Ethan Allen Jon Dickey April 28, 2005

History Founded in 1932 by Theodore Baumritter and Nathan Ancell Sold under the Allen name for the first time in 1937 Incorporated in 1989 to sell furniture through the countries largest network of home furnishing retail stores

Industry Furniture Industry Competitors Furniture International (FBN) La-Z-Boy (LZB)

Corporate Information Operate in two segments Retail 46% of revenue Wholesale 54% of revenue 6,600 employees More than 300 stores based mostly in the U.S

Our Position Acquired on 10/22/1999 Our Position Paid $33.00/share 700 shares Cost basis of $23,100 Our Position Currently trading at $30.60 a share Worth $21,400 A loss of $1,680

Key Statistics ETH Industry Avg Market Cap: 1.08 B P/E (ttm): 14.19 EPS (ttm): 2.14 Revenue: 937.1 M Revenue Growth: 5.3% ROE: 17.42% Profit Margin (ttm): 8.4% Stock Price: $30.60 Industry Avg Market Cap: 478.43 M P/E (ttm): 20.52 EPS (ttm): .69 Revenue: 557.64 M Revenue Growth: 5.7%

Recent ETH Developments Ethan Allen has missed earnings and posted lower profits in each of the past two quarters During that time, ETH stock has fallen by almost 25% Since last earnings call, increased share repurchase capabilities to 2 million shares

Recent Industry Developments Furniture Brands also posted poor earnings in their most recent quarter Domestic Furniture sales are down as a whole The industry appears to be struggling due to a drop in the housing market A very cyclical industry

ETH last 5 years

ETH vs. The Market

ETH vs. LZB

ETH vs. FBN

Future Projections DCF- Stock Price of $21.57 View Excel

Options Buy More Just a few months ago, the stock was very profitable Stock repurchase plan could be a signal that the company is actually undervalued Hold Assuming that ETH will rebound from this downward cycle and the industry will regain profitability

Options Sell ETH has shown very little profitability during its time in the portfolio and has underachieved greatly in recent months

Recommendation Sell all 700 shares of ETH at the market Poor Earnings- the company is not making money right now DCF shows little future growth

Questions?