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Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH) today reported operating results for the three and twelve months ended June 30, 2009.

Three Months Ended June 30, 2009

Net delivered sales for the quarter ended June 30, 2009 amounted to $138.7 million as compared to $235.9 million in the prior year quarter. Net delivered sales for the Company’s Retail division were $102.3 million compared with $176.5 million the prior year quarter. Wholesale sales were $85.2 million versus $147.7 million the prior year quarter. Comparable Ethan Allen design center delivered sales were down 43.5% as compared to the prior year quarter.

For the quarter ended June 30, 2009, diluted loss per share amounted to $0.58 on a loss of $16.9 million, which includes a $12.9 million restructuring and impairment charge for previously announced actions. Also included in the current quarter results was $1.5 million ($0.05 per diluted share) of tax expense for the recording of reserves on certain deferred tax assets. This compares to diluted earnings per share and net income of $0.39 and $11.1 million, respectively, for the prior year, which included a restructuring and impairment charge of $2.8 million. Excluding the impact of the restructuring and impairment charges in both periods and the tax entries in the current quarter, diluted loss per share amounted to $0.23 in the current period compared to diluted earnings per share of $0.45 in the prior year comparable period.

Year Ended June 30, 2009

For the twelve months ended June 30, 2009, net delivered sales totaled $674.3 million as compared to $980.0 million in the prior year comparable period. Net delivered sales for the Company’s Retail division were $508.6 million compared with $724.6 million the prior year. Wholesale sales were $403.4 million versus $616.2 million the prior year. Comparable Ethan Allen design center delivered sales were down 32.5% as compared to the prior year comparable period.

For the twelve months ended June 30, 2009, which includes a $48.4 million goodwill impairment charge and $18.6 million of restructuring and impairment costs, diluted loss per share amounted to $1.83 on a net loss of $52.7 million. As noted above, the results for the fiscal year include $1.5 million tax expense booked in the fourth quarter ($0.05 per diluted share). This compares to diluted earnings per share and net income of $1.97 and $58.1 million respectively, for the prior year, which included a $6.8 million restructuring and impairment charge. Excluding the impact of the goodwill impairment and the tax expense noted above from the current year and the restructuring and impairment charges in both fiscal years, diluted loss per share amounted to $0.31 on a net loss of $8.9 million in the current year period as compared to diluted earnings per share of $2.12 on net income of $62.4 million in the prior year comparable period.

Farooq Kathwari, Chairman and CEO, commented, “Fiscal 2009, while extremely challenging, provided us the opportunity to accelerate our process of reinvention. We focused on two major initiatives. First: to bring our expense and cost structure down. On an annualized basis we reduced about $120 million in operating expenses and about $30 million in manufacturing costs. We will see most of the reductions benefiting our fiscal 2010. Second: to implement many initiatives that will create a strong competitive difference and help grow our sales and profitability. Our move toward custom production in our case goods manufacturing and the launch of the new Interior Design Affiliate program are just the latest examples of these initiatives.”

Mr. Kathwari further stated, “Our focus was also to maintain a strong cash position. As of June 30, 2009 we had $53 million in cash which has grown to $63 million. While business conditions remain very difficult, the rates of decline that we experienced in the last six months were substantially reduced in July.”

Analyst Conference Call

The Company will conduct a Conference Call at 11:00 AM (Eastern) on Wednesday, August 12th. The live webcast and replay are accessible via the Company’s website at http://ethanallen.com/investors.

About Ethan Allen

Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company"; NYSE:ETH) is a leading interior design company and manufacturer and retailer of quality home furnishings. The Company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates six manufacturing facilities in the United States, which includes one sawmill, and one manufacturing facility in Mexico, and manufactures approximately sixty-five percent of its products in its United States plants. For more information on Ethan Allen’s products and services, visit ethanallen.com.

This press release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2008 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 Twelve Months Ended   06/30/09     06/30/08     06/30/09     06/30/08     Net sales $ 138.7 $ 235.9 $ 674.3 $ 980.0 Gross margin 48.7 % 54.2 % 51.5 % 53.7 % Operating margin -14.7 % 8.1 % -10.8 % 9.8 % Operating margin (ex restructuring & impairment charges ) -5.4 % 9.3 % -0.9 % 10.5 % Net income (loss) ($16.9 ) $ 11.1 ($52.7 ) $ 58.1 Net income (loss) (ex restructuring & impairment charges) ($6.8 ) $ 12.9 ($8.9 ) $ 62.4   Operating cash flow $ 8.1 $ 18.9 $ 21.9 $ 86.1 Capital expenditures $ 2.1 $ 13.7 $ 22.5 $ 60.0 Acquisitions $ 0.6 $ 1.0 $ 1.4 $ 7.8 Treasury stock repurchases (settlement date basis) $ 0.0 $ 0.0 $ 0.0 $ 73.2   EBITDA ($13.9 ) $ 26.6 ($45.1 ) $ 124.5 EBITDA as % of net sales -10.0 % 11.3 % -6.7 % 12.7 % EBITDA (ex restructuring & impairment charges ) ($1.0 ) $ 29.4 $ 21.9 $ 131.3 EBITDA as % of net sales (ex restructuring & impairment charges ) -0.7 % 12.5 % 3.3 % 13.4 %        

Selected Financial Data by Business Segment:

Three Months Ended Twelve Months Ended   06/30/09     06/30/08     06/30/09     06/30/08  

Retail

Net sales $ 102.3 $ 176.5 $ 508.6 $ 724.6 Operating margin -13.6 % -0.9 % -18.1 % -0.4 % Operating margin (ex restructuring & impairment charges ) -12.3 % 0.8 % -8.4 % 0.6 %  

 

Wholesale

 

Net sales $ 85.2 $ 147.7 $ 403.4 $ 616.2 Operating margin -9.1 % 13.9 % 1.7 % 16.3 % Operating margin (ex restructuring & impairment charges ) 4.5 % 13.9 % 6.0 % 16.3 %         Ethan Allen Interiors Inc. Selected Financial Information Unaudited (in thousands, except per share amounts)       Three Months Ended Twelve Months Ended   06/30/09     06/30/08   06/30/09   06/30/08   Net sales $ 138,657 $ 235,907 $ 674,277 $ 980,045 Cost of sales   71,107     107,939     326,935     453,980 Gross profit 67,550 127,968   347,342 526,065 Operating expenses: Selling 36,526 58,300 182,800 229,590 General and administrative 38,506 47,699 170,312 193,639 Goodwill impairment - - 48,400 - Restructuring and impairment charge   12,880     2,843   18,601     6,836 Total operating expenses   87,912     108,842     420,113     430,065 Operating income (loss) (20,362 ) 19,126 (72,771 ) 96,000 Interest and other miscellaneous income 336 1,413 3,355 7,891 Interest expense and other related financing costs   2,946     2,920     11,764     11,713 Income (loss) before income taxes (22,972 ) 17,619 (81,180 ) 92,178 Income tax expense (benefit)   (6,049 )   6,519     (28,493 )   34,106 Net income (loss) $ (16,923 ) $ 11,100   $ (52,687 ) $ 58,072   Basic earnings per common share: Net income (loss) per basic share $ (0.58 ) $ 0.39 $ (1.83 ) $ 1.98 Basic weighted average shares outstanding 28,954 28,686 28,814 29,267   Diluted earnings per common share: Net income (loss) per diluted share $ (0.58 ) $ 0.39 $ (1.83 ) $ 1.97 Diluted weighted average shares outstanding 28,954 28,826 28,814 29,470   Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets Unaudited (in thousands)       June 30, June 30, 2009 2008   Assets Current assets: Cash and cash equivalents $ 52,960 $ 74,376 Accounts receivable, net 13,086 12,672 Inventories 156,519 186,265 Prepaid expenses & other current assets 21,060 32,860 Deferred income taxes   5,873   4,005 Total current assets 249,498 310,178   Property, plant and equipment, net 333,599 350,432 Intangible assets, net 45,128 96,823 Other assets   13,003   7,080   Total Assets $ 641,228 $ 764,513       Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt $ 42 $ 41 Customer deposits 31,691 47,297 Accounts payable 22,199 26,444 Accrued expenses & other current liabilities   54,829   61,720 Total current liabilities 108,761 135,502   Long-term debt 203,106 202,988 Other long-term liabilities 23,438 22,923 Deferred income taxes   -   27,327 Total liabilities 335,305 388,740   Shareholders' equity   305,923   375,773   Total Liabilities and Shareholders' Equity $ 641,228 $ 764,513   Ethan Allen Interiors Inc. GAAP Reconciliation Three and Twelve Months Ended June 30, 2009 and 2008 Unaudited (in thousands, except per share amounts)       Three Months Ended Twelve Months Ended June 30, June 30,   2009     2008     2009     2008  

Net Income / Earnings Per Share

Net income (loss) $ (16,923 ) $ 11,100 $ (52,687 ) $ 58,072 Add: restructuring and impairment charge, net of related tax effect   10,150     1,791     43,748     4,307   Net income (loss) (excluding restructuring and impairment charge) $ (6,773 ) $ 12,891   $ (8,939 ) $ 62,379     Earnings (loss) per basic share $ (0.58 ) $ 0.39   $ (1.83 ) $ 1.98   Earnings (loss) per basic share (excluding restructuring and impairment charge) $ (0.23 ) $ 0.45   $ (0.31 ) $ 2.13   Basic weighted average shares outstanding 28,954 28,686 28,814 29,267   Earnings (loss) per diluted share $ (0.58 ) $ 0.39   $ (1.83 ) $ 1.97   Earnings (loss) per diluted share (excluding restructuring and impairment charge) $ (0.23 ) $ 0.45   $ (0.31 ) $ 2.12   Diluted weighted average shares outstanding 28,954 28,826 28,814 29,470  

Consolidated Operating Income / Operating Margin

Operating income (loss) $ (20,362 ) $ 19,126 $ (72,771 ) $ 96,000 Add: restructuring and impairment charge   12,880     2,843     67,001     6,836   Operating income (loss) (excluding restructuring and impairment charge) $ (7,482 ) $ 21,969   $ (5,770 ) $ 102,836     Net sales $ 138,657   $ 235,907   $ 674,277   $ 980,045   Operating margin   -14.7 %   8.1 %   -10.8 %   9.8 % Operating margin (excluding restructuring and impairment charge)   -5.4 %   9.3 %   -0.9 %   10.5 %  

Wholesale Operating Income / Operating Margin

Wholesale operating income (loss) $ (7,726 ) $ 20,492 $ 6,670 $ 100,324 Add: restructuring and impairment charge   11,539     -     17,420     -   Wholesale operating income (excluding restructuring and impairment charge) $ 3,813   $ 20,492   $ 24,090   $ 100,324   Wholesale net sales $ 85,163   $ 147,708   $ 403,378   $ 616,230   Wholesale operating margin   -9.1 %   13.9 %   1.7 %   16.3 % Wholesale operating margin (excluding restructuring and impairment charge)   4.5 %   13.9 %   6.0 %   16.3 %  

Retail Operating Income / Operating Margin

Retail operating income (loss) $ (13,944 ) $ (1,506 ) $ (92,100 ) $ (2,800 ) Add: restructuring and impairment charge   1,341     2,843     49,581     6,836   Retail operating income (loss) (excluding restructuring and impairment charge) $ (12,603 ) $ 1,337   $ (42,519 ) $ 4,036   Retail net sales $ 102,263   $ 176,474   $ 508,621   $ 724,586   Retail operating margin   -13.6 %   -0.9 %   -18.1 %   -0.4 % Retail operating margin (excluding restructuring and impairment charge)   -12.3 %   0.8 %   -8.4 %   0.6 %  

EBITDA

Net income (loss) $ (16,923 ) $ 11,100 $ (52,687 ) $ 58,072 Add: interest expense (income), net 2,703 2,357 10,480 7,613 Add: income tax expense (benefit) (6,049 ) 6,519 (28,493 ) 34,106 Add: depreciation and amortization   6,350     6,593     25,635     24,670   EBITDA $ (13,919 ) $ 26,569   $ (45,065 ) $ 124,461   Net sales $ 138,657   $ 235,907   $ 674,277   $ 980,045   EBITDA as % of net sales   -10.0 %   11.3 %   -6.7 %   12.7 %   EBITDA $ (13,919 ) $ 26,569 $ (45,065 ) $ 124,461 Add: restructuring and impairment charge   12,880     2,843     67,001     6,836   EBITDA (excluding restructuring and impairment charge) $ (1,039 ) $ 29,412   $ 21,936   $ 131,297   Net sales $ 138,657   $ 235,907   $ 674,277   $ 980,045   EBITDA as % of net sales excluding restructuring and       impairment charge)   -0.7 %   12.5 %   3.3 %   13.4 %