Exhibit 99.1 FOR IMMEDIATE RELEASE Ethan Allen Interiors Inc. Investor Contact: Peg Lupton (203) 743-8234 Media Contact: Josie Bielmeier (203) 743-8503 ETHAN ALLEN ANNOUNCES FIRST QUARTER RESULTS DANBURY, CT., October 15, 2003 -- Ethan Allen Interiors Inc. (NYSE:ETH) today reported sales and earnings for the first quarter ended September 30, 2003. Net sales for the current period increased 2.9% to $222.8 million from $216.5 million in the prior year quarter. Net delivered sales for the Company's Retail division increased 10.1% to $132.7 million from $120.5 million in the prior year quarter, and Wholesale sales increased 0.7% during that same period. Comparable Ethan Allen store delivered sales increased 0.6%. Ethan Allen sells through an exclusive network of 310 retail locations, of which 120 are Company-owned. Earnings per share for the quarter ended September 30, 2003 amounted to $0.50 on net income of $18.9 million as compared to $0.52 and $20.1 million, respectively, in the prior year period. Total written orders increased 11.3% as compared to the prior year quarter. At the Wholesale level, net orders booked increased 12.4%, while at the Retail level, written sales increased 8.3% and comparable store written sales decreased 1.3%. Farooq Kathwari, Chairman and CEO, commented: "We are pleased with our results for the quarter. Initiatives recently undertaken to expand our consumer reach and increase operational efficiencies have enabled us to maintain healthy revenues, margins, earnings and cash flow during an uncertain economic period. Our Wholesale margins held up despite taking significant downtime in recent months within our manufacturing operations in an effort to reduce inventory levels. At the Retail level, our margins reflect the sell-off of floor samples to make room for new product introductions." Mr. Kathwari continued: "I have always believed the best time to make major improvements is in slower economic times in order to prepare for the next phase of growth. We are in a strong position to grow our business due to recent initiatives aimed at strengthening our marketing programs and making our U.S. manufacturing operations more efficient through plant consolidations and, overall, by improving our capacity of sourcing both domestically and abroad." On the question of business trends, Mr. Kathwari stated: "During the last month, we have seen signs which are indicative of a strengthening economy and an increase in consumer confidence. While total revenues were up approximately 3% for the quarter, our booked orders also improved at both the Wholesale and the Retail levels, enabling us to maintain stronger backlogs. As a result, we believe we are well-positioned going into this next quarter." Ethan Allen Interiors Inc. is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through an exclusive network of 310 retail stores (309 full-line and 1 Ethan Allen Kids) in the United States and abroad. Ethan Allen has 14 manufacturing facilities, which include 3 sawmills, located throughout the United States. The Company will conduct a Conference Call at 11:00 AM (Eastern) on Wednesday, October 15th. The live webcast and replay are accessible via the Company's website at www.ethanallen.com/investors. This press release should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2003 and other reports filed with the Securities and Exchange Commission. Management's discussion in this release contains forward-looking statements relating to future results of the Company. These forward-looking statements are subject to various assumptions, risk and uncertainties, and accordingly, actual results could differ materially from those contemplated by the forward-looking statements. ####### Ethan Allen Interiors Inc. Selected Financial Information Unaudited (In millions) Selected Consolidated Financial Data: Three Months Ended ------------------ 9/30/03 9/30/02 ------- ------- Net Sales $ 222.8 $ 216.5 Gross Margin 48.7% 49.3% Operating Margin 12.8% 14.7% Net Income $ 18.9 $ 20.1 Operating Cash Flow $ 50.0 $ 41.3 Capital Expenditures $ 4.0 $ 9.3 Treasury Stock Repurchases $ - $ 29.6 EBITDA $ 36.0 $ 37.5 EBITDA as % of Net Sales 16.2% 17.3% Selected Financial Data by Business Segment: Three Months Ended ------------------ Retail 9/30/03 9/30/02 - ------ ------- ------- Net Sales $ 132.7 $ 120.5 Operating Margin 0.2% 2.5% Three Months Ended ------------------ Wholesale 9/30/03 9/30/02 - --------- ------- ------- Net Sales $ 158.9 $ 157.8 Operating Margin 17.0% 18.4% Ethan Allen Interiors Inc. Condensed Consolidated Statements of Operations Unaudited (In thousands, except per share amounts) Three Months Ended September 30, 2003 2002 --------- --------- Net sales $ 222,765 $ 216,529 Cost of sales 114,322 109,814 --------- --------- Gross Profit 108,443 106,715 Operating Expenses: Selling 44,609 42,890 General and administrative 35,522 31,982 Restructuring and impairment charges (264) (92) --------- --------- Total operating expenses 79,867 74,780 --------- --------- Operating Income 28,576 31,935 Interest and other miscellaneous income 2,211 524 Interest and other related financing costs 141 173 --------- --------- Income before income tax expense 30,646 32,286 Income tax expense 11,707 12,204 --------- --------- Net Income $ 18,939 $ 20,082 ========= ========= Basic earnings per share: - ------------------------ Net income per share $ 0.51 $ 0.53 ========= ========= Basic weighted average shares outstanding 37,227 37,986 Diluted earnings per share: - -------------------------- Net income per share $ 0.50 $ 0.52 ========= ========= Diluted weighted average shares outstanding 38,247 38,915 Reconciliation of GAAP to Non-GAAP Information: - ---------------------------------------------- Net income $ 18,939 $ 20,082 Add: interest expense 106 138 Add: income tax expense 11,707 12,204 Add: depreciation and amortization 5,265 5,033 --------- --------- EBITDA $ 36,017 $ 37,457 ========= ========= Net Sales $ 222,765 $ 216,529 ========= ========= EBITDA as % of Net Sales 16.2% 17.3% ========= ========= Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets (In thousands) September 30, June 30, 2003 2003 (unaudited) --------- --------- Assets Current Assets: Cash and cash equivalents $ 129,485 $ 81,856 Accounts receivable, net 28,138 26,439 Inventories, net 190,302 198,212 Prepaid expenses and other current assets 52,017 53,755 --------- --------- Total current assets 399,942 360,262 Property, plant, and equipment, net 282,981 289,423 Intangible assets, net 78,926 78,939 Other assets 2,508 2,944 --------- --------- Total Assets $ 764,357 $ 731,568 ========= ========= Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt and capital lease obligations $ 977 $ 996 Customer deposits 62,450 55,939 Accounts payable 32,680 25,375 Accrued expenses 53,935 52,116 --------- --------- Total current liabilities 150,042 134,426 Long-term debt 9,180 9,222 Deferred income taxes 48,728 47,539 Other long-term liabilities 2,311 2,682 Total shareholders' equity 554,096 537,699 -------- -------- Total Liabilities and Shareholders' Equity $ 764,357 $ 731,568 ======== ========