Ladies and gentlemen, thank you for standing by. And welcome to Haverty's Q1 2010 financial results conference call on the May 6, 2010. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) I will now hand the conference over to Mr. Dennis Fink. Please go ahead, sir.

Thank you, and good morning, everyone. During this conference, we’ll make forward-looking statements which are subject to risk and uncertainties. Actual results may differ materially from those made or implied in such statements which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the SEC. Our President and CEO, Clarence Smith, will now give you his update.

Thank you. Good morning. Thank you for joining our first quarter conference call. As we previously reported, our sales increased 8.2% to $156 million, compared to $144 million for the quarter. Comparative store sales for Q1 were 10.1%, which was exciting for our team to finally see a double-digit positive performance. We’re pleased to report that we produced a profit of $2.4 million versus a loss for last year of $7.3 million. Written sales for the second quarter to date are up 8.8% and for the first time in several years our recent store traffic is positive, up in the mid single digits. Our website traffic is up 13% for the first quarter, which also correlates to a 13% increase in page views. We had 1.7 million unique visitors to havertys.com in the quarter. According to our year end brand tracking report 75% of our customers go to the web before they purchase demonstrating the importance of our fully interactive site. While our Internet sales are not a significant part of our total business, havertys.com's high use demonstrates our customer’s attraction to the site and the strength of our interactive marketing program. Our bedding, upholstery and casual dining business is stronger this year with an encouraging recent trend of increasing bedroom business. While our promotional efforts have worked very well, we are seeing signs of strength in the better goods. We’ve several new better end groups and collections which will be on our floors by mid-summer. We’re having discussions of price increases with some of our companies but we’ve been successful in keeping our costs under control due to our long-standing commitments to our core vendors. Pricing has caused and will cause some shifts in our merchandise line up. We remain dedicated to providing a superior value in our niche.…

Thank you, Clarence. I'll first make a few comments on the P&L. The gross profit for the first quarter of 2010 was 52.1%, compared to 51.1% in the prior year period. This expansion was a result of improvements in product mix and pricing discipline and a reduction in the volume of damage from closeout merchandise. We plan to remain competitive with our pricing structure as we strive to maintain our gross profit margins at or near our 2008 full-year level, which was 51.7%. We anticipate increasing freight rates and material and labor costs for our suppliers to generate potential pressure on our product costs. While it may be difficult to initially recover these increases through our retail pricing, future product costs increases will have a relatively immediate impact on our LIFO reserve. Our first quarter 2010 sales were up 8.2% and through rigorous cost reductions. We were able to decrease total SG&A by $2 million, compared to last year's first quarter. Selling expenses generally vary with sales volume. However for the first quarter of 2010, they decreased 55 basis points, compared to the prior year period due in part to lower third-party finance costs. Customers used less of the private label card programs we offer this year at 38% of sales versus 43% of sales for last year's first quarter. Occupancy expenses decreased $900,000 for the quarter with depreciation expense within that approximately $700,000 less than last year and utility costs also running lower. Delivery and warehouse expenses included in SG&A in the first quarter of 2010 were relatively flat in total dollars as compared to the prior year even with the higher sales volume and increased fuel costs, although last year we adjusted our routes in many of our markets and reduced total headcount, equipment and related delivery expenses.…

Thank you, sir. (Operator Instructions) First question come from Todd Schwartzman. Please state your company name followed by your question. Thank you. Todd Schwartzman – Sidoti & Company: Yeah. Sidoti & Company. Thanks. Good morning, guys.

Good morning, Todd. Todd Schwartzman – Sidoti & Company: First off on the credit promotions, if you can just give us a sense of what was hot for the quarter, what was most popular?

The most popular was the 18-month which is a no interest program that requires a 1% monthly payment and then the whole thing has to be paid off before the end of the 18 months. Todd Schwartzman – Sidoti & Company: Okay. And Dennis, on the tax rate going forward for the balance of the year, how should we think about that?

It is going to depend on the exact circumstances each quarter end and where deferred tax assets are projected to be for the current year, which arise from temporary differences in book and tax income. But it would be likely that the deferred -- that the similar situation occurs in the second and third quarter as it did in the first quarter with some increases in the deferred tax or, excuse me, in the income tax expense category that are offset by decreases in the deferred tax allowance. At some point there is a release of the deferred tax allowance that comes after cumulative three-year book profitability and we’re not sure when that will happen but that would be out there in some future quarter we would hope. Todd Schwartzman – Sidoti & Company: Got it. And any comments would you care to make any on share gains and that you maybe are benefiting from in this first quarter who the -- who the offsetting losers might be?

Well, I still think that the independents will continue to suffer and fall out of the marketplace just because they can't get the overall support. We’re seeing some of that in a number of our markets. Some of the fact that I think we have had some market share gain is just in the fact that we had a 10% comp and we’re not hearing that from other places. So as you know, there are very few people that do release in our industry. But I think it is going to continue to be on the independent side of the market those who are not matched up with major players and who don't have the resource to do that. Todd Schwartzman – Sidoti & Company: Principally imports?

Well, that is a big part of it. They’re going to have to go through middle-men, they’re going to have to pay higher margins, higher costs. They are not going to have goods that are exclusive to them that they can support higher margins and they’re not going to be able to get the product. I think that is going to be a real challenge as business starts to get better is who gets the product from the major factories in Asia. And that is why we’re spending a lot of energy building those relationships, staying on top of them, giving them larger cutting, paying our bills on time, all of the things that we think are important to maintain those relationships. Todd Schwartzman – Sidoti & Company: And Clarence, on the customer deposits both sequentially and year-over-year, it looks like you had between 25% and 30% close to $4 million increase there. Does that speak to the mix shift, can you give us some more color, you had alluded to maybe customers going somewhat more upstream? Can you talk about what is going on with the customer deposits as well as your own mix?

I don't think it’s related directly to the mix. I think it has other things. I’ll let Dennis comment on some of that.

Yeah. The backlog was a little higher at March 30, than it was a year ago or at year end, which is normal when you have an increase in business. We have a few weeks between point-of-sale and purchase at point of sale and the actual delivery when we recognize income. The other part about it is we mentioned that there is less volume under our private-label programs and so people are paying more cash, more Visa and MasterCard, and therefore the deposits would be higher because we are not financing as much. Todd Schwartzman – Sidoti & Company: And what was the mix of the third-party financing for the quarter?

The third-party was down, I had mentioned there is like a 6% decrease in the usage as a percent of sales and all of that was in the third-party programs. Todd Schwartzman – Sidoti & Company: 6 percentage point decline?

6 percentage points of sales, the total volume we did of total sales was down. The difference in the number was 6%. Todd Schwartzman – Sidoti & Company: Got it. Can you just remind me was there any restructuring in the downturn with respect to the compensation mix for your sales force?

Nothing significant. We had a few adjustments but, do you have a comment on that?

No. Just the number of people also obviously with lower volume.

We tried to make sure that our best sales people we took care of but we didn't really have any major adjustments with their individual compensation plans. Todd Schwartzman – Sidoti & Company: Okay. Thank you very much.

Thank you.

Thanks Todd.

Next question come from Budd Bugatch. Please state your company name followed by your question. Budd Bugatch – Raymond James: Good morning, Clarence. Good morning, Dennis. Budd Bugatch, Raymond James.

Good morning, Budd. Budd Bugatch – Raymond James: Historically when you go back and you look second quarter has a little bit of seasonality to the first quarter down, but some years it was relatively flat to the first quarter. And with the backlog up as nicely as it was, what are you thinking about the normal seasonality or the abnormal seasonality?

I think it will be more normal, Budd, than abnormal and it is pretty unusual to see anything other than a decrease in the second quarter… Budd Bugatch – Raymond James: Okay.

… from the first quarter. Budd Bugatch – Raymond James: From the first quarter?

Yeah. Budd Bugatch – Raymond James: Okay. And then that’s what we should expect the second quarter is usually the weakest quarter of the year, is that right?

Absolutely, it is. Budd Bugatch – Raymond James: Okay. When you look at your gross margin, you’ve done very nicely with essentially about 100 basis points improvement year-over-year. And with the pricing increase you had kind of warned us, did I catch you properly to say that you think margin could be under a little bit of pressure in the near-term and then returning as you take the pricing actions you need to take?

Budd, I think that’s a fair way to say it. We are on LIFO and so we get a quick impact of cost increases and we would like to pass those along with the normal margin, but it’s still a competitive marketplace, so we’ll have to see. Budd Bugatch – Raymond James: Okay. Looking at the balance sheet, you have historically until about a year or two ago paid a quarterly regular dividend. And you paid a special dividend last year I think to keep your record intact of consecutive years? And now with the world looking like we’re no longer coming to the biz? What are your – what’s your thought process on that? How does the board think about it? I realize it is a board decision, but I suspect you discuss it at every board meeting?

It is a board decision, Budd. I’m sure it will be discussed. The only thing I would say as management is that I would like to keep that record intact. Budd Bugatch – Raymond James: Okay. And would you like that record to include a regular dividend again as opposed to a special one?

Well, I don't think that’s something I determine. I just want to make sure we earn that record and keep it going. Budd Bugatch – Raymond James: Okay. All right. Thank you.

Okay. Thanks. Budd Bugatch – Raymond James: Congratulations. Nice to see the turn and nice to hear about case goods coming back a little bit.

Yeah. We hope that is a continuing increasing trend. Thank you, Budd. Budd Bugatch – Raymond James: Thank you, sir.

(Operator Instructions) There appears to be no further questions, sir. Please continue.

I want to thank you for joining us on our Q1 call. We appreciate your interest in Havertys. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.