Ethan Allen Interiors Inc. (ETD) 2010年年度報告「NYSE」.pdf

《Ethan Allen Interiors Inc. (ETD) 2010年年度報告「NYSE」.pdf》由會員分享，可在線閱讀，更多相關《Ethan Allen Interiors Inc. (ETD) 2010年年度報告「NYSE」.pdf（89頁珍藏版）》請在三個皮匠報告上搜索。

1、established1932ANNUAL REPORT2010ETHANALLEN.COM2010 ETHAN ALLEN GLOBAL,INC.corporate dataCorporate HeadquartersETHAN ALLEN INTERIORS INC.ETHAN ALLEN DRIVEDANBURY,CT Transfer AgentCOMPUTERSHARE INVESTOR SERVICES,LLC2 NORTH LASALLE STREETP.O.BOX A3504CHICAGO,IL 60690-3504312.360.5196Independent Certifi

2、edPublic AccountantsKPMG LLP3001 SUMMER STREETSTAMFORD,CT 06905203.356.9800Stock Exchange ListingNEW YORK STOCK EXCHANGEETHAN ALLEN INTERIORS INC.TRADING SYMBOL:ETHInvestor RelationsDAVID R.CALLENVICE PRESIDENT,FINANCE AND TREASURERDesignETHAN ALLEN GLOBAL,INC.directorsFarooq KathwariCHAIRMAN OF THE

3、 BOARD,PRESIDENTAND CHIEF EXECUTIVE OFFICERJohn P.BirkelundCO-FOUNDER AND MANAGING DIRECTOR,SARATOGA PARTNERSClinton A.ClarkPRESIDENT AND SOLE STOCKHOLDEROF CAC INVESTMENTS,INC.Kristin GamblePRESIDENT,FLOOD GAMBLE ASSOCIATES,INC.Edward H.MeyerCHAIRMAN OF THE BOARD ANDCHIEF EXECUTIVE OFFICER,OCEAN RO

4、AD ADVISORS,INC.James W.SchmotterPRESIDENT,WESTERN CONNECTICUTSTATE UNIVERSITYAmbassador Frank G.WisnerINTERNATIONAL AFFAIRS ADVISOROF PATTON BOGGS LLPofficersFarooq KathwariCHAIRMAN OF THE BOARD,PRESIDENTAND CHIEF EXECUTIVE OFFICERPamela A.BanksVICE PRESIDENT,GENERAL COUNSELAND SECRETARYDavid R.Cal

5、lenVICE PRESIDENT,FINANCEAND TREASURERBridget DePasqualeVICE PRESIDENT,COMMUNICATIONSAND ASSISTANT SECRETARYDon GarrettVICE PRESIDENT,CASE GOODSMANUFACTURINGDaniel M.GrowVICE PRESIDENT,BUSINESS DEVELOPMENTHenry KapteinaDIRECTOR,INTERNAL AUDITJames D.McCrearyVICE PRESIDENT,FURNITURE SOURCINGJack Moll

6、GENERAL MANAGER,PHYSICAL DISTRIBUTIONNora MurphyEXECUTIVE VICE PRESIDENT,STYLE AND ADVERTISINGKenneth MusanteMANUFACTURING CONTROLLERTracy PaccioneVICE PRESIDENT,MERCHANDISINGCraig StoutVICE PRESIDENT,PRODUCT DEVELOPMENTCASE GOODS AND UPHOLSTERYLynda W.StoutVICE PRESIDENT,RETAIL DIVISIONClifford Tho

7、rnVICE PRESIDENT,UPHOLSTERYMANUFACTURINGCorey WhitelyEXECUTIVE VICE PRESIDENT,OPERATIONSAnn M.ZaccariaVICE PRESIDENT,REAL ESTATEThe actions we have taken during the“Great Recession”have positioned us asa stronger enterprise.We have begun tosee the benefits of these efforts.Revenues,profitability,and

8、 our cash position improvedsignificantly by the end of fiscal 2010.Ourvertically integrated business model gives usa unique opportunity to benefit from growth,and our associates are poised and workingdiligently to drive the business forward.We will continue to focus on our eightstrategic priorities.

9、The first seven involvecontinuing to strengthen important aspectsof our vertically integrated structure.Theeighth priority is to have strong financialresults.I believe that as we continue to workon the first seven priorities,the eighth prioritywill be our natural result.Here is a summary of those pr

10、iorities aswe move into fiscal 2011.Strengthen our network of interiordesigners.A major competitive advantage isthe network of professional design associatesat Ethan Allen.In this age of mediocrity andlack of personal service,focusing on greatpersonal service provided by our associatesinterior desig

11、ners backed by retail serviceassociates and our craftspeople making fineproducts,many of which are customis acompetitive advantage.During the last fewmonths,we have started adding designassociates across North America.Many haveowned their own businesses and now seesignificant advantage in working un

12、der theEthan Allen umbrella.We also continue tomake progress in expanding our IDA(InteriorDesign Affiliate)program;as of June 30,we had 1,300 independent professional affili-ates in this program bringing new clientsto our business.Build an effective marketing program toreach a larger consumer base.O

13、ur secondpriority involves reaching our clients andprospects with a strong marketing communi-cation program,including direct mail,televi-sion,print,and electronic media.We continueto invest in developing a strong websiteutilizing electronic magazines.We recentlylaunched a unique way for our clients

14、to ben-efit from exceptional values through a choiceof savings options.The entire Ethan Allenproduct line is available at exceptional valuesto our clients as they fulfill their home furnish-ings and interior design needs.Develop stylish,good quality,and relevantproduct offerings.In just one years ti

15、me,weconverted our manufacturing of our domesticwood case goods products to custom,made-to-order production.This fall we are launchinga wide array of fresh,new products that coverthe entire range of our offerings.Continue to reposition and strengthendesign centers.During the last decade,wehave made

16、major investments in reposition-ing and relocating the retail division designcenters to prominent locations.We took theopportunity during this recession to evaluatemarkets where we had an overlap in coverageand have consolidated in those areas.Thisstrengthens the remaining design centersandreducesth

17、ecompanysinvestment in brickand mortar and in display inventory,allowingus to redeploy those resources to build a net-work of interior design professionals backedwith state-of-the-art technology.Develop efficient and balanced sourcing.Currently,70%of our products are producedin our North American fa

18、cilities and another6%are sourced from domestic vendors.Soapproximately 76%of our products are madein North America,and 24%are sourced offshore.With our orientation toward customproduct offerings,we believe this balancedsourcing is a strategic advantage.Develop an efficient logistics network atwhole

19、sale and retail.We consolidated ourwholesale delivery operations to one majordistribution center,owned by the company,strategically located in the Southeast UnitedStates.It is supported by a smaller fulfillmentcenter in the South Central United States.Ourretail division now benefits from operatingsi

20、x regional service centers(five owned by thecompany)and 12 smaller district service cen-ters.This total of 18 service centers in NorthAmerica is a far more efficient structure thanthe 50 in operation just a couple of years ago.Utilize technology as a competitiveadvantage.The manufacturing and logist

21、icsconsolidations have resulted in a core levelof infrastructure that is best supported bya common information system platform.Wehave rolled out that platform to our uphol-stery operations in the U.S.and Mexico andare moving it into the rest of the wholesaledivision as well.We rolled out a new IT sy

22、stemin the retail division and continue to add toolsthat improve the efficiency of our designstaff in lead follow-up and data mining.Wealso continue to improve the user-friendlinessof our award-winning website.With touchscreen technology now entering our designcenters,clients are just a touch away f

23、romfilling their interior design needs.Provide superior financial results.This isthe end product of appropriate action on theseven priorities listed above.We have worked very hard this last year to bein our current position.That is,we are readyto grow.We appreciate your continued confi-dence and sup

24、port.Sincerely,FA R OOQ KAT HWA R IChairman of the Board,President and CEOEthan Allen Interiors Inc.dearshareholderfinancialhighlightsAmounts in thousands,except per share data.Fiscal years ended June 30.(a)Includes the effects of pre-tax restructuring and impairment charges totaling$2.4 million,$67

25、.0 million and$6.8 million in fiscal years 2010,2009,and 2008 respectively.(b)Includes the effects of pre-tax restructuring and impairment charges in note(a)andincome tax valuation allowances of$34.1 million and$2.1 million in fiscal years 2010and 2009 respectively.(c)Includes cash and cash equivale

26、nts,marketable securities,and restricted cashand investments.Statement of Operations Data201020092008Net sales$590,054$674,277$980,045Gross profit$280,277$347,342$526,065Operating income(loss)(a)$(11,735)$(72,771)$96,000Net income(loss)(b)$(44,316)$(52,687)$58,072Per Share DataNet income(loss)per di

27、luted share(b)$(1.53)$(1.83)$1.97Diluted weighted average common shares outstanding28,98228,81429,470Balance Sheet DataCash and Securities(c)$102,245$52,960$74,376Working capital$113,950$139,239$176,796Current ratio1.78 to 12.24 to 12.30 to 1Total assets$631,777$646,485$764,093Total debt,including c

28、apital lease obligations$203,267$203,148$203,029Shareholders equity$258,459$305,923$375,773Debt as%of equity78.6%66.4%54.0%Debt as%of capital44.0%39.9%35.1%Cash Returned to ShareholdersDividends paid$5,801$23,617$25,495Cost of shares repurchased$2,589-$69,745Number of shares repurchased0.2 million-2

29、.3 million100254_AnnReport10_FinPage:090184_2009FInPage_finance_hilights 10/6/10 11:13 AM Page 1UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K (Mark One)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Ju

30、ne 30,2010 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 i

31、ncorporation or organization)(I.R.S.Employer Identification No.)Ethan Allen Drive,Danbury,CT 06811 (Address of principal executive offices)(Zip Code)Registrants telephone number,including area code (203)743-8000 Securities registered pursuant to Section 12(b)of the Act:Title of Each Class Name of Ea

32、ch Exchange On Which Registered Common Stock,$.01 par value New York Stock Exchange,Inc.Securities registered pursuant to Section 12(g)of the Act:None(Title of Class)Indicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes X No Indicat

33、e by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes X No 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

34、 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 Inte

35、ractive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files).Yes No Indicate by check mark if disclosure of delinquent filers

36、pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of Registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the re

37、gistrant 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(check one):Indicate by check mark whether the Registran

38、t is a shell company(as defined in Rule 12b-2 of the Act).Yes X No The aggregate market value of the Registrants common stock,par value$.01 per share,held by non-affiliates(based upon the closing sale price on the New York Stock Exchange)on December 31,2009,(the last day of the Registrants most rece

39、ntly completed second fiscal quarter)was approximately$388,065,187.As of July 31,2010,there were 28,740,575 shares of the Registrants common stock,par value$.01 per share,outstanding.DOCUMENTS INCORPORATED BY REFERENCE:The Registrants definitive Proxy Statement for the 2010 Annual Meeting of stockho

40、lders,which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934,is incorporated by reference into Part III hereof.Large accelerated filer Accelerated filer X Non-accelerated filer Smaller reporting company 2 TABLE OF CONTENTS It

41、em Page PART I 1.Business 3 1A.Risk Factors 11 1B.Unresolved Staff Comments 16 2.Properties 16 3.Legal Proceedings 17 4.Reserved 18 PART II 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 18 6.Selected Financial Data 20 7.Managements Discu

42、ssion and Analysis of Financial Condition and Results of Operation 22 7A.Quantitative and Qualitative Disclosures About Market Risk 36 8.Financial Statements and Supplementary Data 37 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77 9A.Controls and Procedures

43、 77 9B.Other Information 78 PART III 10.Directors,Executive Officers and Corporate Governance 78 11.Executive Compensation 78 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 78 13.Certain Relationships and Related Transactions,and Director Independen

44、ce 78 14.Principal Accountant Fees and Services 78 PART IV 15.Exhibits and Financial Statement Schedules 79 Signatures 84 3 PART I Item 1.Business Background Incorporated in Delaware in 1989,Ethan Allen Interiors Inc.,through its wholly-owned subsidiary,Ethan Allen Global,Inc.,and Ethan Allen Global

45、,Inc.s subsidiaries(collectively,We,Us,Our,Ethan Allen or the Company),is a leading manufacturer and retailer of quality home furnishings and accessories,offering a full complement of home decorating and design solutions through one of the countrys largest home furnishing retail networks.We refer to

46、 our Ethan Allen retail outlets as design centers instead of stores to better reflect these expanded capabilities.We have made,and continue to make,considerable investment in our business in order to expand and improve our interior design capabilities and to leverage our domestic manufacturing and l

47、ogistics operations.The Company was founded in 1932 and has sold products under the Ethan Allen brand name since 1937.Mission Statement Our primary business objective is to provide our customers with a convenient,full-service,one-stop shopping solution for their home decorating needs by offering sty

48、lish,high-quality products at good value.In order to meet our stated objective,we have developed and adhere to a focused and comprehensive business strategy.The elements of this strategy,each of which is integral to our solutions-based philosophy,include(i)our vertically integrated operating structu

49、re,(ii)our stylish products and related marketing initiatives,(iii)our retail design center network,(iv)our people,and(v)our focus on providing design solutions.Operating Segments Our products are sold through a dedicated network of 281 retail design centers.As of June 30,2010,the Company operated 1

50、45 design centers(our retail segment)and our independent retailers operated 136 design centers(as compared to 159 and 134,respectively,at the end of the prior fiscal year).Our wholesale segment net sales include sales to our retail segment and sales to our independent retailers.Our retail segment ne

51、t sales accounted for 74%of our consolidated net sales in fiscal 2010 while wholesale segment net sales to independent retailers accounted for 26%.Our net sales to the ten largest independent retailers,who operate 68 design centers,accounted for approximately 15%of our consolidated net sales in fisc

52、al 2010.Our wholesale and retail operating segments represent strategic business areas of our vertically integrated business that operate separately and provide their own distinctive services(further outlined below).This enables us to more effectively offer our complete line of home furnishings and

53、accessories and more efficiently control quality and cost.For certain financial information regarding our operating segments,see Note 16 to the Consolidated Financial Statements included under Item 8 of this Annual Report and incorporated herein by reference.While the manner in which our home furnis

54、hings and accessories are marketed and sold is consistent between our wholesale and retail segments,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 reta

55、il 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).Sales of case good items include,but are not limited to,beds,dressers,armoires,tables,chairs,buffets,entertainment

56、units,home office furniture,and wooden accents.Sales of upholstery home furnishing items include sleepers,recliners,chairs,sofas,loveseats,cut fabrics and leather.Skilled craftsmen cut,sew and upholster custom-designed upholstery items which are available in a variety of frame and fabric options.Hom

57、e accessory and 4 other items include window treatments,wall decor,lighting,clocks,bedding and bedspreads,decorative accessories,area rugs,and home and garden furnishings.Revenue information by product line is not as easily determined within the retail segment.However,because wholesale sales are mat

58、ched,for the most part,to incoming orders,we believe that the allocation of retail sales by product line would be similar to that of the wholesale segment.We evaluate performance of the respective segments based upon revenues and operating income.Inter-segment eliminations result,primarily,from the

59、wholesale sale of inventory to the retail segment,including the related profit margin.Wholesale Segment Overview:Wholesale net sales for each of the last three fiscal years are summarized below(in millions):Fiscal Year Ended June 30,2010 2009 2008 Wholesale net sales$362.5$403.4$616.2 Wholesale net

60、sales for each of the last three fiscal years,allocated by product line,were as follows:Fiscal Year Ended June 30,2010 2009 2008 Case Goods 40%41%43%Upholstered Products 46 41 40 Home Accessories and Other 14 18 17 100%100%100%The wholesale segment,principally involved in the development of the Etha

61、n Allen brand,encompasses all aspects of design,manufacture,sourcing,sale,and distribution of our broad range of home furnishings and accessories.Wholesale revenue is generated upon the wholesale sale and shipment of our products to our network of independently operated design centers and Ethan Alle

62、n operated design centers(see Company operated retail comments below)through its national distribution center and one other smaller fulfillment center.During the past year,independent retailers opened 12 new design centers(of which two were relocations),and closed seven design centers.We continue to

63、 promote the growth and expansion of our independent retailers through ongoing support in the areas of market analysis,site selection,and business development.As in the past,our independent retailers are required to enter into license agreements with us,which(i)authorize the use of certain Ethan All

64、en service marks and(ii)require adherence to certain standards of operation,including a requirement to fulfill related warranty service agreements.We are not subject to any territorial or exclusive retailer agreements in North America.The wholesale segment also develops and implements related market

65、ing and brand awareness programs.Wholesale profitability includes(i)the wholesale gross margin,which represents the difference between the wholesale net sales price and the cost associated with manufacturing and/or sourcing the related product,and(ii)other operating costs associated with wholesale s

66、egment activities.The Companys domestic manufacturing is included in the results of the wholesale segment.During fiscal years 2009 and 2010,we consolidated two upholstery plants and one case goods sawmill plant and dramatically reduced operations of another case goods plant.All redundant operations

67、were moved into other existing plants,thereby improving overall utilization of our domestic manufacturing.During fiscal 2010,we also converted our domestic case goods manufacturing to custom operations.Case goods products are no longer produced to a 5 forecast and held in inventory;but rather,are pr

68、oduced to specific customer orders with the options specified by our clients.We now operate three case goods plants(including one sawmill),three upholstery plants(two upholstery plants on our Maiden,North Carolina campus and one cut and sew plant in Mexico)and one home accessory plant.We also source

69、 selected case good,upholstery,and home accessory items from third-party suppliers located both domestically and outside the United States.As of June 30,2010,we maintained a wholesale backlog of$57.0 million(as compared to$20.6 million as of June 30,2009)which is anticipated to be serviced in the fi

70、rst quarter of fiscal 2011.Backlog at a point in time is a result,primarily,of net orders booked in prior periods,manufacturing schedules,timing associated with the receipt of sourced product,and the timing and volume of wholesale shipments.Because orders may be rescheduled and/or canceled,the measu

71、re of backlog at a point in time may not necessarily be indicative of future sales performance.For the twelve months ended June 30,2010,net orders booked at the wholesale level,which includes orders generated by independently operated and Company operated design centers,totaled$403.7 million as comp

72、ared to$398.5 million for the twelve months ended June 30,2009.In any given period,net orders booked may be impacted by the timing of floor sample orders received in connection with new product introductions.New product offerings may be made available to the retail network at any time during the yea

73、r,including in connection with our periodic retailer conferences.Retail Segment Overview:Retail net sales for each of the last three fiscal years are summarized below(in millions):Fiscal Year Ended June 30,2010 2009 2008 Retail net sales$438.5$508.6$724.6 The retail segment sells home furnishings an

74、d accessories to consumers through a network of Company-operated design centers.During fiscal 2010 we acquired one design center from an independent retailer,opened four new design centers(of which three were relocations),and closed sixteen design centers.In addition,we recently initiated a program

75、that provides the opportunity for Ethan Allen designers to work with independent interior design affiliates that apply and meet Ethan Allen standards.This program provides the opportunity for the Company to reach additional clients with over 1,300 interior designers(serving both Company operated and

76、 independent retail operations)not otherwise affiliated with Ethan Allen and compensates them for the incremental business.Retail revenue is generated upon the retail sale and delivery of our products to our retail customers through its network of 18 service centers(as of June 30,2010).Retail profit

77、ability includes(i)the retail gross margin,which represents the difference between the retail net sales price and the cost of goods purchased from the wholesale segment,and(ii)other operating costs associated with retail segment activities.We pursue further expansion of the Company-operated retail b

78、usiness by opening new design centers,relocating existing design centers and,when appropriate,acquiring design centers from independent retailers.The geographic distribution of retail design center locations is included under Item 2 of Part I of this Annual Report.Products Our strategy has been to p

79、osition Ethan Allen as a preferred brand with superior style,quality and value while,at the same time,providing consumers with a comprehensive,one-stop shopping solution for their home furnishing and design needs.In carrying out our strategy,we continue to expand our reach to a broader consumer base

80、 through a diverse selection of attractively priced products,designed to complement one another,reflecting the popular trend toward eclectic home decorating.Regular product introductions,a broad range of styles and selections within our custom upholstery and case good lines,new finishes for,and rede

81、signs of,previous product introductions,and expanded product offerings to accommodate todays home decorating trends,continue to 6 redefine Ethan Allen,positioning us as a leader in style.During fiscal 2010,we further enhanced the opportunities to create individualized design solutions for our client

82、s with the conversion of our entire domestic case goods products to custom,made-to-order manufacturing.In an effort to more effectively position ourselves as a provider of interior design solutions,we offer a merchandising strategy which involves the grouping of our product offerings,previously cate

83、gorized by collection,into seven distinct product“lifestyles”,each reflecting the diversity and eclecticism that we believe represents the best in American design.In accordance with this merchandising strategy,new products are designed and developed to reflect unique elements applicable to one or mo

84、re of the following lifestyles:Country House;Estate;Glamour;Global;Loft;Metro;and Villa.All of our case goods,upholstered products,and home accessories are styled with distinct design characteristics.Home accessories play an important role in our marketing strategy as they enable us to offer the con

85、sumer the convenience of one-stop shopping by creating a comprehensive home furnishing solution.The interior of our design centers is organized to facilitate display of our product offerings,both in room settings that project the category lifestyle and by product grouping to facilitate comparisons o

86、f the styles and tastes of our clients.To further enhance the experience,technology is used to expand the range of products viewed by including content from our award-winning website and advanced large touch-screen flat panel displays.We continuously monitor changes in home design trends through att

87、endance at international industry events and fashion shows,internal market research,and regular communication with our retailers and design center design consultants who provide valuable input on consumer tendencies.We believe that the observations and input gathered enables us to incorporate approp

88、riate style details into our products to react quickly to changing consumer tastes.For example,since 2006,58%of our current product lines are new.Much of the balance has been refined and enhanced through product redesign,additions,deletions,and/or finish changes.Such undertakings are indicative of o

89、ur ability to adapt to the current consumer trend toward more casual and eclectic lifestyles while,at the same time,maintaining a classic appeal.In response to the demands of our clients for even greater values during the recession of 2009 and 2010,the Company began offering special savings on many

90、products during specified marketing initiatives.This was a necessary move away from our discipline of an everyday best price on all of our product offerings.While we believe that a stable uniform everyday best price approach best allows us to differentiate ourselves through strategies focused on cus

91、tomer credibility and excellence in service,we recognize that in todays economy,consumers demand the even greater values obtained through our periodic savings events.We will continue to monitor consumer sentiments and adjust our promotional activity accordingly.Product Sourcing Activities We are one

92、 of the largest manufacturers of home furnishings in the United States,manufacturing and/or assembling approximately 70%of our products in our six domestic manufacturing facilities.Our facilities are located in the Northeast and Southeast regions of the United States where they are close to sources

93、of raw materials and skilled craftsmen.Our domestic upholstery manufacturing is supported by our high quality upholstery cut and sew plant in Mexico that doubled in size during fiscal 2010.The balance of our production is outsourced according to our own internally-developed design specifications,thr

94、ough third-party suppliers,most of which are located outside the United States.These suppliers,primarily in Asia,have been carefully selected and generally have supplied us for many years.We believe that strategic investment in our manufacturing facilities,combined with an appropriate level of outso

95、urcing through both foreign and domestic suppliers,will accommodate future sales growth and allow us to maintain an appropriate degree of control over cost,quality and service to our customers.We also take pride in our“green”initiatives that include,in select product offerings,the use of responsibly

96、 harvested Appalachian woods,water based finishes,organic textiles and recycled materials.7 Raw Materials and Other Suppliers The most important raw materials we use in furniture manufacturing are lumber,veneers,plywood,hardware,glue,finishing materials,glass,mirrored glass,laminates,fabrics,foam,an

97、d filling material.The various types of wood used in our products include cherry,ash,oak,maple,prima vera,mahogany,birch and pine,substantially all of which are purchased domestically.Fabrics and other raw materials are purchased both domestically and outside the United States.We have no significant

98、 long-term supply contracts,and have sufficient alternate sources of supply to prevent disruption in supplying our operations.We maintain a number of sources for our raw materials which,we believe,contributes to our ability to obtain competitive pricing.Lumber prices fluctuate over time based on fac

99、tors such as weather and demand,which,in turn,impact availability.Higher material prices could have an adverse effect on margins.Appropriate amounts of lumber and fabric inventory are typically stocked so as to maintain adequate production levels.We believe that our sources of supply for these mater

100、ials are sufficient and that we are not dependent on any one supplier.We enter into standard purchase agreements with certain foreign and domestic suppliers to source selected case good,upholstery,and home accessory items.The terms of these arrangements are customary for the industry and do not cont

101、ain any long-term contractual obligations on our behalf.We believe we maintain good relationships with our suppliers.Distribution and Logistics We continued to streamline our logistics operations during fiscal 2010 in both our wholesale and retail segments.In the wholesale segment,the conversion of

102、our domestic case goods to custom manufacturing enabled us to consolidate the warehousing and distribution of our products through one primary distribution center,owned by the Company,strategically located in the Southeast United States.This national distribution center is supported by a smaller Com

103、pany-owned order fulfillment center located in the South Central United States.Our primary distribution center provides efficient cross-dock operations to receive and ship product from our manufacturing facilities and third-party suppliers to our network of retail design centers and retail service c

104、enters.While we manufacture to custom order the majority of our products,we also stock selected case goods,upholstery and accessories to provide for quick delivery of in-stock items and to allow for more efficient production runs.We have established two large“supermarkets of parts”within our existin

105、g manufacturing sites for the components used in our custom case goods manufacturing.Wholesale shipments utilize our own fleet of trucks and trailers or are subcontracted with independent carriers.Approximately 45%of our fleet(trucks and trailers)is leased under operating lease agreements with remai

106、ning terms ranging from one to 27 months.Our policy is to sell our products at the same delivered cost to all Company-operated and independently operated design centers nationwide,regardless of their shipping point.The adoption of this policy has created pricing credibility with our wholesale custom

107、ers and provided our retail network the opportunity to achieve more consistent margins as fluctuations attributable to the cost of shipping have been eliminated.Further,this policy has eliminated the need for our independent retailers to carry significant amounts of inventory in their own warehouses

108、.As a result,we obtain more accurate end-consumer product demand information.Retail service centers are operated by the Company and the independent retailers to prepare products for delivery into clients homes.We continued to streamline Company-operated service centers and reduced the total number 8

109、 from 26 at the end of fiscal 2009 to 18 at the end of fiscal 2010.We continue to evaluate the entire logistics and distribution model to further improve these operations.Marketing Programs Our marketing and advertising strategies are developed to drive traffic into our network of design centers or

110、to shop online at .We believe these strategies give Ethan Allen a strong competitive advantage in the home furnishings industry.We create and coordinate print and television campaigns nationally,as well as assist in local marketing and promotional efforts.The Companys network of approximately 280 re

111、tail design centers and more than 1,300 independent members of the Interior Design Affiliate program benefit from these marketing efforts,and we believe these efforts position us to consistently fulfill our brand promise.Our in-house team of advertising specialists in collaboration with outside prof

112、essionals sends consistent,clear messages that Ethan Allen is a leader in style and service,with everything for the well-designed home.We use several forms of media to accomplish this,including television(national and local),direct mail,newspapers,shelter magazines,email,and online,at .A strong nati

113、onal email marketing campaign delivers emails and design and product brochures to a growing database of clients.Our national television and print advertising campaigns are designed to leverage our strong brand equity,finding creative and compelling ways to remind consumers of our tremendous range of

114、 products,services,special programs,and custom options.We believe that we consistently deliver the most cohesive national advertising campaign in the home furnishings industry.Coordinated local television and print,to the extent these media are utilized,serve to support our national programs.The Eth

115、an Allen direct mail magazine,which brands our product lifestyles and communicates the breadth of our products and services,is one of our most important marketing tools.We publish these magazines and sell them to Company and independently operated design centers who use demographic information colle

116、cted through independent market research to target potential clients.Given the importance of this advertising medium,direct mail marketing lists are continually refined to target those consumers who are most likely to purchase,and improve the return on direct mail expenditures.Approximately 11 milli

117、on copies of our direct mail magazine were distributed to consumers during fiscal 2010.Our television advertising and direct mail efforts are supported by strong print campaigns.We also update our Style Book approximately every six months.In addition to its use as a catalog of our case goods and uph

118、olstery products,the Style Book is full of quality,design,and service stories,and looks and ideas to spark inspiration.This publication is a comprehensive and effective resource for clients.The Companys award winning website,provides our customers and design associates a great way to shop and design

119、 with videos,feature stories,design and style solutions,and fresh,new looks.Visitors will find all our latest news and promotional information here too.The sites myprojects tool lets visitors create idea boards and room plans.If they like,a design professional from their local Ethan Allen design cen

120、ter can give them feedback.The websites Inspire section includes editorial features,new product stories,design trend information,decorating solutions,and a collection of creative films and TV clips showcasing the many looks of Ethan Allen.The As Seen In area shows visitors how Ethan Allen products h

121、ave influenced style around the globe.Ethan Allens direct mail magazines are viewable online with full browsing and shopping capabilities.In the Design section,visitors can find their own style with our style quiz and shop the full assortment of furnishings.Nearly all of Ethan Allens products are no

122、w available for purchase online.9 We also have a robust and informative extranet available to our retailers and design professionals.It is the primary source of communication in and among members of our retail network.It provides information about every aspect of the business of Ethan Allen at retai

123、l,including advertising materials,prototype floor plan displays,and extensive product details.Retail Design Center Network Ethan Allen design centers are typically located in busy urban settings as freestanding destinations or as part of suburban strip malls,depending upon the real estate opportunit

124、ies in a particular market.Our design centers average approximately 16,000 square feet in size but range from approximately 3,000 square feet to 35,000 square feet.We maximize uniformity of presentation throughout the retail design center network through a comprehensive set of standards and display

125、planning assistance.These standard interior design formats assist each design center in presenting a high quality image by using focused lifestyle settings and select product category groupings to display our products and information to facilitate design solutions and to educate consumers.We also cr

126、eate a uniform design center image with consistent exterior facades in addition to the interior layouts.The adherence to all of these standards have helped position Ethan Allen as a leader in home furnishings retailing.We have strengthened the retail network with many initiatives,including the openi

127、ng of new and relocated design centers in desirable locations,introduction of Lifestyle presentations and floor plans,strengthening of the professionalism of our designers through training and certification,and the consolidation of certain design centers and service centers.This continuous improveme

128、nt resulted in fiscal 2010 with four new Company-operated design centers and twelve new independently operated design centers during the year including relocations.Sixteen Company-operated and seven independently operated design centers in underperforming markets were closed or consolidated into exi

129、sting design centers.The Company also converted a Company-owned wholesale distribution center into a regional retail service center and consolidated nine service centers into larger regional service centers.These actions effectively completed the project begun with the consolidation of 27 service ce

130、nters during fiscal 2008 and 2009,significantly reducing the retail logistics infrastructure needed to provide“white glove”delivery service to our customers.People At June 30,2010,the Company had approximately 4,400 employees(“associates”),less than one percent of whom are represented by unions whos

131、e collective bargaining agreements expire within the next year.We expect no significant changes in our relations with the unions and believe we maintain good relationships with our employees.The retail network,which includes both Company-operated and independently operated design centers,is staffed

132、with a sales force of design consultants and service professionals who provide customers with effective home decorating solutions at no additional charge.Our interior design associates receive specialty training with respect to the distinctive design and quality features inherent in each of our prod

133、ucts and programs.This enables them to more effectively communicate the elements of style and value that serve to differentiate us from our competition.As such,we believe our design consultants,and the complimentary service they provide,create a distinct competitive advantage over other home furnish

134、ing retailers.We continue to strengthen the level of service,professionalism,interior design competence,efficiency,and effectiveness of retail design center personnel.The Companys interior design affiliate program,launched in fiscal 2010,resulted in the registration with the Company of more than 1,3

135、00 qualified professional interior designers who add strength and breadth to our interior design reach.We believe that this program augments the Company and independent retailer design staffs to reach more clients and improve market penetration.This structure,along with the emphasis in our messaging

136、 to clients that“we can help as little or as much as you like”SM,continues to improve the customer service experience.10 We recognize the importance of our retail design center network to our long-term success.Accordingly,we believe we(i)have established a strong management team within Company-opera

137、ted design centers and(ii)continue to work closely with our independent retailers in order to assist them.With this in mind,we make our services available to every design center,whether independently operated or Company-operated,in support of their marketing efforts,including coordinated advertising

138、,merchandising and display programs,and extensive training seminars and educational materials.We believe that the development of design consultants,service and delivery personnel,and retailers is important for the growth of our business.As a result,we have committed to make available comprehensive r

139、etail training programs intended to increase the customer service capabilities of each individual.Customer Service Offerings We offer numerous customer service programs,each of which has been developed and introduced to consumers in an effort to make their shopping experience easier and more enjoyab

140、le.Gift Card This program allows customers to purchase,through our website or at any participating retail design center,gift cards which can be redeemed for any of our products or services.On-Line Room Planning We offer,via our website,an interactive on-line room planning resource which serves to fu

141、rther assist consumers with their home decorating needs.Through the use of this web-based tool,customers can determine which of our product offerings best fit their particular needs based on their own individual home floor plan.Ethan Allen Consumer Credit Programs The Ethan Allen Finance Plus progra

142、m offers consumers(clients)a menu of custom financing options through the use of just one account.Clients can choose between(i)“Fixed Payment”which offers fixed monthly payments the customer chooses(12,24,or 36 months)at an interest rate of 9.99%per annum,and(ii)Deferred Interest which offers client

143、s a way to borrow interest free for six months with small minimum monthly payments.If the purchase is not paid by the due date,interest is charged from the date of purchase at a fixed interest rate of 29.99%per annum.All plans provide credit lines from$1,000 to$20,000,or greater,if the customer qual

144、ifies.Financing offered is administered by a third-party financial institution and is granted to our customers on a non-recourse basis to the Company.Clients may apply for an Ethan Allen Finance Plus card at any participating design center or on-line at .Competition The home furnishings industry has

145、 faced numerous challenges,not the least of which is an influx of low-priced products from overseas.As a result,we believe a trend toward product commoditization has developed.In fiscal 2009,the economic recession resulted in many small furniture retailers going out of business and other well-establ

146、ished competitors resorting to heavy discounts to liquidate inventory.Instead of following this trend,we differentiated ourselves as a preferred brand by adhering to a business strategy focused on providing(i)high-quality,well designed and often custom handmade products at good value,(ii)a comprehen

147、sive complement of home furnishing design solutions,including our complimentary design service,and(iii)excellence in customer service.We consider our vertical integration a significant competitive advantage in the current environment as it allows us to design,manufacture and source,distribute,market

148、,and sell our products through one of the industrys largest single-source retail networks.Industry globalization has provided us an opportunity to adhere to a blended sourcing strategy,establishing relationships with certain manufacturers,both domestically and outside the United States,to source sel

149、ected case 11 goods,upholstery,and home accessory items.We intend to continue to balance our domestic production with opportunities to source from foreign and domestic manufacturers,as appropriate,in order to maintain our competitive advantage.We believe the home furnishings industry competes primar

150、ily on the basis of product styling and quality,personal service,prompt delivery,product availability and price.We further believe that we effectively compete on the basis of each of these factors and that,more specifically,our retail format,our award winning website,and complimentary design service

151、 create a distinct competitive advantage,further supporting our mission of providing consumers with a complete home decorating and design solution.We also believe that we differentiate ourselves further with the quality of our design service through our internal training and certification programs a

152、long with our interior design affiliate program.Our objective is to continue to develop and strengthen our retail network by(i)expanding the Company-operated retail business through the relocation of existing design centers,opening of new design centers,and,when appropriate,acquiring design centers

153、from,or selling design centers to,independent retailers,and(ii)obtaining and retaining independent retailers,encouraging such retailers to expand their business through the opening or relocation of new design centers with the objective of increasing the volume of their sales and(iii)further expandin

154、g our sales network through our interior designer affiliate program.Trademarks We currently hold,or have registration applications pending for,numerous trademarks,service marks and design patents for the Ethan Allen name,logos and designs in a broad range of classes for both products and services in

155、 the United States and in many foreign countries.In addition,we have registered,or have applications pending for,many of our major collection names as well as certain of our slogans utilized in connection with promoting brand awareness,retail sales and other services.We view such trade and service m

156、arks as valuable assets and have an ongoing program to diligently monitor and defend,through appropriate action,against their unauthorized use.Available Information We make available,free of charge via our website,all Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form

157、 8-K and other information filed with,or furnished to,the Securities and Exchange Commission(the SEC or the Commission),including amendments to such reports.This information is available at as soon as reasonably practicable after it is electronically filed with,or furnished to,the SEC.In addition,th

158、e SEC maintains a website that contains reports,proxy and information statements,and other information regarding companies that file electronically with the Commission.This information is available at www.sec.gov.In addition,charters of all committees of our Board of Directors,as well as our Corpora

159、te Governance guidelines,are available on our website at or,upon written request,in printed hardcopy form.Written requests should be sent to Office of the Secretary,Ethan Allen Interiors Inc.,Ethan Allen Drive,Danbury,Connecticut 06811.Item 1A.Risk Factors The following information describes certain

160、 significant risks and uncertainties inherent in our business that should be carefully considered,along with other information contained elsewhere in this report and in other filings,when making an investment decision with respect to us.If one or more of these risks actually occurs,the impact on our

161、 business,including our financial condition,results of operations,and cash flows could be adverse.A prolonged economic downturn may continue to materially adversely affect our business.Our business and results of operations are affected by international,national and regional economic conditions.The

162、United States and many other international economies experienced a major recession,with continuing effects 12 for our industry.Our primary customer base,direct or indirect,is composed of individual consumers.A hesitant recovery in the U.S.economy,high unemployment,volatile capital markets,depressed

163、housing prices and tight consumer lending practices have resulted in considerable negative pressure on consumer spending.We believe these events have impacted consumers in our markets in ways that have negatively affected our business.In the event the current economic conditions worsen,our current a

164、nd potential customers may be inclined to further delay their purchases.In addition,further tightening of credit markets may restrict our customers ability and willingness to make purchases.Access to consumer credit could be interrupted and reduce sales and profitability.Our ability to continue to a

165、ccess consumer credit for our clients could be negatively affected by conditions outside our control.Given the difficult capital markets,there is a risk that,though we have agreements that do not expire until July 2014,our business partner which issues our private label credit card program,may not b

166、e able to fulfill their obligations under that agreement.We may be unable to obtain sufficient external funding to finance our operations and growth.Historically,we have relied upon our cash from operations to fund our operations and growth.As we operate and expand our business,we may rely on extern

167、al funding sources,including the proceeds from the issuance of debt or the$60 million revolving bank line of credit under our existing credit facility.Any unexpected reduction in cash flow from operations could increase our external funding requirements to levels above those currently available.Duri

168、ng fiscal 2010,the credit rating agencies Moodys Corporation and Standard and Poors lowered our corporate and senior unsecured credit ratings to Ba2 and B+respectively.If our credit ratings were lowered further,the Companys access to debt could be negatively impacted.There can be no assurance that w

169、e will not experience unexpected cash flow shortfalls in the future or that any increase in external funding required by such shortfalls will be available.Continued operating losses could reduce our liquidity and impact our dividend policy.Historically,we have relied on our cash from operations to f

170、und our operations and the payment of cash dividends.If the Company continues to experience operating losses we may not be able to fund a shortfall from operations and would require external funding.Some financing instruments used by the Company historically may not be available to the Company in th

171、e future.We cannot assure that additional sources of financing would be available to the Company on commercially favorable terms should the Companys capital requirements exceed cash available from operations and existing cash and cash equivalents.In such circumstances,the Company may further reduce

172、its quarterly dividends.Additional impairment charges could reduce our profitability.We have significant long-lived tangible and intangible assets recorded on our balance sheets.If our operating results decline,we may incur additional impairment charges in the future,which could have a material impa

173、ct on our financial results.We evaluate the recoverability of the carrying amount of our long-lived tangible and intangible assets on an ongoing basis.There can be no assurance that the outcome of such future reviews will not result in substantial impairment charges.Impairment assessment inherently

174、involves judgments as to assumptions about expected future cash flows and the impact of market conditions on those assumptions.Future events and changing market conditions may impact our assumptions as to prices,costs or other factors that may result in changes in our estimates of future cash flows.

175、Although we believe the assumptions we use in testing for impairment are reasonable,significant changes in any of our assumptions could produce a significantly different result.13 We face changes in global and local economic conditions that may adversely affect consumer demand and spending,our manuf

176、acturing operations or sources of merchandise.Historically,the home furnishings industry has been subject to cyclical variations in the general economy and to uncertainty regarding future economic prospects.Such uncertainty,as well as other variations in global economic conditions such as rising fue

177、l costs and increasing interest rates,may continue to cause inconsistent and unpredictable consumer spending habits,while increasing our own fuel,utility,transportation or security costs.These risks,as well as industrial accidents or work stoppages,could also severely disrupt our manufacturing opera

178、tions,which could have a material adverse effect on our financial performance.We import a portion of our merchandise from foreign countries.As a result,our costs may be increased by events affecting international commerce and businesses located outside the United States,including changes in internat

179、ional trade,central bank actions,changes in the relationship of the U.S.dollar versus other currencies,and other governmental policies of the U.S.and the countries from which we import a portion of our merchandise.The inability to import products from certain foreign countries or the imposition of s

180、ignificant tariffs could have a material adverse effect on our results of operations.Competition from overseas manufacturers continues to increase and may adversely affect our business,operating results or financial condition.Our wholesale business segment is involved in the development of our brand

181、,which encompasses the design,manufacture,sourcing,sales and distribution of our home furnishings products,and competes with other U.S.and foreign manufacturers.Our retail business segment sells home furnishings to consumers through a network of Company-operated design centers,and competes against a

182、 diverse group of retailers ranging from specialty stores to traditional furniture and department stores,any of which may operate locally,regionally and nationally.We also compete with these and other retailers for appropriate retail locations as well as for qualified design consultants and manageme

183、nt personnel.Such competition could adversely affect our future financial performance.Industry globalization has led to increased competitive pressures brought about by the increasing volume of imported finished goods and components,particularly for case good products,and the development of manufact

184、uring capabilities in other countries,specifically within Asia.The increase in overseas production capacity has created over-capacity for many U.S.manufacturers,including us,which has led to industry-wide plant consolidation.In addition,because many foreign manufacturers are able to maintain substan

185、tially lower production costs,including the cost of labor and overhead,imported product may be capable of being sold at a lower price to consumers,which,in turn,could lead to some measure of further industry-wide price deflation.We cannot provide assurance that we will be able to establish or mainta

186、in relationships with certain manufacturers,whether foreign or domestic,to supply us with selected case goods,upholstery and home accessory items to enable us to maintain our competitive advantage.In addition,the emergence of foreign manufacturers has served to broaden the competitive landscape.Some

187、 of these competitors produce furniture types not manufactured by us and may have greater financial and other resources available to them.This competition could adversely affect our future financial performance.Failure to successfully anticipate or respond to changes in consumer tastes and trends in

188、 a timely manner could adversely impact our business,operating results and financial condition.Sales of our products are dependent upon consumer acceptance of our product designs,styles,quality and price.We continuously monitor changes in home design trends through attendance at international indust

189、ry events and fashion shows,internal marketing research,and regular communication with our retailers and design center design consultants who provide valuable input on consumer tendencies.However,as with all retailers,our business is susceptible to changes in consumer tastes and trends.Such tastes a

190、nd trends can change rapidly and 14 any delay or failure to anticipate or respond to changing consumer tastes and trends in a timely manner could adversely impact our business,operating results and financial condition.The consolidation of manufacturing and logistics operations into fewer sites may i

191、ncrease the exposure to business disruption and could result in higher transportation costs.The Company has reduced the number of redundant manufacturing sites in both our case goods and upholstery operations and operates a single accessories plant.Our upholstery operations consist of two upholstery

192、 plants on our Maiden,North Carolina campus supported by one cut and sew plant in Mexico.If any of these upholstery manufacturing sites experience significant business interruption,our ability to manufacture products timely would likely be impacted.The Company operates one sawmill in support of our

193、case goods operations.Our plants require various raw materials and commodities such as logs and lumber for our case good plants and foam,springs and engineered hardwood board for our upholstery plants.While we have long-standing relationships with multiple outside suppliers of our raw materials and

194、commodities,there can be no assurance of their ability to fulfill our supply needs on a timely basis.The consolidation to fewer wholesale and retail logistics operations has resulted in longer distances for delivery and could result in higher costs to transport products if fuel costs increase signif

195、icantly.Our current and former manufacturing and retail operations and products are subject to increasingly stringent environmental,health and safety requirements.We use and generate hazardous substances in our manufacturing and retail operations.In addition,both the manufacturing properties on whic

196、h we currently operate and those on which we have ceased operations are and have been used for industrial purposes.Our manufacturing operations and,to a lesser extent,our retail operations involve risk of personal injury or death.We are subject to increasingly stringent environmental,health and safe

197、ty laws and regulations relating to our products,current and former properties and our current operations.These laws and regulations provide for substantial fines and criminal sanctions for violations and sometimes require product recalls and/or redesign,the installation of costly pollution control

198、or safety equipment,or costly changes in operations to limit pollution or decrease the likelihood of injuries.In addition,we may become subject to potentially material liabilities for the investigation and cleanup of contaminated properties and to claims alleging personal injury or property damage r

199、esulting from exposure to or releases of hazardous substances or personal injury because of an unsafe workplace.We have been identified as a potentially responsible party in connection with one site that is currently listed,or proposed for inclusion,on the National Priorities List under the Comprehe

200、nsive Environmental Response,Compensation and Liability Act of 1980,as amended,or its state counterpart.In addition,noncompliance with,or stricter enforcement of,existing laws and regulations,adoption of more stringent new laws and regulations,discovery of previously unknown contamination or imposit

201、ion of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities that could be material.Fluctuations in the price,availability and quality of raw materials could result in increased costs or cause production delays which might result in a decli

202、ne in sales,either of which could adversely impact our earnings.We use various types of wood,foam,fibers,fabrics,leathers,and other raw materials in manufacturing our furniture.Certain of our raw materials,including fabrics,are purchased domestically and outside the United States.Fluctuations in the

203、 price,availability and quality of raw materials could result in increased costs or a delay in manufacturing our products,which in turn could result in a delay in delivering products to our customers.For example,lumber prices fluctuate over time based on factors such as weather and demand,which in t

204、urn,impact availability.Production delays or upward trends in raw material prices could result in lower sales or margins,thereby adversely impacting our earnings.15 In addition,certain suppliers may require extensive advance notice of our requirements in order to produce products in the quantities w

205、e desire.This long lead time may require us to place orders far in advance of the time when certain products will be offered for sale,thereby exposing us to risks relating to shifts in consumer demand and trends,and any further downturn in the U.S.economy.We depend on key personnel and could be affe

206、cted by the loss of their services.The success of our business depends upon the services of certain senior executives,and in particular,the services of M.Farooq Kathwari,Chairman of the Board,President and Chief Executive Officer,who is the only one of our senior executives who operates under a writ

207、ten employment agreement.The loss of any such person or other key personnel could have a material adverse effect on our business and results of operations.Our business is sensitive to increasing labor costs,competitive labor markets,our continued ability to retain high-quality personnel and risks of

208、 work stoppages.The market for qualified employees and personnel in the retail and manufacturing industries is highly competitive.Our success depends upon our ability to attract,retain and motivate qualified craftsmen,professional and clerical associates and upon the continued contributions of these

209、 individuals.We cannot provide assurance that we will be successful in attracting and retaining qualified personnel.A shortage of qualified personnel may require us to enhance our wage and benefits package in order to compete effectively in the hiring and retention of qualified employees.Our labor c

210、osts may continue to increase and such increases may not be recovered.In addition,some of our employees are covered by collective bargaining agreements with local labor unions.Although we do not anticipate any difficulty renegotiating these contracts as they expire,a labor-related stoppage by these

211、unionized employees could adversely affect our business and results of operations.The loss of the services of such personnel or our failure to attract additional qualified personnel could have a material adverse effect on our business,operating results and financial condition.Our success depends upo

212、n our brand,marketing and advertising efforts and pricing strategies.If we are not able to maintain and enhance our brand,or if we are not successful in these other efforts,our business and operating results could be adversely affected.Maintaining and enhancing our brand is critical to our ability t

213、o expand our base of customers and may require us to make substantial investments.Our advertising campaign utilizes television,direct mail,newspapers,magazines and radio to maintain and enhance our existing brand equity.We cannot provide assurance that our marketing,advertising and other efforts to

214、promote and maintain awareness of our brand will not require us to incur substantial costs.If these efforts are unsuccessful or we incur substantial costs in connection with these efforts,our business,operating results and financial condition could be adversely affected.We may not be able to maintai

215、n our current design center locations at current costs.We may also fail to successfully select and secure design center locations.Our design centers are typically located in busy urban settings as freestanding destinations or as part of suburban strip malls,depending upon the real estate opportuniti

216、es in a particular market.Our business competes with other retailers and as a result,our success may be affected by our ability to renew current design center leases and to select and secure appropriate retail locations for existing and future design centers.Our results of operations for any quarter

217、 are not necessarily indicative of our results of operations for a full year.Sales of furniture and other home furnishing products fluctuate from quarter to quarter due to such factors as changes in global and regional economic conditions,changes in competitive conditions,changes in production sched

218、ules in response to seasonal changes in energy costs and weather conditions,and changes in consumer order patterns.From time to time,we have experienced,and may continue to experience,volatility with respect 16 to demand for our home furnishing products.Accordingly,results of operations for any quar

219、ter are not necessarily indicative of the results of operations for a full year.Failure to protect our intellectual property could adversely affect us.We believe that our patents,trademarks,service marks,trade secrets,copyrights and all of our other intellectual property are important to our success

220、.We rely on patent,trademark,copyright and trade secret laws,and confidentiality and restricted use agreements,to protect our intellectual property and may seek licenses to intellectual property of others.Some of our intellectual property is not covered by any patent,trademark,or copyright or any ap

221、plications for the same.We cannot provide assurance that agreements designed to protect our intellectual property will not be breached,that we will have adequate remedies for any such breach,or that the efforts we take to protect our proprietary rights will be sufficient or effective.Any significant

222、 impairment of our intellectual property rights or failure to obtain licenses of intellectual property from third parties could harm our business or our ability to compete.Moreover,we cannot provide assurance that the use of our technology or proprietary know-how or information does not infringe the

223、 intellectual property rights of others.If we have to litigate to protect or defend any of our rights,such litigation could result in significant expense.Item 1B.Unresolved Staff Comments None.Item 2.Properties Our corporate headquarters,located in Danbury,Connecticut,consists of one building contai

224、ning 144,000 square feet,situated on approximately 18.0 acres of land,all of which is owned by us.Located adjacent to the corporate headquarters,and situated on approximately 5.4 acres,is the Ethan Allen Hotel and Conference Center,containing 193 guestrooms.This hotel,owned by a wholly-owned subsidi

225、ary of Ethan Allen,is used in connection with Ethan Allen functions and training programs,as well as for functions and accommodations for the general public.We operate seven manufacturing facilities located in five states and Mexico.All of these facilities are owned by the Company and include three

226、case goods plants(including one sawmill)totaling 1,548,845 square feet,three upholstery furniture plants(consisting of two upholstery plants on our Maiden,North Carolina campus and one cut and sew plant in Mexico)totaling 649,396 square feet,and one home accessory plant of 295,000 square feet.In our

227、 wholesale division,we own and operate one national distribution center supported by one owned small parcel and fulfillment center which are a combined 823,414 square feet.Our U.S.manufacturing and distribution facilities are located in North Carolina,Vermont,Virginia,Oklahoma,and New Jersey,and our

228、 Mexico plant is located in Guanajuato.We own five and lease 13 retail service centers,totaling 1,099,500 square feet.Our retail service centers are located throughout the United States and Canada and serve to support our various retail sales districts.The geographic distribution of our retail desig

229、n center network as of June 30,2010 is as follows:Retail Design Center Category Company Operated Independently Operated United States 140 81 Canada 5 2 Asia -49 Middle East -4 Total 145 136 17 Of the 145 Company-operated retail design centers,68 of the properties are owned and 77 of the properties a

230、re leased from independent third parties.Of the 68 owned design centers,18 are subject to land leases.We own nine additional retail properties,one of which is leased to an independent Ethan Allen retailer,and two of which are leased to unaffiliated third parties.See Note 8 to the Consolidated Financ

231、ial Statements included under Item 8 of this Annual Report for more information with respect to our operating lease obligations.Our Ethan Allen Hotel and Conference Center located in Danbury,Connecticut,was financed,in part,with industrial revenue bonds.The bonds bear interest at a fixed rate of 7.5

232、0%and have a remaining balance at June 30,2010 of$3.9 million which matures in one year.The Beecher Falls,Vermont manufacturing facility was financed,in part,by the Town of Canaan,Vermont.The associated remaining debt bears interest at a fixed rate of 3.00%and a balance at June 30,2010 of$0.3 millio

233、n,with maturities of two to 17 years.We believe that all of our properties are well maintained and in good condition.We estimate that our manufacturing plants are currently operating at approximately 65%of capacity.We believe we have additional capacity at selected facilities,which we could utilize

234、with minimal additional capital expenditures.Item 3.Legal Proceedings We are a party to various legal actions with customers,employees and others arising in the normal course of our business.We maintain liability insurance,which is deemed to be adequate for our needs and commensurate with other comp

235、anies in the home furnishings industry.We believe that the final resolution of pending actions(including any potential liability not fully covered by insurance)will not have a material adverse effect on our financial condition,results of operations,or cash flows.Environmental Matters We and our subs

236、idiaries 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.During fiscal 2009,three locations where we and/or our

237、subsidiaries had been named as a Potentially Responsible Party(“PRP”)were resolved.In each case,we were not a major contributor based on the very small volume of waste generated by us in relation to total volume at those sites and were able to take part in de minimis settlement arrangements.One addi

238、tional site in Carroll,New York continued to be evaluated as of June 30,2010.We believe that we are not a major contributor.Liability under the Comprehensive Environmental Response,Compensation and Liability Act of 1980,as amended may be joint and several.As such,to the extent certain named PRPs are

239、 unable,or unwilling,to accept responsibility and pay their apportioned costs,we could be required to pay in excess of our pro rata share of incurred remediation costs.Our understanding of the financial strength of other PRPs has been considered,where appropriate,in the determination of our estimate

240、d liability.As of June 30,2010,we believe that established reserves related to these environmental contingencies are adequate to cover probable and reasonably estimable costs associated with the remediation and restoration of this site.We believe our currently anticipated capital expenditures for en

241、vironmental 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 conce

242、rn 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 furnitu

243、re 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 18 and alternative formulations.In addition,we have instituted a variety of technical

244、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 e

245、missions 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

246、 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 manu

247、facturing process.Item 4.Reserved PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under ticker symbol ETH.The following table sets forth,for each of the past two fiscal

248、 years,(i)closing,and intraday high and low and stock prices as reported on the New York Stock Exchange and(ii)the dividend per share paid by us:Market Price Dividend High Low Close Per Share Fiscal 2010 First Quarter$17.62$9.97$16.50$0.05 Second Quarter 16.96 11.00 13.42 0.05 Third Quarter 22.00 13

249、.00 20.63 0.05 Fourth Quarter 25.40 13.82 13.99 0.05 Fiscal 2009 First Quarter$34.02$22.34$28.02$0.25 Second Quarter 28.90 11.26 14.37 0.25 Third Quarter 15.05 6.98 11.26 0.10 Fourth Quarter 14.47 9.86 10.36 0.05 As of August 13,2010,there were 336 shareholders of record of our common stock.Manageme

250、nt estimates there are over eleven thousand beneficial shareholders of the Companys common stock.On July 20,2010,we declared a dividend of$0.05 per common share,payable on October 25,2010 to shareholders of record as of October 11,2010.We expect to continue to declare quarterly dividends for the for

251、eseeable future,business conditions permitting.Equity Compensation Plan Information The information required by this Item 5 with respect to Equity Compensation Plan Information is set forth in Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,cont

252、ained in this Annual Report and incorporated herein by reference.Issuer Purchases of Equity Securities Certain information regarding purchases made by or on behalf of us or any affiliated purchaser(as defined in Rule 10b-18(a)(3)under the Securities Exchange Act of 1934,as amended)of our common stoc

253、k during the three months ended June 30,2010 is provided below:19 Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(b)Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(b)A

254、pril 2010-1,567,669 May 2010-1,567,669 June 2010 (a)182,600$14.18 182,600 1,385,069 Total 182,600$14.18 182,600 (a)Purchased in two separate open market transactions on two different trading days.(b)On November 21,2002,our Board of Directors approved a share repurchase program authorizing us to repu

255、rchase up to 2,000,000 shares of our common stock,from time to time,either directly or through agents,in the open market at prices and on terms satisfactory to us.Subsequent to that date,the Board of Directors increased the remaining authorization on seven separate occasions,the last of which was on

256、 November 13,2007.Subsequent to June 30,2010 and through August 19,2010,we repurchased,in three separate open market transactions,an additional 204,286 shares of our common stock at a total cost of$2.8 million,representing a weighted average price per share of$13.65.As of August 19,2009,we had a rem

257、aining Board authorization to repurchase 1,180,783 million shares.Stockholder Rights Plan We have a Stockholder Rights Plan,a description of which is set forth in Note 9 to the Consolidated Financial Statements included under Item 8 of this Annual Report and incorporated herein by reference.Such des

258、cription contains all of the required information with respect thereto.Comparative Company Performance The following line graph compares cumulative total stockholder return for the Company with a performance indicator of the overall stock market,the Standard&Poors 500 Index,and an industry index,the

259、 Peer Issuer Group Index,assuming$100 was invested on June 30,2005.20$0$20$40$60$80$100$120$1406/056/066/076/086/096/10COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Ethan Allen Interiors Inc.,the S&P 500 Indexand a Peer GroupEthan Allen Interiors Inc.S&P 500Peer Group*$100 invested on 6/30/05 i

260、n stock or index,including reinvestment of dividends.Fiscal years ending June 30.Copyright 2010 S&P,a division of The McGraw-Hill Companies Inc.All rights reserved.Peer group includes Bassett Furniture Industries,Inc.,Chromcraft Revington,Inc.,Flexsteel Industries,Inc.,Furniture Brands International

261、,Inc.,Haverty Furniture Companies,Inc.,La-Z-boy Inc.,Legett&Platt,Inc.,and Pier 1 Imports Inc.The returns of each company have been weighted according to each companys market capitalization.Item 6.Selected Financial Data The following table presents selected financial data for the fiscal years ended

262、 June 30,2010,2009,2008,2007 and 2006 which has been derived from our consolidated financial statements.The information set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations included under Item 7 of this Annual Report

263、and our Consolidated Financial Statements(including the notes thereto)included under Item 8 of this Annual Report.21 Fiscal Year Ended June 30,2010 2009 2008 2007 2006 Statement of Operations Data:Net sales$590,054$674,277$980,045$1,005,312$1,066,390 Cost of sales 309,777 326,935 453,980 478,729 525

264、,408 Selling,general and administrative expenses 289,575 353,112 423,229 402,022 394,069 Restructuring and impairment charges,net 2,437 67,001 6,836 13,442 4,241 Operating income(loss)(11,735)(72,771)96,000 111,119 142,672 Interest and other expense,net 7,052 8,409 3,822 1,393 4,567 Income(loss)befo

265、re income tax expense (18,787)(81,180)92,178 109,726 138,105 Income tax expense(benefit)25,529 (28,493)34,106 40,499 52,423 Net income(loss)$(44,316)$(52,687)$58,072$69,227$85,682 Per Share Data:Net income(loss)per basic share$(1.53)$(1.83)$1.98$2.19$2.58 Basic weighted average shares outstanding 28

266、,982 28,814 29,267 31,566 33,210 Net income(loss)per diluted share$(1.53)$(1.83)$1.97$2.15$2.51 Diluted weighted average shares outstanding 28,982 28,814 29,470 32,261 34,086 Cash dividends per share$0.20$0.65$0.88$0.80$0.72 Other Information:Depreciation and amortization$29,398$25,635$24,670$23,013

267、$21,599 Capital expenditures and acquisitions$9,972$23,903$67,815$74,370$49,296 Working capital$113,950$139,239$176,796$234,990$278,038 Current ratio 1.78 to 1 2.24 to 1 2.30 to 1 2.59 to 1 2.88 to 1 Effective tax rate -135.9%35.1%37.0%36.9%38.0%Balance Sheet Data(at end of period):Total assets$631,

268、777$646,485$764,093$802,598$814,100 Total debt,including capital lease obligations 203,267 203,148 203,029 202,908 202,787 Shareholders equity$258,459$305,923$375,773$409,642$417,442 Debt as a percentage of equity 78.6%66.4%54.0%49.5%48.6%Debt as a percentage of capital 44.0%39.9%35.1%33.1%32.7%22 I

269、tem 7.Managements Discussion and Analysis of Financial Condition and Results of Operation The following discussion of financial condition and results of operations is based upon,and should be read in conjunction with,our Consolidated Financial Statements(including the notes thereto)included under It

270、em 8 of this Annual Report.Forward-Looking Statements Managements discussion and analysis of financial condition and results of operations and other sections of this Annual Report contain forward-looking statements relating to our future results.Such forward-looking statements are identified by use

271、of forward-looking words such as anticipates,believes,plans,estimates,expects,and intends or words or phrases of similar expression.These forward-looking statements are subject to management decisions and various assumptions,risks and uncertainties,including,but not limited to:the effects of terrori

272、st attacks or conflicts or wars involving the United States or its allies or trading partners;the effects of labor strikes;weather conditions that may affect sales;volatility in fuel,utility,transportation and security costs;changes in global or regional political or economic conditions,including ch

273、anges in governmental and central bank policies;changes in business conditions in the furniture industry,including changes in consumer spending patterns and demand for home furnishings;effects of our brand awareness and marketing programs,including changes in demand for our existing and new products

274、;our ability to locate new design center sites and/or negotiate favorable lease terms for additional design centers or for the expansion of existing design centers;competitive factors,including changes in products or marketing efforts of others;pricing pressures;fluctuations in interest rates and th

275、e cost,availability and quality of raw materials;those matters discussed in Items 1A and 7A of this Annual Report and in our SEC filings;and our future decisions.Accordingly,actual circumstances and results could differ materially from those contemplated by the forward-looking statements.Critical Ac

276、counting Policies Our consolidated financial statements have been prepared in conformity with U.S.generally accepted accounting principles that require,in some cases,that certain estimates and assumptions be made that affect the amounts and disclosures reported in those financial statements and the

277、related accompanying notes.Estimates are based on currently known facts and circumstances,prior experience and other assumptions believed to be reasonable.We use our best judgment in valuing these estimates and may,as warranted,solicit external advice.Actual results could differ from these estimates

278、,assumptions and judgments,and these differences could be material.The following critical accounting policies,some of which are impacted significantly by estimates,assumptions and judgments,affect our consolidated financial statements.Inventories Inventories(finished goods,work in process and raw ma

279、terials)are stated at the lower of cost,determined on a first-in,first-out basis,or market.Cost is determined based solely on those charges incurred in the acquisition and production of the related inventory(i.e.material,labor and manufacturing overhead costs).We estimate an inventory reserve for ex

280、cess quantities and obsolete items based on specific identification and historical write-downs,taking into account future demand and market conditions.If actual demand or market conditions in the future are less favorable than those estimated,additional inventory write-downs may be required.Revenue

281、Recognition Revenue is recognized when all of the following have occurred:persuasive evidence of a sales arrangement exists(e.g.a wholesale purchase order or retail sales invoice);the sales arrangement specifies a fixed or determinable sales price;product is shipped or services are provided to the c

282、ustomer;and collectibility is reasonably assured.As such,revenue recognition occurs upon the shipment of goods to independent retailers or,in the case of Ethan Allen-operated retail design centers,upon delivery to the customer.Recorded sales provide for estimated returns and allowances.We permit our

283、 customers to return defective products and incorrect shipments,and terms we offer are standard for the industry.23 Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments.The allowanc

284、e for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis.Judgments are made with respect to the collectibility of accounts receivable based on historical experience and current economic trends.Actual losses could differ from those esti

285、mates.Retail Design Center Acquisitions-We account for the acquisition of retail design centers and related assets with the purchase method.Accounting for these transactions as purchase business combinations requires the allocation of purchase price paid to the assets acquired and liabilities assume

286、d based on their fair values as of the date of the acquisition.The amount paid in excess of the fair value of net assets acquired is accounted for as goodwill.Impairment of Long-Lived Assets and Goodwill We periodically evaluate whether events or circumstances have occurred that indicate that long-l

287、ived and indefinite-lived assets may not be recoverable or that the remaining useful life may warrant revision.When such events or circumstances are present,the Company determines whether the carrying value exceeds the fair value as described below.The recoverability of long-lived assets are evaluat

288、ed for impairment by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asset.In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the asset,an impairment loss eq

289、ual to the excess of the assets carrying value over its fair value is recorded.The long-term nature of these assets requires the estimation of cash inflows and outflows several years into the future and only takes into consideration technological advances known at the time of the impairment test.Goo

290、dwill and other indefinite-lived intangible assets are evaluated for impairment on an annual basis and between annual tests whenever events or circumstances indicate that the carrying value of the goodwill or other intangible asset may exceed its fair value.We conduct our required annual impairment

291、test of goodwill and other intangible assets during the fourth quarter of each fiscal year.To evaluate goodwill,the Company determines the current fair value of the Reporting Units using a combination of“Market”and“Income”approaches.In the Market approach,the“Guideline Company”method is used,which f

292、ocuses on comparing the Companys risk profile and growth prospects to reasonably similar publicly traded companies.Key assumptions used for the Guideline Company method are total invested capital(“TIC”)multiples for revenues and operating cash flows,as well as consideration of control premiums.The T

293、IC multiples are determined based on public furniture companies within our peer group,and if appropriate,recent comparable transactions are also considered.Control premiums are determined using recent comparable transactions in the open market.Under the Income approach,a discounted cash flow method

294、is used,which includes a terminal value,and is based on external analyst financial projection estimates,as well as internal financial projection estimates prepared by management.The long-term terminal growth rate assumptions reflect our current long-term view of the market in which we compete.Discou

295、nt rates use the weighted average cost of capital for companies within our peer group,adjusted for specific company risk premium factors.The fair value of our trade name,which is the Companys only indefinite-lived intangible asset other than goodwill,is valued using the relief-from-royalty method.Si

296、gnificant factors used in trade name valuation are rates for royalties,future growth,and a discount factor.Royalty rates are determined using an average of recent comparable values.Future growth rates are based on the Companys perception of the long-term values in the market in which we compete,and

297、the discount rate is determined using the weighted average cost of capital for companies within our peer group,adjusted for specific company risk premium factors.The economic downturn that began in the fall of 2008 negatively impacted the Companys revenues and operating margins.In response,the Compa

298、ny reduced headcount,consolidated its manufacturing,retail,and 24 logistics footprint and repositioned its marketing approach.The Companys cash flow forecasts were updated regularly to reflect the rapid changes in the business and the industry.The cash flow projections used in its fair value evaluat

299、ions are the best estimates of the Company and require significant management judgment.During fiscal 2009,the Company determined that$48.4 million of goodwill in the Retail segment was considered impaired and fully written off.The Company performed its annual impairment test in fiscal 2009 and deter

300、mined that no impairment of its remaining goodwill,reported in its wholesale segment was appropriate as the fair value of its net assets exceeded the book value by approximately 10%.During fiscal 2010,the Company concluded that no interim impairment test of its indefinite lived assets was required.N

301、et sales,gross profit,operating income,net income,written orders,and other indicators improved from previous quarters,and though some financial metrics were below management forecasts,our long-term outlook had not changed significantly.The Companys average quarterly stock price increased from$12.11

302、for the quarter ended June 30,2009,to$16.91 for the quarter ended March 31,2010),and cash(including restricted cash)and marketable securities increased to$85.2 million at March 31,2010 from$53.0 million at June 30,2009.During the third and fourth quarters of fiscal 2010,business performance improved

303、 with net sales up sequentially and from the previous year,gross margin improved and cash(including restricted cash)and marketable securities increased to$102.2 million by fiscal year end.The average price of our stock during the fourth fiscal quarter of 2010 was$19.67.In the fourth fiscal quarter e

304、nded June 30,2010,the Company performed its annual impairment test and determined that the fair values of the Wholesale reporting unit and trade name exceeded their carrying value by a substantial margin.To calculate fair value of the assets described above,management relies on estimates and assumpt

305、ions which by their nature have varying degrees of uncertainty.Wherever possible,management therefore looks for third party transactions as described above to provide the best possible support for the assumptions incorporated.Management considers several factors to be significant when estimating fai

306、r value including expected financial outlook of the business,changes in the Companys stock price,the impact of changing market conditions on financial performance and expected future cash flows,and other factors.Deterioration in any of these factors may result in a lower fair value assessment,which

307、could lead to impairment of the long-lived assets and goodwill of the Company.Income Taxes Income taxes are accounted for under the asset and liability method.Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statemen

308、t carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expe

309、cted to be recovered or settled.The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.Additional factors that we consider when making judgments about the deferred tax valuation include tax law changes,a recen

310、t history of cumulative losses,and variances in future projected profitability.The Company evaluates quarterly uncertain tax positions taken or expected to be taken on tax returns for recognition,measurement,presentation,and disclosure in its financial statements.If an income tax position exceeds a

311、50%probability of success upon tax audit,based solely on the technical merits of the position,the Company recognizes an income tax benefit in its financial statements.The tax benefits recognized are measured based on the largest benefit that has a greater than 50%likelihood of being realized upon ul

312、timate settlement.The liability associated with an unrecognized tax benefit is classified as a long-term liability except for the amount for which a cash payment is expected to be made or tax positions settled within one year.We recognize interest and penalties related to income tax matters as a com

313、ponent of income tax expense.Business Insurance Reserves We have insurance programs in place to cover workers compensation and property/casualty claims.The insurance programs,which are funded through self-insured retention,are subject 25 to various stop-loss limitations.We accrue estimated losses us

314、ing actuarial models and assumptions based on historical loss experience.Although we believe that the insurance reserves are adequate,the reserve estimates are based on historical experience,which may not be indicative of current and future losses.In addition,the actuarial calculations used to estim

315、ate insurance reserves are based on numerous assumptions,some of which are subjective.We adjust insurance reserves,as needed,in the event that future loss experience differs from historical loss patterns.Other Loss Reserves We have a number of other potential loss exposures incurred in the ordinary

316、course of business such as environmental claims,product liability,litigation,tax liabilities,restructuring charges,and the recoverability of deferred income tax benefits.Establishing loss reserves for these matters requires the use of estimates and judgment with regard to maximum risk exposure and u

317、ltimate liability or realization.As a result,these estimates are often developed with our counsel,or other appropriate advisors,and are based on our current understanding of the underlying facts and circumstances.Because of uncertainties related to the ultimate outcome of these issues or the possibi

318、lities of changes in the underlying facts and circumstances,additional charges related to these issues could be required in the future.Basis of Presentation As of June 30,2010,Ethan Allen Interiors Inc.has no material assets other than its ownership of the capital stock of Ethan Allen Global,Inc.and

319、 conducts all significant transactions through Ethan Allen Global,Inc.;therefore,substantially all of the financial information presented herein is that of Ethan Allen Global,Inc.Results of Operations Our business has been severely impacted by the economic factors in the United States and abroad whi

320、ch we began to feel in earnest during our second quarter of fiscal 2009.High unemployment,volatile capital markets,depressed housing prices and tight consumer spending all put negative stress on the economy and continue to have a negative impact on our business.As we work through these difficult tim

321、es,we have taken dramatic actions to significantly reduce costs in all facets of our business including closing and realigning manufacturing plants,consolidating logistics operations,and closing under-performing retail design centers.These actions have been taken with appropriate consideration for d

322、emand and management believes it has retained sufficient scalable capacity.We have also launched initiatives to increase sales,such as special savings product promotions,our designer affiliate program,and completed the conversion of our case goods products to custom this fiscal year.Income Tax Valua

323、tion Allowance:As a result of losses we sustained for fiscal 2010 and 2009,which were brought on by the severe economic factors discussed earlier,we reassessed the likelihood that we would be able to realize the benefits of our deferred federal,state and foreign deferred tax assets.As a result,we re

324、corded a$34.1 million valuation allowance against those assets,with a non-cash charge to earnings in the fourth quarter of fiscal 2010.Restructuring Activities:In recent years,we have announced and executed plans to consolidate our operations as part of an overall strategy to maximize production eff

325、iciencies and maintain our competitive advantage.Activity in the Companys restructuring reserves is classified with accrued expenses and other current liabilities in the Consolidated Balance Sheets:In fiscal 2009,the Company announced(i)upholstery plants in Eldred,Pennsylvania and Chino,California w

326、ere consolidated into the Maiden,North Carolina and Silao,Mexico operations,(ii)closure of the Andover,Maine sawmill,(iii)the move of assembly and finishing operations from Beecher Falls,Vermont to Orleans,Vermont,and(iv)wholesale distribution and retail service centers were consolidated.We also beg

327、an the conversion of our 26 domestic case goods manufacturing from producing to a forecast to producing to fill custom orders already written.The total pre-tax restructuring,impairment,accelerated depreciation and other related charges for these fiscal 2009 actions was$29 million($23 million in the

328、wholesale segment and$6 million in the retail segment).The charges arose from(i)a$17 million impact on long-lived assets,(ii)$8 million in employee severance,compensation,and benefit costs,and(iii)$4 million in other associated costs.Current fiscal year charges for these actions include$6.6 million

329、in accelerated depreciation charges for Wholesale(included in cost of sales in the Statement of Operations)partially offset by$0.2 million of restructuring credits,and$2.7 million of restructuring charges for the Retail segment(primarily due to adjustments on non-cancellable leases).These restructur

330、ing actions announced in fiscal 2009 were completed during fiscal 2010,with the remaining liability at June 30,2010 primarily for non-cancellable lease obligations(expirations of less than one year up to five years).In fiscal 2008,we announced a plan to consolidate the operations of certain Ethan Al

331、len-operated retail design centers and retail service centers.In connection with this initiative,we permanently ceased operations at ten design centers and six retail service centers which,for the most part,were consolidated into other existing operations.The restructuring is now complete,with the r

332、emaining liability at June 30,2010 primarily for non-cancellable lease obligations(expirations of less than one year up to 23 years)and other employee benefit costs.Costs for these actions in the current fiscal year resulted in a net$0.2 million credit in the Retail segment due primarily to non-canc

333、ellable lease adjustments.Cumulative charges to date for these actions total$5.7 million.All charges for the fiscal 2009 and 2008 restructuring activities above are included as restructuring and impairment charges in the Statement of Operations unless otherwise noted above.Business Results:Our revenues are comprised of(i)wholesale sales to independently operated and Company-operated retail design