Ethan Allen Expanding in N.C., Closing Leased California Facility

June 4, 2009

Ethan Allen Interiors Inc. (NYSE:ETH), Danbury, Conn., announced on Wednesday that it will expand its upholstery manufacturing operations in Maiden, N.C., as it transfers production from its upholstery operation in Chino, Calif.

The Chino facility lease expires in seven months and was Ethan Allen's only leased manufacturing facility. The consolidation of the Chino operations will affect 65 employees plus an additional 137 contracted workers provided by employment agencies. The company expects to record pre-tax restructuring, impairment, severance and other related charges of approximately $2.7 to $3.1 million, the majority of which will be non-cash in nature representing an after-tax impact of $1.7 to $2 million or $0.06 to $0.07 per diluted share. The majority of this charge is expected to be recorded in the quarter ending June 30.

The Maiden operation currently has 540 employees, and with this change the Company expects to add 302 additional jobs over the next three years.

"The severe recession has resulted in many challenges and also created opportunities to accelerate the reinvention process in establishing a stronger enterprise," said Ethan Allen Chairman and CEO Farooq Kathwari. "We very much regret the impact of this consolidation to our Chino associates. Our plan to expand upholstery operations in Maiden, North Carolina, where we have been operating since 1949, will start immediately. We are pleased that the state and local governmental authorities in North Carolina worked with us in this transition."

Ethan Allen has a retail network of 290 design centers in the United States and abroad, of which 159 are Company owned; and operates eight manufacturing facilities in the United States, which include two sawmills, and one manufacturing facility in Mexico.