UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

☐~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 1-11692

Ethan Allen Interiors Inc.

(Exact name of registrant as specified in its charter)

Delaware		06-1275288
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

25 Lake Avenue Ext., Danbury, Connecticut		06811-5286
(Address of principal executive offices)		~~(Zip~~(Zip Code)

(203) 743-8000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 par value ~~per share~~		~~ETH~~ETD		New York Stock Exchange
(Title of each class)		(Trading symbol)		~~(Name~~(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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). ☐ Yes ☒ No

The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of April ~~19, 2021,~~21, 2022, was ~~25,196,789.~~25,321,792.

ETHAN ALLEN INTERIORS INC.

FORM 10-Q THIRD QUARTER OF FISCAL ~~2021~~2022

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	2

Consolidated Balance Sheets ~~(Unaudited)~~	2

Consolidated Statements of Comprehensive Income ~~(Unaudited)~~	3

Consolidated Statements of Cash Flows ~~(Unaudited)~~	4

Consolidated Statements of Shareholders’ Equity ~~(Unaudited)~~	5

Notes to Consolidated Financial Statements ~~(Unaudited)~~	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 18

Item 3. Quantitative and Qualitative Disclosures About Market Risk	31 34

Item 4. Controls and Procedures	32 35

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	33 36

Item 1A. Risk Factors	33 36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33 37

Item 3. Defaults Upon Senior Securities	33 37

Item 4. Mine Safety Disclosures	33 37

Item 5. Other Information	33 37

Item 6. Exhibits	34 37

SIGNATURES	35 38

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

~~Consolidated Balance Sheets~~CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

	March 31, 2021			June 30, 2020			March 31, 2022			June 30, 2021
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	108,956		$	72,276		$	95,045		$	104,596
Investments								9,525			0
Accounts receivable, net		11,573			8,092			11,549			9,026
Inventories, net		135,686			126,101			182,689			143,978
Prepaid expenses and other current assets		34,905			23,483			42,041			37,679
Total current assets		291,120			229,952			340,849			295,279

Property, plant and equipment, net		233,331			236,678			223,067			231,446
Goodwill		25,388			25,388			25,388			25,388
Intangible assets		19,740			19,740			19,740			19,740
Operating lease right-of-use assets		114,583			109,342			102,477			108,730
Deferred income taxes		1,745			137			566			1,078
Other assets		1,639			1,552			2,816			1,584
Total ASSETS	$	687,546		$	622,789		$	714,903		$	683,245

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	38,716		$	25,595		$	42,696		$	37,786
Customer deposits and deferred revenue		115,250			64,031			136,425			130,635
Accrued compensation and benefits		25,821			18,278			19,974			23,866
Current operating lease liabilities		34,537			27,366			26,269			27,395
Other current liabilities		11,622			3,708			5,073			4,220
Total current liabilities		225,946			138,978			230,437			223,902
Long-term debt		0			50,000
Operating lease liabilities, long-term		97,467			102,111			91,157			97,911
Deferred income taxes		2,058			1,074			6,223			5,028
Other long-term liabilities		5,497			2,562			3,147			4,986
Total LIABILITIES	$	330,968		$	294,725		$	330,964		$	331,827

Commitments and contingencies (see Note 16)
Shareholders' equity:
Preferred stock, $0.01 par value; 1,055 shares authorized; none issued	$	0		$	0
Common stock, $0.01 par value, 150,000 shares authorized, 49,190 and 49,053 shares issued; 25,187 and 25,053 shares outstanding at March 31, 2021 and June 30, 2020, respectively		492			491
Commitments and contingencies (see Note 17)
SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value; 1,055 shares authorized; none issued							$	0		$	0
Common stock, $0.01 par value, 150,000 shares authorized, 49,359 and 49,240 shares issued; 25,322 and 25,237 shares outstanding at March 31, 2022 and June 30, 2021, respectively								494			492
Additional paid-in capital		381,038			378,300			384,406			382,527
Treasury stock, at cost: 24,003 and 24,000 shares at March 31, 2021 and June 30, 2020, respectively		(680,992	)		(680,916	)
Treasury stock, at cost: 24,037 and 24,003 shares at March 31, 2022 and June 30, 2021, respectively								(681,834	)		(680,991	)
Retained earnings		662,535			638,631			686,993			655,346
Accumulated other comprehensive loss		(6,471	)		(8,441	)		(6,083	)		(5,931	)
Total Ethan Allen Interiors Inc. shareholders' equity		356,602			328,065			383,976			351,443
Noncontrolling interests		(24	)		(1	)		(37	)		(25	)
Total shareholders' equity		356,578			328,064			383,939			351,418
Total LIABILITIES AND SHAREHOLDERS' EQUITY	$	687,546		$	622,789		$	714,903		$	683,245

~~Consolidated Statements of Comprehensive Income~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

~~Consolidated Statements of Cash Flows~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

~~Consolidated Statements of Shareholders~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ ~~Equity~~EQUITY (Unaudited)

~~Notes to Consolidated Financial Statements~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Founded in 1932 and 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, manufacturer and retailer in the home furnishings marketplace. ~~Today we~~

We are a global luxury ~~international~~ home fashion brand that is vertically integrated from product design through home delivery, which ~~affords~~offers our customers ~~a value proposition of style,~~stylish product offerings, artisanal quality, and ~~price.~~personalized service. We provide complimentary interior design service to our ~~customers~~clients and sell a full range of ~~furniture products and decorative accents~~home furnishings through a retail network of ~~approximately~~ ~~300~~design centers inlocated throughout the United States and abroad as well as online at ~~ethanallen.com. The~~ethanallen.com.

Ethan Allen design centers represent a mix of locations operated by independent licensees and ~~Company-owned and operated~~Company-operated locations. As of March 31, ~~2021,~~2022, ~~our~~the Company operates ~~144~~141 retail design centers with ~~139~~137 located in the United States and ~~the remaining~~ ~~five~~four in Canada. ~~The majority of the~~Our independently operated design centers are ~~in Asia, with the remaining independently operated design centers~~ located ~~throughout~~in the United States, Asia, the Middle East and Europe. We also own and operate ~~nine~~ten manufacturing facilities ~~including~~ ~~six~~ ~~manufacturing plants~~ in the United States, ~~two~~ ~~manufacturing plants in~~ Mexico and Honduras, including one ~~manufacturing plant~~sawmill, one rough mill and a lumberyard. Approximately 75% of our products are manufactured or assembled in ~~Honduras.~~these North American facilities. We also contract with various suppliers located in Europe, Asia, and various other countries that produce products that support our business.

Impact of the COVID-19 ~~Update~~Pandemic Upon our Financial Condition and Results of Operations

The global coronavirus (“COVID-1919” ~~crisis~~) pandemic continues to disrupt several segments of the economy and has ~~challenged~~caused, and continues to cause, impact to our ~~operations, but our associates continue to persevere through these challenges.~~business. Our ~~primary focus has been to operate in a safe manner,~~design centers are open and demand for our ~~associates and clients. We have implemented various mitigating and safety protocols recommended by the United States Center for Disease Control (“CDC”) guidelines for operating businesses safely.~~

~~In our action plan in response to COVID-~~19 ~~that we announced on~~ ~~April 1, 2020,~~ we took immediate action and made a number of adjustments to our business operations, including temporary design center and manufacturing plant closings, a reduction in headcount and curtailing certain operating expenses. Our approach to the crisisproducts continues to ~~evolve~~be strong as ~~business trends substantially improved during the~~ ~~nine~~ ~~months~~customers allocate greater amounts of ~~fiscal~~ ~~2021~~ ~~as consumers have continued to allocate more~~ discretionary spending to home ~~furnishings. Given~~furnishings than at the ~~positive trends~~start of the COVID-19 pandemic. Since our manufacturing facilities re-opened in ~~cash flows,~~ May 2020, we ~~repaid the remaining $50.0 million in outstanding debt, previously borrowed under our credit facility in~~have ramped up and increased production capacity by adding headcount as well as ~~March 2020.~~ second~~We also resumed~~ shifts and weekend production inshifts to our North American ~~manufacturing plants~~plants. We continue to ~~work through existing order backlog and have ramped up to near pre-COVID-~~19 ~~production levels. The temporary salary reductions were lifted, effective~~ ~~June 30, 2020,~~ ~~as planned and we have brought back many of our associates previously furloughed in~~ ~~April 2020.~~ ~~Further, on~~ ~~August 4, 2020,~~ ~~our Board of Directors reinstated the regular quarterly cash dividend.~~

~~We have seen a significant improvement in business conditions, which has increased our profitability and generated~~experience strong ~~positive cash flow during fiscal~~ ~~2021.~~ ~~Substantially all our design centers that were temporarily closed have reopened and~~ written orders taken at both the retail and wholesale segments, ~~exceeded levels from~~and as a result, our current order backlog increased during the third quarter of fiscal 2022 and is approximately 25% higher compared with a year ~~ago~~. ~~Tempering these improvements are the continuing~~ago.

While we continue to increase production, we continue to experience ongoing logistical challenges ~~faced by~~that we, as well as the entire home furnishings industry, have faced resulting from COVID-19~~-related labor shortages and~~ related supply chain disruptions creating ~~significant~~ delays in order ~~fulfillment and increasing backlogs. Inventory~~fulfillment. Our focus on inventory and supply chain management ~~remain our areas of focus~~is critical as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory shortage and obsolescence. We continue to produce about 75% of our products in our North American manufacturing facilities. The other 25% is sourced primarily from Southeast Asia and China. The receipt of inventory and raw materials imported from these areas has been slowed or disrupted. In addition, ocean freight capacity issues continue to persist worldwide due to the ongoing ~~global~~ COVID-19 pandemic, which has resulted in ~~recent~~ price increases per shipping container. ~~While~~

The COVID-19 pandemic also continues to expose us to greater market risk as a result of increases in the cost of raw materials that we use in our manufacturing processes, principally plywood, fabric and foam products. These raw materials have been, and continue to ~~manage and evaluate our logistics providers, there is~~ no ~~indication~~be, subject to rising inflationary pressures that ~~ocean freight container rates will return~~are partially attributable to ~~pre-COVID-~~the COVID-19 ~~levels in~~pandemic and which have led to increased production costs. As commodity prices (notably, fuel costs) have continued to rise during the ~~near-term and~~third quarter of fiscal 2022, we will continue to evaluate whether further price increases to our customers to offset these ~~increases could have an adverse effect on our consolidated results of operations.~~costs are warranted.

~~Whereas some state and local governments have eased restrictions on commercial retail activity, it is possible that a resurgence in COVID-~~19 ~~cases could prompt a return to tighter restrictions in certain areas. Furthermore, while~~Although we actively manage the ~~home furnishings industry has fared better during the pandemic than certain other sectors~~impact of ~~the economy, continued economic weakness~~ ~~may~~ ~~eventually have an adverse impact upon our business. While we continue to serve our customers and operate our business while managing~~ the ongoing COVID-19 ~~health crisis, there can be~~ no ~~assurance that future~~pandemic, we are unable to predict the impact COVID-19 ~~related developments~~ will ~~not~~have ~~an impact~~ on our ~~business, results~~financial operations in the near- and long-term. The timing of operations or financial condition since the extent and duration of the health crisis remains highly uncertain. We will continue to make decisions regarding the sources and uses of capital in our business to reflect and adapt to changes in market conditions, including any ~~lasting effects of COVID-~~~~19.~~ ~~Future adverse developments in connection with the ongoing COVID-~~19 ~~crisis, including additional waves of COVID-~~19 ~~outbreaks, evolving international, federal, state and local restrictions and safety regulations~~future actions in response to COVID-19 ~~changes in consumer behavior, health concerns,~~is dependent on the ~~pace of economic activity in the wake~~mitigation of the ~~COVID-~~19 ~~crisis, or other similar issues could adversely affect~~spread of the virus along with the adoption and continued effectiveness of vaccines, status of government orders, directives and guidelines, recovery of the business environment, global supply chain conditions, economic conditions, raw material prices, and consumer demand for our ~~business, results of operations or financial condition in the future, or including our financial results and business performance for fiscal~~ ~~2021.~~products.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Ethan Allen conducts business globally and has strategically aligned its business into two reportable segments: wholesale and retail. These two segments represent strategic business areas of our vertically integrated enterprise that operate separately and provide their own distinctive services. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Our consolidated financial statements also include the accounts of an entity in which we are a majority shareholder with the power to direct the activities that most significantly impact the entity’s performance. Noncontrolling interest amounts in the entity are immaterial and included in the Consolidated Statements of Comprehensive Income within Other income (expense), net. All intercompany activity and balances have been eliminated from the consolidated financial statements. In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for fair presentation, have been included in the consolidated financial statements. The results of operations for the three and nine months ended March 31, 2022 are not necessarily indicative of results that may be expected for the entire fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “2021 Annual Report on Form 10-K”).

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”), which ~~requires~~require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of net sales and expenses during the reporting period. Due to the inherent uncertainty involved in making those estimates, actual results could differ from those estimates. Areas in which significant estimates have been made include, but are not limited to, goodwill and indefinite-lived intangible asset impairment analyses, useful lives for property, plant and equipment, inventory obsolescence, ~~lease accounting,~~ business insurance reserves, tax valuation allowances and the evaluation of uncertain tax ~~positions and other loss reserves.~~positions.

We ~~conduct business globally~~present restricted cash as a component of total cash and ~~have strategically aligned~~cash equivalents as presented on our ~~business into~~ ~~two~~ ~~reportable segments: wholesale~~consolidated statement of cash flows and ~~retail. These~~ ~~two~~ ~~segments represent strategic business areas~~within Other Assets on our consolidated balance sheet. As of our vertically integrated enterprise that operate separately and provide their own distinctive services. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany activity and balances have been eliminated from the consolidated financial statements. In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for fair presentation, have been included in the consolidated financial statements. The results of operations for the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ March 31, ~~2021~~2022, ~~are~~we held $0.9 million of restricted cash related to our Ethan Allen insurance captive. We did not hold any restricted cash as of ~~not~~June 30, 2021. ~~necessarily indicative of results that~~ ~~may~~ be expected for the entire fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our fiscal ~~2020~~ ~~Annual Report on Form~~ 10~~-K (the~~ ~~“2020~~ ~~Annual Report on Form~~ 10~~-K”).~~

~~The Company reclassified in the Consolidated Statement of Comprehensive Income certain prior year comparative figures from~~ ~~Interest income, net of interest (expense)~~ to ~~Interest and other financing costs~~ ~~and~~ ~~Other income (expense), net~~ ~~to conform to the current year’s presentation. In addition, the Company reclassified in the Consolidated Statement of Cash Flows certain prior year comparative figures from~~ ~~Other financing activities~~ to ~~Proceeds from employee stock plans~~ ~~within Net cash used in financing activities to conform to the current year's presentation. These changes were made for disclosure purposes only and did~~ ~~not~~We have ~~any impact on previously reported results.~~

~~The Company has~~ evaluated subsequent events through the date ~~that~~of issuance of the ~~consolidated~~ financial statements ~~were issued.~~included in this Quarterly Report on Form 10-Q.

~~Credit Losses of Financial Instruments~~ ~~– In~~ ~~June 2016,~~ ~~the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”)~~ ~~2016~~-~~13,~~~~Financial Instruments~~ – ~~Credit Losses (Topic~~ ~~326~~~~): Measurement of Credit Losses on Financial Instruments,~~ ~~and subsequent amendments to the initial guidance through ASU~~ ~~2018~~-~~19,~~ ~~ASU~~ ~~2019~~-~~04,~~ ~~ASU~~ ~~2019~~-~~05,~~ ~~ASU~~ ~~2019~~-~~10,~~ ~~ASU~~ ~~2019~~-~~11,~~ ~~ASU~~ ~~2020~~-02 ~~and ASU~~ ~~2020~~-03 (collectively, the “ASUs”). The ASUs requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The guidance applies to financial assets measured at amortized cost basis, such as receivables that result from revenue transactions. Accounts receivable is presented net of allowance for doubtful accounts as a result of the assessment of the collectability of customer accounts, which is recorded based on an overall aging analysis and a review of specifically identified accounts, which considers factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that ~~may~~ ~~affect a customer’s ability to pay. We adopted the ASUs as of~~ ~~July 1, 2020~~ ~~using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings. We did~~ ~~not~~ ~~recognize a cumulative-effect adjustment upon adoption as the adoption of the ASUs did~~ ~~not~~ ~~have a material effect on our consolidated financial statements.~~

~~Implementation Costs~~ in ~~a Cloud Computing Arrangement~~ –InFiscal ~~August 2018,~~ 2022~~the FASB issued ASU~~ ~~2018~~-~~15,~~~~Intangibles-Goodwill and Other~~ – ~~Internal-Use Software (Subtopic~~ ~~350~~-40~~): Customer~~’~~s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~, an update related to a client’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs in a cloud computing service contract with the guidance for capitalizing implementation costs to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. We adopted the new guidance as of ~~July 1, 2020~~ ~~using a prospective method. We capitalize implementation costs related to hosted arrangements, which typically include multi-year service terms with additional renewal periods generally ranging from~~ ~~one~~ to ~~three~~ ~~years. The related assets are recorded within~~ ~~Prepaid expenses and other current assets~~ ~~(for service terms less than~~ ~~one~~ ~~year) or~~ ~~Other assets~~ ~~(for service terms greater than~~ ~~one~~ year) on our consolidated balance sheets, net of accumulated amortization for assets placed in service. The amortization of assets placed in service is recorded in selling, general and administrative expenses, consistent with the costs of the hosting arrangement, on the consolidated statements of comprehensive income on a straight-line basis over the term of the hosting arrangement, which includes reasonably certain renewal periods. The adoption of the accounting standard update did ~~not~~ ~~have a material impact on our consolidated financial statements.~~

~~Reference Rate Reform on Financial Reporting~~ ~~– In~~ ~~March 2020,~~ ~~the FASB issued ASU~~ ~~2020~~-~~04,~~~~Reference Rate Reform (Topic~~ ~~848~~~~): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~, an update that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This accounting standards update is intended to ease the process of migrating away from LIBOR to new reference rates. ASU ~~2020~~-04 ~~was adopted in the~~ ~~first~~ ~~quarter of fiscal~~ ~~2021~~ ~~but did~~ ~~not~~ ~~have a material impact on our accounting policies or our consolidated financial statements.~~

Simplifying the Accounting for Income ~~Taxes~~Taxes. – In December 2019, the ~~FASB~~Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of this accounting standards update in the first quarter of fiscal 2022 did not have a material impact on our consolidated financial statements.

Business Combinations. In October 2021, the FASB issued ASU 2021-08,Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. This accounting standards update will be effective for us beginning in the first quarter of fiscal ~~2022.~~2024. We are currently evaluating the impact of this accounting ~~standards update,~~standard, but do not expect it to have a material impact on our consolidated financial statements.

Derivatives and Hedging. In March 2022, the ~~adoption~~FASB issued ASU 2022-01,Derivatives and Hedging (Topic 801): Fair Value Hedging – Portfolio Layer Method, which expands the current single-layer hedging model to allow multiple-layer hedges of a single closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments under the method. This accounting standards update will be effective for us beginning in the first quarter of fiscal 2024. We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our consolidated financial statements.

No other new accounting pronouncements issued or effective as of March 31, ~~2021~~2022 have had or are expected to have a material impact on our consolidated financial statements.

Our reported revenue (net sales) ~~consist~~consists substantially of product sales. We report product sales net of discounts and recognize them at the point in time when control transfers to the customer. For sales to our customers in our wholesale segment, control typically transfers when the product is shipped. The majority of our shipping agreements are freight-on-board shipping point and risk of loss transfers to our wholesale customer once the product is out of our control. Accordingly, revenue is recognized for product shipments on third-party carriers at the point in time that our product is loaded onto the third-party container or truck. For sales in our retail segment, control generally transfers upon delivery to the customer. ~~We recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of~~ ~~one~~ ~~year or less.~~ As our contracts with customers are typically ~~are~~ less than one year in length and do not have significant financing components, we ~~have~~do not ~~adjusted~~adjust promised consideration.

Shipping and Handling. Our practice has been to sell our products at the same delivered cost to all retailers and customers nationwide, regardless of shipping point. Costs incurred by the Company to deliver finished goods are expensed and recorded in selling, general and administrative expenses. We recognize shipping and handling expense as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize net sales.

Sales Taxes.We exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). Sales taxes collected isare not recognized as revenue but isare included in Accounts payable and accrued expenses on the consolidated balance sheets as it is ultimately remitted to governmental authorities.

Returns and Allowances. Estimated refunds for returns and allowances are based on our historical return patterns. We record these estimated sales refunds on a gross basis rather than on a net basis and have recorded an asset for product we expect to receive back from customers in Prepaid expenses and other current assets and a corresponding refund liability in Other current liabilities on our consolidated balance sheets. At March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, these amounts were immaterial.

Allowance for Doubtful Accounts. Accounts receivable arise from the sale of products on trade credit terms and is presented net of allowance for doubtful accounts. We maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis. Judgments are made with respect to the collectability of accounts receivable based on historical experience and current economic trends. On a monthly basis, we review all significant accounts as to their past due balances, as well as collectability of the outstanding trade accounts receivable for possible write-off. It is our policy to write-off the accounts receivable against the allowance account when we deem the receivable to be uncollectible. Additionally, we review orders from retailers that are significantly past due, and we ship product only when our ability to collect payment from our customer for the new order is probable. At March 31, 2022 and June 30, 2021, the allowance for doubtful accounts was immaterial.

Commissions. We capitalize commission fees paid to our associates as contract assets within Prepaid expenses and other current assets on our consolidated balance sheets. These prepaid commissions are subsequently recognized as a selling expense upon delivery (when we have transferred control of our product to our customer). At March 31, ~~2021,~~2022, we had prepaid commissions of ~~$19.7~~$24.2 million, which we expect to recognize ~~to selling expense~~ in the next ~~three~~two ~~months.~~fiscal quarters as Selling, general and administrative expenses within our consolidated statements of comprehensive income.

Customer Deposits. In ~~many~~most cases we receive deposits from customers before we have transferred control of our product to our customers, resulting in contract liabilities. These customer deposits are reported as a current liability in Customer deposits and deferred revenue on our consolidated balance sheets. At June 30, ~~2020~~2021, we had customer deposits of ~~$62.6~~$130.6 million, of which we recognized ~~$1.2~~$9.8 million and ~~$59.0~~$122.8 million ~~respectively,~~ as net sales upon delivery to the customer during the three and nine months ended March 31, ~~2021.~~2022. Customer deposits totaled ~~$115.3~~$136.4 million at March 31, ~~2021.~~2022.

The following table disaggregates our net sales by product category by segment for the three months ended March 31, 2022 (in thousands):

The following table disaggregates our net sales by product category by segment for the three months ended March 31, 2021 (in thousands):

The following table disaggregates our net sales by product category by segment for the nine months ended March 31, 2022 (in thousands):

The following table disaggregates our net sales by product category by segment for the nine months ended March 31, 2021 (in thousands):

~~The following table disaggregates our net sales by product category by segment for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2020 (~~~~in thousands):~~

~~The following table disaggregates our net sales by product category by segment for the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2020 (~~~~in thousands):~~

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. We consider the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy. The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. We have categorized our cash equivalents and investments within the fair value hierarchy as follows:

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets include our corporate money market funds that are classified as cash equivalents. We have categorized our cash equivalents as Level 1 assets ~~within the fair value hierarchy~~ as there are quoted prices in active markets for identical assets or liabilities. ~~As of~~

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. At March 31, ~~2021,~~2022, we ~~did~~ ~~not~~have ~~any outstanding debt. The~~categorized our investments as Level 2 assets.

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of ~~our long-term debt at~~ ~~June 30, 2020~~ ~~was $50.0 million, which approximated its carrying amount given~~ the application of a floating interest rate equal to the monthly LIBOR rate plus a spread using a debt leverage pricing grid. As the interest rate on our long-term debt is a variable rate, adjusted based on market conditions, it approximates the current market-rate for similar instruments available to companies with comparable credit quality and maturity, and therefore, our long-term debt was categorized as a Level 2 ~~liability in the fair value hierarchy as of~~ ~~June 30, 2020.~~ ~~There were~~assets or liabilities. We held no Level 3 assets or liabilities ~~held by the Company~~ as of March 31, ~~2021~~2022 or June 30, 2021.

Assets and Liabilities Measured at Fair Value on a Recurring Basis. The following tables show, by level within the fair value hierarchy, our assets and liabilities that are measured at fair value on a recurring basis at March 31, 2022 and June 30, ~~2020.~~2021. We did not have any transfers between levels of fair value measurements during the periods presented.

As of March 31, 2022 and June 30, 2021, we did not have any outstanding bank borrowings, which we historically have categorized as a Level 2 liability. There were no investments that have been in a continuous loss position for more than one year, and there have been no other-than-temporary impairments recognized.

~~With the exception of the $0.6 million retail asset impairment charge, we~~Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis. We did not record any ~~additional~~ other-than-temporary impairments on ~~those~~ assets required to be measured at fair value on a non-recurring basis during fiscal ~~2021.~~2022.

~~Our goodwill~~ and ~~intangible assets are comprised of goodwill, which represents the excess of cost over the fair value of net assets acquired, and our Ethan Allen trade name and related trademarks. As~~Liabilities Measured at Fair Value for Disclosure Purposes Only. We had 0 outstanding bank borrowings as of March 31, ~~2021,~~2022 ~~the goodwill balance was $25.4 million, while other indefinite-lived intangible assets totaled $19.7 million, consistent with the balances as of~~and June 30, ~~2020.~~2021.

~~Both goodwill and indefinite-lived intangible assets are~~ ~~not~~ ~~amortized as they are estimated to have an indefinite life. We evaluate goodwill and other indefinite-lived intangible assets for impairment on an annual basis during the~~ ~~fourth~~ ~~quarter of each fiscal year, and between annual tests whenever events or circumstances indicate that the carrying value~~ ~~may~~ ~~exceed fair value.~~

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

We have operating leases for many of our design centers that expire at various dates through fiscal 2040. In addition, we also lease certain tangible assets, including computer equipment and vehicles with initial lease terms ranging from three to five years. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Certain operating leases have renewal options and rent escalation clauses as well as various purchase options. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement. Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. The incremental borrowing rate is subsequently reassessed upon a modification to the lease agreement. Some of our leases contain variable lease payments based on a consumer price index or percentage of sales, which are excluded from the measurement of the lease liability.

Lease expense for operating leases consists of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of ~~twelve~~ ~~months or less are~~ ~~not~~ recorded on the balance sheet. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are ~~not~~ ~~included in the initial measurement of the asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.~~

The following table discloses the location and amount of our operating and financing lease costs within our consolidated statements of comprehensive income (in thousands):

~~The following table discloses the location and amount of our operating and financing lease costs within our consolidated statements of comprehensive income (in thousands):~~

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheets as of March 31, ~~2021~~2022 (in thousands):

As of March 31, ~~2021,~~2022, we did not have any ~~financing or~~ operating leases ~~that had~~which have not yet commenced. However, we have one financing lease which has not yet commenced and is therefore neither included in the tables above nor in the lease right-of-use assets and liabilities. The financing lease is for a period of five years and has aggregate undiscounted future lease payments of $0.4 million. This lease will commence when we obtain possession of the underlying leased asset, which is expected to occur in the fourth quarter of fiscal 2022.

There were no non-cash financing lease obligations obtained in exchange for new financing lease assets during the nine months ended March 31, 2022. Financing lease obligations exchanged for new financing lease assets totaled $1.3 million during the same prior year period.

Our goodwill and intangible assets are comprised of goodwill, which represents the excess of cost over the fair value of net assets acquired, and our Ethan Allen trade name and related trademarks. At March 31, 2022 and June 30, 2021, we had $25.4 million of goodwill and $19.7 million of indefinite-lived intangible assets, all of which are recorded in our wholesale segment.

Both goodwill and indefinite-lived intangible assets are not amortized as they are estimated to have an indefinite life. We test our wholesale goodwill and indefinite-lived intangibles for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that it might be impaired. We performed our annual goodwill impairment test during the fourth quarter of fiscal 2021, consistent with the timing of prior years. We concluded it was more likely than not that the fair value was greater than the respective carrying value and no impairment charge was required.

We recorded income tax expense of ~~$3.4~~$7.9 million and ~~$10.6~~$24.4 million, respectively, for the three and nine months ended March 31, ~~2021~~2022 compared with ~~a benefit of $0.3~~$3.4 million and ~~expense of $6.4~~$10.6 million in the prior year comparable periods. Our consolidated effective tax rate was ~~17.8%~~24.2% and ~~20.2%~~25.4% for the three and nine months ended March 31, ~~2021~~2022 compared with ~~58.8%~~17.8% and ~~23.4%~~20.2% in the prior year ~~comparable~~ periods. Our effective tax rate varies from the 21% federal statutory rate primarily due to state ~~taxes and other nonrecurring events that~~ ~~may~~ ~~not~~ ~~be predictable.~~taxes. The ~~decrease~~increase in the effective tax rate ~~during the~~ ~~first~~~~nine~~ ~~months of fiscal~~ ~~2021~~compared with athe prior year ~~ago~~ was primarily due to a reduction in our valuation allowance on ~~certain~~retail state and local deferred tax ~~assets.~~assets in the prior year.

We recognize interest and penalties related to income tax matters as a component of income tax expense. As of March 31, ~~2021,~~2022, we had ~~$2.2~~$2.6 million of unrecognized tax benefits compared with $2.0 million as of ~~which $0.3~~June 30, 2021. It is reasonably possible that various issues relating to approximately $0.4 million ~~are expected to decrease in~~of the total gross unrecognized tax benefits as of March 31, 2022 will be resolved within the next 12 ~~months.~~months as exams are completed or statutes expire. If recognized, ~~$2.0~~approximately $0.4 million of unrecognized tax benefits would reduce our income tax expense ~~and~~in the ~~effective tax rate.~~period realized.

On ~~December 21, 2018,~~January 26, 2022, the Company and most of its domestic subsidiaries (the “Loan Parties”) entered into a ~~Second~~Third Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent and syndication agent and Capital One, National Association, as documentation agent. The Credit Agreement amends and restates the Second Amended and Restated Credit Agreement, dated as of December 21, 2018, as amended. The Credit Agreement provides for a ~~$165~~$125 million revolving credit facility (the “Facility”), subject to borrowing base availability, with ~~the~~a maturity date of ~~December 21, 2023.~~January 26, 2027. The Credit Agreement also provides the Company with an option to increase the size of the facility up to an additional amount of $60 million. We incurred financing costs of ~~$0.6~~$0.5 million during the third quarter of fiscal 2022, which are being amortized as interest expense over the remaining life of the ~~Facility~~Credit Agreement using the effective interest method.

At the Company’s option, revolving loans under the Facility bear interest, based on the average availability, at an annual rate of either (a) the London Interbank Offered rate (“LIBOR”) plus 1.5% to 2.0%, or (b) the higher of (i) the prime rate, (ii) the federal funds effective rate plus 0.5%, or (iii) LIBOR plus 1.0% plus in each case 0.5% to 1.0%.

Availability. The availability of credit at any given time under the Facility will be constrained by the terms and conditions of the ~~Facility,~~Credit Agreement, including the amount of collateral available, a borrowing base formula based upon numerous factors including the value of eligible inventory and eligible accounts receivable, and other restrictions contained in the Facility. All obligations under the Facility are secured by assets of the Loan Parties including inventory, receivables and certain types of intellectual property.

~~Borrowings~~ Total borrowing base availability under the Facility was $121.0 million at March 31, 2022 and $75.7 million at June 30, 2021.

Borrowings. At the Company’s option, borrowings under the Facility in ~~March 2020~~ ~~and repaid $50.0 million in~~ ~~June 2020~~ ~~and~~bear interest, based on the ~~remaining $50.0 million in~~ ~~September 2020~~ ~~using available cash on hand. The borrowings had~~average quarterly availability, at an annual rate of either (a) Adjusted Term SOFR Rate (defined as the Term SOFR Rate plus 0.10%) plus 1.25% to 2.0%, or (b) Alternate Base Rate (defined as the greatest of (i) the prime rate, (ii) the NYRFB rate plus 0.5%, or (iii) the Adjusted Term SOFR Rate for a ~~weighted average interest rate equal to the~~ one-month ~~LIBOR rate~~interest period plus ~~a spread using a debt leverage pricing grid. For~~1.0%) plus 0.25% to 1.0%. We had 0 outstanding borrowings under the ~~nine~~ ~~months ended~~Facility as of March 31, 2022, June 30, 2021 ~~we recorded interest expense of $0.4 million on our outstanding debt.~~or at any time during fiscal 2022. Interest expense ~~was $0.2 million~~ for the nine months ended March 31, ~~2020.~~2022

~~ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES~~ was $0.1 million and $0.4 million, respectively.

Ratios.The Facility contains various restrictive and affirmative covenants, including required financial reporting, limitations on the ability to grant liens, make loans or other investments, incur additional debt, issue additional equity, merge or consolidate with or into another person, sell assets, pay dividends or make other distributions or enter into transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of this type and size. Loans under the Facility may become immediately due and payable upon certain events of default (including failure to comply with covenants, change of control or cross-defaults) as set forth in the Facility.

The Facility does not ~~have~~contain any significant financial ratio covenants or coverage ratio covenants other than a fixed charge coverage ratio covenant based on the ratio of (a) EBITDA, plus cash Rentals, minus Unfinanced Capital Expenditures to (b) Fixed Charges, as such terms are defined in the ~~Facility (the “FCCR Covenant”).~~Facility. The ~~FCCR Covenant~~fixed charge coverage ratio covenant, set at 1.0 to 1.0 and measured on a trailing period of four consecutive fiscal quarters, only applies in certain limited circumstances, including when the unused availability under the Facility ~~falls~~drops below ~~$18.5~~$14.0 million. ~~The FCCR Covenant ratio is set at 1.0 and measured on a trailing~~ ~~twelve~~~~-month basis.~~

At both March 31, ~~2021,~~2022 and June 30, ~~2020,~~ ~~there was $5.0 million and $5.8 million, respectively, of standby letters of credit outstanding under the Facility. Total borrowing base availability under the Facility was $78.3 million at~~ ~~March 31,~~ 2021,~~and $58.9 million at~~ ~~June 30, 2020.~~ ~~At both~~ ~~March 31, 2021,~~ ~~and~~ ~~June 30, 2020,~~ we were in compliance with all the covenants under the Facility.

Letters of Credit. At March 31, 2022 and June 30, 2021, there was $4.0 million and $5.0 million, respectively, of standby letters of credit outstanding under the Facility.

Restructuring and other impairment charges, net of gains, were as follows (in thousands):

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Restructuring payments made by the Company during the firstnine months of fiscal 2022 were $1.1 million, which were primarily for severance, lease exit costs (ongoing monthly rent in exited space) and closing costs related to our Atoka, Oklahoma distribution center. As of March 31, 2022, remaining restructuring liabilities totaled $0.5 million and are primarily reported as a current liability in Accrued Compensation and Benefits and Accounts Payable and Accrued Expenses on our consolidated balance sheets.

~~We compute basic~~Basic and diluted earnings per share (“EPS”) by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated similarly, except that the weighted average outstanding shares are adjusted to include the effects of converting all potentially dilutive share-based awards issued under our employee stock plans. The number of potential common shares outstanding are determined in accordance with the treasury stock method to the extent they are dilutive.

~~Basic and diluted EPS~~ are calculated using the following weighted average share data (in thousands):

Dilutive potential common shares consist of stock options, restricted stock units and performance units.

As of March 31, ~~2021,~~2022 and ~~2020,~~2021, total share-based awards of ~~161,902~~47,211 and ~~290,104,~~161,902, respectively, were excluded from the diluted EPS calculations because their inclusion would have been anti-dilutive.

As of March 31, ~~2021,~~2022 and ~~2020,~~2021, the number of performance units excluded from the calculation of diluted EPS ~~was~~were 169,000 and 316,445, ~~and 287,287,~~ respectively. Contingently issuable shares with performance conditions are evaluated for inclusion in diluted EPS if, at the end of the current period, conditions would be satisfied as if it were the end of the contingency period.

Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments ~~which~~and unrealized gains or losses on investments. Foreign currency translation adjustments are the result of changes in foreign currency exchange rates related to our operations in Canada, Honduras and Mexico. Assets and liabilities are translated into U.S. dollars using the current period-end exchange rate and income and expense amounts are translated using the average exchange rate for the period in which the transaction occurred. Our investments consist of municipal bonds, commercial paper and certificates of deposit with maturities of one year or less. All unrealized gains and losses are included in Accumulated Other Comprehensive Income (Loss) within the consolidated balance sheets.

The components of accumulated other comprehensive (loss) are as follows (in thousands):

The following table sets forth the activity in accumulated other comprehensive ~~loss~~(loss) (in thousands).

~~During~~We recognized total share-based compensation expense of $0.8 million and $1.0 million during the nine months ended March 31, ~~2021,~~2022 and ~~2020,~~2021, ~~we recognized total share-based compensation expense of $1.0 million and $0.2 million,~~ respectively. These amounts have been included in the consolidated statements of comprehensive income within ~~selling, general and administrative expenses.~~SG&A expenses. As of March 31, 2022, $2.4 million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of 2.4 years. There was 0no share-based compensation capitalized for the nine months ended March 31, ~~2021,~~2022 and ~~2020,~~2021, respectively.

At March 31, ~~2021,~~2022, there were ~~1,317,846~~1,411,012 shares of common stock available for future issuance pursuant to the Ethan Allen Interiors Inc. Stock Incentive Plan (the “Plan”), which provides for the grant of stock options, restricted stock, and stock units.

Employee Stock Option Grants. There were 0 stock option awards granted to employees during the ~~first~~nine months ~~of fiscal~~ended March 31, 2022 and 2021. In the prior year period, we granted 15,000 stock options with a weighted average exercise price of $18.44 to existing employees of the Company. These stock option awards vest 25% annually on the anniversary date of the grant and are fully vested after ~~four~~ ~~years, expiring~~ ~~ten~~ ~~years from the date of grant.~~

Non-Employee Stock Option Grants. The Plan also provides for the grant of share-based awards, including stock options, to non-employee directors of the Company. During the first quarter of fiscal ~~2021,~~2022, we granted 25,410 stock options at an exercise price of $23.61 to our existing non-employee directors. In the prior year first quarter, we granted 37,008 stock options at an exercise price of ~~$12.97 to our existing non-employee Directors. In the prior year period, we granted 34,188 stock options at an exercise price of $17.55.~~$12.97. These stock options vest in three equal annual installments beginning on the first anniversary of the date of grant so long as the director continues to serve on ~~our Board.~~the Company’s Board of Directors (the “Board”). All options granted to directors have an exercise price equal to the fair market value of our common stock on the date of grant and remain exercisable for a period of up to ten years, subject to continuous service on our Board. There were no other non-employee stock option grants during fiscal 2021 and have been no such grants during fiscal 2022 to date.

As of March 31, ~~2021,~~2022, $~~0.2~~0.1 million of total unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average remaining period of ~~2.0~~1.9 years. A total of 111,706 stock options were outstanding as of March 31, 2022, at a weighted average exercise price of $23.77 and a weighted average grant date fair value of $8.25.

During the first nine months of fiscal ~~2021,~~2022, we granted ~~38,000~~51,100 non-performance based restricted stock units ~~("RSUs"~~(“RSUs”), with a weighted average grant date fair value of ~~$9.58.~~$20.71. The RSUs granted to employees entitle the holder to receive the underlying shares of common stock as the unit vests over the relevant vesting period. The RSUs do not entitle the holder to receive dividends declared on the underlying shares while the RSUs remain unvested and vest in four equal annual installments on the anniversary of the date of grant. In the firstnine months of the prior fiscal year, we granted 38,000 RSUs with a weighted average grant date fair value of $9.58. The fiscal 2021 RSUs vest in two equal annual installments on the first and second anniversary date of the ~~date of~~ grant. ~~We granted 57,000 RSUs granted during~~

During the first nine months of fiscal ~~2020,~~2022, ~~with~~29,000 RSUs vested leaving 77,350 RSUs outstanding as of March 31, 2022, at a weighted average grant date fair value of ~~$9.15.~~ $16.12.

As of March 31, ~~2021,~~2022, $~~0.6~~1.0 million of total unrecognized compensation expense related to non-vested restricted stock units is expected to be recognized over a weighted average remaining period of ~~2.3~~3.0 years.

~~Under the Plan, the Compensation Committee~~Payout of ~~the Board of Directors was authorized to award common shares to certain employees based~~performance stock unit (“PSU”) grants depend on the achievement of certain financial goals over a given performance period. Payout of these grants depends on our financial performance (80%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other peer companies (20%). The performance award opportunity ranges from 50% of the employee's target award if minimum performance requirements are met to a maximum of 125% of the target award based on the achievementattainment of certain financial and shareholder-return goals over a specific performance period, which is generally three fiscal years. The number of awards that will vest, as well as unearned and canceled awards, ~~depends~~depend on the achievement of certain financial and shareholder-return goals over the three-year performance periods, and will be settled in shares if service conditions are met, requiring employees to remain employed with us through the end of the three-year performance periods. We account for performance stock unit awards as equity-based awards because upon vesting, they will be settled in common shares. We expense as compensation cost the fair value of the shares as of the grant date and amortize expense ratably over the total performance and time vest period, considering the probability that we will satisfy the performance goals.

During the first nine months of fiscal ~~2021~~2022 we granted 90,367 PSUs with a weighted average grant date fair value of $17.15 compared with 117,338 ~~PSUs.~~RSUs at a weighted average grant date fair value of $8.76 in the prior year. We estimate, as of the date of grant, the fair value of PSUs with a discounted cash flow model, using as model inputs the risk-free rate of return as the discount rate, dividend yield for dividends not paid during the restriction period, and a discount for lack of marketability for a one-year post-vest holding period. The lack of marketability discount used is the present value of a future put option using the Chaffe model. ~~The~~

During the firstnine months of fiscal 2022, 35,124 PSUs, that were previously granted in July 2018, vested. As of March 31, 2022, a total of 369,750 PSUs were outstanding at a weighted average ~~assumptions used for the PSUs granted during fiscal~~ ~~2021~~ ~~and~~ ~~2020,~~ ~~respectively, is presented below.~~grant date fair value of $16.90.

~~Our unrecognized~~Unrecognized compensation expense as of March 31, ~~2021,~~2022, related to PSUs, was ~~$1.0~~$1.4 million based on the current estimates of the number of awards that will vest, and is expected to be recognized over a weighted average remaining period of ~~1.9~~2.0 years.

Our operating segments are aligned with how the Company, including our chief operating decision maker, manages the business. As such, our reportable operating segments are the wholesale segment and the retail segment. Our wholesale and retail operating segments represent strategic business areas of our vertically integrated enterprise that operate separately and provide their own distinctive services. This vertical structure enables us to offer our complete line of home furnishings and accents more effectively while controlling quality and cost. 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. We account for intersegment sales transactions between our segments consistent with independent third-party transactions, that is, at current market prices. As a result, the manufacturing profit related to sales to our retail segment is included within our wholesale segment. Operating income realized on intersegment revenue transactions is therefore generally consistent with the operating income realized on our revenue from independent third-party transactions. Segment operating income is based on profit or loss from operations before interest and other financing costs, other income (expense), net and income taxes. Sales are attributed to countries on the basis of the customer's location.

As of March 31, ~~2021,~~2022, the Company operated ~~144~~141 design centers (our retail segment) and our independent retailers operated 160 design centers. Our wholesale segment net sales include sales to our retail segment, which are eliminated in consolidation, and sales to our independent retailers and other third parties. Our retail segment net sales accounted for ~~79.8%~~85.2% of our consolidated net sales ~~for~~during thefirst nine months ~~ended~~of fiscal ~~March 31, 2021,~~ 2022compared ~~to 78.7%~~with 79.8% a year ~~ago.~~prior. Our wholesale segment net sales accounted for the remaining ~~20.2% during fiscal~~ ~~2021.~~14.8%.

Commitments represent obligations, such as those for future purchases of goods or services that are not yet recorded on the balance sheet as liabilities. We record liabilities for commitments when incurred (specifically when the goods or services are received).

Material Cash Requirements from Contractual Obligations. As disclosed in our 2021 Annual Report on Form 10-K, as of June 30, ~~2020,~~2021, we had total contractual obligations of ~~$233.4~~$203.9 million, ~~of which $149.7~~including $143.6 million related to our operating lease commitments ~~$50.0~~and $50.2 million ~~of long-term debt and $32.9 million of~~open purchase ~~obligations.~~orders. Except for ~~the $50.0 million repayment of our long-term debt in~~ ~~September 2020~~ ~~and~~operating lease payments ~~totaling $25.9 million~~ made to our landlords ~~partially offset by $23.7~~totaling $25.0 million ~~in operating lease assets obtained in exchange~~ for ~~operating lease liabilities and $6.3 million in dividends payable as of~~ ~~March 31, 2021,~~ ~~there were~~ no ~~other material changes in our contractual obligations during~~ the first nine months of fiscal ~~2021.~~2022,

~~We are routinely party to various legal proceedings, claims, lawsuits, and regulatory examinations that have arisen in~~ there were no other material changes, outside of the ordinary course of business, in our business, including employment matters, commercial and intellectual property disputes, and environmental items. The outcome of litigation and other legal matters is always uncertain. We believe that the Company has valid defenses to the legal matters currently pending against it, is defending itself vigorously and has recorded accruals determinedcontractual obligations as previously disclosed in ~~accordance with GAAP, where appropriate.~~ 2021 Annual Report on Form 10-K.

Legal Matters. On a quarterly basis, we review our litigation activities and determine if an unfavorable outcome to us is considered “remote,” “reasonably possible” or “probable” as defined by ASC 450, Contingencies. Where we determine an unfavorable outcome is probable and is reasonably estimable, we accrue for potential litigation losses. ~~The liability we~~ ~~may~~ ~~incur with respect to such litigation matters, in case of a negative outcome,~~ ~~may~~ ~~be more than amounts currently accrued, if any; however, we do~~ ~~not~~ ~~expect that~~Although the ~~reasonably possible~~ outcome of these litigation matters would, individually or taken together, have a material adverse effect on our financial condition, results of operations or cash flows. Where we determine an unfavorable outcome is ~~not~~ ~~probable or reasonably estimable, we do~~ ~~not~~ ~~accrue for any potential litigation loss. Although it is possible that resolution of~~ ~~one~~ ~~or more of~~ the ~~legal matters currently pending or threatened could result in losses material to~~various claims and proceedings against us cannot be predicted with certainty, management believes that, based on information available at March 31, ~~2021,~~ 2022,the likelihood is remote that any ~~current pending~~existing claims or proceedings, individually or ~~taken together,~~in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

Environmental items typically involve investigations and proceedings concerning air emissions, hazardous waste discharges, and/or management of solid and hazardous wastes. Under applicable environmental laws and regulations, we and/or our subsidiaries are, or ~~may~~ be, required to remove or mitigate the effects on the environment due to the disposal or release of certain hazardous materials. Based on the present facts, we believe that our facilities are in material compliance with all such applicable laws and regulations and there will be no ~~material adverse effect on our financial position or future results of operations.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~(“MD~~(the “MD&A”) is designed to provide a reader of our consolidated financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future ~~results and~~results. The MD&A should be read in conjunction with our ~~2020~~2021 Annual Report on Form 10-K, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (the “SEC”), and the consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q, including ~~this~~the MD&A, contains ~~forward-looking statements~~“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 ~~as amended,~~ and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~, which~~. Generally, forward-looking statements represent ~~management's~~management’s beliefs and assumptions concerning ~~future events based on information currently available to the Company~~current expectations, projections or trends relating to ~~its~~results of operations, financial results, financial condition, strategic objectives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, investments, future economic performance, business and industry and the effect of the COVID-19 pandemic on the business operations and financial results. Such forward-looking statements ~~are~~can be identified ~~in this report~~ by ~~use of certain~~the fact that they do not relate strictly to historical or current facts. These forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “continue,” “may,” “will,” “short-term,” “target,” “outlook,” “forecast,” “future,” “strategy,” “opportunity,” “would,” “guidance,” “non-recurring,” “one-time,” “unusual,” “should,” “likely,” “COVID-19 impact,” and other words and terms of similar ~~expressions~~meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. We derive many of our forward-looking statements from operating budgets and forecasts, which are based upon many detailed assumptions. While the ~~negatives~~Company believes that its assumptions are reasonable, we caution that it is very difficult to predict the impact of ~~such forward-looking words. These forward-looking~~known factors and it is impossible for the Company to anticipate all factors that could affect actual results and matters that are identified as “short term,” “non-recurring,” “unusual,” “one-time,” or other words and terms of similar meaning may in fact recur in one or more future financial reporting periods.

Forward-looking statements are subject to ~~management decisions~~risks and ~~various assumptions about future events, including projections about our future financial growth and trends with respect~~uncertainties that may cause actual results to ~~our business and results of operations, and~~differ materially from those that are ~~not guarantees of future performance.~~expected. Actual results could differ materially from those anticipated in the forward-looking statements due to a number of risks and uncertainties including, but not limited to the following: the ~~ongoing~~ global COVID-19 pandemic ~~may~~has, and could continue to have, a materially ~~adversely affect~~adverse effect on the Company’s business and its results of ~~operations~~operations; a resurgence of COVID-19 and ~~overall financial performance;~~resulting containment measures could negatively impact our ability to fulfill existing order backlog or cause changes in consumer demand; a resurgence of COVID-19 could lead to temporary closures, including our distribution centers; the Company may require additional funding from external sources, which may not be available at the levels required, or may cost more than expected; declines in certain economic conditions, which impact consumer confidence and spending; financial or operational difficulties due to competition in the residential home furnishings industry; a significant shift in consumer ~~spending;~~preference toward purchasing products online; an overall decline in the health of the economy and consumer spending may ~~affect~~reduce consumer purchases of discretionary items; ~~financial or operational difficulties due to competition in the residential furniture industry; a significant shift in consumer preference toward purchasing products online; ability~~inability to maintain and enhance the Ethan Allen brand; failure to successfully anticipate or respond to changes in consumer tastes and ~~trends; global~~trends in a timely manner; inability to maintain current design center locations at current costs; failure to select and local economic uncertainty may materially adversely affect manufacturing operations or sources of merchandise and international operations; competition from overseas manufacturers and domestic retailers;secure appropriate retail locations; disruptions in the supply ~~chain;~~chain and supply chain management; fluctuations in the price, availability and quality of raw materials resulting in increased costs and production delays, and which could result in ~~increased costs or cause production delays;~~a decline in sales; competition from overseas manufacturers and domestic retailers; the number of manufacturing and distribution sites may increase exposure to business disruptions and could result in higher transportation costs; current and former manufacturing and retail operations and products are subject to increasingly stringent environmental, health and safety requirements; ~~the number of manufacturing and logistics sites may increase exposure to business disruptions and could result in higher transportation costs;~~ product recalls or product safety concerns; extensive reliance on information technology systems to process transactions, summarize results, and manage ~~its~~the business and that of certain independent retailers; disruptions in both primary and back-up systems; successful cyber-attacks and the ability to maintain adequate cyber-security systems and procedures; loss, corruption and misappropriation of data and information relating to customers; global and local economic uncertainty may materially adversely affect manufacturing operations or sources of merchandise and international operations; changes in United States trade and tax ~~policy;~~policies; the phasing out of LIBOR and the impact on interest rates used in future borrowings; reliance on certain key ~~personnel;~~personnel, loss of key personnel or inability to hire additional qualified personnel; ~~additional~~potential future asset impairment charges resulting from changes to estimates or projections used to assess assets’ fair value, financial results that ~~could reduce profitability;~~are lower than current estimates or determinations to close underperforming locations; access to consumer credit could be ~~interrupted; inability to maintain current design center locations at current costs;~~interrupted as a result of external conditions; failure to ~~successfully select and secure design center locations; changes to tax policies;~~protect the Company’s intellectual property; hazards and risks which may not be fully covered by insurance; ~~possible failure to protect the Company’s intellectual property;~~significant labor competition, wage pressure, and at times, a shortage of qualified talent; labor disruptions resulting from COVID-19 vaccination mandates; and other factors disclosed in Part I, Item 1A. Risk Factors, in our ~~2020~~2021 Annual Report on Form 10-K, and elsewhere here in this Quarterly Report on Form 10-Q.

All forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements, as well as other cautionary statements. A reader should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. ~~Our~~The forward-looking statements ~~speak~~included in this Quarterly Report on Form 10-Q are made only as of the date ~~of this Quarterly Report on Form 10-Q. Other than as required by law, we~~hereof. We undertake no obligation to publicly update or revise any forward-looking ~~statements,~~statement, whether as a result of new information, future events or ~~otherwise.~~otherwise, except as otherwise required by law.

Who We Are. Founded in 1932 ~~we are~~and incorporated in Delaware in 1989, Ethan Allen is a leading interior design company, ~~and~~ manufacturer and retailer ~~of quality~~in the home ~~furnishings.~~furnishings marketplace. We are a global luxury home fashion brand that is vertically integrated from product design through home delivery, ~~affording~~which offers our ~~clientele a value proposition of style,~~customers stylish product offerings, artisanal quality and ~~value.~~personalized service. As we celebrate 90 years of innovation, we continue to be known for the quality and craftsmanship of our furniture as well as for the exceptional personal service from design to delivery, and for our commitment to social responsibility and sustainable operations. We ~~offer complementary~~provide complimentary interior design service to our clients and sell a full range of ~~furniture~~home furnishing products ~~and decorative accents~~ through ~~ethanallen.com and~~ a retail network of ~~approximately 300~~ design centers inlocated throughout the United States and ~~abroad. The~~abroad as well as online at ethanallen.com. Our employees are dedicated to helping each customer create a place that they will love to come home to everyday. We approach each situation with an entrepreneurial attitude, staying focused on long-term growth, and treating our associates, vendors, and customers with dignity and justice, which we believe is critical to remaining both profitable and relevant amidst the constant changes taking place in the world. Ethan Allen design centers represent a mix of locations operated by independent licensees and ~~our own~~ Company-operated locations. As of March 31, 2022, the Company operates 141 retail ~~segment.~~design centers, with 137 located in the United States and four in Canada. Our 160 independently-operated design centers are located in the United States, Asia, the Middle East and Europe. We also own and operate ~~nine~~ten manufacturing facilities, including ~~three~~four manufacturing plants, one sawmill, one rough mill and aone lumberyard in the United States, ~~and~~ two manufacturing plants in Mexico and one manufacturing plant in Honduras. Approximately 75% of our products are ~~made~~manufactured in our North American ~~plants.~~manufacturing plants and we also partner with various suppliers located in Europe, Asia, and other countries to produce products that support our business. During the first three quarters of fiscal 2022, we reaffirmed our commitment to maintain and grow our North American workshops, where our customization capabilities help create relevant and quality products and have proven to provide us with a strategic and a branding advantage.

Business Model. Ethan Allen has a distinct vision of American style that we believe differentiates us from our competitors. Our business model is ~~to maintain~~ continued focus on (i) capitalizing on the professional service offered to our customers by our interior design ~~consultants~~professionals in our retail design centers, (ii) investing in new technologies across key aspects of our vertically integrated business, (iii) utilizing ethanallen.com as a key marketing tool to drive traffic to our design centers, (iv) communicating our messages with strong advertising and marketing campaigns, and (v) leveraging the benefits of our vertical integration by maintaining a strong manufacturing capacity in North America.

~~Marketing.~~ Fiscal 2022 Third Quarter in Review~~Ethan Allen’s marketing mission statement, “We Make the American Home~~^TM(1)~~,” drives home~~. As we enter our ~~core brand values. By adopting~~ninth decade as innovative interior designers, manufacturers and retailers, we remain focused on a ~~fresh, ever-evolving creative approach, we extend the reach of~~single enterprise model while maintaining an entrepreneurial attitude. We believe that our ~~brand, enhancing its desirability~~vertically integrated business continues to produce positive results and visibility while driving both new and repeat client traffic to our approximately 300 design centers network-wide and to our primary website, ethanallen.com. We consider the breadth and depth of our product offerings, enhanced by the countless custom options we offer, to be a key competitive advantage. As our e-commerce sales continue increasing at double-digit rates, we have implemented conversion rate optimization updates on both ethanallen.com and ethanallen.ca. We consider our website to be the front door to our brand experience where customers can research our offerings and buy online or engage with an in-store design consultant. Improved on-site search capabilities, expanded Live Chat services, online appointment booking capability, and product listing and display page enhancements have elevated the online user experience. We also invest in targeted search engine optimization and paid search marketing,position us for both national and local markets, driving both referral traffic to our website and physical traffic to our design centers. Customer acquisition resulting from our digital outreach strategies increased our traffic to the website and e-commerce orders increased 100% forfuture growth. During the third quarter of ~~2021 compared~~fiscal 2022, we introduced several key initiatives, including: enhancing our commitment to good corporate governance practices by adding a new Board member; new product introductions in many areas including upholstery, home office, lighting, outdoor living, decorative accents and a new flooring program; the ~~prior~~expansion of our upholstery manufacturing in North Carolina; and the opening of a new concept retail design center in Westport, Connecticut. We were also proud to announce that, for the third consecutive year, ~~period. By investing~~our upholstery operation in ~~digital design technologies, we have expanded~~Mexico was recently named “environmentally and socially responsible” by the Mexican Center for Corporate Philanthropy and the Alliance for Corporate Social Responsibility. These organizations recognize company policies that promote a positive social impact in Mexico and Latin America. We believe that this designation exemplifies our ~~virtual design appointment capabilities. EA inHome®, an augmented reality mobile app, empowers clients~~commitment to ~~preview Ethan Allen products in their homes,~~policies that ensure environmental responsibility as well as dignity and justice for every employee at ~~scale, in a variety of fabrics and finishes. With the 3D Room Planner,~~ our designers generate both 2D floor plans and immersive, realistic 3D walk-throughs of the designs they create. These technologies have been pivotal to our ability to serve clients remotely during the ongoing COVID-19 pandemic as remote shopping has gained popularity due to increased restrictions on in-person capacities and social distancing requirements. Clients can shop with confidence, knowing that they are investing in beautiful, cohesive room designs and pieces that suit their space.Mexican operations.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

~~Impact of COVID-19 on our Business.~~ The COVID-19 pandemic has resulted in significant economic disruption and adversely impacted our business. For a select period during our third and fourth quarters of fiscal 2020, we temporarily closed our design centers and manufacturing facilities due to the COVID-19 pandemic. As a result, on April 1, 2020 we announced our action plan in response to COVID-19 whereby we took several actions to conserve cash in the near term, including the furlough of 70% of our global workforce, the decision by our CEO to temporarily forego his salary through June 30, 2020, a temporary reduction in salaries of up to 40% for all senior management and up to 20% for other salaried employees through June 30, 2020, a temporary reduction of 50% in the cash compensation of the Company’s directors through June 30, 2020, the elimination of all non-essential operating expenses, a delay of capital expenditures, the temporary suspension of the regular quarterly dividend which was reinstated in August 2020, and temporarily halted our share repurchase program. We also borrowed $100 million under our revolving credit facility in March 2020, which was repaid in full by September 2020, negotiated alternative terms for lease payments and reduced merchandise purchases to lower inventory carrying levels. As of the end of the second quarter of fiscal 2021, our manufacturing facilities and design centers had all re-opened and the majority of our furloughed employees had returned to work.

We have seen a significant improvement in business conditions, which has increased our profitability and generated strong positive cash flow during fiscal 2021. Substantially all our design centers that were temporarily closed have reopened and written orders taken at both the retail and wholesale segments exceeded levels from a year ago. Tempering these improvements are the continuing logistical challenges faced by the entire home furnishings industry resulting from COVID-19-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs. Inventory and supply chain management remain our areas of focus as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory shortage and obsolescence. We continue to produce about 75% of our products in our North American manufacturing facilities. The other 25% is sourced primarily from Southeast Asia and China. The receipt of inventory and raw materials imported from these areas has been slowed or disrupted. In addition, ocean freight capacity issues continue to persist worldwide due to the ongoing global COVID-19 pandemic, which has resulted in recent price increases per shipping container. While we continue to manage and evaluate our logistics providers, there is no indication that ocean freight container rates will return to pre-COVID-19 levels in the near-term and these increases could have an adverse effect on our consolidated results of operations.

We believe that we have a strong balance sheet with $109.0 million of cash and no bank debt as of March 31, 2021, providing sufficient liquidity to continue business operations during this volatile period. As the COVID-19 pandemic is complex and rapidly evolving, our plans as described in this report may change. Although we continue to actively manage the impact of the ongoing COVID-19 crisis, we are unable to predict the impact COVID-19 will have on our financial operations in the near and long term. We also continue to actively manage our global supply chain and manufacturing operations, which may be adversely impacted with respect to availability and pricing based on uncontrollable factors. The timing of any future actions in response to COVID-19 is dependent on the mitigation of the spread of the virus, status of government orders, directives and guidelines, recovery of the business environment, economic conditions, and consumer demand for our products. Additionally, we continue to follow enhanced health and safety protocols across all locations to ensure our employees and our customers are well-protected.

~~ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES~~

~~Financial Results~~

~~Fiscal 2021 Third Quarter~~Our business fundamentals continue to be strong as we reported another quarter of growth in ~~Review~~⁽¹⁾. Despite many challenges due to the ongoing COVID-19 pandemic, we had strong performance during the quarter. The increased consumer focus on the home has continued to create a strong demand for our product offeringsnet sales, gross margin, operating margin and ~~interior design services. With~~diluted EPS. Our wholesale and retail segments each recorded double-digit net sales growth. While our retail segment written orders ~~including our e-commerce business,~~were down 3.0% compared to a strong third quarter in fiscal 2021, retail orders were up ~~51.8%, it~~18.2% from the third quarter of fiscal 2019 (prior to the start of the COVID-19 pandemic). Wholesale segment written orders were down 0.2% to last year, but up 8.4% compared with the third quarter of fiscal 2019. The higher level of product demand that we continue to experience has also led to ~~a record high~~an increase in our order backlog ~~at quarter-end.~~ that has continued throughout the third quarter of fiscal 2022 despite the fact that our manufacturing production levels have returned to pre-COVID-19 pandemic levels. We continue to work through our existing order backlog, but are unable to reasonably predict the timing and size of reductions to our backlog. The positive net sales growth combined with our ability to operate more efficiently through the use of technology and reduced headcount (when compared to pre-COVID-19 pandemic levels) helped us expand consolidated gross margin, operating margin and diluted earnings per share. Delivery lead-times remained higher than historical averages due to ongoing supply chain delays and high backlog and we expect these higher lead-times to continue in the near-term. However, our unique vertical structure, whereby we produce about 75% of what we sell, mostly on a custom made-to-order basis in our own North American manufacturing plants, allows us to maintain strong service levels and minimize customer returns and excess inventory.

We ended the third quarter with a strong balance sheet, including cash ~~on hand~~and investments of ~~$109.0~~$104.6 million as of March 31, 2022, while ~~growing~~expanding our consolidated gross and operating margins through disciplined cost and expense controls. ~~Net~~Consolidated net sales increased ~~18.2% during~~11.7% as a result of strong written orders and increased levels of manufacturing production that led to higher deliveries combined with the prior year being negatively impacted by COVID-19 related production delays. The increased production was partially offset by ongoing supply chain disruptions, which negatively impacted imports and raw material availability. As the third quarter progressed, we saw an increase in receipt of product from a higher volume of shipping container receipts. Consolidated gross margin increased 310 basis points to 60.4% primarily due to a change in the sales mix, higher productivity in our wholesale manufacturing, product pricing actions taken, and a favorable product mix partially offset by higher import and raw material costs. Operating margin increased from 10.7% of sales in the third quarter of fiscal 2021 as we began to see increased production in our manufacturing and improvements in our supply chain. Our wholesale segment increased net sales by 15.8% and our retail segment increased 22.2% compared to the prior year ~~quarter. We continued~~period to see written orders accelerate. Our retail segment written orders grew 51.8% in the third quarter as we continue to see increased demand for products in the home category and increased online traffic. Wholesale segment orders, which increased 39.0% during the quarter, while benefitting from the strong retail growth, were negatively affected by the timing of GSA and other government orders due to COVID-19 pandemic related disruptions that are delaying issuance of new orders from the government. Excluding GSA and other government orders, wholesale segment orders booked were up 48.3% for the third quarter. Wholesale orders from our U.S. independent retailers increased 57.6% and orders from our international independent retailers increased 60.9%. While the pace of our written business since reopening has lengthened the time between customer orders and delivery, our distribution, manufacturing, and logistics teams are working hard to reduce these lead times. Our consolidated gross margin increased 120 basis points primarily due to expansion within the wholesale gross margin and a higher share of retail sales as a percentage of consolidated net sales, partially offset by COVID-19 related production disruptions in our manufacturing and logistics. Operating income increased from -0.5% of sales last year to 10.7% of sales16.5% in the current year third quarter. Adjusted operating ~~income,~~margin, which excludes ~~pre-tax charges from~~ restructuring initiatives, asset impairments and other corporate actions in both periods presented, ~~increased to 11.1%~~was 15.8% of sales, up from ~~0.2%~~11.1% of sales ~~last~~in the prior year period, primarily due to higher net sales, strong gross margins and cost containment ~~resulting in a 2.7% reduction in operating expenses.~~measures, including lower marketing costs. Diluted EPS ~~expanded~~grew 59.0% to ~~$0.61 compared with negative $0.01 a year ago.~~$0.97. Adjusted diluted EPS was ~~$0.58, compared with $0.02 in~~$0.93, an increase of 60.3%. Reflecting the ~~prior year third quarter. During the third quarter we generated $36.2 million~~strength of ~~cash from operating activities~~our balance sheet and ~~had no outstanding borrowings. In addition, on January 25, 2021,~~strong history of returning capital to shareholders, our Board ~~of Directors~~ declared a regular quarterly cash dividend of ~~$0.25~~$0.29 per share ~~payable on April 22, 2021.~~in January 2022, which was subsequently paid in February 2022, bringing the total amount of dividends paid to $40.1 million for the nine months ended March 31, 2022.

While we were pleased with our third quarter performance, we also recognize there are several external factors, such as record inflation, rising interest rates, supply chain challenges and global unrest, that has created higher levels of uncertainty. We expect to see softening consumer interest in home furnishings and to address this expected trend, we remain focused on investing in digital design and interactive communication technologies, refining and repositioning our product offerings to reach a larger client base, and leveraging our vertically integrated structure. Although we cannot reasonably estimate any future economic instability on a macroeconomic scale, we believe that our current business model, strategy and balance sheet will permit us to take advantage of opportunities that may present themselves whether it be during times of economic expansion, contraction or dislocation. We believe we ~~have an opportunity~~are well-positioned to continue our growth in net sales while maintaining strong gross and ~~profitability~~operating profit margins due to our high backlog, strong retail network, the personal service of our interior design professionals combined with technology, our unique vertical integration structure whereby about 75% of our products are made in our North American manufacturing workshops, and a strong national logistics with our retail home delivery centers delivering product with white glove service to our ~~client’s~~clients’ home. We expect consumer interest in home and home furnishings to continue and we will remain focused on employee safety, investing in digital design and interactive communication technologies, growing our business, generating strong cash flow, refining and repositioning our product offerings to reach a larger client base, and leveraging our vertical integration.

(1)	Refer to the ~~Regulation G~~ Reconciliation of Non-GAAP Financial Measures section within ~~this~~the MD&A for the reconciliation of GAAP to adjusted key financial metrics.

~~CARES Act.~~ ~~On March 27, 2020,~~COVID-19 Update

The COVID-19 pandemic continues to evolve with resurgences, disruptions, new virus variants and the ~~Coronavirus Aid, Relief,~~continued rollout of vaccines. During the third quarter of fiscal year 2022, we experienced continued COVID-19 related supply chain disruptions, manufacturing disruptions and ~~Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides numerous tax provisions~~labor constraints, all of which have led to delays in our production workflow. While demand for our products continues to be strong, these and other ~~stimulus measures,~~disruptions have delayed the process of converting written orders to delivered shipments. In particular, we experienced more prevalent disruptions during the first half of our fiscal 2022 third quarter, notably with respect to shipping and logistics delays, higher COVID-19 related employee absenteeism, and manufacturing disruptions, including ~~temporary suspension~~raw material supply challenges. These disruptions improved sequentially throughout the latter half of the third quarter of fiscal 2022, and while we continue to assess the impacts to our business and combat any adverse effects, we are unable to predict the full scope of any impacts that the COVID-19 pandemic will have on our financial operations in the near- and long-term.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Supply constraints. We are experiencing record inflationary pressure on our raw materials coupled with supplier volatility as certain ~~payment requirements~~suppliers are also experiencing material and labor shortages. We are working to offset these issues through price increases on our products, supplier negotiations, sourcing initiatives, make-versus-buy analyses, product re-engineering and parts standardization. To further increase our control over raw materials, purchased parts, and labor costs while maintaining our high-quality standards, we completed the purchase of property, plant and equipment from Dimension Wood Products, Inc. during the third quarter of fiscal 2022. This has enabled us to maintain our current production levels, e.g., with 75% of our products being manufactured in our North American facilities and 25% being sourced primarily from Southeast Asia and China. The receipt of inventory and raw material imports from these areas has, at times, been slowed, disrupted and often more expensive than in prior years. The inflationary pricing pressure led to gross margin compression within our wholesale segment during the third quarter of fiscal 2022 as our price increases to our customers did not occur as quickly as the inflationary pressure on our input costs.

Shipping disruptions. We continue to be exposed to rising costs in both domestic and oceanic freight. Transportation costs are managed by optimizing logistics and supply chain planning, but the current freight rate levels are elevated such that significant year-over-year increases occurred so far during fiscal 2022 are expected to remain elevated for the ~~employer-paid part~~remainder of ~~social security taxes,~~ the ~~creation~~current fiscal year. Ocean freight capacity issues also continue to persist worldwide due to the COVID-19 pandemic, which has resulted in significant price increases per shipping container. These elevated freight costs negatively impacted our gross and operating margins, especially within our wholesale segment. In addition, extended shipping times due to port congestion and/or container availability, have led to continued high backlog and delays in product delivery to our customers.

Labor constraints. We saw improvements with respect to our ability to identify and hire talent during the third quarter of fiscal 2022. However, we are experiencing significant labor competition and wage inflation in certain ~~refundable employee retention credits,~~geographies, particularly at our distribution facilities located in the United States. In addition, outside suppliers that we rely on have also experienced, and ~~technical corrections~~continue to experience, labor constraints. These ongoing internal and external labor challenges have led to higher wage rates from ~~prior tax legislation~~actions to attract new and retain existing employees and increased costs from higher overtime and the need to hire temporary help to meet demand. See Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, for ~~tax depreciation~~discussion of ~~certain qualified improvement property. We elected~~risks associated with such labor constraints.

Vaccine mandates. Our ability to ~~defer~~comply with either a vaccine mandate or proposed weekly testing requirements could be difficult, costly and result in attrition. See Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, for discussion of risks associated with the ~~employer-paid part~~potential adverse effects on our workforce with respect to compliance with vaccine mandates and testing requirements. As of ~~social security taxes beginning with pay dates on and after March 12, 2020. At~~ March 31, ~~2021, we deferred a total of $3.9 million in employer-paid social security taxes, of which 50% was recorded on our consolidated balance sheet within~~ ~~Accounts payable and accrued expenses~~ ~~with~~2022, the ~~remaining balance in~~ ~~Other long-term liabilities~~ ~~because we are~~Company is not required to ~~pay any part~~follow a vaccine mandate or subject to weekly testing requirements.

We frequently monitor and re-evaluate our COVID-19 action plan based on guidance from the Centers for Disease Control and Prevention, other parts of the ~~deferred amount until December~~United States government, regulators and other health and safety organizations. We believe that we have a strong balance sheet with $104.6 million of cash and investments with no bank borrowings outstanding as of March 31, ~~2021, at~~2022, that will provide sufficient liquidity to continue business operations in the long-term. Although we continue to actively manage the impact of COVID-19 and the prospect of continuing or future outbreaks, we are unable to predict the impact that the COVID-19 pandemic will have on our financial operations in the near- and long-term. We also continue to actively manage our global supply chain and manufacturing operations, which may continue to be adversely impacted with respect to availability and pricing based on uncontrollable factors.

Ukraine/Russia Conflict

We are closely monitoring the current and potential impact of the Russian invasion of Ukraine on our business, our employees, and our customers. We have taken all necessary steps to ensure compliance with all applicable regulatory restrictions on international trade and financial transactions. We have no offices in Russia or Ukraine, but are monitoring the regional and global ramifications of the unfolding events in the area.

In February 2022, the United States and other countries imposed sanctions on Russia. Due to these sanctions imposed on certain regions of Ukraine and on Russia, our supply chain may be impacted by applicable restrictions and the scope of such restrictions is subject to ongoing change. In addition, due to countermeasures imposed by the Russian government, the sourcing of certain products that use Russian wood may be affected. Even though our manufacturing operations do not use any products that are currently on the sanctioned list, we are continually monitoring the evolving sanctions. We are currently evaluating our suppliers to reduce potential exposure and minimize pricing pressure as the unrest continues to put upward pressure on costs and product availability. At this time, ~~50% is due, with the remaining amount due December 31, 2022.~~we do not anticipate a significant impact to our future results of operations.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

A summary of our key ~~financial~~operating metrics is presented in the following table (in millions, except per share ~~amounts)~~data).

For an understanding of the significant factors that influenced our financial performance ~~for~~during the three and nine months ended March 31, ~~2021,~~2022 and ~~2020,~~2021, respectively, the following discussion should be read in conjunction with the consolidated financial statements and related notes presented in this Quarterly Report on Form 10-Q ($ in millions, except per share amounts). Unless otherwise noted, all comparisons in the following discussion are from the three- and nine-month periods ended March 31, 2021, to the comparable prior fiscal year periods.10-Q.

Fiscal 2022 Third Quarter ~~ended March 31, 2021~~ compared with Fiscal 2021 Third Quarter ~~ended March 31, 2020~~

~~Consolidated net sales~~ were $177.0 million, an increase of 18.2% compared to the same prior year period. We experienced a strong pace of written orders during the quarter and our manufacturing facilities are making timely progress ramping up production to meet this demand after the temporary plant closures in our first quarter of fiscal 2021. While our written orders have outpaced current production, we continue to improve capacity and work through existing backlog. Due to the impact of COVID-19 and its effects on manufacturing productivity, raw materials and increased demand on our supply chain, we believe it will take the next couple quarters for manufacturing to catch up to the increase in customer demand.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Consolidated net sales were $197.7 million, an increase of 11.7% compared to the prior year period. We continue to experience sustained high demand for our products, which has led to written orders being well above pre-pandemic levels. We increased manufacturing production and inventory levels as well as taken pricing actions to counteract rising material and freight costs. These efforts have led to higher deliveries and when combined with the prior year impact from the COVID-19 pandemic, which negatively impacted our ability to deliver product to customers, helped us grow consolidated net sales by 11.7%. While demand for our products continue to be strong, supply and labor constraints have created challenges and, during the current quarter delayed the process of converting written orders to delivered shipments. As the third quarter of fiscal 2022 progressed, we experienced an increase in our manufacturing productivity as well as an increase in receipt of imports and raw materials from a higher volume of shipping container receipts, which led to strong sales growth during the quarter. Existing order backlog increased during the third quarter, which we attribute to strong product demand combined with supply and labor constraints that were prevalent during the first half of the quarter. We believe it will take several quarters to catch up to the increase in customer demand as there remains ongoing supply chain challenges, such as certain raw material shortages, increased cost of shipping and import delays. As we continue to work through the high backlog, we believe that there is an opportunity for future positive growth in delivered net sales based on the size of our order backlog and written order growth.

Wholesale net sales increased ~~15.8%~~12.3% to ~~$107.8~~$121.0 million primarily due to ~~the increased order demand from our North American retail network along with an~~a 16.4% increase in ~~shipments~~intersegment sales to ~~China. These increases were~~our Company-operated design centers combined with a 9.9% increase in sales to our United States independent dealers and a 1.1% increase in contract sales partially offset by ~~a 25.1% decline~~lower international sales. Excluding intersegment sales to our retail segment, wholesale net sales increased from higher United States independent dealer sales. The 1.1% increase in our contract business sales ~~including~~was primarily from the United States government General Services Administration (“GSA”). During the first nine months of fiscal 2022, we have seen strong order growth from the GSA and when combined with high backlog and increased production, led to an increase in net sales during the period. We remain optimistic in future growth as written orders from our GSA contract ~~primarily as~~increased 45.4% during the first nine months of fiscal 2022 compared with a year prior. Our international net sales were down 29.6% due to a reduction in net sales to China. Our sales to international independent retailers represented 2.6% of total wholesale net sales compared to 4.1% in the prior year period.

Wholesale written orders, which represent orders booked through all of our channels, were down 0.2% in the third quarter of fiscal 2022 compared with the third quarter of fiscal 2021. After the reopening of all our retail design centers in early fiscal 2021, we experienced a significant surge in demand leading to a strong, but difficult prior year comparison. As a result of the strong prior year third quarter, our independent North American retail network orders were down 3.7% and international orders from China declined 43.4%. China written orders declined primarily from prolonged COVID-19 related ~~order disruptions.~~lockdowns. Partially offsetting these decreases was a 1.0% increase in orders from our Company-operated design centers. When compared to the third quarter of fiscal 2019 (pre-pandemic levels), written orders from our Company-operated design centers were up 21.9% while our independent North American retail network grew by 3.2%. Due to strong product demand and challenges during the first half of the third quarter, including supply chain disruptions, raw material availability, and COVID-19 absenteeism among our employees and those of our outside suppliers, our wholesale backlog increased by 3.4% in the past three months and by 25.0% compared to the prior fiscal year period, and up 5.8% from June 30, 2021. However, due to strong production and related deliveries during the month of March 2022, we were able to decrease wholesale backlog since February 28, 2022, and remain focused on increasing wholesale production and shipping to the levels that are necessary to service our customers on a timely basis and reduce our backlog.

Retail net sales from Company-operated design centers increased ~~22.2%~~17.9% to ~~$141.4~~$166.7 million. There was a ~~21.9%~~17.9% increase in net sales in the United States, while net sales from our Canadian design centers decreased 19.8%. Retail net sales were up due to strong written orders, increased ~~33.2%. Since~~premier home delivery revenue, high backlog that led to higher deliveries, recent price increases and strong shipments from improved manufacturing production compared to the prior year which was negatively impacted by production delays as a result of the COVID-19 pandemic. As noted earlier, after the reopening of all our retail design centers ~~have re-opened, whether in-person, by appointment only, or virtually,~~in early fiscal 2021, we experienced a significant surge in demand leading to a strong, but difficult prior year comparison. As a result, our retail written orders decreased 3.0% year over year, but are up 18.2% from pre-pandemic levels of fiscal 2019, reflective of the strength of our product offerings and interior design professionals increasingly combining technology with their personal service and continued consumer interest in the home. We have continued to experience strong order trends ~~with written orders up 51.8% in the third quarter compared with a year ago,~~ driven by increased demand for our products and strong execution at the design center level. However, the resurgence of COVID-19 variants during the first half of the third quarter of fiscal 2022 contributed to a 6.7% decrease in quarterly traffic. We remain focused on growing our same-store sales through improved execution at the ~~home furnishings category. In addition,~~design center level as well as opening new design centers, primarily in markets that can be serviced through our ~~e-commerce business was a strong contributor to retail net sales, growing by 161% year over year, as our online traffic continues to increase. There~~regional distribution centers, where we see opportunity for growth, or where we believe we have opportunities for further market penetration. As of March 31, 2022, there were ~~144~~141 Company-operated design centers ~~as of March 31, 2021, including one relocation, the same as at the end of~~compared with 144 in the prior year period.

Gross profit increased ~~20.8%~~17.8% to ~~$101.4~~$119.5 million compared with the prior year third quarter due to ~~stronger net~~ sales growth within both the wholesale and retail segments, a change in the sales mix, product pricing actions taken, benefits realized from the ongoing manufacturing and logistics optimization project and a favorable product mix partially offset by higher raw material and freight costs. Retail gross profit was up due to a 17.9% increase in net shipments combined with a 320-basis point improvement in gross margin from a favorable change in product mix, higher premier home delivery revenue, an ~~improved wholesale gross margin.~~increase in average ticket sale and higher clearance sale margins. Wholesale gross profit increased ~~year over year primarily due a 18.2% increase~~ in ~~net sales and improved operating efficiencies, which led to gross margin expansion despite plant downtime and restrictions during~~ the current year third quarter ~~related to the ongoing COVID-19 pandemic. Retail gross profit increased~~ due to a ~~22.2%~~12.3% increase in wholesale net ~~shipments.~~shipments, efficiencies gained from higher manufacturing production levels, product pricing actions taken, and benefits being realized from the previously executed optimization of manufacturing and logistics initiatives. Each product category within wholesale (upholstery, case goods and home accents) increased its net sales, which helped to partially offset rising raw material and freight costs. Our inability to keep pace with inflationary pressures that we are experiencing negatively impacted our wholesale gross profit during the third quarter. In particular, the price of raw materials involved with upholstery manufacturing, including plywood, foam, frames and fabric, continued to escalate in price over the past twelve months. To help minimize impacts from increasing costs, we believe we have taken necessary pricing actions to align our invoice price more closely with our production costs.

Gross margin was 60.4%, up from 57.3% ~~compared with 56.1%~~ a year ~~ago. On an adjusted basis, the current year consolidated gross margin was 57.3% compared to a~~ prior ~~year gross margin of 56.0%. The increase in consolidated gross margin was~~ due to ~~higher productivity in our wholesale manufacturing and~~ a change in the sales mix, higher manufacturing productivity, product pricing actions taken and a favorable product mix. Retail sales, as a percentage of total consolidated sales, were ~~79.9%~~84.4% in the current year third quarter, ~~compared~~up from 79.9% in the prior year period. We expect this higher percentage of retail sales to consolidated sales to moderate towards normalized levels as we increase delivery of the high wholesale order backlog, including a high contract business backlog. While we were pleased with ~~77.2%~~ a ~~year ago, which positively affected~~strong consolidated gross ~~margin. The wholesale gross~~ margin ~~expanded due~~of 60.4%, we expect our margins to ~~benefits being~~return to a range of approximately 57.5% to 58.5% in the near term from the impact of escalating raw material, labor and freight costs combined with a return of our sales mix to more historical norms. Benefits realized from increased productivity from the ~~prior year~~ongoing manufacturing and logistics optimization ~~project~~helped to minimize margin pressure from rising freight and ~~increased productivity.~~raw material costs.

~~Operating~~SG&A expenses ~~decreased~~increased to ~~$82.4~~$88.3 million, or ~~46.6%~~44.7% of net sales, compared with ~~$84.7~~$81.8 million, or ~~56.6%~~46.2% of net sales ~~last year. The 2.7% decrease~~ in ~~operating~~the prior year period. SG&A expenses, ~~was primarily due to lower selling costs and~~when expressed as a ~~reduction~~percentage of sales, decreased 150 basis points in general and administrative expenses from less headcount. Retail selling expenses were lower due to less designer selling expenses and lower compensation resulting from headcount reductions. Likewise, wholesale selling costs were down due to a reduction in advertising spending and lower compensation costs resulting from headcount reductions. General and administrative expenses decreased due to lower compensation costs, reduced travel expenses, occupancy cost savings and lower regional management charges. Restructuring and impairment charges incurred during the third quarter of fiscal ~~2021~~2022, compared with the same period in the prior year, primarily due to higher sales volume relative to fixed costs. SG&A expenses were up 7.9% while consolidated net sales grew at a much faster rate of 11.7%, which led to improved operating leverage at both the retail and wholesale segment. Our ability to deliver backlog and increase net sales in the future will further improve our operating margins as we leverage our vertically integrated structure. The 7.9% increase in SG&A expenses was primarily driven by higher selling costs of 9.3% and a 5.7% increase in general and administrative expenses. Retail selling expenses were up 10.4% due to the 17.9% increase in net sales, which drove higher delivery costs as well as increased variable compensation. Wholesale selling costs, which includes logistics, grew by 6.6% as fuel and freight costs increased from higher sales volumes and rising commodity prices. These selling costs were partially offset by a reduction in marketing spend. For the third quarter of fiscal 2022, we reduced our advertising in various mediums including less national television and regional radio markets, thereby reducing our overall advertising spend to 2.3% of net sales compared to 3.5% in the prior year third quarter. However, through our recent digital campaigns, we have substantially increased our digital marketing outreach, which helped us reach more households through the publication of our digital magazine. For the remainder of the fiscal 2022 year, we expect our advertising to range between 2-3% of net sales. General and administrative expenses increased 5.7% during the just completed third quarter primarily due to higher compensation from additional headcount, increased occupancy charges from new locations and maintenance costs, and higher retail merchandising and display costs in our design centers with new product introductions.

Restructuring and other impairment charges, net of gains was a reported $1.5 million gain compared to a loss of $0.6 million ~~compared~~in the prior year period. During the third quarter of fiscal 2022, we sold a previously closed retail location to ~~$0.9~~an independent third party for $2.6 million, ~~last year.~~which resulted in a pre-tax gain of $1.5 million. In the year ago third quarter, we sold a previously closed retail property resulting in a pre-tax gain of $0.7 million.

Operating income was ~~$19.0~~$32.7 million compared with ~~a loss of $0.8~~$19.0 million in the prior year ~~third quarter.~~period. Adjusted operating income, which excludes ~~the~~ restructuring and ~~impairment~~other charges, was $31.3 million, or 15.8% of net sales compared with $19.6 million, or 11.1% of net sales ~~compared with $0.4~~in the prior year period. The significant increase in operating income was driven by the $20.7 million ~~or 0.2% of net sales last year. Higher~~increase in consolidated net sales, ~~of $27.2 million or 18.2% coupled with~~retail gross margin expansion, reduced marketing spend and strong cost containment measures partially offset by wholesale gross margin contraction, higher selling expenses and increased delivery and freight costs. Our ability to maintain disciplined cost and expense controls, including strong cost containment measures, reduced marketing spend and tight expense management ~~drove~~within our general and administrative expenses, continues to help drive operating income growth. ~~While we reduced~~Compared to the end of the third quarter of the prior year period, our ~~workforce by approximately 70% in April 2020, we have been able~~headcount is up 165 associates or 4.0%. However, compared to ~~bring many associates back. Our ability~~two years ago, our global headcount is down 4.5%, which has contributed to ~~operate the business with world-wide headcount down 8.2% year over year helped improve our~~ consolidated operating income ~~and margin.~~expansion.

Wholesale operating income was $16.5 million or 13.7% of net sales, an increase compared with $14.5 million or 13.5% of net sales ~~an increase~~in the prior year period due to wholesale net sales growth of 12.3%, reduced marketing spend, strong cost containment measures and manufacturing production levels that have returned back to pre-COVID-19 pandemic levels. These benefits were partially offset by wholesale gross margin contraction from higher raw material costs, increased distribution costs from incremental volume and price and increased headcount within merchandising. Wholesale SG&A expenses, when expressed as a percentage of sales, decreased 140 basis points in the third quarter of fiscal 2022, compared with ~~$8.9 million or 9.6% of~~the same period in the prior year, primarily due to higher sales volume relative to fixed costs. SG&A expenses were up 4.8% while net sales ~~last year due~~grew at a much faster rate of 12.3%, which led to ~~an increase in net sales of $14.7 million or 15.8%.~~improved operating leverage.

Retail operating income was $19.3 million, or 11.6% of sales, compared with $5.0 million, or 3.5% of sales ~~compared with a loss of $8.8 million, or -7.6% of sales, for~~in the prior year period. The retail operating margin ~~increased 1110 basis points~~improved to 11.6% primarily due to the ~~22.2%~~17.9% increase in net sales, a 320-basis point expansion in retail gross margin, a pre-tax gain of $1.5 million from the sale of a previously closed retail location and ~~a 3.8% decrease in~~the ability to manage operating expenses, ~~from~~which grew at a lower rate than net sales. While selling, ~~administrative, occupancy~~delivery and ~~regional management costs. The decreases within~~variable compensation expenses were up due to the growth in sales volume, total retail operating expenses ~~were~~including restructuring and impairment charges, when expressed as a percentage of net sales, decreased 480 basis points. This decrease was due to the ability to leverage fixed costs, adhere to strong cost control measures implemented ~~including a 37.1% reduction in retail headcount from a year ago.~~at the onset of the COVID-19 pandemic, reduce marketing spend while still driving strong written orders and maximize existing administrative headcount.

Income tax expense was $7.9 million compared with $3.4 million ~~an increase of $3.7 million from a~~in the prior year ~~ago~~third quarter primarily due to the ~~$19.5~~$13.6 million increase in income before income taxes. Our consolidated effective tax rate was 24.2% compared with 17.8% in the ~~current~~prior year ~~third quarter~~comparable period. Our effective tax rate of 24.2% varies from the 21% federal statutory rate primarily due to state taxes. The increase in the effective tax rate compared with ~~58.8% last year.~~the prior year was primarily due to a reduction in our valuation allowance on retail state and local deferred tax assets in the prior year period.

Net income was ~~$15.6~~$24.7 million compared with ~~a loss of $0.2~~$15.6 million ~~last year.~~in the prior year period. Adjusted net income, which removes the after-tax impact of ~~$14.7~~restructuring and other charges, was $23.7 million, ~~increased~~up 61.5% from ~~$0.6 million a~~the prior year ~~ago~~period due to stronger net sales, improved retail and consolidated gross margins, ~~and strong~~ cost containment measures resulting in ~~a significant reduction in adjusted~~minimizing operating ~~expenses.~~

~~ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES~~expense growth and improving production and delivery of products to customers partially offset by higher raw material and freight costs.

Diluted EPS was ~~$0.61~~$0.97 compared with ~~a loss of $0.01~~$0.61 per diluted share in the prior year comparable period. Adjusted diluted EPS was ~~$0.58,~~$0.93, up ~~2800.0%~~60.3% compared with ~~$0.02 a~~the prior year ~~ago and driven by improved~~period primarily due to net sales growth of 11.7%, expanded retail and consolidated gross ~~margin,~~margins, our ability to minimize operating expense growth including lower marketing spend, higher production and ~~cost containment measures. Restructuring~~delivery of products to customers and ~~other impairment charges~~improved operating leverage from our vertically integrated enterprise partially offset by higher raw material and freight costs, which negatively ~~affected diluted EPS by $0.03 during the current year third quarter while the net impact of prior year restructuring and impairment charges was $0.03 on diluted EPS.~~impacted our wholesale gross margin.

Nine Months ended March 31, ~~2021~~2022 compared with Nine Months ended March 31, ~~2020~~2021

Consolidated net sales were ~~$506.8~~$588.1 million, an increase of ~~1.7%~~16.0% compared to the ~~same~~ prior year period. ~~While written orders accelerated with retail segment orders up 33.9%~~Despite continued supply chain headwinds, the ongoing impact of sustained demand, improved manufacturing production, and ~~wholesale segment orders up 19.6% during~~pricing actions led to significant sales growth in the first nine months of fiscal ~~2021~~2022 compared towith the ~~prior~~same period a year net sales increased 1.7%. Customer demand continues to outpace product availability. We resumed production in our North American manufacturing plants during the first quarter of fiscal 2021 and have ramped up to near pre-COVID-19 production levels, which we expect will help reduce the high undelivered order backlogs and delivery lead-times.ago.

Wholesale net sales increased ~~7.1%~~12.9% to ~~$306.7~~$346.4 million primarily due to an 18.7% increase in intersegment sales to our Company-operated design centers combined with a 12.0% increase in sales to our U.S. independent dealers partially offset by lower contract and international sales. Excluding intersegment sales to our retail segment, wholesale net sales decreased 1.4% from lower contract and international sales. While our contract business sales were down 11.9%, sales in the ~~increased order demand~~just completed third quarter were up 1.1% from a year ago, a reversal of the trend experienced during the first two quarters in fiscal 2022. Written orders from our contract business were up 65.3% during fiscal 2022, thus we believe that contract sales will be strong during the remainder of 2022. Our international net sales were down 30.4% due to a reduction in net sales to China. Our international sales to independent retailers represented 2.9% of total wholesale net sales compared to 4.7% in the prior year period.

Wholesale written orders, which represent orders booked through all of our channels, were up 3.3% in the first nine months of fiscal 2022 compared with the prior year. Wholesale orders from our Company-operated design centers increased 1.6% while our contract business performed well, increasing 65.3%. Partially offsetting the growth was a 6.5% decrease in orders from our independent North American retail network ~~partially offset by a decline in sales from our contract business~~ and a 55.9% decrease in ~~sales~~international orders from China. The decrease in orders from China is primarily related to ~~our international retail network primarily because of~~ongoing COVID-19 ~~related economic disruptions.~~lockdowns.

Retail net sales from Company-operated design centers increased ~~3.1%~~24.0% to ~~$404.3~~$501.3 million. There was a ~~2.9%~~24.6% increase in net sales in the United States, while net sales from our Canadian design centers increased ~~9.2%~~6.7%. ~~The increase in retail net sales~~Retail written orders grew 0.8% year-over-year, which was ~~primarily due to~~up against a strong prior year period, which we believe reflect the strength of our product ~~mix~~offerings and interior design professionals who are increasingly combining technology with their personal service and continued consumer interest in the home. We have continued to experience strong order trends driven by increased demand for products inand strong execution at the ~~home furnishings category.~~design center level.

Gross profit increased ~~4.8%~~21.6% to ~~$288.5~~$350.9 million compared with the prior year due to strong sales growth within both our wholesale and retail segments, a change in the sales mix, recent product pricing actions taken, higher manufacturing production and a favorable product mix partially offset by higher raw material and freight costs. Retail gross profit was up due to a 24.0% increase in net shipments combined with a 250-basis point improvement in gross margin from a favorable change in product mix, higher premier home delivery revenue, an increase in ~~wholesale~~average ticket sale, product pricing actions taken and less clearance sales partially offset by promotional fees from financing promotions. Wholesale gross profit was flat to last year as improved manufacturing production and related net sales ~~of $20.3 million and an increase in retail net sales of $12.2 million.~~were offset by higher input costs.

Gross margin was 59.7%, up from 56.9% ~~compared with 55.2%~~ a year ~~ago. On an adjusted basis, the current year gross margin was 57.0% compared~~prior due to a ~~prior year gross margin of 56.2%. The 80-basis point increase in consolidated adjusted gross margin during fiscal 2021 was due to higher wholesale productivity and~~ change in the sales ~~mix. The~~mix, a favorable product mix, recent product pricing actions taken and higher manufacturing production partially offset by higher wholesale ~~productivity improved due to benefits being realized~~production and freight costs. Retail sales, as a percentage of total consolidated sales, were 85.2% in the current year, up from ~~the prior year manufacturing and logistics optimization project. Restructuring charges~~79.8% in the prior year period, which ~~included the write off of inventory, higher unfavorable manufacturing variances and incremental freight and relocation costs, negatively~~positively affected ~~our~~ consolidated gross ~~margin by 100 basis points.~~margin.

~~Operating~~SG&A expenses ~~decreased~~increased to ~~$235.3~~$259.5 million, or ~~46.4%~~44.1% of net sales, compared with ~~$248.2~~$233.6 million, or ~~49.8%~~46.1% of net sales ~~last year. Included~~ in the prior year ~~operating expenses~~period. The 11.0% increase was ~~a gain of $11.5 million from the sale of the Passaic, New Jersey property. Operating expenses decreased during fiscal 2021 due to lower~~driven by higher selling costs ~~and a reduction in~~while general and administrative ~~expenses.~~expenses remained comparable to the prior year period. Retail selling expenses were ~~lower~~up 18.8% due to ~~less designer~~the 24.0% increase in net sales while wholesale selling ~~expenses~~costs grew by 8.5% as fuel and ~~lower compensation due to headcount reductions~~freight costs increased from higher sales volumes and ~~reduced direct mail advertising~~rising trucking and shipping costs. ~~Retail general~~These incremental SG&A costs were partially offset by a reduction in marketing spend. General and administrative expenses were lower due to lower compensation due to headcount reductions and reduced store rent. Wholesale selling costs were down due to a reduction in advertising spend and lower compensation costs. Restructuring and impairment charges incurredwell managed during the first nine months of the year, increasing 4.3%, primarily due to additional headcount coupled with higher occupancy and regional management costs. SG&A expenses, when expressed as a percentage of sales, decreased 200 basis points in the first nine months of fiscal ~~2021~~2022, compared with the same period in the prior year, primarily due to higher sales volume relative to fixed costs. SG&A expenses were ~~$1.6~~up 11.0% while consolidated net sales grew at a rate of 16.0%, which led to improved operating leverage.

Restructuring and other impairment charges, net of gains were a gain of $4.8 million compared to a ~~benefit~~charge of ~~$10.2~~$1.6 million ~~last year.~~in the prior year period. The current year gain of $4.8 million primarily related to the sale of three properties for a pre-tax gain of $5.4 million partially offset by severance and other lease exit costs. The prior year charge of $1.6 million related primarily to lease exit costs and the impairment of long-lived assets held at a retail design center location partially offset by gains recognized on the sale of two previously owned retail design centers.

Operating income ~~totaled $53.2~~was $96.3 million compared with ~~$27.1~~$53.2 million ain the prior year ~~ago.~~period. Adjusted operating income, which excludes restructuring and ~~impairment~~other charges, ~~(gains),~~ was $91.8 million, or 15.6% of net sales compared with $55.3 million, or 10.9% of net sales in the ~~current~~prior year ~~compared with $22.1~~period. The significant increase in operating income of $36.6 million ~~or 4.4% of~~was driven by the $81.2 million increase in consolidated net sales, ~~last year. An increase in net sales~~consolidated and ~~strong cost containment measures, including improved expense management~~retail gross margin expansion and reduced ~~headcount, drove operating income growth.~~marketing spend partially offset by lower wholesale gross margin and higher selling expenses.

Wholesale operating income~~totaled $40.4~~ was $39.1 million or 11.3% of net sales, a decrease compared with ~~$31.6 million last year. Adjusted wholesale operating income, which includes restructuring and impairment charges (gains), was~~ $40.4 million or 13.2% of net sales in the ~~current~~prior year ~~compared with $25.9 million, or 9.0% of net sales last year. The 55.8% increase in adjusted wholesale operating income was primarily~~period due to ~~a 7.1% increase in net sales, expanded~~ gross margin contraction from ~~increased~~higher raw material, freight and production costs combined with higher compensation from additional headcount primarily in manufacturing and ~~the prior year optimization project,~~merchandising. These headwinds were partially offset by higher sales volumes and manufacturing production levels as well as strong cost containment measures, including lower marketing spend and improved expense management that helped reduce wholesale ~~compensation within~~ general and administrative expenses, from reduced headcount and lower advertising costs. The Company was able to reduce adjusted operating expenses by 4.7% primarily due to lower headcount, less marketing costs and actions taken to control and minimize expenditures.when expressed as a percentage of net sales.

Retail operating income was $56.3 million, or 11.2% of sales, compared with $16.9 million, ~~compared with a loss~~or 4.2% of ~~$7.3 million for~~sales in the prior year period. ~~Adjusted~~The retail operating ~~income, which includes~~margin improved to 11.2% primarily due to the 24.0% increase in net sales and a 250-basis point expansion in retail gross margin combined with holding SG&A expenses to a growth rate of 12.9%. While selling, delivery and variable compensation expenses were up due to the growth in sales volume, SG&A expenses including restructuring and impairment charges, ~~was $18.9 million, or 4.7%~~when expressed as a percentage of net sales, ~~in the current year compared with a loss of $6.7 million, or -1.7% of net sales last year.~~decreased 380 basis points. The ~~increase in~~decreases within retail ~~operating income of $25.6 million was~~expenses were due to ~~our~~the ability to leverage fixed costs, reduce ~~retail operating expenses by 10.2% year over year, including~~marketing spend, maintain lower ~~selling,~~ administrative ~~occupancy~~headcount and ~~regional management costs. In addition, retail net sales increased by 3.1%.~~adhere to strong cost control measures implemented at the onset of the COVID-19 pandemic.

Income tax expense was ~~$10.6~~$24.4 million compared with ~~$6.4~~$10.6 million ain the prior year ~~ago. Income tax expense was higher~~primarily due to the ~~$25.0~~$43.7 million increase in income before income taxes ~~partially offset by~~and the prior year reversal of a ~~$0.9 million reduction to our~~ valuation ~~allowance on retail segment deferred~~allowance. Our consolidated effective tax ~~assets. Our effective~~ rate was 25.4% compared with 20.2% in the ~~current~~prior year comparable period. Our fiscal 2022 effective tax rate of 25.4% varies from the 21% federal statutory rate primarily due to state taxes. The increase in the effective tax rate compared with ~~23.4% last~~the prior year period was primarily due to the ~~discrete tax benefit related to a~~prior year reduction in our valuation allowance on state and local retail deferred tax assets.

Net income was ~~$41.8~~$71.8 million compared with ~~$21.0~~$41.8 million ~~last year.~~in the prior year period. Adjusted net income, which removes the after-tax impact of ~~$41.1~~restructuring and other charges, was $68.4 million, ~~was~~ up ~~139.6%~~66.3% from ~~$17.2 million a~~the prior year ~~ago~~period due to ~~an expanded wholesale~~stronger net sales, improved retail and consolidated gross ~~profit from optimization efficiencies,~~margins and strong cost containment measures ~~in retail~~ resulting in ~~a significant reduction in adjusted~~minimizing operating ~~expenses and improving production.~~expense growth.

Diluted EPS was ~~$1.65~~$2.81 compared with ~~$0.80~~$1.65 per diluted share in the prior year comparable period. Adjusted diluted EPS was ~~$1.63,~~$2.68, up ~~150.8%~~64.4% compared with ~~$0.65 in~~ the prior ~~year. Restructuring~~year period primarily due to net sales growth of 16.0%, expanded retail and ~~impairment charges,~~consolidated gross margins and our ability to minimize operating expense growth partially offset by ~~a reduction in our valuation allowance tax benefit,~~higher raw material and freight costs, which negatively impacted diluted EPS by $0.02 during fiscal 2021. The gain on the sale of the Passaic, New Jersey property partially offset with other fiscal 2020 restructuring activities and corporate actions increased diluted EPS by $0.15 in the prior year. our wholesale gross margin.

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures, including adjusted gross profit and margin, adjusted operating income and margin, adjusted wholesale operating income and margin, adjusted retail operating income and margin, adjusted net income and adjusted diluted earnings per share. The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below.

These non-GAAP measures are derived from the consolidated financial statements but are not presented in accordance with GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in our industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, we believe these adjusted financial measures and the information they provide are useful in viewing our performance using the same tools that management uses to assess progress in achieving our goals. Adjusted measures may also facilitate comparisons to our historical performance.

The following tables below show a reconciliation of non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

* Adjustments to reported GAAP financial measures including gross profit and margin, operating income and margin, net income, and diluted EPS have been adjusted by the following:

~~At March 31, 2021, we held cash~~We are committed to maintaining a strong balance sheet in order to weather difficult industry conditions, to allow us to take advantage of opportunities in the markets and ~~cash equivalents of $109.0 million compared with $72.3 million at June 30, 2020.~~to execute our long-term strategic initiatives. Our ~~principal~~ sources of liquidity include cash and cash equivalents, short-term investments, cash ~~flow~~ from operations and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures. We continue to monitor our liquidity closely during this continued period of uncertainty and volatility globally, as well as within our industry, related to the COVID-19 pandemic.

We believe our liquidity (cash and cash equivalents on hand of $95.0 million, short-term investments of $9.5 million, cash flow from operating activities of $40.0 million and amounts available under our credit facility of $121.0 million), will be sufficient to fund our operations, including changes in working capital, anticipated capital expenditures, contractual obligations and other financing activities, as they occur, for at least the next 12 months.

As of March 31, 2022, we had working capital of $110.4 million compared to $71.4 million at June 30, 2021 and a current ratio of 1.48 at March 31, 2022, comparable to 1.32 at June 30, 2021 and 1.29 at March 31, 2021. Included in our cash and cash equivalents at March 31, 2022, is $6.9 million held by foreign subsidiaries, a portion of which we have determined to be indefinitely reinvested.

At March 31, 2022, we held cash and cash equivalents of $95.0 million compared with $104.6 million at June 30, 2021. Cash and cash equivalents aggregated to ~~15.8%~~13.3% of our total assets at March 31, ~~2021,~~2022, compared with ~~16.6%~~15.8% of our total assets a year ~~ago~~prior and ~~11.6%~~15.3% at June 30, ~~2020.~~ 2021. In addition, we had short-term investments of $9.5 million to further enhance our returns on cash at March 31, 2022, compared with none at June 30, 2021.

Our cash and cash equivalents ~~increased $36.7~~decreased $9.6 million or 9.1% during the first nine months of fiscal ~~2021~~2022 due to $40.1 million in cash dividends paid, capital expenditures of $9.0 million and $9.5 million in net purchases of investments partially offset by net cash provided by operating activities of ~~$102.1~~$40.0 million ~~partially offset by our repayment~~and $10.6 million in proceeds received from sales of ~~100% or $50.0 million~~property, plant and equipment.

The following table illustrates the main components of our ~~outstanding borrowings under our existing credit facility in September 2020, capital expenditures of $10.3 million and~~ cash ~~dividends paid of $11.6 million.~~

~~A summary of net cash provided by (used in) operating, investing and financing activities~~flows for the nine months ended March 31, ~~2021~~2022 and ~~2020 is provided below~~2021 (in millions):

Cash Provided by (Used in) Operating Activities. We generated ~~$102.1~~$40.0 million in cash from operating activities during the first nine months of fiscal ~~2021,~~2022, a ~~163.7% increase over the prior year primarily due to improved working capital and lower restructuring payments. Strong cash flow generation~~decrease from positive working capital changes were due to higher customer deposits and the timing of accounts payable partially offset by timing of prepaid expenses and increased inventory. Written order growth over the past nine months has significantly outpaced net shipments, leading to a higher customer deposit balance. Restructuring payments$102.1 million in the prior year period primarily due to an increase in working capital partially offset by higher net income generated during the period. Working capital items consist of current assets (accounts receivable, inventories, prepaid expenses and other current assets) less current liabilities (customer deposits, accounts payable and accrued expenses, operating lease liabilities, accrued compensation and other current liabilities). The increase in working capital was led by higher inventory to increase material availability to support expanded manufacturing and distribution capacity to meet written order growth. The prior year change in working capital was primarily due to lower net shipments combined with strong written order growth that drove the customer deposit balance significantly up. The combination of growing our inventory balance to support high demand and the change in customer deposits from increased net shipments primarily led to the significant year-over-year change in working capital. Restructuring payments made during the first nine months of ~~$5.6~~fiscal 2022 of $1.1 million were ~~made in connection with our previously announced optimization of manufacturing~~primarily for the Atoka, Oklahoma distribution center closing costs, employee severance and ~~logistics activities as well as other~~lease exit ~~and relocation costs.~~costs (ongoing monthly rent).

Cash Provided by (Used in) Investing Activities. Cash used in investing activities was $7.9 million, an increase of $2.5 million from cash used of $5.4 million ~~was for~~in the prior year period due to $9.5 million of net purchases of investments (net of proceeds from sales of investments) partially offset by proceeds received from the sale of three properties and a reduction in capital expenditures. During the third quarter of fiscal 2022, we invested a net $9.5 million in municipal bonds, commercial paper and certificates of deposit with maturities of one year or less. These short-term investments are reported within Investments in our consolidated balance sheet as of March 31, 2022. Capital expenditures of $9.0 million during the first nine months of fiscal ~~2021 partially offset by proceeds from the sale~~2022 related to further expansion of ~~property,~~our manufacturing in North Carolina, construction of new retail design centers, spending on design center projection improvements, manufacturing plant upgrades to further increase capacity and ~~equipment. We completed the sale of~~efficiency and investments in technology upgrades. In March 2022, we sold a previously closed ~~retail~~ property to an independent third party ~~in December 2020 and received $1.3 million in cash less $0.1 million in selling and other closing costs. In March~~for $2.6 million. During the second quarter of fiscal 2022 we ~~received proceeds of $3.8 million from~~completed the sale of ~~an additional property.~~our Atoka, Oklahoma distribution center for $2.8 million less closing costs. Lastly, in December 2021, we completed the sale of a property for $5.6 million in cash. In the prior year ~~first nine months, investing activities used cash of $1.4 million due to $11.6 million in proceeds received from~~period, we completed the sale of ~~the Passaic, New Jersey property during September 2019 as well as $0.8 million received from various other~~two previously closed properties ~~partially offset by capital expenditures~~for total proceeds of ~~$12.5 million and retail design center acquisitions. Cash paid to acquire design centers from our independent retailers in arm’s length transactions totaled $1.3 million a year ago.~~$4.9 million.

Cash Provided by (Used in) Financing Activities. Cash used in financing activities was ~~$60.4~~$40.8 million during the first nine months of fiscal ~~2021~~2022 compared with cash ~~provided~~used of ~~$59.1~~$60.4 million in the prior year ~~first nine months.~~period. The significant ~~increase in cash used by financing activities~~change was due to the repayment of $50.0 million ~~repayment of our~~in outstanding borrowings ~~under the revolving credit facility~~last year partially offset by ~~lower purchases~~the payment of ~~company stock, less cash dividends paid and proceeds received from employee stock option exercises. The temporary suspension of our regular quarterly~~a special cash dividend ~~during~~in the ~~fourth quarter of~~current fiscal ~~2020 was lifted~~year and ~~on August 4, 2020, our Board of Directors reinstated~~a 16% increase in the regular quarterly cash ~~dividend of $0.21 per share payable to shareholders of record as of October 8, 2020 and was~~dividend. Total cash dividends paid on October 22, 2020. On November 12, 2020 our Board of Directors declared a regular quarterly cash dividend of $0.25 per share payable on January 21, 2021 to shareholders of record as of January 7, 2021 and on January 25, 2021 a dividend of $0.25 per share payable on April 22, 2021 was declared to shareholders of record as of April 8, 2021. Our policy is to issue quarterly dividends, and we expect to continue to declare and pay comparable quarterly dividends for the foreseeable future, business conditions permitting. We repurchased 1,538,363 shares under our existing share repurchase program during the first nine months of fiscal 2022 were $40.1 million, including a $0.75 per share special dividend paid in August 2021 totaling $19.0 million. The year ago first quarter did not have any cash dividends paid as the Board had previously suspended the cash dividend due to the COVID-19 impact. However, on August 4, 2020, atour Board reinstated the regular quarterly cash dividend and declared a cash dividend, which was paid on October 22, 2020. The regular quarterly dividend was increased by 16% to $0.29 per share on November 30, 2021, and paid on January 5, 2022. A regular quarterly dividend for $0.29 per share was also declared on January 25, 2022 and paid on February 23, 2022.

On January 26, 2022, we entered into the Credit Agreement, which amended and restated the Second Amended and Restated Credit Agreement, dated as of December 21, 2018, between the Loan Parties, JPMorgan Chase Bank, N.A., as administrative agent and syndication agent and Capital One, National Association, as documentation agent. The Credit Agreement provides for the $125.0 million Facility, subject to borrowing base availability, and has a maturity date of January 26, 2027. The Credit Agreement also provides us the option to increase the size of the facility up to an ~~average price~~additional amount of ~~$15.81 per share. There were no share repurchases~~$60 million. We incurred financing costs of $0.5 million during the third quarter of fiscal 2022, which are being amortized as interest expense over the remaining life of the Facility using the effective interest method. See Note 11, Credit Agreement, to the consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q for a further description of the Credit Agreement.

Restricted Cash. We present restricted cash as a component of total cash and cash equivalents as presented on our consolidated statement of cash flows and within Other Assets on our consolidated balance sheet. As of March 31, 2022, we held $0.9 million of restricted cash related to an Ethan Allen insurance captive. We did not hold any restricted cash as of June 30, 2021.

Exchange Rate Changes. Due to changes in exchange rates, our cash and cash equivalents were impacted by less than $0.1 million during the first nine months of fiscal 2022. These changes had an immaterial impact on our cash balances held in Canada, Mexico, and Honduras.

Capital Needs. We maintain the Credit Agreement that provides the Facility of $125 million and is secured primarily by our accounts receivable and inventory. Availability under the Facility fluctuates according to a borrowing base calculated on eligible accounts receivable and inventory, net of customer deposits and reserves. The Credit Agreement has a maturity date of January 26, 2027 and provides us the option to increase the size of the facility up to an additional amount of $60 million. The Facility includes covenants that apply under certain circumstances, including a fixed-charge coverage ratio requirement that applies when excess availability under the credit line is less than certain thresholds. As of March 31, 2022, we were not subject to the fixed-charge coverage ratio requirement, had no borrowings outstanding under the Facility, were in compliance with all other covenants and had borrowing availability of $121.0 million of the $125.0 million credit commitment.

Letters of Credit - At March 31, 2022 and June 30, 2021, ~~year-to-date period.~~there was $4.0 million and $5.0 million, respectively, of standby letters of credit outstanding under the Facility.

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

We believe our liquidity (cash on hand, cash flow from operating activities and amounts available under our credit facility), will be sufficient to fund our operations, including changes in working capital, necessary capital expenditures, fiscal 2021 contractual obligations and other financing activities, as they occur, for at least the next 12 months. During the periodUses of ~~uncertainty and volatility related to the COVID-19 pandemic, we will continue to monitor our liquidity.~~

Included in our cash and cash equivalents is $5.5 million and $3.4 million at March 31, 2021 and June 30, 2020, respectively, held by foreign subsidiaries, a portion of which we have determined to be indefinitely reinvested.

Capital Expenditures. Capital expenditures induring the first nine months of fiscal ~~2021 were $10.3~~2022 totaled $9.0 million compared with ~~$12.5~~$10.3 million in the prior year period. In our initial response to the COVID-19 health crisis, we took immediate action and adjusted our business operations, including delaying investments and capital expenditures, which led to a reduction in our spending. The decrease of ~~$2.1~~$1.3 million from the prior year period related primarily to $2.6 million lower spending on retail design center openings, relocations and projection improvements, as well as the prior year ~~conversion of our Old Fort, North Carolina facility into a distribution center, partially offset by~~ expansion of our existing Maiden, North Carolina manufacturing ~~campus. Approximately 55%~~campus and higher corporate infrastructure and land improvements in the prior year period. The expansion of our existing Maiden, North Carolina upholstery manufacturing campus, which will help plant efficiency, was completed during the third quarter of fiscal 2022. Partially offsetting these decreases was upholstery manufacturing expansion in North Carolina, Case Goods plant upgrades and improvements, including investments in technology, and the purchase of additional manufacturing equipment to further increase capacity. In the first nine months of fiscal 2022, 57% of our total capital expenditures ~~during fiscal 2021~~were for manufacturing capital projects while 34% related to ~~opening new and relocating design centers in desirable locations, updating existing~~retail design center ~~presentations and floor plans and renovating home delivery centers. An additional 28% of our capital expenditures was for manufacturing~~development, expansion and ~~improvements while the remaining 17% was investments in~~renovation as well as installing additional technology within each design center, including new designer workstations, tablets and enhanced security firewalls. The remaining 9% was primarily for Corporate operations and IT system development to ~~improve~~further enhance existing workflows. ~~Given the pace at which business conditions are evolving in response to the COVID-19 health crisis, we may adjust our level of capital expenditures through the remainder of fiscal 2021.~~

We have no material contractual commitments outstanding for future capital expenditures and anticipate that cash from operations will be sufficient to fund future capital expenditures. We expect our full year fiscal 2022 capital expenditures to range between $12 million and $14 million as we continue to invest in technology, increase manufacturing capacity and efficiency and open new or relocate design centers while also continuing to improve all our design center projections.

~~Capital Needs.~~Dividends. ~~During December 2018~~Our Board has sole authority to determine if and when we ~~entered into~~will declare future dividends and on what terms. We have a ~~five-year, $165 million senior secured revolving credit facility, which amended~~strong history of returning capital to shareholders and restated the previously existing facility. During March 2020, we borrowed a total of $100 million under the credit facility, repaid $50 million in June 2020 and the remaining $50 million in September 2020 from available cash. Prior to March 2020, there were no borrowings outstanding under the credit facility. We had elected to draw down on the credit facility to increase our cash position as a precautionary measure and to preserve financial flexibility in consideration of the disruption and uncertainty surrounding the ongoing COVID-19 pandemic. Strong cash flow generation over the past nine months allowed us to repay 100% of our borrowings and still end the quarter with a cash on hand balance of $109.0 million.

~~Letters of Credit~~ - ~~At March 31, 2021 and June 30, 2020, there was $5.0 million and $5.8 million, respectively, of standby letters of credit outstanding under the revolving credit facility.~~

Total availability under the credit facility was $78.3 million at March 31, 2021 and $58.9 million at June 30, 2020. At March 31, 2021 and June 30, 2020, we were in compliance with all the covenants under the revolving credit facility.

~~There were no share repurchases under our existing multi-year share repurchase program (the “Share Repurchase Program”)~~continued this practice during the first nine months of fiscal ~~2021. In~~2022 by paying a special dividend of $0.75 per share and increasing the regular quarterly dividend by 16%, which together highlight the strength of our balance sheet and operating results. During the first nine months of fiscal 2022, we paid total cash dividends of $40.1 million, up from $11.6 million a year ago. The fiscal 2022 payments included a special dividend of $19.0 million, which was paid on August 31, 2021. During the third quarter of fiscal 2022, our Board declared a regular quarterly cash dividend of $0.29 per share on January 25, 2022, which was subsequently paid on February 23, 2022 to shareholders of record as of February 7, 2022.

No cash dividends were paid in the prior year first quarter as the Board had previously suspended the cash dividend due to the COVID-19 impact. However, on August 4, 2020, our Board reinstated the regular quarterly cash dividend and declared a cash dividend, which was paid on October 22, 2020 and totaled $5.3 million.

While we ~~purchased 1,538,363 shares under~~expect the ~~program~~Board to continue declaring regular quarterly cash dividends for the foreseeable future, it may discontinue doing so at ~~an average price~~any time. We will continue to monitor the pace of ~~$15.81 per share.~~ business as it relates to future dividends and any future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us, subject to final determination by our Board.

Share Repurchase Program. At March 31, ~~2021,~~2022, we had a remaining Board authorization to repurchase 2,007,364 shares of our common stock pursuant to our ~~program.~~existing multi-year share repurchase program (the “Share Repurchase Program”). There were no share repurchases under our Share Repurchase Program during the first nine months of fiscal 2022 or fiscal 2021. The timing and amount of any future share repurchases in the open market and through privately negotiated transactions will be determined by the Company’s officers at their discretion and based on a number of factors, including an evaluation of market and economic conditions while also maintaining financial ~~flexibility in consideration of the COVID-19 pandemic. There is no expiration date on the repurchase authorization.~~flexibility.

~~Contractual Obligations~~Acquisitions. From time to time, we acquire design centers from our independent retailers in arm’s length transactions. There were no independent retailer acquisitions in either period presented.

Material Cash Requirements from Contractual Obligations. Fluctuations in our operating results, levels of inventory on hand, operating lease commitments, the degree of success of our accounts receivable collection efforts, the timing of tax and other payments, the rate of written orders and net sales, levels of customer deposits on hand, as well as necessary capital expenditures to support growth of our operations will impact our liquidity and cash flows in future periods. The effect of our contractual obligations on our liquidity and capital resources in future periods should be considered in conjunction with the factors mentioned here. ~~There~~As disclosed in our 2021 Annual Report on Form 10-K, as of June 30, 2021, we had total contractual obligations of $203.9 million, including $143.6 million related to our operating lease commitments and $50.2 million open purchase orders. Except for operating lease payments totaling $25.0 million made to our landlords, there were no other material changes, outside of the ordinary course of business, in our contractual obligations ~~during~~as previously disclosed in 2021 Annual Report on Form 10-K. During the first nine months of fiscal ~~2021.~~2022, $13.5 million of operating lease assets were obtained in exchange for operating lease liabilities. There were no non-cash financing lease obligations obtained in exchange for new financing leases during fiscal 2022.

On November 12, 2020 our Board of Directors increased the regular quarterly cash dividend by 19.0% and declared a regular quarterly cash dividend of $0.25 per share, payable on January 21, 2021, to shareholders of record as of January 7, 2021. On January 25, 2021 our Board of Directors declared a regular quarterly cash dividend of $0.25 per share, payable on April 22, 2021, to shareholders of record as of April 8, 2021. We will continue to monitor the pace of business as it relates to future dividends and any future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us, subject to final determination by our Board of Directors.

~~Off-Balance Sheet~~Other Arrangements ~~and Other Commitments and Contingencies~~

We do not utilize or employ any ~~off-balance sheet~~other arrangements ~~including special-purpose entities,~~ in operating our business. As such, we do not maintain any (i) retained or contingent interests, (ii) derivative instruments or (iii) variable interests which could serve as a source of potential risk to our future liquidity, capital resources and results of operations.

We may, from time to time in the ordinary course of business, provide guarantees on behalf of selected affiliated entities or become contractually obligated to perform in accordance with the terms and conditions of certain business agreements. The nature and extent of these guarantees and obligations may vary based on our underlying relationship with the benefiting party and the business purpose for which the guarantee or obligation is being provided.

We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies, ofin the notes to our consolidated financial statements included in our ~~2020~~2021 Annual Report on Form 10-K. There have been no changes in our significant accounting policies during the first nine months of fiscal ~~2021~~2022 from those disclosed in our ~~2020~~2021 Annual Report on Form 10-K.

~~Critical~~We prepare our consolidated financial statements in conformity with GAAP. In some cases, these principles require management to make difficult and subjective judgments regarding uncertainties and, as a result, such estimates and assumptions may significantly impact our financial results and disclosures. We consider an accounting ~~estimates are those that we believe are both significant and that require~~estimate to be critical if: (i) the accounting estimate requires us to make ~~difficult, subjective~~assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period, or ~~complex judgments, often because~~use of different estimates that we ~~need to estimate~~reasonably could have used in the ~~effect~~current period, would have a material impact on our financial condition or results of ~~inherently uncertain matters.~~operations. We base our estimates on currently known facts and ~~judgments on historical experiences~~circumstances, prior experience and ~~various~~ other ~~factors that~~assumptions we believe to be ~~appropriate under the circumstances.~~reasonable. We use our best judgment in valuing these estimates and may, as warranted, use external advice. Actual results ~~may~~could differ from these estimates, assumptions, and ~~we might obtain different estimates if we used different~~judgments and these differences could be significant. We make frequent comparisons throughout the year of actual experience to our assumptions ~~or conditions.~~to reduce the likelihood of significant adjustments and will record adjustments when differences are known.

We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2020~~2021 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates during the first nine months of fiscal ~~2021~~2022 from those disclosed in our ~~2020~~2021 Annual Report on Form 10-K.

See Note 3, Recent Accounting Pronouncements, to the consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements, including the expected dates of adoption.

In the normal course of business, we are exposed to ~~a variety of~~market risks ~~including~~relating to fluctuations in interest rates and foreign currency exchange rates that could ~~affect~~impact our financial position and results of operations.

Debt. Interest rate risk exists primarily through our borrowing activities. ~~We use U.S. dollar denominated borrowings~~Short-term debt, if required, is used to ~~fund substantially all our~~meet working capital requirements and ~~investment needs. At March 31, 2021, we did~~long-term debt, if required, is generally used to finance long-term investments. There is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not ~~have any debt obligations (fixed~~quantifiable or ~~floating rate) outstanding under our revolving credit facility. It is anticipated that~~predictable because of the ~~fair market value~~variability of ~~any~~ future ~~debt under the credit facility will continue to be immaterially affected by fluctuations in~~ interest rates and weour future financing requirements. For floating-rate obligations, interest rate changes do not ~~believe that~~affect the fair value of ~~such debt~~the underlying financial instrument but would ~~be significantly impacted by current market events. Previous borrowings under the credit facility during fiscal 2020 had an~~impact future earnings and cash flows, assuming other factors are held constant. Conversely, for fixed-rate obligations, interest rate ~~equal to~~changes affect the ~~one-month LIBOR plus a spread using a debt leverage pricing grid. For~~fair value of the ~~nine months ended~~underlying financial instrument but would not impact earnings or cash flows. While we had no fixed or variable rate borrowings outstanding at March 31, ~~2021,~~2022, we ~~recorded~~could be exposed to market risk from changes in risk-free interest rates if we incur variable rate debt in the future as interest expense ~~of $0.4 million, respectively,~~will fluctuate with changes in SOFR. Based on our ~~outstanding debt amounts. We currently do not engage in any interest rate hedging activity~~current and expected levels of exposed liabilities, we ~~have no intention of doing so in the foreseeable future. A~~estimate that a hypothetical 100 basis point change (up or down) in ~~the~~interest rates based on one-month ~~LIBOR rate~~SOFR would not have a material ~~effect~~impact on our ~~consolidated~~ results of operations and financial condition.

LIBOR Transition. Borrowings under our revolving line of credit have an interest rate tied to LIBOR, which is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressure may cause LIBOR to disappear entirely or to perform differently than in the past. It is expected that certainBeginning December 31, 2021, banks ~~will stop~~stopped reporting information used to set LIBOR ~~at the end of 2021 when~~as their reporting obligations ~~cease. This will~~ceased. The cessation of certain LIBOR tenures beginning as of December 31, 2021 and future cessation of other tenures, including the one-month LIBOR, effectively ~~end~~ended the usefulness of LIBOR and ~~end~~ its publication. ~~If LIBOR is no longer available, or otherwise at our option,~~On January 26, 2022, we ~~will pursue alternative~~entered into the Credit Agreement which provides for interest rate calculations ~~in our Credit Agreement, including~~based on the use of the Secured Overnight Financing Rate ~~(SOFR)~~(“SOFR”). ~~A number~~The replacement of ~~other alternatives to~~ LIBOR ~~have been proposed or are being developed, but it is not clear which, if any, will be adopted. Any of these alternative methods~~with SOFR may result in interest payments that are higher than expected or that do not otherwise correlate over time with the payments that would have been made on such indebtedness for the interest periods if the applicable LIBOR rate was available in its current form.

Foreign currency exchange risk is primarily limited to our operation of Company-operated retail design centers located in Canada and our manufacturing plants in Mexico and Honduras, as substantially all purchases of imported parts and finished goods are denominated in United States dollars. As such, foreign exchange gains or losses resulting from market changes in the value of foreign currencies have not had, nor are they expected to have, a material effect on our consolidated results of operations. A decrease in the value of foreign currencies relative to the U.S. dollar may affect the profitability of our vendors, but as we employ a balanced sourcing strategy, we believe any impact would be moderate relative to peers in our industry. The financial statements of our foreign locations are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates for the period for revenues and expenses. Translation gains and losses that arise from translating assets, liabilities, revenues and expenses of foreign operations are recorded in accumulated other comprehensive (loss) income as a component of shareholders’ equity. Foreign exchange gains or losses resulting from market changes in the value of foreign currencies did not have a material impact during the three and nine month ended March 31, 2022.

A hypothetical 10% weaker United States dollar against all foreign currencies at March 31, ~~2021~~2022 would have had an immaterial impact on our consolidated results of operations and financial condition. We currently do not engage in any foreign currency hedging activity and we have no intention of doing so in the foreseeable future.

We are exposed to market risk from changes in the cost of raw materials used in our manufacturing processes, principally logs, lumber, plywood, fabric and foam products. The cost of foam products, which are petroleum-based, is sensitive to changes in the price of oil. We are also exposed to risk with respect to transportation costs for delivering our products, including the cost of fuel. As commodity prices and transportation costs rise, we determine whether a price increase to our customers to offset these costs is warranted. To the extent that an increase in these costs would have a material impact on our results of operations, we believe that our competitors would experience a similar impact.

Our results of operations and financial condition are presented based on historical cost. In future periods, we might be adversely affected by various aspects of inflation to the extent we are not able to overcome these issues through measures such as increasing the prices of our products, creating operational efficiencies and seeking lower cost alternatives. In addition, inflation-related risks could include increased costs for many products and services that are necessary for the operation of our business, as well as the impact of interest rate increases, which could have a negative effect on the housing market.

~~Under the supervision and~~Our management, with the participation of our ~~management, including~~Chairman of the ~~Chairman, President~~Board and Chief Executive Officer ~~(principal~~and our principal executive ~~officer)~~officer (“CEO”) and ~~the Executive~~Senior Vice President, ~~Administration and~~ Chief Financial Officer ~~(principal~~and Treasurer and our principal financial ~~officer)~~officer (“CFO”), ~~we have~~has evaluated the effectiveness of the design and operation of our disclosure controls and procedures ~~(as such term is~~as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act)~~Act, as of the end of the period covered by this ~~report.~~Quarterly Report on Form 10-Q. Based on ~~such~~that evaluation, ~~the principal executive officer~~our CEO and ~~principal financial officer~~CFO have concluded that, as of March 31, ~~2021,~~2022, our disclosure controls and procedures ~~were~~are effective ~~in ensuring~~to provide reasonable assurance that information relating to us (including our consolidated subsidiaries), which is required to be disclosed by us in ~~our periodic~~ reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including ~~our principal executive officer~~the CEO and ~~principal financial officer,~~CFO, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of fiscal ~~quarter ended March 31, 2021,~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes during the first nine months of fiscal ~~2021~~2022 to the matters discussed in Part I, Item 3 -– Legal Proceedings in our ~~2020~~2021 Annual Report on Form 10-K.

We operate in a changing environment that involves a number of risks that could materially and adversely affect our business, financial condition, operating results or cash flows. We described in our ~~2020~~2021 Annual Report on Form 10-K the primary risks related to our business and periodically update those risks for material developments. For a detailed discussion of ~~certain~~those risks that affect our business, refer to the risk factors identified in ~~section~~Part I, Item 1A – Risk Factors in our ~~2020~~2021 Annual Report on Form 10-K.

~~There were~~The risk factors set forth below update, and should be read in conjunction with, the risk factors and information disclosed in our 2021 Annual Report on Form 10-K. Except as presented below, there have been no material changes ~~during the first nine months of fiscal 2021 to~~from the risk factors associated with our business as previously ~~identified~~disclosed in our ~~2020~~2021 Annual Report on Form ~~10‑K.~~10-K.

Labor challenges could have a material adverse effect on our business and results of operations.

In our current operating environment, due in part to COVID-19 and general macroeconomic factors, we continue to experience various labor challenges, including, for example significant competition for skilled manufacturing and production employees; pressure to increase wages as a result of inflationary pressures, and at times, a shortage of qualified full-time labor in certain geographies, particularly at our distribution facilities. Outside suppliers that we rely on have also experienced similar labor challenges. The future success of our operations depends on our ability, and the ability of third parties on which we rely, to identify, recruit, develop and retain qualified and talented individuals in order to supply and deliver our products. A prolonged shortage or inability to retain qualified labor could decrease our ability to effectively produce and meet customer demand and efficiently operate our distribution facilities, which could negatively impact our business and have a material adverse effect on our results of operations. Higher wages to attract new and retain existing employees, as well as higher costs to purchase raw materials or services from such third parties, could also negatively impact our results of operations.

Government-imposed COVID-19 vaccine mandates could lead to labor disruptions, which could have a material adverse effect on our business and results of operations.

On September 9, 2021, President Biden issued an executive order obligating parties that contract with the United States federal government to require their employees to be fully vaccinated against COVID-19, with limited exceptions for certain accommodations including medical disabilities or sincerely held religious beliefs. Additionally, the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an emergency temporary standard (“ETS”) requiring most private employers with 100 or more workers to mandate COVID-19 vaccination or produce a weekly test for all employees Due to our United States government GSA contract, we are classified as a government contractor. We are also a company with more than 100 employees, which could subject us to additional vaccine and testing mandates in jurisdictions in which we operate our business. There could also be potential conflict with actions by certain states that are in conflict with the federal mandate. Given current information and uncertainty surrounding if the mandates are legal and when they become effective, it is not possible to predict with certainty the impacts the mandates would have on us. Currently, the Biden Administration’s executive order, as well as the subsequent guidance by the federal government, are facing legal challenges in federal courts. While we are not presently required to comply with a vaccine mandate or submit to weekly COVID-19 testing, the implementation of any such mandates may result in increased costs, labor disruptions or employee attrition, which could be material as a substantial number of our employees are based in areas of the United States where vaccination rates are below the national average. If we lose employees as a result of these mandates, it will be difficult in the current competitive labor market to find qualified replacement employees, and this could have an adverse effect on future revenues and costs, which could be material. Accordingly, the mandates, if implemented, could have a material adverse effect on our business and results of operations.

Items 2(a) and (b) are not applicable as there have been no unregistered sales of equity securities.

Our Board ~~of Directors~~ has authorized management, at its discretion, to make repurchases of its common stock in the open market and through privately negotiated transactions, subject to market conditions, pursuant to our previously announced repurchase program. At March 31, 2021, we had a remaining Board authorization to repurchase 2,007,364 shares of our common stock pursuant to our program. There were no share repurchases under the program during the quarter ended March 31, 2021. There is no expiration date on the repurchase authorization and the amount and timing of future share repurchases, if any, will be determined by our officers at their discretion, and as allowed by securities laws, covenants under existing bank agreements and other legal and contractual requirements, and will be based on a number of factors, including an evaluation of general market and economic conditions and the trading price of the common stock. The share repurchase program may be suspended or discontinued at any time without prior notice.

We did not repurchase any shares of our outstanding common stock during the third quarter of fiscal 2022 under the existing share repurchase program. At March 31, 2022, we had a remaining Board authorization to repurchase 2,007,364 shares of our common stock pursuant our program.

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.

	Three months ended						Nine months ended						Three months ended						Nine months ended
	March 31,						March 31,						March 31,						March 31,
	2021			2020			2021			2020			2022			2021			2022			2021
Net sales	$	176,962		$	149,774		$	506,846		$	498,269		$	197,659		$	176,962		$	588,079		$	506,846
Cost of sales		75,553			65,825			218,335			223,005			78,199			75,553			237,158			218,335
Gross profit		101,409			83,949			288,511			275,264			119,460			101,409			350,921			288,511

Selling, general and administrative expenses		81,829			83,841			233,649			258,346			88,270			81,829			259,457			233,649
Restructuring and other impairment charges, net of gains		593			862			1,639			(10,173	)		(1,463	)		593			(4,841	)		1,639
Operating income		18,987			(754	)		53,223			27,091			32,653			18,987			96,305			53,223
Other expenses
Interest and other financing costs		51			85			433			184			51			51			147			433
Other income (expense), net		57			298			(378	)		479			(10	)		57			(8	)		(378	)
Income before income taxes		18,993			(541	)		52,412			27,386			32,592			18,993			96,150			52,412
Income tax expense		3,385			(318	)		10,568			6,417			7,878			3,385			24,389			10,568
Net income	$	15,608		$	(223	)	$	41,844		$	20,969		$	24,714		$	15,608		$	71,761		$	41,844

Per share data
Basic earnings per common share:
Net income per basic share	$	0.62		$	(0.01	)	$	1.66		$	0.80		$	0.97		$	0.62		$	2.83		$	1.66
Basic weighted average common shares		25,303			25,703			25,240			26,332			25,434			25,303			25,402			25,240
Diluted earnings per common share:
Net income per diluted share	$	0.61		$	(0.01	)	$	1.65		$	0.80		$	0.97		$	0.61		$	2.81		$	1.65
Diluted weighted average common shares		25,400			25,703			25,305			26,362			25,549			25,400			25,504			25,305

Comprehensive income
Net income	$	15,608		$	(223	)	$	41,844		$	20,969		$	24,714		$	15,608		$	71,761		$	41,844
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(576	)		(3,841	)		1,970			(3,567	)		496			(576	)		(146	)		1,970
Other		(9	)		(15	)		(23	)		(41	)		(11	)		(9	)		(18	)		(23	)
Other comprehensive income, net of tax		(585	)		(3,856	)		1,947			(3,608	)
Other comprehensive income (loss), net of tax														485			(585	)		(164	)		1,947
Comprehensive income	$	15,023		$	(4,079	)	$	43,791		$	17,361		$	25,199		$	15,023		$	71,597		$	43,791

	Nine months ended						Nine months ended
	March 31,						March 31,
	2021			2020			2022			2021
Cash Flows from Operating Activities
Net income	$	41,844		$	20,969		$	71,761		$	41,844
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,359			12,845			12,040			12,359
Share-based compensation expense		999			200			783			999
Non-cash operating lease cost		22,571			24,369			22,505			22,571
Deferred income taxes		(624	)		1,077			1,709			(624	)
Restructuring and other impairment charges, net of gains		2,028			(5,647	)		(4,841	)		2,028
Restructuring payments		(1,180	)		(5,574	)		(1,144	)		(1,180	)
Loss on disposal of property, plant and equipment		15			191			25			15
Other		(88	)		(13	)		23			(88	)
Change in operating assets and liabilities, net of effects of acquisitions:
Change in operating assets and liabilities
Accounts receivable, net		(3,481	)		3,630			(2,523	)		(3,481	)
Inventories, net		(9,974	)		21,567			(38,711	)		(9,974	)
Prepaid expenses and other current assets		(10,872	)		(1,980	)		(3,551	)		(10,872	)
Customer deposits and deferred revenue		51,219			(4,914	)		5,790			51,219
Accounts payable and accrued expenses		12,387			(3,428	)		5,330			12,387
Accrued compensation and benefits		7,535			429			(3,690	)		7,535
Operating lease liabilities		(25,923	)		(24,411	)		(25,027	)		(25,923	)
Other assets and liabilities		3,305			(626	)		(478	)		3,305
Net cash provided by operating activities		102,120			38,684			40,001			102,120

Cash Flows from Investing Activities
Proceeds from disposal of property, plant and equipment		4,913			12,423
Proceeds from sales of property, plant and equipment								10,613			4,913
Capital expenditures		(10,342	)		(12,457	)		(9,031	)		(10,342	)
Acquisitions, net of cash acquired		0			(1,350	)
Other investing activities		0			20
Net cash (used in) provided by investing activities		(5,429	)		(1,364	)
Purchases of investments								(18,521	)		0
Proceeds from sales of investments								9,000			0
Net cash used in investing activities								(7,939	)		(5,429	)

Cash Flows from Financing Activities
Borrowings on revolving credit facility		0			100,000
Payments on borrowings		(50,000	)		0			0			(50,000	)
Payment of cash dividends		(11,612	)		(16,181	)
Dividend payments								(40,114	)		(11,612	)
Proceeds from employee stock plans		1,740			53			1,096			1,740
Repurchases of common stock		(76	)		(24,319	)
Other financing activities		(455	)		(422	)
Taxes paid related to net share settlement of equity awards								(843	)		(76	)
Payments for debt issuance costs								(505	)		0
Payments on financing leases								(389	)		(455	)
Net cash used in financing activities		(60,403	)		59,131			(40,755	)		(60,403	)

Effect of exchange rate changes on cash and cash equivalents		392			(407	)		43			392

Net increase in cash and cash equivalents		36,680			96,044
Cash and cash equivalents at beginning of period		72,276			20,824
Cash and cash equivalents at end of period	$	108,956		$	116,868
Net (decrease) increase in cash, cash equivalents and restricted cash								(8,650	)		36,680
Cash, cash equivalents and restricted cash at beginning of period								104,596			72,276
Cash, cash equivalents and restricted cash at end of period							$	95,946		$	108,956

												Accumulated																							Accumulated
					Additional							Other						Non-										Additional							Other						Non-
	Common Stock				Paid-in		Treasury Stock					Comprehensive			Retained			Controlling			Total			Common Stock				Paid-in		Treasury Stock					Comprehensive			Retained			Controlling			Total
	Shares		Par Value		Capital		Shares		Amount			Loss			Earnings			Interests			Equity			Shares		Par Value		Capital		Shares		Amount			Loss			Earnings			Interests			Equity
Balance at June 30, 2020		49,053	$	491	$	378,300		24,000	$	(680,916	)	$	(8,441	)	$	638,631		$	(1	)	$	328,064
Balance at June 30, 2021																									49,240	$	492	$	382,527		24,003	$	(680,991	)	$	(5,931	)	$	655,346		$	(25	)	$	351,418
Net income		-		0		0		-		0			0			9,353			0			9,353			-		0		0		-		0			0			20,153			0			20,153
Share-based compensation expense		-		0		254		-		0			0			0			0			254			-		0		277		-		0			0			0			0			277
Restricted stock vesting																									55		1		0		32		(779	)		0			0			0			(778	)
Cash dividends declared		-		0		0		-		0			0			(5,287	)		0			(5,287	)		-		0		0		-		0			0			(25,372	)		0			(25,372	)
Other comprehensive income (loss)		-		0		0		-		0			556			0			(9	)		547			-		0		0		-		0			(653	)		0			1			(652	)
Balance at September 30, 2020		49,053	$	491	$	378,554		24,000	$	(680,916	)	$	(7,885	)	$	642,697		$	(10	)	$	332,931

Balance at September 30, 2021																									49,295	$	493	$	382,804		24,035	$	(681,770	)	$	(6,584	)	$	650,127		$	(24	)	$	345,046
Net income		-		0		0		-		0			0			16,883			0			16,883			-		0		0		-		0			0			26,894			0			26,894
Common stock issued on share-based awards		120		1		1,632		0		0			0			0			0			1,633			41		0		813		0		0			0			0			0			813
Share-based compensation expense		-		0		457		-		0			0			0			0			457			-		0		349		-		0			0			0			0			349
Cash dividends declared		-		0		0		-		0			0			(6,325	)		0			(6,325	)		-		0		0		-		0			0			(7,368	)		0			(7,368	)
Other comprehensive income (loss)		-		0		0		-		0			1,990			0			(5	)		1,985			-		0		0		-		0			11			0			(8	)		3
Balance at December 31, 2020		49,173	$	492	$	380,643		24,000	$	(680,916	)	$	(5,895	)	$	653,255		$	(15	)	$	347,564

Balance at December 31, 2021																									49,336	$	493	$	383,966		24,035	$	(681,770	)	$	(6,573	)	$	669,653		$	(32	)	$	365,737
Net income		-		0		0		-		0			0			15,608			0			15,608			-		0		0		-		0			0			24,714			0			24,714
Common stock issued on share-based awards		0		0		107		0		0			0			0			0			107			13		1		283		0		0			0			0			0			284
Share-based compensation expense		-		0		288		-		0			0			0			0			288			-		0		157		-		0			0			0			0			157
Cash dividends declared		-		0		0		-		0			0			(6,328	)		0			(6,328	)		-		0		0		-		0			0			(7,374	)		0			(7,374	)
Restricted stock vesting		0		0		0		3		(76	)		-			0			0			(76	)		10		0		0		2		(64	)		0			0			0			(64	)
Repurchase of common stock		-		0		0				0			0			0			0			0
Other comprehensive income (loss)		-		0		0		-		0			(576	)		0			(9	)		(585	)		-		0		0		-		0			490			0			(5	)		485
Balance at March 31, 2021		49,173	$	492	$	381,038		24,003	$	(680,992	)	$	(6,471	)	$	662,535		$	(24	)	$	356,578
Balance at March 31, 2022																									49,359	$	494	$	384,406		24,037	$	(681,834	)	$	(6,083	)	$	686,993		$	(37	)	$	383,939

													Accumulated																							Accumulated
					Additional								Other						Non-										Additional							Other						Non-
	Common Stock				Paid-in			Treasury Stock					Comprehensive			Retained			Controlling			Total			Common Stock				Paid-in		Treasury Stock					Comprehensive			Retained			Controlling			Total
	Shares		Par Value		Capital			Shares		Amount			Loss			Earnings			Interests			Equity			Shares		Par Value		Capital		Shares		Amount			Loss			Earnings			Interests			Equity
Balance at June 30, 2019		49,049	$	491	$	377,913			22,462	$	(656,597	)	$	(5,651	)	$	647,710		$	63		$	363,929
Balance at June 30, 2020																										49,053	$	491	$	378,300		24,000	$	(680,916	)	$	(8,441	)	$	638,631		$	(1	)	$	328,064
Net income		-		0		0			-		0			0			14,106			0			14,106			-		0		0		-		0			0			9,353			0			9,353
Common stock issued on share-based awards		1		0		18			0		0			0			0			0			18
Share-based compensation expense		-		0		151			-		0			0			0			0			151			-		0		254		-		0			0			0			0			254
Impact of ASU 2016-02 adoption, net of tax		-		0		0			-		0			0			(1,585	)		0			(1,585	)
Cash dividends declared		-		0		0			-		0			0			(5,610	)		0			(5,610	)		-		0		0		-		0			0			(5,287	)		0			(5,287	)
Other comprehensive income (loss)		-		0		0			-		0			(499	)		0			(7	)		(506	)		-		0		0		-		0			556			0			(9	)		547
Balance at September 30, 2019		49,050	$	491	$	378,082			22,462	$	(656,597	)	$	(6,150	)	$	654,621		$	56		$	370,503

Balance at September 30, 2020																										49,053	$	491	$	378,554		24,000	$	(680,916	)	$	(7,885	)	$	642,697		$	(10	)	$	332,931
Net income		-		0		0			-		0			0			7,086			0			7,086			-		0		0		-		0			0			16,883			0			16,883
Common stock issued on share-based awards		4		0		35			0		0			0			0			0			35			120		1		1,632		-		0			0			0			0			1,633
Share-based compensation expense		-		0		(28	)		-		0			0			0			0			(28	)		-		0		457		-		0			0			0			0			457
Cash dividends declared		-		0		0			-		0			0			(5,496	)		0			(5,496	)		-		0		0		-		0			0			(6,325	)		0			(6,325	)
Repurchase of common stock		0		0		0			546		(10,029	)		0			0			0			(10,029	)
Other comprehensive income (loss)		-		0		0			-		0			773			0			(19	)		754			-		0		0		-		0			1,990			0			(5	)		1,985
Balance at December 31, 2019		49,054	$	491	$	378,089			23,008	$	(666,626	)	$	(5,377	)	$	656,211		$	37		$	362,825
Net loss		-		0		0			-		0			0			(223	)		0			(223	)

Balance at December 31, 2020																										49,173	$	492	$	380,643		24,000	$	(680,916	)	$	(5,895	)	$	653,255		$	(15	)	$	347,564
Net income																										-		0		0		-		0			0			15,608			0			15,608
Common stock issued on share-based awards																										0		0		107		0		0			0			0			0			107
Share-based compensation expense		-		0		77			-		0			0			0			0			77			-		0		288		-		0			0			0			0			288
Cash dividends declared		-		0		0			-		0			0			(5,287	)		0			(5,287	)		-		0		0		-		0			0			(6,328	)		0			(6,328	)
Repurchase of common stock		0		0		0			993		(14,290	)		0			0			0			(14,290	)
Restricted stock vesting																										0		0		0		3		(76	)		0			0			0			(76	)
Other comprehensive income (loss)		-		0		0			-		0			(3,841	)		0			(15	)		(3,856	)		-		0		0		-		0			(576	)		0			(9	)		(585	)
Balance at March 31, 2020		49,054	$	491	$	378,166			24,001	$	(680,916	)	$	(9,218	)	$	650,701		$	22		$	339,246
Balance at March 31, 2021																										49,173	$	492	$	381,038		24,003	$	(680,992	)	$	(6,471	)	$	662,535		$	(24	)	$	356,578

	Wholesale			Retail		Eliminations⁽¹⁾			Total
Upholstery⁽²⁾	$	64,993		$	83,819	$	(46,854	)	$	101,958
Case goods⁽³⁾		35,919			42,625		(22,632	)		55,912
Accents⁽⁴⁾		22,451			32,535		(20,616	)		34,370
Other⁽⁵⁾		(2,329	)		7,748		0			5,419
Total	$	121,034		$	166,727	$	(90,102	)	$	197,659

	Fair Value Measurements at March 31, 2022
Assets	Level 1		Level 2		Level 3		Balance
Corporate money market funds⁽¹⁾	$	32,152	$	0	$	0	$	32,152
Investments⁽²⁾		0		9,525		0		9,525
Total	$	32,152	$	9,525	$	0	$	41,677

	Fair Value Measurements at June 30, 2021
Assets	Level 1		Level 2		Level 3		Balance
Corporate money market funds⁽¹⁾	$	70,247	$	0	$	0	$	70,247
Investments⁽²⁾		0		0		0		0
Total	$	70,247	$	0	$	0	$	70,247

	March 31,			June 30,
	2021			2020
Finished goods	$	102,177		$	97,718
Work in process		10,684			9,589
Raw materials		25,631			21,343
Inventory reserves		(2,806	)		(2,549	)
Inventories, net	$	135,686		$	126,101

		Three months ended March 31,
	Statement of Comprehensive Income Location	2021			2020
Operating lease cost⁽¹⁾	Selling, general and administrative (“SG&A”)	$	7,618		$	8,178
Financing lease cost
Depreciation of property	SG&A		247			152
Interest on lease liabilities	Interest and other financing costs		9			8
Short-term lease cost⁽²⁾	SG&A		180			280
Variable lease cost⁽³⁾	SG&A		2,362			2,333
Less: Sublease income	SG&A		(411	)		(486	)
Total lease expense		$	10,005		$	10,465

		Nine months ended March 31,							Three months ended March 31,						Nine months ended March 31,
	Statement of Comprehensive Income Location	2021			2020			Statement of Comprehensive Income Location	2022			2021			2022			2021
Operating lease cost⁽¹⁾	SG&A	$	22,571		$	24,369		Selling, general and administrative (“SG&A”) expenses	$	7,557		$	7,618		$	22,505		$	22,571
Financing lease cost
Depreciation of property	SG&A		542			445		SG&A expenses		119			247			371			542
Interest on lease liabilities	Interest and other financing costs		16			25		Interest and other financing costs		5			9			18			16
Short-term lease cost⁽²⁾	SG&A		667			1,022		SG&A expenses		361			180			978			667
Variable lease cost⁽³⁾	SG&A		6,975			7,169		SG&A expenses		2,417			2,362			7,101			6,975
Less: Sublease income	SG&A		(1,303	)		(1,588	)	SG&A expenses		(292	)		(411	)		(1,091	)		(1,303	)
Total lease expense	Total lease expense	$	29,468		$	31,442		Total lease expense	$	10,167		$	10,005		$	29,882		$	29,468

Fiscal Year	Operating Leases			Financing Leases			Operating Leases			Financing Leases
2021 (remaining three months)	$	8,244		$	138
2022		31,942			529
2022 (remaining three months)							$	8,460		$	123
2023		25,873			490			28,780			490
2024		21,351			320			23,678			320
2025		17,807			8			19,912			8
2026								16,189			0
Thereafter		46,459			0			36,572			0
Total undiscounted future minimum lease payments⁽²⁾		151,676			1,485			133,591			941
Less: imputed interest⁽³⁾		(19,672	)		(44	)		(16,165	)		(19	)
Total present value of lease obligations(1)	$	132,004		$	1,441		$	117,426		$	922

	March 31, 2022			June 30, 2021
Accumulated foreign currency translation adjustments	$	(6,077	)	$	(5,931	)
Accumulated unrealized gains (losses) on investments		(6	)		0
	$	(6,083	)	$	(5,931	)

	FY 2021			FY 2020
Volatility		56.0	%		30.5	%
Risk-free rate of return		0.14	%		1.72	%
Dividend yield		3.26	%		3.97	%

(in thousands)	March 31,			June 30,
Total Assets	2021			2020
Wholesale segment	$	297,946		$	255,011
Retail segment		416,971			390,635
Inventory profit elimination (a)		(27,371	)		(22,857	)
Consolidated total	$	687,546		$	622,789

	-	Cautionary Note Regarding Forward-Looking Statements
	-	Executive Overview ~~including~~
	-	COVID-19 Update
	-	Ukraine/Russia Conflict
	-	Key Operating Metrics
	-	Results of Operations
	-	Reconciliation of Non-GAAP Financial Measures
	-	Liquidity
	-	Capital Resources, including Material Cash Requirements
	-	~~Share Repurchase Program~~
	-	~~Contractual Obligations~~
	-	~~Dividends~~
	-	~~Off-Balance Sheet~~Other Arrangements ~~and Other Commitments and Contingencies~~
	-	~~Foreign Currency~~
	-	Significant Accounting Policies
	-	Critical Accounting Estimates
	-	Recent Accounting Pronouncements

	Wholesale			Retail		Total			Wholesale			Retail		Eliminations⁽¹⁾			Total
Upholstery⁽¹⁾⁽²⁾	$	57,448		$	71,297	$	128,745		$	57,448		$	71,297	$	(36,850	)	$	91,895
Case goods⁽²⁾⁽³⁾		33,054			38,225		71,279			33,054			38,225		(20,231	)		51,048
Accents⁽³⁾⁽⁴⁾		19,022			28,884		47,906			19,022			28,883		(15,173	)		32,732
Other⁽⁴⁾⁽⁵⁾		(1,704	)		2,990		1,286			(1,704	)		2,991		0			1,287
Total before intercompany eliminations	$	107,820		$	141,396		249,216
Intercompany eliminations⁽⁵⁾							(72,254	)
Consolidated net sales						$	176,962
Total									$	107,820		$	141,396	$	(72,254	)	$	176,962

	Wholesale			Retail		Eliminations⁽¹⁾			Total
Upholstery⁽²⁾	$	187,424		$	251,308	$	(135,003	)	$	303,729
Case goods⁽³⁾		104,520			130,956		(70,097	)		165,379
Accents⁽⁴⁾		59,944			97,769		(54,520	)		103,193
Other⁽⁵⁾		(5,485	)		21,263		0			15,778
Total	$	346,403		$	501,296	$	(259,620	)	$	588,079

	Wholesale			Retail		Total			Wholesale			Retail		Eliminations⁽¹⁾			Total
Upholstery⁽¹⁾⁽²⁾	$	163,756		$	203,069	$	366,825		$	163,756		$	203,069	$	(104,118	)	$	262,707
Case goods⁽²⁾⁽³⁾		92,777			109,886		202,663			92,777			109,886		(57,163	)		145,500
Accents⁽³⁾⁽⁴⁾		55,021			82,638		137,659			55,021			82,638		(42,872	)		94,787
Other⁽⁴⁾⁽⁵⁾		(4,850	)		8,702		3,852			(4,850	)		8,702		0			3,852
Total before intercompany eliminations	$	306,704		$	404,295		710,999
Intercompany eliminations⁽⁵⁾							(204,153	)
Consolidated net sales						$	506,846
Total									$	306,704		$	404,295	$	(204,153	)	$	506,846

	Wholesale			Retail		Total
Upholstery⁽¹⁾	$	47,214		$	54,791	$	102,005
Case goods⁽²⁾		30,096			31,822		61,918
Accents⁽³⁾		16,942			25,849		42,791
Other⁽⁴⁾		(1,113	)		3,236		2,123
Total before intercompany eliminations	$	93,139		$	115,698		208,837
Intercompany eliminations⁽⁵⁾							(59,063	)
Consolidated net sales						$	149,774

	Fiscal 2021									Fiscal 2020										Fiscal 2022									Fiscal 2021
	Independent			Company-						Independent			Company-							Independent			Company-						Independent			Company-
	retailers			operated			Total			retailers			operated			Total				retailers			operated			Total			retailers			operated			Total
Design Center activity:
Retail Design Center activity:
Balance at July 1		160			144			304			158			144			302				161			141			302			160			144			304
New locations		12			3			15			11			6			17				5			1			6			12			3			15
Closures		(12	)		(3	)		(15	)		(9	)		(7	)		(16	)			(6	)		(1	)		(7	)		(12	)		(3	)		(15	)
Transfers		-			-			-			(1	)		1			-				-			-			-			-			-			-
Balance at March 31		160			144			304			159			144			303				160			141			301			160			144			304
Relocations (in new and closures)		-			1			1			1			5			6				-			-			-			-			1			1

Design Center geographic locations:
Retail Design Center geographic locations:																			Retail Design Center geographic locations:
United States		34			139			173			36			138			174				34			137			171			34			139			173
Canada		-			5			5			-			6			6				-			4			4			-			5			5
China		109			-			109			105			-			105				107			-			107			109			-			109
Other Asia		11			-			11			11			-			11				12			-			12			11			-			11
Europe		1			-			1			1			-			1
Middle East		5			-			5			6			-			6
Middle East and Europe																					7			-			7			6			-			6
Total		160			144			304			159			144			303				160			141			301			160			144			304

(in thousands, except per share data)	Three months ended
	March 31,
	2022			2021			% Change
Income tax expense	$	7,878		$	3,385			132.7	%
Effective tax rate		24.2	%		17.8	%
Net income	$	24,714		$	15,608			58.3	%
Diluted EPS	$	0.97		$	0.61			59.0	%


Exhibit Number	Exhibit Description	Incorporated by Reference				Filed Herewith	Furnished Herewith
		Form	File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation	8-K	001-11692	3(a)	11/18/2016	-	-
3.2	Amended and Restated By-Laws of the Company	8-K	001-11692	3(d)	11/18/2016	-	-
10.1	Third Amended and Restated Credit Agreement among Ethan Allen Interiors, Inc. and most of its domestic subsidiaries, and J.P. Morgan Chase Bank, N.A. as Administrative Agent and Syndication Agent, and Capital One, National Association as Documentation Agent dated as of January 26, 2022	10-Q	001-11692	10.1	01/27/2022	-	-
10.2	Employment Agreement between the Company and M. Farooq Kathwari, dated February 3, 2022	8-K	001-11692	10.1	02/03/2022	-	-
10.3	Form of Performance-based Stock Unit Agreement	8-K	001-11692	10.2	02/03/2022	-	-
10.4	Form of Restricted Stock Unit Agreement	8-K	001-11692	10.3	02/03/2022	-	-
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

Date: April ~~29, 2021~~28, 2022	BY: /s/ M. Farooq Kathwari
	M. Farooq Kathwari
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

Date: April ~~29, 2021~~28, 2022	BY: /s/ ~~Corey Whitely~~Matthew J. McNulty
	~~Corey Whitely~~Matthew J. McNulty
	~~Executive~~Senior Vice President, ~~Administration and~~ Chief Financial Officer and Treasurer
	(Principal Financial Officer)