EXHIBIT 99.1
| FOR IMMEDIATE RELEASE | Ethan Allen Interiors Inc. |
| Investor Contact: Peg Lupton | |
| (203) 743-8234 | |
| Media Contact: Kelly Maicon | |
| (203) 743-8575 |
DANBURY, CT., July 29, 2004 -- Ethan Allen Interiors Inc. (NYSE:ETH) today reported sales and earnings for the fourth quarter and fiscal year ended June 30, 2004.
As was previously announced in April 2004, the Company recorded a pre-tax restructuring and impairment charge of $12.8 million (or $0.21 per share) during its fourth quarter ended June 30, 2004 related to the consolidation of two manufacturing facilities.
Year Ended June 30, 2004
For the fiscal year ended June 30, 2004, the Company achieved record annual sales totaling $955.1 million, an increase of 5.3%, from $907.3 million in the prior fiscal year. Annual net delivered sales for the Company’s Retail division increased 9.5% to $576.2 million, while Wholesale sales increased 1.9% to $673.8 million during that same period. Year-to-date, comparable Ethan Allen store delivered sales increased 4.6%.
On a full-year basis, total written orders increased 4.4% as compared to the prior year. Within that same period, Wholesale net orders booked increased 3.2%, while Retail written sales increased 7.7% and comparable store written sales increased 2.6%.
Fiscal year earnings per share, including pre-tax restructuring and impairment charges of $12.5 million, amounted to $2.10 on net income of $80.3 million. This compares to earnings per share and net income of $1.95 and $75.4 million, respectively, for the prior fiscal year, which included pre-tax restructuring and impairment charges of $13.1 million. Excluding the impact of the restructuring and impairment charges in both periods, earnings per share and net income amounted to $2.30 and $88.0 million, respectively, for the current year as compared to $2.17 and $83.5 million, respectively, for the prior year.
Three Months Ended June 30, 2004
Net delivered sales for the fourth quarter ended June 30, 2004 increased 4.3% to $246.6 million from $236.4 million in the prior year quarter. Net delivered sales for the Company’s Retail division increased 7.6% to $149.9 million, while Wholesale sales increased 0.8% to $172.3 million during that same period. For the quarter, comparable Ethan Allen store delivered sales increased 6.1%.
Total written orders decreased 7.6% as compared to the prior year quarter. At the Wholesale level, net orders booked decreased 10.2%, while at the Retail level, written sales decreased 0.9% and comparable store written sales decreased 2.6%. The decline in Wholesale orders was partially due to the timing of new product introductions and a leveling of incoming orders resulting from full implementation of the “everyday pricing” program.
For the fourth quarter ended June 30, 2004, earnings per share, including the aforementioned pre-tax restructuring and impairment charge of $12.8 million, amounted to $0.36 on net income of $13.6 million as compared to $0.54 and $20.5 million, respectively, in the prior year quarter. Excluding the impact of the restructuring and impairment charge, earnings per share for the current quarter amounted to $0.57 on net income of $21.5 million.
Farooq Kathwari, Chairman and CEO, commented: “We are pleased with our results for the year. Despite a challenging economic environment we achieved record annual sales of $955 million and increased net income, excluding restructuring and impairment charges in both periods, by 5.4%. In addition, during the fourth quarter, we utilized over $150 million of available cash to pay a special cash dividend of $3.00 per share, repurchase our stock, and also pay our regular quarterly cash dividend.”
Mr. Kathwari further stated: “The last twelve months have provided us an opportunity to make major improvements to our products, our marketing programs, our retail network and all aspects of our operations, including product sourcing. We believe we are in a very good position to take advantage of expected improvements in the economy and the consumer’s continued interest in home decorating. Also, through the introduction of our latest solution – “everyday pricing” – on all of our products, we expect to benefit further from greater productivity of our approximately 3,000 design consultants, increased credibility with the consumer, and an overall improvement in service.”
On the question of business trends, Mr. Kathwari stated: “During the last two weeks, we have seen increased traffic in our stores. Consumers appear cautiously optimistic about the state of the economy and we share that view for this coming quarter. For fiscal 2005, barring any unexpected deterioration in the economy or consumer confidence, we believe we have the opportunity to generate sales and earnings per share growth of approximately 8% and 11%, respectively.”
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 311 retail stores in the United States and abroad, of which 127 are Company-owned. Ethan Allen has 12 manufacturing facilities, which include 2 sawmills, located throughout the United States.
The Company will conduct a Conference Call at 11:00 AM (Eastern) on Thursday, July 29th. 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.
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Ethan Allen Interiors
Inc.
Selected Financial Information
Unaudited
(In millions)
Selected Consolidated Financial Data:
| Three Months Ended |
Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 6/30/04 |
6/30/03 |
6/30/04 |
6/30/03 | |||||||||||
| Net Sales | $ | 246 | .6 | $ | 236 | .4 | $ | 955 | .1 | $ | 907 | .3 | ||
| Gross Margin | 47 | .5% | 48 | .6% | 48 | .3% | 49 | .5% | ||||||
| Operating Margin | 9 | .0% | 13 | .8% | 13 | .4% | 13 | .3% | ||||||
| Operating Margin (ex restructuring & impairment charge) |
14 | .2% | 13 | .8% | 14 | .7% | 14 | .7% | ||||||
| Net Income | $ | 13 | .6 | $ | 20 | .5 | $ | 80 | .3 | $ | 75 | .4 | ||
| Net Income (ex restructuring & impairment charge) | $ | 21 | .5 | $ | 20 | .5 | $ | 88 | .0 | $ | 83 | .5 | ||
| Operating Cash Flow | $ | 13 | .0 | $ | 26 | .3 | $ | 125 | .5 | $ | 100 | .1 | ||
| Capital Expenditures | $ | 9 | .1 | $ | 3 | .9 | $ | 23 | .0 | $ | 27 | .2 | ||
| Treasury Stock Repurchases (settlement date basis) | $ | 38 | .3 | $ | 2 | .4 | $ | 38 | .3 | $ | 50 | .7 | ||
| EBITDA | $ | 27 | .8 | $ | 38 | .6 | $ | 152 | .3 | $ | 143 | .0 | ||
| EBITDA as % of Net Sales | 11 | .3% | 16 | .3% | 15 | .9% | 15 | .8% | ||||||
| EBITDA (ex restructuring & impairment charge) | $ | 40 | .6 | $ | 38 | .6 | $ | 164 | .8 | $ | 156 | .1 | ||
| EBITDA as % of Net Sales (ex restructuring & impairment charge) | 16 | .5% | 16 | .3% | 17 | .3% | 17 | .2% | ||||||
Selected Financial Data by Business Segment:
| Three Months Ended |
Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retail | 6/30/04 |
6/30/03 |
6/30/04 |
6/30/03 | ||||||||||
| Net Sales | $ | 149 | .9 | $ | 139 | .3 | $ | 576 | .2 | $ | 526 | .4 | ||
| Operating Margin | 1 | .9% | 0 | .9% | 2 | .3% | 2 | .8% | ||||||
| Three Months Ended |
Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Wholesale | 6/30/04 |
6/30/03 |
6/30/04 |
6/30/03 | ||||||||||
| Net Sales | $ | 172 | .3 | $ | 170 | .9 | $ | 673 | .8 | $ | 661 | .0 | ||
| Operating Margin | 9 | .7% | 18 | .4% | 16 | .0% | 16 | .5% | ||||||
| Operating Margin (ex restructuring & impairment charge) |
17 | .1% | 18 | .4% | 17 | .9% | 18 | .5% | ||||||
Ethan Allen Interiors
Inc.
Condensed Consolidated Statements of Operations
(In thousands, except
per share amounts)
| |
Three Months Ended June 30, |
Twelve Months Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | 2004 | 2003 | |||||||||||
| |
(unaudited) |
(unaudited) |
| |||||||||||
| Net sales | $ | 246,600 | $ | 236,448 | $ | 955,107 | $ | 907,264 | ||||||
| Cost of sales | 129,515 | 121,533 | 494,027 | 457,880 | ||||||||||
| Gross profit | 117,085 | 114,915 | 461,080 | 449,384 | ||||||||||
Operating expenses: | ||||||||||||||
| Selling | 45,966 | 46,586 | 176,841 | 178,608 | ||||||||||
| General and administrative | 36,155 | 35,622 | 143,914 | 136,970 | ||||||||||
| Restructuring and impairment charges | 12,784 | - | 12,520 | 13,131 | ||||||||||
| Total operating expenses | 94,905 | 82,208 | 333,275 | 328,709 | ||||||||||
| Operating income | 22,180 | 32,707 | 127,805 | 120,675 | ||||||||||
Interest and other miscellaneous income | 161 | 455 | 3,332 | 1,162 | ||||||||||
| Interest and other related financing costs | 154 | 138 | 641 | 645 | ||||||||||
| Income before income tax expense | 22,187 | 33,024 | 130,496 | 121,192 | ||||||||||
| Income tax expense | 8,542 | 12,483 | 50,156 | 45,811 | ||||||||||
| Net income | $ | 13,645 | $ | 20,541 | $ | 80,340 | $ | 75,381 | ||||||
| Basic earnings per share: | ||||||||||||||
Net income per share | $ | 0.37 | $ | 0.55 | $ | 2.16 | $ | 2.00 | ||||||
| Basic weighted average shares outstanding | 36,919 | 37,117 | 37,179 | 37,607 | ||||||||||
Diluted earnings per share: | ||||||||||||||
Net income per share | $ | 0.36 | $ | 0.54 | $ | 2.10 | $ | 1.95 | ||||||
| Diluted weighted average shares outstanding | 37,963 | 38,033 | 38,295 | 38,569 | ||||||||||
Reconciliation of GAAP to Non-GAAP Information: | ||||||||||||||
Net income | $ | 13,645 | $ | 20,541 | $ | 80,340 | $ | 75,381 | ||||||
| Add: restructuring & impairment charge, | ||||||||||||||
| net of related tax effect | 7,862 | - | 7,708 | 8,168 | ||||||||||
| Net income (ex restructuring & impairment charge) | $ | 21,507 | $ | 20,541 | $ | 88,048 | $ | 83,549 | ||||||
Earnings per basic share (ex restructuring & | ||||||||||||||
| impairment charge) | $ | 0.58 | $ | 0.55 | $ | 2.37 | $ | 2.22 | ||||||
Basic weighted average shares outstanding | 36,919 | 37,117 | 37,179 | 37,607 | ||||||||||
Earnings per diluted share (ex restructuring & | ||||||||||||||
| impairment charge) | $ | 0.57 | $ | 0.54 | $ | 2.30 | $ | 2.17 | ||||||
Diluted weighted average shares outstanding | 37,963 | 38,033 | 38,295 | 38,569 | ||||||||||
Ethan Allen Interiors
Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| |
June 30, 2004 |
June 30, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| |
(unaudited) |
|||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 27,528 | $ | 81,856 | ||||
| Accounts receivable, net | 26,967 | 26,439 | ||||||
| Inventories | 186,895 | 198,212 | ||||||
| Prepaid expenses and other current assets | 54,192 | 53,755 | ||||||
| Total current assets | 295,582 | 360,262 | ||||||
| Property, plant, and equipment, net | 277,021 | 289,423 | ||||||
| Intangible assets, net | 80,038 | 78,939 | ||||||
| Other assets | 1,790 | 2,944 | ||||||
| Total Assets | $ | 654,431 | $ | 731,568 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Current maturities of long-term debt and capital lease obligations | $ | 4,712 | $ | 996 | ||||
| Customer deposits | 56,026 | 55,939 | ||||||
| Accounts payable | 22,222 | 25,375 | ||||||
| Accrued expenses | 53,729 | 52,116 | ||||||
| Total current liabilities | 136,689 | 134,426 | ||||||
| Long-term debt | 4,509 | 9,222 | ||||||
| Other long-term liabilities | 1,205 | 2,682 | ||||||
| Deferred income taxes | 51,248 | 47,539 | ||||||
| Total liabilities | 193,651 | 193,869 | ||||||
| Shareholders’ equity | 460,780 | 537,699 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 654,431 | $ | 731,568 | ||||