UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549-1004

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

August 23, 2016

(Date of Report (Date of Earliest Event Reported))

 

LA-Z-BOY INCORPORATED

(Exact name of registrant as specified in its charter)

 

MICHIGAN

 

1-9656

 

38-0751137

(State or other jurisdiction of

 

(Commission

 

(IRS Employer

incorporation)

 

File Number)

 

Identification Number)

 

One La-Z-Boy Drive, Monroe, Michigan

 

48162-5138

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (734) 242-1444

 

None

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02  Results of Operations and Financial Condition

 

On August 23, 2016, La-Z-Boy Incorporated issued a news release to report the company’s financial results for the first quarter ended July 30, 2016. A copy of the news release is attached to this current report on Form 8-K as Exhibit 99.1. Exhibit 99.2 contains unaudited financial data.

 

The information in Item 2.02 of this report and the related exhibits (Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01  Financial Statements and Exhibits

 

(d)        The following exhibits are furnished as part of this report:

 

 

 

Description

99.1

 

News Release Dated August 23, 2016

99.2

 

Unaudited financial schedules

 

2



 

SIGNATURE

 

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.

 

 

LA-Z-BOY INCORPORATED

 

(Registrant)

 

 

 

 

Date: August 23, 2016

 

 

 

 

 

 

BY:

/s/ Margaret L. Mueller

 

Margaret L. Mueller

 

Vice President of Finance

 

3


 

Exhibit 99.1

 

 

NEWS RELEASE

 

Contact:   Kathy Liebmann

(734) 241-2438

kathy.liebmann@la-z-boy.com

 

LA-Z-BOY REPORTS FISCAL 2017 FIRST-QUARTER RESULTS

 

MONROE, Mich., August 23, 2016—La-Z-Boy Incorporated (NYSE: LZB) today reported its operating results for the fiscal 2017 first quarter ended July 30, 2016.

 

Fiscal 2017 first-quarter highlights:

 

·                  Consolidated operating income for the fiscal 2017 first quarter increased 9.0% to $21.8 million, with consolidated operating margin increasing 60 basis points to 6.4% from 5.8% in the fiscal 2016 first quarter;

·                  Operating margin for the upholstery and casegoods segments increased versus the prior-year period;

·                  The company reported earnings per share of $0.28 attributable to La-Z-Boy Incorporated versus $0.27 in last year’s first quarter;

·                  Cash flow from operations was $34.1 million versus $1.5 million in the fiscal 2016 first quarter;

·                  Same-store sales for the La-Z-Boy Furniture Galleries® network declined 1.9% versus  an increase of 5.3% in last year’s first quarter; and

·                  The company purchased more than 500,000 shares of stock in the open market.

 

Sales for the fiscal 2017 first quarter were $340.8 million, compared with $341.4 million in the prior year’s first quarter.  The company reported net income attributable to La-Z-Boy Incorporated of $13.8 million, or $0.28 per share, versus $13.7 million, or $0.27 per share, in last year’s first quarter.

 

Kurt L. Darrow, Chairman, President and Chief Executive Officer, of La-Z-Boy, said, “Our manufacturing operations are running  efficiently and when combined with other supply chain initiatives, we drove improved profitability for the fiscal 2017 first quarter, increasing consolidated operating margin to 6.4%.  While we experienced flat sales for the quarter due to weaker demand at wholesale and inconsistent traffic throughout the La-Z-Boy Furniture Galleries® store system, we are in an excellent service position for both our dealers and the consumer as we approach the traditionally stronger fall selling season.”

 

Wholesale Segments

 

For the fiscal 2017 first quarter, sales in the company’s upholstery segment decreased 1.9% to $267.4 million versus the prior year’s first quarter.  In the casegoods segment, sales for the fiscal 2017 first quarter were $25.0 million, up 7.0% over last year’s first quarter.

 

Darrow commented, “During the quarter, we achieved an 11.1% operating margin in the upholstery segment, some 200 basis points higher than in last year’s comparable quarter.   The main performance

 



 

drivers were improvements in procurement, plant efficiency and productivity, and we also benefitted from a slight shift in product mix.  In our casegoods segment, the operating margin for the quarter was 8.6%, versus 7.2% in last year’s comparable quarter, reflecting both improved volume, particularly as we gain traction with our newer more transitional collections, and operating efficiencies.”

 

Darrow said, “As we move into the early fall, we are optimistic about the prospects for upholstery and casegoods collections introduced at the April Furniture Market in High Point, NC.  In particular, the iCleanfabric collection introduced for our La-Z-Boy product line and the AD Modern group from American Drew were received enthusiastically by our dealer base.  These products will arrive on retail floors in September.”

 

Retail Segment

 

For the fiscal 2017 first quarter, sales in the company’s retail segment increased 10.5% to $95.7 million versus the prior year’s first quarter.  On the core base of 108 stores included in last year’s comparable quarter, delivered sales for the segment decreased 4.4%.

 

Darrow continued, “We continue to grow the company-owned base of La-Z-Boy Furniture Galleries stores® through new stores associated with our 4-4-5 store build-out strategy and acquisitions of stores owned by independent dealers.  With a larger company-owned retail business, we will further benefit from the combined margin associated with our integrated retail strategy, where we earn an operating profit on both the wholesale and retail sides of the business with every piece of furniture sold through a company-owned store.  In the first quarter, the company opened two stores, one in Midlothian, Virginia, and one in Canton, Ohio.  Additionally, subsequent to quarter end, we bought four stores from an independent licensee — three in Calgary and one in Winnipeg — with the acquisitions representing the retail segment’s first foray into Canada.   Historically, in terms of sales, these four stores have been among the highest-performing throughout the La-Z-Boy Furniture Galleries® network and we expect them to contribute approximately $25 million in sales on an annual basis to the company’s retail segment.”

 

Darrow stated, “Our operating margin declined from 5.5% to 2.3% for the quarter, due to lower delivered sales for our core stores and increased investments in our overall marketing spend, including a number of targeted test markets.   While we did experience an up-lift in those markets, the remainder of the business did not meet our expectations for the quarter, given the additional spend.  We will continue, as appropriate, to make long-term marketing investments in the segment and believe this will translate into increased sales and operating profit over time.”

 

La-Z-Boy Furniture Galleries® Store Network

 

System-wide, for the first quarter of fiscal 2017, including company-owned and independent-licensed stores, same-store written sales, which the company tracks as an indicator of retail activity, were down 1.9% versus last year’s first quarter, which experienced a 5.3% increase.

 

For the first quarter, total written sales, which include new and closed stores, increased 2.1% compared with the fiscal 2016 comparable period.  At the end of the first quarter, the La-Z-Boy Furniture Galleries® store system was composed of 342 stand-alone stores, with 98 in the new concept design format.

 

Darrow commented, “For fiscal 2017, we are planning for approximately 30 projects, including 12 net new stores, as well as remodels and relocations that include changing out old-format stores into the new concept design format, which is performing at the highest level of our three store formats. During the first quarter, the La-Z-Boy Furniture Galleries® network opened five new stores, remodeled four,

 



 

relocated one and closed one.  In the second quarter of fiscal 2017, we are planning for three new stores and two remodels throughout the network.”

 

FISCAL 2017 PROJECTED* STORE ACTIVITY

 

 

 

Total FY16

 

New

 

Closed

 

Acquired

 

Total FY17

 

Remodel

 

Relocation

 

Company-owned

 

124

 

8

 

(2

)

5

 

135

 

3

 

 

Dealer-owned

 

214

 

9

 

(3

)

(5

)

215

 

6

 

3

 

Total

 

338

 

17

 

(5

)

 

350

 

9

 

3

 

 


*Projects anticipated to be completed.

 

Balance Sheet and Cash Flow

 

During the quarter, the company generated $34.1 million in cash from operating activities.  La-Z-Boy ended the quarter with $117.2 million in cash and cash equivalents, $32.7 million in investments to enhance returns on cash, and $9.0 million in restricted cash.  During the quarter, the company had $5.2 million in capital expenditures, paid $4.9 million in dividends, and spent $13.6 million purchasing 0.5 million shares of stock in the open market under its existing authorized share purchase program, with remaining authorization to purchase 3.5 million shares.

 

Business Outlook

 

Darrow concluded, “We are optimistic about our business for the long term and believe we are making the correct strategic investments to drive sales growth, profitability and returns to shareholders.  In addition to the execution of our 4-4-5 store build-out strategy, we are working to increase other distribution channels, expand our share of the stationary upholstery category and capitalize on our integrated retail strategy through growing the number of stores owned by the company.  At the same time, we are developing a number of new growth strategies to take us well into the future as we capitalize on our brand strength and efficient operating platform.”

 

Conference Call

 

La-Z-Boy will hold a conference call with the investment community on Wednesday, August 24, 2016, at 8:30 a.m. eastern time.  The toll-free dial-in number is 877.407.0778; international callers may use 201.689.8565.

 

The call will be webcast live, with corresponding slides, and archived on the Internet.  It will be available at http://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-calendar. A telephone replay will be available for a week following the call. This replay will be accessible to callers from the U.S. and Canada at 877.660.6853 and to international callers at 201.612.7415. Enter Conference ID #13643410.

 

Forward-looking Information

 

This news release contains, and oral statements made from time to time by representatives of La-Z-Boy may contain, forward-looking statements. With respect to all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

Actual results could differ materially from those we anticipate or project due to a number of factors, including: (a) changes in consumer confidence and demographics; (b) the possibility of a recession; (c) changes in the real estate and credit markets and their effects on our customers, consumers and suppliers;

 



 

(d) international political unrest, terrorism or war; (e) volatility in energy and other commodities prices; (f) the impact of logistics on imports and exports; (g) interest rate and currency exchange rate changes; (h) operating factors, such as supply, labor or distribution disruptions (e.g., port strikes); (i) changes in the domestic or international regulatory environment; (j) adoption of new accounting principles; (k) severe weather or other natural events such as hurricanes, earthquakes, flooding, tornadoes and tsunamis; (l) our ability to procure fabric rolls and leather hides or cut-and-sewn fabric and leather sets domestically or abroad; (m) information technology conversions or system failures and our ability to recover from a system failure; (n) effects of our brand awareness and marketing programs; (o) the discovery of defects in our products resulting in delays in manufacturing, recall campaigns, reputational damage, or increased warranty costs; (p) litigation arising out of alleged defects in our products; (q) unusual or significant litigation; (r) our ability to locate new La-Z-Boy Furniture Galleries® stores (or store owners) and negotiate favorable lease terms for new or existing locations; (s) the results of our restructuring actions; (t) the impact of potential goodwill or intangible asset impairments; and (u) those matters discussed in Item 1A of our fiscal 2016 Annual Report on Form 10-K 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, whether to reflect new information or new developments or for any other reason.

 

Additional Information

 

This news release is just one part of La-Z-Boy’s financial disclosures and should be read in conjunction with other information filed with the Securities and Exchange Commission, which is available at: http://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-sec.  Investors and others wishing to be notified of future La-Z-Boy news releases, SEC filings and quarterly investor conference calls may sign up at:  http://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-alerts&t=&id=&.

 

Background Information

 

La-Z-Boy Incorporated is one of the world’s leading residential furniture producers, marketing furniture for every room of the home. The La-Z-Boy Upholstery segment companies are England and La-Z-Boy. The Casegoods segment consists of three brands: American Drew, Hammary, and Kincaid. The company-owned Retail segment includes 127 of the 342 La-Z-Boy Furniture Galleries® stores.

 

The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 342 stand-alone La-Z-Boy Furniture Galleries® stores and 551 independent Comfort Studio® locations, in addition to in-store gallery programs for the company’s Kincaid and England operating units. Additional information is available at http://www.la-z-boy.com/.

 


 

Exhibit 99.2

 

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

 

 

 

Quarter Ended

 

(Unaudited, amounts in thousands, except per share data)

 

7/30/16

 

7/25/15

 

Sales

 

$

340,783

 

$

341,423

 

Cost of sales

 

207,252

 

217,191

 

Gross profit

 

133,531

 

124,232

 

Selling, general and administrative expense

 

111,763

 

104,266

 

Operating income

 

21,768

 

19,966

 

Interest expense

 

115

 

112

 

Interest income

 

204

 

205

 

Other income (expense), net

 

(72

)

1,968

 

Income before income taxes

 

21,785

 

22,027

 

Income tax expense

 

7,777

 

7,904

 

Net income

 

14,008

 

14,123

 

Net income attributable to noncontrolling interests

 

(202

)

(447

)

Net income attributable to La-Z-Boy Incorporated

 

$

13,806

 

$

13,676

 

 

 

 

 

 

 

Basic weighted average common shares

 

49,105

 

50,583

 

Basic net income attributable to La-Z-Boy Incorporated per share

 

$

0.28

 

$

0.27

 

 

 

 

 

 

 

Diluted weighted average common shares

 

49,594

 

51,043

 

Diluted net income attributable to La-Z-Boy Incorporated per share

 

$

0.28

 

$

0.27

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.10

 

$

0.08

 

 



 

LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET

 

(Unaudited, amounts in thousands, except par value)

 

7/30/16

 

4/30/16

 

Current assets

 

 

 

 

 

Cash and equivalents

 

$

117,159

 

$

112,358

 

Restricted cash

 

8,983

 

8,977

 

Receivables, net of allowance of $3,070 at 7/30/16 and $3,145 at 4/30/16

 

128,959

 

146,545

 

Inventories, net

 

176,190

 

175,589

 

Other current assets

 

39,082

 

38,503

 

Total current assets

 

470,373

 

481,972

 

Property, plant and equipment, net

 

170,835

 

171,590

 

Goodwill

 

41,152

 

37,193

 

Other intangible assets

 

9,008

 

8,558

 

Deferred income taxes — long-term

 

42,612

 

41,683

 

Other long-term assets, net

 

64,089

 

59,033

 

Total assets

 

$

798,069

 

$

800,029

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Current portion of long-term debt

 

$

266

 

$

290

 

Accounts payable

 

45,064

 

44,661

 

Accrued expenses and other current liabilities

 

106,513

 

112,476

 

Total current liabilities

 

151,843

 

157,427

 

Long-term debt

 

448

 

513

 

Other long-term liabilities

 

87,550

 

84,877

 

Contingencies and commitments

 

 

 

Shareholders’ equity

 

 

 

 

 

Preferred shares — 5,000 authorized; none issued

 

 

 

Common shares, $1 par value — 150,000 authorized; 49,169 outstanding at 7/30/16 and 49,331 outstanding at 4/30/16

 

49,169

 

49,331

 

Capital in excess of par value

 

283,980

 

279,339

 

Retained earnings

 

248,636

 

252,472

 

Accumulated other comprehensive loss

 

(33,801

)

(34,000

)

Total La-Z-Boy Incorporated shareholders’ equity

 

547,984

 

547,142

 

Noncontrolling interests

 

10,244

 

10,070

 

Total equity

 

558,228

 

557,212

 

Total liabilities and equity

 

$

798,069

 

$

800,029

 

 



 

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Quarter Ended

 

(Unaudited, amounts in thousands)

 

7/30/16

 

7/25/15

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

14,008

 

$

14,123

 

Adjustments to reconcile net income to cash provided by (used for) operating activities

 

 

 

 

 

Deferred income tax expense

 

(1,076

)

148

 

Provision for doubtful accounts

 

(77

)

(340

)

Depreciation and amortization

 

6,800

 

6,271

 

Equity-based compensation expense

 

3,329

 

3,012

 

Change in receivables

 

17,664

 

24,610

 

Change in inventories

 

510

 

(22,159

)

Change in other assets

 

(1,467

)

(6,933

)

Change in payables

 

403

 

2,021

 

Change in other liabilities

 

(6,044

)

(19,223

)

Net cash provided by operating activities

 

34,050

 

1,530

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Proceeds from disposal of assets

 

35

 

279

 

Capital expenditures

 

(5,209

)

(6,506

)

Purchases of investments

 

(7,695

)

(5,422

)

Proceeds from sales of investments

 

3,670

 

12,983

 

Acquisitions, net of cash acquired

 

(5,281

)

 

Change in restricted cash

 

(7

)

 

Net cash (used for) provided by investing activities

 

(14,487

)

1,334

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Payments on debt

 

(89

)

(122

)

Stock issued for stock and employee benefit plans

 

2,564

 

145

 

Excess tax benefit on stock option exercises

 

1,137

 

363

 

Purchases of common stock

 

(13,567

)

(9,171

)

Dividends paid

 

(4,923

)

(4,055

)

Net cash used for financing activities

 

(14,878

)

(12,840

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

116

 

(807

)

Change in cash and equivalents

 

4,801

 

(10,783

)

Cash and equivalents at beginning of period

 

112,358

 

98,302

 

Cash and equivalents at end of period

 

$

117,159

 

$

87,519

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activities

 

 

 

 

 

Capital expenditures included in payables

 

$

 

$

500

 

 



 

LA-Z-BOY INCORPORATED

SEGMENT INFORMATION

 

 

 

Quarter Ended

 

(Unaudited, amounts in thousands)

 

7/30/16

 

7/25/15

 

Sales

 

 

 

 

 

Upholstery segment:

 

 

 

 

 

Sales to external customers

 

$

223,809

 

$

232,484

 

Intersegment sales

 

43,607

 

40,192

 

Upholstery segment sales

 

267,416

 

272,676

 

 

 

 

 

 

 

Casegoods segment:

 

 

 

 

 

Sales to external customers

 

20,585

 

21,202

 

Intersegment sales

 

4,453

 

2,191

 

Casegoods segment sales

 

25,038

 

23,393

 

 

 

 

 

 

 

Retail segment sales

 

95,720

 

86,651

 

 

 

 

 

 

 

Corporate and Other:

 

 

 

 

 

Sales to external customers

 

669

 

1,086

 

Intersegment sales

 

1,210

 

516

 

Corporate and Other sales

 

1,879

 

1,602

 

 

 

 

 

 

 

Eliminations

 

(49,270

)

(42,899

)

Consolidated sales

 

$

340,783

 

$

341,423

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

Upholstery segment

 

$

29,809

 

$

24,594

 

Casegoods segment

 

2,147

 

1,690

 

Retail segment

 

2,183

 

4,729

 

Corporate and Other

 

(12,371

)

(11,047

)

Consolidated operating income

 

$

21,768

 

$

19,966