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8-K - 8-K - HG Holdings, Inc. | c95596e8vk.htm |
EX-3.1 - EX-3.1 - HG Holdings, Inc. | c95596exv3w1.htm |
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE: February 3, 2010 |
Stanley Furniture Company, Inc. Investor Contact: Douglas I. Payne (276) 627-2157 |
STANLEY FURNITURE ANNOUNCES
2009 OPERATING RESULTS
2009 OPERATING RESULTS
Glenn Prillaman Elected Chief Executive Officer and Director
STANLEYTOWN, VA, February 3, 2010/Businesswire/ Stanley Furniture Company, Inc. (Nasdaq-NGS:
STLY) today reported sales and operating results for 2009. The Company also announced today that
its Board of Directors elected Glenn Prillaman President and Chief Executive Officer and to serve
as a Director.
Net sales of $160.5 million decreased 29.2% compared to 2008. Primarily as a result of depressed
sales, the Company incurred a net loss of $11.8 million ($1.14 per share) compared to net income of
$3.7 million ($.36 per share) in 2008.
The increased operating loss in 2009 is primarily due to the significant reduction in sales and
production levels. The much lower production levels led to unfavorable factory overhead variances
and plant inefficiencies. Costs associated with the transition of certain items (primarily youth
beds and cribs) from the companys infant and youth product line (marketed as Young
America®) from offshore sourcing to its own domestic manufacturing facilities and higher
selling discounts also contributed to the increased operating loss in 2009.
Financial results in both years were impacted by actions taken to reduce costs in response to lower
sales. The 2009 results include pre-tax restructuring charges of $6.1 million ($3.8 million
after-tax or $.36 per share) compared to $7.3 million ($5.8 million after tax or $.56 per share) in
2008. The 2008 restructuring charges were primarily for costs related to the consolidation of two
manufacturing facilities into one.
The 2009 pre-tax restructuring charges of $6.1 million primarily consists of three major items. A
previously announced warehouse consolidation represents about $2 million pre-tax. A number of
additional steps were taken in the fourth quarter of 2009 to further reduce the Companys cost
structure. Approximately 25% of the Companys salaried positions were eliminated through a
combination of early retirement incentives and layoffs. This resulted in approximately $2 million
pre-tax of restructuring expense in the fourth quarter. The remainder of approximately $2 million
pre-tax restructuring expense resulted from a write-down of inventories based on the Companys
decision to reduce the number of items offered in its adult product lines by discontinuing certain
slow-moving items.
Pre-tax income of $9.3 million was recorded in 2009 from the receipt of funds under the Continued
Dumping and Subsidy Offset Act of 2000 involving wooden bedroom furniture imported from China and
other related payments, net of legal expenses compared to $11.5 million in 2008.
Cash on hand amounted to $41.8 million and total debt equaled $27.9 million at December 31, 2009.
Working capital, excluding cash and current maturities of long-term debt, decreased to $46.9
million at year end 2009 compared to $54.5 million at December 31, 2008. The lower working capital is
primarily due to reductions in inventories and accounts receivable in response to lower sales.
Our Company has incurred significant losses this past year from the unprecedented decline in
sales due to what many are describing as the Great Recession, commented Glenn Prillaman,
President and Chief Executive Officer. In response, we have made many difficult business
decisions to lower our costs, including reductions in management, supervisory, support and
production staff. We believe our sales performance is indicative of consumer demand for
residential wood furniture in our price segment. Demand for better goods has been relatively
stable for the past several quarters; however, we see no signs of any near-term improvement. We
enter 2010 with a strong balance sheet, lower fixed costs and believe we have well-positioned
product lines, concluded Prillaman.
Glenn Prillaman, who most recently served as President and Chief Operating Officer since August
2009, was elected today by the Companys Board of Directors to the position of President and Chief
Executive Officer and to serve as a Director. Albert Prillaman will continue as Chairman. In
this challenging period facing our industry and our Company, I will continue to focus my energies
as Chairman on strategic issues and Board matters while Glenn will be responsible for all
operational aspects of the business, said Albert Prillaman.
Other Information
All earnings (loss) per share amounts are on a fully diluted basis.
Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer of wood furniture
targeted at the premium price range of the residential market. Its common stock is traded on the
Nasdaq stock market under the symbol STLY.
Conference Call Details
Management will host a conference call at 9:00 a.m. EST on February 4, 2010. The dial-in
number is (877) 407-8029. The call will also be web cast and archived on the Companys web site at
www.stanleyfurniture.com. The dial-in-number for the replay (available through February 12, 2010)
is (877) 660-6853, the account reference number is 275 and the conference number is 342014.
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 our 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, business failures or loss of large customers, competition in the furniture
industry including competition from lower-cost foreign manufacturers, our success in transitioning
certain Young America products to our domestic manufacturing facilities, disruptions in offshore
sourcing including those arising from supply or distribution disruptions or those arising from
changes in political, economic and social conditions, as well as laws and regulations, in countries
from which we source products, international trade policies of the United States and countries from
which we source products, manufacturing realignment, the inability to obtain sufficient quantities
of quality raw materials in a timely manner, the inability to raise prices in response to inflation
and increasing costs, failure to anticipate or respond to changes in consumer tastes and fashions
in a timely manner, environmental, health, and safety compliance costs, and extended business
interruption at manufacturing facilities. Any forward-looking statement speaks only as of the
date of this press release, and we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new developments or otherwise.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
Consolidated Operating Results
(in thousands, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales |
$ | 39,906 | $ | 50,357 | $ | 160,451 | $ | 226,522 | ||||||||
Cost of sales |
42,159 | 43,533 | 154,988 | 193,929 | ||||||||||||
Gross profit (loss) |
(2,253 | ) | 6,824 | 5,463 | 32,593 | |||||||||||
Selling, general and administrative
expenses |
8,028 | 8,083 | 30,373 | 36,441 | ||||||||||||
Operating loss |
(10,281 | ) | (1,259 | ) | (24,910 | ) | (3,848 | ) | ||||||||
Income from Continued Dumping
and Subsidy Offset Act, net |
9,340 | 11,485 | 9,340 | 11,485 | ||||||||||||
Other income, net |
27 | 93 | 160 | 308 | ||||||||||||
Interest income |
1 | 75 | 45 | 591 | ||||||||||||
Interest expense |
939 | 996 | 3,748 | 3,802 | ||||||||||||
Income (loss) before income taxes |
(1,852 | ) | 9,398 | (19,113 | ) | 4,734 | ||||||||||
Income tax (benefit) expense |
(573 | ) | 3,152 | (7,362 | ) | 998 | ||||||||||
Net income (loss) |
$ | (1,279 | ) | $ | 6,246 | $ | (11,751 | ) | $ | 3,736 | ||||||
Diluted earnings (loss) per share |
$ | (0.12 | ) | $ | 0.60 | $ | (1.14 | ) | $ | 0.36 | ||||||
Weighted average number of shares |
10,332 | 10,332 | 10,332 | 10,332 | ||||||||||||
Included in the results above are
restructuring and
related charges as follows:
Cost of sales |
$ | 4,010 | $ | 1,758 | $ | 5,231 | $ | 5,860 | ||||||||
Selling, general and administrative
expenses |
876 | 876 | 1,439 | |||||||||||||
Total restructuring and
related charges |
$ | 4,886 | $ | 1,758 | $ | 6,107 | $ | 7,299 | ||||||||
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
Consolidated Condensed Balance Sheets
(in thousands)
Dec. 31, | Dec. 31, | |||||||
2009 | 2008 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | 41,827 | $ | 44,013 | ||||
Accounts receivable, net |
15,297 | 21,873 | ||||||
Inventories |
37,225 | 47,344 | ||||||
Prepaid expenses and other current assets |
4,898 | 3,758 | ||||||
Income tax recoverable |
6,882 | |||||||
Deferred income taxes |
3,433 | 3,906 | ||||||
Total current assets |
109,562 | 120,894 | ||||||
Property, plant and equipment, net |
31,375 | 35,445 | ||||||
Goodwill |
9,072 | 9,072 | ||||||
Other assets |
453 | 460 | ||||||
Total assets |
$ | 150,462 | $ | 165,871 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | 1,429 | $ | 1,429 | ||||
Accounts payable |
11,633 | 11,236 | ||||||
Accrued expenses |
9,223 | 11,170 | ||||||
Total current liabilities |
22,285 | 23,835 | ||||||
Long-term debt |
26,428 | 27,857 | ||||||
Deferred income taxes |
2,128 | 2,778 | ||||||
Other long-term liabilities |
6,774 | 8,293 | ||||||
Stockholders equity |
92,847 | 103,108 | ||||||
Total liabilities and stockholders equity |
$ | 150,462 | $ | 165,871 | ||||
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
Consolidated Condensed Statements of Cash Flows
(in thousands)
Twelve Months Ended | ||||||||
Dec. 31, | Dec. 31, | |||||||
2009 | 2008 | |||||||
Cash flows from operating activities: |
||||||||
Cash received from customers |
$ | 168,504 | $ | 230,255 | ||||
Cash paid to suppliers and employees |
(171,349 | ) | (215,527 | ) | ||||
Cash from Continued Dumping and Subsidy
Offset Act, net |
7,443 | 10,828 | ||||||
Interest paid, net |
(3,664 | ) | (3,111 | ) | ||||
Income taxes paid, net |
(2,120 | ) | (4,168 | ) | ||||
Net cash (used) provided by operating activities |
(1,186 | ) | 18,277 | |||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(2,621 | ) | (2,261 | ) | ||||
Proceeds from sale of assets |
1,303 | |||||||
Other, net |
360 | |||||||
Net cash used by investing activities |
(1,318 | ) | (1,901 | ) | ||||
Cash flows from financing activities: |
||||||||
Repayment of senior notes |
(1,429 | ) | (1,429 | ) | ||||
Dividends paid |
(4,132 | ) | ||||||
Proceeds from insurance policy loans |
1,747 | 1,550 | ||||||
Net cash provided (used) by financing activities |
318 | (4,011 | ) | |||||
Net (decrease) increase in cash |
(2,186 | ) | 12,365 | |||||
Cash at beginning of period |
44,013 | 31,648 | ||||||
Cash at end of period |
$ | 41,827 | $ | 44,013 | ||||
Reconciliation of net (loss) income to
net cash (used) provided by operating activities: |
||||||||
Net (loss) income |
$ | (11,751 | ) | $ | 3,736 | |||
Adjustments to reconcile net (loss) income to net
cash (used) provided by operating activities: |
||||||||
Depreciation and amortization |
5,994 | 8,853 | ||||||
Inventory write-down |
2,077 | |||||||
Deferred income taxes |
(177 | ) | (2,571 | ) | ||||
Stock-based compensation |
839 | 467 | ||||||
Changes in working capital |
3,285 | 7,730 | ||||||
Other assets |
66 | 103 | ||||||
Other long-term liabilities |
(1,519 | ) | (41 | ) | ||||
Net cash (used) provided by operating activities |
$ | (1,186 | ) | $ | 18,277 | |||