Stanley Furniture Company, Inc. reported sales and operating results for 2009. The Company also announced 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 company’s 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 Company’s cost structure. Approximately 25% of the Company’s 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 Company’s 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 Company’s 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.
About Stanley Furniture Company: 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.