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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



FORM 10-Q

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

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                                                                                                                                             06-1275288
(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 March 31, 2004, there were 37,280,037 shares
of Common Stock, par value $.01 outstanding.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Item        Page

Part I - Financial Information

1.   Financial Statements as of March 31, 2004 (unaudited)
      and June 30, 2003 and for the three and nine months ended
      March 31, 2004 and 2003 (unaudited) 		 

       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		 26

4.    Controls and Procedures		 26

Part II - Other Information

1.    Legal Proceedings		 27

2.    Changes in Securities, Use of Proceeds and Issuer Purchases
       of Equity Securities		 27

3.    Defaults Upon Senior Securities		 27

4.    Submission of Matters to a Vote of Security Holders		 27

5.    Other Information		 27

6.    Exhibits and Reports on Form 8-K		 27

      Signatures		 28

1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)

March 31,
2004
(unaudited)
June 30
2003
ASSETS            
Current assets:    
    Cash and cash equivalents     $ 177,018   $ 81,856  
    Accounts receivable, less allowance for doubtful    
      accounts of $1,827 at March 31, 2004 and $1,490    
      at June 30, 2003       26,257     26,439  
    Inventories, net (note 4)       185,794     198,212  
    Prepaid expenses and other current assets       30,608     30,779  
    Deferred income taxes       19,593     22,976  
         Total current assets       439,270     360,262  

Property, plant and equipment, net		       281,640     289,423  
Intangible assets, net (notes 6 and 7)       79,099     78,939  
Other assets       1,826     2,944  
      Total assets     $ 801,835   $ 731,568  
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
    Current maturities of long-term debt and capital    
      lease obligations     $ 4,758   $ 996  
    Customer deposits       61,622     55,939  
    Accounts payable       32,301     25,375  
    Accrued compensation and benefits       27,835     29,308  
    Accrued expenses and other current liabilities (note 5)       23,817     22,808  
         Total current liabilities       150,333     134,426  

Long-term debt		       4,525     9,222  
Other long-term liabilities       1,817     2,682  
Deferred income taxes       50,289     47,539  
      Total liabilities       206,964     193,869  

Shareholders' equity:		    
Class A common stock, par value $.01, 150,000,000 shares    
    authorized; 45,574,547 shares issued at March 31,    
    2004 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    
    March 31, 2004 and June 30, 2003       –     –  
Preferred stock, par value $.01, 1,055,000 shares    
    authorized; no shares issued and outstanding at    
    March 31, 2004 and June 30, 2003       –     –  
Additional paid-in capital       284,524     281,140  
        284,979     281,594  
Less: Treasury stock (at cost), 8,294,510 shares at    
    March 31, 2004 and 8,251,510 shares at June 30, 2003       (206,708 )   (204,931 )

Retained earnings		       515,927     460,456  
Accumulated other comprehensive income (note 10)       673     580  
      Total shareholders' equity       594,871     537,699  
      Total liabilities and shareholders' equity     $ 801,835   $ 731,568  

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
March 31,		 Nine Months Ended
March 31
  2004
2003
2004
2003
Net sales     $ 244,592   $ 224,574   $ 708,507   $ 670,816  

Cost of sales		       125,319     112,624     364,512     336,347  

    Gross profit		       119,273     111,950     343,995     334,469  

Operating expenses:		    
  Selling       45,045     45,257     130,875     132,022  
  General and administrative       36,291     34,632     107,759     101,348  
  Restructuring and impairment charges (note 5)       –     13,223     (264 )   13,131  
       Total operating expenses       81,336     93,112     238,370     246,501  

    Operating income		       37,937     18,838     105,625     87,968  

Interest and other miscellaneous income, net		       223     58     3,171     707  

Interest and other related financing costs		       179     130     487     507  

    Income before income taxes		       37,981     18,766     108,309     88,168  

Income tax expense		       14,623     7,094     41,614     33,328  

    Net income		     $ 23,358   $ 11,672   $ 66,695   $ 54,840  

Per share data (note 9):		    

Basic earnings per common share:		    

    Net income per basic share		     $ 0.63   $ 0.31   $ 1.79   $ 1.45  

    Basic weighted average common shares		       37,300     37,560     37,265     37,771  

Diluted earnings per common share:		    

    Net income per diluted share		     $ 0.61   $ 0.30   $ 1.74   $ 1.42  

    Diluted weighted average common shares		       38,551     38,546     38,406     38,751  




See accompanying notes to consolidated financial statements.

3

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

Nine Months Ended
March 31,
  2004
2003
Operating activities:            
     Net income     $ 66,695   $ 54,840  
     Adjustments to reconcile net income to net    
      cash provided by operating activities:    
         Depreciation and amortization       15,755     15,861  
         Compensation expense (benefit) related to    
          restricted stock award       238     (381 )
         Provision (benefit) for deferred income taxes       6,133     (3,246 )
         Restructuring and impairment charges (credits)       (264 )   13,131  
         Other non-cash (income) expense       (1,436 )   35  
         Change in assets and liabilities, net of the    
          effects of acquired and divested businesses:    
               Accounts receivable       182     2,900  
               Inventories       12,418     (12,251 )
               Prepaid and other current assets       1,963     (3,322 )
               Other assets       1,076     (45 )
               Customer deposits       5,683     7,460  
               Accounts payable       5,149     (5,133 )
               Income taxes payable       841     779  
               Accrued expenses and other current liabilities       (987 )   2,913  
               Other long-term liabilities       (865 )   450  

Net cash provided by operating activities		       112,581     73,991  
Investing activities:    
     Proceeds from the disposal of property, plant    
      and equipment       5,796     2,528  
     Capital expenditures       (13,972 )   (23,334 )
     Acquisitions       –     (10,880 )
     Other       (321 )   207  

Net cash used in investing activities		       (8,497 )   (31,479 )

Financing activities:		    
     Payments on long-term debt and capital leases       (970 )   (3,476 )
     Net proceeds from issuance of common stock       2,306     593  
     Dividends paid       (10,258 )   (6,849 )
     Payments to acquire treasury stock       –     (48,281 )

Net cash used in financing activities		       (8,922 )   (58,013 )

Net increase (decrease) in cash and cash equivalents		       95,162     (15,501 )

Cash and cash equivalents - beginning of period		       81,856     75,688  

Cash and cash equivalents - end of period		     $ 177,018   $ 60,187  

See accompanying notes to consolidated financial statements.

4

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
Nine Months Ended March 31, 2004
(Unaudited)
(In thousands, except share data)

  Common
Stock
Additional
Paid-in
Capital
Treasury    
Stock    
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total

Balance at June 30, 2003		     $ 454   $ 281,140   $ (204,931 ) $ 580   $ 460,456   $ 537,699  

Issuance of 125,461 shares of common		    
   stock upon the exercise of stock    
   options and restricted stock award    
   compensation       1     2,543     –     –     –     2,544  

Purchase of treasury stock		       –     –     (1,777 )   –     –     (1,777 )

Tax benefit associated with the		    
   exercise of employee stock options       –     841     –     –     –     841  

Dividends declared on common stock		       –     –     –     –     (11,224 )   (11,224 )

Other comprehensive income (note 10)		       –     –     –     93     –     93  
Net income       –     –     –     –     66,695     66,695  
   Total comprehensive income                                     66,788  

Balance at March 31, 2004		     $ 455   $ 284,524   $ (206,708 ) $ 673   $ 515,927   $ 594,871  

See accompanying notes to consolidated financial statements.

5

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1)       Basis of Presentation

  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