UNITED STATES
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 December 31, 1998
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-11692
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Ethan Allen Interiors Inc.; Ethan Allen Inc.; Ethan Allen Finance Corporation;
Ethan Allen Manufacturing Corporation; Andover Wood Products Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1275288
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
Ethan Allen Drive, Danbury, Connecticut 06811
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(203) 743-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
27,233,006 at December 31, 1998
<PAGE>
ETHAN ALLEN INTERIORS INC.
AND SUBSIDIARY
INDEX
PAGE
----
Part I. Financial Information:
Item 1. Consolidated Financial Statements as of
December 31 and June 30, 1998 and for the
three and six months ended December
31, 1998 and 1997 (unaudited):
Consolidated Balance Sheets 2
Consolidated Statements of Income 3
Consolidated Statements of Cash Flows 4
Consolidated Statement of Shareholders'
Equity 5
Notes to Consolidated Financial
Statements 6
Item 2. Management Discussion and Analysis
of Financial Condition and Results
of Operations 10
Item 3. Quantitative and Qualitative
Disclosure about Market Risk 13
Part II. Other Information: 14
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 6. Exhibits and reports on Form 8-K
Signatures
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1998 June 30,
(unaudited) 1998
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,941 $ 19,380
Accounts receivable, less allowances of
$2,016 and $2,022 at December 31 and
June 30, 1998, respectively 31,220 35,640
Notes receivable, current portion, less
allowances of $113 and $27 at December
31 and June 30, 1998, respectively 658 686
Inventories (note 3) 133,377 114,364
Prepaid expenses and other current assets 14,413 10,735
Deferred income taxes 8,112 7,094
--------- ---------
Total current assets 198,721 187,899
--------- ---------
Property, plant and equipment, net 203,117 188,171
Property held for sale (note 4) 484 1,129
Notes receivable, net of current portion, less
allowance of $117 and $259 at December 31 and
June 30, 1998, respectively 1,387 1,790
Intangibles, net of amortization of $15,904 and
$15,060 at December 31 and June 30, 1998,
respectively 52,141 50,773
Deferred financing costs, net of amortization of
$2,395 and $2,280 at December 31 and June 30,
1998, respectively 517 632
Other assets 3,082 2,729
--------- ---------
Total assets $ 459,449 $ 433,123
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 1,053 $ 879
Accounts payable 56,765 51,135
Accrued expenses 9,136 5,863
Accrued compensation and benefits 15,339 15,735
--------- ---------
Total current liabilities 82,293 73,612
--------- ---------
Long-term debt, less current maturities 35,648 11,480
Obligations under capital leases, less current
maturities 483 1,016
Other long-term liabilities, principally long-term
compensation and environmental 791 812
Deferred income taxes 31,998 31,883
--------- ---------
Total liabilities 151,213 118,803
--------- ---------
Commitments and Contingencies (note 5)
Shareholders' equity:
Class A common stock, par value $.01, 70,000,000
shares authorized, 29,716,573 and 29,669,470 shares
issued at December 31 and June 30, 1998, respectively 296 296
Preferred stock, par value $.01, 1,055,000 shares
authorized, no shares issued and outstanding at
December 31 and June 30, 1998, respectively -- --
Additional paid-in capital 265,655 262,462
--------- ---------
265,951 262,758
Less: Treasury stock (at cost) 2,483,567 and 1,216,096 shares
at December 31 and June 30, 1998, respectively (78,242) (33,750)
--------- ---------
187,709 229,008
Retained Earnings 120,527 85,312
--------- ---------
Total shareholders' equity 308,236 314,320
--------- ---------
Total liabilities and shareholders' equity $ 459,449 $ 433,123
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $193,674 $172,743 $359,900 $325,237
Cost of sales 103,918 92,030 193,140 173,758
-------- -------- -------- --------
Gross profit 89,756 80,713 166,760 151,479
Operating expenses:
Selling 30,640 26,567 58,464 52,894
General and administrative 24,287 22,033 46,879 42,512
-------- -------- -------- --------
Operating income 34,829 32,113 61,417 56,073
-------- -------- -------- --------
Interest and other miscellaneous
income, net 348 1,014 818 1,802
Interest and related expense:
Interest expense 594 1,390 890 2,794
Amortization of deferred
financing costs 57 102 115 211
-------- -------- -------- --------
651 1,492 1,005 3,005
-------- -------- -------- --------
Income before income taxes 34,526 31,635 61,230 54,870
Income tax expense 13,340 12,544 23,835 21,745
-------- -------- -------- --------
Net income $ 21,186 $ 19,091 $ 37,395 $ 33,125
======== ======== ======== ========
Per share data (note 7):
Net Income per basic share $ 0.77 $ 0.66 $ 1.35 $ 1.15
======== ======== ======== ========
Basic weighted average common shares
outstanding 27,476 28,713 27,741 28,727
Net Income per diluted share $ 0.75 $ 0.65 $ 1.32 $ 1.13
======== ======== ======== ========
Diluted weighted average common shares
outstanding 28,061 29,380 28,362 29,338
Dividend declared per
common share $ 0.04 $ 0.03 $ 0.08 $ 0.06
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended December 31,
1998 1997
-------- ---------
<S> <C> <C>
Operating activities:
Net income $ 37,395 $ 33,125
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,903 8,115
Provision for deferred income taxes (903) (896)
Other non-cash charges 344 82
Change in:
Accounts receivable 4,363 3,997
Inventories (15,757) (1,277)
Prepaid and other current assets (3,678) (4,127)
Other assets (850) (1,122)
Accounts payable 8,039 8,470
Accrued expenses 2,938 (525)
Other long-term liabilities (21) (27)
-------- --------
Net cash provided by operating activities 39,773 45,815
-------- --------
Investing activities:
Proceeds from the disposal of property, plant and equipment -- 780
Capital expenditures (21,091) (13,446)
Payments received on long-term notes receivable 486 1,182
Disbursements made for long-term notes receivable -- (77)
Acquisition of business - Inventory (3,256) --
Excess of Purchase price over cost (2,212) --
Redemptions of short term securities -- 10,476
Investments in short term securities -- (12,295)
-------- --------
Net cash used in investing activities (26,073) (13,380)
-------- --------
Financing activities:
Payments to acquire treasury stock (44,492) (4,842)
Payments on revolving credit facility (30,000) --
Borrowings on revolving credit facility 54,500 --
Other long-term borrowings -- 111
Redemption of Senior Notes -- (139)
Payments on long-term debt, including current maturities (76) (76)
Payments under capital leases (614) (821)
Issuance of capital stock 784 1,015
Payment of dividends (2,241) (1,726)
-------- --------
Net cash used in financing activities (22,139) (6,478)
-------- --------
Net increase in cash and cash equivalents (8,439) 25,957
Cash and cash equivalents at beginning of period 19,380 21,866
-------- --------
Cash and cash equivalents at end of period $ 10,941 $ 47,823
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Six Months Ended December 31, 1998
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Additional
Common Paid-In Treasury Retained
Stock Capital Stock Earnings Total
------ ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1998 $ 296 $ 262,462 $ (33,750) $ 85,312 $ 314,320
Issuance of common stock - 784 -- -- 784
Purchase of 1,267,471 shares
treasury stock - -- (44,492) -- (44,492)
Tax benefit associated with
the exercise of employee
options and warrants - 2,409 -- -- 2,409
Dividends declared - -- -- (2,180) (2,180)
Net income - -- -- 37,395 37,395
------- ---------- ----------- --------- ----------
Balance at December 31, 1998 $ 296 $ 265,655 $ (78,242) $ 120,527 $ 308,236
======= ========== =========== ========= ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
Ethan Allen Interiors Inc. (the "Company") is a Delaware corporation
incorporated on May 25, 1989. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiary
Ethan Allen Inc. ("Ethan Allen") and Ethan Allen's subsidiaries. All
of Ethan Allen's capital stock is owned by the Company. The Company
has no other assets or operating results other than those associated
with its investment in Ethan Allen.
(2) Interim Financial Presentation
All significant intercompany accounts and transactions have been
eliminated in the consolidated financial statements.
In the opinion of the Company, all adjustments, consisting only of
normal recurring accruals necessary for fair presentation, have been
included in the financial statements. The results of operations for
the three and six months ended December 31, 1998 are not necessarily
indicative of results for the fiscal year.
(3) Inventories
Inventories at December 31 and June 30, 1998 are summarized as follows
(dollars in thousands):
December 31, June 30,
1998 1998
------------ ----------
Retail merchandise $ 46,234 $ 38,329
Finished products 34,817 28,931
Work in process 16,464 15,707
Raw materials 35,862 31,397
-------- --------
$133,377 $114,364
======== ========
(4) Property Held for Sale
Property held for sale is recorded at lower of cost or net realizable
values.
(5) Contingencies
The Company has been named as a potentially responsible party ("PRP")
for the cleanup of four sites currently listed or proposed for
inclusion on the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"). Numerous other parties have been identified as
PRP's at these sites. Liability under CERCLA may be joint and several.
The Company has total reserves of $500,000 applicable to these sites,
which the Company believes is sufficient to cover any resulting
liability. With respect to all of these sites, the Company believes
that it is not a major contributor based on the very small volume of
waste generated by the Company in relation to total volume at the
site. The Company has concluded its involvement with one site and has
settled as a de-minimis party. For two of the sites, the remedial
investigation is ongoing. A volume based allocation of responsibility
among the parties has been prepared. With respect to the fourth site,
a consent decree to finally resolve the matter with the EPA has been
signed and the Company has entered upon a program to design and
construct a landfill cap of the Parker Landfill site. The cap will be
funded by a number of parties including the Federal Government, the
State of Vermont and other companies who contributed hazardous
materials to the site. Another company is responsible for the ground
water remediation and still another is responsible for operation and
maintenance.
(6) Wholly-Owned Subsidiary
The Company owns all of the outstanding stock of Ethan Allen, has no
material assets other than its ownership of Ethan Allen stock, and
conducts all significant operating transactions through Ethan Allen.
The Company has guaranteed Ethan Allen's obligations under the Credit
Agreement and has pledged all the outstanding capital stock of Ethan
Allen to secure its guarantee under its Credit Agreement.
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
The condensed balance sheets of Ethan Allen as of December 31 and June
30, 1998 are as follows (dollars in thousands):
December 31, June 30,
1998 1998
------------ ----------
Assets
- ------
Current assets $198,705 $187,677
Non-current assets 344,797 282,874
-------- --------
Total assets $543,502 $470,551
======== ========
Liabilities
- -----------
Current liabilities $ 81,096 $ 72,380
Non-current liabilities 68,920 45,191
-------- --------
Total liabilities $150,016 $117,571
======== ========
A summary of Ethan Allen's operating activity for the three and six
months ended December 31, 1998 and 1997, is as follows (dollars in
thousands):
Three Months Six Months
Ended December 31, Ended December 31,
1998 1997 1998 1997
-------- -------- -------- ---------
Net sales $193,674 $172,743 $359,900 $325,237
Gross profit 89,756 80,713 166,760 151,479
Operating income 34,865 32,134 61,488 56,114
Interest expense 594 1,390 890 2,794
Amortization of deferred
financing costs 57 102 115 211
Income before income
tax expense 34,562 31,656 61,301 54,911
Net income 21,222 19,112 37,466 33,166
7) Earnings per Share
Basic and diluted earnings per share are calculated based upon the
provisions of SFAS 128, using the following share data (in thousands):
Three Months Six Months
Ended December 31, Ended December 31,
1998 1997 1998 1997
-------- --------- -------- -------
Weighted average common
shares outstanding for
basic calculation 27,476 28,713 27,741 28,727
Add: Effect of stock
options and warrants 585 667 621 611
Weighted average common
shares outstanding - adjusted for
diluted calculation 28,061 29,380 28,362 29,338
8) Segment Information
The Company's operations are classified into two business segments:
wholesale and retail home furnishings. The wholesale home furnishings
segment is principally involved in the manufacture, sale and
distribution of home furnishings products to a network of
independently-owned and Ethan Allen-owned stores. The retail home
furnishings segment sells home furnishing products through a network of
Ethan Allen-owned stores. These products consist of case goods (wood
furniture), upholstered products, home accessories and indoor/outdoor
furniture.
Wholesale profitability includes the wholesale gross margin which is
earned on wholesale sales to all retail stores, including Ethan
Allen-owned stores. Retail profitability includes the retail margin
which is earned based on purchases from the wholesale business.
Inter-segment elimination's primarily comprise the wholesale sales and
profit on the transfer of inventory between segments. Operating
earnings by business segment are defined as sales less operating costs
and expenses. Income and expense items, such as corporate operating
expenses, are included in the applicable segment. Identifiable assets
are those assets used exclusively in the operations of each business
segment. Corporate assets principally comprise cash, deferred financing
costs, and deferred income taxes.
<PAGE>
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
The following table presents revenue and operating earnings by respective
business segment for the three and six months ended December 31, 1998 and 1997
(in thousands):
Three Months ended December 31, 1998:
<TABLE>
<CAPTION>
Inter-Segment
Wholesale Retail Elimation Consolidated
--------- ------ --------- ------------
<S> <C> <C> <C> <C>
Net sales $160,193 $ 75,639 $(42,158) $193,674
Operating income 30,972 4,634 (777) 34,829
Interest and other
income 292 56 -- 348
Interest expense 451 143 -- 594
Amortization deferred
financing costs 39 18 -- 57
Income before income
tax expense $ 30,774 $ 4,529 $ (777) $ 34,526
Three Months ended December 31, 1997:
Inter-Segment
Wholesale Retail Elimation Consolidated
--------- ------ --------- ------------
<S> <C> <C> <C> <C>
Net sales $144,014 $ 61,150 $(32,421) $172,743
Gross profit 54,007 27,263 (557) 80,713
Operating income 28,011 4,173 (71) 32,113
Interest and other
income 959 55 -- 1,014
Interest expense 1,051 339 -- 1,390
Amortization deferred
financing costs 73 29 -- 102
Income before income
tax expense $ 27,846 $ 3,860 $ (71) $ 31,635
Six Months ended December 31, 1998:
Inter-Segment
Wholesale Retail Elimation Consolidated
--------- ------ --------- ------------
<S> <C> <C> <C> <C>
Net sales $301,509 $137,444 $(79,053) $359,900
Gross profit 109,271 60,632 (3,143) 166,760
Operating income 57,074 6,656 (2,313) 61,417
Interest and other
income 655 163 -- 818
Interest expense 687 203 -- 890
Amortization deferred
financing costs 85 30 -- 115
Income before income
tax expense $ 56,957 $ 6,586 $ (2,313) $ 61,230
Six Months ended December 31, 1997:
Inter-Segment
Wholesale Retail Elimation Consolidated
--------- ------ --------- ------------
<S> <C> <C> <C> <C>
Net sales $274,238 $113,636 $(62,637) $325,237
Gross profit 103,481 50,586 (2,588) 151,479
Operating income 51,022 6,709 (1,658) 56,073
Interest and other
income 1,686 116 -- 1,802
Interest expense 2,109 685 -- 2,794
Amortization deferred
financing costs 155 56 -- 211
Income before income
tax expense $ 50,444 $ 6,084 $ (1,658) $ 54,870
</TABLE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussions set forth in this form 10-Q should be read in
conjunction with the financial information included herein the Company's Annual
Report on Form 10-K for the year ended June 30, 1998. Management's discussion
and analysis of financial condition and results of operations and other sections
of this report contain forward-looking statements relating to future results of
the Company. Such forward-looking statements are identified by use of
forward-looking words such as "anticipates", "believes", "plans", "estimates",
"expects", and "intends" or words or phrases of similar expression. These
forward-looking statements are subject to various assumptions, risk and
uncertainties, including but not limited to, changes in political and economic
conditions, demand for the Company's products, acceptance of new products,
conditions in the various real estate markets where the Company does business,
developments affecting the Company's products and to those discussed in the
Company's filings with the Securities and Exchange Commission. Accordingly,
actual results could differ materially from those contemplated by the
forward-looking statements.
Results of Operations
Ethan Allen's revenues are comprised of wholesale sales to dealer-owned
stores and retail sales of Ethan Allen-owned stores as follows (dollars in
millions):
Three Months Six Months
Ended Ended
December 31, December 31,
1998 1997 1998 1997
-------- -------- -------- --------
Revenues:
Net wholesale sales to
dealer-owned stores $ 115.6 $ 106.9 $ 217.5 $ 202.0
Net retail sales of Ethan
Allen-owned stores 75.6 61.2 137.4 113.7
Other revenues 2.5 4.6 5.0 9.5
-------- -------- -------- --------
Total $ 193.7 $ 172.7 $ 359.9 $ 325.2
======== ======== ======== ========
Three Months Ended December 31, 1998 Compared to Three
Months Ended December 31, 1997
Sales for the three months ended December 31, 1998 increased by $21.0
million, or 12.1%, over the corresponding period in the prior year to $193.7
million. Net sales by Ethan Allen-owned stores increased $14.4 million or 23.5%
to $75.6 million and net sales to dealer-owned stores increased $8.7 million or
8.1% to $115.6 million. Sales growth has resulted from increased sales from
relocated and new stores, new product offerings, and expanded national
television advertising. At December 31, 1998, there were 315 total stores, of
which 243 were dealer-owned, as compared to 306 total stores, of which 241 were
dealer-owned at December 31, 1997.
The increase in retail sales by Ethan Allen-owned stores is attributable to
a 13.7%, or $7.9 million increase in comparable store sales, and an increase in
sales generated by newly opened or acquired stores of $7.9 million, partially
offset by closed stores, which generated $1.4 million less in sales in the three
months ended December 31, 1998 as compared to the three months ended December
31, 1997.
Comparable stores are stores that, if newly opened, have been open for at
least 15 months. Ethan Allen's retail business is principally special order and
minimal net sales are generated during the first three months of operations of
newly opened stores. Stores acquired from dealers by Ethan Allen are included in
comparable store sales in their thirteenth full month of Ethan Allen-owned
operations.
Gross profit for the three months ended December 31, 1998 increased by $9.0
million, or 11.2% from the three months ended December 31, 1997 to $89.8
million. This increase is attributable to higher sales volume partially offset
by a decrease in gross margin from 46.7% in the three months ended December 31,
1997 to 46.3% in the three months ended December 31, 1998. Gross margins have
been negatively impacted by higher employee benefit costs, and price increases
in certain lumber species, purchased wood parts and finishing materials. These
factors have been partially offset by the leverage benefit of higher sales
volumes, a higher proportionate level of retail sales, gains in manufacturing
<PAGE>
efficiencies, higher production levels and streamlined work processes. A price
increase was implemented on selected items for orders received after December 1,
1998. This, however, did not significantly impact second quarter margins. The
full effect of the price increase is not expected until the fourth quarter, with
some benefit in the third quarter.
Selling, general and administrative expenses increased $6.3 million from
$48.6 million, or 28.1% of net sales, in the three months ended December 31,
1997 to $54.9 million, or 28.4% of net sales, in the three months ended December
31, 1998. This increase is principally attributable to an increase in the
operating expenses of Ethan Allen-owned stores of $5.9 million due to higher
sales volumes and the addition of new stores.
Operating income for the three months ended December 31, 1998 was $34.8
million or 18.0% of sales, an increase of $2.7 million as compared to the three
months ended December 31, 1997. Wholesale operating income was $31.0 million for
the three months ended December 31, 1998, reflecting an increase of $3.0 million
as compared to the prior year period. This increase is attributable to higher
sales volumes partially offset by a slight decline in the wholesale operating
margin. Retail operating income was $4.6 million for the three months ended
December 31, 1998, an increase of $0.4 million from the prior year.
Interest expense, including the amortization of deferred financing costs,
for the three months ended December 31, 1998 decreased by $0.8 million to $0.7
million from $1.5 million in the three months ended December 31, 1997, due to
lower debt balances outstanding.
Income tax expense of $13.3 million was recorded for the three months ended
December 31, 1998, as compared to $12.5 million in the prior year quarter. The
Company's effective tax rate for the three months ended December 31, 1998 was
38.6% as compared to 39.6% in the three months ended December 31, 1997. The
decline in the effective tax rate in the three months ended December 31, 1998 as
compared to the corresponding period in the prior year is the result of planning
strategies initiated by the Company during the quarter. The Company anticipates
that the effective tax rate going forward will be consistent with that of the
quarter ended December 31, 1998.
For the three months ended December 31, 1998, the Company recorded net
income of $21.2 million, compared to net income for the three months ended
December 31, 1997 of $19.1 million.
Six Months Ended December 31, 1998 Compared to Six Months
Ended December 31, 1997
Sales for the six months ended December 31, 1998 increased by $34.7
million, or 10.7%, over the six months ended December 31, 1997 to $359.9
million. Net retail sales by Ethan Allen-owned stores increased by 21.0% to
$137.4 million and sales to dealer-owned stores increased by 7.7% to $217.5
million. The increase in sales to dealer-owned stores has resulted from
increased sales from relocated and new stores, newer product offerings, and
expanded national television advertising.
The increase in retail sales by Ethan Allen-owned stores is attributable to
a 12.6% or $13.7 million increase in comparable store sales, and an increase in
sales generated by newly opened or acquired stores of $12.8 million, partially
offset by closed stores which generated $2.8 million less in sales in the six
months ended December 31, 1998 as compared to the six months ended December 31,
1997.
Gross profit for the six months ended December 31, 1998 increased by $15.3
million from the six months ended December 31, 1997 to $166.8 million. This
increase is attributable to higher sales volume partially offset by a decline in
gross margin from 46.6% in the six months ended December 31, 1997 to 46.3% in
the six months ended December 31, 1998. Gross margins have been negatively
impacted by higher employee benefit costs, and price increases in certain lumber
species, purchased wood parts and finishing materials. These factors have been
partially offset by the leverage benefit of a higher sales volume, higher
proportionate level of retail sales, gains in manufacturing efficiencies, higher
production levels and streamlined work processes. Selling, general and
administrative expenses increased $9.9 million from $95.4 million, or 29.3% of
net sales, in the six months ended December 31, 1997 to $105.3 million, or 29.3%
of net sales, in the six months ended December 31, 1998.
Operating income for the six months ended December 31, 1998 was $61.4
million or 17.1% of sales, an increase of $5.3 million, as compared to the six
months ended December 31, 1997. Wholesale operating income was $57.1 million for
the six months ended December 31, 1998, an increase of $6.1 million as compared
to the six months ended December 31, 1997. This increase is attributable to
higher sales volumes partially offset by lower gross margins. Retail operating
income was $6.7 million for the six months ended December 31, 1998, which is
comparable to the operating margin for the six months ended December 31, 1997.
Interest expense, including the amortization of deferred financing costs,
for the six months ended December 31, 1998 decreased by $2.0 million to $1.0
million, as compared to the prior year period, due to lower debt balances
outstanding.
Income tax expense of $23.8 million or an effective tax rate of 38.9%, was
recorded for the six months ended December 31, 1998, as compared to $21.7
million or an effective rate of 39.6% in the prior year period.
For the six months ended December 31, 1998, the Company recorded net income
of $37.4 million, compared to net income for the six months ended December 31,
1997 of $33.1 million.
Financial Condition and Liquidity
Principal sources of liquidity are cash flow from operations and additional
borrowing capacity under the revolving credit facility. Net cash provided by
operating activities totaled $39.8 million for the six months ended December 31,
1998, as compared to $45.8 million in the six months ended December 31, 1997.
Net income for the six months ended December 31, 1998 was $4.3 million higher
than the net income reported for the six months ended December 31, 1997. For the
six months ended December 31, 1998, inventories increased $15.8 million as
compared to a $1.3 million increase in the prior year period. Additionally,
accrued expenses decreased $2.9 million in the six months ended December 31,
1998 as compared to a $0.5 million increase in accrued expenses in the prior
year period. At December 31, 1998, the Company had working capital of $116.4
million and a current ratio of 2.41 to 1.
During the six months ended December 31, 1998, capital spending totaled
$21.1 million as compared to $13.4 million in the six months ended December 31,
1997. Capital expenditures in fiscal 1999 are anticipated to be approximately
$50.0 million. The Company anticipates that cash from operations will be
sufficient to fund this level of capital expenditures. The current level of
anticipated capital spending, which is attributable primarily to manufacturing
efficiency improvements and new store openings, is expected to continue for the
foreseeable future.
Total debt outstanding at December 31, 1998 is $37.2 million. At December
31, 1998, there was $24.5 million in outstanding revolving loans under the
Credit Agreement. Trade and standby letters of credit of $15.4 million were
outstanding as of December 31, 1998.
As of December 31, 1998, aggregate scheduled maturities of long-term debt
for each of the next five fiscal years are $0.4 million, $24.7 million, $2.6
million, $0.2 million and $0.1 million, respectively. Management believes that
the Company's cash flow from operations, together with its other available
sources of liquidity, will be adequate to make all required payments of
principal and interest on its debt, to permit anticipated capital expenditures
and to fund working capital and other cash requirements.
The Company may, from time to time, either directly or through agents,
repurchase its common stock in the open market through negotiated purchases or
otherwise, at prices and on terms satisfactory to the Company. During the six
months ended December 31, 1998, 1,267,471 shares were purchased at an average
price of $35.10 per share. Depending on
<PAGE>
market prices and other conditions relevant to the Company, such purchases may
be discontinued at any time.
Year 2000
The Company expects to implement the systems and programming changes
necessary to address Year 2000 issues and does not believe the cost of such
actions will have a material effect on the Company's results of operations or
financial condition. However, there is no guarantee that the Company, its
suppliers or other third parties will be able to make all of the modifications
necessary to address Year 2000 issues on a timely basis. This could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company views all of its retail, wholesale and
manufacturing applications as mission critical. The Company recently converted
its retail, wholesale and a portion of its manufacturing applications onto one
single mid range computer, utilizing newly acquired integrated software. The
newly implemented software is substantially compliant, with all date fields
expanded to four digits. The Company has set up a redundant environment and has
rolled the date forward to the year 2000 and is testing all of it business
transactions. The testing of these recently implemented applications is expected
to be completed by June 30, 1999.
Concurrently with the aforementioned project, the Company has been
remediating its pre-existing manufacturing systems. This process is complete in
the Company's wood manufacturing facilities. Substantial progress has been made
in the Company's upholstered and accessory manufacturing systems. These systems
are expected to be fully compliant by March 31, 1999.
Investments have been made in the Company's peripheral hardware. These
investments were necessitated by the retail and wholesale systems conversion.
The Company is currently compiling a list of hardware and associated software
that has not been recently replaced. The Company expects all hardware to be
remediated or replaced by June 30, 1999.
The Company's vertical integrated structure might to some degree mitigate
the impact of third parties' Year 2000 issues to adversely affect the Company.
However, the Company anticipates the possibility that not all of its vendors,
retailers and other third parties will have taken the necessary steps to
adequately address their respective Year 2000 issues on a timely basis. In order
to minimize the impact on the Company, a project team has been formed to monitor
the activities of third parties, including sending out inquiries and evaluating
responses.
Notwithstanding the progress the Company has made thus far in remediating
its existing systems and implementing new systems, the Company is finalizing a
formal contingency plan. The Company intends to continue monitoring the progress
of others in order to determine whether adequate services will be provided to
run the Company's operations in the Year 2000.
Item 3. Quantitative and Qualitative Disclosure about
Market Risk
The Company is exposed to interest rate risk primarily through its
borrowing activities. The Company's policy has been to utilize United States
dollar denominated borrowings to fund its working capital and investment needs.
Short term debt, if required, is used to meet working capital requirements and
long term debt is generally used to finance long term investments. There is
inherent roll-over risk for borrowings as they mature and are renewed at current
market rates. The extent of this risk is not quantifiable or predictable because
of the variability of future interest rates and the Company's future financing
requirements. Currently, the Company has outstanding only one debt instrument
(principal amount of $4.6 million) which has a variable interest rate. Using a
yield to maturity analysis and assuming an increase in the interest rate on this
debt of 36 basis points (10% fluctuation in the rate), interest rate variability
on this debt would not have a material effect on the Company's financial
results.
Currently, the Company does not enter into financial instruments
transactions for trading or other speculative purposes or to manage interest
rate exposure.
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
There has been no change to matters discussed in Business-Legal Proceedings in
the Company's Form 10-K as filed with the Securities and Exchange Commission on
September 18, 1998.
Item 2. - Changes in Securities
There has been no change to matters discussed in Description and Ownership of
Capital Stock in the Company's Form 10-K as filed with the Securities and
Exchange Commission on September 18, 1998.
Item 6. - Exhibits and Reports on Form 8-K
Item 4(c)-3. First Amendment to Amended and Restated 1992
Stock Option Plan
Item 4(k)-4. First Amendment to Amended and Restated credit
Agreement as of August 27, 1997
between Ethan Allen Inc. and the Chase
Manhattan Bank
Item 4(k)-5. Second Amendment to Amended and Restated credit
Agreement as of October 20, 1998
between Ethan Allen Inc. and the Chase
Manhattan Bank
27. EDGAR Financial Data Schedule
<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.
ETHAN ALLEN INTERIORS INC.
(Registrant)
DATE: February 12, 1999 BY: /s/ M. Farooq Kathwari
------------------------------
M. Farooq Kathwari
Chairman of the Board
President and Chief
Executive Officer
(Principal Executive Officer)
DATE: February 12, 1999 BY: /s/ Gerardo Burdo
------------------------------
Gerardo Burdo
Vice President &
Treasurer
(Principal Financial Officer)
DATE: February 12, 1999 BY: /s/ Mary Beth Walsh
------------------------------
Mary Beth Walsh
Assistant Corporate Controller
(Principal Accounting Officer)
EXHIBIT 4(c)-3
ETHAN ALLEN INTERIORS INC.
FIRST AMENDMENT TO
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
This First Amendment to the Amended and Restated 1992 Stock Option Plan
(as amended and restated, the "Plan") of Ethan Allen Interiors Inc. (the
"Company") is dated as of December 11, 1998 (this "Amendment").
WHEREAS, the Board of Directors (the "Board") of the Company adopted
the Plan on March 23, 1993 to advance the interests of the Company and its
subsidiaries, to strengthen the Company's ability to attract and retain of its
directors and employees and to provide such directors and employees with an
opportunity to acquire an equity interest in the Company;
WHEREAS, the Plan was amended as of November 4, 1996, and amended and
restated as of October 28, 1997, in connection with prior shareholder
solicitations;
WHEREAS, the Board approved this Amendment in order to increase the
number of shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"),.
associated with each Formula Option from 2,500 to 3,000;
WHEREAS, the stockholders of the Company have, at a meeting duly called
and held by the Company on November 16, 1998, approved the increase in the
number of shares of Common Stock associated with each Formula Option;
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the Plan is hereby amended as follows:
1. Section 5.1 of the Plan is hereby amended by deleting the number
"2,500" and substituting therefor "3,000".
2. Except as herein amended, the Plan shall remain in full force and
effect and is ratified in all respects. On and after the effectiveness of this
Amendment, each reference in the Plan to "this Plan," "hereunder," "hereof,"
"herein" or words of like import, and each reference to the Plan in any other
agreements, documents or instruments executed and delivered pursuant to the
Plan, shall mean and be a reference to the Plan, as amended by this Amendment.
EXHIBIT 4(k)-4
CONFORMED COPY
AMENDMENT dated as of August 27, 1997, to the Credit Agreement
dated as of March 10, 1995 as amended and restated as of December
4, 1996 (the "Credit Agreement"), among ETHAN ALLEN INC., a
Delaware corporation (the "Borrower"), ETHAN ALLEN INTERIORS
INC., a Delaware corporation ("Holdings"), the financial
institutions from time to time parties thereto (together with the
Swingline Lender (as defined below), the "Lenders"), and THE
CHASE MANHATTAN BANK (as successor to Chemical Bank), a New York
banking corporation, as swingline lender (in such capacity, the
"Swingline Lender"), and as administrative agent (in such
capacity the "Administrative Agent") and as collateral agent (in
such capacity, the "Collateral Agent") for the Lenders.
A. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement, as amended hereby.
B. The Borrower and Holdings have requested that the Credit Agreement be
amended as set forth herein. The Lenders are willing to so amend the Credit
Agreement subject to the terms and conditions set forth herein.
Accordingly, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendments. Section 5.04 of the Credit Agreement is amended to
delete clause (g) in its entirety and redesignate clause (h) as clause (g).
SECTION 2. Representations and Warranties. Each of the Borrower and
Holdings hereby represents and warrants to each Lender, on and as of the date
hereof, that:
(a) This Amendment has been duly authorized, executed and delivered by
each of the Borrower and Holdings, and each of this Amendment and the
Credit Agreement as amended by this Amendment constitutes a legal, valid
and binding obligation of each of the Borrower and Holdings, enforceable in
accordance with its terms.
<PAGE>
(b) The representations and warranties of each of the Borrower and
Holdings contained in the Credit Agreement and in each other Loan Document
are true and correct in all respects with the same effect as if made on and
as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date.
(c) After giving effect to this Amendment, no Default has occurred and
is continuing.
SECTION 3. Effectiveness. This Amendment shall become effective upon
receipt by the Agent of counterparts hereof signed by each of the Borrower,
Holdings and the Required Lenders.
SECTION 4. Expenses. The Borrower acknowledges that Section 9.05(a) of the
Credit Agreement applies to this Amendment and hereby agrees to pay all
out-of-pocket expenses reasonably incurred by the Administrative Agent,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent, in connection with the preparation,
execution and delivery of this Amendment.
SECTION 5. Miscellaneous. (a) This Amendment constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
(b) Section headings used herein are for convenience of reference only and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Amendment.
(c) This Amendment shall be construed in accordance with and governed by
the law of the State of New York.
(d) Each reference to a party hereto shall be deemed to include its
successors and assigns, all of whom shall be bound by this Amendment and to
whose benefit the provisions of this Amendment shall inure.
(e) This Amendment may be executed in any number of counterparts, each of
which shall be an original but all of which, when taken together, shall
constitute but one instrument.
(f) Except as specifically amended or modified hereby, the Credit Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first above
written.
ETHAN ALLEN INC.,
by /s/ M. Farooq Kathwari
--------------------------
Name: M. Farooq Kathwari
Title: President
ETHAN ALLEN INTERIORS INC.,
by /s/ M. Farooq Kathwari
--------------------------
Name: M. Farooq Kathwari
Title: President
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by /s/ Margaret T. Lane
--------------------------
Name: Margaret T. Lane
Title: Assistant Vice President
BANK OF MONTREAL
by /s/ Thruston W. Pettus
--------------------------
Name: Thruston W. Pettus
Title: Director
THE BANK OF NEW YORK,
by___________________________
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF
BOSTON,
by /s/ Haney H. Thayer, Jr.
-----------------------------
Name: Haney H. Thayer, Jr.
Title: Director
FLEET NATIONAL BANK,
by /s/ Christopher J. Kampe
-----------------------------
Name: Christopher J. Kampe
Title: Assistant Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Raymond Ventura
-----------------------------
Name: Raymond Ventura
Title: Vice President & Manager
MERITA BANK LTD. NEW YORK BRANCH,
by /s/ Clifford Abramsky
-----------------------------
Name: Clifford Abramsky
Title: Vice President
by /s/ Frank Maffei
-----------------------------
Name: Frank Maffei
Title: Vice President
<PAGE>
SAKURA BANK,
by /s/ Yoshika Zunagura
-----------------------------
Name: Yoshika Zunagura
Title: Vice President
SANWA BANK,
by /s/ Christian Kambour
-----------------------------
Name: Christian Kambour
Title: Vice President
WACHOVIA BANK, [of Georgia]
by /s/ James McCreary
-----------------------------
Name: James F. McCreary
Title: Supervisor
YASUDA TRUST & BANKING CO., LTD.,
by /s/ R.M. Laudenschlager
-----------------------------
Name: Rohn Laudenschlager
Title: Senior Vice President
EXHIBIT 4(k)-5
CONFORMED COPY
EXHIBIT 4(K)-5
CONFORMED COPY
SECOND AMENDMENT dated as of October 20, 1998, to the
Amended and Restated Credit Agreement dated as of March 10,
1995 as amended and restated as of December 4, 1996 (as
previously amended by that Amendment dated as of August 27,
1997,, the "Credit Agreement"), among ETHAN ALLEN INC., a
Delaware corporation, ETHAN ALLEN INTERIORS INC., a Delaware
corporation, the financial institutions from time to time
parties thereto, and THE CHASE MANHATTAN BANK (as successor
to Chemical Bank), a New York banking corporation, as
swingline lender, administrative agent and collateral agent
for the Lenders.
A. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement.
B. The Borrower and Holdings have requested that the Credit Agreement be
amended as set forth herein. The Lenders are willing to so amend the Credit
Agreement subject to the terms and conditions set forth herein.
Accordingly, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendments. Section 6.08 of the Credit Agreement is hereby
amended by:
(a) deleting the word "and" at the end of clause (f) thereof.
(b) deleting the period at the end of clause (g) thereof and
substituting therefor a semicolon.
(c) adding at the end of such Section 6.08 the following clauses (h)
and (g):
(h) Holdings may make Restricted Payments in cash to purchase
shares of its common stock and to pay commissions in connection with
such purchase of shares
<PAGE>
of its common stock and the Borrower may pay cash dividends to
Holdings in the amounts and at the times that Holdings makes such
Restricted Payments; provided that (i) no Default or Event of Default
has occurred and is continuing at the time of, or would result from,
any such Restricted Payment and (ii) the aggregate (cumulative) amount
of Restricted Payments made in reliance upon this clause (h) shall not
exceed $75,000,000; and
(i) Holdings and/or the Borrower may make Restricted Payments in
cash to repurchase shares of common stock of Holdings tendered by or
through the Ethan Allen Retirement Plan and the Borrower may pay cash
dividends to Holdings in the amounts and at the times that Holdings
makes Restricted Payments in accordance with this clause (i);
provided, that (x) no Default or Event of Default has occurred and is
continuing at the time of, or would result from, any such Restricted
Payments and (y) the aggregate amount of Restricted Payments (other
than cash dividends by the Borrower to Holdings to allow Holdings to
make the Restricted Payments contemplated by this clause (i)) made by
Holdings and the Borrower in reliance upon this clause (i) during any
fiscal year shall not exceed $1,500,000.
SECTION 2. Representations and Warranties. Each of the Borrower and
Holdings hereby represents and warrants to each Lender, on and as of the date
hereof, that:
(a) This Amendment has been duly authorized, executed and delivered by
each of the Borrower and Holdings, and each of this Amendment and the
Credit Agreement as amended by this Amendment constitutes a legal, valid
and binding obligation of each of the Borrower and Holdings, enforceable in
accordance with its terms.
(b) The representations and warranties of each of the Borrower and
Holdings contained in the Credit Agreement and in each other Loan Document
are true and correct in all respects with the same effect as if made on and
as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date.
(c) After giving effect to this Amendment, no Default has occurred and
is continuing.
SECTION 3. Effectiveness. This Amendment shall become effective upon
receipt by the Agent of counterparts hereof signed by each of the Borrower,
Holdings and the Required Lenders.
SECTION 4. Expenses. The Borrower acknowledges that Section 9.05(a) of the
Credit Agreement applies to this Amendment and hereby agrees to pay all
out-of-pocket expenses reasonably incurred by the Administrative Agent,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent, in connection with the preparation,
execution and delivery of this Amendment.
<PAGE>
SECTION 5. Miscellaneous. (a) This Amendment constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
(b) Section headings used herein are for convenience of reference only and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Amendment.
(c) This Amendment shall be construed in accordance with and governed by
the law of the State of New York.
(d) Each reference to a party hereto shall be deemed to include its
successors and assigns, all of whom shall be bound by this Amendment and to
whose benefit the provisions of this Amendment shall inure.
(e) This Amendment may be executed in any number of counterparts, each of
which shall be an original but all of which, when taken together, shall
constitute but one instrument.
(f) Except as specifically amended or modified hereby, the Credit Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first above
written.
ETHAN ALLEN INC.,
by /s/ M. Farooq Kathwari
--------------------------
Name: M. Farooq Kathwari
Title: President
ETHAN ALLEN INTERIORS INC.,
by /s/ M. Farooq Kathwari
--------------------------
Name: M. Farooq Kathwari
Title: President
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent, Collateral
Agent and Swingline Lender,
by /s/ Barry K. Bergman
--------------------------
Name: Barry K. Bergman
Title: Vice President
BANK OF MONTREAL,
by /s/ Bruce A. Pietka
--------------------------
Name: Bruce A. Pietka
Title: Director
<PAGE>
THE BANK OF NEW YORK,
by__________________________
Name:
Title:
BANKBOSTON, N.A.,
by /s/ Susan L. Pardus-Galland
--------------------------
Name: Susan L. Pardus-Galland
Title: Vice President
FLEET NATIONAL BANK,
by /s/ Christopher J. Kampe
--------------------------
Name: Christopher J. Kampe
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Ravmond Ventura
--------------------------
Name: Raymond Ventura
Title: Vice President and Manager
MERITA BANK LTD, NEW YORK
BRANCH,
by __________________________
Name:
Title:
by __________________________
Name:
Title:
<PAGE>
SANWA BANK,
by__________________________
Name:
Title:
WACHOVIA BANK, N.A.
by /s/ John C. Coffin
--------------------------
Name: John C. Coffin
Title: Senior Vice President
YASUDA TRUST & BANKING CO.,
LTD.,
by___________________________
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Ethan Allen Interiors, Inc. for the quarter
ended December 31, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000896156
<NAME> ETHAN ALLEN INTERIORS, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1 <F1>
<CASH> 10,941
<SECURITIES> 0
<RECEIVABLES> 31,220 <F2>
<ALLOWANCES> 0
<INVENTORY> 133,377
<CURRENT-ASSETS> 198,721 <F3>
<PP&E> 309,563
<DEPRECIATION> 106,446
<TOTAL-ASSETS> 459,449 <F4>
<CURRENT-LIABILITIES> 82,293 <F5>
<BONDS> 36,131 <F6>
0
0 <F7>
<COMMON> 296 <F8>
<OTHER-SE> 307,940 <F9>
<TOTAL-LIABILITY-AND-EQUITY> 459,449
<SALES> 193,674
<TOTAL-REVENUES> 193,674 <F10>
<CGS> 103,918
<TOTAL-COSTS> 103,918
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 651 <F11>
<INCOME-PRETAX> 34,526
<INCOME-TAX> 13,340
<INCOME-CONTINUING> 21,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,186
<EPS-PRIMARY> 0.77 <F12>
<EPS-DILUTED> 0.75 <F13>
<FN>
<F1> Not applicable. All figures for Ethan Allen Interiors, Inc. are in U.S.
dollars.
<F2> Figure for receivables is net of allowances for doubtful accounts of
$2,016.
<F3> Includes prepaid expenses of $14,413.
<F4> Includes goodwill of $10,830 (net of amortization).
<F5> Includes current portion of long-term debt of $1,053 of December 31, 1998.
<F6> Includes long-term debt of $35,648 net of the current portion of long-term
debt) and capitalized leases of $483 (net of the current portion of
capitalized leases). As of December 31, 1998 outstanding long-term debt of
Ethan Allen on a consolidated basis consisted of (i) revolving loans under
the Credit Agreement of $24,500, (ii) 9.75% mortgage note of $1,492 (net of
current portion), (iii) industrial revenue bonds of $8,455, and (iv) other
of $1,201 (net of current portion). For a description of the terms of Ethan
Allen's long-term debt, see Footnote 5 to Ethan Allen's fiscal 1998
Consolidated Financial Statements.
<F7> As of December 31, 1998, Ethan Allen had no shares of preferred stock, $.01
par value per share, outstanding. For a description of Ethan Allen's
preferred stock as of June 30, 1998, see Ethan Allen's fiscal 1998
Consolidated Statement of Shareholders' Equity and Footnote 7 to Ethan
Allen's fiscal 1998 Notes to Consolidated Financial Statements.
<F8> As of December 31, 1998, Ethan Allen had 29,716,573 shares of common stock,
$.01 par value per share, issued. For a description of Ethan Allen's common
stock as of June 30, 1998, see Ethan Allen's fiscal 1998 Consolidated
Statement of Shareholders' Equity and Footnote 7 of Ethan Allen's fiscal
1998 Consolidated Financial Statements.
<F9> Consists of $265,655 of additional paid in capital, $120,527 of retained
earnings, and ($78,242) of treasury stock.
<F10>In the quarter ended December 31, 1998, Ethan Allen's revenues were derived
from sales generated by its wholesale and retail operations.
<F11>Consists of $594 of interest expense and $57 of amortization of deferred
costs.
<F12>Basic earnings per share for the quarter ended December 31, 1998 was $0.77.
For information on Ethan Allen's earnings per share, see Ethan Allen's
Consolidated Financial Statements for the quarter ended December 31, 1998.
<F13>Diluted earnings per share for the quarter ended December 31, 1998, was
$0.75.
</FN>
</TABLE>
