cash from  operations  of $11.8  million  in 2000
compared to $27.8  million in 1999 and $25.0  million in 1998.  The  decrease in
2000 compared to 1999 was attributable to increased  inventory levels and higher
tax  payments.  The  increase  in 1999  compared  to 1998 was due  primarily  to
increased  sales.  The Company used the cash generated from  operations in 2000,
1999 and 1998 to fund capital expenditures and repurchase its common stock.

      Net cash used by investing activities was $8.7 million in 2000 compared to
$23.0 million and $6.5 million in 1999 and 1998, respectively. Net cash used for
capital expenditures in 2000 was $8.8 million,  reflecting $2.7 million of prior
year capital expenditures  included in accounts payable at December 31, 1999 and
$6.1 million of capital  expenditures in 2000. In 1999 capital expenditures were
primarily for capacity expansion projects. Approximately $10 million was used to
expand  production  capability for the Company's  bedroom and Young  America(TM)
youth bedroom  products and  approximately  $15 million was used to purchase and
equip a facility  dedicated to the  production  of home office  furniture.  This
dedicated   facility  began   operation  in  the  first  quarter  of  2000.  The
expenditures in 2000, the remaining expenditures in 1999 and the expenditures in
1998 were  primarily  for plant and  equipment  and other  assets in the  normal
course  of  business.  Capital  expenditures  in  2001  are  anticipated  to  be
approximately $6-$7 million.

      Net cash used by financing  activities was $4.9 million,  $7.9 million and
$12.5  million  in 2000,  1999  and  1998,  respectively.  In  2000,  cash  from
operations and borrowings under the revolving credit facility  provided cash for
the purchase and retirement of the Company's common stock,  senior debt payments
and  capital  expenditures.  In 1999,  the  purchase  of  common  stock  and the
reduction in  borrowings  were financed  from  operations,  cash on hand and the
proceeds  from the exercise of stock  options.  In 1998,  the purchase of common
stock and the  reduction in  borrowings  were  financed by cash  generated  from
operations and the proceeds from the exercise of stock options.

      The Company used $19.8 million of cash to purchase  869,400  shares of its
stock on the open  market at an average  price of $22.72 in 2000.  For the three
years ending  December 31, 2000,  the Company has used $30.0  million of cash to
purchase 1.4 million  shares of its stock on the open market at an average price
of $21.27. At December 31, 2000, approximately $10 million remains authorized by
the Company's  Board of Directors to repurchase  shares of the Company's  common
stock.  Consequently,  the Company may,  from time to time,  either  directly or
through  agents,  repurchase  its  common  stock  in the  open  market,  through
negotiated  purchases or otherwise,  at prices and on terms  satisfactory to the
Company.  Depending  on market  prices  and  other  conditions  relevant  to the
Company, such purchases may be discontinued at any time.

      At December 31, 2000,  long-term debt,  including current maturities,  was
$52.2  million.  In March 2000,  the  revolving  credit  facility was amended to
increase available borrowings from $25.0 million to $35.0 million. Approximately
$14.4 million of additional borrowing capacity was available under the revolving
credit facility at December 31, 2000. Annual debt service  requirements are $6.7
million in 2001,  $6.8 million in 2002,  $6.9  million in 2003,  $7.0 million in
2004 and $2.8 million in 2005. The Company believes that its financial resources
are adequate to support its capital needs and debt service requirements.

Recent Accounting Pronouncements

      In December 1999, the  Securities and Exchange  Commission  ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB  101"),  which  provides  guidance on the  recognition,  presentation  and
disclosure  of  revenue in  financial  statements  filed  with the SEC.  SAB 101
outlines the basic  criteria that must be met to recognize  revenue and provides
guidance for disclosures  related to revenue recognition  policies.  SAB 101 was
adopted in the fourth quarter of 2000 and did not have a material  impact on the
Company's financial statements.

      In June 1998, the FASB issued Statement of Financial  Accounting Standards
No. 133,  "Accounting for Derivative  Instruments and Hedging Activities" ("SFAS
133"). In June 2000, the FASB issued Statement of Financial Accounting Standards
No. 138 ("SFAS  138"),  an  amendment  of SFAS 133.  Both  provide  guidance  on
accounting for  derivatives  and hedging  activities.  At December 31, 2000, the
Company had no derivative or hedging activities,  and any future activity is not
anticipated to have a material impact on the Company's financial statements.

Item 7A.Quantitative and Qualitative Disclosures about Market Risks

      Because the Company's obligation under its Revolving Credit Facility bears
interest at a variable  rate,  the Company is sensitive to changes in prevailing
interest  rates. A  one-percentage  point  fluctuation in market  interest rates
would not have had a material impact on earnings during the 2000 fiscal year.





Item 8.   Financial Statements and Supplementary Data

      The financial  statements and schedule listed in Items 14(a)(1) and (a)(2)
hereof  are  incorporated  herein  by  reference  and are  filed as part of this
report.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

      None.

                                    PART III

      In accordance with general  instruction G(3) of Form 10-K, the information
called for by Items 10, 11, 12, and 13 of Part III is  incorporated by reference
to the  Registrant's  definitive  Proxy  Statement  for its  Annual  Meeting  of
Stockholders scheduled for April 25, 2001, except for information concerning the
executive  officers of the Registrant which is included in Part I of this report
under the caption "Executive Officers of the Registrant."


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K
          --------------------------------------------------------------

(a)   Documents filed as a part of this Report:

(1) The following financial statements are included in this report on Form 10-K:

      Report of Independent Accountants

      Balance Sheets as of December 31, 2000 and 1999

      Statements of Income for each of the three years in the period ended
      December 31, 2000

      Statements of Changes in Stockholders'  Equity for each of the three years
      in the period ended December 31, 2000

      Statements of Cash Flows for each of the three years in the period ended
      December 31, 2000

      Notes to Financial Statements

(2)   Financial Statement Schedule:
      ----------------------------

      Schedule  II - Valuation  and  Qualifying  Accounts  for each of the three
      years in the period ended December 31, 2000

(b)   The following  reports on Form 8-K were filed by the Registrant during the
      last quarter of the period covered by this report:

      A report on Form 8-K was filed on  December  13,  2000,  to  announce  the
      Company's  Board of  Directors'  authorization  to increase the  Company's
      stock  repurchase   program  to  $14.6  million  and  to  comment  on  the
      Registrant's fourth quarter and 2001 outlook.



(c)   Exhibits:

 3.1     The Restated  Certificate of Incorporation of the Registrant
         (incorporated by reference to Exhibit 3.1 to the Registrant's Form 10-K
         (Commission File No. 0-19938) for the year ended December 31, 1998).

 3.2     The By-laws of the Registrant  (incorporated by reference to Exhibit
         3.2 to the Registrant's Registration Statement on Form S-1,
         No. 33-7300).

 3.3     Amendment  adopted  March 21,  1988 to the  By-laws  of the  Registrant
         (incorporated by reference to Exhibit 3.3 to the Registrant's Form 10-K
         (Commission File No. 0-14938) for the year ended December 31, 1987).

 3.4     Amendments  adopted  February 8, 1993 to the  By-laws of the Registrant
         (incorporated by reference to Exhibit 3.4 to the Registrant's
         Registration Statement on Form S-1 No. 33-57432).

 4.1     The  Certificate  of  Incorporation  and By-laws of the  Registrant  as
         currently in effect  (incorporated by reference to Exhibits 3.1 through
         3.4 hereto).

 4.2     Note  Agreement  dated February 15, 1994 between the Registrant and the
         Prudential  Insurance Company of America  (Incorporated by reference to
         Exhibit 4.6 to the Registrant's Form 10-K (Commission File No. 0-14938)
         for the year ended December 31, 1993).

 4.3     Letter  Amendment,  dated October 14, 1996, to Note  Agreements,  dated
         February 15, 1994 and June 29,  1995,  between the  Registrant  and The
         Prudential  Insurance Company of America  (incorporated by reference to
         Exhibit 4.1 to the Registrant's Form 10-Q (Commission File No. 0-14938)
         for the quarter ended September 29, 1996).

 4.4     Letter  Amendment,  dated  June 16,  1997,  to Note  Agreements,  dated
         February 15, 1994 and June 29,  1995,  between the  Registrant  and The
         Prudential  Insurance Company of America  (incorporated by reference to
         Exhibit 4.1 to the Registrant's  Statement on Form 8-K (Commission File
         No. 0-14938) filed July 9, 1997).

4.5      Note Purchase and Private Shelf  Agreement,  dated as of June 29, 1995,
         among the Company,  The Prudential Insurance Company of America and the
         affiliates  of  Prudential  who become  Purchasers  as defined  therein
         (incorporated by reference to Exhibit 4.1 to the Registrant's  Form 8-K
         (Commission File No. 0-14938) filed December 2, 1997).

4.6      Amendment, dated as of May 10, 1999, to Note Agreements, dated February
         15, 1994 and June 29, 1995,  between the  Registrant and The Prudential
         Insurance Company of America  (incorporated by reference to Exhibit 4.1
         to the  Registrant's  Form 10-Q  (Commission  File No. 0-14938) for the
         quarter ended June 26, 1999).

      Pursuant to Regulation S-K, Item  601(b)(4)(iii),  instruments  evidencing
long term debt less than 10% of the Registrant's  total assets have been omitted
and will be furnished to the Securities and Exchange Commission upon request.

10.1     Employment  Agreement  made as of  January  1, 1991  between  Albert L.
         Prillaman and the Company (incorporated by reference to Exhibit 10.1 to
         the Registrant's Form 10-K (Commission File No. 0-14938)
         for the year ended December 31, 1991).(2)

10.2     Lease dated  February 23, 1987 between  Stanley  Interiors  Corporation
         and Southern Furniture Exposition Building, Inc. d/b/a Southern
         Furniture Market Center  (incorporated by reference to Exhibit 10.10 to
         the Registrant's Form 10-K (Commission File No. 0-14938) for the year
         ended December 31, 1987).

10.3     Lease dated June 30, 1987 between A. Allan McDonald,  Virginia Cary
         McDonald, C. R. McDonald, Dorothy V. McDonald, and Lillian S. McDonald,
         as lessor, and Stanley Interiors  Corporation,  as lessee (incorporated
         by reference to Exhibit 10.14 to the  Registrant's  Form 10-K
         (Commission  File No. 0-14938) for the year ended December 31, 1987).

10.4     The Stanley  Retirement  Plan, as restated  effective  January 1, 1989,
         adopted  April 20, 1995  (incorporated  by reference to Exhibit 10.4 to
         the  Registrant's  Form 10-K (Commission File No. 0-14938) for the year
         ended December 31, 1995).(2)

10.5     Amendment No. 1, The Stanley  Retirement  Plan, effective  December 31,
         1995, adopted December 15, 1995 (incorporated by reference to Exhibit
         10.5 to the  Registrant's  Form 10-K  (Commission File No. 0-14938)
         for the year ended December 31, 1995).(2)

10.6     Supplemental  Retirement Plan of Stanley Furniture  Company,  Inc., as
         restated effective January 1, 1993. (incorporated by reference to
         Exhibit 10.8 to the  Registrant's  Form 10-K  (Commission File
         No. 0-14938) for the year ended December 31, 1993).(2)

10.7     First Amendment to Supplemental  Retirement Plan of Stanley Furniture
         Company, Inc., effective December 31, 1995,  adopted December 15, 1995
         (incorporated by reference to Exhibit 10.7 to the Registrant's Form
         10-K (Commission File No. 0-14938) for the year ended December 31,
         1995).(2)

10.8     Stanley Interiors Corporation Deferred Compensation Capital Enhancement
         Plan,  effective  January 1, 1986,  as amended and  restated  effective
         August 1, 1987  (incorporated  by  reference  to  Exhibit  10.12 to the
         Registrant's  Registration  Statement on Form  S-1(Commission  File No.
         0-14938), No. 33-7300).(2)

10.9     Split Dollar Insurance Agreement dated as of March 21, 1991 between
         Albert L. Prillaman and the Registrant  (incorporated  by reference to
         Exhibit 10.43 to the  Registrant's  Form 10-K  (Commission File
         No. 0-14938) for the year ended December 31, 1991).(2)

10.10    Second  Amended and Restated  Revolving  Credit  Facility and Term Loan
         Agreement  dated  February 15, 1994 (the  "Second  Amended and Restated
         Credit  Facility")  between the  Registrant,  National  Canada  Finance
         Corp.,  and the National Bank of Canada  (incorporated  by reference to
         Exhibit 10.17 to Registrant's  Form 10-K  (Commission File No. 0-14938)
         for the year ended December 31, 1994).

10.11    First Amendment to Second Amended and Restated Credit Facility dated as
         of August 21,  1995  (incorporated  by  reference  to Exhibit  10.14 to
         Registrant's Form 10-K (Commission File No. 0-14938) for the year ended
         December 31, 1995).

10.12    1992 Stock  Option Plan. (incorporated  by  reference  to  Registrant's
         Registration Statement on Form S-8 No. 33-58396).(2)

10.13    1994 Stock Option Plan. (incorporated by reference to Exhibit 10.18 to
         the Registrant's Form 10-K (Commission File No. 0-14938) for the year
         ended December 31, 1994).(2)

10.14    1994 Executive Loan Plan. (incorporated by reference to Exhibit 10.19
         to the Registrant's Form 10-K (Commission File No. 0-14938) for the
         year ended December 31, 1994).(2)

10.15    Employment Agreement dated as of June 1, 1996, between Douglas I. Payne
         and the  Registrant  (incorporated  by reference to Exhibit 10.1 to the
         Registrant's  Form 10-Q  (Commission  File No. 0-14938) for the quarter
         ended June 30, 1996).(2)

10.16    Amendment No. 1, dated as of October 1, 1996, to the Employment
         Agreement, dated as of January 1, 1991, between the Registrant and
         Albert L. Prillaman (incorporated by reference to Exhibit 10.4 to the
         Registrant's Form 10-Q (Commission File No. 0-14938) for the quarter
         ended September 29, 1996).(2)

10.17    Assignment and Transfer Agreement, dated as of October 8, 1996, between
         National  Canada Finance Corp. and National Bank of Canada  relating to
         the Second Amended and Restated Revolving Credit Facility (incorporated
         by reference to Exhibit 10.1 to the Registrant's  Form 10-Q (Commission
         File No. 0-14938) for the quarter ended September 29, 1996).

10.18    Second  Amendment,  dated as of October 14, 1996, to the Second Amended
         and Restated  Revolving  Credit Facility  (incorporated by reference to
         Exhibit  10.2  to the  Registrant's  Form  10-Q  (Commission  File  No.
         0-14938) for the quarter ended September 29, 1996).

10.19    Third  Amendment,  dated as of June 24, 1997, to the Second Amended and
         Restated  Revolving  Credit  Facility  and Term  Loan  Agreement  dated
         February  15, 1994  between the  Registrant,  National  Canada  Finance
         Corp.,  and the National Bank of Canada  (incorporated  by reference to
         Exhibit 99.4 to the Registrant's Form 8-K (Commission File No. 0-14938)
         filed July 9, 1997).

10.20    Fourth  Amendment,  dated  February 24, 1998, to the Second Amended and
         Restated  Revolving  Credit  Facility  and Term  Loan  Agreement  dated
         February  15, 1994  between the  Registrant,  National  Canada  Finance
         Corp.,  and the National Bank of Canada  (incorporated  by reference to
         Exhibit  10.1  to the  Registrant's  Form  10-Q  (Commission  File  No.
         0-14938) for the quarter ended March 28, 1998).

10.21    Fifth Amendment,  dated as of March 10, 1999, to the Second Amended and
         Restated  Revolving  Credit  Facility  and Term  Loan  Agreement  dated
         February 15, 1994 among the Registrant,  National Canada Finance Corp.,
         and the National Bank of Canada  (incorporated  by reference to Exhibit
         10.1 to the  Registrant's  Form 10-Q  (Commission File No. 0-14938) for
         the quarter ended March 27, 1999).

10.22    Employment  Agreement dated as of April 1, 1999 between John W. Johnson
         and the  Registrant  (incorporated  by reference to Exhibit 10.2 to the
         Registrant's  Form 10-Q  (Commission  File No. 0-14938) for the quarter
         ended March 27, 1999).(2)

10.23    Employment  Agreement  dated as of April 1, 1999  between  William  A.
         Sibbick, Jr. and the Registrant (incorporated by reference to Exhibit
         10.3 to the  Registrant's  Form 10-Q  (Commission File No. 0-14938)
         for the quarter ended March 27, 1999).(2)

10.24    Employment  Agreement  dated as of April 1, 1999 between  Kelly S. Cain
         and the  Registrant  (incorporated  by reference to Exhibit 10.4 to the
         Registrant's  Form 10-Q  (Commission  File No. 0-14938) for the quarter
         ended March 27, 1999).(2)

10.25    Sixth  Amendment,  dated  March 30,  2000,  to the Second  Amended  and
         Restated  Revolving  Credit  Facility  and Term  Loan  Agreement  dated
         February  15,  1994,  among  the  Registrant,  National  Bank of Canada
         (incorporated  by reference to Exhibit  10.1 to the  Registrant's  Form
         10-Q  (Commission  File No.  0-14938)  for the  quarter  ended April 1,
         2001).

10.26    Seventh  Amendment,  dated as of March 31, 2000, to the Second  Amended
         and Restated  Revolving  Credit  Facility and Term Loan Agreement dated
         February  15,  1994,  among  the  Registrant,  National  Bank of Canada
         (incorporated  by reference to Exhibit  10.2 to the  Registrant's  Form
         10-Q  (Commission  File No.  0-14938)  for the  quarter  ended April 1,
         2000).

10.27    2000 Incentive Compensation Plan (incorporate by reference to Exhibit A
         to the Registrant's Proxy Statement (Commission File No. 0-14938) for
         the special meeting of stockholders held on August 24, 2000).(2)

10.28    Amendment  No. 2 to The Stanley  Furniture  Company,  Inc. 1992 Stock
         Option Plan dated as of July 1, 2000 (incorporated by reference to
         Exhibit 10.2 to the  Registrant's  Form 10-Q  (Commission File
         No. 0-14938)for the quarter ended September 1, 2000).(2)

10.29    Amendment  No. 1 to The Stanley  Furniture  Company,  Inc. 1994 Stock
         Option Plan dated as of July 1, 2000 (incorporated by reference to
         Exhibit 10.3 to the Registrant's Form 10-Q (Commission File
         No. 0-14938)for the quarter ended September 1, 2000).(2)

21       Listing of Subsidiaries:

         Charter Stanley Foreign Sales Corporation, a United States Virgin
         Islands Corporation.

23       Consent of PricewaterhouseCoopers LLP(1)

------------------------------------
(1)      Filed herewith
(2)      Management contract or compensatory plan




                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                 STANLEY FURNITURE COMPANY, INC.

February 5, 2001                                 By: /s/Albert L. Prillaman
                                                 -------------------------------
                                                        Albert L. Prillaman
                                                        Chairman, President, and
                                                        Chief Executive Officer

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

         Signature                         Title                     Date

/s/Albert L. Prillaman        Chairman, President, and Chief    February 5, 2001
--------------------------    Executive Officer, and Director
(Albert L. Prillaman)         (Principal Executive Officer)

/s/Douglas I. Payne           Senior Vice President - Finance   February 5, 2001
--------------------------    and Administration and Secretary
(Douglas I. Payne)            (Principal Financial and
                              Accounting Officer)

/s/Robert G. Culp, III        Director                          February 5, 2001
--------------------------
(Robert G. Culp, III)

/s/David V. Harkins           Director                          February 5, 2001
--------------------------
(David V. Harkins)

/s/Edward J. Mack             Director                          February 5, 2001
--------------------------
(Edward J. Mack)

/s/Thomas L. Millner          Director                          February 5, 2001
--------------------------
(Thomas L. Millner)

/s/T. Scott McIlhenny, Jr.    Director                          February 5, 2001
--------------------------
(T.Scott McIlhenny, Jr.)


<PAGE>

                        STANLEY FURNITURE COMPANY, INC.
                           ANNUAL REPORT ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE



Financial Statements                                                        Page


Report of Independent Accountants....................................        F-2

Balance Sheets as of December 31, 2000 and 1999......................        F-3

Statements of Income for each of the three years in the period
  ended December 31, 2000............................................        F-4

Statements of Changes in Stockholders' Equity for each of the
  three years in the period ended December 31, 2000..................        F-5

Statements of Cash Flows for each of the three years in the period
  ended December 31, 2000............................................        F-6

Notes to Financial Statements........................................        F-7


Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts for each of the
  three years in the period ended December 31, 2000..................        S-1






















<PAGE>








                        Report of Independent Accountants



To the Board of Directors and Stockholders of
Stanley Furniture Company, Inc.

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all material  respects,  the financial  position of Stanley
Furniture  Company,  Inc. at December 31, 2000 and 1999,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United  States of  America.  In  addition,  in our  opinion,  the  financial
statement  schedule listed in the  accompanying  index presents  fairly,  in all
material  respects,  the  information set forth therein when read in conjunction
with the related financial statements.  These financial statements and financial
statement  schedule are the  responsibility  of the  Company's  management;  our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial  statement  schedule  based on our audits.  We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United  States of America,  which  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.


                                                      PricewaterhouseCoopers LLP



Richmond, Virginia
January 22, 2001















<PAGE>

<TABLE>

                         STANLEY FURNITURE COMPANY, INC.
                                 BALANCE SHEETS
                        (in thousands, except share data)
<CAPTION>
                                                                               December 31,
                                                                        -------------------------
                                                                          2000             1999
                                                                        --------         --------
<S>                                                                    <C>             <C>
ASSETS
Current assets:
  Cash ..........................................................       $  1,825         $  3,597
  Accounts receivable, less allowances of $2,230 and $2,050......         33,224           32,133
  Inventories:
    Finished goods...............................................         30,521           22,393
    Work-in-process..............................................          9,507            8,432
    Raw materials................................................         14,395           12,755
                                                                        --------         --------
      Total inventories..........................................         54,423           43,580

  Prepaid expenses and other current assets......................            568            1,011
  Deferred income taxes..........................................          2,514            2,463
                                                                        --------         --------
    Total current assets.........................................         92,554           82,784

Property, plant and equipment, net...............................         70,455           72,100
Goodwill, less accumulated amortization of $4,032 and $3,696.....          9,408            9,744
Other assets.....................................................          6,789            5,894
                                                                        --------         --------
    Total assets.................................................       $179,206         $170,522
                                                                        ========         ========

LIABILITIES
Current liabilities:
  Current maturities of long-term debt...........................       $  6,714         $  5,236
  Accounts payable...............................................         19,507           25,836
  Accrued salaries, wages and benefits...........................         10,779           10,864
  Other accrued expenses.........................................          1,795            2,317
                                                                        --------         --------
    Total current liabilities....................................         38,795           44,253

Long-term debt, exclusive of current maturities..................         45,455           33,168
Deferred income taxes............................................         10,860           11,072
Other long-term liabilities......................................          4,619            2,456
                                                                        --------         --------
  Total liabilities..............................................         99,729           90,949
                                                                        --------         --------

STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000 shares authorized,
   6,596,436 and 7,113,655 shares issued and outstanding.........            132              142
Capital in excess of par value...................................         18,160           35,064
Retained earnings................................................         63,907           44,367
Stock option loans...............................................         (2,722)
                                                                        --------         --------
  Total stockholders' equity.....................................         79,477           79,573
                                                                        --------         --------
     Total liabilities and stockholders' equity..................       $179,206         $170,522
                                                                        ========         ========

</TABLE>

                   The accompanying notes are an integral part
                          of the financial statements.


<PAGE>

<TABLE>

                         STANLEY FURNITURE COMPANY, INC.
                              STATEMENTS OF INCOME
                      (in thousands, except per share data)

<CAPTION>
                                                                      For the Years Ended
                                                                          December 31,
                                                          -------------------------------------------
                                                            2000             1999              1998
                                                          --------         --------          --------
<S>                                                       <C>              <C>               <C>
Net sales........................................         $283,092         $264,717          $247,371

Cost of sales....................................          214,499          196,631           186,931
                                                          --------         --------          --------

  Gross profit...................................           68,593           68,086            60,440

Selling, general and administrative expenses.....           33,656           33,796            32,496
                                                          --------         --------          --------

  Operating income...............................           34,937           34,290            27,944

Other expense (income), net......................              (82)             388               411
Interest expense.................................            4,003            3,478             4,164
                                                          --------         --------          --------

  Income before income taxes.....................           31,016           30,424            23,369

Income taxes.....................................           11,476           11,211             8,886
                                                          --------         --------          --------

  Net income.....................................         $ 19,540         $ 19,213          $ 14,483
                                                          ========         ========          ========

Earnings per share:

  Basic..........................................         $   2.76         $   2.70          $   2.07
                                                          ========         ========          ========
  Diluted........................................         $   2.63         $   2.47          $   1.82
                                                          ========         ========          ========

Weighted average shares outstanding:

  Basic...........................................           7,076            7,119             7,008
                                                          ========         ========          ========
  Diluted.........................................           7,429            7,770             7,963
                                                          ========         ========          ========

</TABLE>









                   The accompanying notes are an integral part
                          of the financial statements.



<PAGE>

<TABLE>

                         STANLEY FURNITURE COMPANY, INC.
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
        For each of the three years in the period ended December 31, 2000
                                 (in thousands)


<CAPTION>

                                                    Common Stock        Capital in                   Stock
                                                --------------------     Excess of    Retained      Option
                                                Shares        Amount     Par Value    Earnings       Loans
                                                ------        ------     ---------    --------      ------
<S>                                             <C>           <C>       <C>          <C>           <C>
Balance at January 1, 1998................       6,866         $137      $37,439      $10,671

Purchase and retirement of stock..........        (315)          (6)      (5,547)

Issuance of stock to the Stanley
  Retirement Plan.........................         103            2        1,872

Compensation expense and stock issuance
  related to the executive loan plan......         100            2          131

Exercise of stock options.................         316            6        3,178

Net income................................                                             14,483
                                                 -----         ----      -------      -------       ------

  Balance at December 31, 1998............       7,070          141       37,073       25,154

Purchase and retirement of stock..........        (227)          (4)      (4,704)

Exercise of stock options.................         271            5        2,695

Net income................................                                             19,213
                                                 -----         ----      -------      -------       -------

  Balance at December 31, 1999............       7,114          142       35,064       44,367

Purchase and retirement of stock..........        (870)         (17)     (19,739)

Exercise of stock options.................         352            7        2,835                    $(3,078)

Stock option loan payments................                                                              356

Net income................................                                             19,540
                                                 -----         ----      -------      -------       -------

  Balance at December 31, 2000............       6,596         $132      $18,160      $63,907       $(2,722)
                                                 =====         ====      =======      =======       ========

</TABLE>
                   The accompanying notes are an integral part
                          of the financial statements.



<PAGE>
<TABLE>


                         STANLEY FURNITURE COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<CAPTION>
                                                                     For the Years Ended
                                                                         December 31,
                                                          -------------------------------------------
                                                            2000             1999              1998
                                                            ----             ----              ----
<S>                                                      <C>              <C>               <C>
Cash flows from operating activities:

  Cash received from customers..................          $281,949         $261,566          $245,492
  Cash paid to suppliers and employees..........          (255,058)        (220,642)         (209,030)
  Interest paid.................................            (4,013)          (3,527)           (4,228)
  Income taxes paid, net........................           (11,033)          (9,620)           (7,211)
                                                          --------         --------          --------

    Net cash provided by operating activities...            11,845           27,777            25,023
                                                          --------         --------          --------

Cash flows from investing activities:

  Capital expenditures..........................            (8,768)         (22,866)           (6,680)
  Other, net....................................                42             (157)              191
                                                          --------         --------          --------

    Net cash used by investing activities.......            (8,726)         (23,023)           (6,489)
                                                          --------         --------          --------

Cash flows from financing activities:

  Purchase and retirement of common stock.......           (19,754)          (4,708)           (5,553)
  Repayment of senior notes.....................            (5,236)          (5,135)           (5,086)
  Proceeds from (repayment of) revolving
    credit facility, net........................            19,001                             (3,952)
  Proceeds from exercise of stock options.......               459            1,299             1,556
  Other, net....................................               639              596               536
                                                          --------         --------          --------

    Net cash used by financing activities.......            (4,891)          (7,948)          (12,499)
                                                          --------         --------          --------

Net increase (decrease) in cash.................            (1,772)          (3,194)            6,035
Cash at beginning of year.......................             3,597            6,791               756
                                                          --------         --------          --------

  Cash at end of year...........................          $  1,825         $  3,597          $  6,791
                                                          ========         ========          ========



</TABLE>


                   The accompanying notes are an integral part
                          of the financial statements.



<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies

Organization and Basis of Presentation
      Stanley Furniture Company,  Inc. (the "Company") is a leading designer and
manufacturer of wood furniture exclusively targeted at the upper-medium price
range of the residential market.

      The Company operates in one business  segment.  Substantially all revenues
result from the sale of residential furniture products. Substantially all of the
Company's trade accounts receivable are due from retailers in this market, which
consists of a large number of entities with a broad geographical dispersion.

Revenue Recognition
      Revenue is  recognized  upon  shipment  of product at which time risks and
rewards of ownership transfer to the buyer.

Inventories
      Inventories  are  valued  at the  lower  of cost or  market.  Cost for all
inventories is determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment
      Depreciation  of  property,  plant and  equipment  is  computed  using the
straight-line  method based upon the estimated  useful  lives.  Gains and losses
related to dispositions and retirements are included in income.  Maintenance and
repairs  are  charged  to income  as  incurred;  renewals  and  betterments  are
capitalized.

Capitalized Software Cost
      The Company amortizes certain purchased  computer software costs using the
straight-line  method over the  economic  lives of the related  products  not to
exceed five years.  Unamortized  cost at December 31, 2000 and 1999 was $579,000
and $815,000, respectively.

Goodwill and Long-lived Assets
      Goodwill is being  amortized on a straight-line  basis over 40 years.  The
Company  continually  evaluates the potential  impairment of long-lived  assets,
including  goodwill,  on the  basis  of  whether  the  carrying  value  is fully
recoverable from projected, undiscounted net cash flows.

Income Taxes
      Deferred income taxes are determined  based on the difference  between the
financial statement and income tax bases of assets and liabilities using enacted
tax  rates in  effect in the years in which  the  differences  are  expected  to
reverse.  Deferred  tax  expense  represents  the  change  in the  deferred  tax
asset/liability  balance.  Income tax  credits are  reported  as a reduction  of
income tax expense in the year in which the credits are generated.




<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1.    Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments
      The  fair  value  of the  Company's  long-term  debt  is  estimated  using
discounted cash flow analysis based on the incremental borrowing rates currently
available  to the  Company  for loans  with  similar  terms and  maturities.  At
December 31, 2000, the fair value  approximated  the carrying  amount.  The fair
value of trade receivables, trade payables and letters of credit approximate the
carrying amount because of the short maturity of these instruments.

Pension Plans
      The Company's  funding  policy is to  contribute  to all  qualified  plans
annually  an  amount  equal to the  normal  cost and a portion  of the  unfunded
liability, but not to exceed the maximum amount that can be deducted for federal
income tax purposes.

Earnings per Common Share
      Basic earnings per share is computed based on the average number of common
shares outstanding.  Diluted earnings per share reflects the increase in average
common  shares  outstanding  that would  result  from the  assumed  exercise  of
outstanding stock options, calculated using the treasury stock method.

Stock Options
      The Company applies  Accounting  Principles  Board Opinion No. 25 in
accounting for stock options and discloses the fair value of options granted as
permitted by Statement of Financial Accounting Standards No. 123.

Use of Estimates
      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying  notes.  Changes in such estimates may affect  amounts  reported in
future periods.
<TABLE>

2.    Property, Plant and Equipment
<CAPTION>
                                                     Depreciable
                                                        lives                 (in thousands)
                                                      (in years)           2000             1999
                                                       --------            ----             ----
<S>                                                    <C>             <C>                <C>
      Land and buildings.........................      20 to 50         $ 41,445           $35,871
      Machinery and equipment....................       5 to 12           75,869            62,120
      Office furniture and equipment.............       3 to 10            1,829             1,732
      Construction in progress...................                            610            15,528
                                                                        --------           -------
        Property, plant and equipment, at cost...                        119,753           115,251
      Less accumulated depreciation..............                         49,298            43,151
                                                                        --------           -------
        Property, plant and equipment, net.......                       $ 70,455           $72,100
                                                                        ========           =======
</TABLE>




<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>

 3.    Long-Term Debt
                                                                              (in thousands)
<CAPTION>
                                                                           2000           1999
                                                                           ----           ----
     <S>                                                                <C>            <C>
      7.28% Senior notes due March 15, 2004..................            $17,143        $21,429
      7.57% Senior note due June 30, 2005....................              6,025          6,975
      7.43% Senior notes due November 18, 2007...............             10,000         10,000
      Revolving credit facility..............................             19,001
                                                                         -------        -------
        Total................................................             52,169         38,404
      Less current maturities................................              6,714          5,236
                                                                         -------        -------
        Long-term debt, exclusive of current maturities......            $45,455        $33,168
                                                                         =======        =======
</TABLE>

      In March  2000,  the  Revolving  Credit  Facility  was amended to increase
available  borrowings  from $25  million to $35  million  through  August  2002,
automatically  renewable  thereafter for one year periods  unless  terminated by
either party.  Interest under the facility is payable  monthly at prime (9.5% on
December 29, 2000) or, at the Company's option,  the reserve adjusted LIBOR plus
 .75% per annum (6.56% on December 29,  2000).  The Company  utilizes  letters of
credit to  collateralize  certain  insurance  policies and inventory  purchases.
Outstanding  letters  of credit at  December  31,  2000  were $1.6  million.  At
December 31, 2000,  $14.4 million of additional  borrowings were available under
the revolving credit facility.

      The  above  loan  agreements  require  the  Company  to  maintain  certain
financial covenants.  The Company's ability to pay dividends with respect to the
common  stock  is  restricted  to  $25.0  million  plus  50%  of  the  Company's
consolidated  net  earnings,  adjusted  for net cash  proceeds  received  by the
Company  from the sale of its stock and the amount of payments  for  redemption,
purchase or other  acquisition  of its capital  stock,  subsequent to January 1,
1999.  At December  31,  2000,  these  covenants  limit funds  available  to pay
dividends and repurchase the Company's common stock to $21.9 million.

      Annual debt service requirements are $6.7 million in 2001, $6.8 million in
2002, $6.9 million in 2003, $7.0 million in 2004 and $2.8 million in 2005.

4.    Income Taxes

<TABLE>
      The provision for income taxes consists of (in thousands):
<CAPTION>

                                                               2000              1999              1998
                                                               ----              ----              ----
        <S>                                                  <C>               <C>               <C>
         Current:
           Federal...................................         $10,623           $10,435           $8,558
           State.....................................           1,116               881            1,292
                                                              -------           -------           ------
             Total current...........................          11,739            11,316            9,850
                                                              -------           -------           ------
         Deferred:
           Federal...................................            (233)              (93)            (852)
           State.....................................             (30)              (12)            (112)
                                                              -------           -------           ------
             Total deferred..........................            (263)             (105)            (964)
                                                              -------           -------           ------
               Income taxes..........................         $11,476           $11,211           $8,886
                                                              =======           =======           ======
</TABLE>


<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4.    Income Taxes (continued)
<TABLE>

      A reconciliation  of the difference  between the federal  statutory income
tax rate and the effective income tax rate follows:

<CAPTION>
                                                               2000              1999              1998
                                                               ----              ----              ----
<S>                                                            <C>               <C>               <C>
         Federal statutory rate......................          35.0%             35.0%             35.0%
         State taxes, net of federal benefit.........           2.3               2.4               3.3
         Goodwill....................................            .4                .4                .5
         Life insurance..............................           (.6)              (.5)              (.6)
         Tax savings from foreign sales
           corporation...............................           (.3)              (.3)              (.2)
         Other, net..................................            .2               (.1)
                                                              -----              ----              ----
           Effective income tax rate.................          37.0%             36.9%             38.0%
                                                               ====              ====              ====
</TABLE>
<TABLE>

      The income tax effects of temporary differences that comprise deferred tax
assets and liabilities at December 31 follow (in thousands):
<CAPTION>
                                                                          2000             1999
                                                                          ----             ----
<S>                                                                     <C>              <C>
         Current deferred tax assets (liabilities):
           Accounts receivable..................................         $   568          $   497
           Inventory............................................             (23)              48
           Employee benefits....................................           1,944            1,903
           Other accrued expenses...............................              25               15
                                                                         -------          -------
             Net current deferred tax asset.....................         $ 2,514          $ 2,463
                                                                         =======          =======

         Noncurrent deferred tax liabilities:
           Property, plant and equipment........................         $ 9,570          $10,201
           Employee benefits....................................           1,290              871
                                                                         -------          -------
             Net noncurrent deferred tax liability..............         $10,860          $11,072
                                                                         =======          =======
</TABLE>

5.    Stockholders' Equity

        The Company used $19.8 million of cash to purchase 869,400 shares of its
stock on the open  market at an average  price of $22.72 in 2000.  For the three
years ending  December 31, 2000,  the Company has used $30.0  million of cash to
purchase 1.4 million shares of its common stock on the open market at an average
price of $21.27.  At December 31, 2000,  approximately  $10.0 million remains of
the Board of  Directors  authorization  to  repurchase  shares of the  Company's
common stock.

      In 1998, the Company  contributed 103,400 shares of its common stock, with
a fair value of $1.9 million, to the Stanley Retirement Plan.

      The Company effected a two-for-one stock split, distributed in the form of
a stock dividend on May 15, 1998, to  stockholders of record on May 1, 1998. All
related amounts have been retroactively adjusted to reflect the stock split.



<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5.    Stockholders' Equity (continued)

      In addition to its common stock, the Company's authorized capital includes
1,000,000 shares of "blank check" preferred stock.  None was outstanding  during
the three years ended December 31, 2000. The Board of Directors is authorized to
issue  such  stock in series and to fix the  designation,  powers,  preferences,
rights,  limitations and restrictions with respect to any series of such shares.
Such "blank check" preferred stock may rank prior to common stock as to dividend
rights,  liquidation preferences or both, may have full or limited voting rights
and may be convertible into shares of common stock.

<TABLE>
      Basic and diluted  earnings per share are  calculated  using the following
share data (in thousands):
<CAPTION>

                                                             2000          1999           1998
                                                             ----          ----           ----
<S>                                                         <C>           <C>            <C>
        Weighted average shares outstanding
            for basic calculation....................        7,076         7,119          7,008
        Effect of stock options......................          353           651            955
                                                             -----         -----          -----
            Weighted average shares outstanding
                 for diluted calculation.............        7,429         7,770          7,963
                                                             =====         =====          =====
</TABLE>

6.  Employee Stock Plans

      The Company's stock option plans provide for the granting of stock options
up to an  aggregate of 2,400,000  shares of common stock to key  employees.  The
exercise  price  may not be less  than the fair  market  value of the  Company's
common stock on the grant date.  Granted options vest 20% annually.  At December
31, 2000, 605,002 shares were available for grant.
<TABLE>

      Activity for the three years ended December 31, 2000 follows:
<CAPTION>

                                                                        Number         Weighted-Average
                                                                       of shares        Exercise Price
                                                                       ---------       ----------------
<S>                                                                   <C>                   <C>
         Outstanding at January 1, 1998.......................         1,343,670             $ 4.95
           Lapsed.............................................           (36,400)              7.43
           Exercised..........................................          (316,392)              4.95
           Granted............................................            43,000              17.75
                                                                       ---------

         Outstanding at December 31, 1998.....................         1,033,878               5.47
           Lapsed.............................................            (5,000)              5.73
           Exercised..........................................          (270,762)              4.80
           Granted............................................             5,700              19.13
                                                                       ---------

         Outstanding at December 31, 1999.....................           763,816               5.82
           Lapsed.............................................            (5,000)             18.75
           Exercised..........................................          (352,352)              4.98
           Granted............................................           400,000              24.88
                                                                       ---------
         Outstanding at December 31, 2000.....................           806,464             $15.56
                                                                       =========
</TABLE>



                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6.  Employee Stock Plans (continued)
<TABLE>

      Summarized information regarding stock options outstanding and exercisable
at December 31, 2000 follows:

<CAPTION>

                                               Outstanding                          Exercisable
                                     -------------------------------             -------------------
              Range of                           Average      Average                         Average
           Exercise Price            Shares        Life        Price             Shares        Price
           --------------            -------      ------       -----             -------       -----
<S>                                 <C>            <C>        <C>               <C>           <C>
              Up to $7               330,764        4.6        $ 4.7             330,764       $ 4.7
              $7 to $10               32,000        6.0          8.5              32,000         8.5
             $10 to $20               43,700        7.8         17.7              27,280        17.5
             $20 to $30              400,000       10.0         24.9              92,000        25.0
                                     -------       ----        -----             -------       -----
                                     806,464        7.5        $15.6             482,044       $ 9.5
                                     =======       ====        =====             =======       =====
</TABLE>

      The  estimated  per share  weighted-average  fair  value of stock  options
granted during 2000, 1999 and 1998 was $15.86, $12.73 and $11.78,  respectively,
on the date of grant. A risk-free interest rate of 5.0%, 6.5% and 4.7% for 2000,
1999 and 1998, respectively,  and a 50% volatility rate with an expected life of
10 years was assumed in estimating the fair value for all three years.
<TABLE>

      The following table summarizes the pro forma effects assuming compensation
cost for such awards had been recorded  based upon the estimated  fair value (in
thousands, except per share data):
<CAPTION>

                                                   2000                     1999                   1998
                                            -------------------     --------------------    -------------------
                                               As         Pro          As          Pro         As         Pro
                                            Reported     Forma      Reported      Forma     Reported     Forma
<S>                                          <C>        <C>          <C>         <C>         <C>        <C>
Net income..........................         $19,540    $18,661      $19,213     $18,902     $14,483    $14,175
Basic earnings per share............            2.76       2.64         2.70        2.65        2.07       2.02
Diluted earnings per share..........            2.63       2.52         2.47        2.44        1.82       1.79
</TABLE>

      During   2000,  the  Company  loaned,  in  a  non-cash   transaction,   an
 officer/director  $2.6  million to  purchase  330,420  shares of the  Company's
 common stock. This recourse note, is collaterized by the common stock purchased
 and is payable  on April 19,  2005,  including  accrued  interest  at 6.71% per
 annum.














                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 7.   Employee Benefit Plans

Defined Contribution Plan

      The Company maintains a defined  contribution plan covering  substantially
all of its  employees  and  makes  discretionary  matching  and  profit  sharing
contributions.  The total plan cost, including employer contributions,  was $1.6
million in 2000 and $1.5 million in both 1999 and 1998.

Pension Plans
<TABLE>

      Benefits do not accrue under the Company's  pension plans after 1995.  The
financial status of the plans at December 31 follows (in thousands):
<CAPTION>
                                                               2000                             1999
                                                   ---------------------------        ------------------------
                                                    Stanley           Supple-          Stanley        Supple-
                                                   Retirement          mental         Retirement       mental
                                                      Plan              Plan             Plan           Plan
                                                     -------           -------          -------        -------
<S>                                                 <C>               <C>              <C>            <C>
Change in benefit obligation:
   Beginning benefit obligation...............       $14,539           $ 1,396          $17,963        $ 1,444
   Interest cost..............................         1,131               101            1,177             97
   Actuarial loss (gain)......................           588                86           (3,019)          (111)
   Benefits paid..............................        (2,358)              (42)          (2,740)           (34)
   Settlement cost............................           507                              1,158
                                                     -------           -------          -------        -------
       Ending benefit obligation..............        14,407             1,541           14,539          1,396
                                                     -------           -------          -------        -------
Change in plan assets:
   Beginning fair value of plan assets........        18,065                             19,028
   Actual return on plan assets...............           851                              1,777
   Employer contributions.....................                              42                              34
   Benefits paid..............................        (2,358)              (42)          (2,740)           (34)
                                                     -------           -------          -------        -------
       Ending fair value of plan assets.......        16,558                             18,065
                                                     -------           -------          -------        -------
   Funded status..............................         2,151            (1,541)           3,526         (1,396)
Unrecognized loss (gain)......................         3,480               (25)           2,450           (111)
                                                     -------           -------          -------        -------
    Prepaid (accrued) pension costs...........       $ 5,631           $(1,566)         $ 5,976        $(1,507)
                                                     =======           =======          =======        =======
</TABLE>

      At  December  31,  2000,  and 1999,  the  Stanley  Retirement  Plan assets
included  Company  stock with a fair  value of $1.7  million  and $1.9  million,
respectively.

<TABLE>
      Components of net periodic pension cost follow (in thousands):

<CAPTION>
                                                            2000              1999              1998
                                                            ----              ----              ----
<S>                                                        <C>               <C>               <C>
         Interest cost..........................           $1,231            $1,274            $1,279
         Expected return on plan assets.........           (1,334)           (1,411)           (1,290)
         Net amortization and deferral..........               57               333               435
                                                           ------            ------            ------
            Net periodic benefit cost...........              (46)              196               424
         Settlement expense.....................              492               409               376
                                                           ------            ------            ------
            Total expense.......................           $  446            $  605            $  800
                                                           ======            ======            ======
</TABLE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7.  Employee Benefit Plans (continued)
<TABLE>

      The assumptions  used as of December 31 to determine the plans' financial
status and pension cost were:

<CAPTION>
                                                            2000              1999              1998
                                                            ----              ----              ----
<S>                                                         <C>               <C>               <C>
         Discount rate for funded status.............       7.60%             8.00%             6.65%
         Discount rate for pension cost..............       8.00%             6.65%             7.00%
         Return on assets............................       7.50%             7.50%             7.50%
</TABLE>

Postretirement Benefits Other Than Pensions
<TABLE>

      The Company  provides health care benefits to eligible  retired  employees
between the ages of 55 and 65 and provides life  insurance  benefits to eligible
retired  employees  from age 55 until  death.  The  plan's  financial  status at
December 31 follows (in thousands):
<CAPTION>
                                                                          2000              1999
                                                                         -------           -------
<S>                                                                     <C>              <C>
         Change in benefit obligation:
           Beginning benefit obligation.........................         $ 2,911          $ 3,568
           Service cost.........................................              51               45
           Interest cost........................................             234              212
           Actuarial (gain) loss................................             436             (552)
           Plan participants' contributions.....................             156              125
           Benefits paid........................................            (636)            (487)
                                                                         -------          -------
               Ending benefit obligation........................           3,152            2,911
                                                                         -------          -------
         Change in plan assets:
           Beginning fair value of plan assets..................
           Employer contributions...............................             480              362
           Plan participants' contributions.....................             156              125
           Benefits paid........................................            (636)            (487)
                                                                         -------          -------
               Ending fair value of plan assets.................
                                                                         -------          -------
         Funded status..........................................          (3,152)          (2,911)
         Unrecognized net loss..................................             898              487
         Unrecognized transition obligation.....................           1,564            1,694
                                                                         -------          -------
           Accrued benefit cost.................................         $  (690)         $  (730)
                                                                         =======          =======
</TABLE>
<TABLE>

      Components   of  net  periodic   postretirement   benefit  cost  were  (in
thousands):
<CAPTION>

                                                                  2000             1999            1998
                                                                  ----             ----            ----
<S>                                                               <C>              <C>             <C>
      Service cost....................................            $ 51             $ 45            $ 44
      Interest cost...................................             234              212             239
      Amortization of transition obligation...........             130              130             130
      Amortization and deferral.......................              25               32              41
                                                                  ----             ----            ----
            Net periodic postretirement benefit cost..            $440             $419            $454
                                                                  ====             ====            ====
</TABLE>




                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 7.   Employee Benefit Plans (continued)

      The  weighted-average  discount  rates used in  determining  the actuarial
present value of the projected  benefit  obligation were 7.60%,  8.00% and 6.65%
for 2000,  1999 and 1998,  respectively.  The rate of increase in future  health
care benefit cost used in determining the obligation for 2000 was 7.5% gradually
decreasing to 5.5%  beginning in 2004,  for 1999 was 8% gradually  decreasing to
5.5%  beginning  in 2004  and  for  1998  was 9%  gradually  decreasing  to 5.5%
beginning in 2004.

      An  increase or decrease in the assumed health care cost trend rate of one
percentage point in each future year would affect the accumulated postretirement
benefit obligation at December 31, 2000, by approximately $80,000 and the annual
postretirement benefit cost by approximately $13,000.

Deferred Compensation

     The Company has a deferred  compensation  plan, funded with life insurance
policies,  which permits certain management employees to defer portions of their
compensation and earn a fixed rate of return. The accrued  liabilities  relating
to this plan of $1.5  million and $1.4  million at  December  31, 2000 and 1999,
respectively,  are  included in accrued  salaries,  wages and benefits and other
long-term  liabilities.  The cash  surrender  value,  net of  policy  loans,  is
included in other assets.

 8.   Leases

      The Company  leases  showroom  space and certain other  equipment.  Rental
expenses charged to operations were $1.6 million,  $1.5 million and $1.2 million
in 2000,  1999  and  1998,  respectively.  Future  minimum  lease  payments  are
approximately as follows: 2001 - $970,000; 2002 - $743,000; 2003 - $536,000; and
2004 - $476,000.






<PAGE>


                         STANLEY FURNITURE COMPANY, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>

9.    Supplemental Cash Flow Information
                                                                               (in thousands)
<CAPTION>
                                                                   2000             1999              1998
                                                                   ----             ----              ----
<S>                                                               <C>              <C>               <C>
      Net income............................................      $19,540          $19,213           $14,483
      Adjustments to reconcile net income to net cash
        provided by operating activities:
         Depreciation.......................................        7,546            5,801             5,328
         Amortization.......................................          595              546               447
         Deferred income taxes..............................         (263)            (105)             (964)
         Other, net.........................................           86              140               555
         Changes in assets and liabilities:
           Accounts receivable..............................       (1,091)          (2,992)           (1,714)
           Inventories......................................      (10,842)           2,933              (784)
           Prepaid expenses and other current assets........       (1,852)            (201)              315
           Accounts payable.................................       (3,629)           1,299             3,673
           Accrued salaries, wages and benefits.............         (999)          (1,075)            2,125
           Other accrued expenses...........................          564            1,710             1,760
           Other assets.....................................           27               40                36
           Other long-term liabilities......................        2,163              468              (237)
                                                                  -------          -------          --------
             Net cash provided by operating activities......      $11,845          $27,777          $ 25,023
                                                                  =======          =======          ========
</TABLE>



10.   Quarterly Results of Operations (Unaudited)
<TABLE>
<CAPTION>

                                                            (in thousands, except per share data)
      2000 Quarters:                                  First         Second         Third         Fourth
                                                      -----         ------         -----         ------
<S>                                                  <C>            <C>           <C>            <C>
      Net sales............................          $70,973        $72,118       $71,440        $68,561
      Gross profit.........................           17,350         17,808        17,492         15,943
      Net income...........................            5,049          5,111         5,065          4,313
      Net income per share:
         Basic.............................          $   .71        $   .70       $   .71        $   .64
         Diluted...........................              .66            .67           .68            .61

                                                            (in thousands, except per share data)
      1999 Quarters:                                  First         Second         Third         Fourth
                                                      -----         ------         -----         ------
      Net sales............................          $63,661        $63,384       $65,319        $72,353
      Gross profit.........................           16,046         16,444        17,116         18,480
      Net income...........................            4,188          4,395         4,957          5,674
     Net income per share:
         Basic.............................          $   .59        $   .62       $   .69        $   .80
         Diluted...........................              .54            .56           .64            .74

</TABLE>

                                       -----------------------------------











                         STANLEY FURNITURE COMPANY, INC.
                     SCHEDULE II - VALUATION AND QUALIFYING
               ACCOUNTS For each of the Three Years in the Period
                             Ended December 31, 2000
                                 (In thousands)


<TABLE>
<CAPTION>


Column A                         Column B     Column C     Column D    Column E
--------------------------------------------------------------------------------
                                              Charged
                                 Balance at  (Credited)                 Balance
                                 Beginning   to Costs &                at End of
Descriptions                     of Period   Expenses      Deductions   Period

2000
<S>                                <C>          <C>          <C>        <C>
    Doubtful receivables....       $1,177       $549         $449(a)    $1,277
    Discounts, returns,
      and allowances........          873         80(b)                    953
                                   ------       ----         ----       ------
                                   $2,050       $629         $449       $2,230
                                   ======       ====         ====       ======


1999
    Doubtful receivables....       $1,163       $270         $256(a)    $1,177
    Discounts, returns,
      and allowances........          743        130(b)                    873
                                   ------       ----         ----       ------
                                   $1,906       $400         $256       $2,050
                                   ======       ====         ====       ======


1998
    Doubtful receivables....       $1,116       $435          388(a)    $1,163
    Discounts, returns,
      and allowances........          779        (36)(b)                   743
                                   ------       ----         ----       ------
                                   $1,895       $399         $388       $1,906
                                   ======       ====         ====       ======


</TABLE>

------------------------------------
(a)  Uncollectible receivables written off, net of recoveries.
(b)  Represents net increase (decrease) in the reserve.










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