EXHIBIT 99.1
N E W S R E L E A S E
SUBJECT: HAVERTY FURNITURE
REPORTS RESULTS FOR FIRST QUARTER 2005
ATLANTA, GEORGIA, MAY 2, 2005 -- HAVERTY FURNITURE COMPANIES,
INC. (NYSE: HVT and HVT.A) today reported earnings for the first
quarter ended March 31, 2005. Results for the three months ended
March 31, 2004, and all other amounts as necessary, have been
restated in connection with the Company's review of its lease
accounting. Net income for the first quarter of 2005 was $3.2
million or $0.14 per diluted common share, a 47.4% and 47.3%
decrease, respectively, compared to the first quarter 2004 net
income of $6.0 million or $0.26 per diluted common share, as
restated.
As previously reported, net sales for the first quarter of 2005
were $207.6 million, an increase of 9.1% over sales of $190.3
million for the corresponding quarter in 2004. Comparable-store
sales increased 4.7% for the quarter.
Clarence H. Smith, president and chief executive officer, said,
"We are disappointed in our earnings for the first quarter. Our
operations were significantly affected by the last major phase of
our distribution transition. The overall impact from closing and
consolidating six warehouses into our new Florida Distribution
Center, while operating in the height of the season, was more
costly than we had estimated. The expenses associated with
operating duplicative facilities, moving, training and severance
costs were approximately $1.9 million. Increased demurrage
charges related to larger quantities of imported goods arriving
during this transition were an unexpected additional impact of
approximately $0.6 million. While this transition has been
difficult and demonstrably expensive in period costs and human
capital, we believe it was necessary. We are better positioned
to more efficiently handle our growing share of the dynamic
Florida markets and have improved our ability to add new markets
and stores in our largest and fastest growing state.
"We also experienced increased costs during the quarter related
to ongoing operations for fuel, insurance and professional
service fees. Rising energy costs impact our business from the
inbound freight we pay for our inventory shipments to the
expenses associated with moving product from our distribution
centers to local market delivery points and the final delivery to
our customers' homes. Our inbound freight costs have risen and
our transportation fuel costs increased $0.4 million on a period-
over-period basis. We are analyzing modifications to our routes
and delivery schedules to reduce fuel usage and may raise the fee
we charge our customers for delivery. Insurance costs are up
$0.9 million compared to last year's first quarter, primarily in
the areas of medical and workers' compensation. The new
regulatory requirements and the cost of compliance with Sarbanes-
Oxley contributed to a $0.5 million increase in professional
service fees in this year's first quarter as compared to last
year's first quarter. These rising operating costs have given
our management team new challenges and we are reviewing and
implementing steps to ensure that we are operating our business
as efficiently as possible.
"With April's comparative sales up 7.7% following March's 10.8%
increase, we believe that we are gaining share on our competition
and building the Havertys brand throughout our regions. We have
had solid sales performance for the stores opened in markets we
entered later last year and strong customer response to our
newest store that opened in February in Northern Virginia.
"As anticipated, our gross profit margins were in line with the
results in the most recent three quarters. We expect gross
margins to improve in the last half of the year, due to new
merchandising programs, exclusive products and fewer closeouts.
Our current inventory mix is well balanced with our best sellers
having sufficient quantities in stock to better serve our
customers. Although we are disappointed with the earnings
results for the first quarter of this year, we are confident that
our long-term strategies for distribution and merchandising
provide significant competitive advantages and better position us
to enhance market share and profitability."
Havertys is a full-service home furnishings retailer with 118
showrooms in 16 states in the Southern and Midwestern regions
providing its customers with a wide selection of quality
merchandise in middle- to upper-middle price ranges. Additional
information is available on the Company's website at
www.havertys.com.
This release includes forward-looking statements, which are
subject to risks and uncertainties. Factors that might cause
actual results to differ materially from future results expressed
or implied by such forward-looking statements include, but are
not limited to, general economic conditions, the consumer
spending environment for large ticket items, competition in the
retail furniture industry and other uncertainties detailed from
time to time in the Company's reports filed with the SEC.
The company will sponsor a conference call Tuesday, May 3, 2005
at 9:00 a.m. Eastern Daylight Time to review the first quarter.
Listen-only access to the call is available via the web at
havertys.com (For Investors) and at streetevents.com (Individual
Investor Center), both live and for a limited time, on a replay
basis.
NEWS RELEASE - May 2, 2005 Page 3
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Income
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
2005 2004
---------- --------------
(as restated 1)
Net sales $207,634 $190,301
Cost of goods sold 103,024 92,339
Gross profit 104,610 97,962
---------- -----------
Credit service charges 989 1,304
Gross profit and other revenue 105,599 99,266
---------- -----------
Expenses:
Selling, general and administrative 99,889 89,002
Interest, net 901 1,125
Provision for doubtful accounts 206 131
Other (income) expense, net (459) (589)
Total expenses 100,537 89,669
---------- -----------
Income before income taxes 5,062 9,597
Income taxes 1,888 3,550
---------- -----------
Net income $ 3,174 $ 6,047
========== ===========
Basic earnings per share, net income:
Common Stock $0.14 $0.27
Class A Common Stock $0.13 $0.26
Diluted earnings per share, net income1:
Common Stock $0.14 $0.26
Class A Common Stock $0.13 $0.25
Weighted average shares - basic:
Common Stock 18,374 18,087
Class A Common Stock 4,316 4,364
Weighted average shares - assuming dilution:
Common Stock 23,130 23,185
Class A Common Stock 4,316 4,364
Cash dividends per common share:
Common Stock $0.0625 $0.0625
Class A Common Stock $0.0575 $0.0575
1 See additional details at the end of this release.
more. . .
NEWS RELEASE - May 2, 2005 Page 4
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
March 31, December 31, March 31,
2005 2004 2004
(as restated 1) (as restated 1)
----------- ------------- ------------
Assets
Cash and cash equivalents $ 3,051 $ 10,122 $ 39,535
Auction rate securities 5,000 5,000 ---
Accounts receivable,
net of allowance 82,983 81,132 86,579
Inventories, at LIFO cost 116,013 110,812 109,603
Other current assets 15,324 23,356 13,157
---------- ----------- ----------
Total Current Assets 222,371 230,422 248,874
Accounts receivable, long-term 10,361 9,396 10,675
Property and equipment, net 206,817 205,037 170,253
Other assets 12,298 12,711 10,460
---------- ----------- ----------
$451,847 $ 457,566 $440,262
========== =========== ==========
Liabilities and Stockholders' Equity
Notes payable to banks $ 2,100 $ --- $ ---
Accounts payable and
accrued liabilities 99,950 100,702 85,174
Current portion of long-term debt
and capital lease obligations 13,202 20,270 13,481
---------- ----------- ----------
Total Current Liabilities 115,252 120,972 98,655
Long-term debt and capital
lease obligations 42,335 44,228 63,547
Other liabilities 19,383 20,108 20,710
Stockholders' equity 274,877 272,258 257,350
---------- ----------- ----------
$451,847 $ 457,566 $440,262
========== =========== ==========
1 See additional details at the end of this release.
more. . .
NEWS RELEASE - May 2, 2005 Page 5
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES
Restatement
Results for the three months ended March 31, 2004 and the Condensed
Consolidated Balance Sheets as of December 31, 2004 and March 31, 2004,
included herein, have been restated in connection with the Company's
review of its lease accounting as reported in a separate press release
dated May 2, 2005. The impact of the adjustments is outlined below for
the periods noted (in thousands, except per share data):
Quarter Ended
March 31, 2004
---------------------------
as previously
Income statement data reported as restated
- ----------------------- ----------- ------------
Selling, general and administrative $ 88,791 $ 89,002
Income before income taxes 9,808 9,597
Income taxes 3,658 3,550
Net income 6,150 6,047
Diluted earnings per share - Common Stock $0.27 $0.26
As of December 31, 2004
----------------------------
as previously
Balance sheet data reported as restated
------------- -------------
Accounts payable and accrued liabilities,
including customer deposits $ 105,826 $ 100,702
Other liabilities (long term) 13,286 20,108
Stockholders' equity 273,956 272,258
The liability for accrued straight line rent has been reclassified from
current to long-term in connection with the restatement in recognition of
the portion which will be realized in periods beyond one year.
Earnings per Share
The following details how the number of shares in calculating the diluted
earnings per share for Common Stock are derived under SFAS 128 and EITF 03-6
(shares in thousands):
Quarter Ended
March 31
-----------------------
2005 2004
-------- ---------
Common Stock:
Weighted-average shares outstanding 18,374 18,087
Assumed conversion of Class A Common shares 4,316 4,364
Dilutive options and awards 440 734
------ -------
Total weighted-average
diluted common shares 23,130 23,185
====== =======
The amount of earnings used in calculating diluted earnings per share of
Common Stock is equal to net income since the Class A shares are assumed
to be converted.
Diluted earnings per share of Class A Common Stock includes the effect of
dilutive common stock options which reduces the amount of undistributed
earnings allocated to the Class A Common Stock.
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Contact: Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900