Exhibit 99.1
 
  Ethan Allen Interiors Inc.
Investor / Media Contact:
David R. Callen
Vice President Finance & Treasurer
203-743-8305
 
ETHAN ALLEN REPORTS RESULTS FOR QUARTER
AND ANNOUNCES CASH DIVIDEND

DANBURY, CT., January 24, 2012 – Ethan Allen Interiors Inc. (“Ethan Allen”, the “Company”, “We”, or “Our”) (NYSE:ETH) reported that net sales for the second quarter ended December 31, 2011 increased by 5.7% to $183.3 million and excluding special items, diluted earnings per share increased to $0.30 compared to $0.19 in the previous year quarter. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.07 per share, payable to shareholders of record as of April 10, 2012 to be paid on April 25, 2012.

Farooq Kathwari, Chairman and CEO commented, “We are pleased with the strong 5.7% growth in sales as it builds upon the 21% growth in the previous year quarter. We continue to benefit from major initiatives during the last three years resulting in operating leverage with gross margin increasing to 53.6% from 51.8% and an increase in our adjusted diluted earnings per share for the quarter of 57.9%. Our written orders for the Retail division during the quarter increased 10.3% including comparable written orders which increased 6.7%. Our Retail backlog at December 31, 2011 was 9.4% higher than at this time last year.”

Mr. Kathwari continued, “We are also pleased that strengthening of our liquidity and the balance sheet enables us to provide cash dividends. Our cash and securities at December 31, 2011 amounted to $92.8 million, an increase of $7.2 million from December 31 of last year. During the current quarter, we continued to repurchase our bonds, further reducing our debt by $10 million. Over the last twelve months we have reduced our total debt by $43.6 million.”

Three Months Ended December 31, 2011
Net sales for the quarter ended December 31, 2011 increased 5.7% over the prior year to $183.3 million. The Company’s Retail division net sales increased 9.2% to $143.1 million including comparable design center net sales growth of 6.5%. Net income for the quarter ended December 31, 2011 was $8.1 million or $0.28 per diluted share compared with the prior year of $14.7 million or $0.51 per diluted share. Excluding special items in both periods, net income for the quarter ended December 31, 2011 was $8.6 million or $0.30 per diluted share compared with $5.6 million or $0.19 per diluted share in the prior year period.

Six Months Ended December 31, 2011
Net sales for the six months ended December 31, 2011 increased 8.9% over the prior year to $368.2 million. The Company’s Retail division net sales increased 12.8% to $284.3 million including comparable design center net sales growth of 10.5%. Written orders booked during the six month period by the Retail division were 11.8% greater than the prior year quarter including comparable design center order growth of 9.1%.

Net income for the six months ended December 31, 2011 was $14.8 million or $0.51 per diluted share compared with the prior year of $18.6 million or $0.64 per diluted share. Excluding special items in both periods, net income for the six months ended December 31, 2011 was $15.8 million or $0.54 per diluted share compared with $8.7 million or $0.30 per diluted share in the prior year period.
 
 
Page 1 of 7
 

Mr. Kathwari concluded, “We remain cautiously optimistic due to our many initiatives including major introductions of new products, acquiring qualified and entrepreneurial interior design associates, investing in our manufacturing and logistics, and adding technology in all areas of our enterprise. We also see improving trends in consumer attitudes. We look forward to discussing our initiatives further on the call tomorrow.”

Analyst Conference Call
The Company will conduct a conference call at 11:00 AM (Eastern) on Wednesday January 25th 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 a manufacturer and retailer of quality home furnishings. Ethan Allen offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and through a network of approximately 300 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, 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.

#######
 
 
Page 2 of 7
 
 
Ethan Allen Interiors Inc.
  
Selected Financial Information
  
Unaudited
  
(in thousands)
  
                         
Selected Consolidated Financial Data:
                        
                         
   
Three Months Ended
    
Six Months Ended
  
   
12/31/11
    
12/31/10
    
12/31/11
    
12/31/10
  
                         
Net sales
   $ 183.3     $ 173.3     $ 368.2     $ 338.2  
Gross margin
     53.6 %     51.8 %     53.3 %     50.9 %
Operating margin
     7.6 %     6.0 %     7.5 %     4.7 %
Operating margin (excluding special items*)
     8.5 %     6.1 %     7.9 %     5.0 %
Net income (loss)
   $ 8.1     $ 14.7     $ 14.8     $ 18.6  
Net income (loss) (excluding special items* and unusual income tax effects)
   $ 8.6     $ 5.6     $ 15.8     $ 8.7  
Operating cash flow
   $ 4.7     $ 3.7     $ 11.0     $ 2.8  
Capital expenditures
   $ 8.0     $ 2.5     $ 11.4     $ 4.0  
Treasury stock repurchases (settlement date basis)
   $ 0.0     $ 0.0     $ 0.8     $ 5.4  
                                 
EBITDA
   $ 18.5     $ 16.7     $ 37.1     $ 30.5  
EBITDA as % of net sales
     10.1 %     9.6 %     10.1 %     9.0 %
                                 
EBITDA (excluding special items*)
   $ 20.2     $ 16.7     $ 38.8     $ 30.0  
EBITDA as % of net sales (excluding special items*)
     11.0 %     9.6 %     10.5 %     8.9 %
                                 
                                 
                                 
                                 
Selected Financial Data by Business Segment:
                          
   
Three Months Ended
    
Six Months Ended
  
   
12/31/11
    
12/31/10
    
12/31/11
    
12/31/10
  
Retail
                                
Net sales
   $ 143.1     $ 131.0     $ 284.3     $ 252.0  
Operating margin
     -1.8 %     -0.9 %     -1.4 %     -2.2 %
Operating margin (excluding special items*)
     -0.3 %     -0.9 %     -0.7 %     -2.1 %
                                 
                                 
Wholesale
                                
Net sales
   $ 106.6     $ 100.8     $ 223.0     $ 208.3  
Operating margin
     14.7 %     9.8 %     14.1 %     10.5 %
Operating margin (excluding special items*)
     14.4 %     9.8 %     13.9 %     10.8 %
                                 
* Special items consist of restructuring, impairment, transition charges and other certain items.
Related tax effects are calculated using a normalized income tax rate.
 
 
Page 3 of 7
 
 
Ethan Allen Interiors Inc.
  
Condensed Consolidated Income Statements
  
Unaudited
  
(in thousands)
  
                         
   
Three Months Ended
    
Six Months Ended
  
   
12/31/11
    
12/31/10
    
12/31/11
    
12/31/10
  
                         
Net sales
   $ 183,275     $ 173,345     $ 368,196     $ 338,186  
Cost of sales
     85,056       83,484       172,092       165,944  
Gross profit
     98,219       89,861       196,104       172,242  
Operating expenses:
                                
Selling
     42,246       40,068       85,866       79,395  
General and administrative
     42,006       39,259       82,673       76,702  
Restructuring and impairment charge
     29       59       (11 )     284  
Total operating expenses
     84,281       79,386       168,528       156,381  
Operating income
     13,938       10,475       27,576       15,861  
Interest and other income
     145       1,168       205       4,325  
Interest expense
     2,274       2,902       4,625       5,876  
Income before income taxes
     11,809       8,741       23,156       14,310  
Income tax expense (benefit)
     3,732       (6,003 )     8,309       (4,247 )
Net income
   $ 8,077     $ 14,744     $ 14,847     $ 18,557  
                                 
Basic earnings per common share:
                                
Net income per basic share
   $ 0.28     $ 0.51     $ 0.52     $ 0.65  
Basic weighted average shares outstanding
     28,823       28,728       28,791       28,753  
                                 
Diluted earnings per common share:
                                
Net income per diluted share
   $ 0.28     $ 0.51     $ 0.51     $ 0.64  
Diluted weighted average shares outstanding
     29,069       28,921       29,010       28,936  
 
 
Page 4 of 7
 
 
Ethan Allen Interiors Inc.
  
Condensed Consolidated Balance Sheets
  
Unaudited
  
(in thousands)
  
             
   
December 31,
    
June 30,
  
   
2011
    
2011
  
             
Assets
            
Current assets:
            
Cash and cash equivalents
   $ 66,352     $ 78,519  
Marketable securities
     11,016       12,909  
Accounts receivable, net
     13,828       15,036  
Inventories
     136,197       141,692  
Prepaid expenses & other current assets
     20,330       20,372  
Total current assets
     247,723       268,528  
                 
Property, plant and equipment, net
     291,098       294,853  
Intangible assets, net
     45,128       45,128  
Restricted cash and investments
     15,402       16,391  
Other assets
     3,020       3,425  
                 
Total Assets
   $ 602,371     $ 628,325  
                 
                 
                 
Liabilities and Shareholders' Equity
                
Current liabilities:
                
Current maturities of long-term debt
     -       19  
Customer deposits
     46,561       62,649  
Accounts payable
     22,452       26,958  
Accrued expenses & other current liabilities
     61,593       64,990  
Total current liabilities
     130,606       154,616  
                 
Long-term debt
     152,924       165,013  
Other long-term liabilities
     20,340       18,975  
Deferred income taxes
     8,067       8,034  
Total liabilities
     311,937       346,638  
                 
Shareholders' equity
     290,434       281,687  
                 
Total Liabilities and Shareholders' Equity
   $ 602,371     $ 628,325  
 
 
Page 5 of 7
 
 
Ethan Allen Interiors Inc.
  
GAAP Reconciliation
  
Three and Six Months Ended December 31, 2011 and 2010
  
Unaudited
  
(in thousands, except per share amounts)
  
   
   
Three Months Ended
    
Six Months Ended
  
   
December 31,
    
December 31,
  
   
2011
    
2010
    
2011
    
2010
  
Net Income / Earnings Per Share
                        
Net income
   $ 8,077     $ 14,744     $ 14,847     $ 18,557  
       Special items net of related tax effects *
     1,073       37       1,048       (341 )
       Unusual income tax effects
     (568 )     (9,193 )     (133 )     (9,470 )
Net income (excluding special items* and unusual income tax effects)
   $ 8,582     $ 5,588     $ 15,762     $ 8,746  
                                 
Basic weighted average shares outstanding
     28,823       28,728       28,791       28,753  
Earnings per basic share
   $ 0.28     $ 0.51     $ 0.52     $ 0.65  
Earnings per basic share (excluding special items* and unusual income tax effects)
   $ 0.30     $ 0.19     $ 0.55     $ 0.30  
                                 
Diluted weighted average shares outstanding
     29,069       28,921       29,010       28,936  
Earnings per diluted share
   $ 0.28     $ 0.51     $ 0.51     $ 0.64  
Earnings per diluted share (excluding special
                                
items* and unusual income tax effects)
   $ 0.30     $ 0.19     $ 0.54     $ 0.30  
                                 
                                 
Consolidated Operating Income / Operating Margin
                                
Operating income
   $ 13,938     $ 10,475     $ 27,576     $ 15,861  
Add: special items *
     1,690       59       1,650       963  
Operating income (excluding special items*)
   $ 15,628     $ 10,534     $ 29,226     $ 16,824  
                                 
Net sales
   $ 183,275     $ 173,345     $ 368,196     $ 338,186  
Operating margin
     7.6 %     6.0 %     7.5 %     4.7 %
Operating margin (excluding special items*)
     8.5 %     6.1 %     7.9 %     5.0 %
                                 
Wholesale Operating Income / Operating Margin
                                
Wholesale operating income
   $ 15,702     $ 9,884     $ 31,393     $ 21,823  
Add: special items
     (368 )     -       (368 )     679  
Wholesale operating income (excluding special items*)
   $ 15,334     $ 9,884     $ 31,025     $ 22,502  
Wholesale net sales
   $ 106,631     $ 100,793     $ 223,025     $ 208,348  
Wholesale operating margin
     14.7 %     9.8 %     14.1 %     10.5 %
Wholesale operating margin (excluding special items*)
     14.4 %     9.8 %     13.9 %     10.8 %
                                 
Retail Operating Income / Operating Margin
                                
Retail operating income (loss)
   $ (2,532 )   $ (1,206 )   $ (4,029 )   $ (5,496 )
Add: special items
     2,058       59       2,018       284  
Retail operating income (loss) (excluding special items*)
   $ (474 )   $ (1,147 )   $ (2,011 )   $ (5,212 )
Retail net sales
   $ 143,104     $ 131,014     $ 284,285     $ 252,037  
Retail operating margin
     -1.8 %     -0.9 %     -1.4 %     -2.2 %
Retail operating margin (excluding special items*)
     -0.3 %     -0.9 %     -0.7 %     -2.1 %
                                 
* Special items consist of restructuring, impairment, transition charges and certain other items.
          
Related tax effects are calculated using a normalized income tax rate.
  
 
 
Page 6 of 7
 
 
Ethan Allen Interiors Inc.
  
GAAP Reconciliation
  
Three and Six Months Ended December 31, 2011 and 2010
  
Unaudited
  
(in thousands, except per share amounts)
  
   
   
Three Months Ended
    
Six Months Ended
  
   
December 31,
    
December 31,
  
   
2011
    
2010
    
2011
    
2010
  
EBITDA
                        
Net income
   $ 8,077     $ 14,744     $ 14,847     $ 18,557  
Add:  interest expense, net
     2,124       2,605       4,382       5,280  
Less: income tax expense (benefit)
     3,732       (6,003 )     8,309       (4,247 )
Add:  depreciation and amortization
     4,593       5,322       9,582       10,929  
EBITDA
   $ 18,526     $ 16,668     $ 37,120     $ 30,519  
Net sales
   $ 183,275     $ 173,345     $ 368,196     $ 338,186  
EBITDA as % of net sales
     10.1 %     9.6 %     10.1 %     9.0 %
                                 
EBITDA
   $ 18,526     $ 16,668     $ 37,120     $ 30,519  
Add: special items*
     1,690       59       1,650       (537 )
Adjusted EBITDA
   $ 20,216     $ 16,727     $ 38,770     $ 29,982  
Net sales
   $ 183,275     $ 173,345     $ 368,196     $ 338,186  
Adjusted EBITDA as % of net sales
     11.0 %     9.6 %     10.5 %     8.9 %
                                 
* Special items consist of restructuring, impairment, transition charges and certain other items.
  
Related tax effects are calculated using a normalized income tax rate.
  
 
 
 
 
Page 7 of 7