Haverty Furniture Reports Results for First Quarter 2005 ATLANTA,
Ga., May 2 /PRNewswire-FirstCall/ -- Haverty Furniture Companies,
Inc. (NYSE: HVT; 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 http://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. Condensed Consolidated Statements
of Income (Amounts in thousands except per share data) (Unaudited)
Three Months Ended March 31, 2004 2005 (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 income(1):
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. Condensed Consolidated Balance Sheets (Amounts in
thousands) (Unaudited) December 31, March 31, March 31, 2004 (as
2004 (as 2005 restated(1)) 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. 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 as Income
statement data reported 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 Balance sheet data previously as reported 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.
Contact: Dennis L. Fink, EVP & CFO or Jenny Hill Parker, VP,
Secretary & Treasurer 404-443-2900 DATASOURCE: Haverty
Furniture Companies, Inc. CONTACT: Dennis L. Fink, EVP & CFO,
or Jenny Hill Parker, VP, Secretary & Treasurer, both of
Haverty Furniture Companies, Inc., +1-404-443-2900 Web site:
http://www.havertys.com/
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