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 October 29, 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 October 29, 1994
Common Shares, $1.00 par value 17,975,406
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 November 15, 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 Six Months Ended
------------------- -------------------
Oct. 29, Oct. 23, Oct. 29, Oct. 23,
1994 1993 1994 1993
--------- --------- --------- ---------
Cash Flows from Operating Activities
Net income $12,078 $10,415 $16,348 $17,741
Adjustments to reconcile net income
to net cash provided by operating
activities
Accounting change 0 0 0 (3,352)
Depreciation and amortization 3,590 3,375 7,322 6,674
Change in receivables (43,798) (42,424) (9,889) (11,440)
Change in inventories 621 (2,573) (8,571) (14,904)
Change in other assets and liab. 15,134 15,640 3,041 401
Change in deferred taxes (875) 21 (875) 379
--------- --------- --------- ---------
Total adjustments (25,328) (25,961) (8,972) (22,242)
--------- --------- --------- ---------
Cash Provided by Operating
Activities (13,250) (15,546) 7,376 (4,501)
Cash Flows from Investing Activities
Proceeds from disposals of assets 1,210 56 1,234 67
Capital expenditures (4,498) (5,894) (10,488) (9,214)
Change in other investments (75) (2,013) (534) (3,077)
--------- --------- --------- ---------
Cash Used for Investing Activities (3,363) (7,851) (9,788) (12,224)
Cash Flows from Financing Activities
Short-term debt 261 441 261 441
Long-term debt 0 0 7,500 0
Change in unexpended IRB funds 1,827 0 (739) 0
Retirements of debt (261) (364) (5,011) (453)
Sale of stock under stock option plans 1,154 584 1,357 1,227
Stock for 401(k) employee plans 429 607 830 1,366
Purchase of La-Z-Boy stock (2,742) (79) (9,351) (596)
Payment of cash dividends (3,067) (2,737) (6,176) (5,467)
--------- --------- --------- ---------
Cash Used for Financing Activities (2,399) (1,548) (11,329) (3,482)
Effect of exch. rate changes on cash 131 (111) 114 (236)
--------- --------- --------- ---------
Net change in cash and equivalents (18,881) (25,056) (13,627) (20,443)
Cash and equiv. - beginning of period 31,180 33,421 25,926 28,808
--------- --------- --------- ---------
Cash and equiv. - end of period $12,299 $8,365 $12,299 $8,365
========= ========= ========= =========
Cash paid during period - Income taxes $8,980 $10,320 $11,853 $13,727
- Interest $816 $749 $1,418 $1,423
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.
Certain prior year balance sheet items have been reclassed for comparability
to the current year.
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 1994 Annual Report filed with the
Securities and Exchange Commission. The financial information included
herein, other than the consolidated condensed balance sheet as of April
30, 1994, 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 October 29, 1994 has been
derived from, but does not include all the disclosures contained in, the
audited consolidated financial statements for the year ended April 30,
1994. 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 29, 1995.
3. 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.
Second quarter health care expenses matched expectations while the previous
two quarters exceeded expectations.
The 46% increase in other income for the quarter was due to favorable Canadian
exchange rate fluctuations, a gain on the sale of stock and increased royalty
income being partially offset by lower pension income.
Income tax expense as a percent of pretax profit was higher than last year for
both the quarter and six months ended due to an unfavorable mix of tax rates
across tax divisions.
In October, a plant in Siloam Springs, Arkansas was sold and will be replaced
by a new, larger plant currently under construction.
The Company's strong financial position is reflected in the debt to capital
percentage of 17% and a current ratio of 3.8 to 1 at the end of the second
quarter. At April 30, 1994, the debt to capital percentage was 17% and the
current ratio was 4.1 to 1. At the end of the preceding year's second
quarter, the debt to capital percentage was 18% and the current ratio was 3.7
to 1. As of October 29, 1994, there was $62 million of unused lines of credit
available under several credit arrangements.
Approximately 30% of the 2 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 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 second
quarter results and Management Discussion dated November 15, 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 October 29, 1994 to be signed on its behalf by the undersigned thereunto
duly authorized.
LA-Z-BOY CHAIR COMPANY
(Registrant)
Date: November 15, 1994 James J. Korsnack
Corporate Controller
NYSE & PSE: LZB News Release Contact: Jim Korsnack
(313) 241-4208
LA-Z-BOY'S SECOND QUARTER SALES AND MARGINS IMPROVE
MONROE, MI., November 15, 1994: La-Z-Boy Chair Company's 1995 fiscal second
quarter that ended October 29, 1994 set a second quarter record with sales up
10%, and net income per share up 18% compared to the prior year's second
quarter.
Financial Details
- -----------------
1995 SECOND QUARTER sales grew to $231 million vs. $209 million, an increase
of 10%. Last year's second quarter sales were up 19% over the preceding year.
Net income for the quarter rose to $12.1 million from $10.4 million last year
for an overall gain of 16%, and a per share gain of 18% or $.67 per share vs.
$.57.
1995 FIRST HALF sales were $405 million, 9% more than last year's $371
million. Excluding the effect of a year-earlier tax accounting change, net
income was $16.3 million, up 14% from the prior year's $14.4 million, or $.90
per share vs. $.79.
After an accounting change, which was unrelated to operations but which raised
last year's first half net income 23%, fiscal 1995 first half net income of
$16.3 million compares to $17.7 million, or $.90 per share vs. $.97 last year.
Television Advertising Campaign
- -------------------------------
At the recently completed High Point Home Furnishings Market, La-Z-Boy
unveiled its planned January launch of a new consumer advertising program
designed to reposition La-Z-Boy as America's preeminent resource for living
room and family room furniture. This new campaign is scheduled to be carried
on prime time television beginning January 30th and is La-Z-Boy's first use
of national television since 1989.
Chairman Comments
- -----------------
La-Z-Boy Chairman and President Charles T. Knabusch said, "Most of our
dealers enjoyed strong business in recent months. The La-Z-Boy proprietary
store business also remains strong, validating the direction and programs
we've undertaken.
Mr. Knabusch said, "With the growth La-Z-Boy has experienced in all
categories, particularly major upholstery, it became evident that we needed
to expand our presentation so retailers could be exposed to the depth and
breadth of the La-Z-Boy line. As a result, we enlarged our High Point
showroom presentation from 29,000 square feet to nearly 60,000 square feet.
The expansion of our showroom, coupled with the new advertising program,
resulted in an overwhelmingly positive response from our dealers. We
anticipate that our placements of major upholstery on retail floors will
increase measurably in the coming months."
Form 10-Q on EDGAR
- ------------------
La-Z-Boy has electronically filed its second quarter FORM 10-Q with the
Securities and Exchange Commission via their EDGAR system. Among other
things, this filing includes the balance sheet, income statement and cash
flow statement and additional management discussion.
La-Z-Boy Chair Company Financial Information Release 1 of 4
CONSOLIDATED SUMMARY OF OPERATIONS 11/15/94
(Amounts in thousands, except per share data)
SECOND QUARTER ENDED (UNAUDITED)
----------------------------------------------
Amounts
------------------ Percent of Sales
Oct. 29, Oct. 23, % Over ----------------
1994 1993 (Under) 1994 1993
-------- -------- ------- ------- -------
Sales $230,586 $209,044 10% 100.0% 100.0%
Cost of sales 166,816 152,160 10% 72.3% 72.8%
-------- -------- ------- ------- -------
Gross profit 63,770 56,884 12% 27.7% 27.2%
S, G & A 43,279 39,204 10% 18.8% 18.7%
-------- -------- ------- ------- -------
Operating profit 20,491 17,680 16% 8.9% 8.5%
Interest expense 752 776 -3% 0.3% 0.4%
Other income 601 411 46% 0.2% 0.2%
-------- -------- ------- ------- -------
Pretax income 20,340 17,315 17% 8.8% 8.3%
Income taxes 8,262 6,900 20% 40.6%** 39.8%**
-------- -------- ------- ------- -------
Net income $12,078 $10,415 16% 5.2% 5.0%
======== ======== ======= ======= =======
Average shares 18,028 18,259 -1%
Earnings per share $0.67 $0.57 18%
Dividends per share $0.17 $0.15 13%
** As a percent of pretax income, not sales.
La-Z-Boy Chair Company Financial Information Release 2 of 4
CONSOLIDATED SUMMARY OF OPERATIONS 11/15/94
(Amounts in thousands, except per share data)
SIX MONTHS ENDED (UNAUDITED)
----------------------------------------------
Amounts
------------------ Percent of Sales
Oct. 29, Oct. 23, % Over ----------------
1994 1993 (Under) 1994 1993
-------- -------- ------- ------- -------
Sales $404,973 $371,140 9% 100.0% 100.0%
Cost of sales 300,470 275,207 9% 74.2% 74.2%
-------- -------- ------- ------- -------
Gross profit 104,503 95,933 9% 25.8% 25.8%
S,G & A 76,051 71,453 6% 18.8% 19.2%
-------- -------- ------- ------- -------
Operating profit 28,452 24,480 16% 7.0% 6.6%
Interest expense 1,414 1,496 -5% 0.3% 0.4%
Other income 887 868 2% 0.2% 0.2%
-------- -------- ------- ------- -------
Pretax income 27,925 23,852 17% 6.9% 6.4%
Income taxes 11,577 9,463 22% 41.5%** 39.7%**
-------- -------- ------- ------- -------
Income before acctg. change 16,348 14,389 14% 4.0% 3.9%
Accounting change - 3,352 N/A - 0.9%
-------- -------- ------- ------- -------
Net income $16,348 $17,741 -8% 4.0% 4.8%
======== ======== ======= ======= =======
Average shares 18,140 18,236 -1%
Earnings per share:
- -------------------
Income before acctg. change $0.90 $0.79 14%
Accounting change - 0.18 N/A
-------- -------- -------
Net income $0.90 $0.97 -7%
======== ======== =======
Dividends per share $0.34 $0.30 13%
** As a percent of pretax income, not sales.
La-Z-Boy Chair Company Financial Information Release 3 of 4
CONSOLIDATED BALANCE SHEET 11/15/94
(Dollars in thousands)
Unaudited Increase
------------------ (Decrease) Audited
Oct. 29, Oct. 23, ---------------- April 30,
1994 1993 Dollars Percent 1994
-------- -------- ------- ------- ---------
Current Assets
Cash & equivalents $12,299 $8,365 $3,934 47% $25,926
Receivables 193,004 181,390 11,614 6% 183,115
Inventories
Raw materials 35,561 33,696 1,865 6% 31,867
Work-in-process 33,302 31,126 2,176 7% 29,325
Finished goods 27,885 28,530 (645) -2% 26,676
-------- -------- ------- ------- --------
FIFO inventories 96,748 93,352 3,396 4% 87,868
Excess of FIFO over LIFO (20,941) (17,961) (2,980) -17% (20,632)
-------- -------- ------- ------- ---------
Total inventories 75,807 75,391 416 1% 67,236
Deferred income taxes 15,849 13,720 2,129 16% 15,160
Other current assets 8,735 6,486 2,249 35% 4,148
-------- -------- ------- ------- ---------
Total Current Assets 305,694 285,352 20,342 7% 295,585
Property, plant & equipment 96,663 93,337 3,326 4% 94,277
Goodwill 20,307 21,213 (906) -4% 20,752
Other long-term assets 19,850 18,451 1,399 8% 19,639
-------- -------- ------- ------- ---------
Total Assets $442,514 $418,353 $24,161 6% $430,253
======== ======== ======= ======= =========
Certain prior year balance sheet items have been reclassed for comparability
to the current year.
La-Z-Boy Chair Company Financial Information Release 4 of 4
CONSOLIDATED BALANCE SHEET 11/15/94
(Dollars in thousands)
Unaudited Increase
------------------ (Decrease) Audited
Oct. 29, Oct. 23, ---------------- April 30,
1994 1993 Dollars Percent 1994
-------- -------- ------- ------- ---------
Current Liabilities
Short-term debt $0 $441 ($441) -100% $0
Current portion of L/T debt 1,875 2,964 (1,089) -37% 2,875
Accounts payable 27,170 28,508 (1,338) -5% 21,552
Payroll/benefits 28,561 25,125 3,436 14% 29,453
Estimated income taxes 3,940 4,207 (267) -6% 3,882
Other current liabilities 18,605 16,823 1,782 11% 13,701
-------- -------- ------- ------- ---------
Total Current Liabilities 80,151 78,068 2,083 3% 71,463
Long-term debt 56,245 52,495 3,750 7% 52,495
Deferred income taxes 6,763 6,452 311 5% 6,949
Other long-term liabilities 8,286 7,160 1,126 16% 8,435
Shareholders' Equity
17,975,406 shares, $1.00 par 17,975 18,284 (309) -2% 18,287
Capital in excess of par 10,412 9,192 1,220 13% 10,147
Retained earnings 263,342 247,217 16,125 7% 263,348
Currency translation (660) (515) (145) -28% (871)
-------- -------- ------- ------- ---------
Total Shareholders' Equity 291,069 274,178 16,891 6% 290,911
-------- -------- ------- ------- ---------
Total Liabilities and
Shareholders' Equity $442,514 $418,353 $24,161 6% $430,253
======== ======== ======= ======= =========
Certain prior year balance sheet items have been reclassed for comparability
to the current year.
5
1,000
Apr-29-1995
Oct-29-1994
6-MOS
12,299
0
210,699
17,695
75,807
305,694
212,075
115,412
442,514
80,151
0
17,975
0
0
273,094
442,514
404,973
404,973
300,470
300,470
76,051
0
1,414
27,925
11,577
16,348
0
0
0
16,348
.90
.90
