Good day, ladies and gentlemen, and welcome to the Ethan Allen earnings release conference call. (Operator Instructions) I'd now like to introduce your host for today's conference call, Mr. David Callen. Mr. Callen, you may begin, sir.

Good morning and welcome to the investor and analyst call for the third quarter ended March 31, 2010, for Ethan Allen Interiors Inc. I am David Callen, Vice President of Finance and Treasurer, and joining Mr. Farooq Kathwari, our Chairman, President and CEO, in this quarterly discussion. After I read a few administrative notes, Farooq will provide his opening remarks. I will then review some of the important financial highlights, and Farooq will close our prepared remarks with a detailed review of the business initiatives of the company and then open up the phone lines for questions. Please note that in the earnings release and in the course of our prepared remarks, reference has been made to certain non-GAAP information, which excludes the effect of restructuring impairments, transition charges and unusual income tax impacts in the reported periods. A reconciliation of this non-GAAP information to the most directly comparable GAAP measure was provided with the tables attached to the press release. As an added reminder, comments from this call should be considered in conjunction with the company's reports filed with the SEC. Any forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking comments reflect management's current and best judgment and are subject to various assumptions, risks and uncertainties. Actual future events or results could differ materially from those contemplated in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statements at any time for any reason. Now to Farooq Kathwari for his opening remarks. Farooq?

I will provide a brief overview of the highlights of our third quarter. And then after Dave gives his financial overview, I'll come back and talk in detail about our business initiatives. During the quarter, our written booked orders in the retail division increased by 18.6% and comparable written increased by 24.2%. Our wholesale orders also increased by 24%. The backlogs, which were at very low levels last year and also at the beginning of this quarter, during this quarter, increased at retail by 56% and wholesale backlog was up 115%. And this is compared to the previous year. Now the backlog also increased from last quarter by 34% for the retail division and 29% for our wholesale. The current backlogs are at a level that gives us an opportunity to operate more efficiently in retail, manufacturing and logistics. On a consolidated basis, our total booked orders this past quarter were approximately $176 million, an increase of 20% versus the prior year. And our delivered sales were $147 million, an increase of 5%. With delivered sales of $147 million at an operating income level ex-restructuring and transition costs, we substantially broke even. We have continued to improve our liquidity. Cash investments and restricted cash totaled $85.2 million compared to $53 million as of 6/30/2009, an increase of 61%. We also have a $60 million revolving credit facility in place. Our consolidated booked orders this quarter of approximately $160 million if maintained would translate to annual sales of about $700 million, which would provide us an opportunity to be profitable. While business continues to improve, we are still cautious in our outlook and will need to see another quarter of solid retail activity to project a level of acceptable profitability. Now our delivered sales of $147 million were lower than what we wrote. There were several factors. We started with a low backlog. Most of the increase of written orders came to us at the end of February when our two-month savings initiatives ended. Our transition to custom also had an impact. Instead of shipping domestic case goods from stock, over 90% of new custom orders had the lead time of six to eight weeks. We also have had to get our production in the United States plants. And also, offshore plants lead times have also been longer as they are also gearing up. The great recession has provided us an opportunity to make major improvements to all aspects of our vertically-integrated structure, which I will discuss in greater detail after David's comments. David?

Net delivered sales for the quarter were $147.3 million, up 5% from the prior-year quarter and up 2.8% sequentially from the second quarter. This is notable since historically our third quarter delivered sales are lower than the second quarter fiscal quarter due to normally lower written orders during the holiday season. Our retail segment reported net delivered sales of $107.1 million, up 3.7% versus the prior-year quarter, including an increase of 8.2% by the comparable design centers. Written orders booked in retail increased 18.6% with comparable design center written sales up 23.7% versus the prior-year quarter. Wholesale net delivered sales were $96.6 million, up 9.7% compared with the prior-year quarter and up 14.3% sequentially. Consolidated gross margin for the quarter was 48.9% compared to 47.1% in the prior-year quarter. As we have previously discussed, we continue to incur some transition costs related both to our closed plants and for the ramping up of production and a conversion to custom case goods during the quarter, which totaled $2.1 million or about $0.05 per diluted share. Excluding these costs, our consolidated gross margin would have been 50.3% in the quarter. As discussed, we expect these transition costs to be about $1.5 million through the remainder of this fiscal year. Operating expenses totaled $74.5 million, excluding $400,000 or about $0.01 per share of restructuring charges on previously announced actions. The consolidated operating loss was $2.8 million versus an operating loss in the prior-year quarter of $74.7 million. Excluding the $2.5 million of transition and restructuring costs noted previously for the current year and $48.4 million goodwill impairment and $7.3 million of restructuring charges in the prior year, the net operating loss was $300,000 versus a loss of $19 million last year. It is worth noting that while delivered sales have not yet caught…

As I said earlier, the great recession has provided us an opportunity to focus on our strategic priorities. We continue to focus on eight strategic priorities. First is developing a strong network of interior designers; second, and an effective marketing program to reach a larger consumer base; third is development of stylish, good quality and relevant product offerings; fourth, continued repositioning and strengthening of our design centers; fifth, developing an efficient and balanced sourcing; sixth, developing an efficient logistics network at wholesale and retail; seven, utilizing technology as a competitive advantage; and eighth, providing superior financial results. Those are our priorities. Now just a brief overview of what we have done so far in terms of developing a strong network of interior design associates. The recession has provided us an opportunity to attract strong entrepreneurial interior designers. In recent months, we have begun to add interior design associates to the company's retail division. In addition, we have now have over 1,000 independent interior designers in our IDA program. Acquiring qualified interior designers both working in-house and in our IDA program is a priority and an opportunity. Our marketing communications initiatives continue to focus on internal marketing and training and on external communications. In our external communications, we have continued to invest in national television and have increased our advertising in direct mail. As we move forward, we are developing a very effective communications program to reach a larger consumer base. We continue to strengthen our product programs and we are planning a major retail conference in mid-July in which we'll introduce very relevant new products. We continue to refine our interior design centers and design studios. At March 31, we had 228 in North America and 50 abroad. In fiscal 2010 to date, we consolidated 14 of the company's retail…

(Operator Instructions) Our first question or comment comes from the line of Mr. Robert Higginbotham from Goldman Sachs. Your line is open.

I was a little surprised we didn't see a bigger recovery in gross margin, given all the work you've done around rationalizing your manufacturing base. So I was hoping you could comment on: one, what your current downtimes are; and two, as you think about the offsets being promotional activity and any disruption in consolidating those facilities, if you could help us think about the magnitude between those two and how long we might expect to see some of those disruption impacts?

Yes. Our gross margins have been impacted, as you mentioned, by several factors. First is we've been operating at lower volumes. Second is we have been consolidating our manufacturing, our retail. We also have been converting our domestic case goods into custom. We have been operating and working towards getting one upholstery plant in Maiden, North Carolina, operate instead of seven that we had a few years back and three that we had last year. All of these had an impact on gross margin. Despite all of those things, as Dave mentioned that if you take out some of these restructuring and transition costs, we operated at about 50% gross margin. We have the opportunity of improving them, because we have now started to ramp up our manufacturing. While we made lots of improvements, but lots of improvements were restructuring. We did not get the benefit of improvements in volume. In fact, if anything, all those changes that we have made had a negative impact on gross margins. The good news is we have the opportunity of improving our gross margins as our volumes increase.

Our next question or comment comes from the line of Mr. Budd Bugatch from Raymond James.

To piggyback on that last question, now we're at a level where we've got $170 million-some in orders, when do you think that translates into actually deliveries? And you say you've had the opportunity to improve margin. Are there any impediments or are there any continuing rollovers other than that $1.5 million of restructuring to be an impediment for better margin?

Budd, one fact I did not mention, which was part of that question earlier, which was the impact on our margins because of the savings that we are offering from our everyday best price. That also had an impact. Now, we want to continue to offer savings in the immediate future, even though we were caught somewhat in a difficult situation of having migrated to an everyday best price and then also offering savings. However, the good news is that it does give us an opportunity. If you go back, Bob, and take a look at those scenarios we gave in November, you will see that that is about $610 million which translates to $152 million quarterly sales, and we said we would break even. Now, good news is that this quarter we delivered $147 million, which translates to $590 million, and we substantially broke even. So we brought our breakeven lower. Then if you go to our next scenario, which was $700 million, which translates to $175 million quarterly, and we said if we do that, we have an opportunity of having an operating income of about $43 million. Now, we wrote that. In order to deliver $175 million, we have to continue to operate or to get consolidated written business of $175 million to $200 million, because obviously we need backlogs, especially when we are in the business of providing custom. So operating at about $175 million ongoing basis, I would think that we wrote $175 million. One would say that we would deliver all of it this quarter. I do not know. It's possible that we will probably deliver somewhat less than that, but by continuing at that level, we do operate at $700 million and have an opportunity of having a decent operation margin. And just keep in mind, we did $1 billion a few years back. So our objective is to continue to operate, to bring in volume. Our cost structure is lower. And the leverage of our cost structure on higher volume gives us an opportunity to improve our gross margins and more importantly our operating margins.

So I'm just trying to make sure I understand the timing of that, Farooq. As you've now been just about through all of April, how are we seeing written orders coming in there? I know that you don't normally like to comment on that, but you are out there promoting again. But we have seen the overall wholesale margin; it looks like it's below what has historically been your wholesale margin in the first quarter. How to we get a handle on when we'll see some of these benefits?

It's remarkable that on wholesale sales up $96 million, we had a wholesale margin, excluding restructuring and transition of 9.2% and excluding 7%, at those lower volumes, to operate at about 9% I think is pretty good. But where we've been impacted is the retail margins. And in the retail, we wrote $132 million and we delivered $109 million. We need to deliver about $125 million to $130 million to reduce those losses to come at a breakeven. That also has an impact on our consolidated margins, also has an impact on our operating margins. If we deliver at $125 million or so, it will increase our operating margins anywhere between 10% and 12%. And that is what we have done. That's the opportunity we have. What it also does is it gives us an opportunity of increasing our consolidated operating margins from a breakeven to operating at some decent margins by having our retail operate at breakeven.

Does it look like in this quarter we'll start to see some of those improved revenues?

Now with these events that we have and the last week or so had a major impact on business. That's why in the last week in February, when this last event ended, that's where we got the bulk of the business. March-April initiative ends on May 2. So we have four, five days. And with this kind of a business now that we are doing, those four, five days are important. We have very, very strong programs in place. I would think that writing $175 million does not necessarily mean $175 million of delivered next quarter. That will also depend upon what business we write in April and May. Certainly, we have a better backlog going into this quarter. I think we have a better opportunity of improving our profitability this quarter. But I would be a little bit cautious, don't overdo it, because I think we are still going to run our business and making sure that we gear up correctly. We're gearing up our production. For instance, domestic case goods plants, from where we were in the first quarter of this year, we have now taken it up by approximately 30% to 40%. That's what we're gearing up in this last quarter of this fiscal year. The good news is if our business continues, we're going to get some benefit in this quarter, but going into the next fiscal year first quarter, we would be operating our case goods at a much, much better capacity. Earlier question was if we took any downtime this quarter; we did not. However, we operated with a lot of startup inefficiencies of going into custom. We had lots of overtime in our Maiden operations, because we've hired a lot of people. We're gearing it up. The Maiden operation is now operating at a retail of over $400 million in terms of producing upholstery over there. So I would say that this quarter, be a little cautious, so that you folks don't miss my numbers.

I understand that. But do you want to quantify any of those inefficiencies for us?

If we were to say based on what we did this year, this quarter, approximately I would say next quarter, Dave and I were talking about it, we might end up at about $1.5 million or so in that range next quarter, Budd.

How much were they this quarter, Farooq?

$2.1 million.

So that's basically the restructuring cost. Okay. I know your written was $170 million-some. The customer deposits are up about 58% over the end of the year. Is the backlog up?

Yes, absolutely. As I said, our backlog at retail is substantially up. Just from this last quarter, retail was up 34%, and our backlog at retail compared to last year was up 56%. And that of course reflects on the deposits you see on our balance sheet.

That's right, okay. And my last question is the IDAs with now over 1,000, how much might have that been in terms of your written sales for the quarter? How much did that help?

We don't give that number, Budd. It is making an impact. It is growing. And I thought we would end up with 2,000 IDAs. Now the chances are we're going to have many, many more, because there's a very strong reaction. And the good news also is that, as I said in my comments, our business is based on having strong entrepreneurial interior designers looking for us in our design centers. We just had last week 60 new interior designers go through one week of training program. Most of them had their own businesses. They are now joined as our in-house interior designers. These are not IDAs. So we are attracting a lot of qualified people, because they are available and they like our business. Longer term, as I've said repeatedly, our business is not going to open up more buildings or stores. I want to acquire a lot of qualified interior designers to work in the structure we have. That's how we can leverage our overall structure, the design centers we have, the website we have and other technology that is there.

Our next question or comment comes from the line of Mr. Brad Thomas from KeyBanc Capital.

Let me congratulate you guys on things really heading in the right direction here.

Thanks.

Just wanted to follow-up a little bit on the custom case goods, now that you have another quarter under your belt. Can you just talk a little bit more about the customer response, as well as what you are seeing from a margin impact and an inventory impact in terms of what this initiative is having on your P&L?

Yes, that's a very, very important question. There are a lot of positives, but like with everything, there are also issues. Let me just talk of the issues first. The issue is that it did have an impact on our delivered sales. If in the past, instead of custom, we had it in stock, we would have delivered more. But that's short term that would have been fine. Now, going back into that short term, it also has some negatives, which is, some folks who are not willing to wait most probably may have decided not to use our products. I think small, but that issue is also there. But the benefits of it are great. It gives us an opportunity of offering many, many more options. Right now, obviously we started it by limiting the options, because this conversion was a major, major undertaking. It changed the paradigms of 80 years of our company, the way we manufactured. And as I said, last year this time, we were making zero custom; now, by this time actually by end of April, it's 100% of the order that we are getting are custom. We have still some inventory left that we are going to be out of it, so we would have no finished goods inventory of our domestic manufacturing. Every item today, over 95%, 97% of our orders are custom. That's a remarkable change. Now it gives a great opportunity for our designers, for our customers to have options, and as we go forward, we will add more options. Now in terms of impact of gross margins, it had a very, very negative gross margin impact on our domestic case goods. For this year, we almost basically operated at zero gross margin for our domestic case goods. Keep that in mind when you look at our total margins. And now, we have started to become positive, in fact March was the first month which was a decent month in case goods margin, and as we also increased our capacities by 30%, 40%, which is what we are doing now, and on top of the fact of the learning curve there, we will start increasing and improving our gross margins of domestic case goods.

And then Farooq, you referenced promotions a couple of times; it sounds like its really resonating well with consumers and helping to drive incremental sales. Could you just give us an update on how you're thinking about the use of promotions? Do you feel like it's worth kind of picking up how much you do that, or is an opportunity to perhaps pare it back and get closer to the everyday low price model that you had going back a year and two years ago?

About this time last year, we really had to confront this great recession, and we came to the conclusion that, yes, our everyday best prices, which I worked for ten years to implement them, no longer were going to be viable. But then we also said that if we have to have great savings, they better be great savings, because little saving is not going to make a difference. So June of last year, we started with really great savings, and it did have an impact in terms of getting business to us. But it also had somewhat of an intended consequence which I was not thinking of, which is, it made Ethan Allen more accessible and more affordable to more people, which has been a positive thing. It's because of the fact that we really gave great, great values. Now, it also of course had a negative impact on the margins. As we go forward, we are going to continue to offer savings, but we are moderating it. We are moderating it in the sense that we are merchandising it; there are certain items that we believe it will make sense to offer great savings, so that we can get people started with Ethan Allen, but then we got to refocus back on offering some savings, but really back to providing the great service that we do. And as we go forward, you will start seeing that we'll moderate it; yet, we'll offer really great values to the consumer.

And then just lastly, in terms of thinking about potential inflationary pressures, could you perhaps talk a little bit about what you're seeing in terms of any impact from higher lumber prices, higher fuel costs, higher container rates? What did we see this quarter, and what is the outlook over the next several quarters?

Well, let me just say, going forward, there is no question in my mind that inflationary pressures are there. We are seeing this from overseas, because in the last year, two years, people have held back. We have absorbed a lot of costs. And now we are seeing, suddenly petroleum-related products, we see price increases - steel-related products. Lumber, because of the fact of our domestic situation, we are okay for the time being. We have a very good competitive advantage, because we operate saw mills. Energy costs are going up. Even though our energy costs were down about 10% based on the fact that we have less facilities, but they were up actually over about 10% or 11% on a cost basis. So I think that I would not be surprised that you're going to see price increases coming up, and we also are considering that to see what's the right thing to do.

One last follow-up; Farooq, as we think about that roughly $600 million in breakeven operating margin, do you think you'll be able to achieve that over the next 12 months if we do see sort of this rate of inflationary pressure? Are you able to control those pressures or pass those through?

Well, we have been able to do it because we have continued to improve our cost structure. And we have already gotten a lot of the benefits. The fact is that this quarter had $147 million, which is less than $600 million. We had an operating level broke-even despite tremendous amount of inefficiencies. So the opportunity for us to operate profitably at that kind of a level of volume ongoing is there.

Our next question or comment comes from the line of Mr. Todd Schwartzman from Sidoti.

Could you quantify the designers' in-home visits and their closing ratio versus the prior year?

I will give you my sense of it, but Dave can look at the actual numbers. In the last quarter, with improvement in consumer sentiment, we had started to see people closing on somewhat of a larger projects. And last year, people were holding back. I mean, there are still a lot of concerns out there, but we see more optimism; we see more house calls, and we see larger projects coming in now than we did a quarter back. Todd, I'll take a look at the question you asked to see what numbers we have, and how much we can provide that information.

Sure. Obviously, I'm just trying to get a sense of whether that number is commensurate with, or better or worse than the delivered sales for the quarter. I think on that same note, and I think this kind of speaks to maybe your average ticket, but are consumers buying more items per transaction than a year ago?

Absolutely. In fact, just think of this, we would not be up 20%. Keep in mind, we have less interior designers today, even though we have started adding, we have still about 20% less interior designers than we had about a year back. We have less design centers; we consolidated some smaller designs. And this last quarter, compared to the quarter the year back, our business is up 20% with less designers. So obviously our less designers are being more effective this year than last year.

Now, the case goods model of course is in transition, so maybe it's not fair to ask, but on the upholstery side, what's the average number of items per transaction bought, and what was it a year ago?

Let me think about that to see how much information we can give, and how much is accurate.

Okay. Also, it appears to me that one risk of the in-home visitation is that the consumer could potentially take the blueprint or the design advice given to her by the designer, and then go somewhere else outside of Ethan Allen. Do you do anything, or can you do anything to mitigate that risk?

This is a question that we have sort of pondered over, and has been raised for the last 25 years that I've been running this company. And end of the day, it's a very, very, minor issue. When people work with us, 99%-plus, they work with us; they don't take it somewhere else.

So if it has an adverse outcome, that's just the cost of doing business?

No, we haven't thought about the fact that should we charge for our design service. So you know, all those kinds of things that we are giving the proprietary information. We came to the conclusion, no, we want people to taste this service, to get to it. And it's possible some people may misuse it, but it's like those customers who misuse the customer service. For 1%, I don't want to impact the 99%. 99% of the people work well with our designers.

Is there a way for us to get you to quantify or hopefully characterize the level of discounting, or as you say, savings in March and April thus far versus February?

On the average, at retail, anywhere between 8% and 10%.

Eight and 10%?

At retail.

For which period?

For this last quarter.

And subsequent to quarter's end?

We are continuing with that. Approximately what we are doing Todd is, which is what we used to do a few years back, we are taking approximately 30% of our product lines at every two-month period, putting it on a savings. And about 80% of the business in that quarter is on that 30% of the programs that are on savings.

Finally, just wanted to ask about the systems upgrade, the IT systems both domestically and for Mexico, what are the expenses to be incurred, what's the total cost, and how much of that remains?

Our information technology is an ongoing process. We have in the last year completed bringing our upholstery operations to the most current level of the JD Edwards system, that's what we use. So that has been substantially completed. We have also invested in a new retail system. That's also been completed. We invested last two or three years, on a new website. That's also been completed. Now, there are ongoing costs. We also are going to introduce after about a year of testing, a touch-screen technology this summer. That is an ongoing cost because we'll have to put the screens into the system. Keep in mind that our total capital expenditures this last quarter was approximately $4 million, $3.7 million or so, and out of that, technology most probably represented about $0.5 million.

Any projections for fiscal '11 for full year CapEx?

I would say between $10 million and $15 million.

Our next question or comment comes from the line of Mr. (Todd Baugh) from Stifel Nicolaus).

I was curious; you're running two-month promotions. When you commented at the end of February that the orders were up 25%, and I guess you started another promotion this March and April, and you commented that you got a big boost in February. So I'm assuming the orders that we saw for the quarter were off from the two-month mark because of the timing of those promotions. Is that correct?

That is correct.

And I just want to make sure that you're taking about 30% of your line and discounting it about 8% to 10%?

That's right.

You mentioned moderating that going forward. Any timing or magnitude guidance on that moderation?

We are looking at the economy. We are looking at external conditions. At this stage, I'm thinking of the fall.

I know you've got a lot going on internally with case goods, but I'm curious, I think your first discount way back a year ago was in upholstery. I forget when you started discounting case goods, but have you seen a more favorable reaction to your discounting on upholstery than case goods, given that case goods are typically a higher ticket number, or has it been similar?

Well, we started in June of last year with upholstery, and in August we started in case goods. In recessions, as you know, upholstery holds up much, much better than case goods, and we saw that. However, when we started also offering special savings, and in some cases we offered more than 10% in some limited numbers, I was averaging that, and that we saw had an impact. People saw great value, and it had an impact of helping the increase of our case goods business. Our case goods business, which was down quite a bit about a year back, is still down. Our upholstery, in fact, this fiscal year is up compared to the last fiscal year, while our case goods is still down, but not as much as it was. So our offering of special savings has helped increase our business in case goods.

And then lastly, what is the current mix coming in on case goods from Asia versus here? How do you see that changing moving forward, and then any color on sort of what you're seeing out of your Asian suppliers? We read a lot about the inflating costs, the container cost going up, and we've got the currency issue, but I also hear labor is going up in China. Any color there? Thank you.

About the last two, three years, our case goods, domestic, was 40%, overseas was 60%. Our upholstery was almost 100%, domestic. And now, as we get into this quarter, I think the ratio is going to be 60-40 domestic. And as we go forward, the domestic most probably will be between 60% and 70%, and the rest will be offshore in case goods.

And is that because they're responding to your custom offers? Are you having to price the imports up, or what's causing such a sudden shift?

A number of factors; first is the fact that we do have a great product line. Keep in mind that 60% of all the case goods we sell in China, I think we have got 35 or 36 stores there, they're shipped from the United States. We offered great value. That's why our margins have been at the level of volume we're doing; we have not had a margin. But as we improve the volumes in our plants, we'll also have efficiency. So we price them right. We are solid wood, which gives us a competitive advantage. Third is, the fact is that we have also promoted more of our domestic case goods overseas, because it's available to us. The overseas lead times have increased, and as you know, they also have had a lot of serious issues of ramping back, and they are now ramping back. In fact, our domestic lead time is much, much lower than our offshore lead time. So all of those factors have helped us increase the domestic case goods.

Our next question or comment comes from the line of Mr. Joel Havard from Hilliard Lyons.

This first question is probably more for David, two parts. First of all, this gets to the factory transition, it gets to what's going on with the inventory management. I'm presuming there's some synthesis of those factors involved. David, the working capital commitment has been improving year-over-year; are you in a sustainable range here, particularly vis-à-vis a year ago?

Yes, we feel really good about where we are in terms of our working capital, and of course, there are a couple of things that you need to consider. On the inventory side, we think that we've done what we really want to do in terms of overall inventory reductions. As volumes increase, there may be somewhat of an increase in our inventory balances, but that's a necessary part of growing the business.

Sure, in total dollars, but as a percent of sales, can you hold in this range at least? I mean it is significantly better, even like half again better than year ago.

Yes, I believe that we can do that. And the other side of the working capital for us, Joel, is the deposits from customers, and that helps our working capital, because that's a current liability.

And one technical follow-up, David, the number of Company and dealer stores at quarter end?

At the end of the quarter, Company-owned were 146, and the independents were 132.

And Farooq, I know this is probably something you can only speak to in a "sense of,' but you all made some moves, calendar Q3 last year I think on the credit side. Do you still feel comfortable with the dry powder you've got, and is there any notable transition to what's going on with the way these customers are starting to come back, particularly to say, is it increasingly credit-driven and is it one side of the program or another, or is it more of a cash purchase?

Our client base, even when we do offer them financing, they generally pay even before the end of the term. So the demographics that we are dealing with has had less impact on the financing issues, credit issues, than I think the general population. We are offering financing, but I think that more as a closing tool than as a strong advertising or a marketing offering. It gives an opportunity for our designers to get back to people and have them close. The chances are, most probably they would have closed anyway - possibly, but we are helping it. It's more of an insurance that we do. So while we have offered it, it is a convenience. We have a six-month no interest with a minimum principal payment with the new laws, and people utilize it instead of using, say, MasterCard or Visa.

But you're saying, then, that you're not seeing a sudden shift to a higher utilization of your credit program? This has been more traditional purchase, just more of it?

That's right.

That's encouraging.

All right, we'll take one more question.

Our final question comes from the line of Mr. Brian Gaines from Springhouse Capital.

I think you discussed it a little bit, but I was a little bit confused. I think in a press release in February, the orders were up 25% for the first two months of the year, and now they're up 20%. So am I right to infer that March was up somewhere in the 10% range, or is there much more to it than that, is that way too simplistic?

When you take three months, we have a larger period to calculate it from. The second factor was that a major increase did take place in February, because our savings event ended the end of February. The next one is ending May 2nd.

Got it. So the numbers were not up nearly as much as it was in January and February, but that's because of a promotional event?

That's right. It was actually the end of the promotional event, because we did have a promotional in March also, but the last one ended in end of February.

Thanks for clarifying. Thank you.

All right, well thanks very much. If you have any more comments or questions, please let us know, and look forward to having to talking to you soon.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.