-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IMGDRCepGhvi2oUCesk2+7lXCcZZNGDvrDjiq/FdH6R2aQTlHZj9EvQbvYAWKjwO xUeXcnUZBKX19PjJ+sGcNg== 0000932440-08-000238.txt : 20080423 0000932440-08-000238.hdr.sgml : 20080423 20080422183643 ACCESSION NUMBER: 0000932440-08-000238 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080421 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080423 DATE AS OF CHANGE: 20080422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ETHAN ALLEN INTERIORS INC CENTRAL INDEX KEY: 0000896156 STANDARD INDUSTRIAL CLASSIFICATION: WOOD HOUSEHOLD FURNITURE, (NO UPHOLSTERED) [2511] IRS NUMBER: 061275288 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11692 FILM NUMBER: 08770249 BUSINESS ADDRESS: STREET 1: ETHAN ALLEN DR STREET 2: PO BOX 1966 CITY: DANBURY STATE: CT ZIP: 06811 BUSINESS PHONE: 2037438000 8-K 1 ea8k_042108-253958.htm FORM 8-K - RESULTS OF OPERATIONS
 

UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington D.C.  20549
 
FORM 8-K
 
Current Report
 
Pursuant to Section 13 or 15(d) of the
 
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  April 21, 2008
 
ETHAN ALLEN INTERIORS INC.
 
(Exact name of registrant as specified in its charter)
 
 
Delaware
1-11692
06-1275288
 
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
Ethan Allen Drive
Danbury, CT
 
 
06811
 
(Address of principal executive offices)
(Zip Code)
 
     

 
Registrant’s telephone number, including area code:    (203) 743-8000
 
                                       Not Applicable                                       
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 

INFORMATION TO BE INCLUDED IN REPORT
 
SECTION 2 – FINANCIAL INFORMATION
 
Item 2.02         Results of Operations and Financial Condition
 
The information contained within Item 2.02 of this Form 8-K and the Exhibits attached hereto shall  not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
 
On April 21, 2008, Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) issued a press release setting forth its operating results for the three and nine months ended March 31, 2008. A copy of the press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
 
 
On April 22, 2008 Ethan Allen conducted a conference call during which certain unaudited, non-GAAP financial information related to the Company’s operations for the three and nine months ended March 31, 2008 and March 31, 2007 was disclosed. This information is set forth in the attached Exhibit 99.2.
 
 
Exhibits 99.1 and 99.2 include references to the Company's (i) consolidated operating profit, (ii) wholesale operating profit, (iii) net income, (iv) earnings per share, and (v) earnings before interest, taxes, depreciation and amortization ("EBITDA"), all excluding the effects of  restructuring and impairment charges recorded during the three months ended March 31, 2008 and the three and nine months ended March 31, 2007 as a result of the Company's decisions to consolidate retail and manufacturing facilities. A reconciliation of these financial measures to the most directly comparable financial measure reported in accordance with generally accepted accounting principles (“GAAP”) is also provided in Exhibit 99.2.
 
 
Management believes that excluding items which are deemed to be non-recurring in nature from financial measures such as operating profit, wholesale operating profit, net income, and earnings per share, allows investors to more easily compare and evaluate the Company's financial performance relative to prior periods and industry comparables.  These adjusted measures also aid investors in understanding the operating results of the Company absent such non-recurring or unusual events.
 
 
Management considers EBITDA an important indicator of the operational strength and performance of its business, including the ability of the Company to pay interest, service debt and fund capital expenditures. Given the nature of the Company's operations, including the tangible assets necessary to carry out its production and distribution activities, depreciation and amortization represent Ethan Allen's largest non-cash charges. As these non-cash charges do not affect the Company's ability to service debt or make capital expenditures, it is important to consider EBITDA in addition to, but not as a substitute for, operating income, net income and other measures of financial performance reported in accordance with GAAP, including cash flow measures such as operating cash flow.  Further, EBITDA is one measure used to determine compliance with the Company's existing credit facility.
 

 
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
 
Item 9.01         Financial Statements and Exhibits
 
(d) Exhibits
 
Exhibit
Description
99.1
Press release dated April 21, 2008
99.2
Reconciliation of non-GAAP financial information disclosed in April 21, 2008 press release and conference call to the most directly comparable GAAP financial measure

2
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ETHAN ALLEN INTERIORS INC.
 
Date: April 22, 2008
By:
  /s/ M. Farooq Kathwari
   
M. Farooq Kathwari
   
Chairman, President and
Chief Executive Officer



3
EXHIBIT INDEX
 

 
Exhibit
 
Description
99.1
Press release dated April 21, 2008
99.2
Reconciliation of non-GAAP financial information disclosed in April 21, 2008 press release and conference call to the most directly comparable GAAP financial measure




4

EX-99 2 ea8k_apr2208-exh991.htm EXHIBIT 99.1 - PRESS RELEASE

EXHIBIT 99.1

For Immediate Release Ethan Allen Interiors Inc.
Contact: Peg Lupton
  (203) 743-8234


ETHAN ALLEN ANNOUNCES THIRD QUARTER SALES AND EARNINGS

DANBURY, CT., April 21, 2008 – Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH) today reported operating results for the three and nine months ended March 31, 2008.

Three Month Results
Net delivered sales for the quarter ended March 31, 2008 decreased 4.3% to $235.9 million as compared to $246.5 million in the prior year quarter. Net delivered sales for the Company’s Retail division increased 3.0% to $172.8 million. Wholesale sales decreased 9.1% to $156.3 million during that same period. Comparable Ethan Allen design center delivered sales decreased 1.1% as compared to the prior year quarter.

During the quarter ended March 31, 2008, four Design Centers were converted to smaller size Design Studios better suited to the markets they serve. In addition, seven Design Centers and two retail Service Centers were closed and, for the most part, were consolidated into other existing operations resulting in a total pretax restructuring and impairment charge of $4.0 million or $2.5 million after tax and $0.09 per diluted share.

For the quarter ended March 31, 2008, earnings per diluted share, which includes the aforementioned restructuring and impairment charge, amounted to $0.30 on net income of $8.8 million. This compares to earnings per diluted share and net income of $0.54 and $17.5 million, respectively, in the prior year comparable period which also included a restructuring and impairment charge. Excluding the impact of the restructuring and impairment charges on both periods, earnings per diluted share for the current quarter amounted to $0.39 on net income of $11.4 million and for the comparable prior year period $0.54 per share on net income of $17.4 million.

Nine Month Results
For the nine months ended March 31, 2008, net delivered sales decreased 0.4% to $744.1 million as compared to $746.8 million in the prior year comparable period. Net delivered sales for the Company’s Retail division increased 7.2% to $548.1 million, while Wholesale sales decreased 5.0% to $468.5 million during that same period. Comparable Ethan Allen design center delivered sales decreased 0.5% as compared to the prior year period.

For the nine months ended March 31, 2008, which includes the aforementioned restructuring and impairment charge, earnings per diluted share amounted to $1.58 on net income of $47.0 million. This compares to earnings per diluted share and net income of $1.50 and $48.7 million, respectively, in the prior year comparable period which also included a restructuring and impairment charge. Excluding the impact of these charges in both periods, earnings per diluted share for the current year amounted to $1.67 on net income of $49.5 million, from $1.76 per share, on net income of $57.2 million in the prior year comparable period.

Farooq Kathwari, Chairman and CEO, commented, “Despite the challenges of a weak economy, we are pleased with the major progress we are making in positioning Ethan Allen as a provider of design solutions and service. Our results in the third quarter ended March 31, 2008, were impacted by a weaker economy and costs associated with the many initiatives we have implemented to strengthen our business.”
 
Mr. Kathwari continued, “Sales in March particularly slowed down due to broader economic concerns raised by the extraordinary intervention of the Federal Reserve to stabilize financial institutions, and to some extent due to Easter falling in March this year. With a relatively calmer economic environment in April, and Easter behind us, the decline in sales so far has been considerably reduced.”

Mr. Kathwari stated, “During the March quarter we continued to reposition our retail network. We opened four new relocated design centers, converted four into design studios, consolidated or closed seven design centers and two retail service centers, and substantially completed the implementation of Lifestyle presentations in nearly all of our 153 company-owned design centers. During the quarter that will end June 30, 2008, we expect to consolidate the two remaining Design Centers located in New York City with the opening of the new flagship Design Center in Manhattan located at 3rd Avenue and 60th Street. The company expects to take a $3 to $4 million pretax restructuring charge or $1.9 to $2.5 million after tax, during the fourth quarter. We also expect to open five or six additional new design centers during the fourth quarter.”

Mr. Kathwari continued, “As we stated in our April 10, 2008, press release, we have absorbed costs related to all of these initiatives, especially in the third quarter, and we should see benefits in our next fiscal year. Most of the major relocation of our design centers is expected to be completed this fiscal year, and we expect our capital expenditures for the next fiscal year to be reduced by about 30% to 50% from the current annual expenditure level of about $70 million.” 

Commenting on the outlook, Mr. Kathwari said: “While the near term economic environment remains uncertain, we remain confident that the many initiatives we have taken will help us to continue to do relatively well in the near term, and more importantly, that we are positioned to do well as the over all economy starts to move in a positive direction.”Ethan Allen Interiors Inc. is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through a network of 291 design centers in the United States and abroad, of which 153 are Company-owned. Ethan Allen has nine manufacturing facilities, which include two sawmills, located throughout the United States and one facility located in Mexico.

 

The Company will conduct a Conference Call at 8:30 a.m. (Eastern) on Tuesday, April 22nd. The live webcast and replay are accessible via the Company’s website at www.ethanallen.com/investors .

 
This press release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2007 and other reports filed with the Securities and Exchange Commission. This press release and related discussions contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect management’s current expectations concerning future events and results of the Company, and are subject to various assumptions, risks and uncertainties. Accordingly, actual future events or results could differ materially from those contemplated by the forward-looking statements. The Company assumes no obligation to update or provide revision to any forward-looking statement at any time for any reason.

#######

 

 

 

 

Ethan Allen Interiors Inc.

Selected Financial Information

Unaudited

(In millions)

         

Selected Consolidated Financial Data:

       
 

Three Months Ended

Nine Months Ended

 

3/31/08

3/31/07

3/31/08

3/31/07

Net Sales

        235.9

     $246.5

     $744.1

     $746.8

Gross Margin

          53.1%

         52.1%

         53.5%

         52.0%

Operating Margin

            6.6%

         11.4%

         10.3%

         10.6%

Operating Margin (ex restructuring &

       

impairment charge (credit))

            8.3%

         11.3%

         10.9%

         12.4%

Net Income

          $8.8

       $17.5

       $47.0

       $48.7

Net Income (ex restructuring & impairment

       

charge (credit))

        $11.4

       $17.4

       $49.5

       $57.2

         

Operating Cash Flow

        $19.9

       $13.7

       $67.3

       $69.9

Capital Expenditures

        $16.0

       $12.5

       $46.3

       $47.5

Treasury Stock Repurchases (settlement

       

date basis)

           8.4

        16.9

        73.2

        34.6

         

EBITDA

       $22.2

      $34.5

      $97.9

      $97.3

EBITDA as % of Net Sales

           9.4%

        14.0%

        13.2%

        13.0%

EBITDA (ex restructuring & impairment

       

charge (credit))

       $26.2

      $34.3

     $101.9

    $110.8

EBITDA as % of Net Sales (ex

       

restructuring & impairment charge (credit))

        11.1%

       13.9%

        13.7%

        14.8%

 

 

 

Selected Financial Data by Business Segment:

     
         
 

Three Months Ended

Nine Months Ended

Retail

3/31/08

3/31/07

3/31/08

3/31/07

Net Sales

$ 172.8

$ 167.7

$ 548.1

$ 511.1

Operating Margin

(4.9%)

(0.1%)

(0.2%)

1.7%

Operating Margin (ex restructuring &

 

 

 

 

impairment charge (credit))

(2.6%)

(0.1%)

0.5% 

1.7%

 

       
 

Three Months Ended

Nine Months Ended

Wholesale

3/31/08

3/31/07

3/31/08

3/31/07

Net Sales

$ 156.3

$ 171.9

$ 468.5

$ 493.2

Operating Margin

17.1%

18.5%

17.0%

 14.9%

Operating Margin (ex restructuring &

 

 

impairment charge (credit))

17.1%

18.4%

 17.0%

17.6%



 

Ethan Allen Interiors Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

   

Three Months
Ended March 31,

 

Nine Months
Ended March 31,

 
   

2008

 

2007

 

2008

 

2007

 
   

(unaudited)

 

(unaudited)

 
                   

Net sales

 

$235,901

 

$246,539

 

$744,138

 

$746,781

 

Cost of sales

 

110,714

 

118,023

 

346,041

 

358,186

 

Gross profit

 

125,187

 

128,516

 

398,097

 

388,595

 

Operating expenses:

                 

Selling

 

56,112

 

54,880

 

171,290

 

164,093

 

General & administrative

 

49,502

 

45,729

 

145,940

 

132,214

 

Restructuring & impairment charge
(credit)

 

3,993

 

(180)

 

3,993

 

13,442

 

Total operating expenses

 

109,607

 

100,429

 

321,223

 

309,749

 

Operating income

 

15,580

 

28,087

 

76,874

 

78,846

 

Interest & other miscellaneous income

 

1,375

 

2,339

 

6,478

 

7,146

 

Interest & other related financing costs

 

2,914

 

2,927

 

8,793

 

8,780

 

Income before income tax expense

 

14,041

 

27,499

 

74,559

 

77,212

 

Income tax expense

 

5,195

 

10,000

 

27,587

 

28,469

 

Net income

 

$8,846

 

$17,499

 

$46,972

 

$48,743

 
                   

Basic earnings per share:

                 

Net income per share

 

$0.31

 

$0.55

 

$1.59

 

$1.54

 

Basic weighted average shares outstanding

 

28,909

 

31,656

 

29,461

 

31,736

 
                   

Diluted earnings per share:

                 

Net income per share

 

$0.30

 

$0.54

 

$1.58

 

$1.50

 

Diluted weighted average shares outstanding

 

29,049

 

32,352

 

29,685

 

32,495

 


 

 

 

 

 

 



 

Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(In thousands)

         
   

March 31,

 

June 30,

Assets

 

2008

2007

Current Assets:

       

Cash and cash equivalents

$

77,011

$

147,879

Accounts receivable, net

 

12,551

 

14,602

Inventories

 

186,357

 

181,884

Prepaid expenses and other current assets

 

39,117

 

33,104

Deferred income taxes

 

2,327

 

4,960

Total current assets

 

317,363

 

382,429

         

Property, plant, and equipment, net

 

343,160

 

322,185

Intangible assets, net

 

94,045

 

92,500

Other assets

 

4,823

 

5,484

Total Assets

$

759,391

$

802,598

         

Liabilities and Shareholders’ Equity

       

Current Liabilities:

       

Current maturities of long-term debt

$

41

$

40

Customer deposits

 

46,363

 

52,072

Accounts payable

 

22,934

 

26,650

Accrued expenses and other current liabilities

 

68,841

 

68,677

Total current liabilities

 

138,179

 

147,439

         

Long-term debt

 

202,958

 

202,868

Other long-term liabilities

 

20,515

 

12,003

Deferred income taxes

 

28,067

 

30,646

Total liabilities

 

389,719

 

392,956

         

Shareholders’ equity

 

369,672

409,642

Total Liabilities and Shareholders’ Equity

$

759,391

$

802,598


 

EX-99 3 ea8k_042108-exh992.htm FINANCIAL INFORMATION

Ethan Allen Interiors Inc.
                   
EXHIBIT 99.2
 
GAAP Reconciliation
                       
Three and Nine Months Ended March 31, 2008 and 2007
                   
(in thousands, except per share amounts)
                       
                         
   
Three Months Ended
   
Nine Months Ended
 
   
March       
   
March       
 
   
2008
   
2007
   
2008
   
2007
 
                         
Net Income / Earnings Per Share
                       
Net income
  $ 8,846     $ 17,499     $ 46,972     $ 48,743  
Add: restructuring and impairment charge (credit), net of
                         
  related tax effect
    2,516       (115 )     2,516       8,486  
Net income (excluding restructuring and impairment
                         
  charge (credit))
  $ 11,362     $ 17,384     $ 49,488     $ 57,229  
                                 
                                 
Earnings per basic share
  $ 0.31     $ 0.55     $ 1.59     $ 1.54  
Earnings per basic share (excluding restructuring and
                         
  impairment charge (credit))
  $ 0.39     $ 0.55     $ 1.68     $ 1.80  
Basic weighted average shares outstanding
    28,909       31,656       29,461       31,736  
                                 
                                 
                                 
Earnings per diluted share
  $ 0.30     $ 0.54     $ 1.58     $ 1.50  
Earnings per diluted share (excluding restructuring and
                         
  impairment charge (credit))
  $ 0.39     $ 0.54     $ 1.67     $ 1.76  
Diluted weighted average shares outstanding
    29,049       32,352       29,685       32,495  
                                 
                                 
Consolidated Operating Income / Operating Margin
                               
Operating income
  $ 15,580     $ 28,087     $ 76,874     $ 78,846  
Add: restructuring and impairment charge (credit)
    3,993       (180 )     3,993       13,442  
Operating income (excluding restructuring and impairment
                         
  charge (credit))
  $ 19,573     $ 27,907     $ 80,867     $ 92,288  
                                 
Net sales
  $ 235,901     $ 246,539     $ 744,138     $ 746,781  
Operating margin
    6.6 %     11.4 %     10.3 %     10.6 %
Operating margin (excluding restructuring and impairment
                         
  charge (credit))
    8.3 %     11.3 %     10.9 %     12.4 %
                                 
                                 
Wholesale Operating Income / Operating Margin
                               
Wholesale operating income
  $ 26,676     $ 31,862     $ 79,832     $ 73,423  
Add: restructuring and impairment charge (credit)
    -       (180 )     -       13,442  
Wholesale operating income (excluding restructuring and
                         
  impairment charge (credit))
  $ 26,676     $ 31,682     $ 79,832     $ 86,865  
                                 
Wholesale net sales
  $ 156,269     $ 171,906     $ 468,522     $ 493,208  
Wholesale operating margin
    17.1 %     18.5 %     17.0 %     14.9 %
Wholesale operating margin (excluding restructuring and
                         
  impairment charge (credit))
    17.1 %     18.4 %     17.0 %     17.6 %
                                 
Retail Operating Income / Operating Margin
                               
                                 
Retail operating income (loss)
  $ (8,544 )   $ (94 )   $ (1,294 )   $ 8,540  
                                 
Add: restructuring and impairment charge (credit)
    3,993       -       3,993       -  
                                 
Retail operating income (excluding restructuring and
                         
  impairment charge (credit))
  $ (4,551 )   $ (94 )   $ 2,699     $ 8,540  
                                 
Retail net sales
  $ 172,779     $ 167,724     $ 548,112     $ 511,104  
                                 
Retail operating margin
    -4.9 %     -0.1 %     -0.2 %     1.7 %
                                 
Retail operating margin (excluding restructuring and
                         
  impairment charge (credit))
    -2.6 %     -0.1 %     0.5 %     1.7 %
                                 
EBITDA
                               
                                 
Net income
  $ 8,846     $ 17,499     $ 46,972     $ 48,743  
Add: interest expense (income), net
    2,173       1,158       5,256       2,876  
Add: income tax expense
    5,195       10,000       27,587       28,469  
Add: depreciation and amortization
    5,991       5,818       18,077       17,241  
EBITDA
  $ 22,205     $ 34,475     $ 97,892     $ 97,329  
Net sales
  $ 235,901     $ 246,539     $ 744,138     $ 746,781  
EBITDA as % of net sales
    9.4 %     14.0 %     13.2 %     13.0 %
                                 
EBITDA
  $ 22,205     $ 34,475     $ 97,892     $ 97,329  
Add: restructuring and impairment charge (credit)
    3,993       (180 )     3,993       13,442  
EBITDA (excluding restructuring and impairment charge (credit))
  $ 26,198     $ 34,295     $ 101,885     $ 110,771  
Net sales
  $ 235,901     $ 246,539     $ 744,138     $ 746,781  
EBITDA as % of net sales (excluding restructuring and impairment charge (credit))
    11.1 %     13.9 %     13.7 %     14.8 %


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