ETH Ethan Allen Interiors Inc

Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company") (NYSE:ETH) today reported operating results for the three and twelve months ended June 30, 2006. Year Ended June 30, 2006 For the twelve months ended June 30, 2006, the Company achieved record sales totaling $1.066 billion, an increase of 12.4% from $949.0 million in the prior year. Net delivered sales for the Company's Retail division increased 17.9% to $691.0 million, while Wholesale sales increased 11.0% to $736.1 million during that same period. Comparable Ethan Allen store delivered sales increased 12.3% over the prior year. For the twelve months ended June 30, 2006, earnings per share, which includes a pre-tax restructuring and impairment charge of $4.2 million related to the Company's ongoing conversion of one of its existing manufacturing facilities into a regional distribution center, increased 14.6% to $2.51 on net income of $85.7 million. This compares to earnings per share and net income of $2.19 and $79.3 million, respectively, in the prior year. Excluding the impact of the restructuring and impairment charge, earnings per share for the current twelve-month period amounted to $2.59 on net income of $88.3 million. During fiscal 2006, the Company utilized $84.1 million of available cash from operations to repurchase 2.5 million shares of its common stock in the open market. As of June 30, 2006, the Company had remaining authorization available to repurchase an additional 1.6 million shares. Three Months Ended June 30, 2006 Net delivered sales for the quarter ended June 30, 2006 increased 12.3% to $272.0 million from $242.3 million in the prior year quarter. Net delivered sales for the Company's Retail division increased 21.8% to $184.4 million, while Wholesale sales increased 3.6% to $178.0 million during that same period. Comparable Ethan Allen store delivered sales increased 12.8% over the prior year quarter. For the quarter ended June 30, 2006, earnings per share increased 17.9% to $0.66 on net income of $22.4 million. This compares to earnings per share and net income of $0.56 and $19.5 million, respectively, in the prior year comparable period. During the current quarter, the Company utilized $33.0 million of available cash from operations to repurchase 910,900 shares of its common stock in the open market. Farooq Kathwari, Chairman and CEO, commented: "We are pleased with our results for the year and in reaching the milestone of $1 billion in annual sales. We believe that the continued progress being made by Ethan Allen is reflective of several initiatives undertaken in recent years, including: the continued repositioning of our retail network; investments to increase the professionalism of our retail management team; the success of new product introductions; improved advertising and marketing programs; and faster delivery of our products to our customers. All of these initiatives have been undertaken with a common objective - a renewed focus on superior customer service." Mr. Kathwari continued: "As I have stated previously, a number of these initiatives have entailed significant cost. Still, despite these costs and the current year effects of the higher prices of selected raw materials and fuel, we have recognized notable increases in both profitability and operating cash flow." Commenting on the Company's outlook for the fiscal year ended June 30, 2007, Mr. Kathwari stated: "While the results of the last twelve months are encouraging, written business in recent months has slowed from the levels noted during the past year. In addition, we remain cautiously aware of the state of the economy and the threat of further increases in interest rates and fuel prices which could have an adverse impact on consumer spending and profitability. Still, with the strategies we've recently implemented, we believe we have the opportunity to continue to grow our business. At the present time, we believe that fiscal year 2007 sales and earnings per share will increase 5-7% and 10-12%, respectively. As always, we will provide updates to this guidance during the year should circumstances warrant." Ethan Allen is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through an exclusive network of 306 interior design centers in the United States and abroad, of which 139 are Company-owned. Ethan Allen has 11 manufacturing facilities, which include 2 sawmills, located throughout the United States. The Company will conduct a Conference Call at 11:00 AM (Eastern) on Thursday, June 27th. 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, 2005 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. -0- *T Ethan Allen Interiors Inc. Selected Financial Information (In millions) Selected Consolidated Financial Data: ------------------------------------- Three Months Ended Twelve Months Ended ------------------ ------------------- 6/30/06 6/30/05 6/30/06 6/30/05 -------- -------- -------- -------- Net Sales $ 272.0 $ 242.3 $1,066.4 $ 949.0 Gross Margin 51.4% 49.9% 50.7% 48.6% Operating Margin 13.5% 13.3% 13.4% 13.6% Operating Margin (ex restructuring & impairment charge) 13.5% 13.3% 13.8% 13.6% Net Income $ 22.4 $ 19.5 $ 85.7 $ 79.3 Net Income (ex restructuring & impairment charge) $ 22.4 $ 19.5 $ 88.3 $ 79.3 Operating Cash Flow $ 39.7 $ 24.2 $ 132.1 $ 103.3 Capital Expenditures $ 13.2 $ 6.1 $ 41.5 $ 30.3 Treasury Stock Repurchases (settlement date basis) $ 33.0 $ 22.6 $ 84.1 $ 82.2 EBITDA $ 44.2 $ 37.3 $ 168.8 $ 151.4 EBITDA as % of Net Sales 16.2% 15.4% 15.8% 16.0% EBITDA (ex restructuring & impairment charge) $ 44.2 $ 37.3 $ 173.0 $ 151.4 EBITDA as % of Net Sales (ex restructuring & impairment charge) 16.2% 15.4% 16.2% 16.0% Selected Financial Data by Business Segment: -------------------------------------------- Three Months Ended Twelve Months Ended -------------------- -------------------- Retail 6/30/06 6/30/05 6/30/06 6/30/05 ------ --------- --------- --------- --------- Net Sales $ 184.4 $ 151.4 $ 691.0 $ 586.2 Operating Margin 4.6% 3.1% 2.9% 2.2% Three Months Ended Twelve Months Ended -------------------- -------------------- Wholesale 6/30/06 6/30/05 6/30/06 6/30/05 --------- --------- --------- --------- --------- Net Sales $ 178.0 $ 171.8 $ 736.1 $ 663.2 Operating Margin 15.7% 17.1% 17.0% 17.5% Operating Margin (ex restructuring & impairment charge) 15.7% 17.1% 17.6% 17.5% Ethan Allen Interiors Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) ---------------------------------------------------------------------- Three Months Ended Twelve Months Ended June 30, June 30, 2006 2005 2006 2005 ---------------------------------------------------------------------- Net sales $272,002 $242,260 $1,066,390 $949,012 Cost of sales 132,160 121,482 525,408 487,958 --------- --------- ----------- --------- Gross profit 139,842 120,778 540,982 461,054 Operating expenses: Selling 58,113 50,707 224,404 188,054 General and administrative 44,878 37,922 169,665 144,241 Restructuring and impairment charges - - 4,241 (219) --------- --------- ----------- --------- Total operating expenses 102,991 88,629 398,310 332,076 --------- --------- ----------- --------- Operating income 36,851 32,149 142,672 128,978 Interest and other miscellaneous income 1,976 (203) 4,926 1,203 Interest and other related financing costs 2,996 273 9,493 761 --------- --------- ----------- --------- Income before income tax expense 35,831 31,673 138,105 129,420 Income tax expense 13,437 12,162 52,423 50,082 --------- --------- ----------- --------- Net income $ 22,394 $ 19,511 $ 85,682 $ 79,338 ========= ========= =========== ========= Basic earnings per share: ------------------------- Net income per share $ 0.68 $ 0.57 $ 2.58 $ 2.24 ========= ========= =========== ========= Basic weighted average shares outstanding 32,819 34,531 33,210 35,400 Diluted earnings per share: --------------------------- Net income per share $ 0.66 $ 0.56 $ 2.51 $ 2.19 ========= ========= =========== ========= Diluted weighted average shares outstanding 33,824 34,960 34,086 36,193 Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets (In thousands) ---------------------------------------------------------------------- June 30, June 30, 2006 2005 ---------------------------------------------------------------------- Assets Current Assets: Cash and cash equivalents $ 173,801 $ 3,448 Accounts receivable, net 22,179 28,019 Inventories 189,650 186,479 Prepaid expenses and other current assets 38,126 46,443 ---------- ---------- Total current assets 423,756 264,389 Property, plant, and equipment, net 294,170 275,211 Intangible assets, net 87,899 82,897 Other assets 6,416 5,889 ---------- ---------- Total Assets $ 812,241 $ 628,386 ========== ========== Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt and capital lease obligations $ 39 $ 240 Customer deposits 53,203 53,654 Accounts payable 30,560 19,352 Accrued expenses and other current liabilities 61,916 60,720 ---------- ---------- Total current liabilities 145,718 133,966 Long-term debt 202,748 12,270 Other long-term liabilities 12,151 12,445 Deferred income taxes 34,182 35,637 ---------- ---------- Total liabilities 394,799 194,318 Shareholders' equity 417,442 434,068 ---------- ---------- Total Liabilities and Shareholders' Equity $ 812,241 $ 628,386 ========== ========== *T