Havertys Reports Results for First Quarter 2008

ATLANTA, April 30 /PRNewswire-FirstCall/ -- HAVERTY FURNITURE COMPANIES, INC. (NYSE:HVT)(NYSE:and)(NYSE:HVT.A) today reported earnings for the first quarter ended March 31, 2008. Net income for the first quarter of 2008 increased to $1.0 million or $0.05 per diluted common share, compared to the first quarter 2007 net income of $0.8 million or $0.04 per diluted common share.

As previously reported, net sales for the first quarter of 2008 were $185.2 million, or 3.0% less than the sales in the corresponding quarter in 2007. On a comparable-store basis, sales decreased 6.3% for the quarter.

Clarence H. Smith, president and chief executive officer, said, "Our earnings for the first quarter were up 24.2% on a 3.0% sales decline. Gross margins were strong at 52.1% compared to the prior year's quarter of 49.9% and reflect the impact of several of our strategies. We chose to use credit as a stimulant for sales rather than emphasizing price discounting during the first quarter. Slightly more than one third of the gross profit improvement was due to our product mix and better pricing discipline. Heightened diligence over our inventories reduced the levels of damaged and close out merchandise and accounted for a third of the gross margin improvement. Our gross profit is also impacted by the level of sales financed using our in-house long-term no interest credit promotions. During 2008, we shifted more of these promotions to the third-party and the impact of this shift generated approximately another third of the gross margin improvement.

"We are pleased with the progress of the initiatives we undertook last year to lower our SG&A expenses and have seen improvement in most areas. The savings were largely offset by the shift to longer term free interest credit offers provided through the third-party which increased our selling costs approximately $2.8 million for the first quarter of 2008 compared to 2007 when credit promotions had not been emphasized. Higher fuel costs were another offset that led to flat overall SG&A expenses.

"Our inventories are higher than at year-end, due in part to our building stock because of the impact of factory closures around the Chinese New Year. However, they are in line with our budget and well balanced. Accounts receivable continues to decrease as we shift away from in-house financing of long-term promotions. We have experienced some increases in write offs and delinquencies, but due to the reduction in total receivables our allowance account has declined slightly.

"Our industry is still struggling to find the bottom of this cycle. We are encouraged by our performance in certain of our markets but we still see significant weakness in Florida. We began selling on the web last month and have recently begun promoting havertys.com more heavily using banner advertising and enhanced search engine practices. Our approach remains to connect with the customer in ways she chooses to shop and drive customers to our stores pre-disposed to purchase. We believe that we can leverage our existing organization and fixed cost structure with any positive sales momentum.

"Current indications for April sales are that total written business was down approximately 7% to 8% with total delivered sales flat. We will release April sales results next week."

Havertys is a full-service home furnishings retailer with 124 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 Thursday, May 1, 2008 at 10:00 a.m. Eastern Daylight Time to review the first quarter. Listen-only access to the call is available via the web at www.havertys.com (For Investors) and at
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Income
(Amounts in thousands except per share data)
(Unaudited)

Three Months Ended
March 31,

2008 2007

Net sales $185,253 $191,073
Cost of goods sold 88,818 95,642
Gross profit 96,435 95,431

Credit service charges 565 655
Gross profit and other revenue 97,000 96,086

Expenses:
Selling, general and
administrative 95,037 95,127
Interest, net (131) (59)
Provision for doubtful accounts 328 145
Other (income) expense, net (42) (480)
Total expenses 95,192 94,733

Income before income taxes 1,808 1,353

Income taxes 776 522

Net income $1,032 $831

Basic earnings per share:
Common Stock $0.05 $0.04
Class A Common Stock $0.05 $0.03
Diluted earnings per share:
Common Stock $0.05 $0.04
Class A Common Stock $0.05 $0.03

Weighted average shares - basic:
Common Stock 17,112 18,486
Class A Common Stock 4,127 4,197
Weighted average shares - assuming
dilution(1):
Common Stock 21,443 22,977
Class A Common Stock 4,127 4,197

Cash dividends per common share:
Common Stock $0.0675 $0.0675
Class A Common Stock $0.0625 $0.0625

(1) See additional details at the end of this release.

HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)

March 31, December 31, March 31,
2008 2007 2007

Assets
Cash and cash equivalents $2,195 $167 $7,984
Accounts receivable,
net of allowance 49,866 58,748 64,736
Inventories, at LIFO cost 109,598 102,452 119,795
Other current assets 16,825 17,569 17,426
Total Current Assets 178,484 178,936 209,941

Accounts receivable, long-term 4,863 8,003 14,105
Property and equipment, net 206,161 209,912 219,225
Other assets 25,021 25,086 13,425

$414,529 $421,937 $456,696

Liabilities and Stockholders' Equity
Notes payable to banks $8,250 $- $10,550
Accounts payable and
accrued liabilities 73,322 84,527 79,738
Current portion of long-term debt
and lease obligations 6,357 8,353 10,366
Total Current Liabilities 87,929 92,880 100,654

Long-term debt and lease
obligations, less current portion 20,261 20,331 36,618
Other liabilities 29,232 29,881 26,688
Stockholders' equity 277,107 278,845 292,736

$414,529 $421,937 $456,696

HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

Quarter Ended March 31,
2008 2007

Operating Activities
Net income $1,032 $831
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,447 5,646
Provision for doubtful accounts 328 145
Loss (gain) on sale of property
and equipment 18 (208)
Other 329 315

Changes in operating assets and
liabilities (6,674) (13,949)

Net cash provided by (used in)
operating activities 480 (7,220)

Investing Activities
Capital expenditures (1,852) (2,453)
Proceeds from sale of property and
equipment 197 877
Other investing activities 237 45

Net cash used in investing
activities (1,418) (1,531)

Financing Activities
Proceeds from borrowings under
revolving credit facilities 69,075 302,425
Payments of borrowings under
revolving credit facilities (60,825) (294,475)

Net increase in borrowings
under revolving credit facilities 8,250 7,950
Payments on long-term debt and lease
obligations (2,066) (2,068)
Treasury stock acquired (1,806) - Proceeds from exercise of stock
options - 224
Dividends paid (1,412) (1,510)

Net cash provided by financing
activities 2,966 4,596

Increase (decrease) in cash and cash
equivalents 2,028 (4,155)

Cash and cash equivalents at
beginning of period 167 12,139

Cash and cash equivalents at end of
period $2,195 $7,984

HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES

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,
2008 2007

Common Stock:
Weighted-average shares
outstanding 17,112 18,486

Assumed conversion of Class A
Common shares 4,127 4,197

Dilutive options and awards 204 294

Total weighted-average
diluted common shares 21,443 22,977

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 and awards which reduces the amount of
undistributed earnings allocated to the Class A Common Stock.

Contact for information:
Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900

First Call Analyst:
FCMN Contact:

Source: Haverty Furniture Companies, Inc.

CONTACT: Dennis L. Fink, EVP & CFO or Jenny Hill Parker, VP, Secretary &
Treasurer, of Haverty Furniture Companies, Inc., +1-404-443-2900

Web site: http://www.havertys.com/

2008-04-30 18:15:24 0349764 PRNEWSWIRE