SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR QUARTER ENDED July 29, 1995 COMMISSION FILE NUMBER 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 North Telegraph Road, Monroe, Michigan 48162-3390
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (313) 241-4414
None
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each issuer's classes of
common stock, as of the last practicable date:
Class Outstanding at July 29, 1995
Common Shares, $1.00 par value 18,461,367
Part I. Financial Information
The Consolidated Balance Sheet and Consolidated Statement of Income required
for Part I are contained in the Registrant's Financial Information Release
dated August 17, 1995 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
-------------------
July 29, July 30,
1995 1994
--------- ---------
Cash Flows from Operating Activities
Net income $3,175 $4,270
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 4,684 3,732
Change in receivables 37,849 33,909
Change in inventories (4,393) (9,192)
Change in other assets and liab. (15,846) (12,093)
Change in deferred taxes 0 0
--------- ---------
Total adjustments 22,294 16,356
--------- ---------
Cash Provided by Operating
Activities 25,469 20,626
Cash Flows from Investing Activities
Proceeds from disposals of assets 133 24
Capital expenditures (3,160) (5,990)
Change in other investments 959 (459)
--------- ---------
Cash Used for Investing Activities (2,068) (6,425)
Cash Flows from Financing Activities
Long-term debt 0 7,500
Change in unexpended IRB funds 0 (2,566)
Retirements of debt (4,072) (4,750)
Capital lease principal payments (517) 0
Sale of stock under stock option plans 1,268 203
Stock for 401(k) employee plans 305 401
Purchase of La-Z-Boy stock (4,392) (6,609)
Payment of cash dividends (3,155) (3,109)
--------- ---------
Cash Used for Financing Activities (10,563) (8,930)
Effect of exch. rate changes on cash (78) (17)
--------- ---------
Net change in cash and equivalents 12,760 5,254
Cash and equiv. at beginning of period 27,048 25,926
--------- ---------
Cash and equiv. at end of period $39,808 $31,180
========= =========
Cash paid during period - Income taxes $1,657 $2,873
- Interest $1,110 $602
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
LA-Z-BOY CHAIR COMPANY AND OPERATING DIVISIONS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The financial information is prepared in conformity with generally
accepted accounting principles and such principles are applied on a basis
consistent with those reflected in the 1995 Annual Report filed with the
Securities and Exchange Commission. The financial information included
herein, other than the consolidated condensed balance sheet as of April
29, 1995, has been prepared by management without audit by independent
certified public accountants who do not express an opinion thereon. The
consolidated condensed balance sheet as of July 29, 1995 has been
derived from, but does not include all the disclosures contained in, the
audited consolidated financial statements for the year ended April 29,
1995. 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 27, 1996.
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
La-Z-Boy's sales and profits historically have been weakest in the first
quarter of the fiscal year due to the Company's two-week vacation shutdown
which coincides with the slowest sales period. Therefore, first quarter
comparison to the prior year's first quarter may not be indicative of trends
that will continue in the remaining quarters of the fiscal year.
Due to the cyclical nature of the Company's business, comparison of operations
between the most recently completed quarter and the immediate preceding
quarter would not be meaningful and could be misleading to the reader of these
financial statements.
For further Management Discussion, see attached Exhibit 99.
The Company's strong financial position is reflected in the debt to capital
percentage of 20% and a current ratio of 4.0 to 1 at the end of the first
quarter. At April 29, 1995, the debt to capital percentage was 20% and the
current ratio was 3.7 to 1. At the end of the preceding year's first quarter,
the debt to capital percentage was 17% and the current ratio was 4.4 to 1.
As of July 29, 1995, there was $63 million of unused lines of credit
available under several credit arrangements.
Approximately 15% 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 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
The Annual Meeting of Stockholders of La-Z-Boy Chair Company was held on July
31, 1995, for the purposes of electing four members to the board of directors.
Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities and Exchange Act of 1934 and there was no solicitation in opposition
of Management's solicitations. All of Management's nominees for directors as
listed in the proxy statement were elected.
Item 6. Exhibits and Reports on Form 8-K.
------------------------------------------
(a)(27) Financial Data Schedule (EDGAR only)
(99) News Release and Financial Information Release: re Actual first
quarter results and Management Discussion dated August 17, 1995.
(b) An 8-K was filed on May 1, 1995 relating to the acquisition of
England/Corsair. An 8-K/A was filed May 10, 1995 amending this 8-K.
An 8-K was filed June 1, 1995 releasing fourth quarter and full year
financial results. This release also included the financial section of the
1995 Annual Report.
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 July 29, 1995 to be signed on its behalf by the undersigned thereunto
duly authorized.
LA-Z-BOY CHAIR COMPANY
(Registrant)
Date: August 17, 1995 James J. Korsnack
Corporate Controller
5
1,000
JUL-29-1995
JUL-29-1995
3-MOS
39,808
0
173,113
18,024
85,485
306,870
115,848
137,542
483,023
76,103
0
18,461
0
0
302,313
483,023
195,757
195,757
151,378
151,378
37,494
0
1,464
5,810
2,634
3,175
0
0
0
3,175
.17
.17
News Release
SOFT FURNITURE DEMAND DAMPENS LA-Z-BOY'S FIRST QUARTER
MONROE, MI., August 17, 1995: La-Z-Boy Chair Company's reported sales rose
12% during the company's 1996 first quarter that ended July 29, 1995. As
expected, comparable sales (which includes a recently acquired company's sales
as if they were in last year's results) declined slightly for the period due
to industrywide softness in residential furniture sales. Earnings were lower
primarily because of fixed costs and other previously committed to expenses.
La-Z-Boy management expects improved results in the second quarter.
Financial Details
-----------------
First quarter sales were $195.8 million, up 12% from sales of $174.4 million
in the 1995 fiscal first quarter. The '96 first quarter was the first in which
results of recently acquired England/Corsair, Inc. (E/C) were included with
those of La-Z-Boy. Comparable sales -- that is, including E/C on a pro forma
basis in last year's sales -- decreased 1%. Sales were down slightly at the
company's four U.S. residential furniture divisions, while Canadian sales and
contract furniture sales increased.
NET PROFITS were $3.2 million compared to last year's first quarter profits of
$4.3 million. Per share profits were $0.17 vs. last year's $0.23. Profits were
affected by soft residential demand, higher interest expenses and higher
national TV advertising expenditures.
Chairman Comments
-----------------
La-Z-Boy Chairman and President Charles T. Knabusch said the company's 1%
comparable sales decline was "modest" compared to soft sales for the U.S.
furniture industry as a whole. "La-Z-Boy's new national TV advertising campaign
and improvements in the strength of our nationwide dealer organization are two
reasons why our sales performance remains ahead of the industry average."
Mr. Knabusch said sales in the '96 second quarter ending in October, "could
exceed last year's strong second quarter" after adjusting for E/C's
noncomparable sales. "We base this positive view on economic statistics related
to the furniture industry and the favorable outlook expressed by our dealers,"
he said.
More
----
On July 31, 1995, La-Z-Boy increased its dividend per share 12% or $.02 from
$0.17 to $0.19 for shareholders of record as of today.
In general, incoming sales orders and backlogs, as of this press release date,
are slightly behind the levels of a year ago and significantly greater than
three months ago.
For more details please see La-Z-Boy's Form 10-Q filed with the SEC (available
on EDGAR) which includes, among other things, the full P&L, balance sheet, cash
flow statement and more management dicussion.
NYSE & PSE: LZB Contact: Jim Korsnack (313) 241-4208
La-Z-Boy Chair Company Financial Information Release 1 of 2
CONSOLIDATED SUMMARY OF OPERATIONS 08/17/95
(Amounts in thousands, except per share data)
THIRD QUARTER ENDED (UNAUDITED)
----------------------------------------------
Amounts
------------------ Percent of Sales
July 29, July 30, % Over ----------------
1995 1994 (Under) 1995 1994
-------- -------- ------- ------- -------
Sales $195,757 $174,387 12% 100.0% 100.0%
Cost of sales 151,378 133,654 13% 77.3% 76.6%
-------- -------- ------- ------- -------
Gross profit 44,379 40,733 9% 22.7% 23.4%
S, G & A 37,937 33,032 15% 19.4% 19.0%
-------- -------- ------- ------- -------
Operating profit 6,442 7,701 -16% 3.3% 4.4%
Interest expense 1,464 662 121% 0.7% 0.4%
Interest income 456 273 67% 0.2% 0.2%
Other income 375 273 37% 0.2% 0.1%
-------- -------- ------- ------- -------
Pretax income 5,809 7,585 -23% 3.0% 4.3%
Income taxes 2,634 3,315 -21% 45.3%* 43.7%*
-------- -------- ------- ------- -------
Net income $3,175 $4,270 -26% 1.6% 2.4%
======== ======== ======= ======= =======
Average shares 18,494 18,253 1%
Earnings per share $0.17 $0.23 -26%
Dividends per share $0.17 $0.17 0%
* As a percent of pretax income, not sales.
Acquisition amortization of $260 for the first quarter ended July 30, 1994
has been reclassified from other income to selling, general and
administrative.
Overall:
--------
Refer to today's news release for additional comments. England/Corsair (E/C) is
included in the quarter ended July 29, 1995 results, but not in the quarter
ended July 30, 1994 results.
Gross Profit:
-------------
Gross profit declined from 23.4% of sales last year to 22.7% of sales this year
primarily due to the historically lower than average gross profit of E/C. This
impact is expected to continue throughout the year.
S,G & A:
--------
The increase in S,G, & A from 19.0% of sales last year to 19.4% of sales
this year was primarily due to higher national TV advertising expenditures.
Interest Expense:
-----------------
The increase in interest expense was due to the inclusion of E/C along with
interest on notes issued to purchase E/C.
Income Taxes:
-------------
The increase in income tax as a percent of pretax income increased from 43.7%
last year to 45.3% this year primarily due to the amortization of
non-deductible goodwill relating to the purchase of E/C. To a lesser extent,
the rate increase was also due to the amortization of other non-deductible
goodwill.
La-Z-Boy Chair Company Financial Information Release 2 of 2
CONSOLIDATED BALANCE SHEET 08/17/95
(Dollars in thousands)
Unaudited Increase
------------------ (Decrease) Audited
July 29, July 30, ---------------- April 29,
1995 1994 Dollars Percent 1995
-------- -------- ------- ------- ---------
Current Assets
Cash & equivalents $39,808 $31,180 $8,628 28% $27,048
Receivables 155,089 149,206 5,883 4% 192,938
Inventories
Raw materials 38,968 36,451 2,517 7% 39,604
Work-in-process 35,570 30,621 4,949 16% 35,036
Finished goods 33,742 30,137 3,605 12% 29,051
-------- -------- ------- ------- --------
FIFO inventories 108,280 97,209 11,071 11% 103,691
Excess of FIFO over LIFO (22,795) (20,781) (2,014) -10% (22,600)
-------- -------- ------- ------- ---------
Total inventories 85,485 76,428 9,057 12% 81,091
Deferred income taxes 18,242 15,160 3,082 20% 18,242
Other current assets 8,246 6,419 1,827 28% 6,081
-------- -------- ------- ------- ---------
Total Current Assets 306,870 278,393 28,477 10% 325,400
Property, plant & equipment 115,848 96,770 19,078 20% 117,175
Goodwill 41,414 20,529 20,885 102% 41,701
Other long-term assets 18,891 22,456 (3,565) -16% 19,542
-------- -------- ------- ------- ---------
Total Assets $483,023 $418,148 $64,875 16% $503,818
======== ======== ======= ======= =========
Unaudited Increase
----------------- (Decrease) Audited
July 29, July 30, ----------------- April 29,
1995 1994 Dollars Percent 1995
------- ------- ------- ------- --------
Current Liabilities
Current portion of l/t debt $5,676 $1,875 $3,801 203% $4,676
Current portion - captl leases 2,078 - 2,078 N/M 2,078
Accounts payable 29,169 24,160 5,009 21% 29,323
Payroll/benefits 18,549 16,475 2,074 13% 31,845
Estimated income taxes 5,854 4,293 1,561 36% 4,855
Other current liabilities 14,777 16,238 (1,461) -9% 15,343
-------- -------- ------- ------- ---------
Total Current Liabilities 76,103 63,041 13,062 21% 88,120
Long-term debt 66,077 56,245 9,832 17% 71,149
Capital leases 5,141 - 5,141 N/M 5,298
Deferred income taxes 6,610 6,949 (339) -5% 6,610
Other long-term liabilities 8,318 8,933 (615) -7% 9,001
Shareholders' Equity
18,461,367 shares, $1.00 par 18,461 18,011 450 2% 18,562
Capital in excess of par 28,130 10,237 17,893 175% 28,085
Retained earnings 274,995 255,627 19,368 8% 277,738
Currency translation (812) (895) 83 9% (745)
-------- -------- ------- ------- ---------
Total Shareholders' Equity 320,774 282,980 37,794 13% 323,640
-------- -------- ------- ------- ---------
Total Liabilities and
Shareholders' Equity $483,023 $418,148 $64,875 16% $503,818
======== ======== ======= ======= =========
The July 29, 1995 and the April 29, 1995 balance sheets include E/C's assets
and liabilities. The July 30, 1994 balance sheet does not include E/C and is
not comparable to the other periods.
