Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

See notes to these condensed consolidated financial statements.

Haverty Furniture Companies, Inc. (“Havertys,” “the Company,” “we,” “our,” or “us”) is a retailer of a broad line of residential furniture in the middle to upper-middle price ranges. We operate all of our stores using the Havertys brand and do not franchise our concept. We operate in one reportable segment, home furnishings retailing. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transact ions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included.

The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities.  We believe that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on our financial condition or results of operations.

For further information, refer to the consolidated financial statements and footnotes thereto included in Havertys’ Annual Report on Form 10-K for the year ended December 31, 2009.

Accounts receivable balances resulting from certain credit promotions have scheduled payment amounts which extend beyond one year. Portions of the receivables are classified as long-term based on the specific programs’ historical collection rates, which are generally faster than the scheduled rates. The portions of receivables contractually due beyond one year classified as current and long-term are estimates. The timing of actual collections that are contractually due beyond one year may be different from the amounts estimated to be collected within one year. However, based on experience, we do not believe the collection rates will differ significantly. At JuneSeptember 30, 2010 and December 31, 2009, the accounts receivable contractually due beyond one year from the respective balance sheet dates totaled approximately $2.1$1.9 million and $ 2.8$2.8 million, respectively.

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on actual inventory levels. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates. Since these estimates may be affected by factors beyond management’s control, interim calculationsresults are subject to the final year-end LIFO inventory valuations.

Havertys has a $60,000,000 revolving credit facility (the “Credit Agreement”) with two banks which is secured by inventory, accounts receivable, cash and certain other personal property.  Our Credit Agreement includes negative covenants that limit our ability to, among other things (a) create unsecured funded indebtedness or capital lease obligations collectively in excess of $15,000,000 in aggregate outstandings at any one time, (b) create indebtedness secured by real estate or engage in sale leaseback transactions which together exceed $60,000,000 in the aggregate, (c) sell or dispose of real property or other assets in excess of $30,000,000 in the aggregate, and (d) pay dividends in excess of $6,000,000 or repurchase capital stock in excess of $5,000,000 during any trailing twelve month period.

Availability fluctuates under a borrowing base calculation and is reduced by outstanding letters of credit.  The borrowing base was $52.1$51.7 million at JuneSeptember 30, 2010.  Amounts available are reduced by $10.0 million since a fixed charge coverage ratio test is not met for the immediately preceding twelve month period and are also reduced by $7.6 million for outstanding letters of credit at JuneSeptember 30, 2010, resulting in a net availability of $34.5$34.1 million.  There were no borrowed amounts outstanding under the Credit Agreement at JuneSeptember 30, 2010. We are in compliance with the terms of the Credit Agreement at JuneSeptember 30, 2010 and there exists no default or event of default.  The Credit Agreement has provisions for commitment fees on unused amounts and terminates in December 2011.

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes we make a year to date adjustment.

The effective tax rates for the sixnine months ended JuneSeptember 30, 2010 and 2009 were 1.5%2.8% and (1.0)(2.5)%, respectively.  The income tax expense or benefit that would otherwise be recognized was virtually offset by a change in the valuation allowance for deferred taxes. The remainder ofAccordingly, the resulting tax expense is for Texas state taxes,tax, which areis based on gross profit and not pre-tax income or loss.

The fair values of our cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate thetheir carrying valuevalues due to their short-term nature.  The assets related to our self-directed, non-qualified deferred compensation plan for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique.  These assets totaled approximately $1.4$1.6 million at JuneSeptember 30, 2010 and $1.5 million at December 31, 2009 and are included in other assets.  The related liability of the same amount is included in other liabilities.

We report our earnings per share using the two-class method.  The income or loss per share for each class of common stock is calculated assuming 100% of our earnings or losses are distributed as dividends to each class of common stock based on their contractual rights.

The Common Stock of the Company has a preferential dividend rate of at least 105% of the dividend paid on the Class A Common Stock. The Class A Common Stock, which has ten votes per share as opposed to one vote per share for the Common Stock (on all matters other than the election of directors), may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class A Common Stock.

The following is a reconciliation of the earnings (loss) earnings and number of shares used in calculating the diluted earnings (loss) earnings per share for Common Stock and Class A Common Stock (amounts in thousands):

We did not include in the computation of diluted earnings (loss) earnings per share for the three months ended JuneSeptember 30, 2010 and 2009 approximately 1,894,0001,203,000 and 1,933,0001,746,000 shares, and for the sixnine months ended JuneSeptember 30, 2010 and 2009 approximately 886,000882,000 and 2,014,0002,029,000 shares, respectively. These shares represent underlying stock options, awards and common stock equivalents that would be anti-dilutive if included.

We have a defined benefit pension plan covering substantially all employees hired on or before December 31, 2005.  The pension plan was closed to any employee hired after that date.  The benefits are based on years of service and the employee’s final average compensation.  Effective January 1, 2007, no new benefits are earned under this plan for additional years of service after December 31, 2006.

We also have a non-qualified, non-contributory supplemental executive retirement plan (SERP) for employees whose retirement benefits are reduced due to their annual compensation levels.  The SERP limits the total amount of annual retirement benefits that may be paid to a participant in the SERP from all sources (Retirement Plan, Social Security and the SERP) to $125,000.  The SERP is not funded so we pay benefits directly to participants.

Net pension costs included the following components (in thousands):

Qualified pension plan obligations are funded in accordance with prescribed regulatory requirements and with an objective of meeting funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments.  We expect to makemade a $3.0$3.1 million contribution to our qualified pension plan in 2010.

Comprehensive income (loss) represents net earnings (loss) plus any revenue, expenses, gains or losses that are specifically excluded from net income and recognized directly as a component of stockholders’ equity.

The reconciliation of net income (loss) to comprehensive income (loss) is as follows (in thousands):

The following discussion of Havertys’ financial condition and results of operations should be read together with the accompanying Condensed Consolidated Financial Statements and related notes thereto and our 2009 Annual Report to Stockholders.

Our sales are generated by customer purchases of home furnishings.  Revenue is recognized upon delivery to the customer.  Our sales for 2010 have increased over the prior year as expected given the severity of the declines in 2009.

Sales for the secondthird quarter of 2010 increased $15.4$5.2 million or 11.9%3.4% as compared to the prior year period and comparable store sales increased 13.2%4.3% or $16.8$6.4 million.  The remaining $1.4$1.2 million of the change in sales in the secondthird quarter of 2010 was from new, closed and otherwise non-comparable stores.  Sales for the first sixnine months of 2010 increased $27.2$32.4 million or 9.9%7.6% as compared to the prior year period and comparable store sales increased 11.6%9.0% or $31.0$ 37.4 million.  The remaining $3.8$5.0 million of the change in sales in the first sixnine months of 2010 was from new, closed and otherwise non-comparable stores.  Stores are non-comparable if open for less than one year or if the selling square footage has been changed significantly during the past 12 full months. Large clearance sales events from w arehousewareh ouse or temporary locations are excluded from comparable store sales, as are periods when stores are closed or being extensively remodeled.

The double digit percent increase for the secondthird quarter of 2010 was our thirdfourth consecutive quarter of positive comparable store sales.  These increases are relative to the very difficult sales environment last year.  Consumer confidence has trended lower since the beginning of 2010 and the economic recovery is very modest.  These factors combined with an extremely weak housing market create a very difficult environment for the retail home furnishings industry.

Gross profit for the secondthird quarter of 2010 was 51.2%51.3%, compared to 51.4%52.1% in the prior year period.  This decrease is primarily the result of a $0.6$0.4 million (0.4%(0.3% of sales) increase in our LIFO reserve.reserve compared to a $0.5 million (0.3% of sales) decrease in the reserve in 2009.  Increased cargo freight expenses have impacted our product costs.  It is difficult to recover these types of increases in our retail pricing in the same time frame that they are recognized under the LIFO inventory costing method.

Gross profit for the sixnine months ended JuneSeptember 30 was 51.5% in 2010 was 51.7% compared to 51.3% for the same period inand 2009.  Improvements in gross profit generated by product mix and pricing discipline were offset in part by the impact of the $0.6$1.0 million increase in the LIFO reserve.reserve in 2010 compared to a $0.5 million reduction in 2009.

We anticipate increasing freight and material costs and labor rates for our suppliers could generate potential pressure on product costs. We plan to remain competitive, but not overly aggressive with our pricing structure, as we strive to maintain our gross profit margin for the full year at or near 51.2%.the third quarter level.

Substantially all of our occupancy and home delivery costs are included in selling, general and administrative expenses as are a portion of our warehousing expenses. Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold.

Selling, general and administrative (“SG&A”) expenses are comprised of five categories:  selling; occupancy; delivery and certain warehousing costs; advertising and marketing; and administrative.

Our secondthird quarter 2010 SG&A costs as a percent of sales decreased 4.6%1.1% to 51.6%50.4% from 56.2%51.5% in the prior year period.  SG&A costs for the sixnine months ended JuneSeptember 30, 2010 were 5.0%3.6% as a percent of sales lower at 51.1%50.9%, compared to 56.1%54.5% in the prior year period.

Selling expenses generally vary with sales volume, and were relatively flat as a percent of net sales for the secondthird quarter and first sixnine months of 2010 as compared to the prior year periods.

Occupancy costs are a significant portion of our SG&A costs and are generally fixed.  Depreciation expense included in occupancy costs was approximately $0.7$0.5 million and $1.4$1.8 million lower in the secondthird quarter and sixnine months ended JuneSeptember 30, 2010, respectively compared to the prior year periods.  We plan to open a new store and close two locations in the fourth quarter.

Delivery and warehousing expenses included in SG&A for the secondthird quarter of 2010 were relatively flat as a percent of net sales as compared to the prior year period.  In response to the lower sales levels experienced during the prior years, we adjusted routes and reduced total head count, equipment and related delivery expenses.  Delivery and warehouse expenses for the first sixnine months of 2010 as a percent of net sales were downrelatively flat compared to the prior year period by 42 basis points due to cost control efficiencies which were partly offset by higher fuel costs.

Our advertising and marketing expenses were up 0.7% as a percent of net sales in the secondthird quarter of 2010 wereand relatively flat and down 45 basis points for the first sixnine months of 2010 as compared to the prior year periods. We expect to increase our fourth quarter total dollar spend inwill be modestly higher than the seasonally stronger second half of the year.third quarter level.

Our administrative costs were relatively flat indown $0.8 million for the secondthird quarter of 2010 compared to 2009.  These costs were2009 and down $1.3$2.1 million for the sixnine months ended JuneSeptember 30, 2010, as compared to the prior year period due in large part to reductions in compensation.

The majority of the overhead cost reduction plans we have implemented were substantially complete by the second half of 2009.  We expect the dollar level of SG&A expenses for the last six monthsquarter of 2010 to increase over the same period last year.  This increase is primarily related to the costs of a new store, the expense portion of remodelings and spending on advertising.

The in-house financing offer most frequently chosen by our customers carries no interest for 12 months and requires equal monthly payments. This program generates very minor credit revenue and it is more cost effective than outsourcing.  We offer our customers different credit promotions through a third-party credit provider. Sales financed by this provider are not Havertys’ receivables; accordingly, we do not have any credit risk or service responsibility for these accounts, and there is no credit or collection recourse to Havertys. The most popular programs offered through the third-party provider for the secondthird quarter 2010 were no interest offers requiring 18 or 24 monthly payments.

During January 2008, we ceased offering internally financed programs with no interest payment terms greater than 12 months which had been a significant driver of our portfolio. Collections on our portfolio have continued and with the change in programs, accounts receivable have declined.  The allowance is $0.5$0.4 million lower than the balance a year ago due to the reduction in total accounts receivable, lower write off experience and a more than proportionate reduction of the total dollars in delinquent and problem categories.

Interest, expense (income), net is primarily comprised of interest expense on our lease obligations and commitment fees on our unused credit facility.

Our tax rate for the sixnine months ended JuneSeptember 30, 2010 and 2009 was 1.5%2.8% and (1.0)(2.5)%, respectively.  The tax expense or benefit generated during the periods was virtually offset by changes in our deferred tax valuation allowance.

The income tax benefitexpense for the secondthird quarter of 2010 includes an increasea decrease to our deferred tax valuation allowance of $0.2$0.4 million, a decreasean increase of $0.01$0.02 in per share earnings compared to the prior year period increase in the allowance of $2.4$0.1 million, which decreased earnings $0.11a negligible impact on per share.share earnings.  The income tax expense for the sixnine months ended JuneSeptember 30, 2010 includes a reduction in the allowance of $0.7$1.1 million, an increase of $0.03$0.05 in per share earnings compared to the prior year period increase in the allowance of $5.1$5.2 million, which decreased earnings $0.24 per share.

The tax expense reported for 2010 and 2009 is for Texas state taxes which are based on gross profit and not pre-tax income or loss.

We continue to review the realizability of our deferred income tax assets in determining the appropriateness of the related valuation allowance.

We did not renew the leases for our Albany, Georgia and Fredericksburg, Virginia locations and closed those stores in the first quarter of 2010.  We expect to closeclosed our storesstore in Bowling Green, Kentucky at the end of the third quarter and will close our Abilene, Texas atstore in the fourth quarter of 2010 to coincide with the end of their lease term in the fourth quarter of 2010.terms.  We plan to enterentered the Columbus, Georgia market with a single store during the fourth quarter ofin October 2010.  These, and other potential changes, should reduce net selling space in 2010 by approximately 1% to 2%1.6%.

Our planned annual expenditures for 2010 are $13.5 million including $5.0 million for new stores and store improvements and $6.3$7.2 million for information technology.  Expenditures will depend on the number of new locations and the level of improvements they might require.

Our sources of capital include, but are not limited to, cash flows from operations, public and private issuances of debt and equity securities and bank borrowings.  We believe that cash balances, funds from operations, proceeds from sales of properties and use of our Credit Agreement are adequate to fund our working capital requirements, capital expenditures, scheduled debt payments, income tax obligations and benefit plan contributions for the foreseeable future.

Our $60.0 million revolving credit facility (the “Credit Agreement”) with two banks terminates in December 2011.  The Credit Agreement is secured by inventory, accounts receivable and cash. The borrowing base at JuneSeptember 30, 2010 was $52.1$51.7 million.  Amounts available are reduced by $10.0 million since a fixed charge coverage ratio test is not met for the immediately preceding twelve month period and are also reduced by $7.6 million for outstanding letters of credit at JuneSeptember 30, 2010, resulting in a net availability of $34.5$34.1 million. There is no amount outstanding and there were no borrowed amounts outstandingborrowings under the Credit Agreement at Juneduring the nine months ended September 30, 2010.

Our cash flows provided by operating activities totaled $18.0$26.8 million in the first sixnine months of 2010 compared to $13.8$38.4 million for the same period of 2009.  This increasedecrease was primarily the resultdue to larger reductions in 2009 of net income of $1.7 millionaccounts receivable and inventory offset by earnings in 2010 compared to the netversus a loss of $13.8 million for 2009, which was offset by working capital changes.in 2009.  For additional information about the changes in our assets and liabilities, refer to our Balance Sheet Changes discussion.

Our cash flows used in investing activities totaled $2.9$6.7 million in the first sixnine months of 2010 versus $5.4$4.8 million provided in the same period of 2009.  This decrease is primarily due to proceeds of $6.6 million from a sale-leaseback transaction in 2009.2009 and an increase of $5.0 million in capital expenditures.

Our cash flows provided by financing activities totaled $2.6$2.5 million in the first sixnine months of 2010 compared to $0.6$0.7 million used for the same period of 2009.  This change is primarily due to $3.3 million in proceeds from exercises of stock options in 2010.

Our balance sheet as of JuneSeptember 30, 2010, as compared to our balance sheet as of December 31, 2009, changed as follows:

Certain of the statements in this Form 10-Q, particularly those anticipating future performance, business prospects, growth and operating strategies and similar matters, and those that include the words “believes,” “anticipates,” “estimates” or similar expressions constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  For those statements, Havertys claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainti es.  The following important factors could cause future results to differ: changes in the economic environment; changes in industry conditions; competition; merchandise costs; energy costs; timing and level of capital expenditures; introduction of new products; rationalization of operations; and other risks identified in Havertys’ SEC reports and public announcements.

There have been no material changes with respect to our financial instruments and their related market risks since the date of the Company’s most recent annual report.  We have exposure to floating interest rates through our Credit Agreement.  Therefore, interest expense will fluctuate with changes in LIBOR and other benchmark rates.  We do not believe a 100 basis point change in interest rates would have a significant adverse impact on our operating results or financial position.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company’s reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicatedcommu nicated to ou rour management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009, which could materially affect our business, financial condition or future results.  The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing the Company.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.