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, 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 December 31, 2004, there were 35,497,507 shares
of
Class A Common Stock, par value $.01, outstanding.
| Item | Page |
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|---|---|---|
Part I - Financial Information |
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1. Financial Statements as of December 31, 2004 and June 30, 2004 and for the three and six months ended December 31, 2004 and 2003 |
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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. Unregistered Sales of Equity 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 |
27 | |
Signatures |
28 |
1
ETHAN ALLEN INTERIORS
INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
| December 31, 2004 |
June 30, 2004 |
|||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 33,045 | $ | 27,528 | ||||
|
Accounts receivable, less allowance for doubtful
accounts of $2,056 at December 31, 2004 and $2,194 | ||||||||
| at June 30, 2004 | 21,172 | 26,967 | ||||||
| Inventories (note 4) | 171,117 | 186,895 | ||||||
| Prepaid expenses and other current assets | 33,418 | 28,166 | ||||||
| Deferred income taxes | 25,386 | 26,026 | ||||||
| Total current assets | 284,138 | 295,582 | ||||||
Property, plant and equipment, net | 274,542 | 277,021 | ||||||
| Intangible assets (notes 6 and 7) | 80,980 | 80,038 | ||||||
| Other assets | 3,163 | 1,790 | ||||||
| Total assets | $ | 642,823 | $ | 654,431 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
|
Current maturities of long-term debt and capital
lease obligations | $ | 80 | $ | 4,712 | ||||
| Customer deposits | 51,658 | 56,026 | ||||||
| Accounts payable | 19,957 | 22,222 | ||||||
| Accrued compensation and benefits | 28,156 | 27,950 | ||||||
| Accrued expenses and other current liabilities (note 5) | 29,760 | 25,779 | ||||||
| Total current liabilities | 129,611 | 136,689 | ||||||
Long-term debt | 4,471 | 4,509 | ||||||
| Other long-term liabilities | 1,037 | 1,205 | ||||||
| Deferred income taxes | 51,782 | 51,248 | ||||||
| Total liabilities | 186,901 | 193,651 | ||||||
Shareholders' equity: | ||||||||
|
Class A common stock, par value $.01, 150,000,000 shares
authorized; 45,854,962 shares issued at December 31, 2004 and 45,812,032 shares issued at June 30, 2004 | 458 | 458 | ||||||
|
Class B common stock, par value $.01, 600,000 shares
authorized; no shares issued and outstanding at December 31, 2004 and June 30, 2004 | - | - | ||||||
|
Preferred stock, par value $.01, 1,055,000 shares
authorized; no shares issued and outstanding at December 31, 2004 and June 30, 2004 | - | - | ||||||
| Additional paid-in capital | 291,175 | 289,707 | ||||||
| 291,633 | 290,165 | |||||||
|
Less: Treasury stock (at cost), 10,357,455 shares at
December 31, 2004 and 9,255,955 shares at June 30, 2004 | (282,382 | ) | (244,026 | ) | ||||
Retained earnings | 445,488 | 414,041 | ||||||
| Accumulated other comprehensive income (note 10) | 1,183 | 600 | ||||||
| Total shareholders' equity | 455,922 | 460,780 | ||||||
| Total liabilities and shareholders' equity | $ | 642,823 | $ | 654,431 | ||||
See accompanying notes to consolidated financial statements.
2
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands,
except per share data)
| Three Months Ended December 31, |
Six Months Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Net sales | $ | 245,252 | $ | 241,150 | $ | 475,598 | $ | 463,915 | ||||||
Cost of sales | 125,796 | 124,871 | 245,749 | 239,193 | ||||||||||
| Gross profit | 119,456 | 116,279 | 229,849 | 224,722 | ||||||||||
Operating expenses: | ||||||||||||||
| Selling | 46,676 | 41,221 | 89,889 | 85,830 | ||||||||||
| General and administrative | 36,041 | 35,946 | 72,153 | 71,468 | ||||||||||
| Restructuring and impairment charges (note 5) | (52 | ) | - | (219 | ) | (264 | ) | |||||||
| Total operating expenses | 82,665 | 77,167 | 161,823 | 157,034 | ||||||||||
| Operating income | 36,791 | 39,112 | 68,026 | 67,688 | ||||||||||
Interest and other miscellaneous income, net | 1,301 | 737 | 1,246 | 2,948 | ||||||||||
Interest and other related financing costs | 138 | 167 | 287 | 308 | ||||||||||
| Income before income taxes | 37,954 | 39,682 | 68,985 | 70,328 | ||||||||||
Income tax expense | 14,688 | 15,284 | 26,790 | 26,991 | ||||||||||
| Net income | $ | 23,266 | $ | 24,398 | $ | 42,195 | $ | 43,337 | ||||||
| Per share data (note 9): | ||||||||||||||
Basic earnings per common share: | ||||||||||||||
Net income per basic share | $ | 0.65 | $ | 0.65 | $ | 1.18 | $ | 1.16 | ||||||
| Basic weighted average common shares | 35,601 | 37,269 | 35,906 | 37,248 | ||||||||||
Diluted earnings per common share: | ||||||||||||||
Net income per diluted share | $ | 0.64 | $ | 0.64 | $ | 1.15 | $ | 1.13 | ||||||
| Diluted weighted average common shares | 36,564 | 38,420 | 36,831 | 38,333 | ||||||||||
See accompanying notes to consolidated financial statements.
3
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
| Six Months Ended December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
|||||||||
| Operating activities: | ||||||||||
| Net income | $ | 42,195 | $ | 43,337 | ||||||
|
Adjustments to reconcile net income to net
cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 10,326 | 10,505 | ||||||||
| Compensation expense (benefit) related to
restricted stock award | 253 | 170 | ||||||||
| Provision (benefit) for deferred income taxes | 1,174 | 1,445 | ||||||||
| Restructuring and impairment charges (credits) | (219 | ) | (264 | ) | ||||||
|
(Gain) loss on disposal of property, plant
and equipment | (1,273 | ) | (1,608 | ) | ||||||
| (Gain) loss on sale of retail stores | (627 | ) | - | |||||||
| Other | 22 | 48 | ||||||||
| Change in assets and liabilities, net of the | ||||||||||
| effects of acquired and divested businesses: | ||||||||||
| Accounts receivable | 5,666 | 3,900 | ||||||||
| Inventories | 14,133 | 12,629 | ||||||||
| Prepaid expenses and other current assets | (1,159 | ) | 3,371 | |||||||
| Other assets | (657 | ) | 477 | |||||||
| Customer deposits | (4,474 | ) | (1,458 | ) | ||||||
| Accounts payable | (1,207 | ) | 3,687 | |||||||
| Accrued expenses and other current liabilities | 2,745 | 756 | ||||||||
| Other long-term liabilities | (90 | ) | (459 | ) | ||||||
| Net cash provided by operating activities | 66,808 | 76,536 | ||||||||
| Investing activities: | ||||||||||
|
Proceeds from the disposal of property, plant
and equipment | 4,114 | 5,274 | ||||||||
| Proceeds from the sale of retail stores | 2,094 | - | ||||||||
| Capital expenditures | (15,416 | ) | (9,241 | ) | ||||||
| Acquisitions | (750 | ) | - | |||||||
| Other | 379 | 61 | ||||||||
| Net cash used in investing activities | (9,579 | ) | (3,906 | ) | ||||||
| Financing activities: | ||||||||||
| Payments on long-term debt and capital leases | (4,676 | ) | (905 | ) | ||||||
| Net proceeds from issuance of common stock | 903 | 1,494 | ||||||||
| Dividends paid | (9,062 | ) | (6,518 | ) | ||||||
| Payments to acquire treasury stock | (39,102 | ) | - | |||||||
| Net cash used in financing activities | (51,937 | ) | (5,929 | ) | ||||||
Effect of exchange rate changes on cash | 225 | (83 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 5,517 | 66,618 | ||||||||
Cash and cash equivalents - beginning of year | 27,528 | 81,856 | ||||||||
| Cash and cash equivalents - end of period | $ | 33,045 | $ | 148,474 | ||||||
See accompanying notes to consolidated financial statements.
4
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Six Months Ended December 31, 2004
(In thousands, except
share data)
| Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Retained Earnings |
Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at June 30, 2004 | $ | 458 | $ | 289,707 | $ | (244,026 | ) | $ | 600 | $ | 414,041 | $ | 460,780 | |||||||
|
Issuance of 42,930 shares of common
stock upon the exercise of stock options and restricted stock award compensation | - | 1,156 | - | - | - | 1,156 | ||||||||||||||
| Purchase of treasury stock | - | - | (38,356 | ) | - | - | (38,356 | ) | ||||||||||||
|
Tax benefit associated with the exercise of employee stock options | - | 312 | - | - | - | 312 | ||||||||||||||
| Dividends declared on common stock | - | - | - | - | (10,748 | ) | (10,748 | ) | ||||||||||||
| Other comprehensive income (note 10) | - | - | - | 583 | - | 583 | ||||||||||||||
| Net income | - | - | - | - | 42,195 | 42,195 | ||||||||||||||
| Total comprehensive income | ||||||||||||||||||||