# Haverty Furniture Companies Inc: Form 10-Q for the period ended Sep 30, 2011

- Company: [Haverty Furniture Companies Inc](/companies/hvt.md) (CIK 216085)
- Form: 10-Q
- Filed: 2011-11-03
- Accepted by EDGAR: Nov 3, 2011, 16:19 ET
- Period: 2011-09-30
- Accession: 0000216085-11-000044
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/216085/000021608511000044/hvt1093011.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/216085/000021608511000044/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2011-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2011-07-01 to 2011-09-30 | $155.4m | us-gaap:SalesRevenueNet |
| Revenue | 9 months, 2011-01-01 to 2011-09-30 | $452.6m | us-gaap:SalesRevenueNet |
| Gross profit | 3 months, 2011-07-01 to 2011-09-30 | $80.4m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2011-01-01 to 2011-09-30 | $232.8m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2011-07-01 to 2011-09-30 | $80.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2011-01-01 to 2011-09-30 | $234.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Income tax | 3 months, 2011-07-01 to 2011-09-30 | −$31.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2011-01-01 to 2011-09-30 | $37.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2011-07-01 to 2011-09-30 | $118.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2011-01-01 to 2011-09-30 | −$1.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2011-07-01 to 2011-09-30 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2011-01-01 to 2011-09-30 | −$0.07 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2011-07-01 to 2011-09-30 | $0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2011-01-01 to 2011-09-30 | −$0.07 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2011-07-01 to 2011-09-30 | 22,162,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2011-01-01 to 2011-09-30 | 18,600,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2011-01-01 to 2011-09-30 | $30.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2011-01-01 to 2011-09-30 | $14.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2011-09-30 | $66.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2011-09-30 | $178.9m | us-gaap:AssetsCurrent |
| Total assets | at 2011-09-30 | $372.8m | us-gaap:Assets |
| Current liabilities | at 2011-09-30 | $75.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2011-09-30 | $118.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2011-09-30 | $254.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 4,181 characters.

### Provision for Income Taxes

Our effective tax rate for the third quarter and first nine months of 2011 was 35.6% benefit and (2.5)% expense respectively, compared to expense of 4.7% and 2.8% for the same periods of 2010.

The estimated annual effective rate for 2011 and 2010 was impacted by changes in our deferred tax valuation allowance. Income tax expense also includes Texas state taxes which are based on gross profit and not pre-tax income or loss. The income tax expense for 2011 also includes a discrete item related to a $155,000 reduction in our recorded income tax receivables.

We continue to review the realizability of our deferred income tax assets. Valuation allowances of $13.3 million associated with certain federal and state deferred tax assets could be reduced in 2011 based on, among other factors, the level of income generated in 2011.

### Store Plans and Capital Expenditures

We completed the relocation of a store in Austin, Texas during the second quarter of 2011 and in late October opened a store in Boca Raton, Florida, a new market for us. We also expect to open a relocated Asheville, North Carolina store during the fourth quarter of 2011. These changes should increase net selling space in 2011 by less than 1% assuming the new store opens and the existing store closes as scheduled. Store plans for 2012 include the opening of a new store in Baltimore, Maryland in the second quarter and later in the year a replacement store in Atlanta, Georgia and two new stores in other markets. These changes would increase net selling square footage 2.4% in 2012.

Our planned annual expenditures for 2011 are $19.0 million including $11.0 million for new stores and store improvements, $4.8 million for the purchases of four stores previously under lease and $3.2 million for information technology. Capital expenditures for 2012 are estimated to be $18.5 million.

### Liquidity and Capital Resources

Our sources of capital include, but are not limited to, cash flows from operations, public and private issuances of debt and equity securities and bank borrowings. We believe that available short-term and long-term capital resources are adequate to fund our working capital requirements, capital expenditures, scheduled debt payments, income tax obligations, benefit plan contributions and stock repurchases for the foreseeable future.

In September we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with a bank. The Credit Agreement amends and restates the agreement governing our existing revolving credit facility to reduce the aggregate commitments under the facility to $50.0 million from $60.0 million, extend the maturity date to September 1, 2016 from December 22, 2011, reduce the applicable margin for borrowings and modify certain of the covenants. The types of fees associated with the Credit Agreement are similar to the prior facility, but due to a longer term and better pricing the annual amortization and unused commitment fees are estimated to be approximately $0.3 million compared to $0.8 million.

The Credit Agreement is secured by inventory, accounts receivable, certain other personal property and cash. The borrowing base at September 30, 2011 was $46.0 million. Amounts available are reduced by $6.2 million since a fixed charge coverage ratio test was not met for the immediately preceding twelve months, resulting in a net availability of $39.8 million. There were no borrowings under the credit facilities during the nine months ended September 30, 2011.

### Summary of Cash Activities

Our cash flows provided by operating activities totaled $30.1 million in the first nine months of 2011 compared to $26.8 million for the same period of 2010. This increase was due to a larger reduction of inventory and increase in customer deposits in 2011 compared to 2010. These were partially offset by the shift in accounts payable and accrued liabilities to a reduction in cash flows in 2011 from an increase in 2010 as well as a small loss in 2011 compared to earnings in 2010. For additional information about the changes in our assets and liabilities refer to our Balance Sheet Changes discussion.

## Market risk

As filed, 482 characters.

There have been no material changes with respect to our financial instruments and their related market risks since the date of the Company’s most recent annual report. We have exposure to floating interest rates through our Credit Agreement. Therefore, interest expense will fluctuate with changes in LIBOR and other benchmark rates. We do not believe a 100 basis point change in interest rates would have a significant adverse impact on our operating results or financial position.

## Controls and procedures

As filed, 946 characters.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.

## Risk factors

As filed, 614 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Filed Nov 3, 2011.
Source: SEC EDGAR, the filing index for accession 0000216085-11-000044. Last ingested by Listed: Nov 4, 2026, 17:07 ET. No prices; not investment advice.