EXHIBIT 99.1
N E W S R E L E A S E
SUBJECT: HAVERTY FURNITURE
REPORTS RESULTS FOR THIRD QUARTER 2005
ATLANTA, GEORGIA, NOVEMBER 1, 2005 HAVERTY FURNITURE COMPANIES,
INC. (NYSE: HVT and HVT.A) today reported earnings for the third
quarter ended September 30, 2005. Net income for the third
quarter was $3.8 million or $0.17 per diluted share of Common
Stock, as compared to the third quarter 2004 net income of $4.2
million or $0.18 per diluted share of Common Stock.
For the nine months ended September 30, 2005, net income was $8.3
million or $0.36 per diluted share of Common Stock versus net
income of $13.9 million or $0.60 per diluted share of Common
Stock for the same period in 2004.
Net sales for the third quarter of 2005 were $202.0 million, an
increase of 2.3% over sales of $197.4 million for the
corresponding quarter in 2004.
Clarence H. Smith, president and chief executive officer, said,
"As previously reported, we experienced a comparable-store sales
decline of 1% for the third quarter. These soft sales results
did not allow us to leverage the higher occupancy and
transportation costs we incurred.
"Our efficiency and timeliness in delivering to our customers was
hampered in part due to challenges with our imported merchandise
flow relative to space in our distribution center. A significant
expansion of our Eastern Distribution Center is underway and is
scheduled for completion early next year. This change should
enable us to better handle the normal fluctuations in business
and increase our peak throughput capacity. We are also paring
down our expansive product line to better fit our migration to a
higher level of imports. Our supply chain team has been
strengthened by the addition of individuals with significant
experience who are implementing better techniques and discipline
in this vital area.
"The third quarter other income was primarily the gains on sales
of two stores and one closed warehouse.
"We are continuing to build our Havertys brand. In mid-October
we mailed our first ever catalog to select consumers. This
attractive 80-page piece is expected to have longer consumer
retention time than our typical freestanding newspaper inserts.
"Our sales reporting and productivity tools have been
significantly enhanced. This allows our managers and
merchandisers quicker and easier access to the pulse of our
business in the merchandise area and in managing and motivating
our sales force.
"Havertys is entering its 17th state this week with the grand
opening of our Indianapolis, Indiana store. We plan to open our
second Ohio store, this one in Columbus near the Polaris Mall, by
the end of the year. In addition to the openings in 2006 that we
have previously announced, we expect there will be additional
fill-in opportunities," Smith concluded.
Dennis Fink, executive vice president and chief financial
officer, said, "Our inventory is valued based on certain
components including product costs and in-bound freight.
Inventory that flows through our distribution centers, and the
regional warehouses in prior periods, is capitalized with
additional costs for certain expenses related to handling and
transportation to local markets. The amounts shown in cost of
goods sold previously included only the product costs, certain
vendor allowances, in-bound freight and LIFO adjustments. All
warehouse, transportation and distribution costs were included in
the line item Selling, General and Administrative (SG&A). The
portion of SG&A expenses capitalized into inventory was
recognized through SG&A rather than cost of goods sold. We have
completed our transition to a distribution model that has
increased the level of inventory flowing through the distribution
centers. Accordingly, we are now including in cost of goods sold
the amounts capitalized into inventory for handling and
transportation, and reclassified the prior periods for
comparability. This is a change only in the presentation of our
Statements of Income and has no impact on earnings or the
valuation of inventory."
Havertys is a full-service home furnishings retailer with 118
showrooms in 17 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.
News releases include 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 Wednesday, November 2,
2005 at 10:00 a.m. Eastern Standard Time to review the third
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 -- November 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 Nine Months Ended
September 30, September 30,
-------------------- ----------------------
2005 2004 2005 2004
(as restated-1) (as restated-1)
Net sales $ 202,044 $ 197,445 $ 602,071 $ 567,360
Cost of goods sold 105,947 102,865 315,746 292,473
--------- --------- --------- ---------
Gross profit 96,097 94,580 286,325 274,887
Credit service charges 837 992 2,702 3,459
--------- --------- --------- ---------
Gross profit and other
revenue 96,934 95,572 289,027 278,346
Expenses:
Selling, general and
administrative 93,154 88,964 276,827 254,806
Interest, net 166 741 1,464 2,830
Provision for doubtful
accounts 152 116 668 445
Other expense (income), net (2,645) (987) (3,084) (1,840)
--------- --------- --------- ---------
Total expenses 90,827 88,834 275,875 256,241
--------- --------- --------- ---------
Income before income taxes 6,107 6,738 13,152 22,105
Income taxes 2,291 2,501 4,852 8,175
--------- --------- --------- ---------
Net income $ 3,816 $ 4,237 $ 8,300 $ 13,930
========= ========= ========= =========
Basic earnings per share,
net income:
Common Stock $0.17 $0.19 $0.37 $0.63
Class A Common Stock $0.16 $0.18 $0.35 $0.59
Diluted earnings per share,
net income-1:
Common Stock $0.17 $0.18 $0.36 $0.60
Class A Common Stock $0.16 $0.18 $0.35 $0.58
Weighted average shares
- basic:
Common Stock 18,278 18,252 18,361 18,187
Class A Common Stock 4,306 4,338 4,311 4,348
Weighted average shares,
assuming dilution-1:
Common Stock 22,652 22,965 22,860 23,066
Class A Common Stock 4,306 4,338 4,311 4,348
Cash dividends per common
share:
Common Stock $0.0625 $0.0625 $0.1875 $0.1875
Class A Common Stock $0.0575 $0.0575 $0.1725 $0.1725
1-See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- November 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 4
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
September 30, December 31, September 30,
2005 2004 2004
(as restated-1)(as restated-1)
-------------- -------------- --------------
Assets
Cash and cash equivalents $ 764 $ 10,122 $ 20,612
Auction rate securities -- 5,000 --
Accounts receivable,
net of allowance 84,806 81,132 87,227
Inventories, at LIFO cost 108,928 110,812 114,922
Other current assets 22,901 23,356 17,514
------------ ------------ -----------
Total Current Assets 217,399 230,422 240,275
Accounts receivable, long-term 7,724 9,396 10,967
Property and equipment, net 215,371 205,037 183,819
Other assets 7,854 12,711 8,364
------------ ------------ -----------
$ 448,348 $ 457,566 $ 443,425
============ ============ ===========
Liabilities and Stockholders' Equity
Notes payable to banks $ -- $ -- $ --
Accounts payable and
accrued expenses 105,545 100,702 88,535
Current portion of long-term debt
and capital lease obligations 13,253 20,270 13,268
------------ ------------ -----------
Total Current Liabilities 118,798 120,972 101,803
Long-term debt and capital
lease obligations 35,407 44,228 57,159
Other liabilities 19,659 20,108 20,808
Stockholders' equity 274,484 272,258 263,655
------------ ------------ -----------
$ 448,348 $ 457,566 $ 443,425
============= ============ ===========
1-See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- November 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 5
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Nine Months Ended September 30,
2005 2004
(as restated-1)
----------- --------------
Operating Activities
Net Income $ 8,300 $ 13,930
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 15,781 14,145
Provision for doubtful accounts 669 445
(Gain) loss on sale of property
and equipment (2,570) --
Other 1,103 (730)
Changes in operating assets and liabilities 4,203 (4,805)
----------- ----------
Net cash provided by operating activities 27,486 22,985
----------- ----------
Investing Activities
Capital expenditures (27,290) (28,216)
Proceeds from sale of land 1,200 --
Proceeds from sale of auction rate securities 5,000 --
Proceeds from sale of property and equipment 5,985 2,501
Other investing activities 1,490 2,246
----------- ----------
Net cash used in investing activities (13,615) (23,469)
----------- ----------
Financing Activities
Net increase in borrowings under revolving
credit facilities -- --
Payments on long-term debt and capital
lease obligations (15,838) (8,503)
Treasury stock acquired (3,811) --
Proceeds from exercise of stock options 605 2,165
Dividends paid (4,185) (4,157)
----------- ----------
Net cash used in financing activities (23,229) (10,495)
----------- ----------
Decrease in cash and cash equivalents (9,358) (10,979)
Cash and cash equivalents at beginning of period 10,122 31,591
----------- ----------
Cash and cash equivalents at end of period $ 764 $ 20,612
=========== ==========
1-See additional details at the end of this release.
more. . . . .
NEWS RELEASE -- November 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 6
Restatement and Reclassification
Results for the nine months ended September 30, 2004 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 Company capitalizes certain expenses related to handling and
transportation into inventory which flows through its distribution
centers. All warehouse, transportation and distribution costs are
included in the line item Selling, General and Administrative (SG&A).
In prior periods, expenditures capitalized into inventory were
recognized through SG&A rather than cost of goods sold. The Company
has completed its transition to a distribution model that has increased
the level of inventory flowing through the distribution centers.
Accordingly, the Company now includes those costs capitalized into
inventory for handling and transportation in cost of goods sold and
has reclassified the prior periods for comparability.
The impact of these changes is outlined below for the periods noted
(in thousands, except per share data):
Quarter Ended
September 30, 2004
--------------------------------------------------------
as as restated
previously restatement and
reported adjustment reclassification reclassified
----------- ----------- ---------------- -------------
<s> <c> <c> <c> <c>
Income statement data
Cost of goods sold $ 98,326 $ -- $ 4,539 $ 102,865
Selling, general and administrative 93,406 97 (4,539) 88,964
Income before income taxes 6,835 (97) -- 6,738
Income taxes 2,551 (50) -- 2,501
Net income 4,284 (47) -- 4,237
Diluted earnings per share -
Common Stock $0.19 ($0.01) -- $0.18
Nine Months Ended
September 30, 2004
--------------------------------------------------------
as as restated
previously restatement and
reported adjustment reclassification reclassified
----------- ----------- ---------------- -------------
Income statement data
Cost of goods sold $ 279,625 $ -- $ 12,848 $ 292,473
Selling, general and administrative 267,143 511 (12,848) 254,806
Income before income taxes 22,616 (511) -- 22,105
Income taxes 8,437 (262) -- 8,175
Net income 14,179 (249) -- 13,930
Diluted earnings per share -
Common Stock $0.61 ($0.01) -- $0.60
The impact of the reclassification on additional quarterly and annual periods
is available on the Company's website, havertys.com (For Investors).
As of December 31, 2004 As of September 30, 2004
-------------------------- --------------------------
as previously as previously
Balance Sheet Data reported as restated reported as restated
------------ ----------- ------------- ------------
<s> <c> <c> <c> <c>
Accounts payable and accrued expenses,
including customer deposits $ 105,826 $ 100,702 $ 82,223 $ 88,535
Other liabilities (long term) 13,286 20,108 13,780 20,808
Stockholders' equity 273,956 272,258 265,484 263,655
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.
more . . . .
NEWS RELEASE -- November 1, 2005
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Page 7
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 Nine Months Ended
September 30 September 30
-------------- -----------------
2005 2004 2005 2004
------- ------- ------- -------
Common Stock:
Weighted-average shares outstanding 18,278 18,252 18,361 18,187
Assumed conversion of Class A
Common shares 4,306 4,338 4,311 4,348
Dilutive options and awards 68 375 188 531
------- ------- ------ ------
Total weighted-average
diluted common shares 22,652 22,965 22,860 23,066
======= ======= ====== ======
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.
# # # # #
Contact: Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900