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
MAY 29, 2002
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(Date of Report (Date of Earliest Event Reported))
LA-Z-BOY INCORPORATED
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(Exact name of registrant as specified in its charter)
MICHIGAN 38-0751137
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1284 North Telegraph Road, Monroe, Michigan 48162-3390
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (734) 241-4414
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None
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Former name, former address and former fiscal year,if changed since last report.
Item 5. Other Events
La-Z-Boy announces fourth quarter and full year operating results.
Item 7. Financial Statements and Exhibits
99.1 Press Release
La-Z-Boy REPORTS BETTER-THAN-EXPECTED
FOURTH QUARTER AND FULL YEAR OPERATING RESULTS
MONROE MI, May 29, 2002 - La-Z-Boy Incorporated (NYSE, PCX: LZB) today reported
net income of $0.41 per diluted share for the three months ended April 27, 2002,
compared to $0.17 per share in the same quarter a year earlier. Prior to a
previously-announced $0.09 per share restructuring charge, earnings for the most
recent quarter were $0.50 per diluted share. This was above the $0.42 - $0.46
per share guidance range provided earlier by the company. Year-earlier fourth
quarter earnings, prior to an $0.11 restructuring charge, totaled $0.28 per
diluted share. Fourth quarter sales of $596 million were slightly ahead of the
prior year quarter's $593 million.
President and CEO Jerry Kiser said he was pleased with the strong improvement in
profitability achieved in the most recent quarter and the healthy sales gains
recorded by the company's mid-priced upholstery businesses. He said, "Sales
continued to strengthen across all of our residential product lines, while the
contract office, health care business and the hospitality sectors remain
challenging. Our recent trend of sequentially improving profit margins continued
in the latest quarter on a 'normalized' basis (excluding restructuring
expenses). Specifically, the normalized operating margin for the fourth quarter
rose to 8.6% from 6.9% in the prior quarter and 6.0% in the fourth quarter of
fiscal 2001. This was our best quarterly operating margin in 2 1/2 years, and a
direct reflection of the actions we have taken during the past year."
Further Kiser said, "We began our restructuring efforts at the end of fiscal
2001 and through a series of actions, we substantially downsized our domestic
manufacturing operations, primarily on the casegoods (wood furniture) side. In
total, this restructuring cut our domestic casegoods production capacity and our
casegoods manufacturing headcount by approximately 45% each. We also increased
our manufacturing flexibility through the conversion of several former
manufacturing facilities to import service centers, which will enable us to
blend a growing volume of imports with our domestic production. These actions
will allow us to remain competitive in this segment of the market while
providing quality, service and stylish product to the consumer at a value
price."
Net income for the fiscal year ended April 27, 2002, was $1.01 per diluted
share, compared to $1.13 a year earlier. Prior to restructuring charges of $0.22
in fiscal 2002 and $0.11 in fiscal 2001, and a $0.05 per share nonrecurring
insurance recovery gain in 2001, earnings per diluted share were $1.23 for
fiscal 2002 and $1.19 in fiscal 2001. Total sales for fiscal 2002 declined 4%,
to $2.154 billion. Kiser continued, "Excluding the Pilliod operations we
divested, our overall sales decline for the year was 2%. This is significantly
better than the recent calendar 2001 experience of the overall U.S. residential
furniture manufacturers, whose shipments dropped 10.2% and better than the top
25 U.S. residential furniture manufacturers who as a group saw their calendar
2001 sales decline 6.6%, according to the industry publication Furniture/Today.
For us, there is no question that the strength of our La-Z-Boy brand name, our
proprietary distribution system, progressive styling and our companies'
entrepreneurial spirit give us a significant advantage over our competition."
He continued, "We worked hard throughout the year at significantly lowering our
cost structure across the entire company. The cumulative effect of these moves
began to become evident in our numbers in the second half of our fiscal year, as
business conditions in our industry firmed up somewhat. We also instituted a
major organizational change last year, dividing the company into two reporting
groups - upholstery and casegoods - and hired or promoted a number of top notch
executives to the division head level within the two operating groups. With
these actions and a qualified, motivated team, La-Z-Boy Incorporated today is a
stronger, more competitive and better-positioned organization."
Business segment comments
Fourth quarter upholstery sales rose 11%, following a 7% gain in the previous
quarter, and increased 4% for the full year. The upholstery operating margin
rose to nearly 11% in the most recent quarter, from a 9% level in both the
previous quarter and the fourth quarter of fiscal 2001. Kiser noted that this
improvement was due in part to the continuing success of the La-Z-Boy Furniture
Galleries(R) store system, which enjoyed an overall same store sales gain of
13.2% for the three months ended April 2002. "We are encouraged by the initial
results of our updated Furniture Galleries store design concept," Kiser said,
"and a number of our other upholstery companies also enjoyed solid sales growth
in the year's final three months, as well."
Fourth quarter casegoods sales remained weaker than upholstery sales, declining
22% from a year earlier. Excluding Pilliod, which was divested effective
November 30, 2001, total casegoods sales were down 14% for the fourth quarter
and 15% for the full year. Kiser noted that despite this continuing sales
softness, our casegoods normalized operating margin (before restructuring
charges) rose to 5.3% in the fourth quarter, from 5.0% the prior quarter and
less than 2% a year earlier. "We regard this as encouraging," he said, "and we
fully expect our casegoods profitability to benefit significantly from our
previously announced downsizing moves later this fiscal year, as consumer
appetites for these larger ticket home furnishings revive."
Balance sheet improvements
Kiser added that during this difficult period, the company's total inventories
were reduced by $18 million in the fourth quarter and by $49 million for the
full year. He said strong cash flow enabled total debt to be reduced by $74
million during fiscal 2002, noting, "We ended fiscal 2002 with a
debt-to-capitalization ratio of 16.6%, down from 23.7% a year earlier, which
provides us with a great deal of financial flexibility." He noted another $31
million of cash flow was used to repurchase 1.2 million shares of La-Z-Boy
common stock during the fourth quarter, which brought the full year stock
repurchase activity to 1.6 million shares, at a total cost of $38 million. As of
April 27, 2002, La-Z-Boy still had 3.6 million shares remaining under its
current share repurchase authorization, Kiser said. The impact of these
repurchases to the quarter and full year's earnings was $0.01 per share.
Business outlook
Kiser concluded, "It seems clear at this point that our industry is in the early
phases of a long-term recovery. Assuming that U.S. consumer confidence continues
to strengthen, we expect the coming year to be a significantly improved one for
both our industry and our company. While the casegoods sector of our business
remains sluggish, we anticipate that continuing growth in the upholstery segment
will produce a low single digit overall sales increase for our seasonally low
July quarter and we expect earnings for the July quarter in the range of
$0.22-$0.27 per diluted share, compared with $0.05 a year ago. And, if casegoods
demand rebounds in the second half as anticipated, we would expect sales gains
for our full fiscal year ending next April in the mid single digit range, with
earnings in the area of $1.60- $1.75 per diluted share."
Conference Call Information
The dial-in phone number for tomorrow's live conference call (May 30, 2002 at 11
a.m. EDT) will be (800) 374-1298 for persons calling from within the U.S. or
Canada, and (706) 634-5855 for international callers. The call will also be
webcast live and archived on the Internet, both at www.la-z-boy.com. A telephone
replay will be available from approximately 2 p.m. tomorrow, May 30th, through
noon on June 6th. This replay will be available to callers from the U.S. and
Canada at (800) 642-1687 and to international callers at (706) 645-9291. The
replay passcode will be 4015950.
Forward-looking Information
Any forward-looking statements contained in this report 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: changes in consumer sentiment or demand, changes in housing sales, the
impact of terrorism, the impact of interest rate changes, the impact of imports,
changes in currency rates, competitive factors, operating factors, and other
factors identified from time to time in the company's reports filed with the
Securities and Exchange Commission. The company undertakes 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. We have filed a Form 8-K report which includes a
condensed balance sheet, income statement and cash flow statement for fiscal
2002, and, is now available at www.la-z-boy.com. Investors and others wishing
to be notified via e-mail of future La-Z-Boy news releases, SEC filings and
conference calls may sign up for this service at:
http://my.lazboy.com/mygallery/investor_relations.htm
Background Information
With annual sales in excess of $2 billion, La-Z-Boy Incorporated is one of the
world's leading residential furniture producers. The La-Z-Boy Incorporated
family of companies produces furniture for every room of the home and office, as
well as for the hospitality and assisted-living markets. The upholstery segment
companies are Bauhaus, Centurion, Clayton Marcus, England, HickoryMark,
La-Z-Boy, La-Z-Boy Contract Furniture Group and Sam Moore, and its casegoods
segment companies are Alexvale, American Drew, American of Martinsville,
Hammary, Kincaid, Lea and Pennsylvania House.
The corporation's vast proprietary distribution network is dedicated exclusively
to selling La-Z-Boy Incorporated products and brands, and includes 297
stand-alone La-Z-Boy Furniture Galleries(R) and 317 La-Z-Boy In-Store Gallerys,
in addition to in-store gallery programs at the company's Kincaid, Pennsylvania
House, Clayton Marcus, England and Lea business units. According to industry
trade publication Furniture/Today, the La-Z-Boy Furniture Galleries retail
network by itself represents the industry's fifth largest U.S. furniture
retailer. Additional information is available at www.la-z-boy.com.
99.2 Financial Statements
Description Page #
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Condensed Consolidated Statement of Income 5
Condensed Consolidated Balance Sheet 6
Condensed Consolidated Statement of Cash Flows 6