SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
June 3, 2003
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(Date of Report (Date of Earliest Event Reported))
LA-Z-BOY INCORPORATED
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(Exact name of registrant as specified in its charter)
MICHIGAN 38-0751137
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1284 North Telegraph Road, Monroe, Michigan 48162-3390
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (734) 241-4414
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None
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Former name, former address and former fiscal year, if changed
since last report.
Item 5. Other Events
News Release
Contact: Mark Stegeman (734) 241-4418 mark.stegeman@la-z-boy.com
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LA-Z-BOY INCORPORATED ANNOUNCES CASEGOODS GROUP REORGANIZATION
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MONROE, MI., June 3, 2003 - La-Z-Boy Incorporated (NYSE, PCX: LZB) announced
today a major reorganization of its Casegoods Group, including a realignment of
several key management responsibilities, the establishment of a new global
sourcing organization, and the rationalization of the company's casegoods
manufacturing facilities.
La-Z-Boy Incorporated president and CEO, Gerald L. Kiser said, "Over the last
several years, the furniture industry has increasingly been facing fierce
competition from lower cost import products, especially the casegoods segment of
the business. It has dramatically altered the domestic manufacturing environment
for the entire industry. We, like many others, have been transitioning to a more
balanced mix of imported and domestically produced product. In order to compete
more effectively, we are significantly altering the current organizational
structure of our Casegoods Group."
Organizational changes
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All manufacturing and sourcing will now be consolidated under one umbrella in
order to maximize our manufacturing flexibility and better coordinate our import
supply chain and warehousing requirements. Bill Johnson has been named
president-operations for the La-Z-Boy Casegoods Group with direct responsibility
for all the domestic manufacturing plants and import sourcing. Johnson was
previously senior vice president-manufacturing of La-Z-Boy Casegoods Group. In
his new role, Johnson will report directly to Jerry Kiser, as will each of the
Casegoods Group brand presidents.
Kiser continued, "As a result, each of our casegoods companies will focus solely
on merchandising, sales, marketing, and product development and relinquish its
manufacturing responsibilities. Each company will retain and reinforce its brand
identity and continue to sell in the same product lines and price categories. We
believe this realignment will unleash their ability to expand distribution and
grow their top line."
Kiser stated, "We remain strongly committed to domestic production and are aware
that to be competitive on a global basis, we must maximize the utilization of
our domestic manufacturing assets. Furthermore, as noted earlier, each of the
individual casegoods companies will retain its individual niche in product
design, brand identity, marketing and distribution channels. Now, however, they
will be able to source either from more efficient domestic production facilities
or our newly formed La-Z-Boy Global, Ltd."
La-Z-Boy Global, Ltd.
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All imported casegoods products will now be centrally coordinated through
La-Z-Boy Global, which will be responsible for vendor selection, quality
control, and logistics. Lamont Hope, previously president of Lea Industries, has
been named president of La-Z-Boy Global and will report to Bill Johnson. Kiser
said, "Lamont has a strong operational background and has been intimately
involved in global sourcing for the past several years. He is ideally qualified
to reorganize and streamline this effort on a coordinated basis." La-Z-Boy
Global will also assist our Upholstery Group companies with sourcing selected
fabrics, cut and sewn fabric and leather material kits, exposed wood parts and
some fully upholstered product.
Commenting on La-Z-Boy's new global sourcing organization, Kiser said, "The
consolidation of these efforts is a much more productive way to handle
La-Z-Boy's overall import volume, which has been growing at a rapid pace.
La-Z-Boy Global will enable us to focus our in-house expertise on sourcing
products more effectively and better monitor our suppliers' performance in the
areas of cost, quality and delivery."
Other organizational changes
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Kiser further stated, "To fill the void left by Lamont Hope at Lea Industries,
Jack Richardson, president of American Drew, will now have combined
responsibility for American Drew and Lea Industries. Jack has extensive
marketing experience and management capability to lead a smooth transition of
these two companies' corporate functions. Products for both of the brands will
continue to be separately developed and sold through their existing
distribution. This is merely an administrative management consolidation and our
dealers will not see a change in brand integrity, products or servicing."
Facilities rationalization
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"As noted in our recent news release," Kiser said, "we have been closely
examining our domestic casegoods facilities for some time now in light of recent
sales declines in this segment of our business and our growing migration to
imports. As I said in our recent investor conference call, imports represented
about 31% of our total casegoods sales in fiscal 2003, up from 21% last year,
and we are projecting a nearly 40% import rate in fiscal 2004. We deeply regret
the need to close additional plants and disrupt the lives of our employees at
the affected locations, but we strongly believe these actions are in the best
long-term interests of our remaining employees and our company. We will be
providing severance pay and transition assistance to these employees to try and
help them through this difficult period."
The closure of the company's two plants in Morristown, TN and its plant in
Monroe, NC will result in the loss of approximately 480 manufacturing jobs in
total, or 11% of the Casegoods Group's current employee base. Production will be
phased out at Lea Industries' plants #4 and #5 in Morristown, TN, and they will
be closed as of August 15th, impacting approximately 330 jobs at the two
facilities. Production will be relocated to other La-Z-Boy casegoods
manufacturing facilities. The warehousing and shipping facilities located in
Morristown, TN will continue to operate, employing approximately 40 full-time
people.
The Pennsylvania House upholstery plant in Monroe, NC, a leased facility, will
be closed as of August 29th, with the loss of approximately 150 jobs. This
production will also be shifted to another La-Z-Boy manufacturing location. The
required plant closure notifications have been filed today with appropriate
local officials in each community.
Approximately 75 jobs will be created at several other La-Z-Boy facilities
resulting from this rationalization of production, with a net reduction of 405
jobs. Qualified employees from our affected facilities will be given the first
opportunity to fill these new positions.
Restructuring charge
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These actions will result in pre-tax charges of approximately $10 million, or
$0.11 per diluted share on an after-tax basis. The largely non-cash charge will
be taken primarily in the current fiscal quarter, which ends July 26, 2003, and
will cover the write-down of certain fixed assets and inventories. The majority
of the balance of the charge representing severance and relocation costs will be
incurred in the first half of our fiscal year in accordance with the recently
released Statement of Financial Accounting Standards No.146 -Accounting for
Costs Associated with Exit or Disposal Activities. The plant closures and
resultant shifting of production to other La-Z-Boy casegoods facilities should
produce annual savings in the range of $5 - $ 6 million, after the transition is
fully implemented by the beginning of our fiscal fourth quarter."
Summary
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Kiser concluded, "Combined, these actions represent a dramatic cultural change
for our Casegoods Group and will take much of the balance of this year to fully
implement. Besides all the personnel moves and new responsibilities, our
processes and systems will be reorganized to accommodate the change. Our
potential for success over the long term, however, will be greatly enhanced by
these moves as we focus and harness our resources for maximum effectiveness at a
significantly lower cost. We are committed to growing sales and improving our
operating profit margins. We have already made real progress and these actions
will continue to move us forward on this front."
Forward-looking Information
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Any forward-looking statements contained in this news release are based on
current information and assumptions and represent management's best judgment at
the present time. Actual results could differ materially from those anticipated
or projected due to a number of factors. These factors include, but are not
limited to: changes in consumer sentiment or demand, changes in demographics,
changes in housing sales, the impact of terrorism or war, energy price changes,
the impact of SARS on imports, the impact of logistics on imports, the impact of
interest rate changes, the availability and cost of capital, the impact of
imports, changes in currency rates, competitive factors, operating factors, such
as supply, labor, or distribution disruptions including changes in operating
conditions or costs, effects of restructuring actions, changes in the regulatory
environment, the impact of new manufacturing technologies, factors relating to
acquisitions and other factors identified from time to time in the company's
reports filed with the Securities and Exchange Commission. The company
undertakes no obligation to update or revise any forward-looking statements,
either to reflect new developments, or for any other reason.
Background Information
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With annual sales in excess of $2 billion, La-Z-Boy Incorporated is one of the
world's leading residential furniture producers, marketing furniture for every
room of the home and office, as well as for the hospitality, health care and
assisted-living industries. The La-Z-Boy Upholstery Group companies are Bauhaus,
Centurion, Clayton Marcus, England, La-Z-Boy, La-Z-Boy Contract Furniture Group
and Sam Moore, and the La-Z-Boy Casegoods Group companies are Alexvale, American
Drew, American of Martinsville, Hammary, Kincaid, Lea and Pennsylvania House.
The corporation's vast proprietary distribution network is dedicated exclusively
to selling La-Z-Boy Incorporated products and brands, and includes 314
stand-alone La-Z-Boy Furniture Galleries(R) stores and 317 La-Z-Boy In-Store
Gallery's, in addition to in-store gallery programs at the company's Kincaid,
Pennsylvania House, Clayton Marcus, England and Lea operating units. According
to industry trade publication Furniture/Today, the La-Z-Boy Furniture Galleries
retail network by itself represents the industry's fifth largest U.S. furniture
retailer. Additional information is available at www.la-z-boy.com.
SIGNATURE
Pursuant to the requirements 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
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(Registrant)
Date June 3, 2003 /s/Louis M. Riccio, Jr.
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Louis M. Riccio, Jr.
On behalf of the registrant and as
Chief Accounting Officer