-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, g3lcbhIN7ZRQrvcWpghQmeogcglAN9ZiAYZTbE181QKSBDPh99Ooq47Y4zIaLU9l r2tO3ZWDldruH/44+VJBqA== 0000057131-94-000003.txt : 19940216 0000057131-94-000003.hdr.sgml : 19940216 ACCESSION NUMBER: 0000057131-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940122 FILED AS OF DATE: 19940214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LA Z BOY CHAIR CO CENTRAL INDEX KEY: 0000057131 STANDARD INDUSTRIAL CLASSIFICATION: 2510 IRS NUMBER: 380751137 STATE OF INCORPORATION: MI FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-09656 FILM NUMBER: 94507839 BUSINESS ADDRESS: STREET 1: 1284 N TELEGRAPH RD CITY: MONROE STATE: MI ZIP: 48161-3390 BUSINESS PHONE: 3132414414 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR QUARTER ENDED January 22, 1994 COMMISSION FILE NUMBER 0-5091 LA-Z-BOY CHAIR COMPANY (Exact name of registrant as specified in its charter) MICHIGAN 38-0751137 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1284 North Telegraph Road, Monroe, Michigan 48161-3390 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (313) 241-4414 None Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each issuer's classes of common stock, as of the last practicable date: Class Outstanding at January 22, 1994 Common Shares, $1.00 par value 18,320,185 Part I. Financial Information The Consolidated Balance Sheet and Consolidated Statement of Income required for Part I are contained in the Registrant's Financial Information Release dated February 14, 1994 and are incorporated herein by reference. LA-Z-BOY CHAIR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited, dollar amounts in thousands) Three Months Ended Nine Months Ended ------------------- ------------------- Jan. 22, Jan. 23, Jan. 22, Jan. 23, 1994 1993 1994 1993 --------- --------- --------- --------- Cash Flows from Operating Activities: Net income $ 7,988 $ 6,391 $25,729 $15,681 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,580 4,406 10,254 11,458 Change in receivables 28,195 17,598 16,826 14,201 Change in inventories (1,460) 357 (16,364) (4,241) Change in other assets and liab. (7,331) 567 (7,001) 6,110 Change in deferred taxes 3 281 (2,970) 280 --------- --------- --------- --------- Total adjustments 22,987 23,209 745 27,808 --------- --------- --------- --------- Cash Provided by Operations 30,975 29,600 26,474 43,489 Cash Flows from Investing Activities: Proceeds from disposals of assets 79 176 146 228 Capital expenditures (4,069) (3,190) (13,283) (8,341) Change in other investments (234) (157) (3,311) (2,470) --------- --------- --------- --------- Cash Used for Investing Activities: (4,224) (3,171) (16,448) (10,583) Cash Flows from Financing Activities: Short-term debt 0 486 441 1,767 Retirements of debt (530) (1,456) (983) (3,907) Sale of Stock under stock option plans 456 350 1,683 962 Stock for 401(k) employee plans 707 636 2,073 1,895 Purchase of La-Z-Boy stock (261) (33) (857) (1,246) Payment of cash dividends (3,109) (2,723) (8,576) (8,172) --------- --------- --------- --------- Cash Used for Financing Activities: (2,737) (2,740) (6,219) (8,701) Effect of exch. rate changes on cash 23 (176) (213) (489) --------- --------- --------- --------- Net change in cash and equivalents 24,037 23,513 3,594 23,716 Cash and equiv. - beginning of period 8,365 21,940 28,808 21,737 --------- --------- --------- --------- Cash and equiv. - end of period $32,402 $45,453 $32,402 $45,453 ========= ========= ========= ========= Cash paid during period - Income tax $ 6,542 $ 4,323 $20,269 $12,353 - Interest 522 554 1,945 2,246 For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. LA-Z-BOY CHAIR COMPANY AND OPERATING DIVISIONS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation --------------------- The financial information is prepared in conformity with generally accepted accounting principles and such principles are applied on a basis consistent with those reflected in the 1993 Annual Report filed with the Securities and Exchange Commission. The financial information included herein, other than the consolidated condensed balance sheet as of April 24, 1993, has been prepared by management without audit by independent certified public accountants who do not express an opinion thereon. The consolidated condensed balance sheet as of January 22, 1994 has been derived from, but does not include all the disclosures contained in, the audited consolidated financial statements for the year ended April 24, 1993. The information furnished includes all adjustments and accruals consisting only of normal recurring accrual adjustments which are in the opinion of management, necessary for a fair presentation of results for the interim period. 2. Interim Results --------------- The foregoing interim results are not necessarily indicative of the results of operations for the full fiscal year ending April 30, 1994. 3. Income Taxes ------------ Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", was issued by the Financial Accounting Standards Board (FASB) in February 1992. The Company elected to adopt the new standard effective April 25, 1993. The Company's first quarter 10-Q report dated August 17, 1993 includes notes which more fully discuss the adoption of this new standard. 4. Commitments and Contingencies ----------------------------- There has been no significant change from the prior fiscal year end audited financial statements. LA-Z-BOY CHAIR COMPANY AND OPERATING DIVISIONS MANAGEMENT DISCUSSION Due to the cyclical nature of the Company's business, comparison of operations between the most recently completed quarter and the immediate preceding quarter would not be meaningful and could be misleading to the reader of these financial statements. For further Management Discussion, see attached Exhibit I. The Company's strong financial position is reflected in the debt to capital percentage of 16% and a current ratio of 3.8 to 1 at the end of the third quarter. At April 24, 1993, the debt to capital percentage was 17% and the current ratio was 3.6 to 1. At the end of the preceding year's third quarter, the debt to capital percentage was 19% and the current ratio was 3.7 to 1. As of January 22, 1994, there was $61 million of unused lines of credit available under several credit arrangements. The Company is authorized to purchase up to 2 million shares of Company stock on the open market. Approximately 47% of the shares have been purchased to date. The Company plans to be in the market for its shares as changes in its stock price and other factors present appropriate opportunities. PART II. OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- The Company has been named as defendant in various lawsuits arising in the normal course of business. It is not possible at the present time to estimate the ultimate outcome of these actions; however, management believes that the resultant liability, if any, will not be material to the Company's consolidated financial position. Item 2. Changes in Securities - ------------------------------ None. Item 3. Default Upon Senior Securities - --------------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None. Item 5. Other Information - -------------------------- None. Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ Exhibit I News Release and Financial Information Release: re Actual third quarter results and Management Discussion dated February 14, 1994. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended January 22, 1994 to be signed on its behalf by the undersigned thereunto duly authorized. LA-Z-BOY CHAIR COMPANY (Registrant) Date: February 14, 1994 James J. Korsnack Corporate Controller EX-1 2 NYSE & PSE: LZB News Release Contact: Jim Korsnack (313) 241-4208 THIRD QUARTER LA-Z-BOY SALES UP 13%, EARNINGS UP 25% MONROE, MI., February 14, 1994: La-Z-Boy Chair Company's third quarter that ended on January 22, 1994 recorded sales up 13% and net income up 25% vs. last year's third quarter. Both sales and earnings were record highs for a third quarter. Details of Financial Results - ---------------------------- Third quarter sales grew to $193 million vs. $170 million, an increase of 13%, while net income improved 25% to $8.0 million( $.44 per share) from $6.4 million ($.35 per share) in last year's third quarter. Cash dividends paid rose 13%. For the nine months ended January, sales were $564 million, 16% more than last year's $486 million, and net income before an accounting change for income taxes was $22.4 million ($1.23 per share) vs. $15.7 million ($.86 per share) last year. After the accounting change, net income was $1.41 per share vs. $.86 last year. Chairman Comments - ----------------- Charles T. Knabusch, La-Z-Boy Chairman and President, said, "Sales volume was strong again across all five of our operating divisions, particularly at Hammary [which primarily produces occasional tables]. La-Z-Boy modulars, sofas, sleepers and reclining sofas continue to have much higher than average rates of sales increases. Operating profit improved 28% even though many of our plants had extra costs and problems due to the bad weather in late December and early January." Regarding the near future, Mr. Knabusch was generally optimistic. "Last year's fourth quarter had very strong sales and profits. Even so, it looks like we can do better this year although the percentage improvements probably won't be as strong as the last two quarters." New Manufacturing Facility - -------------------------- Earlier this quarter La-Z-Boy announced that it will begin construction on a new upholstery factory in Arkansas. The plant will be over 350,000 square feet and will replace an existing older 200,000 square foot plant. It is expected to cost roughly $7 million (including equipment) and generate new jobs within the first two years of operation. La-Z-Boy Chair Company Financial Information Release 1 of 4 CONSOLIDATED SUMMARY OF OPERATIONS 02/14/94 (Amounts in thousands, except per share data) THIRD QUARTER ENDED (UNAUDITED) ---------------------------------------------- Amounts ------------------ Percent of Sales Jan. 22, Jan. 23, % Over ---------------- 1994 1993 (Under) 1994 1993 -------- -------- ------- ------- ------- Sales $192,648 $169,810 13% 100.0% 100.0% Cost of sales 141,771 125,677 13% 73.6% 74.0% -------- -------- ------- ------- ------- Gross profit 50,877 44,133 15% 26.4% 26.0% S, G & A 36,877 33,210 11% 19.1% 19.6% -------- -------- ------- ------- ------- Operating profit 14,000 10,923 28% 7.3% 6.4% Interest expense 682 765 -11% 0.4% 0.5% Other income 153 346 -56% 0.1% 0.3% -------- -------- ------- ------- ------- Pretax income 13,471 10,504 28% 7.0% 6.2% Income taxes * 5,483 4,113 33% 40.7% 39.2% -------- -------- ------- ------- ------- Net income $ 7,988 $ 6,391 25% 4.1% 3.8% ======== ======== ======= ======= ======= Average shares 18,302 18,175 1% Earnings per share $0.44 $0.35 26% Dividends per share $0.17 $0.15 13% * Percent of sales column is calculated as a percent of pretax income. La-Z-Boy Chair Company Financial Information Release 2 of 4 CONSOLIDATED SUMMARY OF OPERATIONS 02/14/94 (Amounts in thousands, except per share data) NINE MONTHS ENDED (UNAUDITED) ---------------------------------------------- Amounts ------------------ Percent of Sales Jan. 22, Jan. 23, % Over ---------------- 1994 1993 (Under) 1994 1993 -------- -------- ------- ------- ------- Sales $563,788 $485,690 16% 100.0% 100.0% Cost of sales 416,978 363,144 15% 74.0% 74.8% -------- -------- ------- ------- ------- Gross profit 146,810 122,546 20% 26.0% 25.2% S,G & A 108,330 95,557 13% 19.2% 19.6% -------- -------- ------- ------- ------- Operating profit 38,480 26,989 43% 6.8% 5.6% Interest expense 2,178 2,473 -12% 0.4% 0.5% Other income 1,021 1,295 -21% 0.2% 0.2% -------- -------- ------- ------- ------- Pretax income 37,323 25,811 45% 6.6% 5.3% Income taxes * 14,946 10,130 48% 40.0% 39.2% -------- -------- ------- ------- ------- Income before acctg. change 22,377 15,681 43% 4.0% 3.2% Accounting change 3,352 - N/A 0.6% N/A -------- -------- ------- ------- ------- Net income $ 25,729 $ 15,681 64% 4.6% 3.2% ======== ======== ======= ======= ======= Average shares 18,257 18,168 0% Earnings per share: - ------------------- Income before acctg. change $1.23 $0.86 43% Accounting change 0.18 - N/A -------- -------- ------- Net income $1.41 $0.86 64% ======== ======== ======= Dividends per share $0.47 $0.45 4% * Percent of sales column is calculated as a percent of pretax income. La-Z-Boy Chair Company Financial Information Release 3 of 4 CONSOLIDATED BALANCE SHEET 02/14/94 (Dollars in thousands) Unaudited Increase ------------------ (Decrease) Audited Jan. 22, Jan. 23, ---------------- April 24, 1994 1993 Dollars Percent 1993 -------- -------- ------- ------- --------- Current Assets Cash & cash equivalents $ 32,402 $ 45,453 ($13,051) -29% $ 28,808 Receivables 158,280 146,430 11,850 8% 175,106 Inventories Raw materials 33,259 25,394 7,865 31% 27,555 Work-in-process 32,063 28,687 3,376 12% 30,598 Finished goods 29,698 22,227 7,471 34% 20,135 -------- -------- ------- ------- --------- Total FIFO 95,020 76,308 18,712 25% 78,288 LIFO reserve (18,170) (14,258) (3,912) -27% (17,801) -------- -------- ------- ------- --------- Total LIFO inventories 76,850 62,050 14,800 24% 60,487 Deferred income taxes 13,720 7,389 6,331 86% 9,152 Other current assets 5,956 644 5,312 825% 5,423 -------- -------- ------- ------- --------- Total Current Assets 287,208 261,966 25,242 10% 278,976 Property, plant & equipment 93,889 90,596 3,293 4% 90,407 Goodwill 20,991 22,228 (1,237) -6% 21,658 Other long-term assets 12,922 8,387 4,535 54% 10,023 -------- -------- ------- ------- --------- Total Assets $415,010 $383,177 $31,833 8% $401,064 ======== ======== ======= ======= ========= Current Liabilities Short-term debt $ 0 $ 1,400 ($ 1,400) -100% $ 0 Current portion of L/T debt 2,875 1,727 1,148 66% 542 Accounts payable 22,740 21,765 975 4% 20,010 Payroll/benefits related 26,913 22,840 4,073 18% 30,842 Estimated income taxes 3,148 3,329 (181) -5% 9,011 Other current liabilities 20,460 19,451 1,009 5% 17,046 -------- -------- ------- ------- --------- Total Current Liabilities 76,136 70,512 5,624 8% 77,451 Long-term debt 52,495 55,459 (2,964) -5% 55,370 Deferred income taxes 6,455 5,339 1,116 21% 4,857 Shareholders' equity 18,320,185 shares, $1.00 par 18,320 18,200 120 1% 18,195 Capital in excess of par 9,596 8,227 1,369 17% 8,494 Retained earnings 252,550 225,911 26,639 12% 236,842 Currency translation (542) (471) (71) -15% (145) -------- -------- ------- ------- --------- Total Shareholders' Equity 279,924 251,867 28,057 11% 263,386 -------- -------- ------- ------- --------- Total Liabilities and Shareholders' Equity $415,010 $383,177 $31,833 8% $401,064 ======== ======== ======= ======= ========= La-Z-Boy Chair Company Financial Information Release 4 of 4 02/14/94 Overall: - -------- Refer to today's press release for additional comments. Other Income: - ------------- The $193 (56%) decline in other income for the quarter was due to changes in pension-related assumptions. The expected long-term rate of return and the discount rate were each lowered .5 points. In addition, a 16 year amortization of the unrecognized net loss of the plan was started. The fourth quarter should show a similar decline compared to the prior year. Accounting Change: - ------------------ During the first quarter of fiscal year 1994, the Company recorded a change in accounting principle in connection with the issuance of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", by the Financial Accounting Standards Board. This change in accounting principle increased net income and the net deferred tax asset by $3.4 million or $.18 per share. Cash: - ----- The decrease in cash from $45 million last January to $32 million this year was largely due to the increase in inventories, capital expenditures and receivables. Raw materials were up 31% primarily in the area of fabric, wood and leather. The availability of wood has been better this year than last year. Most of the increase in finished goods inventories was due to plans to better fill dealer orders at LZB's two largest divisions that offer shipments from stock as opposed to build-to-order. The capital expenditure increase was planned as expenditures last year were below average. The receivables increase was largely due to the 13% increase in sales for the quarter. Other Current Assets: - --------------------- The $5 million increase from last year was due to increased VEBA funding, increased prepaid selling expenses, better estimating of expected health-care expenses and changes in the timing of health-care payments. Extra Week in Fourth Quarter: - ----------------------------- The fourth quarter to end April 30, 1994 will have 14 weeks in it compared to 13 weeks in the prior year's fourth quarter. The full year ending April 30, 1994 will have 53 weeks compared to 52 weeks last year. -----END PRIVACY-ENHANCED MESSAGE-----