News Release
SOFT FURNITURE DEMAND DAMPENS LA-Z-BOY'S FIRST QUARTER
MONROE, MI., August 17, 1995: La-Z-Boy Chair Company's reported sales rose
12% during the company's 1996 first quarter that ended July 29, 1995. As
expected, comparable sales (which includes a recently acquired company's sales
as if they were in last year's results) declined slightly for the period due
to industrywide softness in residential furniture sales. Earnings were lower
primarily because of fixed costs and other previously committed to expenses.
La-Z-Boy management expects improved results in the second quarter.
Financial Details
-----------------
First quarter sales were $195.8 million, up 12% from sales of $174.4 million
in the 1995 fiscal first quarter. The '96 first quarter was the first in which
results of recently acquired England/Corsair, Inc. (E/C) were included with
those of La-Z-Boy. Comparable sales -- that is, including E/C on a pro forma
basis in last year's sales -- decreased 1%. Sales were down slightly at the
company's four U.S. residential furniture divisions, while Canadian sales and
contract furniture sales increased.
NET PROFITS were $3.2 million compared to last year's first quarter profits of
$4.3 million. Per share profits were $0.17 vs. last year's $0.23. Profits were
affected by soft residential demand, higher interest expenses and higher
national TV advertising expenditures.
Chairman Comments
-----------------
La-Z-Boy Chairman and President Charles T. Knabusch said the company's 1%
comparable sales decline was "modest" compared to soft sales for the U.S.
furniture industry as a whole. "La-Z-Boy's new national TV advertising campaign
and improvements in the strength of our nationwide dealer organization are two
reasons why our sales performance remains ahead of the industry average."
Mr. Knabusch said sales in the '96 second quarter ending in October, "could
exceed last year's strong second quarter" after adjusting for E/C's
noncomparable sales. "We base this positive view on economic statistics related
to the furniture industry and the favorable outlook expressed by our dealers,"
he said.
More
----
On July 31, 1995, La-Z-Boy increased its dividend per share 12% or $.02 from
$0.17 to $0.19 for shareholders of record as of today.
In general, incoming sales orders and backlogs, as of this press release date,
are slightly behind the levels of a year ago and significantly greater than
three months ago.
For more details please see La-Z-Boy's Form 10-Q filed with the SEC (available
on EDGAR) which includes, among other things, the full P&L, balance sheet, cash
flow statement and more management dicussion.
NYSE & PSE: LZB Contact: Jim Korsnack (313) 241-4208
La-Z-Boy Chair Company Financial Information Release 1 of 2
CONSOLIDATED SUMMARY OF OPERATIONS 08/17/95
(Amounts in thousands, except per share data)
THIRD QUARTER ENDED (UNAUDITED)
----------------------------------------------
Amounts
------------------ Percent of Sales
July 29, July 30, % Over ----------------
1995 1994 (Under) 1995 1994
-------- -------- ------- ------- -------
Sales $195,757 $174,387 12% 100.0% 100.0%
Cost of sales 151,378 133,654 13% 77.3% 76.6%
-------- -------- ------- ------- -------
Gross profit 44,379 40,733 9% 22.7% 23.4%
S, G & A 37,937 33,032 15% 19.4% 19.0%
-------- -------- ------- ------- -------
Operating profit 6,442 7,701 -16% 3.3% 4.4%
Interest expense 1,464 662 121% 0.7% 0.4%
Interest income 456 273 67% 0.2% 0.2%
Other income 375 273 37% 0.2% 0.1%
-------- -------- ------- ------- -------
Pretax income 5,809 7,585 -23% 3.0% 4.3%
Income taxes 2,634 3,315 -21% 45.3%* 43.7%*
-------- -------- ------- ------- -------
Net income $3,175 $4,270 -26% 1.6% 2.4%
======== ======== ======= ======= =======
Average shares 18,494 18,253 1%
Earnings per share $0.17 $0.23 -26%
Dividends per share $0.17 $0.17 0%
* As a percent of pretax income, not sales.
Acquisition amortization of $260 for the first quarter ended July 30, 1994
has been reclassified from other income to selling, general and
administrative.
Overall:
--------
Refer to today's news release for additional comments. England/Corsair (E/C) is
included in the quarter ended July 29, 1995 results, but not in the quarter
ended July 30, 1994 results.
Gross Profit:
-------------
Gross profit declined from 23.4% of sales last year to 22.7% of sales this year
primarily due to the historically lower than average gross profit of E/C. This
impact is expected to continue throughout the year.
S,G & A:
--------
The increase in S,G, & A from 19.0% of sales last year to 19.4% of sales
this year was primarily due to higher national TV advertising expenditures.
Interest Expense:
-----------------
The increase in interest expense was due to the inclusion of E/C along with
interest on notes issued to purchase E/C.
Income Taxes:
-------------
The increase in income tax as a percent of pretax income increased from 43.7%
last year to 45.3% this year primarily due to the amortization of
non-deductible goodwill relating to the purchase of E/C. To a lesser extent,
the rate increase was also due to the amortization of other non-deductible
goodwill.
La-Z-Boy Chair Company Financial Information Release 2 of 2
CONSOLIDATED BALANCE SHEET 08/17/95
(Dollars in thousands)
Unaudited Increase
------------------ (Decrease) Audited
July 29, July 30, ---------------- April 29,
1995 1994 Dollars Percent 1995
-------- -------- ------- ------- ---------
Current Assets
Cash & equivalents $39,808 $31,180 $8,628 28% $27,048
Receivables 155,089 149,206 5,883 4% 192,938
Inventories
Raw materials 38,968 36,451 2,517 7% 39,604
Work-in-process 35,570 30,621 4,949 16% 35,036
Finished goods 33,742 30,137 3,605 12% 29,051
-------- -------- ------- ------- --------
FIFO inventories 108,280 97,209 11,071 11% 103,691
Excess of FIFO over LIFO (22,795) (20,781) (2,014) -10% (22,600)
-------- -------- ------- ------- ---------
Total inventories 85,485 76,428 9,057 12% 81,091
Deferred income taxes 18,242 15,160 3,082 20% 18,242
Other current assets 8,246 6,419 1,827 28% 6,081
-------- -------- ------- ------- ---------
Total Current Assets 306,870 278,393 28,477 10% 325,400
Property, plant & equipment 115,848 96,770 19,078 20% 117,175
Goodwill 41,414 20,529 20,885 102% 41,701
Other long-term assets 18,891 22,456 (3,565) -16% 19,542
-------- -------- ------- ------- ---------
Total Assets $483,023 $418,148 $64,875 16% $503,818
======== ======== ======= ======= =========
Unaudited Increase
----------------- (Decrease) Audited
July 29, July 30, ----------------- April 29,
1995 1994 Dollars Percent 1995
------- ------- ------- ------- --------
Current Liabilities
Current portion of l/t debt $5,676 $1,875 $3,801 203% $4,676
Current portion - captl leases 2,078 - 2,078 N/M 2,078
Accounts payable 29,169 24,160 5,009 21% 29,323
Payroll/benefits 18,549 16,475 2,074 13% 31,845
Estimated income taxes 5,854 4,293 1,561 36% 4,855
Other current liabilities 14,777 16,238 (1,461) -9% 15,343
-------- -------- ------- ------- ---------
Total Current Liabilities 76,103 63,041 13,062 21% 88,120
Long-term debt 66,077 56,245 9,832 17% 71,149
Capital leases 5,141 - 5,141 N/M 5,298
Deferred income taxes 6,610 6,949 (339) -5% 6,610
Other long-term liabilities 8,318 8,933 (615) -7% 9,001
Shareholders' Equity
18,461,367 shares, $1.00 par 18,461 18,011 450 2% 18,562
Capital in excess of par 28,130 10,237 17,893 175% 28,085
Retained earnings 274,995 255,627 19,368 8% 277,738
Currency translation (812) (895) 83 9% (745)
-------- -------- ------- ------- ---------
Total Shareholders' Equity 320,774 282,980 37,794 13% 323,640
-------- -------- ------- ------- ---------
Total Liabilities and
Shareholders' Equity $483,023 $418,148 $64,875 16% $503,818
======== ======== ======= ======= =========
The July 29, 1995 and the April 29, 1995 balance sheets include E/C's assets
and liabilities. The July 30, 1994 balance sheet does not include E/C and is
not comparable to the other periods.