La-Z-Boy Chair Company
Matched Retirement Savings Plan
Financial Statements and
Supplemental Information
December 31, 2000 and 1999
La-Z-Boy Chair Company
Matched Retirement Savings Plan
Index to Financial Statements and Supplemental Information
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Page(s)
Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits at
December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2000 3
Notes to Financial Statements 4-10
Supplemental Information:*
Schedule of Assets (Held at End of Year) Schedule I
* Other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of
La-Z-Boy Chair Company
Matched Retirement Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of La-Z-Boy Chair Company Matched Retirement Savings Plan (the "Plan") at
December 31, 2000 and 1999, and the changes in net assets available for benefits
for the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan'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 auditing standards
generally accepted in the United States of America, 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. This
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/PricewaterhouseCoopers LLP
Toledo, Ohio
June 29, 2001
La-Z-Boy Chair Company 2
Matched Retirement Savings Plan
Statement of Net Assets Available for Benefits
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December 31,
2000 1999
Assets:
Investments $ 82,584,275 $ 80,617,879
Receivables:
Interest/dividends receivable 2,501 2,093
Participant loans receivable 9,252,931 8,203,833
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Net assets available for benefits $ 91,839,707 $ 88,823,805
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The accompanying notes are an integral part of these financial statements.
La-Z-Boy Chair Company 3
Matched Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
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Year Ended
December 31,
2000
Additions:
Additions to net assets attributed to:
Interest and dividend income $ 3,157,570
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Contributions:
Employer 10,753,428
Rollovers 422,790
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Total additions 14,333,788
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Deductions:
Deductions from net assets attributed to:
Net depreciation in fair value of investments 5,516,496
Benefits paid to participants 5,663,819
Administrative expenses 137,571
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Total deductions 11,317,886
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Net increase 3,015,902
Net assets available for benefits:
Beginning of year 88,823,805
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End of year $ 91,839,707
==================
The accompanying notes are an integral part of these financial statements.
La-Z-Boy Chair Company 4
Matched Retirement Savings Plan
Notes to Financial Statements
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1. Description of the Plan
The following description of the La-Z-Boy Chair Company Matched
Retirement Savings Plan (the Plan) is provided for general information
purposes only. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
General
La-Z-Boy Incorporated (the Company) sponsors the Plan, which is a defined
contribution plan covering eligible participants. The Plan is
administered by a Central Board of Administration (the Board) appointed
by the Board of Directors of the Company. The Company has appointed Key
Trust Company of Ohio, N.A. (Trustee), as the Plan's trustee. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
Participation
Employees who have completed 1,000 hours of service in a six month period
and have attained age twenty-one are eligible to become participants as
of January 1 or July 1 following their qualification, with the exception
of employees of the Company's ineligible subsidiaries.
Vesting
Participants are always fully vested in their own deferral accounts and
become fully vested in the Company's matching contribution accounts after
five years of service.
Contributions
Contributions to the Plan consist of the following:
a. authorized participant compensation deferral contributions in an
amount up to fifteen percent of eligible compensation for
participants who do not actively participate in the La-Z-Boy Chair
Company Profit Sharing Plan (Profit Sharing Plan), another Company
sponsored benefit plan, or up to seven percent for those
participants who do participate in the Profit Sharing Plan;
b. an employer matching contribution equal to fifty percent of each
participant's compensation deferral contribution, up to a maximum
of two percent of the participant's eligible compensation during
the plan year;
c. Plan participants who do not participate in the Profit Sharing
Plan and do not meet the requirements of Rule of 75, as defined
below, are entitled to an additional employer matching
contribution equal to twenty-five percent of the participant's
compensation deferral contribution for the plan year which exceeds
two percent, but does not exceed four percent, of the
participant's eligible compensation for such plan year;
5
1. Description of the Plan (continued)
Contributions (continued)
d. employees who do not participate in the Profit Sharing Plan, whose
sum of age and years of service is greater than or equal to
seventy-five, receive an additional amount of employer match from
the Company (Rule of 75);
e. any forfeiture restoration amount; and
f. amounts that participants have the ability, under certain
circumstances, to contribute that have been received as
distributions from pension benefit plans or "rollovers" from
selected individual retirement arrangements.
However, total individual participant contributions shall not exceed the
lesser of:
a. fifteen percent of the eligible compensation of the participant
during the plan year; or
b. the aggregate individual participant limitations set forth under
Section 415 of the Internal Revenue Code (IRC).
Effective July 1, 2000, employees of Sam Moore Furniture Industries,
Inc., a subsidiary of the Company, became eligible to participate in the
Plan, subject to the Plan's participation provisions. Eligible employees
may make authorized participant compensation deferral contributions of up
to fifteen percent of eligible compensation, however such employees are
not subject to the Plan's provisions for matching contributions from the
Company.
Included in employer contributions for 2000 and 1999 are participant
compensation deferrals of $8,429,143 and $8,241,060, respectively. In
addition, the Company's matching contributions for 2000 and 1999 were
$2,324,285 and $2,417,737 in La-Z-Boy Incorporated common stock,
respectively.
The forfeited, nonvested portion of a terminated participant's account
may be used to reduce the Company's matching contribution. During 2000
and 1999, $81,866 and $63,011, respectively, of employer matching
contributions were forfeited by terminated employees before those amounts
became vested. During 2000 and 1999, forfeited nonvested balances in the
amounts of $236,886 and $0, respectively, were used to offset the
Company's matching contributions.
6
1. Description of the Plan (continued)
Plan Benefits
Participants having five years of service under the Plan are entitled to
the full value of their accounts beginning at normal retirement age
(sixty-five). Participants with at least ten years of participation are
eligible for early retirement at age fifty-five. The value of a retiree's
account will normally be paid within sixty days after the end of the
month in which he or she retires.
If a participant's total vested account balance is below $5,000, the
benefit payment will be made in the form of a lump sum cash payment. If
the total vested account balance exceeds $5,000, the participant may
elect to receive the portion of their account which is invested in the
La-Z-Boy Incorporated Company Stock Fund (Company Stock Fund) in cash or
in La-Z-Boy Incorporated common stock. The remainder of the account
balance is paid in the form of a lump sum cash payment.
Death Benefits
Upon the death of a participant, the value of his or her account becomes
fully vested. As soon as administratively feasible thereafter, the value
of the participant's account will be paid to any beneficiary designated
by the participant or as stipulated in the Plan.
Disability Benefits
Participants who become totally and permanently disabled are eligible for
disability retirement benefits. The participant shall have the value of
his or her account fully vested and payable in the same manner as normal
retirement benefits.
Hardship or Financial Need
Upon application by the participant, the Board may direct distribution of
such participant's funds to alleviate extreme hardship. In no event shall
the amount exceed eighty percent of the participant's total compensation
deferral contribution balance. The distribution shall be subject to
personal income and excise taxes.
A participant may also apply to borrow an amount not less than $1,000 or
greater than the lesser of $50,000 or fifty percent of the participant's
vested account balance in the Plan. Interest rates on loans granted are
determined by the Board.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accounts of the Plan are maintained on the accrual basis of
accounting in accordance with accounting principles generally accepted in
the United States of America.
7
2. Summary of Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits at the date of the financial
statements and the reported changes in net assets available for benefits
during the reporting period. Actual results could differ from those
estimates.
Expenses of the Plan
Investment advisory and management fees are paid by the Plan. All other
Plan expenses and professional fees are paid by the Company.
Investments
Investments in securities traded on a national securities exchange are
valued based on published quotations on the last business day of the plan
year. Securities not so traded are valued at the latest available and
appropriate bid price on that date. Mutual fund investments are valued
based on the market value of the underlying investments as of the last
business day of the plan year. Participant loans receivable are valued at
cost which approximates fair value.
Net Appreciation and Depreciation of Investments
Realized gains and losses are calculated by subtracting the proceeds from
the sale of investments during the plan year from the fair value of the
investments at the beginning of the plan year, or at the time of purchase
if acquired during the plan year. Unrealized appreciation and
depreciation of investments is calculated by taking the fair value of the
investments at the end of the plan year less the fair value of the
investments at the beginning of the plan year, or at the time of purchase
if acquired during the plan year.
Allocation of Assets
Participant compensation deferral contributions are allocated to
individual participant accounts each pay period. Company matching
contributions are allocated to individual participant accounts monthly.
Changes in the fair market value of investments and gains and losses on
the disposition of investments, and investment income are allocated to
individual participant accounts on a daily basis in proportion to their
account balance.
8
3. Investment Options
The Plan provides participants with seven investment options as follows:
Bond Fund - funds are invested in shares of a registered investment
company (mutual fund) that invests in U.S. Treasury bonds and securities
of various U.S. government agencies.
Balanced Fund - funds are invested in shares of a registered investment
company that invests in corporate stocks and bonds and various U.S.
government agencies.
Company Stock Fund - funds are invested in the Company's common stock.
Equity Fund - funds are invested in shares of a registered investment
company that invests mainly in common stocks that are expected to reflect
the Standard and Poor's 500 Composite Index performance.
Growth Fund - funds are invested in shares of a registered investment
company that invests mainly in common stocks that are believed by the
fund manager to have potential for future returns greater than the
Standard and Poor's 500 Composite Index performance.
Global Equity Fund - funds are invested in shares of a registered
investment company that invests in common stocks of companies of any size
throughout the world.
Fixed Income Fund - funds are invested in shares of a registered
investment company that invests in money market accounts, short-term
certificates of deposit, U.S. government bonds and corporate notes.
Allocations to the funds are made in five percent increments.
Participants may change the allocation of contributions among the
investment options and transfer amounts between investment options on a
daily basis. The Company's matching contribution is invested in the
Company's common stock.
9
4. Investments
The following presents investments that represent five percent or more of
the Plan's net assets:
December 31,
2000 1999
La-Z-Boy Incorporated common stock, 2,096,212
and 1,961,151 shares, respectively $ 32,904,806* $ 33,196,327*
Victory Stock Index Fund, 633,626 and 612,755
shares, respectively 13,546,931 14,969,616
Victory Balanced Fund, 817,741 and 749,367
shares, respectively 11,064,040 10,588,558
EB Reserve Fund, 64,383 and 62,214 shares,
respectively 11,243,481 10,103,283
Franklin Small Cap Growth Fund, 247,409 and
216,270 shares, respectively 9,730,585 9,543,985
Participant loans 9,252,931 8,203,833
* Nonparticipant directed
During 2000, the Plan's investments (including net appreciation and
depreciation on investments bought and sold, as well as held during the
year) depreciated by $5,516,496 as follows:
Mutual funds $ 3,512,570
Company's common stock 2,003,926
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$ 5,516,496
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10
5. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
December 31,
2000 1999
Net assets:
Common stock $ 32,904,806 $ 33,196,327
================ ===============
December 31,
2000
Changes in net assets:
Contributions $ 4,580,395
Dividends 599,375
Net depreciation (2,003,926)
Benefits paid to participants (1,758,083)
Transfers to participant-directed investments (1,602,174)
Administrative expenses (107,108)
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$ (291,521)
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6. Party-in-interest
Investments in the Company Stock Fund consist of 2,096,212 and 1,961,151
shares of La-Z-Boy Incorporated common stock at December 31, 2000 and
1999, respectively. Shares for this fund are purchased on the open market
by the Trustee or are issued by the Company at fair market value. At
December 31, 2000 and 1999, the Plan held certain investments in mutual
funds managed by the Trustee. Purchases and sales of these mutual funds
are open market transactions at fair value. Consequently, such
transactions are permitted under the provisions of the Plan and are
exempt from prohibition of party-in-interest transactions under the IRS
Code and ERISA.
7. Tax Status of the Plan
The Internal Revenue Service has determined and informed the Company by a
letter dated July 6, 1995, that the Plan and related trust are designed
in accordance with applicable sections of the IRC. Although the Plan has
been amended since receiving the determination letter, the Plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with applicable
requirements of the IRC.
8. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, all amounts previously allocated to the participants
shall be fully vested subject only to any charge or lien, which may then
or thereafter exist and be due to the Trustee.
La-Z-Boy Chair Company Schedule I
Matched Retirement Savings Plan
Schedule of Assets (Held at End of Year)
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Identity of Current
Issuer or Borrower Description of Investment Cost Value
* La-Z-Boy Incorporated La-Z-Boy Incorporated Common Stock
Fund $ 23,770,654 $ 32,904,806
* Key Trust Company of
Ohio, N.A. Victory Stock Index Fund 13,546,931
* Key Trust Company of
Ohio, N.A. Victory Balanced Fund 11,064,040
* Key Trust Company of
Ohio, N.A. EB Reserve Fund 11,243,481
* Key Trust Company of
Ohio, N.A. Franklin Small Cap Growth Fund 9,730,585
* Key Trust Company of
Ohio, N.A. Victory Financial Reserve Fund 1,594,639
* Key Trust Company of
Ohio, N.A. Janus Worldwide Fund 2,064,491
* Key Trust Company of
Ohio, N.A. EB Money Market Fund 435,302
* Participant Loans Interest rates ranging
from 7.00 % through 10.00 %
Maturity dates ranging
from 2001 through 2014 9,252,931
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$ 91,837,206
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* Key Trust Company of Ohio, N.A., La-Z-Boy Incorporated and participants are
known parties-in-interest of the Plan.
This schedule was prepared from data certified by the Trustee of the Plan.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-03097) of La-Z-Boy Incorporated of our report
dated June 29, 2001 relating to the financial statements of the La-Z-Boy Chair
Company Matched Retirement Saving Plan, which appears in this Form 11-K.
/s/PricewaterhouseCoopers LLP
Toledo, Ohio
June 29, 2001