Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Haverty’s Furniture fourth Quarter and year end 2007 earnings conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be opened for questions. (Operator Instructions) As a reminder this conference is being recorded today, Friday, February 22, 2008. I would now like to turn the conference over to Mr. Dennis Fink, EVP and CFO. Please go ahead sir.

Good morning everyone. During this conference we’ll make forward-looking statements which are subject to risk and uncertainties and assumptions that are difficult to predict. Actual results may differ material from those expressed in such statements which speak only as of the date they were made and in which we undertake no obligation to publicly update or revise. Factors that could cause Haverty’s actual results to differ materially from the expected results are disclosed in the company’s reports filed with the SEC and we caution you to give consideration to those possibilities. Now are President and CEO Clarence Smith will give you an update on Haverty’s progress.

Good morning. Thank you for joining our fourth quarter call. The fourth quarter results showed an improvement over the performance of the previous three quarters. While we were disappointed with the total sales drop of 4.7% and the decline of net income to $1.6 million we’ve had several encouraging trends. Gross profit margins improved 29 basis points reflecting lower markdowns and the ability to achieve better margins due to exclusive designs and sourcing capabilities. We expect to continue to improve our gross margins in 2008. We had effective expense control in most all areas of our business advertising, delivery and administrative costs were reduced demonstrating good controls in a tough environment. Our inventories were well managed at $102 million down from $124 million at the end of 2006. Inventories were up $8.7 million from the end of the third quarter bringing us up to more optimal levels for serving our customers. We’re very pleased with our merchandising supply chain and forecasting teams developing expertise and flowing goods in a timely manner from up to 12 time zones away. We just finished a strong Presidents’ weekend sale with a total written sales up low double digits over a weak 2007, a very encouraging performance. February month-to-date total written sales are slightly up over last year. We’re also encouraged by our website traffic which has jumped dramatically over last year. We believe that our improved www.Havertys.com site has helped drive presold buyers into our stores. We go live with second phase of the enhanced www.Havertys.com and the ability to make transactions seamlessly through our operating systems early next month. We believe that our multichannel abilities to serve our customer s will help us strengthen our competitive advantage. As the home furnishings industry changes so does our company, our brand reputation, as well…

First some P&L comments, within our SG&A expenses the fourth quarter advertising and marketing spend decreased $1.8 million dollars or 48 basis points of net sales versus the prior year’s fourth quarter. The annual 2007 advertising and marketing spend decreased $5.5 million dollars compared to 2006 and stayed flat as a percent of net sales. The biggest change in our fourth quarter selling expenses was the cost of expanding the offering of free interest credit promotions to our customers through a third party finance company. This expense was up $3 million dollars over the fourth quarter last year and it was essentially flat with the level of spending in the third quarter. Compared to 2006 as a full year selling expenses decreased $2.9 million dollars but increased 75 basis points of net sales. This was comprised of sales commission decreasing with the lower volume which was offset mostly in dollars by credit promotion expenses which for the year increased $2.5 million dollars over 2006. These credit promotions were offered to help stimulate sales during the third and fourth quarter and for a little bit of the second quarter actually and we’ve promoted longer term free interest financing for our customers and required less down payments. The credit program costs are expected to continue at near the level they are now or were for the third and fourth quarter throughout 2008 due to the higher anticipated usage and more frequency with which we offer these promotions and also the lower expected down payments is also planned to continue. Occupancy expenses increased to $1.3 million dollars or 107 basis points of sales for the quarter and for the year occupancy expenses rose to $4.1 million or 138 basis points. Higher costs were mainly due to four new store openings in 2007, specifically…

(Operator Instructions) Our first question comes from the line of Laura Champine with Morgan Keegan. Please go ahead. Laura Champine – Morgan, Keegan & Company, Inc.: We all know that business is tough, what’s your sense of when same store sales might turn for you?

Well as has been pointed out there have been 16 straight months of negative comps. It is certainly a priority, we would hope that would be soon but, it’s something that’s too difficult to predict under the circumstances. Laura Champine – Morgan, Keegan & Company, Inc.: Dennis, you mentioned in the store opening comments that you plan to add three stores and that two of those are replacement stores and then talked later about store closures. Are those stores closure in addition to the two stores that you are relocating?

Yes they are. Laura Champine – Morgan, Keegan & Company, Inc.: Is there any preliminary that you might be able to offer us for where your store count might be at the year end?

We think that the store count will probably go down in 2008, very modestly. And again, the closings are for the most part, natural closings where the lease term is up or in one possible scenario somebody wants to sub lease the store from us and we might let them.

Our next question comes from the line Marc Buckley Jones with Behrman Capital. Please go ahead. Mark Buckley Jones – Behrman Capital: I just wanted to get a little bit more color on the share buyback program. Do you by any chance have a number for the accretion to EPS that would have come about as a result of the buy back?

Let me get that, it’s very small so far because so much of the buyback was in the fourth quarter. If you have another question go ahead while I look for that number. Mark Buckley Jones – Behrman Capital: I guess, it’s related to the buyback. You said that you bought back 6% of the shares that were outstanding as of the start of the year. Aare there any fixed targets for how much you want to repurchase? I know you also mentioned that your target was about $13 on which obviously now it is now trading around $10.

Well, no we said that we would be buying below that book which is $13 and I think the average was $9.

It was $9.32.

$9.32. Mark Buckley Jones – Behrman Capital: I guess what we are leading to is that in these difficult times would it perhaps maybe make sense to suspend the buyback program and strengthen the balance sheet further using that cash?

Well, that’s a good point. We are watching it very closely. We don’t want to build debt certainly not to buy stock back so we’re protecting that balance sheet and are going to be very conservative about this buy back and only do it when we have the cash to support it, unless it goes very, very low. I think you are correct, we want to be conservative, we want to watch our cash and buying back stock might not be the right thing, it just depends on the circumstances.

Just to answering your other question the share count the weighted average diluted shares for the quarter were down 4.3% from last year’s fourth quarter and for the year the share count is down 1.3% on a weighted average diluted basis. Most of that is due to the buy back, a little bit was due to lower stock price and less dilution. Mark Buckley Jones – Behrman Capital: You mentioned that your debt cap ratio at the moment is about 10%. Is that the sort of target you’re aiming for?

Well, our strategic plan is to stay under 25%. This is as low as it’s been since I’ve been with the company. I wouldn’t say that’s a target I think under the circumstances it’s a good position to be in as you mentioned of the tough conditions.

Our next question comes from the line of Rex Henderson with Raymond James & Associates. Please go ahead. Rexford Henderson – Raymond James & Associates: I want to talk a little bit about the cost, you did a good job about the cost control and Dennis when you were talking about the puts and takes you said that the credit cost would continue through 2008 as a negative to the cost structure but some of the benefits you’ve seen from payroll reduction and from some of the other benefits, when do we start anniversarying those? And, how much more opportunity do you have to continue paring down the cost structure?

We think we have other opportunities. We are continuing to look at the routing and distribution and I think there are some opportunities there. There are some personnel issues that are non-selling involved that we are continuing to evaluate. I think that were getting down to we don’t want to hurt our service levels in our stores and as you know it takes a number of people to staff those so other than those areas I think that we’re probably pretty close to what cuts can be taken. Rexford Henderson – Raymond James & Associates: When we’ll begin anniversarying some of these cuts you’ve been making in what, the third quarter?

Actually we had lower expense in the first quarter last year in advertising but we do still plan on having lower expenditures because we are targeting so much better. The other cuts in the distribution area were mostly late second quarter.

That’s right, that’s right so in a few months those would be aniversaried.

Then, in the first quarter last year we had very low credit costs and we had run more internal which is less expensive but it ties up more money, obviously. Also our sales were down quite a bit and part of our effort to keep sales flat or even increasing a little would be based on this credit promotion and lower down payments which is attractive to consumers right now for obvious reasons. Rexford Henderson – Raymond James & Associates: The second question revolves around the website, I think that’s great that you’re getting some response to your website. Can you kind of quantify how much the traffic is up there? And, how much conversion you’re getting from the website into the stores?

I don’t think we can measure that conversion yet. We will know a lot more once we go live on the transaction which will be next month. We have doubled the traffic, and I don’t have those numbers at hand from last year. It’s pretty dramatic, we improved our site as you know late last year and it has been very well received. We’re spending more money promoting the site, doing some search advertising and some banner advertising. We’ve hired a new agency to help us do that and that’s helped drive it there too so we think it’s a very positive new trend and I think we will see some potential traction there in the next coming months.

Our next question comes from the line of Bruce Baughman with Franklin Advisory Services. Please go ahead. Bruce Baughman – Franklin Advisory Services: My only remaining question gets back to the matter of the deferred tax increase over the year, can you just flesh out what goes into that?

There’s a lot of items that goes into that and the largest part of it or one of the larger parts let me say is just the depreciation for book and tax purposes. We have done several tax free exchanges which defers the gain on a sale of a property for tax purposes and lowers the value of the property you replace it with and therefore the depreciation expense going forward is lower so the write-off or the depreciation you get for book is not impacted by that, but it is for tax. The other thing is of course with real estate there’s an oxymoron called the tax benefit of real estate which is interesting because most building materials and construction costs are for tax purposes spread over 39 years, which is very long and for book purposes most businesses use a shorter period to depreciate the building over. So you have an automatic built in differential there with taking depreciation expense slower for tax purposes. Then finally we’ve got inventory differences for life of goods for tax and book but the figures are different that we use. One’s based on an external index and external tax figure and it’s a fairly complex analysis to come up with this. Those are the highlights we’ll put a little more disclosure on it in the 10k when that comes out in a few weeks. Bruce Baughman – Franklin Advisory Services: Okay. Then the particular item regarding the tax free exchange of property, does the effect to defer taxes come subsequent to the transaction with a somewhat distorted result on depreciation or does some of it arise from the transaction?

It arises upon the transaction and then over the course it goes back the other way. Bruce Baughman – Franklin Advisory Services: Oh, I see. So to the extent that if there was one or more transactions of that sort during the year it increased the deferred tax account and then over time that it would tend the other way?

The answer is yes and probably if you’d like want to talk more about that you may want to go off line. But, it’s worthy of discussion I just might have to get some details in front of me and we could go over that. Bruce Baughman – Franklin Advisory Services: That’s fine, I’ll wait to the K comes out and if I still want to talk about it we’ll get together.

Our next question comes from the line of John Baugh with Stifel Nicolaus. Please go ahead. John Baugh – Stifel Nicolaus & Company, Inc.: Can you talk about competition, what you’re seeing in general, what you’re seeing specifically in Florida? I guess what I’m driving at is that typically you have the pain of going out of business sales that competitors are doing in these times of course with the long term gain of eliminating the competition, are you seeing any of that? Just general comments there.

Well, John we just opened a store in West Orlando. The grand opening is today but they opened a week ago and Steve Burdette brought back a business section from the Orlando Centennial yesterday that has on the front page, “Sofa slowdown” and it’s about the slowdown in the regions retailers failing and the furniture retailers mentioned in the article are all the independents and that’s what’s happening. We see that happening in all of our markets but it’s probably stronger in Florida just because it’s tougher there. I think the independents who have dominated in this industry will hurt the worst, they will fall out the fastest and we’re starting to see that and I think that will be where we gain the share first. The major players in the markets we’re in, the Rooms To Go, the Ashley’s, they’re going to be there, they’re on the lower end of our business. We’re trying and I think we’re doing a good job of separating ourselves to be the better player and I think that the department stores are losing share because they’re de-emphasizing the category and I think that will be where we try to gain the shares. In this kind of environment I think the smaller independents are going to be hit the hardest. John Baugh – Stifel Nicolaus & Company, Inc.: So the City’s and the Carl’s and you know the bigger, I assume those are the bigger independents are going to survive, but we’re not reading about them?

I don’t speak for them, because they are all independent but you know I think they are going to see some of them fall out too, it’s just too difficult in Florida, if you want to be specific. Florida is just very, very brutal and I don’t see that getting much better for a little while. John Baugh – Stifel Nicolaus & Company, Inc.: So when you talked to February being better did you see that in Florida? And again, the question relating to Florida do the liquidation sales or going out of business does that sort of hurt you even that much more than Florida’s already hurting, but then of course we get the benefit later?

I don’t know in some markets it might for a little while. We had a major independent go out in Tallahassee that probably affected us a little bit but that’s been one of the better markets. Frankly, Tallahassee is one of the better Florida markets. It might affect us temporarily but many times these smaller players as they go out, by the time they go out they are not much of a factor. John Baugh – Stifel Nicolaus & Company, Inc.: I’m sorry did you see that lift in February in Florida at all?

In some markets but not over all. John Baugh – Stifel Nicolaus & Company, Inc.: The other question was basically on the cash implications of the change. Dennis, I understand that was an accounting change but was that a cash change too? A onetime cash change? How do I think about that?

That’s a good question and it’s really a classification change not per say an accounting change because the accounting rules didn’t change it’s just that the circumstances we have now fit into showing it net. And it is not any real change but the cash flow statement did show a $12 million dollar lower provided by operating activities because in essence what we have done is took something we had as a payable and netted it against the cash balance. It’s not - that money in terms of its availability, we sometimes have cash balances that are short term investments overnight and usually around $10 million is the number when we have - in previous statements when we had a cash balance over $10 million the excess over that was invested in overnight and interest bearing. So you have kind of a level there that’s just clearings and transit coming in, you know credit card receipts, deposits from customers’ checks, in effect in transit, and then on the other side you have the outstanding checks that haven’t yet cleared. So there’s a certain level of cash that isn’t available to you under the old treatment. Under the new treatment or because of the new circumstances the two get netted together and it’s really a onetime change on the account flow. Does that help at all?

Our next question comes from the line of Todd Schwartzman with Sidoti & Company. Please go ahead. Todd Schwartzman – Sidoti & Company: Could you talk about the average ticket during the quarter and how it fared both sequentially and year-over-year?

The average ticket is down slightly and that has been the trend over the last year. We’ve seen that drop. Todd Schwartzman – Sidoti & Company: And versus quarter Q3?

I think it’s up over Q3 but it’s down over the previous year. Todd Schwartzman – Sidoti & Company: The other thing, I was curious Clarence regarding your change in your approach to your media strategy what you’ve done thus far, what you plan to do in the year ahead and beyond, I wondering if you could talk a little bit about what you mean by closer analysis of individual markets that you referenced in the press release? In other words do you have a better handle now on specific preferences characteristics of certain markets versus previously? Or just maybe add some color to that.

Well, I think that we definitely do. We have centralized the buying of all of our media here. We definitely have a better feel of what’s happening in the individual markets because were hiring firms that help us analyze that and we’re spending a lot of energy on that. We are spending less money in newspaper and spending more on Internet, direct mail and trying to reach our customer directly. So I am very confident that in the last 60 to 90 days we’ve significantly improved our ability to get our message out. It took us a while in this transition but I know that we are doing a better job today than we were a year ago and then where we were several years ago. But, this end of the business, the advertising is changing dramatically and we’re dedicated to staying on top of that. Todd Schwartzman – Sidoti & Company: Is it also your own experience in and time in some of these newer markets in addition to some of this outside third party help you’ve gotten?

Sure, yes. We know the markets pretty well, we’ve been there a long time and we know the different players and the different stations and that type of thing. I think we’re just getting a much better handle on it, controlling the cost better, reacting quicker to opportunities and understand what our customers prefer and targeting her that way. Todd Schwartzman – Sidoti & Company: In hindsight was the learning curve a little bit more problematic in some of these newer markets than you expected?

I would say that was true.

(Operator Instructions) Our next question is a follow up from the line of Mark Buckley Jones. Please go ahead. Mark Buckley Jones – Behrman Capital: Just a couple of quick follow up questions please. With you guys reducing your inventory, how do you think that’s going to affect your ability to generate same store sales?

We got a little lean in the third quarter and I think it hurt us. I believe we’re back balanced now. We cut back pretty heavily midyear last year and because the supply chain is so far away we weren’t able to react as quickly as we would’ve liked and we had some supplier issues, some bankruptcy issues etcetera but I think were in a good position now. I like our inventory levels where we are, I like our product mix and I think we are better able to serve our customer today then we were a year ago or certainly 90 days ago. So we were a little to lean and I think we are about where we should be right now. Mark Buckley Jones – Behrman Capital: That sounds hopeful. And then, with regards to your receivable your total receivables have come down about 15% yet your provisions for doubtful debt expense on income statement has almost doubled. Have you identified bad debts as becoming a problem and will it get worse given the currents state of the markets?

What we’ve seen is that the last two years, 2005 and 2006 were incredibly low in delinquencies and write-offs and overall bad debt expense and that provision is made each quarter based on the status of the accounts that we have and the trends that were seeing. So, I would not expect a big increase from the run rate of the third and fourth quarter on that line item but that just running at that rate is an increase over the first half of 2007 and it’s certainly an increase over 2005 and 2006. But, we have a very good credit quality customer and were confident the portfolio is strong but it’s in the big sea and the tides changing we are certainly impacted by that as well. It’s still a write-off rate of between 2% and 3% and that’s looking at annual write-offs as a percentage of the average A/R balance and that’s still at the lower side of credit card portfolios, so we’re pleased with it in that sense. But you’re right it is costing us more right now. Mark Buckley Jones – Behrman Capital: Is your policy, do you have one to provide for debts as they get older or do you specifically provide for specifically identified bad debts?

We look at the trend in write-offs and the status of the accounts and the status means how the aging of it and we do it really by category. Also the status means has there been trouble reaching the customer, has the customer told us they are thinking about filing bankruptcy, are they with a credit collection agency, which is a good thing, but still we have factors that we apply to all of these statuses. We don’t look specifically at an account at a time as you would perhaps at a bank because we do have like 50 to 60,000 accounts that we have so we do categorize them.

Our next question comes from the line of Budd Bugatch with Raymond James. Please go ahead. Budd Bugatch – Raymond James: I have two kind of larger questions well one larger and one maybe a more near term. Can you talk a little bit about the strategy and you’ve talked a little bit about the stress in the industry and we’ve seen some fairly notable departures from the industry recently of some well known names, or soon to be departure. In the past when we have had that kind of situation you’ve taken advantage of those real estate opportunities and moved into new markets. How are you looking at it now with what we’re seeing the 45 store chains and other large departures? I know that this is a tough time for the industry but you all have had a history of looking longer term.

Yes, we do look long term, but I would say that the bankruptcies that we have seen, we look at all of those stores. I’ll be specific we looked at the Sofa Express Stores, there was really only one or two that was even interesting to us. The bankruptcy with Wick’s are in markets outside our footprint and we’re not interested in moving outside our footprint, right now. So, we look at all of them, we’ll continue to, there are some we’re looking at now, but I haven’t seen anything that is of value particularly and anything that would be important to us, within our footprint and we are very specific about that, we do not want to move outside of this distribution network. Budd Bugatch – Raymond James: Well, you did it in the past.

We did it in the past when we were making more money and we were a little more aggressive. I would say that our move into the Midwest was a tough one for us, we’re there, we’re going to stay there, but I don’t see us expanding it until there are opportunities that are terrific values for us. It does cost us more to get the goods there. We are very pleased about our move into Virginia, but that was in our territory, it’s still further from the supply chain. There’re going to be opportunities for us here and we want to be earning more before we take more risk outside.

Budd, I might add we want to be more confident in the general appetite for home furnishings. At some point there will be a return to better business and we would like to time any expansions we have, even if bargains more when we think there is going to be more turn around. Budd Bugatch – Raymond James: My second question has to go can you kind characterize the success in merchandising this year? When we look at the K, what’s going to be the better merchandise performers in terms of classifications this year? Where will see some Deltas?

I think well overall the sales were down in total anyway, but the better performing classes were the upholstery classes and have been. The case goods have been a bigger ticket and tougher but we are seeing some good growth well, let me put it this way, we are seeing improvement in those categories. I am very pleased with the product mix but it has taken us a while to develop in coming direct from Asia. It’s coming in now, it’s all inclusive to us and it has been well received. And I think that the improvement will show quicker in case goods, because that was a decline and I think we are good at it and we’ll improve on that. Budd Bugatch – Raymond James: And how about bedding?

Bedding has been good. Bedding is the better category of any. That’s held on, the tickets, the big tickets are incredible, the price people are paying for bedding but that is still a challenge to beat the previous year.

(Operator Instructions) Management, there are no further questions, please continue with any closing remarks.

I’d like to thank you for your interest in Haverty and thank you for joining us on the call. We appreciate it.

Ladies and gentlemen this concludes the Haverty Furniture fourth quarter and year end 2007 earnings conference call. You may now disconnect. Thanks for using AT&T conferencing and have a pleasant day.