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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
-------------- ------------------
Commission file number: 0-8498
HAVERTY FURNITURE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 58-0281900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
866 WEST PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30308
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 881-1911
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($1.00 PAR VALUE)
(Title of class)
CLASS A COMMON STOCK ($1.00 PAR VALUE)
(Title of class)
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. Yes X No
---- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Paragraph 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. X
-----
The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant as of March 8, 1996 was $82,555,517. The
aggregate market value was computed by reference to the average of the closing
bid and asked prices of the registrant's two classes of common stock on such
date. For the purpose of this response only, executive officers, directors and
holders of 5% or more of common stock are affiliates of the registrant.
As of March 8, 1996, the number of shares outstanding of the registrant's
two classes of $1.00 par value common stock were: Common Stock -- 8,680,855;
Class A Common Stock -- 2,962,608.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1995 Annual Report to Stockholders are
incorporated by reference herein in response to Items 5-8 of Part II of this
report. Portions of the registrant's proxy statement, dated March 20, 1996,
for the 1996 annual meeting of stockholders are incorporated by reference
herein in response to Part III of this report, except information on executive
officers, which is included in Part I of this report.
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<PAGE> 2
PART I
ITEM 1. BUSINESS.
GENERAL
Haverty Furniture Companies, Inc. (the "Company") originated as a family
business established in 1885 in Atlanta, Georgia. The Company was incorporated
in 1929 under the laws of the State of Maryland. Its corporate headquarters
are located at 866 West Peachtree Street, N.W., Atlanta, Georgia. The Company
operates 94 full service retail furniture stores located in 11 contiguous
states in the Southeast and Southwest and is one of the largest specialty
furniture retailers in the United States. The Company sells a broad range of
household furniture and accessories primarily in the middle to upper-middle
price ranges. As an added convenience to its customers, the Company offers
financing through a revolving charge credit plan.
BUSINESS STRATEGY
The Company believes that its fundamental strengths include its location in
the growing southern regions, its target customer base in the economically
favored middle to upper-middle income ranges, its clearly focused merchandising
strategy, its long-term favorable relationships with its principal suppliers,
its sound financial position and its experienced management. During 1995 the
Company opened and remodeled/expanded more square footage than any other year
in its history. A new store format has evolved and seven such format stores
were opened during 1995. The Company has also increased its attention to
strategic initiatives in reducing distribution and general and administrative
costs. The Company plans to continue its expansion into new market areas and
strengthen its position in its current markets within its geographic regions.
REVENUES
The following table sets forth the approximate percentage contributions by
product or service to the Company's gross revenues for the past three years
(gross revenues represent the gross sales of all merchandise plus all credit
service charge revenues as reflected by all sales invoices of the Company):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
------ -------- ------
<S> <C> <C> <C>
Merchandise:
Living Room Furniture . . . . . . . . . . . . . . . . . 51.0% 51.8% 51.9%
Bedroom Furniture . . . . . . . . . . . . . . . . . . . 23.0 22.2 21.8
Dining Room Furniture . . . . . . . . . . . . . . . . . 12.6 13.1 13.5
Bedding . . . . . . . . . . . . . . . . . . . . . . . . 7.1 7.1 7.1
All Other Merchandise and Accessories . . . . . . . . . 3.5 2.9 2.7
Credit Service Charges . . . . . . . . . . . . . . . . . 2.8 2.9 3.0
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
MERCHANDISING
The Company is able to tailor its merchandise presentation to the needs and
tastes of the local market. All six regional managers are included in the
Company's buying team and reflect their preferences in a merchandising mix that
is roughly 20-25 percent localized. Each local market manager can then select
from region specific merchandise items that are appropriate to that particular
locale. These managers also are responsible in their respective markets for
pricing merchandise that is not advertised chain wide. This allows the Company
to be competitively priced in each city and yet yield high gross margins.
The Company implemented a shift in merchandising about four years ago which
has successfully differentiated the Company from other chains. Management has
avoided using the lower, more promotional price-driven
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merchandise categories that many national chains have emphasized, giving the
Company a unique position for a large retailer. The Company selects its
merchandise from a wide array of manufacturers. During 1995, the Company
purchased approximately 50% of its volume from 10 vendors, creating significant
purchasing power. Approximately 75% of the Company's volume was purchased from
30 vendors, which gives the Company's customers an outstanding assortment,
especially compared to franchised retailers who offer only one manufacturer's
product line. The Company offers brands such as Drexel Heritage and
Thomasville. Customer awareness of these quality names draws attention to all
the Company's better-end merchandise. Because of the large volume of business
that is generated with both of these suppliers, management has greater
flexibility in selecting items from their lines for stores in the Company's
different market areas.
CREDIT OPERATIONS
The Company's customers are provided with a revolving charge credit plan in
a credit amount determined by an on-line credit approval system. In 1995 and
1994, credit sales constituted 80% of the Company's net sales. The Company's
standard (non-promotional) credit service charge rates for purchases on
accounts opened after February 1995 were 18% or 21% per annum (except in
Arkansas where it is 10%) depending on state laws and may vary in the future
with market conditions. The Company offers a lower credit service charge rate
for individual purchases of over $3,000 and routinely promotes no interest
charges for specified periods up to one year.
Over the last five years, provisions for losses on customer accounts
receivable have averaged less than 1% of sales. Management believes this
relatively low rate, as compared to those of certain other furniture retailers,
is due to a thorough credit screening and collection program and to the Company
attracting a more affluent customer through its overall marketing programs.
Promotions which offer interest-free periods for a specified period have been
successful in attracting customers and stimulating sales as well as meeting
competition.
STORE FORMAT
For the last four years the Company has remodeled and expanded many of its
showrooms to incorporate an "upscale interiors" presentation, including
professionally designed and fully accessorized room settings to portray how the
furniture will look in the home.
In 1995, the Company began using a new store format which was developed for
use in its expansion strategy to meet customers' perceptions of quality and
value. The exterior features a neo-classic design using brick and stucco
building elements. The selling area of these stores ranges from 34,000 square
feet to 50,000 square feet, with an average of 45,000 square feet. The
interior balances an expansive selection with a shopper-friendly format,
handling traffic flow better and improving visibility. The format employs a
"racetrack" design which has grouped room settings around the perimeter of the
store and a customer center in the core. This floor plan allows the Company's
sales force to be attentive and helpful, while letting the customer set the
pace. The interior draws more attention to the expanded selection of
merchandise through various techniques such as strike zones and varied ceiling
heights. The customer center core features an atrium, a refreshment area and
the Company's accessories gallery, Finishing Touches.
NEW STORE GROWTH AND EXPANSION
The Company increased its selling square footage 17% in 1995. This
expansion included seven new stores and the expansion of eight existing
locations. The Company entered three new cities and enhanced its presence in
three existing markets with its new store format. Management plans to increase
selling square footage in 1996 by 9% by opening seven new format stores and
expanding seven existing locations. The new stores will replace current
locations in four existing markets and will be used to enter three new cities.
Sales per square foot in 1995 was $159 for the Company's 94 total stores,
off slightly from the $160 in 1994. The seven new format stores, which were
open on average less than three months, produced $203 in annualized
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sales per square foot during the fourth quarter. Management estimates that at
the end of 1996, 84% of the Company's selling area will consist of square
footage with the "upscale interiors" presentation.
OPERATIONAL INITIATIVES
Distribution. The Company's store concentration enables its regional
warehouse distribution network to provide central receiving points from vendors
and distribution of product to local market warehouses. The Company operates
three regional warehouses in Charlotte, North Carolina; Jackson, Mississippi;
and Ocala, Florida. The regional warehouses serve all of the Company's local
markets except for Dallas, Texas and Atlanta, Georgia, which each have a
regional-size warehouse. The Company's enhanced information system and
just-in-time delivery practices have allowed local markets to begin to push
inventory back from their warehouses to the regional warehouses. The resulting
reduction of inventories in local market warehouses, and the Company's newly
implemented JIT capabilities have allowed management to begin converting these
facilities into prepping centers and cross-dock locations for local deliveries.
Retail locations with attached warehouse space can be expanded and remodeled to
increase retail square footage. The Company plans to expand five such locations
in 1996. The strengthening distribution network will permit the Company to
decrease total square footage for warehousing goods in 1996 despite the
significant increase in retail square footage in 1995 and additional planned
increase in 1996.
Credit Operations. The Company is consolidating all functions associated
with its receivables from its current 45 market area sites to a single site in
Chattanooga, Tennessee. Management believes the consolidated operations will
generate savings in personnel and operating costs and that the Company
maintains a distinct advantage by controlling credit approval and the credit
relationship with the customer, rather than outsourcing this function.
CUSTOMER SERVICE
The Company believes that personalized customer service and experienced
personnel are important elements in the success of the Company's retail
furniture business, and the Company continually seeks to improve the quality of
customer service and its reputation with suppliers and customers. The Company
trains its sales personnel to understand and assist customers with their
individual furnishings and decorating needs and also emphasizes prompt and
careful delivery of merchandise.
The Company solicits comments from its customers using various methods
including surveys left at the time of delivery for completion and return to the
Company reporting the customer's level of satisfaction with their Havertys
shopping and delivery experience.
EMPLOYEES
As of December 31, 1995, the Company employed approximately 2,780
employees: 2,571 in individual retail store operations, 124 in its corporate
offices and 85 in its regional warehouses. No employee of the Company is a
party to any union contract and the Company considers its employee relations to
be good.
COMPETITION
Although the degree of competition varies by geographic area, the retail
sale of home furnishings is a highly fragmented and competitive business. The
Company competes with numerous individual retail furniture stores as well as
chains. The Company currently ranks among the top ten in sales for full
service retail home furnishings store chains in the United States, based on
available industry data for 1994. The Company also competes with other
specialty retail sellers of home furnishings, especially the better department
stores. Department stores benefit competitively from more established name
recognition in specific markets, a larger customer base due to their department
store product lines and proprietary credit cards. The Company believes that
the effect of these competitive factors is offset by the Company's clearly
focused market position and its commitment to customer service.
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The Company believes that the primary elements of competition in its
industry are customer service, merchandise quality, style, selection, display,
price and store location and design. The Company feels that its success to
date is attributable in part to its abilities to focus an aggressive
well-defined merchandising and advertising effort on the middle and
upper-middle income customer, to make prompt delivery of orders through
maintenance of inventory and to tailor the inventory maintained at its stores
to local demands. In addition, the Company believes that its buying power
gives it a competitive advantage with respect to the price and value of its
product offerings. The Company emphasizes credit services tailored to its
product offerings and the specific needs of its target customers. By financing
its own customer accounts, the Company believes that it provides a significant
service to its customer which also enables the Company to maintain contact with
the customer over the term of the account. The Company regards its experienced
sales personnel and personalized customer service as important factors in its
competitive success. Lastly, the Company believes it has uniquely positioned
itself in the marketplace with merchandise that appeals to customers who are
somewhat more affluent than those of most other competitive furniture chain
stores. Management believes this customer segment responds more cautiously to
typical discount promotions and focuses on the real value and customer service
offered by a retailer. This serves as somewhat of a buffer to normal
competitive pressures and provides the opportunity for more consistent margins
across the product line.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
AGE POSITION WITH THE COMPANY
NAME AS OF 3-08-96 AND OTHER INFORMATION
---- ------------- ---------------------
<S> <C> <C>
Rawson Haverty . . . . . . . . . . 75 Chairman of the Board since 1984. President from 1955 to 1984.
Chief Executive Officer from 1955 to 1990. Director since 1947.
John E. Slater, Jr. . . . . . . . . 61 President and Chief Executive Officer since April 1994. Executive
Vice President from 1993 to 1994. Chief Operating Officer from
1992 to 1994. Senior Vice President from 1987 to 1993. General
Manager, Stores of the Company from 1990 to 1992. Director
since 1983.
Dan C. Bryant . . . . . . . . . . . 53 Controller since 1985.
Steven G. Burdette . . . . . . . . 34 Vice President, Merchandising, since 1994. Assistant Vice
President, Merchandising, from 1993 to 1994.
J. Edward Clary . . . . . . . . . . 35 Vice President, Management Information Services, since 1994.
Thomas P. Curran . . . . . . . . . 43 Vice President, Advertising, since 1987.
Dennis L. Fink . . . . . . . . . . 44 Senior Vice President and Chief Financial Officer since 1993.
Principal accounting and financial officer and a director of
Horizon Industries, Inc., a publicly held carpet manufacturer,
from 1977 to 1992. Senior Vice President, Treasurer and Chief
Financial Officer of Horizon from 1985 to 1992.
</TABLE>
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EXECUTIVE OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
AGE POSITION WITH THE COMPANY
NAME AS OF 3-08-96 AND OTHER INFORMATION
---- ------------- ---------------------
<S> <C> <C>
Ben M. Haverty. . . . . . . . . . . 35 Vice President of Marketing Programs, since 1994. Assistant
Secretary, since 1993. Assistant Vice President, Merchandising
from 1990 to 1994.
Rawson Haverty, Jr. . . . . . . . . 39 Vice President, Real Estate and Insurance Divisions, since 1992.
Assistant Vice President from 1987 to 1992. Assistant Secretary
from 1985 to 1993. Director since 1992.
Christine M. Jones . . . . . . . . 66 Vice President, Stockholder Relations, since 1993 and Corporate
Secretary since 1978. Assistant Vice President from 1986 to
1993.
Joan S. Nagy . . . . . . . . . . . 60 Vice President, Human Resources, since 1993. Assistant Vice
President, Human Resources from 1985 to 1993.
Clarence H. Smith . . . . . . . . . 45 Vice President, Operations and Development, since 1994. Vice
President since 1984. Regional Manager and General Manager of
Atlanta, Georgia retail operations from 1986 to 1994. Director
since 1989.
Hugh G. Wells, Jr . . . . . . . . . 62 Vice President since 1985 and Treasurer since 1987.
M. Tony Wilkerson . . . . . . . . . 50 Senior Vice President, Marketing, since 1994. Vice President,
Merchandising, from 1990 to 1994. Assistant Vice President from
1987 to 1990.
</TABLE>
Rawson Haverty and John Rhodes Haverty, M.D. (a director of the Company)
are first cousins. Clarence H. Smith is the nephew of Rawson Haverty and the
first cousin of Clarence H. Ridley (a director of the Company), Rawson Haverty,
Jr. and Ben M. Haverty. Rawson Haverty, Jr. and Ben M. Haverty are the sons
of Rawson Haverty and first cousins of Clarence H. Ridley and Clarence H.
Smith. Clarence H. Ridley is the nephew of Rawson Haverty and first cousin of
Clarence H. Smith, Rawson Haverty, Jr. and Ben M. Haverty.
ITEM 2. PROPERTIES.
The Company's executive and administrative offices are located at 866 West
Peachtree Street, N.W., Atlanta, Georgia and occupy a two-story brick building
purchased in 1971 and an adjacent, one-story brick building purchased in 1986.
These facilities contain approximately 29,000 and 15,000 square feet of working
area, respectively.
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The following table sets forth information concerning the operating
facilities of the Company as of December 31, 1995:
<TABLE>
<CAPTION>
Retail Market Area Regional
Locations (c) Warehouses Warehouses
--------- ------------ ----------
<S> <C> <C> <C>
Owned (a) 48 8 3
Leased (b) 46 14 0
-- -- -
Total 94 22 3
== == =
</TABLE>
(a) Includes capital leases on 13 facilities.
(b) The leases have various termination dates through 2010 plus
renewal options.
(c) 25 of the retail locations have attached warehouse space.
In addition, as of December 31, 1995, the Company has 3 retail facilities
under construction and has entered into an agreement for the lease of 2 others.
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Retail square footage at December 31 (in thousands) 2,764 2,357 2,256
% Change in retail square footage 17.3% 4.5% 2.6%
Net Sales per Square Foot (in thousands) $159 $160 $148
</TABLE>
For additional information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" beginning on page 9 of the 1995
Annual Report, incorporated herein by reference in response to Item 7 hereof.
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings, other than routine
litigation incidental to the business of the Company, to which the Company is a
party or of which its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of fiscal 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Common Stock Market Prices and Dividends on page 28 of the Company's annual
report to stockholders for the year ended December 31, 1995, are incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected 5-Year Financial Data on page 13 of the Company's annual report to
stockholders for the year ended December 31, 1995, is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 9 through 12 of the Company's annual report to stockholders
for the year ended December 31, 1995, is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The report of the independent auditors and the financial statements on
pages 14 through 27 of the Company's annual report to stockholders for the year
ended December 31, 1995, are incorporated herein by reference.
Selected Quarterly Financial Data on page 26 of the Company's annual report
to stockholders for the year ended December 31, 1995, is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors of the Company contained in the
Company's proxy statement for the 1996 annual meeting of stockholders, dated
March 20, 1996, is incorporated herein by reference. Information relating to
executive officers of the Company is included in this report under Item 1 of
Part I.
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation contained in the
Company's proxy statement, dated March 20, 1996, for the 1996 annual meeting of
stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information relating to security ownership of certain beneficial owners
and management contained in the Company's proxy statement, dated March 20,
1996, for the 1996 annual meeting of stockholders is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information relating to certain relationships and related transactions
contained in the Company's proxy statement dated March 20, 1996 at page 16, for
the 1996 annual meeting of stockholders is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
The following exhibits, financial statements and financial statement
schedule are filed as a part of this report:
(a) (1) and (2). LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE
The following consolidated financial statements of Haverty Furniture
Companies, Inc., included in the annual report of the registrant to its
stockholders for the year ended December 31, 1995, are incorporated by
reference in Item 8:
Consolidated Balance Sheets--December 31, 1995 and 1994
Consolidated Statements of Income--Fiscal Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity--Fiscal Years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows--Fiscal Years ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
The following financial statement schedule of Haverty Furniture
Companies, Inc. is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(3) Exhibits.
The exhibits listed below are filed with or incorporated by reference
into this Report. Unless otherwise indicated, the exhibit number of
documents incorporated by reference corresponds to the exhibit number in
the referenced document. Exhibits 10.1 through 10.10 represent
compensatory plans.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
*3.1 -- Articles of Incorporation of Haverty Furniture Companies, Inc. as amended and restated on March 6, 1973, and
amended on April 24, 1979, and as amended on April 25, 1985. (10-Q for the quarter ended June 30, 1985)
*3.1.1 -- Articles of Incorporation of Haverty Furniture Companies, Inc. as amended on April 25, 1986. (10-Q for the
quarter ended March 31, 1986)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
*3.1.2 -- Amendment to Articles of Incorporation of Haverty Furniture Companies, Inc. as amended on April 28, 1989.
(10-Q for the quarter ended June 30, 1989)
*3.2.2 -- Amended and Restated By-Laws of Haverty Furniture Companies, Inc. as amended on August 5, 1987. (10-K for
the year ended December 31, 1987)
*3.2.3 -- Amendment to By-Laws of Haverty Furniture Companies, Inc. as amended on November 4, 1988. (10-Q for the
quarter ended March 31, 1989)
*4.1 -- Note Agreement between Haverty Furniture Companies, Inc. and The Prudential Purchasers (The Prudential
Insurance Company of America) c/o Prudential Capital Group, dated December 29, 1993. (10-K for the year
ended December 31, 1993)
*4.1.1 -- First Amendment to Note Agreement between Haverty Furniture Companies, Inc. and The Prudential Purchasers
(The Prudential Insurance Company of America) c/o Prudential Capital Group, dated December 29, 1993
No other instrument authorizes long-term debt securities in an amount in excess of ten percent (10%) of the
total assets of the Company. The Company agrees to furnish copies of instruments and agreements authorizing
long-term debts of less than ten percent (10%) of its total assets to the Commission upon request.
*10.1 -- Directors' Deferred Compensation Plan having an effective date of December 15, 1982 (Form S-2, Registration
Statement No. 2-84860, as filed with the Securities and Exchange Commission on June 30, 1983 and as amended
on July 20, 1983 by Amendment No. I, Exhibit 10.2)
*10.1.1 -- First Amendment of Directors' Deferred Compensation Plan (Registration Statement on Form S-2, File No.
33-59400, Exhibit 10.1.1)
*10.2 -- Supplemental Executive Retirement Plan, effective January 1, 1983 (10-K for the year ended December 31,
1984, Exhibit 10.3)
*10.3 -- Thrift Plan and Trust, as amended, effective January 1, 1985 (Exhibit 4.1 to Registration Statement on
Form S-8, File No. 33-44285)
*10.4 -- 1986 Non-Qualified Stock Option Plan (10-K for the year ended December 31, 1987, Exhibit 10.7)
*10.5 -- 1988 Incentive Stock Option Plan, as amended (Exhibit 4.1 to Registration Statement on Form S-8, File No.
33-53609)
*10.6 -- 1988 Non-Qualified Stock Option Plan (10-Q for the quarter ended June 30, 1989, Exhibit 10.2)
*10.6.1 -- Amendment Number One to 1988 Non-Qualified Stock Option Plan (Registration Statement on Form S-2, File No.
33-59400, Exhibit 10.9.1)
*10.7 -- Haverty Furniture Companies, Inc. Employee Stock Purchase Plan, as amended and restated as of February 7,
1995
*10.8 -- Deferred Compensation Agreement between Haverty Furniture Companies, Inc. and Rawson Haverty, Sr., dated
December 21, 1992. (10-K for the year ended December 31, 1993, Exhibit 10.9)
</TABLE>
10
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
*10.9 -- 1993 Non-Qualified Stock Option Plan (Registration Statement on Form S-8, File No. 33-53607, Exhibit 5.1)
10.10 -- Supplemental Executive Retirement Plan, effective January 1, 1996.
13.1 -- Annual Report to Stockholders for the year ended December 31, 1995.
23.1 -- Consent of Ernst & Young LLP
27 -- Financial Data Schedule (for SEC use only)
</TABLE>
* Incorporated by reference.
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1995.
(c) Exhibits -- The response to this portion of Item 14 is as
submitted in Item 14(a)(3).
(d) Financial Statement Schedules -- The response to this portion of
Item 14 is submitted as a separate section of this report.
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HAVERTY FURNITURE COMPANIES, INC.
Date: March 15, 1996 By: /s/ JOHN E. SLATER, JR.
-------------------------------------------------
John E. Slater, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 15, 1996 By: /s/ DENNIS L. FINK
-------------------------------------------------
Dennis L. Fink
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: March 15, 1996 By: /s/ DAN C. BRYANT
-------------------------------------------------
Dan C. Bryant
Controller (Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RAWSON HAVERTY Chairman of the Board March 15, 1996
------------------------------
Rawson Haverty
/s/ JOHN E. SLATER, JR. President, Chief Executive March 15, 1996
------------------------------ Officer and Director
John E. Slater, Jr.
/s/ FRED J. BATES Regional Manager and Director March 18, 1996
------------------------------
Fred J. Bates
/s/ KENNETH BLACK, JR. Director March 18, 1996
------------------------------
Dr. Kenneth Black, Jr.
/s/ JOHN RHODES HAVERTY, M.D. Director March 18, 1996
------------------------------
John Rhodes Haverty, M.D.
/s/ RAWSON HAVERTY, JR. Vice President and Director March 19, 1996
------------------------------
Rawson Haverty, Jr.
/s/ L. PHILLIP HUMANN Director March 18, 1996
------------------------------
L. Phillip Humann
/s/ LYNN H. JOHNSTON Director March 20, 1996
------------------------------
Lynn H. Johnston
/s/ FRANK S. MCGAUGHEY, III Director March 19, 1996
------------------------------
Frank S. McGaughey, III
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM A. PARKER, JR. Director March 15, 1996
------------------------------
William A. Parker, Jr.
/s/ CLARENCE H. RIDLEY Director March 19, 1996
------------------------------
Clarence H. Ridley
/s/ CLARENCE H. SMITH Vice President and Director March 15, 1996
------------------------------
Clarence H. Smith
/s/ ROBERT R. WOODSON Director March 15, 1996
------------------------------
Robert R. Woodson
</TABLE>
13
<PAGE> 15
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>
Column A Column B Column C-1 Column D Column E
- ------------------------------------------------------------------------------------------------------------------
Additions
Balance at charged Balance at
beginning of to costs and Deductions- end of
Description period expenses describe (1) period
- ----------- -------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Allowance for doubtful accounts $7,105 $2,854 $2,854 $7,105
====== ====== ====== ======
Year ended December 31, 1994:
Allowance for doubtful accounts $6,485 $2,773 $2,153 $7,105
====== ====== ====== ======
Year ended December 31, 1993:
Allowance for doubtful accounts $5,400 $3,154 $2,069 $6,485
====== ====== ====== ======
</TABLE>
(1) Uncollectible accounts written off and losses on accounts resulting from
repossessions and discounts and allowances.
(2) Column C-2 "Additions Charged To Other Accounts" has been omitted as the
response is "none".
F-1
<PAGE> 1
EXHIBIT 10.10
HAVERTY FURNITURE COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
<PAGE> 2
HAVERTY FURNITURE COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, it is in the best interest of Haverty Furniture Companies, Inc. (the
"Corporation") to retain a select group of competent and loyal management
personnel; and
WHEREAS, Congress has from time to time limited the amounts of retirement
benefits available to the more highly compensated employees in relationship to
their pay; and
WHEREAS, the Corporation finds it in its best interest to supplement the
retirement pay of a select group of management personnel who might otherwise
receive less retirement pay due to congressional limits;
NOW THEREFORE, the Corporation hereby establishes the following Supplemental
Executive Retirement Plan effective January 1, 1996 ("Effective Date"):
<PAGE> 3
ARTICLE I
DEFINITIONS
1.1 Affiliate. "Affiliate" means the Corporation and any other entity that
is a member of the same controlled group as defined in Code Sections
414(b), (c) or (m).
1.2 Board of Directors. "Board of Directors" means the Board of Directors of
Haverty Furniture Companies, Inc.
1.3 Code. "Code" means the Internal Revenue Code of 1986, as amended.
1.4 Committee. "Committee" means the Employee Benefits Committee of the
Board of Directors of the Corporation. The Committee will have primary
responsibility for administering the Plan under Article VI.
1.5 Corporation. "Corporation" means Haverty Furniture Companies, Inc. and
any Affiliate whose participation in this Plan has been approved by the
Board of Directors.
1.6 Eligible Spouse. "Eligible Spouse" means the person to whom the
Participant is legally married at the time of the Participant's death.
1.7 Employee. "Employee" means a common law full-time employee of the
Corporation.
1.8 Normal Retirement Date. "Normal Retirement Date" means the first day of
the month coinciding with or next following the date the Participant attains
age 65.
2
<PAGE> 4
1.9 Participant. "Participant" means an Employee of the Corporation who is
one of a select group of management and highly compensated employees, and
who otherwise meets the requirements of Article II of this Plan.
1.10 Plan. "Plan" means the Haverty Furniture Companies, Inc. Supplemental
Executive Retirement Plan set forth in this document, as amended from time
to time.
1.11 Plan Year. "Plan Year" means the calendar year.
1.12 Retirement. "Retirement" means the commencement of benefits at normal,
late, or early retirement to the Participant under the terms of the
Retirement Plan.
1.13 Retirement Plan. "Retirement Plan" means the Haverty Furniture
Companies, Inc. Retirement Plan.
1.14 Retirement Plan Benefit. "Retirement Plan Benefit" means the accrued
benefit payable from the Retirement Plan as of the date of benefit
commencement.
1.15 Social Security Benefit. "Social Security Benefit" means the Primary
Insurance Amount payable at age 65 or actual retirement, if later, to the
Participant under the Federal Social Security Act. Solely for purposes of
determining the amount of benefits payable from this Plan prior to Normal
Retirement Date, the estimated Primary Insurance Amount payable from
Social Security at age 65 will be actuarially reduced (using the early
retirement reduction factors specified in the Retirement Plan) to the
date of benefit commencement.
3
<PAGE> 5
ARTICLE II
ELIGIBILITY
Any Employee of the Corporation who:
(a) is among a select group of management or highly compensated Employees,
(b) is a participant in the Retirement Plan and
(c) has a benefit under the Retirement Plan that has been limited by Section
401(a)(17) of the Code, relating to the $150,000 (indexed) limit on
compensation,
shall be eligible to participate in the Plan as of the later of January 1, 1996
or the date the Employee exceeds the limit referred to in (c) above.
4
<PAGE> 6
ARTICLE III
VESTING
A Participant's benefits under this Plan shall vest in the retirement benefit
calculated under Section 4.1 in the same manner and at the same time as the
Participant vests in his benefit under the Retirement Plan.
5
<PAGE> 7
ARTICLE IV
RETIREMENT BENEFIT
4.1 Calculation of Retirement Benefit. Subject to Section 4.4, upon
Retirement from the Corporation, a Participant shall be entitled to
receive an annual benefit under this Plan which is equal to the amount
that would have been paid to the Participant from the Retirement Plan if
the Participant's Retirement Plan Benefit had not been limited by Code
Section 401(a)(17), less the amount of the Participant's actual Retirement
Plan Benefit.
4.2 Pre-retirement Death Benefit. Subject to Section 4.4, upon the death of
the Participant prior to Retirement, his Eligible Spouse shall be entitled
to the death benefit that would have been paid to her from the Retirement
Plan if such benefit had not been limited by Code Section 401(a)(17), less
the amount actually payable to her from the Retirement Plan. In the case
of an unmarried Participant who dies prior to Retirement, no death
benefits shall be payable under this Plan.
4.3 Termination of Employment. Subject to Section 4.4, upon termination of
employment by the Participant from the Corporation, a vested Participant
shall be entitled to receive a benefit under this Plan equal to the
Retirement Plan Benefit that would have been paid to the Participant from
the Retirement Plan on account of termination of employment if the
Participant's benefit had not been limited by Code Section 401(a)(17),
less the amount of the Participant's actual Retirement Plan Benefits paid
from the Retirement Plan on account of termination of employment.
4.4 Maximum Benefit. Notwithstanding anything in this Plan to the contrary,
if the total annual benefit (based on the life annuity form) initially
payable at or after Normal Retirement Date from this Plan, Social
Security, and the Retirement Plan, would
6
<PAGE> 8
otherwise exceed $125,000, the benefit payable from this Plan will be
reduced so that the total annual benefit will equal $125,000.
This maximum benefit is actuarially reduced (using the early retirement
reduction factors specified in the Retirement Plan) if benefits commence
prior to Normal Retirement Date.
4.5 Timing and Form of Payment. Any benefit payable under this Plan will
commence at the same time and in the same form as benefits payable under
the Retirement Plan, with the following exception. If the lump sum value
of any benefit payable under this Plan (using the actuarial basis for lump
sums specified in the Retirement Plan) is less then $10,000, the benefit
from this Plan shall be paid in one lump sum as soon as practical
following termination of employment.
4.6 Post-retirement Death Benefit. If the Participant dies after his
benefits have commenced, no death benefit will be payable except to the
extent provided under the form of benefit he was receiving.
7
<PAGE> 9
ARTICLE V
EVENTS CAUSING FORFEITURE
Termination of Employment. Termination of employment for any reason prior to
the Participant's vesting under Article III will cause the Participant and all
Beneficiaries under the Plan to forfeit any unvested interest in this Plan.
8
<PAGE> 10
ARTICLE VI
COMMITTEE
The Plan shall be administered by the Employee Benefits Committee, which is a
standing committee of the Board of Directors, appointed annually. The Employee
Benefits Committee is the Administrator for all formal employee benefit plans
of the Corporation and also oversees and gives guidance for all other employee
benefit programs and policies of the Corporation. The members of the Committee
are all non-Employee directors.
9
<PAGE> 11
ARTICLE VII
AMENDMENT AND/OR TERMINATION
7.1 Amendment or Termination of the Plan. The Board of Directors may amend
or terminate this Plan at any time by an instrument in writing.
7.2 No Retroactive Effect on Awarded Benefits. No amendment will affect the
rights of any Participant to the benefit provided under this Plan
previously accrued by the Participant without his consent. However, the
Board of Directors shall retain the right at any time to change in any
manner the retirement benefit provided in Article IV but only as to
accruals after the date of the amendment.
7.3 Effect of Termination. If the Plan is terminated, no further benefit
under the Plan will accrue. The Plan benefit accrued to the date of
termination will be payable under the conditions, at the time and in the
form then provided in the Plan.
7.4 Successor Employer. In case the Corporation consolidates or merges with
another entity and is not the surviving corporation, sells substantially
all of its assets, is a party to a reorganization and substantially all of
its assets are transferred to another entity or dissolves, this Plan shall
automatically terminate unless there is a successor organization, in which
case the successor organization shall assume all liabilities accrued under
the Plan.
10
<PAGE> 12
ARTICLE VIII
FUNDING
8.1 Corporate Obligation. The Corporation or any successor thereto shall pay
the benefits due the Participants under this Plan.
8.2 Participants Must Rely Only on General Credit of the Corporation. It is
specifically recognized by both the Corporation and the Participants that
this Plan is only a general corporate commitment and that each Participant
must rely upon the general credit of the Corporation for the fulfillment
of its obligations hereunder. Under all circumstances the rights of
Participants to any asset held by the Corporation will be no greater than
the rights expressed in this Plan. Nothing contained in this Plan will
constitute a guarantee by the Corporation that the assets of the
Corporation will be sufficient to pay any benefits under this Plan or
would place the Participant in a secured position ahead of general
creditors of the Corporation.
11
<PAGE> 13
ARTICLE IX
MISCELLANEOUS
9.1 Limitation of Rights. Nothing in this Plan will be construed:
(a) to give a Participant any right with respect to any benefit
except in accordance with the terms of this Plan;
(b) to limit in any way the right of the Corporation to terminate
a Participant's employment with the Corporation at any time;
(c) to evidence any agreement or understanding, expressed or
implied, that the Corporation will employ a Participant in any
particular position or for any particular remuneration; or
(d) to give a Participant or any other person claiming through
him any interest or right under this Plan other than that of any
unsecured general creditor of the Corporation.
9.2 Facility of Payment. Whenever, in the opinion of the Corporation and the
Committee, a person entitled to receive any benefit hereunder is under a
legal disability or is incapacitated in any way so as to be unable to
manage his financial affairs, the Corporation may make payments to such
person or to his legal representative or to a relative or friend of such
person for his benefit, in such manner as the Corporation and the
Committee consider advisable. Any payment of a benefit or installment
thereof made in accordance with the provisions of the Section shall be a
complete discharge of any liability for the making of such payment under
the provisions of the Plan.
9.3 Nonalienation of Benefits. No right or benefit under this Plan will be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance
or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same will be
12
<PAGE> 14
void. No right or benefit under this Plan will in any manner be liable
for or subject to any debts, contracts, liabilities or torts of the
person entitled to such benefits.
9.4 Responsibility for Distributions and Withholding of Taxes. The Committee
will furnish information to the Corporation, concerning the amount and
form of distribution to any Participant entitled to a distribution so that
the Corporation may make the distribution required. It will also
calculate the deductions from the amount of the benefit paid under the
Plan for any taxes required to be withheld by federal, state or local
government based on the Participant's instructions, and will cause them to
be withheld.
9.5 Reliance Upon Information. The Committee will not be liable for any
decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the
foregoing, any decision or action taken by the Committee when it relies
upon information supplied it by any officer of the Corporation, the
Corporation's legal counsel, the Corporation's actuary, the Corporation's
independent accountants or other advisors in connection with the
administration of this Plan will be deemed to have been taken in good
faith.
9.6 Severability. If any term, provision, covenant or condition of the Plan
is held to be invalid, void or otherwise unenforceable, the rest of the
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated.
9.7 Notice. Any notice or filing required or permitted to be given to the
Committee or a Participant will be sufficient if in writing and hand
delivered or sent by U.S. mail to the principal office of the Corporation
or to the residential mailing address of the Participant. Notice will be
deemed to be given as of the date of hand delivery or if delivery is by
mail, as of the date shown on the postmark.
13
<PAGE> 15
9.8 Gender. Whenever any words are used in this Plan in the masculine,
feminine, or neuter gender they are to be construed as though they were
also used in another gender in all cases where they would so apply.
9.9 Governing Law. The Plan will be construed, administered and governed in
all respects by the laws of the State of Georgia to the extent they are
not preempted by Federal law.
9.10 Effective Date. This Plan will be operative and effective on January 1,
1996.
* * * * * * * * * *
IN WITNESS WHEREOF, the Corporation has executed this document this 3rd day
of November, 1995, to evidence the Plan as adopted by the Board of
Directors of Haverty Furniture Companies, Inc. in November, 1995.
HAVERTY FURNITURE COMPANIES, INC.
By: /s/ Rawson Haverty
-------------------------------------
Rawson Haverty, Chairman of the Board
Attested By: /s/ Christine M. Jones
---------------------------------------
Christine M. Jones, Corporate Secretary
SEAL
14
<PAGE> 1
EXHIBIT 13.1
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain items
from the Company's consolidated statements of income as a percentage of net
sales.
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Net sales ............................ 100.0% 100.0% 100.0%
Gross profit ......................... 47.2 47.4 47.2
Credit service charges ............... 3.1 3.2 3.3
Selling, general and administrative .. 42.4 41.7 42.3
Interest expense ..................... 2.8 2.3 2.2
Provision for doubtful accounts ...... 0.7 0.8 1.0
Other income (expense), net .......... 0.5 (0.3) (0.1)
Income before income taxes ........... 4.9 5.5 4.8
Net income ........................... 3.1 3.4 3.0
Effective tax rate ................... 37.3% 38.2% 37.9%
===== ===== =====
</TABLE>
For an understanding of the significant factors that influenced the
Company's performance during the past three years, the following discussion
should be read in conjunction with the consolidated financial statements
appearing elsewhere in this annual report.
1995 COMPARED TO 1994
Net sales for 1995 increased 6.8% from $370,132,000 to $395,470,000. This
increase was attributable to a 3.1% comparable-store sales increase, a 14.4%
increase in sales from stores expanded within the last year and from seven new
stores.
Gross profit as a percent of net sales was 47.2% for 1995 as compared with
47.4% in 1994. This slight erosion is attributable to the Company's substantial
presence in several highly competitive markets. The LIFO reserve also increased
in 1995 impacting the gross profit margin negatively by 0.2% versus 0.1% in
1994.
Selling, general and administrative expenses as a percent of sales
increased to 42.4% in 1995 compared to 41.7% in 1994. This increase was the
result of several factors including higher depreciation costs associated with
new and expanded stores. Additionally, five of the seven new retail locations in
1995 were open on average less than two months. This short period does not
provide the time necessary to reach a sales level to adequately cover the
stores' higher initial operating costs. Also included in selling, general and
administrative expenses are the planned store pre-opening costs, which are
expensed as incurred, of approximately $656,000. These expenses were only
approximately $25,000 in 1994 as new store openings were at a very low level.
9
<PAGE> 2
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Credit service charges declined to 3.1% of net sales in 1995 from 3.2%
in 1994 as customer financing at lower promotional rates continued at a rate
comparable to the prior year. Management believes that responding to the terms
of advertised financing promotions offered by many of its competitors reduces
the need to emphasize off-price promotional activity and can stimulate sales.
The Company's credit programs do not require retroactive interest to be charged
to customers who do not fully comply with the terms of these promotions, as do
many of the credit programs offered by its competitors.
A provision for doubtful accounts of 0.7% and 0.8% of net sales was made
in 1995 and 1994, respectively. The Company's accounts receivable growth
continued to reflect the level of credit versus cash sales of approximately 80%
in 1995 and 1994.
The Company is consolidating its credit operations from 45 market-area
locations to one corporate site. Management believes the transition will be
completed during the third quarter of 1996 and the related personnel and other
operational efficiencies will save general and administrative costs on a going
forward basis.
Interest expense increased 0.5% as a percent of net sales due to an
increase of 30.1% in average debt levels to support increased capital
expenditures. The Company's effective interest rate increased 53 basis points
reflecting the higher rates associated with the long-term debt incurred during
1995. The Company has entered into interest rate swap agreements to reduce the
impact of changes in interest rates on its bank line-of-credit arrangements and
floating-rate notes payable. Interest expense is adjusted for the differential
to be paid or received as interest rates change. The effect of such adjustments
on interest expense was not significant during 1995.
Other income in 1995 of $2,124,000 consists primarily of a $1,189,000 gain
from the tornado destruction of a retail location and $932,000 in gains from
the sale of certain real estate.
1994 COMPARED TO 1993
Net sales increased 14.6% as comparable-store sales (sales from stores
opened or expanded for one year or more) increased 10.0%. Management attributes
the improvement to several factors including a favorable general economic
climate. The program of remodeling and expanding stores in certain markets,
coupled with the success of upgraded merchandise lines, enabled sales to grow
at a faster pace than the home furnishings industry's estimated average of
6.5%, according to the American Furniture Manufacturers Association.
Gross profit as a percent of net sales improved 0.2% primarily due to the
effect of improved merchandise purchasing and lower inflation under the LIFO
accounting method which was partially offset by strong sales growth in large
metropolitan markets which have greater price competition. The increase in
sales of higher-price point furniture lines, which typically yield slightly
lower gross margins, was also a factor.
The LIFO provision was 0.1% of net sales in 1994 versus 0.5% in 1993.
During the fourth quarter of 1994, the Company changed its method of accounting
for LIFO inventories from applying U.S. Bureau of Labor Statistics (BLS)
indices to internally developed indices. The Company believes the internally
developed indices more accurately measure increases and decreases in the
Company's cost of merchandise and produce a better matching of current costs
and revenues. The LIFO provision would have been 0.3% of net sales in 1994 had
the BLS indices been used. The cumulative effect of such change at the
beginning of 1994 and proforma amounts for prior years are not determinable.
Credit service charges declined to 3.2% of net sales from 3.3% in 1993 as
customer financing at lower promotional interest rates increased slightly.
Free-interest promotions for specified periods up to one year were available on
a periodic basis to stimulate sales and meet competition.
Selling, general and administrative expenses decreased 0.6% as a percent
of net sales in 1994 reflecting the fixed cost nature of many expenses in this
category as well as improvements in cost control by the Company. General
insurance costs declined 0.3% as a percent of net sales due to more favorable
claims experience and improved safety programs. Advertising expense decreased
0.2% as a percent of net sales as the Company continued to perform more
production work in-house. In absolute dollars, advertising expenses increased
12.3% as the Company moved to reinforce the quality merchandise and service
themes which management uses to differentiate the Company.
10
<PAGE> 3
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Interest expense increased 0.1% as a percent of net sales due to an
increase of 18.8% in average debt levels to support higher accounts receivable
and capital expenditures. Also, the Company's effective interest rate increased
17 basis points reflecting increased short-term rates.
A provision for doubtful accounts of 0.8% and 1.0% of net sales was made
in 1994 and 1993, respectively. The Company's accounts receivable rose from the
strong sales volume and the increase in credit versus cash sales to 80% of net
sales versus 78% in 1993. The Company continued to experience bad debt
write-offs consistent with its expectations.
Other expenses increased from 0.1% to 0.3% of net sales. During the fourth
quarter of 1994, the Company determined that land originally purchased in 1987,
for warehouse expansion in its Dallas market was no longer suitable, in size or
location given the growth of that market and lack of improvements in the
immediate vicinity's infrastructure. In connection with plans to sell these
properties, the Company made a write-down of $1.1 million which was charged to
other expenses. The Company sold one property and obtained an offer to purchase
the other resulting in an additional loss or write-down of $196,000, during
1995.
LIQUIDITY AND SOURCES OF CAPITAL
The Company has used internally generated funds and bank borrowings to
finance its continuing operations and growth. Net cash used in operating
activities was $1.4 million in 1995, $1.9 million in 1994 and $15.2 million in
1993. The Company carries its own customer accounts receivable and thus
increasing credit sales negatively impact cash flows from operations. Accounts
receivable increased $15.3 million in 1995, $25.5 million in 1994 and $31.5
million in 1993.
The ratio of current assets to current liabilities was 2.6 at the end of
1995, compared to 2.5 and 4.1 at the end of 1994 and 1993, respectively. The
increase in current assets continues to be attributable to higher accounts
receivable and inventory levels. Inventory levels were 14% higher in 1995 as
the Company added 17% more retail square footage during the year. Inventory
turnover for 1995 was impacted negatively as over half of the increase in the
inventory level was due to new square footage which was open, on average, less
than two months.
Investing activities used $42.5 million of cash in 1995 compared to $24.6
million in 1994 and $12.3 million in 1993. During 1995, the Company completed
the construction of seven new stores and the expansion of eight existing
stores. Capital expenditures of approximately $14.6 million were also made for
projects which will be completed in 1996.
Financing activities provided $44.1 million of cash during 1995 primarily
from $50 million in unsecured term notes maturing at various dates through 2008.
The Company has arrangements with eight banks under line-of-credit
agreements to borrow up to $104 million. At December 31, 1995, of this amount,
$74 million were committed lines ($17.8 million unused) and $30 million were
uncommitted lines ($17.8 million unused). Borrowings accrue interest at
competitive money-market rates and all lines are reviewed annually for renewal.
The Company has a revolving credit/term loan agreement with a commercial bank
providing for borrowings of $15 million through 1998, at which time it converts
to a term loan, maturing in 1998. If utilized, this facility would replace a
$15 million short-term committed line. The Company's financial covenants under
various loan agreements allow for securitization of up to approximately
one-half of the outstanding balances of accounts receivable. The Company plans
to enter into a financing transaction of this type in 1996, the proceeds of
which would reduce accounts receivable and notes payable to banks.
11
<PAGE> 4
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
In addition to cash flow from operations, the Company uses bank lines of
credit on an interim basis to finance capital expenditures and repay long-term
debt. Longer-term transactions such as sale/lease-backs, private placements and
mortgage financing are used periodically to reduce short-term borrowings and
manage interest-rate risk. The Company pursues a diversified approach to its
financing requirements and balances its overall capital structure with
fixed-rate or capped-rate debt as determined by the interest rate environment
(79% of total debt was interest-rate protected at December 31, 1995). The
Company's average effective interest rates on all borrowings (excluding capital
leases) were 7.2%, 7.3% and 7.0% in 1995, 1994 and 1993, respectively.
Capital expenditures are presently expected to include for 1996 the
addition of 5 new stores and the remodeling and expansion of 7 existing
locations. The preliminary estimate of capital expenditures for 1996 is $22
million. In addition, the Company has committed to lease 3 stores and a
distribution center commencing in 1996 under operating lease agreements.
Minimum lease commitments, including guaranteed residual values, are expected
to aggregate $31 million for the initial five-year term. Funds available from
operations, bank lines of credit and other possible financing transactions are
expected to be adequate to finance the Company's planned expenditures.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement
121 in the first quarter of 1996 and, based on current circumstances, does not
believe the effect of adoption will be material.
SEASONALITY
Although the Company does not consider its business to be seasonal, sales
are somewhat higher in the second half of the year, particularly in the fourth
quarter.
12
<PAGE> 5
<TABLE>
<CAPTION>
================================================================================================================
SELECTED 5-YEAR FINANCIAL DATA
(In thousands, except per share data)
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales ...................... $ 395,470 $ 370,132 $ 322,859 $ 282,022 $ 246,390
- ----------------------------------------------------------------------------------------------------------------
Cost of Goods Sold ............. 209,000 194,688 170,348 150,725 129,581
Credit Service Charges ......... 12,376 11,664 10,500 10,489 11,566
Depreciation and Amortization... 10,634 8,602 6,875 6,069 5,479
Interest Expense ............... 11,158 8,470 7,240 7,518 8,190
- ----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes ..... $ 19,444 $ 20,279 $ 15,650 $ 7,188 $ 3,555
Income Taxes ................... 7,261 7,741 5,934 2,656 1,315
----------------------------------------------------------------------------
Net Income ..................... $ 12,183 $ 12,538 $ 9,716 $ 4,532 $ 2,240
- ----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes
as a % of Net Sales........... 4.9% 5.5% 4.8% 2.5% 1.4%
Net Income as a % of Net Sales.. 3.1% 3.4% 3.0% 1.6% 0.9%
================================================================================================================
Earnings Per Share (a) ......... $ 1.05 $ 1.10 $ .91 $ .53 $ .26
================================================================================================================
Cash Dividends-
Amount........................ $ 3,406 $ 3,082 $ 2,772 $ 2,120 $ 2,102
Per Share:
Common Stock (a)............ .3000 .2750 .2650 .2550 .2533
Class A Common Stock (a).... .2800 .2550 .2490 .2417 .2400
================================================================================================================
Capital Expenditures ........... $ 44,896 $ 24,387 $ 13,721 $ 9,701 $ 8,353
Additional Capitalized Leases .. -- -- -- -- 2,100
================================================================================================================
Working Capital ................ $ 159,937 $ 139,695 $ 147,733 $ 103,467 $ 99,190
Current Ratio .................. 2.64 TO 1 2.50 to 1 4.11 to 1 2.66 to 1 3.02 to 1
================================================================================================================
Accounts Receivable, Net ....... $ 172,877 $ 160,405 $ 137,630 $ 109,301 $ 92,931
================================================================================================================
Inventories .................... $ 73,597 $ 64,582 $ 54,739 $ 50,573 $ 49,483
================================================================================================================
Property and Equipment,
Net Carrying Value............ $ 112,405 $ 80,198 $ 67,439 $ 61,296 $ 57,899
================================================================================================================
Total Assets ................... $ 371,778 $ 315,103 $ 264,353 $ 229,184 $ 208,653
================================================================================================================
Long-term Debt and Capital
Lease Obligations............. $ 129,233 $ 87,164 $ 94,197 $ 79,630 $ 74,406
================================================================================================================
Stockholders' Equity ........... $ 140,955 $ 131,055 $ 120,418 $ 83,567 $ 80,804
Equity Per Common Share (a) .... 12.13 11.40 10.59 9.77 9.54
================================================================================================================
Number of Retail Stores:
Open at beginning of period... 90 89 88 86 86
Opened during period.......... 7 1 3 5 --
Closed/relocated
during period............... 3 -- 2 3 --
----------------------------------------------------------------------------
Open at end of period......... 94 90 89 88 86
----------------------------------------------------------------------------
Remodeled and/or
expanded during period...... 8 13 16 12 4
================================================================================================================
</TABLE>
(a) Adjusted for all stock dividends and splits.
13
<PAGE> 6
<TABLE>
<CAPTION>
========================================================================================
CONSOLIDATED STATEMENTS OF INCOME
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
Year Ended December 31
---------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales .............................. $395,470 $370,132 $322,859
Cost of goods sold ..................... 209,000 194,688 170,348
-------- -------- --------
Gross profit .......................... 186,470 175,444 152,511
Credit service charges ................. 12,376 11,664 10,500
-------- -------- --------
198,846 187,108 163,011
Costs and expenses:
Selling, general and administrative... 167,514 154,491 136,551
Interest ............................. 11,158 8,470 7,240
Provision for doubtful accounts ...... 2,854 2,773 3,154
-------- -------- --------
181,526 165,734 146,945
-------- -------- --------
17,320 21,374 16,066
Other income (expense), net ............ 2,124 (1,095) (416)
-------- -------- --------
INCOME BEFORE INCOME TAXES 19,444 20,279 15,650
Income taxes (Note 8) .................. 7,261 7,741 5,934
-------- -------- --------
NET INCOME $ 12,183 $ 12,538 $ 9,716
======== ======== ========
Average number of common and common
equivalent shares outstanding ........ 11,555 11,425 10,733
======== ======== ========
Earnings per share ..................... $ 1.05 $ 1.10 $ .91
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 7
<TABLE>
<CAPTION>
==============================================================================================================
CONSOLIDATED BALANCE SHEETS
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands, except share data)
December 31
----------------------
ASSETS 1995 1994
-------- -------
<S> <C> <C>
Current Assets
Cash and cash equivalents .................................................... $ 2,146 $ 1,925
Accounts receivable (Note 2) ................................................. 172,877 160,405
Inventories (Note 3) ......................................................... 73,597 64,582
Other current assets ......................................................... 5,852 2,686
Deferred income taxes (Note 8) ............................................... 2,938 3,396
-------- --------
TOTAL CURRENT ASSETS 257,410 232,994
Property and equipment (Notes 4 and 7) ......................................... 112,405 80,198
Other assets ................................................................... 1,963 1,911
-------- --------
$371,778 $315,103
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to banks (Note 5) .............................................. $ 53,400 $ 49,200
Accounts payable and accrued expenses (Note 6) ............................... 35,988 32,809
Income taxes (Note 8) ........................................................ 112 3,332
Current portion of long-term debt and capital lease obligations
(Notes 7 and 12)............................................................ 7,973 7,958
-------- --------
TOTAL CURRENT LIABILITIES 97,473 93,299
Long-term debt and capital lease obligations, less current portion (Notes 7
and 12)..................................................................... 129,233 87,164
Deferred income taxes (Note 8) ................................................. 1,786 1,347
Other liabilities .............................................................. 2,331 2,238
Commitments (Note 12)
Stockholders' Equity (Notes 9 and 11):
Capital Stock, par value $1 per share -
Preferred Stock, Authorized - 1,000,000 shares; Issued: None
Common Stock, Authorized - 15,000,000 shares;
Issued: 1995 - 9,154,780 shares; 1994 - 8,928,532 shares
(including shares in treasury: 1995 and 1994 - 498,948) ................. 9,155 8,929
Convertible Class A Common Stock, Authorized - 5,000,000 shares;
Issued: 1995 - 3,217,411 shares; 1994 - 3,313,606 shares
(including shares in treasury: 1995 and 1994 - 249,055) ................. 3,217 3,314
Additional paid-in capital .................................................... 32,494 31,500
Retained earnings ............................................................. 101,666 92,889
-------- --------
146,532 136,632
Less cost of Common Stock and Convertible
Class A Common Stock in treasury ............................................ 5,577 5,577
-------- --------
TOTAL STOCKHOLDERS' EQUITY 140,955 131,055
-------- --------
$371,778 $315,103
======== ========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 8
<TABLE>
<CAPTION>
===============================================================================================================================
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
Common Class A Additional
Stock Common Stock Paid-in Retained Treasury
($1 Par Value) ($1 Par Value) Capital Earnings Stock Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 $ 5,583 $ 3,718 $ 3,354 $ 76,489 $ (5,577) $ 83,567
Net income ......................... -- -- -- 9,716 -- 9,716
Cash dividends on common stock:
Amount ........................... -- -- -- (2,772) -- (2,772)
Per share:
Common - $.265
Class A Common - $.249
Conversion of Class A Common Stock.. 359 (359) -- -- -- --
Stock option transactions, net ..... 470 100 4,321 -- -- 4,891
Sale of Common Stock ............... 1,391 -- 23,625 -- -- 25,016
Stock split (3 for 2) .............. 962 (105) (857) -- -- --
--------- --------- --------- ---------- --------- ----------
BALANCE AT DECEMBER 31, 1993 8,765 3,354 30,443 83,433 (5,577) 120,418
Net income ......................... -- -- -- 12,538 -- 12,538
Cash dividends on common stock:
Amount ........................... -- -- -- (3,082) -- (3,082)
Per share:
Common - $.275
Class A Common - $.255
Conversion of Class A Common Stock.. 80 (80) -- -- -- --
Stock option transactions, net ..... 84 40 1,057 -- -- 1,181
--------- --------- --------- ---------- --------- ----------
BALANCE AT DECEMBER 31, 1994 8,929 3,314 31,500 92,889 (5,577) 131,055
Net income ......................... -- -- -- 12,183 -- 12,183
Cash dividends on common stock:
Amount ........................... -- -- -- (3,406) -- (3,406)
Per share:
Common - $.30
Class A Common - $.28
Conversion of Class A Common Stock.. 100 (100) -- -- -- --
Stock option transactions, net ..... 126 3 994 -- -- 1,123
--------- --------- --------- ---------- --------- ----------
BALANCE AT DECEMBER 31, 1995 ....... $ 9,155 $ 3,217 $ 32,494 $ 101,666 $ (5,577) $ 140,955
========= ========= ========= ========== ========= ==========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 9
<TABLE>
<CAPTION>
============================================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands)
Year Ended December 31
-------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................................................... $ 12,183 $ 12,538 $ 9,716
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization...................................... 10,634 8,602 6,875
Provision for doubtful accounts.................................... 2,854 2,773 3,154
Reduction of cost to market value of property held for sale ....... 140 1,100 --
Deferred income taxes ............................................. 897 (698) 456
(Gain) loss on sale or involuntary conversion of property and
equipment........................................................ (2,121) 86 (85)
-------- -------- --------
Subtotal 24,587 24,401 20,116
Changes in operating assets and liabilities:
Accounts receivable................................................ (15,326) (25,548) (31,483)
Inventories........................................................ (9,472) (9,843) (4,166)
Other current assets............................................... (1,161) 24 375
Accounts payable and accrued expenses.............................. 3,179 5,747 1,769
Income taxes....................................................... (3,220) 3,332 (1,789)
-------- -------- --------
NET CASH USED IN OPERATING ACTIVITIES (1,413) (1,887) (15,178)
-------- -------- --------
INVESTING ACTIVITIES
Purchases of property and equipment.................................... (44,896) (24,387) (13,721)
Proceeds from sale of property and equipment .......................... 2,407 128 822
Other investing activities ............................................ (2,893) (329) 635
Insurance proceeds .................................................... 2,922 -- --
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (42,460) (24,588) (12,264)
-------- -------- --------
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings....................... 4,200 37,300 (14,900)
Proceeds from issuance of long-term debt............................... 50,044 925 30,000
Payment of long-term debt and capital lease obligations................ (7,960) (8,479) (15,242)
Exercise of stock options.............................................. 1,123 1,181 4,891
Dividends paid......................................................... (3,406) (3,082) (2,772)
Sale of Common Stock................................................... -- -- 25,016
Other financing activities............................................. 93 (59) (126)
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 44,094 27,786 26,867
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......................... 221 1,311 (575)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........................... 1,925 614 1,189
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR................................. $ 2,146 $ 1,925 $ 614
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 10
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: The Company is a full-service home furnishings retailer with
94 showrooms in 11 southern states, selling a broad line of middle to high-end
furniture. The middle to upper-middle income households earning in excess of
$35,000 annually are the Company's predominant target market.
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates: The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using the last-in, first-out (LIFO) method. As discussed in Note
3, the Company changed its method of accounting for LIFO inventories in 1994.
Property and Equipment and Depreciation: Property and equipment are stated
at cost less accumulated depreciation and amortization. Depreciation is
provided over the estimated useful lives of the assets using the straight-line
method. Leasehold improvements are amortized over the shorter of the estimated
useful life or the lease term of the related asset. Investments in property
under capital leases are amortized over the related lease term.
Cash Equivalents: The Company considers all liquid investments with a
maturity of three months or less when purchased to be cash equivalents. Cash
equivalents are stated at cost, which approximates fair market value.
Fair Values of Financial Instruments: The Company's financial instruments
consist of cash, accounts receivable, accounts payable and long-term debt.
Cash, accounts receivable and accounts payable are stated at fair market value;
the carrying amount of long-term debt approximates fair market value based on
current interest rates. Interest rate swap agreements are valued based on the
estimated amount the Company would pay to terminate the agreements at the
reporting date, taking into account current interest rates and the credit
worthiness of the swap counterparties.
Interest Rate Swap Agreements: These agreements involve the receipt of
fixed-rate amounts in exchange for floating-rate interest payments over the
life of the agreements without an exchange of the underlying principal amount.
The differential to be paid or received is accrued as interest rates change and
recognized as an adjustment to interest expense related to the debt. The
related amount payable to or receivable from counterparties is included in
other liabilities or assets. The fair values of the swap agreements are not
recognized in the financial statements.
Advertising Expense: The cost of advertising is expensed as incurred. The
Company incurred approximately $28,000,000, $26,800,000 and $23,900,000 in
advertising costs during 1995, 1994 and 1993, respectively.
Stock Based Compensation: The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair value of
the shares at the date of grant. The Company accounts for stock option grants
in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and, accordingly, recognizes no compensation expense for the stock
option grants.
Earnings Per Share: Earnings per share are computed based on the weighted
average number of common shares plus significant dilutive common stock
equivalents related to stock options.
Impact of Recently Issued Accounting Standards: In March 1995, the FASB
issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," which requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. Statement
121 also addresses the accounting for long-lived assets that are expected to be
disposed of. The Company will adopt Statement 121 in the first quarter of 1996
and, based on current circumstances, does not believe the effect of adoption
will be material.
18
<PAGE> 11
================================================================================
NOTE 2 - ACCOUNTS RECEIVABLE
Credit sales under Company credit programs were, as a percent of sales,
approximately 80% in 1995 and 1994 and 78% in 1993. Accounts receivable are
shown net of the allowance for doubtful accounts of $7,105,000 at December 31,
1995 and 1994, respectively. Accounts receivable terms vary as to payment terms
(30 days to four years) and interest rates (0% to 21%) and are generally
collateralized by the merchandise sold. Accounts receivable balances due after
one year at December 31, 1995 and 1994 were approximately $57,194,000 and
$46,368,000, respectively, and have been included in current assets in
accordance with trade practice.
The Company believes that the carrying value of existing customer
receivables is the best estimate of fair value because of their short average
maturity and estimated bad debt losses have been reserved. Concentrations of
credit risk with respect to customer receivables are limited due to the large
number of customers comprising the Company's account base and their
dispersion across eleven states.
NOTE 3 - INVENTORIES
Inventories are measured using the last-in, first-out (LIFO) method of
inventory valuation. The excess of current cost over the value of inventories
based upon the LIFO method was approximately $13,416,000 and $12,698,000 at
December 31, 1995 and 1994, respectively. A number of the Company's competitors
use the first-in, first-out (FIFO) basis of inventory valuation which
approximates current costs. The use of the LIFO valuation method as compared to
the FIFO method had the effect of decreasing net income by $.04, $.02 and $.09
per share for the years ended 1995, 1994 and 1993, respectively, had the
Company's effective tax rate been applied to changes in income resulting
therefrom, and had no other assumptions been made as to changes in income.
During the fourth quarter of 1994, the Company changed its method of
accounting for LIFO inventories from applying U.S. Bureau of Labor Statistics
indices to internally developed indices. The Company believes the internally
developed indices more accurately measure increases and decreases in the
Company's cost of merchandise and produce a better matching of current costs
and revenues. The effect of the change in the accounting for LIFO inventories
was to increase net income by approximately $330,000 or $.03 per share in the
year ended December 31, 1994. The cumulative effect of such change at the
beginning of 1994 and proforma income amounts for prior years are not
determinable.
<TABLE>
<CAPTION>
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows (in thousands):
1995 1994
------------ ------------
<S> <C> <C>
Land ............................................. $ 22,480 $ 17,552
Buildings and improvements ....................... 79,020 60,368
Equipment ........................................ 48,722 40,159
Capital leases ................................... 9,989 9,989
Construction in progress ......................... 7,940 1,350
------------- ------------
168,151 129,418
Less accumulated depreciation .................... (49,193) (43,103)
Less accumulated capital lease amortization ...... (6,553) (6,117)
------------- ------------
Property and equipment, net ...................... $ 112,405 $ 80,198
============ ============
</TABLE>
Interest cost capitalized amounted to $1,209,000 in 1995, $85,000 in 1994
and $3,000 in 1993.
19
<PAGE> 12
================================================================================
Note 5 - Credit Arrangements
Under short-term line-of-credit arrangements with banks, the Company may
borrow up to $104,000,000 upon such terms as the Company and the banks mutually
agree. These arrangements are reviewed annually for renewal.
Committed lines of credit totaled $74,000,000 with customary fees payable
on the unused portion ($17,800,000 unused at December 31, 1995). No fees or
compensating balances are required for the remaining $30,000,000 uncommitted
lines of credit ($17,800,000 unused at December 31, 1995).
At December 31, 1995, the Company owed $68,400,000 in short-term loans to
banks, of which $15,000,000 was classified as long-term debt as described in
Note 7. The weighted average stated interest rate for these borrowings
outstanding at December 31, 1995 and 1994 was 6.1% and 6.3%, respectively. The
Company has interest-rate swap agreements as described in Note 7
covering approximately $16,900,000 of short-term debt.
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The components of accounts payable and accrued expenses are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Accounts payable, trade ................... $ 13,313 $12,495
Accrued compensation ...................... 7,144 7,043
Taxes other than income taxes ............. 6,547 5,866
Other ..................................... 8,984 7,405
-------- -------
$ 35,988 $32,809
</TABLE> ======== =======
NOTE 7 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Unsecured term note (a) ....................... $ 30,000 $ --
7.44% unsecured note payable (b) .............. 15,000 --
7.16% unsecured note payable (c) .............. 30,000 30,000
10.1% unsecured note payable (d) .............. 22,500 27,500
Secured debt (e) .............................. 19,678 22,056
6.3% to 10.5% capital lease obligations,
due through 2016............................. 5,028 5,566
Unsecured notes (f) ........................... 15,000 10,000
-------- -------
137,206 95,122
Less portion classified as current liability .. 7,973 7,958
-------- -------
$129,233 $87,164
======== =======
</TABLE>
20
<PAGE> 13
================================================================================
NOTE 7 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
(a) The term note is payable in quarterly installments initially of
$250,000 commencing in February 1998 and then $1,000,000
commencing in February 2000. The note matures in November 2006 and
interest is payable quarterly. The note has a floating rate of
interest at LIBOR plus 0.7%
(b) The note is payable in semi-annual installments of $1,250,000
commencing in January 2003 and matures in October 2008. Interest is
payable quarterly.
(c) The note is payable in semi-annual principal payments of $2,143,000
commencing in October 2000 and matures in April 2007. Interest is
payable quarterly.
(d) The note is payable in semi-annual installments of $2,500,000 plus
interest payable quarterly and matures in April 2000.
(e) Secured debt is comprised of various first mortgage notes and first
deeds of trust including some with fixed rates of interest ranging
from 5.7% to 7.9% and some with floating rates of interest ranging
from LIBOR plus 0.5% (note rate of 6.18% at December 31, 1995) to 70%
of prime rate due through 2007. The Company may prepay the
floating-rate notes at any time without penalty. Property and
equipment with a net book value at December 31, 1995 of $31,670,000
is pledged as collateral on secured debt.
(f) The Company has a revolving credit/term loan agreement with a
commercial bank providing for borrowings of $15,000,000 revolving
through 1998. If utilized, this facility would replace a $15,000,000
short-term committed line. Interest is charged at the bank's prime
rate, or LIBOR plus 0.375%, or any fixed rate as offered at that time
acceptable to the Company. The Company may prepay the loan at any
interest payment date without penalty. Under the terms of this
agreement, the Company has the option to refinance short-term notes
and accordingly, $15,000,000 was classified as long-term debt at
December 31, 1995.
The Company's debt agreements require, among other things, that the
Company: (a) meet certain working capital requirements; (b) limit the type and
amount of indebtedness incurred; (c) limit the operating lease rentals; and (d)
grant certain lenders identical security for any liens placed upon the
Company's assets, other than those liens specifically permitted in the loan
agreements. The Company is in compliance with these covenants at December 31,
1995.
The note agreement which governs the 10.1%, 7.16% and 7.44% unsecured
notes payable allows for the issuance of additional notes of up to $15 million
in the aggregate at any time in 1996 if requested by the Company. This
uncommitted "shelf" facility would be funded at prevailing market interest
rates for similar credit-rated borrowers and would mature in no more than
12 years with an average life of 10 years or less.
The Company has entered into interest rate swap agreements to reduce the
impact of changes in interest rates on its bank line-of-credit arrangements and
floating-rate notes payable. At December 31, 1995, the Company had six
outstanding interest rate swap agreements, having a notional amount of
$78,076,000. Two of the agreements effectively fix the average interest rate on
the Company's $30 million floating-rate note at 8.2% through 2006. The
remaining agreements are at rates ranging from 5.29% to 5.95% maturing in 1998,
2000 and 2002. Under the terms of the agreements, the Company makes payments at
fixed rates and receives payments at variable rates which are based on LIBOR
adjusted quarterly. The fair values of these agreements at December 31, 1995,
are approximately $3,400,000.
The aggregate maturities of long-term debt and capital lease obligations
during the five years subsequent to December 31, 1995 are as follows:
1996--$7,973,000; 1997--$8,056,000; 1998--$24,102,000; 1999--$9,817,000;
2000--$11,205,000. Such scheduled maturities assume that the short-term notes
are refinanced under the maximum term available under the related $15,000,000
revolving credit/term loan agreement.
Cash payments for interest were approximately $11,308,000, $8,156,000 and
$7,325,000 in 1995, 1994 and 1993, respectively.
21
<PAGE> 14
================================================================================
NOTE 8 - INCOME TAXES
Income tax expense (benefit) consists of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Current:
Federal................................ $5,653 $7,269 $4,721
State ................................. 711 1,170 757
------ ------ ------
6,364 8,439 5,478
------ ------ ------
Deferred:
Federal................................ 787 (607) 444
State ................................. 110 (91) 12
------ ------ ------
897 (698) 456
------ ------ ------
$7,261 $7,741 $5,934
====== ====== ======
</TABLE>
Income tax expense differs from the amount computed by applying the
statutory Federal income tax rate. The differences are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- ---------
<S> <C> <C> <C>
Statutory rates applied to income
before income taxes ................... $ 6,805 $ 7,097 $ 5,376
State income taxes, net of federal
tax benefit............................ 462 761 497
Other.................................... (6) (117) 61
------- ------- ---------
$ 7,261 $ 7,741 $ 5,934
======= ======= =========
</TABLE>
Deferred tax assets and liabilities as of December 31, 1995 and 1994
were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts ........................... $1,039 $1,628
Retirement and compensation obligations.................... 1,142 1,028
Inventory related ......................................... 82 645
Retrospective and self-insurance accruals.................. 568 593
Capitalized leases ........................................ 448 501
Loss on property write-down ............................... 432 429
Other ..................................................... 243 --
------ ------
Total deferred tax assets 3,954 4,824
------ ------
Deferred tax liabilities:
Net property and equipment ................................ 2,288 2,667
Other ..................................................... 124 108
Gain on involuntary conversion ............................ 390 --
------ ------
Total deferred tax liabilities 2,802 2,775
------ ------
Net deferred tax assets ..................................... $1,152 $2,049
====== ======
</TABLE>
22
<PAGE> 15
================================================================================
NOTE 8 - INCOME TAXES (CONTINUED)
The current federal and state tax provisions do not reflect the tax
savings resulting from deductions associated with the Company's various stock
option plans. These savings were $190,000, $156,000 and $1,331,000 in 1995,
1994 and 1993, respectively, and were credited to stockholders' equity.
The Company made income tax payments of $9,403,000, $5,107,000 and
$5,895,000 in 1995, 1994 and 1993, respectively.
NOTE 9 - STOCKHOLDERS' EQUITY
Common Stock has a preferential dividend rate, while Class A Common Stock
has greater voting rights (including the ability to elect a majority of the
Board of Directors). Class A Common Stock is convertible at the holder's option
at any time into Common Stock on a 1-for-1 basis; Common Stock is not
convertible into Class A Common Stock. There is no present plan for issuance of
Preferred Stock.
NOTE 10 - BENEFIT PLANS
The Company has a defined benefit pension plan covering substantially all
employees. The benefits are based on years of service and the employee's final
average compensation. The Company's funding policy is to contribute annually an
amount which is within the range of the minimum required contribution and the
maximum amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
The following table sets forth the plan's funded status and amounts
recognized in the Company's balance sheet at December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Actuarial present value of projected benefit obligations:
Accumulated benefit obligations, including vested benefits
of $19,217 in 1995 and $17,360 in 1994 ................................ $ 20,143 $ 17,989
Increase for projected salary increases .................................. 6,690 4,543
Projected benefit obligations for service rendered to date................ 26,833 22,532
Plan assets at fair value ................................................. 22,421 19,391
---------- ---------
Plan assets less than projected benefit obligations ....................... (4,412) (3,141)
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions................ 2,488 2,314
Unrecognized prior service cost ........................................... 1,005 1,127
Unrecognized net asset..................................................... (948) (1,150)
---------- ---------
Accrued pension expense included in the balance sheet...................... $ (1,867) $ (850)
========== =========
</TABLE>
Net pension cost included the following components (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- --------
<S> <C> <C> <C>
Service cost-benefits earned
during the period ................................... $ 1,041 $ 1,130 $ 763
Interest cost on projected benefit obligations ........... 1,903 1,676 1,547
Actual loss (return) on plan assets ...................... (4,293) 1,292 (2,747)
Net amortization and deferral ............................ 2,599 (3,173) 1,133
---------- ---------- --------
Net pension cost ......................................... $ 1,250 $ 925 $ 696
========== ========== ========
</TABLE>
23
<PAGE> 16
================================================================================
NOTE 10 - BENEFIT PLANS (CONTINUED)
The weighted-average discount rates used in determining the actuarial
present value of benefit obligations were 7.5% and 8.5% at December 31, 1995
and 1994, respectively. The annual rate of increase for future compensation was
6.0% for 1995 and 1994. The expected long-term rate of return on plan assets
was 8.5% for 1995, 1994 and 1993.
The plan's assets consist primarily of U.S. Government securities and
listed stocks and bonds. Included in the plan assets at December 31, 1995 were
34,000 shares of the Company's Common Stock and 142,000 shares of the Company's
Class A Common Stock with an aggregate fair value of $2,380,000.
The Company has a non-qualified, non-contributory Supplemental Executive
Retirement Plan (SERP) which covers five retired executive officers. The plan
provides annual supplemental retirement benefits to the executives amounting to
55% of final average earnings less benefits payable from the Company's defined
benefit pension plan and Social Security benefits. Under the plan, which is not
funded, the Company pays benefits directly to covered executives beginning at
their retirement. At December 31, 1995, the projected benefit obligation for
this plan totaled $2,031,000, of which $1,628,000 is included in the
accompanying balance sheet. Pension expense recorded under the SERP amounted to
$204,000, $246,000 and $196,000 for 1995, 1994 and 1993, respectively.
The Company has an employee savings/retirement (401k) plan to which
substantially all employees may contribute. The Company matches employee
contributions to the extent of 50% of the first 2% of earnings and 25% of the
next 4% contributed by participants. The Company expensed approximately
$801,000 in 1995, $744,000 in 1994 and $561,000 in 1993 in matching employer
contributions to this plan.
The Company offers no postretirement benefits other than pensions and no
significant postemployment benefits.
NOTE 11 - STOCK OPTION PLANS
The Stock Option Committee of the Board of Directors serves as
Administrator for the Company's incentive and non-qualified stock option plans.
Options are granted by the Committee under both stock plans to officers and
non-officer employees. In accordance with certain provisions of the
non-qualified plan, options granted to non-employee directors of the Company
are automatic annual grants on a pre-determined date to purchase a specific
number of shares at the fair market value of the shares on such date. As of
December 31, 1995, the maximum number of options which may be granted under
incentive and non-qualified stock option plans were 50,098 and 354,000,
respectively.
The table below summarizes options activity for the past three years under
the Company's stock option plans.
<TABLE>
<CAPTION>
Incentive Stock Non-Qualified
Option Plans Stock Option Plans
------------------ --------------------
Option Average Option Average
Shares Price Shares Price
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Outstanding at January 1, 1993 ...... 881,513 $ 6.44 268,500 $ 6.23
Granted ........................... 234,375 12.65 57,000 16.13
Exercised ......................... (778,818) 6.54 (106,000) 6.35
Cancelled or expired .............. (225) 7.00 -- --
-------- ------ -------- -------
Outstanding at December 31, 1993 .... 336,845 10.55 219,500 8.74
Granted ........................... 287,500 14.17 88,000 15.29
Exercised ......................... (68,447) 8.67 (39,000) 6.99
Cancelled or expired .............. (24,698) 12.06 (7,000) 8.45
-------- ------ -------- -------
Outstanding at December 31, 1994 .... 531,200 12.68 261,500 11.22
Granted ........................... 324,750 12.33 89,000 12.65
Exercised ......................... (24,200) 6.46 (76,000) 10.75
Cancelled or expired .............. (137,500) 14.13 (13,000) 5.15
-------- ------ -------- -------
Outstanding at December 31, 1995 .... 694,250 $12.45 261,500 $ 12.14
======== ====== ======== =======
</TABLE>
24
<PAGE> 17
================================================================================
NOTE 11 - STOCK OPTION PLANS (CONTINUED)
Of the options outstanding at December 31, 1995, 930,250 shares were for
Common Stock and 25,500 shares were for Class A Common Stock. All non-qualified
options outstanding were exercisable and 490,414 shares of options under the
incentive plans were exercisable at December 31, 1995.
In addition, the Company had shares available for future purchases under
the Employee Stock Purchase Plan at December 31, 1995. This plan, approved by
the stockholders in 1992, enables the Company to grant substantially all
employees options to purchase up to 750,000 shares of common stock, of which
187,782 shares have been exercised from inception of the plan, at a price equal
to the lesser of (a) 85% of the stock's fair market value at the date of grant,
or (b) 85% of the stock's fair market value at the exercise date. Shares
purchased may not exceed 10% of the employee's annual compensation, as defined,
or $25,000 of common stock at its fair market value (determined at the time
such option is granted) for any one calendar year. Employees pay for the shares
ratably over a period of six months (the purchase period) through payroll
deductions or lump sum payments, and cannot exercise their option to purchase
any of the shares until the conclusion of the purchase period. In the event an
employee elects not to exercise such options, the full amount withheld is
refundable. During 1995, options for 82,346 shares were exercised at an average
price of $9.88 per share. At December 31, 1995, 48,946 options were outstanding
at an average price of $11.58 per share.
NOTE 12 - COMMITMENTS
The Company leases certain property and equipment. Initial lease terms
range from 5 years to 30 years and certain leases contain renewal options
ranging from 1 to 25 years or provide for options to purchase the related
property at fair market value. The leases generally require the Company to pay
all maintenance, property taxes and insurance costs.
At December 31, 1995, aggregate future minimum payments under capital
leases and non-cancelable operating leases with initial or remaining terms in
excess of one year consisted of the following (in thousands):
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- --------
<S> <C> <C>
1996 ............................................ $ 979 $ 9,775
1997 ............................................ 1,011 9,152
1998 ............................................ 1,002 8,938
1999 ............................................ 797 8,468
2000 ............................................ 637 7,820
Subsequent to 2000 .............................. 3,282 45,738
Less total minimum sublease rentals ............. -- (2,409)
------ --------
Net minimum lease payments ...................... $ 87,482
========
Total minimum lease amounts ..................... 7,708
Amounts representing interest ................... 2,680
------
Present value of future minimum lease payments .. $5,028
======
</TABLE>
25
<PAGE> 18
================================================================================
NOTE 12 - COMMITMENTS (CONTINUED)
Rental expense applicable to operating leases consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ----------
<S> <C> <C> <C>
Property
Minimum ....................................... $ 10,343 $ 9,477 $ 8,390
Additional rentals based on sales ............. 560 689 508
Sublease income ............................... (952) (858) (753)
---------- --------- ----------
9,951 9,308 8,145
Equipment ...................................... 2,360 1,584 1,235
---------- --------- ----------
$ 12,311 $ 10,892 $ 9,380
========== ========= ==========
</TABLE>
At December 31, 1995, the Company had committed to lease certain
properties beginning in 1996 under operating lease agreements. Minimum lease
commitments, including guaranteed residual values, under the leases are expected
to be $31 million for the initial five-year term.
NOTE 13 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the unaudited quarterly results of
operations for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 Quarter Ended
---------------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
--------- ------- -------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales ................... $ 94,383 $ 88,678 $100,970 $111,439
Gross profit ................ 44,468 41,668 47,663 52,671
Credit service charges ...... 3,063 3,021 3,014 3,278
Income before income taxes .. 4,402 3,382 4,994 6,666
Net income .................. 2,729 2,097 3,095 4,262
Earnings per share .......... .24 .18 .27 .37
<CAPTION>
1994 Quarter Ended
--------------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales ................... $ 88,016 $ 84,747 $ 94,529 $102,840
Gross profit ................ 41,509 39,832 44,391 49,712
Credit service charges ...... 2,883 2,892 2,902 2,987
Income before income taxes .. 4,398 3,321 4,754 7,806
Net income .................. 2,726 2,060 2,947 4,805
Earnings per share .......... .24 .18 .26 .42(a)
</TABLE>
(a) Reflects fourth quarter adjustments including a write-down of
property to fair value which reduced net income by approximately
$680,000 or $.06 per share and the effect of a change in
accounting for LIFO inventories (Note 3) which increased net income
by approximately $330,000 or $.03 per share.
26
<PAGE> 19
================================================================================
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Haverty Furniture Companies, Inc.
We have audited the accompanying consolidated balance sheets of Haverty
Furniture Companies, Inc. and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Haverty Furniture Companies, Inc. and subsidiaries at December 31, 1995 and
1994, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
Atlanta, Georgia /s/ Ernst & Young LLP
January 30, 1996
27
<PAGE> 20
MARKET PRICES AND DIVIDEND INFORMATION
The Company's two classes of common stock are quoted on The Nasdaq Stock Market
(National Market). The trading symbol for the Common Stock is HAVT and for
Class A Common Stock is HAVTA. Based on the number of holders of record and an
estimate of the number of individual participants represented by security
position listings, there are approximately 4,000 holders of Common Stock and
500 holders of the Class A Common Stock. High and low sales prices reported by
The Nasdaq National Market and dividends for the last two years were (in
dollars):
<TABLE>
<CAPTION>
1995
- ---------------------------------------------------------------------------
Common Stock Class A Common Stock
---------------------------- -----------------------------
Quarter Dividend Dividend
Ended High Low Declared High Low Declared
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 13 1/4 10 3/8 .0750 13 1/2 10 1/2 .0700
June 30 13 9 5/8 .0750 12 3/4 9 1/2 .0700
Sept. 30 13 7/8 9 3/4 .0750 12 1/2 10 3/4 .0700
Dec. 31 15 13 .0750 14 3/4 13 1/2 .0700
</TABLE>
<TABLE>
<CAPTION>
1994
- ---------------------------------------------------------------------------
Common Stock Class A Common Stock
---------------------------- -----------------------------
Quarter Dividend Dividend
Ended High Low Declared High Low Declared
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 19 1/4 14 1/4 .0675 19 1/4 14 1/4 .0625
June 30 16 12 .0675 15 3/4 11 3/4 .0625
Sept. 30 14 1/2 10 3/4 .0700 15 11 1/4 .0650
Dec. 31 14 10 7/8 .0700 14 1/4 10 3/4 .0650
</TABLE>
28
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Haverty Furniture Companies, Inc. of our report dated January 30, 1996,
included in the 1995 Annual Report to Shareholders of Haverty Furniture
Companies, Inc.
Our audits also included the financial statement schedule of Haverty Furniture
Companies, Inc. listed in Item 14(a). This schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Company's Registration
Statement (Form S-8 No. 33-53607) pertaining to the 1993 Non-Qualified Stock
Option Plan of Haverty Furniture Companies, Inc., the Registration Statement
(Form S-8 No. 33-28560) pertaining to the 1988 Non-Qualified Stock Option Plan
of Haverty Furniture Companies, Inc., the Registration Statement (Form S-8 No.
33-13755) pertaining to the 1986 Non-Qualified Stock Option Plan of Haverty
Furniture Companies, Inc., the Registration Statement (Form S-8 No. 33-53609)
pertaining to the 1988 Incentive Stock Option Plan of Haverty Furniture
Companies, Inc. and the Registration Statement (Form S-8 No. 33-45724)
pertaining to the Employee Stock Purchase Plan of Haverty Furniture Companies,
Inc. of our report dated January 30, 1996, with respect to the financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule included
in this Annual Report (Form 10-K) of Haverty Furniture Companies, Inc.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HAVERTY FURNITURE COS., INC. AND
SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,146
<SECURITIES> 0
<RECEIVABLES> 179,982
<ALLOWANCES> 7,105
<INVENTORY> 73,597
<CURRENT-ASSETS> 257,410
<PP&E> 168,151
<DEPRECIATION> 55,746
<TOTAL-ASSETS> 371,778
<CURRENT-LIABILITIES> 97,473
<BONDS> 137,206
0
0
<COMMON> 12,372
<OTHER-SE> 134,160
<TOTAL-LIABILITY-AND-EQUITY> 371,778
<SALES> 395,470
<TOTAL-REVENUES> 407,846
<CGS> 209,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,854
<INTEREST-EXPENSE> 11,158
<INCOME-PRETAX> 19,444
<INCOME-TAX> 7,261
<INCOME-CONTINUING> 12,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,183
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 0
</TABLE>
