EX-99.2 3 a19-4991_1ex99d2.htm EX-99.2

Exhibit 99.2

 

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

 

 

 

Quarter Ended

 

(Unaudited, amounts in thousands, except per share data)

 

1/26/19

 

1/27/18

 

Sales

 

$

467,582

 

$

413,638

 

Cost of sales

 

277,712

 

251,140

 

Gross profit

 

189,870

 

162,498

 

Selling, general and administrative expense

 

149,027

 

129,403

 

Operating income

 

40,843

 

33,095

 

Interest expense

 

(538

)

(113

)

Interest income

 

540

 

444

 

Other income (expense), net

 

(941

)

(1,094

)

Income before income taxes

 

39,904

 

32,332

 

Income tax expense

 

10,730

 

20,047

 

Net income

 

29,174

 

12,285

 

Net income attributable to noncontrolling interests

 

(443

)

(176

)

Net income attributable to La-Z-Boy Incorporated

 

$

28,731

 

$

12,109

 

 

 

 

 

 

 

Basic weighted average common shares

 

46,820

 

47,234

 

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

 

$

0.61

 

$

0.26

 

 

 

 

 

 

 

Diluted weighted average common shares

 

47,091

 

47,757

 

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

 

$

0.61

 

$

0.25

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.13

 

$

0.12

 

 

 

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

 

 

 

Nine Months Ended

 

(Unaudited, amounts in thousands, except per share data)

 

1/26/19

 

1/27/18

 

Sales

 

$

1,291,610

 

$

1,163,922

 

Cost of sales

 

778,813

 

707,369

 

Gross profit

 

512,797

 

456,553

 

Selling, general and administrative expense

 

420,294

 

372,891

 

Operating income

 

92,503

 

83,662

 

Interest expense

 

(1,143

)

(430

)

Interest income

 

1,534

 

1,163

 

Other income (expense), net

 

(2,046

)

(271

)

Income before income taxes

 

90,848

 

84,124

 

Income tax expense

 

22,374

 

36,889

 

Net income

 

68,474

 

47,235

 

Net income attributable to noncontrolling interests

 

(1,428

)

(579

)

Net income attributable to La-Z-Boy Incorporated

 

$

67,046

 

$

46,656

 

 

 

 

 

 

 

Basic weighted average common shares

 

46,808

 

47,852

 

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

 

$

1.43

 

$

0.97

 

 

 

 

 

 

 

Diluted weighted average common shares

 

47,212

 

48,325

 

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

 

$

1.42

 

$

0.96

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.37

 

$

0.34

 

 

 

LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET

 

(Unaudited, amounts in thousands, except par value)

 

1/26/19

 

4/28/18

 

Current assets

 

 

 

 

 

Cash and equivalents

 

$

101,579

 

$

134,515

 

Restricted cash

 

2,003

 

2,356

 

Receivables, net of allowance of $2,762 at 1/26/19 and $1,956 at 4/28/18

 

149,526

 

154,055

 

Inventories, net

 

219,211

 

184,841

 

Other current assets

 

75,086

 

42,451

 

Total current assets

 

547,405

 

518,218

 

Property, plant and equipment, net

 

195,680

 

180,882

 

Goodwill

 

184,717

 

75,254

 

Other intangible assets, net

 

30,274

 

18,190

 

Deferred income taxes — long-term

 

21,231

 

21,265

 

Other long-term assets, net

 

82,149

 

79,158

 

Total assets

 

$

1,061,456

 

$

892,967

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Short-term borrowings

 

$

20,000

 

$

—

 

Current portion of long-term debt

 

205

 

223

 

Accounts payable

 

72,421

 

62,403

 

Accrued expenses and other current liabilities

 

176,277

 

118,721

 

Total current liabilities

 

268,903

 

181,347

 

Long-term debt

 

47

 

199

 

Other long-term liabilities

 

120,720

 

86,205

 

Contingencies and commitments

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Preferred shares — 5,000 authorized; none issued

 

—

 

—

 

Common shares, $1 par value — 150,000 authorized; 46,730 outstanding at 1/26/19 and 46,788 outstanding at 4/28/18

 

46,730

 

46,788

 

Capital in excess of par value

 

306,896

 

298,948

 

Retained earnings

 

330,491

 

291,644

 

Accumulated other comprehensive loss

 

(26,854

)

(25,199

)

Total La-Z-Boy Incorporated shareholders’ equity

 

657,263

 

612,181

 

Noncontrolling interests

 

14,523

 

13,035

 

Total equity

 

671,786

 

625,216

 

Total liabilities and equity

 

$

1,061,456

 

$

892,967

 

 

 

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Nine Months Ended

 

(Unaudited, amounts in thousands)

 

1/26/19

 

1/27/18

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

68,474

 

$

47,235

 

Adjustments to reconcile net income to cash provided by (used for) operating activities

 

 

 

 

 

(Gain)/Loss on disposal of assets

 

41

 

(1,849

)

Gain on conversion of investment

 

—

 

(2,204

)

Change in deferred taxes

 

2,538

 

10,543

 

Provision for doubtful accounts

 

477

 

198

 

Depreciation and amortization

 

23,182

 

23,671

 

Equity-based compensation expense

 

8,174

 

7,929

 

Pension plan contributions

 

(7,000

)

(2,000

)

Change in receivables

 

1,152

 

5,057

 

Change in inventories

 

(18,950

)

(9,142

)

Change in other assets

 

(10,103

)

(3,304

)

Change in payables

 

4,954

 

12,529

 

Change in other liabilities

 

18,509

 

2,537

 

Net cash provided by operating activities

 

91,448

 

91,200

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Proceeds from disposals of assets

 

447

 

620

 

Proceeds from property insurance

 

154

 

1,807

 

Capital expenditures

 

(35,766

)

(24,138

)

Purchases of investments

 

(14,956

)

(24,124

)

Proceeds from sales of investments

 

14,304

 

17,109

 

Acquisitions, net of cash acquired

 

(78,582

)

(16,495

)

Net cash used for investing activities

 

(114,399

)

(45,221

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Net proceeds from credit facility

 

20,000

 

—

 

Payments on debt

 

(169

)

(203

)

Payments for debt issuance costs

 

—

 

(220

)

Stock issued for stock and employee benefit plans, net of shares withheld for taxes

 

4,012

 

1,418

 

Purchases of common stock

 

(16,726

)

(46,074

)

Dividends paid

 

(17,381

)

(16,343

)

Net cash used for financing activities

 

(10,264

)

(61,422

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

(74

)

2,204

 

Change in cash, cash equivalents and restricted cash

 

(33,289

)

(13,239

)

Cash, cash equivalents and restricted cash at beginning of period

 

136,871

 

150,859

 

Cash, cash equivalents and restricted cash at end of period

 

$

103,582

 

$

137,620

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activities

 

 

 

 

 

Capital expenditures included in payables

 

$

2,827

 

$

3,926

 

 

 

LA-Z-BOY INCORPORATED

SEGMENT INFORMATION

 

 

 

Quarter Ended

 

Nine Months Ended

 

(Unaudited, amounts in thousands)

 

1/26/19

 

1/27/18

 

1/26/19

 

1/27/18

 

Sales

 

 

 

 

 

 

 

 

 

Upholstery segment:

 

 

 

 

 

 

 

 

 

Sales to external customers

 

$

265,487

 

$

262,874

 

$

759,569

 

$

739,429

 

Intersegment sales

 

68,961

 

58,084

 

185,370

 

160,697

 

Upholstery segment sales

 

334,448

 

320,958

 

944,939

 

900,126

 

 

 

 

 

 

 

 

 

 

 

Casegoods segment:

 

 

 

 

 

 

 

 

 

Sales to external customers

 

23,129

 

23,887

 

73,774

 

68,821

 

Intersegment sales

 

4,936

 

3,328

 

14,054

 

11,969

 

Casegoods segment sales

 

28,065

 

27,215

 

87,828

 

80,790

 

 

 

 

 

 

 

 

 

 

 

Retail segment sales

 

159,417

 

125,815

 

418,331

 

353,068

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other:

 

 

 

 

 

 

 

 

 

Sales to external customers

 

19,549

 

1,062

 

39,936

 

2,604

 

Intersegment sales

 

3,300

 

2,818

 

9,156

 

6,839

 

Corporate and Other sales

 

22,849

 

3,880

 

49,092

 

9,443

 

 

 

 

 

 

 

 

 

 

 

Eliminations

 

(77,197

)

(64,230

)

(208,580

)

(179,505

)

Consolidated sales

 

$

467,582

 

$

413,638

 

$

1,291,610

 

$

1,163,922

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

34,566

 

$

31,699

 

$

90,602

 

$

88,422

 

Casegoods segment

 

3,332

 

2,792

 

10,173

 

8,833

 

Retail segment

 

14,158

 

7,076

 

25,179

 

12,746

 

Corporate and Other

 

(11,213

)

(8,472

)

(33,451

)

(26,339

)

Consolidated operating income

 

$

40,843

 

$

33,095

 

$

92,503

 

$

83,662

 

 

 

LA-Z-BOY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

 

 

 

Quarter Ended

 

Nine Months Ended

 

 (Unaudited, amounts in thousands, except per share data)

 

1/26/19

 

1/27/18

 

1/26/19

 

1/27/18

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

189,870

 

$

162,498

 

$

512,797

 

$

456,553

 

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

 

420

 

114

 

2,911

 

375

 

Non-GAAP gross profit

 

$

190,290

 

$

162,612

 

$

515,708

 

$

456,928

 

 

 

 

 

 

 

 

 

 

 

GAAP SG&A

 

$

149,027

 

$

129,403

 

$

420,294

 

$

372,891

 

Less: Purchase accounting charges — amortization of intangible assets and retention agreements

 

(896

)

613

 

(2,237

)

(343

)

Non-GAAP SG&A

 

$

148,131

 

$

130,016

 

$

418,057

 

$

372,548

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

40,843

 

$

33,095

 

$

92,503

 

$

83,662

 

Add back: Purchase accounting charges

 

1,316

 

(499

)

5,148

 

718

 

Non-GAAP operating income

 

$

42,159

 

$

32,596

 

$

97,651

 

$

84,380

 

 

 

 

 

 

 

 

 

 

 

GAAP income before income taxes

 

$

39,904

 

$

32,332

 

$

90,848

 

$

84,124

 

Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense

 

1,507

 

(499

)

5,527

 

718

 

Non-GAAP income before income taxes

 

$

41,411

 

$

31,833

 

$

96,375

 

$

84,842

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to La-Z-Boy Incorporated

 

$

28,731

 

$

12,109

 

$

67,046

 

$

46,656

 

Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense

 

1,507

 

(499

)

5,527

 

718

 

Less: Tax effect of purchase accounting charges

 

(439

)

81

 

(1,360

)

(315

)

Non-GAAP net income attributable to La-Z-Boy Incorporated

 

$

29,799

 

$

11,691

 

$

71,213

 

$

47,059

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.61

 

$

0.25

 

$

1.42

 

$

0.96

 

Add back: Purchase accounting charges, net of tax, per share

 

0.02

 

—

 

0.09

 

0.01

 

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

 

$

0.63

 

$

0.25

 

$

1.51

 

$

0.97

 

 

 

LA-Z-BOY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

SEGMENT INFORMATION

 

 

 

Quarter Ended

 

 (Unaudited, amounts in thousands)

 

1/26/19

 

% of sales

 

1/27/18

 

% of sales

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

34,566

 

10.3

%

$

31,699

 

9.9

%

Casegoods segment

 

3,332

 

11.9

%

2,792

 

10.3

%

Retail segment

 

14,158

 

8.9

%

7,076

 

5.6

%

Corporate and Other

 

(11,213

)

N/M

 

(8,472

)

N/M

 

GAAP Consolidated operating income

 

$

40,843

 

8.7

%

$

33,095

 

8.0

%

 

 

 

 

 

 

 

 

 

 

Purchase accounting charges affecting operating income

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

(241

)

 

 

$

(614

)

 

 

Casegoods segment

 

—

 

 

 

—

 

 

 

Retail segment

 

420

 

 

 

115

 

 

 

Corporate and Other

 

1,137

 

 

 

—

 

 

 

Consolidated purchase accounting charges affecting operating income

 

$

1,316

 

 

 

$

(499

)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income (loss)

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

34,325

 

10.3

%

$

31,085

 

9.7

%

Casegoods segment

 

3,332

 

11.9

%

2,792

 

10.3

%

Retail segment

 

14,578

 

9.1

%

7,191

 

5.7

%

Corporate and Other

 

(10,076

)

N/M

 

(8,472

)

N/M

 

Non-GAAP Consolidated operating income

 

$

42,159

 

9.0

%

$

32,596

 

7.9

%

 

 

 

Nine Months Ended

 

(Unaudited, amounts in thousands)

 

1/26/19

 

% of sales

 

1/27/18

 

% of sales

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

90,602

 

9.6

%

$

88,422

 

9.8

%

Casegoods segment

 

10,173

 

11.6

%

8,833

 

10.9

%

Retail segment

 

25,179

 

6.0

%

12,746

 

3.6

%

Corporate and Other

 

(33,451

)

N/M

 

(26,339

)

N/M

 

GAAP Consolidated operating income

 

$

92,503

 

7.2

%

$

83,662

 

7.2

%

 

 

 

 

 

 

 

 

 

 

Purchase accounting charges affecting operating income

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

(37

)

 

 

$

116

 

 

 

Casegoods segment

 

—

 

 

 

—

 

 

 

Retail segment

 

1,508

 

 

 

602

 

 

 

Corporate and Other

 

3,677

 

 

 

—

 

 

 

Consolidated purchase accounting charges affecting operating income

 

$

5,148

 

 

 

$

718

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income (loss)

 

 

 

 

 

 

 

 

 

Upholstery segment

 

$

90,565

 

9.6

%

$

88,538

 

9.8

%

Casegoods segment

 

10,173

 

11.6

%

8,833

 

10.9

%

Retail segment

 

26,687

 

6.4

%

13,348

 

3.8

%

Corporate and Other

 

(29,774

)

N/M

 

(26,339

)

N/M

 

Non-GAAP Consolidated operating income

 

$

97,651

 

7.6

%

$

84,380

 

7.2

%

 

N/M — Not Meaningful