<PAGE>
                                      
                                        UNITED STATES             
                              SECURITIES AND EXCHANGE COMMISSION
                                            Washington, D.C.  20549
                                                   FORM 10-K
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE         
     SECURITIES EXCHANGE ACT OF 1934    [FEE REQUIRED]  

       For the fiscal year ended December 31, 1997
                                                      OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
       SECURITIES EXCHANGE ACT OF 1934    [NO FEE REQUIRED]  

For the transition period from              to             

                          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 20, 1998:
$95.1 million

Indicate the number of shares outstanding of each of the
Registrant's classes of common stock as of January 27, 1998:

Common Stock, par value $.02 per share                3,432,759   
       (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 30, 1998 are incorporated by reference into Part III.

































<PAGE>


                                               TABLE OF CONTENTS


Part I                                                       Page


      Item 1      Business.............................       3   
      Item 2      Properties...........................       8   
      Item 3      Legal Proceedings....................       8   
      Item 4      Submission of Matters to a Vote
                    of Security Holders................       8   
    
Part II


      Item 5      Market for Registrant's Common Equity
                    and Related Stockholder Matters....       11
      Item 6      Selected Financial Data..............       12
      Item 7      Management's Discussion and Analysis
                    of Financial Condition and Results 
                    of Operations......................       14
      Item 8      Financial Statements and
                    Supplementary Data.................       17
      Item 9      Changes in and Disagreements with
                    Accountants on Accounting and 
                    Financial Disclosure...............       17

Part III

      Items 10 through 13..............................       18

Part IV

      Item 14     Exhibits, Financial Statement 
                    Schedule and Reports on Form 8-K...       18

      Signatures.......................................       24 

      Index to Financial Statements and Schedule.......      F-1<PAGE>
<PAGE>
                                        Stanley Furniture Company,
Inc.

                                                    PART I

Item 1.     Business

General

     The Company is a leading designer and manufacturer of
residential 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 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 bedroom, dining room, youth bedroom (Young
AmericaTM), living room tables, entertainment centers, home office
(The OfficeTM), and upholstery.  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 furniture resource in the upper-medium price range.  The
Company intends to continue expanding its product styles with
particular emphasis on upholstery, 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.  To emphasize this comparison the
Company uses the marketing theme, "We Just Look Expensive."










     The Company provides wood 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

   Bedroom.......................................        25       
   Dining room...................................        22       
   Youth bedroom (Young America).................        16       
   Occasional:
      Living room tables.........................        19       
      Entertainment centers......................        13       
      Home office (The Office)...................         5       
 

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

     The Company introduced upholstered furniture products in the
fall of 1994, allowing the Company to expand its product offerings
in the upper-medium price range.  The Company's entry into the
upholstery business takes advantage of its existing distribution
network without requiring a significant capital investment.  The
Company's upholstered products consist mainly of stationary sofas,
sleepers, love seats, and chairs.  Since initial introduction, the
Company has expanded its upholstered products and currently offers
a variety of frames and approximately 500 fabric selections.

     The Company designs and develops new product styles each year
to replace discontinued items or styles and, if desired, 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 and national and regional chain stores.  Representative
customers include Sears, J.C. Penney, Rhodes, Rooms To Go, Breuners
Home Furnishings, Robb & Stucky, Nebraska Furniture Mart,
Furnitureland South, and Haverty's.  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 merchandising 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, a nine-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 over 3,600 customers during the past
twelve months, and approximately 8% of the Company's sales in 1997
were to international customers.  No single customer accounted for
more than ten percent of the Company's sales in 1997.  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 three
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 16.3 days on average during 1997 with average finished goods
inventory turns of 6.2.  Since the Company ships customer orders on
average in less than three weeks, management believes that the size
of its backlog is not necessarily indicative of its long-term
operations.  The Company's backlog of unshipped orders was $34.9
million at December 31, 1997 and $23.6 million at December 31,
1996.

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, metals, frames, filling, and cushioning materials.  The
Company uses a variety of species of lumber, including cherry, oak,
ash, poplar, pine, maple, and mahogany.  The Company's five largest
suppliers accounted for approximately 21% of its purchases in 1997.

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 1996 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.  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, 1997, the Company employed approximately 2,800
associates.  None of the Company's associates is represented by a
labor union.  The Company considers its relations with its
associates to be good.

Patents and 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 patents, trademarks, and licenses,
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 environmental regulations.

     Regulations issued in December 1995 under the Clean Air Act
Amendments of 1990 as part of the National Emission Standards for
Hazardous Air Pollutants program and negotiated into the Furniture
Maximum Achievable Control Technology Standard, requires the
Company to reformulate certain furniture finishes and institute
process and administrative changes to reduce emissions of hazardous
air pollutants.  The Company believes it is in compliance with
these regulations by its use of compliant coatings and by training
its associates in work practice standards.  The Company cannot at
this time estimate the future impact of these standards on the
Company's operations and capital expenditure requirements.


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.


















<PAGE>
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.  The
Company believes its manufacturing facilities are being efficiently
utilized and that it could increase production at its facilities if
required by customer demand.  Each facility is focused on specific
product lines to optimize efficiency.  The Company estimates that
its facilities are presently operating at approximately 90% of
capacity, principally on a one-shift basis.  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.

                                          Approximate    Owned    
                                         Facility Size     or   
        Location         Primary Use     (Square Feet)  Leased

     Stanleytown, VA     Manufacturing      1,660,000   Owned 
                         and Corporate
                         Headquarters          61,000   Owned 
     West End, NC        Manufacturing        470,000   Owned 
     West End, NC        Lumber Yard                    Leased(1)
     Lexington, NC       Manufacturing        635,000   Owned 
     Robbinsville, NC    Manufacturing        540,000   Owned 
     High Point, NC      Showroom              80,000   Leased(2)
                   
(1)  Lease expires May 31, 2007.
(2)  Lease expires October 31, 1999.  Approximately 17,500 square
     feet is subleased.

Item 3.    Legal Proceedings

     None.

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

     None.













<PAGE>

Executive Officers of the Registrant

     The Company's executive officers and their ages as of January
1, 1998 are as follows:
                                  
                                                                  
        Name                Age          Position        
        
Albert L. Prillaman........  52    Chairman, President         
                                    and  Chief Executive
                                    Officer      
Bobby I. Hodges............  60    Senior Vice President-      
                                    Manufacturing
Douglas I. Payne...........  39    Senior Vice President-      
                                    Finance and 
                                    Administration,               
                                    Treasurer and Secretary
William A. Sibbick.........  41    Senior Vice President-    
                                    Sales
Kelly S. Cain..............  43    Senior Vice President-Product  
                                    Development and               
                                    Merchandising
                                    
                        
     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 thereto, Mr.
Prillaman had 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 Main
Street BankGroup Incorporated and First Alert, Inc.

     Bobby I. Hodges has been Senior Vice President-Manufacturing
of the Company since April 1995.  He has been a Vice President
since June 1993.  He was Senior Vice President-Manufacturing of the
Stanley Furniture division from January 1986 until June 1993. 
Prior to that time, Mr. Hodges held various positions related to
manufacturing management since his employment in 1967.

     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.  He was Vice President-Treasurer of the Company from
December 1989 to September 1993. Prior to that time, Mr. Payne held
various financial management positions since his employment 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.  He was Vice
President - Product Development from June 1993 until April 1995.  
He was Vice President-Senior Product Manager of the Stanley
Furniture division from January 1992 until June 1993.  Prior to
that time, Mr. Sibbick was Vice President-Product Manager since his
employment 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.  Prior to that time, Mr.
Cain held various management positions in sales and marketing since
his employment 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 as reported by
Nasdaq.
<TABLE>

                                             High       Low 
<S>                                         <C>       <C>
1997

First Quarter..........................     $26.00    $18.25
Second Quarter.........................      23.50     17.00
Third Quarter..........................      29.75     22.75
Fourth Quarter.........................      29.00     22.75
 

1996

First Quarter..........................     $10.75    $ 8.00
Second Quarter.........................      12.13     10.00
Third Quarter..........................      17.50     10.25
Fourth Quarter.........................      20.75     14.00
</TABLE>


     The quotations reflect interdealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent
actual transactions.  As of January 20, 1998, there were
approximately 1,600 beneficial stockholders.  The Company currently
retains 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 with respect
to the Common Stock is restricted, under certain loan covenants, 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, 1997.  As of December 31, 1997, $5.6 million was
available for the payment of dividends under these restrictions.





<PAGE>
Item 6.     Selected Financial Data
<TABLE>
                                         Years Ended December 31, 
        
                         1997     1996     1995     1994     1993 
   
                           (in thousands, except per share data)
<S>                    <C>      <C>      <C>      <C>      <C>
Income Statement Data:
Net sales..............$211,905 $201,905 $174,179 $184,342 $167,091
Cost of sales:
  From products sold....159,453  153,332  137,621  148,453  134,972
  Business interruption
    insurance (1).......                                    (5,036)
      Gross profit...... 52,452   48,573   36,558   35,889   37,155
Selling, general and admin-
  istrative expenses.....29,949   30,403   26,454   26,483   25,976
Unusual items, net(2)....                    (136)                
    Operating income.....22,503   18,170   10,240    9,406   11,179
Other expense, net.......   276      616      433      444    1,346
Gain on insurance settlement(3)                     (2,379) (2,186)
Interest expense......... 3,538    3,344    3,534    2,969    3,048
  Income from continuing
    operations before income
    taxes................18,689   14,210    6,273    8,372    8,971
Income taxes............. 7,102    5,470    2,384    3,256    3,691
  Income from continuing 
    operations..........$11,587 $  8,740 $  3,889 $  5,116 $  5,280

Basic Earnings Per Share:  
Income from continuing 
    operations..........$  2.76 $   1.85 $    .82 $   1.08 $   1.39
Weighted average shares
  (4)(5)................  4,197    4,722    4,727    4,725    3,792

Diluted Earnings Per Share:
Income from continuing 
  operations............$  2.50 $   1.77 $    .82 $   1.08 $   1.39
Weighted average shares
  (4)(5)................  4,639    4,945    4,727    4,744    3,792

Supplementary Income From Con-
  tinuing Operations Per 
  Share Data-Diluted:
Before non-recurring 
  gain(6)...............$  2.50 $   1.77 $    .82 $    .77 $    .90
Non-recurring gain on
  insurance.............                               .31      .29
  As reported...........$  2.50 $   1.77 $    .82 $   1.08 $   1.19
Weighted average shares
  (7)...................  4,639    4,945    4,727    4,744    4,725
</TABLE>


<PAGE>
Item 6.     Selected Financial Data (continued)
<TABLE>
                                         Years Ended December 31, 
        
                           1997     1996     1995     1994     1993
                             (in thousands, except per share data)
<S>                      <C>     <C>      <C>      <C>      <C>
Balance Sheet Data:
Cash.................... $   756 $  8,126 $    298 $    301 $   200
Inventories.............  45,730   40,239   40,167   39,905  37,684
Working capital.........  41,440   46,225   42,422   42,912  40,833
Total assets............ 143,225  141,510  134,551  124,519 124,859
Long-term debt including
  current maturities(5).  52,577   39,350   41,067   33,395  32,647
Stockholders' equity 
  (4)(5)(8).............  48,247   61,617   54,739   50,830  47,204
</TABLE>
   
(1)  In 1993, the Company recorded $5.0 million of business
interruption insurance replacing the gross profit on lost sales due
to a fire.

(2)   In 1995, the Company recognized a pretax credit of $1.1
million after it was released from a lease obligation at a
previously closed manufacturing facility.  Also included is a
pretax charge for a severance accrual.

(3)   In 1993, a $2.2 million pretax gain was recorded since
insurance proceeds exceeded the book value of leasehold
improvements and equipment destroyed in a fire.  In 1994, the
Company recorded a pretax gain of $2.4 million as part of the final
insurance settlement.  

(4)   In July 1993, the Company completed a public offering of
1,725,000 shares of common stock at $8.50 per share.  The net
proceeds of $13.1 million were used to reduce debt.  

(5)   In 1997, the Company purchased 1,163,201 million shares of
its common stock for a total consideration of $25.3 million. See
Note 5 of the Notes to Financial Statements.  

(6)   Income from continuing operations before insurance related
gains was $3.7 million in 1994 and $4.3 million in 1993.

(7)   The 1993 period includes the effect of pro forma adjustments
assuming the July 1993 public offering of 1,725,000 shares of
common stock occurred at the beginning of the year.

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




<PAGE>

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>
                                             For the Years Ended
                                                 December 31,     
                                         1997       1996     1995
<S>                                     <C>        <C>      <C>   
Net sales...............................100.0%     100.0%   100.0%
Cost of sales........................... 75.3       75.9     79.0
  Gross profit.......................... 24.7       24.1     21.0
Selling, general and administrative
  expenses...............................14.1       15.1     15.2
Unusual items, net.......................                     (.1)
  Operating income.......................10.6        9.0      5.9
Other expenses, net......................  .1         .3       .3
Interest expense......................... 1.6        1.7      2.0
  Income from continuing operations
    before income taxes.................. 8.9        7.0      3.6
Income taxes............................. 3.4        2.7      1.4
  Income from continuing operations...... 5.5%       4.3%     2.2%
</TABLE>

1997 Compared to 1996

     Net sales increased $10.0 million, or 5.0%, for 1997 compared
to 1996.  The increase was due primarily to higher average selling
prices and to a lesser extent higher unit volume.

     Gross profit margin for 1997 increased to 24.7% from 24.1% for
the comparable 1996 period.  The higher gross profit margin was due
primarily to lower raw material costs as a percentage of net sales
and improved operating efficiencies.  However, gross profit margin
declined from 25.2% for the first half of 1997 to 24.4% for the
second half of 1997, due primarily to increased lumber cost.
Management expects this trend to continue into 1998.

     Selling, general and administrative expenses as a percentage
of net sales were 14.1% and 15.1% for 1997 and 1996, respectively. 
These expenses were lower in 1997 due primarily to lower selling
expenses and a reduced provision for bad debts.



     As a result of the above, operating income increased to $22.5
million, or 10.6% of net sales, from $18.2 million, or 9.0% of net
sales, in 1996.

     Interest expense for the 1997 period increased due to higher
debt levels resulting from the Company's June and November 1997
repurchases of its common stock.  Including the December 1996
purchase of 150,000 shares, the Company acquired a total of
1,313,201 shares of its common stock for a total consideration of
$27.6 million.

     The Company's effective income tax rate was 38.0% and 38.5%
for 1997 and 1996, respectively. 


1996 Compared to 1995

     Net sales increased $27.7 million, or 15.9%, for 1996 compared
to 1995.  The increase was due principally to higher unit volume.

     Gross profit margin for 1996 increased to 24.1% from 21.0% for
the comparable 1995 period.  The higher gross profit margin was due
primarily to stabilizing raw material costs, improved operating
efficiencies, and the leveraging of fixed costs due to increased
production levels.

     Selling, general and administrative expenses as a percentage
of net sales were 15.1% and 15.2% for 1996 and 1995, respectively. 
These expenses increased for the 1996 period due principally to (i)
higher selling cost resulting from increased sales and increased
merchandising expenses, (ii) increased compensation expense
pursuant to the Company's incentive compensation plan for key
employees, and (iii) increased provision for bad debts.    

     During the second quarter of 1995, the Company recognized an
unusual item consisting of the net effect of (i) an accrual
reversal as a result of being released from a lease obligation at
its previously closed Waynesboro, Virginia facility and (ii) a
charge for severance resulting from the resignation of a former
officer.

     As a result of the above, operating income for 1996 increased
to $18.2 million, or 9.0% of net sales, from $10.2 million, or 5.9%
of net sales, in 1995.

     The Company's effective income tax rate was 38.5% and 38.0%
for 1996 and 1995, respectively.







Financial Condition, Liquidity and Capital Resources

     In November 1997, the Company issued $10.0 million of 7.43%
senior notes due 2007 in a private placement of debt. The proceeds
were used to purchase 413,201 shares of its common stock from the
ML-Lee Acquisition Fund, L.P. and its affiliates.  In June 1995,
the Company issued a $10.0 million 7.57% senior note due 2005 in a
private placement of debt. The proceeds were used to purchase two
previously leased manufacturing facilities.  

       At December 31, 1997, long-term debt including current
maturities was $52.6 million. Approximately $19.1 million of
additional borrowing capacity was available under a revolving
credit facility.  However, current loan covenants restrict
borrowings to an additional $6.4 million at December 31, 1997,
without obtaining lender consent.  Annual debt service requirements
are $5.1 million in 1998, $9.1 million in 1999, $5.2 million in
2000, $6.7 million in 2001, and $6.8 million in 2002.  The Company
believes that its financial resources are adequate to support its
capital needs and debt service requirements.  

       The Company has and will continue to make certain
investments in its software systems and applications to ensure the
Company is year 2000 compliant.  The financial impact to the
Company has not been and is not anticipated to be material to its
financial position or results of operations in any given year.

Operating Cash Flows

     The Company generated cash from operations of $8.3 million in
1997 compared to $15.3 million in 1996.  The decrease in cash
generated from operations was due primarily to higher payments to
suppliers and employees due to increased production.  Also, cash
was required to fund higher tax payments resulting from higher
taxable income in 1997.  The Company used the cash generated from
operations in 1997 and 1996 to fund capital expenditures, reduce
borrowings and repurchase its common stock.  During 1995, cash
generated from operations of $6.6 million was used to reduce
borrowings under the revolving credit facility and to fund capital
expenditures.
  
Investing Activities

     Net cash used by investing activities was $4.2 million in 1997
compared to $4.0 million and $14.7 million in 1996 and 1995,
respectively.  In the 1995 period, proceeds from the issuance of
senior notes and additional borrowings from the revolving credit
facility were used to purchase two previously leased plant
facilities for $10.5 million.  The 1997 and 1996 expenditures, and
the remaining expenditures for 1995, were primarily for plant and
equipment and other assets in the normal course of business. 





Financing Activities

     Net cash used by financing activities was $11.5 million and
$3.5 million in 1997 and 1996, respectively, compared to cash
provided by financing activities of $8.1 million in 1995.  In 1997,
the purchase of common stock was financed by the private placement
of debt, the revolving credit facility and cash generated from
operations.  In 1996, the purchase of common stock and the
reduction in borrowings were financed by cash generated from
operations.  The 1995 borrowings provided cash for the purchase of
the two previously leased plant facilities and other capital
expenditures.    

Discontinued Operations

     In 1996, the Company was released from a lease obligation
resulting from the purchase and concurrent resale of certain
facilities at a former division, which ceased operations in 1994. 
Accordingly, the Company recorded an after tax gain of $246,000, or
$.05 per share, as a partial reversal of a previous accrual,
representing the final adjustment for the cost of the closure.

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.






















<PAGE>
                                                   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 30, 1998, 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, 1997 and 1996

     Statements of Income - for each of the three years in the    
     period ended December 31, 1997

     Statements of Changes in Stockholders' Equity for each of the 
     three years in the period ended December 31, 1997

     Statements of Cash Flows - for each of the three years in the 
     period ended December 31, 1997

     Notes to Financial Statements

(2)  Financial Statement Schedule:

     Schedule II - Valuation of Qualifying Accounts - for each    
     of the three years in the period ended December 31, 1997

(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 2, 1997, to       
     disclose the repurchase of 413,201 shares of the Company's   
     common stock from the ML-Lee Acquisition Fund, L.P. and      
     its affiliates.



<PAGE>
(c)  Exhibits:
 
 3.1 The Certificate of Incorporation of the Registrant           
     (incorporated by reference to Exhibit 3.1 to the Registrant's 
     Registration Statement on Form S-1, No. 33-7300).

 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).

 3.5 Certificate of Stock Designation dated May 1, 1991 of the    
     Registrant as modified by an Amendment to Certificate of     
     Designation dated May 31, 1991 (incorporated by reference to 
     Exhibit 3.6 to the Registrant's Form 10-K for the year ended 
     December 31, 1991).

 3.6 Certificate of Merger dated as of November 9, 1992           
     (incorporated by reference to Exhibit 3.6 to the Registrant's 
     Statement on Form S-1 No. 33-57432).

 3.7 Certificate of Amendment dated June 30, 1993. (incorporated by

     reference to Exhibit 3.7 to the Registrant's Form 10-K for the

     year ended December 31, 1994).

 4.1 The Certificate of Incorporation and By-laws of the Registrant

     as currently in effect (incorporated by reference to  Exhibits

     3.1 through 3.7 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 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 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 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 filed December 2,   
     1997).

     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 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 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 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 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 for 
      the year ended December 31, 1995).(2)



(2)   Management contract or compensatory plan

<PAGE>
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 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 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, No. 33-7300).(2)

10.9  Stanley 401(k) Retirement Savings Plan, as amended and      
      restated effective January 1, 1996 (incorporated by reference

      to Exhibit 10.9 to the Registrant's Form 10-K for the year  
      ended December 31, 1995).(2)

10.10 Employment Agreement made as of January 1, 1991 between     
      William Cubberley, Jr. and the Registrant (incorporated by  
      reference to Exhibit 10.42 to the Registrant's Form 10-K for 
      the year ended December 31, 1991).(2)

10.11 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 
      for the year ended December 31, 1991).(2)

10.12 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 for the year ended December 31, 1994).

10.13 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 for the 
      year ended December 31, 1995).

10.14 1992 Stock Option Plan (incorporated by reference to        
      Registrant's Registration Statement on Form S-8, No. 33-    
      58396).(2)          
(2)   Management contract or compensatory plan

<PAGE>
    
10.15 1994 Stock Option Plan. (incorporated by reference to Exhibit
      10.18 to the Registrant's Form 10-K for the year ended      
      December 31, 1994).(2) 

10.16 1994 Executive Loan Plan. (incorporated by reference to     
      Exhibit 10.19 to the Registrant's Form 10-K for the year    
      ended December 31, 1994).(2)

10.17 Loan and Stock Purchase Agreement dated as of December 2,   
      1994 by Albert L. Prillaman. (incorporated by reference to  
      Exhibit 10.20 to the Registrant's Form 10-K for the year    
      ended December 31, 1994).(2)

10.18 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 for 
      the quarter ended June 30, 1996).(2)

10.19 Amendment No. 1 to Employment Agreement between C. William  
      Cubberley, Jr. and the Registrant, dated as of June 1, 1996 
      (incorporated by reference to Exhibit 10.2 to the           
      Registrant's Form 10-Q for the quarter ended June 30,       
      1996).(2)
  
10.20 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 for 
      the quarter ended September 29, 1996).

10.21 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 for the quarter  
      ended September 29, 1996).

10.22 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  
      for the quarter ended September 29, 1996).   

10.23 Stock Purchase Agreement, dated as of November 13, 1996,    
      between the Registrant and the Selling Stockholders listed on
      Schedule 1 thereto (incorporated by reference to Exhibit 99.1

      to the Registrant's Registration Statement on Form S-3 No.  
      333-14063).  

               
(2)   Management contract or compensatory plan

<PAGE>

10.24 First Amendment to Loan and Stock Pledge Agreement, dated   
      December 31, 1996, by Albert L. Prillaman (incorporated by
      reference to Exhibit 10.27 to the Registrant's Form 10-K for 
      the year ended December 31, 1996). 

10.25 Stock Purchase Agreement, dated as of June 27, 1997 among the
      Registrant and the Selling Stockholders named therein       
      (incorporated by reference to Exhibit 99.1 to the           
      Registrant's Form 8-K filed July 9, 1997).

10.26 Registration Rights Agreement dated as of November 9, 1992 by
      and among the Registrant, ML-Lee Acquisition Fund, L.P., ML-
      Lee Acquisition Fund II, L.P., ML-Lee Acquisition Fund      
      (Retirement Accounts) II, L.P., Lee Stockholders (as defined 
      therein) and Management Stockholders (as defined therein)   
      (incorporated by reference to Exhibit 4.3 to the Registrant's
      Statement on Form S-1 No. 33-57432).

10.27 Amendment No. 1, dated as of June 27, 1997, to Registration 
      Rights Agreement, dated as of November 9, 1992, by and among 
      the Registrant, ML-Lee Acquisition Fund, L.P., ML-Lee       
      Acquisition Fund II, L.P., ML-Lee Acquisition Fund          
      (Retirement Accounts) II, L.P., Lee Stockholders and Manage- 
      ment Stockholders (incorporated by reference to Exhibit 99.2 
      to the Registrant's Form 8-K filed July 9, 1997).

10.28 Stock Purchase Agreement, dated as of November 11, 1997,    
      among the Company and the Selling Stockholders named therein 
      (incorporated by reference to Exhibit 99.2 to the           
      Registrant's Form 8-K filed December 2, 1997).
    
10.29 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 filed July 9, 1997).

11    Schedule of Computation of Earnings Per Share.(1)

21    Listing of Subsidiaries:

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

23    Consent of Coopers & Lybrand L.L.P.(1)

27    Financial Data Schedule.(1)


                     
(1) Filed herewith

<PAGE>



                                                  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 6, 1998              By:  /s/Albert L. Prillaman
                                   Albert L. Prillaman
                                   Chariman, 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,   February 6, 1998
(Albert L. Prillaman)       and Chief Executive
                            Officer, and Director
                            (Principal Executive
                            Officer)

/s/Douglas I. Payne         Senior Vice President  February 6, 1998
(Douglas I. Payne)          -Finance and
                            Administration,
                            Treasurer and
                            Secretary (Principal
                            Financial and
                            Accounting Officer)

/s/David V. Harkins         Director               February 6, 1998
(David V. Harkins

/s/C. Hunter Boll           Director               February 6, 1998
(C. Hunter Boll)

/s/Edward J. Mack           Director               February 6, 1998
(Edward J. Mack)

/s/T.Scott McIlhenny,Jr.    Director               February 6, 1998
(T.Scott McIlhenny, Jr.)





<PAGE>
                                    STANLEY FURNITURE COMPANY, INC.
                                         ANNUAL REPORT ON FORM 10-K
                               FOR THE YEAR ENDED DECEMBER 31, 1997
                         INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
                                                       





Financial Statements                                        Page

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

Balance Sheets as of December 31, 1997 and 1996...........  F-3
 
Statements of Income for each of the three years
  in the period ended December 31, 1997...................  F-4

Statements of Changes in Stockholders' Equity for each
  of the three years in the period ended 
  December 31, 1997......................................   F-5

Statements of Cash Flows for each of the three years
  in the period ended December 31, 1997...................  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, 1997.......................................  S-1

















                                                      F-1


<PAGE>

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


We have audited the financial statements and financial statement
schedule of Stanley Furniture Company, Inc. listed in the index on
page F-1.  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 in accordance with generally accepted
auditing standards.  Those standards 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.  An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stanley
Furniture Company, Inc. as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.  In addition, in our
opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information
required to be included therein.






                                           Coopers & Lybrand L.L.P.




Richmond, Virginia
January 23, 1998






                                                      F-2

<PAGE>
                                     STANLEY FURNITURE COMPANY, INC
                                                BALANCE SHEETS
                                  (in thousands, except share data)
<TABLE>
                                                                  
                                                   December 31,   
   
                                                1997           1996

<S>                                          <C>            <C> 
ASSETS
Current assets:
  Cash.......................................$    756       $ 8,126
  Accounts receivable, less allowances of 
    $1,895 and $1,945........................  27,427        23,096
  Inventories:
    Finished goods...........................  21,220        20,953
    Work-in-process..........................   6,997         6,142
    Raw materials............................  17,513        13,144
                                               45,730        40,239

  Prepaid expenses and other 
    current assets...........................   1,571           486
  Deferred income taxes......................     770         1,886
    Total current assets.....................  76,254        73,833

Property, plant and equipment, at cost.......  84,545        80,737
  Less accumulated depreciation..............  32,831        28,024
                                               51,714        52,713
Goodwill, less accumulated amortization
  of $3,024 and $2,688.......................  10,416        10,752
Other assets.................................   4,841         4,212
                                             $143,225      $141,510
LIABILITIES 
Current liabilities:
  Current maturities of long-term debt.......$  5,086       $   725
  Accounts payable...........................  18,164        14,630
  Accrued salaries, wages and benefits.......   9,687         9,584
  Other accrued expenses.....................   1,877         2,669
    Total current liabilities................  34,814        27,608

Long-term debt, exclusive of current 
  maturities.................................  47,491        38,625
Deferred income taxes........................  10,448        11,673
Other long-term liabilities..................   2,225         1,987
  Total liabilities..........................  94,978        79,893

STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000 
  shares authorized, 3,432,759 and 
  4,579,042 shares issued and outstanding....      68            91
Capital in excess of par value...............  37,508        62,442
Retained earnings (deficit)..................  10,671         (916)
  Total stockholders' equity.................  48,247        61,617
                                             $143,225      $141,510
</TABLE>
                        The accompanying notes are an integral part
                                    of the financial statements.

                                                      F-3
<PAGE>
                                    STANLEY FURNITURE COMPANY, INC.
                                            STATEMENTS OF INCOME
                              (in thousands, except per share data)

<TABLE>
                                             For the Years Ended
                                                 December 31,     
                                          1997      1996      1995
<S>                                     <C>       <C>      <C>
Net sales...........................    $211,905  $201,905 $174,179

Cost of sales.......................     159,453   153,332  137,621
  
  Gross profit......................      52,452    48,573   36,558

Selling, general and administrative
  expenses..........................      29,949    30,403   26,454
Unusual items, net..................                          (136)

  Operating income .................      22,503    18,170   10,240

Other expense, net..................         276       616      433
Interest expense....................       3,538     3,344    3,534

  Income from continuing operations 
    before income taxes.............      18,689    14,210    6,273

Income taxes........................       7,102     5,470    2,384

Income from continuing operations...      11,587     8,740    3,889


Gain from discontinued operations,
  net of taxes......................                   246        
      Net income....................    $ 11,587  $  8,986  $ 3,889

Basic earnings per share:
  Continuing operations.............    $   2.76  $   1.85  $   .82
  Discontinued operations...........                   .05        
    Net income......................    $   2.76  $   1.90  $   .82
Weighted average shares outstanding.       4,197     4,722    4,727

    
Diluted earnings per share:
  Continuing operations.............    $   2.50  $   1.77  $   .82
  Discontinued operations...........                   .05        
    Net income......................    $   2.50  $   1.82  $   .82
Weighted average shares outstanding.       4,639     4,945    4,727
</TABLE>

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

                                                      F-4
<PAGE>

                                   STANLEY FURNITURE COMPANY, INC.
                    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
  For each of the three years in the period ended December 31, 1997
                                            (in thousands)

<TABLE>                                                         
                                                 Capital       
                                                   in      Retained
                                 Common Stock   Excess of  Earnings
                               Shares   Amount  Par Value (Deficit)
<S>                             <C>      <C>    <C>       <C>
Balance at January 1,
  1995......................    4,727    $94    $64,527   $(13,791)
  
Compensation expense for
  executive loan plan, net..                         20

Net income..................                                 3,889
  Balance at December 31,
    1995....................    4,727     94     64,547     (9,902)

Purchase and retirement
  of common stock...........     (150)    (3)    (2,265)

Compensation expense for
  executive loan plan, net..                        133

Other.......................        2                27

Net income..................                                 8,986
  Balance at December 31,
    1996....................    4,579     91     62,442       (916)

Purchase and retirement
  of common stock...........   (1,163)   (23)   (25,306)

Compensation expense for
  executive loan plan, net..                        133

Exercise of stock options...       17               239

Net income..................                                11,587
  Balance at December 31, 
    1997....................    3,433    $68    $37,508    $10,671
</TABLE>
                     The accompanying notes are an integral part
                                of the financial statements.
                                                     F-5 

<PAGE>
                                    STANLEY FURNITURE COMPANY, INC.
                                           STATEMENTS OF CASH FLOWS
                                                (in thousands)
<TABLE>
                                          For the Years Ended
                                               December 31,       
  
                                        1997       1996       1995 
<S>                                   <C>       <C>       <C>
Cash flows from operating activities:

  Cash received from customers......  $207,590  $200,793  $175,189
  Cash paid to suppliers and 
    employees.......................  (187,346) (176,739) (164,022)
  Interest paid.....................    (3,403)   (3,483)   (3,535)
  Income taxes paid, net............    (8,529)   (5,259)   (1,033)

    Net cash provided by operating
      activities....................     8,312     15,312    6,599 

Cash flows from investing activities:

  Capital expenditures..............    (4,076)    (3,599) (14,225)
  Purchase of other assets..........      (143)      (370)    (467)
  Proceeds from sale of assets......                   13       25
 
    Net cash used by investing 
      activities....................    (4,219)    (3,956) (14,667)

Cash flows from financing activities:

  Purchase and retirement of common 
    stock...........................   (25,329)    (2,268)        
  Issuance of senior notes..........    10,000              10,000
  Repayment of senior note..........      (725)      (650)        
  Proceeds from (repayment of) revolving  
    credit facility, net.............    3,952       (914)  (2,320)
  Other, net.........................      639        304      385 

    Net cash (used) provided  by 
      financing activities...........  (11,463)    (3,528)   8,065

Net (decrease) increase in cash......   (7,370)     7,828       (3)
Cash at beginning of year............    8,126        298      301

  Cash at end of year................ $    756   $  8,126   $  298
</TABLE>
                The accompanying notes are an integral part
                       of the financial statements.

                                                      F-6
<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 furniture exclusively targeted at the
upper-medium price range of the residential market.

     The Company operates predominantly 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.

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, 1997 and 1996 was $838,000 and $720,000, respectively.

Goodwill and Long-lived Assets
     Goodwill is being amortized on a straight-line basis over 40
years.  The Company continually evaluates the existence of
impairment of long-lived assets, including goodwill, on the basis
of whether it 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.

                                                      F-7

<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, 1997, 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
     The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share", resulting in the
restatement of earnings per share for all prior periods.  Basic
earnings per common share are based upon the weighted average
shares outstanding.  Outstanding stock options are treated as
common stock equivalents for purposes of computing diluted earnings
per share and represent the difference between basic and diluted
weighted average shares outstanding.

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.  Actual results
could differ from those estimates.








                                                      F-8

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


 2.  Property, Plant and Equipment at December 31 
 <TABLE>                                    
                                       Depreciable
                                         lives      (in thousands)
                                       (in years)   1997      1996
     <S>                                <C>       <C>       <C>
     Land and buildings.............    20 to 50  $33,941   $33,694
     Machinery and equipment........     5 to 12   48,180    45,120
     Office furniture and equipment.     3 to 10    1,836     1,794
     Construction in progress.......                  588       129
                                                  $84,545   $80,737
</TABLE>

 3.  Long-Term Debt at December 31
<TABLE>        
                                                    (in thousands)
                                                    1997      1996
     <S>                                          <C>       <C>
     7.28% Senior notes due March 15, 2004........$30,000   $30,000
     7.57% Senior note due June 30, 2005..........  8,625     9,350
     7.43% Senior notes due November 18, 2007..... 10,000
     Revolving credit facility....................  3,952         
         Total.................................... 52,577    39,350
     Less current maturities......................  5,086       725
                                                  $47,491   $38,625
</TABLE>

     In November 1997, the Company issued $10.0 million of 7.43%
senior notes due 2007 in a private placement of debt, which was
used to purchase 413,201 shares of its common stock from the ML-Lee
Acquisition Fund, L.P. and its affiliates.

     The revolving credit facility provides for borrowings of up to
$25.0 million through June 1999, automatically renewable thereafter
for one year periods unless terminated by either party.  Interest
under the facility is payable monthly at prime (8.50% on December
31, 1997) or, at the Company's option, the reserve adjusted LIBOR
plus 1.0% per annum (6.60% on December 31, 1997).  

     The above loan agreements require the Company to maintain
certain financial covenants.  As of December 31, 1997, these
covenants limit additional borrowings to $6.4 million and limit
funds available to pay dividends and repurchase its common stock to
$5.6 million.  

     Annual debt service requirements are $5.1 million in 1998,
$9.1 million in 1999, $5.2 million in 2000, $6.7 million in 2001
and $6.8 million in 2002.

     The Company utilizes letters of credit to collateralize
certain insurance policies and inventory purchases.  Outstanding
letters of credit at December 31, 1997 were $1.9 million.

                                                      F-9
<PAGE>

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

 4.  Income Taxes

     The provision for income taxes on income from continuing
operations consists of (in thousands):
<TABLE>
                                           1997     1996     1995
      <S>                                 <C>      <C>      <C>
      Current:
        Federal.........................  $6,454   $5,217   $1,750 
        State...........................     757      952      412
          Total current.................   7,211    6,169    2,162
      Deferred:
        Federal.........................     (96)    (567)     156 
        State...........................     (13)    (132)      66
          Total deferred................    (109)    (699)     222
            Income taxes................  $7,102   $5,470   $2,384
</TABLE>
      
     A reconciliation of the difference between the federal
statutory income tax rate and the effective income tax rate on
income from continuing operations follows:
<TABLE>
                                           1997     1996    1995
      <S>                                  <C>      <C>     <C>
      Federal statutory rate..........     35.0%    35.0%   35.0% 
      State taxes, net of federal
        benefit.......................      2.6      3.8     5.0  
      Goodwill........................       .6       .8     1.9  
      Life insurance..................      (.7)     (.7)   (1.5)
      Tax savings from foreign sales
        corporation...................      (.5)    (1.4)    (.8)
      Tax credits.....................                       (.2) 
      Other, net......................      1.0      1.0    (1.4)
        Effective income tax rate.....     38.0%    38.5%   38.0%
</TABLE>
     
     The income tax effects of temporary differences that comprise
deferred tax assets and liabilities at December 31 follow (in
thousands):
<TABLE>
                                             1997      1996 
      <S>                                  <C>        <C>
      Current deferred tax assets (liabilities):
        Accounts receivable............... $  (180)   $   618
        Inventory.........................     (18)      (521)   
        Employee benefits.................     901      1,692     
        Other accrued expenses............      67         97     
          Net current deferred tax asset.. $   770    $ 1,886     

      Noncurrent deferred tax liabilities:
        Property, plant and equipment..... $10,236    $11,229
        Employee benefits.................     212        444 
          Net noncurrent deferred tax 
            liability..................... $10,448    $11,673   

</TABLE>
                                                     F-10

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


 5.  Stockholders' Equity, Stock Options and Related Matters

     The Company's stock option plans provide for the granting of
stock options up to an aggregate of 700,000 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, 1997 and 1996, options to purchase 496,188 and
385,443 shares, were exercisable with a weighted-average exercise
price of $9.74 and $9.66, respectively.  At December 31, 1997,
3,651 shares were available for grant.  Activity for the three
years ended December 31, 1997 follows:

<TABLE>
                                        Number    Weighted-Average
                                       of shares   Exercise Price 
     <S>                               <C>               <C> 
     Outstanding at January 1, 1995.... 670,000          $ 9.86
       Cancelled or Lapsed.............(162,047)           9.84
       Granted......................... 170,000            8.75

     Outstanding at December 31, 1995...677,953            9.59   
       Lapsed...........................(15,216)           9.80   
       Exercised........................ (2,500)           9.75
       Granted.......................... 20,000           14.78
  
     Outstanding at December 31, 1996...680,237            9.74   
       Lapsed........................... (9,000)           9.17   
       Exercised........................(16,902)           9.48   
       Granted.......................... 17,500           20.11   
      
     Outstanding at December 31, 1997...671,835          $ 9.89   
</TABLE>

     Options outstanding at December 31, 1997, include 634,335
shares with an exercise price ranging from $8.50 to $10.00 and a
weighted-average remaining contractual life of 7.2 years.  The
remaining options have an exercise price ranging from $12.13 to
$28.00 with a weighted-average remaining contractual life of 9.1
years.

     The estimated per share weighted-average fair value of stock
options granted during 1997, 1996, and 1995 was $14.50, $8.00 and
$6.00 respectively, on the date of grant.  A risk-free interest
rate of 5.4%, 6.8% and 6.2% for 1997, 1996, and 1995 respectively,
and a 50% volatility rate with an expected life of 10 years was
assumed in estimating the fair value.

                                                     F-11
<PAGE>
                                  STANLEY FURNITURE COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5.  Stockholders' Equity, Stock Options, and Related Matters      
    (continued)

     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):
<TABLE>
                           1997           1996            1995
                        As     Pro     As     Pro       As    Pro
                     Reported Forma  Reported Forma  Reported Forma
<S>                  <C>     <C>      <C>    <C>      <C>    <C>
Net income...........$11,587 $11,326  $8,986 $8,754   $3,889 $3,685
Basic earnings per 
  share..............   2.76    2.70    1.90   1.85      .82    .78
Diluted earnings per 
  share..............   2.50    2.45    1.82   1.79      .82    .78
</TABLE>

     During 1994, the Company entered into a contractual agreement
to issue 50,000 shares of common stock to the chief executive
officer at $10.00 per share (the market price on the date of the
agreement) in exchange for a non-recourse 7.6% note receivable. One
tenth of the principal amount plus accrued interest is due each
December 31 until 1998 and the remaining principal is due January
2, 1999.  The Company agreed to forgive the accrued interest plus
one tenth of the initial principal amount each December 31, if the
executive remains employed by the Company.  During 1996, the
Company agreed to forgive the outstanding loan balance over the
remaining three years, subject to the executive's continued
employment.  Compensation expense was $285,000, $308,000 and
$98,000 for 1997, 1996 and 1995, respectively.

     During 1996, a secondary offering of 1,000,000 shares of the
Company's common stock owned by the ML-Lee Acquisition Fund, L.P.
(the "Lee Fund") and its affiliates was completed.  In connection
with the offering, the Company incurred approximately $325,000 of
expenses.  The Company also purchased 150,000 shares of its common
stock, which were subject to the over-allotment option from the
secondary offering, for an aggregate consideration of $2.3 million.

     In 1997, the Company completed two transactions for the
purchase of its common stock owned by the Lee Fund and its
affiliates.   In June 1997, 750,000 shares were purchased for an
aggregate purchase price of $15.0 million and in November 1997,
413,201 shares were purchased for an aggregate purchase price of
$10.3 million.  Assuming the shares were repurchased at the
beginning of the year and financed entirely by borrowings under the
revolving credit facility at an assumed rate of 7.25%, the pro
forma diluted earnings per share would have been $2.77 for 1997.



                                                     F-12
<PAGE>
                                STANLEY FURNITURE COMPANY, INC.
                         NOTES TO FINANCIAL STATEMENTS (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,
1997.  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.

 6.  Employee Benefit Plans

Defined Contribution Plan

     The Company maintains a defined contribution plan covering
substantially all of its employees.  Discretionary matching and
profit sharing contributions for 1997 and 1996 totaled $1.2 million
and $856,000, respectively.  Prior to 1996, the Company made no
contributions.

Pension Plans

     Benefits were accrued under the Company's pension plans
through 1995.  The Stanley Retirement Plan covers substantially all
employees hired prior to 1995.  The Supplemental Plan is unfunded
and covers certain key employees hired prior to 1989.  Stanley
Retirement Plan assets are invested in fixed income and equity
securities.  Benefits under both plans are based on average
compensation and service through 1995. The financial status of the
plans at December 31 follows (in thousands):
<TABLE>

                                      1997               1996 
                               Stanley   Supple-  Stanley   Supple-
                             Retirement  mental  Retirement  mental
                                Plan      Plan      Plan      Plan 
 <S>                          <C>       <C>      <C>       <C>
 Accumulated benefit obligation:
   Vested.....................$(15,361) $(1,210) $(14,334) $  (990)
   Nonvested..................  (1,785)            (1,636)        
 Accumulated benefit obliga-
   tion.......................$(17,146) $(1,210) $(15,970) $  (990)
 Projected benefit obligation.$(17,146) $(1,210) $(15,970) $  (990)
 Plan assets at fair value....  17,170             16,116         
 Plan assets more than 
   (less than) projected benefit
   obligation.................      24   (1,210)      146     (990)
 Unrecognized (gain) loss.....   4,776       (5)    3,994      (62)
   Prepaid (accrued) pension 
     costs....................$  4,800  $(1,215) $  4,140  $(1,052)
</TABLE>


                                                     F-13
<PAGE>

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


6.  Employee Benefit Plans (continued)
<TABLE>     
     Components of net periodic pension cost follow (in thousands):

                                         1997       1996      1995
      <S>                               <C>        <C>      <C>
      Service cost....................                      $  774
      Interest cost...................  $1,279     $1,295    1,256
      Actual return on assets.........  (1,587)      (618)  (1,320)
      Net amortization and deferral...     550        (55)     965 
      Loss on curtailment.............                          31
                                        $  242     $  622   $1,706
</TABLE>
<TABLE>
     The assumptions used as of December 31 to determine the plans'
financial status and pension cost were:

                                         1997       1996      1995 
      <S>                                <C>        <C>       <C>
      Discount rate for funded status..  7.00%      7.75%     7.67%
      Discount rate for pension cost...  7.75%      7.67%     9.00%
      Salary progression...............   N/A        N/A      5.00%
      Return on assets.................  7.50%      7.50%     7.75%
</TABLE>
     A reduction in the discount rate of 0.25% would create an
additional minimum pension liability of $5.4 million and would
result in a charge to stockholders' equity of $3.3 million, net of
deferred taxes, at December 31, 1997.


Postretirement Benefits Other Than Pensions

     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. 
Substantially all of the Company's employees are eligible for these
benefits after satisfying service and age provisions.  Employees
who elect benefits at retirement contribute to the cost of
coverage.  The plan is unfunded.  











                                                F-14          
<PAGE>
                              STANLEY FURNITURE COMPANY, INC.
                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6.  Employee Benefit Plans (continued)
<TABLE>
     The plan's financial status at December 31 follows (in
thousands):
                                                1997         1996 
      <S>                                     <C>          <C>
      Accumulated postretirement benefit 
        obligation:   
        Retirees............................. $(2,963)     $(3,049)
        Fully eligible active plan 
          participants.......................    (285)        (254)
        Other active plan participants.......    (393)        (300)
      Accumulated postretirement
        benefit obligation...................  (3,641)      (3,603)
      Unrecognized net loss..................     895          741
      Unrecognized transition obligation.....   1,954        2,084
        Accrued postretirement benefit cost..  $ (792)     $  (778)
</TABLE>




<TABLE>
     Components of net periodic postretirement benefit cost were  
(in thousands):
                                      1997         1996      1995
      <S>                            <C>           <C>       <C>
      Service cost...............    $   36        $  35     $ 93
      Interest cost..............       261          274      510
      Amortization of transition 
        obligation...............       131          130      134
      Amortization and deferral..        29           33      182
                                     $  457        $ 472     $919
</TABLE>

     The weighted-average discount rates used in determining the
actuarial present value of the projected benefit obligation were 
7.00%, 7.75% and 7.67% for 1997, 1996 and 1995, respectively.  The
rate of increase in future health care benefit cost used in
determining the obligation for 1997 was 9% gradually decreasing to 
5.5% beginning in 2004; for 1996 was 10% gradually decreasing to
5.5% beginning in 2003; and, for 1995 was 12% gradually decreasing
to 6% beginning in 2002.

     Increasing the assumed health care cost trend rate by one
percentage point in each future year would increase the accumulated
postretirement benefit obligation at December 31, 1997, by $101,000
and the annual postretirement benefit cost by $12,000.

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 $1.4
million at December 31, 1997 and 1996, 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. 
                                                     F-15
<PAGE>
                              STANLEY FURNITURE COMPANY, INC.
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)



 7.  Leases

     The Company leased a substantial portion of its facilities
under operating leases through June 1995, at which time the Company
purchased these facilities.  The Company continues to lease
showroom space and certain other equipment.  Rental expenses
charged to operations were $1.1 million, $970,000, and $1.4 million
in 1997, 1996 and 1995, respectively.    Future minimum lease
payments, net of subleases, are approximately as follows:  1998 -
$913,000; 1999 -  $728,000; 2000 -$54,000; and thereafter -
$45,000.

 8.  Discontinued Operations

     In 1996, the Company was released from a lease obligation
resulting from the purchase and concurrent resale of certain
facilities at a former division, which ceased operations in 1994. 
Accordingly, the Company recorded an after tax gain of $246,000, or
$.05 per share, as a partial reversal of a previous accrual,
representing the final adjustment for the cost of the closure.


 9.  Related Party Transactions

     During 1996 and 1997, the Company completed three purchases of
its common stock from the ML-Lee Acquisition Fund, L.P. and its
affiliates (the "Lee Fund") totaling 1.3 million shares for a total
consideration of $27.6 million.  The Lee Fund sold to public
investors its remaining ownership in January 1998.  The Company
maintained a management agreement with an affiliate of the Lee Fund
which was terminated in November 1997.  Fees paid pursuant to this
agreement amounted to $125,000 in 1997, $241,000 in 1996, and
$250,000 in 1995.

10.  Unusual Items

     During 1995, the Company was released from a lease obligation
at its previously closed Waynesboro, Virginia manufacturing
facility.  Accordingly, the Company recognized a pretax credit of
$1.1 million related to the reversal of an accrual provided in 1991
for the closing of the facility.  Unusual items also included a
pretax charge for severance resulting from the resignation of a
former officer of the Company.




                                                     F-16
<PAGE>

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


<TABLE>
11.  Supplemental Cash Flow Information
                                               (in thousands)
                                          1997      1996      1995
    <S>                                 <C>       <C>       <C>
    Net income......................... $11,587   $ 8,986  $ 3,889
    Adjustments to reconcile net income
      to net cash provided by operating 
      activities:
        Depreciation...................   5,000     4,774    4,503
        Amortization...................     432       426      416
        Other, net.....................     340       463      118
        Loss on disposal of fabric
          division.....................              (246)        
        Changes in assets and 
          liabilities:
          Accounts receivable..........  (4,331)     (364)   1,028 
         Inventories...................  (5,491)      (72)    (262)
          Prepaid expenses and other 
            current assets.............  (2,180)   (1,347)  (1,030)
          Accounts payable.............   3,534       993   (1,022)
          Accrued salaries, wages and         
            benefits...................     (27)    2,965     (500)
          Other accrued expenses.......    (713)     (479)     137 
          Deferred income taxes........    (109)     (134)     222
          Other assets.................      32        29       25 
          Other long-term liabilities..     238      (682)    (925)
            Net cash provided by 
              operating activities..... $ 8,312   $15,312  $ 6,599 

</TABLE>









                                                     F-17
<PAGE>
                                STANLEY FURNITURE COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS (CONTINUED)


12.  Quarterly Results of Operations (Unaudited)

     The Company's unaudited quarterly results of operations were
as follows (in thousands, except per share data):

<TABLE>
    
                               First     Second    Third     Fourth

     1997 Quarters:
     <S>                      <C>       <C>       <C>       <C>
     Net sales............... $49,631   $49,469   $54,270   $58,534
     Gross profit............  12,461    12,488    13,288    14,214
     Net income..............   2,772     2,756     2,935     3,125
     Net income per share:
       Basic................. $   .60   $   .60   $   .76   $   .85
       Diluted...............     .55       .55       .68       .75

     1996 Quarters:

     Net sales............... $48,190   $47,282   $52,550   $53,882
     Gross profit............  10,769    11,087    12,778    13,939
     Net income from continuing
       operations............   1,583     1,704     2,615     2,839
     Net income from continuing
       operations per share:
       Basic................. $   .33   $   .36   $   .55   $   .60
       Diluted...............     .33       .35       .53       .56
</TABLE>
                                                                  
 



















                                                     F-18
<PAGE>

                           STANLEY FURNITURE COMPANY, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
 For each of the Three Years in the Period Ended December 31, 1997
                                   (In thousands)



<TABLE>                                                           
      
           
 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 
    
<S>                 <C>           <C>          <C>         <C> 
1997
   Doubtful 
     receivables.   $1,332        $ 20         $236(a)     $1,116
   Discounts,
     returns,
     and 
     allowances..      613         166(b)                     779
                    $1,945        $186         $236        $1,895

1996
   Doubtful 
     receivables.   $  600        $860         $128(a)     $1,332
   Discounts, 
     returns,
     and 
     allowances..      557          56(b)                     613
                    $1,157        $916         $128        $1,945

1995
   Doubtful 
     receivables.   $  528        $302         $230(a)     $  600
   Discounts, 
     returns,
     and 
     allowances..      405         152(b)                     557
                     $ 933        $454         $230        $1,157 







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

</TABLE>






                                                      S-1