ETH Ethan Allen Interiors Inc

Ethan Allen Interiors Inc. (�Ethan Allen� or the �Company�) (NYSE:ETH) today reported sales and earnings for the three and six months ended December 31, 2006. Three and Six Month Results Net delivered sales for the quarter ended December 31, 2006 amounted to $257.4 million as compared to $276.0 million in the prior year quarter. Net delivered sales for the Company�s Retail division decreased 1.4% to $177.4 million, while Wholesale sales decreased 11.7% to $165.7 million during that same period. Comparable Ethan Allen design center delivered sales decreased 8.5% as compared to the prior year quarter. For the six months ended December 31, 2006, net delivered sales totaled $500.2 million as compared to $527.3 million in the prior year comparable period. Net delivered sales for the Company�s Retail division increased 1.5% to $343.4 million, while Wholesale sales decreased 12.2% to $321.3 million during that same period. Comparable Ethan Allen design center delivered sales decreased 5.3% as compared to the prior year comparable period. For the quarter ended December 31, 2006, earnings per share amounted to $0.70 on net income of $22.8 million. This compares to earnings per share and net income of $0.77 and $26.2 million, respectively, in the prior year comparable period. For the six months ended December 31, 2006, earnings per share, which includes a previously announced September 2006 restructuring and impairment charge, amounted to $0.96 on net income of $31.2 million. This compares to earnings per share and net income of $1.26 and $43.3 million, respectively, in the prior year comparable period which included a September 2005 restructuring and impairment charge. Excluding the impact of these charges in both periods, earnings per share amounted to $1.22 on net income of $39.8 million in the current year period as compared to earnings per share and net income of $1.34 and $45.9 million, respectively, in the prior year comparable period. Farooq Kathwari, Chairman and CEO, commented: "We are pleased to report quarterly operating earnings of 14.2% of sales despite a soft home furnishings retail environment and challenging prior year comparisons which, together, resulted in a 6.7% decline in sales. Delivered sales and earnings for the December 2005 quarter were favorably impacted by stronger economic conditions and our initiative to reduce the lead time associated with the delivery of our products to the consumer. As a result, we experienced a substantial reduction in our backlog and increased profitability during the prior year quarter.� Mr. Kathwari further stated: �Our focus remains the positioning of Ethan Allen as a provider of interior design solutions. In order to achieve this objective, we continue to strengthen the professionalism of our associates, develop stylish products which better facilitate a one-stop design experience, and open new design centers in key markets. These efforts, we believe, along with our comprehensive and coordinated marketing programs, provide us a distinct competitive advantage and an opportunity to grow our business.� Commenting on business trends, Mr. Kathwari continued: �We saw positive trends in comparable written sales during the month of December. We also recognize that the home furnishings retail environment, as a whole, remains uncertain. At this stage, due to the strong positioning of Ethan Allen at retail, we believe the current average of analyst estimates for the fiscal third quarter ended March 31, 2007 is within reach.� 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 an exclusive network of 307 design centers in the United States and abroad, of which 149 are Company-owned. Ethan Allen has 9 manufacturing facilities, which include 2 sawmills, located throughout the United States. The Company will conduct a Conference Call at 11:00 AM (Eastern) on Wednesday, January 24th. 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, 2006 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 Six Months Ended 12/31/06� 12/31/05� 12/31/06� 12/31/05� Net Sales $ 257.4� $ 276.0� $ 500.2� $ 527.3� Gross Margin 52.0% 50.7% 52.0% 50.5% Operating Margin 14.2% 16.0% 10.1% 13.7% Operating Margin (ex restructuring & impairment charge (credit)) 14.1% 16.0% 12.9% 14.5% Net Income $ 22.8� $ 26.2� $ 31.2� $ 43.3� Net Income (ex restructuring & impairment charge (credit)) $ 22.6� $ 26.2� $ 39.8� $ 45.9� � Operating Cash Flow $ 20.9� $ 20.5� $ 56.2� $ 66.1� Capital Expenditures $ 19.3� $ 16.3� $ 34.9� $ 21.1� Treasury Stock Repurchases (settlement date basis) $ -� $ 14.3� $ 17.7� $ 51.1� � EBITDA $ 42.9� $ 49.5� $ 62.9� $ 82.7� EBITDA as % of Net Sales 16.7% 17.9% 12.6% 15.7% EBITDA (ex restructuring & impairment charge (credit)) $ 42.6� $ 49.5� $ 76.5� $ 86.9� EBITDA as % of Net Sales (ex restructuring & impairment charge (credit)) 16.5% 17.9% 15.3% 16.5% Selected Financial Data by Business Segment: � � � Three Months Ended Six Months Ended Retail 12/31/06� 12/31/05� 12/31/06� 12/31/05� Net Sales $ 177.4� $ 180.0� $ 343.4� $ 338.4� Operating Margin 3.3% 5.2% 2.5% 3.3% � Three Months Ended Six Months Ended Wholesale 12/31/06� 12/31/05� 12/31/06� 12/31/05� Net Sales $ 165.7� $ 187.5� $ 321.3� $ 366.0� Operating Margin 18.2% 17.9% 12.9% 17.3% Operating Margin (ex restructuring & impairment charge (credit)) 18.0% 17.9% 17.2% 18.5% Ethan Allen Interiors Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) � Three Months Six Months Ended December 31, Ended December 31, 2006� 2005� 2006� 2005� � (unaudited) (unaudited) � Net sales $ 257,419� $ 276,003� $ 500,242� $ 527,317� Cost of sales 123,669� 136,149� 240,163� 260,923� Gross profit 133,750� 139,854� 260,079� 266,394� � Operating expenses: Selling 54,175� 54,511� 109,213� 107,951� General & administrative 43,360� 41,055� 86,485� 81,720� Restructuring & impairment charge (credit) (314) � -� 13,622� 4,241� Total operating expenses 97,221� 95,566� 209,320� 193,912� Operating income 36,529� 44,288� 50,759� 72,482� Interest & other miscellaneous income 2,575� 1,161� 4,807� 1,203� Interest & other related financing costs 2,915� 2,974� 5,853� 3,402� Income before income tax expense 36,189� 42,475� 49,713� 70,283� Income tax expense 13,397� 16,311� 18,469� 26,989� Net income $ 22,792� $ 26,164� $ 31,244� $ 43,294� Basic earnings per share: Net income per share $ 0.72� $ 0.79� $ 0.98� $ 1.29� Basic weighted average shares outstanding 31,737� 33,078� 31,776� 33,499� � Diluted earnings per share: Net income per share $ 0.70� $ 0.77� $ 0.96� $ 1.26� Diluted weighted average shares outstanding 32,503� 33,845� 32,567� 34,236� Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets (In thousands) � December 31, June 30, 2006� 2006� � (unaudited) � Assets Current Assets: Cash and cash equivalents $ 155,564� $ 173,801� Accounts receivable, net 15,212� 22,179� Inventories 179,604� 189,650� Prepaid expenses and other current assets 41,548� 38,126� Total current assets 391,928� 423,756� � Property, plant, and equipment, net 312,581� 294,170� Intangible assets, net 90,127� 87,899� Other assets 6,122� 6,416� Total Assets $ 800,758� $ 812,241� � Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 39� $ 39� Customer deposits 46,709� 53,203� Accounts payable 23,403� 28,549� Accrued expenses and other current liabilities 64,217� 63,927� Total current liabilities 134,368� 145,718� � Long-term debt 202,808� 202,748� Other long-term liabilities 12,183� 12,151� Deferred income taxes 30,985� 34,182� Total liabilities 380,344� 394,799� � Shareholders' equity 420,414� 417,442� Total Liabilities and Shareholders' Equity $ 800,758� $ 812,241�