La-Z-Boy Reports Second-Quarter Profit
Fiscal 2010 second-quarter highlights:
-- Net income was $0.11 per share, including a $0.01 per-share
restructuring charge, versus a loss in last year's second quarter of
$1.05 per share, which included a $0.04 per-share restructuring charge;
-- Sales for the second quarter declined 9.4%, reflecting ongoing difficult
macroeconomic conditions;
-- The upholstery segment posted a 10.9% operating margin on a 6% decline
in sales;
-- The retail segment's performance continued to improve, with the
operating loss reduced by 49%, or $5.1 million , on a 3.7% sales decline;
-- The company generated $22.2 million in cash from operating activities
and increased cash on its balance sheet to $59.0 million .
Net sales for the second quarter were
Darrow continued, "We also strengthened our balance sheet this quarter. During the period, we generated
Wholesale Segments
For the fiscal 2010 second quarter, sales in the company's upholstery segment decreased 6.1% to
Darrow commented, "Despite a 6% sales decline versus a year ago, our upholstery group posted a 10.9% operating margin, which was three times our run rate compared with last year's second quarter. This is a testament to the significant changes made to our cost structure across all upholstery operations. The majority of the contribution stems from the
System-wide, for the second quarter of fiscal 2010, including company-owned and independent-licensed stores, same-store written sales, which the company tracks as an indicator of retail activity, were down 0.6%. Total written sales, which include new and closed stores, were down 7.5%. At the end of the second quarter, 311 stand-alone stores comprised the La-Z-Boy Furniture Galleries® system.
Darrow said, "In the casegoods segment, we completed the consolidation of the production transfer to our
"In our youth business, we had a very successful introduction at the October High Point Furniture Market of a new line of furniture licensed with
Retail
For the quarter, retail sales were
Balance Sheet
Business Outlook
Darrow stated, "Although the magnitude of volume declines is not as great as we experienced over the last several quarters, we remain concerned about the overall macroeconomic environment and it is too early to predict a recovery for our industry. We will continue to look for ways to drive sales and operate our business in the most efficient manner possible while continuing to make whatever changes are necessary to our business model. We will also maintain a clear focus on our balance sheet to ensure our company has the greatest operating flexibility in the challenging environment."
Conference Call
Forward-looking Information
Any forward-looking statements contained in this news release are based on current information and assumptions and represent management's best judgment at the present time. Actual results could differ materially from those anticipated or projected due to a number of factors. These factors include, but are not limited to: (a) changes in consumer confidence and demographics; (b) continued economic recession and fluctuations in our stock price; (c) changes in the real estate and credit markets and the potential impacts on our customers and suppliers; (d) the impact of terrorism or war; (e) continued energy and other commodity price changes; (f) the impact of logistics on imports; (g) the impact of interest rate and currency exchange rate changes; (h) operating factors, such as supply, labor or distribution disruptions including changes in operating conditions, product recalls or costs; (i) effects of restructuring actions; (j) changes in the domestic or international regulatory environment; (k) the impact of adopting new accounting principles; (l) the impact from natural events such as hurricanes, earthquakes and tornadoes; (m) the ability to procure fabric rolls and leather hides or cut and sewn fabric and leather sets domestically or abroad; (n) those matters discussed in Item 1A of our fiscal 2009 Annual Report and factors relating to acquisitions and other factors identified from time-to-time in our reports filed with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, either to reflect new developments or for any other reason.
Additional Information
This news release is just one part of
http://www.la-z-boy.com/about/investorRelations/IR_email_alerts.aspx.
Background Information
The corporation's proprietary distribution network is dedicated exclusively to selling
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
Second Quarter Ended
(Unaudited, amounts in thousands, except per --------------------
share data) 10/24/09 10/25/08
-------- --------
Sales $300,707 $331,948
Cost of sales
Cost of goods sold 204,962 243,090
Restructuring 663 2,236
--- -----
Total cost of sales 205,625 245,326
Gross profit 95,082 86,622
Selling, general and administrative 84,697 101,499
Write-down of goodwill - 408
Restructuring 520 687
--- ---
Operating income (loss) 9,865 (15,972)
Interest expense 831 1,651
Interest income 199 630
Other income (expense), net 236 (685)
--- ----
Earnings (loss) before income taxes 9,469 (17,678)
Income tax expense 3,762 36,032
----- ------
Net income (loss) 5,707 (53,710)
Net (income) loss attributable to
noncontrolling interests 200 (34)
--- ---
Net income (loss) attributable to La-Z-Boy
Incorporated $5,907 $(53,744)
====== ========
Basic average shares 51,527 51,458
Basic net income (loss) attributable to
La-Z-Boy Incorporated per share $0.11 $(1.05)
Diluted average shares 51,755 51,458
Diluted net income (loss) attributable to
La-Z-Boy Incorporated per share $0.11 $(1.05)
Dividends paid per share $- $0.04
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended
(Unaudited, amounts in thousands, except per ----------------
share data) 10/24/09 10/25/08
-------- --------
Sales $563,378 $653,600
Cost of sales
Cost of goods sold 386,511 478,685
Restructuring 1,399 8,032
----- -----
Total cost of sales 387,910 486,717
Gross profit 175,468 166,883
Selling, general and administrative 162,153 192,770
Write-down of goodwill - 1,700
Restructuring 821 1,467
--- -----
Operating income (loss) 12,494 (29,054)
Interest expense 1,810 3,146
Interest income 475 1,562
Other income (expense), net 945 (541)
--- ----
Earnings (loss) before income taxes 12,104 (31,179)
Income tax expense 4,201 30,988
----- ------
Net income (loss) 7,903 (62,167)
Net (income) attributable to noncontrolling
interests (13) (121)
--- ----
Net income (loss) attributable to La-Z-Boy
Incorporated $7,890 $(62,288)
====== ========
Basic average shares 51,503 51,443
Basic net income (loss) attributable to
La-Z-Boy Incorporated per share $0.15 $(1.21)
Diluted average shares 51,551 51,443
Diluted net income (loss) attributable to
La-Z-Boy Incorporated per share $0.15 $(1.21)
Dividends paid per share $- $0.08
LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Unaudited, amounts in thousands) 10/24/09 4/25/09
-------------------------------- --------- ---------
Current assets
Cash and equivalents $59,037 $17,364
Restricted cash 500 18,713
Receivables, net of allowance of $25,195 at
10/24/09 and $28,385 at 4/25/09 162,878 147,858
Inventories, net 138,946 140,178
Deferred income taxes-current 795 795
Other current assets 15,956 22,872
------ ------
Total current assets 378,112 347,780
Property, plant and equipment, net 142,704 150,234
Trade names 3,100 3,100
Other long-term assets 48,183 51,431
------ ------
Total assets $572,099 $552,545
======== ========
Current liabilities
Current portion of long-term debt $2,067 $8,724
Accounts payable 46,318 41,571
Accrued expenses and other current
liabilities 86,167 75,733
------ ------
Total current liabilities 134,552 126,028
Long-term debt 46,911 52,148
Deferred income taxes 724 724
Other long-term liabilities 67,950 63,875
Contingencies and commitments - -
Equity
La-Z-Boy Incorporated shareholders' equity:
Common shares, $1 par value 51,546 51,478
Capital in excess of par value 199,585 205,945
Retained earnings 87,342 70,769
Accumulated other comprehensive loss (20,955) (22,698)
------- -------
Total La-Z-Boy Incorporated shareholders'
equity 317,518 305,494
Noncontrolling interests 4,444 4,276
----- -----
Total equity 321,962 309,770
------- -------
Total liabilities and equity $572,099 $552,545
======== ========
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
Second Quarter Ended Six Months Ended
(Unaudited, amounts -------------------- ----------------
in thousands) 10/24/09 10/25/08 10/24/09 10/25/08
-------- -------- -------- --------
Cash flows from
operating activities
Net income (loss) $5,707 $(53,710) $7,903 $(62,167)
Adjustments to
reconcile net
income (loss) to
cash provided by
(used for)
operating activities
Gain on sale of
assets (75) (604) (88) (2,670)
Write-down of
long-lived assets 200 - 200 -
Write-down of
goodwill - 408 - 1,700
Restructuring 1,183 2,923 2,220 9,499
Provision for
doubtful accounts 2,152 4,797 4,514 9,000
Depreciation and
amortization 6,135 5,989 12,244 11,943
Stock-based
compensation expense 1,621 986 2,628 1,855
Change in
receivables (26,484) (22,261) (17,586) (8,091)
Change in
inventories 3,329 (63) 1,231 10,843
Change in other
assets 11,106 2,272 6,439 (529)
Change in payables 7,073 8,375 4,747 1,927
Change in other
liabilities 10,282 (5,199) 11,553 (26,117)
Change in deferred
taxes (8) 41,677 - 42,838
-- ----- --- ------
Total adjustments 16,514 39,300 28,102 52,198
------ ------ ------ ------
Net cash provided
by (used for)
operating
activities 22,221 (14,410) 36,005 (9,969)
Cash flows from
investing activities
Proceeds from
disposals of
assets 230 2,805 1,916 7,786
Capital expenditures (1,340) (2,618) (2,779) (9,990)
Purchases of
investments (1,338) (3,516) (2,537) (8,965)
Proceeds from sales
of investments 1,445 5,233 4,109 11,027
Change in
restricted cash - (2,668) 17,007 (2,956)
Change in other
long-term assets 29 158 14 229
-- --- -- ---
Net cash provided
by (used for)
investing activities (974) (606) 17,730 (2,869)
Cash flows from
financing activities
Proceeds from debt 10,213 24,831 20,673 39,466
Payments on debt (10,408) (6,430) (32,567) (25,287)
Dividends paid - (2,074) - (4,151)
--- ------ --- ------
Net cash provided
by (used for)
financing
activities (195) 16,327 (11,894) 10,028
Effect of exchange
rate changes on
cash and equivalents (348) (604) (168) (643)
---- ---- ---- ----
Change in cash and
equivalents 20,704 707 41,673 (3,453)
Cash and equivalents
at beginning of
period 38,333 10,317 17,364 14,477
------ ------ ------ ------
Cash and equivalents
at end of period $59,037 $11,024 $59,037 $11,024
======= ======= ======= =======
Cash paid (net of
refunds) during
period - income
taxes $(13,348) $(719) $(13,082) $204
Cash paid during
period - interest $563 $1,287 $1,288 $2,413
LA-Z-BOY INCORPORATED
SEGMENT INFORMATION
Second Quarter Ended Six Months Ended
-------------------- ----------------
(Unaudited, amounts in 10/24/09 10/25/08 10/24/09 10/25/08
thousands) (13 weeks) (13 weeks) (26 weeks) (26 weeks)
--------- --------- --------- ---------
Sales
Upholstery Group $232,780 $247,934 $429,472 $485,052
Casegoods Group 37,302 48,473 73,167 96,594
Retail Group 38,014 39,484 73,976 81,911
VIEs 12,248 11,793 23,987 25,871
Other/eliminations (19,637) (15,736) (37,224) (35,828)
------- ------- ------- -------
Consolidated $300,707 $331,948 $563,378 $653,600
======== ======== ======== ========
Operating income (loss)
Upholstery Group $25,359 $8,338 $41,649 $18,194
Casegoods Group (184) 755 (305) 2,132
Retail Group (5,301) (10,391) (10,969) (20,401)
VIEs (402) (2,621) (137) (3,709)
Corporate and Other (8,424) (8,722) (15,524) (14,071)
Goodwill write-down - (408) - (1,700)
Restructuring (1,183) (2,923) (2,220) (9,499)
------ ------ ------ ------
$9,865 $(15,972) $12,494 $(29,054)
====== ======== ======= ========
SOURCE
Kathy Liebmann, +1-734-241-2438, kathy.liebmann@la-z-boy.com