ETHAN ALLEN FILES DEFINITIVE PROXY MATERIALS AND MAILS LETTER TO STOCKHOLDERS
(Thomson Reuters ONE) -
ETHAN ALLEN FILES DEFINITIVE PROXY MATERIALS AND
MAILS LETTER TO STOCKHOLDERS
Urges Stockholders to Vote the WHITE Proxy Card Today "FOR" Ethan Allen's Highly
Qualified
Director Nominees
Ethan Allen Has the Right Plan and the Right Team to Continue Building
Sustainable Value for Stockholders
DANBURY, CT (October 28, 2015) -- Ethan Allen Interiors Inc. ("Ethan Allen" or
the "Company") (NYSE:ETH) today announced that it has filed definitive proxy
materials with the U.S. Securities and Exchange Commission ("SEC") in connection
with its upcoming 2015 Annual Meeting of Stockholders, to be held on November
24, 2015. Ethan Allen stockholders of record as of October 5, 2015 are eligible
to vote at the 2015 Annual Meeting of Stockholders.
The Ethan Allen Board of Directors unanimously recommends that stockholders vote
the WHITE proxy card FOR the election of the Board's experienced and highly
qualified director nominees: James B. Carlson, Clinton A. Clark, John J. Dooner,
Jr., Domenick J. Esposito, M. Farooq Kathwari, James W. Schmotter and Tara I.
Stacom.
In connection with the filing of the proxy statement, the Ethan Allen Board is
mailing a letter to stockholders detailing the significant progress made under
the leadership of the Board and management team and the important transition
currently underway at Ethan Allen to enhance value for stockholders and achieve
near and long-term revenue growth and continued profitability through:
* Completing implementation of our new product offerings that are designed to
appeal to a wide demographic customer base;
* Increasing our advertising and promotions to drive traffic;
* Continuing renovation and relocation of design centers, plus targeting 40
additional new U.S. markets to add new design centers;
* Continued strengthening of our interior design associates to further
differentiate our unique level of personal service;
* Increasing on-line business; and
* Expanding international business in key markets.
The full text of the letter follows:
October 27, 2015
Dear Stockholder:
You are cordially invited to attend the 2015 Annual Meeting of Stockholders of
Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company"). The Annual Meeting
will be held at the Ethan Allen International Corporate Headquarters, Ethan
Allen Drive, Danbury, Connecticut 06811 at 10:00 A.M., Eastern Time, on Tuesday,
November 24, 2015.
Your vote this year is especially important. We believe that the matters you are
being asked to approve will have a direct and meaningful impact on the value of
your investment. In the enclosed material, you will see your management's
successful track record of value creation and the vision for your Company,
overseen by a strong, independent and experienced Board of Directors.
Your annually elected Board comprises seven directors, six of whom are
independent. The other director is Chief Executive Officer Farooq Kathwari, who
is also Ethan Allen's largest stockholder and beneficially owns more than 11% of
the Company's outstanding common stock. In addition, during 2015, we appointed
two new highly qualified independent directors to the Board, and we announced
the retirement of long-serving directors Kristin Gamble and Frank Wisner.
Your Board believes that electing the entire Ethan Allen slate of director
nominees is in the best interests of all Ethan Allen stockholders. Your Board's
nominees on the WHITE proxy card include James B. Carlson, Clinton A. Clark,
John J. Dooner, Jr., Domenick J. Esposito, M. Farooq Kathwari, James W.
Schmotter and Tara I. Stacom.
Ethan Allen is in the midst of executing a substantial transformation strategy,
which the Board and management believe will position the Company for significant
long-term growth and success. This transformation includes the evolution of our
brand and product offerings, and the strengthening of our vertically integrated
operations, positioning us to deliver continued profitable growth and enhanced
stockholder value. We believe that these initiatives will accelerate growth,
further improve our operating performance and strengthen our financial position.
The execution of this strategy also requires a high level of operational and
business expertise and experience, which the Ethan Allen Board and management is
best positioned to oversee. As we complete the third and fourth phases of our
repositioning strategy, fiscal 2016 will be a transition year. We expect to see
the full benefits of our transformation beginning in fiscal 2017.
Even during this transition period, the Company has performed extremely well
over the past five years including[i]: net sales compound annual growth rate
(CAGR) of 5%, adjusted operating income CAGR of 119%, and adjusted earnings
before interest, taxes, depreciation, and amortization (EBITDA) CAGR of 27%.
Adjusted earnings per share increased from a FY2010 loss of $0.15 per share to
FY2015 adjusted earnings of $1.41 per share. Also during the past five years,
the Company has maintained a strong operating cash flow generating $277 million,
allowing the Company to repay $210.4 million of debt, pay $61 million in regular
and special dividends, increase the regular dividend per share by 127%, and
average return on equity of approximately 12%, return on assets of approximately
7% and return on invested capital of approximately 9%.
Recently, Sandell Asset Management Corp. and certain of its affiliates
(together, "Sandell") acquired a 5.5% interest in our Company. We believe that
Sandell, as evidenced by its actions and demands as more fully set forth below,
acquired its interest solely for the purpose of achieving a short-term financial
gain. In so doing, we further believe that Sandell's goals would harm the
Company and its stockholders. Despite our accomplishments and our clear strategy
to drive profitable growth and enhance stockholder value, Sandell is waging what
we believe to be a misguided proxy contest seeking to replace six of seven
directors at Ethan Allen's upcoming Annual Meeting.
As a Board and management team, we always listen to our stockholders, seek to
engage in a meaningful and constructive dialogue and seek to establish a
corporate governance structure that completely aligns Company and stockholder
interests. Examples over the past several years include:
* Elimination of our classified Board;
* Elimination of our stockholder rights plan;
* Extraordinary decision by our CEO to voluntarily cap his compensation in
fiscal 2013, 2014 and 2015;
* Dramatically changing the vast majority of our CEO compensation in 2015 to
performance-based compensation;
* Rescheduling the Annual Meeting to allow our stockholders more time to
submit thoughtful and positive nominations and business proposals; and
* Submitting to stockholders a proposal to eliminate provisions in our charter
that some perceived limited shareholder voting in certain circumstances.
Since Sandell recently became a stockholder this past Spring, we have engaged in
discussions with Sandell numerous times to attempt to understand its views and
objectives. During our discussions, Sandell has not demonstrated any interest
or willingness in working constructively with the Company or understanding our
business, nor has it presented any credible ideas, plans or analysis on ways
Ethan Allen could further enhance value beyond the transformation strategy we
are already executing. We believe Sandell's lack of credible engagement
demonstrates that it is only interested in achieving a short-term gain by
running a costly and distracting proxy contest to implement its misguided
objectives at the expense of all Ethan Allen stockholders.
Conversely, your Board is actively engaged in the oversight of the Company's
strategy and is committed to delivering solid long-term results while serving
the best interests of all Ethan Allen stockholders. We are committed to
maintaining a superior and diverse board that has the skill set to evolve and
guide the Company in a rapidly changing environment and that is empowered to
hold management accountable for delivering and executing on our goals.
WE ARE AGRESSIVELY PURSUING A TRANSFORMATIVE STRATEGY, REPOSITIONING
ETHAN ALLEN AS A LEANER, VERTICALLY-INTEGRATED INTERIOR DESIGN COMPANY
Your Board and management team have created an integrated vertical operating
structure that enables streamlined execution across the Company's design,
manufacturing, distribution, retail and marketing segments. Maintaining a
vertical structure is a long-term strategic decision that we are confident
creates significant competitive advantages and best positions Ethan Allen for
long-term growth. This model necessitates strong and experienced leadership at
many levels throughout retail, manufacturing and logistics.
Optimizing Design Center and Manufacturing Footprints
We believe that, by resizing and relocating design centers while expanding our
reach across key markets, we are better positioned than our competitors to serve
our customers and capitalize on growth opportunities. Since 2000, the Company
has relocated 55 design centers and Ethan Allen's independent retailers have
relocated 38 design centers. Of the 55 design centers the Company relocated, 38
properties were sold for proceeds of $67.2 million. Ethan Allen continues to
sell off legacy properties and relocate and move their operations and customer
base into smaller footprints. We are currently targeting about 40 new markets in
North America with smaller footprints and will continue to prudently evaluate
opportunities to expand internationally.
We have also consolidated 20 manufacturing plants and disposed of surplus
properties as we repositioned our manufacturing footprint into six key plants in
the U.S., with an additional plant in each of Mexico and Honduras. Our efforts
at being a leaner and more cost efficient organization have driven cash flow and
generated adjusted EBITDA of approximately $90 million on an annual basis over
the past three fiscal years.( i )
Harnessing Technology to Drive Growth
We are adding technology at all levels of our business to create a dynamic omni-
channel environment. This includes investing in our technology infrastructure,
including digital, retail, manufacturing, operations, warehousing and logistics
platforms, to seamlessly link information across our vertically-integrated
Company.
By effectively combining technology with personal service, we are uniquely able
to enhance the retail experience for our customers. We have integrated our
wholesale ERP systems, manufacturing systems, distribution and warehousing
systems, retail and point of sale systems and, most importantly, our digital and
ecommerce systems as a part of our omni-channel strategy. We have also
introduced constructive and relevant technology to our design centers and have
provided our interior designers with tablets that allow them easy access to our
ordering systems, product visualization tools and product information. We
rebranded our website, with a focus on driving traffic to our 300 design
centers. With over 200 Design Centers in North America, about 70% of our target
demographic is within an easy drive to an Ethan Allen Design Center and 90% of
our clients who visit a design center have been on our website. Our 1,500
interior designers who work with clients that come into a Design Center and
experience our personal design service, create higher average tickets and
enhanced repeat sales. We are also focused on increasing our ecommerce sales. We
have streamlined the online custom offerings to make the buying process quick
and easy. This creates an opportunity for incremental online sales that do not
cannibalize the brick and mortar interior design service oriented sales. For
fiscal 2015, online transactions are up 28% and conversion rates are up 22%.
Optimizing Capital Structure and Maximizing Value of All Company Assets
Your Board and management team seek to continue to drive growth, reduce costs
and optimize our capital structure, including prudently leveraging the debt
capital markets and evaluating mortgage financing, sale-leasebacks and other
strategic opportunities. Further, your Board and management team are maximizing
the value of our real estate assets while maintaining our strategic and
financial flexibility. In order to maintain the flexibility to strategically
relocate design centers to markets with the highest potential for growth, we
determined the most effective use of our real estate is as collateral to raise
new long-term debt, which the Company is in the process of evaluating.
The Company has remained focused on building stockholder returns through
leveraging our strong operational performance to generate excess cash to return
to stockholders through special and regular dividends and stock repurchases,
totaling $81 million in the past five years.
ETHAN ALLEN IS DELIVERING STRONG FINANCIAL PERFORMANCE AND
CONSISTENT STOCKHOLDER RETURNS
Ethan Allen's financial performance from fiscal 2010 to fiscal 2015 demonstrates
that we have the right strategy in place and that the value-enhancing
opportunities we are pursuing will contribute to future growth. We are also
growing product demand through the acceleration of marketing efforts, including
the addition of new design centers, a multi-faceted advertising strategy and
fresh product offers.
We have a proven track record of delivering strong financial performance and
stockholder returns. As we complete the third and fourth phases of our
repositioning strategy, fiscal 2016 will be a transition year. We believe that,
beginning in fiscal 2017, we will be well positioned to begin an accelerated
growth phase, towards sales of $1 billion at which level we expect to increase
our operating margin from our industry leading 11% to about 15% of sales. This
is consistent with our successful history of repositioning the Company due to
changing economic environments.
The Company's share price valuation metrics have remained consistently on par
with our furniture peers even during the Company's current transformation that
the Company has been undergoing these past couple of years. With the completion
of the transformation strategy during fiscal 2016, the Company will have the
opportunity of trading at an expanded market premium beginning in fiscal 2017.
Over the last five fiscal years, we:
* Repurchased $21 million of common stock;
* Paid $61 million in special and regular dividends;
* Increased the dividend per share by 127%;
* Invested $96 million in capital expenditures; and
* Generated total stockholder returns of 15.4% (compound annual growth rate
assuming dividends reinvested) as compared to 17.3% for the S&P 500 and
17.5% for the Russell 3000
During fiscal year 2015, we:
* Repurchased $16.5 million of common stock;
* Paid $13.3 million in dividends;
* Ended the fiscal year with a dividend yield of about 1.9%;
* Reduced net debt by $53.3 million; and
* Generated total stockholder returns of 8.3% as compared to 7.4% for the S&P
500 and 7.3% for the Russell 3000
We have also achieved significant financial milestones from fiscal 2010 to
fiscal 2015, including(i):
* Consolidated Net Sales compound annual growth rate of 5%;
* Adjusted operating income compound annual growth rate of 119%;
* Adjusted earnings per share increase from a FY2010 loss of $0.15 per share
to FY2015 adjusted earnings of $1.41 per share; and
* Adjusted EBITDA compound annual growth rate of 27%.
YOUR BOARD HAS DEMONSTRATED ITS COMMITMENT TO EFFECTIVE CORPORATE GOVERNANCE,
STOCKHOLDER ENGAGEMENT AND RESPONSIVENESS
Ethan Allen has consistently demonstrated a commitment to transparent and
effective corporate governance. We have a long-standing policy and practice to
engage with our stockholders to discuss the Company's objectives and better
understand the thoughts of our stockholders. In addition, the Company has
implemented stockholder friendly corporate governance structure and policies.
See ethanallen.com/governance for a full overview of these policies.
Our Board of Directors is composed of seven directors, six of whom are
independent, and all of whom are elected annually. In 2015, consistent with our
longstanding practice of strengthening and refreshing the Board over the years,
we added two new directors, Domenick J. Esposito and Tara I. Stacom, for
election at the Annual Meeting who are replacing two long-serving directors. Of
the six independent director nominees, five are new to your Board since 2010.
Our highly-qualified independent directors represent a range of fresh
perspective and diverse experience, with backgrounds in marketing, finance and
accounting, legal, international, real estate, and general management. Our Board
is transparent and open-minded in fulfilling its fiduciary responsibilities on
behalf of all stockholders. Importantly, our Board is very engaged, not only at
a strategic level but also on an operational level.
Conversely, Sandell's slate of nominees have very limited experience as a
director of a public company or in retail, manufacturing or marketing related to
a home furnishings enterprise.
SANDELL'S POSITIONS ARE INCONSISTENT;
YOUR BOARD IS ALIGNED WITH THE INTERESTS OF ALL STOCKHOLDERS
WE URGE YOU TO DISCARD ANY GOLD PROXY CARD YOU MAY RECEIVE FROM SANDELL
As Ethan Allen's largest stockholder who beneficially owns more than 11% of the
Company's outstanding common stock, Mr. Kathwari, our Chairman and CEO, is
deeply aligned with the interests of all stockholders.
Your Board, including Mr. Kathwari, finds it disconcerting that Sandell is
publicly attacking the performance of the Company, its leadership team and Board
of Directors; yet in private discussions, Sandell proposed that Mr. Kathwari
take the Company private in a transaction where Sandell would like to be a
partner. We question why Sandell is waging a public proxy contest against the
very same leadership it proposed to be a partner with in the future.
In addition, as we outlined previously, Sandell has not demonstrated any
interest or willingness in working constructively with the Company or
understanding our business, nor has it presented any credible ideas, plans or
analysis on ways Ethan Allen could further enhance value beyond the
transformation strategy we are already executing. We believe Sandell's lack of
credible engagement demonstrates that it is only interested in achieving a
short-term gain by running a costly and distracting proxy contest to implement
its misguided objectives at the expense of all Ethan Allen stockholders.
We question Sandell's motives in attempting to coerce Mr. Kathwari into short-
term opportunities at the expense of all stockholders. Taken together, its
actions are, at best, disingenuous. Please do not return or otherwise vote any
gold proxy card sent to you by Sandell.
The Board continues to unanimously believe that Ethan Allen's strategy, overseen
by Mr. Kathwari, is the best course of action at this time.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE ETHAN ALLEN DIRECTORS
ON THE WHITE PROXY CARD TODAY
We believe Ethan Allen stockholders can protect the value of their investment by
voting "FOR" the election of your Board's experienced and highly qualified
director nominees on the WHITE proxy card TODAY: James B. Carlson, Clinton A.
Clark, John J. Dooner, Jr., Domenick J. Esposito, M. Farooq Kathwari, James W.
Schmotter and Tara I. Stacom.
Thanks to our efforts, Ethan Allen today is a leading interior design company.
While we know there is more work to do, and our journey is not complete, we are
confident that we have the right plan and the right team in place to deliver
value for all of our stakeholders.
Thank you for your continued support, interest and investment in Ethan Allen.
Sincerely,
/s/ /s/
M. Farooq Kathwari Kristin Gamble
Chairman of the Board, Director
President and Principal Executive Officer
/s/ /s/
James B. Carlson James W. Schmotter
Director Lead Independent Director
/s/ /s/
Clinton A. Clark Tara I. Stacom
Director Director
/s/ /s/
John J. Dooner Frank G. Wisner
Director Director
/s/
Dominick Esposito
Director
--------------------------------------------------------------------------------
[i] Refer to "non-GAAP reconciliation" below.
About Ethan Allen
Ethan Allen Interiors Inc. (ETH) is a leading interior design company and
manufacturer and retailer of quality home furnishings. The Company offers
complimentary interior design service to its clients and sells a full range of
furniture products and decorative accessories through ethanallen.com and a
network of approximately 300 Design Centers in the United States and abroad.
Ethan Allen owns and operates eight manufacturing facilities including five
manufacturing plants and one sawmill in the United States plus one plant each in
Mexico and Honduras. Approximately seventy percent of its products are made in
its North American plants. For more information on Ethan Allen`s products and
services, visit ethanallen.com.
Forward Looking Statements
This press release and related discussions should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended June 30, 2015 (the
"2015 Form 10-K") and other reports filed with the Securities and Exchange
Commission. This press release and related discussions contain forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements include
statements about such matters as: our capital structure; future or targeted
operational and financial performance; liquidity, capital and debt levels;
strategic plans; transformation initiatives; the pending proxy contest, the
impacts thereof and other possible changes in the composition of the Company's
board of directors; stock repurchase and dividend plans; our intent to secure
debt or other forms of financing; demand for our products; our position in
markets we serve; and regional and global economic and industry market
conditions and changes therein. Such forward-looking statements reflect
management's current expectations concerning future events and results of the
Company, and are subject to various assumptions, risks and uncertainties
including specifically, and without limitation, those set forth in Part I, Item
1A "Risk Factors" of the 2015 Form 10-K. Accordingly, actual future events or
results could differ materially from those contemplated by the forward-looking
statements. The Company assumes no obligation to update or provide revision to
any forward-looking statement at any time for any reason.
Additional Information
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company`s stockholders in
respect of the 2015 annual meeting. Ethan Allen has filed with the U.S.
Securities and Exchange Commission a definitive proxy statement and an
accompanying proxy card in connection with the 2015 annual meeting (the "2015
proxy materials"). The 2015 proxy materials contain important information about
the Company, its directors and executive officers, the 2015 annual meeting and
related matters. Stockholders are strongly urged to read the 2015 proxy
materials, any amendments and supplements thereto, and the accompanying proxy
card carefully. Stockholders will be able to obtain free copies of the 2015
proxy materials and other documents filed with the SEC by the Company through
the web site maintained by the SEC at www.sec.gov and on the company`s web site
at http://www.ethanallen.com/en_us/investor-relations1.html. Information
regarding the identity of potential participants, and their direct or indirect
interests, by security holdings or otherwise, are set forth in the 2015 proxy
materials.
Non-GAAP Financial Measures
This press release and related discussions refer to certain non-GAAP
information, which excludes the effects of restructuring, impairment, transition
costs, and certain other items recorded during the periods presented.
Reconciliations of this non-GAAP information to the most directly comparable
GAAP measure are available below and on our website, ethanallen.com.
Non-GAAP reconciliation
2015 2010
Operating income $ 65.9 $ (11.7)
Special items 4.6 13.1
Adjusted Operating income $ 70.5 $ 1.4
EPS $ 1.27 $ (1.53)
Special items 0.14 1.38
Adjusted EPS $ 1.41 $ (0.15)
Net income $ 37.1 $ (44.3)
Interest expense, net 5.5 10.9
Income tax expense 19.5 25.5
Depreciation and amortization 19.1 29.4
------------------------
EBITDA 81.3 21.5
Special items 8.2 5.5
Adjusted EBDITA $ 89.5 $ 27.0
Return on Equity = current fiscal year net income / average of current and
prior fiscal year-end shareholders' equity
Return on Assets = (current fiscal year net income less after tax interest
expense) / average of current and prior fiscal year-end total assets
Return on Invested Capital = (current fiscal year net income less after-tax
interest expense) / average of current and prior fiscal year-end totals of
debt plus equity.
Special items consist of restructuring, transition charges and certain other
items.
Ethan Allen Interiors Inc. Investor / Media Contact
Corey Whitely
Executive Vice President, Administration
Chief Financial Officer and Treasurer
cwhitely(at)ethanalleninc.com
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Ethan Allen Interiors Inc. via GlobeNewswire
[HUG#1962156]
Unternehmensinformation / Kurzprofil:
Datum: 28.10.2015 - 18:28 Uhr
Sprache: Deutsch
News-ID 430183
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contact information:
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