SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 26, 1997 Commission File No. 1-9656
LA-Z-BOY INCORPORATED
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0751137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1284 N. Telegraph Road, Monroe, Michigan 48162-3390
(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 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 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 the Form
10-K or any amendment to this Form 10-K. X
The aggregate market value of the voting stock held by nonaffiliates
of the Registrant as of June 20, 1997 was $638,020,555.
The number of common shares of the Registrant outstanding on June 20,
1997 was 17,972,410.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the 1997 Annual Report to Shareholders for the year ended
April 26, 1997 are incorporated by reference into Parts I, II and IV.
Portions of the Annual Proxy Statement filed with the Securities and
Exchange Commission June 27, 1997 are incorporated by reference into Part
III.
PART I
ITEM 1. BUSINESS.
In fiscal year 1997, the Registrant changed its name from La-Z-Boy
Chair Company to La-Z-Boy Incorporated to better reflect the broadening
nature of the Registrant's business, which includes manufacturing chairs as
well as many other types of home and office furnishings. Other information
required in Part I, Item 1, section (a) is contained in Note 2 of the
Registrant's 1997 Annual Report on page 21, and is incorporated herein by
reference.
(b)-(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. "Business Furniture" dealers are those
who resell seating and casegood products to commercial dealers. Additional
information regarding products and market share data is contained in the
Registrant's 1997 Annual Report on page 26 in the Background section of the
Management Discussion and Analysis and is incorporated herein by reference.
(c) (1) (ii) Status of New Products or Segments
During fiscal year 1997, the Registrant did not add any major products
or segments.
(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 and padding. 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 mostly centralized basis. The Registrant fabricates
many 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 material costs historically have been about 38 percent of 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 41 percent of total
upholstery product material costs. Polyurethane (poly) foam and lumber are
the next two largest types of upholstery raw material costs. Poly is highly
sensitive to changes in the price of oil. Price increases for raw materials
have kept pace with the inflation rate in recent years and are expected to
continue to do so.
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 many 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 materially 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
its 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).
Extended dating is often offered on sales promotions.
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
Business Furniture Group.
(c) (1) (vii) Customers
The Registrant distributes to almost 15,000 locations. The Registrant
does not have any customer whose sales amount to 10 percent or more of its
consolidated sales for fiscal year 1997. The Registrant's approximate dealer
mix consisted of 41 percent proprietary, 13 percent to major dealers (Mont-
gomery Ward and other department stores) and 46 percent to general dealers.
The Registrant's largest customer, Montgomery Ward, announced that it has
filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy
Code. The Registrant is currently evaluating the impact this will have on
receivable reserves. However, the effect is not expected to be material.
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 dedicat-
ed galleries have been established for each of the Registrant's divisions.
(c) (1) (viii) Orders and Backlog
It has been determined that the majority of the Registrant's
Residential Division orders are for dealer stock, with approximately 35
percent of orders being requested directly by customers. Furthermore,
about 9 percent of units produced at all divisions are built for the
Registrant's inventory. The remainder are "built-to-order" for dealers.
As of May 31, 1997 and June 1, 1996 backlogs were approximately $81
million and $73 million, respectively. These amounts represent less than
five 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 entirely on backlogs
to predict future sales since the sales cycle is only five weeks and backlog
can change from week to week.
The cancellation policy for La-Z-Boy Incorporated, in general, is
that an order cannot be canceled after it has been selected for production.
Orders from prebuilt stock, though, may be canceled 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
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.
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 U.S.
reclining or motion chair field and a substantially larger number of
competitors in the upholstery business as a whole, as well as in the case-
goods and Business Furniture businesses.
(c) (1) (xi) Research and Development Activities
The Registrant spent $8.3 million in fiscal 1997 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 $8.0 million in
fiscal 1996 on such activities and $7.9 million on such activities in fiscal
1995. The Registrant's customers generally do not engage in research with
respect to the Registrant's products.
(c) (1) (xii) Compliance with Environmental Regulations
Information relating to Compliance with Environmental Regulations
(Note 11 of the Consolidated Financial Statements appearing on pages 25 and
26 and the environmental discussion contained within the Management Discuss-
ion and Analysis appearing on page 28 of La-Z-Boy Incorporated's Annual
Report to Shareholders for 1997) is incorporated herein by reference.
(c) (1) (xiii) Number of Employees
The Registrant and its subsidiaries employed 11,236 persons as of
April 26, 1997 and 10,733 persons as of April 27, 1996.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales.
The Registrant does not make any material amount of sales of up-
holstered furniture to foreign customers. The Registrant sells upholstered
furniture to Canadian customers through its Canadian subsidiary, La-Z-Boy
Canada Limited. Sales in Europe also occur through the Registrant's
recently acquired subsidiary Centurion Furniture plc, a furniture manu-
facturer in the United Kingdom. See Note 2 of the Notes to Consolidated
Financial Statements for more details on Centurion Furniture plc.
The Registrant also derives a small amount of royalty revenues from
the sale and licensing of its trademarks, tradenames and patents to certain
foreign manufacturers.
Export sales are increasing, and are less than 2% of sales.
ITEM 2. PROPERTIES.
In the United States, the Registrant operates twenty-nine manufactur-
ing plants (most with warehousing space), has an automated fabric processing
center and has 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, the average age and the approximate number of
employees at such locations as of April 26, 1997 are as follows:
Floor Space Average Number of
Location (square feet) Operations Conducted Age Employees
----------- ------------- ------------------------- --------- ----------
Clearfield, 48,000 Upholstering and -- 49
Utah assembly of upholstery
Dayton, 909,320 Manufacture, assembly 14 1,890
Tennessee and warehousing of
upholstery
Florence, 416,249 Manufacture, assembly 27 453
South Carolina and warehousing of
upholstery
Florence, 48,400 Fabric processing 20 17
South Carolina center
Grand Rapids, 440,000 Manufacture and assembly 82 98
Michigan of Business furntiure/
systems*
Hudson area, 1,072,745 Manufacture, assembly, 31 1,173
North Carolina and warehousing of
(Kincaid) casegoods and division
office
Leland, 311,990 Manufacture, assembly and 21 342
Mississippi warehousing of Business
Furniture casegoods
and upholstery
Lenoir area, 654,688 Manufacture, assembly & 29 546
North Carolina warehousing of primarily
(Hammary) casegoods and some
upholstered products and
division office
Lincolnton, 375,823 Manufacture, warehousing, 29 253
North Carolina and assembly of upholstery
Monroe, 242,235 Corporate office, Residential 47 547
Michigan and Business Furniture Group
offices and R & D
Neosho, 560,640 Manufacture, assembly 21 1,195
Missouri and warehousing of
upholstery
New Tazewell, 696,484 Manufacture, assembly 7 1,299
Tennessee and warehousing of primarily
(England/Corsair) upholstery and division office
Newton, 640,707 Manufacture, assembly and 20 1,289
Mississippi leather cutting, plywood
cutting and warehousing of
upholstery
Redlands, 189,125 Upholstering, assembly 27 321
California and warehousing of
upholstery
Siloam Springs, 399,616 Upholstering, warehousing, 2 408
Arkansas and assembly of upholstery
Tremonton, 672,770 Manufacture, assembly 12 952
Utah and warehousing of
upholstery
Waterloo, 257,340 Assembly and warehousing 27 404
Ontario and of upholstery and
(La-Z-Boy division office
Canada) _________ __ ______
7,936,132 24 11,236
========= == ======
* Note: The Grand Rapids plant is in the process of being shutdown.
Operations are planned to end by the end of August, 1997. Buildings
representing 330,000 square feet have been sold.
The Monroe, Michigan; Redlands, California; Dayton, Tennessee; Water-
loo, Ontario, Canada; Lincolnton, North Carolina; Grand Rapids , Michigan (a
110,000 square foot building); Lenoir, North Carolina; Hudson, North
Carolina; New Tazewell, Tennessee and the Newton, Mississippi woodworking
plants are owned by the Registrant. The Florence, South Carolina; Neosho,
Missouri; Newton, Mississippi; Siloam Springs, Arkansas 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 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 Incorporated (lessee). These leases are
capitalized on the Registrant's books. The Clearfield, Utah plant is under
a long term lease.
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.
ITEM 3. LEGAL PROCEEDINGS.
Information relating to certain legal proceedings (Note 11 of the
Consolidated Financial Statements appearing on page 25 of La-Z-Boy
Incorporated's Annual Report to Shareholders for 1997) is incorporated
herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were voted upon during the fourth quarter of 1997.
PART II
The information required in Part II (Items 5 through 8) is contained
in the La-Z-Boy Incorporated's Annual Report to Shareholders for 1997, in
the Financial Report pages 17 through 31, and is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
The information required in Part III (Items 10 through 13) is contain-
ed in the Registrant's proxy statement dated June 27, 1997 on pages 1
through 13 and 18, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
Listed below are all the documents filed as part of this report:
(a) Index to Financial Statements
(1) Financial Statements:
Page in Exhibit I
Report of Independent Accountants on Financial
Statement Schedule............................................S-2
(2) Financial Statement Schedule:
II Valuation and Qualifying Accounts............................ S-3
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:
(3)(a) Restated Articles of Incorporation (filed on Form 10-Q dated
November, 12 1996 (Commission File No. 1-9656) and is
incorporated herein by reference).
(b) By-laws (filed on Form 10-Q dated November 12, 1996 (Commission
File No. 1-9656) and is incorporated herein by reference).
(4)(a) Form of certificate for Common Stock $1.00 (filed herewith).
(b) Instruments defining the rights of holders of long-term debt
are not filed herewith, pursuant to paragraph (4)(iii) of
Regulation S-K Item 601. The Registrant will furnish all such
documents to the Securities and Exchange Commission upon its
request.
*(10)(a) 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).
*(b) La-Z-Boy Chair Company Amended and Restated 1996 Performance
Based Stock Plan (filed as Exhibit A to Registrant's proxy
statement dated June 28, 1996 (Commission File No. 1-9656) and
incorporated herein by reference).
*(c) 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 incorporat-
ed herein by reference).
*(d) La-Z-Boy Incorporated Executive Incentive Compensation Plan
Description (filed herewith).
*(e) 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).
*(f) 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 incorporat-
ed herein by reference).
*(g) 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).
*(h)(1)Form of Change in Control Agreement (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).
(h)(2)Employees who are parties to the Change in Control Agreement
(filed herewith).
*(i) 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).
(j) Amended and Restated Reorganization Agreement with England/
Corsair, Inc. (filed as Annex A to Registrant's Form S-4
Registration Statement dated April 7, 1995 (Commission File No.
33-57623) and incorporated herein by reference).
*(k) Description of loan to Mr. C.T. Knabusch (filed herwith).
*(l) Summary Plan Description and Partial Plan Document for the La-
Z-Boy Incorporated Personal Executive Insurance Program
description (filed herewith).
(13) Portions of the 1997 Annual Report to Shareholders (With the
exception of the information incorporated in Part I and II, this
document is not deemed to be filed as part of the report on Form
10-K).
(21) List of subsidiaries of La-Z-Boy Incorporated (filed herewith).
(23) Consent of Price Waterhouse LLP (filed herewith).
(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
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LA-Z-BOY INCORPORATED
/s/C. T. Knabusch
BY ------------------------ July 24, 1997
C. T. Knabusch
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below, as of July 24, 1997, by the following
persons on behalf of the Registrant and in the capacities indicated.
/s/E.J. Shoemaker
- -------------------------- --------------------------
E.J. Shoemaker L.G. Stevens
Executive Vice President Director
of Engineering, Director and Vice
Chairman of the Board
/s/C.T. Knabusch /s/J.F. Weaver
- -------------------------- --------------------------
C.T. Knabusch J.F. Weaver
Chairman of the Board, President Director
and Chief Executive Officer
/s/G.M. Hardy /s/D.K. Hehl
- -------------------------- --------------------------
G.M. Hardy D.K. Hehl
Secretary and Treasurer, Principal Director
Accounting Officer and Director
/s/F. H. Jackson
- -------------------------- --------------------------
F. H. Jackson R.E. Lipford
Vice President of Finance, Prinicpal Director
Financial Officer and Director
/s/H.G. Levy
- -------------------------- --------------------------
P.H. Norton H.G. Levy
Senior Vice President Sales and Director
Marketing and Director
--------------------------
J.W. Johnston
Director, Mr. Johnston is the
son-in-law of E.J. Shoemaker
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
YEARS ENDED APRIL 26, 1997, APRIL 27, 1996, AND APRIL 29, 1995
LA-Z-BOY INCORPORATED
MONROE, MICHIGAN
INDEX TO FINANCIAL STATEMENTS
The financial statements, together with the report thereon of Price
Waterhouse LLP dated May 29, 1997 appearing on pages 17 through 31 of the
accompanying 1997 Annual Report to Shareholders are incorporated by
reference in this Form 10-K Annual Report. With the exception of the
aforementioned information, and the information incorporated in Part II, the
1997 Annual Report to Shareholders is not to be deemed filed as part of this
report. The following financial statements schedule should be read in
conjunction with the financial statements in such 1997 Annual Report to
Shareholders. Financial statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
FINANCIAL STATEMENT SCHEDULE
1997, 1996, AND 1995
Report of Independent Accountants on Financial
Statement Schedule
Schedule II Valuation and Qualifying Accounts
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
La-Z-Boy Incorporated
Our audits of the consolidated financial statements referred to in our
report dated May 29, 1997 appearing on Page 17 of the 1997 Annual Report to
Shareholders of La-Z-Boy Incorporated (which report and consolidated
financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement
Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this
Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE LLP
Toledo, Ohio
May 29, 1997
LA-Z-BOY INCORPORATED AND SUBSIDIARIES SCHEDULE II VALUATION
AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Trade
accounts
Additions receivable
Balance at charged to Acquisition "written off" Balance
beginning costs and of operating net of at end of
Description of period expenses division recoveries period
- ------------- ----------- ----------- ------------- ------------- ----------
Year ended
April 26, 1997
Allowance for
doubtful accounts
& long-term
notes $18,033 $5,688 $4,790 $18,931
Accrued
Warranties $9,577 $1,198 $10,775
Year ended
April 27, 1996:
Allowance for
doubtful accounts
& long-term
notes $17,829 $5,530 $5,326 $18,033
Accrued
Warranties $8,450 $1,127 $9,577
Year ended
April 29, 1995:
Allowance for
doubtful accounts
& long-term
notes $14,795 $5,847 $92 $2,905 $17,829
Accrued
Warranties $6,650 $1,350 $450 $8,450
Exhibit (3)(4)(a)
LA-Z-BOY INCORPORATED
FORM OF CERTIFCATE FOR COMMON STOCK $1.00 PAR VALUE
- ---------------------------------[PICTURE]----------------------------------
(decorative border [OF THE FOUNDERS:] (decorative border
surrounding certificate) surrounding certificate)
- ---------------------------- [ E.M KNABUSCH ]-----------------------------
(decorative border) [ & ] (decorative border)
--------------------- -------------------
| NUMBER | [ E.J SHOEMAKER ] | SHARES |
| DU [identification | | [No. of Shares |
| number unique to | | represented by |
| certificate] | | certificate] |
--------------------- -------------------
INCORPORATED UNDER THE LAWS OF THE STATE OF MICHIGAN
COMMON THIS CERTIFICATE IS
SHARES La-Z-Boy Incorporated TRANSFERRABLE IN THE
IN THE CITY OF NEW YORK
(boxed area is shaded)
----------------------------------------------------------- SEE
| This Certifies that [Name of CUSIP [CUSIP No.]| REVERSE
| Shareholder] | FOR
| | CERTAIN
| | DEFIN-
| | ITIONS
| is the owner of [Number of Shares] |
| |
-----------------------------------------------------------
COUNTERSIGNED AND REGISTERED BY:
AMERICAN STOCK TRANSFER & TRUST COMPANY
BY: [name] TRANSFER AGENT
AND REGISTRAR
[signature] AUTHORIZED SIGNATURE
(the above mentioned signature spaces appear on the right edge of the
certificates running perpendicular to all other lines of text on the form)
FULLY PAID AND NON-ASSESSABLE COMMON SHARES , $1.00 PAR VALUE OF
La-Z-Boy Incorporated transferable on the books of the Corporation by
the holder hereof, in person or by duly authorized attorney upon surrender
of this Certificate properly endorsed. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers. Dated ("SHARE CERTIFICATE" IS WATERWARKED
BENEATH THIS PARAGRAPH)
/s/G.M. Hardly [La-Z-Boy Incorporated Seal] /s/C.T. Knabusch
Secretary [May 1, 1941] President
[Monroe, Michigan]
- --------------------------- -----------------------------
(decorative border (decorative border
surrounding certificate) surrounding certificate)
- ----------------------------------------------------------------------------
(PAGE 2)
(No surrounding decorative border)
La-Z-Boy Incorporated (the "Company") will furnish to a shareholder,
upon request and without charge, a full statement of designation, relative
rights, preferences, and limitations of the shares of each class of its
capital stock authorized to be issued and, if the Company is authorized to
issue any class of shares in series, the designation, relative rights,
preferences, and limitations of each series so far as the same have been
purchased and the authority of the Board of Directors to designate and
prescribe the relative rights, preferences, and limitations of other
services.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws and regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT-- Custodian
TEN ENT--as tenants by entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts
of survivorship and not as to Minors Act
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For the Value Received,______ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
--------------------------------------
| |
| |
--------------------------------------
____________________________________________________________________________
(Please print or typewrite name & address, including zip code, of assignee)
____________________________________________________________________________
____________________________________________________________________________
Common Shares represented by the within Certificate, and do hereby
irrevocably constitute and appoint
___________________________________________, Attorney to transfer the said
Shares on the books of the within named corporation with full power of
substitution in the premises.
Date_______________
------------------------------------------------
Notice: The signature to this assignment must
correspond with the name as written
upon the face of the certificate in
every particular, without alteration or
enlargement or any change whaterever.
Exhibit (10)(d)
LA-Z-BOY INCORPORATED
EXECUTIVE INCENTIVE COMPENSATION PLAN
DESCRIPTION
The purpose of the Executive Incentive Compensation Plan is to provide a
cash award to key management employees for the achievement of specific
annual goals.
The Compensation Committee of the Board of Directors (the Committee)
annually establishes short-term performance criteria covering areas such as
sales growth and improved earnings. The specific focus and weighting of the
criteria is based on key short-term priorities of the corporation. The
performance criteria are established at the start of the fiscal year or as
shortly thereafter as possible.
The target and maximum award opportunity for each participant is established
by the Committee. The target award for participants ranges from 10% to 55%
of base pay with a maximum award of 200% of the target (i.e. 20% to 110% of
base pay). The award paid is based on actual results compared to the
established performance targets. Payment of the award occurs within 90 days
after the end of the fiscal year. A participant must be on the payroll at
the end of the fiscal year (or have retired during the fiscal year) to be
eligible for an award.
Exhibit (10)(h)(2)
EMPLOYEES WHO ARE PARTIES TO
THE CHANGE IN CONTROL AGREEMENT
C.T. Knabusch, Chairman of the Board and President
E.J. Shoemaker, Vice Chairman and Executive Vice President Engineering
G.M. Hardy, Secretary and Treasurer
G.L. Kiser, Executive Vice President and Chief Operating Officer
F.H. Jackson, Vice President Finance
P.H. Norton, Senior Vice President Sales and Marketing
D.R. Jordan, Vice President Organizational Development and Planning
Exhibit (10)(k)
LA-Z-BOY INCORPORATED
DESCRIPTION OF LOAN TO MR. C. T. KNABUSCH
On December 12, 1996, the Company made an unsecured, interest-free loan of
$117,336 to Mr. Charles T. Knabusch which is payable on demand.
Exhibit (10)(l)
SUMMARY PLAN DESCRIPTION
AND
PARTIAL PLAN DOCUMENT
FOR
LA-Z-BOY INCORPORATED
PERSONAL EXECUTIVE INSURANCE PROGRAM
INTRODUCTION
LA-Z-BOY INCORPORATED (the "Company"), on behalf of itself and its
related companies, is pleased to provide you with this summary (and Partial
Plan Document) of the La-Z-Boy Incorporated Personal Executive Insurance
Program ("PEP" or the "Program"). The Program became effective in April,
1997.
As you read this summary, you should keep in mind that it is merely a
summary and not a complete statement of all of the terms of the Plan. As
you know, as a participant in the Program, you are a party to and have a
copy of an Equity Split-Dollar Agreement (the "Agreement") and an Assignment
of Policy for Collateral Security (the "Collateral Assignment") which relate
solely to you. The portion of this Summary and Partial Plan Document under
the heading "CONTRIBUTIONS", the Agreement and the Collateral Assignment,
together with the insurance policy, provide the complete terms of the
Program. You are encouraged to carefully review each of those documents.
If there is any inconsistency between the summary and those documents, the
documents will govern. If there are any inconsistencies among the summary,
the Agreement or the insurance policy, the insurance policy will govern.
You can get additional information and examine copies of any documents
relating to the Program by contacting the La-Z-Boy Incorporated Central
Board of Administration at the address shown below.
IMPORTANT NAMES, ADDRESSES, NUMBERS AND MISCELLANEOUS FACTS
The name of the Program is the "La-Z-Boy Incorporated Personal
Executive Insurance Program." Your individual arrangement is entitled the
"Equity Split-Dollar Plan of [your name] under the La-Z-Boy Incorporated
Personal Executive Insurance Program."
The name, address and telephone number of the Company are:
LA-Z-BOY INCORPORATED
1284 N. Telegraph Road
Monroe, Michigan 48162-3390
Phone Number: 313-241-1444
The Company's federal Employer Identification Number is 38-0751137 and
the plan number of the Program is 590.
The "Plan Administrator" of the Program is the Company, which is also
the "Named Fiduciary" of the Program. The Company has delegated day-to-day
responsibility for the Program to the La-Z-Boy Incorporated Central Board
of Administration (the "Central Board").
The Central Board serves as the agent for service of legal process, and
the address for service is the one shown above.
The Program keeps its records on a fiscal year that ends on the last
Saturday in April of each year.
The death benefit provided under the Program is funded entirely with
the insurance policy on your life or the life of a designated family member
issued by Interstate Assurance Company ("Interstate"). Your insurance policy
is a "universal life" type policy. You are the owner of the insurance
policy.
TYPE OF PLAN
The Program uses a contributory, collateral assignment split-dollar
life insurance plan. A split-dollar life insurance plan is a method of
financing premium payments on a life insurance policy that has lifetime
values. According to the Internal Revenue Service, a split-dollar life
insurance plan is an "arrangement whereby the party with the need and the
party with the ability to pay premiums join in purchasing an insurance
contract in which there is a substantial investment element." A split-
dollar plan is therefore not a special type of life insurance -- it is a way
of buying (or at least of financing) life insurance.
The Program provides an insured death benefit for each participant or
designated family member. The Program also emphasizes capital accumulation.
The accumulated values may be utilized by the participant to provide, for
example, supplemental income at retirement. However, the Program does not
qualify for insurance under Title IV of ERISA because it is not a pension
plan.
Under the Program, the Company pays three annual premiums (referred to
in the Agreement as "Unscheduled Premiums"). The Company will receive back
the total of all Unscheduled Premiums paid by the Company upon the death of
the insured or when the Agreement terminates, if earlier. The Company
generally will not receive back the total of any tax "gross-ups" paid by the
Company to the employee until the death of the insured, but the Company
reserves the right to demand payment of these amounts when the Agreement
terminates. The Unscheduled Premium payments made by the Company and any
"gross-ups" paid by the Company to the employee can be viewed as temporary
advances to assist in developing the benefits under the Program. The
Company's "advances" are secured through a collateral assignment of the
insurance policy to the Company in the amount of the Unscheduled Premium
payments and any "gross-ups" paid by the Company to the employee. The terms
of this assignment are described in the Collateral Assignment. The
Company's rights and restrictions as collateral assignee are described in
Section 5 of the Agreement.
For its own business purposes, the Company may borrow from Interstate
an amount not to exceed the aggregate amount of the Unscheduled Premiums
then or theretofore paid by the Company. The Company may secure such
borrowing by assigning to Interstate the Company's interest in the
Collateral Assignment. The Company may never borrow any part of the
insurance policy's loan value or cash surrender value.
As a participant, you make annual premium payments (referred to in the
Agreement as "Scheduled Premiums") in accordance with the terms of the
insurance policy. Since the policy is a universal life policy, you have
some flexibility in determining the number of Scheduled Premiums to be made.
The Program provides, however, that you will make Scheduled Premium payments
during the first seven policy years (i.e., at least seven annual or eighty-
four monthly Scheduled Premium payments must be made).
You own the insurance policy issued on your life or the life of your
designated family member. The Company has no legal, equitable or beneficial
right, title or interest in the insurance policy, except to the extent of
the lien on and security interest in the policy created under the Collateral
Assignment. You may not borrow from the policy for any reason during the
first seven (7) policy years.
The excess of the policy proceeds over the total of the Unscheduled
Premiums paid by the Company and any "gross-ups" paid by the Company to the
employee is the death benefit that will be paid to the named beneficiary
under the policy.
ADMINISTRATION
The Program is administered by the Central Board and by Interstate.
Interstate provides the life insurance policies used by the Program (see the
discussion under the heading "Funding" below). In general, the Central
Board is responsible for administering the requirements set forth in this
Partial Plan Document and in the Agreement, and Interstate is responsible
for matters relating to the insurance policies. For example, the Central
Board makes sure the eligibility requirements (these are discussed under the
heading "ELIGIBILITY") are met, but it is up to Interstate to decide whether
or not it will issue an insurance policy on an employee or designated family
member who has otherwise met the eligibility requirements. Interstate is
not a party to the Agreement or the Collateral Assignment. The rights and
obligations of Interstate are determined exclusively by the insurance
policy.
Except as discussed above with respect to the powers and responsibilit-
ies of Interstate, the Central Board shall have power to construe and
interpret all provisions of this Program, including but not limited to the
power to construe and interpret all provisions of this Program relating to
eligibility for benefits and the amount, manner and time of payment of
benefits, any such construction and interpretation by the Central Board and
any action taken thereon in good faith by any administrative party to be
final and conclusive upon any affected party. The Central Board shall also
have power to correct any defect, supply any omission, or reconcile any
inconsistency in such manner and to such extent as the Central Board shall
deem proper to carry out and put into effect this Program; and any
construction made or other action taken by the Central Board, if and when
communicated in writing to any affected party or other administrative party,
shall be binding upon such other party and may be relied upon by such other
party. Nevertheless, the rights and obligations of Interstate are
determined exclusively by the insurance policy.
ELIGIBILITY
In order to become a participant in the Program, an employee must meet
all of the following requirements:
1. The employee is a "key employee." A "key employee" is an
employee of the Company who the Central Board, on behalf of
the Company, determines is in a position to favorably affect
in a significant manner the efficiency, profitability or
growth of the Company by reason of the nature and extent of
the particular employee's duties, responsibilities, personal
capabilities, performance and potential;
2. The employee is selected by the Compensation Committee of the
Company's Board of Directors to participate in the Program;
and
3. The employee or designated family member is insurable under
the terms of the Program. This means that the Central Board,
in its sole discretion, determines that the cost of the policy
for that employee or designated family member is reasonable.
Under the terms of the La-Z-Boy Chair Company Employees' Profit
Sharing and Supplemental Executive Retirement Plans, employees who
participate in the Program will not be eligible to receive additional
benefits under those plans.
BENEFITS
Only employees who meet all of the eligibility requirements (including
insurability at reasonable cost) and become participants are entitled to the
benefits provided under the Program. The basic benefit provided is an
insured death benefit payable to the beneficiary designated by the
participant. The death benefit is equal to the excess of the total death
benefit under the life insurance policy over the sum of Unscheduled
Premiums paid by the Company plus any "gross-ups" paid by the Company to the
employee as of the time of the insured's death. The Program is also
designed to emphasize capital accumulation. The accumulated value can be
utilized by the participant to provide, for example, supplemental income at
retirement. Payments from the Program are made in accordance with the
provisions of the Agreement, the Collateral Assignment and the insurance
policy.
The amount of insurance on each participant or designated family member
is determined by the Company and is not necessarily the same for all
participants. The initial face amount of life insurance provided under your
policy is shown on a personal Benefit Schedule which the Central Board will
provide to you. The actual death benefit will decrease each year from the
amount shown on your Benefit Schedule, depending on the "amount at risk"
each year. (See discussion of the "amount at risk" under the heading
entitled "TAXATION OF ECONOMIC BENEFIT.")
DISQUALIFICATION, REDUCTION, LOSS, FORFEITURE OR DENIAL OF BENEFITS
There are a number of circumstances under which the benefits of the
Program may not be available to an employee who has met the eligibility
requirements previously described. These are listed below and should be
read carefully.
1. The Company may discontinue the Program upon thirty (30) days
prior written notice.
2. The ability of the Company to pay the Unscheduled Premiums to the
insurance company and any "gross-ups" to the employee depends on
the Company's continued financial success. Such determination will
be made solely by the Company.
3. A participant who terminates his employment with the Company will
cease to be a participant in the Program.
4. Each participant must pay the Scheduled Premiums (see "Funding")
required under the Program. If a participant does not make
these premium payments, the Company may terminate the Program
with respect to that participant. Failure to make the Scheduled
Premium payments may jeopardize the benefits provided under the
Program. See the discussion under "CONTRIBUTIONS", below, for
some circumstances under which the Company might not assist a
current employee in paying the Scheduled Premiums.
5. A material misstatement on the application for insurance may result
in a denial of benefits during the two-year period following the
effective date of the insurance policy.
6. If the insured dies by suicide within two years from the effective
date of the insurance policy, the amount payable as a death benefit
will be limited to the Scheduled Premiums paid by the participant,
less any loans or cash withdrawals.
7. If a default occurs under Section 10 of the Agreement or Section 11
of the Collateral Assignment, the Agreement will terminate.
In the event the Program is terminated (either as to all participants
or as to an individual participant), a participant may preserve and continue
the life insurance policy by timely repaying the Company the total amount of
the Unscheduled Premiums and, if the Company so requires, the gross-ups
previously paid by the Company and by continuing to make the Scheduled
Premium payments.
FUNDING
The death benefit is funded entirely with a life insurance policy
purchased from Interstate. The cost of the life insurance policy on the
life of the participant or designated family member is borne by the Company
and the participant. In accordance with the terms of the Agreement, the
Company pays three Unscheduled Premiums, and the participant pays the annual
Scheduled Premiums when due. Nothing contained in this Program shall give a
participant or an insured any right, title or interest in any property of
the Company.
CONTRIBUTIONS
In an employee's initial year of participation, the Company will (in
effect) pay a bonus to him by paying the insurance company the Scheduled
Premium ("SP") on his behalf. The Company will also establish and maintain
on behalf of the participant a bookkeeping account. In subsequent years,
the bookkeeping account will be debited if the following quantity is
negative:
(N% x W) - (15% x W1),
where "N%" is the then-current annual rate of contribution which could be
made according to the Company's guidelines (absent any IRS restrictions*) by
the participant's employer to the La-Z-Boy Chair Company Employees' Profit
Sharing Plan, "W" is the participant's base salary in that year and "W1" is
the participant's base salary in the year in which his participation in the
Program begins.
If a participant's bookkeeping account is to be debited in any year,
the amount of that debit will be:
SP - [(N%/15%) x SP],
where "SP" is the Scheduled Premium on his behalf and "N%" is the then-
current annual rate of contribution which could be made according to the
Company's guidelines (absent any IRS restrictions)* by the participant's
employer to the La-Z-Boy Chair Company Employees' Profit Sharing Plan.
Conversely, a participant's bookkeeping account may be credited if, in
any year, N% exceeds 15%. The amount of that credit will be:
[(N%/15%) x SP] - SP,
where "SP" is the Scheduled Premium on his behalf and "N%" is the then-
current annual rate of contribution which could be made according to the
Company's guidelines (absent any IRS restrictions) by the participant's
employer to the La-Z-Boy Chair Company Employees' Profit Sharing Plan.
However, no credit will be made unless there have been prior debits to the
bookkeeping account. In other words, the credits can eliminate prior
debits, but cannot be used to establish a reserve against future debits.
In an employee's initial year of participation and as long as the debit
balance in his bookkeeping account does not exceed "SP" (the Scheduled
Premium on his behalf), the Company will (in effect) pay a bonus to him by
paying the insurance company on his behalf the entire Scheduled Premium
("SP"). However, if the debit balance does exceed SP, the Company's payment
on the participant's behalf will be limited to N% x W, where "N%" is the
then-current annual rate of contribution which could be made (absent any IRS
restrictions) by the participant's employer to the La-Z-Boy Chair Company
Employees' Profit Sharing Plan and "W" is the participant's base salary in
that year.
For any fiscal year where the Company pays all or part of the Scheduled
Premium on behalf of an employee, the Company will also pay the employee a
"gross-up" bonus to lessen the tax effect on the employee of the Company's
payment of all or part of the Scheduled Premium. This "gross-up" bonus will
be computed as 32% of the part, if any, of the Scheduled Premium amount paid
by the Company on the employee's behalf. By accepting a gross-up payment,
the employee agrees that the Company will receive back the total of any tax
"gross-ups" paid by the Company to the employee upon the death of the
insured, or earlier if the Company so requires.
TAXATION OF ECONOMIC BENEFIT
A split-dollar life insurance plan can be viewed as providing a flow of
benefits from the employer to the insured employee. The benefits flowing to
the participant under the Program consist of both earnings attributable to
the Company's Unscheduled Premium payments and the economic value of the
death benefit. The economic value of the death benefit is measured by
multiplying the "net amount at risk" (i.e., the gross death benefit payable
to the participant's beneficiary net of any participant cash surrender
value) times the lower of the so-called "P.S. 58" cost or Interstate's term
rate per $1,000 of insurance. The Scheduled Premiums reduce the amount of
the death benefit flow currently taxable to the participant. The flow of
benefits attributable to the earnings on the Unscheduled Premium payments
may be considered imputed income to the participant. The amount taxable to
the participant for any year depends on a number of factors, including the
amount of insurance and the age of the participant. In addition, the
Company's payment of all or any portion of the Scheduled Premium on behalf
of the employee as well as any "gross-ups" paid by the Company to the
employee will result in taxable income to the employee. Information on the
taxable economic benefit per year for each participant will be provided to
the participant by the Central Board. The Company and the Central Board
cannot provide you with tax advice regarding the Program. You are urged to
consult your personal tax advisor regarding the tax aspects of the Program.
ADOPTION OF PROGRAM TO COVER OTHER COMPANIES, FACILITIES OR GROUPS
Any related company may adopt the Program (as a whole company or as to
any one or more divisions, subsidiaries, facilities, etc.) effective as of
the day it specifies. Adoption shall be accomplished by the express consent
of the Central Board and the agreement of the adopting company (by action of
or ratification by its board of directors). The same procedure shall be
followed when an employer that has adopted the Program wishes to change the
positions, facilities, etc. covered by this Program. For these purposes, a
"related company" means and includes any entity, whether or not incorporat-
ed, which is aggregated with La-Z-Boy Incorporated under Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code; provided that no entity shall
be considered to be a related company at any time prior or subsequent to the
period of time during which it meets the foregoing definition, and provided
further that the status of being employed by a related company shall only
pertain to an individual during the period of time when his employer is a
related company, and not to any period of time prior or subsequent to its
related company status. Unless the context otherwise requires, at any time
while a related company has adopted this Program (i) the term Company as
used herein with respect to any employee or participant shall be construed
to mean the adopting entity by which such individual is employed, and (ii)
whenever the term Company is used in connection with action to be taken in
connection with the Program or its administration, the term Company shall
mean La-Z-Boy Incorporated. A list of participating employers as of June 1,
1997 appears at the end of this document.
AMENDMENT AND TERMINATION
This Program may be amended from time to time, or suspended or
terminated, at the sole discretion of the Company through action of the
Central Board. However, no such action shall impair any rights which may
have accrued under the Program prior to the effective date of such action.
Any successor corporation or business entity to the Company may expressly
assume the Program and any liability of the Company to make payments
thereunder.
CLAIMS PROCEDURE
A. Non-Death Benefit Claim:
The participant (or "claimant") must make a claim for any non-death
benefits under the Program by submitting a written request to the Central
Board. Upon receipt of such request, the Central Board may require the
participant to complete such forms and provide such additional information
as may be reasonably necessary to establish the claimant's right to a
benefit under the Program. The Central Board will review and make the
decision with respect to the claim. In the case of a death benefit claim,
the beneficiary designated under the policy by the participant must file a
claim with Interstate. See part B below.
If a claim for benefits other than a death benefit is wholly or
partially denied, the Central Board will furnish to the claimant written
notice of such decision within thirty (30) days after the claim has been
filed. If special circumstances require more than thirty (30) days to
process the claim, this period may be extended for up to an additional
thirty (30) days by giving written notice to the claimant before the end of
the initial 30-day period stating the special circumstances requiring the
extension and the date by which a final decision is expected. Failure to
provide a notice of decision in the time specified will constitute a denial
of the claim and the claimant will be entitled to require a review of the
denial under the review procedure discussed below.
The notice to be provided to every claimant who is denied a claim for
benefits must be in writing and must set forth, in a manner calculated to be
understood by the claimant, the following:
(1) the specific reason or reasons for the denial;
(2) specific reference to pertinent provisions of this Partial Plan
Document, the Agreement or the Collateral Assignment on which the
denial is based;
(3) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(4) an explanation of the Program's claim review procedure describing
the steps to be taken by a claimant who wishes to submit his claim
for review.
The purpose of the review procedure is to provide a procedure by which
a claimant may have a reasonable opportunity to appeal a denial of a claim
to the Central Board for a full and fair review. To accomplish that
purpose, the claimant or his duly authorized representative:
(1) may request a review upon written application to the Central
Board;
(2) may review pertinent Program documents; and
(3) may submit issues and comments in writing.
A claimant (or his duly authorized representative) may request a review
by filing a written application for review with the Central Board at any
time within sixty (60) days after receipt by the claimant of written notice
of the denial of his claim. Such request must set forth in reasonable
detail:
(1) the grounds upon which the request for review is based and any
facts in support thereof; and
(2) any issues or comments which the claimant considers pertinent to
his claim.
The decision on review of a denied claim will be made in the following
manner:
(1) The decision on review will be made by the Central Board which
may, in its discretion, hold a hearing on the denied claim. The
Central Board must make its decision promptly, which will ordinar-
ily be not later than sixty (60) days after receipt of the request
for review, unless special circumstances (such as the need to hold
a hearing) require an extension of time for processing the review
of the denied claim. In that case, a decision will be rendered as
soon as possible, but not later than one hundred twenty (120) days
after the receipt of the request for review. If an extension of
time is required due to special circumstances, written notice of
the extension will be furnished to the claimant prior to the time
the extension commences. Any hearing will be held at the
Company's main offices in Monroe, Michigan unless the claimant and
the Central Board agree otherwise.
(2) The decision on review will be in writing and will include
specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references
to the pertinent provisions of the Program documents on which the
decision is based. The decision of the Central Board will be
final and conclusive on all persons.
(3) In the event the decision on review is not furnished to the
claimant within the time required, the claim will be deemed denied
on review.
B. Death Benefit Claim:
A claim for a death benefit must follow the procedures established by
Interstate, which may include time deadlines. If a beneficiary (or
"claimant") makes a written request to the Central Board, the Central Board
will either provide copies of forms or instructions required by Interstate
to make a claim or advise the claimant how to obtain them. Interstate will
notify the claimant if the claim is denied and will explain the procedures
it has for reviewing any claims which it denies.
STATEMENT OF ERISA RIGHTS
(This statement required by federal law and regulation.)
As a participant in the La-Z-Boy Incorporated Personal Executive
Insurance Program (the "Program"), you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974
("ERISA"). ERISA provides that all participants are entitled to:
1. Examine, without charge, at the Central Board's office, all Program
documents, including insurance contracts.
2. Obtain copies of all Program documents and other Program inform-
ation upon written request to the Central Board. The Central Board
may make a reasonable charge for the copies.
If copies of any of the materials mentioned above are requested, and if
such copies are not received within thirty (30) days after the request, the
participant making the request may enforce his rights to such materials by
filing suit in federal court. Unless the materials were not sent because of
matters beyond the control of the Central Board, the Central Board may be
required to pay the participant up to $100 for each day's delay until the
materials are received.
In addition to creating rights for Program participants, ERISA places
duties upon the Program fiduciaries, who are persons responsible for operat-
ing the Program. They are required to exercise their duties under the
Program with prudence and solely in the interest of the Program
participants.
No action will be taken against any employee by the Company or by any
other person for exercising his rights as set forth herein.
If you file a claim for a benefit which is denied, in whole or in part,
you will receive a written explanation of the reason for the denial. You
have the right to have your claim reconsidered (see the preceding section
entitled "CLAIMS PROCEDURE"). If, after following the claims procedure,
your claim is denied, in whole or in part, you may bring suit in federal or
state court. Other suits brought with respect to the Program, such as to
obtain materials mentioned above, or against Program fiduciaries for failure
to carry out their Program duties properly, or against any person dis-
criminating against you for asserting your rights, must be brought in
federal court. In many instances, you may request assistance from the U.S.
Department of Labor. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the party you have
sued to pay these costs and fees; if you lose, the court may order you to
pay these costs and fees; or the court may decide that each party should pay
its own costs and fees.
If you have any questions about this statement or your rights under
ERISA, you should contact the Central Board or the nearest Area Office of
the U.S. Labor-Management Service Administration, Department of Labor.
AMENDMENT
The Agreement and Collateral Assignment may be amended at any time and
from time to time by a written instrument executed by the participant and
the Company. The consent of Interstate to an amendment may be required in
some circumstances.
MISCELLANEOUS
Titles and headings are included for convenience only and shall not
control the meaning or interpretation of any provision of this Program. The
use of masculine pronouns shall be deemed to include both males and females;
similarly, where the context so indicates, the singular shall include the
plural and vice versa. Except to the extent that federal law shall govern,
the validity and construction of the Program and each of its provisions
shall be subject to and governed by the laws of the State of Michigan except
that the insurance policy and each of its provisions shall be subject to and
governed by the laws of the State of Iowa.
If any provision of this Program is found, held or deemed to be void,
unlawful or unenforceable under any applicable statute or other controlling
law, the remainder of this Program shall continue in full force and effect.
QUESTIONS
If you have a question which is not answered here, ask the Central
Board. Should you misplace your copy of any of the documents which comprise
the Program, copies are available from the Central Board. Of course, the
Program itself, rather than this summary of the Program, will control all
rights under the Program.
PARTICIPATING EMPLOYERS (as of June 1, 1997)
La-Z-Boy Incorporated and its domestic divisions
Kincaid Furniture Company
England/Corsair, Inc.
For employees of Kincaid Furniture Company, the information on page 1 should
be as follows:
Your sponsoring employer is Kincaid Furniture Company, Inc. Its
address is P.O. Box 605, Hudson, North Carolina 28638 and its telephone
number is (704) 728-3261.
The employer identification number of Kincaid Furniture Company, Inc.
is 56-1259619.
For employees of England/Corsair, Inc., the information on page 1 should be
as follows:
Your sponsoring employer is England/Corsair, Inc. Its address is 402
Old Knoxville Highway, New Tazewell, Tennessee 37825 and its telephone
number is (423) 626-2145.
The employer identification number of England/Corsair, Inc. is 62-
0699863.
* For example, according to the Company's guidelines a 20% contribution
rate might be indicated, whereas IRS restrictions would generally limit
the contribution rate to 15%.
Financial Report
Report of Management Responsibilities
La-Z-Boy Incorporated
The management of La-Z-Boy Incorporated is responsible for the preparation
of the accompanying consolidated financial statements, related financial
data, and all other information included in the following pages. The
financial statements have been prepared in accordance with generally
accepted accounting principles and include amounts based on management's
estimates and judgments where appropriate.
Management is further responsible for maintaining the adequacy and
effectiveness of established internal controls. These controls provide
reasonable assurance that the assets of La-Z-Boy Incorporated are safeguard-
ed and that transactions are executed in accordance with management's
authorization and are recorded properly for the preparation of financial
statements. The internal control system is supported by written policies and
procedures, the careful selection and training of qualified personnel, and a
program of internal auditing.
The accompanying report of the Company's independent accountants states
their opinion on the Company's financial statements, based on examinations
conducted in accordance with generally accepted auditing standards. The
Board of Directors, through its Audit Committee composed exclusively of
outside directors, is responsible for reviewing and monitoring the financial
statements and accounting practices. The Audit Committee meets periodically
with the internal auditors, management, and the independent accountants to
ensure that each is meeting its responsibilities. The Audit Committee and
the independent accountants have free access to each other with or without
management being present.
Charles T. Knabusch Frederick H. Jackson
Chief Executive Officer Chief Financial Officer
Price Waterhouse LLP
To the Board of Directors and Shareholders of La-Z-Boy Incorporated
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows, present fairly, in all material respects, the financial position
of La-Z-Boy Incorporated and its subsidiaries at April 26, 1997 and April
27, 1996, and the results of their operations and their cash flows for each
of the three fiscal years in the period ended April 26, 1997, 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.
Price Waterhouse LLP
Toledo, Ohio
May 29, 1997
Consolidated Balance Sheet
- --------------------------------------------------------------------
(Amount in thousands, except par value) As of 4/26/97 4/27/96
- --------------------------------------------------------------------
Assets
- ------
Current assets
Cash and equivalent................... $25,382 $27,060
Receivables, less allowances of $16,442 in
1997 and $15,253 in 1996......... 215,032 206,430
Inventories
Raw materials.................... 36,959 37,274
Work-in-process.................. 34,854 35,241
Finished goods.................. 28,177 28,333
--------- ---------
FIFO inventories............ 99,990 100,848
Excess of FIFO over LIFO.... (21,219) (21,656)
--------- ---------
Total inventories........... 78,771 79,192
Deferred income taxes................. 20,950 19,271
Other current assets.................. 2,640 5,148
--------- ---------
Total current assets.............. 342,775 337,101
Property, plant and equipment, net.......... 114,658 116,199
Goodwill, less accumulated amortization of
$9,744 in 1997 and $8,087 in 1996..... 38,702 40,359
Other long-term assets, less allowances of
$2,489 in 1997 and $2,780 in 1996..... 32,272 23,887
--------- ---------
Total assets..................... $528,407 $517,546
======== ========
Liabilities and shareholders' equity
- ------------------------------------
Current liabilities
Current portion of long-term debt..... $4,611 $5,625
Current portion of capital leases..... 2,017 2,114
Accounts payable...................... 28,589 30,997
Payroll/other compensation............ 37,934 34,609
Estimated income taxes................ 5,412 5,572
Other current liabilities............. 19,106 17,601
-------- -------
Total current liabilities........ 97,669 96,518
Long-term debt............................. 52,449 57,075
Capital leases............................. 2,202 4,219
Deferred income taxes...................... 6,329 6,663
Other long-term liabilities................ 10,420 9,695
Commitments and contingencies.............. - -
Shareholders' equity
Preferred Shares-5,000 authorized; 0 issued - -
Common shares, $1 par value-40,000 authorized;
17,908 issued in 1997 and 18,385 in 1996 17,908 18,385
Capital in excess of par value........ 27,697 28,016
Retained earnings..................... 314,731 297,750
Currency translation adjustments...... (998) (775)
--------- ---------
Total shareholders' equity....... 359,338 343,376
--------- ---------
Total liabilities and
shareholders'equity....... $528,407 $517,546
======== ========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
Consolidated Statement of Income
- ------------------------------------------------------------------------
(Amounts in thousands, Fiscal
except per share data) year ended 4/26/97 4/27/96 4/29/95
- ------------------------------------------------------------------------
Sales................................ $1,005,825 $947,263 $850,271
Cost of sales........................ 744,662 705,379 629,222
--------- -------- --------
Gross profit................... 261,163 241,884 221,049
Selling, general and administrative. 187,230 174,376 158,551
--------- -------- --------
Operating profit............... 73,933 67,508 62,498
Interest expense..................... 4,376 5,306 3,334
Interest income...................... 1,770 1,975 1,628
Other income......................... 2,508 2,023 1,229
--------- -------- --------
Pretax income........................ 73,835 66,200 62,021
Income tax expense
Federal -current............. 26,247 23,383 22,716
-deferred............ (1,699) (818) (1,205)
State -current............. 4,304 4,540 4,177
-deferred............ (314) (158) 31
---------- -------- --------
Total tax expense........... 28,538 26,947 25,719
---------- -------- --------
Net income............... $45,297 $39,253 $36,302
======= ======= =======
Weighted average shares.. 18,108 18,498 18,044
======= ======= =======
Net income per share..... $2.50 $2.12 $2.01
======= ======= =======
Consolidated Statement of Changes in Stockholders' Equity
- ----------------------------------------------------------------------------
Capital Currency
in excess translation
Common of Retained adjust-
(Amounts in thousands) shares par value Earnings ments Total
- ----------------------------------------------------------------------------
At April 30, 1994... $18,287 $10,147 $263,348 ($871) $290,911
Purchase of La-Z-Boy
stock................ (529) (12,243) (12,772)
Currency translation..... 126 126
Stock options/401(k)..... 137 601 2,617 3,355
Acquisition of operating
division............. 667 17,337 18,004
Dividends paid........... (12,286) (12,286)
Net income............... 36,302 36,302
--------- -------- ---------- -------- -----------
At April 29, 1995... 18,562 28,085 277,738 (745) 323,640
Purchases of La-Z-Boy
stock................ (372) (9,663) (10,035)
Currency translation..... (30) (30)
Stock options/401(k)..... 195 (69) 4,128 4,254
Dividends paid........... (13,706) (13,706)
Net income............... 39,253 39,253
--------- --------- --------- -------- -----------
At April 27, 1996... 18,385 28,016 297,750 (775) 343,376
Purchases of La-Z-Boy
stock................ (693) (20,058) (20,751)
Currency translation..... (223) (223)
Stock options/401(k)..... 216 (319) 5,884 5,781
Dividends paid........... (14,142) (14,142)
Net income............... 45,297 45,297
--------- --------- --------- -------- -----------
At April 26, 1997... $17,908 $27,697 $314,731 ($998) $359,338
The years ended April 26, 1997 and April 27, 1996 include England/Corsair.
The year ended April 29, 1995 does not include England/Corsair.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
Consolidated Statement of Cash Flows
- ------------------------------------------------------------------------
Fiscal
(Amounts in thousands) year ended 4/26/97 4/27/96 4/29/95
- ------------------------------------------------------------------------
Cash flows from operating activities
Net income.............................. $45,297 $39,253 $36,302
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization.... 20,382 20,147 15,156
Change in receivables............ (8,178) (13,492) (6,013)
Change in inventories............ 421 1,899 (4,142)
Change in other assets
and liabilities................. 4,254 5,184 1,624
Change in deferred taxes......... (2,014) (975) (2,619)
------- ------- -------
Total adjustments............ 14,865 12,763 4,006
------- ------- -------
Cash provided by operating activities..... 60,162 52,016 40,308
Cash flows from investing activities
Proceeds from disposals of assets....... 1,527 1,063 1,442
Capital expenditures.................... (17,778) (18,168) (18,980)
Acquisition of operating division, net of
cash acquired.......................... - - (2,486)
Change in other investments............. (8,596) (1,229) (254)
-------- -------- --------
Cash used for investing
activities................. (24,847) (18,334) (20,278)
Cash flows from financing activities
Short-term debt......................... - - 261
Long-term debt.......................... - - 7,500
Retirements of debt..................... (5,640) (13,125) (5,011)
Capital leases.......................... - 1,161 -
Capital lease principle payments........ (2,114) (2,204) -
Stock for stock option plans............ 4,213 2,876 1,834
Stock for 401(k) employee plans......... 1,568 1,378 1,521
Purchases of La-Z-Boy stock............. (20,751) (10,035) (12,772)
Payment of cash dividends............... (14,142) (13,706) (12,286)
-------- -------- --------
Cash used for financing
activities.................. (36,866) (33,655) (18,953)
Effect of exchange rate changes on cash... (127) (15) 45
Net change in cash and equivalents........ (1,678) 12 1,122
Cash and equivalents at beginning of the year 27,060 27,048 25,926
-------- -------- --------
Cash and equivalents at end of the year... $25,382 $27,060 $27,048
======== ======== ========
Cash paid during the year
-Income taxes....................... $28,670 $27,024 $28,010
-Interest........................... $4,437 $5,408 $3,281
For purposes of the Consolidated 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.
Notes to Consolidated Financial Statements
Note 1: Accounting Policies
The Company operates primarily in the U.S. 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
Incorporated and its wholly owned subsidiaries. All significant intercompany
transactions have been eliminated.
Risks and Uncertainties
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles, which require management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, sales and expenses for the reporting periods. Actual results
could differ from those estimates.
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.
Goodwill is evaluated periodically as events or circumstances indicate a
possible inability to recover its carrying amount. Such evaluation is based
on profitability projections and cash flow analysis. If future expected
undiscounted cash flows are insufficient to recover the carrying amount of
the asset, then an impairment loss is recognized.
Revenue Recognition
Revenue is recognized upon shipment of product.
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.
Note 2: Acquisitions
On April 29, 1995, the Company acquired all of the capital stock of England/
Corsair, Inc., a manufacturer of upholstered furniture. For the twelve
months ended April 1995, England/Corsair sales were $103.2 million and
income before income tax expense was $3.9 million.
During fiscal year 1997, La-Z-Boy acquired approximately 75% of the ordinary
share capital of Centurion Furniture plc, a furniture manufacturer located
in England. The remainder of the ordinary share capital is expected to be
acquired in the first quarter of fiscal year 1998. Sales for their year
ended March 31, 1997 were $12 million. The investment appears in other long-
term assets on the balance sheet.
Note 3: Cash and Equivalents
- ------------------------------------------------------------------
(Amounts in thousands) 4/26/97 4/27/96
- ------------------------------------------------------------------
Cash in bank........................ $5,782 $7,060
Certificates of deposit............. 19,600 20,000
--------- ---------
Total cash and equivalents..... $25,382 $27,060
======= =======
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 fiscal years 1997 and 1996, $16 million was invested in this bank's
certificates.
Note 4: Property, Plant and Equipment
- ----------------------------------------------------------------------------
Life in Depreciation
(Amounts in thousands) years method 4/26/97 4/27/96
- ----------------------------------------------------------------------------
Land and land improvements........ 0-20 150%DB $11,296 $10,753
Buildings and building
fixtures..................... 15-30 150%DB 110,875 108,120
Machinery and equipment........ 10 200%DB 107,316 99,869
Information systems............ 5 200%DB 16,295 14,888
Network and production
tracking systems......... 5-10 SL 1,873 253
Transportation equipment....... 5 SL 14,974 16,680
Other.......................... 3-10 Various 14,186 14,875
-------- -------
276,815 265,438
Less: accumulated depreciation.............. 162,157 149,239
-------- -------
Property, plant and equipment, net....... $114,658 $116,199
======== ========
DB = Declining Balance SL = Straight Line
Note 5: Debt and Capital Lease Obligations
- ------------------------------------------------------------------------
Interest
(Amounts in thousands) rates Maturities 4/26/97 4/27/96
- ------------------------------------------------------------------------
Credit lines........... 5.9%-6.1% 1998-02 $15,000 $15,000
Private placement...... 8.8% 1998-00 5,625 7,500
La-Z-Boy notes......... 8.0% 1998-99 4,984 7,476
Industrial revenue
bonds............... 3.8%-4.7% 1999-15 30,870 31,870
Other debt............. 5.0%-7.0% 1998-00 581 854
-------- --------
Total debt........................................... $57,060 $62,700
Less: current portion...... 4,611 5,625
-------- --------
Long-term debt............. $52,449 $57,075
======== ========
Weighted average interest 5.4% 5.5%
Fair value of long-term debt $57,200 $62,931
The Company has a $50 million unsecured revolving credit line through August
2001, requiring interest only payments through August 2001 and requiring
principal payment in August 2001. 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 also
include interest. The bonds are secured by the facilities constructed from
the bond proceeds.
The Company leases equipment (primarily trucks used as transportation
equipment) under capital leases expiring at various dates through fiscal
year 2001. The majority of the leases include bargain purchase options.
Maturities of debt and lease obligations for the five years subsequent to
April 26, 1997 are $7 million, $7 million, $3 million, $1 million and $22
million, respectively. As of April 26, 1997, the Company had remaining
unused lines of credit and commitments of $63 million under several credit
arrangements.
Note 6: Financial Guarantees
La-Z-Boy has provided financial guarantees relating to loans and leases in
connection with some proprietary stores. The amounts of the unsecured
guarantees are shown in the following table. Because almost all guarantees
are expected to retire without being funded in whole, the contract amounts
are not estimates of future cash flows.
- ------------------------------------------------------------------------
4/26/97 4/27/96
Contract Contract
(Amounts in thousands) Amount Amount
- ------------------------------------------------------------------------
Lease guarantees................................ $4,458 $4,403
Loan guarantees................................. $20,049 $16,713
- ------------------------------------------------------------------------
Most guarantees require periodic payments to La-Z-Boy in exchange for the
guarantee. Terms of current guarantees generally range from one to five
years.
The guarantees have off-balance-sheet credit risk because only the periodic
payments and accruals for possible losses are recognized in the Consolidated
Balance Sheet until the guarantee expires. Credit risk represents the
accounting loss that would be recognized at the reporting date if counter-
parties failed to perform completely as contracted. The credit risk amounts
are equal to the contractual amounts, assuming that the amounts are fully
advanced and that no amounts could be recovered from other parties.
Note 7: Stock Option Plans
The Company's shareholders adopted an employee Incentive Stock Option Plan
that provided 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 was authorized to grant options for
up to 1,600,000 common shares.
- ------------------------------------------------------------------------
Weighted
Number average
of shares exercise price
- ------------------------------------------------------------------------
Outstanding at April 30, 1994............. 489,974 $22.65
Granted................................... 109,412 27.48
Exercised................................. (73,759) 19.60
Expired or cancelled...................... (40,927) 25.00
--------
Outstanding at April 29, 1995............. 484,700 24.03
Granted................................... 140,245 30.98
Exercised................................. (87,917) 16.80
Expired or cancelled...................... (4,478) 26.15
--------
Outstanding at April 27, 1996............. 532,550 27.05
Granted (see below)....................... - -
Exercised................................. (120,714) 22.82
Expired or cancelled...................... (3,659) 27.11
--------
Outstanding at April 26, 1997............. 408,177 28.30
=======
Exercisable at April 26, 1997............. 235,676 27.11
Shares available for grants
at April 26, 1997....................... -
The options outstanding at April 26, 1997 have exercise prices between
$21.75 and $33.55 and a weighted-average remaining contractual life of 2.1
years.
The Company's shareholders have adopted Restricted Share Plans. Under one
plan, which has expired, the Compensation Committee of the Board of
Directors was authorized to offer for sale up to an aggregate of 600,000
common shares to certain employees. There were 11,300 shares granted and
issued in fiscal year 1996 under this plan. Under a second plan, up to an
aggregate of 50,000 common shares were authorized for sale to non-employee
directors. This plan expires in the fiscal year 2000. Under the Restricted
Share Plans, shares are offered at 25% of the fair market value at the date
of grant. 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 2,500 and 1,000 were granted and issued during fiscal
years 1997 and 1996, respectively, under the director's plan. Shares remain-
ing for future grants under the director's plan amounted to 34,000 at April
26, 1997.
No Incentive or employee Restricted stock options were granted in fiscal
year 1997 as the plans have expired. Those options, which would have been
granted in fiscal year 1997, along with the fiscal year 1998 Incentive and
employee Restricted stock options, will be granted in fiscal year 1998
provided the new plans are approved by the Company's shareholders.
The Company's shareholders have also adopted a Performance-Based Restricted
Stock Plan. This plan authorizes the Compensation Committee of the Board of
Directors to award up to an aggregate of 400,000 shares to key employees.
This plan expires in fiscal year 2004. Grants of shares are based entirely
on achievement of goals over a three-year performance period. Any award made
under the plan will be at the sole discretion of the Compensation Committee
after judging all relevant factors. At April 26, 1997, performance awards
were outstanding pursuant to which up to approximately 110,000 shares may be
issued in fiscal years 1998 through 2000 for the three outstanding plan
years, depending on the extent to which certain specified performance
objectives are met. The costs of performance awards are expensed over the
performance period. In fiscal year 1997, 42,420 shares were issued.
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, encourages, but does not require, companies to
record compensation for stock-based employee compensation plans at fair
value. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. The differences between the
recognition and measurement provisions of SFAS No. 123 and APB No. 25 are
not significant to the Company's result of operations or net income per
share.
Note 8: 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
eligible highly compensated employees called a SERP (Supplemental Executive
Retirement Plan).
The Company offers voluntary 401(k) retirement plans to eligible employees
within all U.S. operating divisions. Currently over 60% of eligible
employees are participating in the plans. The Company makes matching con-
tributions based on specific formulas. For most divisions, this match is
made in La-Z-Boy stock.
The Company maintains a defined benefit pension plan for all eligible
factory hourly employees. The actuarially determined net periodic pension
cost and retirement costs are computed as follows (for the fiscal years
ended):
- ------------------------------------------------------------------------
(Amounts in thousands) 4/26/97 4/27/96 4/29/95
- ------------------------------------------------------------------------
Service cost......................... $1,767 $1,802 $1,739
Interest cost........................ 2,270 2,051 1,861
Actual return on plan assets......... (5,475) (5,468) (2,737)
Net amortization and deferral........ 2,381 3,031 571
------- ------- -------
Net periodic pension cost............ 943 1,416 1,434
Profit sharing/SERP.................. 6,352 5,681 5,710
401(k)............................... 1,625 1,429 1,388
Other................................ 529 497 508
------- ------- -------
Total retirement costs........... $9,449 $9,023 $9,040
====== ====== ======
The funded status of the pension plan was as follows:
- ------------------------------------------------------------------------
(Amounts in thousands) 4/26/97 4/27/96
- ------------------------------------------------------------------------
Actuarial present value of
projected benefit obligation.................... ($32,011) ($29,035)
Plan assets at fair value......................... 41,568 37,503
-------- ---------
Excess of plan assets over
projected benefit obligation.................... 9,557 8,468
Prior year service cost not yet recognized
in net periodic pension cost.................... 823 921
Unrecognized net (gain)/loss...................... (946) 1,320
Unrecognized initial asset........................ (3,002) (3,333)
------- -------
Prepaid pension asset $6,432 $7,376
====== ======
The expected long-term rate of return on plan assets was 8.0% for fiscal
years 1997, 1996 and 1995. The discount rate used in determining the
actuarial present value of projected benefit obligations was 7.5% for fiscal
years 1997, 1996 and 1995. Vested benefits included in the projected benefit
obligation were $29 million and $26 million at April 26, 1997 and April 27,
1996, respectively. Plan assets are invested in a diversified portfolio that
consists primarily of debt and equity securities.
The Company's pension plan funding policy is to contribute annually at least
the amount necessary so that the plan assets exceed the projected benefit
obligation.
Note 9 - 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 fiscal years ended):
- ------------------------------------------------------------------------
(Amounts in thousands) 4/26/97 4/27/96 4/29/95
- ------------------------------------------------------------------------
Gross health care..................... $30,831 $30,122 $30,414
Participant payments.................. (6,393) (6,005) (4,783)
-------- -------- --------
Net health care................. $24,438 $24,117 $25,631
======= ======= =======
The Company makes annual provisions for any current and future retirement
health-care costs which may not be covered by retirees' collected premiums.
Note 10: Income Taxes
The primary components of the Company's deferred tax assets and liabilities
as of April 26, 1997 and April 27, 1996 were as follows:
- ------------------------------------------------------------------------
(Amounts in thousands) 4/26/97 4/27/96
- ------------------------------------------------------------------------
Current
Deferred income tax assets/(liabilities)
Bad debt................................. $7,649 $7,395
Warranty................................. 4,448 3,941
SERP..................................... 1,680 1,452
Workers' compensation.................... 1,594 1,464
State income tax......................... 1,161 987
Inventory................................ 1,026 900
Performance-based restricted stock plan.. 693 717
Other.................................... 2,847 2,603
Valuation allowance...................... (148) (188)
------- -------
Total current deferred tax assets 20,950 19,271
Noncurrent
Deferred income tax assets/(liabilities)
Property, plant and equipment............ (3,717) (3,627)
Pension.................................. (2,783) (3,055)
Net operating losses..................... 1,533 1,458
Other.................................... 207 212
Valuation allowance...................... (1,569) (1,651)
------- -------
Total noncurrent deferred
tax liabilities....................... (6,329) (6,663)
------- -------
Net deferred tax asset........... $14,621 $12,608
======= =======
The differences between the provision for income taxes and income taxes
computed using the U.S. federal statutory rate were as follows (for the
fiscal years ended):
- ------------------------------------------------------------------------
(% of pretax income) 4/26/97 4/27/96 4/29/95
- ------------------------------------------------------------------------
Statutory tax rate........................ 35.0% 35.0% 35.0%
Increase (reduction) in taxes resulting in:
State income taxes net of federal benefit 3.5 4.3 4.4
Tax credits............................. (0.4) (1.1) (0.5)
Acquisition amortization................ 0.9 1.5 0.7
Unrecognized loss carryforwards......... 0.1 0.9 1.6
Miscellaneous items..................... (0.4) 0.1 0.3
------- ------- -------
Effective tax rate 38.7% 40.7% 41.5%
===== ===== =====
Note 11: Contingencies
The Company has been named as a defendant in various lawsuits arising in the
normal course of business. It is not possible at the present time to
estimate the ultimate outcome of these actions; however, management believes
that the resultant liability, if any, will not be material based on the
Company's previous experience with lawsuits of these types.
The former England/Corsair shareholders were given the opportunity to
receive additional Company common stock based on England/Corsair's actual
profit performance in each of the two years following acquisition.
Approximately $2 million of common stock will be issued in the first quarter
of fiscal year 1998 relating to fiscal year 1997 performance. Goodwill will
be increased by the value of the common stock issued.
The Company has been named as a potentially responsible party (PRP) at three
environmental clean-up sites. The Seaboard Chemical Company site is a
Resource Conservation and Recovery Act (RCRA) site, managed under the
direction of the State of North Carolina. Four of the Company's
manufacturing facilities were individually named as PRP's (the total number
of PRP's named at this site is over 1,750). A "De Micromis" settlement with
the State for any future obligations at this site was made available to
those PRP's who were responsible for sending extremely small volumes of
material to the site. This settlement was available for, and accepted by,
three out of the four Company facilities. Given its small volume of material
sent to this site (approximately 0.06% of the total volume), management
anticipates that the remaining facility will be eligible for a "De Minimus"
level settlement in the future.
The Organic Chemicals Inc. site is a Superfund site, managed under the
direction of the U.S. Environmental Protection Agency (EPA). One of the
Company's manufacturing facilities was named as a PRP (a total of 182 PRP's
have been named). This facility is considered a "De Minimus" party, having
only contributed 0.02% of the total volume of materials at the site. A De
Minimus settlement offer, that would resolve all such parties from their
future obligations at this site, is currently under review by the EPA.
The Caldwell Systems site is a voluntary RCRA closure, with its activities
being coordinated by the EPA. Three of the Company's manufacturing
facilities have been identified as having sent materials to this site (a
total of 938 parties have been identified).
Two of these facilities (with a combined contribution of just over 1% of the
total site volume) participate on the Steering Committee responsible for
negotiating closure activities. The third facility, (with a contribution of
less than 0.05% of the total site volume) is considered a "De Minimus"
party.
Based on a review of all currently known facts, management does not
anticipate that future expenditures in this area will have a material
adverse effect. At April 26, 1997, a total of $200,000 has been accrued with
respect to these three sites.
Management Discussion and Analysis
The Management Discussion and Analysis, as required by the Securities and
Exchange Commission, should be read in conjunction with the Report of
Management Responsibilities, the Report of Independent Accountants, the
Consolidated Financial Statements and related Notes, and all other pages
that follow them in the annual report.
Background
- ----------------------------------------------------
Sales by type 1997 1996 1995
- ----------------------------------------------------
Residential (home)
Upholstery 78% 78% 76%
Wood & other 16 16 18
--- --- ---
94 94 94
Contract (office) 6 6 6
---- ---- ----
100% 100% 100%
--- --- ---
- -----------------------------------------------------
Sales by country 1997 1996 1995
- -----------------------------------------------------
United States 94% 94% 94%
Canada and other 6 6 6
---- ---- ----
100% 100% 100%
--- --- ---
La-Z-Boy is organized into six operating divisions. U.S. Residential (70
years in business) accounts for the majority of the upholstery category and
approximately two-thirds of consolidated sales.
- -----------------------------------------------------------
U.S. Residential division
sales by dealer type 1997 1996 1995
- -----------------------------------------------------------
Galleries/proprietary 51% 47% 46%
General dealers 36 40 39
Dept. Stores/chains 13 13 15
---- ---- ----
100% 100% 100%
---- ---- ----
Kincaid (51 years) is part of the wood category. England/Corsair (33 years),
acquired in April 1995 and not included in the 1995 column of the tables
above, is part of the upholstery category. La-Z-Boy Contract Furniture Group
(25 years) is all of the Contract line. Hammary (53 years) is primarily in
the wood category. La-Z-Boy Canada (68 years) is part of the upholstery
category.
La-Z-Boy is the third largest furniture maker in the US, the largest
reclining-chair manufacturer in the world and America's largest manufacturer
of upholstered furniture.
Analysis of Operations
Year Ended April 26, 1997
(1997 compared with 1996)
La-Z-Boy's sales increased 6% in fiscal 1997 over 1996 and exceeded $1
billion for the first time. This growth rate is believed to be slightly
better than the industry growth rate. The sales growth was spread among
all the Company's divisions with wood and contract sales somewhat above the
average. The Ducks Unlimited Collection, introduced in April 1996,
contributed significantly to the wood division sales increases. Selling
price increases were small.
The gross margin (gross profit dollars as a percent of sales) improved to
26.0% in 1997 from 25.5% in 1996. The increase in sales volume, along with
the effect of cost cutting initiatives, contributed to the margin
improvement. The effect of these favorable items was only partially offset
by increased material and labor costs and the mix change toward products
with lower than average gross margins.
In 1997, the number of plants producing wood frame parts was reduced in an
effort to improve quality and reduce costs. The reductions had little
financial impact on 1997 as the timing was spread over the year and some
conversion costs were incurred offsetting some of the lower production
costs. Benefits are expected in 1998.
In April 1997, the Company announced plans to close the Contract plants in
Grand Rapids, Michigan and to begin producing these products at an existing
plant in Lincolnton, North Carolina. The move is planned for the first
quarter of 1998. Two of the plants have been sold and the third will be
sold.
S, G & A expense increased to 18.6% of sales in 1997 from 18.4% of sales in
1996 primarily due to increased costs for employee bonuses and incentives.
Interest expense declined 18% primarily due to lower debt and capital lease
obligations.
Income tax expense as a percent of pretax income declined to 38.7% in 1997
from 40.7% in 1996. The Canadian division's results were favorable compared
to the prior year, reducing the unfavorable impact on the effective tax
rate. Also, the benefits of some efforts to reduce tax expense were
recognized during the year.
During 1997, La-Z-Boy acquired approximately 75% of the ordinary share
capital of Centurion Furniture plc, a furniture manufacturer located in
England. The remainder of the ordinary share capital is expected to be
acquired in the first quarter of 1998. Sales for their year ended March 31,
1997 were $12 million.
Analysis of Operations
Year Ended April 27, 1996
(1996 compared with 1995)
Sales increased 11% in fiscal 1996 over 1995. The increase was due to the
inclusion of England/Corsair (E/C) in 1996. On a comparable basis, sales
declined 1% from 1995 in a year that the industry experienced softness in
the residential furniture market. Sales of contract furniture increased
while residential upholstery approximated the prior year and residential
wood and other declined. Selling price increases were generally in the 1-2%
range.
The gross margin of 25.5% declined from 26.0% in 1995. The decline was
largely due to the inclusion of E/C which has historically had a lower gross
margin than La-Z-Boy. The gross margin was favorably affected by lower
health-care and frame stock lumber costs. However, higher fabric and poly
costs, along with lower margins in the residential wood and other divisions
due to lower volume, offset these savings.
S, G & A expense of 18.4% of sales in 1996 was down from 18.6% in 1995. The
decline was largely due to the inclusion of E/C which has historically had
lower S, G & A expense than La-Z-Boy.
Margins for the La-Z-Boy Contract Furniture Group improved in 1996 as
planned and the division came close to breaking even. Attention was
directed toward reducing manufacturing costs and S, G & A expense.
Interest expense increased in 1996 due to debt issued to acquire England/
Corsair. In addition, debt and capital lease obligations were assumed when
England/Corsair was acquired. Most of the assumed debt was retired during
the year.
Liquidity and Financial Condition
Effective April 29, 1995, La-Z-Boy acquired England/Corsair, Inc. (E/C), a
manufacturer of upholstered furniture. Payment was in the form of $18.0
million La-Z-Boy common stock, $10.0 million notes and $2.6 million cash.
E/C debt and capital lease obligations of $14.4 million were assumed by La-
Z-Boy. As of April 26, 1997, these assumed obligations had been reduced to
$4.5 million.
Below is a summary of the cash flow statement. Free cash flow represents the
cash remaining from operations after reinvesting in business opportunities.
This cash flow allows the Company to pay dividends and repurchase stock
generally without incurring additional debt.
- ---------------------------------------------------------------------------
(Amounts in thousands) Year ended 4/26/97 4/27/96 4/29/95
- ---------------------------------------------------------------------------
Cash flows provided by (used for):
Net income........................ $45,297 $39,253 $36,302
Other operating activities........ 14,865 12,763 4,006
Investing activities.............. (24,847) (18,334) (20,278)
------ ------ ------
Free cash flow.......................... 35,315 33,682 20,030
Cash flows provided by (used for):
Financing activities.............. (36,866) (33,655) (18,953)
Exchange rate changes............. (127) (15) 45
------ ------ ------
Increase (decrease) in cash ($1,678) $12 $1,122
======== === ======
Cash flows from operations amounted to $60 million in 1997, $52 million in
1996 and $40 million in 1995 and have been adequate for day-to-day
expenditures, dividends to shareholders and capital expenditures.
Capital expenditures were $17.8 million in 1997, $18.2 million in 1996 and
$19.0 million in 1995. Capacity utilization was approximately 60% at the end
of 1997.
In 1995, La-Z-Boy obtained $7.5 million through the sale of industrial
revenue bonds. The proceeds were used to construct a new plant in Siloam
Springs, Arkansas. Retirements of debt totaled between $5 million and $13
million for each of the last three years.
The Company had unused lines of credit and commitments of $63 million under
several credit arrangements as of April 26, 1997. The primary credit
arrangement is a $50 million unsecured revolving credit line through August
2001, requiring interest only payments through August 2001 and a payment of
principal in August 2001. The credit agreement includes covenants that,
among other things, require the Company to maintain certain financial
statement ratios. The Company has complied with all of the requirements.
The La-Z-Boy Board of Directors has authorized the repurchase of Company
stock. Shares acquired in 1997, 1996 and 1995 totaled 694,000, 372,000 and
529,000, respectively. As of April 26, 1997, 474,000 shares were available
for repurchase. In May 1997, the Board of Directors authorized the re-
purchase of an additional one million shares. The Company plans to be in the
market for its shares as changes in its stock price and other financial
opportunities arise.
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 shareholders' equity
plus total debt). The current ratio at the end of both 1997 and 1996 was
3.5:1. The debt to capital ratio was 14.6% at the end of 1997 and 16.7% at
the end of 1996.
Continuing compliance with existing federal, state and local provisions
dealing with protection of the environment is not expected to have a
material effect upon the Company's capital expenditures, earnings,
competitive position or liquidity. The Company will continue its program of
conducting voluntary compliance audits at its facilities. The Company has
also taken steps to assure compliance with the provisions of Titles III and
V of the 1990 Clean Air Act Amendments.
The Company has accrued for certain environmental remediation activities
relating to past operations, including those under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA, often
referred to as Superfund) and the Resource Conservation and Recovery Act
(RCRA). The Company is participating in the closure of three such sites.
There will be future expenditures in this area, but based on a review of all
currently known facts, management does not anticipate that they will have a
material adverse effect. For further discussion of environmental matters,
refer to Note 11: Contingencies, in the Notes to Consolidated Financial
Statements.
Outlook
Statements in the Outlook section are forward looking and based on current
expectations. Actual results may differ materially.
One of La-Z-Boy's financial goals is for sales to grow faster than the
furniture industry with a benchmark of 10% per year. For 1997, La-Z-Boy
sales increased 6% from 1996 which the Company believes was slightly
better than the industry average. Some furniture industry forecasts for
calendar year 1997 over 1996 are in the 4-6% range. While a 10% sales
increase is not anticipated in 1998, sales are expected to be slightly above
the industry average.
The Company's major residential efforts and opportunities for U.S. 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 number of dealer owned and operated proprietary stores is expected to
continue increasing. These stores are a major contributor to La-Z-Boy's
ability to achieve its sales goal.
At the end of April 1997, the backlog of orders was somewhat below the prior
year level. The decline was mostly due to efforts to fill orders quicker
than in the past allowing customers to order product closer to the expected
delivery date. The rate of incoming orders in recent weeks has been above
the rate for the similar period last year. The backlog is not expected to
change significantly in 1998 and first quarter sales are expected to exceed
the prior year.
A second financial goal is for earnings (operating profit and net income) to
grow equal to or greater than the sales growth. For 1997, the operating
profit margin increased to 7.4% of sales from 7.1% in 1996. In 1998, the
operating margin is expected to improve again. The gross margin as a percent
of sales is expected to increase somewhat due to efficiencies of higher
production. Selling price increases are expected to be small while material
costs are not expected to increase. Increased S, G & A expense as a percent
of sales, largely due to increased information technology related expenses,
is expected to offset part of the margin change. For 1997, net income as a
percent of sales improved to 4.5% of sales from 4.1% in 1996 and is expected
to also improve slightly in 1998 primarily due to the expected increase in
operating profit.
A third goal is to continue improving the quality of earnings by concentrat-
ing on margins and return on capital (operating profit, interest income and
other income as a percent of beginning of year capital) with a benchmark of
20%. For 1997, return on capital was 19.0% compared to the 1996 return of
17.6%.
Further, La-Z-Boy expects to enhance shareholder value by dividend improve-
ment and using our stock repurchase plan.
La-Z-Boy has an opportunity to improve its operating margins through
increases in efficiency, improvements in the utilization of equipment and
facilities and increases in sales volumes, even though sales growth may be
in product lines with lower gross margins.
Capital expenditures are forecast to be approximately $25 to $30 million in
1998 compared to $18 million in 1997. Major items in the 1998 plan include:
network and production tracking systems along with woodworking, fabric
cutting and metal stamping equipment.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share," which
specifies the computation, presentation and disclosure requirements for
earnings per share. The statement is effective for periods ending after
December 15, 1997. The Company does not expect adoption of this standard
will have a material impact on its financial statements.
The Company's future results of operations and other forward looking state-
ments contained in this Outlook involve a number of risks and uncertainties.
These statements are based on assumptions relating to business conditions,
the general economy, competitive factors and other similar assumptions.
Variations in these assumptions could cause actual results to differ
materially. In particular, the Company's sales and profits can be impacted
materially in any one quarter by changes in interest rates and consumer
confidence in the economy.
Consolidated Six Year Summary of Selected Financial Data
(Dollar amounts in thousands, except per share data)
- ----------------------------------------------------------------------------
Year ended 1997 1996 1995 1994 1993 1992
in April (52 weeks)(52 weeks)(52 weeks)(53 weeks)(52 weeks)(52 weeks)
- ----------------------------------------------------------------------------
Sales........ $1,005,825 $947,263 $850,271 $804,898 $684,122 $619,471
Cost of
sales....... 744,662 705,379 629,222 593,890 506,435 453,055
---------- -------- -------- -------- -------- --------
Gross profit 261,163 241,884 221,049 211,008 177,687 166,416
Selling, general
and admin... 187,230 174,376 158,551 151,756 131,894 123,927
---------- -------- -------- -------- -------- --------
Operating Profit 73,933 67,508 62,498 59,252 45,793 42,489
Interest expense 4,376 5,306 3,334 2,822 3,260 5,305
Interest income 1,770 1,975 1,628 1,076 1,474 1,093
Other income 2,508 2,023 1,229 649 1,292 1,628
---------- -------- -------- -------- -------- --------
Pretax income 73,835 66,200 62,021 58,155 45,299 39,905
Income tax expense 28,538 26,947 25,719 23,438 18,015 14,805
---------- -------- -------- -------- -------- --------
Net income $45,297 $39,253 $36,302 $34,717** $27,284 $25,100
======= ======= ======= ======= ======= =======
Weighted average shares
outstg ('000s) 18,108 18,498 18,044 18,268 18,172 18,064
Per common share outstanding
Net income $2.50 $2.12 $2.01 $1.90** $1.50 $1.39
Cash div. Paid $0.78 $0.74 $0.68 $0.64 $0.60 $0.58
Book value on year end
shares outstg $20.07 $18.68 $17.44 $15.91 $14.48 $13.58
Return on average
shhldrs' equity 12.9% 11.8% 12.2%* 12.5%** 10.7% 10.6%
Gr prft as % sales 26.0% 25.5% 26.0% 26.2% 26.0% 26.9%
Op. prft as % sales 7.4% 7.1% 7.4% 7.4% 6.7% 6.9%
Op. prft, interest income
& other inc. as % of
beg.-of-yr capital19.2% 17.6% 18.9% 19.1% 15.8% 15.1%
Net inc. as % sales 4.5% 4.1% 4.3% 4.3%** 4.0% 4.1%
Inc. tax exp. as % of
pretax income 38.7% 40.7% 41.5% 40.3% 39.8% 37.1%
Deprec. & amort. $20,382 $20,147 $15,156 $14,014 $14,061 $14,840
Capital expend. $17,778 $18,168 $18,980 $17,485 $12,248 $12,187
Prpty, plnt &
equip, (net) $114,658 $116,199 $117,175 $94,277 $90,407 $93,440
Working capital $245,106 $240,583 $237,280 $224,122 $202,398 $184,431
Current ratio 3.5 to 1 3.5 to 1 3.7 to 1 4.1 to 1 3.8 to 1 3.7 to 1
Total assets $528,407 $517,546 $503,818 $430,253 $401,064 $376,722
Debt/cap. Leases $61,279 $69,033 $83,201 $55,370 $55,912 $60,726
Shhldrs. Equity $359,338 $343,376 $323,640 $290,911 $263,386 $246,359
Ending capital $420,617 $412,409 $406,841 $346,281 $319,298 $307,085
Debt-equity ratio 17.1% 20.1% 25.7% 19.0% 21.2% 24.6%
Debt-capital ratio 14.6% 16.7% 20.5% 16.0% 17.5% 19.8%
Shareholders 12,729 12,293 12,665 12,615 9,032 8,081
Employees 11,236 10,733 11,149 9,370 8,724 8,153
* April 1995 shareholders' equity used in this calculation excludes $18,004
relating to stock issued on the last day of the fiscal year for the
acquisition of an operating division.
** Excludes the income effect of adopting SFAS 109 in May 1993 of $3,352 or
$0.18 per share.
Dividend and Market Information
- ------------------------------------------------------------------------
Market Price
Fiscal 1997 Dividends -----------------------------
Quarter ended Paid High Low Close
- ------------------------------------------------------------------------
July 27 $0.19 $32 5/8 $28 1/4 $29 1/8
Oct. 26 0.19 31 3/8 28 1/4 30 3/8
Jan. 25 0.19 31 3/8 29 1/4 31 3/8
Apr. 26 0.21 36 7/8 30 3/4 32 1/4
------
$0.78
=====
- ------------------------------------------------------------------------
Market Price
Fiscal 1996 Dividends -----------------------------
Quarter ended Paid High Low Close
- ------------------------------------------------------------------------
July 29 $0.17 $29 1/2 $25 5/8 $27 1/2
Oct. 28 0.19 30 3/4 27 1/8 29 5/8
Jan. 27 0.19 33 1/2 28 5/8 30 5/8
Apr. 27 0.19 36 3/4 27 30 1/8
------
$0.74
=====
- ----------------------------------------------------------------------------
P/E
Divi- Divi- Dividend Market Price Net Ratio
Fiscal dends dend Payout ---------------------- Income ---------
Year Paid Yield Ratio High Low Close Per Sh. High Low
- ----------------------------------------------------------------------------
1997 $0.78 2.4% 31.2% $36 7/8 $28 1/4 $32 1/4 $2.50 15 11
1996 0.74 2.5% 34.9% 33 3/4 25 5/8 30 1/8 2.12 16 12
1995 0.68 2.5% 33.8% 33 3/4 25 3/8 27 2.01 17 13
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 1.50 20 12
1992 0.58 2.5% 41.7% 28 3/4 19 1/2 23 1/2 1.39 21 14
La-Z-Boy Incorporated common shares are traded on the NYSE and the PCX
(symbol LZB).
Unaudited Quarterly Financial Information
- ----------------------------------------------------------------------------
(Amounts in thousands, except per share data) Fiscal
Year
Quarter ended 7/27/96 10/26/96 1/25/97 4/26/97 1997
- ----------------------------------------------------------------------------
Sales............. $202,227 $271,554 $244,581 $287,463 $1,005,825
Cost of sales..... 154,917 197,017 180,979 211,749 744,662
--------- --------- --------- --------- ----------
Gross profit... 47,310 74,537 63,602 75,714 261,163
Selling, general and
administrative... 39,354 49,006 47,765 51,105 187,230
--------- --------- --------- --------- ----------
Operating
profit........ 7,956 25,531 15,837 24,609 73,933
Interest expense.. 1,107 1,097 1,096 1,076 4,376
Interest income... 463 367 430 510 1,770
Other income...... 785 521 639 563 2,508
--------- --------- --------- --------- ----------
Pretax income.. 8,097 25,322 15,810 24,606 73,835
Income tax expense 3,499 10,070 6,009 8,960 28,538
--------- --------- --------- --------- ----------
Net income..... $4,598 $15,252 $9,801 $15,646 $45,297
====== ======= ====== ======= =======
Net income
per share...... $0.25 $0.84 $0.54 $0.87 $2.50
===== ===== ===== ===== =====
- ----------------------------------------------------------------------------
....... Fiscal
Year
Quarter ended 7/29/95 10/28/95 1/27/96 4/27/96 1996
- ----------------------------------------------------------------------------
Sales............. $195,757 $258,320 $226,354 $266,832 $947,263
Cost of sales..... 151,378 188,644 170,602 194,755 705,379
--------- --------- --------- --------- ----------
Gross profit... 44,379 69,676 55,752 72,077 241,884
Selling, general and
administrative... 37,937 45,905 41,783 48,751 174,376
--------- --------- --------- --------- ----------
Operating
profit........ 6,442 23,771 13,969 23,326 67,508
Interest expense.. 1,464 1,437 1,217 1,188 5,306
Interest income... 456 484 390 645 1,975
Other income...... 375 476 436 736 2,023
--------- --------- --------- --------- ----------
Pretax income.. 5,809 23,294 13,578 23,519 66,200
Income tax expense 2,634 9,038 5,794 9,481 26,947
--------- --------- --------- --------- ----------
Net Income..... $3,175 $14,256 $7,784 $14,038 $39,253
====== ======= ====== ======= =======
Net income per share $0.17 $0.77 $0.42 $0.76 $2.12
===== ===== ===== ===== =====
*Excludes the income effect of adopting SFAS 109 in May 1993 of $3,352 or
$0.18 per share.
Exhibit (21)
LA-Z-BOY INCORPORATED
LIST OF SUBSIDIARIES
Subsidiary
Jurisdiction of Incorporation
La-Z-Boy Canada, Ltd.
Ontario, Canada
La-Z-Boy Ad Co.
Michigan
Kincaid Furniture Company, Incorporated
Delaware
La-Z-Boy Export Ltd.
Barbados
LZB Finance, Inc.
Michigan
England/Corsair, Inc.
Michigan
LZB Properties, Inc.
Michigan
LZB Florida Realty, Inc.
Michigan
Centurion Furniture PLC
United Kingdom
Distincion Muebles, Sa de C.V.
Mexico
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 33-8996, 33-8997, 333-03097 and 33-54743) of La-
Z-Boy Incorporated of our report dated May 29, 1997 appearing on page 17 of
the Annual Report to Shareholders which is incorporated in this Annual
Report on Form 10-K. We also consent to the incorporation by reference of
our report on the Financial Statement Schedule, which appears on page S-2 of
this Form 10-K.
PRICE WATERHOUSE LLP
Toledo, Ohio
July 24, 1997
5
1,000
APR-26-1997
APR-26-1997
12-MOS
25,382
0
215,032
0
78,771
342,775
276,815
162,157
528,407
97,669
0
17,908
0
0
341,430
528,407
1,005,825
1,005,825
744,662
744,662
187,230
0
4,376
73,835
28,538
45,297
0
0
0
45,297
2.50
2.50
Receivables are reported net of allowances for doubtful accounts on
the Statement of Financial Position.
