10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2010

OR

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

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 x     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	x
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 x

The numbers of shares outstanding of the registrant’s two classes of $1 par value common stock as of July 31, 2010, were: Common Stock – 18,477,465; Class A Common Stock – 3,365,632.

HAVERTY FURNITURE COMPANIES, INC.

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
	Item 1.   Financial Statements
	Condensed Consolidated Balance Sheets – June 30, 2010 (unaudited) and December 31, 2009	1
	Condensed Consolidated Statements of Operations – Three and Six Months ended June 30, 2010 and 2009 (unaudited)	2
	Condensed Consolidated Statements of Cash Flows – Six Months ended June 30, 2010 and 2009 (unaudited)	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
	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	13

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	62,141		$	44,466
Accounts receivable		13,721			15,299
Inventories		89,002			93,301
Prepaid expenses		9,638			8,741
Other current assets		5,674			6,494
Total current assets		180,176			168,301
Accounts receivable, long-term		614			844
Property and equipment		170,608			176,363
Deferred income taxes		10,685			9,114
Other assets		5,618			6,311
	$	367,701		$	360,933
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	18,007		$	19,128
Customer deposits		17,862			14,002
Accrued liabilities		29,598			30,208
Deferred income taxes		7,615			7,750
Current portion of lease obligations		406			357
Total current liabilities		73,488			71,445
Lease obligations, less current portion		6,609			6,826
Other liabilities		37,109			38,105
Total liabilities		117,206			116,376
Stockholders’ equity
Capital Stock, par value $1 per share:
Preferred Stock, Authorized: 1,000 shares; Issued: None
Common Stock, Authorized: 50,000 shares; Issued: 2010 – 26,122;  2009 – 25,288 shares		26,122			25,288
Convertible Class A Common Stock, Authorized: 15,000 shares; Issued: 2010 – 4,004; 2009 – 4,431 shares		4,004			4,431
Additional paid-in capital		65,706			62,614
Retained earnings		246,701			244,953
Accumulated other comprehensive loss		(16,078	)		(16,685	)
Less treasury stock at cost – Common Stock        (2010 – 7,760; 2009 – 7,769 shares) and Convertible Class A Common Stock  (2010 and 2009 – 522 shares)		(75,960	)		(76,044	)
Total stockholders’ equity		250,495			244,557
	$	367,701		$	360,933

See notes to these condensed consolidated financial statements.

1

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data – Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Net sales	$	145,075		$	129,683		$	301,111		$	273,921
Cost of goods sold		70,800			63,062			145,571			133,537
Gross profit		74,275			66,621			155,540			140,384
Credit service charges		184			311			398			704
Gross profit and other revenue		74,459			66,932			155,938			141,088
Expenses:
Selling, general and administrative		74,875			72,860			153,753			153,738
Interest, net		206			203			414			380
Provision for doubtful accounts		43			247			206			662
Other (income) expense, net		(8	)		141			(210	)		20
		75,116			73,451			154,163			154,800
(Loss) income before income taxes		(657	)		(6,519	)		1,775			(13,712	)
Income tax (benefit) expense		(51	)		63			27			133
Net (loss) income	$	(606	)	$	(6,582	)	$	1,748		$	(13,845	)
Basic and diluted (loss) earnings per share:
Common Stock	$	(0.03	)	$	(0.31	)	$	0.08		$	(0.65	)
Class A Common Stock	$	(0.03	)	$	(0.30	)	$	0.08		$	(0.62	)
Basic weighted average shares outstanding:
Common Stock		18,060			17,397			17,820			17,360
Class A Common Stock		3,673			3,987			3,773			3,996
Diluted weighted average shares outstanding:
Common Stock		21,733			21,384			21,945			21,356
Class A Common Stock		3,673			3,987			3,773			3,996

See notes to these condensed consolidated financial statements.

2

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands – Unaudited)

	Six Months Ended June 30,
	2010			2009
Cash Flows from Operating Activities:
Net  income (loss)	$	1,748		$	(13,845	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		8,528			10,115
Share-based compensation expense		1,008			955
Provision for doubtful accounts		206			662
Deferred income taxes		(1,706	)		—
Net gain on sale of property and equipment		(117	)		(19	)
Other		(169	)		300
Changes in operating assets and liabilities:
Accounts receivable		1,602			9,499
Inventories		4,299			10,322
Customer deposits		3,860			1,947
Other assets and liabilities		473			3,895
Accounts payable and accrued liabilities		(1,684	)		(9,984	)
Net cash provided by operating activities		18,048			13,847
Cash Flows from Investing Activities:
Capital expenditures		(3,137	)		(1,263	)
Proceeds from sale-leaseback transaction		—			6,625
Proceeds from sale of property and equipment		206			29
Other investing activities		—			43
Net cash  (used in) provided by investing activities		(2,931	)		5,434
Cash Flows from Financing Activities:
Proceeds from borrowings under revolving credit facility		—			5,800
Payments of borrowings under revolving credit facility		—			(5,800	)
Net change in borrowings under revolving credit facility		—			—
Payments on lease obligations		(168	)		(148	)
Proceeds from exercise of stock options		3,319			—
Other financing activities		(593	)		(475	)
Net cash provided by (used in) financing activities		2,558			(623	)
Increase in cash and cash equivalents during the period		17,675			18,658
Cash and cash equivalents at beginning of period		44,466			3,697
Cash and cash equivalents at end of period	$	62,141		$	22,355

See notes to these condensed consolidated financial statements.

3

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 in one reportable segment, home furnishings retailing. 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 for complete financial statements. The financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transact ions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included.

We have reclassified amounts in components of the prior period cash flow statement related to share-based compensation expense to conform to the current period’s presentation.  This reclassification does not change the amount reported as “cash provided by operating activities.”

The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. 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 or results of operations.

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, 2009.

NOTE B – Accounts Receivable

Accounts receivable balances resulting from certain credit promotions have scheduled payment amounts which extend beyond one year. Portions of the receivables are classified as long-term based on the specific programs’ historical collection rates, which are generally faster than the scheduled rates. The portions of receivables contractually due beyond one year classified as current and long-term are estimates. The timing of actual collections that are contractually due beyond one year may be different from the amounts estimated to be collected within one year. However, based on experience, we do not believe the collection rates will differ significantly. At June 30, 2010 and December 31, 2009, the accounts receivable contractually due beyond one year from the respective balance sheet dates totaled approximately $2.1 million and $ 2.8 million, respectively.

NOTE C – 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 calculations are subject to the final year-end LIFO inventory valuations.

4

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE D – Credit Arrangement

Havertys has a $60,000,000 revolving credit facility (the “Credit Agreement”) with two banks which 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) create unsecured funded indebtedness or capital lease obligations collectively in excess of $15,000,000 in aggregate outstandings at any one time, (b) create indebtedness secured by real estate or engage in sale leaseback transactions which together exceed $60,000,000 in the aggregate, (c) sell or dispose of real property or other assets in excess of $30,000,000 in the aggregate, and (d) pay dividends in excess of $6,000,000 or repurchase capital stock in excess of $5,000,000 during any trailing twelve month period.

Availability fluctuates under a borrowing base calculation and is reduced by outstanding letters of credit.  The borrowing base was $52.1 million at June 30, 2010.  Amounts available are reduced by $10.0 million since a fixed charge coverage ratio test is not met for the immediately preceding twelve month period and are also reduced by $7.6 million for outstanding letters of credit at June 30, 2010, resulting in a net availability of $34.5 million.  There were no borrowed amounts outstanding under the Credit Agreement at June 30, 2010. We are in compliance with the terms of the Credit Agreement at June 30, 2010 and there exists no default or event of default.  The Credit Agreement has provisions for commitment fees on unused amounts and terminates in December 2011.

NOTE E – 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.

The effective tax rates for the six months ended June 30, 2010 and 2009 were 1.5% and (1.0)%, respectively.  The income tax expense or benefit that would otherwise be recognized was virtually offset by a change in the valuation allowance for deferred taxes. The remainder of the tax expense is for Texas state taxes, which are based on gross profit and not pre-tax income or loss.

NOTE F – Fair Value of Financial Instruments

The fair values of our cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate the carrying value due to their short-term nature.  The assets related to our self-directed, non-qualified deferred compensation plan for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique.  These assets totaled approximately $1.4 million at June 30, 2010 and $1.5 million at December 31, 2009 and are included in other assets.  The related liability of the same amount is included in other liabilities.

5

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE G – Earnings Per Share

We report our earnings per share using the two-class method.  The income or loss per share for each class of common stock is calculated assuming 100% of our earnings or losses 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.

The following is a reconciliation of the (loss) earnings and number of shares used in calculating the diluted (loss) earnings per share for Common Stock and Class A Common Stock (amounts in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010		2009
Numerator:
Common:
Distributed earnings	$	—		$	—		$	—	$	—
Undistributed (loss) earnings		(508	)		(5,403	)		1,455		(11,356	)
Basic		(508	)		(5,403	)		1,455		(11,356	)
Class A Common  (loss) earnings		(98	)		(1,179	)		293		(2,489	)
Diluted	$	(606	)	$	(6,582	)	$	1,748	$	(13,845	)
Class A Common:
Distributed earnings	$	—		$	—		$	—	$	—
Undistributed (loss) earnings		(98	)		(1,179	)		293		(2,489	)
	$	(98	)	$	(1,179	)	$	293	$	(2,489	)
Denominator:
Common:
Weighted average shares outstanding - basic		18,060			17,397			17,820		17,360
Assumed conversion of Class A Common Stock		3,673			3,987			3,773		3,996
Dilutive options, awards and common stock equivalents		—			—			352		—
Total weighted-average diluted Common Stock		21,733			21,384			21,945		21,356
Class A Common:
Weighted average shares outstanding		3,673			3,987			3,773		3,996

We did not include in the computation of diluted (loss) earnings per share for the three months ended June 30, 2010 and 2009 approximately 1,894,000 and 1,933,000 shares, and for the six months ended June 30, 2010 and 2009 approximately 886,000 and 2,014,000 shares, respectively. These shares represent underlying stock options, awards and common stock equivalents that would be anti-dilutive if included.

6

HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE H – Pension Plans

We have a defined benefit pension plan covering substantially all employees hired on or before December 31, 2005.  The pension plan was closed to any employee hired after that date.  The benefits are based on years of service and the employee’s final average compensation.  Effective January 1, 2007, no new benefits are earned under this plan for additional years of service after December 31, 2006.

We also have a non-qualified, non-contributory supplemental executive retirement plan (SERP) for employees whose retirement benefits are reduced due to their annual compensation levels.  The SERP limits the total amount of annual retirement benefits that may be paid to a participant in the SERP from all sources (Retirement Plan, Social Security and the SERP) to $125,000.  The SERP is not funded so we pay benefits directly to participants.

Net pension costs included the following components (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Service cost-benefits earned during period	$	25		$	28		$	50		$	56
Interest cost on projected benefit obligations		1,001			998			2,002			1,996
Expected return on plan assets		(946	)		(851	)		(1,892	)		(1,702	)
Amortization of prior service costs		52			52			104			104
Amortization of actuarial loss		201			267			402			534
Net pension costs	$	333		$	494		$	666		$	988

Qualified pension plan obligations are funded in accordance with prescribed regulatory requirements and with an objective of meeting funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments.  We expect to make a $3.0 million contribution to our qualified pension plan in 2010.

NOTE I – Comprehensive Income

Comprehensive income (loss) represents net earnings (loss) plus any revenue, expenses, gains or losses that are specifically excluded from net income and recognized directly as a component of stockholders’ equity.

The reconciliation of net income (loss) to comprehensive income (loss) is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010		2009
Net (loss) income	$	(606	)	$	(6,582	)	$	1,748	$	(13,845	)
Other comprehensive income		303			51			607		101
Comprehensive (loss) income	$	(303	)	$	(6,531	)	$	2,355	$	(13,744	)

7

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

The following discussion of Havertys’ financial condition and results of operations should be read together with the accompanying Condensed Consolidated Financial Statements and related notes thereto and our 2009 Annual Report to Stockholders.

Net Sales

Our sales are generated by customer purchases of home furnishings.  Revenue is recognized upon delivery to the customer.  Our sales for 2010 have increased over the prior year as expected given the severity of the declines in 2009.

Sales for the second quarter of 2010 increased $15.4 million or 11.9% as compared to the prior year period and comparable store sales increased 13.2% or $16.8 million.  The remaining $1.4 million of the change in sales in the second quarter of 2010 was from new, closed and otherwise non-comparable stores.  Sales for the first six months of 2010 increased $27.2 million or 9.9% as compared to the prior year period and comparable store sales increased 11.6% or $31.0 million.  The remaining $3.8 million of the change in sales in the first six months of 2010 was from new, closed and otherwise non-comparable stores.  Stores are non-comparable if open for less than one year or if the selling square footage has been changed significantly during the past 12 full months. Large clearance sales events from w arehouse or temporary locations are excluded from comparable store sales, as are periods when stores are closed or being extensively remodeled.

The double digit percent increase for the second quarter of 2010 was our third consecutive quarter of positive comparable store sales.  These increases are relative to the very difficult sales environment last year.  Consumer confidence has trended lower since the beginning of 2010 and the economic recovery is very modest.  These factors combined with an extremely weak housing market create a very difficult environment for the retail home furnishings industry.

Gross Profit

Gross profit for the second quarter of 2010 was 51.2%, compared to 51.4% in the prior year period.  This decrease is primarily the result of a $0.6 million (0.4% of sales) increase in our LIFO reserve.  Increased cargo freight expenses impacted our product costs.  It is difficult to recover these types of increases in our retail pricing in the same time frame that they are recognized under the LIFO inventory costing method.

Gross profit for the six months ended June 30, 2010 was 51.7% compared to 51.3% for the same period in 2009.  Improvements in gross profit generated by product mix and pricing discipline were offset in part by the impact of the $0.6 million increase in the LIFO reserve.

We anticipate increasing freight and material costs and labor rates for our suppliers could generate potential pressure on product costs. We plan to remain competitive, but not overly aggressive with our pricing structure, as we strive to maintain our gross profit margin for the full year at or near 51.2%.

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 second quarter 2010 SG&A costs as a percent of sales decreased 4.6% to 51.6% from 56.2% in the prior year period.  SG&A costs for the six months ended June 30, 2010 were 5.0% lower at 51.1%, compared to 56.1% in the prior year period.

Selling expenses generally vary with sales volume, and were relatively flat as a percent of net sales for the second quarter and first six months of 2010 as compared to the prior year periods.

8

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

Occupancy costs are a significant portion of our SG&A costs and are generally fixed.  Depreciation expense included in occupancy costs was approximately $0.7 million and $1.4 million lower in the second quarter and six months ended June 30, 2010, respectively compared to the prior year periods.  We plan to open a new store and close two locations in the fourth quarter.

Delivery and warehousing expenses included in SG&A for the second quarter of 2010 were relatively flat as a percent of net sales as compared to the prior year period.  In response to the lower sales levels experienced during the prior years, we adjusted routes and reduced total head count, equipment and related delivery expenses.  Delivery and warehouse expenses for the first six months of 2010 as a percent of net sales were down compared to the prior year period by 42 basis points due to cost control efficiencies which were partly offset by higher fuel costs.

Our advertising and marketing expenses as a percent of net sales in the second quarter of 2010 were relatively flat and down 45 basis points for the first six months of 2010 as compared to the prior year periods. We expect to increase our total dollar spend in the seasonally stronger second half of the year.

Our administrative costs were relatively flat in the second quarter of 2010 compared to 2009.  These costs were down $1.3 million for the six months ended June 30, 2010, as compared to the prior year period due in large part to reductions in compensation.

The majority of the overhead cost reduction plans we have implemented were substantially complete by the second half of 2009.  We expect the dollar level of SG&A expenses for the last six months of 2010 to increase over the same period last year.  This increase is primarily related to the costs of a new store, the expense portion of remodelings and spending on advertising.

Credit Service Charge Revenue and Allowance for Doubtful Accounts

The in-house financing offer most frequently chosen by our customers carries no interest for 12 months and requires equal monthly payments. This program generates very minor credit revenue and it is more cost effective than outsourcing.  We offer our customers different credit promotions through a third-party credit provider. Sales financed by this provider are not Havertys’ receivables; accordingly, we do not have any credit risk or service responsibility for these accounts, and there is no credit or collection recourse to Havertys. The most popular programs offered through the third-party provider for the second quarter 2010 were no interest offers requiring 18 or 24 monthly payments.

The following summarizes credit service charge revenue, the financing vehicles used, accounts receivable and allowance for doubtful accounts (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Credit service charge revenue	$	184		$	311		$	398		$	704
Amount financed as a % of sales:
Havertys		6.2	%		6.2	%		6.0	%		6.0	%
Third-party		30.8	%		35.9	%		31.6	%		36.5	%
		37.0	%		42.1	%		37.6	%		42.5	%

	June 30,
	2010				2009
Accounts receivable		$	15,185			$	17,522
Allowance for doubtful accounts			850				1,300
Allowance as a % of accounts receivable			5.6	%			7.4	%

9

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

During January 2008, we ceased offering internally financed programs with no interest payment terms greater than 12 months which had been a significant driver of our portfolio. Collections on our portfolio have continued and with the change in programs, accounts receivable have declined.  The allowance is $0.5 million lower than the balance a year ago due to the reduction in total accounts receivable and a more than proportionate reduction of the total dollars in delinquent and problem categories.

Interest, net

Interest expense (income), net is primarily comprised of interest expense on our lease obligations and commitment fees on our unused credit facility.

Provision for Income Taxes

Our tax rate for the six months ended June 30, 2010 and 2009 was 1.5% and (1.0)%, respectively.  The tax expense or benefit generated during the periods was virtually offset by changes in our deferred tax valuation allowance.

The income tax benefit for the second quarter of 2010 includes an increase to our deferred tax valuation allowance of $0.2 million, a decrease of $0.01 in per share earnings compared to the prior year period increase in the allowance of $2.4 million, which decreased earnings $0.11 per share.  The income tax expense for the six months ended June 30, 2010 includes a reduction in the allowance of $0.7 million, an increase of $0.03 in per share earnings compared to the prior year period increase in the allowance of $5.1 million, which decreased earnings $0.24 per share.

The tax expense reported for 2010 and 2009 is for Texas state taxes which are based on gross profit and not pre-tax income or loss.

We continue to review the realizability of our deferred income tax assets in determining the appropriateness of the related valuation allowance.

Store Plans and Capital Expenditures

We did not renew the leases for our Albany, Georgia and Fredericksburg, Virginia locations and closed those stores in the first quarter of 2010.  We expect to close our stores in Bowling Green, Kentucky and Abilene, Texas at the end of their lease term in the fourth quarter of 2010.  We plan to enter the Columbus, Georgia market with a single store during the fourth quarter of 2010.  These, and other potential changes, should reduce net selling space in 2010 by approximately 1% to 2%.

Our planned annual expenditures for 2010 are $13.5 million including $5.0 million for new stores and store improvements and $6.3 million for information technology.  Expenditures will depend on the number of new locations and the level of improvements they might require.

Liquidity and Capital Resources

Our sources of capital include, but are not limited to, cash flows from operations, public and private issuances of debt and equity securities and bank borrowings.  We believe that cash balances, funds from operations, proceeds from sales of properties and use of our Credit Agreement are adequate to fund our working capital requirements, capital expenditures, scheduled debt payments, income tax obligations and benefit plan contributions for the foreseeable future.

Our $60.0 million revolving credit facility (the “Credit Agreement”) with two banks terminates in December 2011.  The Credit Agreement is secured by inventory, accounts receivable and cash. The borrowing base at June 30, 2010 was $52.1 million.  Amounts available are reduced by $10.0 million since a fixed charge coverage ratio test is not met for the immediately preceding twelve month period and are also reduced by $7.6 million for outstanding letters of credit at June 30, 2010, resulting in a net availability of $34.5 million. There were no borrowed amounts outstanding under the Credit Agreement at June 30, 2010.

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

Summary of Cash Activities

Our cash flows provided by operating activities totaled $18.0 million in the first six months of 2010 compared to $13.8 million for the same period of 2009.  This increase was primarily the result of net income of $1.7 million in 2010 compared to the net loss of $13.8 million for 2009, which was offset by working capital changes.  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 $2.9 million in the first six months of 2010 versus $5.4 million provided in the same period of 2009.  This decrease is primarily due to proceeds of $6.6 million from a sale-leaseback transaction in 2009.

Our cash flows provided by financing activities totaled $2.6 million in the first six months of 2010 compared to $0.6 million used for the same period of 2009.  This change is primarily due to $3.3 million in proceeds from exercises of stock options in 2010.

Balance Sheet Changes for the Six Months Ended June 30, 2010

Our balance sheet as of June 30, 2010, as compared to our balance sheet as of December 31, 2009, changed as follows:

·   increase in cash of $17.7 million;

·   decrease in inventories of $4.3 million as we adjusted purchases and operating levels and increased the LIFO reserve $0.6 million;

·   decrease in property and equipment of $5.8 million as depreciation expense outpaced capital expenditures; and  

·   increase in customer deposits of $3.9 million due to timing of written business to delivery of product to customer and    increased level of cash and credit card sales.

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 uncertainti es.  The following important factors could cause future results to differ: changes in the economic environment; 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.

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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.  We have exposure to floating interest rates through our Credit Agreement.  Therefore, interest expense will fluctuate with changes in LIBOR and other benchmark rates.  We do not believe a 100 basis point change in interest rates would have a significant adverse impact on our operating results or financial position.

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 to provide reasonable assurance that information required to be disclosed in the Company’s reports 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 ou r management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.

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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, 2009, 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 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.
*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.

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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:	August 5, 2010	By:	/s/ Clarence H. Smith
			Clarence H. Smith
			President and Chief Executive Officer
		By:	/s/ Dennis L. Fink
			Dennis L. Fink
			Executive Vice President and Chief Financial Officer

EX-3.2

Exhibit 3.2

BYLAWS

OF

HAVERTY FURNITURE COMPANIES, INC.

ARTICLE I

Stockholders

SECTION 1.       Annual Meeting.

(a)           A meeting of the stockholders for the purpose of electing Directors and for the transaction of such other business as may properly be brought before the meeting shall be held annually at 10:00 a.m., on the second Friday of May, or at such other time and/or such other date as shall be fixed by resolution of the Board.

(b)           To be properly brought before the meeting, business must be either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the meeting by or at the direction of the Board, or (iii) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given written notice thereof that is received by the Secretary of the Corporation at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the date of the mailin g of the notice for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed more than 30 days from the first anniversary of the preceding year’s annual meeting, notice by the stockholder must be so received not earlier than the 120th day prior to the date of the annual meeting and not later than the later of the 90th day prior to the date of the meeting and the 10th day following the day on which public announcement of the date of the meeting is first made. To be effective, a stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (A) a brief description of the business desired to be brought before the annua l meeting and the reasons for conducting such business at the annual meeting, (B) the name and record address of the stockholder proposing such business, (C) the class and number of shares of the Corporation that are beneficially owned by the stockholder, and (D) any material interest of the stockholder or any affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of the stockholder in such business.

(c)           Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section, provided, however, that nothing in this Section shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting.

(d)           The presiding officer of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Article, and if the presiding officer should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(e)           For purposes of this Section, “public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, Bloomberg, PR Newswire or comparable news agency or (ii) in a document publicly filed by the orporation with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

(f)           Notwithstanding the foregoing provisions of this Section, a stockholder also shall comply with all applicable requirements of state law and of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matter set forth in this Section.  Nothing in this Section shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or any successor provision thereof.

SECTION 2.       Special Meetings.

Special meetings of the stockholders may be called at any time for any purpose or purposes by the Chairman of the Board, the President, the Chief Executive Officer, by a majority of the Board of Directors, or by a majority of the Executive Committee. Stockholders entitled to cast a majority of all votes entitled to be cast at a special meeting may request that the Board of Directors call a special meeting of the stockholders for the purpose or purposes stated in the written request. Upon receiving the request, the Board of Directors shall determine the validity of the request and, if valid, shall determine the time and place of the meeting. However called, the Secretary shall give notice of the time and place of the special meeting and the business to be transacted at the meeting. No bus iness other than that stated in the notice shall be transacted at any special meeting.

SECTION 3.      Place of Meetings.

All meetings of stockholders shall be held at the principal offices of the Corporation or at such other location as the Board of Directors may provide in the notice of the meeting.

SECTION 4.     Fixing of Record Date for Determining Stockholders.

(a)           For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix, in advance, a date as the record date for the purpose of determining those stockholders who shall be entitled to notice of, or to vote at, any meeting of stockholders. The date shall be not more than 90 days, and in the case of a meeting of stockholders, not less than 20 days prior to the date on which the particular action requiring such determination of stockholders is to be taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period, not to exceed in any case 20 days. When the stock tr ansfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, the closing of the transfer books shall be at least 10 days before the date of the meeting.

(b)           For the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 90 days prior to such action.  If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

SECTION 5.     Notice of Meetings.

Notice of each meeting of the stockholders shall be given to each stockholder entitled to vote at the meeting or otherwise entitled to notice of the meeting either by written notice mailed to the stockholder’s mailing address as it appears on the records of the Corporation or by a form of electronic transmission to an address consented to by the stockholder, or by any other method that is adequate for notice of a stockholders’ meeting under the Maryland General Corporation Law. If mailed, notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s mailing address as it appears on the records of the Corporation.  The notice shall be given not more than 90 nor less than 10 days before the meeting and shall state the place, day, and hour at which the meeting is to be held. Notice of a meeting of the stockholders does not need to be given to any stockholder who waives notice in a signed writing filed with the records of the meeting either before or after the meeting is held.

SECTION 6.     Quorum.

At any meeting of stockholders the presence in person or by proxy of the holders of record of a majority of the shares of stock entitled to vote at the meeting shall constitute a quorum. In the absence of a quorum, the stockholders entitled to vote who shall be present in person or by proxy at any meeting (or adjournment thereof) may, by a majority vote and without further notice, adjourn the meeting from time to time, but not for a period of more than 120 days after the original record date until a quorum shall attend. At any adjourned meeting at which a quorum shall be present, any business may be transacted that could have been transacted if the meeting had been held as originally scheduled.

SECTION 7.     Conduct of Meetings.

Meetings of stockholders shall be presided over by the Chairman of the Board, by the Vice Chairman of the Board (if one is elected), by the President or Secretary or by any other officer of the Corporation appointed by the Board of Directors for this purpose. The records of the proceedings shall be kept and authenticated by such other person as may be appointed for that purpose at the meeting by the presiding officer. To participate in a meeting, stockholders must be present in person or by proxy; stockholders may not participate by means of a conference telephone or other communications equipment. Any meeting of stockholders may adjourn from time to time without further notice to a date not more than 120 days after the original record date at the same or some other place.

SECTION 8.     Proxies.

Stockholders may vote either in person or by proxy, and if by proxy, in any manner authorized by the Maryland General Corporation Law. A proxy that is dated more than 11 months before the meeting at which it is offered shall not be accepted unless the proxy shall state a longer period for which it is to remain in force. A written proxy shall be dated and signed by the stockholder, or the stockholder’s duly authorized agent, but need not be sealed, witnessed or acknowledged. Proxies shall be filed with the Secretary of the Corporation at or before the meeting.

SECTION 9.    Voting.

Except with respect to the election of directors and as otherwise provided in the Charter of the Corporation, at all meetings of stockholders the holders of shares of Common Stock and Class A Common Stock shall vote together as a single class and each holder of shares of (a) Common Stock shall be entitled to one vote for each share of stock and (b) Class A Common Stock shall be entitled to ten votes for each share of stock of the Corporation registered in the stockholder’s name upon the books of the Corporation on the date fixed by the Board of Directors as the record date for the determination of stockholders entitled to vote at the meeting. In the election of directors, the holders of shares of Common Stock and Class A Common Stock shall vote as separate classes in accordance wit h the Charter of the Corporation and each such holder shall be entitled to one vote for each share of stock.  Except as otherwise provided in the Charter of the Corporation, all elections of directors submitted to a vote at meetings of stockholders shall be decided by a plurality of all votes cast in person or by proxy by shares entitled to vote in the election of each class of directors.  All other matters submitted to a vote at meetings of stockholders shall be decided by a majority of all votes cast in person or by proxy, unless more than a majority of the votes cast is required by statute, by the Charter of the Corporation, or by these Bylaws. If the presiding officer shall so determine, a vote by ballot may be taken upon any election or matter, and the vote shall be so taken upon the request of the holders of 20 percent of the stock present and entitled to vote on the election or matter. If the presiding officer shall so determine, the votes on all matters to be voted upon by ballot may be postponed to be voted on at the same time or on a single ballot.

SECTION 10.   Inspectors of Elections.

One or more inspectors may be appointed by the presiding officer at any meeting. If so appointed, the inspector or inspectors shall open and close the polls, receive and take charge of the proxies and ballots, decide all questions as to the qualifications of voters and the validity of proxies, determine and report the results of elections and votes on matters before the meeting, and do such other acts as may be proper to conduct the election and the vote with fairness to all stockholders.

SECTION 11.   List of Stockholders.

Prior to each meeting of the stockholders, the Secretary of the Corporation shall prepare, as of the record date fixed by the Board of Directors with respect to the meeting, a full and accurate list of all stockholders entitled to vote at the meeting, indicating the number of shares and class of stock held by each stockholder. The Secretary shall be responsible for the production of that list at the meeting.  Nothing contained in this Section shall require the Corporation to include electronic mail addresses or other electronic contact information on any such list of stockholders.

ARTICLE II

Board of Directors

SECTION 1.       Powers.

The property, business, and affairs of the Corporation shall be managed by the Board of Directors of the Corporation. The Board of Directors may exercise all the powers of the Corporation, except those conferred upon or reserved to the stockholders by statute, by the Charter of the Corporation or by these Bylaws. The Board of Directors shall keep minutes of each of its meetings and a full account of all of its transactions.

SECTION 2.      Number of Directors.

The number of directors of the Corporation shall be 11 or such lesser number not less than 8 or such greater number not more than 12 as may from time to time be determined by the vote of the majority of the entire Board of Directors. However, the tenure of Office of a director shall not be affected by any change in the number of directors.

SECTION 3.      Nomination of Directors.

(a)           Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors at a meeting of stockholders. Nominations of persons for election as Directors may be made at a meeting of stockholders, by or at the direction of the Board of Directors, by any nominating committee or person appointed by the Board or by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section. Nominations, other than those made by or at the direction of the Board, shall be made pursuant to written notice delivered to or mailed and received by the Secretary of the Corporation at the principal execut ive offices of the Corporation not less than 90 days nor more than 120 days prior to the meeting; provided, however, that in the event the date of the annual meeting is advanced or delayed more than 30 days from the first anniversary of the preceding year’s annual meeting, notice by the stockholder must be so received not earlier than the 120th day prior to the date of the annual meeting and not later than the later of the 90th day prior to the date of the meeting and the 10th day following the day on which public announcement of the date of the meeting is first made. To be effective, the notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, (A) the name, age, business address a nd residence address of the person, (B) the principal occupation or employment of the person, (C) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person, and (D) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and (ii) as to the stockholder giving the notice (A) the name and record address of stockholder and (B) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of the proposed nominee to serve as Director of the Corporation.

(b)           The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if the presiding officer shall so determine and shall so declare to the meeting, the defective nomination shall be disregarded.

SECTION 4.     Election and Holding Office.

Except as hereinafter provided, the members of the Board of Directors shall be elected each year at the annual meeting of stockholders by a plurality of all votes cast in person or by proxy by shares entitled to vote in the election of each class of directors, provided a quorum is present. Each director shall hold office until the next annual meeting of stockholders held after his or her election and until his or her successor shall have been duly elected and qualified, except in the event of the director’s death, retirement, resignation or removal. Each person elected as director of the Corporation shall qualify as such by written acceptance or by attendance at and participation as a director in a duly called meeting of the Board of Directors.

SECTION 5.     Removal.

Subject to the provisions of Article I, Section 1, at a duly called meeting of the stockholders at which a quorum is present, the holders of Common Stock or Class A Common Stock, as the case may be, may, by vote of the holders of a majority of the votes entitled to be cast to elect such class of directors at the meeting, remove with or without cause any director or directors from office, and may elect a successor or successors to fill any resulting vacancy for the remainder of the term of the director so removed.

SECTION 6.    Vacancies.

If any director shall die, retire, resign or become incapacitated, or if the stockholders shall remove any director without electing a successor to fill the remaining term, that vacancy may be filled by the vote of a majority of the remaining members of the Board of Directors who were elected by the same class of stock entitled to elect the director whose vacancy is being filled, although a majority may be less than a quorum. Vacancies in the Board created by an increase in the number of directors may be filled by the vote of a majority of the directors elected by the class of stockholders entitled to elect the director to fill such vacancy at the next annual meeting of stockholders. A director elected by the Board of Directors to fill any vacancy, however created, shall hold office unti l the next annual meeting of stockholders and until his or her successor shall have been duly elected and qualified.

SECTION 7.    Meetings.

Immediately after each annual meeting of stockholders at which a Board of Directors shall have been elected or at such subsequent date not later than 30 days after the annual meeting of stockholders as may be determined by the Board of Directors, the Board of Directors shall meet, without notice, for the election of officers of the Corporation, and for the transaction of other business. Other regular meetings of the Board of Directors shall be held at such time and place as shall from time to time be determined by resolution of Directors. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the Chief Executive Officer, the President, or by a majority of the directors or a majority of the members of the Executive Committee. Regular and special meetings of the Board of Directors may be held at such place, in or out of the State of Maryland, as the Board may from time to time determine.

SECTION 8.   Notice of Meetings.

Except for the meeting immediately following the annual meeting of stockholders, notice of the place, day and hour of a regular meeting of the Board of Directors shall be given in writing to each director or by electronic transmission or any other means permitted by the Maryland General Corporation Law not less than two days prior to the meeting and delivered to the director or to the director’s residence or usual place of business, or by mailing it, postage prepaid and addressed to the director at his or her address as it appears upon the records of the Corporation. Notice of special meetings may be given in the same way, or may be given personally, by telephone, or by telegraph or facsimile message sent to the director’s home or business address as it appears upon the recor ds of the Corporation, not less than two days prior to the meeting. Unless required by these Bylaws or by resolution of the Board of Directors, no notice of any meeting of the Board of Directors need state the business to be transacted at the meeting. No notice of any meeting of the Board of Directors need be given to any director who attends, or to any director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives notice.

SECTION 9.   Quorum.

A majority of the entire Board of Directors shall constitute a quorum for the transaction of business at meetings of the Board of Directors. Except as otherwise provided by statute, by the Charter of the Corporation, or by these Bylaws, the vote of a majority of the directors present at a duly constituted meeting shall be sufficient to pass any measure, and such decision shall be the decision of the Board of Directors. In the absence of a quorum, the directors present, by majority vote and without further notice, may adjourn the meeting from time to time until a quorum shall be present. Members of the Board may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.  Participating in this manner shall constitute presence in person at the meeting. The Board of Directors may also take action or make decisions by any other method which may be permitted by statute, by the Charter of the Corporation, or by these Bylaws.

SECTION 10.  Presumption of Assent.

A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless the director announces his or her dissent at the meeting, and (a) the dissent is entered in the minutes of the meeting, (b) before the meeting adjourns the director files with the person acting as the secretary of the meeting a written dissent to the action, or (c) the director forwards a written dissent within 24 hours after the meeting is adjourned by registered or certified mail to the Secretary of the Corporation. The right to dissent does not apply to a director who voted in favor of the action or who failed to announce his or her dissent at the meeting. A director may abstain from voting on any matter before the meeting by so stating at the time the vote is taken and by causing the abstention to be recorded or stated in writing in the same manner as provided above for a dissent.

SECTION 11.  Consent of Directors in Lieu of Meeting.

Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if a consent in writing, setting forth the action, shall be signed by all of the directors entitled to vote on the matter and such written consent is filed with the minutes of proceedings of the Board of Directors.

SECTION 12.  Compensation.

Each director shall be entitled to receive such remuneration as may be established from time to time by resolution of the Board of Directors. Each director also may receive reimbursement for the reasonable expenses incurred in attending the meetings of the Board of Directors, the meetings of any committee thereof, or otherwise in connection with attending to the affairs of the Corporation.

SECTION 13.  Director Emeritus or Chairman Emeritus.

The title of Director Emeritus or, in an appropriate case, Chairman Emeritus, may be conferred by the Board of Directors upon any former director or, in an appropriate case, a former Chairman of the Board who, in the judgment of the Board, has brought credit and distinction to the Corporation through long and faithful service. The title hereby created is honorary only and does not carry with it the powers, duties, or obligations of a director of the corporation or any other power, duty or obligation. A Director Emeritus or Chairman Emeritus shall not be deemed a director or member of the Board of Directors but upon invitation of the Chairman may attend meetings of the Board and may take part in the deliberative proceedings of the Board, but may not vote. A Director Emeritus or Chairman Emeritus shall not participate in meetings of the independent directors nor in meetings of committees of the Board of Directors.  A Director Emeritus or Chairman Emeritus may upon invitation of the Chief Executive Officer attend meetings of the Company’s management.

ARTICLE III

Committees

SECTION 1.     Executive Committee.

The Board of Directors shall designate annually an Executive Committee, consisting of not less than four Directors of whom the Chairman of the Board, if any, shall be one. The Board shall designate a Chairman of the Committee who shall serve as Chairman of the Committee at the pleasure of the Board. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may exercise all powers in the management and direction of the business and affairs of the Corporation, except as limited by the Maryland General Corporation Law or by resolution of the Board of Directors. All action taken by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision and alteration by the Board, provided that no rights of third parties may be adversely affected by any revision or alteration. Delegation of authority to the Executive Committee shall not relieve the Board of Directors or any director of any responsibility imposed by law or statute or by the Charter of the Corporation.

SECTION 2.     Audit Committee.

The Board of Directors shall designate annually an Audit Committee consisting of not less than three Directors, all of whom shall meet the independence and financial literacy and expertise requirements of the New York Stock Exchange and the requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. The Audit Committee shall also include at least one “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The member of the Audit Committee shall serve at the pleasure of the Board of Directors.  The Board shall designate a chairman from among the membership of the Audit Committee. The Audit Committee shall have the powers and perform the duties assigned by the Board of Directors and as set forth in the Audit C ommittee’s charter.

SECTION 3.      Executive Compensation and Employee Benefits Committee.

The Board of Directors shall designate annually a Executive Compensation and Employee Benefits Committee (the “Compensation Committee”) consisting of not less than three Directors, none of whom shall be officers or employees of the Company and all of whom shall meet the independence requirements of the New York Stock Exchange. The members of the Compensation Committee shall serve at the pleasure of the Board of Directors.  The Board shall designate a chairman from among the membership of the Compensation Committee. The Compensation Committee shall have the powers and perform the duties assigned by the Board of Directors and as set forth in Compensation Committee’s charter.

SECTION 4.    Nominating and Corporate Governance Committee.

The Board of Directors shall designate annually a Nominating and Corporate Governance Committee (“Governance Committee”) consisting of not less than three Directors, none of whom shall be officers or employees of the Corporation and all of whom shall meet the independence requirements of the New York Stock Exchange. The members of the Governance Committee shall serve at the pleasure of the Board of Directors.  The Board shall designate a chairman from among the membership of the Governance Committee. The Governance Committee shall have the powers and perform the duties assigned by the Board of Directors and as set forth in the Governance Committee’s charter.

SECTION 5.   Other Committees.

From time to time the Board of Directors may provide for and appoint other committees to have the powers and perform the duties assigned to them by the Board of Directors.

SECTION 6.    Meetings of Committees.

Each Committee of the Board of Directors shall fix its own rules of procedure, and shall meet as provided by those rules or by resolution of the Board, or at the call of the chairman or any two members of the committee. A majority of each committee shall constitute a quorum thereof, and in every case the affirmative vote of a majority of the entire committee shall be necessary to take any action. Each committee may also take action by any other method that may be permitted by statute, by the Charter of the Corporation, or by these Bylaws, including by unanimous written consent of members of the committee. In the event a member of a committee fails to attend any meeting of the committee, the other members of the committee present at the meeting, whether or not they constitute a quorum, ma y appoint a member of the Board of Directors to act in the place of the absent member. Regular minutes of the proceedings of each committee and a full account of all its transactions shall be kept in a book provided for the purpose. Vacancies in any committee of the Board of Directors shall be filled by the Board of Directors. Members of any Committee of the Board of Directors may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.  Participating in this manner shall constitute presence in person at the meeting.

ARTICLE IV

Officers

SECTION 1.    Election and Tenure.

The Board of Directors may elect a Chairman and a Vice Chairman from among the directors. The Board of Directors shall elect a President, a Treasurer and a Secretary, and may elect one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Treasurers, Assistant Secretaries, and such other officers with such powers and duties as the Board may designate, none of whom need be a director. Each officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his or her election and until a successor shall have been duly chosen and qualified or until he or she shall have resigned or been removed.

SECTION 2.    Chairman of the Board.

The Chairman of the Board shall preside at all meetings of stockholders and of the Board of Directors at which he or she shall be present. The Chairman may but need not be an employee of the Corporation and shall have such other powers and perform such other duties as from time to time may be assigned by the Board of Directors.

SECTION 3.    Vice Chairman of the Board.

If elected, the Vice Chairman of the Board, in the absence of the Chairman of the Board, shall preside at all meetings of stockholders and the Board of Directors at which he or she shall be present. The Vice Chairman shall have such other powers and perform such other duties as from time to time may be assigned by the Board of Directors or by the Chairman of the Board.

SECTION 4.   President.

The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall have appointed the Chairman of the Board or the Vice Chairman of the Board as such, and, subject to the control of the Board of Directors and the Executive Committee, shall have general charge and supervision of the Corporation’s business, affairs, and properties. The President shall have authority to sign and execute, in the name of the Corporation, all authorized deeds, mortgages, bonds, contracts or other instruments. The President may sign, with the Secretary or the Treasurer, or with any Assistant Secretary or Assistant Treasurer, stock certificates of the Corporation. In the absence of the Chairman and the Vice Chairman of the Board, the President, if present, shall presi de at meetings of stockholders. The President (and, if the President is not the Chief Executive Officer, the Chief Executive Officer) may delegate any powers and duties given to him or her to any other officer or employee of the Corporation except as otherwise provided by the Board of Directors. In general, the President shall perform all the duties ordinarily incident to the office of a president of a corporation, and such other duties as, from time to time, may be assigned by the Board of Directors or by the Executive Committee.

SECTION 5.   Vice Presidents.

Each Vice President, which term shall include any Executive Vice President or Senior Vice President, shall have the powers to perform such duties as may be assigned by the Board of Directors or the President, unless otherwise provided herein.  At the request of the President or in the President’s absence or during the President’s inability to act, if no Chief Operating Officer has been elected, the Vice President or Vice Presidents shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President. If there is more than one Vice President, the Board of Directors may determine which one or more of the Vice Presidents shall perform any of such duties or exercise any of such functions, or if the determination is not made by the Board, the President may make the determination. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board of Directors or by the President. For purposes of this Article IV, Section 5, the term Vice President does not include a Vice President appointed pursuant to Article IV, Section 11.

SECTION 6.    General Counsel.

The General Counsel shall be the chief legal advisor of the Corporation and shall have responsibility for the management of the legal affairs and litigation of the Corporation and, in general, shall perform the duties incident to the office of general counsel of a Corporation and such other duties as may be assigned by the Board of Directors, the Chairman of the Board or by the President.

SECTION 7.    Secretary.

The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors, and of the Executive Committee, including all the votes taken at the meetings, and record them in books provided for that purpose. The Secretary shall see that all notices are duly given in accordance with the provisions of these Bylaws or as required by statute. The Secretary shall be the custodian of the records and of the corporate seal of the Corporation. The Secretary may affix the corporate seal to any document executed on behalf of the Corporation, and may attest the same. The Secretary may sign, with the President or a Vice President, stock certificates of the Corporation. In general, the Secretary shall perform all duties ordinarily incident to the office of a secretary of a corp oration, and such other duties as, from time to time, may be assigned by the Board of Directors or by the President.

SECTION 8.    Treasurer.

The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies, or depositories as may be designated by the Board of Directors. The Treasurer shall maintain full and accurate accounts of all assets, liabilities and transactions of the Corporation, and shall render to the President and the Board of Directors, whenever they may require it, an account of all transactions as Treasurer and of the financial condition of the Corporation. In general, the Treasurer shall perform all the duties ordinarily incident to the office of a treasurer of a corporation, and such other duties as, from t ime to time, may be assigned by the Board of Directors or by the President.

SECTION 9.   Chief Operating Officer.

The Chief Operating Officer, if one is elected, shall be a general executive officer of the Corporation, with authority as such, and at the request of the Chief Executive Officer or the disability of the Chief Executive Officer, shall perform the duties and exercise the functions of the Chief Executive Officer, unless the Board of Directors shall otherwise determine. When the Chief Operating Officer is acting as the Chief Executive Officer, he or she shall have the powers of the Chief Executive Officer as set forth herein. The Chief Operating Officer shall have such other powers and perform such other duties as may be assigned by the Board of Directors or by the President.

SECTION 10.  Chief Financial Officer.

The Chief Financial Officer shall perform all of the powers and duties of the office of the chief financial officer of the Corporation and in general shall have overall supervision of the financial and accounting operations of the Corporation.  The Chief Financial Officer shall perform such other duties as may be assigned to the Chief Financial Officer by the Board of Directors or by the Chief Executive Officer.

SECTION 11.  Appointed Officers.

The Board of Directors or the Chief Executive Officer may from time to time appoint one or more Vice Presidents, Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers or other officers with such administrative powers and duties as may be designated or approved by the Chief Executive Officer. An appointed Vice President, Assistant Vice President, Assistant Secretary, Assistant Treasurer or such other officer may be removed by the Chief Executive Officer without further action by the Board of Directors.

SECTION 12.  Officers Holding Two or More Offices.

Any two or more of the above named offices, except those of Chairman and Vice Chairman of the Board and those of President and Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity, if the instrument is required by statute, by the Charter of the Corporation, by these Bylaws, or by resolution of the Board of Directors to be executed, acknowledged, or verified by two or more officers.

SECTION 13.  Removal.

Any officer of the Corporation may be removed, with or without cause, by a vote of a majority of the entire Board of Directors or by the Executive Committee or (except in case of  an officer elected by the Board) by an officer of the Corporation upon whom such power of removal may have been conferred

SECTION 14.  Vacancies.

A vacancy in any office because of death, resignation, removal, or any other cause shall be filled for the unexpired portion of the term by election of the Board of Directors or by the Executive Committee, and in the case of appointed officers by the Chief Executive Officer.

ARTICLE V

Stock

SECTION 1.    Certificates.

Each stockholder shall be entitled to a certificate or certificates which shall represent and certify the number and kind of shares of the Corporation’s stock owned by the stockholder for which full payment has been made, or for which payment is being made by installments in conjunction with a stockholder-approved option plan. Each stock certificate shall be signed by the Chairman, the President or a Vice President and countersigned by the Secretary or Treasurer or Assistant Secretary or Assistant Treasurer of the Corporation. A stock certificate shall be deemed to be so signed and sealed whether the required signatures are manual or facsimile signatures and whether the seal is a facsimile seal or any other form of seal. In case any officer of the Corporation who has signed a stock certificate ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before the stock certificate is issued, the certificate may nevertheless be issued and delivered by the Corporation as if the officer had not ceased to be such officer on the date of issue.

SECTION 2.   Transfer of Shares.

Shares of stock shall be transferable only on the books of the Corporation by the holder thereof, in person or by duly authorized agent, upon the surrender of the stock certificate representing the shares to be transferred, properly endorsed. The Board of Directors shall have power and authority to make other rules and regulations concerning the issue, transfer and registration of stock certificates as it may deem expedient.

SECTION 3.    Transfer Agents and Registrars.

The Corporation may have one or more transfer agents and one or more registrars of its stock, whose respective duties the Board of Directors may, from time to time, define. No stock certificate shall be valid until countersigned by a transfer agent, if the Corporation has a transfer agent in respect of that class or series of capital stock, or until registered by a registrar, if the Corporation has a registrar in respect of that class or series of capital stock. The duties of transfer agent and registrar may be combined.

SECTION 4.    Additional Regulations.

The Board of Directors, the Chairman of the Board, or the Chief Executive Officer, as appropriate, may make such additional rules and regulations as each may deem expedient concerning the issuance, transfer and registration of certificates for shares of the capital stock of the Corporation.

SECTION 5.    Lost, Stolen or Destroyed Certificates.

In case any stock certificate is alleged to have been lost, stolen, mutilated, or destroyed, the Board of Directors, Chairman, Vice Chairman, Chief Executive Officer or Secretary may authorize the issuance of a new certificate in place thereof upon such terms and conditions as it may deem advisable and in accordance with such procedure as he or she shall deem proper and prescribe. The Board of Directors, Chairman, Vice Chairman, Chief Executive Officer or Secretary may, in its or his or her discretion, further require the owner of the stock certificate or the owner’s duly authorized agent to give bond with sufficient surety to the Corporation to indemnify it against any loss or claim which may arise by reason of the issue of a stock certificate in the place of one reportedly lost, stolen, mutilated or destroyed.

ARTICLE VI

Dividends and Finance

SECTION 1.   Dividends.

Subject to any statutory or Charter conditions and limitations, the Board of Directors may in its discretion declare what, if any, dividends shall be paid by the Corporation from time to time, the date when the dividends shall be payable, and the date for the determination of holders of record to whom the dividends shall be paid.

SECTION 2.   Depositories.

All funds of the Corporation shall be deposited, from time to time, to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may select, or as may be selected by any officer or officers, agent or agents of the Corporation to whom such power may, from time to time, be delegated by the Board of Directors.

Checks drawn on any bank or banks with which funds of the Corporation are deposited shall, unless otherwise provided by the Board of Directors, be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall, from time to time, be determined by resolution of the Board of Directors.  Such authority may be general or confined to specific circumstances.

SECTION 3.    Corporate Obligations.

No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness or guaranties of the obligations of others shall be issued in the name of the Corporation unless authorized by a resolution of the Board of Directors or its Executive Committee. Such authority may be either general or specific. When duly authorized, all loans, promissory notes, acceptances, other evidences of indebtedness and guaranties shall be signed by the Chairman, Vice Chairman, President, Chief Financial Officer, or Treasurer.

SECTION 4.   Fiscal Year.

The fiscal year of the Corporation shall begin on the first day of January and end on the last day of December of each year.

ARTICLE VII

Books and Records

SECTION 1.   Books and Records.

The Corporation shall maintain a stock ledger which shall contain the name and address of each stockholder and the number of shares of stock of the Corporation which the stockholder holds. The ledger shall be kept at the principal offices of the Corporation, or at the offices of the Corporation’s stock transfer agent. All other books, accounts, and records of the Corporation, including the original or a certified copy of these Bylaws, the minutes of all stockholders meetings, a copy of the annual statement, and any voting trust agreements on file with the Corporation, shall be kept and maintained by the Secretary at the principal offices of the Corporation.

SECTION 2.    Inspection Rights.

Except as otherwise provided by statute or by the Charter of the Corporation, the Board of Directors shall determine whether and to what extent the books, accounts, and records of the Corporation or any of them, shall be open to the inspection of stockholders. No stockholder shall have any right to inspect any book, account, document or record of the Corporation except as conferred by statute, by the Charter of the Corporation, or by resolution of the Board of Directors.

ARTICLE VIII

Seal

The Corporation may have a corporate seal which shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Maryland.”  The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced and shall be in the charge of the Secretary.

ARTICLE IX

Indemnification of Directors, Officers, Employees And Agents

SECTION 1.   Definitions.

The terms used in this Article IX shall have the same meaning as such terms are defined in the Maryland General Corporation Law.

SECTION 2.   Permitted Indemnification of Director.

(a)              The Corporation shall indemnify any director made a party to any proceeding by reason of service in that capacity unless it is established that:

(i)              The act or omission of the director was material to the matter giving rise to the proceeding and (A) was committed in bad faith or (B) was the result of active and deliberate dishonesty; or

(ii)              The director actually received an improper personal benefit in money, property, or services; or

(iii)              In the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful.

(b)              Indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the director in connection with the proceeding. However, if the proceeding was one by or in the right of the Corporation, indemnification may not be made in respect of any proceeding in which the director shall have been adjudged to be liable to the Corporation.

(c)              The termination of any proceeding by judgment, order, or settlement does not create a presumption that the director did not meet the requisite standard of conduct set forth in this Section. However, the termination of any proceeding by conviction, or plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the director did not meet that standard of conduct.

SECTION 3.   No Indemnification of Director for Proceedings Against the Corporation or Improper Personal Benefit.

The Corporation shall not indemnify a director under Section 2 of this Article or advance expenses under Section 6 of this Article for a proceeding brought by that director against the Corporation, except (i) for a proceeding brought to force indemnification under this Article; or (ii) if the Charter of the Corporation or Bylaws, a resolution of the Board of Directors, or an agreement approved by the Board of Directors to which the Corporation is a party, expressly provides otherwise. A director may not be indemnified under Section 2 of this Article in respect of any proceeding charging improper personal benefit to the director, whether or not involving action in the director’s official capacity, in which the director was adjudged to be liable on the basis that a personal benefit was improperly received.

SECTION 4.   Required Indemnification.

Unless limited by the Charter of the Corporation, a director who has been successful, on the merits or otherwise, in the defense of any proceeding referred to in Section 2 of this Article shall be indemnified against reasonable expenses incurred by the director in connection with the proceeding.

SECTION 5.   Determination that Indemnification is Proper.

(a)              Indemnification under Section 2 of this Article may not be made by the Corporation unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Section 2.

Such determination shall be made:

                  (i)              By the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such a quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate.

                 (ii)              If neither the requisite quorum of the Board nor a committee of the Board can be obtained, or if a majority of a quorum consisting of disinterested directors or a disinterested committee so directs, then the determination shall be made either (A) by special legal counsel, which shall be counsel specifically appointed for such purpose, or (B) by a majority vote of the stockholders.

                (iii)              If the determination is made by special legal counsel, such counsel shall be selected either by the Board of Directors or a disinterested committee as set forth in subparagraph (i) above, or if the requisite quorum of the full Board cannot be obtained and the committee cannot be established, then by a majority vote of the full Board in which directors who are parties may participate.

(b)              Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible. However, if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in the manner specified in this Section for selection of such special counsel.

(c)              Shares held by directors who are parties to the proceeding may not be voted on the subject matter under this Section.

(d)              A court of appropriate jurisdiction, upon application of a director and such notice as the court shall require, may order indemnification in the following circumstances:

(i)              If it determines a director is entitled to reimbursement under Section 4, the court shall order indemnification, in which case the director shall be entitled to recover the expenses of securing such reimbursement; or

(ii)              If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director has met the standards of conduct set forth in Section 2 of this Article or has been adjudged liable under the circumstances described in Section 3, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any proceeding by or in the right of the Corporation or in which the director was found liable in the circumstances described in Section 3 shall be limited to expenses.

(e)              A court of appropriate jurisdiction may be the same court in which the proceeding involving the director’s liability took place.

SECTION 6.   Advancement of Expenses.

(a)              Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the Corporation in advance of the final disposition of the proceeding upon receipt by the Corporation of (i) a written affirmation by the director of the director’s good faith belief that the standard of conduct necessary for indemnification by the Corporation as authorized in this Article has been met and (ii) a written undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

(b)              The undertaking required by the foregoing paragraph shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make the repayment.

(c)              Payments under this Section shall be made as provided by the Charter of the Corporation, by the Bylaws or by contract or as specified in Section 5.

SECTION 7.   Validity of Indemnification Provision.

The indemnification and advancement of expenses provided or authorized by this Article shall not be deemed exclusive of any other rights, by indemnification or otherwise, to which a director may be entitled under the Charter of the Corporation, the Bylaws, a resolution of stockholders or directors, an agreement or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.

SECTION 8.   Reimbursement of Expenses.

This Article does not limit the Corporation’s power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent in the proceeding.

SECTION 9.   Director’s Service to Employee Benefit Plan.

The Corporation shall indemnify its directors pursuant to this Article in connection with a director’s service to an employee benefit plan at the request of the Corporation. For purposes of indemnification under this Article, action taken or omitted by a director in the performance of his or her duties with respect to an employee benefit plan, for a purpose reasonably believed by the director to be in the interest of the participants and beneficiaries of the plan, shall be deemed to be for a purpose which is not opposed to the best interests of the Corporation. In addition, excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed to be fines for purposes of indemnification under this Article.

SECTION 10.  Officer, Employee or Agent.

Unless limited by the Charter of the Corporation:

(a)              An officer of the Corporation who has been successful, on the merits or otherwise, in the defense of any proceeding referred to in Section 2 of this Article shall be indemnified against reasonable expenses incurred by the officer in connection with the proceeding;

(b)              The Corporation, in the discretion of the Board of Directors, may indemnify and advance expenses to an officer, employee, or agent of the Corporation to the same extent that it may indemnify directors or advance expenses to directors under this Article; and

(c)              The Corporation, in addition, may indemnify and advance expenses to an officer, employee, or agent who is not a director to such further extent, consistent with law, as may be provided by the Charter of the Corporation, the Bylaws, general or specific action of the Board of Directors or contract.

SECTION 11.  Insurance or Similar Protection.

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability asserted against and incurred by such person in any such capacity or arising out of such person’s position, whether or not the Corporation would have the power to indemnify against liability under the provisions of this Article. The Corporation may provide similar protection, including a trust fund, letter o f credit, or surety bond, not inconsistent with this Article. Insurance or similar protection may be provided by a subsidiary or an affiliate of the Corporation.

SECTION 12.  Report of Indemnification to Stockholders.

Any indemnification of, or advance of expenses to, a director in accordance with this Article, if arising out of a proceeding by or in the right of the Corporation, shall be reported in writing to the stockholders with the notice of the next stockholders’ meeting or prior to the meeting.

ARTICLE X

Miscellaneous

SECTION 1.   Bonds.

The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his or her duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.

SECTION 2.  Voting Shares in Other Corporations.

Any shares in other corporations or associations, which may from time to time be held by the Corporation, may be represented and voted at any meeting of the shareholders thereof by the Chairman of the Board, the President or any other officer of the Corporation so designated by the Chairman of the Board or the President of the Corporation, or by proxy executed in the name of the Corporation by the Chairman of the Board, the President or such designated officer.

SECTION 3.   References.

All references and uses herein of the masculine or feminine pronouns “he”, “his”, “she” or “her” shall have equal applicability to and shall also mean their masculine and feminine counterpart pronouns.

ARTICLE XI

Amendments

Subject to the provisions of Article I, Section 1 and Article I, Section 2, these Bylaws may be amended at a meeting of the stockholders by the affirmative vote of two-thirds (2/3) of all the votes cast at the meeting, provided the text of the amendment and the general nature of the proposed amendment is submitted with the notice of the meeting. The Board of Directors may also amend these Bylaws by a vote of a majority of the directors present at a meeting.

Adopted:  04-30-2007

As Amended: 05-12-2010

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EX-31.1

Exhibit 31.1

I, Clarence H. Smith, President and Chief Executive Officer of Haverty Furniture Companies, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2010 of Haverty Furniture Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   designed such internal control over  financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   disclosed in this report any change in the registrant’s internal control over financial reporting that  occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:              August 5 , 2010	/s/ Clarence H. Smith
	Clarence H. Smith President and Chief Executive Officer

EX-31.2

                                                                                                                                         
60;                                                                                                                                 Exhibit 31.2

I, Dennis L. Fink, Executive Vice President and Chief Financial Officer of Haverty Furniture Companies, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2010 of Haverty Furniture Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   designed such internal control over  financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   disclosed in this report any change in the registrant’s internal control over financial reporting that  occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 5, 2010	/s/ Dennis L. Fink
	Dennis L. Fink Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Haverty Furniture Companies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2010 (the “Report”), I, Clarence H. Smith, President and Chief Executive Officer of the Company, and I, Dennis L. Fink, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(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.

Date:              August 5, 2010	/s/ Clarence H. Smith
	Clarence H. Smith President and Chief Executive Officer
	/s/ Dennis L. Fink
	Dennis L. Fink Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Haverty Furniture Companies, Inc. and will be retained by Haverty Furniture Companies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.