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Ethan Allen Reports Record Annual Sales

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Ethan Allen Interiors Inc. reported operating results for the three and twelve months ended June 30, 2006. For the twelve months ended June 30, 2006, the Company achieved record sales totaling $1.066 billion, an increase of 12.4% from $949.0 million in the prior year. Net delivered sales for the Company's Retail division increased 17.9% to $691.0 million, while Wholesale sales increased 11.0% to $736.1 million during that same period. Comparable Ethan Allen store delivered sales increased 12.3% over the prior year. For the twelve months ended June 30, 2006, earnings per share, which includes a pre-tax restructuring and impairment charge of $4.2 million related to the Company's ongoing conversion of one of its existing manufacturing facilities into a regional distribution center, increased 14.6% to $2.51 on net income of $85.7 million. This compares to earnings per share and net income of $2.19 and $79.3 million, respectively, in the prior year. Excluding the impact of the restructuring and impairment charge, earnings per share for the current twelve-month period amounted to $2.59 on net income of $88.3 million. During fiscal 2006, the Company utilized $84.1 million of available cash from operations to repurchase 2.5 million shares of its common stock in the open market. As of June 30, 2006, the Company had remaining authorization available to repurchase an additional 1.6 million shares. Net delivered sales for the quarter ended June 30, 2006 increased 12.3% to $272.0 million from $242.3 million in the prior year quarter. Net delivered sales for the Company's Retail division increased 21.8% to $184.4 million, while Wholesale sales increased 3.6% to $178.0 million during that same period. Comparable Ethan Allen store delivered sales increased 12.8% over the prior year quarter. For the quarter ended June 30, 2006, earnings per share increased 17.9% to $0.66 on net income of $22.4 million. This compares to earnings per share and net income of $0.56 and $19.5 million, respectively, in the prior year comparable period. During the current quarter, the Company utilized $33.0 million of available cash from operations to repurchase 910,900 shares of its common stock in the open market. Farooq Kathwari, Chairman and CEO, commented: "We are pleased with our results for the year and in reaching the milestone of $1 billion in annual sales. We believe that the continued progress being made by Ethan Allen is reflective of several initiatives undertaken in recent years, including: the continued repositioning of our retail network; investments to increase the professionalism of our retail management team; the success of new product introductions; improved advertising and marketing programs; and faster delivery of our products to our customers. All of these initiatives have been undertaken with a common objective - a renewed focus on superior customer service." Mr. Kathwari continued: "As I have stated previously, a number of these initiatives have entailed significant cost. Still, despite these costs and the current year effects of the higher prices of selected raw materials and fuel, we have recognized notable increases in both profitability and operating cash flow." Commenting on the Company's outlook for the fiscal year ended June 30, 2007, Mr. Kathwari stated: "While the results of the last twelve months are encouraging, written business in recent months has slowed from the levels noted during the past year. In addition, we remain cautiously aware of the state of the economy and the threat of further increases in interest rates and fuel prices which could have an adverse impact on consumer spending and profitability. Still, with the strategies we've recently implemented, we believe we have the opportunity to continue to grow our business. At the present time, we believe that fiscal year 2007 sales and earnings per share will increase 5-7% and 10-12%, respectively. As always, we will provide updates to this guidance during the year should circumstances warrant." Ethan Allen is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through an exclusive network of 306 interior design centers in the United States and abroad, of which 139 are Company-owned. Ethan Allen has 11 manufacturing facilities, which include 2 sawmills, located throughout the United States.

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