1、2009 ETHAN ALLEN GLOBAL,INC.09annualreportThe challenges of operating this business infiscal 2009 were extreme,but they also gave usan opportunity to aggressively restructureand reinvent many elements of our enterprise.These actions have made us ready for chal-lenges and opportunities as we move for
2、ward.We reduced our cost structure by$150 millioncompared to fiscal 2008,which affected everyfacet of our vertically integrated structureand included the consolidation of several manu-facturing,distribution,and retail operations.We improved liquidity and maximized cash byreducing inventories by$30 m
3、illion,cuttingquarterly dividends to$0.05 from$0.25 pershare,contributing stock in lieu of cash to our401(k)plan,reducing the cash compensationof management,and establishing a$40 millionasset-based revolving credit facility.We also took the following important steps tostrengthen the business and pos
4、ition ourselvesfor growth as we move forward:We continued to evolve into a solutions-based interior design enterprise.Substantiallyall of our associates in our Design Centers arequalified in interior design.We also strengthenedtheir service approach by implementing a team-based structure,which match
5、es the skills of ourdesign consultants with the needs of their clients.We maintained a strong network at retail.At the end of the fiscal year,we had 293 DesignCenters159 operated by the company and134 by our independent retailers.Due to majorinvestments made during the last ten years,half of our Des
6、ign Centers are less than six yearsold,while 30%are less than three years old.Asa result,we expect to continue substantiallyreducing our capital expenditures from$60 mil-lion in fiscal 2008 and$22.5 million in fiscal 2009to less than$15 million expected in fiscal 2010.We introduced our Interior Desi
7、gner Affiliate(IDA)membership program.This initiativeto enroll independent interior designers as anextension of our retail network expands ourreach to more clients.The independent design-ers will work in cooperation with our in-housedesign consultants,and the program offers amajor opportunity to gro
8、w our business.We enhanced our products.We expandedour custom offerings beyond upholstery tonow include case goods.We expect to substan-tially complete a transition to custom casegoods by the end of fiscal 2010.In manageableincrements,we have also been transitioningall of our case goods to eco-frien
9、dly water-based finishes.These initiatives should helpour domestic case goods to operate profitablyand offer a competitive advantage.We maintained a strong national advertisingand marketing communications presence.This fiscal year we centralized our advertisingcampaign efforts,which enabled us to sa
10、vecosts while continuing to get out our messagesto inspire,build traffic,and introduce initiatives.Our approach is multi-layered and includesnational television ads,national and local printadvertising,our new online magazines,emailblasts,web advertising,targeted direct mail,and new free Style Worksh
11、ops.We strengthened our U.S.-based manufac-turing.We announced during the fiscal yearthe consolidation of two upholstery plants andthe realignment of our Northeastern case goodsplants.This effort moves our operations to ourmost viable owned locations,and it puts us in aposition to use our U.S.-based
12、 manufacturingto our advantage,with real benefits in terms ofquality,style,and delivery for our clients.We consolidated and refined our logisticsnetwork.During the year,we continued toconsolidate several leased retail warehouseservice centers to company-owned distributionfacilities.As of June 30,200
13、9,we were operating26 service centers,compared to 34 at the endof fiscal 2008,and 50 at the end of fiscal 2007.We improved our technology.Early in 2009,we launched an award-winning state-of-the-artwebsite,which offers an inno-vative combination of personal service andtechnology.The website offers an
14、 interactivedesign tool called My Projects that allowssite visitors to create idea boards and roomplans and get feedback online from a designconsultant at a local Design Center.We alsocontinued to improve our information systemswith the roll-out of an updated retail systemwe call Vision 8,and also c
15、ontinued to upgradeour manufacturing information systems.With these initiatives in place,we believe wehave positioned Ethan Allen for growth andprofitability.We appreciate your continuedconfidence and support.Sincerely,dearshareholdersFA R OOQ KAT HWA R IChairman of the Board,President and CEOEthan
16、Allen Interiors Inc.COR POR AT E D ATACorporate HeadquartersETHAN ALLEN INTERIORS INC.ETHAN ALLEN DRIVEDANBURY,CT Transfer AgentCOMPUTERSHARE INVESTOR SERVICES,LLC2 NORTH LASALLE STREETP.O.BOX A3504CHICAGO,IL 60690-3504312.360.5196Independent CertifiedPublic AccountantsKPMG LLP3001 SUMMER STREETSTAM
17、FORD,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.D IR ECT OR SFarooq KathwariCHAIRMAN OF THE BOARD,PRESIDENTAND CHIEF EXECUTIVE OFFICERJoh
18、n 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 ROAD ADVISORS,INC.Richard A.SandbergCHIEF FINANC
19、IAL OFFICER OFOXFORD IMMUNOTEC,LTD.Ambassador Frank G.WisnerINTERNATIONAL AFFAIRS ADVISOR OFPATTON BOGGS LLP.OF F ICER SFarooq KathwariCHAIRMAN OF THE BOARD,PRESIDENTAND CHIEF EXECUTIVE OFFICERPamela A.BanksVICE PRESIDENT,GENERAL COUNSELAND SECRETARYDavid R.CallenVICE PRESIDENT,FINANCE AND TREASURER
20、Don GarrettVICE PRESIDENT,CASE GOODSMANUFACTURINGDaniel M.GrowVICE PRESIDENT,BUSINESS DEVELOPMENTHenry KapteinaDIRECTOR,INTERNAL AUDITSandra LamenzaGENERAL MANAGER,ETHAN ALLEN HOTELJames D.McCrearyVICE PRESIDENT,FURNITURE SOURCINGJack MollGENERAL MANAGER,PHYSICAL DISTRIBUTIONNora MurphyEXECUTIVE VIC
21、E PRESIDENT,STYLE AND ADVERTISINGKenneth MusanteMANUFACTURING CONTROLLERTracy PaccioneVICE PRESIDENT,MERCHANDISINGCraig StoutVICE PRESIDENT,PRODUCT DEVELOPMENTCASE GOODS AND UPHOLSTERYLynda W.StoutVICE PRESIDENT,RETAIL DIVISIONClifford ThornVICE PRESIDENT,UPHOLSTERYMANUFACTURINGCorey WhitelyEXECUTIV
22、E VICE PRESIDENT,OPERATIONSAnn M.ZaccariaVICE PRESIDENT,REAL ESTATE UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K/A (Amendment No.1)(Mark One)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30,2009
23、 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 incorporati
24、on 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 Each Exchang
25、e 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.X Yes No Indicate by check
26、 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 months(or
27、 for such shorter period that the Registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.X Yes No Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Da
28、te 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 pursuant t
29、o 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 registrant i
30、s 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 Registrant is a she
31、ll 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 31,2008,(the last day of the Registrants most recently compl
32、eted second fiscal quarter)was approximately$413,411,234.As of July 31,2009,there were 28,916,929 shares of the Registrants common stock,par value$.01 per share,outstanding.DOCUMENTS INCORPORATED BY REFERENCE:The Registrants definitive Proxy Statement for the 2009 Annual Meeting of stockholders,whic
33、h 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 EXPLANATORY NOTE Ethan Allen Int
34、eriors,Inc.(the“Company”)is filing this Amendment No.1 on Form 10-K/A(the“Form 10-K/A”)to the Companys Annual Report on Form 10-K for the year ended June 30,2009(the“Original Filing”),to correct a typographical error in the description and subtotal for total comprehensive income(loss)appearing in th
35、e Consolidated Statements of Shareholders Equity for the year ended June 30,2009.See the Consolidated Statements of Shareholders Equity appearing on page 43 of the audited consolidated financial statements contained in this form 10-K/A.For the convenience of the reader,this Form 10-K/A sets forth th
36、e Original Filing in its entirety.However,this form 10-K/A only amends Item 8 of part II of the Original Filing,to correct a typographical error in the description and subtotal for other comprehensive income(loss),and no other information in the Original Filing is amended hereby.In addition,Item 15
37、of Part IV of the Original Filing has been amended to contain currently dated consent,and certifications from the Companys Chief Executive Officer and Chief Financial Officer,and are attached to this form 10-K/A as Exhibits 23,31.1,31.2,32.1 and 32.2 2 TABLE OF CONTENTS Item Page PART I 1.Business 3
38、 1A.Risk Factors 11 1B.Unresolved Staff Comments 16 2.Properties 16 3.Legal Proceedings 17 4.Submission of Matters to a Vote of Security Holders 18 PART II 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 19 6.Selected Financial Data 20 7.M
39、anagements Discussion and Analysis of Financial Condition and Results of Operation 22 7A.Quantitative and Qualitative Disclosures About Market Risk 37 8.Financial Statements and Supplementary Data 37 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77 9A.Control
40、s and Procedures 77 9B.Other Information 77 PART III 10.Directors,Executive Officers and Corporate Governance 77 11.Executive Compensation 77 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 77 13.Certain Relationships and Related Transactions,and Dir
41、ector Independence 77 14.Principal Accountant Fees and Services 77 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 Et
42、han Allen Global,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 netw
43、orks.In recent years,we have made,and continue to make,considerable investment in our business in order to expand and improve our interior design capabilities.In order to better reflect these expanded capabilities,we have changed the designation of our Ethan Allen retail outlets from stores to desig
44、n centers.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 stylish,high-
45、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 structure,(ii)our
46、 products and related marketing initiatives,(iii)our retail design center network,(iv)our people,and(v)our numerous customer service offerings.Operating Segments Our operations are classified into two operating segments:wholesale and retail.These operating segments represent strategic business areas
47、 which,although they operate separately and provide their own distinctive services,enable us to more effectively offer our complete line of home furnishings and accessories.For certain financial information regarding our operating segments,see Note 16 to the Consolidated Financial Statements include
48、d under Item 8 of this Annual Report and incorporated herein by reference.The wholesale segment is principally involved in the development of the Ethan Allen brand,which encompasses the design,manufacture,domestic and off-shore sourcing,sale and distribution of a full range of home furnishings and a
49、ccessories to a network of independently operated and Ethan Allen operated design centers as well as related marketing and brand awareness efforts.Wholesale revenue is generated upon the wholesale sale and shipment of our product to all retail design centers,including those operated by Ethan Allen.W
50、holesale profitability includes(i)the wholesale gross margin,which represents the difference between the wholesale sales price and the cost associated with manufacturing and/or sourcing the related product,and(ii)other operating costs associated with wholesale segment activities.The retail segment s
51、ells home furnishings and accessories to consumers through a network of Company-operated design centers.Retail revenue is generated upon the retail sale and delivery of our product to our customers.Retail profitability includes(i)the retail gross margin,which represents the difference between the re
52、tail sales price and the cost of goods purchased from the wholesale segment,and(ii)other operating costs associated with retail segment activities.While the manner in which our home furnishings and accessories are marketed and sold is consistent,the nature of the underlying recorded sales(i.e.wholes
53、ale versus retail)and the specific services that each operating segment provides(i.e.wholesale manufacturing,sourcing,and distribution versus retail selling)are different.Within the wholesale segment,we maintain revenue information according to each respective product line(i.e.case goods,upholstery,
54、or home accessories and other).Sales of case good items include,but are not limited to,4 beds,dressers,armoires,tables,chairs,buffets,entertainment units,home office furniture,and wood accents.Sales of upholstery home furnishing items include sleepers,recliners,chairs,sofas,loveseats,cut fabrics and
55、 leather.Skilled craftsmen cut,sew and upholster custom-designed upholstery items which are available in a variety of frame and fabric options.Home accessory and other items include window treatments,wall decor,lighting,clocks,bedding and bedspreads,decorative accessories,area rugs,and home and gard
56、en furnishings.Revenue information by product line is not as easily determined within the retail segment.However,because wholesale production and sales are matched,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 whol
57、esale segment.We evaluate performance of the respective segments based upon revenues and operating income.Inter-segment eliminations result,primarily,from the wholesale sale of inventory to the retail segment,including the related profit margin.In fiscal 2009,wholesale sales to independent retailers
58、 and retail sales of Company-operated design centers accounted for approximately 25%and 75%,respectively,of our c consolidated net sales.Wholesale Segment Overview:Wholesale net sales for each of the last three fiscal years are summarized below(in millions):Fiscal Year Ended June 30,2009 2008 2007 W
59、holesale net sales$403.4$616.2$656.0 Wholesale net sales for each of the last three fiscal years,allocated by product line,were as follows:Fiscal Year Ended June 30,2009 2008 2007 Case Goods 41%43%44%Upholstered Products 41 40 38 Home Accessories and Other 18 17 18 100%100%100%During fiscal 2009,we
60、operated as many as ten manufacturing facilities,including four case good plants(two of which include separate sawmill operations),four upholstery plants and one home accessory plant,located within the United States and one cut and sew operation in Mexico.As announced during the fiscal year,we are c
61、onsolidating two upholstery plants into existing operations and one case goods plant including its sawmill operation.By the end of our first fiscal quarter of 2010,we plan to operate three case goods plants(including one sawmill),three upholstery plants(two upholstery plants on our Maiden,North Caro
62、lina campus and one cut and sew plant in Mexico)and one home accessory plant.We also source selected case good,upholstery,and home accessory items from third-party suppliers located both domestically and outside the United States.As of June 30,2009,we maintained a wholesale backlog of$20.6 million(a
63、s compared to$33.0 million as of June 30,2008)which is anticipated to be serviced in the first quarter of fiscal 2010.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 an
64、d volume of wholesale shipments.Because orders may be rescheduled and/or canceled,the measure of backlog at a point in time may not necessarily be indicative of future sales performance.For the twelve months ended June 30,2009,net orders booked at the wholesale level,which includes orders generated
65、by independently operated and Company-operated design centers,totaled$398.5 million as compared to$617.1 million for the twelve months ended June 30,2008.In any given period,net orders booked may be 5 impacted by the timing of floor sample orders received in connection with new product introductions
66、.New product offerings may be made available to the retail network at any time during the year,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 30,2
67、009 2008 2007 Retail net sales$508.6$724.6$698.6 We sell our products through a dedicated network of 293 retail design centers.As of June 30,2009,we operated 159 design centers and independent retailers operated 134 design centers(as compared to 159 and 136,respectively,at the end of the prior fisca
68、l year).The ten largest independent retailers own a total of 62 design centers,which,based on net orders booked,accounted for approximately 11%of total net sales in fiscal 2009.During fiscal 2009 we acquired four design centers from independent retailers,opened six new design centers(of which three
69、were relocations),and closed seven design centers.In addition,during the past year,independent retailers opened fourteen new design centers(of which three were relocations),and closed nine design centers.In the past five years,we and our independent retailers have,on a combined basis,opened 107 new
70、design centers(of which 44 were relocations),and closed 81.The geographic distribution of all retail design center locations is included under Item 2 of Part I of this Annual Report.We pursue further expansion of the Company-operated retail business by opening new design centers,relocating existing
71、design centers and,when appropriate,acquiring design centers from independent retailers.In addition,we continue to promote the growth and expansion of our independent retailers through ongoing support in the areas of market analysis,site selection,and business development.All retailers are required
72、to enter into license agreements with us which(i)authorize the use of certain Ethan Allen 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 agreem
73、ents in North America.Products Our strategy has been to position Ethan Allen as a preferred brand with superior quality and value while,at the same time,providing consumers with a comprehensive,one-stop shopping solution for their home furnishing needs.In carrying out our strategy,we continue to exp
74、and our reach to a broader consumer base through a diverse selection of attractively priced products,many of which have been designed to complement one another,reflecting the recent trend toward more eclectic home decorating.Recent product introductions,as well as increased styles and fabric selecti
75、ons within our custom upholstery line,new finishes for,and redesigns of,previous product introductions,and expanded product offerings to accommodate todays home decorating trends,are serving to redefine Ethan Allen,positioning us as a leader in style.In an effort to more effectively position ourselv
76、es as a provider of interior design solutions,we introduced a merchandising strategy which involves the grouping of our product offerings,previously categorized by collection,into seven distinct product“lifestyles”,each reflecting the diversity and eclecticism that we believe represents the best in
77、American design.In accordance with this merchandising strategy,new products are designed and developed to reflect unique elements applicable to one or more of the following lifestyles:Country House;Estate;Glamour;Global;Loft;Metro;and Villa.All of our case goods,upholstered products,and home accesso
78、ries are styled with distinct design characteristics.Home accessories play an important role in our marketing strategy as they enable us to offer the consumer the 6 convenience of one-stop shopping by creating a comprehensive home furnishing solution.The interior of our design centers is designed to
79、 facilitate display of our product offerings in complete room settings in order to project the category lifestyle.We continuously monitor changes in home design trends through attendance at international industry events and fashion shows,internal market research,and regular communication with our re
80、tailers and design center design consultants who provide valuable input on consumer tendencies.Observations and input gathered as a result of our efforts enable us to incorporate appropriate style details into our products thereby allowing us,we believe,to react quickly to changing consumer tastes.F
81、or example,since 2005,approximately 70%of our current complement of product offerings is new.Much of the balance has been refined and enhanced through product redesign,additions,deletions,and/or finish changes.Such undertakings are indicative of our ability to adapt to the current consumer trend tow
82、ard more casual and eclectic lifestyles while,at the same time,maintaining a classic appeal.In fiscal 2005,we also introduced an innovative pricing program,eliminating periodic sale events in lieu of a nation-wide uniform everyday best price on all of our product offerings.We believe that this appro
83、ach demonstrates our commitment to differentiating ourselves through strategies focused on customer credibility and excellence in service.In addition,everyday best pricing provided us the opportunity to critically examine all facets of our business,making substantive changes,where necessary,in order
84、 to more effectively carry out our solutions-based approach to home decorating.In response to the recession,in the latter part of fiscal 2009 the Company offered special savings mostly on select initiatives including new product introductions.Product Sourcing Activities We are one of the largest man
85、ufacturers of home furnishings in the United States,manufacturing and/or assembling approximately 65%of our products within six manufacturing facilities,one of which includes separate sawmill operations.Our facilities are located in the Northeast and Southeast regions of the United States and in Mex
86、ico where they are close to sources of raw materials and skilled craftsmen.The balance of our production is outsourced according to our own internally-developed design specifications,through third-party suppliers,most of which are located outside the United States.These suppliers,primarily in Asia,h
87、ave been carefully selected and generally have supplied us for many years.We believe that continued investment in our manufacturing facilities,combined with an appropriate level of outsourcing through both foreign and domestic suppliers,will accommodate future sales growth and allow us to maintain a
88、n appropriate degree of control over cost,quality and service to our customers.We also take pride in our“green”initiatives which include the use of responsibly harvested Appalachian woods,water based finishes,organic textiles and recycled materials.Raw Materials and Other Suppliers The most importan
89、t raw materials we use in furniture manufacturing are lumber,veneers,plywood,hardware,glue,finishing materials,glass,mirrored glass,laminates,fabrics,foam,and filling material.The various types of wood used in our products include cherry,ash,oak,maple,prima vera,mahogany,birch and pine,substantially
90、 all of which are purchased domestically.Fabrics and other raw materials are purchased both domestically and outside the United States.We have no significant long-term supply contracts,and have sufficient alternate sources of supply to prevent disruption in supplying our operations.We maintain a num
91、ber of sources for our raw materials which,we believe,contributes to our ability to obtain competitive pricing.Lumber prices fluctuate over time based on factors such as weather and demand,which,in turn,impact availability.Higher material prices could have an adverse effect on margins.7 Appropriate
92、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 materials are sufficient and that we are not dependent on any one supplier.We enter into standard purchase agreements with certain foreign and dom
93、estic suppliers to source selected case good,upholstery,and home accessory items.The terms of these arrangements are customary for the industry and do not contain any long-term contractual obligations on our behalf.We believe we maintain good relationships with our suppliers.Distribution and Logisti
94、cs Within the wholesale segment,we warehouse and distribute our products primarily through a national network of four primary distribution centers(three of which are owned)strategically located throughout the United States.These distribution centers hold finished product received from our manufactur
95、ing facilities and our third-party suppliers,for shipment to retail design centers and retail service centers.From time to time,we may also rent temporary warehouse space and/or utilize third-party logistics service providers to accommodate our additional storage needs.We stock selected case goods,u
96、pholstery and accessories to provide for quick delivery of in-stock items and to allow for more efficient production runs.Wholesale shipments are made utilizing our own fleet of trucks and trailers or through subcontracting agreements with independent carriers.Approximately 45%of our fleet(trucks an
97、d trailers)is leased under operating lease agreements with terms ranging from one to 72 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
98、 created pricing credibility with our customers 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
99、amounts of inventory in their own warehouses.As a result,we obtain more accurate information regarding product demand in order to better plan production runs and manage inventory levels.Retail service centers are operated by the Company and the independent retailers to prepare products for delivery
100、into clients homes.The Company-operated service centers have been made more efficient and enabled us to reduce the total number from 50 at the beginning of fiscal 2008 to 26 at the end of fiscal 2009.We continue to evaluate the entire logistics and distribution model to further streamline these oper
101、ations.Marketing Programs We believe that our ability to create high-quality marketing programs and coordinate advertising efforts for Ethan Allen design centers,including,from time to time,coordination of local market advertising,provides a competitive advantage over other home furnishing manufactu
102、rers and retailers.With a dedicated network of about 300 retail design centers taking advantage of such internally-developed marketing efforts,we believe we are better positioned to fulfill our brand promise on a more consistent basis.The objectives of our marketing campaign are to(i)communicate our
103、 position as both a leader in style and a full-service provider of home decorating and design solutions,and(ii)drive traffic into the retail design center network.In support of these objectives,several forms of media are utilized,including television(both national and local),direct mail,newspapers,m
104、agazines,radio,and our internet website.We also conduct a national email marketing campaign which serves to distribute electronic newsletters containing inspirational interior design ideas to a growing database of consumers.8 Our national television and print advertising campaigns are designed to ca
105、pitalize on our existing brand equity and maintain top-of-mind awareness of the breadth of our product and service offerings.With this is mind,our in-house team of advertising specialists has developed what we believe is the most cohesive national advertising campaign in the home furnishings industr
106、y.Coordinated local television and print,to the extent these media are utilized,serve to support our national programs.The Ethan Allen direct mail magazine,which brands our product lifestyles and communicates the breadth of our services,is one of our most important marketing tools.We publish and sel
107、l the magazines to both Company-operated and independently operated design centers,which,with demographic information collected through independent market research,are able to target potential customers.Given the importance of this advertising medium,direct mail marketing lists continue to be refine
108、d in order to target those consumers that are most likely to purchase,with the objective of improving our return on direct mail expenditures.Approximately 12 million copies of our direct mail magazine were distributed to consumers during fiscal 2009.Our television advertising and direct mail efforts
109、 are supported by strong print and radio campaigns in various markets.During fiscal 2009,we also updated our 200-page Ethan Allen Style book.This publication,which includes a catalogue of our home furnishings and accessories,projects our seven product lifestyles to our clients and helps customers id
110、entify their own personal style using our product offerings.We believe this publication represents one of the most comprehensive and effective home decorating resources in the home furnishings industry.In 2009,the Company launched the all-new website which combines personal service and technology.Th
111、e new state-of-the-art website provides a new way to shop for Ethan Allen and is designed to inspire visitors with videos,feature stories,design and style solutions,new photography,and Ethan Allens portfolio for livable designthe Seven Lifestyles.It offers a new interactive design tool called My Pro
112、jects that allows site visitors to create idea boards and room plans and get feedback online from a design consultant at a local design center.The websites Inspire section includes editorial features,new product stories,design trend information,decorating solutions,and a collection of creative films
113、 and TV clips showcasing Ethan Allens Lifestyles and looks.The As Seen In column shows visitors how Ethan Allen products have 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 explo
114、re the Seven Lifestyles in depth and after finding their own style with our style quiz,shop the furnishings featured in the fully designed rooms.For the first time,visitors to can now access nearly all of the Companys more than 3,000 products online.The new received recognition at the 2008 IAC Award
115、s(Internet Advertising Committee)as“outstanding website”.We have also developed an extranet website which links the retail design centers with consumer information captured on-line,such as customer requests for design assistance and copies of our direct mail magazine.This medium has become the prima
116、ry source of communications within our retail network providing a variety of information,including a Company-wide daily news flash,downloads of current advertising materials,prototype design center display floor plans and detailed product information.Retail Design Center Network Ethan Allen design c
117、enters are typically located in busy urban settings as freestanding destinations or as part of suburban strip malls,depending upon the real estate opportunities in a particular market.At the present time,our design centers average approximately 16,000 square feet in size.While the footprint for most
118、 of our retail network is similar,our design centers currently range in size 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.These standards assist each design cente
119、r in presenting a high quality image and offer retail customers consistent levels of product selection and service.A uniform design center image is conveyed through 9 our ongoing program to model all retail design centers with similar and consistent exterior facades and interior layouts.This program
120、 is carried out at all design centers,including those that are independently operated.We provide display planning assistance to all Company-operated design centers and independent retailers to support them in updating the interior projection and to maintain a consistent image.We have developed a sta
121、ndard interior design format for our retail network which,through the use of focused lifestyle settings to display our products and information displays to educate consumers,has positioned Ethan Allen as a leader in home furnishings retailing.We have strengthened the retail division with many initia
122、tives,including the opening 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 a team approach,and the consolidation of certain design centers and service center
123、s.The bulk of this effort was completed by the end of fiscal 2008,but continued in fiscal 2009 with six new Company-operated design centers during the year including relocations and seven in underperforming markets closed.We consolidated 16 Company-operated retail service centers into larger service
124、 centers in fiscal 2008 and another eleven in fiscal 2009.We also opened three Company-operated service centers in fiscal 2009.This effort continues to reduce the retail logistics infrastructure needed to provide“white glove”delivery service to our customers.People At June 30,2009,we had approximate
125、ly 4,300 employees(“associates”),less than one percent of whom are represented by unions.These collective bargaining agreements expire at various times within the next two years.We expect no significant changes in our relations with these unions and believe we maintain good relationships with our em
126、ployees.The retail network,which includes both Company-operated and independently operated design centers,is staffed with a sales force of design consultants and service professionals who operate in teams to provide customers with an effective home decorating solution at no additional charge.Our ass
127、ociates receive appropriate training with respect to the distinctive design and quality features inherent in each of our products and programs,allowing them to more effectively communicate the elements of style and value that serve to differentiate us from the competition.As such,we believe our desi
128、gn consultants,and the complimentary service they provide,create a distinct competitive advantage over other home furnishing retailers.We have made considerable investment within the retail network to strengthen the level of service,professionalism,interior design competence,efficiency,and effective
129、ness of retail design center personnel.The implementation of the team concept is the latest phase of that progression,which resulted in the development of over 280 interior design teams within the Company design centers.We believe that with this structure,along with the emphasis in our messaging to
130、clients that“we can help as little or as much as you like”,as well as offering the benefit of making appointments with our design professionals,we continue to improve the customer service experience.We recognize the importance of our retail design center network to our long-term success.Accordingly,
131、we believe we(i)have established strong management teams within Company-operated design centers and(ii)continue to work closely with our independent retailers in order to assist them in strengthening their teams.With this in mind,we make our services available to every design center,whether independ
132、ently operated or Company-operated,in support of their marketing efforts,including coordinated advertising,merchandising and display programs,and extensive training seminars and educational materials.We believe that the development of design teams,design consultants,service and delivery personnel,an
133、d retailers is important for the growth of our business.As a result,we have committed to make available a comprehensive retail training program which is intended to increase the customer service capabilities of each individual.10 Customer Service Offerings We offer numerous customer service programs
134、,each of which has been developed and introduced to consumers in an effort to make their shopping experience easier and more enjoyable.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
135、products or services.Rewards In celebration of the new website,the Company recently launched its“Become a Member”campaign.Members who are eligible receive 500 reward points.Each point is redeemable toward future qualifying purchases for up to the lesser of$500 or 5%of the total qualifying purchase p
136、rice.Shoppers can redeem their points both in Design Centers or online,through a limited time.On-Line Room Planning We offer,via our website,an interactive on-line room planning resource which serves to further assist consumers with their home decorating needs.Through the use of this web-based tool,
137、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 program offers consumers(clients)a menu of three custom financing options through the use of just one
138、 account.Clients can choose between(1)“Term Choice”which offers fixed monthly payments the customer chooses from 12 to 60 months at an interest rate from 3.99%to 9.99%per annum,(2)No Payment/Deferred Interest which offers clients a way to borrow interest free for three or six months with no monthly
139、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 24.99%per annum,and(3)“Ethan Allen Prime”which offers the lowest minimum monthly payment plan including no payments the first three months;interest is accrued at a rate that
140、 matches the current prime rate.All plans provide credit lines from$1,000 to$20,000,or greater,if the customer qualifies.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 Alle
141、n Finance Plus card at any participating design center or on-line at .Competition In recent years,the home furnishings industry has faced numerous challenges,not the least of which is an influx of low-priced competition from overseas.As a result,we believe a trend toward product commoditization has
142、developed.In fiscal 2009,the economic recession resulted in many small furniture retailers going out of business and other well-established competitors resorting to heavy discounts to liquidate inventory.Instead of following this trend,we differentiate ourselves as a preferred brand by adhering to a
143、 business strategy focused on providing(i)high-quality,well designed and often custom handmade products at good value,(ii)a comprehensive complement of home furnishing design solutions,including our complimentary design service,and(iii)excellence in customer service.We consider our vertical integrat
144、ion a significant competitive advantage in the current environment as it allows us to design,manufacture and source,distribute,market,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
145、sourcing strategy,establishing relationships with certain manufacturers,both domestically and outside the United States,to source selected case goods,upholstery,and home accessory items.We intend to continue to balance our domestic production with opportunities to source from foreign and domestic ma
146、nufacturers,as appropriate,in order to maintain our competitive advantage.11 We believe the home furnishings industry competes primarily 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 b
147、asis of each of these factors and that,more specifically,our retail format,our award winning website,and complimentary design service create a distinct competitive advantage,further supporting our mission of providing consumers with a complete home decorating and design solution.Our objective is to
148、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 from,or selling design centers to,independent retailers,and(ii)obtai
149、ning 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.Trademarks We currently hold,or have registration applications pending for,numerous trademar
150、ks,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 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 c
151、ertain of our slogans utilized in connection with promoting brand awareness,retail sales and other services.We view such trade and service marks as valuable assets and have an ongoing program to diligently monitor and defend,through appropriate action,against their unauthorized use.Available Informa
152、tion 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 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.Thi
153、s information is available at as soon as reasonably practicable after it is electronically filed with,or furnished to,the SEC.In addition,the SEC maintains a website that contains reports,proxy and information statements,and other information regarding companies that file electronically with the Com
154、mission.This information is available at www.sec.gov.In addition,charters of all committees of our Board of Directors,as well as our Corporate 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 Secre
155、tary,Ethan Allen Interiors Inc.,Ethan Allen Drive,Danbury,Connecticut 06811.Item 1A.Risk Factors The following information describes certain significant risks and uncertainties inherent in our business that should be carefully considered,along with other information contained elsewhere in this repor
156、t 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 business,including our financial condition,results of operations,and cash flows could be adverse.A prolonged economic downturn may continue to materially adver
157、sely affect our business.Our business and results of operations are affected by international,national and regional economic conditions.The United States and many other international economies have entered a recession.Our primary customer base,direct or indirect,is composed of individual consumers.C
158、ontinued weakness in the U.S.economy,high unemployment,volatile capital markets,depressed 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 negative
159、ly affected our business.In the event the current economic 12 downturn continues,or worsens,our current and 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.Acces
160、s to consumer credit could be interrupted and reduce sales and profitability.Our ability to continue to access 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
161、 expire until July 2012,our business partner which issues our private label credit card program,may not be 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
162、 operations to fund our operations and growth.As we operate and expand our business,we may rely on external funding sources,including the proceeds from the issuance of debt or the$40 million revolving bank line of credit(expandable to$60 million)under our existing credit facility.Any unexpected redu
163、ction in cash flow from operations could increase our external funding requirements to levels above those currently available.If our Standard&Poors credit rating remains below investment grade through March 2010,the issuer of our private label credit cards may exercise a right to demand up to$12 mil
164、lion in letters of credit which would reduce the credit available for borrowings from the$27.5 million remaining available at June 30,2009.If the total remaining availability of the revolver is below$17.5 million,a lien by the banks would be imposed on the Companys intellectual property.If our credi
165、t ratings were lowered further,the Companys access to debt(including its ability to expand the current revolver from$40 million to up to$60 million)could be negatively impacted.There can be no assurance that we will not experience unexpected cash flow shortfalls in the future or that any increase in
166、 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 fund our operations and the payment of cash dividends.If the Company continues to experience
167、 operating losses we may not be able to fund a shortfall from operations and would require external funding.Due to recent changes in the capital markets,some financing instruments used by the Company in the past are currently not available to the Company.We cannot assure that additional sources of f
168、inancing 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 its quarterly dividends.Additional impairment charges
169、could reduce our profitability.We have significant long-lived tangible and intangible assets recorded on our balance sheets.If our operating results continue to decline,we may incur additional impairment charges in the future,which could have a material impact on our financial results.Although any s
170、uch impairment charge would be a non-cash expense,it could materially increase our expenses and reduce our profitability in the period recorded.We will continue to evaluate the recoverability of the carrying amount of our long-lived tangible and intangible assets on an ongoing basis.There can be no
171、assurance that the outcome of such future reviews will not result in substantial impairment charges.Impairment assessment inherently involves judgments as to assumptions about expected future cash flows and the impact of market conditions on those assumptions.Future events and changing market condit
172、ions may impact our assumptions as to prices,costs or other factors that may result in changes in our estimates of future cash flows.Although we believe the assumptions we use in testing for impairment are reasonable,significant changes in any of our assumptions could produce a significantly differe
173、nt result.13 We face changes in global and local economic conditions that may adversely affect consumer demand and spending,our manufacturing operations or sources of merchandise.Historically,the home furnishings industry has been subject to cyclical variations in the general economy and to uncertai
174、nty regarding future economic prospects.Such uncertainty,as well as other variations in global economic conditions such as rising fuel costs and increasing interest rates,may continue to cause inconsistent and unpredictable consumer spending habits,while increasing our own fuel,utility,transportatio
175、n or security costs.These risks,as well as industrial accidents or work stoppages,could also severely disrupt our manufacturing operations,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 b
176、e increased by events affecting international commerce and businesses located outside the United States,including changes in international 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 fro
177、m which we import a portion of our merchandise.The inability to import products from certain foreign countries or the imposition of significant tariffs could have a material adverse effect on our results of operations.Competition from overseas manufacturers continues to increase and may adversely af
178、fect our business,operating results or financial condition.Our wholesale business segment is involved in the development of our brand,which encompasses the design,manufacture,sourcing,sales and distribution of our home furnishings products,and competes with other U.S.and foreign manufacturers.Our re
179、tail business segment sells home furnishings to consumers through a network of Company-operated design centers,and competes against a diverse group of retailers ranging from specialty stores to traditional furniture and department stores,any of which may operate locally,regionally and nationally.We
180、also compete with these and other retailers for appropriate retail locations as well as for qualified design consultants and management personnel.Such competition could adversely affect our future financial performance.Industry globalization has led to increased competitive pressures brought about b
181、y the increasing volume of imported finished goods and components,particularly for case good products,and the development of manufacturing capabilities in other countries,specifically within Asia.The increase in overseas production capacity in recent years has created over-capacity for many U.S.manu
182、facturers,including us,which has led to industry-wide plant consolidation.In addition,because many foreign manufacturers are able to maintain substantially lower production costs,including the cost of labor and overhead,imported product may be capable of being sold at a lower price to consumers,whic
183、h,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 maintain relationships with certain manufacturers,whether foreign or domestic,to supply us with selected case goods,upholstery and home accessory items to en
184、able us to maintain our competitive advantage.In addition,the recent emergence of foreign manufacturers has served to broaden the competitive landscape.Some of these competitors produce furniture types not manufactured by us and may have greater financial and other resources available to them.This c
185、ompetition could adversely affect our future financial performance.Failure to successfully anticipate or respond to changes in consumer tastes and trends in a timely manner could adversely impact our business,operating results and financial condition.Sales of our products are dependent upon consumer
186、 acceptance of our product designs,styles,quality and price.We continuously monitor changes in home design trends through attendance at international industry events and fashion shows,internal marketing research,and regular communication with our retailers and design center design consultants who pr
187、ovide valuable input on consumer tendencies.However,as with all retailers,our 14 business is susceptible to changes in consumer tastes and trends.Such tastes and trends can change rapidly and any delay or failure to anticipate or respond to changing consumer tastes and trends in a timely manner coul
188、d adversely impact our business,operating results and financial condition.The consolidation of manufacturing and logistics operations into fewer sites may increase the exposure to business disruption and could result in higher transportation costs.The Company has reduced the number of redundant manu
189、facturing sites in both our case goods and upholstery operations.Our upholstery operations consist of two upholstery plants on our Maiden,North Carolina campus supported in part by one cut and sew plant in Mexico.If any of these upholstery manufacturing sites experience significant business interrup
190、tion,our ability to manufacture products timely would likely be impacted.Our plants require various raw materials and commodities such as logs and lumber for our case goods plants and foam,springs and engineered hardwood board for our upholstery plants.While we have long standing relationships with
191、multiple outside suppliers of our raw materials and commodities,there can be no assurance of their ability to fulfill our supply needs on a timely basis.The consolidation to fewer retail logistics operations has resulted in longer distances for delivery and could result in higher costs to transport
192、products if fuel costs increase significantly.Our current and former manufacturing and retail operations 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 manufac
193、turing properties on which 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 envi
194、ronmental,health and safety laws and regulations relating to our current and former properties and our current operations.These laws and regulations provide for substantial fines and criminal sanctions for violations and sometimes require the installation of costly pollution control or safety equipm
195、ent 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 resulting from ex
196、posure to or releases of hazardous substances or personal injury as a result 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 Comprehensive Enviro
197、nmental 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 imposition of new o
198、r 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 decline in sales,
199、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 both outside the United States and domestically.Fluctuations in the price,
200、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 turn,imp
201、act 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 we desir
202、e.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.Our business is sensitive to increasing labor costs
203、,competitive labor markets,our continued ability to retain high-quality personnel and risks of 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 qualifie
204、d craftsmen,management,marketing and sales personnel and upon the continued contributions of these 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 pack
205、age in order to compete effectively in the hiring and retention of qualified employees.Our labor costs 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 anticip
206、ate any difficulty renegotiating these contracts as they expire,a labor-related stoppage by these unionized employees could adversely affect our business and results of operations.The loss of the services of key personnel or our failure to attract additional qualified personnel could have a material
207、 adverse effect on our business,operating results and financial condition.Our success depends upon our brand,marketing and advertising efforts and pricing strategies,and 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
208、 results could be adversely affected.Maintaining and enhancing our brand is critical to our ability to 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 e
209、xisting brand equity.We cannot provide assurance that our marketing,advertising and other efforts to 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 busines
210、s,operating results and financial condition could be adversely affected.We may not be able to maintain 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 fr
211、eestanding destinations or as part of suburban strip malls,depending upon the real estate opportunities 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 appropri
212、ate retail locations for existing and future design centers.We depend on key personnel and could be affected 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,Pres
213、ident and Chief Executive Officer,who is the only one of our senior executives who operates under a written 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 results of operations for any quarter
214、 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
215、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
216、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
217、.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
218、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
219、 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
220、 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
221、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 195 guestrooms.This hotel,owned by a wholly-owned subsidi
222、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.During fiscal 2009,we operated as many as ten manufacturing facilities located in six states and Mexico.All of these facilities are owned,with
223、the exception of a 145,636 square foot leased upholstery plant in California which will be closed by January 2010.As announced during fiscal year 2009,we are consolidating select upholstery and case goods plants into existing operations.By the end of our first quarter of fiscal 2010,we plan to opera
224、te three case goods plants(including one sawmill)totaling 1,644,522 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 that is 295,000 squa
225、re feet all of which are owned by the company.In addition,we operate four primary distribution centers,totaling 1,179,029 square feet.All of these facilities are owned,with the exception of one leased distribution facility in California,which is 80,000 square feet.Our U.S.manufacturing and distribut
226、ion facilities for future operations are located in North Carolina,Vermont,Virginia,Oklahoma,California,New Jersey and Indiana,and our Mexico plant is located in Guanajuato.We own four and lease 22 retail service centers,totaling 1,268,631 square feet.Our retail service centers are located throughou
227、t the United States and Canada and serve to support our various retail sales districts.17 The geographic distribution of our retail design center network as of June 30,2009 is as follows:Retail Design Center Category Company Operated Independently Operated United States 154 88 North America-Other(1)
228、5 2 Asia -41 Middle East -3 Total 159 134 (1)We own and operate five retail design centers located in Canada.Of the 159 retail design centers operated by us,76 of the properties are owned and 83 of the properties are leased from independent third parties.Of the 76 design center locations owned by us
229、,20 are subject to land leases.We own three additional retail properties,two of which are leased to independent Ethan Allen retailers,and one of which is leased to an unaffiliated third party.See Note 8 to the Consolidated Financial Statements included under Item 8 of this Annual Report for more inf
230、ormation 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 7.50%and have a remaining balance at June 30,2009 of$3.9 million which mat
231、ures in two years.The Beecher Falls,Vermont manufacturing facility was financed,in part,by the State of Vermont Economic Development Authority(“VEDA”)and the Town of Canaan,Vermont.The VEDA debt matured in June 2006 and was repaid in full at that time.The Town of Canaan debt bears interest at a fixe
232、d rate of 3.00%and has a remaining balance at June 30,2009 of$0.3 million,with maturities of three to 18 years.We believe that all of our properties are well maintained and in good condition.We estimate that our manufacturing division is currently operating at approximately 50%of capacity.As a resul
233、t,we announced the consolidation of our Eldred,Pennsylvania and Chino,California upholstery plants into existing operations as well as the closure of our Andover,Maine case goods plant and realignment of other case goods operations in the Northeast.We believe we have additional capacity at selected
234、facilities,which we could utilize 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 need
235、s and commensurate with other companies 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.Env
236、ironmental Matters We and our subsidiaries are subject to various environmental laws and regulations.Under these laws,we and/or our subsidiaries are,or may be,required to remove or mitigate the effects on the environment of the disposal or release of certain hazardous materials.During the fiscal yea
237、r ending June 30,2009,our liability with respect to three active sites currently listed,or proposed for inclusion,on the National Priorities List(NPL)under the Comprehensive Environmental Response,Compensation and Liability Act of 1980,as amended(CERCLA),where we and/or our subsidiaries had been nam
238、ed as a Potentially Responsive Party(“PRP”)located in Southington,Connecticut;High Point,North Carolina;and Atlanta,Georgia has been resolved.18 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 ab
239、le to take part in de minimus settlement arrangements.Specifically,with respect to the Southington site,our volumetric share is less than 1%of over 51 million gallons disposed of at the site and there are more than 1,000 PRPs.With respect to the High Point site,our volumetric share is less than 1%of
240、 over 18 million gallons disposed of at the site and there are more than 2,000 PRPs,including more than 1,000 de minimis parties(of which we are one).With respect to the Atlanta site,a former solvent recycling/reclamation facility,our volumetric share is less than 1%of over 20 million gallons dispos
241、ed of at the site by more than 1,700 PRPs.In addition to the now settled actions discussed above,in July 2000,we were notified by the State of New York(the State)that we may be named a PRP in a separate,unrelated matter with respect to a site located in Carroll,New York.In May,2009,we were notified
242、by the State that it had conducted an initial environmental study and that we have been named as a PRP.We believe that we are not a major contributor;however,a review of the initial environmental study is ongoing.Liability under CERCLA may be joint and several.As such,to the extent certain named PRP
243、s are 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 est
244、imated liability.As of June 30,2009,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 these sites.We believe our currently anticipated capital expenditures
245、 for environmental control facility matters are not material.We are subject to other federal,state and local environmental protection laws and regulations and are involved,from time to time,in investigations and proceedings regarding environmental matters.Such investigations and proceedings typicall
246、y concern air emissions,water discharges,and/or management of solid and hazardous wastes.We believe that our facilities are in material compliance with all such applicable laws and regulations.Regulations issued under the Clean Air Act Amendments of 1990 required the industry to reformulate certain
247、furniture finishes or institute process changes to reduce emissions of volatile organic compounds.Compliance with many of these requirements has been facilitated through the introduction of high solids coating technology and alternative formulations.In addition,we have instituted a variety of techni
248、cal 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 redu
249、ce emissions per unit of production.We remain committed to implementing new waste minimization programs and/or enhancing existing programs with the objective of(i)reducing the total volume of waste,(ii)limiting the liability associated with waste disposal,and(iii)continuously improving environmental
250、 and job safety programs on the factory floor which serve to minimize emissions and safety risks for employees.We will continue to evaluate the most appropriate,cost effective,control technologies for finishing operations and design production methods to reduce the use of hazardous materials in the
251、manufacturing process.Item 4.Submission of Matters to a Vote of Security Holders No matters were submitted for vote by our security holders during the fourth quarter of fiscal 2009.19 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Secur
252、ities 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 years,(i)the high and low stock prices as reported on the New York Stock Exchange and(ii)the dividend per share paid by us:Market Price Dividend High
253、 Low Close Per Share 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 Fiscal 2008 First Quarter$36.55$31.57$32.69$0.22 Second Quarter 35.41 25.87 28.50 0.22 Third Quarter 31.98 22.67 28.43
254、0.22 Fourth Quarter 31.37 24.48 24.60 0.22 As of August 13,2009,there were 328 shareholders of record of our common stock.Management estimates there are over eleven thousand beneficial shareholders of the Companys common stock.On July 21,2009,we declared a dividend of$0.05 per common share,payable o
255、n October 26,2009 to shareholders of record as of October 9,2009.We expect to continue to declare quarterly dividends for the foreseeable future,business conditions permitting.Equity Compensation Plan Information The information required by this Item 5 with respect to Equity Compensation Plan Inform
256、ation is set forth in Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,contained in this Annual Report and incorporated herein by reference.Issuer Purchases of Equity Securities On November 21,2002,our Board of Directors approved a share repurcha
257、se program authorizing us to repurchase 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 as follows:from 904
258、,755 shares to 2,500,000 shares on April 27,2004;from 753,600 shares to 2,000,000 shares on November 16,2004;from 691,100 shares to 2,000,000 shares on April 26,2005;from 393,100 shares to 2,500,000 shares on November 15,2005;from 1,110,400 shares to 2,500,000 shares on July 25,2006;from 707,300 to
259、2,500,000 shares on July 24,2007,and from 1,368,000 to 2,000,000 shares on November 13,2007.As of June 30,2009 we had a remaining Board authorization to repurchase 1,567,669 shares.There were no share repurchases during the quarter or fiscal year ended June 30,2009.Stockholder Rights Plan We have a
260、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 description contains all of the required information with respect thereto.20 Comparative Company Perfor
261、mance 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 Peer Issuer Group Index,assuming$100 was invested on June 30,2004.COMPARISON OF 5 YEAR CUMULATIV
262、E TOTAL RETURN*Among Ethan Allen Interiors Inc.,The S&P 500 IndexAnd A Peer Group$0$20$40$60$80$100$120$140$1606/046/056/066/076/086/09Ethan Allen Interiors Inc.S&P 500Peer Group*$100 invested on 6/30/04 in stock or index,including reinvestment of dividends.Fiscal year ending June 30.Copyright 2009
263、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,Inc.,Haverty Furniture Companies,Inc.,La-Z-boy Inc.,Legett&Platt,Inc.,and Pier 1 Imports Inc.Th
264、e 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 June 30,2009,2008,2007,2006 and 2005 which has been derived from our consolidated financial sta
265、tements.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 and our Consolidated Financial Statements(including the notes thereto)included under Item 8 of t
266、his Annual Report.21 Fiscal Year Ended June 30,2009 2008 2007 2006 2005 Statement of Operations Data:Net sales$674,277$980,045$1,005,312$1,066,390$949,012 Cost of sales 326,935 453,980 478,729 525,408 487,958 Selling,general and administrative expenses 353,112 423,229 402,022 394,069 332,295 Restruc
267、turing and impairment charges,net 67,001 6,836 13,442 4,241 (219)Operating income(loss)(72,771)96,000 111,119 142,672 128,978 Interest and other expense(income),net 8,409 3,822 1,393 4,567 (442)Income(loss)before income tax expense (81,180)92,178 109,726 138,105 129,420 Income tax expense(benefit)(2
268、8,493)34,106 40,499 52,423 50,082 Net income(loss)$(52,687)$58,072$69,227$85,682$79,338 Per Share Data:Net income(loss)per basic share$(1.83)$1.98$2.19$2.58$2.24 Basic weighted average shares outstanding 28,814 29,267 31,566 33,210 35,400 Net income(loss)per diluted share$(1.83)$1.97$2.15$2.51$2.19
269、Diluted weighted average shares outstanding 28,814 29,470 32,261 34,086 36,193 Cash dividends per share$0.65$0.88$0.80$0.72$0.60 Other Information:Depreciation and amortization$25,635$24,670$23,013$21,599$21,338 Capital expenditures and acquisitions$23,903$67,815$74,370$49,296$34,381 Working capital
270、$139,239$176,796$234,990$278,038$130,423 Current ratio 2.24 to 1 2.30 to 1 2.59 to 1 2.88 to 1 1.97 to 1 Effective tax rate 35.1%37.0%36.9%38.0%38.7%Balance Sheet Data(at end of period):Total assets$646,485$764,093$802,598$814,100$628,386 Total debt,including capital lease obligations 203,148 203,02
271、9 202,908 202,787 12,510 Shareholders equity$305,923$375,773$409,642$417,442$434,068 Debt as a percentage of equity 66.4%54.0%49.5%48.6%2.9%Debt as a percentage of capital 39.9%35.1%33.1%32.7%2.8%22 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operation The follow
272、ing 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 Item 8 of this Annual Report.Forward-Looking Statements Managements discussion and analysis of financi
273、al 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 of forward-looking words such as anticipates,believes,plans,estimates,expects,and intends or words o
274、r 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 terrorist attacks or conflicts or wars involving the United States or its allies or trading partners;the ef
275、fects 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 changes in governmental and central bank policies;changes in business conditions in the furniture indu
276、stry,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;our ability to locate new design center sites and/or negotiate favorable lease terms for additional
277、 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 the cost,availability and quality of raw materials;those matters discussed in Items 1A and 7A of this
278、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 Accounting Policies Our consolidated financial statements have been prepared in conformity with U.S.ge
279、nerally accepted accounting principles which require,in some cases,that certain estimates and assumptions be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes.Estimates are based on currently known facts and circumstances,prior exp
280、erience 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,assumptions and judgments,and these differences could be material.The following critical accountin
281、g 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 materials)are stated at the lower of cost,determined on a first-in,first-out basis,or market.Cost is
282、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 excess quantities and obsolete items based on specific identification and historical write-downs,taki
283、ng 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 Recognition Revenue is recognized when all of the following have occurred:persuasive evidence of a
284、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 customer;and collectibility is reasonably assured.As such,revenue recognition occurs upon the shipme
285、nt 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 customers to return defective products and incorrect shipments,and terms we offer are standard for
286、 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 allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an
287、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 estimates.Retail Design Center Acquisitions-We account for the acquisition of retail design centers and
288、 related assets in accordance with Statement of Financial Accounting Standards(SFAS)No.141,Business Combinations,which requires application of the purchase method for all business combinations initiated after June 30,2001.Accounting for these transactions as purchase business combinations requires t
289、he allocation of purchase price paid to the assets acquired and liabilities assumed 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 periodicall
290、y evaluate whether events or circumstances have occurred that indicate that long-lived assets may not be recoverable or that the remaining useful life may warrant revision.When such events or circumstances are present,we assess the recoverability of long-lived assets by determining whether the carry
291、ing 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 equal to the excess of the assets carrying value ove
292、r 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.In accordance with SFAS No.142,Goodwill and Other Int
293、angible Assets,goodwill 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
294、annual impairment test during the fourth quarter of each fiscal year and use a discounted cash flow model to estimate fair value.This model requires the use of long-term planning forecasts and assumptions regarding industry-specific economic conditions that are outside our control.Income Taxes Incom
295、e 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 statement carrying amounts of existing assets and liabilities and their respective tax bases and operati
296、ng 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 expected to be recovered or settled.The effect on deferred tax assets and liabilities of a change in
297、 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 recent history of cumulative losses,and variances in future projected profitability.Effective July 1,
298、2007,we adopted Financial Accounting Standards Board(FASB)Interpretation No.(FIN)48,Accounting for Uncertainty in Income Taxes,an interpretation of FASB Statement No.109,Accounting for Income Taxes,which provides a comprehensive model for the recognition,measurement,presentation,and disclosure in a
299、companys financial statements of uncertain tax positions taken,or expected to be taken,on a tax return.If an income tax position exceeds a 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 state
300、ments.The tax benefits recognized are measured based on the largest benefit that has a greater than 50%likelihood of being realized upon ultimate 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
301、 is expected to be made or tax positions settled within one year.We recognize interest and penalties related to income tax matters as a component of income tax expense.24 Business Insurance Reserves We have insurance programs in place to cover workers compensation and property/casualty claims.The in
302、surance programs,which are funded through self-insured retention,are subject to various stop-loss limitations.We accrue estimated losses using actuarial models and assumptions based on historical loss experience.Although we believe that the insurance reserves are adequate,the reserve estimates are b
303、ased on historical experience,which may not be indicative of current and future losses.In addition,the actuarial calculations used to estimate insurance reserves are based on numerous assumptions,some of which are subjective.We adjust insurance reserves,as needed,in the event that future loss experi
304、ence differs from historical loss patterns.Other Loss Reserves We have a number of other potential loss exposures incurred in the ordinary course of business such as environmental claims,product liability,litigation,tax liabilities,restructuring charges,and the recoverability of deferred income tax
305、benefits.Establishing loss reserves for these matters requires the use of estimates and judgment with regard to maximum risk exposure and ultimate liability or realization.As a result,these estimates are often developed with our counsel,or other appropriate advisors,and are based on our current unde
306、rstanding of the underlying facts and circumstances.Because of uncertainties related to the ultimate outcome of these issues or the possibilities of changes in the underlying facts and circumstances,additional charges related to these issues could be required in the future.Basis of Presentation As o
307、f June 30,2009,Ethan Allen Interiors Inc.has no material assets other than its ownership of the capital stock of Ethan Allen Global,Inc.and conducts all significant transactions through Ethan Allen Global,Inc.;therefore,substantially all of the financial information presented herein is that of Ethan
308、 Allen Global,Inc.Results of Operations Our Company has been severely impacted by the ongoing recession in the United States and abroad.Continued weakness in the U.S.economy,high unemployment,volatile capital markets,depressed housing prices and tight consumer lending practices have driven consumer
309、confidence down to,or near,historical lows and resulted in considerable negative pressure on spending by individual consumers,our primary customer base.The Company is continuing to adjust our infrastructure to match our sales volumes as we work through these difficult times.Restructuring Activities:
310、In 2009,the Company made several announcements on changes to our operations as we continue to improve the structure of our business especially in light of the recent economic downturn.In January 2009,the Company announced a plan to consolidate the operations of its Eldred,Pennsylvania upholstery man
311、ufacturing plant and several of its retail service centers.In June 2009,the Company announced the consolidation of its Chino,California operations into its Maiden,North Carolina facility and the consolidation of its Andover,Maine sawmill and dimension mill to its Beecher Falls,Vermont sawmill and di
312、mension mill operations.For these fiscal 2009 actions,the Company estimates pre-tax restructuring,impairment,and other related charges will ultimately approximate$30 million,consisting of$15 million in write down of long-lived assets,$8 million in employee severance and other payroll and benefit cos
313、ts,and$7 million in other associated costs.By segment,we expect$23 million in costs for the wholesale segment and$7 million for the retail segment.Total costs for these 2009 actions in the current fiscal year by segment are$17.0 million for Wholesale,and$2.6 million for Retail all of which have been
314、 classified in the Statement of Operations as restructuring and impairment charges.Approximately 800 employee positions and 140 contract worker positions will be eliminated due to these actions.In January 2008,we announced a plan to consolidate the operations of certain Company-operated retail desig
315、n centers and retail service centers.In connection with this initiative,we have permanently ceased operations at ten 25 design centers and six retail service centers which,for the most part,were consolidated into other existing operations.We also implemented our design team concept across the Retail
316、 division at the end of the fiscal year.We recorded pre-tax restructuring,impairment,and other related charges of$6.8 million for fiscal 2008,with$3.3 million for lease cancellation and other costs which will be paid out over periods ranging from less than one to seven years,$2.7 million,which was n
317、on-cash in nature,related to fixed asset impairment charges,primarily for real property and leasehold improvements,and$0.9 million was related to employee severance and benefits.During fiscal 2009,we recorded a net reduction of pre-tax restructuring,impairment,and other related charges of$1.0 millio
318、n,primarily due to net gains on the sale of real estate of$4.2 million,partly offset by additional charges and adjustments to previous estimates for leased facilities of$2.3 million and employee severance,benefits and other charges of$0.5 million.Cumulative charges to date for these actions total$5.
319、5 million,all of which have been classified in the Statement of Operations as restructuring and impairment charges.In addition to the Retail charges,$0.4 million was recorded in the first quarter of fiscal 2009 to update the fair value of a wholesale plant site held for sale.On September 6,2006,we a
320、nnounced a plan to close our Spruce Pine,North Carolina case goods manufacturing facility and convert our Atoka,Oklahoma upholstery manufacturing facility into a regional distribution center.The decision impacted approximately 465 employees.We recorded a pre-tax restructuring and impairment charge o
321、f$14.1 million during the quarter ended September 30,2006,of which$4.0 million was related to employee severance and benefits and other plant exit costs,and$10.1 million of fixed asset impairment charges.During the first six months of fiscal 2007,adjustments totaling$0.4 million were recorded to rev
322、erse remaining previously established accruals which were no longer deemed necessary.Analysis of Goodwill and Other Intangible Assets:We conduct an annual impairment analysis of goodwill and other indefinite lived intangible assets the first of April each fiscal year,unless events occur or circumsta
323、nces change that would more likely than not reduce the fair value of the goodwill or other indefinite lived intangible assets below their carrying value.In determining whether an interim test is appropriate,management considers several factors including changes in the Companys stock price,financial
324、performance,third party ratings on its long term debt,and expected financial outlook of the business.Methods employed to value the enterprise and the Companys retail and wholesale segments include the market approach and the income approach,which are reconciled with the total market capitalization o
325、f the Company.These valuation methods use historical revenues and cash flows,as well as Company and external analysts financial projections and apply discount rates,weighted average cost of capital rates,total invested capital multiples,and premium control multiples.Fair value of our trade name is v
326、alued using the relief-from-royalty method.Significant factors used in trade name valuation are royalty rates,future growth and discount rates,and expense rates.In the fiscal quarter ended December 31,2008,net sales declined 7.9%from the previous quarter and there was a meaningful decline(34.5%)in t
327、he companys average stock price from the first fiscal quarter to the second(from$26.35 to$17.27).This decline coupled with the sudden and dramatic change in the business climate as seen through the financial crisis with global banking institutions led to an interim evaluation of goodwill and other i
328、ntangible assets.As a result of these tests,management concluded that the estimated value of the wholesale and retail segments exceeded their carrying values and no impairment was indicated.In the fiscal quarter ended March 31,2009,net sales declined 26.0%from the previous quarter resulting in a 660
329、 basis point decline in gross margin plus a further decline(36.2%)in the companys average stock price(from$17.27 to$11.02).These declines coupled with a significant loss from operations led to a second interim evaluation of goodwill and other intangible assets.As a result of these tests,management c
330、oncluded the carrying value of goodwill on our retail divisions books exceeded its fair value.Therefore,we recorded a non-cash impairment charge of$48.4 million.No impairment of the goodwill or other indefinite lived assets on our wholesale divisions books was appropriate.26 In the fiscal quarter en
331、ded June 30,2009,the Company performed its annual impairment test on April 1 and noted no additional impairment was appropriate.During the quarter,business performance stabilized with net sales slightly lower(1%)than the previous quarter,gross margin improved 160 basis points and there was a slight
332、increase in cash on hand(to$53 million).The average price of our stock increased 9.8%(from$11.02 to$12.11).The ratings on the Companys long term debt were lowered by third parties to speculative grade and the Company updated its forecasts.The Company considered these factors and concluded that an in
333、terim impairment test was not required on the wholesale segment.No additional evaluation of the retail segment was appropriate as all goodwill was written off in the previous fiscal quarter.There can be no assurance that the outcome of future reviews will not result in substantial impairment charges.Impairment assessment inherently involves judgments as to assumptions about expected future cash f
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