EXHIBIT 99.1
N E W S R E L E A S E
SUBJECT: HAVERTY FURNITURE
REPORTS RESULTS FOR SECOND QUARTER 2005
ATLANTA, GEORGIA, AUGUST 1, 2005 HAVERTY FURNITURE COMPANIES, INC.
(NYSE: HVT and HVT.A) today reported earnings for the second quarter
ended June 30, 2005. Net income for the second quarter was $1.3
million or $0.06 per diluted share of Common Stock, as compared to
the second quarter 2004 net income of $3.6 million or $0.16 per
diluted share of Common Stock.
For the six months ended June 30, 2005, net income was $4.5 million
or $0.20 per diluted share of Common Stock versus net income of $9.7
million or $0.42 per diluted share of Common Stock for the same
period in 2004.
Net sales for the second quarter of 2005 were $192.4 million, an
increase of 7.1% over sales of $179.6 million for the corresponding
quarter in 2004. As previously reported, comparable-store sales
increased 2.3% for the quarter.
Clarence H. Smith, president and chief executive officer, said, "We
noted in our June sales release that our second quarter earnings
would be significantly below the prior year's quarter. These
disappointing results were due to weak sales during May and June and
exacerbated by the increased fixed costs associated with our
distribution system. We believe that sales for big-ticket furniture
items have been hampered by a number of factors including: rising
fuel costs, continued negative impressions concerning the economy in
the media, and heavy promotional activity by the automobile industry.
Our marketing and merchandising teams have developed a slightly more
promotional strategy for implementation in the second half of the
year to more aggressively compete for our customers' dollars. We
believe that we will have improvement in our gross profit margins
during the third and fourth quarters as all of the planned closures
of local market warehouses and related inventory liquidations have
been completed.
"Our second quarter total SG&A costs have risen sharply compared to
last year but decreased 4.6% from the first quarter level. Second
quarter sales, normally the seasonally weakest of the year, fell 7.3%
on a sequential quarter basis, more than is typical. The
distribution system that we now operate is effective but the fixed
costs are higher. To properly leverage these costs we must generate
greater sales volume and not fall short of the sales we are staffed
and scheduled to serve. Our operations team is now able to assess
the fully functional consolidated distribution system, and we expect
to make certain refinements, reducing costs where possible. We
anticipate that our total SG&A expenses for the second half will be
at or slightly below last year's second half costs as a percent of
sales if we can achieve a total sales increase of approximately seven
percent.
"We are pleased to announce that Steven Langer has joined our team as
Assistant Vice President, Supply Chain. He has developed
considerable expertise in this field during his career working with
global companies such as Georgia Pacific and Delta Airlines. Product
flow is a key area of importance to us as we source from Asia and
other parts of the world and expand to new markets. Steven fills the
vacancy left by the retirement of a senior member of our team.
"Actual net sales for July 2005 will be announced on Thursday, August
4th. Preliminary figures show sales of approximately $66.6 million,
5.5% below July last year in total and 8.8% lower on a comparable-
store basis. Written orders in July were up approximately 3.2% in
total versus last year with comps off 1%. The July 4th holiday
weekend was disappointing, but written orders on a comp basis were
modestly positive for the remainder of July.
"There was one less delivery day in July this year as compared to
last year which impacted total sales by an estimated 4%. Comp-store
sales for July last year were up 9.9%, so the comparison was
difficult. Comp-store sales for August and September last year were
down 4.1% and 8.4% respectively, largely due to disruptions from four
hurricanes, so the comparisons should be much easier.
"During the fourth quarter we will be opening stores near Castleton
Mall in Indianapolis, IN and by the Polaris Mall in Columbus, OH,
both new markets for Havertys. Two older stores in Shreveport, LA
will be replaced with a single, better-located showroom, and we will
be expanding our Woodbridge, VA store in our growing presence in the
Washington, DC metro market. We have decided to close our older,
underperforming store on Airport Boulevard in Austin, TX in October
and have a contract to sell the property for a profit. We are
looking for a second store in Austin in the growing southwestern
suburbs to compliment our beautiful store in the Lakeline Mall
shopping district north of the city. The opening of our Ft.
Lauderdale, FL store in the Sawgrass Mall area has been moved to
early 2006.
"Other new stores planned for 2006 include: Port Charlotte, FL,
another new city for Havertys in the first quarter; a new store in
the southeastern suburbs of Atlanta, GA near Stonecrest Mall in the
second quarter; and in the third quarter, a new showroom in the Cedar
Hill shopping area south of Dallas, TX," Smith concluded.
Havertys is a full-service home furnishings retailer with 118
showrooms in 16 southern and central states 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, August 2, 2005 at
10:00 a.m. Eastern Daylight Time to review the second 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 -- August 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 3
Condensed Consolidated Statements of Income
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
------------------ ---------------------
2005 2004 2005 2004
(as restated1) (as restated1)
Net sales $192,394 $ 179,614 $ 400,027 $ 369,915
Cost of goods sold 95,310 88,960 198,334 181,299
--------- ---------- --------- ---------
Gross profit 97,084 90,654 201,693 188,616
Credit service charges 875 1,163 1,865 2,467
--------- ---------- --------- ---------
Gross profit and other
revenue 97,959 91,817 203,558 191,083
Expenses:
Selling, general and
administrative 95,249 85,149 195,138 174,151
Interest, net 397 964 1,298 2,089
Provision for doubtful accounts 311 198 517 329
Other expense (income), net 20 (264) (439) (853)
--------- ---------- --------- ---------
Total expenses 95,977 86,047 196,514 175,716
--------- ---------- --------- ---------
Income before income taxes 1,982 5,770 7,044 15,367
Income taxes 673 2,124 2,561 5,675
--------- ---------- --------- ---------
Net income $ 1,309 $ 3,646 $ 4,483 $ 9,692
========= ========== ========= =========
Basic earnings per share,
net income 1:
Common Stock $0.06 $0.16 $0.20 $0.44
Class A Common Stock $0.05 $0.15 $0.19 $0.41
Diluted earnings per share,
net income 1:
Common Stock $0.06 $0.16 $0.20 $0.42
Class A Common Stock $0.05 $0.15 $0.19 $0.40
Weighted average shares - basic
Common Stock 18,431 18,221 18,403 18,154
Class A Common Stock 4,311 4,343 4,314 4,354
Weighted average shares -
assuming dilution:
Common Stock 22,913 23,048 22,956 23,116
Class A Common Stock 4,311 4,343 4,314 4,354
Cash dividends per common share:
Common Stock $0.0625 $0.0625 $0.125 $0.125
Class A Common Stock $0.0575 $0.0575 $0.115 $0.115
1 See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- August 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 4
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
June 30, December 31,
2005 2004
(as restated1)
----------- --------------
Assets
Cash and cash equivalents $ 861 $ 10,122
Auction rate securities -- 5,000
Accounts receivable,
net of allowance 86,754 81,132
Inventories, at LIFO cost 110,359 110,812
Other current assets 16,663 23,356
--------- ---------
Total Current Assets 214,637 230,422
Accounts receivable, long-term 9,220 9,396
Property and equipment, net 210,322 205,037
Other assets 11,700 12,711
--------- ---------
$445,879 $ 457,566
========= =========
Liabilities and Stockholders' Equity
Notes payable to banks $ 11,350 $ --
Accounts payable and
accrued expenses 88,558 100,702
Current portion of long-term debt
and capital lease obligations 12,816 20,270
--------- ----------
Total Current Liabilities 112,724 120,972
Long-term debt and capital
lease obligations 37,982 44,228
Other liabilities 19,662 20,108
Stockholders' equity 275,511 272,258
--------- ----------
$445,879 $ 457,566
========= ==========
1 See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- August 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 5
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2005 2004
(as restated1)
---------- --------------
Operating Activities
Net Income $ 4,483 $ 9,692
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,524 9,452
Provision for doubtful accounts 517 329
Loss on sale of property and equipment 32 94
Other 830 126
Changes in operating assets and liabilities (11,443) (14,095)
--------- ---------
Net cash provided
by operating activites 4,943 5,598
--------- ---------
Investing Activities
Capital expenditures (15,937) (10,835)
Purchases of auction rate securities -- (15,000)
Proceeds from sale of auction rate securities 5,000 --
Proceeds from sale of property and equipment 96 911
Other investing activities 1,209 2,196
--------- ---------
Net cash used in
investing activities (9,632) (22,728)
--------- ---------
Financing Activities
Net increase in borrowings under revolving
credit facilities 11,350 --
Payments on long-term debt and capital
lease obligations (13,700) (6,650)
Proceeds from exercise of stock options 576 1,792
Dividends paid (2,798) (2,768)
--------- ---------
Net cash used in
financing activities (4,572) (7,626)
--------- ---------
Decrease in cash and cash equivalents (9,261) (24,756)
Cash and cash equivalents at beginning of period 10,122 31,591
--------- ---------
Cash and cash equivalents at end of period $ 861 $ 6,835
--------- ---------
1 See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- August 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 6
Restatement
- -----------
Results for the six months ended June 30, 2005 and the Condensed Consolidated
Balance Sheets as of December 31, 2004, included herein, have been restated
in connection with the Company's review of its lease accounting as reported
in its Form 10-K/A filed on June 27, 2005. The impact of the adjustments is
outlined below for the periods noted (in thousands, except per share data):
Quarter Ended Six Months Ended
June 30, 2004 June 30, 2004
---------------------- ------------------------
as previously as previously
Income statement data reported as restated reported as restated
---------------------- ----------- ----------- -------- -----------
<s> <c> <c> <c> <c>
Selling, general and administrative $ 84,946 $ 85,149 $173,737 $ 174,151
Income before income taxes 5,973 5,770 15,781 15,367
Income taxes 2,228 2,124 5,886 5,675
Net income 3,745 3,646 9,895 9,692
Diluted earnings per share - Common Stock $0.16 $0.16 $0.43 $0.42
As of December 31, 2004
--------------------------
as previously
Balance sheet data reported as restated
------------------- ------------- -----------
Accounts payable and accrued expenses,
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 Six Months Ended
June 30 June 30
------------------- -------------------
2005 2004 2005 2004
------ ------ ------ -----
<s> <c> <c> <c> <c>
Common Stock:
Weighted-average shares outstanding 18,431 18,221 18,403 18,154
Assumed conversion of Class A Common shares 4,311 4,343 4,314 4,354
Dilutive options and awards 171 484 239 608
-------- --------- -------- ---------
Total weighted-average
diluted common shares 22,913 23,048 22,956 23,116
======== ========= ======== =========
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