NYSE & PSE: LZB News Release Contact: Jim Korsnack
(313) 241-4208
LA-Z-BOY HAD RECORD FOURTH QUARTER SALES AND EARNINGS;
THE FULL YEAR WAS "EXCEPTIONALLY STRONG"
MONROE, MI., June 2, 1994: La-Z-Boy Chair Company's fiscal fourth quarter
that ended on April 30, 1994 recorded sales up 13% (on a comparable week basis)
and net income up 6% vs. last year's fourth quarter. Both sales and earnings
were record highs for a fourth quarter.
Details of Financial Results
- - ----------------------------
Fourth quarter sales grew to $241 million vs. $198 million, an increase of 22%;
however, the current year's fourth quarter contained 14 weeks vs. 13 weeks in
the prior year, therefore sales on a comparable week basis increased 13%. Net
income improved 6% to $12.3 million ($.67 per share) from $11.6 million ($.64
per share) last year. Operating profit rose 10%.
For the 53 weeks ended April '94, sales were $805 million, 18% greater than last
year's $684 million. Net income before an accounting change increased 27% to
$34.7 million ($1.90 per share) vs. $27.3 million ($1.50 per share) last year.
After the accounting change, net income was $2.08 per share vs. $1.50 last year.
Chairman Comments
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La-Z-Boy Chairman and President Charles T. Knabusch said, "Fourth quarter sales
improved more than expected, and profits exceeded last year's strong numbers.
We set many records in 1994, as each of our five divisions had sales gains for
the quarter and full year. La-Z-Boy achieved its financial goals thanks to
extraordinary employee efforts as well as to an improving economy."
Mr. Knabusch said he expects La-Z-Boy to continue outperforming the U.S.
furniture industry. While industry sales currently are forecast to grow five
to seven percent annually, La-Z-Boy is targeting increases of 10 percent per
year, or a rate of growth at least higher than the industry's.
"It appears likely that we will meet this goal again in fiscal 1995,"
Mr. Knabusch said. "Sales orders in recent weeks have exceeded those of last
year's comparable weeks. So, we're off to a good start, but because 1994 sales
were exceptionally strong, it's unrealistic to expect another round of double-
digit sales percentage increases." The Company's fiscal 1995 selling year is
52 weeks long versus 53 weeks in the year just completed.
"Given continued strength in sales, earnings per share should improve in fiscal
1995, even though profit margins may improve only slightly. The Residential
Division's response time to customers and capacity utilization are improving.
The La-Z-Boy Contract Furniture Group is bringing out exciting new products.
La-Z-Boy Canada has just started opening free-standing stores similar to the
La-Z-Boy Furniture Galleries that are proving so successful in the U.S. The
Hammary Division's new home theater systems are selling strongly, and plant
expansion should strengthen the Kincaid Division's margins."
La-Z-Boy Chair Company Financial Information Release 1 of 5
CONSOLIDATED SUMMARY OF OPERATIONS 06/02/94
(Amounts in thousands, except per share data)
FOURTH QUARTER ENDED (UNAUDITED)
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Amounts
------------------
Apr. 30, Apr. 24, Percent of Sales
1994 1993 % Over ----------------
(14 weeks)(13 weeks) (Under) 1994 1993
--------- -------- ------- ------- -------
Sales $241,110 $198,432 22%* 100.0% 100.0%
Cost of sales 176,912 143,291 23% 73.4% 72.2%
--------- -------- ------- ------- -------
Gross profit 64,198 55,141 16% 26.6% 27.8%
S, G & A 42,370 35,298 20% 17.5% 17.8%
--------- -------- ------- ------- -------
Operating profit 21,828 19,843 10% 9.1% 10.0%
Interest expense 644 787 -18% 0.3% 0.4%
Other income (352) 432 -181% -0.2% 0.2%
--------- -------- ------- ------- -------
Pretax income 20,832 19,488 7% 8.6% 9.8%
Income taxes 8,492 7,885 8% 40.8%** 40.5%**
--------- -------- ------- ------- -------
Net income $ 12,340 $ 11,603 6% 5.1% 5.8%
========= ======== ======= ======= =======
Average shares 18,308 18,190 1%
Earnings per share $0.67 $0.64 5%
Dividends per share $0.17 $0.15 13%
* This is a 13% increase on a comparable per week basis.
** As a percent of pretax income, not sales.
La-Z-Boy Chair Company Financial Information Release 2 of 5
CONSOLIDATED SUMMARY OF OPERATIONS 06/02/94
(Amounts in thousands, except per share data)
TWELVE MONTHS ENDED (AUDITED)
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Amounts
------------------
Apr. 30, Apr. 24, Percent of Sales
1994 1993 % Over ----------------
(53 weeks)(52 weeks) (Under) 1994 1993
-------- -------- ------- ------- -------
Sales $804,898 $684,122 18% 100.0% 100.0%
Cost of sales 593,890 506,435 17% 73.8% 74.0%
-------- -------- ------- ------- -------
Gross profit 211,008 177,687 19% 26.2% 26.0%
S,G & A 150,700 130,855 15% 18.7% 19.2%
-------- -------- ------- ------- -------
Operating profit 60,308 46,832 29% 7.5% 6.8%
Interest expense 2,822 3,260 -13% 0.4% 0.5%
Other income 669 1,727 -61% 0.1% 0.3%
-------- -------- ------- ------- -------
Pretax income 58,155 45,299 28% 7.2% 6.6%
Income taxes 23,438 18,015 30% 40.3%** 39.8%**
-------- -------- ------- ------- -------
Income before acctg. change 34,717 27,284 27% 4.3% 4.0%
Accounting change 3,352 - N/A 0.4% N/A
-------- -------- ------- ------- -------
Net income $ 38,069 $ 27,284 40% 4.7% 4.0%
======== ======== ======= ======= =======
Average shares 18,268 18,172 1%
Earnings per share:
- - -------------------
Income before acctg. change $1.90 $1.50 27%
Accounting change 0.18 - N/A
-------- -------- -------
Net income $2.08 $1.50 39%
======== ======== =======
Dividends per share $0.64 $0.60 7%
** As a percent of pretax income, not sales.
La-Z-Boy Chair Company Financial Information Release 3 of 5
CONSOLIDATED BALANCE SHEET 06/02/94
(Dollars in thousands)
Audited Increase
------------------- (Decrease)
Apr. 30, Apr. 24, -----------------
1994 1993 Dollars Percent
--------- --------- --------- -------
Current Assets
Cash & equivalents $ 25,926 $ 28,808 ($ 2,882) -10%
Receivables 183,115 169,950 13,165 8%
Inventories
Raw materials 31,867 27,555 4,312 16%
Work-in-process 29,325 30,598 (1,273) -4%
Finished goods 26,676 20,135 6,541 32%
--------- --------- --------- -------
FIFO inventories 87,868 78,288 9,580 12%
Excess of FIFO over LIFO (20,632) (17,801) (2,831) -16%
--------- --------- --------- -------
Total inventories 67,236 60,487 6,749 11%
Deferred income taxes 15,160 9,152 6,008 66%
Other current assets 4,148 5,065 (917) -18%
--------- --------- -------- -------
Total Current Assets 295,585 273,462 22,123 8%
Property, plant & equipment 94,277 90,407 3,870 4%
Goodwill 20,752 21,658 (906) -4%
Other long-term assets 19,639 15,537 4,102 26%
--------- --------- --------- --------
Total Assets $430,253 $401,064 $29,189 7%
========= ========= ========= ========
Certain April 24, 1993 balance sheet items have been reclassed for
comparability to April 30, 1994.
La-Z-Boy Chair Company Financial Information Release 4 of 5
CONSOLIDATED BALANCE SHEET 06/02/94
(Dollars in thousands)
Audited Increase
------------------- (Decrease)
Apr. 30, Apr. 24, -----------------
1994 1993 Dollars Percent
--------- --------- --------- -------
Current Liabilities
Current portion of L/T debt $ 2,875 $ 542 $ 2,333 430%
Accounts payable 21,552 20,010 1,542 8%
Payroll/benefits 29,453 28,411 1,042 4%
Estimated income taxes 3,882 9,011 (5,129) -57%
Other current liabilities 13,701 13,090 611 5%
--------- --------- --------- -------
Total Current Liabilities 71,463 71,064 399 1%
Long-term debt 52,495 55,370 (2,875) -5%
Deferred income taxes 6,949 4,857 2,092 43%
Other long-term liabilities 8,435 6,387 2,048 32%
Shareholders' equity
18,286,689 shares, $1.00 par 18,287 18,195 92 1%
Capital in excess of par 10,147 8,494 1,653 19%
Retained earnings 263,348 236,842 26,506 11%
Currency translation (871) (145) (726) -501%
--------- --------- --------- -------
Total Shareholders' Equity 290,911 263,386 27,525 10%
--------- --------- --------- -------
Total Liabilities and
Shareholders' Equity $430,253 $401,064 $29,189 7%
========= ========= ========= =======
Certain April 24, 1993 balance sheet items have been reclassed for
comparability to April 30, 1994.
La-Z-Boy Chair Company Financial Information Release 5 of 5
06/02/94
Overall:
- - --------
Refer to today's press release for additional comments.
Extra Week in Fourth Quarter:
- - -----------------------------
The fourth quarter ended April 30, 1994 contained 14 weeks compared to 13
weeks in the prior year's fourth quarter. The full year ended April 30, 1994
contained 53 weeks compared to 52 weeks last year.
Sales:
- - ------
While the fourth quarter reflects a 22% sales increase on the Consolidated
Summary of Operations, on a per week basis the sales increase was 13%. The
full year 18% sales increase was 15% on a per week basis.
Gross Profit:
- - -------------
The fourth quarter ended April 30, 1994 gross profit of 26.6% of sales fell
short of the prior year's 27.8% primarily as a result of higher health-care
costs. Management is uncertain whether this represents a trend or a one-time
event. In any event, management continues to evaluate various steps it can
take to help reduce the rate of health-care cost increases.
Other Income:
- - -------------
The $784 (181%) decline in other income for the quarter and $1,058 (61%)
decline for the year were due to exchange losses due to the decline in the
Canadian currency exchange rate throughout the year and changes in pension-
related assumptions which were implemented in the third quarter.
Accounting Change:
- - ------------------
During the first quarter of fiscal year 1994, the Company recorded a change in
accounting principle in connection with the issuance of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", by the Financial
Accounting Standards Board. This change in accounting principle increased net
income and the net deferred tax asset by $3.4 million or $.18 per share.
Capital Expenditures:
- - ---------------------
The 1994 capital expenditures of $17 million exceeded the 1993 and 1992 levels
of $12 million. Management is forecasting 1995 capital expenditures to be
$19-$24 million.
Additional Information:
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La-Z-Boy has filed a Form 8-K with the Securities and Exchange Commission via
their Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. This
filing includes the financial section of the Company's annual report (e.g.,
Consolidated Statement of Cash Flows, Notes to Consolidated Financial
Statements, Management Discussion and Analysis, etc.).