HG Holdings, Inc. - Quarter Report: 2007 September (Form 10-Q)

stlyq307form10q.htm

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 29, 2007

[ ]

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 incorporation or organization)			(I.R.S. Employer 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)

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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one);

Large accelerated filer ( ) Accelerated filer (x) Non-accelerated filer ( )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (x)

As of October 12, 2007, 10,332,179 shares of common stock of Stanley Furniture Company, Inc., par value $.02 per share were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1.CONSOLIDATED FINANCIAL STATEMENTS

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	(unaudited)
	September 29,			December 31,
	2007			2006
ASSETS
Current assets:
Cash	$	15,264		$	6,269
Accounts receivable, less allowances of $2,132 and $1,554		35,270			32,260
Inventories:
Finished goods		47,998			45,172
Work-in-process		5,945			5,183
Raw materials		8,395			9,009
Total inventories		62,338			59,364

Prepaid expenses and other current assets		1,513			2,085
Deferred income taxes		3,357			3,928
Total current assets		117,742			103,906

Property, plant and equipment, net		47,662			49,159
Goodwill		9,072			9,072
Other assets		969			541
Total assets	$	175,445		$	162,678

LIABILITIES
Current liabilities:
Current maturities of long-term debt	$	2,857		$	2,857
Accounts payable		17,432			17,789
Accrued salaries, wages and benefits		9,407			9,868
Other accrued expenses		2,637			1,356
Total current liabilities		32,333			31,870

Long-term debt, exclusive of current maturities		29,286			5,714
Deferred income taxes		6,475			7,422
Other long-term liabilities		8,430			8,025
Total liabilities		76,524			53,031

STOCKHOLDERS’ EQUITY
Common stock, $.02 par value, 25,000,000 shares authorized 10,332,179 and 10,928,610 shares issued and outstanding		207			219
Capital in excess of par value		548			59
Retained earnings		99,066			114,189
Accumulated other comprehensive loss		(900	)		(4,820	)
Total stockholders’ equity		98,921			109,647
Total liabilities and stockholders’ equity	$	175,445		$	162,678

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

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share data)

	Three Months				Nine Months
	Ended				Ended
	September		September		September		September
		29, 2007		30, 2006		29, 2007		30, 2006

Net sales	$	73,181	$	75,911	$	216,011	$	236,911

Cost of sales		60,432		60,951		176,128		184,575

Gross profit		12,749		14,960		39,883		52,336

Selling, general and administrative expenses		9,608		9,996		30,116		32,447
Pension plan termination charge (see note 4)						6,605
Operating income		3,141		4,964		3,162		19,889

Other income, net		79		91		187		252
Interest income		139		76		325		332
Interest expense		955		537		2,299		1,570

Income before income taxes		2,404		4,594		1,375		18,903

Income taxes		769		1,598		440		6,578

Net income	$	1,635	$	2,996	$	935	$	12,325

Earnings per share:

Basic	$	.16	$	.26	$	.09	$	1.04
Diluted	$	.16	$	.26	$	.09	$	1.01

Weighted average shares outstanding:

Basic		10,312		11,396		10,521		11,861
Diluted		10,503		11,657		10,744		12,147

Cash dividend declared and paid per common share	$	.10	$	.08	$	.30	$	.24

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

STANLEY FURNITURE COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited)

(in thousands)

	Nine Months Ended
	September			September
		29, 2007			30, 2006
Cash flows from operating activities:
Cash received from customers	$	212,857		$	234,933
Cash paid to suppliers and employees		(204,407	)		(199,742	)
Interest paid, net		(1,488	)		(1,335	)
Income taxes paid, net		(3,537	)		(8,612	)
Net cash provided by operating activities		3,425			25,244

Cash flows from investing activities:
Capital expenditures		(3,206	)		(2,023	)
Purchase of other assets		(28	)		(17	)
Net cash (used) by investing activities		(3,234	)		(2,040	)

Cash flows from financing activities:
Issuance of senior notes		25,000
Repayment of senior notes		(1,428	)		(1,428	)
Purchase and retirement of common stock		(13,557	)		(28,282	)
Proceeds from insurance policy loans		1,386			1,241
Dividends paid		(3,161	)		(2,859	)
Proceeds from exercised stock options		532			713
Tax benefit from exercise of stock options		32			255
Net cash provided (used) by financing activities		8,804			(30,360	)

Net increase (decrease) in cash		8,995			(7,156	)
Cash at beginning of period		6,269			12,556
Cash at end of period	$	15,264		$	5,400

Reconciliation of net income to net cash provided by operating activities:


Net income (loss)	$	935		$	12,325
Depreciation and amortization		4,562			4,368
Pension termination		5,002
Deferred income taxes		(2,290	)		(758	)
Tax benefit from exercise of stock options		(32	)		(255	)
Stock-based compensation		492			268
Other, net		194			23
Changes in assets and liabilities:
Accounts receivable		(3,010	)		(1,314	)
Inventories		(2,974	)		10,195
Prepaid expenses and other current assets		(959	)		(406	)
Accounts payable		(457	)		1,822
Accrued salaries, wages and benefits		481			(1,262	)
Other accrued expenses		1,384			777
Other assets		(308	)		(265	)
Other long-term liabilities		405			(274	)
Net cash provided by operating activities	$	3,425		$	25,244

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

STANLEY FURNITURE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

1.	Preparation of Interim Unaudited Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, 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, we believe 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. We suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and accompanying notes included in our latest Annual Report on Form 10-K.

2. Property, Plant and Equipment

	September		December
		29, 2007		31, 2006
Land and buildings	$	41,372	$	40,887
Machinery and equipment		82,116		79,051
Office furniture and equipment		1,452		1,452
Construction in process		1,387		2,071
Property, plant and equipment, at cost		126,327		123,461
Less accumulated depreciation		78,665		74,302
Property, plant and equipment, net	$	47,662	$	49,159

Debt

	September		December
		29, 2007		31, 2006
7.43% senior notes due through November 18, 2007	$	1,428	$	1,428
6.94% senior notes due through May 3, 2011		5,715		7,143
6.73% senior notes due through May 3, 2017		25,000
Total		32,143		8,571
Less current maturities		2,857		2,857
Long-term debt, exclusive of current maturities	$	29,286	$	5,714

We received $25 million in proceeds from a private note placement in April 2007. The note bears interest at 6.73% per annum and is payable in seven equal annual principal payments starting in May 2011, with the final payment due in May 2017. Proceeds from the loan are being used for general corporate purposes, including our stock repurchase program.

4. Employee Benefit Plans

Final distribution of assets and termination of our defined benefit pension plan occurred during the second quarter of 2007. As anticipated, this resulted in a final cash contribution of $1.6 million and a termination charge to earnings or settlement expense of $6.6 million. Our supplemental plan (a nonqualified plan) was not affected by this termination.

Components of pension cost:

Three Months

Nine Months

Ended

September

29, 2007

30, 2006

29, 2007

30, 2006

Interest cost

232

243

696

Expected return on plan assets

(245

)

(188

)

(736

)

Amortization of accumulated loss

125

218

375

Net cost

112

273

335

Settlement expense

341

6,606

652

Total expense

453

6,879

987

Components of other postretirement benefit cost:

	Three Months					Nine Months
	Ended					Ended
	September			September		September			September
		29, 2007			30, 2006		29, 2007			30, 2006
Service cost	$	20		$	25	$	62		$	73
Interest cost		40			43		119			130
Amortization of transition obligation		32			33		97			98
Amortization of prior service cost		(2	)				(6	)
Amortization of accumulated loss		6			10		17			31
Net periodic postretirement benefit cost	$	96		$	111	$	289		$	332

5.	Stockholders’ Equity

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:

Three Months

Nine Months

Ended

September

29, 2007

30, 2006

29, 2007

30, 2006

Weighted average shares outstanding

for basic calculation

10,312

11,396

10,521

11,861

Add: Effect of dilutive stock options

191

261

223

286

Weighted average shares outstanding

Adjusted for diluted calculation

10,503

11,657

10,744

12,147

A reconciliation of the activity in Stockholders’ Equity accounts for the quarter ended September 30, 2007 is as follows:

Accumulated

Capital in

Other

Common

Excess of

Retained

Comprehensive

Stock

Par Value

Earnings

Loss

Balance, December 31, 2006

219

114,189

(4,820

)

Cumulative effect of adoption of FIN 48

Adjusted balance, January 1, 2007

219

114,211

(4,820

)

Net Income

935

Exercise of stock options

531

Tax benefit on exercise of stock options

Stock repurchases

(13

)

(625

)

(12,919

)

Stock-based compensation

492

Cash dividends paid, $.30 per share

(3,161

)

Pension termination

3,739

Adjustment to net periodic benefit cost

181

Balance, September 29, 2007

207

548

99,066

(900

)

6. Income Taxes

We adopted the provisions of Financial Standards Accounting Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109 on January 1, 2007. As a result of the implementation of FIN 48, we recognized no material adjustment in the liability for unrecognized income tax benefits. At the adoption date of January 1, 2007, we had $923,000 of unrecognized tax benefits, all of which would affect our effective tax rate if recognized.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of January 1, 2007, we had approximately $219,000 of accrued interest related to uncertain tax positions.

The tax years 2003-2006 remain open to examination by the major taxing jurisdictions to which we are subject.

There have been no material changes in the amounts of our unrecognized tax benefits or interest and

penalties related to uncertain tax positions since we adopted FIN 48.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Over the past few years the residential wood furniture industry has experienced a surge in low cost imported products, primarily from China. Imports have grown dramatically in the past few years and now account for most residential wood furniture sold in the United States.

In response to this trend, we developed a blended strategy of combining our domestic manufacturing capabilities with an offshore sourcing program and realigned our manufacturing capacity. We incorporate selected imported finished items in our product line to lower cost, provide design flexibility and offer a better value to our customers. Sourced product represented approximately 34% of sales for both the first nine months of 2007 and total year 2006. We anticipate this percentage will remain about the same for the remainder of 2007.

In response to the continued industry-wide slowdown, we announced on October 10, 2007 plans to reduce our workforce and consolidate manufacturing operations by bringing our Martinsville production to our Stanleytown facility and expanding warehouse operations at the Martinsville facility. This action will result in a reduction of about 250 associates over the next two to four months. We expect to record a pre-tax restructuring and impairment charge, including operational inefficiencies, of about $6 million ($4.1 million after tax), or $.39 per share, about half of which will be non-cash. Most of the earnings impact is expected to occur in the fourth quarter of 2007 and the first quarter of 2008.

We will continue to evaluate our manufacturing capacity needs considering current and anticipated demand for our products, overall market conditions, offshore sourcing opportunities, and other factors we consider relevant. Should further capacity reductions become necessary, this could cause asset impairment or other restructuring charges in the future.

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

Three Months

Nine Months

Ended

September

29, 2007

30, 2006

29, 2007

30, 2006

Net sales

100.0

Cost of sales

82.6

80.3

81.5

77.9

Gross profit

17.4

19.7

18.5

22.1

Selling, general and administrative expenses

13.1

13.2

13.9

13.7

Pension plan termination charge

3.1

Operating income

4.3

6.5

1.5

8.4

Other income, net

Interest income

Interest expense

1.3

1.1

Income (loss) before income taxes

3.3

6.0

8.0

Income taxes

1.1

2.1

2.8

Net income (loss)

2.2

3.9

5.2

Net sales decreased $2.7 million, or 3.6%, for the three month period ended September 29, 2007 from the comparable 2006 period. For the nine month period, net sales decreased $20.9 million, or 8.8% from the 2006 nine month period. This was primarily due to lower unit volume, resulting from continued weakness in demand, which we believe is due primarily to current industry conditions.

Gross profit margins for the three and nine month periods of 2007 were 17.4% and 18.5%, respectively, compared to 19.7% and 22.1%, for the comparable 2006 periods. Lower margins resulted primarily from lower sales and production levels, raw material inflation and increased compensation costs. The lower sales and production levels led to lower margins due to the under absorption of factory overhead costs. In addition, costs associated with the transition to lower staffing and output levels at one of our factories, which was completed late in the first quarter of 2007, reduced gross profit margins earlier in the year.

Selling, general and administrative expenses for the three and nine month periods of 2007 as a percentage of net sales were 13.1% and 13.9%, respectively, compared to 13.2% and 13.7% for the comparable 2006 periods. Selling, general and administrative expenses for the three and nine months periods decreased $388,000 and $2.3 million, respectively, compared to the 2006 periods, due to lower selling expenses resulting from decreased sales, lower bad debt expense and cost control initiatives implemented in response to lower sales.

Final distribution of assets and termination of our defined benefit pension plan occurred during the second quarter of 2007, resulting in a settlement charge to earnings of $6.6 million pre-tax, or $4.5 million, net of taxes, and an additional cash contribution of $1.6 million.

As a result of the above, operating income, including the pension termination charge, as a percentage of net sales was 4.3% and 1.5% for the three and nine month periods of 2007 compared to 6.5% and 8.4%, for the comparable 2006 periods.

Interest income for the three and nine month periods of 2007 increased primarily due to higher cash levels. Interest expense increased during the three and nine month periods due to higher average debt levels. The increase in interest income and interest expense is due primarily to the $25 million private note placement which occurred during the second quarter of 2007.

The effective tax rate for 2007 is expected to be 32.0%, compared to 34.8% for total year 2006. The lower rate for 2007 is due primarily to lower income and the continued phase in of the qualified domestic production deduction.

Financial Condition, Liquidity and Capital Resources

Our sources of liquidity include cash on hand, cash from operations and amounts available under a $25.0 million credit facility. These sources have been adequate for day-to-day expenditures, debt payments, purchases of our stock, capital expenditures and payment of cash dividends to stockholders. We expect these sources of liquidity to continue to be adequate for the future.

Working capital, excluding cash and current maturities of long-term debt, increased $4.4 million during the first nine months of 2007 to $73.0 million from $68.6 million at year end. The increase was primarily due to an increase in accounts receivable and inventories.

Cash generated from operations was $3.4 million in the first nine months of 2007 compared to $25.2 million in the 2006 period. The decrease was primarily due to lower receipts from customers due to lower sales, higher inventory levels and the final contribution of $1.6 million to terminate our defined benefit pension plan; offset by lower tax payments due to lower taxable income.

Net cash used by investing activities was $3.2 million in the 2007 period compared to $2.0 million in 2006 and consisted of normal capital expenditures. Capital expenditures for 2007 are now anticipated to be in the range of $4.0 million to $4.5 million.

Net cash provided by financing activities was $8.8 million in the 2007 period compared to net cash used of $30.4 million in the 2006 period. In the 2007 period, a portion of the proceeds from our $25 million private note placement and cash from operations provided funds for the purchase and retirement of our common stock, payment of cash dividends and a scheduled debt payment of $1.4 million. During the first nine months of 2007, $13.6 million was used to purchase 639,331 shares of our common stock in the open market at an average price of $21.20. Approximately $19.0 million is currently authorized by our Board of Directors to repurchase shares of our common stock. In the 2006 period, cash from operations and proceeds from the exercise of stock options provided funds for the purchase and retirement of our common stock and the payment of cash dividends.

At September 29, 2007, long-term debt including current maturities was $32.1 million. Debt service requirements are $1.4 million for the remainder of 2007, $1.4 million each in 2008 through 2010, and $5 million in 2011.

As of September 29, 2007, approximately $25 million of additional borrowings were available under the revolving credit facility and cash on hand was $15.3 million.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our 10-K for the fiscal year ended December 31, 2006, except as follows:

FIN 48 – We account for uncertain tax positions in accordance with FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of income. See note 6 to the consolidated financial statements, “Income Taxes”, for additional detail on our uncertain tax positions.

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, competition in the furniture industry including competition from lower-cost foreign manufacturers, 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 China or other countries from which we source products, international trade policies of the United States and countries from which we source products, manufacturing realignment including operational inefficiencies resulting from the consolidation, relocation and disposal costs relating to equipment at the Martinsville facility, the inability to obtain sufficient quantities of quality raw materials in a timely manner, business failures or loss of large customers, the inability to raise prices in response to inflation and increasing costs, failure to anticipate or respond to changes to consumer tastes and fashions in a timely manner, environmental compliance costs and extended business interruption at manufacturing facilities.

Any forward-looking statement speaks only as of the date of this filing and we undertake 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

Our revolving credit facility bears interest at a variable rate; therefore, changes in prevailing interest rates impact our borrowing costs. A one-percentage point fluctuation in market interest rates would not have a material impact on earnings during the first nine months of 2007.

None of our foreign sales or purchases are denominated in foreign currency and we do not have any foreign currency hedging transactions. While our foreign purchases are denominated in U.S. dollars, a relative decline in the value of the U.S. dollar could result in an increase in the cost of our component parts and finished items obtained from offshore sourcing and reduce our earnings, unless we are able to increase our prices for these items to reflect any such increased cost.

ITEM 4.

Controls and Procedures

(a)

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

(b)	Changes in internal controls over financial reporting. There were no changes in our internal control over financial reporting that occurred during the third quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:

Maximum number (or

Total number of

approximate dollar

Total

Shares purchased

value) of shares that

number of

Average

as part of publicly

may yet be purchased

price paid

announced plans

under the plans or

Period

Purchased

per share

or programs

programs (a)

July 1 to August 4, 2007

117,500

19.14

117,500

19,042,193

August 5 to September 1, 2007

19,042,193

September 2 to Sept. 29, 2007

19,042,193

Total

117,500

19.14

117,500

(a)

On July 17, 2006, we announced that our Board of Directors increased our stock repurchase authorization to $50 million. Consequently, we may purchase our common stock, from time to time, either directly or through agents, in the open market, through negotiated purchases or otherwise, at prices and on terms satisfactory to us.

ITEM 5. Other Information

On October 12, 2007, the registrant entered into an Amendment to Amended and Restated Note Purchase and Private Shelf Agreements (the “Note Agreement Amendment”) with The Prudential Insurance Company of America (“Prudential”), Hartford Life Insurance Company, Medica Health Plans, Pruco Life Insurance Company of New Jersey, Prudential Retirement Insurance and Annuity Company, Mutual of Omaha Insurance Company. The Note Agreement Amendment, a copy of which is filed as Exhibit 4.1 to this Form 10-Q, amends certain loan covenants primarily in connection with the restructuring and impairment charges relating to the consolidation of the Company’s Martinsville facility.

On October 12, 2007, Stanley Furniture Company Inc., a Delaware corporation (the “Company”), and Wachovia Bank, National Association, a national banking association and successor to SouthTrust Bank, an Alabama banking corporation (the “Lender”), entered into the Fifth Amendment to Credit Agreement, dated as of October 12, 2007 (the “Bank Amendment”), which amends the Credit Agreement, dated as of August 29, 2003 (as amended by the First Amendment to Credit Agreement, dated as of April 23, 2004, the Second Amendment to Credit Agreement, dated as of June 15, 2005, the Third Amendment to Credit Agreement dated July 14, 2006), the Fourth Amendment to Credit Agreement, dated as of July 13, 2007, by and between the Company and the Lender. The Bank Amendment amends certain loan covenants, a copy of which is filed as Exhibit 10.2 to this Form 10-Q, amends certain loan covenants primarily in connection with the restructuring and impairment charges relating to the consolidation of the Company’s Martinsville facility.

The foregoing summary is qualified in its entirety by reference to the Bank Amendment and the Note Agreement Amendment, copies of which are incorporated by reference to Exhibits 4.1 and 10.2, respectively, to this Form 10-Q.

ITEM 6.

Exhibits

3.1	Restated Certificate of Incorporation of the Registrant as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended July 2, 2005).

3.2	By-laws of the Registrant as amended (incorporated by reference to Exhibit 3 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended September 27, 2003).

4.1	Amendment to Amended and Restated Note Purchase and Private Shelf Agreements dated as of October 12, 2007, among the Registrant, The Prudential Insurance Company of America (“Prudential”), Hartford Life Insurance Company, Medica Health Plans, Pruco Life Insurance Company of New Jersey, Prudential Retirement Insurance and Annuity Company, Mutual of Omaha Insurance Company. (1)

10.1	Fourth Amendment, to the revolving credit facility dated August 29, 2003, between the Registrant and Wachovia Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended June 30, 2007.)

10.2	Fifth Amendment, dated October 12, 2007, to the revolving credit facility dated August 29, 2003, between the Registrant and Wachovia Bank. (1)

31.1	Certification by Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)

31.2	Certification by Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)

32.1	Certification of Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)

32.2	Certification of Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (1)

(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.

Date: October 16, 2007		STANLEY FURNITURE COMPANY, INC.
		By: /s/ Douglas I. Payne
		Douglas I. Payne
		Executive V.P. – Finance & Administration And Secretary
		(Principal Financial and Accounting Officer)