HAVERTY FURNITURE COMPANIES INC (Form: 10-Q, Received: 05/04/2016 11:47:08)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2016

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period fromto

Commission file number: 1-14445

HAVERTY FURNITURE COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Maryland		58-0281900
(State of incorporation)		(I.R.S. Employer Identification No.)

780 Johnson Ferry Road, Suite 800 Atlanta, Georgia		30342
(Address of principal executive office)		(Zip Code)
(404) 443-2900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐		Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The numbers of shares outstanding of the registrant's two classes of $1 par value common stock as of May 2, 2016, were: Common Stock – 20,117,647; Class A Common Stock – 2,027,049.

HAVERTY FURNITURE COMPANIES, INC.

INDEX

		Page No.

PART I.	FINANCIAL INFORMATION

	Item 1. Financial Statements

	Condensed Consolidated Balance Sheets – March 31, 2016 (unaudited) and December 31, 2015	1

	Condensed Consolidated Statements of Comprehensive Income – Three Months ended March 31, 2016 and 2015 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows – Three Months ended March 31, 2016 and 2015 (unaudited)	3

	Notes to Condensed Consolidated Financial Statements (unaudited)	4

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	9

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	12

	Item 4. Controls and Procedures	12


PART II.	OTHER INFORMATION

	Item 1A. Risk Factors	13

	Item 6. Exhibits	14

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	March 31, 2016			December 31, 2015
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	53,733		$	70,659
Investments		12,740			12,725
Restricted cash and cash equivalents		8,010			8,005
Accounts receivable		4,857			5,948
Inventories		110,200			108,896
Prepaid expenses		10,411			6,137
Other current assets		5,317			6,341
Total current assets		205,268			218,711
Accounts receivable, long-term		546			655
Property and equipment		236,587			229,283
Deferred income taxes		17,234			17,245
Other assets		6,038			5,357
Total assets	$	465,673		$	471,251
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	24,172		$	27,815
Customer deposits		23,782			21,036
Accrued liabilities		30,541			42,060
Current portion of lease obligations		3,239			3,051
Total current liabilities		81,734			93,962


Lease obligations, less current portion		53,038			50,074
Other liabilities		25,864			25,476
Total liabilities		160,636			169,512

Stockholders' equity
Capital Stock, par value $1 per share
Preferred Stock, Authorized – 1,000 shares; Issued: None
Common Stock, Authorized – 50,000 shares; Issued: 2016 – 28,491; 2015 – 28,486		28,491			28,486
Convertible Class A Common Stock, Authorized – 15,000 shares; Issued: 2016 - 2,549; 2015 – 2,554		2,549			2,554
Additional paid-in capital		84,229			83,179
Retained earnings		282,223			279,760
Accumulated other comprehensive loss		(1,919	)		(1,938	)
Less treasury stock at cost – Common Stock (2016 - 8,373; 2015 – 8,362) and Convertible Class A Common Stock (2016 and 2015 – 522)		(90,536	)		(90,302	)
Total stockholders' equity		305,037			301,739
Total liabilities and stockholders' equity	$	465,673		$	471,251

See notes to these condensed consolidated financial statements.

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

( In thousands, except per share data – Unaudited )

	Three Months Ended, March 31,
(In thousands, except per share data)	2016			2015

Net sales	$	194,511		$	191,331
Cost of goods sold		90,092			88,684
Gross profit		104,419			102,647
Credit service charges		65			72
Gross profit and other revenue		104,484			102,719

Expenses:
Selling, general and administrative		96,353			92,303
Provision for doubtful accounts		104			23
Other income, net		(182	)		(27	)
Total expenses		96,275			92,299

Income before interest and income taxes		8,209			10,420
Interest expense, net		622			492

Income before income taxes		7,587			9,928
Income tax expense		2,918			3,809
Net income	$	4,669		$	6,119

Other comprehensive income
Adjustments related to retirement plans; net of tax expense of $11 and $31	$	19		$	50

Comprehensive income	$	4,688		$	6,169

Basic earnings per share:
Common Stock	$	0.21		$	0.27
Class A Common Stock	$	0.20		$	0.26

Diluted earnings per share:
Common Stock	$	0.21		$	0.27
Class A Common Stock	$	0.20		$	0.25

Cash dividends per share:
Common Stock	$	0.100		$	0.080
Class A Common Stock	$	0.095		$	0.075

See notes to these condensed consolidated financial statements.

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands – Unaudited)

	Three Months Ended March 31,
	2016			2015
Cash Flows from Operating Activities:
Net income	$	4,669		$	6,119
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		6,792			6,098
Share-based compensation expense		1,050			1,113
Provision for doubtful accounts		104			23
Other		(24	)		(6	)
Changes in operating assets and liabilities:
Accounts receivable		1,096			766
Inventories		(1,304	)		(209	)
Customer deposits		2,746			5,896
Other assets and liabilities		(3,512	)		(451	)
Accounts payable and accrued liabilities		(16,380	)		(5,785	)
Net cash (used in) provided by operating activities		(4,763	)		13,564
Cash Flows from Investing Activities:
Capital expenditures		(8,979	)		(6,711	)
Maturities of certificates of deposit		—			1,000
Other		4			23
Net cash used in investing activities		(8,975	)		(5,688	)

Cash Flows from Financing Activities:
Payments on lease obligations		(748	)		(593	)
Dividends paid		(2,205	)		(1,802	)
Common stock purchased		(235	)		—
Construction allowance receipts		—			3,286
Other		—			(102	)
Net cash (used in) provided by financing activities		(3,188	)		789
(Decrease) increase in cash and cash equivalents during the period		(16,926	)		8,665
Cash and cash equivalents at beginning of period		70,659			65,481
Cash and cash equivalents at end of period	$	53,733		$	74,146

See notes to these condensed consolidated financial statements.

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – Business and Reporting Policies

Haverty Furniture Companies, Inc. ("Havertys," "the Company," "we," "our," or "us") is a retailer of a broad line of residential furniture in the middle to upper-middle price ranges. We operate all of our stores using the Havertys brand and do not franchise our concept. We operate within a single reportable segment. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. The financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included.

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from those estimates.

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. We believe that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on our financial condition, results of operations or cash flows.

For further information, refer to the consolidated financial statements and footnotes thereto included in Havertys' Annual Report on Form 10-K for the year ended December 31, 2015.

NOTE B – Information about Products and Services

The following table presents the net sales of each major product category and service for each of the periods noted:

	Three Months Ended March 31,
(In thousands)	2016					2015
	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Case Goods
Bedroom Furniture	$	31,580		16.2	%	$	33,752		17.7	%
Dining Room Furniture		21,331		11.0			20,510		10.7
Occasional		20,199		10.4			19,941		10.4
		73,110		37.6			74,203		38.8
Upholstery		78,873		40.5			76,409		39.9
Mattresses		19,361		10.0			20,668		10.8
Accessories, outdoor furniture and other ⁽¹⁾		23,167		11.9			20,051		10.5
	$	194,511		100.0	%	$	191,331		100.0	%

(1) Includes delivery charges and product protection.

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE C - Recently Issued and Adopted Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU's) to the FASB's Accounting Standards Codification. The Company considers the applicability and impact of all ASU's. Newly effective ASU's not noted herein were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

Share-based payments. In March 2016, the FASB issued ASU 2016-09 regarding ASC Topic 718, "Compensation - Stock Compensation." This amendment changes how companies account for certain aspects of share-based payments to employees. Entities will be required to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement when the awards vest or are settled. The amendment will allow for the repurchase of a greater number of an employee's shares for tax withholding purposes without triggering liability accounting and for entities to make a policy election to account for forfeitures as they occur. The guidance is effective for the Company for interim and annual periods beginning January 1, 2017 and early adoption is permitted. We plan to adopt ASU 2016-09 January 1, 2017 and apply the guidance on a prospective basis. The impact on our consolidated financial position or results of operations will be primarily driven by the amount of any tax benefits or deficiencies which in prior years would have been recorded to additional paid-in capital and under this ASU will be charged to the income statement.

Leases. In February 2016, the FASB issued ASU 2016-02 regarding ASC Topic 842, "Leases," which amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The main difference between previous GAAP and the amended standard is the recognition of lease assets and lease liabilities by lessees on the balance sheet for those leases classified as operating leases under previous GAAP. As a result, the Company will have to recognize a liability representing its lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this standard will have on our consolidated financial position or results of operations.

Deferred Taxes. In November 2015, the FASB issued ASU 2015-17 regarding ASC Topic 740, "Income Taxes: Balance Sheet Classification of Deferred Taxes." This amendment changes how deferred taxes are recognized by eliminating the requirement of presenting deferred tax liabilities and assets as current and noncurrent on the balance sheet. Instead, the requirement is to classify all deferred tax liabilities and assets as noncurrent. We adopted ASU 2015-17 for the quarter ended December 31, 2015 and have applied the new guidance prospectively and accordingly the prior balance sheets were not retrospectively adjusted.

Revenue Recognition . As discussed in Note 1 of the Company's notes to the consolidated financial statements in its 2015 Annual Report on Form 10-K, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09) in May 2014. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," that deferred the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. The FASB permitted early adoption of the standard, but not before the original effective date of December 15, 2016. We are currently evaluating this ASU to determine our adoption method and the impact it will have on our consolidated financial position, results of operations and related disclosures.

NOTE D – Restricted Cash and Cash Equivalents

Our insurance carrier requires us to collateralize a portion of our workers' compensation obligations. These escrowed funds are shown as restricted cash and cash equivalents on our consolidated balance sheet and are investments in money market funds held by an agent. The changes in the balance are shown in investing activities on our consolidated statements of cash flows. The annual agreement with our carrier governing these funds expires on December 31, 2016.

HAVERTY FURNITURE COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE E - Investments

Investments consist of commercial paper and certificates of deposit. The commercial paper totaled approximately $10.0 million at March 31, 2016 and December 31, 2015 with original maturities of more than three months but less than six months. Certificates of deposit had original maturities of greater than three months. The fair values of the investments approximate their carrying amounts.

NOTE F – Interim LIFO Calculations

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on actual inventory levels. Accordingly, interim LIFO calculations must necessarily be based on management's estimates. Since these estimates may be affected by factors beyond management's control, interim results are subject to change based upon the final year-end LIFO inventory valuations.

NOTE G – Fair Value of Financial Instruments

The fair values of our cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their carrying values due to their short-term nature. The assets related to our self-directed, non-qualified deferred compensation plans for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique. The assets related to our deferred compensation plans totaled approximately $4.0 million at March 31, 2016 and $3.3 million at December 31, 2015 and are included in other assets. The related liabilities of the same amounts are included in other liabilities.

NOTE H – Credit Arrangement

In March 2016 we entered into the First Amendment to Amended and Restated Credit Agreement (the "Credit Agreement") with a bank. The Credit Agreement amends our revolving credit facility to increase the aggregate commitments from $50.0 million to $60.0 million, extend the maturity date to March 31, 2021 from September 1, 2016, lower the commitment fees on unused amounts, reduce the applicable margin for interest rates on borrowings, modify the borrowing base calculation, and change the collateral reporting requirements. We have not had any borrowings under the revolving credit facility since its origination in 2008.

The $60.0 million revolving credit facility is secured by inventory, accounts receivable, cash and certain other personal property. Our Credit Agreement includes negative covenants that limit our ability to, among other things (a) incur, assume or permit to exist additional indebtedness or guarantees; (b) incur liens and engage in sale leaseback transactions or real estate sales in excess of $100.0 million; (c) pay dividends or redeem or repurchase capital stock; (d) engage in certain transactions with affiliates; and (e) alter the business that the Company conducts.

Availability fluctuates under a borrowing base calculation and is reduced by outstanding letters of credit. The borrowing base was $60.1 million at March 31, 2016 and there were no outstanding letters of credit. Amounts available are based on the lesser of the borrowing base or the $60.0 million line amount and reduced by $6.0 million since a fixed charge coverage ratio test was not met for the immediately preceding twelve months, resulting in a net availability of $54.0 million. There were no borrowed amounts outstanding under the Credit Agreement at March 31, 2016.

HAVERTY FURNITURE COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE I – Income Taxes

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a year to date adjustment.

Our effective tax rate for the three months ended March 31, 2016 and 2015 was 38.5% and 38.4%, respectively. The primary difference in the effective rate and the statutory rate is due to state income taxes.

NOTE J – Stock Based Compensation Plan

As more fully discussed in Note 12 of the notes to the consolidated financial statements in our 2015 Annual Report on Form 10-K, we have awards outstanding for Common Stock under stock-based employee compensation plans.

The following table summarizes our award activity during the three months ended March 31, 2016:

	Restricted Stock Awards					Stock-Settled Appreciation Rights
	Shares or Units			Weighted-Average Award Price		Rights		Weighted-Average Award Price
Outstanding at December 31, 2015		344,490		$	22.87		100,875	$	18.14
Granted		205,640			18.80		—		—
Restrictions lapsed or exercised		—			—		—		—
Forfeited		(4,450	)		19.29		—		—
Outstanding at March 31, 2016		545,680			21.36		100,875	$	18.14
Exercisable at March 31, 2016		—			—		48,875	$	18.14
Restricted awards expected to vest		530,140			21.39		—		—

Grants of equity awards are made to certain officers and key employees under stockholder approved long-term incentive plans. The restrictions on most of the awards generally lapse annually, primarily over four year periods. During 2016, the Company granted 58,138 awards for which the shares ultimately issued will be based upon the achievement of various performance measures. The restricted units earned under most of these awards vest after three years. The remaining grants have time-based vesting of one or four years. The compensation is being charged to selling, general and administrative expense over the respective grants' vesting periods, primarily on a straight-line basis. Stock based compensation expense for the three months ended March 31, 2016 and March 31, 2015, was approximately $1.0 million and $1.1 million, respectively. The aggregate intrinsic value of outstanding restricted common stock grants was $11.5 million at March 31, 2016. The aggregate intrinsic value of vested and outstanding stock-settled appreciation rights at March 31, 2016 was approximately $0.1 million and $0.3 million, respectively.

As of March 31, 2016, the remaining unamortized compensation cost related to unvested equity awards was approximately $7.1 million and is expected to be recognized over a weighted-average period of 2.5 years.

HAVERTY FURNITURE COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE K – Earnings Per Share

We report our earnings per share using the two-class method. The income per share for each class of common stock is calculated assuming 100% of our earnings are distributed as dividends to each class of common stock based on their contractual rights.

The Common Stock of the Company has a preferential dividend rate of at least 105% of the dividend paid on the Class A Common Stock. The Class A Common Stock, which has ten votes per share as opposed to one vote per share for the Common Stock (on all matters other than the election of directors), may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class A Common Stock.

	Three Months Ended March 31,
	2016		2015
Numerator:
Common:
Distributed earnings	$	2,012	$	1,646
Undistributed earnings		2,248		3,938
Basic		4,260		5,584
Class A Common earnings		409		535
Diluted	$	4,669	$	6,119

Class A Common:
Distributed earnings	$	193	$	156
Undistributed earnings		216		379
	$	409	$	535
Denominator:
Common:
Weighted average shares outstanding - basic		20,121		20,569
Assumed conversion of Class A Common Stock		2,031		2,081
Dilutive options, awards and common stock equivalents		344		327

Total weighted-average diluted Common Stock		22,496		22,977

Class A Common:
Weighted average shares outstanding		2,031		2,081

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Net Sales

Our sales are generated by customer purchases of home furnishings. Revenue is recognized upon delivery to the customer.

Comparable-store or "comp-store" sales for the periods presented are sales from stores open throughout the period and the corresponding prior year period. If a store expansion results in a 10% or greater increase in selling square footage, its sales are removed from the comparable store sales base until it has been open a full 12 months.

The following outlines our sales and comp-store sales increases and decreases for the periods indicated (dollars in millions, amounts and percentages may not always add to totals due to rounding):

		2016												2015
		Net Sales							Comp-Store Sales					Net Sales							Comp-Store Sales
Period		Total Dollars		% Change			$ Change		% Change			$ Change		Total Dollars		% Change			$ Change		% Change			$ Change
	Q1	$	194.5		1.7	%	$	3.2		0.9	%	$	1.6	$	191.3		5.3	%	$	9.6		3.8	%	$	6.6

Our sales increase in the first quarter was at the same pace as the fourth quarter of 2015.

Our average written ticket was up 1.1% and custom order upholstery written business grew 4.0% for the first quarter compared to the 2015 period.

Gross Profit

Gross profit for the first quarter of 2016 was 53.7%, flat compared to the prior year period and slightly better than our estimates. Our margins were negatively impacted by discontinued and mismatched products which will have continued impact during the remainder of the year.

Our expectation for annual gross profit margins for 2016 remains unchanged at approximately 53.5%.

Substantially all of our occupancy and home delivery costs are included in selling, general and administrative expenses as are a portion of our warehousing expenses. Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses are comprised of five categories: selling; occupancy; delivery and certain warehousing costs; advertising and marketing; and administrative.

Our SG&A costs as a percent of sales was 49.5% for the three months ended March 31, 2016 and 48.2% for the same period in 2015. Total SG&A dollars for the first quarter of 2016 increased $4.1 million compared to the prior year period. Our selling costs increased $0.8 million in 2016 over 2015 due mainly to greater sales commissions and salaries. Occupancy expense rose $0.8 million primarily due to increases in depreciation and other costs associated with three new stores. Advertising and marketing expenses were $1.2 million higher in the first quarter of 2016 as we altered the level and mix of our media spending. Administrative costs rose $0.6 million primarily from inflation and higher health insurance expenses.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Our normal fixed and discretionary type expenses within SG&A costs are expected to be approximately $251.0 million for the full year 2016 versus the $240.9 million, for the same costs in 2015. The increase is largely due to depreciation and occupancy costs for new and relocated stores, staffing increases and inflation. The fixed and discretionary expenses were $61.1 million for the first quarter of 2016 versus $57.9 million in 2015, and the increases for the rest of the year will fluctuate with store expansion and marketing activity with the highest level in the fourth quarter. The variable type costs within SG&A for the first quarter of 2016 were 18.1% compared to 18.0% in 2015, and are anticipated to be approximately 17.8% to 17.9% percent of sales for the full year.

Liquidity and Capital Resources

Our primary cash requirements include working capital needs, contractual obligations, income tax obligations and capital expenditures. We have funded these requirements primarily through cash generated from operations. We have no funded debt and our lease obligations are primarily due to arrangements that are not considered capital leases but must be recorded on our balance sheets. We believe funds generated from our expected results of operations and available cash and cash equivalents will be sufficient to fund our primary obligations, dividends, stock repurchases and complete capital projects that we have underway or currently contemplate.

We also have a revolving credit facility which we amended in March 2016. Refer to Note H to the Notes to the Condensed Consolidated Financial Statements for additional information on our credit facility. The availability at March 31, 2016 was $54.0 million and there were no borrowed amounts outstanding.

Summary of Cash Activities

Our cash flows used in operating activities totaled $4.8 million in the first three months of 2016 compared to cash flows provided by operating activities of $13.6 million for the same period of 2015. This decrease was primarily due to a larger increase in inventories and larger decreases in accounts payable and accrued liabilities in 2016 compared to 2015. For additional information about the changes in our assets and liabilities refer to our Balance Sheet Changes discussion.

Our cash flows used in investing activities totaled $9.0 million in the first three months of 2016 versus $5.7 million for the same period of 2015. This increase was due to increased capital expenditures in 2016 and the maturities of certificates of deposit in 2015.

Financing activities used cash of $3.2 million in the first three months of 2016 compared to providing cash of $0.8 million for the same period of 2015. This difference was primarily the result of the receipt of $3.3 million in construction allowances in 2015 from landlords at stores where Havertys is considered the owner of the property during the construction period.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Balance Sheet Changes for the Three Months Ended March 31, 2016

Our balance sheet as of March 31, 2016, as compared to our balance sheet as of December 31, 2015, changed as follows:

·	increase in prepaid expenses of $4.3 million due to payments for maintenance agreements for new computer hardware;

·	increase in property and equipment of $7.3 million primarily due to capital expenditures and additional leased properties recorded on our balance sheet;

·	increase in customer deposits of $2.7 million as undelivered sales increased as is generally the case during the first quarter;

·	decrease in accrued liabilities of $11.5 million due to typical payments made in the first quarter of year end accruals such as incentive pay and income tax estimated payments; and

·	increase in lease obligations of $3.2 million as one additional store lease was recorded on our balance sheet.

Store Plans and Capital Expenditures

The following table summarizes our planned store activity for 2016.

Location	Opening (Closing)	Category
Lubbock, Texas	Q-2-16	Temporary
College Station, Texas	Q-3-16	New Market
Charlottesville, Virginia	Q-3-16	New Market
To be announced, Florida	Q-3-16	Closure

These changes combined with our other activity should increase net selling space in 2016 by approximately 1.4%. Total capital expenditures are estimated to be $33.0 million in 2016 depending on the timing of spending for new projects.

Off-Balance Sheet Arrangements

As of March 31, 2016 we had no off-balance sheet arrangements or obligations.

Critical Accounting Estimates

Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. Our critical accounting estimates are identified and described in our annual report on Form 10-K for the year ended December 31, 2015. We had no significant changes in those critical accounting estimates since our last annual report.

Forward-Looking Information

Certain of the statements in this Form 10-Q, particularly those anticipating future performance, business prospects, growth and operating strategies and similar matters, and those that include the words "believes," "anticipates," "estimates" or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. For those statements, Havertys claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based

on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in the economic environment; changes in the housing market; changes in industry conditions; competition; merchandise costs; energy costs; timing and level of capital expenditures; introduction of new products; rationalization of operations; and other risks identified in Havertys' SEC reports and public announcements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes with respect to our financial instruments and their related market risks since the date of the Company's most recent annual report.

Item 4. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The board of directors has authorized management, at its discretion, to purchase limited amounts of our common stock and Class A common stock. A program was initially approved by the board on November 3, 1986 with subsequent authorizations made as to the number of shares or amount of dollars for purchases. On November 10, 2015, the board authorized management to purchase up to $10.0 million of common and Class A common stock after a remaining authorization made in August 2014 is complete.

The following table presents information with respect to our repurchase of Havertys' common stock during the first quarter of 2016:

	(a) Total Number of Shares Purchased				(b) Average Price Paid Per Share				(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				(d) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
March 1 - March 31			11,497			$	20.43				11,497			$	11,058,894

Item 6. Exhibits

(a) Exhibits

The exhibits listed below are filed with or incorporated by reference into this report (those filed with this report are denoted by an asterisk). Unless otherwise indicated, the exhibit number of documents incorporated by reference corresponds to the exhibit number in the referenced documents.

Exhibit Number		Description of Exhibit (Commission File No. 1-14445)
3.1		Articles of Amendment and Restatement of the Charter of Haverty Furniture Companies, Inc. effective May 26, 2006 (Exhibit 3.1 to our Second Quarter 2006 Form 10-Q).
3.2		By-laws of Haverty Furniture Companies, Inc. as amended effective May 12, 2010 (Exhibit 3.2 to our First Quarter 2010 Form 10-Q).
*10.1		First Amendment to Amended and Restated Credit Agreement by and among Haverty Furniture Companies Inc. and Havertys Credit Services, Inc., as the Borrowers, and SunTrust Bank, as the Issuing Bank and Administrative Agent.
*31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
*31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
*32.1		Certification pursuant to 18 U.S.C. Section 1350.
*101		The following financial information from Haverty Furniture Companies, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at March 31, 2016, and December 31, 2015, (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (iv) the Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

			HAVERTY FURNITURE COMPANIES, INC. (Registrant)


Date:	May 4, 2016	By:	/s/ Clarence H. Smith
			Clarence H. Smith
			Chairman of the Board, President and Chief Executive Officer
			(principal executive officer)


		By:	/s/ Dennis L. Fink
			Dennis L. Fink
			Executive Vice President and Chief Financial Officer (principal financial and accounting officer)

EXHIBIT 10.1

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this " Amendment "), is made and entered into as of March 31, 2016, by and among HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation (" HFC "), HAVERTYS CREDIT SERVICES, INC., a Tennessee corporation (" HCS " and, together with HFC, each, a " Borrower " and, collectively, the " Borrowers "), the financial institutions party hereto as lenders (the " Lend-ers "), and SUNTRUST BANK, in its capacity as administrative agent for the Lenders (the " Administrative Agent ") and as issuing bank (the " Issuing Bank ").

W I T N E S S E T H :

WHEREAS, the Borrowers, the Guarantors, the Lenders and the Administrative Agent are parties to a certain Amended and Restated Credit Agreement, dated as of September 1, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the " Credit Agreement "; capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement), pursuant to which the Lenders have made certain financial accommodations available to the Borrowers;

WHEREAS, the Borrowers have requested that the Lenders and the Administrative Agent amend certain provisions of the Credit Agreement, and subject to the terms and conditions hereof, the Lenders are willing to do so;

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of all of which are acknowledged, the Borrowers, the Lenders and the Administrative Agent agree as follows:

1.	Amendments .

a. Section 1.1 of the Credit Agreement is amended by deleting the definitions of "Aggregate Revolving Loan Commitments", "Applicable Margin", "Borrowing Base", "Cash Equivalents", "Change in Control", "Exception Conditions", and "Maturity Date" in their entirety and inserting the following definitions in lieu thereof:

" Aggregate Revolving Loan Commitments " shall mean, as of any particular time, the aggregate committed principal amount of all Revolving Loan Commitments at such time, including any increase in Revolving Loan Commitments made pursuant to Section 2.17(a) hereof. On the First Amendment Date, the Aggregate Revolving Loan Commitments are $60,000,000.

" Applicable Margin " shall mean, with respect to each Advance and issuance of Letters of Credit, a per annum rate of interest as set forth in the pricing grid below (the " Pricing Grid ") determined by the Administrative Agent by reference to the applicable Average Availability for the fiscal month most recently ended, effective as of the second Business Day after the Borrowing Base Certificate required pursuant to Section 7.5(a) is delivered by the Administrative Borrower to the Administrative Agent for such fiscal month most recently ended:

Level	Average Availability	Applicable Margin
I	Less than $30,000,000	1.50%
II	Greater than or equal to $30,000,000	1.25%

Notwithstanding the foregoing, the Applicable Margin from the First Amendment Date through (and including) the date two (2) Business Days after the delivery of the Borrowing Base Certificate required pursuant to Section 7.5(a) for the fiscal month ending on March 31, 2016 shall be at Level II as set forth in the Pricing Grid.

In the event that the Administrative Borrower fails to timely provide any Borrowing Base Certificate in accordance with the terms of Section 7.5(a) , and without prejudice to any additional rights under Section 9.2 , as of the second Business Day after delivery of such Borrowing Base Certificate was due until the date two (2) Business Days following the date such Borrowing Base Certificate was delivered, the Applicable Margin shall be at Level I as set forth in the Pricing Grid.

In the event that the information contained in any Borrowing Base Certificate is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin based upon the Pricing Grid (the " Accurate Applicable Margin ") for any period that such Borrowing Base Certificate covered (an " Applicable Period ") than the Applicable Margin actually applied for such Applicable Period, then (i) the Administrative Borrower shall immediately deliver to the Administrative Agent a corrected Borrowing Base Certificate for such Applicable Period, (ii) the Applicable Margin shall be adjusted such that after giving effect to the corrected Borrowing Base Certificate the Applicable Margin shall be reset to the Accurate Applicable Margin based upon the Pricing Grid for such period and (iii) the Borrowers shall immediately deliver to the Administrative Agent full payment in respect of the accrued additional interest on the Advances and Letters of Credit as a result of such Accurate Applicable Margin for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 2.11 .

Nothing contained in this definition shall limit the rights of the Administrative Agent and the other Lenders to exercise their rights under Section 2.3(b) or Section 9.2 .

" Borrowing Base " shall mean, at any particular time, the sum of:

(a) 90% of the NOLV of Eligible Inventory, plus

(b) 90% of the book value of Eligible Credit Card Receivables; minus

" Cash Equivalents " shall mean, collectively, (a) marketable, direct obligations of the US and its agencies maturing within three hundred sixty-five (365) days of the date of purchase, (b) commercial paper issued by corporations, each of which shall (i) have a consolidated net worth of at least $500,000,000, and (ii) mature within one hundred eighty (180) days from the date of the original issue thereof and is rated "P-1" or better by Moody's or "A-1" or better by S&P, (c) certificates of deposit maturing within three hundred sixty-five (365) days of the date of purchase and issued by a US national or state bank having deposits totaling more than $500,000,000, and whose short-term debt is rated "P-1" or better by Moody's or "A-1" or better by S&P, (d) up to $100,000 per institution and up to $1,000,000 in the aggregate in (i) short-term obligations issued by any local commercial bank or trust company located in those areas where any Borrower conducts its business, whose deposits are insured by the Federal Deposit Insurance Corporation, or (ii) commercial bank-insured money market funds, or any combination of the types of investments described in this clause (d), (e) certificates of deposit maturing more than three hundred sixty-five (365) days after the date of purchase but less than two (2) years after the date of purchase and issued by a US national or state bank having deposits totaling more than $500,000,000, and whose short-term debt is rated "P-1" or better by Moody's or "A-1" or better by S&P; provided that the aggregate amount of all such certificates of deposit permitted under this clause (e) (excluding certificates of deposit held in accounts with a Lender) shall not at any time exceed $20,000,000 and (f) mutual funds investing solely in any one or more of the Cash Equivalents described in clauses (a) through (d) above or money market funds that (x) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, (y) are rated AAA by S&P and Aaa by Moody's and (z) have portfolio assets of at least $5,000,000,000.

" Change in Control " shall mean the occurrence of one or more of the following events: (a) any sale, lease, exchange or other transfer (in a single transaction or a series of related transactions) of all or substantially all of the assets of the Administrative Borrower to any Person or "group" (within the meaning of the Exchange Act and the rules promulgated thereunder by the Securities and Exchange Commission as in effect on the date hereof), (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or "group" (within the meaning of the Exchange Act and the rules promulgated thereunder by the Securities and Exchange Commission as in effect on the date hereof) acting in concert (other than by Class A Shareholders) acquiring beneficial ownership, of 30% or more of the outstanding shares of the Class A Common Stock of the Administrative Borrower; or (c) during any period of twenty-four (24) consecutive months, a majority of the members of the board of directors of the Administrative Borrower cease to be composed of individuals (A) who were members of the board of directors or other equivalent governing body of the Administrative Borrower on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body, or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

" Exception Conditions " shall mean, with respect to any event, that before and after giving pro forma effect to such event (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) either (a)(x) Availability (calculated based on a Borrowing Base Certificate received by Administrative Agent not more than thirty (30) days prior to the applicable event) would equal or exceed seventeen and one-half percent (17.5%) of the Aggregate Revolving Loan Commitments and (y) the Fixed Charge Coverage Ratio for the twelve (12) month period most recently ended for which the Administrative Agent has received financial statements pursuant to Section 7.1 would not be less than 1.00:1.00, or (b) Availability (calculated based on a Borrowing Base Certificate received by Administrative Agent not more than thirty (30) days prior to the applicable event) would equal or exceed twenty percent (20%) of the Aggregate Revolving Loan Commitments, and (iii) if requested by the Administrative Agent, the Administrative Borrower shall have delivered to the Administrative Agent its updated projected Availability and cash flow reports, prepared in good faith based on reasonable assumptions consistent with past practice, demonstrating that Availability over the immediately following twelve consecutive months will equal or exceed the greater of (A) $12,500,000 and (B) twenty percent (20%) of the Aggregate Revolving Loan Commitments.

" Maturity Date " shall mean March 31, 2021, or such earlier date as payment of the Loans shall be due (whether by acceleration or otherwise).

b. The definition of "Required Lenders" in Section 1.1 of the Credit Agreement is amended by replacing "$50,000,000" in each of clauses (i) and (ii) therein with "$60,000,000".

c. Section 1.1 of the Credit Agreement is amended by adding the following definitions in appropriate alphabetical order:

" First Amendment " shall mean that certain First Amendment to the Credit Agreement, dated as of the First Amendment Date, between the Borrowers, the Lenders, and Administrative Agent.

" First Amendment Date " shall mean March 31, 2016.

d. Section 2.4(b) of the Credit Agreement is amended by replacing "0.375%" therein with "0.250%".

e. Section 6.15 of the Credit Agreement is amended by deleting subsection (b) thereof in its entirety and inserting the following in lieu thereof:

(b) Other than the Excluded Accounts, each Credit Party shall maintain, in its name, at a Cash Management Bank, one or more Deposit Accounts, Concentration Accounts and Disbursement Accounts that are subject to a Control Account Agreement in form and substance reasonably satisfactory to the Administrative Agent (individually, a " Blocked Account " and collectively, the " Blocked Accounts "). Each such Control Account Agreement shall provide, among other things, that the relevant Cash Management Bank agrees, from and after the receipt of a notice (an " Activation Notice ") from the Administrative Agent (which Activation Notice may be given by the Administrative Agent at any time at which (i) an Event of Default has occurred and is continuing or (ii) Availability for five (5) consecutive Business Days is less than the greater of (A) $7,500,000 and (B) twelve and one-half percent (12.5%) of the Aggregate Revolving Loan Commitments (the foregoing being referred to herein as an " Activation Event ")), to forward immediately all amounts in each Blocked Account, as the case may be to the Administrative Agent per its instructions and to commence the process of daily sweeps from such account to the Administrative Agent. If at any time after an Activation Notice has been given, Availability for sixty (60) consecutive days equals or exceeds the greater of (A) $7,500,000 and (B) twelve and one-half percent (12.5%) of the Aggregate Revolving Loan Commitments, then the Administrative Agent shall, promptly upon request of the Administrative Borrower, notify the Cash Management Bank that the daily sweeps from such account shall cease until further notice from the Administrative Agent that a subsequent Activation Event has occurred.

f. Section 7.1 of the Credit Agreement is amended by replacing the final sentence of subsection (a) of such Section in its entirety with the following:

Notwithstanding the foregoing, no monthly financial statements shall be required to be delivered under this Section 7.1(a) unless (i) (A) during such month the aggregate principal amount of all Revolving Loans, Swing Loans, Agent Advances and Overadvances outstanding exceeds $9,000,000 for five (5) consecutive Business Days or (B) on any Business Day during such month the aggregate amount of all Letter of Credit Obligations outstanding exceeds $9,000,000, or (ii) an Event of Default has occurred and is continuing; provided that thereafter such monthly financial statements shall no longer be required to be delivered if, for sixty (60) consecutive days, the aggregate outstanding principal amount of all Revolving Loans, Swing Loans, Agent Advances and Overadvances is zero and the aggregate outstanding amount of all Letter of Credit Obligations does not exceed $9,000,000.

g. Section 7.5 of the Credit Agreement is amended by replacing subsection (a) of such Section in its entirety with the following:

(a) Administrative Borrower shall deliver to the Administrative Agent (i) a Borrowing Base Certificate as of the last day of the prior fiscal quarter, month or week, as the case may be, which shall be in such form as shall be satisfactory to the Administrative Agent, (ii) an Inventory status report, (iii) a Credit Card Receivables status report or statement as of such date, setting forth the balance of the Credit Card Receivables aged not more than five days from date of sale and (iv) an aging of Qualified Receivables as of such date, in each case with the supporting documentation and schedules in reasonable detail to confirm such calculations. The foregoing certificates and reports shall be delivered by the Administrative Borrower to the Administrative Agent quarterly within thirty (30) days after the end of each fiscal quarter, provided that if Availability is less than or equal to the greater of (x) seventy-five percent (75.0%) of the Aggregate Revolving Loan Commitments and (y) $45,000,000 (the " Quarterly Reporting Threshold "), then the foregoing certificates and reports shall be delivered by the Administrative Borrower to the Administrative Agent monthly within fifteen (15) days after the end of each fiscal month, provided further , that if Availability is less than or equal to the greater of (x) fifteen percent (15.0%) of the Aggregate Revolving Loan Commitments and (y) $9,000,000 (the " Monthly Reporting Threshold "), then the foregoing certificates and reports shall be delivered by the Administrative Borrower to the Administrative Agent weekly within three (3) Business Days after the end of each fiscal week; in each case, (A) until such time as Availability has exceeded the Monthly Reporting Threshold for sixty (60) consecutive days (at which time the foregoing certificates and reports shall thereafter be delivered by the Administrative Borrower to the Administrative Agent monthly within fifteen (15) days after the end of each fiscal month), or (B) until such time as Availability has exceeded the Quarterly Reporting Threshold for sixty (60) consecutive days (at which time the foregoing certificates and reports shall thereafter be delivered by the Administrative Borrower to the Administrative Agent quarterly within thirty (30) days after the end of each fiscal quarter).

h. Section 7.6(g) of the Credit Agreement is amended by inserting 'or the "First Amendment Date"' after 'the "Agreement Date"'.

i. Section 8.7 of the Credit Agreement is amended by replacing subsection (d) of such Section in its entirety with the following:

(d) Acquire (i) any Person, (ii) all or any substantial part of the assets, property or business of a Person, (iii) any real estate or (iv) any assets that constitute a division or operating unit of the business of any Person, other than (x) the acquisition of or assumption of real estate leases so long as such leased sites are operated as Haverty stores or warehouses, (y) the acquisition of other assets, stock or line of business, but for purposes of this clause (y) subject to compliance with the Exception Conditions before and after giving effect to such acquisition or assumption and (z) in connection with any Permitted Sale-Leaseback Transaction, (1) the repurchase of any leased real property pursuant to the terms of any Permitted Sale-Leaseback Transaction as a result of the casualty or condemnation of such property or (2) the substitution or exchange of owned real property of a Borrower for real property leased by such Borrower thereunder if the sum (without duplication) of (A) the aggregate purchase price of all properties sold and leased back after the First Amendment Date in Sale-Leaseback Transactions permitted under Section 8.10 , plus (B) the aggregate outstanding principal amount of Permitted Real Estate Financing incurred after the First Amendment Date, plus (C) the Net Real Estate Exchange Value incurred after the First Amendment Date does not exceed $100,000,000 in the aggregate;

j. Section 8.8 of the Credit Agreement is amended by deleting such Section in its entirety and inserting the following in lieu thereof:

Section 8.8 Fixed Charge Coverage Ratio . At any time Availability is less than the greater of (a) $6,000,000 or (b) ten percent (10.0%) of the Aggregate Revolving Loan Commitments, the Credit Parties and their Subsidiaries shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio, as of the end of the fiscal month most recently ended for which the Administrative Agent has received financial statements, for the period of the immediately preceding twelve (12) months, of not less than 1.00:1.00.

k. All references to "Agreement Date" contained in the following Sections of the Credit Agreement are hereby amended by replacing such references with "First Amendment Date": Section 5.1(c) (Partnerships; Joint Ventures; Subsidiaries), Section 5.1(d) (Capital Stock and Related Matters), Section 5.1(j) (Taxes), Section 5.1(n) (Liabilities; Litigation), Section 5.1(u) (Solvency), Section 5.1(aa) (Name of Credit Party), Section 5.1(dd) (OFAC), Section 6.15 (Cash Management System), Section 6.23 (Intellectual Property Pledge), Section 8.1(d) (Purchase Money/Capital Leases), Section 8.1(f) (Permitted Real Estate Financing), Section 8.7(b) (Disposition of Assets) and Section 8.10 (Sales and Leasebacks).

l. Schedule I of the Credit Agreement is amended by replacing such schedule in its entirety with Schedule I attached to this Amendment.

m. Exhibit B to the Credit Agreement is hereby amended by replacing such Exhibit in its entirety with Exhibit A attached to this Amendment.

n. Schedule 5.1(c)-1 (Subsidiaries), Schedule 5.1(c)-2 (Partnerships/Joint Ventures), Schedule 5.1(d) (Outstanding Capital Stock Ownership), Schedule 5.1(j) (Taxes), Schedule 5.1(n) (Liabilities; Litigation) and Schedule 6.15 (Bank and Investment Accounts) are each amended by replacing such schedule in its entirety with the corresponding schedule attached hereto as part of Exhibit B attached to this Amendment.

o. Section 11.1 of the Credit Agreement is hereby amended by replacing Section 11.1(a)(ii) in its entirety with the following:

(ii)	If to the Administrative Agent, to it at:

SunTrust Bank
Mail Code GA-ATL-1981

3333 Peachtree Road, 4th Floor-East Tower

Atlanta, Georgia 30326

Attn: Asset Manager-Haverty Furniture Companies

Telecopy No.: 404-439-9717

Email: angela.leake@SunTrust.com

with a copy to:

King & Spalding
1180 Peachtree Street, NW
Atlanta, Georgia 30309
Attention: Carolyn Z. Alford, Esq.
Telecopy No.: (404) 572-5100
Email: czalford@kslaw.com

2. Conditions to Effectiveness of this Amendment . Notwithstanding any other provision of this Amendment and without affecting in any manner the rights of the Lenders hereunder, it is understood and agreed that this Amendment shall not become effective, and the Borrowers shall have no rights under this Amendment, until the Administrative Agent shall have received (i) reimbursement or payment of its costs and expenses incurred in connection with this Amendment or the Credit Agreement (including reasonable fees, charges and disbursements of King & Spalding LLP, counsel to the Administrative Agent), (ii) executed counterparts to this Amendment from the Borrowers, each of the Guarantors and the Lenders, (iii) duly executed Notes payable to the order of each Lender requesting a promissory note in the amount of such Lender's Revolving Loan Commitment, as amended hereby, (iv) a duly executed Borrowing Base Certificate calculated after giving effect to this Amendment, (v) a certificate signed by an Authorized Signatory of each Credit Party, including a certificate of incumbency with respect to each Authorized Signatory of such Credit Party, together with appropriate attachments which shall include, without limitation, the following: (A) a copy of the certificate of incorporation of such Credit Party certified to be true, complete and correct by the Secretary of State of the State of such Credit Party's incorporation, (B) a true, complete and correct copy of the by-laws of such Credit Party, (C) a true, complete and correct copy of the resolutions of such Credit Party authorizing the execution, delivery and performance by such Credit Party of this Amendment, the other Loan Documents and the transactions contemplated herein, and (D) certificates of good standing from the State of incorporation of each Credit Party and each other jurisdiction where such Credit Party is required to be qualified to do business as a foreign corporation and a failure to be so qualified could reasonably be expected to have a Materially Adverse Effect (other than the State of Tennessee with respect to Haverty Furniture Companies, Inc., which shall be delivered on or before June 15, 2016 or such later date as the Administrative Agent may agree), and (vi) an opinion of counsel to the Credit Parties, addressed to the Administrative Agent, the Issuing Bank and each of the Lenders, and covering such matters relating to the Credit Parties, this Amendment, the Loan Documents and the transactions contemplated herein and therein as the Administrative Agent shall reasonably request.

3. Representations and Warranties . To induce the Lenders and the Administrative Agent to enter into this Amendment, each Credit Party hereby represents and warrants to the Lenders and the Administrative Agent:

(a) Each of the Borrowers and each of its Subsidiaries (i) is duly orga-nized, validly existing and in good standing as a corporation, partnership or limited liability company under the laws of the jurisdiction of its organization, (ii) -has all requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified would not reasonably be expected to result in a Material Adverse Effect;

(b) The execution, delivery and performance by each Credit Party of the this Amendment, the Credit Agreement, as amended hereby, and the other Loan Documents to which it is a party are within such Credit Party's organizational powers and have been duly authorized by all necessary organizational, and if required, shareholder, partner or member action;

(c) The execution, delivery and performance by the Borrowers of this Amendment, and by each Credit Party of the other Loan Documents to which it is a party (i) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, (ii) will not violate any Requirements of Law applicable to either of the Borrowers or any of such Borrower's Subsidiaries or any judgment, order or ruling of any Governmental Authority, (iii) will give rise to a right thereunder to require any payment to be made by either of the Borrowers or any of such Borrower's Subsidiaries;

(d) This Amendment has been duly executed and delivered for the benefit of or on behalf of each Credit Party and constitutes a legal, valid and binding obligation of each Credit Party, enforceable against such Credit Party in accordance with its terms except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights and remedies in general; and

(e) After giving effect to this Amendment, the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects, and no Default or Event of Default has occurred and is continuing as of the date hereof.

4. Effect of Amendment . Except as set forth expressly herein, all terms of the Credit Agreement, as amended hereby, and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Borrowers to the Lenders and the Administrative Agent. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement.

5. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Georgia and all applicable federal laws of the United States of America.

6. No Novation . This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Credit Agreement or an accord and satisfaction in regard thereto.

7. Costs and Expenses . The Borrowers agree to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for the Administrative Agent with respect thereto.

8. Counterparts . This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile transmission or by electronic mail in pdf form shall be as effective as delivery of a manually executed counterpart hereof.

9. Binding Nature . This Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective successors, successors-in-titles, and assigns.

10. Entire Understanding . This Amendment sets forth the entire understanding of the parties with respect to the matters set forth herein, and shall supersede any prior negotia-tions or agreements, whether written or oral, with respect thereto.

11. Reaffirmations and Acknowledgments .

(a) Reaffirmation . Each Borrower ratifies and confirms the terms of the Credit Agreement as amended hereby and all promissory notes issued thereunder. Each Borrower acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of the Borrowers to the Lenders or any other obligation of the Borrowers, or any actions now or hereafter taken by the Lenders with respect to any obligation of the Borrowers, the Credit Agreement (i) is and shall continue to be a primary obligation of the Borrowers, and (ii) is and shall continue to be in full force and effect in accordance with its terms.

(b) Acknowledgment of Perfection of Security Interest . Each Borrower hereby acknowledges that, as of the date hereof, the security interests and liens granted to the Administrative Agent and the Lenders under the Credit Agreement and the other Loan Documents are in full force and effect, are properly perfected and are enforceable in accordance with the terms of the Credit Agreement and the other Loan Documents.

[ Signature Pages To Follow ]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, under seal in the case of the Borrowers, by their respective authorized officers as of the day and year first above written.

BORROWERS:

HAVERTY FURNITURE COMPANIES, INC.

By: /s/ D ennis L. Fink

Name: Dennis L. Fink

Title: Executive Vice President and

Chief Financial Officer

HAVERTYS CREDIT SERVICES, INC.

By: /s/ Dennis L. Fink

Name: Dennis L. Fink
Title: President

SUNTRUST BANK , as Administrative Agent, as Issuing Bank and as a Lender

By: /s/ Angela Leake

Name: Angela Leak

Title: Director

SCHEDULE I
COMMITMENTS

Lender	Revolving Loan Commitment	Revolving Commitment Ratio
SunTrust Bank	$60,000,000	100%
Total	$60,000,000	100%

EXHIBIT A

Form of borrowing base certificate attached.

EXHIBIT B

See attached updated schedules .

Issuer	Type of Security	Owner and Number of Shares Issued and Outstanding by Class	Number of Holders	% Ownership

Haverty Furniture Companies, Inc.*	Common Stock Class A Common Stock	28,486,458 2,553,759	578 61	- -


Havertys Credit Services, Inc.	Common Stock Series A Preferred Stock	5,000 shares issued to Haverty Furniture Companies, Inc. 1,000 shares issued to Haverty Furniture Companies, Inc.	1 1	100% 100%

NAME	STATE OF INCORPORATION	HAVERTY FURNITURE COMPANIES, INC. PERCENTAGE OF OWNERSHIP OF ITS SUBSIDIARY


Havertys Credit Services, Inc.	Tennessee	100%

Date: May 4, 2016		/s/ Clarence H. Smith
		Clarence H. Smith Chairman of the Board, President and Chief Executive Officer

Date: May 4, 2016		/s/ Dennis L. Fink
		Dennis L. Fink Executive Vice President and Chief Financial Officer

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.