UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-11692
| Ethan Allen Interiors Inc.
(Exact name of registrant as specified in its charter) |
| Delaware
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06-1275288
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer ID No.) |
| Ethan Allen Drive, Danbury, Connecticut 06811
(Address of principal executive offices) |
| (203) 743-8000
(Registrant’s telephone number, including area code) |
| N/A
(Former name, former address and former fiscal year, if changed since last report) |
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.
[X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
At December 31, 2003, there were 37,286,990 shares
of
Common Stock, par value $.01 outstanding.
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Part I - Financial Information |
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1. Financial Statements as of December 31, 2003 (unaudited) and June 30, 2003 and for the three and six months ended December 31, 2003 and 2002 (unaudited) |
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Consolidated Balance Sheets |
2 | |
Consolidated Statements of Operations |
3 | |
Consolidated Statements of Cash Flows |
4 | |
Consolidated Statements of Shareholders' Equity |
5 | |
Notes to Consolidated Financial Statements |
6 | |
2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
14 | |
3. Quantitative and Qualitative Disclosures About Market Risk |
25 | |
4. Controls and Procedures |
25 | |
Part II - Other Information |
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1. Legal Proceedings |
26 | |
2. Changes in Securities and Use of Proceeds |
26 | |
3. Defaults Upon Senior Securities |
26 | |
4. Submission of Matters to a Vote of Security Holders |
26 | |
5. Other Information |
26 | |
6. Exhibits and Reports on Form 8-K |
26 | |
Signatures |
27 |
1
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
| December 31, 2003 (unaudited) |
June 30, 2003 | |||||||
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 148,474 | $ | 81,856 | ||||
| Accounts receivable, less allowance for doubtful | ||||||||
| accounts of $1,276 at December 31, 2003 and $1,490 | ||||||||
| at June 30, 2003 | 22,539 | 26,439 | ||||||
| Inventories, net (note 4) | 185,583 | 198,212 | ||||||
| Prepaid expenses and other current assets | 30,176 | 30,779 | ||||||
| Deferred income taxes | 21,787 | 22,976 | ||||||
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| Total current assets | 408,559 | 360,262 | ||||||
Property, plant and equipment, net |
281,618 | 289,423 | ||||||
| Intangible assets, net (notes 6 and 7) | 79,052 | 78,939 | ||||||
| Other assets | 2,285 | 2,944 | ||||||
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| Total assets | $ | 771,514 | $ | 731,568 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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| Current liabilities: | ||||||||
| Current maturities of long-term debt and capital | ||||||||
| lease obligations | $ | 4,793 | $ | 996 | ||||
| Customer deposits | 54,481 | 55,939 | ||||||
| Accounts payable | 28,267 | 25,375 | ||||||
| Accrued compensation and benefits | 28,186 | 29,308 | ||||||
| Accrued expenses and other current liabilities (note 5) | 25,208 | 22,808 | ||||||
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| Total current liabilities | 140,935 | 134,426 | ||||||
Long-term debt |
4,557 | 9,222 | ||||||
| Other long-term liabilities | 2,223 | 2,682 | ||||||
| Deferred income taxes | 47,795 | 47,539 | ||||||
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| Total liabilities | 195,510 | 193,869 | ||||||
Shareholders' equity: |
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| Class A common stock, par value $.01, 150,000,000 shares | ||||||||
| authorized; 45,538,500 shares issued at December 31, | ||||||||
| 2003 and 45,449,086 shares issued at June 30, 2003 | 455 | 454 | ||||||
| Class B common stock, par value $.01, 600,000 shares | ||||||||
| authorized; no shares issued and outstanding at | ||||||||
| December 31, 2003 and June 30, 2003 | -- | -- | ||||||
| Preferred stock, par value $.01, 1,055,000 shares | ||||||||
| authorized; no shares issued and outstanding at | ||||||||
| December 31, 2003 and June 30, 2003 | -- | -- | ||||||
| Additional paid-in capital | 283,598 | 281,140 | ||||||
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| 284,053 | 281,594 | |||||||
| Less: Treasury stock (at cost), 8,251,510 shares at | ||||||||
| December 31, 2003 and June 30, 2003 | (204,931 | ) | (204,931 | ) | ||||
Retained earnings |
496,310 | 460,456 | ||||||
| Accumulated other comprehensive income (note 10) | 572 | 580 | ||||||
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| Total shareholders' equity | 576,004 | 537,699 | ||||||
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| Total liabilities and shareholders' equity | $ | 771,514 | $ | 731,568 | ||||
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See accompanying notes to consolidated financial statements.
2
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
| Three Months Ended December 31, |
Six Months Ended December 31, | |||||||||||||
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| 2003 | 2002 | 2003 | 2002 | |||||||||||
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| Net sales | $ | 241,150 | $ | 229,713 | $ | 463,915 | $ | 446,242 | ||||||
| Cost of sales | 124,871 | 113,909 | 239,193 | 223,723 | ||||||||||
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| Gross profit | 116,279 | 115,804 | 224,722 | 222,519 | ||||||||||
| Operating expenses: | ||||||||||||||
| Selling | 41,221 | 43,875 | 85,830 | 86,765 | ||||||||||
| General and administrative | 35,946 | 34,734 | 71,468 | 66,716 | ||||||||||
| Restructuring and impairment charges (note 5) | -- | -- | (264 | ) | (92 | ) | ||||||||
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| Total operating expenses | 77,167 | 78,609 | 157,034 | 153,389 | ||||||||||
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| Operating income | 39,112 | 37,195 | 67,688 | 69,130 | ||||||||||
| Interest and other miscellaneous income, net | 737 | 125 | 2,948 | 649 | ||||||||||
| Interest and other related financing costs | 167 | 204 | 308 | 377 | ||||||||||
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| Income before income taxes | 39,682 | 37,116 | 70,328 | 69,402 | ||||||||||
| Income tax expense | 15,284 | 14,030 | 26,991 | 26,234 | ||||||||||
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| Net income | $ | 24,398 | $ | 23,086 | $ | 43,337 | $ | 43,168 | ||||||
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Per share data (note 9): |
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| Basic earnings per common share: | ||||||||||||||
| Net income per basic share | $ | 0.65 | $ | 0.61 | $ | 1.16 | $ | 1.14 | ||||||
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| Basic weighted average common shares | 37,269 | 37,767 | 37,248 | 37,876 | ||||||||||
| Diluted earnings per common share: | ||||||||||||||
| Net income per diluted share | $ | 0.64 | $ | 0.60 | $ | 1.13 | $ | 1.11 | ||||||
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| Diluted weighted average common shares | 38,420 | 38,793 | 38,333 | 38,854 | ||||||||||
See accompanying notes to consolidated financial statements.
3
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
| Six Months Ended December 31, | ||||||||
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| 2003 | 2002 | |||||||
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| Operating activities: | ||||||||
| Net income | $ | 43,337 | $ | 43,168 | ||||
| Adjustments to reconcile net income to net | ||||||||
| cash provided by operating activities: | ||||||||
| Depreciation and amortization | 10,505 | 10,367 | ||||||
| Compensation expense (benefit) related to | ||||||||
| restricted stock award | 170 | (398 | ) | |||||
| Provision (benefit) for deferred income taxes | 1,445 | 666 | ||||||
| Restructuring and impairment charges | (264 | ) | (92 | ) | ||||
| Other non-cash (income) expense | (1,643 | ) | (112 | ) | ||||
| Change in assets and liabilities, net of the | ||||||||
| effects of acquired and divested businesses: | ||||||||
| Accounts receivable | 3,900 | 10,467 | ||||||
| Inventories | 12,629 | 3,987 | ||||||
| Prepaid and other current assets | 3,371 | (2,448 | ) | |||||
| Other assets | 477 | (404 | ) | |||||
| Customer deposits | (1,458 | ) | (277 | ) | ||||
| Accounts payable | 2,892 | (7,213 | ) | |||||
| Income taxes payable | 795 | 1,919 | ||||||
| Accrued expenses and other current liabilities | 756 | (3,447 | ) | |||||
| Other long-term liabilities | (459 | ) | (150 | ) | ||||
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| Net cash provided by operating activities | 76,453 | 56,033 | ||||||
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| Investing activities: | ||||||||
| Proceeds from the disposal of property, plant | ||||||||
| and equipment | 5,274 | 2,435 | ||||||
| Capital expenditures | (9,241 | ) | (16,925 | ) | ||||
| Acquisitions | -- | (10,742 | ) | |||||
| Other | 61 | 178 | ||||||
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| Net cash used in investing activities | (3,906 | ) | (25,054 | ) | ||||
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| Financing activities: | ||||||||
| Payments on long-term debt and capital leases | (905 | ) | (3,435 | ) | ||||
| Net proceeds from issuance of common stock | 1,494 | 490 | ||||||
| Dividends paid | (6,518 | ) | (4,587 | ) | ||||
| Payments to acquire treasury stock | -- | (29,578 | ) | |||||
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| Net cash used in financing activities | (5,929 | ) | (37,110 | ) | ||||
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| Net increase (decrease) in cash and cash equivalents | 66,618 | (6,131 | ) | |||||
| Cash and cash equivalents - beginning of period | 81,856 | 75,688 | ||||||
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| Cash and cash equivalents - end of period | $ | 148,474 | $ | 69,557 | ||||
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See accompanying notes to consolidated financial statements.
4
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated
Statements of Shareholders’ Equity
Six Months Ended December 31, 2003
(Unaudited)
(In
thousands, except share data)
| Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Retained Earnings |
Total | |||||||||||||||
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| Balance at June 30, 2003 | $ | 454 | $ | 281,140 | $ | (204,931 | ) | $ | 580 | $ | 460,456 | $ | 537,699 | |||||||
Issuance of 89,414 shares of common |
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| stock upon the exercise of stock | ||||||||||||||||||||
| options and restricted stock award | ||||||||||||||||||||
| compensation | 1 | 1,663 | -- | -- | -- | 1,664 | ||||||||||||||
Tax benefit associated with the |
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| exercise of employee stock options | -- | 795 | -- | -- | -- | 795 | ||||||||||||||
Dividends declared on common stock |
-- | -- | -- | -- | (7,483 | ) | (7,483 | ) | ||||||||||||
Other comprehensive income |
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| (loss) (note 10) | -- | -- | -- | (8 | ) | -- | (8 | ) | ||||||||||||
| Net income | -- | -- | -- | -- | 43,337 | 43,337 | ||||||||||||||
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| Total comprehensive income | -- | -- | -- | -- | -- | 43,329 | ||||||||||||||
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| Balance at December 31, 2003 | $ | 455 | $ | 283,598 | $ | (204,931 | ) | $ | 572 | $ | 496,310 | $ | 576,004 | |||||||
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See accompanying notes to consolidated financial statements.
5
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Unaudited)
| Ethan Allen Interiors Inc. (the “Company”) is a Delaware corporation incorporated on May 25, 1989. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Ethan Allen Inc. (“Ethan Allen”) and Ethan Allen’s subsidiaries. All of Ethan Allen’s capital stock is owned by the Company. The Company has no other assets or operating results other than those associated with its investment in Ethan Allen. |
| All intercompany accounts and transactions have been eliminated in the consolidated financial statements. In the opinion of the Company, all adjustments, consisting only of normal recurring accruals necessary for fair presentation, have been included in the consolidated financial statements. The results of operations for the three and six months ended December 31, 2003 are not necessarily indicative of results that may be expected for the entire fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2003. |
| Certain reclassifications have been made to prior year financial information in order to conform to the current year’s presentation. These changes were made for disclosure purposes only and did not have an impact on previously reported results of operations or shareholders’ equity. |
| The Company’s 1992 Stock Option Plan (th |