UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

[   ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

 
      Commission File Number:  1-11692
 

Ethan Allen Interiors Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
06-1275288
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

Ethan Allen Drive, Danbury, Connecticut
06811
(Address of principal executive offices)
(Zip Code)

(203) 743-8000
 (Registrant's telephone number, including area code)

N/A 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes  [   ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).  [X] Yes [   ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act

Large accelerated filer              [   ]
Accelerated filer                                  [X]
Non-accelerated filer                [   ]
Smaller reporting company                [   ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  [   ] Yes  [X] No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

At April 24, 2012, there were 28,863,319 shares of Class A Common Stock,
par value $.01, outstanding.

 
 
 
TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
 
   
March 31, 2012
    
June 30, 2011
  
   
(Unaudited)
        
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 73,130     $ 78,519  
Marketable securities (note 5)
     11,259       12,909  
Accounts receivable, less allowance for doubtful accounts of $1,261 at March 31, 2012 and $1,171 at June 30, 2011
     17,571       15,036  
Inventories (note 6)
     142,262       141,692  
Prepaid expenses and other current assets
     24,209       20,372  
Total current assets
     268,431       268,528  
                 
Property, plant and equipment, net
     297,211       294,853  
Goodwill and other intangible assets
     45,128       45,128  
Restricted cash and investments (note 4)
     15,410       16,391  
Other assets
     7,251       3,425  
Total assets
   $ 633,431     $ 628,325  
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current liabilities:
                
Current maturities of long-term debt (note 9)
   $ 192     $ 19  
Customer deposits
     61,512       62,649  
Accounts payable
     26,655       26,958  
Accrued compensation and benefits
     26,458       28,359  
Accrued expenses and other current liabilities (note 7)
     29,117       36,631  
Total current liabilities
     143,934       154,616  
Long-term debt (note 9)
     154,058       165,013  
Other long-term liabilities
     17,719       18,975  
Deferred income taxes
     -       8,034  
Total liabilities
     315,711       346,638  
Shareholders' equity:
                
Class A common stock, par value $0.01; 150,000,000 shares authorized; 48,486,704 shares issued at March 31, 2012 and 48,350,065 shares issued at June 30, 2011
     485       484  
Class B common stock, par value $0.01; 600,000 shares authorized; no shares issued and outstanding at  March 31, 2012 and June 30, 2011
     -       -  
Preferred stock, par value $0.01; 1,055,000 shares authorized; no shares issued and outstanding at March 31, 2012 and June 30, 2011
     -       -  
Additional paid-in-capital
     360,518       359,728  
                 
Less: Treasury stock (at cost), 19,623,385 shares at March 31, 2012 and 19,571,092 shares at June 30, 2011
     (583,538 )     (582,691 )
Retained earnings
     538,224       501,908  
Accumulated other comprehensive income (note 13)
     1,825       2,258  
Total Ethan Allen Interiors Inc. shareholders' equity
     317,514       281,687  
Noncontrolling interests (note 1)
     206       -  
Total shareholders equity
     317,720       281,687  
Total liabilities and shareholders' equity
   $ 633,431     $ 628,325  
 
See accompanying notes to consolidated financial statements.
                
 
2
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)

   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2012
    
2011
    
2012
    
2011
  
                         
Net sales
   $ 175,861     $ 162,822     $ 544,057     $ 501,008  
Cost of sales
     81,586       79,753       253,678       245,697  
Gross profit
     94,275       83,069       290,379       255,311  
                                 
Operating expenses:
                                
Selling
     44,281       39,147       130,147       118,542  
General and administrative
     42,191       39,056       124,864       115,758  
Restructuring and impairment charge, net (note 7)
     16       109       5       393  
Total operating expenses
     86,488       78,312       255,016       234,693  
                                 
Operating income
     7,787       4,757       35,363       20,618  
                                 
Interest and other miscellaneous income, net
     157       1,128       362       5,453  
                                 
Interest and other related financing costs (note 9)
     2,189       2,773       6,814       8,649  
                                 
Income before income taxes
     5,755       3,112       28,911       17,422  
                                 
Income tax benefit (note 3)
     (21,793 )     (406 )     (13,484 )     (4,653 )
                                 
Net income
   $ 27,548     $ 3,518     $ 42,395     $ 22,075  
                                 
Per share data (note 12):
                                
Basic earnings per common share:
                                
Net income  per basic share
   $ 0.95     $ 0.12     $ 1.47     $ 0.77  
Basic weighted average common shares
     28,857       28,751       28,813       28,753  
Diluted earnings per common share:
                                
Net income per diluted share
   $ 0.94     $ 0.12     $ 1.46     $ 0.76  
Diluted weighted average common shares
     29,236       28,987       29,085       28,953  
 
See accompanying notes to consolidated financial statements.
      

 
3
 
ETHAN ALLEN INTERIORS INC.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
 
Nine months ended
  
 
March 31,
  
  2012    
2011
  
Operating activities:
            
Net income
   $ 42,395     $ 22,075  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     14,092       16,120  
Compensation expense related to share-based awards
     1,218       669  
Provision (benefit) for deferred income taxes
     (20,501 )     15  
Loss on disposal of property, plant and equipment
     1,645       310  
Other
     193       (268 )
                 
Change in assets and liabilities, net of the effects from acquired and divested businesses:
                
Accounts receivable
     (3,108 )     (3,875 )
Inventories
     946       3,462  
Prepaid and other current assets
     (2,497 )     4,854  
Other assets
     150       473  
Customer deposits
     (1,622 )     (90 )
Accounts payable
     (303 )     1,418  
Accrued expenses
     (3,519 )     (5,288 )
Other liabilities
     (1,256 )     711  
Net cash provided by operating activities
     27,833       40,586  
                 
Investing activities:
                
Proceeds from the disposal of property, plant & equipment
     1,792       145  
Change in restricted cash and investments
     981       953  
Capital expenditures
     (19,836 )     (5,731 )
Acquistions
     (520 )     (611 )
Purchases of marketable securities
     (3,290 )     (8,214 )
Sales of marketable securities
     4,675       6,069  
Other
     773       (456 )
Net cash used in investing activities
     (15,425 )     (7,845 )
                 
Financing activities:
                
Payments on long-term debt and capital lease obligations
     (12,145 )     (26,070 )
Proceeds from issuance of common stock
     225       29  
Proceeds from non controlling interest
     275       -  
Payments of deferred financing costs
     -       (125 )
Payment of cash dividends
     (6,046 )     (4,313 )
Purchases and other retirements of company stock
     (847 )     (5,377 )
Net cash used in financing activities
     (18,538 )     (35,856 )
Effect of exchange rate changes on cash
     741       75  
Net decrease in cash & cash equivalents
     (5,389 )     (3,040 )
Cash & cash equivalents at beginning of period
     78,519       73,852  
Cash & cash equivalents at end of period
   $ 73,130     $ 70,812  
 
See accompanying notes to consolidated financial statements.
          
 
 
4
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
Nine Months Ended March 31, 2012
(Unaudited)
(In thousands, except share data)
 
                     
Accumulated
                    
         
Additional
          
Other
          
Non-
        
   
Common
    
Paid-in
    
Treasury
    
Comprehensive
    
Retained
    
Controlling
        
   
Stock
    
Capital
    
Stock
    
Income
    
Earnings
    
Interests
    
Total
  
Balance at June 30, 2011
   $ 484     $ 359,728     $ (582,691 )   $ 2,258     $ 501,908     $ -     $ 281,687  
                                                         
Issuance of common shares upon the exercise of share-based awards
     1       224       -       -       -       -       225  
                                                         
Compensation expense associated with share-based awards (note 11)
     -       1,218       -       -       -       -       1,218  
                                                         
Tax benefit associated with exercise of share based awards
     -       (652 )     -       -       -       -       (652 )
                                                         
Purchase/retirement of 52,293 shares of company stock
     -       -       (847 )     -       -       -       (847 )
                                                         
Dividends declared on common stock
     -       -       -       -       (6,079 )             (6,079 )
                                                         
Increase from business combination
                                             275       275  
                                                         
Other comprehensive income (note 13):
                                                        
Currency translation adjustments
     -       -       -       (467 )     -       -       (467 )
Unrealized gain (loss) on investments
     -       -       -       (6 )     -       -       (6 )
Loss on derivatives, net of tax
     -       -       -       40       -       -       40  
Net income
     -       -       -       -       42,395       (69 )     42,326  
Total comprehensive income
                                                     41,893  
Balance at March 31, 2012
   $ 485     $ 360,518     $ (583,538 )   $ 1,825     $ 538,224     $ 206     $ 317,720  
 
See accompanying notes to consolidated financial statements.
              
 
 
5
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
(1)     Basis of Presentation

Ethan Allen Interiors Inc. ("Interiors") is a Delaware corporation incorporated on May 25, 1989. The consolidated financial statements include the accounts of Interiors, its wholly owned subsidiary Ethan Allen Global, Inc. ("Global"), and Global’s subsidiaries (collectively "We", "Us", "Our", "Ethan Allen", or the "Company"). All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All of Global’s capital stock is owned by Interiors, which has no assets or operating results other than those associated with its investment in Global.

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making those estimates, actual results could differ from those estimates. Areas in which significant estimates have been made include, but are not limited to, revenue recognition, the allowance for doubtful accounts receivable, inventory obsolescence, tax valuation allowances, useful lives for property, plant and equipment and intangible assets, goodwill and indefinite-lived intangible asset impairment analyses, the evaluation of uncertain tax positions and the fair value of assets acquired and liabilities assumed in business combinations.

In October 2011 the Company and one of its independent retailers formed a new business entity which began operating a new Ethan Allen design center in Florida. Our consolidated financial statements include the accounts of this entity because we are a majority shareholder and have the power to direct the activities that most significantly impact the entity’s performance. Noncontrolling interest amounts in the net loss of this entity of $40 thousand and $69 thousand, respectively net of tax, for the three and nine months ended March 31, 2012, are included in the Consolidated Statement of Operations within interest and other miscellaneous income, net. Additionally, changes to noncontrolling investment interests of $0.2 million are presented in the equity section of the Consolidated Balance Sheets at March 31, 2012.

 (2)    Interim Financial Presentation

In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for fair presentation, have been included in the consolidated financial statements. The results of operations for the three and nine months ended March 31, 2012 are not necessarily indicative of results that may be expected for the entire fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended June 30, 2011.

(3)    Income Taxes

The Company reviews its expected annual effective income tax rates and makes changes on a quarterly basis as necessary based on certain factors such as changes in forecasted annual operating income; changes to actual or forecasted permanent book to tax differences; impacts from tax law changes; or change in judgment as to the realizability of deferred tax assets. The Company identifies items which are not normal and are non-recurring in nature and treats these as discrete events. The tax effect of discrete items is recorded in the quarter in which the discrete events occur. Due to the volatility of these factors, the Company's consolidated effective income tax rate can change significantly on a quarterly basis.

The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries files income tax returns in the U.S., various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by the taxing authorities in such major jurisdictions as the U.S., Canada, and Mexico. As of March 31, 2012, the Company and certain of its subsidiaries are currently under Federal audit in the U.S. for the year 2010, state and local audits in the U.S. for the years 2006  through 2010 and Canada for years 2008 through 2010. It is reasonable to expect that various issues relating to uncertain tax benefits will be resolved within the next twelve months as exams are completed or as statutes expire and will impact the effective tax rate.

 
6
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
The Company established a full valuation allowance as of June 30, 2010. At that time, due to the preponderance of negative evidence, management’s assessment was that realization of tax assets was not reasonably assured. During the quarter ended March 31, 2012, we changed our assessment and determined it is now more likely than not that we will be able to realize the benefits of our deferred federal, state and foreign deferred tax assets. As a result, we released all of our United States federal and Canadian valuation allowances against net deferred tax assets. We have retained a valuation allowance against various state and local deferred tax assets in our retail segment.

The Company’s consolidated effective tax rate was a negative 378.7% and a negative 46.6% for the three and nine months ended March 31, 2012 respectively, and negative 13.0% and negative 26.7% for the three and nine months ended March 31, 2011 respectively. The current quarter effective tax rate includes the benefit from the reversal of the valuation allowance, the recognition of certain previously unrecognized tax benefits, partially offset by the tax expense on the current quarter’s net income, interest expense on uncertain tax positions, and the impact of maintaining valuation allowances on deferred tax assets in the retail segment.

(4)    Restricted Cash and Investments

At March 31, 2012 and June 30, 2011, we held $15.4 million and $16.4 million respectively, of restricted cash and investments in lieu of providing letters of credit for the benefit of the provider of our workmen’s compensation and other insurance and for the benefit of the issuer of our private label credit card. These funds can be invested in high quality money market mutual funds, U.S. Treasuries and U.S. Government agency fixed income instruments, and cannot be withdrawn without the prior written consent of the secured party. These assets are carried at cost, which approximates market value and are classified as long-term assets because they are not expected to be used within one year to fund operations. See also Note 5, “Marketable Securities” and Note 14, “Fair Value Measurements".

(5)    Marketable Securities

At March 31, 2012 and June 30, 2011, the Company held marketable securities of $11.3 million and $12.9 million respectively, classified as current assets, consisting of U.S. municipal and corporate bonds with maturities ranging from less than one year to less than two years, which were rated A/A2 or better by the rating services Standard & Poors (“S&P”) and Moodys Investors Service (“Moodys”) respectively. There have been no material realized or unrealized gains or losses for the nine months ended March 31, 2012 and March 31, 2011. We do not believe there are any impairments considered to be other than temporary at March 31, 2012. Also see Note 4, "Restricted Cash and Investments" and Note 14, “Fair Value Measurements".
 
 
7
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
(6)    Inventories

Inventories at March 31, 2012 and June 30, 2011 are summarized as follows (in thousands):
 
   
March 31,
    
June 30,
  
   
2012
    
2011
  
             
Finished goods
   $ 109,256     $ 108,438  
Work in process
     8,882       8,868  
Raw materials
     24,124       24,386  
    $ 142,262     $ 141,692  
 
Inventories are presented net of a related valuation allowance of $2.8 million at March 31, 2012 and $1.7 million at June 30, 2011.

(7)    Restructuring and Impairment Charges

In recent years, we have announced and executed plans to consolidate our operations as part of an overall strategy to maximize production efficiencies and maintain our competitive advantage. Plans announced in fiscal 2008 and 2009 had no material impact on fiscal 2012 financial statements and the balance of reserves for these actions, for non-cancellable lease obligations with expirations ranging from less than two to 22 years, totaled $1.5 million and $2.5 million at March 31, 2012 and June 30, 2011 respectively.

(8)    Business Acquisitions and Joint Ventures

From time to time the Company acquires design centers from its independent retailers in arms length transactions. There were no material acquisitions completed during the nine months ended March 31, 2012 or 2011 respectively. In October 2011, the Company and one if its independent retailers formed a joint venture which began operating a new Ethan Allen design center in Florida during the quarter ended December 31, 2011. The Company contributed $0.8 million for a 75% interest in the joint venture. The independent retailer holds a non-controlling interest.

 (9)   Borrowings

Total debt obligations at March 31, 2012 and June 30, 2011 consist of the following (in thousands):

   
March 31,
    
June 30,
  
   
2012
    
2011
  
5.375% Senior Notes due 2015
   $ 152,955     $ 164,821  
Capital leases
     1,295       -  
Other debt
     -       211  
Total debt
     154,250       165,032  
Less current maturities
     192       19  
Total long-term debt
   $ 154,058     $ 165,013  
 
In September 2005, we issued $200.0 million in ten-year senior unsecured notes due 2015 (the "Senior Notes"). The Senior Notes were issued by Global, bearing an annual coupon rate of 5.375% with interest payable semi-annually in arrears on April 1 and October 1. We have used the net proceeds of $198.4 million to improve our retail network, invest in our manufacturing and logistics operations, and for other general corporate purposes. During fiscal 2011, the Company reduced its outstanding debt by $38.2 million. Outstanding debt was further reduced by an aggregate of $10.8 million during the current fiscal year.
 
 
8
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
We also maintain a $50 million senior secured, asset-based revolving credit facility (the “Facility”). We have not had any revolving loans under the Facility at any time. At March 31, 2012 and June 30, 2011, there were $0.6 million and $0.7 million of standby and trade letters of credit, respectively, outstanding under the Facility. The Facility is subject to borrowing base availability and includes a right for the Company to increase the total facility to $100 million subject to certain conditions. The Facility is secured by all property owned, leased or operated by the Company in the United States excluding any real property owned by the Company and contains customary covenants which may limit the Company’s ability to incur debt, engage in mergers and consolidations, make restricted payments (including dividends), sell certain assets, and make investments. Remaining availability under the facility totaled $49.4 million at March 31, 2012 and $49.3 million at June 30, 2011 and as a result, covenants and other restricted payment limitations did not apply. The Facility expires March 25, 2016, or June 26, 2015 if the Senior Notes have not been refinanced prior to that date.

During the quarter ended March 31, 2012, the Company entered into a six year lease to receive financing, maintenance and recordkeeping services for our truck fleet. The lease is treated as a capital lease, and the present value of the minimum future lease payments of the financed portion is $1.3 million, with $0.2 million due within the next year. The lease term expires in February 2018.

At March 31, 2012 and June 30, 2011, we were in compliance with all covenants of the Senior Notes and the Facility.

(10)  Litigation

Environmental Matters
We and our subsidiaries are subject to various environmental laws and regulations. Under these laws, we and/or our subsidiaries are, or may be, required to remove or mitigate the effects on the environment of the disposal or release of certain hazardous materials. As of March 31, 2012 and June 30, 2011, we believe that the Company was adequately reserved. We believe our currently anticipated capital expenditures for environmental control facility matters are not material.

We are subject to other federal, state and local environmental protection laws and regulations and are involved, from time to time, in investigations and proceedings regarding environmental matters. Such investigations and proceedings typically concern air emissions, water discharges, and/or management of solid and hazardous wastes. We believe that our facilities are in material compliance with all such applicable laws and regulations.

Regulations issued under the Clean Air Act Amendments of 1990 required the industry to reformulate certain furniture finishes or institute process changes to reduce emissions of volatile organic compounds. Compliance with many of these requirements has been facilitated through the introduction of high solids coating technology and alternative formulations. In addition, we have instituted a variety of technical and procedural controls, including reformulation of finishing materials to reduce toxicity, implementation of high velocity low pressure spray systems, development of storm water protection plans and controls, and further development of related inspection/audit teams, all of which have served to reduce emissions per unit of production. We remain committed to implementing new waste minimization programs and/or enhancing existing programs with the objective of (i) reducing the total volume of waste, (ii) limiting the liability associated with waste disposal, and (iii) continuously improving environmental and job safety programs on the factory floor which serve to minimize emissions and safety risks for employees. We will continue to evaluate the most appropriate, cost effective, control technologies for finishing operations and design production methods to reduce the use of hazardous materials in the manufacturing process.
 
 
9
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
(11)   Share-Based Compensation

Effective October 1, 2011, the Company and M. Farooq Kathwari, our President and Chief Executive Officer, entered into a new employment agreement (the "Agreement"). Pursuant to the terms of the Agreement, Mr. Kathwari was awarded on October 1, 2011, (i) options to purchase 300,000 shares of our common stock at an exercise price of $13.61 (the closing price of a share of our common stock on September 30, 2011), and (ii) 105,000 shares of restricted stock, with both awards vesting ratably over a 5-year period on each June 30, unless earlier vested, in certain circumstances, in accordance with the terms of the Agreement. During the quarter ended September 30, 2011, the Company awarded options to purchase 30,000 shares of our common stock to certain executives other than Mr. Kathwari, at the closing stock price on the respective grant dates. These options vest in four equal annual installments on the grant date anniversary. On July 26, 2011, as a result of the Company’s performance, the Compensation Committee of the Company’s board of directors awarded Mr. Kathwari 30,000 service-based restricted shares, which vest in three equal annual installments on the grant date anniversary.

(12)   Earnings Per Share

Basic and diluted earnings per share are calculated using the following weighted average share data (in thousands):
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2012
    
2011
    
2012
    
2011
  
Weighted average common shares outstanding for basic calculation
     28,857       28,751       28,813       28,753  
Effect of dilutive stock options and other share-based awards
     379       236       272       200  
Weighted average common shares outstanding adjusted for dilution calculation
     29,236       28,987       29,085       28,953  
 
As of March 31, 2012 and 2011, stock options to purchase 1,540,000 and 1,711,771 common shares, respectively, were excluded from the respective diluted earnings per share calculation because their impact was anti-dilutive.

(13)   Comprehensive Income

Our accumulated other comprehensive income, which is comprised of losses on certain derivative instruments, accumulated foreign currency translation adjustments, and unrealized gain and loss on investments totaled $1.8 million at March 31, 2012 and $2.3 million at June 30, 2011. Foreign currency translation adjustments are the result of changes in foreign currency exchange rates related to our operations in Canada and Mexico, and, during the quarters ended December 2011 and March 2012, a plant under development in Honduras. Foreign currency translation adjustments exclude income tax expense (benefit) given that the earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time.

(14)   Fair Value Measurements
 
We determine fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on assumptions that market participants use in pricing the asset or liability, and not on assumptions specific to the Company. In addition, the fair value of liabilities includes consideration of non-performance risk including our own credit risk. Each fair value measurement is reported in one of three levels, determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
 
 
10
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
 
Level 1
Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
 
 
Level 2
Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
Level 3
Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
 
The following section describes the valuation methodologies we use to measure different financial assets and liabilities at fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and June 30, 2011 (in thousands):
 
March 31, 2012
  
   
Level 1
    
Level 2
    
Level 3
    
Balance
  
Cash equivalents
   $ 88,540       -       -     $ 88,540  
Available-for-sale securities
     -       11,259       -       11,259  
Total
   $ 88,540     $ 11,259     $ -     $ 99,799  
 
June 30, 2011
  
   
Level 1
    
Level 2
    
Level 3
    
Balance
  
Cash equivalents
   $ 94,910       -       -     $ 94,910  
Available-for-sale securities
     -       12,909       -       12,909  
Total
   $ 94,910     $ 12,909     $ -     $ 107,819  
 
Cash equivalents consist of money market accounts and mutual funds in U.S. government and agency fixed income securities. We use quoted prices in active markets for identical assets or liabilities to determine fair value. At March 31, 2012 and June 30, 2011, $15.4 million and $16.4 million, respectively, of the cash equivalents were restricted, and classified as a long-term asset.
 
At March 31, 2012, available-for-sale securities consist of $10.1 million in U.S. municipal bonds and $1.2 million of corporate bonds, and at June 30, 2011, available-for-sale securities consisted of $12.9 million in U.S. municipal bonds, all with maturities of less than two years. The bonds are rated A/A2 or better by S&P/Moodys respectively. As of March 31, 2012 and March 31, 2011, there were no material gross unrealized gains or losses on available-for-sale securities.
 
As of March 31, 2012 and June 30, 2011, the contractual maturities of our available-for-sale investments were as follows:
 
 
11
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
March 31, 2012
  
   
Cost
    
Estimated Fair Value
  
Due in one year or less
   $ 9,105     $ 9,213  
Due after one year through five years
   $ 2,023     $ 2,046  
                 
June 30, 2011
  
   
Cost
    
Estimated Fair Value
  
Due in one year or less
   $ 7,311     $ 7,393  
Due after one year through five years
   $ 5,428     $ 5,517  
 
No investments have been in a continuous loss position for more than one year, and no other-than-temporary impairments were recognized. Also see Note 4, "Restricted Cash and Investments", and Note 5, "Marketable Securities".

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
 
We measure certain assets at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. During the nine month periods ended March 31, 2012 and  2011, we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis.

(15)   Segment Information

Our operations are classified into two operating segments: wholesale and retail. These operating segments represent strategic business areas which, although they operate separately and provide their own distinctive services, enable us to more effectively offer our complete line of home furnishings and accessories.

The wholesale segment is principally involved in the development of the Ethan Allen brand, which encompasses the design, manufacture, domestic and offshore sourcing, sale and distribution of a full range of home furnishings and accessories to a network of independently operated and Ethan Allen operated design centers as well as related marketing and brand awareness efforts. Wholesale revenue is generated upon the wholesale sale and shipment of our product to all retail design centers, including those operated by Ethan Allen. Wholesale profitability includes (i) the wholesale gross margin, which represents the difference between the wholesale sales price and the cost associated with manufacturing and/or sourcing the related product, and (ii) other operating costs associated with wholesale segment activities.

The retail segment sells home furnishings and accessories to consumers through a network of Company operated design centers. Retail revenue is generated upon the retail sale and delivery of our product to our customers. Retail profitability includes (i) the retail gross margin, which represents the difference between the retail sales price and the cost of goods purchased from the wholesale segment, and (ii) other operating costs associated with retail segment activities.

Inter-segment eliminations result, primarily, from the wholesale sale of inventory to the retail segment, including the related profit margin.

We evaluate performance of the respective segments based upon revenues and operating income. While the manner in which our home furnishings and accessories are marketed and sold is consistent, the nature of the underlying recorded sales (i.e. wholesale versus retail) and the specific services that each operating segment provides (i.e. wholesale manufacturing, sourcing, and distribution versus retail selling) are different. Within the wholesale segment, we maintain revenue information according to each respective product line (i.e. case goods, upholstery, or home accessories and other). The allocation of retail sales by product line is reasonably similar to that of the wholesale segment. A breakdown of wholesale sales by these product lines for the three and nine months ended March 31, 2012 and 2011 is provided as follows:
 
 
12
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2012
    
2011
    
2012
    
2011
  
Case Goods
     39 %     43 %     39 %     40 %
Upholstered Products
     43 %     41 %     44 %     45 %
Home Accessories and Other
     18 %     16 %     17 %     15 %
      100 %     100 %     100 %     100 %

Segment information for the three and nine months ended March 31, 2012 and 2011 is provided below (in thousands):

   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2012
    
2011
    
2012
    
2011
  
Net sales:
                        
Wholesale segment
   $ 121,044     $ 104,119     $ 344,069     $ 312,467  
Retail segment
     131,402       117,029       415,687       369,066  
Elimination of inter-company sales
     (76,585 )     (58,326 )     (215,699 )     (180,525 )
Consolidated Total
   $ 175,861     $ 162,822     $ 544,057     $ 501,008  
                                 
Operating income (loss):
                                
Wholesale segment
   $ 18,191     $ 13,253     $ 49,584     $ 35,076  
Retail segment (1)(2)
     (6,549 )     (7,271 )     (10,578 )     (12,767 )
Adjustment of inter-company profit (3)
     (3,855 )     (1,225 )     (3,643 )     (1,691 )
Consolidated Total
   $ 7,787     $ 4,757     $ 35,363     $ 20,618  
                                 
Depreciation & Amortization:
                                
Wholesale segment
   $ 1,733     $ 2,350     $ 5,717     $ 7,313  
Retail segment
     2,777       2,841       8,375       8,807  
Consolidated Total
   $ 4,510     $ 5,191     $ 14,092     $ 16,120  
                                 
Capital expenditures:
                                
Wholesale segment
   $ 1,366     $ 1,450     $ 9,769     $ 4,136  
Retail segment
     7,078       309       10,067       1,595  
Acquisitions
     520       426       520       611  
Consolidated Total
   $ 8,964     $ 2,185     $ 20,356     $ 6,342  
 
 
13
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
   
March 31,
    
June 30,
  
   
2012
    
2011
  
Total Assets:
            
Wholesale segment
   $ 298,460     $ 309,081  
Retail segment
     366,418       347,044  
Inventory profit elimination (4)
     (31,447 )     (27,800 )
Consolidated Total
   $ 633,431     $ 628,325  
 
(1)
Operating income (loss) for the retail segment for the three months ended March 31, 2011 includes pre-tax restructuring and impairment charges of $0.1 million.
(2)
Operating income (loss) for the retail segment for the nine months ended March 31, 2011 includes pre-tax restructuring and impairment charges of  $0.4 million.
(3)
Represents the change in wholesale profit contained in the retail segment inventory at the end of the period.
(4)
Represents the wholesale profit contained in the retail segment inventory that has not yet been realized. These profits are realized when the related inventory is sold.
 
At March 31, 2012, there were 86 independent retail design centers located outside the United States compared with 64 at March 31, 2011, with the increase occurring in China. Approximately 6.5% of our net sales during the current nine months were derived from sales to international retail design centers compared with 7.2% in the prior year.

(16)   Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-05, “Presentation of Comprehensive Income”. This ASU increases the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not change the items that must be reported in other comprehensive income. This ASU is effective for annual and interim periods beginning on or after December 15, 2011 (July 1, 2012 for the Company), and must be applied retrospectively.

(17)   Financial Information About the Parent, the Issuer and the Guarantors
 
On September 27, 2005, Global (the "Issuer") issued $200 million aggregate principal amount of Senior Notes which have been guaranteed on a senior basis by Interiors (the "Parent"), and other wholly owned domestic subsidiaries of the Issuer and the Parent, including Ethan Allen Retail, Inc., Ethan Allen Operations, Inc., Ethan Allen Realty, LLC, Lake Avenue Associates, Inc. and Manor House, Inc. The subsidiary guarantors (other than the Parent) are collectively called the "Guarantors". The guarantees of the Guarantors are unsecured. All of the guarantees are full, unconditional and joint and several and the Issuer and each of the Guarantors are 100% owned by the Parent. Our other subsidiaries which are not guarantors are called the "Non-Guarantors".

The following tables set forth the condensed consolidating balance sheets as of March 31, 2012 and June 30, 2011, the condensed consolidating statements of operations for the three and nine months ended March 31, 2012 and 2011, and the condensed consolidating statements of cash flows for the nine months ended March 31, 2012 and 2011 of the Parent, the Issuer, the Guarantors and the Non-Guarantors.
 
 
14
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING BALANCE SHEET
(In thousands)
March 31, 2012

   
Parent
    
Issuer
    
Guarantors
    
Non-Guarantors
    
Eliminations
    
Consolidated
  
Assets
                                    
Current assets:
                                    
Cash and cash equivalents
   $ -     $ 61,042     $ 9,381     $ 2,707     $ -     $ 73,130  
Marketable securities
     -       11,259       -       -       -       11,259  
Accounts receivable, net
     -       17,019       552       -       -       17,571  
Inventories
     -       -       168,992       4,717       (31,447 )     142,262  
Prepaid expenses and other current assets
     -       6,948       14,552       2,709       -       24,209  
Intercompany receivables
     -       820,578       267,656       (9,029 )     (1,079,205 )     -  
Total current assets
     -       916,846       461,133       1,104       (1,110,652 )     268,431  
Property, plant and equipment, net
     -       8,501       274,047       14,663       -       297,211  
Goodwill and other intangible assets
     -       37,905       7,223       -       -       45,128  
Restricted cash and investments
     -       15,410       -       -       -       15,410  
Other assets
     -       6,445       806       -       -       7,251  
Investment in affiliated companies
     645,567       (106,422 )     -       -       (539,145 )     -  
Total assets
   $ 645,567     $ 878,685     $ 743,209     $ 15,767     $ (1,649,797 )   $ 633,431  
Liabilities and Shareholders’ Equity
                                                
Current liabilities:
                                                
Current maturities of long-term debt
   $ -     $ -     $ 192     $ -     $ -     $ 192  
Customer deposits
     -       -       59,040       2,472       -       61,512  
Accounts payable
     -       8,949       17,382       324       -       26,655  
Accrued expenses and other current liabilities
     2,163       37,238       15,156       1,018       -       55,575  
Intercompany payables
     325,684       327       743,874       9,320       (1,079,205 )     -  
Total current liabilities
     327,847       46,514       835,644       13,134       (1,079,205 )     143,934  
Long-term debt
     -       152,955       1,103       -       -       154,058  
Other long-term liabilities
     -       3,789       13,843       87       -       17,719  
Total liabilities
     327,847       203,258       850,590       13,221       (1,079,205 )     315,711  
Shareholders’ equity
     317,720       675,427       (107,381 )     2,546       (570,592 )     317,720  
Total liabilities and shareholders’ equity
   $ 645,567     $ 878,685     $ 743,209     $ 15,767     $ (1,649,797 )   $ 633,431  
 
 
15
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING BALANCE SHEET
(In thousands)
June 30, 2011
 
   
Parent
    
Issuer
    
Guarantors
    
Non-Guarantors
    
Eliminations
    
Consolidated
  
Assets
                                    
Current assets:
                                    
Cash and cash equivalents
   $ -     $ 69,763     $ 7,716     $ 1,040     $ -     $ 78,519  
Marketable securities
     -       12,909       -       -       -       12,909  
Accounts receivable, net
     -       13,609       174       1,253       -       15,036  
Inventories
     -       -       164,938       4,554       (27,800 )     141,692  
Prepaid expenses and other current assets
     -       4,598       14,866       908       -       20,372  
Intercompany receivables
     -       784,285       249,461       (8,423 )     (1,025,323 )     -  
Total current assets
     -       885,164       437,155       (668 )     (1,053,123 )     268,528  
Property, plant and equipment, net
     -       8,023       276,057       10,773       -       294,853  
Goodwill and other intangible assets
     -       37,905       7,223       -       -       45,128  
Restricted cash and investments
     -       16,391       -       -       -       16,391  
Other assets
     -       2,700       725       -       -       3,425  
Investment in affiliated companies
     602,699       (93,132 )     -       -       (509,567 )     -  
Total assets
   $ 602,699     $ 857,051     $ 721,160     $ 10,105     $ (1,562,690 )   $ 628,325  
Liabilities and Shareholders’ Equity
                                                
Current liabilities:
                                                
Current maturities of long-term debt
   $ -     $ -     $ 19     $ -     $ -     $ 19  
Customer deposits
     -       -       59,633       3,016       -       62,649  
Accounts payable
     -       7,333       19,233       392       -       26,958  
Accrued expenses and other current liabilities
     2,130       43,212       18,746       902       -       64,990  
Intercompany payables
     318,882       597       702,748       3,096       (1,025,323 )     -  
Total current liabilities
     321,012       51,142       800,379       7,406       (1,025,323 )     154,616  
Long-term debt
     -       164,832       181       -       -       165,013  
Other long-term liabilities
     -       4,392       14,474       109       -       18,975  
Deferred income taxes
     -       8,034       -       -       -       8,034  
Total liabilities
     321,012       228,400       815,034       7,515       (1,025,323 )     346,638  
Shareholders’ equity
     281,687       628,651       (93,874 )     2,590       (537,367 )     281,687  
Total liabilities and shareholders’ equity
   $ 602,699     $ 857,051     $ 721,160     $ 10,105     $ (1,562,690 )   $ 628,325  
 
 
16
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In thousands)
Three months ended March 31, 2012
 
   
Parent
    
Issuer
    
Guarantors
  
Non-Guarantors
  
Eliminations
  
Consolidated
  
Net sales
   $ -     $ 121,425     $ 191,275     $ 7,971     $ (144,810 )   $ 175,861  
Cost of sales
     -       89,850       127,738       4,704       (140,706 )     81,586  
Gross profit
     -       31,575       63,537       3,267       (4,104 )     94,275  
                                                 
Selling, general and administrative expenses
     45       11,969       70,748       3,710       -       86,472  
Restructuring and impairment charge, (credit) net
     -       -       16       -       -       16  
Total operating expenses
     45       11,969       70,764       3,710       -       86,488  
Operating income (loss)
     (45 )     19,606       (7,227 )     (443 )     (4,104 )     7,787  
                                                 
Interest and other miscellaneous income, net
     27,593       (6,598 )     66       (36 )     (20,868 )     157  
Interest and other related financing costs
     -       2,180       9       -       -       2,189  
Income before income tax expense
     27,548       10,828       (7,170 )     (479 )     (24,972 )     5,755  
Income tax expense
     -       (20,869 )     (947 )     23       -       (21,793 )
                                                 
Net income/(loss)
   $ 27,548     $ 31,697     $ (6,223 )   $ (502 )   $ (24,972 )   $ 27,548  
 
Three months ended March 31, 2011
 
   
Parent
    
Issuer
    
Guarantors
  
Non-Guarantors
  
Eliminations
  
Consolidated
  
Net sales
   $ -     $ 104,481     $ 167,548     $ 6,692     $ (115,899 )   $ 162,822  
Cost of sales
     -       78,061       112,671       3,641       (114,620 )     79,753  
Gross profit
     -       26,420       54,877       3,051       (1,279 )     83,069  
                                                 
Selling, general and administrative expenses
     45       10,330       64,404       3,424       -       78,203  
Restructuring and impairment charge, (credit) net
     -       -       109       -       -       109  
Total operating expenses
     45       10,330       64,513       3,424       -       78,312  
Operating income (loss)
     (45 )     16,090       (9,636 )     (373 )     (1,279 )     4,757  
                                                 
Interest and other miscellaneous income, net
     3,563       (8,956 )     (1 )     (1 )     6,523       1,128  
Interest and other related financing costs
     -       2,698       75       -       -       2,773  
Income before income tax expense
     3,518       4,436       (9,712 )     (374 )     5,244       3,112  
Income tax expense
     -       (406 )     -       -       -       (406 )
                                                 
Net income/(loss)
   $ 3,518     $ 4,842     $ (9,712 )   $ (374 )   $ 5,244     $ 3,518  
 
 
17
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In thousands)
Nine months ended March 31, 2012
 
   
Parent
    
Issuer
    
Guarantors
  
Non-Guarantors
  
Eliminations
  
Consolidated
  
Net sales
   $ -     $ 343,988     $ 582,651     $ 25,399     $ (407,981 )   $ 544,057  
Cost of sales
     -       256,237       387,435       14,340       (404,334 )     253,678  
Gross profit
     -       87,751       195,216       11,059       (3,647 )     290,379  
                                                 
Selling, general and administrative expenses
     135       34,427       209,903       10,546       -       255,011  
Restructuring and impairment charge, (credit) net
     -       -       5       -       -       5  
Total operating expenses
     135       34,427       209,908       10,546       -       255,016  
Operating income (loss)
     (135 )     53,324       (14,692 )     513       (3,647 )     35,363  
                                                 
Interest and other miscellaneous income, net
     42,530       (13,108 )     211       (30 )     (29,241 )     362  
Interest and other related financing costs
     -       6,805       9       -       -       6,814  
Income before income tax expense
     42,395       33,411       (14,490 )     483       (32,888 )     28,911  
Income tax expense
     -       (12,766 )     (777 )     59       -       (13,484 )
                                                 
Net income/(loss)
   $ 42,395     $ 46,177     $ (13,713 )   $ 424     $ (32,888 )   $ 42,395  
 
Nine months ended March 31, 2011
 
   
Parent
    
Issuer
    
Guarantors
  
Non-Guarantors
  
Eliminations
  
Consolidated
  
Net sales
   $ -     $ 312,979     $ 525,023     $ 21,504     $ (358,498 )   $ 501,008  
Cost of sales
     -       237,882       352,821       11,551       (356,557 )     245,697  
Gross profit
     -       75,097       172,202       9,953       (1,941 )     255,311  
                                                 
Selling, general and administrative expenses
     135       32,381       192,283       9,501       -       234,300  
Restructuring and impairment charge, (credit) net
     -       -       393       -       -       393  
Total operating expenses
     135       32,381       192,676       9,501       -       234,693  
Operating income (loss)
     (135 )     42,716       (20,474 )     452       (1,941 )     20,618  
                                                 
Interest and other miscellaneous income, net
     22,210       (14,797 )     (30 )     4       (1,934 )     5,453  
Interest and other related financing costs
     -       8,421       228       -       -       8,649  
Income before income tax expense
     22,075       19,498       (20,732 )     456       (3,875 )     17,422  
Income tax expense
     -       (4,653 )     -       -       -       (4,653 )
                                                 
Net income/(loss)
   $ 22,075     $ 24,151     $ (20,732 )   $ 456     $ (3,875 )   $ 22,075  
 
 
18
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In thousands)
Nine months ended March 31, 2012
 
   
Parent
    
Issuer
    
Guarantors
    
Non-Guarantors
    
Eliminations
    
Consolidated
  
Net cash provided by (used in) operating activities
   $ 6,668     $ 2,161     $ 16,667     $ 2,337     $ -     $ 27,833  
Cash flows from investing activities:
                                                
Capital expenditures
     -       (1,592 )     (16,833 )     (1,411 )     -       (19,836 )
Acquisitions
     -       -       (520 )     -       -       (520 )
Proceeds from the disposal of property, plant and equipment
     -       -       1,792       -       -       1,792  
Change in restricted cash and investments
     -       981       -       -       -       981  
Purchase of marketable securities
     -       (3,290 )     -       -       -       (3,290 )
Proceeds from the sale of marketable securities
     -       4,675       -       -       -       4,675  
Other
     -       262       511       -       -       773  
Net cash provided by (used in) investing activities
     -       1,036       (15,050 )     (1,411 )     -       (15,425 )
                                                 
Cash flows from financing activities:
                                                
Payments on long-term debt
     -       (11,918 )     (227 )     -       -       (12,145 )
Purchases and other retirements of company stock
     (847 )     -       -       -       -       (847 )
Proceeds from issuance of common stock
     225       -       -       -       -       225  
Proceeds from noncontrolling interest
     -       -       275       -       -       275  
Dividends paid
     (6,046 )     -       -       -       -       (6,046 )
Net cash provided by (used in) financing activities
     (6,668 )     (11,918 )     48       -       -       (18,538 )
                                                 
Effect of exchange rate changes on cash
     -       -       -       741       -       741  
                                                 
Net decrease in cash and cash equivalents
     -       (8,721 )     1,665       1,667       -       (5,389 )
                                                 
Cash and cash equivalents – beginning of period
     -       69,763       7,716       1,040       -       78,519  
 
                                               
Cash and cash equivalents – end of period
   $ -     $ 61,042     $ 9,381     $ 2,707     $ -     $ 73,130  
 
 
19
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In thousands)
Nine months ended March 31, 2011
 
   
Parent
    
Issuer
    
Guarantors
    
Non-Guarantors
    
Eliminations
    
Consolidated
  
Net cash provided by operating activities
   $ 9,661     $ 25,531     $ 3,709     $ 1,685     $ -     $ 40,586  
                                                 
Cash flows from investing activities:
                                                
Capital expenditures
     -       (473 )     (3,585 )     (1,673 )     -       (5,731 )
Acquistions
     -