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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
------- Securities Exchange Act of 1934
For the quarterly period ended September 28, 2002 or
------------------
Transition report pursuant to Section 13 or 15(d) of the
------- Securities Exchange Act of 1934
For the transition period from to .
---------- ----------
Commission file number 0-14938.
STANLEY FURNITURE COMPANY, INC.
(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 No.)
1641 Fairystone Park Highway, Stanleytown, Virginia 24168
(Address of principal executive offices, Zip Code)
(276) 627-2000
------------------------- ---------------
(Registrant's telephone number, including area code)
-------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock as of October 14, 2002.
Class Number
Common Stock, par value $.02 per share 6,519,717 Shares
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 28, December 31,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash .................................................... $ 8,598 $ 1,955
Accounts receivable, less allowances of $2,701 and $2,024 31,753 23,862
Inventories:
Finished goods ........................................ 35,724 31,287
Work-in-process ....................................... 7,055 7,833
Raw materials ......................................... 12,816 10,402
-------- --------
Total inventories ................................. 55,595 49,522
Prepaid expenses and other current assets ............... 1,035 2,354
Deferred income taxes ................................... 3,153 3,153
-------- --------
Total current assets .................................. 100,134 80,846
Property, plant and equipment, net .......................... 60,522 66,708
Goodwill .................................................... 9,072 9,072
Other assets ................................................ 5,540 6,377
-------- --------
Total assets .......................................... $175,268 $163,003
======== ========
LIABILITIES
Current liabilities:
Current maturities of long-term debt .................... $ 6,914 $ 6,839
Accounts payable ........................................ 17,818 11,841
Accrued salaries, wages and benefits .................... 11,943 9,060
Other accrued expenses .................................. 4,248 1,835
-------- --------
Total current liabilities ............................. 40,923 29,575
Long-term debt, exclusive of current maturities ............. 24,129 30,214
Deferred income taxes ....................................... 11,251 11,251
Other long-term liabilities ................................. 4,419 4,669
-------- --------
Total liabilities ..................................... 80,722 75,709
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000 shares authorized,
6,519,717 and 6,643,388 shares issued and outstanding ..... 131 133
Capital in excess of par value .............................. 13,594 17,537
Retained earnings ........................................... 80,849 72,228
Stock option loans .......................................... (28) (2,604)
-------- --------
Total stockholders' equity .............................. 94,546 87,294
-------- --------
Total liabilities and stockholders' equity ............ $175,268 $163,003
======== ========
The accompanying notes are an integral part of
the financial statements.
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Three Months Nine Months
Ended Ended
-------------------- ---------------------
September September September September
28, 2002 29, 2001 28, 2002 29, 2001
--------- --------- --------- ---------
Net sales ......................................... $61,338 $60,007 $176,180 $177,972
Cost of sales ..................................... 46,386 46,195 133,287 136,635
Restructuring and related charges (credit) (Note 2) (209) 3,548
------- ------- -------- --------
Gross profit .................................. 15,161 13,812 39,345 41,337
Selling, general and administrative expenses ...... 7,990 7,856 23,799 22,791
Unusual charge (Note 3) ........................... 2,800
------- ------- -------- --------
Operating income .............................. 7,171 5,956 15,546 15,746
Other expense (income), net ....................... (13) 6 (167) 24
Interest expense .................................. 767 1,010 2,347 3,095
------- ------- -------- --------
Income before income taxes .................... 6,417 4,940 13,366 12,627
Income taxes ...................................... 2,278 1,704 4,745 4,490
------- ------- -------- --------
Net income .................................... $ 4,139 $ 3,236 $ 8,621 $ 8,137
======= ======= ======== ========
Earnings per share:
Basic ......................................... $ .63 $ .49 $ 1.30 $ 1.23
======= ======= ======== ========
Diluted ....................................... $ .62 $ .47 $ 1.26 $ 1.18
======= ======= ======== ========
Weighted average shares outstanding:
Basic ......................................... 6,554 6,615 6,631 6,611
======= ======= ======== ========
Diluted ....................................... 6,681 6,884 6,822 6,914
======= ======= ======== ========
The accompanying notes are an integral part of the
financial statements.
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
---------------------
September September
28, 2002 29, 2001
--------- ---------
Cash flows from operating activities:
Cash received from customers ............................................. $167,824 $177,346
Cash paid to suppliers and employees ..................................... (150,676) (159,382)
Interest paid ............................................................ (2,367) (3,033)
Income taxes paid, net ................................................... (1,142) (4,927)
-------- --------
Net cash provided by operating activities ............................ 13,639 10,004
-------- --------
Cash flows from investing activities:
Capital expenditures ..................................................... (605) (3,883)
Other, net ............................................................... 696
-------- --------
Net cash provided (used) by investing activities ..................... 91 (3,883)
-------- --------
Cash flows from financing activities:
Issuance of senior notes ................................................. 10,000
Repayment of revolving credit facility, net .............................. (600) (10,001)
Repayment of senior notes ................................................ (5,410) (5,286)
Purchase and retirement of common stock .................................. (3,066) (1,973)
Proceeds from exercised stock options .................................... 1,194 543
Proceeds from insurance policy loans ..................................... 795 719
-------- --------
Net cash used by financing activities ................................ (7,087) (5,998)
-------- --------
Net increase in cash ..................................................... 6,643 123
Cash at beginning of period .............................................. 1,955 1,825
-------- --------
Cash at end of period ................................................ $ 8,598 $ 1,948
======== ========
Reconciliation of net income to net cash provided by operating activities:
Net income ............................................................... $ 8,621 $ 8,137
Depreciation and amortization ........................................ 4,477 4,815
Unusual charge ....................................................... 2,800
Restructuring and related charges .................................... 1,755
Deferred income taxes ................................................ (209)
Loss on sale of assets ............................................... 31 28
Changes in assets and liabilities:
Accounts receivable .............................................. (7,891) (750)
Inventories ...................................................... (6,073) (827)
Prepaid expenses and other current assets ........................ 1,863 (1,050)
Accounts payable ................................................. 5,977 (2,921)
Accrued salaries, wages and benefits ............................. 2,883 (751)
Other accrued expenses ........................................... 2,413 913
Other assets ......................................................... (167) (146)
Other long-term liabilities .......................................... (250) (35)
-------- --------
Net cash provided by operating activities ................................ $ 13,639 $ 10,004
======== ========
The accompanying notes are an integral part of
the financial statements.
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Preparation of Interim Unaudited Financial Statements
The financial statements of Stanley Furniture Company, Inc. (referred to as
"Stanley" or the "Company") have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the opinion of
management, these statements include all adjustments necessary for a fair
presentation of the results of all interim periods reported herein. All such
adjustments are of a normal recurring nature. Certain information and footnote
disclosures prepared in accordance with generally accepted accounting principles
have been either condensed or omitted pursuant to SEC rules and regulations.
However, management believes that the disclosures made are adequate for a fair
presentation of results of operations and financial position. Operating results
for the interim periods reported herein may not be indicative of the results
expected for the year. It is suggested that these financial statements be read
in conjunction with the financial statements and accompanying notes included in
Stanley's latest Annual Report on Form 10-K.
2. Restructuring and Related Charges
The Company approved a plan in the fourth quarter of 2001 to close its former
West End, North Carolina facility and consolidate production from this facility
into other Company facilities as a result of excess capacity created by expanded
offshore sourcing. Manufacturing operations were phased out during the first
quarter of 2002 with certain warehousing and other activities completed in the
second quarter of 2002, including the sale of real estate. During the third
quarter of 2002, the Company determined that $209,000 of restructuring related
inventory reserves were no longer required and credited the amount back to
income. As a result of the above, the Company recorded net restructuring and
related charges of $3.5 million for the nine month period ending September 28,
2002. The restructuring accrual at September 28, 2002, consists of a lease
obligation and severance cost.
The following summarizes the 2002 restructuring and related charges (in
thousands):
Reserve Total Reserve
Balance Total Non-cash Cash Balance
12/31/01 Charges Charges Payments 9/28/02
-------- ------- ------- -------- -------
Increased depreciation due to shorter lives $1,755 $1,755
Other exit costs .......................... $ 733 1,793 $1,972 $ 554
------ ------ ------ ------ ------
Total ................................... $ 733 $3,548 $1,755 $1,972 $ 554
====== ====== ====== ====== ======
3. Unusual Charge
An unusual charge of $1.8 million ($2.8 million pretax) or $.26 per diluted
share was recorded in 2001 to write-off receivables due to the liquidation of a
former customer.
4. Property, Plant and Equipment
(in thousands)
September December 31,
28, 2002 2001
--------- ---------
Land and buildings .......................... $37,830 $42,763
Machinery and equipment ..................... 73,988 79,139
Office fixtures and equipment ............... 1,701 1,829
Construction in progress .................... 200
------- -------
Property, plant and equipment, at cost .. 113,719 123,731
Less accumulated depreciation ............... 53,197 57,023
------- -------
$60,522 $66,708
======= =======
5. Long-Term Debt
(in thousands)
September December 31,
28, 2002 2001
--------- --------
Installment Notes:
7.28% senior notes due through March 15, 2004 ..... $ 8,572 $12,857
7.57% senior note due through June 30, 2005 ....... 3,900 5,025
7.43% senior notes due through November 18, 2007 .. 8,571 8,571
6.94% senior notes due through May 3, 2011 ........ 10,000 10,000
Revolving credit facility ............................ 600
------- -------
Total ............................................. 31,043 37,053
Less current maturities .............................. 6,914 6,839
------- -------
$24,129 $30,214
======= =======
In August 2002, the revolving credit facility was amended to decrease available
borrowings from $35.0 million to $25.0 million.
6. Stock Option Plan
The Company maintains a stock option plan under which holders of certain
exercisable stock options may obtain interest-bearing loans from the Company to
facilitate their exercise of stock options. During the second quarter of 2002,
approximately 86,000 shares of the Company's common stock was surrendered by the
Chief Executive Officer to the Company in payment of a $2.6 million outstanding
loan plus accrued interest. As of September 28, 2002, approximately $28,000 in
stock option loans are outstanding.
7. Earnings Per Common Share
Basic earnings per common share are based upon the weighted average shares
outstanding. Outstanding stock options are treated as potential common stock for
purposes of computing diluted earnings per share. Basic and diluted earnings per
share are calculated using the following share data (in thousands):
Three Months Nine Months
Ended Ended
-------------------- --------------------
September September September September
28, 2002 29, 2001 28, 2002 29, 2001
-------- --------- -------- ---------
Weighted average shares outstanding
for basic calculation .................. 6,554 6,615 6,631 6,611
Add: Effect of stock options .............. 127 269 191 303
----- ----- ----- -----
Weighted average shares outstanding,
adjusted for diluted calculation ... 6,681 6,884 6,822 6,914
===== ===== ===== =====
8. Goodwill
On January 1, 2002 the Company adopted Statement of Financial Accounting
Standard No. 142, ("SFAS 142"), "Goodwill and Other Intangible Assets". In
accordance with SFAS 142, the Company discontinued goodwill amortization and
tested goodwill of $9.1 million for impairment as of January 1, 2002 determining
that no transitional impairment loss was necessary. The Company will continue to
test goodwill for impairment at least annually. The following table presents net
income on a comparable basis, after adjustment for goodwill amortization (in
thousands, except per share amounts):
Three Months Nine Months
Ended Ended
------------------------- --------------------------
September September September September
28, 2002 29, 2001 28, 2002 29, 2001
------------ ----------- ------------ ------------
Net income:
As reported ...................... $4,139 $3,236 $8,621 $8,137
Goodwill amortization (net of tax) 84 252
------ ------ ------ ------
Adjusted net income ............ $4,139 $3,320 $8,621 $8,389
====== ====== ====== ======
Basic earnings per share:
As reported ...................... $ .63 $ .49 $ 1.30 $ 1.23
====== ====== ====== ======
As adjusted ...................... $ .63 $ .50 $ 1.30 $ 1.27
====== ====== ====== ======
Diluted earnings per share:
As reported ...................... $ .62 $ .47 $ 1.26 $ 1.18
====== ====== ====== ======
As adjusted ...................... $ .62 $ .48 $ 1.26 $ 1.21
====== ====== ====== ======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
Results of Operations
The following table sets forth the percentage relationship to net sales of
certain items included in the Statements of Income:
Three Months Nine Months
Ended Ended
------------------ --------------------
September September September September
28, 2002 29, 2001 28, 2002 29, 2001
-------- --------- --------- ---------
Net sales ................................ 100.0% 100.0% 100.0% 100.0%
Cost of sales ............................ 75.6 77.0 75.7 76.8
Restructuring and related charges (credit) (.3) 2.0
----- ----- ----- -----
Gross profit ........................... 24.7 23.0 22.3 23.2
Selling, general and administrative
expenses ............................... 13.0 13.1 13.5 12.8
Unusual charge ........................... 1.6
----- ----- ----- -----
Operating income .................... 11.7 9.9 8.8 8.8
Other income ............................. .1
Interest expense ......................... 1.3 1.7 1.3 1.7
----- ----- ----- -----
Income before income taxes ............. 10.4 8.2 7.6 7.1
Income taxes ............................. 3.7 2.8 2.7 2.5
----- ----- ----- -----
Net income ............................... 6.7% 5.4% 4.9% 4.6%
===== ===== ===== =====
Net sales increased $1.3 million, or 2.2%, for the three month period ended
September 28, 2002 from the comparable 2001 period. For the nine month period,
net sales decreased $1.8 million, or 1.0%, from the comparable 2001 period. The
increase for the three month period was due primarily to higher unit volume. The
nine month period decrease resulted from lower unit volume and lower average
selling prices. The Company expects fourth quarter 2002 sales to approximate
third quarter 2002 sales, resulting in an increase in the high single digits on
a percentage basis over fourth quarter 2001.
Gross profit margin, excluding restructuring and related charges, for the three
and nine month periods of 2002 increased to 24.4% and 24.3%, respectively, from
23.0% and 23.2% for the comparable 2001 periods. The increase was due to cost
savings resulting from closing the Company's former West End, North Carolina
facility discussed below, lower raw material cost and offshore sourcing
initiatives.
Selling, general and administrative expenses for the three and nine month
periods of 2002 as a percentage of net sales was 13.0% and 13.5%, respectively,
compared to 13.1% and 12.8% for the comparable 2001 periods. Selling, general
and administrative expenditures increased in the nine month period of 2002
primarily as a result of higher selling expenses related to new product
introductions.
As a result of the above, operating income before restructuring and unusual
charges, as a percentage of net sales was 11.4% and 10.8%, respectively, for the
three and nine month periods of 2002, compared to 9.9% and 10.4%, respectively,
for each of the comparable 2001 periods.
Interest expense for the three and nine month periods of 2002 decreased due
primarily to lower average debt levels.
The Company's effective income tax rate was 35.5% for the 2002 nine month period
and 34.0% for total year 2001. The increase in the effective tax rate was due
primarily to higher state income taxes.
In December 2001, the Company announced a plan to expand offshore sourcing,
realign manufacturing capacity and significantly lower operating costs.
Integration of selected imported component parts and finished items in its
product line will lower costs, provide design flexibility and offer a better
value to its customers. This initiative created excess capacity in the Company's
manufacturing facilities. Accordingly, the Company closed its West End, North
Carolina factory and consolidated production from this facility into other
Company facilities. Closing the West End facility is expected to reduce costs by
$4 to $5 million annually and has eliminated approximately 13%, or 400, of the
Company's employees. Manufacturing operations at the West End facility were
completely phased out during the first quarter of 2002. In the second quarter of
2002, the Company completed all closing related activities including the sale of
real estate.
As a result of the West End facility closing, the Company recorded total
restructuring and related charges of $6.6 million, compared to a previously
anticipated range of $7 to $9 million. During the third quarter of 2002, the
Company determined that $209,000 of restructuring related inventory reserves
were no longer required and credited the amount back to income. For the nine
month period of 2002, net restructuring and related charges of $3.5 million were
recorded. These charges consisted of asset write-downs (through increased
depreciation), relocation of equipment and inventory, operating inefficiencies
and severance cost. The restructuring accrual at September 28, 2002 of $554,000
consists of a lease obligation for real estate and severance cost.
Financial Condition, Liquidity and Capital Resources
Cash generated from operations was $13.6 million in the first nine months of
2002 compared to $10.0 million in the 2001 period. Working capital increased
$3.0 million in the 2002 nine month period compared to an increase of $2.5
million in the comparable 2001 period. Inventories increased $6.0 million from
year end levels due primarily to normal seasonal trends. Lower tax and interest
payments also contributed to the increase in cash generated from operations.
The Company anticipates making a $2.0 million to $3.0 million contribution to
its defined benefit plan in the fourth quarter of 2002.
Net cash provided by investing activities was $91,000 in the 2002 period
compared to cash used by investing activities of $3.9 million in the 2001
period. The Company received net proceeds of $696,000 from the sale of real
estate at its former West End, North Carolina facility. The decline in capital
requirements for 2002 is due to the relocation of a significant portion of the
machinery and equipment from the West End facility to other Company facilities.
As a result, capital expenditures in 2002 are anticipated to be approximately
$1.5 million, down from $4.2 million in 2001.
Net cash used by financing activities was $7.1 million in the 2002 period
compared to $6.0 million in the 2001 period. In the 2002 period, cash from
operations and proceeds from the exercise of stock options provided cash for
senior debt payments, repayment of the revolving credit facility and purchase
and retirement of the Company's common stock. During the third quarter, the
Company purchased 158,500 shares of its stock in the open market at an average
price of $19.34. At September 28, 2002, approximately $4.9 million remains
authorized by the Company's Board of Directors to repurchase shares of the
Company's common stock. In the second quarter of 2002, 85,914 shares of the
Company's common stock were surrendered by the Chief Executive Officer to the
Company in payment of a $2.6 million outstanding loan and accrued interest,
relating to stock option exercise in 2000. In the 2001 period, cash from
operations and the issuance of $10 million in senior notes provided cash for
reduction of borrowings under the revolving credit facility, senior debt
payments, the purchase and retirement of the Company's common stock and capital
expenditures.
At September 28, 2002, long-term debt including current maturities was $31.0
million. Debt service requirements are $1.4 million remaining in 2002, $6.9
million in 2003, $7.0 million in 2004, $4.3 million in 2005, and $2.9 million in
2006. In August 2002, the revolving credit facility was amended to decrease
available borrowings from $35.0 million to $25.0 million. As of September 28,
2002, approximately $24.2 million of additional borrowings were available under
the Company's revolving credit facility. The Company believes that its financial
resources are adequate to support its capital needs and debt service
requirements.
Critical Accounting Policies
The SEC recently issued release FR-60 related to "Disclosure of Critical
Accounting Policies".
Management has chosen accounting policies that are necessary to accurately and
fairly report the Company's operational and financial position. Below are the
critical accounting policies that involve the most significant judgments and
estimates used in the preparation of the Company's financial statements.
Allowance for doubtful accounts - The Company maintains an allowance for
doubtful receivables for estimated losses resulting from the inability of our
trade customers to make required payments. We provide an allowance for specific
customer accounts where collection is doubtful and also provide a general
allowance for other accounts based on historical collection and write-off
experience. Judgment is critical because some customers have experienced
financial difficulties. If their financial condition were to worsen, additional
allowances might be required.
Inventory valuation - Inventory is valued at the lower of cost or market. Cost
for all inventories is determined using the first-in, first-out (FIFO) method.
We evaluate our inventory to determine excess or slow moving items based on
current order activity and projections of future demand. For those items
identified, we estimate their market value or net sales value based on current
trends. An allowance is created for those items having a net sales value less
than cost. This process recognizes projected inventory losses when they become
evident rather than at the time they are sold.
Long-lived assets - Property and intangible assets are reviewed for possible
impairment when events indicate that the carrying amount of an asset may not be
recoverable. Assumptions and estimates used in the evaluation of impairment may
affect the carrying value of long-lived assets, which could result in impairment
charges in future periods. Our depreciation and amortization policies reflect
judgments on the estimated useful lives of assets.
Restructuring and related charges - The Company has provided restructuring and
related charges for closure of the West End, North Carolina facility. These
charges require judgment about the net realizable value of assets and other exit
costs to be incurred. If actual amounts differ from the estimates adjustments
will be required in future statements of income. For example, in the second
quarter of 2002 the charge for increased depreciation was reduced by
approximately $195,000 because actual proceeds from the disposal of West End's
assets exceeded the anticipated amount and in the third quarter of 2002 the
Company determined that $209,000 of restructuring related inventory reserves
were no longer required and credited the amount back to income.
The Company does not have transactions or relationships with "special purpose"
entities, and the Company does not have any off balance sheet financing other
than normal operating leases primarily for showroom and computer equipment.
Forward-Looking Statements
Certain statements made in this report are not based on historical facts, but
are forward-looking statements. These statements can be identified by the use of
forward-looking terminology such as "believes," "estimates," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy. These
statements reflect 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 competition in the furniture industry including
competition from lower-cost foreign manufacturers, successful implementation of
expanded offshore sourcing, the cyclical nature of the furniture industry,
fluctuations in the price for lumber which is the most significant raw material
used by the Company, credit exposure to customers in the current economic
climate, capital costs and general economic conditions. Any forward-looking
statement speaks only as of the date of this filing, and the Company undertakes
no obligation to update or revise any forward-looking statements, whether as a
result of new developments or otherwise.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Because the Company's obligation under its Revolving Credit Facility bears
interest at a variable rate, the Company is sensitive to changes in prevailing
interest rates. A one-percentage point fluctuation in market interest rates
would not have a significant impact on earnings during the first nine months of
2002.
ITEM 4. Controls and Procedures
a. Evaluation of disclosure controls and procedures. The Company's
principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as
defined in Exchange Act Rule 13a-14(c)), based on their evaluation of
such controls and procedures conducted within 90 days prior to the date
hereof, are effective to ensure that information required to be
disclosed by the Company in the reports it files under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission and that such information is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
b. Changes in internal controls. There have been no significant changes in
the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation referred to above.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 Ninth amendment, dated August 16, 2002, to the
second amended and restated revolving credit facility
dated February 15, 1994, between the Registrant and
PNC Bank, National Association. (1)
Exhibit 99.1 Certification of Albert L. Prillaman, Chief
Executive Officer of the Company, pursuant to
18 U. S. C. Section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002 (1)
Exhibit 99.2 Certification of Douglas I. Payne, Chief Financial
Officer of the Company, pursuant to 18 U. S. C.
Section 1350, as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (1)
(b) Reports on Form 8-K
None
- ---------------------------
(1) Filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANLEY FURNITURE COMPANY, INC.
Date: October 15, 2002 By: /s/ Douglas I. Payne
------------------------
Douglas I. Payne
Executive V.P. - Finance & Administration and
Secretary
(Principal Financial and Accounting Officer)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Albert L. Prillaman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stanley Furniture
Company, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date October 15, 2002 /s/ Albert L. Prillaman
-----------------------
Albert L. Prillaman
Chief Executive Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas I. Payne, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stanley Furniture
Company, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial
condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: October 15, 2002 /s/ Douglas I. Payne
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Douglas I. Payne
Chief Financial Officer