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 18, 2009
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|
(Date
of Report (Date of Earliest Event
Reported))
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LA-Z-BOY INCORPORATED
|
|
(Exact
name of registrant as specified in its
charter)
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MICHIGAN
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1-9656
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38-0751137
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||
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(State
or other jurisdiction of
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(Commission
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(IRS
Employer
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||
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incorporation)
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File
Number)
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Indentification
Number)
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1284
North Telegraph Road, Monroe, Michigan
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48162-3390
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(Address
of principal executive offices)
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Zip
Code
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Registrant's
telephone number, including area code (734)
242-1444
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None
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(Former
name or former address, if changed since last
report.)
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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:
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ 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
18, 2009, La-Z-Boy Incorporated issued a press release to report the company’s
financial results for the quarter ended July 25, 2009. A copy of the press
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 filed or furnished as part of this
report:
|
Description
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||
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99.1
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Press
Release Dated August 18, 2009
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99.2
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Unaudited
financial
schedules
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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.
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LA-Z-BOY
INCORPORATED
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(Registrant)
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Date:
August 18, 2009
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BY:
/S/ Margaret L. Mueller
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Margaret
L. Mueller
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Corporate
Controller
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EXHIBIT
99.1
NEWS
RELEASE
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Contact:
Kathy Liebmann
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(734)
241-2438
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kathy.liebmann@la-z-boy.com
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LA-Z-BOY REPORTS
FIRST-QUARTER PROFIT
MONROE,
MI. August 18, 2009—La-Z-Boy Incorporated (NYSE: LZB) today
reported its operating results for the fiscal first quarter ended July 25,
2009.
Fiscal
2010 first-quarter highlights:
|
|
·
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Net
income was $0.04 per share versus a loss of $0.17 per share in last year’s
first quarter, despite a sales decline of 18.3%, reflecting the difficult
macroeconomic environment;
|
|
|
·
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The
company generated $13.8 million in cash from operating activities and
reduced debt by $11.7 million;
|
|
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·
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Net
debt at quarter end was $10.8
million;
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|
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·
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The
retail segment’s performance continued to improve, with the operating loss
reduced by 43%, or $4.3 million, on a 15% sales decline compared with the
prior-year period.
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Net sales
for the first quarter were $262.7 million, down 18.3% compared with the prior
year’s first quarter. The company reported net income attributable to
La-Z-Boy Incorporated of $2.0 million, or $0.04 per share, compared with a loss
of $8.5 million, or a loss of $0.17 per share in the fiscal 2009 first
quarter. The 2010 first-quarter results include a $0.01 per share
restructuring charge, primarily related to the consolidation of the company’s
casegoods facilities and the previously announced store closures within the
company’s retail segment. La-Z-Boy Incorporated’s fiscal 2009
first-quarter results included a $0.09 restructuring charge, primarily related
to the closure of the company’s Tremonton, Utah and United Kingdom operations,
and a $0.03 per share intangible write-down related to the goodwill associated
with the company’s U.K. operation.
Kurt L.
Darrow, President and Chief Executive Officer of La-Z-Boy, said, “In what is
historically a weaker-demand quarter given seasonality issues, our results for
the period demonstrate the effectiveness of the many structural changes we have
made to our business combined with the major strategic initiatives implemented
over the past several years. These moves are continuing to bear fruit
and enabled us to earn a profit on a $59 million quarter-over-quarter sales
decline. While the macroeconomic environment remains
challenging, our team is focused on driving sales, improving service levels to
our customers and ensuring our operating footprint remains lean and
efficient. Additionally, our retail segment continues to gain
traction and make significant progress. For the third consecutive
quarter, we decreased our operating losses despite year-over-year sales
declines.”
Darrow
continued, “In this environment, we are cognizant of the importance of a strong
balance sheet and increasing our liquidity. During the quarter, we
generated $13.8 million in cash from operating activities and decreased our debt
by $11.7 million. At quarter end, our net debt was $10.8 million and
we increased the availability on our revolving line of credit to $70.5 million.
While the operating environment remains a challenge, we are confident La-Z-Boy
Incorporated’s strong balance sheet and business model are positioning us for
the long term with a competitive footprint in the marketplace.”
Wholesale
Segments
For the
fiscal 2010 first quarter, sales in the company’s upholstery segment decreased
17% to $196.7 million compared with $237.1 million in the prior year’s first
quarter. On the $40.4 million decline in sales, the segment’s
operating margin increased to 8.3% from 4.2% in the prior year’s
quarter. In the casegoods segment, sales for the fiscal first quarter
were $35.9 million, down 25.5% from $48.1 million in the fiscal 2009 first
quarter. The segment virtually broke even on an operating basis
versus a 2.9% operating margin in last year’s first quarter.
Darrow
commented, “Our operating margin performance in our upholstery segment was solid
for the first quarter, demonstrating the magnitude of changes made to our
business model both in terms of its cost structure and operating
platform. The combination of cost reductions across all our
upholstery companies and the efficiency of the cellular production process at
our La-Z-Boy branded facilities is clearly evident in our improved 8.3%
operating margin, which almost doubled quarter over quarter. We were
able to achieve these results during what is historically our slowest quarter
due to seasonality factors, including a one-week plant shutdown for maintenance
and vacation. Going forward, we expect to further improve the
efficiency of our upholstery segment as our Mexican-based cut-and-sew facility
continues to expand its production capacity. Today, we have more than 600 people
working in Mexico and, as reported previously, we expect to see cost savings
early in calendar 2010, with the full benefit, estimated to be $20 million,
realized in fiscal 2011.”
Darrow
continued, “In our casegoods business, we ceased production at our North
Wilkesboro, NC plant during the quarter and began the transfer of production to
our Hudson, NC facility. This consolidation will be completed during
the second quarter and we believe it will have minimal impact on service levels
to our customers. Our North Wilkesboro facility will be converted to
a finished-goods warehouse as we vacate a leased warehouse operation in
Statesville, NC. The above changes will result in annual cost
savings of approximately $5 to $6 million, based on current volume, when
completed in the spring of 2010. The segment’s operating margin was
negatively impacted during the quarter by higher-than-usual sales discounts
resulting from the ongoing reduction of inventories of discontinued
collections. During the period, we reduced our casegoods inventory by
8%, with the majority of it finished goods. In general, we continue
to see the higher ticket categories, including bedroom and dining room the most
challenging at retail, with youth furniture and occasional items performing
slightly better.”
System-wide,
for the first 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 2.3%. Total written
sales, which include new and closed stores, were down 8.4%.
Retail
For the
quarter, retail sales were $36.0 million, down 15.2% compared with the
prior-year period. The retail group posted an operating loss of $5.7
million for the quarter, and its operating margin was (15.8%). Darrow
stated, “Despite a significant decline in sales quarter over quarter, our team
decreased our operating loss by $4.3 million, a testament to the effectiveness
of the numerous changes implemented across the business. Importantly,
in this environment, we have a strong marketing presence, which is helping to
drive traffic into the stores. Additionally, we have placed
significant emphasis on the improvement and effectiveness of our sales team and
are converting more customers into buyers while increasing the average
ticket. Going forward, our team will continue to execute against the
various business model changes while focusing on increased sales and customer
service.”
Balance
Sheet
La-Z-Boy’s
debt-to-capitalization ratio was 13.5% compared with 18.4% a year ago and 16.4%
at the end of fiscal 2009. Darrow stated, “Our management team has
continued to maintain an intense focus on strengthening our balance sheet to
allow us to navigate our way through what continues to be a challenging
macroeconomic environment. During the quarter, we generated cash,
decreased our debt and increased our availability under our revolving line of
credit by $5.5 million to $70.5 million.”
Business
Outlook
Darrow
stated, “Although our year-over-year sales decline was lower than in the past
two quarters, we believe the operating environment will remain challenging for
the remainder of the year. Against that backdrop, we will continue to
manage our business aggressively and make any necessary adjustments that volume
trends may dictate while having a disciplined focus on running our operations as
efficiently as possible.”
Conference
Call
La-Z-Boy
will hold a conference call with the investment community on Wednesday, August
19, 2009, at 8:30 a.m. eastern time. The toll-free dial-in number is
877.407.0778; international callers may use 201.689.8565.
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) supply, labor or distribution
disruptions; (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)
unanticipated labor/industrial actions; (o) 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 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://www.la-z-boy.com/about/InvestorRelations/sec_filings.aspx. 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://www.la-z-boy.com/about/investorRelations/IR_email_alerts.aspx.
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 Group
companies are Bauhaus, England and La-Z-Boy. The La-Z-Boy Casegoods Group
companies are American Drew/Lea, Hammary and Kincaid.
The
corporation’s proprietary distribution network is dedicated exclusively to
selling La-Z-Boy Incorporated products and brands, and includes 317 stand-alone
La-Z-Boy Furniture Galleries® stores and 475 ComfortStudios®, in addition to
in-store gallery programs at the company’s Kincaid, England and Lea operating
units. According to industry trade publication In Furniture, the La-Z-Boy
Furniture Galleries retail network is North America’s largest single-brand
furniture retailer. Additional information is available at http://www.la-z-boy.com/.
EXHIBIT
99.2
LA-Z-BOY
INCORPORATED
CONSOLIDATED
STATEMENT OF OPERATIONS
|
First
Quarter Ended
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||||||||
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(Unaudited,
amounts in thousands, except per share data)
|
7/25/09
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7/26/08
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||||||
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Sales
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$ | 262,671 | $ | 321,652 | ||||
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Cost
of sales
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||||||||
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Cost
of goods sold
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181,549 | 235,596 | ||||||
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Restructuring
|
736 | 5,795 | ||||||
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Total
cost of sales
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182,285 | 241,391 | ||||||
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Gross
profit
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80,386 | 80,261 | ||||||
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Selling,
general and administrative
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77,456 | 91,270 | ||||||
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Write-down
of intangibles
|
— | 1,292 | ||||||
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Restructuring
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301 | 781 | ||||||
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Operating
income (loss)
|
2,629 | (13,082 | ) | |||||
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Interest
expense
|
980 | 1,495 | ||||||
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Interest
income
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276 | 932 | ||||||
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Other
income, net
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711 | 143 | ||||||
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Earnings
(loss) before income taxes
|
2,636 | (13,502 | ) | |||||
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Income
tax expense (benefit)
|
439 | (5,044 | ) | |||||
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Net
income (loss)
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2,197 | (8,458 | ) | |||||
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Less
net income attributable to noncontrolling interests
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214 | 86 | ||||||
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Net
income (loss) attributable to La-Z-Boy Incorporated
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$ | 1,983 | $ | (8,544 | ) | |||
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Basic
average shares
|
51,479 | 51,428 | ||||||
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Basic
net income (loss) attributable to La-Z-Boy Incorporated per
share
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$ | 0.04 | $ | (0.17 | ) | |||
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Diluted
average shares
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51,479 | 51,428 | ||||||
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Diluted
net income (loss) attributable to La-Z-Boy Incorporated per
share
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$ | 0.04 | $ | (0.17 | ) | |||
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Dividends
paid per share
|
$ | — | $ | 0.04 | ||||
During
the first quarter of fiscal 2010, we implemented SFAS No. 160, the new
accounting standard which changes how companies account for noncontrolling
interests. Refer to our Form 10-Q for the quarter ended July 25, 2009
for additional information.
LA-Z-BOY
INCORPORATED
CONSOLIDATED
BALANCE SHEET
|
(Unaudited, amounts in
thousands)
|
7/25/09
|
4/25/09
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||||||
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Current
assets
|
||||||||
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Cash
and equivalents
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$ | 38,333 | $ | 17,364 | ||||
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Restricted
cash
|
500 | 18,713 | ||||||
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Receivables,
net of allowance of $24,408 at 7/25/09 and $28,385 at
4/25/09
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137,552 | 147,858 | ||||||
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Inventories,
net
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142,276 | 140,178 | ||||||
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Deferred
income taxes—current
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795 | 795 | ||||||
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Other
current assets
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28,074 | 22,872 | ||||||
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Total
current assets
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347,530 | 347,780 | ||||||
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Property,
plant and equipment, net
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146,593 | 150,234 | ||||||
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Trade
names
|
3,100 | 3,100 | ||||||
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Other
long-term assets, net of allowance of $1,492 at 7/25/09 and $4,309 at
4/25/09
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48,359 | 51,431 | ||||||
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Total
assets
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$ | 545,582 | $ | 552,545 | ||||
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Current
liabilities
|
||||||||
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Current
portion of long-term debt
|
$ | 2,121 | $ | 8,724 | ||||
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Accounts
payable
|
39,245 | 41,571 | ||||||
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Accrued
expenses and other current liabilities
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77,037 | 75,733 | ||||||
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Total
current liabilities
|
118,403 | 126,028 | ||||||
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Long-term
debt
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47,052 | 52,148 | ||||||
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Deferred
income taxes
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732 | 724 | ||||||
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Other
long-term liabilities
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65,657 | 63,875 | ||||||
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Contingencies
and commitments
|
— | — | ||||||
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Equity
|
||||||||
|
La-Z-Boy
Incorporated shareholders’ equity:
|
||||||||
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Common
shares, $1 par value
|
51,480 | 51,478 | ||||||
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Capital
in excess of par value
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198,361 | 205,945 | ||||||
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Retained
earnings
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81,352 | 70,769 | ||||||
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Accumulated
other comprehensive loss
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(22,059 | ) | (22,698 | ) | ||||
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Total
La-Z-Boy Incorporated shareholders' equity
|
309,134 | 305,494 | ||||||
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Noncontrolling
interests
|
4,604 | 4,276 | ||||||
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Total
equity
|
313,738 | 309,770 | ||||||
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Total
liabilities and equity
|
$ | 545,582 | $ | 552,545 | ||||
LA-Z-BOY
INCORPORATED
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
First
Quarter Ended
|
||||||||
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(Unaudited, amounts in
thousands)
|
7/25/09
|
7/26/08
|
||||||
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Cash
flows from operating activities
|
||||||||
|
Net
income (loss)
|
$ | 2,197 | $ | (8,458 | ) | |||
|
Adjustments
to reconcile net income (loss) to cash provided by operating
activities
|
||||||||
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Gain
on sale of assets
|
(13 | ) | (2,066 | ) | ||||
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Write-down
of intangibles
|
— | 1,292 | ||||||
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Restructuring
|
1,037 | 6,576 | ||||||
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Provision
for doubtful accounts
|
2,362 | 4,203 | ||||||
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Depreciation
and amortization
|
6,109 | 5,954 | ||||||
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Stock-based
compensation expense
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1,007 | 869 | ||||||
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Change
in receivables
|
8,898 | 14,170 | ||||||
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Change
in inventories
|
(2,098 | ) | 10,906 | |||||
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Change
in payables
|
(2,326 | ) | (6,448 | ) | ||||
|
Change
in other assets and liabilities
|
(3,396 | ) | (23,718 | ) | ||||
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Change
in deferred taxes
|
8 | 1,161 | ||||||
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Total
adjustments
|
11,588 | 12,899 | ||||||
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Net
cash provided by operating activities
|
13,785 | 4,441 | ||||||
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Cash
flows from investing activities
|
||||||||
|
Proceeds
from disposals of assets
|
1,686 | 4,981 | ||||||
|
Capital
expenditures
|
(1,439 | ) | (7,372 | ) | ||||
|
Purchases
of investments
|
(1,199 | ) | (5,449 | ) | ||||
|
Proceeds
from sales of investments
|
2,664 | 5,794 | ||||||
|
Change
in restricted cash
|
17,007 | (288 | ) | |||||
|
Change
in other long-term assets
|
(15 | ) | 71 | |||||
|
Net
cash provided by (used for) investing activities
|
18,704 | (2,263 | ) | |||||
|
Cash
flows from financing activities
|
||||||||
|
Proceeds
from debt
|
10,460 | 14,635 | ||||||
|
Payments
on debt
|
(22,159 | ) | (18,857 | ) | ||||
|
Dividends
paid
|
— | (2,077 | ) | |||||
|
Net
cash used for financing activities
|
(11,699 | ) | (6,299 | ) | ||||
|
Effect
of exchange rate changes on cash and equivalents
|
179 | (39 | ) | |||||
|
Change
in cash and equivalents
|
20,969 | (4,160 | ) | |||||
|
Cash
and equivalents at beginning of period
|
17,364 | 14,477 | ||||||
|
Cash
and equivalents at end of period
|
$ | 38,333 | $ | 10,317 | ||||
|
Cash
paid (net of refunds) during period – income taxes
|
$ | 266 | $ | 923 | ||||
|
Cash
paid during period – interest
|
$ | 725 | $ | 1,126 | ||||
LA-Z-BOY
INCORPORATED
SEGMENT
INFORMATION
|
First Quarter Ended
|
||||||||
|
(Unaudited, amounts in
thousands)
|
7/25/09
|
7/26/08
|
||||||
|
Sales
|
||||||||
|
Upholstery
Group
|
$ | 196,692 | $ | 237,118 | ||||
|
Casegoods
Group
|
35,865 | 48,121 | ||||||
|
Retail
Group
|
35,961 | 42,427 | ||||||
|
VIEs/Eliminations
|
(5,847 | ) | (6,014 | ) | ||||
|
Consolidated
|
$ | 262,671 | $ | 321,652 | ||||
|
Operating
income (loss)
|
||||||||
|
Upholstery
Group
|
$ | 16,290 | $ | 9,857 | ||||
|
Casegoods
Group
|
(121 | ) | 1,377 | |||||
|
Retail
Group
|
(5,668 | ) | (10,010 | ) | ||||
|
Corporate
and Other*
|
(6,835 | ) | (6,438 | ) | ||||
|
Restructuring
|
(1,037 | ) | (6,576 | ) | ||||
|
Intangible
Write-down
|
— | (1,292 | ) | |||||
| $ | 2,629 | $ | (13,082 | ) | ||||
*Variable
Interest Entities ("VIEs") are included in corporate and
other.