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
November 3, 1999
(Date of Report (Date of Earliest Event Reported))
LA-Z-BOY INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Michigan
(State or Other Jurisdiction of Incorporation)
1-9656
(Commission File Number)
38-0751137
(I.R.S. Employer Identification No.)
1284 N. Telegraph Road
Monroe, Michigan 48162
(Address of Principal Executive Offices, Including Zip Code)
(734) 242-1444
(Registrant's Telephone Number, Including Area Code)
[not applicable]
(Former Name or Former Address If Changed Since Last Report
1
ITEM 5. OTHER EVENTS.
On November 3, 1999, La-Z-Boy issued a news release reporting its second quarter
of fiscal year 2000 results of operations. The News Release is attached hereto
as Exhibit 99.1 and the Financial Information Release to be submitted to stock
analysts and others in the investor relations community and posted on the
Company's website at www.la-z-boy.com is attached as Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits
99.1 News Release dated November 3, 1999.
99.2 Financial Information Release to be submitted to stock analysts
and others in the investor relations community and posted on the
Company's website (www.la-z-boy.com) on November 3, 1999.
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
Date: November 3, 1999 /s/Gene M. Hardy
-------------------------
Gene M. Hardy
Secretary and Treasurer
2
News Release
LA-Z-BOY, INC. REPORTS STRONG
SECOND QUARTER RESULTS
NYSE & PCX: LZB Contact: Gene Hardy (734) 241-4306
MONROE, MI., November 3, 1999: In the second quarter of its fiscal year
2000, La-Z-Boy Incorporated again reached record levels of sales and profits.
La-Z-Boy is one of the world's principal furniture producers.
Financial Details
For the second quarter ended October 23, 1999, sales reached $387.7
million, up almost 16% from last year's second quarter of $334.8 million. Net
income was up over 26% to $23.3 million vs. $18.4 million. Diluted earnings per
share increased 26% to $0.44 from $0.35.
For the six months ended October 23, 1999, sales reached $709.4
million, up 18% from last year's $603.7 million. Net income was up 43% to
$36.6 million vs. $25.6 million. Diluted earnings per share was up 44% to
$0.69 vs. $0.48.
President Comments
"Our sales continue to improve at a rate meeting our highest expectations,"
according to company President and COO, Gerald L. Kiser. "Dealer feedback from
the recently completed furniture market in High Point, NC reinforced our
positive near term sales outlook."
Marketing
La-Z-Boy's Oasis Recliner is receiving worldwide publicity. Reports in
media ranging from newspapers to magazines to BBC radio and ESPN point to this
chair's most novel feature: a built in cooler in the left armrest that holds a
six-pack of 12-ounce cans. This La-Z-Boy convenience feature, plus the chair's
ten-motor massage with heat, and an optional phone with caller ID and 99-number
speed dial have reporters calling Oasis "the ultimate sports fan recliner."
At the October international furniture market, the Oasis was rolled out in a
collection of 19 leather-like coverings that allow consumers to choose recliners
upholstered in their favorite team colors.
Wendall & Al, the lovable La-Z-Boy raccoons, were back on primetime
television this fall singing the praises of La-Z-Boy comfort through the classic
"My Fair Lady" tune, "Wouldn't It Be Loverly." This new commercial, the first
ever to use a Lerner & Lowe showtune, reached millions of viewers with its
uniquely appropriate lyrics of..."all I want is a room somewhere...far away from
the cold night air...with one enormous chair...."
How to Get More Information
A financial information release containing an income statement, balance
sheet and additional management discussion is available now at the Company's
internet site (www.la-z-boy.com).
Forward-Looking Information
Any forward-looking statements contained in this report represent
management's current expectations based on present information and current
assumptions. These statements can be identified by the use of forward-looking
terminology such as "expects" or "outlook". Forward-looking statements are
inherently subject to risks and uncertainties. Actual results could differ
materially from those which are anticipated or projected due to a number of
factors. These factors include, but are not limited to, anticipated growth in
sales; success of product introductions; fluctuations of interest rates; changes
in consumer confidence/demand and other risks and factors identified from time
to time in the Company's reports.
3
11/3/99 Page 1 of 4
La-Z-Boy Incorporated Financial Information Release
CONSOLIDATED STATEMENT OF INCOME
(Amounts in thousands, except per share data)
SECOND QUARTER ENDED
------------------------------------------------
(UNAUDITED)
------------------- Percent of Sales
Oct. 23, Oct. 24, % Over --------------
1999 1998 (Under) 1999 1998
-------- -------- -------- ----- -----
Sales $387,736 $334,831 16% 100.0% 100.0%
Cost of sales 286,520 245,062 17% 73.9% 73.2%
-------- -------- -------- ----- -----
Gross profit 101,216 89,769 13% 26.1% 26.8%
S, G & A 62,920 59,510 6% 16.2% 17.8%
-------- -------- -------- ----- -----
Operating profit 38,296 30,259 27% 9.9% 9.0%
Interest expense 1,866 1,164 60% 0.5% 0.3%
Interest income 610 471 30% 0.2% 0.1%
Other income 927 865 7% 0.2% 0.3%
-------- -------- -------- ----- -----
Pretax income 37,967 30,431 25% 9.8% 9.1%
Income tax expense 14,697 11,984 23% 38.7% * 39.4% *
-------- -------- -------- ----- -----
Net income $ 23,270 $ 18,447 26% 6.0% 5.5%
======== ======== ======== ===== =====
Diluted average shares 52,625 53,425 -1%
Diluted EPS $0.44 $0.35 26%
Basic EPS $0.44 $0.35 26%
Dividends per share $0.08 $0.08 0%
SIX MONTHS ENDED
--------------------------------------------------
(UNAUDITED)
------------------- Percent of Sales
Oct. 23, Oct. 24, % Over ----------------
1999 1998 (Under) 1999 1998
-------- -------- -------- ------- -----
Sales $709,395 $603,711 18% 100.0% 100.0%
Cost of sales 527,546 450,493 17% 74.4% 74.6%
-------- -------- -------- ------- -----
Gross profit 181,849 153,218 19% 25.6% 25.4%
S, G & A 121,896 110,798 10% 17.1% 18.4%
-------- -------- -------- ------- -----
Operating profit 59,953 42,420 41% 8.5% 7.0%
Interest expense 3,305 2,351 41% 0.5% 0.4%
Interest income 1,206 1,048 15% 0.2% 0.2%
Other income 1,708 1,220 40% 0.2% 0.2%
-------- -------- -------- ------- -----
Pretax income 59,562 42,337 41% 8.4% 7.0%
Income tax expense 22,999 16,706 38% 38.6% * 39.5% *
-------- -------- -------- ------- -----
Net income $ 36,563 $ 25,631 43% 5.2% 4.2%
======== ======== ======== ======= =====
Diluted average shares 52,610 53,543 -2%
Diluted EPS $0.69 $0.48 44%
Basic EPS $0.70 $0.48 46%
Dividends per share $0.16 $0.15 7%
* As a percent of pretax income, not sales.
4
11/3/99 Page 2 of 4
La-Z-Boy Incorporated Financial Information Release
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except par value)
Unaudited Increase
--------------------- (Decrease) Audited
Oct. 23, Oct. 24, -------------------- Apr. 24,
1999 1998 Dollars Percent 1999
--------- --------- -------- ------- ---------
Current assets
Cash & equivalents $ 12,769 $ 22,721 ($ 9,952) -44% $ 33,550
Receivables 281,651 256,328 25,323 10% 265,157
Inventories
Raw materials 56,139 47,847 8,292 17% 47,197
Work-in-process 43,354 39,118 4,236 11% 37,447
Finished goods 43,388 35,627 7,761 22% 34,920
--------- --------- --------- -------- ---------
FIFO inventories 142,881 122,592 20,289 17% 119,564
Excess of FIFO over LIFO (23,303) (22,712) (591) -3% (23,053)
--------- --------- --------- -------- ---------
Total inventories 119,578 99,880 19,698 20% 96,511
Deferred income taxes 22,660 19,396 3,264 17% 20,028
Other current assets 11,510 5,889 5,621 95% 10,342
--------- --------- --------- -------- ---------
Total current assets 448,168 404,214 43,954 11% 425,588
Property, plant & equipment, net 143,006 119,660 23,346 20% 125,989
Goodwill 89,271 48,017 41,254 86% 46,985
Other long-term assets 39,719 29,847 9,872 33% 31,230
--------- --------- --------- -------- ---------
Total assets $ 720,164 $ 601,738 $ 118,426 20% $ 629,792
========= ========= ========= ======== =========
Current liabilities
Current portion - long-term debt $ 1,585 $ 4,726 ($ 3,141) -66% $ 2,001
Current portion - capital leases 844 1,099 (255) -23% 784
Accounts payable 59,506 50,693 8,813 17% 45,419
Payroll/other compensation 44,641 39,063 5,578 14% 53,697
Income taxes 5,818 6,885 (1,067) -15% 4,103
Other current liabilities 29,393 26,491 2,902 11% 26,424
--------- --------- --------- -------- ---------
Total current liabilities 141,787 128,957 12,830 10% 132,428
Long-term debt 119,594 63,319 56,275 89% 62,469
Capital leases 1,485 300 1,185 395% 219
Deferred income taxes 4,995 5,454 (459) -8% 5,697
Other long-term liabilities 14,554 11,912 2,642 22% 14,064
Commitments & contingencies
Shareholders' equity
Common shares, $1 par 52,143 52,909 (766) -1% 52,340
Capital in excess of par 32,543 30,328 2,215 7% 31,582
Retained earnings 354,795 310,417 44,378 14% 332,934
Currency translation (1,732) (1,858) 126 7% (1,941)
--------- --------- --------- -------- ---------
Total shareholders' equity 437,749 391,796 45,953 12% 414,915
Total liabilities and
--------- --------- --------- -------- ---------
shareholders' equity $720,164 $ 601,738 $ 118,426 20% $629,792
========= ========= ========= ======== =========
5
11/3/99 La-Z-Boy Incorporated Financial Information Release Page 3 of 4
COMMENTS AND ANALYSIS
Pending Acquisitions:
As previously announced, on September 28, 1999, La-Z-Boy and LADD
Furniture, Inc. entered into a merger agreement, pursuant to which LADD would
become a wholly-owned subsidiary of La-Z-Boy. This transaction is subject to
regulatory approval and approval by LADD's shareholders and, if approved, is
expected to be completed during the current fiscal quarter. The Company's
acquisition of Alexvale Furniture, Inc. is still pending and expected to close
during the current quarter. Both transactions are to be accounted for as
purchases.
Closing the pending acquisitions, particularly the LADD transaction, would
significantly affect the Company's financial results going forward. The
discussion that follows focuses primarily on La-Z-Boy's historical financial
results and does not include any discussion of those potential effects. More
information concerning the acquisitions will be provided in the proxy
statement/prospectus that will be sent to LADD shareholders.
Sales:
Sales in the second quarter of fiscal year 2000 were up 16% over the prior
year's second quarter. Roughly half of the 16% sales increase was caused by the
acquisition of Bauhaus, which occurred in June, 1999. The remaining increase was
spread across both the Residential upholstery and Residential casegoods
segments.
Gross profit margin:
The gross profit margin decreased to 26.1% of sales from 26.8% of sales in
last year's second quarter on a 16% increase in sales and a 14% increase in unit
volume. Higher labor and overhead costs were incurred during the quarter as a
result of improving plant floor layout to accommodate additional product lines
and implement lean manufacturing processes. While causing short-term disruptions
and increased plant labor and overhead costs, these changes are expected to
generate long-term production capacity without the need for additional
facilities. In addition, significant employee training costs for new hires,
especially in sewing and upholstery, were incurred. It has become increasingly
difficult to acquire and retain labor in a low unemployment environment. These
labor and overhead cost trends are expected to continue into the third quarter,
but at a lesser degree than experienced in the second quarter.
The gross profit margin was also somewhat impacted by an increased cost for
plywood and cardboard packaging during the second quarter, which was only
partially offset by a decreased cost for leather. Costs for plywood in the third
quarter are expected to decrease and costs for cardboard packaging are expected
to increase.
Selling, general & administrative:
Second quarter selling, general & administrative expenses decreased to
16.2% of sales vs. 17.8% last year. Information technology, bad debt and selling
expenses as a percent of sales were below the prior year.
Interest expense:
Second quarter interest expense as a percent of sales increased from 0.3%
last year to 0.5% due to financing obtained in the first quarter for the
acquisition of Bauhaus.
Income tax expense:
Income tax expense as a percent of pretax income declined to 38.7% from
39.4% last year. The Canadian division results for the second quarter were
favorable compared to last year's second quarter. Since this division has net
operating loss carryforwards to offset the income, this resulted in a decrease
to the second quarter's effective tax rate.
Forward-looking information:
Any forward-looking statements contained in this report represent
management's current expectations based on present information and current
assumptions. These statements can be identified by the use of forward-looking
terminology such as "expected" or "trend". Forward-looking statements are
inherently subject to risks and uncertainties. Actual results could differ
materially from those which are anticipated or projected due to a number of
factors. These factors include, but are not limited to, anticipated growth in
sales; success of product introductions; fluctuations of interest rates; changes
in consumer confidence/demand and other risks and factors identified from time
to time in the Company's reports.
6