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UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

 

 

Current Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

 

 

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

 

(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))

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Item 2.05

Costs Associated with Exit or Disposal Activities.

 

On April 16, 2014, we issued a news release committing to a restructuring of our casegoods business to transition to an all-import model for our wood furniture.  As a result of the restructuring we intend to:

·

discontinue casegoods production at our Hudson, North Carolina facility,

·

exit the hospitality business,

·

market for sale our youth furniture business, Lea Industries, and

·

consolidate operations from two North Wilkesboro, North Carolina facilities at the Hudson facility.

As a result of the restructuring, we will incur costs that we estimate will total between $2.5 million and $2.9 million, including approximately $1.2 to $1.4 million for one-time employee termination benefits and approximately $1.3 to $1.5 million of costs to consolidate facilities.  We estimate that all of these costs will result in future cash expenditures.

In addition to these costs, we expect to incur impairment charges as described in Item 2.06.

Item 2.06

Material Impairments

 

In connection with committing to the restructuring described in Item 2.05 of this report, we concluded that generally accepted accounting principles will require charges for impairment of some of our long-lived assets and inventory totaling between $9.5 million and $11.5 million, none of which we estimate will result in future cash expenditures.

Item 7.01

Regulation FD Disclosure

 

A copy of the news release referred to in Item 2.05 is attached to this current report on Form 8-K as Exhibit 99.1.

 

The information in this Item 7.01 and the related exhibit (Exhibit 99.1) 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 exhibit is furnished as part of this report:

 

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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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Exhibit 99.1

 

 

NEWS RELEASE

 

MONROE, MI., April 16, 2014—La-Z-Boy Incorporated (NYSE: LZB) today announced it will restructure its casegoods business, which represents approximately 10% of revenue, by transitioning to an all-import model for its wood furniture.  To accomplish the restructuring:

·

During the second quarter of fiscal 2015, La-Z-Boy will discontinue casegoods production at its Hudson, North Carolina facility.  That facility currently produces bedroom furniture collections for the Kincaid and American Drew lines that account for approximately 12% of the company’s wood furniture business. The company will also exit the hospitality business as that furniture is also manufactured at the Hudson facility.

·

The company will market for sale its youth furniture business, Lea Industries, as it does not align with the company’s long-term strategic objectives.

·

La-Z-Boy will consolidate and transition its warehouse and repair functions from its two North Wilkesboro, North Carolina facilities to Hudson.

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “After careful analysis and much consideration, we made the difficult decision to transition our casegoods operation to become solely an importer of wood furniture.  We have implemented many changes to our casegoods manufacturing model over the past few years to be more competitive.  However, in the final analysis, we determined we cannot generate enough domestic volume to support the size facility we operate in North Carolina and believe this move will strengthen our positioning and performance in the segment.  With strong manufacturing partners and a global supply chain team on the ground in Asia managing quality and logistics, we will seamlessly transition our remaining domestic bedroom product offerings.  We remain firmly committed to ensuring our dealers and their customers continue to receive the excellent service they have come to expect and depend on from La-Z-Boy Incorporated.”

Darrow continued, “We expect to cease production at our Hudson facility during the second quarter of fiscal 2015 and until that time will honor all existing production orders in our current backlog.  At the same time, we will begin transitioning the Kincaid and American Drew bedroom product lines overseas.  The restructuring will not affect the Kincaid upholstery program.  We regret the impact the plant closure will have on the approximately 100 employees affected.  We greatly appreciate the contribution of each individual and thank them all for their years of dedicated service.  We will provide outplacement assistance to these employees during this transition period.  By the end of calendar 2014, the two North Wilkesboro facilities, which together are approximately 520,000 square feet, will be idled and marketed for sale along with the wood-working equipment from the Hudson plant.”

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Darrow stated, “With respect to our youth business, Lea is not a strategic fit from a size perspective in terms of its revenue or earnings, and we believe our efforts would be enhanced by focusing our resources on the core casegoods product lines, which include bedroom, dining room and occasional pieces, positioned in the mid to upper-mid price points of the market.  As we market the Lea business for sale, we will continue to service our existing dealers while providing them with product until such time as a new owner is found.”

Darrow noted, “Our casegoods business remains an integral component of our total product offering to the consumer.  In addition to the many independent dealers carrying our various casegoods brands, our wood business plays a significant role at our La-Z-Boy Furniture Galleries® stores in terms of occasional pieces and as part of our growing In-Home Design program.  We are committed to the casegoods business and believe these changes will position the segment to contribute to the company’s overall growth and profitability plan.”

As a result of the restructuring, La-Z-Boy will take pre-tax charges in the range of $13 million to $15 million, or $0.15 to $0.17 per share after tax, of which approximately 75% is expected to be non-cash.  These charges will be principally for the impairment of certain long-lived assets and inventory and will also include severance, benefits and other associated costs.  The majority of these charges will be incurred in the fourth quarter of the company’s 2014 fiscal year and the remainder taken in the first half of fiscal 2015. In addition, the Lea business will be reported as discontinued operations commencing with the fourth quarter of fiscal 2014.

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) speed of economic recovery or the possibility of another recession; (c) changes in the real estate and credit markets and their effects on our customers and suppliers; (d) international political unrest, terrorism or war; (e) volatility in energy and other commodities prices; (f) the impact of logistics on imports; (g) interest rate and currency exchange rate changes; (h) operating factors, such as supply, labor or distribution disruptions; (i) any court actions requiring us to return any of the Continued Dumping and Subsidy Offset Act distributions we have received; (j) changes in the domestic or international regulatory environment; (k) adoption of new accounting principles; (l) severe weather or other natural events such as hurricanes, earthquakes, flooding, tornadoes and tsunamis; (m) our ability to procure fabric rolls and leather hides or cut-and-sewn fabric and leather sets domestically or abroad; (n) information technology conversions or system failures; (o) effects of our brand awareness and marketing programs; (p) the discovery of defects in our products resulting in delays in manufacturing, recall campaigns, reputational damage, or increased warranty costs; (q) litigation arising out of alleged defects in our products; (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) our ability to integrate acquired businesses and realize the benefit of anticipated synergies; and (t) those matters discussed in Item 1A of our fiscal 2013 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.

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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 La-Z-Boy and England. The Casegoods segment consists of four brands: American Drew, Lea, Hammary and Kincaid. The company-owned Retail segment includes 100 of the 312 La-Z-Boy Furniture Galleries® stores.

 

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