Ethan Allen Interiors Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 15 - Financial Information About the Parent, the Issuer and the Guarantors

Note 15 - Financial Information About the Parent, the Issuer and the Guarantors

9 Months Ended

Mar. 31, 2014

Disclosure Text Block Supplement [Abstract]

Condensed Financial Statements [Text Block]

(15)

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, 2014 and June 30, 2013, the condensed consolidating statements of operations for the three and nine months ended March 31, 2014 and 2013, and the condensed consolidating statements of cash flows for the nine months ended March 31, 2014 and 2013 of the Parent, the Issuer, the Guarantors and the Non-Guarantors.

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

March 31, 2014
	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	79,893		$	12,407		$	3,504		$	-		$	95,804
Marketable securities		-		20,138			-			-			-			20,138
Accounts receivable, net		-		15,743			255			5			-			16,003
Inventories		-		-			169,518			6,240			(30,703	)		145,055
Prepaid expenses and other current assets		-		5,199			13,758			1,957			-			20,914
Intercompany receivables		-		838,999			315,744			(3,453	)		(1,151,290	)		-
Total current assets		-		959,972			511,682			8,253			(1,181,993	)		297,914
Property, plant and equipment, net		-		8,845			260,872			17,080			-			286,797
Goodwill and other intangible assets		-		37,905			7,223			-			-			45,128
Restricted cash and investments		-		8,907			-			-			-			8,907
Other assets		-		3,893			1,483			778			-			6,154
Investment in affiliated companies		713,554		(113,256	)		-			-			(600,298	)		-
Total assets	$	713,554	$	906,266		$	781,260		$	26,111		$	(1,782,291	)	$	644,900
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	-	$	-		$	496		$	-		$	-		$	496
Customer deposits		-		-			61,582			3,618			-			65,200
Accounts payable		-		5,352			18,237			518			-			24,107
Accrued expenses and other current liabilities		3,039		32,199			14,400			1,415			-			51,053
Intercompany payables		357,641		(8,468	)		773,829			28,288			(1,151,290	)		-
Total current liabilities		360,680		29,083			868,544			33,839			(1,151,290	)		140,856
Long-term debt		-		129,230			1,283			-			-			130,513
Other long-term liabilities		-		4,181			16,032			444			-			20,657
Total liabilities		360,680		162,494			885,859			34,283			(1,151,290	)		292,026
Shareholders’ equity		352,874		743,772			(104,599	)		(8,172	)		(631,001	)		352,874
Total liabilities and shareholders’ equity	$	713,554	$	906,266		$	781,260		$	26,111		$	(1,782,291	)	$	644,900

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

June 30, 2013
	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	57,307		$	12,463		$	2,831		$	-		$	72,601
Marketable securities		-		15,529			-			-			-			15,529
Accounts receivable, net		-		12,061			212			4			-			12,277
Inventories		-		-			161,683			5,463			(29,890	)		137,256
Prepaid expenses and other current assets		-		9,882			11,275			1,750			-			22,907
Intercompany receivables		-		831,238			302,577			(3,726	)		(1,130,089	)		-
Total current assets		-		926,017			488,210			6,322			(1,159,979	)		260,570
Property, plant and equipment, net		-		9,432			265,698			16,542			-			291,672
Goodwill and other intangible assets		-		37,905			7,223			-			-			45,128
Restricted cash and investments		-		15,433			-			-			-			15,433
Other assets		-		2,188			1,488			806			-			4,482
Investment in affiliated companies		686,451		(111,647	)		-			-			(574,804	)		-
Total assets	$	686,451	$	879,328		$	762,619		$	23,670		$	(1,734,783	)	$	617,285
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	-	$	-		$	480		$	-		$	-		$	480
Customer deposits		-		-			56,030			3,068			-			59,098
Accounts payable		-		7,390			15,097			508			-			22,995
Accrued expenses and other current liabilities		2,720		29,710			16,683			1,253			-			50,366
Intercompany payables		349,374		(7,460	)		766,039			22,136			(1,130,089	)		-
Total current liabilities		352,094		29,640			854,329			26,965			(1,130,089	)		132,939
Long-term debt		-		129,152			1,657			-			-			130,809
Other long-term liabilities		-		4,492			14,355			333			-			19,180
Total liabilities		352,094		163,284			870,341			27,298			(1,130,089	)		282,928
Shareholders’ equity		334,357		716,044			(107,722	)		(3,628	)		(604,694	)		334,357
Total liabilities and shareholders’ equity	$	686,451	$	879,328		$	762,619		$	23,670		$	(1,734,783	)	$	617,285

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

Three months ended March 31, 2014

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	109,795		$	185,221		$	9,655		$	(131,610	)	$	173,061
Cost of sales		-			83,285			119,365			6,721			(129,440	)		79,931
Gross profit		-			26,510			65,856			2,934			(2,170	)		93,130
Selling, general and administrative expenses		45			12,939			65,866			4,728			-			83,578
Operating income (loss)		(45	)		13,571			(10	)		(1,794	)		(2,170	)		9,552
Interest and other income (expense)		5,303			(1,932	)		(30	)		31			(3,269	)		103
Interest and other related financing costs		-			1,850			20			-			-			1,870
Income (loss) before income taxes		5,258			9,789			(60	)		(1,763	)		(5,439	)		7,785
Income tax expense		-			2,316			130			81			-			2,527
Net income/(loss)	$	5,258		$	7,473		$	(190	)	$	(1,844	)	$	(5,439	)	$	5,258

Three months ended March 31, 2013

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	108,595		$	188,589		$	9,311		$	(138,351	)	$	168,144
Cost of sales		-			81,631			124,977			5,959			(136,208	)		76,359
Gross profit		-			26,964			63,612			3,352			(2,143	)		91,785
Selling, general and administrative expenses		45			12,817			65,310			4,953			-			83,125
Operating income (loss)		(45	)		14,147			(1,698	)		(1,601	)		(2,143	)		8,660
Interest and other income (expense)		4,419			(2,404	)		5			(131	)		(1,899	)		(10	)
Interest and other related financing costs		-			2,180			15			-			-			2,195
Income (loss) before income taxes		4,374			9,563			(1,708	)		(1,732	)		(4,042	)		6,455
Income tax expense		-			3,001			(943	)		23			-			2,081
Net income/(loss)	$	4,374		$	6,562		$	(765	)	$	(1,755	)	$	(4,042	)	$	4,374

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

Nine months ended March 31, 2014

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	332,623		$	587,149		$	30,596		$	(402,544	)	$	547,824
Cost of sales		-			252,701			378,522			20,460			(401,731	)		249,952
Gross profit		-			79,922			208,627			10,136			(813	)		297,872
Selling, general and administrative expenses		135			34,481			203,205			14,705			-			252,526
Operating income (loss)		(135	)		45,441			5,422			(4,569	)		(813	)		45,346
Interest and other income (expense)		25,982			(1,302	)		(73	)		(7	)		(24,372	)		228
Interest and other related financing costs		-			5,551			63			-			-			5,614
Income (loss) before income taxes		25,847			38,588			5,286			(4,576	)		(25,185	)		39,960
Income tax expense		-			11,793			2,227			93			-			14,113
Net income/(loss)	$	25,847		$	26,795		$	3,059		$	(4,669	)	$	(25,185	)	$	25,847

Nine months ended March 31, 2013

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	327,987		$	594,200		$	29,040		$	(404,395	)	$	546,832
Cost of sales		-			247,433			387,459			17,894			(405,959	)		246,827
Gross profit		-			80,554			206,741			11,146			1,564			300,005
Selling, general and administrative expenses		135			35,171			207,116			13,612			-			256,034
Operating income (loss)		(135	)		45,383			(375	)		(2,466	)		1,564			43,971
Interest and other income (expense)		24,419			(2,923	)		30			(206	)		(21,128	)		192
Interest and other related financing costs		-			6,546			46			-			-			6,592
Income (loss) before income taxes		24,284			35,914			(391	)		(2,672	)		(19,564	)		37,571
Income tax expense		-			13,059			159			69			-			13,287
Net income/(loss)	$	24,284		$	22,855		$	(550	)	$	(2,741	)	$	(19,564	)	$	24,284

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

Nine months ended March 31, 2014

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	8,136		$	21,223		$	8,818		$	1,842		$	-	$	40,019
Cash flows from investing activities:
Capital expenditures		-			(314	)		(11,159	)		(1,115	)		-		(12,588	)
Proceeds from the disposal of property, plant and equipment		-			24			2,643			-			-		2,667
Change in restricted cash and investments		-			6,526			-			-			-		6,526
Purchases of marketable securities		-			(17,500	)		-			-			-		(17,500	)
Sales of marketable securities		-			12,323						-			-		12,323
Other		-			253			-			-			-		253
Net cash provided by (used in) investing activities		-			1,312			(8,516	)		(1,115	)		-		(8,319	)
Cash flows from financing activities:
Payments on long-term debt		-			-			(358	)		-			-		(358	)
Dividends paid		(8,399	)		-			-			-			-		(8,399	)
Other		263			51			-			-			-		314
Net cash provided by (used in) financing activities		(8,136	)		51			(358	)		-			-		(8,443	)
Effect of exchange rate changes on cash		-			-			-			(54	)		-		(54	)
Net increase (decrease) in cash and cash equivalents		-			22,586			(56	)		673			-		23,203
Cash and cash equivalents – beginning of period		-			57,307			12,463			2,831			-		72,601
Cash and cash equivalents – end of period	$	-		$	79,893		$	12,407		$	3,504		$	-	$	95,804

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

Nine months ended March 31, 2013

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	18,360		$	12,214		$	10,950		$	2,921		$	-	$	44,445
Cash flows from investing activities:
Capital expenditures		-			(1,115	)		(13,165	)		(2,265	)		-		(16,545	)
Acquisitions		-			-			(598	)		-			-		(598	)
Proceeds from the disposal of property, plant and equipment		-			51			3,175			-			-		3,226
Change in restricted cash and investments		-			(14	)		-			-			-		(14	)
Purchases of marketable securities		-			(17,547	)		-			-			-		(17,547	)
Sales of marketable securities		-			7,990			-			-			-		7,990
Other		-			783			550			-			-		1,333
Net cash provided by (used in) investing activities		-			(9,852	)		(10,038	)		(2,265	)		-		(22,155	)
Cash flows from financing activities:
Payments on long-term debt		-			-			(187	)		-			-		(187	)
Dividends paid		(19,617	)		-			-			-			-		(19,617	)
Other		1,257			166			-			-			-		1,423
Net cash provided by (used in) financing activities		(18,360	)		166			(187	)		-			-		(18,381	)
Effect of exchange rate changes on cash		-			-			-			15			-		15
Net increase (decrease) in cash and cash equivalents		-			2,528			725			671			-		3,924
Cash and cash equivalents – beginning of period		-			64,946			12,276			2,499			-		79,721
Cash and cash equivalents – end of period	$	-		$	67,474		$	13,001		$	3,170		$	-	$	83,645