1、ANNUAL REPORT 2014We are pleased with our strong financial performance and the many initiatives weimplemented for the fiscal year that endedon June 30,2014.The following is a brief overview of our financial results:nEarnings per diluted share increased32.4%to$1.47,net sales of$746.7 million increase
2、d 2.4%,and operating income increased 15.2%over the priorfiscal year.nOur retail divisions operating income increased 31.2%or$2.5 million from the prior fiscal year,while the wholesale divisions operating income increased13.7%or$7.0 million.nOur liquidity continues to be strong,enabling us to pay$11
3、.3 million in dividends during the fiscal year.nOur inventories increased as planned by$9.0 million from June 30,2013,to support our expanded assortment of in-stock products.nOur total cash and securities balance at June 30,2014,increased by$32.3 million over the prior fiscal year end to$135.8 milli
4、on.nWe increased our quarterly dividend by 20%beginning with record date October 9,2014.These strong results reflect the leverage of our vertically integrated structure.STRENGTHENED PRODUCT PROGRAMS During the year,we strengthened our product design team to expand the reach ofour product offerings t
5、hrough developmentof fresh,stylish designs in updated finishesand materials.Our vertical integration allowed us to fast-track the process from design and engineering through manufacture.This fall,we will start introducing more than 600 new products in our Design Centers and on our websites.This majo
6、r introduction of new productsstrengthens our brand as a home fashionleader and will be supported by:nThe introduction of improved websitesscheduled to launch in the fall.nIncreased marketing activities,includingdirect mail,television,and digital.nThe external and internal projections ofour Design C
7、enters will be refreshed during fiscal 2015 to present our newproducts in fresh and eclectic settings.We will begin fiscal 2015 in a period of transition with the sale of floor samples and inventory to make room for the new products,which will be introduced in stages throughout the fiscal year.These
8、 newproducts are classically designed,beautifullycrafted,and fashionable yet relaxed,reflecting todays more casual lifestyles.STRENGTHENED OUR MANUFACTURING OPERATIONS We continue to invest in our manufacturing,and our newest North American plant,inHonduras,became fully operational duringfiscal 2014
9、.During fiscal 2015,we will focus on:nThe continued expansion and refinement of our North American manufacturing,including the addition of new finishing capabilities in our North Carolina upholstery plant.nMaximizing the benefit of our vertical integration,as most of our new productsare designed to
10、be made in our NorthAmerican workshops.EXPANDED RETAIL FOOTPRINT We will continue to focus on the relocationand opening of new Design Centers.In fiscal2014,we continued to make major progressin opening new and relocated Design Centers.In North America,Company-operated locations include:Sarasota,FL;W
11、inter Park,FL;Burlington,MA;Portland,ME;Marlboro,NJ;and Lyndhurst,OH.International Design Centers opened by our independent retailers include:Calgary,Canada;Bucharest,Romania;Amman,Jordan(second location);and China(sevenlocations).A number of Design Centers areopening in the upcoming months,includin
12、g:a location in Doha,Qatar;a second locationin Dubai,UAE;and relocations in Houston,TX;Marlboro,NJ;and Marlton,NJ.INVESTMENTS IN TECHNOLOGYThis year,to increase productivity,weequipped each of our designers with tablets.We expanded the number of touchscreeninformation centers in our Design Centersan
13、d are in the final stages of launching ournew websites later this fall.We also leverage technology in our environmental initiatives,and this year,we further converted our Design Centers to use energy-saving LED lighting.We alsonow use specially formulated foam,which is free of flame-retardant chemic
14、als,in our upholstery products.With the many initiatives started in fiscal2014 now coming to fruition,we are positioned for renewed growth.This wouldnot have been possible without the effortsand accomplishments of our talented associates in North America and around the world.We have an exciting fisc
15、al 2015ahead,and I would like to thank all of our clients and shareholders for their continued support.Sincerely,FAROOQ KATHWARIChairman of the Board,President and CEO Ethan Allen Interiors Inc.DEAR FELLOW SHAREHOLDERSFINANCIALHIGHLIGHTSSTATEMENT OF OPERATIONS DATA201420132012Net sales$746,659$729,0
16、83$729,373Gross profit$406,496$398,349$390,288Operating income$69,636$60,437$49,697Net income$42,931$32,478$49,694PER SHARE DATANet income per diluted share$1.47$1.11$1.71 Diluted weighted average common shares outstanding29,27629,23929,109 BALANCE SHEET DATACash and securities(a)$135,836$103,563$10
17、4,142 Working capital$169,582$127,631$131,715 Current ratio2.25 to 11.96 to 11.87 to 1Total assets$654,434$617,285$644,788 Total debt,including capital lease obligations$130,912$131,289$154,500Shareholders equity$367,215$334,150$321,668 Debt as%of equity35.6%39.3%48.0%Debt as%of capital26.3%28.2%32.
18、4%CASH RETURNED TO SHAREHOLDERSDividends paid$11,297$22,220$8,062Cost of shares repurchased$1,350Number of shares repurchased0.1 millionAmounts in thousands,except per share data.Fiscal years ended June 30.(a)Includes cash and cash equivalents,marketable securities,and restricted cash and investment
19、s.OVER THE PAST TWELVE MONTHS,WE HAVE TAKEN SEVERAL SIGNIFICANT STEPS TO HELP POSITION ETHAN ALLEN FOR FUTURE GROWTH.HERE ARE A FEW OF OUR KEY INITIATIVES.REFINING OUR VERTICAL INTEGRATIONIn fiscal 2014,we focused on improving productivity in our manufacturing facilities inNorth Carolina,Vermont,New
20、 Jersey,andMexico,and our new Honduras facility wentfully operational.Because we design,source,and manufacture about 70%of our productsand then distribute,market,and deliver them,we control our costs,quality,and service anddeliver that value to our clients.INVESTING IN TECHNOLOGYIn fiscal 2014,we be
21、gan the redesign ofour websites.In October,we will launchthe next generation of EthanA andEthanAllen.ca.In addition,we now havestate-of-the-art touchscreen kiosks in everyDesign Center and tablets in the hands ofevery designer so that they can efficientlydo business at work and on the go.PROJECTING
22、A RELEVANT MESSAGEWe continued to convey the quality andvalue of our brand.We refined our marketing and media mix,optimizing theuse of direct mail,shelter magazines,network and cable TV,and every relevantsocial media platform.This allows us to further differentiate ourselves from our competitors.GRO
23、WTH BY DESIGNEXPANDING OUR PRODUCT OFFERINGSWe accelerated the development of our newproduct programs,and we are now in theprocess of bringing hundreds of new styles toour clients.This major introduction,which includes stylish,livable furniture and home accents,is launching in our Design Centers in
24、the fall of 2014.STRENGTHENING OUR RETAIL NETWORKWe continued to make major investments inour retail division.We expanded our international footprint and added qualifiedmanagement and entrepreneurial interior designers.Our products are sold through adedicated global network of approximately300 Desig
25、n Centers worldwide that employclose to 2,000 highly skilled interior design professionals.That makes us the worlds leading interior design network.(Shown at right:Some of our top-performing designers.)UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K (Mark One)X ANNUAL
26、 REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30,2014 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.(
27、Exact name of registrant as specified in its charter)Delaware 06-1275288 (State or other jurisdiction of incorporation 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 c
28、ode (203)743-8000 Securities registered pursuant to Section 12(b)of the Act:Title of Each Class Name of Each Exchange On Which Registered Common Stock,$.01 par value New York Stock Exchange,Inc.Securities registered pursuant to Section 12(g)of the Act:None(Title of Class)Indicate by check mark if th
29、e Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.X Yes No Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes X No Indicate by check mark whether the Registrant(1)has filed all reports
30、 required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the Registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.X Yes No Indicate by check mark
31、whether the Registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data 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
32、 required to submit and post such files).X Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of Registrants knowledge,in definitive proxy or information statements incorporated by refe
33、rence in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller
34、 reporting company”in Rule 12b-2 of the Exchange Act(check one):Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes X No The aggregate market value of the Registrants common stock,par value$.01 per share,held by non-affiliates(based upon the clos
35、ing sale price on the New York Stock Exchange)on December 31,2013,(the last day of the Registrants most recently completed second fiscal quarter)was approximately$798,035,877.As of July 31,2014,there were 28,927,235 shares of the Registrants common stock,par value$.01 per share,outstanding.DOCUMENTS
36、 INCORPORATED BY REFERENCE:Certain information contained in the Registrants definitive Proxy Statement for the 2014 Annual Meeting of stockholders,which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934,is incorporated by refe
37、rence into Part III hereof.Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company 1 TABLE OF CONTENTS Item Page PART I 1.Business 3 1A.Risk Factors 11 1B.Unresolved Staff Comments 16 2.Properties 16 3.Legal Proceedings 17 4.Mine Safety Disclosures 17 PART II 5.Ma
38、rket for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 17 6.Selected Financial Data 19 7.Managements Discussion and Analysis of Financial Condition and Results of Operation 21 7A.Quantitative and Qualitative Disclosures About Market Risk 32 8.Financi
39、al Statements and Supplementary Data 32 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 65 9A.Controls and Procedures 65 9B.Other Information 66 PART III 10.Directors,Executive Officers and Corporate Governance 66 11.Executive Compensation 66 12.Security Owners
40、hip of Certain Beneficial Owners and Management and Related Stockholder Matters 66 13.Certain Relationships and Related Transactions,and Director Independence 66 14.Principal Accountant Fees and Services 66 PART IV 15.Exhibits and Financial Statement Schedules 67 Signatures 71 2 PART I Item 1.Busine
41、ss Background Incorporated in Delaware in 1989,Ethan Allen Interiors Inc.,through its wholly-owned subsidiary,Ethan Allen Global,Inc.,and Ethan Allen Global,Inc.s subsidiaries(collectively,We,Us,Our,Ethan Allen or the Company),is a leading interior design company and manufacturer and retailer of qua
42、lity home furnishings.Founded over 80 years ago,today were a leading international home fashion brand doing business in North America,Europe,Asia and the Middle East.We are vertically integrated from design through delivery,affording our clientele a value equation of style,quality and price that is
43、unique to the industry.We offer complimentary interior design service to our clients and sell a full range of furniture products and decorative accents through and a network of approximately 300 design centers in the United States and abroad.The design centers represent a mix of independent licensee
44、s and our own Company operated retail segment.We own and operate eight manufacturing facilities including five manufacturing plants and one sawmill in the United States and a manufacturing plant in each of Mexico and Honduras.Mission Statement Our primary business objective is to provide our custome
45、rs with a convenient,full-service,one-stop shopping solution for their home decorating needs by offering stylish,high-quality products at good value.In order to meet our stated objective,we have developed and adhere to a focused and comprehensive business strategy.The elements of this strategy,each
46、of which is integral to our solutions-based philosophy,include(i)our vertically integrated operating structure,(ii)our stylish products and related marketing initiatives,(iii)our retail design center network,(iv)our people,and(v)our focus on providing design solutions.Operating Segments Our products
47、 are sold through a dedicated global network of approximately 300 retail design centers.As of June 30,2014,the Company operated 143 design centers(our retail segment)and our independent retailers operated 152 design centers(as compared to 147 and 148,respectively,at the end of the prior fiscal year)
48、.Our wholesale segment net sales include sales to our retail segment and sales to our independent retailers.Our retail segment net sales accounted for 78%of our consolidated net sales in fiscal 2014.Our wholesale segment net sales to independent retailers accounted for 22%,including approximately 12
49、%of our net sales in fiscal 2014 to the ten largest independent retailers,who operate 91 design centers.Our independent retailer in China operated 70 of these locations at the end of fiscal 2014.Our wholesale and retail operating segments represent strategic business areas of our vertically integrat
50、ed business that operate separately and provide their own distinctive services(further outlined below).This enables us to more effectively offer our complete line of home furnishings and accents and more efficiently control quality and cost.For certain financial information regarding our operating s
51、egments,see Note 15 to the Consolidated Financial Statements included under Item 8 of this Annual Report and incorporated herein by reference.Our home furnishings and accents are marketed and sold in a similar manner in our wholesale and retail segments,although the type of customer(wholesale versus
52、 retail)and the specific services that each operating segment provides are different.Within the wholesale segment,we maintain revenue information according to each respective product line(i.e.case goods,upholstery,or home accents and other).Case goods include items such as beds,dressers,armoires,tab
53、les,chairs,buffets,entertainment units,home office furniture,and wooden accents.Upholstery items include sleepers,recliners,chairs,sofas,loveseats,cut fabrics and leather.Skilled craftsmen cut,sew and upholster custom-designed upholstery items which are available in a variety of frame and fabric opt
54、ions.Home accessory and other items include window treatments,wall decor,lighting,clocks,bedding 3 and bedspreads,decorative accents,area rugs,and home and garden furnishings.The allocation of retail sales by product line follows that of the wholesale segment(see table of wholesale net sales allocat
55、ed by product line in the Wholesale Segment Overview below).We evaluate performance of the respective segments based upon revenues and operating income.Inter-segment transactions result,primarily,from the wholesale sale of inventory to the retail segment,including the related profit margin.Wholesale
56、 Segment Overview:Wholesale net sales for each of the last three fiscal years are summarized below(in millions):201420132012Wholesale net sales453.6$434.4$456.9$Fiscal Year Ended June 30,Wholesale net sales for each of the last three fiscal years,allocated by product line,were as follows:20142013201
57、2Case Goods36%37%38%Upholstered Products48%48%44%Home Accents and Other16%15%18%100%100%100%Fiscal Year Ended June 30 The wholesale segment,principally involved in the development of the Ethan Allen brand,encompasses all aspects of design,manufacture,sourcing,sale,and distribution of our broad range
58、 of home furnishings and accents.Wholesale revenue is generated upon the wholesale sale and shipment of our products to our network of independently operated design centers and Company operated design centers(see Company operated retail comments below)through its national distribution center and one
59、 other smaller fulfillment center.During the past year,independent retailers opened 10 new design centers and closed six.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.As in
60、the past,our independent retailers are required to enter into license agreements with us,which(i)authorize the use of certain Ethan Allen trademarks and(ii)require adherence to certain standards of operation,including a requirement to fulfill related warranty service agreements.We are not subject to
61、 any territorial or exclusive retailer agreements in North America.The wholesale segment also develops and implements related marketing and brand awareness programs.Wholesale profitability includes(i)the wholesale gross margin,which represents the difference between the wholesale net sales price and
62、 the cost associated with manufacturing and/or sourcing the related product,and(ii)other operating costs associated with wholesale segment activities.Approximately 70%of the products sold by the Company are manufactured in its North American plants.During fiscal 2014,the Companys manufacturing footp
63、rint increased by 20,000 square feet,further increasing throughput in our newest Company operated North American plant in Honduras.We operate four case good plants(two in Vermont including one sawmill,one in North Carolina,and one in Honduras),three upholstery plants(two in our North Carolina campus
64、,and one in Mexico)and one home accessory plant in New Jersey.We also source selected case goods,upholstery,and home accessory items from third-party suppliers domestically and abroad.As of June 30,2014,our wholesale backlog was$44.9 million(as compared to$48.0 million as of June 30,2013)which is an
65、ticipated to be serviced in the first quarter of fiscal 2015.This backlog fluctuates based on the timing of 4 net orders booked,manufacturing schedules and efficiency,the timing of sourced product receipts,the timing and volume of wholesale shipments,and the timing of various promotional events.Beca
66、use orders may be rescheduled and/or canceled and the sourcing timing may change,the measure of backlog at a point in time may not necessarily be indicative of future sales performance.For the twelve months ended June 30,2014,net orders booked at the wholesale level,which includes orders generated b
67、y independently operated and Company operated design centers,totaled$452.6 million as compared to$434.1 million for the twelve months ended June 30,2013.In any given period,net orders booked may be impacted by the timing of floor sample orders received in connection with new product introductions.Ne
68、w 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):The retail segment sells home
69、furnishings and accents to consumers through a network of Company operated design centers.The Company also offers access to its products to qualified independent interior designers through our interior design affiliate(“IDA”)program.Retail revenue is generated upon the retail sale and delivery of ou
70、r products to our retail customers through our network of service centers.Retail profitability reflects(i)the retail gross margin,which represents the difference between the retail net sales price and the cost of goods,purchased primarily from the wholesale segment,and(ii)other operating costs assoc
71、iated with retail segment activities.We measure the performance of our design centers based on net sales and written orders booked on a comparable period to period basis.Comparable design centers are those which have been operating for at least 15 months.During the first three months of operations o
72、f newly opened(including relocated)design centers,written orders are booked but minimal net sales are achieved through the delivery of products.Design centers we acquire from independent retailers are included in comparable design center sales in their 13th full month of Ethan Allen-owned operations
73、.The frequency of our promotional events as well as the timing of the end of those events can also affect the comparability of orders booked during a given period.We pursue further expansion of the Company operated retail business by adding interior design professionals and expanding the IDA program
74、,opening new design centers,relocating existing design centers and,when appropriate,acquiring design centers from independent retailers.During fiscal 2014,we opened nine new design centers,six of which were relocations.We now have several multi-lingual websites operating on the Companys cloud based
75、platform,as we continue to expand our design centers in non-English speaking international markets.The geographic distribution of retail design center locations is included under Item 2 of Part I of this Annual Report.Products Our strategy has been to position Ethan Allen as a preferred brand with s
76、uperior style,quality and value while,at the same time,providing consumers with a comprehensive,one-stop shopping solution for their home furnishing and design needs.In carrying out our strategy,we continue to expand our reach to a broader consumer base through a diverse selection of attractively pr
77、iced products,designed to complement one another,reflecting current fashion trends in home decorating.During fiscal 2014,the Company continued to strengthen its product offerings by introducing new products to retail consumers in case goods,upholstery,and home accents.In June 2014,the Company introd
78、uced to the retail network a very large collection of new products and existing products in new finishes under the umbrella of“Classics”to be introduced in fiscal 2015.Regular product introductions,a broad 201420132012Retail net sales580.7$578.3$559.4$Fiscal Year Ended June 30,5 range of styles and
79、custom options within our upholstery and case good lines and expanded product offerings to accommodate todays home decorating trends,continue to define Ethan Allen,positioning us as a leader in home fashion.The interior of our design centers are organized to facilitate display of our product offerin
80、gs,both in room settings that project the category lifestyle and by product grouping to facilitate comparisons of the styles and tastes of our clients.To further enhance the experience,technology is used to expand the range of products viewed by including content from our website and advanced large
81、touch-screen flat panel displays.We continuously monitor changes in home fashion trends through attendance at international industry events and fashion shows,internal market research,and regular communication with our retailers and design center design consultants who provide valuable input on consu
82、mer tendencies.We believe that the observations and input gathered enable us to incorporate appropriate style details into our products to react quickly to changing consumer tastes.Product Development and Sourcing Activities Using a combination of on staff and outsourced product designers,we design
83、the majority of the products we sell;all of which are branded Ethan Allen.This important facet of our vertically integrated business enables us to control the design specifications and establish consistent levels of quality across our product offerings.We manufacture and/or assemble approximately 70
84、%of the products we sell in our own North American plants making us one of the largest manufacturers of home furnishings in the United States.To capitalize on this vertical integration,during fiscal 2014 the Company undertook a significant redesign of products to take advantage of the Companys custo
85、m manufacturing capabilities in its North American plants,which will be introduced in fiscal 2015.These introductions follow a significant change in products which began in fiscal 2012.Our main manufacturing facilities are located in the Northeast and Southeast regions of the United States supported
86、 by an upholstery plant in Mexico and a case goods plant in Honduras.Our plants are located near sources of raw materials and skilled craftspeople.We source approximately 30%of the products we sell from third-party suppliers,most of which are located outside the United States,primarily in Asia.We ca
87、refully select our sourcing partners and require them to provide products according to our specifications and quality standards.We believe that strategic investments in our manufacturing facilities balanced with outsourcing from foreign and domestic suppliers will accommodate significant future sale
88、s growth and allow us to maintain an appropriate degree of control over cost,quality and service to our customers.We take pride in our“green”initiatives including but not limited to the use of responsibly harvested Appalachian woods and expanded use of water based finishes,organic cotton textiles an
89、d recycled materials in our products.In November 2013,after previously implementing the Enhancing Furnitures Environmental Culture(EFEC)environmental management system sponsored by the American Home Furnishing Alliance(AHFA)at all of its domestic manufacturing facilities,our manufacturing division w
90、as awarded Sustainable by Design(SBD)registration which is the highest level of achievement under the EFEC program.The Company has also expanded its EFEC registration to all of its corporate distribution and home delivery service centers.SBD provides a framework for home furnishings companies to cre
91、ate and maintain a corporate culture of conservation and environmental stewardship by integrating socio-economic policies and sustainable business practices into their manufacturing operations and sourcing strategies.Raw Materials and Other Suppliers The most important raw materials we use in furnit
92、ure 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 all of which are purchased dome
93、stically.6 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 number of sources for our raw mat
94、erials,which we believe contribute to our ability to obtain competitive pricing.Lumber prices and availability fluctuate over time based on factors such as weather and demand.The cost of some of our raw materials such as foam and shipping costs are dependent on petroleum cost.Higher material prices,
95、cost of petroleum,and costs of sourced products could have an adverse effect on margins.Appropriate amounts of lumber and fabric inventory are typically stocked to maintain adequate production levels.We believe that our sources of supply for these materials are sufficient and that we are not depende
96、nt on any one supplier.Within our existing case goods manufacturing sites,we have“supermarkets of parts”housing the components used in our custom manufacturing of those products.We enter into standard purchase agreements with certain foreign and domestic suppliers to source selected case goods,uphol
97、stery,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 Logistics We distribute our products through two distribu
98、tion centers,owned by the Company,strategically located in Virginia and Oklahoma.These distribution centers provide efficient cross-dock operations to receive and ship product from our manufacturing facilities and third-party suppliers to our network of Company and independently operated retail serv
99、ice centers.Retail service centers prepare products for delivery into clients homes.At June 30,2014,the Company operated retail design centers were supported by 13 Company operated retail service centers plus 10 service centers operated by third parties.While we manufacture to custom order the major
100、ity of our products,we also stock selected case goods,upholstery and home accents to provide for quick delivery of in-stock items and to allow for more efficient production runs.Wholesale shipments utilize our own fleet of trucks and trailers or are subcontracted with independent carriers.Approximat
101、ely 88%of our fleet(trucks and trailers)is owned,with the remainder under capital lease agreements with remaining terms ranging from three to four years.Our practice has been to sell our products at the same delivered cost to all Company and independently operated design centers in North America,reg
102、ardless of their shipping point.This policy creates pricing credibility with our wholesale customers while providing our retail network the opportunity to achieve more consistent margins by removing fluctuations attributable to the cost of shipping.Further,this policy eliminates the need for our ind
103、ependent retailers to carry significant amounts of inventory in their own warehouses.As a result,we obtain more accurate consumer product demand information.Marketing Programs Our marketing and advertising strategies are developed to drive traffic into our network of design centers and to .We believ
104、e these strategies give Ethan Allen a strong competitive advantage in the home furnishings industry.We create and coordinate print,digital and television campaigns nationally,as well as assist in international and local marketing and promotional efforts.The Companys network of approximately 300 reta
105、il design centers,along with the independent members of the Interior Design Affiliate program,benefit from these marketing efforts,and we believe these efforts position us to consistently fulfill our brand promise.Our team of advertising specialists create consistent,clear messages that Ethan Allen
106、is a leader in fashion and service,with everything for the well designed home.We use several forms of media to communicate our message,including television(national and local),direct mail,newspapers,shelter magazines,social media,and 7 digital advertising.These messages are also conveyed on our webs
107、ite at .A strong email marketing program delivers promotional messages,inspiration,design ideas and product brochures to a growing database of clients.Our national television,social media,online and print advertising campaigns are designed to leverage our strong brand equity,finding creative and com
108、pelling ways to remind consumers of our tremendous range of products,services,special programs,and custom options.Coordinated local television and print advertising also serve to support our national programs.The Ethan Allen direct mail magazine,which emphasizes the eclectic mix of our wide breadth
109、of products and services,is a key marketing tool.We publish these magazines and sell them to Company and independently operated design centers that use demographic information collected through independent market research to target potential clients.Given the importance of this advertising medium,di
110、rect mail marketing lists are continually refined to target those consumers who are most likely to purchase,and improve the return on direct mail expenditures.Approximately 27 million copies of our direct mail magazine were distributed to consumers during fiscal 2014.E provides our clients and our a
111、ssociates with the tools they need to shop and design.The website features a series of helpful tabs with videos,feature stories,design and style solutions,and fresh new looks.Those looking to shop our site can do so by lifestyle,by product,or by room in an easy-to-navigate format.The sites“My Projec
112、ts”tool lets visitors create idea boards and even gives them the option of consulting with a design professional from their local Ethan Allen design center.Visitors to will also find all our latest news and promotional information.Nearly all of Ethan Allens products are available for purchase online
113、.To enhance the Ethan Allen client experience,our design centers have interactive touchscreens,where users can take our Style Quiz,browse our full product catalog,check out hundreds of fully designed rooms,print product descriptions,learn about promotions,and much more.Our social media content is up
114、dated regularly and offers fans and followers inspirational images,trend information,and design ideas,as well as tips for how to bring distinctive Ethan Allen style to their homes.We also have a robust and informative extranet available to our retailers and design professionals.It is the primary sou
115、rce of communication in and among members of our retail network.It provides information about every aspect of the retail business at Ethan Allen,including advertising materials,prototype floor plan displays,and extensive product details.Some of our design consultants utilize customized tablets so th
116、ey can be more productive in our clients homes.Retail Design Center Network Ethan Allen design centers are typically located in busy urban settings as freestanding destinations or as part of suburban strip malls,depending upon the real estate opportunities in a particular market.Our design centers a
117、verage approximately 16,000 square feet in size and range from approximately 1,500 square feet to 35,000 square feet.Because of increases in efficiency which we believe are largely due to our repositioning efforts and improvements in technology,the design centers weve opened in the past three fiscal
118、 years average 10,400 square feet.We maximize uniformity of presentation throughout the retail design center network through a comprehensive set of standards and display planning assistance.These standard interior design formats assist each design center in presenting a high quality image by using f
119、ocused lifestyle settings and select product category groupings to display our products and information to facilitate design solutions and to educate consumers.We also create a uniform design center image with consistent exterior facades in addition to the interior layouts.The adherence to all of th
120、ese standards has helped position Ethan Allen as a leader in home furnishings retailing.8 We continue to strengthen the retail network with many initiatives,including the opening of new and relocating design centers in desirable locations,updating presentations and floor plans,strengthening of the p
121、rofessionalism of our designers through training and certification,and the consolidation of certain design centers and service centers.People At June 30,2014,the Company had approximately 5,000 employees(“associates”),none of whom are represented by unions.We believe we maintain good relationships w
122、ith our employees.The retail network,which includes both Company and independently operated design centers,is staffed with a sales force of design consultants and service professionals who provide customers with effective home decorating solutions at no additional charge.Our interior design associat
123、es receive specialty training with respect to the distinctive design and quality features inherent in each of our products and programs.This enables them to more effectively communicate the elements of style and value that serve to differentiate us from our competition.As such,we believe our design
124、consultants,and the complimentary service they provide,create a distinct competitive advantage over other home furnishing retailers.We continue to strengthen the level of service,professionalism,interior design competence,efficiency,and effectiveness of retail design center associates.The Companys i
125、nterior design affiliate program adds further strength and breadth to our interior design reach.We believe that this program augments the Company and independent retailer design staffs to reach more clients and improve market penetration.We recognize the importance of our retail design center networ
126、k to our long-term success.Accordingly,we believe we(i)have established a strong management team within Company operated design centers and(ii)continue to work closely with our independent retailers in order to assist them.With this in mind,we make our services available to every design center,wheth
127、er independently 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 consultants,service and delivery personnel,and
128、retailers is important for the growth of our business.As a result,we have committed to make available comprehensive retail training programs intended to increase the customer service capabilities of each individual.Customer Service Offerings We offer numerous customer service programs,each of which
129、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 and redeem gift cards through our website or at any participating retail design center,which can be used for any of our products
130、 or services.Ethan Allen Consumer Credit Programs The Ethan Allen Platinum program offers consumers(clients)a menu of custom financing options.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 a
131、pply for an Ethan Allen Platinum card at any participating design center or on-line at .Competition The domestic and global home furnishings industry faces numerous challenges,which include an influx of low-priced products from overseas.As a result,there is a high degree of competition in our market
132、s.We differentiate ourselves as a preferred brand by adhering to a business strategy focused on providing(i)high-quality,well designed and often custom,handmade products at good value,(ii)a comprehensive complement of home 9 furnishing design solutions,including our complimentary design service,and(
133、iii)excellence in customer service.We consider our vertical integration a significant competitive advantage in the current environment as it allows us to design,manufacture and source,distribute,market,and sell our products through one of the industrys largest single-source retail networks.The inter
134、net also provides a highly competitive medium for the sale of a significant amount of home furnishings each year,and we believe its becoming increasingly important.Although much of that product is sold through commodity oriented,low priced and low service retailers,we believe consumers are spending
135、more time window shopping on the internet and are thus better informed when they do visit our brick and mortar facilities.At Ethan Allen,the ultimate goal of our internet strategy is to drive traffic into our network of design centers by combining technology with excellent personal service.At ,custo
136、mers have the opportunity to buy our products online but we take the process further.With so much of our product offering being custom,we encourage our website customers to get online help from our network of interior design professionals.This complimentary interior design support creates a competit
137、ive advantage through our excellent personal service.This enhances the experience and regularly leads to internet customers becoming clients of our network of interior design centers.Industry globalization has provided us an opportunity to adhere to a blended sourcing strategy,establishing relations
138、hips 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 manufacturers,as appropriate,in order to m
139、aintain our competitive advantage.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 basis of each of these factors and that,more
140、 specifically,our product presentations,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.We also believe that we differentiate ourselves further with the quality
141、of our design service through our intensive training.Our objective is to continue to develop and strengthen our retail network by(i)expanding the Company operated retail business through the repositioning of and opening of new design centers,and(ii)obtaining and retaining independent retailers,encou
142、raging such retailers to expand their business through the opening or relocation of new design centers with the objective of increasing the volume of their sales and(iii)further expanding our sales network through our IDA program and recently introduced realtor referral program.Trademarks We current
143、ly hold,or have registration applications pending for,numerous trademarks,service marks and design patents for the Ethan Allen name,logos and designs in a broad range of classes for both products and services in the United States and in many foreign countries.In addition,we have registered,or have a
144、pplications pending for certain of our slogans utilized in connection with promoting brand awareness,retail sales and other services and certain collection names.We view such trademarks and service marks as valuable assets and have an ongoing program to diligently monitor and defend,through appropri
145、ate action,against their unauthorized use.Available Information We make available,free of charge via our website,all Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and other information filed with,or furnished to,the Securities and Exchange Commission(the SEC
146、or the Commission),including amendments to such reports.This information is available at as soon as reasonably practicable after it is electronically filed with,or furnished to,the SEC.In addition,the SEC maintains a website that contains reports,proxy and information 10 statements,and other informa
147、tion regarding companies that file electronically with the Commission.This information is available at www.sec.gov.In addition,charters of all committees of our Board of Directors,as well as our Corporate Governance guidelines,are available on our website at or,upon written request,in printed hardco
148、py form.Written requests should be sent to Office of the Secretary,Ethan Allen Interiors Inc.,Ethan Allen Drive,Danbury,Connecticut 06811.Item 1A.Risk Factors The following information describes certain significant risks and uncertainties inherent in our business that should be carefully considered,
149、along with other information contained elsewhere in this report and in other filings,when making an investment decision with respect to us.If one or more of these risks actually occurs,the impact on our business,including our financial condition,results of operations,and cash flows could be adverse.
150、An economic downturn may materially adversely 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 experienced a major recession,which reduced the available market s
151、ize for our industry from historic peak levels.While we have recalibrated the footprint of our vertically integrated enterprise to be profitable with lower revenues than achieved at our historic peak,an economic downturn of significance or extended duration could adversely affect consumer demand and
152、 discretionary spending habits and,as a result,our business performance,profitability,and cash flows.Access 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
153、our control.If capital market conditions were to worsen meaningfully,there is a risk that our business partner that issues our private label credit card program may not be able to fulfill its obligations under that agreement.In addition,further tightening of credit markets may restrict our customers
154、 ability and willingness to make purchases.We may be unable to obtain sufficient external funding to finance our operations and growth.Historically,we have relied upon our cash from operations to fund our operations and growth.As we operate and expand our business,we may rely on external funding sou
155、rces,including the proceeds from the issuance of debt or the$50 million revolving bank line of credit under our existing credit facility.Any unexpected reduction in cash flow from operations could increase our external funding requirements to levels above those currently available.The credit rating
156、agencies Moodys Corporation and Standard and Poors most recent rating of our corporate and senior unsecured credit is Ba2 and BB-respectively.If our credit ratings were lowered,the Companys access to debt could be negatively impacted.There can be no assurance that we will not experience unexpected c
157、ash flow shortfalls in the future or that any increase in external funding required by such shortfalls will be available on acceptable terms or at all.Operating losses could reduce our liquidity and impact our dividend policy.Historically,we have relied on our cash from operations to fund our operat
158、ions and the payment of cash dividends.If the Companys financial performance were to deteriorate resulting in financial losses we may not be able to fund a shortfall from operations and would require external funding.Some financing instruments used by the Company historically may not be available to
159、 the Company in the future.We cannot assure that additional sources of financing would be available to the Company on commercially favorable terms should the Companys capital requirements exceed cash available from operations and existing cash and cash equivalents.In such circumstances,the Company m
160、ay reduce its quarterly dividends.11 Additional impairment charges could reduce our profitability.We have significant long-lived tangible and intangible assets recorded on our balance sheets.If our operating results decline,we may incur impairment charges in the future,which could have a material im
161、pact on our financial results.We evaluate the recoverability of the carrying amount of our long-lived tangible and intangible assets on an ongoing basis.There can be no assurance that the outcome of such future reviews will not result in substantial impairment charges.Impairment assessment inherentl
162、y involves judgments as to assumptions about expected future cash flows and the impact of market conditions on those assumptions.Future events and changing market conditions may impact our assumptions as to prices,costs or other factors that may result in changes in our estimates of future cash flow
163、s.Although we believe the assumptions we use in testing for impairment are reasonable,significant changes in any of our assumptions could produce a significantly different result.We face changes in global and local economic conditions that may adversely affect consumer demand and spending,our manufa
164、cturing operations or sources of merchandise.Historically,the home furnishings industry has been subject to cyclical variations in the general economy and to uncertainty regarding future economic prospects.Such uncertainty,as well as other variations in global economic conditions such as rising fuel
165、 costs,wage and benefit inflation,currency fluctuations,and increasing interest rates,may continue to cause inconsistent and unpredictable consumer spending habits,while increasing our own input costs.These risks,as well as industrial accidents or work stoppages,could also severely disrupt our manuf
166、acturing operations,which could have a material adverse effect on our financial performance.We import a portion of our merchandise from foreign countries and operate manufacturing plants in Mexico and Honduras.As a result,our ability to obtain adequate supplies or to control our costs may be adverse
167、ly affected by events affecting international commerce and businesses located outside the United States,including natural disasters,changes in international trade,central bank actions,changes in the relationship of the U.S.dollar versus other currencies,labor availability and cost,and other governme
168、ntal policies of the U.S.and the countries from which we import our merchandise or in which we operate facilities.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 fro
169、m overseas manufacturers and domestic retailers may adversely affect 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 produ
170、cts,and competes with other U.S.and foreign manufacturers.Our retail network 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
171、which may operate locally,regionally and nationally,as well as over the internet.We 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 performan
172、ce.Industry globalization has led to increased competitive pressures brought about by the increasing volume of imported finished goods and components,particularly for case good products,and the development of manufacturing capabilities in other countries,specifically within Asia.The increase in over
173、seas production capacity has created over-capacity for many manufacturers,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
174、 may be capable of being sold at a lower price to consumers,which,in turn,could lead to some measure of further industry-wide price deflation.12 We cannot provide assurance that we will be able to establish or maintain relationships with sufficient or appropriate manufacturers,whether foreign or dom
175、estic,to supply us with selected case goods,upholstery and home accessory items to enable us to maintain our competitive advantage.In addition,the emergence of foreign manufacturers has served to broaden the competitive landscape.Some of these competitors produce furniture types not manufactured by
176、us and may have greater financial resources available to them or lower costs of operating.This competition 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 busi
177、ness,operating results and financial condition.Sales of our products are dependent upon consumer acceptance of our product designs,styles,quality and price.We continuously monitor changes in home design trends through attendance at international industry events and fashion shows,internal marketing r
178、esearch,and regular communication with our retailers and design consultants who provide valuable input on consumer tendencies.However,as with all retailers,our business is susceptible to changes in consumer tastes and trends.Such tastes and trends can change rapidly and any delay or failure to antic
179、ipate or respond to changing consumer tastes and trends in a timely manner could adversely impact our business,operating results and financial condition.Our number of manufacturing and logistics sites may increase our exposure to business disruptions and could result in higher transportation costs.W
180、e have a limited number of manufacturing sites in our case good and upholstery operations,consolidated our distribution network into fewer centers for both wholesale and retail segments,and operate a single home accents plant.Our upholstery operations consist of two upholstery plants on our Maiden,N
181、orth Carolina campus and one plant in Mexico.The Company operates three manufacturing plants(North Carolina,Vermont,and Honduras)and one sawmill in support of our case goods operations.Our plants require various raw materials and commodities such as logs and lumber for our case good plants and foam,
182、springs and engineered hardwood board for our upholstery plants.As a result of the consolidation of our manufacturing operations into fewer facilities,if any of our manufacturing or logistics sites experience significant business interruption,our ability to manufacture products or deliver timely wou
183、ld likely be impacted.While we have long-standing relationships with 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 locations has resulted in longer distances for deli
184、very and could result in higher costs to transport products if fuel costs increase significantly.Our current and former manufacturing and retail operations and products are subject to increasingly stringent environmental,health and safety requirements.We use and generate hazardous substances in our
185、manufacturing and retail operations.In addition,both the manufacturing 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 person
186、al injury or death.We are subject to increasingly stringent environmental,health and safety laws and regulations relating to our products,current and former properties and our current operations.These laws and regulations provide for substantial fines and criminal sanctions for violations and someti
187、mes require product recalls and/or redesign,the installation of costly pollution control or safety equipment,or costly changes in operations to limit pollution or decrease the likelihood of injuries.In addition,we may become subject to potentially material liabilities for the investigation and clean
188、up of contaminated properties and to claims alleging personal injury or property damage resulting from exposure to or releases of hazardous substances or personal injury because of an unsafe workplace.In addition,noncompliance with,or stricter enforcement of,existing laws and regulations,adoption of
189、 more stringent new laws and regulations,discovery of previously unknown contamination or imposition of new or 13 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 ra
190、w materials could result in increased costs or cause production delays which might result in a decline in sales,either of which could adversely impact our earnings.We use various types of wood,foam,fibers,fabrics,leathers,and other raw materials in manufacturing our furniture.Certain of our raw mate
191、rials,including fabrics,are purchased domestically and outside North America.Fluctuations in the price,availability and quality of raw materials could result in increased costs or a delay in manufacturing our products,which in turn could result in a delay in delivering products to our customers.For
192、example,lumber prices fluctuate over time based on factors such as weather and demand,which in turn,impact availability.Production delays or upward trends in raw material prices could result in lower sales or margins,thereby adversely impacting our earnings.In addition,certain suppliers may require
193、extensive advance notice of our requirements in order to produce products in the quantities we desire.This long lead time may require us to place orders far in advance of the time when certain products will be offered for sale,thereby exposing us to risks relating to shifts in consumer demand and tr
194、ends,and any significant downturn in the U.S.economy.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,President a
195、nd 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 business is sensitive to increasing labor co
196、sts,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 quali
197、fied craftsmen,professional and clerical associates 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 packa
198、ge in order to compete effectively in the hiring and retention of qualified employees.Our labor and benefit costs may continue to increase and such increases may not be recovered.This could have a material adverse effect on our business,operating results and financial condition.Our success depends u
199、pon our brand,marketing and advertising efforts and pricing strategies.If we are not able to maintain and enhance our brand,or if we are not successful in these other efforts,our business and operating results could be adversely affected.Maintaining and enhancing our brand is critical to our ability
200、 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 existing brand equity.We cannot provide assurance that our marketing,advertising and other efforts t
201、o promote and maintain awareness of our brand will not require us to incur substantial costs.If these efforts are unsuccessful or we incur substantial costs in connection with these efforts,our business,operating results and financial condition could be adversely affected.We may not be able to maint
202、ain our current design center locations at current costs.We may also fail to successfully select and secure design center locations.Our design centers are typically located in busy urban settings as freestanding destinations or as part of suburban 14 strip malls,depending upon the real estate opport
203、unities in a particular market.Our business competes with other retailers and as a result,our success may be affected by our ability to renew current design center leases and to select and secure appropriate retail locations for existing and future design centers.Our results of operations for any qu
204、arter 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
205、schedules in response to seasonal changes in energy costs and weather conditions,changes in consumer order patterns,and the timing of various promotional events.From time to time,we have experienced,and may continue to experience,volatility with respect to demand for our home furnishing products.Acc
206、ordingly,results of operations for any quarter 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 intelle
207、ctual property are important to our success.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
208、any patent,trademark,or copyright or any applications 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
209、 be sufficient or effective.Any significant 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 kn
210、ow-how or information does not infringe the 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.The Company relies heavily on information and technology to operate its business,and any disruption to
211、its technology infrastructure or the internet could harm the Companys operations.We operate many aspects of our business including financial reporting,and customer relationship management through server and web-based technologies,and store various types of data on such servers or with third-parties
212、who in turn store it on servers and in the“cloud”.Any disruption to the internet or to the Companys or its service providers global technology infrastructure,including malware,insecure coding,“Acts of God,”attempts to penetrate networks,data leakage and human error,could have adverse affects on the
213、Companys operations.While we have invested and continue to invest in information technology risk management and disaster recovery plans,these measures cannot fully insulate the Company from technology disruptions or data loss and the resulting adverse effect on the Companys operations and financial
214、results.We could incur substantial costs due to compliance with conflict mineral regulations,which may materially adversely affect our business,operating results,and financial condition.The SEC has adopted rules regarding disclosure of the use of conflict minerals(commonly referred to as tantalum,ti
215、n,tungsten,and gold),which are mined from the Democratic Republic of the Congo and surrounding countries.This requirement could affect the sourcing of materials used in some of our products as well as the companies we use to manufacture our products.If our products are found to contain conflict mine
216、rals sourced from the Democratic Republic of the Congo or surrounding countries,the Company would take actions such as changing materials or designs to reduce the possibility that the purchase of conflict minerals may fund armed groups in the region.These actions could add engineering and other cost
217、s to the manufacture of our products.We expect to incur costs to continue to upgrade our process to discover the origin of the tantalum,tin,tungsten,and gold used in our products,and to audit our conflict minerals disclosures.Our reputation and consequently our financial condition may also suffer if
218、 we have included conflict minerals originating in the Democratic 15 Republic of the Congo or surrounding countries in our products,and those conflict minerals funded armed groups in the region.Item 1B.Unresolved Staff Comments None.Item 2.Properties Our corporate headquarters,located in Danbury,Con
219、necticut,consists of one building containing 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 approximately 200
220、 guestrooms.This hotel,owned by a wholly-owned subsidiary of Ethan Allen,is used in connection with Ethan Allen functions and training programs,as well as for functions and accommodations for the general public.We operate eight manufacturing facilities located in the U.S.,Mexico and Honduras.All of
221、these facilities are owned by the Company and include four case good plants(including one sawmill)totaling 1,731,000 square feet,three upholstery furniture plants totaling 820,000 square feet,and one home accessory plant of 295,000 square feet.Our wholesale division also owns and operates one nation
222、al distribution center supported by one owned small parcel and fulfillment center which are a combined 883,000 square feet.Two of our case goods manufacturing facilities are located in Vermont,one is in North Carolina and one is in Choloma,Honduras.We have two upholstery manufacturing facilities at
223、our Maiden,North Carolina campus,and one in Guanajuato,Mexico.Our distribution facility is located in Virginia.We own four and lease nine retail service centers,totaling 880,000 square feet.Our retail service centers are located throughout the United States and Canada and serve to support our variou
224、s retail sales districts.The geographic distribution of our retail design center network as of June 30,2014 is as follows:CompanyIndependentlyOperatedOperatedUnited States135 61 Canada6 4 Asia-81 Europe2 1 Middle East-5 Total143 152 Retail Design Center Category Of the 143 Company operated retail de
225、sign centers,70 of the properties are owned and 73 of the properties are leased from independent third parties.Of the 70 owned design centers,17 are subject to land leases.We own eight additional retail properties,two of which are leased to independent Ethan Allen retailers,and four of which are lea
226、sed to unaffiliated third parties.See Note 7 to the Consolidated Financial Statements included under Item 8 of this Annual Report for more information with respect to our operating lease obligations.We believe that all of our properties are well maintained and in good condition.We estimate that our
227、manufacturing plants are currently operating at approximately 74%of capacity based on their current shifts and staffing.We believe we have additional capacity at selected facilities,which we could utilize with minimal additional capital expenditures.16 Item 3.Legal Proceedings We are a party to vari
228、ous legal actions with customers,employees and others arising in the normal course of our business.We maintain liability insurance,which is deemed to be adequate for our needs and commensurate with other companies in the home furnishings industry.We believe that the final resolution of pending actio
229、ns(including any potential liability not fully covered by insurance)will not have a material adverse effect on our financial condition,results of operations,or cash flows.Environmental Matters We and our subsidiaries are subject to various environmental laws and regulations.Under these laws,we and/o
230、r 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.We believe our currently anticipated capital expenditures for environmental control facility matters are not material.We are subject to other feder
231、al,state and local environmental protection laws and regulations and are involved,from time to time,in investigations and proceedings regarding environmental matters.Such investigations and proceedings typically concern air emissions,water discharges,and/or management of solid and hazardous wastes.W
232、e believe that our facilities are in material compliance with all applicable environmental laws and regulations.Federal and state regulations provided the initiative for us to reformulate certain furniture finishes or institute process changes to reduce emissions of volatile organic compounds.Compli
233、ance 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 technical and procedural controls,including reformulation of finishing materials to reduce toxicity,implementa
234、tion of high velocity low pressure spray systems,development of storm water protection plans and controls,and further development of related inspection/audit teams,all of which have served to reduce emissions per unit of production.We remain committed to implementing new waste minimization programs
235、and/or enhancing existing programs with the objective of(i)reducing the total volume of waste,(ii)limiting the liability associated with waste disposal,and(iii)continuously improving environmental and job safety programs on the factory floor which serve to minimize emissions and safety risks for emp
236、loyees.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 manufacturing process.Item 4.Mine Safety Disclosures Not applicable PART II Item 5.Market for Registrant
237、s Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange(“NYSE”)under ticker symbol ETH.The following table sets forth,for each quarterly period during the past two fiscal years,(i)the intraday high and low sales
238、prices of our common stock as reported on the NYSE and(ii)the dividends per share paid by us:17 DividendsHighLowPer ShareFiscal 2014First Quarter31.25$25.30$0.10$Second Quarter31.09 23.88 0.10 Third Quarter31.52 24.03 0.10 Fourth Quarter27.63 22.83 0.10 Fiscal 2013First Quarter25.30$19.54$0.09$Secon
239、d Quarter30.29 21.48 0.50 Third Quarter33.18 26.26 0.09 Fourth Quarter33.36 26.76 0.09 Market Price Mr.Kathwari,Chief Executive Officer and President,has certified to the NYSE,pursuant to Section 303A.12 of the NYSEs Listing Company Manual,that he is unaware of any violation by the Company of the NY
240、SEs corporate governance listing standards.As of August 8,2014,there were 258 shareholders of record of our common stock.Management estimates there are approximately 9,000 beneficial shareholders of the Companys common stock.We expect to continue to declare quarterly dividends for the foreseeable fu
241、ture,business conditions permitting.Equity Compensation Plan Information The Equity Compensation Plan Information required by this Item will appear in the Ethan Allen Interiors Inc.proxy statement for the Annual Meeting of Shareholders scheduled to be held on November 18,2014 and is incorporated her
242、ein by reference in the introductory paragraph of Part III of this Annual Report.Issuer Purchases of Equity Securities On November 21,2002,our Board of Directors approved a share repurchase program authorizing us to repurchase up to 2,000,000 shares of our common stock,from time to time,either direc
243、tly or through agents,in the open market at prices and on terms satisfactory to us.Subsequent to that date,the Board of Directors increased the remaining authorization on seven separate occasions,the last of which was on November 13,2007.There were no share repurchases during the quarter ended June
244、30,2014.As of June 30,2014 we had a remaining Board authorization to repurchase 1,101,490 shares.Comparative Company Performance The following line graph compares the cumulative total stockholder return for the Company with the S&P 500 Index,the S&P Retailing index,and a peer group index,assuming$10
245、0 was invested on June 30,2009.The Company believes the broad and published industry index is more meaningful than the peer group index.Consequently,the peer group index will not be included after fiscal 2014.The peer group includes Bassett Furniture Industries,Inc.,Flexsteel Industries,Inc.,Haverty
246、 Furniture Companies,Inc.,La-Z-boy Inc.,Leggett&Platt,Inc.,and Pier 1 Imports Inc.Removed from the peer group for all periods were Furniture Brands International,Inc.and Chromcraft Revington due to their delisting from the NYSE.The returns of each company have been weighted according to each company
247、s market capitalization.18 Item 6.Selected Financial Data The following table presents selected financial data for the fiscal years ended June 30,2014,2013,2012,2011 and 2010 which has been derived from our consolidated financial statements(dollar amounts in thousands except per share data).The info
248、rmation 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 this Annual Repor
249、t.$0$50$100$150$200$250$300$350$400 6/09 6/10 6/11 6/12 6/13 6/14 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Ethan Allen Interiors Inc.,the S&P 500 Index,S&P Retailing Index and Peer Group Ethan Allen Interiors Inc.S&P 500 S&P Retailing Index Peer Group*$100 invested on 6/30/09 in stock or i
250、ndex,including reinvestment of dividends.Fiscal year ending June 30.Copyright 2014 S&P,a division of The McGraw-Hill Companies Inc.All rights reserved.19 20142013201220112010Consolidated Operations Data Net Sales746,659$729,083$729,373$678,960$590,054$Cost of Sales340,163 330,734 339,085 329,500 309
251、,777 Selling,general andadministrative expenses336,860 337,912 340,591 317,527 289,575 Restructuring and impairmentcharges,net-2,437 Operating income(loss)69,636 60,437 49,697 31,933 (11,735)Interest and other expense,net7,234 10,263 8,458 5,562 7,052 Income(loss)before incometax expense62,402 50,17
252、4 41,239 26,371 (18,787)Income tax expense(benefit)19,471 17,696 (8,455)(2,879)25,529 Net income(loss)42,931$32,478$49,694$29,250$(44,316)$Per Share DataNet income(loss)per basicshare1.48$1.13$1.72$1.02$(1.53)$Basic weighted average sharesoutstanding28,918 28,864 28,824 28,758 28,982 Net income(loss
253、)per dilutedshare1.47$1.11$1.71$1.01$(1.53)$Diluted weighted averageshares outstanding29,276 29,239 29,109 28,966 28,982 Cash dividends per share0.40$0.77$0.30$0.22$0.20$Other InformationDepreciation and amortization17,930$18,008$18,581$20,816$29,398$Capital expenditures andacquisitions19,305$19,775
254、$23,404$12,051$9,972$Working capital169,582$127,631$131,715$113,912$113,950$Current ratio2.25 to 11.96 to 11.87 to 11.74 to 11.78 to 1Effective tax rate31.2%35.3%-20.5%-10.9%-135.9%Balance Sheet Data(at end of period)Total assets654,434$617,285$644,788$628,325$631,777$Total debt,including capitallea
255、se obligations 130,912 131,289 154,500 165,032 203,267 Shareholders equity367,467$334,357$321,868$281,687$258,459$Debt as a percentage of equity35.6%39.3%48.0%58.6%78.6%Debt as a percentage of capital26.3%28.2%32.4%36.9%44.0%Fiscal Year Ended June 30,20 Item 7.Managements Discussion and Analysis of
256、Financial Condition and Results of Operation The following discussion of financial condition and results of operations is based upon,and should be read in conjunction with,our Consolidated Financial Statements(including the notes thereto)included under Item 8 of this Annual Report.Forward-Looking St
257、atements Managements discussion and analysis of financial condition and results of operations and other sections of this Annual Report contain forward-looking statements relating to our future results.Such forward-looking statements are identified by use of forward-looking words such as anticipates,
258、believes,plans,estimates,expects,and intends or words or phrases of similar expression.These forward-looking statements are subject to management decisions and various assumptions,risks and uncertainties,including,but not limited to:the potential effects of natural disasters affecting our suppliers
259、or trading partners;the effects of labor strikes;weather conditions that may affect sales;volatility in fuel,utility,transportation and security costs;changes in global or regional political or economic conditions,including changes in governmental and central bank policies;changes in business condit
260、ions in the furniture industry,including changes in consumer spending patterns and demand for home furnishings;effects of our brand awareness and marketing programs,including changes in demand for our existing and new products;our ability to locate new design center sites and/or negotiate favorable
261、lease terms for additional design centers or for the expansion of existing design centers;competitive factors,including changes in products or marketing efforts of others;pricing pressures;fluctuations in interest rates and the cost,availability and quality of raw materials;the effects of terrorist
262、attacks or conflicts or wars involving the United States or its allies or trading partners;those matters discussed in Items 1A and 7A of this Annual Report and in our SEC filings;and our future decisions.Accordingly,actual circumstances and results could differ materially from those contemplated by
263、the forward-looking statements.Critical Accounting Policies Our consolidated financial statements have been prepared in conformity with U.S.generally accepted accounting principles that require,in some cases,that certain estimates and assumptions be made that affect the amounts and disclosures repor
264、ted in those financial statements and the related accompanying notes.Estimates are based on currently known facts and circumstances,prior experience and other assumptions believed to be reasonable.We use our best judgment in valuing these estimates and may,as warranted,solicit external advice.Actual
265、 results could differ from these estimates,assumptions and judgments,and these differences could be material.The following critical accounting policies,some of which are impacted significantly by estimates,assumptions and judgments,affect our consolidated financial statements.Inventories Inventories
266、(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 determined based solely on those charges incurred in the acquisition and production of the related inventory(i.e.material,labor and manufacturing overhead cost
267、s).We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-downs,taking into account future demand and market conditions.If actual demand or market conditions in the future are less favorable than those estimated,additional inve
268、ntory write-downs may be required.Revenue Recognition Revenue is recognized when all of the following have occurred:persuasive evidence of a sales arrangement exists(e.g.a wholesale purchase order or retail sales invoice);the sales arrangement specifies a fixed or determinable sales price;title and
269、risk of ownership has passed to the customer;no specific performance obligations remain;product is shipped or services are provided to the customer or a fixed schedule of delivery is agreed upon and in place;collectability is reasonably assured.As such,revenue recognition generally occurs upon the s
270、hipment of goods to independent retailers or,in the case of Ethan Allen operated retail design centers,upon delivery to the customer.If shipping is billed to customers,this is included in revenue.Recorded sales 21 provide for estimated returns and allowances.We permit our customers to return defecti
271、ve products and incorrect shipments,and terms we offer are standard for the industry.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 base
272、d on a review of specifically identified accounts in addition to an overall aging analysis.Judgments are made with respect to the collectability of accounts receivable based on historical experience and current economic trends.Actual losses could differ from those estimates.Retail Design Center Acqu
273、isitions-We account for the acquisition of retail design centers and related assets with the purchase method.Accounting for these transactions as purchase business combinations requires the allocation of purchase price paid to the assets acquired and liabilities assumed based on their fair values as
274、 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 Goodwill and other indefinite-lived intangible assets are evaluated for impairment on an annual basis during the fourth quarter
275、 of each fiscal year,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.When testing goodwill for impairment,we may assess qualitative factors for some or all of our reporting units to determi
276、ne whether it is more likely than not(that is,a likelihood of more than 50 percent)that the fair value of a reporting unit is less than its carrying amount,including goodwill.Alternatively,we may bypass this qualitative assessment for some or all of our reporting units and determine whether the carr
277、ying value exceeds the fair value using a quantitative assessment as described below.The recoverability of long-lived assets are evaluated for impairment by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asse
278、t.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 over its fair value is recorded.The long-term nature of these assets requires the estimation of cash inflows and outf
279、lows several years into the future and only takes into consideration technological advances known at the time of the impairment test.To evaluate goodwill using a quantitative assessment,the Company determines the current fair value of the reporting units using a combination of“Market”and“Income”appr
280、oaches.In the Market approach,the“Guideline Company”method is used,which focuses on comparing the Companys risk profile and growth prospects to reasonably similar publicly traded companies.Key assumptions used for the Guideline Company method are total invested capital(“TIC”)multiples for revenues a
281、nd operating cash flows,as well as consideration of control premiums.The TIC multiples are determined based on public furniture companies within our peer group,and if appropriate,recent comparable transactions are considered.Control premiums are determined using recent comparable transactions in the
282、 open market.Under the Income approach,a discounted cash flow method is used,which includes a terminal value,and is based on external analyst financial projection estimates,as well as internal financial projection estimates prepared by management.The long-term terminal growth rate assumptions reflec
283、t our current long-term view of the market in which we compete.Discount rates use the weighted average cost of capital for companies within our peer group,adjusted for specific company risk premium factors.The fair value of our trade name,which is the Companys only indefinite-lived intangible asset
284、other than goodwill,is valued using the relief-from-royalty method.Significant factors used in trade name valuation are rates for royalties,future growth,and a discount factor.Royalty rates are determined using an average of recent comparable values.Future growth rates are based on the Companys perc
285、eption of the long-term values in the market in which we compete,and the discount rate is determined using the weighted average cost of capital for companies within our peer group,adjusted for specific company risk premium factors.22 In the fourth quarter of fiscal years 2014 and 2013,the Company pe
286、rformed qualitative assessments of the fair value of the wholesale reporting unit and concluded that the fair value of its goodwill exceeded its carrying value.In fiscal year 2011 the Company performed a quantitative assessment and determined the fair value of its wholesale reporting unit exceeded i
287、ts carrying value by a substantial margin.The fair value of the trade name exceeded its carrying value by a substantial margin in fiscal years 2014,2013 and 2012.To calculate fair value of these assets,management relies on estimates and assumptions which by their nature have varying degrees of uncer
288、tainty.Wherever possible,management therefore looks for third party transactions to provide the best possible support for the assumptions incorporated.Management considers several factors to be significant when estimating fair value including expected financial outlook of the business,changes in the
289、 Companys stock price,the impact of changing market conditions on financial performance and expected future cash flows,and other factors.Deterioration in any of these factors may result in a lower fair value assessment,which could lead to impairment of the long-lived assets and goodwill of the Compa
290、ny.Income Taxes Income taxes are accounted for under the asset and liability method.Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
291、tax bases and operating loss and tax credit carryforwards.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.The effect on deferred tax assets and liabi
292、lities of a change in tax rates is recognized in income in the period that includes the enactment date.Additional factors that we consider when making judgments about the deferred tax valuation include tax law changes,a recent history of cumulative losses,and variances in future projected profitabil
293、ity.The Company evaluates,on a quarterly basis,uncertain tax positions taken or expected to be taken on tax returns for recognition,measurement,presentation,and disclosure in its financial statements.If an income tax position exceeds a 50%probability of success upon tax audit,based solely on the tec
294、hnical merits of the position,the Company recognizes an income tax benefit in its financial statements.The tax benefits recognized are measured based on the largest benefit that has a greater than 50%likelihood of being realized upon ultimate settlement.The liability associated with an unrecognized
295、tax benefit is classified as a long-term liability except for the amount for which a cash payment is expected to be made or tax positions settled within one year.We recognize interest and penalties related to income tax matters as a component of income tax expense.Business Insurance Reserves We have
296、 insurance programs in place to cover workers compensation and property/casualty claims.The insurance 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 exper
297、ience.Although we believe that the insurance reserves are adequate,the reserve estimates are based on historical experience,which may not be indicative of current and future losses.In addition,the actuarial calculations used to estimate insurance reserves are based on numerous assumptions,some of wh
298、ich are subjective.We adjust insurance reserves,as needed,in the event that future loss experience differs from historical loss patterns.Other Loss Reserves We have a number of other potential loss exposures incurred in the ordinary course of business such as environmental claims,product liability,l
299、itigation,tax liabilities,restructuring charges,and the recoverability of deferred income tax benefits.Establishing loss reserves for these matters requires the use of estimates and judgment with regard to maximum risk exposure and ultimate liability or realization.As a result,these estimates are of
300、ten developed with our counsel,or other appropriate advisors,and are based on our current understanding of the underlying facts and circumstances.Because of uncertainties related to the ultimate outcome of these issues or the possibilities of changes in the underlying facts and circumstances,additio
301、nal charges related to these issues could be required in the future.23 Basis of Presentation As of June 30,2014,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 Globa
302、l,Inc.;therefore,substantially all of the financial information presented herein is that of Ethan Allen Global,Inc.Results of Operations For the year ended June 30,2014,our net sales of$746.7 million increased 2.4%compared to fiscal 2013,operating income increased 15.2%over the prior fiscal year,and
303、 earnings of$1.47 per diluted share was 32.4%above the year ended June 30,2013.Net cash provided by operating activities was$59.9 million,a 2.3%decrease over the prior fiscal year of$61.3 million.Our retail divisions operating income was up$2.5 million or 31.2%from the prior fiscal year,while the wh
304、olesale division operating income grew$7.0 million or 13.7%.Our liquidity continues to be strong,enabling us to pay$11.3 million in dividends during the fiscal year,and increase our inventories by$9.0 million from June 30 2013,while increasing our total cash and securities balance at June 30,2014 by
305、$32.3 million over the prior fiscal year end to$135.8 million.Net sales for both our wholesale and retail business segments improved over the prior fiscal year,closing the year with a strong fourth quarter for both segments,following a third quarter that was somewhat hampered by severe winter weathe
306、r in many parts of the country.Our full year retail segment sales in fiscal 2014 compared to fiscal 2013 grew 0.4%,with a fourth quarter sales increase of 7.1%compared to the fourth quarter of fiscal 2013.Wholesale net sales for the fiscal 2014 year increased 4.4%compared to fiscal 2013,and fourth q
307、uarter fiscal 2014 sales increased 8.8%over the fourth quarter of fiscal 2013.Total orders booked by our retail segment increased 1.0%for fiscal 2014 compared to fiscal 2013,while comparable design center orders increased 3.0%.Total orders booked by our retail segment in the fourth quarter were impa
308、cted by our decision to close our year-end sale on July 7,2014 instead of June 30.This change took advantage of the timing of the July 4 holiday period and the July 8 scheduled price increase,though it resulted in some sales and orders which would ordinarily occur in June falling into the next fisca
309、l year.We continue to make investments to strengthen the level of service,professionalism,interior design competence,efficiency,and effectiveness of the retail network design center personnel.We believe that over time,we will continue to benefit from(i)continuous repositioning and opening of new des
310、ign centers in our retail network,(ii)frequent new product introductions,(iii)new and innovative marketing promotions and effective use of targeted advertising media,and(iv)continued use of the latest technology coupled with personal service from our interior design professionals.We believe our netw
311、ork of professionally trained interior design professionals differentiates us significantly from others in our industry.Our manufacturing and logistics operations also gained efficiency by adding capacity in Honduras and adding new technology to our operations.We estimate our manufacturing facilitie
312、s are currently operating at approximately 74%of capacity based on their current shifts and staffing.We believe we have sufficient scalable capacity that can support strong sales growth while maintaining control over cost,quality and service to our customers.Business Results:Our revenues are compris
313、ed of(i)wholesale sales to independently operated and Company operated retail design centers and(ii)retail sales of Company operated design centers.See Note 15 to our Consolidated Financial Statements for the year ended June 30,2014 included under Item 8 of this Annual Report.24 The components of co
314、nsolidated revenues and operating income(loss)are as follows(in millions):201420132012Revenue:Wholesale segment453.6$434.4$456.9$Retail segment580.7 578.3 559.4 Elimination of inter-segment sales(287.6)(283.6)(286.9)Consolidated revenue746.7$729.1$729.4$Operating income(loss):Wholesale segment57.8$5
315、0.8$64.4$Retail segment10.5 8.0 (11.5)Adjustment for inter-company profit(1)1.3 1.6 (3.2)Consolidated operating income69.6$60.4$49.7$Fiscal Year Ended June 30,(1)Represents the change in wholesale profit contained in Ethan Allen operated design center inventory existing at the end of the period.Fisc
316、al 2014 Compared to Fiscal 2013 Consolidated revenue for the fiscal year ended June 30,2014 was$746.7 million compared to$729.1 million in fiscal 2013.There was year-over-year sales growth in both the wholesale and retail segments.The increase in the wholesale segment was partly due to higher intern
317、ational shipments in the current year and increased shipments to the retail segment.Wholesale revenue for fiscal 2014 increased by$19.2 million,or 4.4%,to$453.6 million from$434.4 million in the prior fiscal year.The year-over-year increase was attributable to increased sales to both our Company ope
318、rated design centers and independent retailers worldwide.Orders similarly increased 4.3%during the same period.The number of total design centers globally as of June 30,2014 was 295,which was unchanged from June 30,2013.The independently operated retail network increased by four net design centers t
319、o 152 at June 30,2014 including a net increase of 2 locations to 70 in China.The count of Ethan Allen operated design centers was 143 at June 30,2014 and 147 at June 30,2013,and we opened nine design centers(six of which were relocations),and closed seven design centers.Our international net sales t
320、o independent retailers were 6.5%of our consolidated net sales for the year ended June 30,2014 compared with 5.1%the previous year.Retail revenue from Ethan Allen operated design centers for the twelve months ended June 30,2014 increased by$2.5 million,or 0.4%,to$580.7 million from$578.3 million for
321、 the twelve months ended June 30,2013.Year-over-year,written orders for the Company operated design centers increased 1.0%and comparable design centers written business increased 3.0%.Gross profit for fiscal 2014 increased to$406.5 million from$398.3 million in fiscal 2013.The$8.1 million increase i
322、n gross profit was primarily attributable to the increase in wholesale net sales of 4.4%or$19.2 million.Our consolidated gross margin decreased to 54.4%for fiscal 2014 from 54.6%in fiscal 2013 as a result,primarily,of the lower mix of retail net sales to consolidated net sales in the current year(77
323、.8%)compared to the prior fiscal year(79.3%).Operating expenses decreased$1.1 million or 0.3%to$336.9 million or 45.1%of net sales in fiscal 2014 from$337.9 million or 46.3%of net sales in fiscal 2013.The decrease in current year expenses is primarily due to operating efficiencies,partly offset by h
324、igher variable costs on increased sales.Operating income for the year ended June 30,2014 totaled$69.6 million,or 9.3%of net sales,compared to$60.4 25 million,or 8.3%of net sales,in the prior year.Wholesale operating income for fiscal 2014 totaled$57.8 million,or 12.7%of net sales,as compared to$50.8
325、 million,or 11.7%of net sales,in the prior year.Retail operating income was$10.5 million,or 1.8%of sales,for fiscal 2014,compared to$8.0 million,or 1.4%of sales,for fiscal 2013,an improvement of$2.5 million.The improvement in consolidated operating income was primarily attributable to an increase in
326、 sales volume for both the retail and wholesale segments and the improved gross profit in the wholesale segment leveraged against tightly controlled operating expenses.Interest and other income,net was$0.3 million in fiscal 2014 compared to an expense of$1.5 million in fiscal 2013.The$1.8 million in
327、crease was primarily due to the loss incurred on the repurchase of$24 million of the Senior Notes during the fourth quarter of the prior fiscal year.Interest and other related financing costs decreased$1.3 million to$7.5 million from$8.8 million in the prior year.The decrease is primarily due to les
328、s interest expense throughout fiscal 2014,from lower debt due to the Senior Note repurchases during fiscal 2013.Income tax was an expense of$19.5 million for fiscal 2014 as compared to an expense of$17.7 million for fiscal 2013.Our effective tax rate for fiscal 2014 was 31.2%compared to 35.3%in fisc
329、al 2013.The current fiscal year effective tax rate includes tax expense on income,the benefit from the reversal of valuation allowances against certain deferred tax assets in the retail segment,and the recognition of certain previously unrecognized tax benefits,partly offset by recording additional
330、uncertain tax positions and interest expense on uncertain tax positions.The prior period effective tax rate includes tax expense on income,interest expense on uncertain tax positions,and the recording of additional uncertain tax positions partially offset by the recognition of previously unrecognize
331、d tax benefits and the impact of maintaining certain valuation allowances.Net income for fiscal 2014 was$42.9 million as compared to$32.5 million in fiscal 2013.Net income per diluted share totaled$1.47 in the current year compared to$1.11 per diluted share in the prior year.Fiscal 2013 Compared to
332、Fiscal 2012 Consolidated revenue for the fiscal year ended June 30,2013 was$729.1 million compared to$729.4 million in fiscal 2012.There was year-over-year growth in the retail segment in both net sales and written orders,which were offset by declines in our wholesale segment.The decreases in the wh
333、olesale segment were partly due to lower international shipments and higher display product sales in fiscal 2012.Wholesale revenue for fiscal 2013 decreased by$22.5 million,or 4.9%,to$434.4 million from$456.9 million in fiscal 2012.The year-over-year decrease was primarily attributable to a reduction in the incoming order rate for the second and third quarters of fiscal 2013.Orders in the fourth q
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