Document
false0000057131 0000057131 2020-06-23 2020-06-23


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported):
June 23, 2020
 
 
 
 
 
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 No.)
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
N/A
      (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:

  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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $1.00 par value
 
LZB
 
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                          





Item 2.02  Results of Operations and Financial Condition.
On June 23, 2020, La-Z-Boy Incorporated (the “Company”) issued a news release to report the Company’s financial results for the fiscal year ended April 25, 2020. A copy of the news release is attached to this Current Report on Form 8-K as Exhibit 99.1.

Item 7.01  Regulation FD Disclosure.
The information in Item 2.02 of this report 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 and shall not be deemed to be incorporated by reference in any filing of the Company 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
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 






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 hereunto duly authorized.
 
LA-Z-BOY INCORPORATED
 
 
(Registrant)
 

Date: June 23, 2020
 
BY:/s/Lindsay A. Barnes
 
 
Lindsay A. Barnes
Vice President, Corporate Controller and Chief Accounting Officer
 



Exhibit


EXHIBIT 99.1
https://cdn.kscope.io/bdb2f15c17a35e0306a57a52526f9793-lzbimagepressrelease.jpg
                        
NEWS RELEASE                    
    
Contact: Kathy Liebmann        (734) 241-2438                 kathy.liebmann@la-z-boy.com


LA-Z-BOY REPORTS FISCAL 2020 FOURTH-QUARTER AND YEAR-END RESULTS

Results Impacted by COVID-19


MONROE, Mich., June 23, 2020--La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported its operating results for the fiscal 2020 fourth quarter and full year ended April 25, 2020.

Fiscal 2020 full year versus Fiscal 2019 full year:

Consolidated sales decreased 2.4% to $1.70 billion, reflecting ten months of strength and two months of dramatic temporary impact from the COVID-19 pandemic
Consolidated operating margin:
GAAP: 7.0% versus 7.4%
Non-GAAP*: 8.2% versus 7.8%
Upholstery: 10.8% versus 10.1%
Retail: 8.2% versus 6.9%
Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
GAAP: $1.66 versus $1.44
Non-GAAP*: $2.16 versus $2.14
Cash generated from operating activities increased 9.0% to $164.2 million
The company returned $68.4 million to shareholders through share purchases and dividends
Cash, cash equivalents, and restricted cash were $263.5 million at year end, including $75.0 million in cash proactively drawn on the company's credit facility, and the company held $28.6 million in investments to enhance returns on cash, up from $131.8 million in cash, cash equivalents and restricted cash, and $31.5 million in investments to enhance returns on cash at the end of fiscal 2019

Fiscal 2020 fourth quarter versus Fiscal 2019 fourth quarter:

Consolidated sales decreased 19.1% to $367.3 million, reflecting two months of dramatic temporary impact from the COVID-19 pandemic
Consolidated operating margin:
GAAP: 3.7% versus 8.2%
Non-GAAP*: 9.3% versus 8.6%
Upholstery: 11.8% versus 11.6%
Retail: 10.8% versus 8.5%
Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
GAAP: $0.05 versus $0.03





Non-GAAP*: $0.49 versus $0.64
Cash generated from operating activities was $44.5 million
The company returned $14.5 million to shareholders through share purchases and dividends

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, "La-Z-Boy delivered strong performance for 10 months of fiscal 2020 through February. The iconic La-Z-Boy brand, excellent Retail performance, great product introductions and supply chain strength translated to solid sales and earnings growth for those 10 months. Our fourth quarter started with a 20.4% increase in written same-store sales for the entire La-Z-Boy Furniture Galleries® network in February, and we experienced other examples of strength across our vast network of distribution. However, the trajectory of sales and earnings growth for the last two months of the year were significantly impacted by COVID-19 and mandated retail closures across North America. With the health, safety and well-being of our employees, customers and the communities in which we operate of paramount importance, we responded to the pandemic swiftly, with a decisive Action Plan announced March 29, 2020. The majority of retailers, including our company-owned La-Z-Boy Furniture Galleries® stores, closed for at least the last four weeks of our quarter, and most closures extended into the first quarter of fiscal 2021. We temporarily closed the majority of our manufacturing operations, and managed all other expenses, including temporarily furloughing 70% of our workforce and dramatically reducing all other cash expenditures to preserve liquidity."

Darrow added, "As we have moved through this uncertain period and look to the future, we have remained agile and continued to make tough choices to align and strengthen our business with the new operating environment. We are pleased to have called back some 6,000 furloughed workers, who have eagerly returned or will return to work by July 1st. However, we also made the decision to permanently close our Newton, Mississippi manufacturing facility and reduce our global workforce by approximately 10%. We deeply regret the impact of our actions on affected employees, but these moves are in the best long-term interest of the company."

Darrow concluded, "Moving forward, furniture retailers and La-Z-Boy Furniture Galleries® stores have reopened and we are seeing strong early demand. Our manufacturing facilities have ramped from zero production at the end of April and are moving toward 80% of prior-year production as we head into July. While time will tell how these trends continue to evolve, with the inherent strengths of the La-Z-Boy brand and our broad base of retail customers, I have every confidence we will emerge with strength and have the potential for market share gains as the demand environment improves. I am proud of our company's performance for the year, including our quick response to the pandemic and the aggressive ramp up we have achieved since re-starting operations. With a philosophy of fiscal conservatism, we entered the pandemic period with a solid cash position, managed through the early stages of the crisis well, and still generated $164.2 million in cash from operations and returned $68.4 million to shareholders through dividends and share purchases."

Consolidated sales in the fourth quarter of fiscal 2020 decreased 19.1% to $367.3 million, due to the impact of COVID-19 on the last two months of the quarter. Consolidated GAAP operating margin decreased to 3.7% versus 8.2% in the prior-year quarter. Non-GAAP operating margin was 9.3% in the current-year quarter versus 8.6% in last year’s fourth quarter, reflecting increases in the Upholstery and Retail segments offset by a decline in the Casegoods segment. GAAP and Non-GAAP results for the fourth quarter include a 440 basis point benefit related to a rebate of previously paid China tariffs, partially offset by higher bad debt expense. The fiscal 2019 fourth-quarter GAAP and Non-GAAP results include a 40 basis point charge related to changes in employee benefit policies.

For the entire La-Z-Boy Furniture Galleries® network, after nine months of written same-store sales up 6.4%, written same-store sales for the La-Z-Boy Furniture Galleries® network decreased 35.0% in the fourth quarter as a result of the COVID-19 pandemic and related store closures.

For the quarter, sales in the company’s Upholstery segment decreased 21.7% to $253.3 million and GAAP operating margin increased to 11.8% from 11.5% in last year’s fourth quarter. Non-GAAP operating margin increased to 11.8% versus 11.6%. Operating margin increased primarily as a result of a one-time rebate of previously paid tariffs, mostly offset by higher bad debt expense, including a write-off for the Art Van





bankruptcy and a provision for potential credit losses in the COVID-19 environment. Also, during the quarter, SG&A spending was lower due to the company's COVID-19 Action Plan, but higher as a percent of sales due to the decline in sales related to the pandemic. In the Casegoods segment, sales decreased 19.7% to $21.4 million and operating margin was 1.9% compared with 9.1% in the prior-year period, primarily reflecting the impact of COVID-19.

Sales in the Retail segment decreased 8.0% to $139.7 million in the fourth quarter of fiscal 2020. GAAP operating margin for the Retail segment improved to 10.7% from 8.4% in last year’s fourth quarter. Non-GAAP operating margin increased to 10.8% in the current-year quarter from 8.5% in last year’s fourth quarter. Operating margin improvement was driven primarily by prior-period written sales delivered in the current quarter, and lower operating expenses related to the company's COVID-19 Action Plan, including compensation and advertising, due to closed stores. After a strong February start, on the core base of 152 company-owned stores in last year’s fourth quarter, delivered same-store sales declined 10.0% with the majority of stores closed for the last four weeks of the quarter, and many remaining closed into the first quarter of fiscal 2021.

Fiscal 2020 fourth-quarter sales for Joybird (reported in the Corporate & Other segment) decreased 29.6% to $15.4 million. Joybird posted a larger GAAP loss versus the prior-year quarter, primarily due to a $26.9 million non-cash pre-tax goodwill impairment charge, partially offset by the reversal of the Joybird contingent consideration liability valued at $7.9 million. La-Z-Boy continues to make improvements across the Joybird business model with the objective to balance investments in growth with bottom-line performance. However, the negative impact of COVID-19 tempered financial projections and the company concluded the fair value of future earn-out payments is zero and the carrying value of goodwill was partially impaired. As Joybird continues to hone its business model, it is expected to deliver value to the La-Z-Boy enterprise over the long term.

GAAP diluted EPS was $0.05 for the fiscal 2020 fourth quarter versus $0.03 in the prior-year quarter. Non-GAAP* diluted EPS was $0.49 versus $0.64 in last year’s fourth quarter.

Balance Sheet and Cash Flow

For the fourth quarter, the company generated $44.5 million in cash from operating activities. La-Z-Boy ended the quarter with $263.5 million in cash, cash equivalents, and restricted cash, including $75 million in cash proactively drawn on the company's credit facility to enhance liquidity in response to COVID-19, and $28.6 million in investments to enhance returns on cash compared with $131.8 million in cash, cash equivalents and restricted cash, and $31.5 million in investments to enhance returns on cash at the end of fiscal 2019. During the period, the company invested $10.6 million in the business through capital expenditures. The company paid $6.5 million in dividends and spent $8.0 million purchasing 0.3 million shares of stock in the open market under its existing authorized share purchase program during the fourth quarter. For the full fiscal 2020 year, the company paid $25.1 million in dividends and spent $43.4 million purchasing 1.4 million shares, leaving 4.5 million shares of purchase availability in the program.

*Non-GAAP amounts for the fiscal 2020 year exclude:
a non-cash pre-tax, non-tax-deductible goodwill impairment charge of $26.9 million, or $0.58 per diluted share
a non-cash pre-tax charge of $6.0 million, or $0.09 per diluted share, related to an impairment for one investment
a pre-tax purchase accounting net benefit related to acquisitions completed in prior periods totaling $1.4 million, or $0.07 per diluted share, with a $2.1 million benefit included in operating income and $0.7 million expense included in interest expense
pre-tax net benefit of $4.4 million, or $0.07 per diluted share, related to the company's supply chain optimization initiative, including the closure and sale of the company's Redlands, California upholstery manufacturing facility and relocation of its Newton, Mississippi leather cut-and-sew operations
pre-tax benefit of $1.9 million, or $0.03 per diluted share, related to the 2019 termination of the company's defined benefit pension plan






*Non-GAAP amounts for the full fiscal 2019 year exclude:
a non-cash pre-tax charge of $32.7 million, or $0.58 per diluted share, related to the termination of the company's defined benefit pension plan
pre-tax purchase accounting charges totaling $7.5 million, or $0.12 per diluted share, with $6.9 million included in operating income and $0.6 million included in interest expense

*Non-GAAP amounts for the fourth quarter of fiscal 2020 exclude:
a non-cash pre-tax, non-tax-deductible goodwill impairment charge of $26.9 million, or $0.58 per diluted share
a pre-tax purchase accounting net benefit related to acquisitions completed in prior periods totaling $5.9 million, or $0.14 per diluted share, with a $6.1 million benefit included in operating income and $0.2 million expense included in interest expense
pre-tax benefit of $0.1 million, or $0.00 per diluted share, related to the company’s supply chain optimization initiative

*Non-GAAP amounts for the fourth quarter of fiscal 2019 exclude:
a non-cash pre-tax charge of $32.7 million, or $0.58 per diluted share, related to the termination of the company's defined benefit pension plan
pre-tax purchase accounting charges of $2.0 million, or $0.03 per diluted share, with $1.8 million included in operating income and $0.2 million included in interest expense

Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating Non-GAAP measures used in this press release and a reconciliation to the applicable GAAP measure.

Conference Call

La-Z-Boy will hold a conference call with the investment community on Wednesday, June 24, 2020, at 8:30 a.m. eastern time. The toll-free dial-in number is 844.602.0380; international callers may use 862.298.0970.

The call will be webcast live, with corresponding slides, and archived on the Internet. It will be available at https://lazboy.gcs-web.com/. 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 877.481.4010 and to international callers at 919.882.2331. Enter Replay Passcode: 35012. The webcast replay will be available for one year.

Cautionary Note Regarding Forward-Looking Statements

This news release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, business, and industry and the effect of the novel coronavirus (“COVID-19”) pandemic on our business operations and financial results.

The forward-looking statements in this press release are based on certain assumptions and currently available information and are subject to various risks and uncertainties, many of which are unforeseeable and beyond our control. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our fiscal 2020 Annual Report on Form 10-K and other factors identified in our reports filed with the Securities and Exchange Commission. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information future events 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: https://lazboy.gcs-web.com/financial-information/sec-filings. 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: https://lazboy.gcs-web.com/.

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 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 154 of the 354 La-Z-Boy Furniture Galleries® stores. Joybird is an e-commerce retailer and manufacturer of upholstered furniture.
The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 354 stand-alone La-Z-Boy Furniture Galleries® stores and 555 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/.

Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), this press release also includes Non-GAAP financial measures. Management uses these Non-GAAP financial measures when assessing our ongoing performance. This press release contains references to Non-GAAP operating income, Non-GAAP operating margin, Non-GAAP income before income taxes, Non-GAAP net income attributable to La-Z-Boy Incorporated and Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share, each of which exclude goodwill impairment charges, purchase accounting charges, charges for our supply chain optimization initiative, an impairment charge for one investment and impacts from terminating the company's defined benefit pension plan. The purchase accounting charges may include the amortization of intangible assets, incremental expense upon the sale of inventory acquired at fair value, amortization of employee retention agreements, fair value adjustments of future cash payments recorded as interest expense, and adjustments to the fair value of contingent consideration. The charges for our supply chain optimization initiative may include severance costs, accelerated depreciation expense, costs to relocate equipment and inventory, as well as other costs related to the closure, relocation and sale of certain manufacturing operations. These Non-GAAP financial measures are not meant to be considered superior to or a substitute for La-Z-Boy Incorporated’s results of operations prepared in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of such Non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables.

Management believes that presenting certain Non-GAAP financial measures will help investors understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. Management excludes goodwill impairment charges and purchase accounting charges because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions consummated and the success with which we operate the businesses acquired. While the company has a history of acquisition activity, it does not acquire businesses on a predictable cycle, and the impact of goodwill impairment charges and purchase accounting charges is unique to each acquisition and can vary significantly from acquisition to acquisition. Similarly, the charges related to the company’s supply chain optimization initiative are dependent on the timing, size, number and nature of the operations being moved or closed, and the charges may not be incurred on a predictable cycle. Management also excludes impacts from the termination of the company’s defined benefit pension plan and an impairment charge for one investment when assessing the company’s operating and financial performance due to the one-time nature of the transactions. Management believes that exclusion of these items facilitates more consistent comparisons of the company’s operating results over time. Where applicable, the accompanying





“Reconciliation of GAAP to Non-GAAP Financial Measures” tables present the excluded items net of tax calculated using the effective tax rate from operations for the period in which the adjustment is presented, except for the non-cash pension termination charge, which had a specific tax impact due to the one-time nature of the transaction, the non-tax deductible goodwill impairment charge and the adjustment to the fair value of contingent consideration.


# # #






LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
 
 
Quarter Ended
 
Year Ended
(Unaudited, amounts in thousands, except per share data)
 
4/25/20
 
4/27/19
 
4/25/20
 
4/27/19
Sales
 
$
367,281

 
$
453,791

 
$
1,703,982

 
$
1,745,401

Cost of sales
 
195,575

 
264,018

 
982,537

 
1,042,831

Gross profit
 
171,706

 
189,773

 
721,445

 
702,570

Selling, general and administrative expense
 
131,418

 
152,602

 
575,821

 
572,896

Goodwill impairment
 
26,862

 

 
26,862

 

Operating income 
 
13,426

 
37,171

 
118,762

 
129,674

Interest expense
 
(400
)
 
(399
)
 
(1,291
)
 
(1,542
)
Interest income
 
692

 
569

 
2,785

 
2,103

Pension termination refund (charge)
 

 
(32,671
)
 
1,900

 
(32,671
)
Other income (expense), net
 
307

 
(191
)
 
(6,983
)
 
(2,237
)
Income before income taxes
 
14,025

 
4,479

 
115,173

 
95,327

Income tax expense
 
10,649

 
2,812

 
36,189

 
25,186

Net income
 
3,376

 
1,667

 
78,984

 
70,141

Net income attributable to noncontrolling interests
 
(1,081
)
 
(139
)
 
(1,515
)
 
(1,567
)
Net income attributable to La-Z-Boy Incorporated
 
$
2,295

 
$
1,528

 
$
77,469

 
$
68,574

 
 
 
 
 
 
 
 
 
Basic weighted average common shares
 
45,962

 
46,889

 
46,399

 
46,828

Basic net income attributable to La-Z-Boy Incorporated per share
 
$
0.05

 
$
0.03

 
$
1.67

 
$
1.46

 
 
 
 
 
 
 
 
 
Diluted weighted average common shares
 
46,157

 
47,369

 
46,736

 
47,333

Diluted net income attributable to La-Z-Boy Incorporated per share
 
$
0.05

 
$
0.03

 
$
1.66

 
$
1.44







LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Unaudited, amounts in thousands, except par value)
 
4/25/20
 
4/27/19
Current assets
 
 
 
 
Cash and equivalents
 
$
261,553

 
$
129,819

Restricted cash
 
1,975

 
1,968

Receivables, net of allowance of $7,541 at 4/25/20 and $2,180 at 4/27/19
 
99,351

 
143,288

Inventories, net
 
181,643

 
196,899

Other current assets
 
81,804

 
69,144

Total current assets
 
626,326

 
541,118

Property, plant and equipment, net
 
214,767

 
200,523

Goodwill
 
161,017

 
185,867

Other intangible assets, net
 
28,653

 
29,907

Deferred income taxes – long-term
 
20,839

 
20,670

Right of use lease asset
 
318,647

 

Other long-term assets, net
 
64,640

 
81,705

Total assets
 
$
1,434,889

 
$
1,059,790

 
 
 
 
 
Current liabilities
 
 
 
 
Short-term borrowings
 
$
75,000

 
$

Current portion of long-term debt
 

 
180

Accounts payable
 
55,511

 
65,365

Lease liability, short-term
 
64,376

 

Accrued expenses and other current liabilities
 
155,282

 
173,091

Total current liabilities
 
350,169

 
238,636

Long-term debt
 

 
19

Lease liability, long-term
 
270,162

 

Other long-term liabilities
 
98,252

 
124,159

Shareholders' equity
 
 
 
 
Preferred shares – 5,000 authorized; none issued
 

 

Common shares, $1 par value – 150,000 authorized; 45,857 outstanding at 4/25/20 and 46,955 outstanding at 4/27/19
 
45,857

 
46,955

Capital in excess of par value
 
318,215

 
313,168

Retained earnings
 
343,633

 
325,847

Accumulated other comprehensive loss
 
(6,952
)
 
(3,462
)
Total La-Z-Boy Incorporated shareholders' equity
 
700,753

 
682,508

Noncontrolling interests
 
15,553

 
14,468

Total equity
 
716,306

 
696,976

Total liabilities and equity
 
$
1,434,889

 
$
1,059,790


LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
Year Ended
(Unaudited, amounts in thousands)
 
4/25/20
 
4/27/19
Cash flows from operating activities
 
 
 
 
Net income
 
$
78,984

 
$
70,141

Adjustments to reconcile net income to cash provided by operating activities
 
 
 
 
Gain on disposal of assets
 
(10,068
)
 
(325
)
Gain on sale of investments
 
(693
)
 
(656
)
Change in deferred taxes
 
719

 
(1,668
)
Provision for doubtful accounts
 
13,383

 
502

Depreciation and amortization
 
31,192

 
31,147

Equity-based compensation expense
 
8,371

 
10,981

Change in right-of use lease asset
 
67,673

 

Goodwill impairment
 
26,862

 

Pension termination (refund)/charge
 
(1,900
)
 
32,671

Pension plan contributions
 

 
(7,000
)
Change in receivables
 
29,686

 
7,195

Change in inventories
 
14,900

 
3,135

Change in other assets
 
7,039

 
(7,737
)
Change in payables
 
(9,913
)
 
(2,388
)
Change in lease liabilities
 
(66,238
)
 

Change in other liabilities
 
(25,755
)
 
14,747

Net cash provided by operating activities
 
164,242

 
150,745

 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Proceeds from disposals of assets
 
11,273

 
1,941

Proceeds from insurance
 
1,080

 
184

Capital expenditures
 
(46,035
)
 
(48,433
)
Purchases of investments
 
(37,477
)
 
(20,698
)
Proceeds from sales of investments
 
37,244

 
20,944

Acquisitions, net of cash acquired
 
(6,850
)
 
(76,505
)
Net cash used for investing activities
 
(40,765
)
 
(122,567
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Net proceeds from credit facility
 
75,000

 

Payments on debt and finance lease liabilities
 
(161
)
 
(223
)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes
 
3,029

 
13,901

Purchases of common stock
 
(43,369
)
 
(22,957
)
Dividends paid
 
(25,091
)
 
(23,508
)
Net cash provided by (used for) financing activities
 
9,408

 
(32,787
)
 
 
 
 
 
Effect of exchange rate changes on cash and equivalents
 
(1,144
)
 
(475
)
Change in cash, cash equivalents and restricted cash
 
131,741

 
(5,084
)
Cash, cash equivalents and restricted cash at beginning of period
 
131,787

 
136,871

Cash, cash equivalents and restricted cash at end of period
 
$
263,528

 
$
131,787

 
 
 
 
 
Supplemental disclosure of non-cash investing activities
 
 
 
 
Capital expenditures included in payables
 
$
3,528

 
$
3,250







LA-Z-BOY INCORPORATED
SEGMENT INFORMATION
 
 
Quarter Ended
 
Year Ended
(Unaudited, amounts in thousands)
 
4/25/20
 
4/27/19
 
4/25/20
 
4/27/19
Sales
 
 
 
 
 
 
 
 
Upholstery segment:
 
 
 
 
 
 
 
 
Sales to external customers
 
$
194,377

 
$
257,388

 
$
941,228

 
$
1,016,957

Intersegment sales
 
58,915

 
65,915

 
263,031

 
251,285

Upholstery segment sales
 
253,292

 
323,303

 
1,204,259

 
1,268,242

 
 
 
 
 
 
 
 
 
Casegoods segment:
 
 
 
 
 
 
 
 
Sales to external customers
 
16,841

 
21,903

 
85,402

 
95,677

Intersegment sales
 
4,554

 
4,742

 
20,633

 
18,796

Casegoods segment sales
 
21,395

 
26,645

 
106,035

 
114,473

 
 
 
 
 
 
 
 
 
Retail segment sales
 
139,660

 
151,870

 
598,554

 
570,201

 
 
 
 
 
 
 
 
 
Corporate and Other:
 
 
 
 
 
 
 
 
Sales to external customers
 
16,403

 
22,630

 
78,798

 
62,566

Intersegment sales
 
2,157

 
2,290

 
10,294

 
11,446

Corporate and Other sales
 
18,560

 
24,920

 
89,092

 
74,012

 
 
 
 
 
 
 
 
 
Eliminations
 
(65,626
)
 
(72,947
)
 
(293,958
)
 
(281,527
)
  Consolidated sales
 
$
367,281

 
$
453,791

 
$
1,703,982

 
$
1,745,401

 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
 
 
 
 
 
 
 
Upholstery segment
 
$
29,832

 
$
37,304

 
$
134,691

 
$
127,906

Casegoods segment
 
413

 
2,416

 
7,749

 
12,589

Retail segment
 
14,984

 
12,743

 
48,256

 
37,922

Corporate and Other
 
(31,803
)
 
(15,292
)
 
(71,934
)
 
(48,743
)
  Consolidated operating income
 
$
13,426

 
$
37,171

 
$
118,762

 
$
129,674







LA-Z-BOY INCORPORATED
UNAUDITED QUARTERLY FINANCIAL DATA

Fiscal 2020
Fiscal Quarter Ended
 
(13 weeks)
 
(13 weeks)
 
(13 weeks)
 
(13 weeks)
(Amounts in thousands, except per share data)
 
7/27/2019
 
10/26/2019
 
1/25/2020
 
4/25/2020
Sales
 
$
413,633

 
$
447,212

 
$
475,856

 
$
367,281

Cost of sales
 
245,921

 
264,823

 
276,218

 
195,575

Gross profit
 
167,712

 
182,389

 
199,638

 
171,706

Selling, general and administrative expense
 
144,290

 
152,788

 
147,325

 
131,418

Goodwill impairment
 

 

 

 
26,862

Operating income
 
23,422

 
29,601

 
52,313

 
13,426

Interest expense
 
(318
)
 
(308
)
 
(265
)
 
(400
)
Interest income
 
727

 
522

 
844

 
692

Pension termination refund
 

 
1,900

 

 

Other income (expense), net
 
(760
)
 
(532
)
 
(5,998
)
 
307

Income before income taxes
 
23,071

 
31,183

 
46,894

 
14,025

Income tax expense
 
5,083

 
8,279

 
12,178

 
10,649

Net income
 
17,988

 
22,904

 
34,716

 
3,376

Net income attributable to noncontrolling interests
 
81

 
(311
)
 
(204
)
 
(1,081
)
Net income attributable to La-Z-Boy Incorporated
 
$
18,069

 
$
22,593

 
$
34,512

 
$
2,295

Diluted weighted average common shares
 
47,125

 
46,879

 
46,584

 
46,157

Diluted net income attributable to La-Z-Boy Incorporated per share
 
$
0.38

 
$
0.48

 
$
0.74

 
$
0.05

Fiscal 2019
Fiscal Quarter Ended
 
(13 weeks)
 
(13 weeks)
 
(13 weeks)
 
(13 weeks)
(Amounts in thousands, except per share data)
 
7/28/2018
 
10/27/2018
 
1/26/2019
 
4/27/2019
Sales
 
$
384,695

 
$
439,333

 
$
467,582

 
$
453,791

Cost of sales
 
236,173

 
264,928

 
277,712

 
264,018

Gross profit
 
148,522

 
174,405

 
189,870

 
189,773

Selling, general and administrative expense
 
125,362

 
145,905

 
149,027

 
152,602

Operating income
 
23,160

 
28,500

 
40,843

 
37,171

Interest expense
 
(104
)
 
(501
)
 
(538
)
 
(399
)
Interest income
 
602

 
392

 
540

 
569

Pension termination charge
 

 

 

 
(32,671
)
Other income (expense), net
 
892

 
(1,997
)
 
(941
)
 
(191
)
Income before income taxes
 
24,550

 
26,394

 
39,904

 
4,479

Income tax expense
 
5,599

 
6,045

 
10,730

 
2,812

Net income
 
18,951

 
20,349

 
29,174

 
1,667

Net income attributable to noncontrolling interests
 
(648
)
 
(337
)
 
(443
)
 
(139
)
Net income attributable to La-Z-Boy Incorporated
 
$
18,303

 
$
20,012

 
$
28,731

 
$
1,528

Diluted weighted average common shares
 
47,161

 
47,259

 
47,091

 
47,369

Diluted net income attributable to La-Z-Boy Incorporated per share
 
$
0.39

 
$
0.42

 
$
0.61

 
$
0.03


    










LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 
Quarter Ended
 
Year Ended
(Amounts in thousands, except per share data)
 
4/25/20
 
4/27/19
 
4/25/20
 
4/27/19
GAAP gross profit
 
$
171,706

 
$
189,773

 
$
721,445

 
$
702,570

Add back: Purchase accounting charges - incremental expense upon the sale of inventory acquired at fair value
 
138

 
175

 
541

 
3,086

   Add back: Supply chain optimization initiative charges
 
95

 

 
5,386

 

Non-GAAP gross profit
 
$
171,939

 
$
189,948

 
$
727,372

 
$
705,656

 
 
 
 
 
 
 
 
 
GAAP SG&A
 
$
131,418

 
$
152,602

 
$
575,821

 
$
572,896

Less: Purchase accounting (charges) gains - adjustment to fair value of contingent consideration and amortization of intangible assets and retention agreements
 
6,240

 
(1,594
)
 
2,663

 
(3,831
)
Add back: Supply chain optimization initiative gain on sale
 

 

 
9,745

 

Non-GAAP SG&A
 
$
137,658

 
$
151,008

 
$
588,229

 
$
569,065

 
 
 
 
 
 
 
 
 
GAAP operating income
 
$
13,426

 
$
37,171

 
$
118,762

 
$
129,674

Add back: Purchase accounting charges (gains)
 
(6,102
)
 
1,769

 
(2,122
)
 
6,917

Less: Supply chain optimization initiative gain on sale and charges
 
95

 

 
(4,359
)
 

Add back: Goodwill impairment
 
26,862

 

 
26,862

 

Non-GAAP operating income
 
$
34,281

 
$
38,940

 
$
139,143

 
$
136,591

 
 
 
 
 
 
 
 
 
GAAP income before income taxes
 
$
14,025

 
$
4,479

 
$
115,173

 
$
95,327

Add back: Purchase accounting charges (gains) recorded as part of gross profit, SG&A, and interest expense
 
(5,933
)
 
1,959

 
(1,428
)
 
7,486

Less: Supply chain optimization initiative gain on sale and charges
 
95

 

 
(4,359
)
 

Add back: Goodwill impairment
 
26,862

 

 
26,862

 

Add back: Investment impairment
 

 

 
6,000

 

Less: Pension termination (refund) charge
 

 
32,671

 
(1,900
)
 
32,671

Non-GAAP income before income taxes
 
$
35,049

 
$
39,109

 
$
140,348

 
$
135,484

 
 
 
 
 
 
 
 
 
GAAP net income attributable to La-Z-Boy Incorporated
 
$
2,295

 
$
1,528

 
$
77,469

 
$
68,574

Add back: Purchase accounting charges (gains) recorded as part of gross profit, SG&A, and interest expense
 
(5,933
)
 
1,959

 
(1,428
)
 
7,486

   Less: Tax effect of purchase accounting
 
(635
)
 
(335
)
 
(1,746
)
 
(1,356
)
Less: Supply chain optimization initiative gain on sale and charges
 
95

 

 
(4,359
)
 

Add back: Tax effect of supply chain optimization initiative gain on sale and charges
 
(30
)
 

 
1,176

 

Add back: Goodwill impairment
 
26,862

 

 
26,862

 

Add back: Investment impairment
 

 

 
6,000

 

   Less: Tax effect of investment impairment
 

 

 
(1,618
)
 

Less: Pension termination (refund) charge
 

 
32,671

 
(1,900
)
 
32,671

Add back: Tax effect of pension termination (refund) charge
 

 
(5,580
)
 
513

 
(5,919
)
Non-GAAP net income attributable to La-Z-Boy Incorporated
 
$
22,654

 
$
30,243

 
$
100,969

 
$
101,456

 
 
 
 
 
 
 
 
 
GAAP net income attributable to La-Z-Boy Incorporated per diluted share
 
$
0.05

 
$
0.03

 
$
1.66

 
$
1.44

Add back: Purchase accounting charges (gains), net of tax, per share
 
(0.14
)
 
0.03

 
(0.07
)
 
0.12

Less: Supply chain optimization initiative gain on sale and charges, net of tax, per share
 

 

 
(0.07
)
 

Add back: Goodwill impairment, net of tax, per share
 
0.58

 

 
0.58

 

Add back: Investment impairment, net of tax, per share
 

 

 
0.09

 

Less: Pension termination (refund) charge, net of tax, per share
 

 
0.58

 
(0.03
)
 
0.58

Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share
 
$
0.49

 
$
0.64

 
$
2.16

 
$
2.14






LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
SEGMENT INFORMATION
 
 
Quarter Ended
(Amounts in thousands)
 
4/25/20
 
% of sales
 
4/27/19
 
% of sales
GAAP operating income (loss)
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
29,832

 
11.8%
 
$
37,304

 
11.5%
   Casegoods segment
 
413

 
1.9%
 
2,416

 
9.1%
   Retail segment
 
14,984

 
10.7%
 
12,743

 
8.4%
   Corporate and Other
 
(31,803
)
 
N/M
 
(15,292
)
 
N/M
      Consolidated GAAP operating income
 
$
13,426

 
3.7%
 
$
37,171

 
8.2%
 
 
 
 
 
 
 
 
 
Non-GAAP items affecting operating income
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
149

 
 
 
$
57

 
 
   Casegoods segment
 

 
 
 

 
 
   Retail segment
 
138

 
 
 
175

 
 
   Corporate and Other
 
20,568

 
 
 
1,537

 
 
      Consolidated Non-GAAP items affecting operating income
 
$
20,855

 
 
 
$
1,769

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating income (loss)
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
29,981

 
11.8%
 
$
37,361

 
11.6%
   Casegoods segment
 
413

 
1.9%
 
2,416

 
9.1%
   Retail segment
 
15,122

 
10.8%
 
12,918

 
8.5%
   Corporate and Other
 
(11,235
)
 
N/M
 
(13,755
)
 
N/M
      Consolidated Non-GAAP operating income
 
$
34,281

 
9.3%
 
$
38,940

 
8.6%
 
 
 
 
 
 
 
 
 
N/M - Not Meaningful
 
 
 
 
 
 
 
 
 
 
Year Ended
(Amounts in thousands)
 
4/25/20
 
% of sales
 
4/27/19
 
% of sales
GAAP operating income (loss)
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
134,691

 
11.2%
 
$
127,906

 
10.1%
   Casegoods segment
 
7,749

 
7.3%
 
12,589

 
11.0%
   Retail segment
 
48,256

 
8.1%
 
37,922

 
6.7%
   Corporate and Other
 
(71,934
)
 
N/M
 
(48,743
)
 
N/M
      Consolidated GAAP operating income
 
$
118,762

 
7.0%
 
$
129,674

 
7.4%
 
 
 
 
 
 
 
 
 
Non-GAAP items affecting operating income
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
(4,139
)
 
 
 
$
20

 
 
   Casegoods segment
 

 
 
 

 
 
   Retail segment
 
541

 
 
 
1,683

 
 
   Corporate and Other
 
23,979

 
 
 
5,214

 
 
      Consolidated Non-GAAP items affecting operating income
 
$
20,381

 
 
 
$
6,917

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating income (loss)
 
 
 
 
 
 
 
 
   Upholstery segment
 
$
130,552

 
10.8%
 
$
127,926

 
10.1%
   Casegoods segment
 
7,749

 
7.3%
 
12,589

 
11.0%
   Retail segment
 
48,797

 
8.2%
 
39,605

 
6.9%
   Corporate and Other
 
(47,955
)
 
N/M
 
(43,529
)
 
N/M
      Consolidated Non-GAAP operating income
 
$
139,143

 
8.2%
 
$
136,591

 
7.8%
 
 
 
 
 
 
 
 
 
N/M - Not Meaningful