DANBURY, Conn.--(BUSINESS WIRE)--October 27, 2010--Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH) reported operating results for the three months ended September 30, 2010.

Net sales for the quarter ended September 30, 2010 were $164.8 million, up 21.0% from the prior year quarter. The Company’s Retail division delivered net sales of $121.0 million, an increase of 17.3% from the prior year quarter. Total written orders booked for the Retail division decreased 2.4% while comparable design center orders were 3.5% higher than the prior year quarter.

Farooq Kathwari, Chairman, President and CEO commented, “We are pleased with the growth of sales and profitability. The ‘Great Recession’ has provided an opportunity to make substantial improvements in most aspects of our vertically integrated enterprise. Written business for the quarter was impacted by the timing of the end of savings events, which ended October 18 this year compared with a September 30 conclusion last year.”

Net income for the quarter ended September 30, 2010 was $3.8 million or $0.13 per diluted share. This compares with a net loss the prior year quarter of $13.6 million or $0.47 per diluted share. Excluding special items from both periods, the current quarter net income was $3.2 million or $0.11 per diluted share compared to a prior year net loss of $5.7 million or $0.20 per diluted share.

The Company maintained strong liquidity and ended the quarter with cash and securities totaling $90.7 million. During the quarter, the Company paid $7.7 million to repurchase a portion of its common stock and bonds. An additional $3.0 million of bonds were repurchased in early October 2010.

Mr. Kathwari stated, “While we are faced with an uncertain economic environment, we are cautiously optimistic that due to our many initiatives, we have the opportunity to gain market share and continue to show improvements compared to the prior year in both sales and earnings. During the past quarter, we increased our advertising spending and introduced our new campaign, which while maintaining the aspirational value of our brand, also gets the message across about our excellent values, stylish products, quality, and interior design services.”

The Company will conduct a conference call at 11:00 AM (Eastern) on Thursday, October 28^th to discuss the financial results and our business initiatives. The live webcast and replay are accessible via the Company’s website at http://ethanallen.com/investors.

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 280 Design Centers in the United States and abroad. Ethan Allen owns and operates seven manufacturing facilities in North America, including five manufacturing plants and one sawmill in the United States and one manufacturing plant in Mexico. Approximately seventy percent of its products are made in its United States 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, 2010 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. 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 Information
Unaudited
(in thousands)

Selected Consolidated Financial Data:

	Three Months Ended
	09/30/10	09/30/09

Net sales	$164.8	$136.2
Gross margin	50.0%	42.8%
Operating margin	3.3%	-11.8%
Operating margin (excluding special items*)	3.8%	-5.0%
Net income (loss)	$3.8	($13.6)
Net income (loss) (excluding special items* and
related income tax effects)	$3.2	($5.7)
Operating cash flow	($0.9)	$17.0
Capital expenditures	$1.5	$2.5
Treasury stock repurchases (settlement
date basis)	$5.4	$0.0

EBITDA	$13.9	($2.8)
EBITDA as % of net sales	8.4%	-2.1%

EBITDA (excluding special items*)	$13.3	($0.1)
EBITDA as % of net sales (excluding special items*)	8.0%	-0.1%




Selected Financial Data by Business Segment:
	Three Months Ended
	09/30/10	09/30/09
Retail
Net sales	$121.0	$103.2
Operating margin	-3.5%	-11.0%
Operating margin (excluding special items*)	-3.4%	-10.4%


Wholesale
Net sales	$107.6	$81.3
Operating margin	11.1%	-5.7%
Operating margin (excluding special items*)	11.7%	4.9%



Ethan Allen Interiors Inc.
Condensed Consolidated Income Statements
Unaudited
(in thousands)

	Three Months Ended
	09/30/10		09/30/09

Net sales	$	164,841	$	136,190
Cost of sales		82,460		77,881
Gross profit		82,381		58,309
Operating expenses:
Selling		39,327		35,934
General and administrative		37,443		37,651
Restructuring and impairment charge		225		812
Total operating expenses		76,995		74,397
Operating income (loss)		5,386		(16,088	)
Interest and other income		3,157		797
Interest expense		2,974		2,981
Income (loss) before income taxes		5,569		(18,272	)
Income tax expense (benefit)		1,756		(4,693	)
Net income (loss)	$	3,813	$	(13,579	)

Basic earnings per common share:
Net income (loss) per basic share	$	0.13	$	(0.47	)
Basic weighted average shares outstanding		28,779		28,926

Diluted earnings per common share:
Net income (loss) per diluted share	$	0.13	$	(0.47	)
Diluted weighted average shares outstanding		28,950		28,926



Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)

	September 30,		June 30,
	2010		2010

Assets
Current assets:
Cash and cash equivalents	$	62,728	$	73,852
Marketable securities		11,671		11,075
Accounts receivable, net		16,484		17,105
Inventories		138,518		134,040
Prepaid expenses & other current assets		26,565		23,620
Total current assets		255,966		259,692

Property, plant and equipment, net		302,095		305,747
Intangible assets, net		45,128		45,128
Restricted cash and investments		16,329		17,318
Other assets		3,495		3,892

Total Assets	$	623,013	$	631,777



Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt		3,899		3,898
Customer deposits		51,111		52,605
Accounts payable		20,422		23,952
Accrued expenses & other current liabilities		65,055		65,287
Total current liabilities		140,487		145,742

Long-term debt		197,042		199,369
Other long-term liabilities		18,060		19,123
Deferred income taxes		8,956		9,084
Total liabilities		364,545		373,318

Shareholders' equity		258,468		258,459

Total Liabilities and Shareholders' Equity	$	623,013	$	631,777



Ethan Allen Interiors Inc.
GAAP Reconciliation
Three Months Ended September 30, 2010 and 2009
Unaudited
(in thousands, except per share amounts)

	Three Months Ended
	September 30,
	2010			2009
Net Income / Earnings Per Share
Net income (loss)	$	3,813		$	(13,579	)
Add: special items net of related tax effects *		(655	)		7,893
Net income (loss) (excluding special items* and
related income tax effects)	$	3,158		$	(5,686	)

Earnings (loss) per basic share	$	0.13		$	(0.47	)
Earnings (loss) per basic share (excluding special items*
and related income tax effects)	$	0.11		$	(0.20	)
Basic weighted average shares outstanding		28,779			28,926

Earnings (loss) per diluted share	$	0.13		$	(0.47	)
Earnings (loss) per diluted share (excluding special
items* and related income tax effects)	$	0.11		$	(0.20	)
Diluted weighted average shares outstanding		28,950			28,926

Consolidated Operating Income / Operating Margin
Operating income (loss)	$	5,386		$	(16,088	)
Add: special items *		904			9,318
Operating income (loss) (excluding special items*)	$	6,290		$	(6,770	)

Net sales	$	164,841		$	136,190
Operating margin		3.3	%		-11.8	%
Operating margin (excluding special items*)		3.8	%		-5.0	%

Wholesale Operating Income / Operating Margin
Wholesale operating income (loss)	$	11,939		$	(4,660	)
Add: special items		679			8,656
Wholesale operating income (excluding special items*)	$	12,618		$	3,996
Wholesale net sales	$	107,555		$	81,281
Wholesale operating margin		11.1	%		-5.7	%
Wholesale operating margin (excluding special items*)		11.7	%		4.9	%

Retail Operating Income / Operating Margin
Retail operating income (loss)	$	(4,290	)	$	(11,349	)
Add: special items		225			662
Retail operating income (loss) (excluding special items*)	$	(4,065	)	$	(10,687	)
Retail net sales	$	121,023		$	103,150
Retail operating margin		-3.5	%		-11.0	%
Retail operating margin (excluding special items*)		-3.4	%		-10.4	%



Ethan Allen Interiors Inc.
GAAP Reconciliation
Three Months Ended September 30, 2010 and 2009
Unaudited
(in thousands, except per share amounts)

	Three Months Ended
	September 30,
	2010			2009

EBITDA
Net income (loss)	$	3,813		$	(13,579	)
Add: interest expense (income), net		2,675			2,766
Add: income tax expense (benefit)		1,756			(4,693	)
Add: depreciation and amortization (including accelerated depreciation)		5,607			12,697
EBITDA	$	13,851		$	(2,809	)
Net sales	$	164,841		$	136,190
EBITDA as % of net sales		8.4	%		-2.1	%

EBITDA	$	13,851		$	(2,809	)
Add: special items*		(596	)		2,688
Adjusted EBITDA	$	13,255		$	(121	)
Net sales	$	164,841		$	136,190
Adjusted EBITDA as % of net sales		8.0	%		-0.1	%

CONTACT:
Ethan Allen Interiors Inc.
Investors / Media:
David R. Callen, 203-743-8305
Vice President Finance & Treasurer

* Special items consist of restructuring, impairment, transition charges, and certain other items.
Related tax effects are calculated using a normalized income tax rate.