SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
to
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1994 - Commission File No. 1-9656
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 N. Telegraph Road, Monroe, Michigan 48161
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number - Area Code (313) 242-1444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON SHARES, $1.00 Par Value
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
-----
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
----- -----
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant as of June 17, 1994.
Common Shares, $1.00 Par Value - $533,081,370
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 17, 1994
Common Shares, $1.00 Par Value 18,303,223
Documents Incorporated By Reference:
Portions of the 1994 Annual Report to Shareholders for the year ended
April 30, 1994 are incorporated by reference into Part I.
Portions of the Annual Proxy Statement filed with the Securities and
Exchange Commission on June 24, 1994 are incorporated by reference into
Part III.
Part I items 1-3 Part II items 5-8, Part III items 10-13 and Part IV item 14
are amended in their entirety, and a new section of Part I is added as set
forth below.
PART I
Item 1. Business
The information required in Part I, Item 1, sections (a), (b) is
contained in the Registrant's 1994 Annual Report to Shareholders,
pages 1 thru 7, and is incorporated herein by reference.
(c)(1)(i) Principal Products
The Registrant operates in the furniture industry and as such does
not have differing segments. "Residential" dealers are those who resell
to individuals for their home use. "Contract" seating and casegood
products are sold to commercial dealers. Additional information
regarding products and market share data is contained in the
Registrant's 1994 Financial Report and Other Information, as shown in
Exhibit I page 22, and is incorporated herein by reference.
(c)(1)(ii) Status of New Products or Segments
There were not any major new products or segments during the 1994
fiscal year.
(c)(1)(iii) Raw Materials
The principal raw materials used by the Registrant in the
manufacture of its products are hardwoods for solid wood dining room
and bedroom furniture, casegoods, occasional tables and for the frame
components of seating units; plywood and chipwood for internal parts;
veneers for dining room furniture, wall units, and occasional tables;
water-based and liquid finishes (stains, sealants, lacquers) for
external wood; steel for the mechanisms; leather, cotton, wool,
synthetic and vinyl fabrics for covers; and polyester batting and
non-chlorofluorocarbonated polyurethane foam for cushioning. Steel and
wood products are generally purchased from a number of sources, usually
in the vicinity of the particular plant, and product-covering fabrics
and polyurethane are purchased from a substantial number of sources on
a centralized basis. The Registrant fabricates the majority of the
parts in its products, largely because quality parts made to its exact
specifications are not obtainable at reasonable cost from outside
sources.
Raw materials costs historically have been about 35 percent of net
sales in the upholstery operations and a somewhat higher percentage in
the casegoods operations. Purchased fabric (which includes leather) is
the largest single raw material cost representing about 40 percent of total
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upholstery product material costs. Polyurethane (poly) foam for cushions
and padding and lumber are the next two largest types of upholstery raw
material costs. Both fabric and poly are highly sensitive to changes in
the price of oil. Price increases for raw materials excluding lumber have
kept pace with the inflation rate in recent years and are expected to
continue to do so. Lumber prices have increased during the past year by
about 10 to 20 percent, depending on the species of lumber.
Lumber, like most commodities, historically has had sharp changes in
prices over the short term and long term. The Registrant is usually not as
affected by these changes as much as other furniture manufacturers due to
the large percentage of upholstered goods manufactured that do not require
as much lumber as casegoods. Also, wood substitutes, (e.g. steel, plastic)
can be used to some degree in upholstered products.
(c)(1)(iv) Patents, Licenses and Franchises or Concessions
The Registrant has a number of patents on its reclining chair and
rocking chair mechanisms which it believes were important to the early
success of the Registrant and to its present competitive position. It
believes, however, that since it is so firmly established in the
industry, the loss of any single or small group of patents would not
now materially or adversely affect the Registrant's business. The
Registrant has no material licenses, franchises or concessions.
(c)(1)(v) Seasonal Business
The Registrant generally experiences its lowest level of sales
during the first quarter. When possible, the scheduling of production
is designed to maintain generally uniform manufacturing activity
throughout the year, except for mid summer plant shutdowns to coincide
with slower sales.
(c)(1)(vi) Practices Regarding Working Capital Items
The Registrant does not carry significant amounts of upholstered
finished goods inventory to meet rapid delivery requirements of
customers or to assure itself of a continuous allotment of goods from
suppliers. Normal customer terms provide for one payment due within 45
days with a 1 percent discount within 30 days (one installment, 1
percent discount 30 net 45).
Most casegoods finished goods inventories are built to provide for
quicker delivery requirements of customers without installment credit
terms therefore, resulting in higher levels of finished product on hand
at any period in time than the upholstered products. Kincaid and
Hammary divisions primarily sell casegood products. Casegoods are also
sold through the Contract Division.
2
(c)(1)(vii) Customers
The Registrant distributes to over 12,000 locations. The
Registrant does not have any customer whose sales amount to 10 percent
or more of the Registrant's consolidated sales. The Registrant's
approximate dealer mix consists of 39 percent proprietary, 15 percent
to major dealers (Montgomery Ward and other department stores) and
46 percent to general dealers.
Proprietary stores consist of stores dedicated to the sale of
La-Z-Boy products and in-store dedicated galleries. The dedicated stores
include La-Z-Boy Furniture Galleries stores and Showcase Shoppes. In-
store dedicated galleries have been established for each of the Company's
divisions.
(c)(1)(viii) Orders and Backlog
It has been determined that the majority of the Registrant's
Residential Division orders were for dealer stock, with approximately 35
percent of orders being requested directly by customers. Furthermore,
about 20 percent of units produced at all divisions were built for the
Registrant's inventory. The remainder were "built-to-order" for dealers.
As of July 2, 1994, backlogs were approximately $73 million compared
to approximately $77 million on June 26, 1993. This represents less than
six weeks of sales. On average, orders are shipped in approximately five
weeks. Any measure of backlog at a point in time may not be indicative of
future sales performance. The Registrant does not rely on backlogs to
predict future sales since the sales cycle is only five weeks and backlog
can change a lot from week to week.
The decrease in backlogs from 1993 to 1994 can be attributed largely
to the unusually high backlog of orders at the end of 1993. At that time
the furniture industry was emerging from a four year recession and the
Registrant had just introduced many new products, such as the American
Home Collection.
The cancellation policy for La-Z-Boy Chair Company, in general,
is that an order cannot be cancelled after it has been put into
production. Orders from prebuilt stock though, may be cancelled up to the
time of shipment.
(c)(1)(ix) Renegotiation Contracts
The Registrant does not have any material portion of business
which may be subject to renegotiation of profits or termination of
contracts or subcontracts at the election of the Government.
(c)(1)(x) Competitive Conditions
3
The Registrant believes that it ranks third in the U.S. in dollar
volume of sales within the Residential furniture industry, which
includes manufacturers of bedroom, dining room and living room
furniture. Based on the most accurate statistics available, the
Registrant believes that it is the largest manufacturer of upholstered
products and solid wood bedroom/dining room products in the United
States.
The Registrant competes primarily by emphasis on quality of its
products, dealer support and a lifetime warranty on the reclining and
legrest mechanisms.
The Registrant has approximately fifteen major competitors in the
reclining or motion chair field and a substantially larger number of
competitors in the upholstery business as a whole and in the Casegoods
and Contract businesses.
The Registrant's best U.S. market share information (in dollars,
not units) indicates that it has about 30 to 35 percent of the
recliner market, above 8 percent of the residential upholstery market,
and less than 2 percent of the residential casegoods market. These
market shares have been increasing slightly over the last three years
in most lines.
(c)(1)(xi) Research & Development
The Registrant spent $6.4 million in fiscal 1994 for new product
development, existing product improvement, quality control,
improvement of current manufacturing operations and research into the
use of new materials in the construction of its products. The
Registrant spent $6.2 million in fiscal 1993 on such activities and
$5.5 million on such activities in fiscal 1992. The Registrant's
customers do not engage in research with respect to the Registrant's
products.
(c)(1)(xii) Compliance with Environmental Regulations
The Registrant has been identified as a Potentially Responsible Party
("PRP") at two clean-up sites: Organic Chemical and Seaboard Chemical
Company. At each site, the Company has been identified as a de minimus
contributor and volumetric assessments indicate that the Company's
contributions to each site have been less than .1% of the total. Each
site has either completed or has begun the Phase I cleanup and the total
cleanup costs expected to be incurred at each site have been estimated.
The Company is also participating with a number of other companies in the
voluntary RCRA closure of the Caldwell Systems site. The Company's
volumetric assessment at this site is in the 1% range. The steering
committee responsible for negotiating the cleanup plan with the EPA has
recently reinitiated its negotiations in anticipation of initial cleanup
4
activities. Estimates of the cleanup costs at the Caldwell site are
also available. The number of PRP's and voluntary participants at the
three sites range from 182 to in excess of 1,750. Based on a review of
the number, composition and financial stability of the PRP's and voluntary
participants at each site, along with cleanup cost estimates available,
management does not believe that any significant risk exists that the
Company will be required to incur total costs in excess of $100,000 at
any of the sites. At April 30, 1994, a total of $300,000 has been accrued
with respect to these three sites.
The Registrant's current environmental compliance concerns are focused
on new regulations for Storm Water Pollution Prevention and the 1990
Clean Air Act Amendments. The Registrant has participated in a group storm
water permit program sponsored by its trade association (American
Furniture Manufacturers Association - AFMA); has contracted with a
consulting firm to provide assistance to its plants with the
development of Storm Water Pollution Prevention Plans; and has
contracted with another firm to conduct detailed air emission
inventories and assist in the preparation of timely and complete
operating permits for Clean Air Act compliance. The Registrant feels that
compliance with these issues is important for maintaining its ongoing
operations and competitive position. The Registrant does not anticipate
that this compliance effort will have a significant effect on capital
expenditures, earnings or competitive position.
(c)(1)(xiii) Number of Employees
The Registrant and its subsidiaries employed 9,370 persons as of
April 30, 1994 and 8,724 persons as of April 24, 1993.
(d) Financial Information about Foreign and Domestic Operations and
Export Sales.
The Registrant does not make any material amount of sales of
upholstered furniture to foreign customers. The Registrant sells
upholstered furniture to Canadian customers through its Canadian
subsidiary, La-Z-Boy Canada Limited.
The Registrant also derives an insignificant amount of royalty
revenues from the sale and licensing of its trademarks, tradenames and
patents to certain foreign manufacturers.
Export sales are increasing, but no specific sales objectives have
been set at this time.
5
Item 2. Properties
In the United States, the Registrant operates twenty-three
manufacturing plants (most with warehousing space), has an automated
fabric processing center and divisional and corporate offices. The
Registrant has one manufacturing plant in Canada. Some locations listed
below have more than one plant.
The location of these plants, the approximate floor space,
principal operations conducted and the approximate number of employees
at such locations as of April 30, 1994 are as follows:
Floor Space Number of
Location (square feet) Operations Conducted Details Employees
-------- ------------- --------------------- ------- ---------
Monroe, 233,900 Corporate offices (1) 476
Michigan
Newton, 628,175 Manufacture, assembly, (2) 1,136
Mississippi leather cutting and
warehousing of upholstery
Redlands, 189,125 Upholstering, assembly (3) 267
California and warehousing of
upholstery
Florence, 414,920 Manufacture, assembly (4) 449
South Carolina and warehousing of
upholstery
Florence, 48,400 Fabric processing (5) 17
South Carolina center
Neosho, 560,640 Manufacture, assembly (6) 1,105
Missouri and warehousing of
upholstery
Dayton, 909,320 Manufacture, assembly (7) 1,808
Tennessee and warehousing of
upholstery
Siloam Springs, 200,910 Manufacture and (8) 296
Arkansas assembly of upholstery
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Floor Space Number of
Location (square feet) Operations Conducted Details Employees
------------ ------------ ---------------------- --------- ---------
Tremonton, 672,770 Manufacture, assembly (9) 839
Utah and warehousing of
upholstery
Leland, 311,990 Manufacture, assembly and (10) 413
Mississippi warehousing of Contract
casegoods and upholstery
Waterloo, 257,340 Manufacture, assembly, (11) 412
Ontario and warehousing of
upholstery
Lincolnton, 373,830 Manufacture and (12) 393
North Carolina assembly of upholstery
Grand Rapids, 440,000 Manufacture and assembly (13) 117
Michigan of Contract office
furniture/systems
Lenoir area 554,770 Manufacture, assembly and (14) 467
(Hammary), warehousing of primarily
North Carolina Casegoods and some
upholstered products
Hudson area 1,045,050 Manufacture, assembly, (15) 1,175
(Kincaid), and warehousing of
North Carolina Casegoods
--------- -----
6,841,140 9,370
(1) On December 1, 1974, the Registrant purchased from Floral City
Furniture Company a 15,700 square foot showroom adjacent to
the Registrant's Home Office and a plant on Telegraph Road in
Monroe, Michigan. This facility was constructed in 1935 and
expanded in 1970 to a total square footage of 215,200. It was
brought to its present size by an addition of 18,700 square
feet in 1990.
(2) Originally built in 1961 with 274,200 square feet of space and
includes: 190,000 square foot addition started during 1986,
4,000 square feet added in 1990, 19,100 square feet
constructed in 1991 and 13,510 square feet added in 1992. In
1992, an 82,500 square foot woodworking facility was
constructed. During 1993, the manufacturing and warehouse
buildings were expanded a total of 43,200 square feet. In
1994, a chiller building and a conveyor pit were constructed.
7
(3) The original building of 158,670 square feet was constructed
in 1967. A 21,200 square foot warehouse addition was completed
in 1987 and a 9,255 square foot warehouse addition was completed
in 1992.
(4) 244,085 and 67,680 square feet represent additions constructed
in 1969 and 1973. In 1994, a 7,020 square foot batting storage
building was completed. The balance represents a building
constructed prior to 1930 and purchased in 1966.
(5) The original building of 24,900 square feet was completed in
1975. The Registrant completed construction of a 23,500
square foot addition to the Fabric Processing Center in 1980.
(6) This facility includes a 130,000 square foot addition completed in
1979, two dry kilns constructed in 1985 at a total square
footage of 4,300, a 72,000 square foot manufacturing addition
completed in 1987 and in addition made in 1990 of 25,000 square
feet. During 1993 a 37,500 square foot metal stamping room was
added. The balance of 291,840 represents the original building
which was constructed in 1969.
(7) The original building of 320,420 square feet was constructed
in 1973. Additions include: a 48,800 square foot warehouse
addition completed in 1982, 195,000 square feet started during
1986, 68,700 square feet added in 1990, a major upholstery
plant of 274,600 square feet added in 1991, and an 1,800
square foot storage building completed in 1992.
(8) Includes 24,595 square feet from an addition constructed in
1973, 74,000 square feet represents an addition constructed in
1985, 11,310 square feet were added in 1986 and the balance
represents a building constructed in 1943 and purchased in
1973.
(9) The original building of 220,400 square feet was constructed in
1979. Additions include a 60,000 square foot warehouse addition
completed in 1982, a 121,960 square foot addition completed in
1984, 62,500 square feet of expansion during 1989 and an
upholstery plant addition of 207,910 square feet in 1991.
(10) In 1985, the Registrant acquired the net assets of Dillingham
Manufacturing Company, Inc., which included a 153,500 square
foot manufacturing plant located in Leland, Mississippi. This
building was originally constructed in 1959 and 1970. There
was a 153,035 square foot expansion done during 1990. In 1992,
a 7,300 square foot office addition was completed on the site
of the previous office and in 1993, a 1,450 square foot
maintenance shop was added.
8
(11) As of February 28, 1979, the Registrant acquired the net
assets of Deluxe Upholstering Limited from the Molson
Companies Limited, which included a 124,300 square foot
manufacturing plant located in Waterloo, Ontario, Canada. In
1985, the Registrant relocated its manufacturing plant in
Waterloo, to an existing facility of 209,820 square feet
within the same city and expanded it to its present size in
1989.
(12) In 1986, the net assets of Burris Industries were acquired,
which included a 373,830 square foot manufacturing plant
located in Lincolnton, North Carolina. The building parts were
constructed in 1963, 1965, 1969 and 1974.
(13) In 1986, the net assets of RoseJohnson Incorporated were
acquired, which included a three building total of 440,000
square feet located in Grand Rapids, Michigan. Two of the
buildings were constructed in the early 1900's. Of the two
buildings, one building contains 185,000 total square feet, while
the other building contains 145,000 square feet. The third
building, consisting of 110,000 square feet, was completed in 1960.
(14) In 1986, the operating assets of Hammary Furniture Company
were acquired, which included three manufacturing facilities:
one built in 1946 consisting of 136,500 square feet located in
Lenoir, North Carolina; another constructed in 1968 with
341,580 square feet, including a warehouse of 141,000 built in
1990, located in Granite Falls, North Carolina; and a third
facility in Sawmills, North Carolina, built in 1963 consisting
of 75,000 square feet. During 1993, a 4,000 square foot dry
lumber storage building was built to replace a 2,310 square
foot building that was torn down.
(15) In 1988, the net assets of Kincaid Furniture Company were
acquired, which included 730,000 square feet in six
manufacturing locations within North Carolina. A 237,500
square foot warehouse addition was completed in 1991 and a
5,000 square foot boiler building was added in 1993. During
1994, the completion of the following additions expanded
Kincaid by 72,550 square feet: a cafeteria, a rough mill
building, a dry shed building, and a finishing room.
The Monroe, Michigan; Redlands, California; Dayton, Tennessee; Siloam
Springs, Arkansas; Waterloo, Ontario, Canada; Lincolnton, North
Carolina; Grand Rapids, Michigan; Lenoir, North Carolina; Hudson, North
Carolina and Newton, Mississippi woodworking facility plants are owned
in fee by the Registrant. The Florence, South Carolina; Neosho,
Missouri; Newton, Mississippi and Tremonton, Utah plants as well as the
automated Fabric Processing Center were financed by the issuance of
industrial revenue bonds and are occupied under long-term leases with
9
government authorities. The Leland, Mississippi plant is under a long
term lease between the Board of Supervisors of Washington County,
Mississippi (lessor) and La-Z-Boy Chair Company (lessee). These leases
are capitalized on the Registrant's books. The Registrant believes
that its plants are well maintained, in good operating condition and
will be adequate to meet its present and near future business
requirements. The average age of the Registrants' properties is 25
years.
Item 3. Legal Proceedings
Information relating to certain legal proceedings (Note 9 of the
Consolidated Financial Statements in the Registrant's 1994 Financial
Report and Other Information, as shown in Exhibit I page 17) is
incorporated herein by reference.
Executive Officers of the Registrant
Listed below is the information required for the Executive Officers of the
Company
Name Age Business Experience
Charles T. Knabusch 54 Chairman of the Board and President of the
Company for more than five years.
Edwin J. Shoemaker 87 Vice Chairman of the Board and Executive
Vice President of Engineering for more
than five years.
Frederick H. Jackson 66 Vice President Finance for more than five years.
Patrick H. Norton 72 Senior Vice President, Sales and Marketing for
more than five years.
Charles W. Nocella 62 Vice President of Manufacturing for more than
five years.
Gene M. Hardy 57 Secretary and Treasurer of the Company for more
than five years.
PART II
The information required in Part II (Items 5 thru 8) is contained
in the La-Z-Boy Chair Company's 1994 Financial Report and Other Information,
Exhibit I pages 1 thru 17 and 24 through 35, and is incorporated herein by
reference.
Item 9 is not applicable.
10
PART III
For information concerning the Company's Executive Officers required
by Regulation S-K 401(b), see "Executive Officers of the Registrant"
above. All other information required in Part III (Items 10 thru 13) is
contained in the Registrant's proxy statement dated June 24, 1994, on
pages 1 thru 14, and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Index to Financial Statements
(1) Financial Statements:
Page in Exhibit I
Report of Independent Accountants . . . . . . . . . . 2
Consolidated Statements of Income for the
three years ended April 30, 1994 . . . . . . . . . . 3
Consolidated Balance Sheets at April 30, 1994
and April 24, 1993 . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
three years ended April 30, 1994 . . . . . . . . . . 6
Consolidated Statements of Changes in Share-
holders' Equity for the three years ended
April 30, 1994 . . . . . . . . . . . . . . . . . . . 8
Notes to Consolidated Financial Statements . . . . . 9
(2) Financial Statement Schedules:
For the three years ended April 30, 1994
V Property, Plant and Equipment . . . . . . . . . 18
VI Accumulated Depreciation, Depletion and Amorti-
zation of Property, Plant and Equipment . . . . 20
VIII Valuation and Qualifying Accounts . . . . . . . 22
IX Supplementary Income Statement Information . . . 23
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
(3) Exhibits
I. 1994 Financial Report and Other Information (filed with this
amendment)
11
II. Pages 1-7 of the Registrant's Annual Report to Shareholders
(previously filed as an exhibit to this report on Form 10-K).
III. Articles of Incorporation filed on Form 10-K dated July 20,
1993 (Commission File No. 1-9656) is incorporated herein by
reference.
IV. By-laws filed on Form 10-K dated July 20, 1993 (Commission File
No. 1-9656) is incorporated herein by reference.
V. Form of certificate for Common Stock $1.00 par value (filed
as an exhibit to registrant's Form S-8 Registration Statement
(Commission File No. 33-50318) and incorporated herein by
reference).
* VI. La-Z-Boy Chair Company 1993 Performance-Based Stock plan (filed
as Exhibit A to registrant's proxy statement dated June 25, 1993
(Commission File No. 1-9656) and incorporated herein by
reference).
* VII. La-Z-Boy Chair Company Restricted Stock Plan for Non-Employee
Directors (filed as Exhibit B to registrant's proxy statement
dated July 6, 1989 (Commission File No. 1-9656) and incorporated
herein by reference).
*VIII.La-Z-Boy Chair Company Executive Incentive Compensation Plan
Description (filed as an exhibit to registrant's Current Report
on Form 8-K dated February 6, 1995 (Commission File No. 1-9656)
and incorporated herein by reference).
*IX. La-Z-Boy Chair Company Supplemental Executive Retirement Plan
dated May 1, 1991 (filed as an exhibit to registrant's Current
Report on Form 8-K dated February 6, 1995 (Commission File No.
1-9656) and incorporated herein by reference).
*X. La-Z-Boy Chair Company 1986 Restricted Share Plan (filed as an
exhibit to registrant's proxy statement dated June 26, 1986
(Commission File No. 1-9656) and incorporated herein by reference).
12
*XI. La-Z-Boy Chair Company Amended and Restated 1989 Restricted Share
Plan filed as Exhibit A to registrant's proxy statement dated
July 6, 1989 (Commission File No. 1-9656) and incorporated herein
by reference).
*XII.La-Z-Boy Chair Company 1986 Incentive Stock Option Plan (filed
as Exhibit B to registrant's proxy statement dated June 26, 1986
(Commission File No. 1-9656) and incorporated herein by
reference).
*XIII.Form of Change in Control Agreement, accompanied by list of
employees party thereto (filed as an exhibit to registrant's
Current Report on Form 8-K dated February 6, 1995 (Commission
File No. 1-9656) and incorporated herein by reference).
*XIV. Form of Indemnification Agreement and list of Registrant's
directors who are parties thereto (filed as an exhibit to Form 8,
Amendment No. 1 dated November 3, 1989 (Commission File No.
1-9656) and incorporated herein by reference).
XV. Agreement and Plan of Merger with Kincaid Furniture Company,
Incorporated (filed as Exhibit (c) to registrant's Schedule 14D-1
dated December 18, 1987 (Commission File No. S-36021) and
incorporated herein by reference).
XVI. Revolving Credit and Term Loan Agreement dated as of April 22,
1988 (filed as an exhibit to registrant's Form 8, Amendment No. 1
dated November 3, 1989 (Commission File No. 1-9656) and
incorporated herein by reference).
XVII.Fixed Rate Term Loan Agreement dated as of April 22, 1988 (filed
as an exhibit to registrant's Form 8, Amendment No. 1 dated
November 3, 1989 (Commission File No. 1-9656) and incorporated
herein by reference).
XVIII.La-Z-Boy Chair Company 1979 Key Employee Stock Option Plan (filed
as an exhibit to Form S-8 Registration Statement effective
February 15, 1980 (Commission File No. 2-66510) and incorporated
herein by reference).
13
XIX. List of subsidiaries of La-Z-Boy Chair Company filed as an exhibit
to Form S-4 (Commission File No. 33-57623) and incorporated herein
by reference).
XX. Consent of Price Waterhouse LLP (filed with this amendment).
(27) Financial Data Schedule (EDGAR only)
________________________________
* Indicates a contract or benefit plan under which one or more executive
officers or directors may receive benefits.
(b) Reports on Form 8-K
News Release and Financial Information Release filed on Form 8-K,
dated June 2, 1994 (Commission File No. 1-9656).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
LA-Z-BOY CHAIR COMPANY
BY s\ F. H. Jackson March 20, 1995
-----------------
F. H. Jackson
Vice President Finance
14
EXHIBIT I: 1994 FINANCIAL REPORT AND OTHER INFORMATION
1
Report of Independent Accountants
To the Board of Directors and Shareholders
of La-Z-Boy Chair Company:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) on page 11 present fairly, in all material
respects, the financial position of La-Z-Boy Chair Company and its subsidiaries
at April 30, 1994 and April 24, 1993, and the results of their operations and
their cash flows for each of the three years in the period ended April 30, 1994,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 8 to the Consolidated Financial Statements, on April 25,
1993, the Company changed its method of accounting for income taxes.
Price Waterhouse LLP
Toledo, Ohio
June 2, 1994
2
Consolidated Statement of Income
(Amounts in thousands, except per share data)
- -----------------------------------------------------------------------------
Year Ended April 30, April 24, April 25,
1994 1993 1992
(53 weeks) (52 weeks) (52 weeks)
- -----------------------------------------------------------------------------
Sales................................ $804,898 $684,122 $619,471
Cost of sales........................ 593,890 506,435 453,055
--------- --------- ---------
Gross profit....................... 211,008 177,687 166,416
Selling, general and administrative.. 151,756 131,894 123,927
--------- --------- ---------
Operating profit................... 59,252 45,793 42,489
Interest expense..................... 2,822 3,260 5,305
Interest income...................... 1,076 1,474 1,093
Other income......................... 649 1,292 1,628
--------- --------- ---------
Total other income................. 1,725 2,766 2,721
Income before income tax expense..... 58,155 45,299 39,905
Income tax expense
Federal - current.................. 19,719 16,726 17,595
- deferred................. (445) (1,965) (5,417)
State - current.................. 4,283 3,254 2,627
- deferred................. (119) - -
--------- --------- ---------
Total tax expense................ 23,438 18,015 14,805
--------- --------- ---------
Net income before accounting change.. 34,717 27,284 25,100
Accounting change.................... 3,352 - -
--------- --------- ---------
Net income....................... $38,069 $27,284 $25,100
========= ========= =========
Weighted average shares.............. 18,268 18,172 18,064
========= ========= =========
Net income per share before
accounting change.................. $1.90 $1.50 $1.39
Accounting change.................... .18 - -
--------- --------- ---------
Net income per share............. $2.08 $1.50 $1.39
========= ========= =========
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
Acquisition amortization of $1,056 in 1994 and $1,039 in 1993 and 1992 has
been reclassified from other income to selling, general and administrative.
3
Consolidated Balance Sheet
(Amounts in thousands, except par value)
- ----------------------------------------------------------------------------
As of April 30, April 24,
1994 1993
- ----------------------------------------------------------------------------
Assets
- ------
Current Assets
Cash and equivalents.............................. $ 25,926 $ 28,808
Receivables, less allowances of $13,537 in 1994
and $10,500 in 1993............................. 183,115 169,950
Inventories
Raw materials................................... 31,867 27,555
Work-in-progress................................ 29,325 30,598
Finished goods.................................. 26,676 20,135
--------- ---------
FIFO inventories.............................. 87,868 78,288
Excess of FIFO over LIFO...................... (20,632) (17,801)
--------- ---------
Total inventories........................... 67,236 60,487
Deferred income taxes............................. 15,160 9,152
Other current assets.............................. 4,148 5,065
--------- ---------
Total Current Assets............................ 295,585 273,462
Property, plant and equipment, net.................. 94,277 90,407
Goodwill, less accumulated amortization of
$5,574 in 1994 and $4,668 in 1993................. 20,752 21,658
Other long-term assets, less allowances of
$1,257 in 1994 and $1,170 in 1993................. 19,639 15,537
--------- ---------
Total Assets.................................. $430,253 $401,064
========= =========
4
Consolidated Balance Sheet
(Amounts in thousands, except par value)
- ----------------------------------------------------------------------------
As of April 30, April 24,
1994 1993
- ----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities
Current portion of long-term debt................. $ 2,875 $ 542
Accounts payable.................................. 21,552 20,010
Payroll/benefits.................................. 29,453 28,411
Estimated income taxes............................ 3,882 9,011
Other current liabilities......................... 13,701 13,090
--------- ---------
Total Current Liabilities....................... 71,463 71,064
Long-term debt...................................... 52,495 55,370
Deferred income taxes............................... 6,949 4,857
Other long-term liabilities......................... 8,435 6,387
Shareholders' Equity
Preferred Shares - 5,000 authorized; 0 issued..... - -
Common shares, $1 par value - 40,000 authorized;
18,287 issued in 1994 and 18,195 in 1993........ 18,287 18,195
Capital in excess of par value.................... 10,147 8,494
Retained earnings................................. 263,348 236,842
Currency translation adjustments.................. (871) (145)
--------- ---------
Total Shareholders' Equity...................... 290,911 263,386
--------- ---------
Total Liabilities and Shareholders' Equity.... $430,253 $401,064
========= =========
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements. Certain April 24, 1993 balance sheet items have
been reclassed for comparability to April 30, 1994.
5
Consolidated Statement of Cash Flows
(Amounts in thousands) Increase (Decrease) in Cash and Equivalents
- -----------------------------------------------------------------------------
Year Ended April 30, April 24, April 25,
1994* 1993 1992
(53 weeks) (52 weeks) (52 weeks)
- -----------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income.............................. $ 38,069 $ 27,284 $ 25,100
Adjustments to reconcile net income to net
cash provided by operating activities:
Accounting change................... (3,352) - -
Depreciation and amortization....... 14,014 14,061 14,840
Change in receivables............... (13,165) (14,475) (7,039)
Change in inventories............... (6,749) (2,679) 2,599
Change in other assets and liab..... (168) 12,368 6,301
Change in deferred taxes............ (564) (1,965) (5,417)
--------- --------- ---------
Total adjustments................. (9,984) 7,310 11,284
--------- --------- ---------
Cash Provided by Operating
Activities...................... 28,085 34,594 36,384
Cash Flows from Investing Activities:
Proceeds from disposals of assets....... 177 2,100 508
Capital expenditures.................... (17,485) (12,248) (12,187)
Change in pref. stocks held as invest... - - 1,583
Change in other investments............. (2,981) (2,624) -
--------- --------- ---------
Cash Used for Investing Activities (20,289) (12,772) (10,096)
Cash Flows from Financing Activities:
Short-term debt......................... 727 1,767 4,444
Long-term debt.......................... - - 24,700
Change in unexpended IRB funds.......... - - 414
Retirements of debt..................... (1,269) (6,581) (39,285)
Sale of stock under stock option plans.. 1,850 1,372 1,973
Stock for 40l(k) employee plans......... 2,952 2,503 1,533
Purchase of La-Z-Boy stock.............. (2,928) (2,676) (388)
Payment of cash dividends............... (11,692) (10,902) (10,474)
--------- --------- ---------
Cash Used for Financing Activities (10,360) (14,517) (17,083)
Effect of exchange rate changes on cash... (318) (234) (428)
--------- -------- ---------
Net change in cash and equivalents........ (2,882) 7,071 8,777
Cash and equiv. at beginning of the year.. 28,808 21,737 12,960
--------- --------- ---------
Cash and equiv. at end of the year........ $25,926 $28,808 $21,737
========= ========= =========
Cash paid during the year - Income taxes.. $29,116 $16,789 $20,128
- Interest...... $2,675 $3,108 $5,105
6
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 Consolidated Financial Statements are an integral
part of these statements.
*Certain April 24, 1993 balance sheet items have been reclassed for
comparability to April 30, 1994.
7
Consolidated Statement of Changes in Shareholders' Equity
(Amounts in thousands)
- ------------------------------------------------------------------------------
Capital Currency
in Trans-
Excess lation
Common of Par Retained Adjust-
Shares Value Earnings ments Total
- ------------------------------------------------------------------------------
Balance at April 27, 1991.. $17,979 $ 6,293 $203,934 $1,011 $229,217
Purchase of La-Z-Boy stock... (16) (372) (388)
Currency translation......... (602) (602)
Exercise of stock options.... 107 427 1,439 1,973
Exercise of 40l(k) stock..... 65 585 883 1,533
Dividends paid............... (10,474) (10,474)
Net income................... 25,100 25,100
-------- ------- --------- ------- ---------
Balance at April 25, 1992.. 18,135 7,305 220,510 409 246,359
Purchase of La-Z-Boy stock... (117) (2,559) (2,676)
Currency translation......... (554) (554)
Exercise of stock options.... 74 245 1,053 1,372
Exercise of 40l(k) stock..... 103 944 1,456 2,503
Dividends paid............... (10,902) (10,902)
Net income................... 27,284 27,284
-------- ------- --------- ------- ---------
Balance at April 24, 1993.. 18,195 8,494 236,842 (145) 263,386
Purchase of La-Z-Boy stock... (91) (2,837) (2,928)
Currency translation......... (726) (726)
Exercise of stock options.... 90 307 1,453 1,850
Exercise of 40l(k) stock..... 93 1,346 1,513 2,952
Dividends paid............... (11,692) (11,692)
Net income................... 38,069 38,069
-------- ------- --------- ------- ---------
Balance at April 30, 1994.. $18,287 $10,147 $263,348 ($871) $290,911
======== ======= ========= ======= =========
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
8
Notes to Consolidated Financial Statements
Note 1: Accounting Policies
The Company operates in the furniture industry. The following is a summary of
significant accounting policies followed in the preparation of these financial
statements.
Principles of Consolidation
The consolidated financial statements include the accounts of La-Z-Boy Chair
Company and its wholly owned subsidiaries. All significant intercompany
transactions have been eliminated.
Revenue Recognition
Revenue is recognized upon shipment of product.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined on
the last-in, first-out (LIFO) basis.
Property, Plant and Equipment
Items capitalized, including significant betterments to existing facilities,
are recorded at cost. Depreciation is computed using primarily accelerated
methods over the estimated useful lives of the assets.
Goodwill
The excess of the cost of operating companies acquired over the value of their
net assets is amortized on a straight-line basis over 30 years from the date
of acquisition.
Income Taxes
Income tax expense is provided on all revenue and expense items included in
the consolidated statement of income, regardless of the period such items are
recognized for income tax purposes. In fiscal 1994 the Company changed its
method of accounting for income taxes (see Note 8).
9
PAGE
Note 2: Cash and Equivalents
(Amounts in thousands)
- -----------------------------------------------------------------
April 30, April 24,
1994 1993
- -----------------------------------------------------------------
Cash in bank........................... $ 5,926 $ 5,808
Certificates of deposit................ 20,000 15,000
Commercial paper....................... - 8,000
------- -------
Total cash and equivalents........... $25,926 $28,808
======= =======
The Company invests in certificates of deposit with a bank whose board of
directors includes three members of the Company's board of directors. At the
end of 1994 and 1993, $10 million and $15 million, respectively, was invested
in this bank's certificates.
Note 3: Property, Plant and Equipment
(Amounts in thousands)
- ------------------------------------------------------------------
April 30, April 24,
1994 1993
- ------------------------------------------------------------------
Land and land improvements............ $ 7,117 $ 6,604
Buildings and building fixtures....... 92,720 88,669
Machinery and equipment............... 82,971 73,281
Information systems................... 9,859 10,523
Other................................. 11,789 12,092
-------- --------
204,456 191,169
Less: accumulated depreciation....... 110,179 100,762
-------- --------
Property, plant and equipment, net.. $ 94,277 $ 90,407
======== ========
10
PAGE
Note 4: Debt
(Dollar amounts in thousands)
- -------------------------------------------------------------------------
Interest April 30, April 24,
rates Maturities 1994 1993
- -------------------------------------------------------------------------
Credit lines.............. 4.1% 1995-98 $15,000 $15,000
Private placement......... 8.8% 1995-02 15,000 15,000
Industrial 2.7%-
revenue bonds........... 3.3% 1995-12 25,370 25,912
------- -------
Total debt................................... $55,370 $55,912
Less: current portion........................ 2,875 542
------- -------
Long-term debt............................... $52,495 $55,370
======= =======
Weighted average interest 4.8% 4.8%
Fair value of long-term debt $56,003 $56,597
In April 1991 the Company entered into a $50 million unsecured revolving
credit line (Credit Agreement) to extend through August 31, 1998, requiring
interest payments only through August 31, 1994 and periodic payments of
principal and interest through 1998. The Company is in the process of
renewing the Credit Agreement to require interest only payments through
August 1999 and to require principal payment in August 1999. The Credit
Agreement also includes covenants that, among other things, require the
Company to maintain certain financial statement ratios. The Company has
complied with all of the requirements.
Proceeds from industrial revenue bonds were used to finance the construction
of manufacturing facilities. These arrangements require the Company to insure
and maintain the facilities and make annual payments that include interest.
The bonds are secured by the facilities constructed from the bond proceeds.
Maturities on debt obligations for the five years subsequent to April 30,
1994 are $3 million, $2 million, $3 million, $2 million and $3 million,
respectively. As of April 30, 1994, the Company had remaining unused lines
of credit and commitments of $60 million under several credit arrangements.
11
PAGE
Note 5: Stock Option Plans
The Company's shareholders adopted an employee stock option plan that provides
grants to certain employees to purchase common shares of the Company at not
less than their fair market value at the date of grant. Options are for five
years and become exercisable at 25% per year beginning one year from date of
grant. The Company is authorized to grant options for up to 1,600,000 common
shares.
- --------------------------------------------------------------------
Number of Per share
shares option price
- --------------------------------------------------------------------
Outstanding at April 25, 1992.... 415,942 $14.13 - $22.13
Granted........................ 133,750 $21.75
Exercised...................... (59,099) $14.13 - $22.13
Expired or cancelled........... (27,019)
- --------------------------------------------------------------------
Outstanding at April 24, 1993.... 463,574 $14.13 - $22.13
Granted........................ 120,110 $29.63
Exercised...................... (78,584) $14.13 - $22.13
Expired or cancelled........... (15,126)
- --------------------------------------------------------------------
Outstanding at April 30, 1994.... 489,974 $14.13 - $29.63
- --------------------------------------------------------------------
Exercisable at April 30, 1994.... 193,915
Shares available for grants at
April 30, 1994................. 877,725
- --------------------------------------------------------------------
The Company's shareholders have adopted Restricted Share Plans under which the
Compensation and Stock Option Committee of the Board of Directors was
authorized to offer for sale up to an aggregate of 650,000 common shares to
certain employees and non-employee directors at 25% of the fair market value
of the shares. The plans require that all shares be held in an escrow account
for a period of three years in the case of an employee, or until the
participant's service as a director ceases in the case of a director. In the
event of an employee's termination during the escrow period, the shares must
be sold back to the Company at the employee's cost.
Shares aggregating 11,800 and 14,450 were granted and issued during the fiscal
years 1994 and 1993, respectively, under the Restricted Share Plans. Shares
remaining for future grants under the above plans amounted to 442,075 at
April 30, 1994.
The Company's shareholders have also adopted a Performance-Based Restricted
Stock Plan. This plan authorizes the Compensation and Stock Option Committee
of the Board of Directors to award up to an aggregate of 400,000 shares to key
employees. Grants of shares are based entirely on achievement of goals over
12
a three-year performance period. Any award made under the plan will be at
the sole discretion of the Committee after judging all relevant factors. At
April 30, 1994, performance awards were outstanding pursuant to which up to
47,000 shares and 43,520 shares may be issued in fiscal years 1996 and 1997,
respectively, depending on the extent to which certain specified performance
objectives are met. The costs of performance awards are expensed over the
performance period.
Note 6: Retirement
The Company has contributory and non-contributory retirement plans covering
substantially all factory employees.
Eligible salaried employees are covered under a trusteed profit sharing
retirement plan. Cash contributions to a trust are made annually based on
profits.
The Company has established a non-qualified deferred compensation plan for
highly compensated employees called a SERP (Supplemental Executive Retirement
Plan).
The Company offers a voluntary 401(k) retirement plan to eligible employees
within all U.S. operating divisions. Currently over 70% of eligible employees
are participating in the plan. Employee contributions are matched with
La-Z-Boy stock at $0.50 on the dollar up to a maximum company contribution of
1% of pay.
The actuarially determined net periodic pension cost and retirement costs are
computed as follows (for the years ended):
(Amounts in thousands)
- ------------------------------------------------------------------------------
April 30, April 24, April 25,
1994 1993 1992
(53 weeks) (52 weeks) (52 weeks)
- ------------------------------------------------------------------------------
Service cost........................... $1,526 $1,426 $ 839
Interest cost.......................... 1,683 1,455 1,303
Actual return on plan assets........... (719) (2,197) (2,428)
Net amortization and deferral.......... (1,575) (234) 233
------- ------- -------
Net periodic pension cost............ 915 450 (53)
Profit sharing......................... 4,659 4,341 3,557
SERP................................... 795 691 559
40l(k)................................. 1,145 1,002 835
Other.................................. 442 478 726
------- ------- -------
Total retirement costs............... $7,956 $6,962 $5,624
======= ======= =======
13
The funded status of the pension plans was as follows:
(Amounts in thousands)
- ------------------------------------------------------------------------------
April 30, April 24,
1994 1993
- ------------------------------------------------------------------------------
Actuarial present value of accumulated benefit
obligation........................................ ($23,887) ($19,608)
Plan assets at fair value........................... 28,531 27,134
--------- ---------
Excess of plan assets over projected benefit
obligation...................................... 4,644 7,526
Prior year service cost not yet recognized in net
periodic pension cost............................. 1,117 1,215
Unrecognized net loss............................... 5,274 1,895
Unrecognized initial asset.......................... (3,995) (4,326)
--------- ---------
Prepaid pension asset............................. $7,040 $6,310
========= =========
The expected long-term rate of return on plan assets was 8.5% for 1994 and 9.0%
for 1993 and 1992. The discount rate used in determining the actuarial present
value of accumulated benefit obligations was 7.5% for 1994, 8.0% for 1993 and
8.5% for 1992. Vested benefits included in the accumulated benefit obligation
were $21 million and $17 million at April 30, 1994 and April 24, 1993,
respectively. Plan assets are invested in a diversified portfolio that
consists primarily of debt and equity securities.
The Company's pension plan funding policy has been to contribute annually the
maximum amount that can be deducted for federal income tax purposes.
Note 7: Health Care
The Company offers eligible employees an opportunity to participate in group
health plans. Participating employees make required premium payments through
pretax payroll deductions.
Health-care expenses were as follows (for the years ended):
(Amounts in thousands)
- ----------------------------------------------------------------------------
April 30, April 24, April 25,
1994 1993 1992
(53 weeks) (52 weeks) (52 weeks)
- ----------------------------------------------------------------------------
Gross health care................. $29,061 $23,962 $22,298
Participant payments.............. (4,442) (2,356) (1,323)
-------- -------- --------
Net health care................. $24,619 $21,606 $20,975
======== ======== ========
14
The 1994 gross health-care expenses increased 21% over 1993 which was a much
higher rate of increase than 1993's 7% increase over 1992, even after
adjusting for employment increases.
Participant payments increased markedly due to premium payments for most
employees becoming effective January 1993 making 1994 the first full payment
year. Participant payments covered 15% of health-care expenses in 1994.
Net health-care costs in 1994 increased 14% over 1993 compared to a 3% increase
in 1993 over 1992 even though much higher participant payments occurred.
The Company makes annual provisions for any current and future retirement
health-care costs which may not be covered by retirees' collected premiums.
Note 8: Income Taxes
Effective April 25, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which applies a
balance sheet approach to income tax accounting. In accordance with the new
standard, the balance sheet reflects the anticipated tax impact of future
taxable income or deductions implicit in the balance sheet in the form of
temporary differences. These temporary differences reflect the difference
between the basis in assets and liabilities as measured in the financial
statements and as measured by tax laws using enacted tax rates. On April 25,
1993, the Company recorded a tax credit of $3 million or $0.18 per share,
which represents the net increase in the net deferred tax asset as of that
date. Such amount has been reflected in the consolidated statement of
income as an accounting change. Prior years' financial statements have not
been restated.
15
PAGE
The primary components of the Company's deferred tax assets and liabilities as
of April 30, 1994 and April 25, 1993 (date of adoption) are as follows:
(Amounts in thousands)
- ---------------------------------------------------------------------------
April 30, April 25,
1994 1993
- ---------------------------------------------------------------------------
Current
Deferred income tax assets (liabilities):
Bad debt................................... $ 5,993 $ 4,628
Warranty................................... 2,703 2,496
Workers' compensation...................... 1,211 1,118
Inventory.................................. 916 1,186
State income tax........................... (40) 1,569
Other...................................... 4,881 2,794
-------- --------
Net current deferred tax assets.......... 15,664 13,791
Noncurrent
Deferred income tax assets (liabilities):
Property, plant and equipment.............. (4,372) (4,108)
Pension.................................... (2,899) (2,638)
Other...................................... 322 408
------- -------
Net noncurrent deferred tax liabilities.. (6,949) (6,338)
Valuation allowance.......................... (504) (342)
------- -------
Net deferred tax asset..................... $8,211 $7,111
======= =======
The differences between the provision for income taxes and income taxes
computed using the U.S. federal statutory rate are as follows (for the years
ended):
(% of pretax income)
- ------------------------------------------------------------------------------
April 30, April 24, April 25,
1994 1993 1992
- ------------------------------------------------------------------------------
Statutory tax rate......................... 35.0 34.0 34.0
Increase (reduction) in taxes resulting in:
State income taxes net of federal benefit.. 4.8 4.7 4.3
Tax credits................................ (0.2) (0.3) (1.0)
Acquisition amortization................... 0.7 0.9 0.9
Merger of previously acquired operation.... - - (0.7)
Miscellaneous items........................ 0.0 0.5 (0.4)
----- ----- -----
Effective tax rate......................... 40.3 39.8 37.1
===== ===== =====
16
Note 9: Contingencies
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 and the Company's
legal counsel believe that the resultant liability, if any, will not be
material based on the Company's previous experience with lawsuits of these
types.
The Registrant has been identified as a Potentially Responsible Party
("PRP") at two clean-up sites: Organic Chemical and Seaboard Chemical
Company. At each site, the Company has been identified as a de minimus
contributor and volumetric assessments indicate that the Company's
contributions to each site have been less than .1% of the total. Each
site has either completed or has begun the Phase I cleanup and the total
cleanup costs expected to be incurred at each site have been estimated.
The Company is also participating with a number of other companies in the
voluntary RCRA closure of the Caldwell Systems site. The Company's
volumetric assessment at this site is in the 1% range. The steering
committee responsible for negotiating the cleanup plan with the EPA has
recently reinitiated its negotiations in anticipation of initial cleanup
activities. Estimates of the cleanup costs at the Caldwell site are
also available. The number of PRP's and voluntary participants at the
three sites range from 182 to in excess of 1,750. Based on a review of
the number, composition and financial stability of the PRP's and voluntary
participants at each site, along with cleanup cost estimates available,
management does not believe that any significant risk exists that the
Company will be required to incur total costs in excess of $100,000 at
any of the sites. At April 30, 1994, a total of $300,000 has been accrued
with respect to these three sites.
17
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollars in thousands)
Foreign
Balance Currency Other
at Additions Trans- Adjust- Balance
Beginning & Reclass- Retire- lation ments at end of
Classification of Period ifications ments Adjustments (1) Period
- -------------- --------- ---------- ------- ----------- ------ --------
Year ended April 30, 1994
Land and land
improvements $6,604 $543 $0 ($30) $0 $7,117
Buildings and
building
fixtures 88,669 4,551 (40) (460) 0 92,720
Machinery and
equipment 73,281 10,209 (237) (282) 0 82,971
Information
systems 10,523 1,736 (2,376) (24) 0 9,859
Other 12,092 446 (686) (63) 0 11,789
-------- ------- -------- ------ ------ --------
Total $191,169 $17,485 ($3,339) ($859) $0 $204,456
======== ======= ======== ====== ====== ========
Year ended April 24, 1993
Land and land
improvements $6,184 $562 ($120) ($22) $0 $6,604
Buildings and
building
fixtures 89,082 2,668 (2,749) (332) 0 88,669
Machinery and
equipment 67,519 7,149 (1,189) (198) 0 73,281
Information
systems 10,212 530 (202) (17) 0 10,523
Other 12,792 1,339 (1,992) (47) 0 12,092
-------- ------- -------- ------ ----- --------
Total $185,789 $12,248 ($6,252) ($616) $0 $191,169
======== ======= ======== ====== ===== ========
18
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollars in thousands)
(continued)
Foreign
Balance Currency Other
at Additions Trans- Adjust- Balance
Beginning & Reclass- Retire- lation ments at end of
Classification of Period ifications ments Adjustments (1) Period
- -------------- --------- ---------- ------- ----------- ------ --------
Year ended April 25, 1992
Land and land
improvements $5,724 $267 ($1) ($11) $205 $6,184
Buildings and
building
fixtures 84,318 2,760 (86) (163) 2,253 89,082
Machinery and
equipment 61,525 6,279 (1,073) (97) 885 67,519
Information
systems 10,393 1,202 (1,360) (23) 0 10,212
Other 11,928 1,679 (1,103) (8) 286 12,792
-------- ------- -------- ------ ------ --------
Total $173,888 $12,187 ($3,623) ($302) $3,629 $185,789
======== ======= ======== ====== ====== ========
NOTE: Land improvements, buildings and building fixtures, machinery and
equipment, information systems and other are depreciated using
primarily accelerated methods over the estimated useful lives of
the assets as follows:
Years
Land improvements 20
Buildings and building fixture 15 to 30
Machinery and equipment 10
Information systems 5
Other 3 to 10
(1): The other adjustments column reflects a non-cash write-up of
assets previously written down in fiscal year 1988. These assets
are physically still in use, therefore $3,639 in installed cost
and $3,361 in accumulated depreciation was added back. The net
book value write-up of $278 was recognized as a credit to
depreciation expense and a debit to accumulated depreciation in
fiscal year 1992 and is not shown in this 10-K but is included in
the cash flow statement.
19
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(Dollars in thousands)
Foreign
Balance Currency Other
at Additions Trans- Adjust- Balance
Beginning & Reclass- Retire- lation ments at end of
Classification of Period ifications ments Adjustments (1) Period
- -------------- --------- ---------- ------- ----------- ------ ---------
Year ended April 30, 1994
Land and
improvements $1,570 $209 $0 ($5) $0 $1,774
Buildings and
building
fixtures 35,919 3,903 (4) (146) 0 39,672
Machinery and
equipment 45,295 6,819 (180) (220) 0 51,714
Information
systems 8,986 1,034 (2,323) (22) 0 7,675
Other 8,992 1,065 (655) (58) 0 9,344
-------- ------- -------- ------ ----- --------
Total $100,762 $13,030 ($3,162) ($451) $0 $110,179
======== ======= ======== ====== ===== ========
Year ended April 24, 1993
Land and
improvements $1,495 $191 ($113) ($3) $0 $1,570
Buildings and
building
fixtures 32,917 3,950 (854) (94) 0 35,919
Machinery and
equipment 40,036 6,452 (1,046) (147) 0 45,295
Information
systems 8,065 1,134 (198) (15) 0 8,986
Other 9,836 1,134 (1,941) (37) 0 8,992
------- ------- -------- ------ ----- --------
Total $92,349 $12,861 ($4,152) ($296) $0 $100,762
======= ======= ======== ====== ===== ========
20
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(Dollars in thousands)
(Continued)
Balance Foreign Other
at Additions Trans- Adjust- Balance
Beginning & Reclass- Retire- lation ments at end of
Classification of Period ifications ments Adjustments (1) Period
- -------------- --------- ---------- ------- ----------- ------ -------
Year ended April 25, 1992
Land and land
improvements $1,251 $184 ($1) ($1) $62 $1,495
Buildings and
building
fixtures 26,959 3,918 (48) (40) 2,128 32,917
Machinery and
equipment 33,924 6,235 (935) (65) 877 40,036
Information
systems 7,170 1,971 (1,056) (20) 0 8,065
Other 9,076 1,543 (1,075) (2) 294 9,836
------- ------- -------- ------ ------ --------
Total $78,380 $13,851 ($3,115) ($128) $3,361 $92,349
======= ======= ======== ====== ====== ========
(1) The other adjustments column reflects a non-cash write-up of assets
previously written down in fiscal year 1988. These assets are
physically still in use, therefore $3,639 in installed cost and
$3,361 in accumulated depreciation was added back. The net book
value write-up of $278 was recognized as a credit to depreciation
expense and a debit to accumulated depreciation in fiscal year 1992
and is not shown in this 10-K but is included in the cash flow
statement.
21
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Trade
accounts
Additions receivable
Balance at charged to "written off" Balance
beginning costs and net of at end of
Description of period expenses recoveries period
------------------- ---------- ---------- ------------- ---------
YEAR ENDED
APRIL 30, 1994:
Allowance for
doubtful accounts &
long-term notes $11,670 $7,578 $4,453 $14,795
Accrued Warranties $6,250 $400 $6,650
YEAR ENDED
APRIL 24, 1993:
Allowance for
doubtful accounts &
long-term notes $7,217 $7,891 $3,438 $11,670
Accrued Warranties $5,950 $300 $6,250
YEAR ENDED
APRIL 25, 1992:
Allowance for
doubtful accounts
receivable $11,351 $9,271 $13,397 $7,217
Accrued Warranties $5,650 $300 $5,950
22
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Dollars in thousands)
Charged to Costs
and Expenses
----------------
Year ended April 30, 1994
Maintenance and repairs $18,990
Advertising costs $19,558
Year ended April 24, 1993
Maintenance and repairs $16,360
Advertising costs $19,558
Year ended April 25, 1992
Maintenance and repairs $13,203
Advertising costs $19,041
23
PAGE
Management Discussion
The Management Discussion and Analysis, as required by the Securities and
Exchange Commission, should be read in conjunction with the Report of
Independent Accountants, the Financial Statements and related Notes, and all
other pages that follow them in the 1994 Financial Report and Other
Information.
Background
- -------------------------------------------------------------------------
Sales by Type 1994 1993 1992
- -------------------------------------------------------------------------
Residential (Home)
Upholstery............................... 76% 74% 75%
Wood & Other............................. 18% 19% 17%
---- ---- ----
94% 93% 92%
Contract (Office).......................... 6% 7% 8%
---- ---- ----
100% 100% 100%
==== ==== ====
- -------------------------------------------------------------------------
Sales by Country 1994 1993 1992
- -------------------------------------------------------------------------
United States.............................. 94% 95% 95%
Canada and Foreign......................... 6% 5% 5%
---- ---- ----
100% 100% 100%
==== ==== ====
La-Z-Boy is organized into five operating divisions. Residential (67 years in
business) accounts for the majority of the upholstery category. Kincaid (48
years) is part of the wood category. La-Z-Boy Contract Furniture Group (22
years) is all of the Contract line. Hammary (50 years) is primarily in the
wood category. La-Z-Boy Canada (65 years) is part of the upholstery category.
La-Z-Boy's market share of all U.S. upholstery furniture products is above 8%.
On the basis of available market share data (in dollars), La-Z-Boy has 30-35%
of the U.S. single-seat recliner market and is the world's largest recliner
manufacturer. (The next largest U.S. competitor holds roughly 20% of the
U.S. market.) La-Z-Boy's sleep sofa current market share, approximately
12%, has been growing over the last three years.
Market share data by individual product lines other than recliners and sleepers
(e.g., sofas, reclining sofas, wood bedroom and dining room, wood occasional,
etc.) indicate that, although La-Z-Boy does not have a market share above 10%
in any one line, the Company's market share has been growing over the last
three years in most lines.
24
Analysis of Operations
Year Ended April 30, 1994
(1994 compared with 1993)
U.S. furniture industry sales increased roughly 6-8% in La-Z-Boy's fiscal 1994
over 1993. La-Z-Boy's sales increase of 18% over 1993 continued to exceed the
increase experienced by the industry as a whole. Approximately 2% of this
increase was due to 1994 including 53 weeks while 1993 contained 52 weeks.
Management believes the sales volume increase was largely due to improvements
in the economy. Other factors contributing to the sales increase to a lesser
degree include the opening of more La-Z-Boy Furniture Galleries stores and
capital expenditures the last few years at Hammary and Kincaid helping to
improve product quality, delivery and availability. Selling price increases
were generally in the 2-4% range. Major product lines that experienced rates
of unit growth above the Company average were the modulars, lower end
recliners, sofas, reclining sofas, high end recliners and bedroom (wood).
No divisions or companies were acquired or disposed of during the last six
years. Therefore, all sales growth has been internally generated.
During 1994, the La-Z-Boy Contract Furniture Group was formed through the
merger of the former La-Z-Boy Contract and RoseJohnson divisions.
The number of independently owned La-Z-Boy Furniture Galleries stores continued
to grow in 1994. Most of these stores were major upgrades or new locations
for earlier generation La-Z-Boy Showcase Shoppes. These stores are part of
the reason La-Z-Boy sales growth has exceeded the industry average. In
addition, the number of smaller in-store galleries continued to grow for all
divisions.
The gross margin (gross profit dollars as a percent of sales) of 26.2% in 1994
was up from the 26.0% gross margin in 1993. The lack of some one-time costs
that affected 1993 relating to start up and training for new styles and
changes to manufacturing techniques accounted for an improvement of
approximately .8 points. To a lesser degree, the gross margin improved due to
the 18% sales increase covering a larger portion of fixed costs. These reasons
for improvement more than offset the combined .7 point unfavorable effects of
increased sales of product lines with lower-than-average gross margins along
with increased costs associated with increasing production volume quickly to
keep up with sales. To a lesser degree, increased health-care cost also
unfavorably affected the gross margin.
Other income declined in 1994 due to a reduction in interest income, changes in
pension-related assumptions and Canadian currency exchange losses.
Income tax expense as a percent of pretax income increased to 40.3% in 1994
from 39.8% in 1993. The effect of the 1% increase in the federal tax rate to
35% was partially offset by changes in profitability among divisions.
25
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", which changed the method of accounting for income taxes, was adopted
by the Company effective April 25, 1993. This change in accounting principle
increased net income and the net deferred tax asset by $3.4 million or $.18
per share.
Analysis of Operations
Year Ended April 24, 1993
(1993 compared with 1992)
La-Z-Boy's 1993 sales increase of 10% over 1992 once again exceeded the growth
in the U.S. residential furniture industry as a whole. The 1993 sales increase
together with forecasted growth in the industry indicates that the furniture
industry recession which adversely affected results for the previous four years
has ended. Selling price increases during 1993 were generally in the 1-3%
range. Major product lines that experienced rates of unit sales growth above
the Company average were the reclining sofa, high end recliner, lower end
recliners, bedroom (wood) and occasional (wood) product lines.
During 1993, 18 independently owned La-Z-Boy Furniture Galleries stores opened,
bringing the total number of stores to 63. The rate of new store openings and
their sales volumes are meeting management's expectations. Most of these
openings were major upgrades or new locations for earlier generation La-Z-Boy
Showcase Shoppes.
Gross margin of 26.0% in 1993 was down from the 26.9% gross margin in 1992
even though unit volume increased. This decline in gross margin was primarily
in the Residential division which generates roughly 70% of consolidated sales.
The Residential division gross margin declined for two main reasons. The
primary reason was that unexpectedly high labor and overhead costs were
incurred at most plants. These costs were primarily caused by the introduction
of new styles and efforts to improve plant methods while at the same time,
reduce inventories, improve the flexibility to handle a greater number of
different styles, and ship dealer orders more complete and quicker than in the
past. In addition, an anticipated unfavorable product line mix effect occurred
from selling more product lines with lower-than-average gross margins.
S,G & A expense for 1993 of 19.3% of sales was lower than the 1992 percentage
of 20.0% primarily due to the relatively large sales increase and a decline in
bad debt expense.
Interest expense declined $2.0 million in 1993 from 1992 due to a combination
of lower debt principal amounts and lower interest rates.
The increase in other income was primarily due to increased interest income
realized from higher cash balances throughout the year more than offsetting
lower interest rates.
26
Income tax expense as a percent of pretax income increased to 39.8% in 1993
from 37.1% in 1992. In 1992, there was a one-time tax benefit from the merger
of a previously acquired division.
Liquidity and Financial Condition
Cash flows from operations amounted to $28 million in 1994, $35 million in
1993 and $36 million in 1992 and have usually been adequate for day-to-day
expenditures, dividends to shareholders and capital expenditures.
The 1994 cash flow from operations declined $6.5 million from 1993. Other
assets and liabilities changed from a source of cash in 1993 to a use of cash
in 1994 primarily due to the payment of income taxes. Also, inventories
increased $6.7 million.
Capital expenditures were $17.5 million in 1994 compared to $12.2 million for
both 1993 and 1992. Some capacity expansions occurred in 1994 while the prior
two years did not require expansions. Capacity utilization of about 70% at
the end of 1994 was up from about 65% at the end of 1993.
Cash flows relating to debt caused both inflows and outflows of cash. No new
debt was raised in the last three years. During 1992, a $15.0 million bridge
loan was refinanced through a private placement and two industrial revenue
bonds totaling $9.7 million were refinanced at a lower interest rate.
Retirements of debt totaled between $1 million and $15 million for each of the
last three years and are primarily related to paying down the $53 million debt
incurred in 1987 to acquire an operating division. While the cash flow
statement shows that $39.3 million of debt was retired in 1992, $24.7 million
relates to refinancing as described above.
As of April 30, 1994, the Company had unused lines of credit and commitments of
$60 million under several credit arrangements. In April 1991, the Company
entered into a $50 million unsecured revolving credit line (Credit Agreement) to
extend through August 31, 1998, requiring interest payments only through August
31, 1994 and periodic payments of principal and interest through 1998. At year
end, the Company was in the process of renewing the Credit Agreement to require
interest only payments through August 1999 and to require principal payment in
August 1999. The credit Agreement also includes covenants that, among other
things, require the Company to maintain certain financial statement ratios.
The Company has complied with all of the requirements.
In October 1987, the La-Z-Boy Board of Directors authorized a one-million
share stock repurchase program. In February 1993, the Board authorized the
repurchase of another one million shares. As of April 30, 1994 and April 24,
1993, the Company had acquired about 1,010,000 and 930,000 shares, respectively,
of its own stock. The Company plans to be in the market for its shares as
changes in its stock price and other financial opportunities arise.
27
The financial strength of the Company is reflected in two commonly used ratios
- -the current ratio (current assets divided by current liabilities) and the
debt-to-capital ratio (total debt divided by beginning of the year shareholders'
equity plus total debt). The current ratio at the end of 1994 and 1993 was
4.1:1 and 3.8:1, respectively. The debt to capital ratio was 17.4% at the end
of 1994 and 18.5% at the end of 1993.
La-Z-Boy provides for all current and future potential liabilities as required
including those relating to postretirement benefits.
The Company is subject to contingencies pursuant to environmental laws and
regulations. The Company accrues for certain environmental remediation
activities related to past operations, including Superfund clean-up and
Resource Conservation and Recovery Act compliance activities, for which
commitments have been made and reasonable cost estimates are possible.
Currently, the Company has been determined to be a "de-minimus" level
potentially responsible party (PRP) at three clean-up sites and has provided
for any known costs relating to these sites. The Company is also conducting
voluntary compliance audits at Company owned facilities.
Outlook
La-Z-Boy's 1995 fiscal year to end April 29, 1995 will include 52 weeks
compared to fiscal year 1994, which included 53 weeks. This is approximately
a 2% reduction in the length of the year which will affect sales and other
financial comparisons from year to year.
The Company expects the economic recovery to continue through calendar year
1994. Sales in fiscal year 1995 are expected to exceed the 1994 results but
due to the stronger than expected year in 1994, the double digit sales
increase experienced in 1994 is not expected to repeat.
One of La-Z-Boy's financial objectives is to achieve sales increases of 10%
per year or increases at least greater than that of the furniture industry.
Some furniture industry forecasts for calendar year 1994 over 1993 are in the
5-7% range. For 1994, La-Z-Boy sales increased 18% over 1993.
The Company's major residential efforts and opportunities for sales growth
greater than industry averages are focused outside the recliner market segment,
e.g., stationary upholstery (single and multi-seat), reclining sofas and
modulars, wood occasional and wall units and wood bedroom and dining room.
The newly formed La-Z-Boy Contract Furniture Group sales growth rate in the
next few years is expected to exceed the average of the other divisions.
Today, this division is not generating a profit and profits are not expected
to improve in 1995 due to research and development expenditures of
approximately $1.5 million, reorganization costs and start-up costs associated
with the recent merger of the two formerly separate contract divisions.
Eventually, profit margins comparable to the Company's average rates are
believed to be able to be achieved. Profitability at this level would help the
28
Company reach the financial goals described below even though this division is
not large enough to dramatically affect the consolidated results.
Given no recession, no major competitive environment changes, no major strategic
changes and other similar assumptions, profitability is expected to improve in
1996 and the division is expected to begin generating an operating profit
between 1997 and 1998. The research and development expenditures are
necessary as the products of the two former divisions had not been refreshed
recently and also to redesign the products in an integrated way. In addition,
the lines are to expand into a broader range of products. R & D costs are
expected to remain around this level through 1996 but are expected to become a
smaller percentage of sales as volume increases. The reorganization and start
up costs of the division are estimated to be between $.5 and $2 million.
A second financial goal is to improve operating profit as a percent of sales
in 1995 compared to 1994. For 1994, the operating profit margin was 7.4% of
sales.
A third goal is to achieve operating profit, excluding acquisition
amortization interest income and other income (return) as a percent of
beginning of the year capital of 20%. For 1994, return on capital was 19.4%.
La-Z-Boy has an opportunity to improve its margins through increases in
efficiency, improvements in the utilization of equipment and facilities and
increases in sales volumes, even though product line growth may be in lines
with lower gross margins.
Capital expenditures are forecast to be approximately $19 to $24 million in
1995 compared to $17.5 million in 1994. The 1995 forecast includes the
construction of a new upholstery factory in Arkansas. The 396,000 square foot
plant is being constructed to replace an existing older 200,000 square foot
plant. Long-term financing of the expected $7 million cost is planned to be
through the use of industrial revenue bonds.
The Registrant has been identified as a Potentially Responsible Party
("PRP") at two clean-up sites: Organic Chemical and Seaboard Chemical
Company. At each site, the Company has been identified as a de minimus
contributor and volumetric assessments indicate that the Company's
contributions to each site have been less than .1% of the total. Each
site has either completed or has begun the Phase I cleanup and the total
cleanup costs expected to be incurred at each site have been estimated.
The Company is also participating with a number of other companies in the
voluntary RCRA closure of the Caldwell Systems site. The Company's
volumetric assessment at this site is in the 1% range. The steering
29
committee responsible for negotiating the cleanup plan with the EPA has
recently reinitiated its negotiations in anticipation of initial cleanup
activities. Estimates of the cleanup costs at the Caldwell site are
also available. The number of PRP's and voluntary participants at the
three sites range from 182 to in excess of 1,750. Based on a review of
the number, composition and financial stability of the PRP's and voluntary
participants at each site, along with cleanup cost estimates available,
management does not believe that any significant risk exists that the
Company will be required to incur total costs in excess of $100,000 at
any of the sites. At April 30, 1994, a total of $300,000 has been accrued
with respect to these three sites.
30
Consolidated Six-Year Summary of Selected Financial Data
(Dollar amounts in thousands, except per share data)
- -------------------------------------------------------------------------------
Year Ended in April 1994 1993 1992 1991 1990 1989
(53 wks) (52 wks) (52 wks) (52 wks) (52 wks) (52 wks)
- -------------------------------------------------------------------------------
Sales.............. $804,898 $684,122 $619,471 $608,032 $592,273 $553,187
Cost of sales...... 593,890 506,435 453,055 449,502 430,383 397,776
--------- --------- --------- --------- --------- ---------
Gross profit..... 211,008 177,687 166,416 158,530 161,890 155,411
Sell, gen & admin.. 151,756 131,894 123,927 116,278 112,652 107,978
--------- --------- --------- --------- --------- ---------
Oper profit...... 59,252 45,793 42,489 42,252 49,238 47,433
Interest expense... 2,822 3,260 5,305 6,374 7,239 7,567
Interest income.... 1,076 1,474 1,093 1,215 1,597 1,864
Other income....... 649 1,292 1,628 1,277 1,939 2,244
--------- --------- --------- --------- --------- ---------
Total other inc.. 1,725 2,766 2,721 2,492 3,536 4,108
--------- --------- --------- --------- --------- ---------
Income before tax.. 58,155 45,299 39,905 38,370 45,535 43,974
Income tax expense. 23,438 18,015 14,805 15,009 17,282 16,508
--------- --------- --------- --------- --------- ---------
Net income....... $34,717* $27,284 $25,100 $23,361 $28,253 $27,466
========= ========= ========= ========= ========= =========
Weighted avg shares
outstg ('000s)... 18,268 18,172 18,064 17,941 17,868 17,886
Per com shr outstg
Net income....... $1.90* $1.50 $1.39 $1.30 $1.58 $1.54
Cash div paid.... $0.64 $0.60 $0.58 $0.56 $0.54 $0.46
BV on YE shr outst. $15.91 $14.48 $13.58 $12.75 $11.98 $10.91
Rtn avg shrhdr eqt. 12.5%* 10.7% 10.6% 10.5% 13.8% 14.7%
Gr prft % of sales. 26.2% 26.0% 26.9% 26.1% 27.3% 28.1%
Op prft % of sales. 7.4% 6.7% 6.9% 6.9% 8.3% 8.6%
Op prft, excl. acq.
amort., int. inc.
& other inc. % of
BOY capital...... 19.4% 16.2% 15.4% 15.6% 19.6% 19.3%
Net inc % of sales. 4.3%* 4.0% 4.1% 3.8% 4.8% 5.0%
Income tax expense
% pretax income.. 40.3% 39.8% 37.1% 39.1% 38.0% 37.5%
- -------------------------------------------------------------------------------
Deprec & amortiz... $14,014 $14,061 $14,840 $14,039 $13,735 $13,607
Capital expendtrs.. $17,485 $12,248 $12,187 $21,428 $22,418 $9,334
Prty,plt,eqpt,net.. $94,277 $90,407 $93,440 $95,508 $89,141 $79,845
- -------------------------------------------------------------------------------
Working capital.... $224,122 $202,398 $184,431 $172,989 $170,292 $158,947
Current ratio...... 4.1 to 1 3.8 to 1 3.7 to 1 3.7 to 1 3.4 to 1 3.1 to 1
Total assets....... $430,253 $401,064 $376,722 $363,085 $361,856 $349,007
- -------------------------------------------------------------------------------
31
Consolidated Six-Year Summary of Selected Financial Data
(Dollar amounts in thousands, except per share data)
- -------------------------------------------------------------------------------
Year Ended in April 1994 1993 1992 1991 1990 1989
(53 wks) (52 wks) (52 wks) (52 wks) (52 wks) (52 wks)
- -------------------------------------------------------------------------------
Long-term debt..... $52,495 $55,370 $55,912 $62,187 $69,066 $70,641
Debt............... $55,370 $55,912 $60,726 $70,867 $78,036 $80,244
Shareholders' eqty. $290,911 $263,386 $246,359 $229,217 $214,585 $194,293
Ending capital..... $346,281 $319,298 $307,085 $300,084 $292,621 $274,537
Ratio debt to eqty. 19.0% 21.2% 24.6% 30.9% 36.4% 41.3%
Ratio debt to capl. 17.4% 18.5% 20.9% 24.8% 28.7% 31.0%
- -------------------------------------------------------------------------------
Shareholders....... 12,615 9,032 8,081 7,208 6,827 4,843
Employees.......... 9,370 8,724 8,153 7,828 8,046 7,743
- -------------------------------------------------------------------------------
*Excludes the income effect of adopting SFAS 109 in May 1993 of $3,352 or
$.18 per share.
Note: Acquisition amortization of $1,056 for 1994, $1,039 for 1990-1993 and
$1,041 for 1989 has been reclassified from other income to selling, general and
administrative.
32
PAGE
Dividend and Market Information
----------------------------------------------------
1994 Divi- Market Price
Quarter dends -------------------------------
Ended Paid High Low Close
----------------------------------------------------
July 24 $0.15 $31 7/8 $25 1/2 $29 3/4
Oct. 23 0.15 31 7/8 29 1/4 31 3/8
Jan. 22 0.17 39 3/4 31 1/2 39 3/4
Apr. 30 $0.17 $40 $30 1/2 $33 1/2
-----
$0.64
=====
----------------------------------------------------
1993 Divi- Market Price
Quarter dends -------------------------------
Ended Paid High Low Close
-----------------------------------------------------
July 25 $0.15 $24 5/8 $21 $23 3/8
Oct. 24 0.15 24 3/8 18 20 3/8
Jan. 23 0.15 27 1/8 20 5/8 26 3/8
Apr. 24 $0.15 $29 3/4 $26 3/8 $28
-----
$0.60
=====
- -------------------------------------------------------------------------------
Dividend Market Price P/E Ratio
Dividends Dividend Payout ----------------------- ---------
Year Paid Yield Ratio High Low Close Earnings High Low
- -------------------------------------------------------------------------------
1994 $0.64 1.9% 33.7%* $40 25 1/2 33 1/2 $1.90* 21* 13*
1993 0.60 2.1% 40.0% 29 3/4 18 28 l.50 20 12
1992 0.58 2.5% 41.7% 28 3/4 19 1/2 23 1/2 1.39 21 14
1991 0.56 2.6% 43.1% 21 1/2 12 1/4 21 1/4 1.30 17 9
1990 0.54 2.8% 34.2% 23 16 3/4 19 5/8 1.58 15 11
1989 0.46 2.4% 29.9% 19 7/8 14 19 1/8 1.54 13 9
La-Z-Boy Chair Company common shares are traded on the NYSE and the PSE
(symbol LZB).
33
PAGE
Unaudited Quarterly Financial Information
(Amounts in thousands, except per share data)
- -------------------------------------------------------------------------------
Quarter Ended July 24 October 23 January 22 April 30 Year 1994
(13 weeks) (13 weeks) (13 weeks) (14 weeks) (53 weeks)
- -------------------------------------------------------------------------------
Sales............ $162,096 $209,044 $192,648 $241,110 $804,898
Cost of sales.... 123,047 152,160 141,771 176,912 593,890
-------- -------- -------- --------- ---------
Gross profit... 39,049 56,884 50,877 64,198 211,008
Selling, general
& admin........ 32,509 39,464 37,136 42,647 151,756
-------- -------- -------- --------- ---------
Opertg profit.. 6,540 17,420 13,741 21,551 59,252
Interest expense. 720 776 682 644 2,822
Total other inc.. 717 671 412 (75) 1,725
-------- -------- -------- --------- ---------
Inc before tax. 6,537 17,315 13,471 20,832 58,155
Income tax exp... 2,563 6,900 5,483 8,492 23,438
-------- -------- -------- --------- ---------
Net income... $3,974* $10,415 $7,988 $12,340 $34,717*
======== ======== ======== ========= =========
Net income
per share.. $0.22* $0.57 $0.44 $0.67 $1.90*
======== ======== ======== ========= =========
- -------------------------------------------------------------------------------
Quarter Ended July 25 October 24 January 23 April 24 Year 1993
(13 weeks) (13 weeks) (13 weeks) (13 weeks) (52 weeks)
- -------------------------------------------------------------------------------
Sales............ $140,003 $175,877 $169,810 $198,432 $684,122
Cost of sales.... 106,543 130,924 125,677 143,291 506,435
-------- -------- -------- -------- --------
Gross profit... 33,460 44,953 44,133 55,141 177,687
Selling, general
& admin........ 28,738 34,129 33,469 35,558 131,894
-------- -------- -------- -------- --------
Opertg profit.. 4,722 10,824 10,664 19,583 45,793
Interest expense. 867 841 765 787 3,260
Total other inc.. 778 691 605 692 2,766
-------- -------- -------- -------- --------
Inc before tax. 4,633 10,674 10,504 19,488 45,299
Income tax exp... 1,850 4,167 4,113 7,885 18,015
-------- -------- -------- -------- --------
Net income... $2,783 $6,507 $6,391 $11,603 $27,284
======== ======== ======== ======== ========
Net income
per share.. $0.15 $0.36 $0.35 $0.64 $1.50
======== ======== ======== ======== ========
34
*Excludes the income effect of adopting SFAS 109 in May 1993 of $3,352 or
$.18 per share.
Note: Acquisition amortization of $260 for the first and second quarters and
fourth quarter of 1993, $259 for the third quarters and $277 for the fourth
quarter of 1994 has been reclassified from other income to selling,
general and administrative.
35
EXHIBIT XX
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-8996, 33-8997, 33-31502, and 33-50318) of
La-Z-Boy Chair Company of our report dated June 2, 1994 appearing on
page 2 of Exhibit I of this Form 10-K/A.
PRICE WATERHOUSE LLP
Toledo, Ohio
March 16, 1995
5
1,000
APR-30-1994
APR-30-1994
12-MOS
25,926
0
196,652
13,537
67,236
295,585
204,456
110,179
430,253
71,463
0
18,287
0
0
272,624
430,253
804,898
804,898
593,890
593,890
151,756
0
2,822
58,155
23,438
34,717
0
0
3,352
38,069
2.08
2.08
