Haverty Furniture Reports Results for Second Quarter 2005 ATLANTA,
Aug. 1 /PRNewswire-FirstCall/ -- HAVERTY FURNITURE COMPANIES, INC.
(NYSE: HVT; 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 htp://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. Condensed Consolidated Statements
of Income (Amounts in thousands except per share data) (Unaudited)
Quarter Ended Six Months Ended June 30, June 30, 2004 2004 2005 (as
restated(1)) 2005 (as restated(1)) 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. Condensed Consolidated Balance
Sheets (Amounts in thousands) (Unaudited) December 31, June 30,
2004 2005 (as restated(1)) 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. Condensed Consolidated Statements of Cash Flows (Amounts
in thousands) (Unaudited) Six Months Ended June 30, 2004 2005 (as
restated(1)) 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
activities 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. 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 as previously as
Income statement data reported restated reported restated 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 as Balance sheet data reported
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 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. 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, of +1-404-443-2900 Web site:
http://www.havertys.com/
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