Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Sep. 30, 2016 | Oct. 21, 2016 | |
Document Information [Line Items] | ||
Entity Registrant Name | ETHAN ALLEN INTERIORS INC | |
Entity Central Index Key | 896,156 | |
Trading Symbol | eth | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 27,650,618 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Common Class A [Member] | ||
Shareholders' equity: | ||
Class A common stock | $ 489 | $ 489 |
Cash and cash equivalents | 69,254 | 52,659 |
Accounts receivable, less allowance for doubtful accounts of $1,539 at September 30, 2016 and $1,639 at June 30, 2016 | 9,867 | 9,467 |
Inventories | 159,343 | 162,323 |
Prepaid expenses and other current assets | 24,494 | 23,755 |
Total current assets | 262,958 | 248,204 |
Property, plant and equipment, net | 273,455 | 273,615 |
Goodwill and other intangible assets | 45,128 | 45,128 |
Restricted cash and investments | 7,302 | 7,820 |
Other assets | 2,750 | 2,642 |
Total assets | 591,593 | 577,409 |
Less current maturities | 2,941 | 3,001 |
Customer Deposits | 62,392 | 60,958 |
Accounts payable | 20,857 | 15,437 |
Accrued compensation and benefits | 23,113 | 22,067 |
Accrued expenses and other current liabilities | 25,393 | 21,884 |
Total current liabilities | 134,696 | 123,347 |
Total long-term | 38,147 | 38,837 |
Other long-term liabilities | 22,958 | 23,023 |
Total liabilities | 195,801 | 185,207 |
Additional paid-in-capital | 376,065 | 374,972 |
Less: Treasury stock (at cost) | (628,300) | (624,932) |
Retained earnings | 653,122 | 646,315 |
Accumulated other comprehensive income (loss) | (5,776) | (4,846) |
Total Ethan Allen Interiors Inc. shareholders' equity | 395,600 | 391,998 |
Noncontrolling interests | 192 | 204 |
Total shareholders' equity | 395,792 | 392,202 |
Total liabilities and shareholders' equity | $ 591,593 | $ 577,409 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Accounts receivable, allowance for doubtful accounts | $ 1,539 | $ 1,639 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net sales | $ 193,287 | $ 190,391 |
Cost of sales | 84,820 | 85,718 |
Gross profit | 108,467 | 104,673 |
Selling, general and administrative expenses | 90,130 | 83,773 |
Operating income | 18,337 | 20,900 |
Interest and other income (expense) | 143 | 126 |
Interest and other related financing costs | 323 | 456 |
Income before income taxes | 18,157 | 20,570 |
Income tax expense | 6,628 | 7,423 |
Net income | $ 11,529 | $ 13,147 |
Basic earnings per common share: | ||
Net income per basic share (in dollars per share) | $ 0.42 | $ 0.46 |
Basic weighted average common shares (in shares) | 27,725 | 28,410 |
Diluted earnings per common share: | ||
Net income per diluted share (in dollars per share) | $ 0.41 | $ 0.46 |
Diluted weighted average common shares (in shares) | 28,012 | 28,673 |
Comprehensive income: | ||
Net income | $ 11,529 | $ 13,147 |
Other comprehensive income | ||
Currency translation adjustment | (930) | (984) |
Other | (12) | 6 |
Other comprehensive income (loss) | (942) | (978) |
Comprehensive income | $ 10,587 | $ 12,169 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net income | $ 11,529 | $ 13,147 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,999 | 4,783 |
Compensation expense related to share-based payment awards | 804 | 427 |
Provision (benefit) for deferred income taxes | 169 | (218) |
(Gain) loss on disposal of property, plant and equipment | 666 | 106 |
Other | (148) | (482) |
Change in operating assets and liabilities, net of effects of acquired businesses: | ||
Accounts receivable | (400) | (158) |
Inventories | 2,980 | (4,651) |
Prepaid and other current assets | (1,493) | 1,519 |
Customer Deposits | 1,434 | (1,393) |
Accounts payable | 2,052 | 1,202 |
Accrued expenses and other current liabilities | 4,554 | 1,269 |
Other assets and liabilities | 370 | 503 |
Net cash provided by operating activities | 27,516 | 16,054 |
Investing activities: | ||
Proceeds from the disposal of property, plant & equipment | 1,258 | 1 |
Change in restricted cash and investments | 518 | 207 |
Capital expenditures | (7,440) | (3,138) |
Sales of marketable securities | 2,150 | |
Other investing activities | 42 | 52 |
Net cash provided by (used in) investing activities | (5,622) | (728) |
Financing activities: | ||
Payments on long-term debt and capital lease obligations | (829) | (809) |
Payment of cash dividends | (4,738) | (3,992) |
Other financing activities, net | 306 | 447 |
Net cash provided by (used in) financing activities | (5,261) | (4,354) |
Effect of exchange rate changes on cash | (38) | (146) |
Net increase in cash & cash equivalents | 16,595 | 10,826 |
Cash & cash equivalents at beginning of period | 52,659 | 76,182 |
Cash & cash equivalents at end of period | $ 69,254 | $ 87,008 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Unaudited) - 3 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Balance at Jun. 30, 2016 | $ 489 | $ 374,972 | $ (624,932) | $ (4,846) | $ 646,315 | $ 204 | $ 392,202 |
Stock issued on share-based awards | 306 | 306 | |||||
Compensation expense associated with share-based awards | 804 | 804 | |||||
Tax benefit associated with exercise of share based awards | (17) | (17) | |||||
Purchase/retirement of company stock | (3,368) | (3,368) | |||||
Dividends declared on common stock | (4,722) | (4,722) | |||||
Comprehensive income | (930) | 11,529 | (12) | 10,587 | |||
Balance at Sep. 30, 2016 | $ 489 | $ 376,065 | $ (628,300) | $ (5,776) | $ 653,122 | $ 192 | $ 395,792 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Business Description and Basis of Presentation [Text Block] | (1) Basis of Presentation Ethan Allen Interiors Inc. ("Interiors") is a Delaware corporation incorporated on May 25, 1989. The consolidated financial statements include the accounts of Interiors, its wholly owned subsidiary Ethan Allen Global, Inc. ("Global"), and Global’s subsidiaries (collectively "we", "us", "our", "Ethan Allen", or the "Company"). All intercompany accounts and transactions have been eliminated in the consolidated financial statements. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, which requires 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 revenues 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, revenue recognition, the allowance for doubtful accounts receivable, inventory obsolescence, tax valuation allowances, useful lives for property, plant and equipment and definite-lived intangible assets, goodwill and indefinite-lived intangible asset impairment analyses, the evaluation of uncertain tax positions and the fair value of assets acquired and liabilities assumed in business combinations. |
Note 2 - Interim Financial Pres
Note 2 - Interim Financial Presentation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | (2) Interim Financial Presentation 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 months ended September 30, 2016 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 our Annual Report on Form 10-K for the year ended June 30, 2016. |
Note 3 - Income Taxes
Note 3 - Income Taxes | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | (3) Income Taxes The Company reviews its expected annual effective income tax rates and makes changes on a quarterly basis as necessary based on certain factors such as changes in forecasted annual operating income; changes to actual or forecasted permanent book to tax differences; impacts from future tax audits with state, federal or foreign tax authorities; impacts from tax law changes; or change in judgment as to the realizability of deferred tax assets. The Company identifies items which are not normal and are non-recurring in nature and treats these as discrete events. The tax effect of discrete items is recorded in the quarter in which the discrete events occur. Due to the volatility of these factors, the Company's consolidated effective income tax rate can change significantly on a quarterly basis. The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries files income tax returns in the U.S., various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination in such domestic and foreign jurisdictions. As of September 30, 2016, the Company and certain subsidiaries are currently under audit in the U.S. from 2009 through 2013. While the amount of uncertain tax benefits with respect to the entities and years under audit may change within the next twelve months, it is not anticipated that any of the changes will be significant. It is reasonably possible that some of these audits may be completed during the next twelve months. It is reasonable to expect that various issues relating to uncertain tax benefits will be resolved within the next twelve months as exams are completed or as statutes expire and will impact the effective tax rate. The Company’s consolidated effective tax rate was 36.5% for the three months ended September 30, 2016 and 36.1% for the three months ended September 30, 2015. Both the current and prior year effective tax rates primarily include tax expense on the corresponding taxable year’s net income, and tax and interest expense on uncertain tax positions, partially offset by the reversal and recognition of some uncertain tax positions. |
Note 4 - Restricted Cash and In
Note 4 - Restricted Cash and Investments | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Restricted Assets Disclosure [Text Block] | (4) Restricted Cash and Investments At September 30, 2016 and June 30, 2016, we held $7.3 million and $7.8 million respectively, of restricted cash and investments in lieu of providing letters of credit for the benefit of the provider of our workmen’s compensation insurance and other insurance. These funds can be invested in high quality money market mutual funds, U.S. Treasuries and U.S. Government agency fixed income instruments, and cannot be withdrawn without the prior written consent of the secured party. These assets are carried at cost, which approximates market value and are classified as long-term assets because they are not expected to be used within one year to fund operations. See also Note 11, “Fair Value Measurements". |
Note 5 - Inventories
Note 5 - Inventories | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | (5) Inventories Inventories at September 30, 2016 and June 30, 2016 are summarized as follows (in thousands): September 30, 2016 June 30, 2016 Finished goods $ 124,427 $ 129,627 Work in process 10,383 9,497 Raw materials 27,148 27,554 Valuation allowance (2,615 ) (4,355 ) Inventories $ 159,343 $ 162,323 |
Note 6 - Borrowings
Note 6 - Borrowings | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | (6) Borrowings Total debt obligations at September 30, 2016 and June 30, 2016 consist of the following (in thousands): September 30, 2016 June 30, 2016 Revolving Credit Facility due 10/21/2019 $ 25,000 $ 25,000 Term Loan due 10/21/2019 15,583 16,167 Capital leases and other 505 671 Total debt 41,088 41,838 Less current maturities 2,941 3,001 Total long-term $ 38,147 $ 38,837 The Company entered into a five year, $150 million senior secured revolving credit and term loan facility on October 21, 2014, as amended (the “Facility”). The Facility, which expires on October 21, 2019, provides a term loan of up to $35 million and a revolving credit line of up to $115 million, subject to borrowing base availability. We incurred financing costs of $1.5 million under the Facility, which are being amortized by the interest method, over the remaining life of the Facility. 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 1.75%, or (b) the higher of (i) the prime rate, (ii) the federal funds effective rate plus 0.50%, or (iii) LIBOR plus 1.0% plus in each case 0.5% to 0.75%. At September 30, 2016 the annual interest rate in effect on the revolving loan was 2.0625%. At the Company’s option, term loans under the Facility bear interest, based on the Company’s rent adjusted leverage ratio, at an annual rate of either (a) LIBOR plus 1.75% to 2.25%, or (b) the higher of (i) the prime rate, (ii) the federal funds effective rate plus 0.50%, or (iii) LIBOR plus 1.0% plus in each case 0.75% to 1.25%. At September 30, 2016 the annual interest rate in effect on the term loan was 2.3125%. The Company pays a commitment fee of 0.15% to 0.25% per annum on the unused portion of the Facility, and fees on issued letters of credit at an annual rate of 1.5% to 1.75% based on the average availability. Certain payments are restricted if the availability under the revolving credit line falls below 20% of the total revolving credit line, and the Company is subject to pro forma compliance with the fixed charge coverage ratio if applicable. Quarterly installments of principal on the term loan are payable based on a straight line 15-year amortization period, with the balance due at maturity. The Company does not expect to repay the revolving credit line portion of the Facility within the next year. The Facility is secured by all property owned, leased or operated by the Company in the United States and includes certain real property owned by the Company and contains customary covenants which may limit the Company’s ability to incur debt; engage in mergers and consolidations; make restricted payments (including dividends and share repurchases); sell certain assets; and make investments. The Company must maintain a minimum fixed charge coverage ratio of 1.1 to 1.0 at all times. If the outstanding term loans are less than $17.5 million and the fixed charge coverage ratio equals or exceeds 1.25 to 1.0, the fixed charge coverage ratio ceases to apply and thereafter is only triggered if average monthly availability is less than 15% of the amount of the revolving credit line. During November 2015, we made a $16.5 million prepayment on the term loan, bringing the outstanding term loan to $17.3 million, and the fixed charge coverage ratio ceased to apply. Our average subsequent availability exceeded 65.0%, such that the fixed charge coverage ratio did not apply. The Company intends to use the Facility for working capital and general corporate purposes, including dividend payments and share repurchases. At September 30, 2016 and June 30, 2016, there was $0.1 million and $0.2 million respectively, of standby letters of credit outstanding under the Facility. Total availability under the Facility was $89.9 million at September 30, 2016 and $89.8 million at June 30, 2016. At both September 30, 2016 and June 30, 2016, we were in compliance with all of the covenants under the Facility. The following table summarizes, as of September 30, 2016, the timing of cash payments related to our outstanding long-term debt obligations for the remaining nine months of fiscal 2017, and each of the five fiscal years subsequent to June 30, 2017, and thereafter (in thousands). Periods ending June 30, 2017 $ 2,474 2018 2,815 2019 2,396 2020 34,213 2021 - 2022 and thereafter - Total scheduled debt payments $ 41,898 |
Note 7 - Litigation
Note 7 - Litigation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Legal Matters and Contingencies [Text Block] | (7) Litigation We are routinely party to various legal proceedings, including investigations or as a defendant in litigation, in the ordinary course of business. We are also subject to various federal, state and local environmental protection laws and regulations and are involved, from time to time, in investigations and proceedings regarding environmental matters. Such investigations and proceedings typically concern air emissions, water discharges, and/or management of solid and hazardous wastes. Under these laws, we and/or our subsidiaries are, or may be, required to remove or mitigate the effects on the environment of the disposal or release of certain hazardous materials. Regulations issued under the Clean Air Act Amendments of 1990 required the industry to reformulate certain furniture finishes or institute process changes to reduce emissions of volatile organic compounds. Compliance with many of these requirements has been facilitated through the introduction of high solids coating technology and alternative formulations. In addition, we have instituted a variety of technical and procedural controls, including reformulation of finishing materials to reduce toxicity, implementation of high velocity low pressure spray systems, development of storm water protection plans and controls, and further development of related inspection/audit teams, all of which have served to reduce emissions per unit of production. We remain committed to implementing new waste minimization programs and/or enhancing existing programs with the objective of (i) reducing the total volume of waste, (ii) limiting the liability associated with waste disposal, and (iii) continuously improving environmental and job safety programs on the factory floor which serve to minimize emissions and safety risks for employees. In order to reduce the use of hazardous materials in the manufacturing process, we will continue to evaluate the most appropriate, cost-effective control technologies for finishing operations and production methods. We believe that our facilities are in material compliance with all such applicable laws and regulations. Our currently anticipated capital expenditures for environmental control facility matters are not material. 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 U.S. GAAP. Where we determine an unfavorable outcome is probable and is reasonably estimable, we accrue for potential litigation losses. The liability we may ultimately incur with respect to such litigation matters, in the event of a negative outcome, may be in excess of amounts currently accrued, if any; however, we do not expect that the reasonably possible outcome of these litigation matters would, individually or in the aggregate, 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 the outcome of the various claims and proceedings against us cannot be predicted with certainty, management believes that the likelihood is remote that any existing claims or proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows. |
Note 8 - Share-based Compensati
Note 8 - Share-based Compensation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | (8) Share-Based Compensation All options are issued at the closing stock price on each grant date, and have a contractual term of 10 years. A summary of stock option activity occurring during the three months ended September 30, 2016 is presented below: Shares Outstanding as of June 30, 2016 907,073 Activity during the three months ended September 30, 2016 Granted 20,153 Exercised (9,191 ) Canceled (forfeited/expired) (10,460 ) Outstanding as of September 30, 2016 907,575 Exerciseable as of September 30, 2016 557,844 A summary of stock unit activity occurring during the three months ended September 30, 2016 is presented below. Units Weighted Average Grant Date Fair Value Non-vested units at June 30, 2016 218,050 $ 24.53 Granted 81,250 29.92 Vested - - Canceled (forfeited/expired) - - Non-vested units at September 30, 2016 299,300 25.99 At September 30, 2016, there were 1,250,264 shares of common stock available for future issuance pursuant to the Stock Incentive Plan. |
Note 9 - Earnings Per Share
Note 9 - Earnings Per Share | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | (9) Earnings Per Share Basic and diluted earnings per share are calculated using the following weighted average share data (in thousands): Three months ended September 30, 2016 2015 Weighted average shares of common stock outstanding for basic calculation 27,725 28,410 Effect of dilutive stock options and other share-based awards 287 263 Weighted average shares of common stock outstanding adjusted for dilution calculation 28,012 28,673 As of September 30, 2016 and 2015, stock options to purchase 492,565 and 576,009 common shares, respectively, were excluded from the respective diluted earnings per share calculations because their impact was anti-dilutive. |
Note 10 - Accumulated Other Com
Note 10 - Accumulated Other Comprehensive Income | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Comprehensive Income (Loss) Note [Text Block] | (10) Accumulated Other Comprehensive Income Accumulated other comprehensive income consists of foreign currency translation adjustments which are the result of changes in foreign currency exchange rates related to our operations in Canada, Belgium, Honduras, and Mexico, and exclude income taxes given that the earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite time. The table following sets forth the activity in accumulated other comprehensive income for the period ended September 30, 2016 (in thousands). Balance June 30, 2016 $ (4,846 ) Changes before reclassifications $ (930 ) Amounts reclassified from accumulated other comprehensive income $ - Current period other comprehensive income $ (930 ) Balance September 30, 2016 $ (5,776 ) |
Note 11 - Fair Value Measuremen
Note 11 - Fair Value Measurement | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Fair Value Disclosures [Text Block] | (11) Fair Value Measurements We determine fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on assumptions that market participants use in pricing the asset or liability, and not on assumptions specific to the Company. In addition, the fair value of liabilities includes consideration of non-performance risk including our own credit risk. Each fair value measurement is reported in one of three levels, determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. The following section describes the valuation methodologies we use to measure different financial assets and liabilities at fair value. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents our assets and liabilities measured at fair value on a recurring basis at September 30, 2016 and June 30, 2016 (in thousands): September 30, 2016 Level 1 Level 2 Level 3 Balance Cash equivalents $ 76,556 $ - $ - $ 76,556 Total $ 76,556 $ - $ - $ 76,556 June 30, 2016 Level 1 Level 2 Level 3 Balance Cash equivalents $ 60,479 $ - $ - $ 60,479 Total $ 60,479 $ - $ - $ 60,479 Cash equivalents consist of money market accounts and mutual funds in U.S. government and agency fixed income securities. We use quoted prices in active markets for identical assets or liabilities to determine fair value. There were no transfers between level 1 and level 2 during the first three months of fiscal 2017 or fiscal 2016. At September 30, 2016 and June 30, 2016, $7.3 million and $7.8 million, respectively, of the cash equivalents were restricted, and classified as long-term assets. No investments have been in a continuous loss position for more than one year, and no other-than-temporary impairments were recognized. See also Note 4, "Restricted Cash and Investments" . Assets and Liabilities Measured at Fair Value on a Non-recurring Basis We measure certain assets at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the three month period ended September 30, 2016, we did not record any other-than-temporary impairments on those assets required to be measured at fair value on a non-recurring basis. |
Note 12 - Segment Information
Note 12 - Segment Information | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | (12) Segment Information Our operations are classified into two operating segments: wholesale and retail. These operating segments represent strategic business areas of our vertically integrated business which, although they operate separately and provide their own distinctive services, enable us to more efficiently control the quality and cost of our complete line of home furnishings and accents. The wholesale segment is principally involved in the development of the Ethan Allen brand, which encompasses the design, manufacture, domestic and offshore sourcing, sale and distribution of a full range of home furnishings and accents to a network of independently operated and Ethan Allen operated design centers as well as related marketing and brand awareness efforts. Wholesale revenue is generated upon the wholesale sale and shipment of our product to all retail design centers, including those operated by Ethan Allen. The retail segment sells home furnishings and accents to consumers through a network of Company operated design centers and online through ethanallen.com. Retail revenue is generated upon the retail sale and delivery of our product to our customers. Inter-segment eliminations result, primarily, from the wholesale sale of inventory to the retail segment, including the related profit margin. We evaluate performance of the respective segments based upon revenues and operating income. While the manner in which our home furnishings and accessories are marketed and sold is consistent, the nature of the underlying recorded sales (i.e. wholesale versus retail) and the specific services that each operating segment provides (i.e. wholesale manufacturing, sourcing, and distribution versus retail selling) are different. Within each segment, we maintain revenue information according to each respective product line (i.e. case goods, upholstery, or home accents and other). The proportion of wholesale segment sales by these product lines for the three months ended September 30, 2016 and 2015 is provided as follows: Three months ended Septermber 30, 2016 2015 Case Goods 32 % 33 % Upholstered Products 52 % 49 % Home Accents and Other 16 % 18 % 100 % 100 % The proportion of retail segment sales by these product lines for the three months ended September 30, 2016 and 2015 is provided as follows: Three months ended September 30, 2016 2015 Case Goods 30 % 30 % Upholstered Products 49 % 46 % Home Accents and Other 21 % 24 % 100 % 100 % Segment information for the three months ended September 30, 2016 and 2015 is provided below (in thousands): Three months ended September 30, 2016 2015 Net sales: Wholesale segment $ 114,564 $ 120,455 Retail segment 152,255 146,040 Elimination of inter-company sales (73,532 ) (76,104 ) Consolidated Total $ 193,287 $ 190,391 Operating income: Wholesale segment $ 16,491 $ 20,587 Retail segment 1,023 1,640 Adjustment of inter-company profit (1) 823 (1,327 ) Consolidated Total $ 18,337 $ 20,900 Depreciation & Amortization: Wholesale segment $ 1,910 $ 1,911 Retail segment 3,089 2,872 Consolidated Total $ 4,999 $ 4,783 Capital expenditures: Wholesale segment $ 3,639 $ 1,516 Retail segment 3,801 1,622 Acquisitions - - Consolidated Total $ 7,440 $ 3,138 September 30, 2016 June 30, 2016 Total Assets: Wholesale segment $ 288,800 $ 271,116 Retail segment 335,711 339,942 Inventory profit elimination (2) (32,918 ) (33,649 ) Consolidated Total $ 591,593 $ 577,409 (1) Represents the change in wholesale profit contained in the retail segment inventory at the end of the period. (2) Represents the wholesale profit contained in the retail segment inventory that has not yet been realized. These profits are realized when the related inventory is sold. |
Note 13 - Recently Issued Accou
Note 13 - Recently Issued Accounting Pronouncements | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | (13) Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers In July 2015, the FASB issued ASU No. 2015-11 , In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued Accounting Standards 2016-09, Improvements to Employee Share-Based Payment Accounting |
Note 14 - Subsequent Events
Note 14 - Subsequent Events | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | (14) Subsequent Events None |
Note 5 - Inventories (Tables)
Note 5 - Inventories (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | September 30, 2016 June 30, 2016 Finished goods $ 124,427 $ 129,627 Work in process 10,383 9,497 Raw materials 27,148 27,554 Valuation allowance (2,615 ) (4,355 ) Inventories $ 159,343 $ 162,323 |
Note 6 - Borrowings (Tables)
Note 6 - Borrowings (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Debt [Table Text Block] | September 30, 2016 June 30, 2016 Revolving Credit Facility due 10/21/2019 $ 25,000 $ 25,000 Term Loan due 10/21/2019 15,583 16,167 Capital leases and other 505 671 Total debt 41,088 41,838 Less current maturities 2,941 3,001 Total long-term $ 38,147 $ 38,837 |
Schedule of Maturities of Long-term Debt [Table Text Block] | Periods ending June 30, 2017 $ 2,474 2018 2,815 2019 2,396 2020 34,213 2021 - 2022 and thereafter - Total scheduled debt payments $ 41,898 |
Note 8 - Share-based Compensa23
Note 8 - Share-based Compensation (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Shares Outstanding as of June 30, 2016 907,073 Activity during the three months ended September 30, 2016 Granted 20,153 Exercised (9,191 ) Canceled (forfeited/expired) (10,460 ) Outstanding as of September 30, 2016 907,575 Exerciseable as of September 30, 2016 557,844 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | Units Weighted Average Grant Date Fair Value Non-vested units at June 30, 2016 218,050 $ 24.53 Granted 81,250 29.92 Vested - - Canceled (forfeited/expired) - - Non-vested units at September 30, 2016 299,300 25.99 |
Note 9 - Earnings Per Share (Ta
Note 9 - Earnings Per Share (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three months ended September 30, 2016 2015 Weighted average shares of common stock outstanding for basic calculation 27,725 28,410 Effect of dilutive stock options and other share-based awards 287 263 Weighted average shares of common stock outstanding adjusted for dilution calculation 28,012 28,673 |
Note 10 - Accumulated Other C25
Note 10 - Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Balance June 30, 2016 $ (4,846 ) Changes before reclassifications $ (930 ) Amounts reclassified from accumulated other comprehensive income $ - Current period other comprehensive income $ (930 ) Balance September 30, 2016 $ (5,776 ) |
Note 11 - Fair Value Measurem26
Note 11 - Fair Value Measurement (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | September 30, 2016 Level 1 Level 2 Level 3 Balance Cash equivalents $ 76,556 $ - $ - $ 76,556 Total $ 76,556 $ - $ - $ 76,556 June 30, 2016 Level 1 Level 2 Level 3 Balance Cash equivalents $ 60,479 $ - $ - $ 60,479 Total $ 60,479 $ - $ - $ 60,479 |
Note 12 - Segment Information (
Note 12 - Segment Information (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Total Assets [Member] | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | September 30, 2016 June 30, 2016 Total Assets: Wholesale segment $ 288,800 $ 271,116 Retail segment 335,711 339,942 Inventory profit elimination (2) (32,918 ) (33,649 ) Consolidated Total $ 591,593 $ 577,409 |
Income Statement Section One [Member] | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three months ended September 30, 2016 2015 Net sales: Wholesale segment $ 114,564 $ 120,455 Retail segment 152,255 146,040 Elimination of inter-company sales (73,532 ) (76,104 ) Consolidated Total $ 193,287 $ 190,391 Operating income: Wholesale segment $ 16,491 $ 20,587 Retail segment 1,023 1,640 Adjustment of inter-company profit (1) 823 (1,327 ) Consolidated Total $ 18,337 $ 20,900 Depreciation & Amortization: Wholesale segment $ 1,910 $ 1,911 Retail segment 3,089 2,872 Consolidated Total $ 4,999 $ 4,783 Capital expenditures: Wholesale segment $ 3,639 $ 1,516 Retail segment 3,801 1,622 Acquisitions - - Consolidated Total $ 7,440 $ 3,138 |
Retail Segment [Member] | |
Notes Tables | |
Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | Three months ended September 30, 2016 2015 Case Goods 30 % 30 % Upholstered Products 49 % 46 % Home Accents and Other 21 % 24 % 100 % 100 % |
Wholesale Segment [Member] | |
Notes Tables | |
Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | Three months ended Septermber 30, 2016 2015 Case Goods 32 % 33 % Upholstered Products 52 % 49 % Home Accents and Other 16 % 18 % 100 % 100 % |
Note 3 - Income Taxes (Details
Note 3 - Income Taxes (Details Textual) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Effective Income Tax Rate Reconciliation, Percent | 36.50% | 36.10% |
Note 4 - Restricted Cash and 29
Note 4 - Restricted Cash and Investments (Details Textual) - USD ($) $ in Millions | Sep. 30, 2016 | Jun. 30, 2016 |
Restricted Cash and Investments, Noncurrent | $ 7.3 | $ 7.8 |
Note 5 - Inventories - Schedule
Note 5 - Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Finished goods | $ 124,427 | $ 129,627 |
Work in process | 10,383 | 9,497 |
Raw materials | 27,148 | 27,554 |
Valuation allowance | (2,615) | (4,355) |
Inventories | $ 159,343 | $ 162,323 |
Note 6 - Borrowings (Details Te
Note 6 - Borrowings (Details Textual) $ in Thousands | Jan. 28, 2015USD ($) | Oct. 21, 2014USD ($) | Nov. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2015USD ($) |
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |||||
Term Loan [Member] | Federal Funds Effective Swap Rate [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||
Term Loan [Member] | Additional Margin on Variable Rate Option [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||||
Term Loan [Member] | Additional Margin on Variable Rate Option [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | |||||
Term Loan [Member] | ||||||
Long-term Debt | $ 35,000 | $ 17,300 | $ 15,583 | $ 16,167 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.3125% | |||||
Debt Instrument, Amortization Period | 15 years | |||||
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio | 1.1 | |||||
Debt Covenant, Fixed Charge Coverage Ratio, Maximum Outstanding Term Loans | $ 17,500 | |||||
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio for Covenant to Cease to Apply | 1.25 | |||||
Debt Instrument, Covenant, Minimum Percentage of Total Revolving Credit to Avoid Triggering Fixed Charge Coverage Ratio Covenant | 15.00% | |||||
Repayments of Debt | $ 16,500 | |||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |||||
Revolving Credit Facility [Member] | Federal Funds Effective Swap Rate [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||
Revolving Credit Facility [Member] | Additional Margin on Variable Rate Option [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||
Revolving Credit Facility [Member] | Additional Margin on Variable Rate Option [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||||
Revolving Credit Facility [Member] | Minimum [Member] | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.15% | |||||
Revolving Credit Facility [Member] | Maximum [Member] | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% | |||||
Revolving Credit Facility [Member] | ||||||
Long-term Debt | $ 25,000 | 25,000 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 115,000 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.0625% | |||||
Debt Instrument, Covenant, Percentage of Total Revolving Credit | 20.00% | |||||
Letter of Credit [Member] | Minimum [Member] | ||||||
Line of Credit Facility, Interest Rate During Period | 1.50% | |||||
Letter of Credit [Member] | Maximum [Member] | ||||||
Line of Credit Facility, Interest Rate During Period | 1.75% | |||||
Debt Instrument, Term | 5 years | |||||
Debt Agreement, Maximum Borrowing Capacity | $ 150,000 | |||||
Long-term Debt | $ 41,088 | 41,838 | ||||
Debt Issuance Costs, Net | $ 1,500 | |||||
Line of Credit Facility, Average Availability | 65.00% | |||||
Letters of Credit Outstanding, Amount | $ 100 | 200 | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 89,900 | $ 89,800 |
Note 6 - Borrowings - Total Deb
Note 6 - Borrowings - Total Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 | Nov. 30, 2015 | Jan. 28, 2015 |
Revolving Credit Facility [Member] | ||||
Long-term Debt | $ 25,000 | $ 25,000 | ||
Term Loan [Member] | ||||
Long-term Debt | 15,583 | 16,167 | $ 17,300 | $ 35,000 |
Long-term Debt | 41,088 | 41,838 | ||
Capital leases and other | 505 | 671 | ||
Less current maturities | 2,941 | 3,001 | ||
Total long-term | $ 38,147 | $ 38,837 |
Note 6 - Borrowings - Aggregate
Note 6 - Borrowings - Aggregate Scheduled Maturities of Debt (Details) $ in Thousands | Sep. 30, 2016USD ($) |
2,017 | $ 2,474 |
2,018 | 2,815 |
2,019 | 2,396 |
2,020 | 34,213 |
2,021 | |
2022 and thereafter | |
Total scheduled debt payments | $ 41,898 |
Note 8 - Share-based Compensa34
Note 8 - Share-based Compensation (Details Textual) | 3 Months Ended |
Sep. 30, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Contractual Term | 10 years |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,250,264 |
Note 8 - Share-based Compensa35
Note 8 - Share-based Compensation - Stock Options Activity (Details) | 3 Months Ended |
Sep. 30, 2016shares | |
Outstanding (in shares) | 907,073 |
Granted (in shares) | 20,153 |
Exercised (in shares) | (9,191) |
Canceled (forfeited/expired) (in shares) | (10,460) |
Outstanding (in shares) | 907,575 |
Exerciseable (in shares) | 557,844 |
Note 8 - Share-based Compensa36
Note 8 - Share-based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] | 3 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Non-vested units (in shares) | shares | 218,050 |
Non-vested, weighted average grant date fair value (in dollars per share) | $ / shares | $ 24.53 |
Granted (in shares) | shares | 81,250 |
Granted, weighted average grant date fair value (in dollars per share) | $ / shares | $ 29.92 |
Vested (in shares) | shares | |
Vested, weighted average grant date fair value (in dollars per share) | $ / shares | |
Canceled (forfeited/expired) (in shares) | shares | |
Canceled (forfeited/expired), weighted average grant date fair value (in dollars per share) | $ / shares | |
Non-vested units (in shares) | shares | 299,300 |
Non-vested units, weighted average grant date fair value (in dollars per share) | $ / shares | $ 25.99 |
Note 9 - Earnings Per Share (De
Note 9 - Earnings Per Share (Details Textual) - shares | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 492,565 | 576,009 |
Note 9 - Earnings Per Share - C
Note 9 - Earnings Per Share - Calculation of Weighted Average Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Weighted average shares of common stock outstanding for basic calculation (in shares) | 27,725 | 28,410 |
Effect of dilutive stock options and other share-based awards (in shares) | 287 | 263 |
Weighted average shares of common stock outstanding adjusted for dilution calculation (in shares) | 28,012 | 28,673 |
Note 10 - Accumulated Other C39
Note 10 - Accumulated Other Comprehensive Income - Activity in Accumulated Other Comprehensive Income (Details) | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | |
Balance | $ (4,846,000) |
Changes before reclassifications | (930,000) |
Amounts reclassified from accumulated other comprehensive income | 0 |
Current period other comprehensive income | (930,000) |
Balance | (5,776,000) |
Balance | (4,846,000) |
Balance | $ (5,776,000) |
Note 11 - Fair Value Measurem40
Note 11 - Fair Value Measurement (Details Textual) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Jun. 30, 2016 | |
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities | $ 0 | |
Restricted Cash and Investments, Noncurrent | $ 7,300,000 | $ 7,800,000 |
Note 11 - Fair Value Measurem41
Note 11 - Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Fair Value, Inputs, Level 1 [Member] | ||
Cash equivalents | $ 76,556 | $ 60,479 |
Total | 76,556 | 60,479 |
Total | 76,556 | 60,479 |
Fair Value, Inputs, Level 2 [Member] | ||
Cash equivalents | ||
Total | ||
Total | ||
Fair Value, Inputs, Level 3 [Member] | ||
Cash equivalents | ||
Total | ||
Total | ||
Cash equivalents | 76,556 | 60,479 |
Total | 76,556 | 60,479 |
Total | $ 76,556 | $ 60,479 |
Note 12 - Segment Information42
Note 12 - Segment Information (Details Textual) | 3 Months Ended |
Sep. 30, 2016 | |
Number of Operating Segments | 2 |
Note 12 - Wholesale Sales by Pr
Note 12 - Wholesale Sales by Product Line (Details) - Wholesale Segment [Member] | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Case Goods [Member] | ||
Wholesale sales, percentage | 32.00% | 33.00% |
Upholstered Products [Member] | ||
Wholesale sales, percentage | 52.00% | 49.00% |
Home Accents and Other [Member] | ||
Wholesale sales, percentage | 16.00% | 18.00% |
Wholesale sales, percentage | 100.00% | 100.00% |
Note 12 - Retail Sales by Produ
Note 12 - Retail Sales by Product Line (Details) - Retail Segment [Member] | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Case Goods [Member] | ||
Retail Sales, Percentage | 30.00% | 30.00% |
Upholstered Products [Member] | ||
Retail Sales, Percentage | 49.00% | 46.00% |
Home Accents and Other [Member] | ||
Retail Sales, Percentage | 21.00% | 24.00% |
Retail Sales, Percentage | 100.00% | 100.00% |
Note 12 - Income by Segment (De
Note 12 - Income by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
Wholesale Segment [Member] | Operating Segments [Member] | |||
Net sales | $ 114,564 | $ 120,455 | |
Operating Income | 16,491 | 20,587 | |
Wholesale Segment [Member] | |||
Depreciation and amortization | 1,910 | 1,911 | |
Capital Expenditures | 3,639 | 1,516 | |
Retail Segment [Member] | Operating Segments [Member] | |||
Net sales | 152,255 | 146,040 | |
Operating Income | 1,023 | 1,640 | |
Retail Segment [Member] | |||
Depreciation and amortization | 3,089 | 2,872 | |
Capital Expenditures | 3,801 | 1,622 | |
Acquisitions [Member] | |||
Capital Expenditures | |||
Intersegment Eliminations [Member] | |||
Net sales | (73,532) | (76,104) | |
Operating Income | [1] | 823 | (1,327) |
Net sales | 193,287 | 190,391 | |
Operating Income | 18,337 | 20,900 | |
Depreciation and amortization | 4,999 | 4,783 | |
Capital Expenditures | $ 7,440 | $ 3,138 | |
[1] | Represents the change in wholesale profit contained in the retail segment inventory at the end of the period. |
Note 12 - Assets by Segment (De
Note 12 - Assets by Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 | |
Wholesale Segment [Member] | |||
Assets | $ 288,800 | $ 271,116 | |
Retail Segment [Member] | |||
Assets | 335,711 | 339,942 | |
Inventory Profit Elimination [Member] | |||
Assets | [1] | (32,918) | (33,649) |
Assets | $ 591,593 | $ 577,409 | |
[1] | The wholesale profit contained in the retail segment inventory that has not yet been realized. These profits are realized when the related inventory is sold. |