-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SN5B85cEubmZOYuhrbrnXcCB7OvJ8P5LiCEmU+eHbrRW9IdHQUTu/6MePVSSKlXM dOqgJg2X63WPrSzzCXHCWA== 0000057131-97-000024.txt : 19970806 0000057131-97-000024.hdr.sgml : 19970806 ACCESSION NUMBER: 0000057131-97-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970726 FILED AS OF DATE: 19970805 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LA-Z-BOY INCORP CENTRAL INDEX KEY: 0000057131 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 380751137 STATE OF INCORPORATION: MI FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09656 FILM NUMBER: 97651808 BUSINESS ADDRESS: STREET 1: 1284 N TELEGRAPH RD CITY: MONROE STATE: MI ZIP: 48162 BUSINESS PHONE: 3132414414 FORMER COMPANY: FORMER CONFORMED NAME: LA Z BOY CHAIR CO DATE OF NAME CHANGE: 19920703 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 July 26, 1997 COMMISSION FILE NUMBER 1-9656 LA-Z-BOY INCORPORATED (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 48162-3390 (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 July 26, 1997 - ------------------------------ ---------------------------- Common Shares, $1.00 par value 17,974,876 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 August 5, 1997 and are incorporated herein by reference. LA-Z-BOY INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited, dollar amounts in thousands) Three Months Ended ------------------ July 26, July 27 1997 1996 --------- -------- Cash Flows from Operating Activities Net income $1,726 $4,598 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 4,873 4,855 Change in receivables 48,902 44,935 Change in inventories (14,158) (12,928) Change in other assets and liab. (15,223) (19,250)* Change in deferred taxes - - --------- -------- Total adjustments 24,394 17,612 * --------- -------- Cash Provided by Operating Activities 26,120 22,210 * Cash Flows from Investing Activities Proceeds from disposals of assets 316 113 Capital expenditures (5,568) (4,580) Change in other investments (447) (5,621) ---------- -------- Cash Used for Investing Activities (5,699) (10,088)* Cash Flows from Financing Activities Short-term debt - - Long-term debt - - Retirements of debt (1,925) (2,940) Capital leases - - Capital lease principal payments (527) (565) Stock for stock option plans 2,012 1,470 Stock for 401(k) employee plans 403 383 Purchase of La-Z-Boy stock (2,424) (7,126) Payment of cash dividends (3,768) (3,482) ---------- -------- Cash Used for Financing Activities (6,229) (12,260)* Effect of exch. rate changes on cash 36 (52)* ---------- -------- Net change in cash and equivalents 14,228 (190) Cash and equiv. at beginning of period 25,382 27,060 ---------- -------- Cash and equiv. at end of period $39,610 $26,870 ========== ======== Cash paid during period - Income taxes $1,441 $2,257 - Interest $839 $833 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. * These numbers have changed slightly from what was reported in the first quarter last year. They have been corrected as a reclass error. LA-Z-BOY INCORPORATED 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 1997 Annual Report filed with the Securities and Exchange Commission. The financial information included herein, other than the consolidated condensed balance sheet as of April 26, 1997, 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 July 26, 1997 has been derived from, but does not include all the disclosures contain- ed in, the audited consolidated financial statements for the year ended April 26, 1997. 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 25, 1998. 3. Commitments and Contingencies ----------------------------- There has been no significant change from the prior fiscal year end audited financial statements. LA-Z-BOY INCORPORATED AND OPERATING DIVISIONS MANAGEMENT DISCUSSION La-Z-Boy's sales and profits historically have been weakest in the first quarter of the fiscal year due to the Company's two-week vacation shutdown which coincides with the slowest sales period. Therefore, first quarter comparison to the prior year's first quarter may not be indicative of trends that will continue in the remaining quarters of the fiscal year. 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 99. The Company's strong financial position is reflected in the debt to capital percentage of 14% and a current ratio of 3.9 to 1 at the end of the first quarter. At April 26, 1997, the debt to capital percentage was 15% and the current ratio was 3.5 to 1. At the end of the preceding year's first quarter, the debt to capital percentage was 16% and the current ratio was 3.9 to 1. As of July 26, 1997, there was $62 million of unused lines of credit available under several credit arrangements. Approximately 35% of the 4 million shares of Company stock authorized for purchase on the open market are still available for purchase by the Company. 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 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ The Annual Meeting of Shareholders of La-Z-Boy Incorporated was held on July 28, 1997, for the purposes of electing three members to the board of directors as well as considering and acting upon proposals to approve the La-Z-Boy Incorporated 1997 Incentive Stock Option Plan and the 1997 Restricted Share Plan. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and there was no solicitation in opposition to Management's solicitations. The Shareholders elected all of Management's nominees for directors as listed in the proxy statement and approved the La-Z-Boy Incorporated 1997 Incentive Stock Option Plan and the 1997 Restricted Share Plan. The distribution of shareholders' votes was as follows: Shares Voted Shares Election of Directors: In Favor Withheld ------------- ------------- Lorne G. Stevens 16,258,184 247,157 Patrick H. Norton 16,096,638 408,703 Frederick H. Jackson 16,200,120 305,221 Adoption of the La-Z-Boy Incorporated 1997 Incentive Stock Option Plan: Shares Voted in Favor 14,919,016 Shares Voted Against 1,283,984 Abstentions 302,341 Adoption of the La-Z-Boy Incorporated 1997 Restricted Share Plan: Shares Voted in Favor 15,155,433 Shares Voted Against 1,034,844 Abstentions 315,064 Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a)(10i) La-Z-Boy Incorporated 1997 Incentive Stock Option Plan (filed as Exhibit A to the registrant's proxy (Commission File No. 1-9656) dated June 27, 1997)is incorporated herein by reference. (10ii) La-Z-Boy Incorporated 1997 Restricted Share Plan (filed as Exhibit B to the registrant's proxy (Commission File No. 1-9656) dated June 27, 1997)is incorporated herein by reference. (27) Financial Data Schedule (EDGAR only). (99) News Release and Financial Information Release: re Actual first quarter results and Management Discussion dated August 5, 1997 (filed herewith). (b) An 8-K was filed on May 13, 1997 to disclose an exchange of 33,718 shares of La-Z-Boy Incorporated Common Shares for 1,078,976 ordinary shares of Centurion Furniture plc, a corporation incorporated in England and Wales, not already owned by the Company. This exchange brought the registrant's ownership in Centurion Furniture, plc to 99.6%. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the Quarterly Report on Form 10-Q for the quarter ended July 26, 1997 to be signed on its behalf by the undersigned thereunto duly authorized. LA-Z-BOY INCORPORATED (Registrant) /s/G.M. Hardy Date August 5, 1997 ----------------------------- Gene M. Hardy Secretary and Treasurer (Principal Accounting Officer) EX-27 2
5 1,000 3-MOS APR-25-1998 JUL-26-1997 39,610 0 164,101 0 92,928 319,295 279,897 164,287 509,675 81,638 0 17,975 0 0 341,306 509,675 212,326 212,326 164,184 164,184 45,357 0 1,024 2,993 1,267 1,726 0 0 0 1,726 .10 .10 Receivables are reported net of allowances for doubtful accounts on the Statement of Financial Position.
EX-99 3 News Release ------------ LA-Z-BOY HAD HIGHER SALES, LOWER PROFITS IN FIRST QUARTER MONROE, MI., August 5, 1997: La-Z-Boy Incorporated continued reaching record levels of quarterly sales but reported a drop in profits due primarily to its largest customer, Montgomery Ward, declaring bankruptcy. Financial Details - ----------------- For the first quarter ended 7/26/97, sales reached $212.3 million, up 5% from last year's first quarter of $202.2 million. Operating profit was $2.8 million vs. $8.0 million. Net income was $1.7 million vs. $4.6 million, and net income per share was $0.10 vs. $0.25. Chairman Comments - ----------------- La-Z-Boy Chairman and President Charles T. Knabusch said the continuing rise in sales "reflects our introduction of new products, aggressive marketing efforts and an improved economic climate." He said first quarter profits were "significantly impacted" by Montgomery Ward's recent filing for Chapter 11 bankruptcy protection. For many years, this chain was La-Z-Boy's largest single retail account. He noted however, that Sears HomeLife stores have started carrying La-Z-Boy furniture, and that major regional furniture chains also feature the company's products. Profits were also adversely affected by costs to improve manufacturing systems as well as a decision to retain more skilled employees during the slow summer sales period in order to better meet strong fall sales demands. Sales Orders - ------------ The rate of sales increases over the prior year for August and September are expected to be higher than the 5% first quarter rate based on actual orders in house and more optimism than 90 days ago. Sales have been increasing with backlogs up slightly, reflecting an improvement over the trend of the last couple of years. (All sales increases were internally generated.) Marketing - --------- The Residential Division's June "La-Z-Boy Great Room Giveaway Sweepstakes," promoted nationally in USA Weekend and Parade magazines, generated store traffic exceeding expectations, according to La-Z-Boy retailers. This highly successful program is expected to be repeated in coming months. In September and October, La-Z-Boy's popular "Wendall and Al" television advertising campaign will air again during leading prime time TV programs including Caroline in the City, ER, Frasier, Home Improvement and The Drew Carey Show. These ads position La-Z-Boy as America's producer of furniture for the entire home. From September through April of next year, the Residential Division will advertise continuously in the nation's most widely read women's magazines and "shelter" magazines with a program targeted to reach close to 100 million purchasers of home furnishings. La-Z-Boy has created a CD ROM library of retail advertising materials to help dealers tie their local promotional efforts to the company's national campaigns. More Information - ---------------- La-Z-Boy's first quarter 10-Q filing including a full income statement, balance sheet, cash flow statement and additional management discussion is available now at La-Z-Boy's worldwide web site (www.lazboy.com). About 24 to 48 hours after this release the first quarter 10-Q information should be available on the SEC's web site in their EDGAR databases (www.sec.gov). The SEC's site also contains additional La-Z-Boy financial information, including 8-K and other filings, going back about two years. NYSE & PCX: LZB Contact: Gene Hardy (313) 241-4306 08/05/97 La-Z-Boy Incorporated Financial Information Release 1 of 3 CONSOLIDATED STATEMENT OF INCOME (Amounts in thousands, except per share data) FIRST QUARTER ENDED (UNAUDITED) --------------------------------------------- Percent of Sales July 26, July 27, % Over ---------------- 1997 1996 (Under) 1997 1996 -------- -------- ------- ------ ------ Sales $212,326 $202,227 5% 100.0% 100.0% Cost of sales 164,184 154,917 6% 77.3% 76.6% -------- -------- ------- ------ ------ Gross profit 48,142 47,310 2% 22.7% 23.4% S, G & A 45,357 39,354 15% 21.4% 19.5% -------- -------- ------- ------ ------ Operating profit 2,785 7,956 -65% 1.3% 3.9% Interest expense 1,024 1,107 -7% 0.5% 0.5% Interest income 482 463 4% 0.2% 0.2% Other income 750 785 -4% 0.4% 0.4% -------- -------- ------- ------ ------ Pretax income 2,993 8,097 -63% 1.4% 4.0% Income taxes 1,267 3,499 -64% 42.3%* 43.2%* -------- -------- ------- ------ ----- Net income $1,726 $4,598 -62% 0.8% 2.3% ======== ======== ======= ====== ====== Average shares 17,951 18,291 -2% Net income per share $0.10 $0.25 -60% Dividends per share $0.21 $0.19 11% * As a percent of pretax income, not sales. 08/05/97 La-Z-Boy Incorporated Financial Information Release 2 of 3 CONSOLIDATED BALANCE SHEET (Dollars in thousands) Unaudited Increase ------------------ (Decrease) Audited July 26, July 27, --------------- April 26, 1997 1996 Dollars Percent 1997 -------- -------- ------- ------- -------- Current assets Cash & equivalents $39,610 $26,870 $12,740 47% $25,382 Receivables 164,101 161,406 2,695 2% 215,032 Inventories Raw materials 40,455 40,309 146 0% 36,959 Work-in-process 35,880 35,701 179 1% 34,854 Finished goods 37,890 37,845 45 0% 28,177 -------- -------- ------- ------- -------- FIFO inventories 114,225 113,855 370 0% 99,990 Excess of FIFO over LIFO (21,297) (21,735) 438 2% (21,219) -------- -------- ------- ------- -------- Total inventories 92,928 92,120 808 1% 78,771 Deferred income taxes 20,950 19,271 1,679 9% 20,950 Other current assets 1,706 6,544 (4,838) -74% 2,640 -------- -------- ------- ------- -------- Total current assets 319,295 306,211 13,084 4% 342,775 Property, plant & equipment 115,610 116,323 (713) -1% 114,658 Goodwill 40,187 39,947 240 1% 38,702 Other long-term assets 34,583 30,639 3,944 13% 32,272 -------- -------- ------- ------- -------- Total assets $509,675 $493,120 $16,555 3% $528,407 ======== ======== ======= ======= ======== Unaudited Increase ----------------- (Decrease) Audited July 26, July 27, --------------- April 26, 1997 1996 Dollars Percent 1997 -------- -------- ------- ------- ------- Current liabilities Current portion - l/t debt $4,611 $4,625 ($14) 0% $4,611 Current portion - captl leases 1,932 2,114 (182) -9% 2,017 Accounts payable 29,959 27,027 2,932 11% 28,589 Payroll/other comp 23,014 21,651 1,363 6% 37,934 Estimated income taxes 5,105 6,903 (1,798) -26% 5,412 Other current liabilities 17,017 16,492 525 3% 19,106 -------- -------- ------- ------ ------ Total current liabilities 81,638 78,812 2,826 4% 97,669 Long-term debt 50,524 55,135 (4,611) -8% 52,449 Capital leases 1,760 3,654 (1,894) -52% 2,202 Deferred income taxes 6,329 6,663 (334) -5% 6,329 Other long-term liabilities 10,143 9,729 414 4% 10,420 Commitments & contingencies Shareholders' equity 17,974,876 shares, $1.00 par 17,975 18,207 (232) -1% 17,908 Capital in excess of par 28,318 28,225 93 0% 27,697 Retained earnings 313,893 293,563 20,330 7% 314,731 Currency translation (905) (868) (37) -4% (998) -------- -------- ------- ------ ------- Total shareholders' equity 359,281 339,127 20,154 6% 359,338 -------- -------- ------- ------ ------- Total liabilities and shareholders' equity $509,675 $493,120 $16,555 3% $528,407 ======== ======== ======= ====== ======== 8/5/97 La-Z-Boy Incorporated Financial Information Release Page 3 of 3 Overall: - ------- Refer to today's press release for additional information. Gross Profit: - ------------ Gross profit margins declined to 22.7% of sales from 23.7% in last year's first quarter even though sales dollars increased 5% and sales units increased 3% - 4%. The decline in gross profit margin was primarily due to unfavorable direct labor and overhead costs incurred in positioning many residential upholstery plants to meet the anticipated increased production demands associated with the fall selling season. Other reasons for the decline in margins include higher lumber and plywood processing costs, higher costs due to some raw material parts delivery disruptions and higher freight costs. Most of the above reasons for declining first quarter margins appear to be non-recurring. S,G & A: - ------- First quarter S, G & A increased to 21.4% of sales vs. 19.5%. The largest cause is due to the increase of bad debts expense relating to the Chapter 11 declaration of bankruptcy by Montgomery Ward Holding Corporation. Sales to Montgomery Ward, La-Z-Boy's largest dealer, amounted to slightly less than 5% of sales in the last year. About $3.1 million in S, G & A bad debts expense is due to Montgomery Ward. This is expected to be a "one- time" income statement impact. Another area of S, G & A increase (as a percent of sales) is in the Information Technologies (IT) area. Starting about a year ago and continuing perhaps another year or two, an IT "infrastructure" type of investment has been made of both an expense and capitalized nature. Some other areas of S, G & A increase over last year (as a percent of sales) were freight expense, sales meeting expenses, and some outside consulting expenses. These were all "one-time" expenses and are not expected to continue to increase throughout the new fiscal year at a rate exceeding the rate of sales. Cash: - ---- The first quarter cash balance was 56% above last year end. The increase was largely due to a decrease in accounts receivable. Because of very strong sales in the fourth quarter of FY97, cash impacts are being recognized in the first quarter of FY98. Goodwill: - -------- Goodwill increased approximately $1.5 million from 4/26/97 to 7/26/97. The former England/Corsair shareholder's were given the opportunity to receive additional Company common stock based on England/Corsair's actual profit performance in each of the two years following acquisition. Approximately $1.9 million of common stock was issued in the first quarter of FY98 relating to England/Corsair's actual FY97 performance. Goodwill was increased by the value of the common stock issued. -----END PRIVACY-ENHANCED MESSAGE-----