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Ethan Allen Interiors (ETH)
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ETH » Topics » (14) Subsequent Events

This excerpt taken from the ETH 10-Q filed May 11, 2009.

(15)            Subsequent Events

 

Revolver Termination

 

The Company terminated its $100 million cash flow based revolving credit facility effective May 4, 2009.  Although we have no plans to use any revolving credit facility in the near term, we are in negotiations to establish an asset based revolving credit facility of up to $60 million.  At March 31, 2009, we had $12.5 million in trade and standby letters of credit outstanding under the revolving credit facility. These letters of credit continue to be supported by a separate facility with JP Morgan.  We believe we will continue to have adequate liquidity to meet our current needs.

 

Ethan Allen declares quarterly cash dividend

 

Ethan Allen’s Board of Directors has declared a quarterly cash dividend of $0.05 per share, which will be payable to shareholders of record as of July 10, 2009 and paid on July 24, 2009.

 

This excerpt taken from the ETH 10-Q filed Feb 9, 2009.

(15)         Subsequent Events

 

Restructuring, impairment and other related charges

On January 6, 2009, the Company announced a plan to consolidate the operations of its Eldred, Pennsylvania upholstery manufacturing plant and several of its retail service centers. As a result, the company expects to record in the second half of our fiscal year ending June 30, 2009, approximately $8.0 to $9.0 million pretax restructuring, impairment and other related charges, the majority of which will be non-cash in nature.  Business currently serviced by the Eldred Pennsylvania facility will be transferred to the Company’s facilities in North Carolina and California, and the Company plans to expand the production in those facilities. Business currently served by the retail service centers will be transferred to other Company locations serving the same general market areas.  These consolidations impact about 350 employees.

 

Amendment to revolving credit agreement

On January 29, 2009, the Company’s credit facility was amended to reduce the line to $100 million, amend the fixed charge coverage ratio to 1.75 to 1, change the leverage ratio to 3.25 to 1, add a triggering lien if a ratio of fixed charges falls below 2.00, and places certain limitations on acquisitions and divestitures. It also limits cash dividends if the fixed charge coverage on a rolling four quarter basis is below 2.00 to 1. We complied with the covenants of the amended agreement at December 31, 2008.

 

Ethan Allen declares quarterly cash dividend

Ethan Allen’s Board of Directors has declared a regular quarterly cash dividend of $0.10 per share, which will be payable to shareholders of record as of April 14, 2009 and paid on April 28, 2009.

 

This excerpt taken from the ETH 10-Q filed May 9, 2006.

(14)      Subsequent Events

  In April 2006, the Company acquired two Ethan Allen retail stores from an independent retailer for total consideration of $1.1 million. As a result of this acquisition, the Company (i) recorded additional inventory of $0.9 million and other assets of $0.4 million, and (ii) assumed customer deposits of $0.8 million. Goodwill associated with this acquisition totaled $0.6 million.

This excerpt taken from the ETH 8-K filed Feb 3, 2006.

(18)      Subsequent Events

  Stock Repurchases and Remaining Authorization

  Subsequent to June 30, 2005 and through September 9, 2005, the Company repurchased, in 17 separate open market transactions, an additional 1,140,000 shares of its common stock at a total cost of $36.8 million, representing an average price per share of $32.28. As of September 9, 2005, the Company had a remaining Board authorization to repurchase 860,000 shares.

  Revolving Credit Facility

  On July 21, 2005, the Company entered into a five-year, $200.0 million unsecured revolving credit facility with J.P. Morgan Chase Bank, N.A. (“JP Morgan”), as administrative agent, and certain other lenders (the “New Credit Agreement”). The New Credit Agreement replaces the five-year, $100.0 million unsecured credit facility, effective June 2004, which is discussed further in Note 7.

  The New Credit Agreement consists of a $200.0 million unsecured revolving credit facility and includes an accordion feature providing an additional $100.0 million of liquidity, if needed. In addition, the New Credit Agreement contains sub-facilities for trade and standby letters of credit of $100.0 million and swing line loans of $5.0 million. Revolving loans under the New Credit Agreement bear interest at JP Morgan’s Alternate Base Rate (as defined), or adjusted LIBOR plus 0.40% (plus a utilization fee of 0.125% during any period that usage of the facility is 50% or more of the total commitment under the facility), and are subject to adjustment resulting from changes in the credit rating of Ethan Allen’s senior unsecured debt. The New Credit Agreement also provides for the payment of (i) a facility fee equal to 0.10% per annum on the average daily amount (whether used or unused) of the revolving credit commitment and (ii) a letter of credit fee equal to 0.525% per annum on the average daily letters of credit outstanding.

  The New Credit Agreement has a maturity date of July 21, 2010 and there are no minimum repayments required during the term of the facility. The revolving loans may be borrowed, repaid and re-borrowed over the term of the facility until final maturity.

  The New Credit Agreement also contains various covenants which limit the ability of the Company to: incur debt; engage in mergers and consolidations; make restricted payments; sell certain assets; make investments; and issue stock. The Company is also required to meet certain financial covenants including a fixed charge coverage ratio and a leverage ratio. In addition, the New Credit Agreement contains customary representations and warranties, conditions to borrowing (including the continued accuracy of such representations and warranties) and events of default (the occurrence of which would entitle the lenders to accelerate the maturity of any outstanding borrowings and terminate their commitment to make future loans).

  As of September 9, 2005, the Company had revolving loans and trade and standby letters of credit outstanding under the New Credit Agreement totaling $17.0 million and $15.6 million, respectively. Remaining available borrowing capacity under the New Credit Agreement at that date was $167.4 million.

  Senior Unsecured Notes

  On July 26, 2005, the Board of Directors of the Company authorized the issuance of up to $200.0 million in senior unsecured notes. At this time, the specific terms of the proposed financing, including the duration of the notes and the related pricing, have not yet been determined, and closing of the issuance is subject to satisfactory determination thereof, changes in capital market

F-23

  conditions, material changes affecting the Company or its business or industry and other factors. If completed as authorized, the Company intends to utilize the proceeds from the issuance for general corporate purposes including, but not limited to, (i) retail store expansion, (ii) investment in manufacturing operations, (iii) acquisitions, (iv) the payment of dividends, and (v) the repurchase of shares of the Company’s common stock in the open market. The Company has no present commitments or understandings as to any material acquisition.

  In connection with the forecasted issuance of the proposed notes, the Company entered into 6 separate forward contracts to hedge the risk-free interest rate associated with $108.0 million of the related debt in order to minimize the negative impact of interest rate fluctuations on the Company’s earnings, cash flows and equity. The forward contracts were entered into with a major banking institution thereby minimizing the risk of credit loss. These hedging transactions were executed during July and August 2005 and, as such, have not been reflected in the Company’s financial position, results of operations or cash flows for the year ended June 30, 2005. The Company will apply the provisions of SFAS No. 133 in accounting for these derivative instruments.

  Acquisitions

  On July 1, 2005, the Company acquired three Ethan Allen retail stores from an independent retailer for total consideration of approximately $1.7 million. As a result of this acquisition, the Company (i) recorded additional inventory of approximately $1.4 million and other assets of approximately $0.1 million, and (ii) assumed customer deposits of approximately $0.6 million and other liabilities of approximately $0.1 million. Goodwill associated with this acquisition totaled approximately $0.9 million and represents the premium paid to the seller related to the acquired business (i.e. market presence) and other fair value adjustments to the assets acquired and liabilities assumed.

  Restructuring and Impairment Charge

  On September 7, 2005, the Company announced a plan to convert its Dublin, Virginia case goods manufacturing facility into a regional distribution center. In connection with this initiative, the Company will permanently cease production at the Dublin location and consolidate the distribution operations of its existing Old Fort, North Carolina location into the new, larger facility.

  The decision impacts approximately 325 employees, of which the Company expects approximately 75 to remain employed by Ethan Allen in new positions. The net reduction in headcount is anticipated to occur throughout the second quarter of fiscal 2006. The Company will record a pre-tax restructuring and impairment charge of approximately $4.0 to $5.0 million ($2.5 to $3.1 million, after-tax) for costs associated with this initiative, of which approximately $1.5 million relates to employee severance and benefits and other plant exit costs, and approximately $2.5 to $3.5 million relates to fixed asset impairment charges, primarily for real property and machinery and equipment.

F-24

This excerpt taken from the ETH 10-K filed Sep 13, 2005.

(18)      Subsequent Events

  Stock Repurchases and Remaining Authorization

  Subsequent to June 30, 2005 and through September 9, 2005, the Company repurchased, in 17 separate open market transactions, an additional 1,140,000 shares of its common stock at a total cost of $36.8 million, representing an average price per share of $32.28. As of September 9, 2005, the Company had a remaining Board authorization to repurchase 860,000 shares.

  Revolving Credit Facility

  On July 21, 2005, the Company entered into a five-year, $200.0 million unsecured revolving credit facility with J.P. Morgan Chase Bank, N.A. (“JP Morgan”), as administrative agent, and certain other lenders (the “New Credit Agreement”). The New Credit Agreement replaces the five-year, $100.0 million unsecured credit facility, effective June 2004, which is discussed further in Note 7.

  The New Credit Agreement consists of a $200.0 million unsecured revolving credit facility and includes an accordion feature providing an additional $100.0 million of liquidity, if needed. In addition, the New Credit Agreement contains sub-facilities for trade and standby letters of credit of $100.0 million and swing line loans of $5.0 million. Revolving loans under the New Credit Agreement bear interest at JP Morgan’s Alternate Base Rate (as defined), or adjusted LIBOR plus 0.40% (plus a utilization fee of 0.125% during any period that usage of the facility is 50% or more of the total commitment under the facility), and are subject to adjustment resulting from changes in the credit rating of Ethan Allen’s senior unsecured debt. The New Credit Agreement also provides for the payment of (i) a facility fee equal to 0.10% per annum on the average daily amount (whether used or unused) of the revolving credit commitment and (ii) a letter of credit fee equal to 0.525% per annum on the average daily letters of credit outstanding.

  The New Credit Agreement has a maturity date of July 21, 2010 and there are no minimum repayments required during the term of the facility. The revolving loans may be borrowed, repaid and re-borrowed over the term of the facility until final maturity.

  The New Credit Agreement also contains various covenants which limit the ability of the Company to: incur debt; engage in mergers and consolidations; make restricted payments; sell certain assets; make investments; and issue stock. The Company is also required to meet certain financial covenants including a fixed charge coverage ratio and a leverage ratio. In addition, the New Credit Agreement contains customary representations and warranties, conditions to borrowing (including the continued accuracy of such representations and warranties) and events of default (the occurrence of which would entitle the lenders to accelerate the maturity of any outstanding borrowings and terminate their commitment to make future loans).

  As of September 9, 2005, the Company had revolving loans and trade and standby letters of credit outstanding under the New Credit Agreement totaling $17.0 million and $15.6 million, respectively. Remaining available borrowing capacity under the New Credit Agreement at that date was $167.4 million.

  Senior Unsecured Notes

  On July 26, 2005, the Board of Directors of the Company authorized the issuance of up to $200.0 million in senior unsecured notes. At this time, the specific terms of the proposed financing, including the duration of the notes and the related pricing, have not yet been determined, and closing of the issuance is subject to satisfactory determination thereof, changes in capital market

56

  conditions, material changes affecting the Company or its business or industry and other factors. If completed as authorized, the Company intends to utilize the proceeds from the issuance for general corporate purposes including, but not limited to, (i) retail store expansion, (ii) investment in manufacturing operations, (iii) acquisitions, (iv) the payment of dividends, and (v) the repurchase of shares of the Company’s common stock in the open market. The Company has no present commitments or understandings as to any material acquisition.

  In connection with the forecasted issuance of the proposed notes, the Company entered into 6 separate forward contracts to hedge the risk-free interest rate associated with $108.0 million of the related debt in order to minimize the negative impact of interest rate fluctuations on the Company’s earnings, cash flows and equity. The forward contracts were entered into with a major banking institution thereby minimizing the risk of credit loss. These hedging transactions were executed during July and August 2005 and, as such, have not been reflected in the Company’s financial position, results of operations or cash flows for the year ended June 30, 2005. The Company will apply the provisions of SFAS No. 133 in accounting for these derivative instruments.

  Acquisitions

  On July 1, 2005, the Company acquired three Ethan Allen retail stores from an independent retailer for total consideration of approximately $1.7 million. As a result of this acquisition, the Company (i) recorded additional inventory of approximately $1.4 million and other assets of approximately $0.1 million, and (ii) assumed customer deposits of approximately $0.6 million and other liabilities of approximately $0.1 million. Goodwill associated with this acquisition totaled approximately $0.9 million and represents the premium paid to the seller related to the acquired business (i.e. market presence) and other fair value adjustments to the assets acquired and liabilities assumed.

  Restructuring and Impairment Charge

  On September 7, 2005, the Company announced a plan to convert its Dublin, Virginia case goods manufacturing facility into a regional distribution center. In connection with this initiative, the Company will permanently cease production at the Dublin location and consolidate the distribution operations of its existing Old Fort, North Carolina location into the new, larger facility.

  The decision impacts approximately 325 employees, of which the Company expects approximately 75 to remain employed by Ethan Allen in new positions. The net reduction in headcount is anticipated to occur throughout the second quarter of fiscal 2006. The Company will record a pre-tax restructuring and impairment charge of approximately $4.0 to $5.0 million ($2.5 to $3.1 million, after-tax) for costs associated with this initiative, of which approximately $1.5 million relates to employee severance and benefits and other plant exit costs, and approximately $2.5 to $3.5 million relates to fixed asset impairment charges, primarily for real property and machinery and equipment.

57

This excerpt taken from the ETH 10-Q filed May 10, 2005.

(13)     Subsequent Events

  The Company has been authorized by its Board of Directors to repurchase its common stock, from time to time, either directly or through agents, in the open market at prices and on terms satisfactory to the Company. As of December 31, 2004, the Company had a remaining Board authorization to purchase 2.0 million shares. Subsequent to December 31, 2004 and through February 3, 2005, the Company repurchased, in five separate open market transactions, an additional 188,000 shares of its common stock at a total cost of $6.7 million, representing an average price per share of $35.70. All of the Company’s common stock repurchases and retirements are recorded as treasury stock and result in a reduction of shareholders’ equity.

This excerpt taken from the ETH 10-Q filed May 10, 2005.

(12)     Subsequent Events

  Stock Repurchases and Remaining Authorization

  The Company has been authorized by its Board of Directors to repurchase its common stock, from time to time, either directly or through agents, in the open market at prices and on terms satisfactory to the Company. As of September 30, 2004, the Company had a remaining Board authorization to purchase 1.2 million shares. Subsequent to September 30, 2004 and through November 4, 2004, the Company repurchased, in 10 separate open market transactions, an additional 477,000 shares of its common stock at a total cost of $16,595,872, representing an average price per share of $34.79. All of the Company’s common stock repurchases and retirements are recorded as treasury stock and result in a reduction of shareholders’ equity.

15

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

  Repayment of Debt

  As of September 30, 2004, approximately $4.6 million of the Company’s debt is related to floating rate industrial revenue bonds which were issued to finance the construction of its Maiden, North Carolina manufacturing facility. These bonds matured on October 1, 2004 and were fully repaid by the Company on that date.

  Recent Tax Legislation

  On October 22, 2004, the American Jobs Creation Act of 2004 (the “Act”) was signed into law. The Company is currently reviewing the provisions of the Act in order to determine its impact, if any, on the Company’s future consolidated financial condition, results of operations, and cash flows.

16

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

This excerpt taken from the ETH 10-Q filed May 10, 2005.

(13)     Subsequent Events

  Stock Repurchases and Remaining Authorization

  The Company has been authorized by its Board of Directors to repurchase its common stock, from time to time, either directly or through agents, in the open market at prices and on terms satisfactory to the Company. As of March 31, 2005, the Company had a remaining Board authorization to purchase 1.4 million shares. Subsequent to March 31, 2005 and through May 9, 2005, the Company repurchased, in nine separate open market transactions, an additional 716,900 shares of its common stock at a total cost of $22.6 million, representing an average price per share of $31.47. On April 26, 2005, the Board of Directors increased the remaining authorization of 691,100 shares to 2.0 million shares. All of the Company’s common stock repurchases and retirements are recorded as treasury stock and result in a reduction of shareholders’ equity.

  Borrowings

  During April 2005, the Company borrowed $12.5 million under its revolving credit facility to fund working capital needs. The borrowings, which are short-term in nature, bear interest at a rate of 6.125%.

  Acquisition

  On May 6, 2005, the Company acquired four Ethan Allen retail stores from an independent retailer for total consideration of approximately $3.4 million. As a result of this acquisition, the Company (i) recorded additional inventory of approximately $2.3 million and other assets of approximately $1.0 million, and (ii) assumed customer deposits of approximately $0.8 million. Goodwill associated with this acquisition totaled approximately $0.9 million and represents the premium paid to the seller related to the acquired business (i.e. market presence) and other fair value adjustments to the assets acquired and liabilities assumed.

This excerpt taken from the ETH 10-Q filed Feb 4, 2005.

(12)     Subsequent Events

  The Company has been authorized by its Board of Directors to repurchase its common stock, from time to time, either directly or through agents, in the open market at prices and on terms satisfactory to the Company. As of December 31, 2004, the Company had a remaining Board authorization to purchase 2.0 million shares. Subsequent to December 31, 2004 and through February 3, 2005, the Company repurchased, in five separate open market transactions, an additional 188,000 shares of its common stock at a total cost of $6.7 million, representing an average price per share of $35.70. All of the Company’s common stock repurchases and retirements are recorded as treasury stock and result in a reduction of shareholders’ equity.

EXCERPTS ON THIS PAGE:

10-Q
May 11, 2009
10-Q
Feb 9, 2009
10-Q
May 9, 2006
8-K
Feb 3, 2006
10-K
Sep 13, 2005
10-Q
May 10, 2005
10-Q
May 10, 2005
10-Q
May 10, 2005
10-Q
Feb 4, 2005

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