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

6 Months Ended

Dec. 31, 2014

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

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

December 31, 2014

	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	103,727		$	5,971		$	3,244		$	-		$	112,942
Marketable securities		-		8,865			-			-			-			8,865
Accounts receivable, net		-		10,361			265			-			-			10,626
Inventories		-		-			175,436			5,880			(29,567	)		151,749
Prepaid expenses and other current assets		-		10,213			10,880			1,930			-			23,023
Intercompany receivables		-		854,758			332,230			(3,412	)		(1,183,576	)		-
Total current assets		-		987,924			524,782			7,642			(1,213,143	)		307,205
Property, plant and equipment, net		-		8,158			260,009			16,622			-			284,789
Goodwill and other intangible assets		-		37,905			7,223			-			-			45,128
Restricted cash and investments		-		8,008			-			-			-			8,008
Other assets		-		4,628			1,687			622			-			6,937
Investment in affiliated companies		751,476		(104,740	)		-			-			(646,736	)		-
Total assets	$	751,476	$	941,883		$	793,701		$	24,886		$	(1,859,879	)	$	652,067
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	-	$	55,474		$	808		$	-		$	-		$	56,282
Customer deposits		-		-			49,469			3,310			-			52,779
Accounts payable		-		4,532			14,701			268			-			19,501
Accrued expenses and other current liabilities		3,613		30,039			11,108			1,614			-			46,374
Intercompany payables		366,876		(8,804	)		792,251			33,253			(1,183,576	)		-
Total current liabilities		370,489		81,241			868,337			38,445			(1,183,576	)		174,936
Long-term debt		-		73,833			1,918			-			-			75,751
Other long-term liabilities		-		3,976			15,969			448			-			20,393
Total liabilities		370,489		159,050			886,224			38,893			(1,183,576	)		271,080
Shareholders’ equity		380,987		782,833			(92,523	)		(14,007	)		(676,303	)		380,987
Total liabilities and shareholders’ equity	$	751,476	$	941,883		$	793,701		$	24,886		$	(1,859,879	)	$	652,067

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

June 30, 2014

	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	-	$	95,567		$	10,347		$	3,262		$	-		$	109,176
Marketable securities		-		18,153			-			-			-			18,153
Accounts receivable, net		-		12,118			308			-			-			12,426
Inventories		-		-			168,996			6,141			(28,862	)		146,275
Prepaid expenses and other current assets		-		6,954			10,800			1,845			-			19,599
Intercompany receivables		-		836,086			322,382			(3,478	)		(1,154,990	)		-
Total current assets		-		968,878			512,833			7,770			(1,183,852	)		305,629
Property, plant and equipment, net		-		8,848			262,272			17,036			-			288,156
Goodwill and other intangible assets		-		37,905			7,223			-			-			45,128
Restricted cash and investments		-		8,507			-			-			-			8,507
Other assets		-		4,620			1,647			747			-			7,014
Investment in affiliated companies		731,003		(107,050	)		-			-			(623,953	)		-
Total assets	$	731,003	$	921,708		$	783,975		$	25,553		$	(1,807,805	)	$	654,434
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	-	$	-		$	501		$	-		$	-		$	501
Customer deposits		-		-			55,810			3,874			-			59,684
Accounts payable		-		6,423			17,699			198			-			24,320
Accrued expenses and other current liabilities		3,013		30,656			16,292			1,581			-			51,542
Intercompany payables		360,523		(8,468	)		773,850			29,085			(1,154,990	)		-
Total current liabilities		363,536		28,611			864,152			34,738			(1,154,990	)		136,047
Long-term debt		-		129,255			1,156			-			-			130,411
Other long-term liabilities		-		4,241			15,763			505			-			20,509
Total liabilities		363,536		162,107			881,071			35,243			(1,154,990	)		286,967
Shareholders’ equity		367,467		759,601			(97,096	)		(9,690	)		(652,815	)		367,467
Total liabilities and shareholders’ equity	$	731,003	$	921,708		$	783,975		$	25,553		$	(1,807,805	)	$	654,434

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

Three months ended December 31, 2014

	Parent			Issuer		Guarantors		Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	114,191	$	206,620	$	10,365		$	(134,109	)	$	197,067
Cost of sales		-			87,625		132,434		7,079			(136,145	)		90,993
Gross profit		-			26,566		74,186		3,286			2,036			106,074

Selling, general and administrative expenses		45			13,351		70,395		4,623			-			88,414
Operating income (loss)		(45	)		13,215		3,791		(1,337	)		2,036			17,660

Interest and other income (expense)		10,083			1,143		2		59			(11,198	)		89
Interest and other related financing costs		-			1,868		14		-			-			1,882
Income (loss) before income taxes		10,038			12,490		3,779		(1,278	)		(9,162	)		15,867
Income tax expense		-			4,443		1,368		18			-			5,829

Net income/(loss)	$	10,038		$	8,047	$	2,411	$	(1,296	)	$	(9,162	)	$	10,038

Three months ended December 31, 2013

	Parent			Issuer		Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	111,305	$	207,100		$	10,502		$	(135,803	)	$	193,104
Cost of sales		-			85,483		132,002			6,882			(137,262	)		87,105
Gross profit		-			25,822		75,098			3,620			1,459			105,999

Selling, general and administrative expenses		45			11,910		69,174			5,020			-			86,149
Operating income (loss)		(45	)		13,912		5,924			(1,400	)		1,459			19,850

Interest and other income (expense)		11,600			2,498		(43	)		(22	)		(13,990	)		43
Interest and other related financing costs		-			1,850		21			-			-			1,871
Income (loss) before income taxes		11,555			14,560		5,860			(1,422	)		(12,531	)		18,022
Income tax expense		-			4,419		2,059			(11	)		-			6,467

Net income/(loss)	$	11,555		$	10,141	$	3,801		$	(1,411	)	$	(12,531	)	$	11,555

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

Six months ended December 31, 2014

	Parent			Issuer		Guarantors		Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	236,656	$	407,113	$	22,521		$	(278,517	)	$	387,773
Cost of sales		-			178,609		261,068		15,031			(277,812	)		176,896
Gross profit		-			58,047		146,045		7,490			(705	)		210,877

Selling, general and administrative expenses		90			24,092		138,861		9,704			-			172,747
Operating income (loss)		(90	)		33,955		7,184		(2,214	)		(705	)		38,130

Interest and other income (expense)		22,007			2,458		1		83			(24,317	)		232
Interest and other related financing costs		-			3,727		44		-			-			3,771
Income (loss) before income taxes		21,917			32,686		7,141		(2,131	)		(25,022	)		34,591
Income tax expense		-			9,974		2,600		100			-			12,674

Net income/(loss)	$	21,917		$	22,712	$	4,541	$	(2,231	)	$	(25,022	)	$	21,917

Six months ended December 31, 2013

	Parent			Issuer		Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	-		$	222,828	$	401,928		$	20,941		$	(270,934	)	$	374,763
Cost of sales		-			169,416		259,157			13,739			(272,291	)		170,021
Gross profit		-			53,412		142,771			7,202			1,357			204,742

Selling, general and administrative expenses		90			21,542		137,339			9,977			-			168,948
Operating income (loss)		(90	)		31,870		5,432			(2,775	)		1,357			35,794

Interest and other income (expense)		20,679			630		(43	)		(38	)		(21,103	)		125
Interest and other related financing costs		-			3,701		43			-			-			3,744
Income (loss) before income taxes		20,589			28,799		5,346			(2,813	)		(19,746	)		32,175
Income tax expense		-			9,477		2,097			12			-			11,586

Net income/(loss)	$	20,589		$	19,322	$	3,249		$	(2,825	)	$	(19,746	)	$	20,589

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

Six months ended December 31, 2014

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	6,270		$	(3,476	)	$	5,766		$	1,900		$	-	$	10,460

Cash flows from investing activities:
Capital expenditures		-			(501	)		(11,085	)		(1,529	)		-		(13,115	)
Acquisitions		-			-			(1,991	)		-			-		(1,991	)
Proceeds from the disposal of property, plant and equipment		-			3,627			3,222			-			-		6,849
Change in restricted cash and investments		-			499			-			-			-		499
Sales of marketable securities		-			8,930			-			-			-		8,930
Other		-			90			-			-			-		90
Net cash provided by (used in) investing activities		-			12,645			(9,854	)		(1,529	)		-		1,262

Cash flows from financing activities:
Payments on long-term debt		-			-			(288	)		-			-		(288	)
Dividends paid		(6,381	)		-			-			-			-		(6,381	)
Increase in deferred financing costs		-			(1,020	)		-			-			-		(1,020	)
Other		111			11			-			-			-		122
Net cash provided by (used in) financing activities		(6,270	)		(1,009	)		(288	)		-			-		(7,567	)

Effect of exchange rate changes on cash		-			-			-			(389	)		-		(389	)
Net increase (decrease) in cash and cash equivalents		-			8,160			(4,376	)		(18	)		-		3,766

Cash and cash equivalents – beginning of period		-			95,567			10,347			3,262			-		109,176
Cash and cash equivalents – end of period	$	-		$	103,727		$	5,971		$	3,244		$	-	$	112,942

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

Six months ended December 31, 2013

	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	5,316		$	16,056		$	608		$	626		$	-	$	22,606

Cash flows from investing activities:
Capital expenditures		-			(201	)		(7,946	)		(411	)		-		(8,558	)
Acquisitions		-			-			-			-			-		-
Proceeds from the disposal of property, plant and equipment		-			19			752			-			-		771
Change in restricted cash and investments		-			498			-			-			-		498
Purchases of marketable securities		-			(15,716	)		-			-			-		(15,716	)
Sales of marketable securities		-			10,723			-			-			-		10,723
Other		-			175			-			-			-		175
Net cash provided by (used in) investing activities		-			(4,502	)		(7,194	)		(411	)		-		(12,107	)

Cash flows from financing activities:
Payments on long-term debt		-			-			(238	)		-			-		(238	)
Dividends paid		(5,502	)		-			-			-			-		(5,502	)
Other		186			35			-			-			-		221
Net cash provided by (used in) financing activities		(5,316	)		35			(238	)		-			-		(5,519	)

Effect of exchange rate changes on cash		-			-			-			22			-		22
Net increase (decrease) in cash and cash equivalents		-			11,589			(6,824	)		237			-		5,002

Cash and cash equivalents – beginning of period		-			57,307			12,463			2,831			-		72,601
Cash and cash equivalents – end of period	$	-		$	68,896		$	5,639		$	3,068		$	-	$	77,603