<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
------------------
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------------- --------------
COMMISSION FILE NUMBER: 1-14445
-------
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
--------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the registrant's two classes of $1
par value common stock as of November 10, 1999 were: Common Stock -
17,297,927; Class A Common Stock - 4,786,214.
<PAGE>
HAVERTY FURNITURE COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information:
Condensed Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998 1
Condensed Consolidated Statements of Income -
Quarter and nine months ended September 30, 1999 and 1998 3
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1999 and 1998 4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Quantitative and Qualitative Disclosure of Market Risk 9
Part II. Other Information 10
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 737 $ 1,874
Accounts receivable 178,771 194,472
Less allowance for doubtful accounts ( 7,900) ( 8,300)
--------------- ---------------
170,871 186,172
Inventories, at LIFO 84,442 82,084
Other current assets 9,096 8,047
--------------- ---------------
Total Current Assets 265,146 278,177
Property and equipment 215,154 196,814
Less accumulated depreciation and amortization ( 92,510) ( 85,481)
-------------- ---------------
122,644 111,333
Other assets 3,235 3,391
--------------- ---------------
$ 391,025 $ 392,901
=============== ===============
</TABLE>
<PAGE>
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
------------ -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $ -- $ 6,400
Accounts payable and accrued expenses 75,033 54,356
Current portion of long-term debt and
capital lease obligations 12,773 9,711
--------------- ---------------
Total Current Liabilities 87,806 70,467
Long-term debt and capital lease obligations, less current portion 134,131 161,778
Other liabilities 2,709 2,598
Stockholders' Equity
Capital stock, par value $1 per share:
Preferred Stock, Authorized: 1,000 shares;
Issued: None
Common Stock, Authorized:
50,000 shares; Issued: 1999 - - 21,555 shares;
1998 - - 20,786 shares
(including shares in treasury:
1999 - - 4,271; 1998 - - 3,478) 21,555 20,786
Convertible Class A Common Stock, Authorized:
15,000 shares; Issued: 1999 - - 5,334 shares;
1998 - -5,544 shares (including shares in
treasury: 1999 and 1998 - -522) 5,334 5,544
Additional paid-in capital 30,715 27,173
Retained earnings 148,572 133,207
--------------- ---------------
206,176 186,710
Less cost of Common Stock and
Convertible Class A Common Stock in treasury ( 39,797) ( 28,652)
--------------- --------------
166,379 158,058
--------------- ---------------
$ 391,025 $ 392,901
=============== ===============
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
----------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 157,875 $ 139,004 $ 449,895 $ 390,368
Cost of goods sold 82,769 73,527 236,979 206,805
----------- ----------- ----------- ----------
Gross profit 75,106 65,477 212,916 183,563
Credit service charges 3,643 4,300 11,457 12,899
----------- ----------- ----------- -----------
78,749 69,777 224,373 196,462
Cost and expenses:
Selling, general and administrative 63,697 57,964 183,589 165,411
Interest 2,797 3,215 8,820 10,063
Provision for doubtful accounts 1,008 1,345 3,208 5,428
Other expense (income), net 10 ( 44) ( 75) ( 158)
----------- ---------- ---------- ----------
67,512 62,480 195,542 180,744
----------- ----------- ----------- -----------
Income Before Income Taxes 11,237 7,297 28,831 15,718
Income taxes 4,045 2,591 10,379 5,623
----------- ----------- ----------- -----------
Net Income $ 7,192 $ 4,706 $ 18,452 $ 10,095
=========== =========== =========== ===========
Diluted earnings per share $0.31 $0.20 $0.80 $0.43
Basic earnings per share $0.32 $0.21 $0.83 $0.44
Weighted average diluted shares 23,182 23,208 23,098 23,593
Weighted average basic shares 22,258 22,686 22,313 23,119
Cash dividends per common share:
Common Stock $0.050 $0.0425 $0.1400 $0.1225
Class A Common Stock $0.047 $0.0400 $0.1325 $0.1150
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30
1999 1998
--------------- ---------------
<S> <C> <C>
Operating Activities
Net income $ 18,452 $ 10,095
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,011 10,605
Provision for doubtful accounts 3,208 5,428
Deferred income taxes ( 206) 903
Gain on sale of property and equipment ( 14) ( 21)
-------------- --------------
Subtotal 32,451 27,010
Changes in operating assets and liabilities:
Accounts receivable 12,093 18,213
Inventories ( 2,358) 2,966
Other current assets ( 832) ( 733)
Accounts payable and accrued expenses 20,555 13,161
Income taxes 122 3,996)
-------------- --------------
Net cash provided by operating activities 62,031 56,621
--------------- ---------------
Investing Activities
Purchases of property and equipment ( 22,524) ( 9,173)
Proceeds from sale of property and equipment 215 168
Other investing activities 156 266
--------------- ---------------
Net cash used in investing activities ( 22,153) ( 8,739)
-------------- --------------
Financing Activities
Net (decrease) increase in short-term borrowings ( 17,500) ( 82,500)
Proceeds from issuance of long-term debt -- 59,200
Payment of long-term debt and capital lease obligations ( 13,485) ( 5,477)
Purchase of treasury stock ( 11,145) ( 19,465)
Exercise of stock options 4,101 3,686
Dividends paid ( 3,087) ( 2,807)
Other financing activities 101 69
--------------- ---------------
Net cash used in financing activities ( 41,015) ( 47,294)
-------------- ---------------
(Decrease)increase in cash and cash equivalents ( 1,137) 588
Cash and cash equivalents at beginning of period 1,874 390
--------------- ---------------
Cash and cash equivalents at end of period $ 737 $ 978
=============== ===============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements. The financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation. In
the opinion of management, all adjustments considered necessary for a fair
presentation have been included and all such adjustments are of a normal
recurring nature.
Earnings per share and all shares outstanding have been restated to record
the effect of the 2-for-1 stock split on August 25, 1999.
NOTE B - INTERIM LIFO CALCULATIONS
An actual valuation of inventory under the LIFO method can be made only at the
end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Since these are
affected by factors beyond management's control, interim results are subject to
the final year-end LIFO inventory valuation.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
Certain information included in this Quarterly Report on Form 10-Q contains, and
other reports or materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company or its
management) contain or will contain, "forward-looking statements" within the
meaning of Section 21E of the Securities and Exchange Act of 1934, as amended,
Section 27A of the Securities Act of 1933, as amended, and pursuant to the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may relate to financial results and plans for future business
activities, and are thus prospective. Such forward looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, general economic conditions, changes in consumer spending for
large ticket items such as furniture, economic conditions affecting the housing
market, the mortgage interest rate environment, competition in the retail
furniture industry, and other uncertainties detailed in this report and detailed
from time to time in other filings by the Company with the Securities and
Exchange Commission. Any forward-looking statements are made pursuant to the
Private Securities Litigation Reform Act of 1995 and, as such, speak only as of
the date made.
RESULTS OF OPERATIONS
Net sales for the third quarter and nine months ended September 30, 1999
increased 13.6% and 15.2% over the same periods for 1998, respectively.
Comparable-store sales increased 12.6% and 13.1% over the year-earlier third
quarter and nine month periods, respectively. The Company's largest markets,
Dallas and Atlanta, experienced the strongest comparable-store sales for the
quarter and nine-month period. Comparable-store sales increases were broad based
as four of the six regions had double-digit percent increases and the other
two regions had high single digit increases, through September 30, 1999. A
store's results are included in the comparable-store sales computation
beginning with the anniversary of its opening. Overall, continued steady
economic growth and high employment stimulated housing markets and consumer
spending on home furnishings.
Gross margin as a percent of net sales improved for the third quarter to
47.6% for 1999 compared to 47.1% for the 1998 period, and was up to 47.3%
from 47.0% for the nine months ended September 30, 1999 and 1998,
respectively. These improved margins are the result of continued emphasis of
brand name products such as Thomasville, Broyhill, Lane and La-Z-Boy, and the
continued themes in the Company's advertising programs on quality, value and
service. The ability to increase sales without the use of heavy discounting
or extended deferred- payment credit promotions has contributed to the
increased margins as has higher levels of associated delivery charges and
product care and protection revenues. Additionally, merchandise close out
sales activity had been higher than normal in the 1998 periods due to the
liquidation of inventory prior to the closing of three clearance centers.
Third quarter credit service charge revenues decreased to 2.3% of net sales
from 3.1% for the prior year while the nine-month period decreased to 2.5%
from 3.3%. This reduction was due to a lower average outstanding accounts
receivable portfolio and to a shift toward more consumer usage of free
interest promotions rather than deferred-payment promotions.
Selling, general and administrative expenses as a percent of net sales decreased
to 40.4% as compared to 41.7% and to 40.8% from 42.4% for the quarter and nine
months ended September 30, 1999 and 1998, respectively. The continued leveraging
of fixed costs in occupancy and administrative expenses and effective cost
controls in advertising contributed to these improvements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
6
<PAGE>
AND RESULTS OF OPERATIONS
(Continued)
The provision for doubtful accounts as a percentage of net sales decreased to
0.6% from 1.0% and 0.7% from 1.4% for the quarter and nine months ended
September 30, 1999 and 1998, respectively. This continued reduction reflects the
trend of decreased delinquencies, bankruptcies and write offs and a general
reduction in overall receivables. These combined factors led to a $400,000
reduction in the second quarter provision for doubtful accounts as prescribed
by the Company's methodology for calculating the required allowance. The
Company also continues to evaluate and improve its credit and collection
operations. Management does not expect any significant changes in the current
consumer credit environment for the remainder of 1999.
Interest expense decreased $0.4 million and $1.2 million, and as a percent of
net sales, to 1.8% from 2.3% and to 2.0% from 2.6% for the quarter and
nine-month period ended September 30, 1999 and 1998, respectively, from the
year-earlier periods. This reduction was mostly due to lower debt levels
which decreased 15.0% and 11.5% for the quarter and nine-month periods, as
the Company's effective interest rate was slightly higher at 7.4% for the
quarter and lower at 7.2% for the nine-month period, respectively, from the
year-earlier periods.
LIQUIDITY AND SOURCES OF CAPITAL
The Company has historically used internally-generated funds, bank borrowings
and private placements with institutions to finance its continuing operations
and growth. Net cash provided by operating activities was $62.0 million during
the first nine months of 1999. The Company carries its own customer accounts
receivable which provided positive cash flows as receivables decreased $12.1
million due to less customer usage of credit promotions offered (more purchases
were made using national credit cards) as well as from faster payoffs. Such
faster turnover arose from shortened free interest periods and more customer
usage of the 12 equal monthly payments with no interest plan.
Investing activities used $22.2 million of cash during the nine months ended
September 30, 1999. Capital expenditures during the period were $22.5 million,
mostly for additional store locations, which open primarily in the latter
half of 1999.
Financing activities used $41.0 million of cash during the nine months ended
September 30, 1999, primarily to reduce debt in the amount of $31.0 million
and for the purchase of $11.1 million of treasury stock.
In addition to cash flows 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 private placements of senior notes,
sale/leasebacks and mortgage financings 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, as determined by the interest rate environment, with
fixed-rate debt and interest rate swap agreements to reduce the impact of
changes in interest rates on its variable rate debt (99.3% of total debt was
interest rate protected at September 30, 1999). The Company's average effective
interest rate on all borrowings (excluding capital leases) was 7.3% at September
30, 1999.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
The Company opened two stores and closed a clearance center in the third
quarter. Three stores are scheduled for opening in the fourth quarter, one of
which is a relocation, and two existing stores will be physically expanded.
Capital expenditures for the remainder of 1999 to support these projects, and
additional ones which will be completed in 2000, are estimated to be $7.5
million. Funds available from operations, bank lines of credit and other
possible financing transactions are expected to be adequate to finance the
Company's current planned expenditures.
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.
YEAR 2000
As is more fully described in the Company's annual report on Form 10-K for the
year ended December 31, 1998, the Company is modifying or replacing portions of
its software and certain hardware for Year 2000 compliance. The review,
remediation and testing of the Company's store systems software was completed in
May 1998 except for third party credit scoring software which is being
completed in the fourth quarter of 1999.
The review, remediation and testing of the corporate office systems was
completed in March 1999. The Company brought substantially all of its
software and IT systems into compliance with Year 2000 issues in June 1999.
Certain additional, less critical, Y2K issues have been identified and will
be remediated during the fourth quarter. These items relate to personal
computing, telephone voice communication and office document imaging.
Management's assessment of the estimated costs and risks associated with the
Year 2000 project and the status of the Company's contingency plans are
unchanged from that described in the 1998 annual report.
The Company also has identified its suppliers, vendors and financial
institutions (external agents) and is coordinating with them to address
potential Year 2000 issues. Year 2000 questionnaires were sent to these entities
to monitor their progress and to minimize any adverse consequences that might
result if an entity is not Year 2000 compliant. Responses have been received
from approximately 95% of these external agents with no major potential problems
identified. The non-responding external agents are primarily merchandise
suppliers for which the Company has identified substitute products from
compliant suppliers.
With respect to Year 2000 risks, the Company believes it has identified all
critical areas and is in the process of developing contingency plans for those
critical areas identified. Critical is defined as any business process or
application failure that would result in a material operational or financial
impact. If the Company's remediation efforts and the remediation efforts of
external agents fail (which the Company believes is the most reasonably likely
worst case scenario), the Company's contingency plans include performing certain
processes manually while working to assess and correct any errors in the current
systems and possibly changing suppliers. These plans are intended to enable the
Company to continue operating even if a degree of business interruption occurs
at Year 2000.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
The complexity of the potential Year 2000 issues and the proposed solutions are
dependent on the technical skills of the Company's employees and on the
representations and preparedness of third parties and are among the factors that
could cause the Company's Year 2000 compliance efforts to be less than fully
effective. Additionally, there are a number of risks that are beyond the
Company's reasonable control, such as the failure of utility companies to
deliver electricity, the failure of telecommunications companies to provide
voice and data services, the failure of financial institutions to process
transactions and transfer funds, the failure of vendors to deliver merchandise
or perform services required by the Company and the collateral effects on the
Company of the effects of Year 2000 issues on the economy in general. Although
the Company believes that its Year 2000 compliance program is designed to
appropriately identify and address those Year 2000 issues that are subject to
the Company's reasonable control, there can be no assurance that the Company's
efforts in this regard will be fully effective or that Year 2000 issues will not
have a material adverse effect on the Company's business, financial condition or
results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
There have been no material changes with respect to the Company's derivative
financial instruments and other financial instruments and its related market
risk since the date of the most recent Annual Report on Form 10-K.
9
<PAGE>
PART II. OTHER INFORMATION
Item 4. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this report.
10.10.1 - Amendment No. One to the Supplemental Executive
Retirement Plan
10.10.2 - Amendment No. Two to the Supplemental Executive Retirement
Plan
27 - Financial Data Schedule.
(b) Reports on Form 8-K.
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
Date NOVEMBER 15, 1999 By: /s/ Dennis L. Fink
------------------------- -----------------------------
Dennis L. Fink,
Executive Vice President and
Chief Financial Officer
(principal financial officer)
By: /s/ Dan C. Bryant
------------------------------
Dan C. Bryant,
Vice President and Controller
(principal accounting officer)
By: /s/ Jenny H. Parker
------------------------------
Jenny H. Parker,
Vice President,
Secretary and Treasurer
11
<PAGE>
EXHIBIT 10.10.1
AMENDMENT NUMBER ONE
TO THE
HAVERTY FURNITURE COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Haverty Furniture Companies, Inc. (the "Corporation")
established the Haverty Furniture Companies, Inc. Supplemental Executive
Retirement Plan (the "Plan"), effective as of January 1, 1996; and
WHEREAS, the Corporation reserved the right in Section 7.1 of the Plan to
amend said Plan by action of its Board of Directors; and
WHEREAS, the Board is now desirous of approving a formal amendment to the
Plan in order to provide for (1) the addition of new participants to the Plan,
and (2) the adoption of special benefits for named participants, both as
determined by the Board.
NOW THEREFORE, the Plan is amended, effective January 1, 1999, in the
following respects:
1. Amend Article I to add a new Section 1.16 to read as follows:
"1.16 APPENDIX (OR APPENDICES). "Appendix (or Appendices)" means,
collectively or individually as the context may indicate,
each Appendix attached hereto and made a part of the Plan.
Each Appendix describes provisions of the Plan, as
determined pursuant to Section 4.7, as they apply to a
particular Participant."
2. Amend Article II by adding a new paragraph to the end of said Article to read
as follows:
"Any other Employee who is among a select group of management
or highly compensated Employees of the Corporation and who is
designated by the Board of Directors shall be eligible to
participate in the Plan as of the date determined by the Board
of Directors."
3. Amend Article IV by adding a new Section 4.7 to read as follows:
"4.7 SPECIAL BENEFITS. Notwithstanding anything in this Plan to
the contrary, the Board may decide to offer Special
Benefits to a named Participant upon his termination of
employment with the Corporation. Provisions relating to the
effective date, the amount of, timing and form of payment
of such benefits shall be set forth in an Appendix."
4. Amend the Plan by adding Appendix A to the Plan, as attached hereto and made
part of this Amendment Number One.
<PAGE>
HAVERTY FURNITURE COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
APPENDIX A
SPECIAL BENEFITS APPLICABLE TO JOAN S. NAGY
With respect to Participant Joan S. Nagy, the provisions of this Appendix A
shall apply pursuant to Section 4.7 of the Plan:
SPECIAL RETIREMENT BENEFIT
1. EFFECTIVE DATE: The provisions of this Appendix A shall apply effective as of
July 1, 1999.
2. AMOUNT AND FORM OF SPECIAL BENEFIT: The following benefits shall be payable:
(a) An annual benefit equal to $10,000. Such benefit shall be
payable in monthly installments of $833.33 for the
Participant's life. Upon the Participant's death, no survivor
benefits shall be payable.
(b) A monthly benefit of $204.50 equal to the difference between
(i) the monthly amount of $1,646.89 that would have been paid
to the Participant from the Retirement Plan had she been
credited with 18 years of service and her pay had not been
limited pursuant to Code Section 401(a)(17), and (ii) the
Participant's actual Retirement Plan Benefit of $1,442.39.
The monthly benefit of $204.50 is the amount that will be
payable for the Participant's lifetime, with no survivor
benefits payable upon her death. However, the benefit payable
under this paragraph (b) must be paid in the same form as the
benefit payable to the Participant under the Retirement Plan.
The monthly amount of $204.50 will therefore be adjusted, if
necessary, to the amount payable under the form of benefit
elected by the Participant for benefits payable from the
Retirement Plan.
The benefit described in this paragraph (b) includes the
amount otherwise payable pursuant to Section 4.1 of the Plan
and is not in addition to such amount.
<PAGE>
EXHIBIT 10.10.2
AMENDMENT NUMBER TWO
TO THE
HAVERTY FURNITURE COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Haverty Furniture Companies, Inc. (the "Corporation")
established the Haverty Furniture Companies, Inc. Supplemental Executive
Retirement Plan (the "Plan"), effective as of January 1, 1996; and
WHEREAS, the Corporation reserved the right in Section 7.1 of the Plan to
amend the Plan by action of its Board of Directors; and
WHEREAS, the Board now wishes to approve a formal amendment to the Plan
in order approximately to restore the amount of benefits a Participant will lose
under the Retirement Plan by reason of the Participant's participation in the
Corporation's Top Hat Mutual Fund Option Plan;
NOW THEREFORE, the Plan is amended, effective as of January 1, 1999, as
follows:
1. Amend Article II (c) to read as follows:
"(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, or has a benefit under the Retirement Plan that has been
reduced because the cash bonuses which the Employee has elected to defer
under the Top Hat Mutual Fund Option Plan are not included in the
Retirement Plan's definition of Compensation in the year in which such
cash bonuses would have been paid,"
2. Amend Sections 4.1, 4.2 and 4.3 to add, in each such Section, the
following language immediately after the term "Code Section
401(a)(17):"
"or if the cash bonuses which the Participant elected to defer under the
Corporation's Top Hat Mutual Fund Option Plan had not been excluded from
the Retirement Plan's definition of Compensation in the year in which
such cash bonuses would have been paid,"
3. Amend Section 4.4 to add a proviso to the end of the first sentence,
reading as follows:
"; provided, however, that such $125,000 total annual benefit shall not
be deemed to include the portion of this Plan's annual benefit which
makes up for the reduction in the Participant's Retirement Plan Benefit
which resulted from excluding the cash bonuses the Participant has
elected to defer under the
<PAGE>
Corporation's Top Hat Mutual Fund Option Plan from the Retirement Plan's
definition of Compensation in the year in which such cash bonuses would
have been paid."
4. Except as changed by this Amendment Number Two, the provisions of the
Plan are hereby ratified and confirmed and shall remain in full force and
effect. The Plan may be restated to incorporate the provisions of this
Amendment Number Two.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 737
<SECURITIES> 0
<RECEIVABLES> 178,771
<ALLOWANCES> 7,900
<INVENTORY> 84,442
<CURRENT-ASSETS> 265,146
<PP&E> 215,154
<DEPRECIATION> 92,510
<TOTAL-ASSETS> 391,025
<CURRENT-LIABILITIES> 87,806
<BONDS> 146,904
0
0
<COMMON> 26,889
<OTHER-SE> 139,490
<TOTAL-LIABILITY-AND-EQUITY> 391,025
<SALES> 449,895
<TOTAL-REVENUES> 461,352
<CGS> 236,979
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,208
<INTEREST-EXPENSE> 8,820
<INCOME-PRETAX> 28,831
<INCOME-TAX> 10,379
<INCOME-CONTINUING> 18,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,452
<EPS-BASIC> .83
<EPS-DILUTED> .80
</TABLE>
