Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Segment Information

v2.4.0.8
Note 13 - Segment Information
 3 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

(13)  Segment Information


Our operations are classified into two operating segments: wholesale and retail. These operating segments represent strategic business areas of our vertically integrated business which, although they operate separately and provide their own distinctive services, enable us to more efficiently control the quality and cost of our complete line of home furnishings and accents.


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 accents 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.


The retail segment sells home furnishings and accents 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.


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 accents 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 months ended September 30, 2014 and 2013 is provided as follows:


   

Three months ended

 
   

September 30,

 
   

2014

   

2013

 

Case Goods

    36 %     35 %

Upholstered Products

    46 %     47 %

Home Accents and Other

    18 %     18 %
      100 %     100 %

Segment information for the three months ended September 30, 2014 and 2013 is provided below (in thousands):


   

Three months ended

 
   

September 30,

 
   

2014

   

2013

 

Net sales:

               

Wholesale segment

  $ 124,600     $ 113,198  

Retail segment

    145,043       141,827  

Elimination of inter-company sales

    (78,937 )     (73,366 )

Consolidated Total

  $ 190,706     $ 181,659  
                 

Operating income:

               

Wholesale segment

  $ 21,542     $ 16,132  

Retail segment

    1,762       (204 )

Adjustment of inter-company profit (1)

    (2,834 )     16  

Consolidated Total

  $ 20,470     $ 15,944  
                 

Depreciation & Amortization:

               

Wholesale segment

  $ 2,094     $ 1,891  

Retail segment

    2,625       2,398  

Consolidated Total

  $ 4,719     $ 4,289  
                 

Capital expenditures:

               

Wholesale segment

  $ 3,961     $ 1,474  

Retail segment

    1,449       1,831  

Acquisitions

    1,991       -  

Consolidated Total

  $ 7,401     $ 3,305  

   

September 30,

   

June 30,

 
   

2014

   

2014

 

Total Assets:

               

Wholesale segment

  $ 343,085     $ 339,271  

Retail segment

    358,697       344,025  

Inventory profit elimination (2)

    (31,603 )     (28,862 )

Consolidated Total

  $ 670,179     $ 654,434  

(1)

Represents the change in wholesale profit contained in the retail segment inventory at the end of the period.

(2)

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.