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Press release from Business Wire

Ethan Allen Reports Results for Quarter and Fiscal Year Ended June 30, 2012

Wednesday, July 25, 2012

Ethan Allen Reports Results for Quarter and Fiscal Year Ended June 30, 201216:30 EDT Wednesday, July 25, 2012 DANBURY, Conn. (Business Wire) -- Ethan Allen Interiors Inc. (“Ethan Allen”, the “Company”, “We”, or “Our”) (NYSE:ETH) reported operating results for the three and twelve months ended June 30, 2012. Farooq Kathwari, Chairman and CEO commented, “We are pleased with our results for the fiscal year ended June 30, 2012 and the continued progress to position us for growth. For the fiscal year ended June 30, net sales increased by 7.4% to $729.4 million. Our net income per diluted share excluding special items was $0.94 compared with $0.58 in the previous year; an increase of 62%. In addition, we absorbed costs associated with liquidation of inventory to make room for major new product introductions.” Mr. Kathwari further stated, “For our fourth quarter ended June 30, 2012 net sales increased by 4.1% and our net income per diluted share excluding special items was $0.27 compared to $0.21 in the prior year quarter. As previously discussed, we completed the introduction of the final phase of new products during the quarter. We absorbed $0.03 per diluted share due to incremental impacts from display inventory liquidations to make room for new products. This impact is not adjusted from our non-GAAP numbers. This major initiative positions us well for growth going forward.” Three Months Ended June 30, 2012 Net sales for the quarter ended June 30, 2012 increased 4.1% over the prior year to $185.3 million. The Company's Retail division net sales increased 5.0% to $143.7 million including comparable design center net sales growth of 3.6%. Retail division written orders recorded during the fourth quarter increased 2.3% over 14.6% growth the prior year's fourth quarter. Comparable design center written orders grew 0.6% over 12.9% growth the prior year. Net income for the quarter ended June 30, 2012 was $7.3 million or $0.25 per diluted share compared with the prior year of $7.2 million or $0.25 per diluted share. Excluding special items in both periods, net income for the quarter ended June 30, 2012 was $7.8 million or $0.27 per diluted share compared with $6.1 million or $0.21 per diluted share in the prior year period. Twelve Months Ended June 30, 2012 Net sales for the twelve months ended June 30, 2012 increased 7.4% over the prior year to $729.4 million. The Company's Retail division net sales increased 10.6% to $559.4 million including comparable design center net sales growth of 8.4%. Written orders booked during the twelve month period by the Retail division were 8.9% greater than the prior year quarter including comparable design center order growth of 6.4%. Net income for the twelve months ended June 30, 2012 was $49.7 million or $1.71 per diluted share compared with the prior year of $29.3 million or $1.01 per diluted share. During the third quarter the Company reversed deferred tax asset valuation allowances and certain other tax reserves resulting in $23.9 million in non-cash tax benefits. Excluding these benefits and other special items in both periods, net income for the twelve months ended June 30, 2012 was $27.5 million or $0.94 per diluted share compared with $16.9 million or $0.58 per diluted share in the prior year period. Mr. Kathwari concluded, “We are well positioned to grow. We have substantially strengthened the main areas of our vertically integrated structure including our product offerings, our advertising and communications, our interior design Retail network, our manufacturing and logistics operations, and in the technology employed throughout our business. We will discuss our many initiatives further on our conference call on Thursday.” Analyst Conference Call The Company will conduct a conference call at 11:00 AM (Eastern) on Thursday, July 26th to discuss the financial results and its business initiatives. The live webcast and replay are accessible via the Company's website at http://ethanallen.com/investors. About Ethan Allen Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates eight manufacturing facilities including five manufacturing plants and one sawmill in the United States plus two plants in Mexico and Honduras. Approximately seventy percent of its products are made in its North American plants. For more information on Ethan Allen's products and services, visit ethanallen.com. This press release should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2011 (the “2011 Form 10-K”) and other reports filed with the Securities and Exchange Commission. This press release and related discussions contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect management's current expectations concerning future events and results of the Company, and are subject to various assumptions, risks and uncertainties including specifically, and without limitation, those set forth in Part I, Item 1A “Risk Factors” of the 2011 Form 10-K. Accordingly, actual future events or results could differ materially from those contemplated by the forward-looking statements. The Company assumes no obligation to update or provide revision to any forward-looking statement at any time for any reason.   Ethan Allen Interiors Inc.Selected Financial InformationUnaudited (in millions)           Selected Consolidated Financial Data:   Three Months EndedTwelve Months Ended06/30/1206/30/1106/30/1206/30/11   Net sales $185.3 $178.0 $729.4 $679.0 Gross margin 53.9% 52.9% 53.5% 51.5% Operating margin 7.7% 6.4% 6.8% 4.7% Operating margin (excluding special items*) 7.7% 6.8% 7.1% 5.0% Net income $7.3 $7.2 $49.7 $29.3 Net income (excluding special items* and unusual income tax effects) $7.8 $6.1 $27.5 $16.9 Operating cash flow $9.9 $22.6 $37.7 $63.2 Capital expenditures $3.0 $3.4 $22.9 $9.1 Acquisitions $0.0 $2.3 $0.5 $3.0 Treasury stock repurchases (settlement date basis) $0.5 $0.0 $1.4 $5.4   EBITDA $18.9 $15.9 $68.3 $57.3 EBITDA as % of net sales 10.2% 8.9% 9.4% 8.4%   EBITDA (excluding special items*) $18.8 $16.6 $70.4 $57.6 EBITDA as % of net sales (excluding special items*) 10.1% 9.4% 9.6% 8.5%         Selected Financial Data by Business Segment:Three Months EndedTwelve Months Ended06/30/1206/30/1106/30/1206/30/11Retail Net sales $143.7 $136.8 $559.4 $505.9 Operating margin -0.7% -1.9% -2.1% -3.0% Operating margin (excluding special items*) -0.7% -1.3% -1.7% -2.8%     Wholesale Net sales $112.8 $110.5 $456.9 $422.9 Operating margin 13.2% 13.4% 14.1% 11.8% Operating margin (excluding special items*) 13.2% 13.4% 14.1% 12.0%   * Special items consist of restructuring, impairment, transition charges and other certain items. Related tax effects are calculated using a normalized income tax rate.     Ethan Allen Interiors Inc.Condensed Consolidated Income StatementsUnaudited (in thousands)             Three Months EndedTwelve Months Ended06/30/1206/30/1106/30/1206/30/11   Net sales $ 185,316 $ 177,952 $ 729,373 $ 678,960 Cost of sales   85,407     83,803   339,085     329,500   Gross profit 99,909 94,149 390,288 349,460 Operating expenses: Selling 43,716 43,067 173,863 161,609 General and administrative 41,949 39,034 166,813 154,792 Restructuring and impairment charge   (90)   733   (85)   1,126   Total operating expenses   85,575     82,834   340,591     317,527   Operating income 14,334 11,315 49,697 31,933 Interest and other income 200 111 562 5,564 Interest expense   2,206     2,477   9,020     11,126   Income before income taxes 12,328 8,949 41,239 26,371 Income tax expense (benefit)   5,029     1,774   (8,455)   (2,879) Net income $7,299   $7,175$49,694   $29,250     Basic earnings per common share: Net income per basic share $ 0.25 $ 0.25 $ 1.72 $ 1.02 Basic weighted average shares outstanding 28,856 28,772 28,824 28,758   Diluted earnings per common share: Net income per diluted share $ 0.25 $ 0.25 $ 1.71 $ 1.01 Diluted weighted average shares outstanding 29,179 29,007 29,109 28,966     Ethan Allen Interiors Inc.Condensed Consolidated Balance SheetsUnaudited (in thousands)       June 30,   June 30, 20122011   Assets Current assets: Cash and cash equivalents $ 79,721 $ 78,519 Marketable securities 9,005 12,909 Accounts receivable, net 14,919 15,036 Inventories 155,739 141,692 Prepaid expenses & other current assets 21,261 20,372 Deferred income taxes   2,147   - Total current assets 282,792 268,528   Property, plant and equipment, net 295,695 294,853 Intangible assets, net 45,128 45,128 Restricted cash and investments 15,416 16,391 Other assets   5,757   3,425   Total Assets $644,788$628,325     Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt 250 19 Customer deposits 65,465 62,649 Accounts payable 27,315 26,958 Accrued expenses & other current liabilities   58,047   64,990 Total current liabilities 151,077 154,616   Long-term debt 154,250 165,013 Other long-term liabilities 17,593 18,975 Deferred income taxes   -   8,034 Total liabilities 322,920 346,638   Shareholders' equity   321,868   281,687   Total Liabilities and Shareholders' Equity $644,788$628,325     Ethan Allen Interiors Inc.GAAP ReconciliationThree and Twelve Months Ended June 30, 2012 and 2011Unaudited (in thousands, except per share amounts)     Three Months Ended   Twelve Months EndedJune 30,June 30,2012   20112012   2011Net Income / Earnings Per Share     Net income $ 7,299 $ 7,175 $ 49,694 $ 29,250 Special items net of related tax effects * (57 ) 465 1,318 194 Unusual income tax effects   529       (1,492 )   (23,508 )     (12,505 ) Net income (excluding special items* and unusual income tax effects) $ 7,771     $ 6,148   $ 27,504     $ 16,939   Basic weighted average shares outstanding 28,856 28,772 28,824 28,758 Earnings per basic share $ 0.25     $ 0.25   $ 1.72     $ 1.02   Earnings per basic share (excluding special items* and unusual income tax effects) $ 0.27     $ 0.21   $ 0.95     $ 0.59     Diluted weighted average shares outstanding 29,179 29,007 29,109 28,966 Earnings per diluted share $ 0.25     $ 0.25   $ 1.71     $ 1.01   Earnings per diluted share (excluding special items* and unusual income tax effects) $ 0.27     $ 0.21   $ 0.94     $ 0.58       Consolidated Operating Income / Operating Margin Operating income $ 14,334 $ 11,315 $ 49,697 $ 31,933 Add: special items *   (90 )     733     2,075       1,805   Operating income (excluding special items*) $ 14,244     $ 12,048   $ 51,772     $ 33,738     Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960   Operating margin   7.7 %     6.4 %   6.8 %     4.7 % Operating margin (excluding special items*)   7.7 %     6.8 %   7.1 %     5.0 %   Wholesale Operating Income / Operating Margin Wholesale operating income $ 14,852 $ 14,822 $ 64,436 $ 49,898 Add: special items   -       -     131       679   Wholesale operating income (excluding special items*) $ 14,852     $ 14,822   $ 64,567     $ 50,577   Wholesale net sales $ 112,846     $ 110,479   $ 456,915     $ 422,946   Wholesale operating margin   13.2 %     13.4 %   14.1 %     11.8 % Wholesale operating margin (excluding special items*)   13.2 %     13.4 %   14.1 %     12.0 %   Retail Operating Income / Operating Margin Retail operating income (loss) $ (944 ) $ (2,577 ) $ (11,522 ) $ (15,344 ) Add: special items   (90 )     733     1,944       1,126   Retail operating income (loss) (excluding special items*) $ (1,034 )   $ (1,844 ) $ (9,578 )   $ (14,218 ) Retail net sales $ 143,730     $ 136,844   $ 559,417     $ 505,910   Retail operating margin   -0.7 %     -1.9 %   -2.1 %     -3.0 % Retail operating margin (excluding special items*)   -0.7 %     -1.3 %   -1.7 %     -2.8 %     Ethan Allen Interiors Inc.GAAP ReconciliationThree and Twelve Months Ended June 30, 2012 and 2011Unaudited (in thousands, except per share amounts)     Three Months Ended   Twelve Months EndedJune 30,June 30,2012   20112012   2011     EBITDA Net income $ 7,299 $ 7,175 $ 49,694 $ 29,250 Add: interest expense, net 2,059 2,269 8,478 10,076 Add: income tax expense (benefit) 5,029 1,774 (8,455 ) (2,879 ) Add: depreciation and amortization   4,489       4,696     18,581       20,816   EBITDA $ 18,876     $ 15,914   $ 68,298     $ 57,263   Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960   EBITDA as % of net sales   10.2 %     8.9 %   9.4 %     8.4 %   EBITDA $ 18,876 $ 15,914 $ 68,298 $ 57,263 Add: special items*   (90 )     733     2,075       305   Adjusted EBITDA $ 18,786     $ 16,647   $ 70,373     $ 57,568   Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960   Adjusted EBITDA as % of net sales   10.1 %     9.4 %   9.6 %     8.5 %   * Special items consist of restructuring, impairment, transition charges and certain other items. Related tax effects are calculated using a normalized income tax rate. Ethan Allen Interiors Inc.Investor / Media:David R. Callen, 203-743-8305Vice President Finance & Treasurer