La-Z-Boy Reports Fiscal 2013 Third-Quarter Results

              La-Z-Boy Reports Fiscal 2013 Third-Quarter Results

PR Newswire

MONROE, Mich., Feb. 19, 2013

MONROE, Mich., Feb. 19, 2013 /PRNewswire/ --La-Z-Boy Incorporated (NYSE: LZB)
today reported its operating results for the fiscal 2013 third quarter ended
January 26, 2013.

Fiscal 2013 third-quarter highlights:

  oSales for the third quarter increased 10.3% compared with the fiscal 2012
    third quarter;
  oOperating income increased 37% to $23.3 million, compared with $17.0
    million in the fiscal 2012 third quarter;
  oThe upholstery segment's sales increased 12.3% and its operating margin
    was 10.1% versus 9.1% in last year's third quarter;
  oThe company's retail segment was profitable, posting an operating margin
    of 3.7% compared with (1.1%) in last year's third quarter;
  oSame-store written sales for the La-Z-Boy Furniture Galleries® store
    network increased 11.8% for the third quarter; and
  oThe company generated $35.9 million in cash for the quarter from operating
    activities and ended the quarter with $112 million in cash and
    equivalents.

Net sales for the fiscal 2013 third quarter were $349.1 million, up 10.3%
compared with the prior year's third quarter. The company reported net income
attributable to La-Z-Boy Incorporated of $17.1 million, or $0.32 per diluted
share, which included $0.04 relating to gains on the sale of investments and a
related tax benefit. This compares with last year's third-quarter net income
attributable to La‑Z‑Boy Incorporated of $15.0 million, or $0.28 per diluted
share, of which $0.07 per share was primarily due to a reduction of certain
valuation reserves against the company's deferred tax assets, and $0.02 per
share reflected anti-dumping duties received from the CDSOA distributions.

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy,
said, "We are definitely pleased by the momentum in our business. For the
quarter, we posted solid increases in same-store written sales for the
La-Z-Boy Furniture Galleries® network of stores as well as sales increases in
our upholstery and retail segments. We continue to experience strong
performance and improvement in our retail business, leading to profitability
this quarter while further validating our integrated retail strategy. At the
same time, we generated strong cash flow during the quarter, and increased our
cash position while buying back shares, paying a dividend and closing on the
property for the company's new world headquarters. Given the ongoing strength
of our results, we are well positioned to continue to invest in our business
to drive growth, capture market share and improve profitability."

Wholesale Segments

For the fiscal 2013 third quarter, sales in the company's upholstery segment
increased 12.3% to $280.0 million from $249.3 million in the prior year's
third quarter. The upholstery segment's operating margin for the quarter was
10.1% compared with 9.1% in last year's third quarter. In the casegoods
segment, sales for the fiscal 2013 third quarter were $32.6 million, down 4.7%
from $34.2 million in the fiscal 2012 third quarter, and the operating margin
for the segment decreased to 0.6% from 5.4% in last year's third quarter.

Darrow commented, "In January, our Dayton, Tennessee La-Z-Boy manufacturing
facility was named by IndustryWeek magazine as one of its 10 Best Plants in
North America for 2012. This prestigious honor recognizes our lean and
continuous improvement efforts as we strive to deliver the highest quality
products to our customers. This operating philosophy is employed by all our
facilities and is a cornerstone of our approach to doing business. We are
continuing to invest in our "Live life comfortably" advertising campaign to
drive awareness, traffic and additional volume for our retail partners. We
spent an additional $1.5 million on advertising versus last year's third
quarter, which as a percentage of sales, was consistent with last year's third
quarter. The campaign continues to bring attention to the vast array of
stylish upholstered furniture we offer, and feedback from the consumer tells
us she is pleased with the value in our product. Sales increases in
stationary product are outpacing our core recliner business, and the power
category continues to perform very well. On the operating side, our improved
productivity continues to drive enhanced margins, and we remain diligent with
respect to the daily management of our production and supply chain to ensure
ongoing efficiencies."

Darrow continued, "On the Casegoods side of the business, our Hudson, North
Carolina operation experienced improved efficiencies as we began the process
of converting our lumber processing facility over to an assembly operation
using outsourced parts. However, the increased efficiencies were offset in
our results by a charge taken this quarter for a probable adjustment to our
import duties. Although the major casegoods business, including bedroom and
dining room groups, continues to be challenged across the industry, our
occasional business continues to exhibit positive momentum. As we move into
the fourth quarter, we will begin shipping our backlog of new groups
introduced at the October Furniture Market, where we received strong
placements on many of our major collections."

Retail Segment

For the fiscal 2013 third quarter, retail delivered sales were $72.8 million,
up 24.6% compared with the third quarter of last year. Excluding the southern
Ohio and other new stores, delivered sales for the core 82 stores included in
last year's third quarter increased 6.1%. The retail group's operating
profit for the period was $2.7 million, with an operating margin of 3.7%,
compared with an operating loss of $0.6 million, or an operating margin of
(1.1%) in last year's third quarter.

Darrow stated, "Our retail team has done excellent work over the past several
years to improve the operation's performance and move it to profitability.
We've reduced our cost structure, modified selling processes, revamped our
distribution center strategy and improved our margins. In addition to
registering the 16^th consecutive quarterly year-over-year improvement, the
segment was not only profitable for this third quarter but is now operating at
a profit year to date.

During the quarter we experienced improvements in most key sales metrics and
continued to build on our strategic imperative of offering the consumer
choice, custom options and speed to market. With the opening of a third store
in Pittsburgh, Pennsylvania, we also completed the build out of that market
during the period, and converted our Paramus, New Jersey store into the new
concept design. With our retail segment profitable, we believe the true
earnings power inherent in the integrated retail model will become more
evident as we continue to strengthen the performance of our company-owned
retail operation."

La-Z-Boy Furniture Galleries® Stores Network

System-wide, for the third quarter of fiscal 2013, including company-owned and
independent-licensed stores, same-store written sales, which the company
tracks as an indicator of retail activity, were up 11.8% versus last year's
third quarter. Same-store written sales include the sales of all currently
active stores which have been opened for a minimum of 12 months.

Total written sales, which include new and closed stores, for the third
quarter were up 14.1%. At the end of the third quarter, the La-Z-Boy
Furniture Galleries® store system was composed of 316 stand-alone stores.

The La-Z-Boy Furniture Galleries® store network, including company-owned and
independent-licensed stores, plans to remodel one store and close one store in
the fourth quarter of fiscal 2013. Fiscal year to date, six stores were
opened and two were closed. Throughout the year, three stores were relocated
and four were remodeled.

Balance Sheet and Cash Flow

During the quarter, the company generated $35.9 million in cash from operating
activities and ended the period with $112 million in cash and equivalents.
Total debt was $7.6 million. At quarter end, La-Z-Boy's
debt-to-capitalization ratio was 1.6% compared with 2.1% at the end of fiscal
2012 and 6.4% at the end of the third quarter last year.

Dividend

The company's Board of Directors declared a quarterly cash dividend of $0.04
per share on the company's common stock. The dividend will be payable March
8, 2013, to shareholders of record as of March 1, 2013.

Business Outlook

Darrow stated, "We are quite pleased with the trends we are seeing in our
business. The improving housing market, coupled with what is historically our
strongest volume period, makes us cautiously optimistic as we move into the
fourth quarter. The La-Z-Boy brand is the strongest in the industry, our
network of La-Z-Boy branded distribution outlets is vast and our operating
platform is efficient. We are confident we have the right business model in
place to drive growth and increased profitability and will continue to make
strategic investments to support those objectives."

Conference Call

La-Z-Boy will hold a conference call with the investment community on
Wednesday, February 20, 2013, at 8:30 a.m. eastern time. The toll-free
dial-in number is 877.407.0778; international callers may use 201.689.8565.

Forward-looking Information

This news release contains, and oral statements made from time to time by
representatives of La‑Z‑Boy may contain, "forward-looking statements." With
respect to all forward-looking statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

Actual results could differ materially from those we anticipate or project due
to a number of factors, including: (a) changes in consumer confidence and
demographics; (b) speed of economic recovery or the possibility of another
recession; (c) changes in the real estate and credit markets and their effects
on our customers and suppliers; (d) international political unrest, terrorism
or war; (e) volatility in energy and other commodities prices; (f) the impact
of logistics on imports; (g) interest rate and currency exchange rate changes;
(h) operating factors, such as supply, labor or distribution disruptions; (i)
any court actions requiring us to return our share of certain Continued
Dumping and Subsidy Offset Act distributions; (j) changes in the domestic or
international regulatory environment; (k) adoption of new accounting
principles; (l) severe weather or other natural events such as hurricanes,
earthquakes, flooding, tornadoes and tsunamis; (m) our ability to procure
fabric rolls and leather hides or cut-and-sewn fabric and leather sets
domestically or abroad; (n) fluctuations in our stock price; (o) information
technology conversions or system failures; (p) effects of our brand awareness
and marketing programs; (q) the discovery of defects in our products resulting
in delays in manufacturing, recall campaigns, reputational damage, or
increased warranty costs; (r) litigation arising out of alleged defects in our
products; (s) our ability to locate new La-Z-Boy Furniture Galleries® stores
owners and negotiate favorable lease terms for new or existing locations; (t)
our ability to successfully integrate acquired businesses and realize the
benefit of anticipated synergies; and (u) those matters discussed in Item 1A
of our fiscal 2012 Annual Report on Form 10-K and other factors identified
from time-to-time in our reports filed with the Securities and Exchange
Commission. We undertake no obligation to update or revise any forward-looking
statements, whether to reflect new information or new developments or for any
other reason.

Additional Information

This news release is just one part of La-Z-Boy's financial disclosures and
should be read in conjunction with other information filed with the Securities
and Exchange Commission, which is available at:
http://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-sec. Investors and
others wishing to be notified of future La-Z-Boy news releases, SEC filings
and quarterly investor conference calls may sign up at:
http://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-alerts&t=&id=&.

Background Information

La-Z-Boy Incorporated is one of the world's leading residential furniture
producers, marketing furniture for every room of the home. The La-Z-Boy
Upholstery segment companies are Bauhaus, England and La-Z-Boy. The operating
units in the Casegoods segment consist of two groups, one including American
Drew, Lea and Hammary, and the second being Kincaid.The company-owned Retail
segment includes 97 of the 316 La-Z-Boy Furniture Galleries® stores.

The corporation's proprietary distribution network is dedicated to selling
La-Z-Boy Incorporated products and brands, and includes 316 stand-alone
La-Z-Boy Furniture Galleries® stores and 558 independent Comfort Studios®
locations, in addition to in-store gallery programs for the company's Kincaid,
England and Lea operating units. Additional information is available at
http://www.la-z-boy.com/.



LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
                                                           Third Quarter Ended
(Unaudited, amounts in thousands, except per share data)   1/26/13    1/28/12
Sales                                                      $349,148   $316,515
Cost of sales                                              235,699    216,724
 Gross profit                                            113,449    99,791
Selling, general and administrative expense                90,171     82,771
Operating income                                           23,278     17,020
Interest expense                                           148        274
Interest income                                            198        138
Income from Continued Dumping and Subsidy Offset Act       —          1,415
Other income (expense), net                                2,404      (89)
Income before income taxes                                 25,732     18,210
Income tax expense                                         8,569      2,864
Net income                                                 17,163     15,346
Net income attributable to noncontrolling interests        (99)       (388)
Net income attributable to La-Z-Boy Incorporated           $17,064    $14,958
Basic weighted average shares outstanding                  52,431     51,811
Basic net income attributable to La-Z-Boy Incorporated     $0.32      $0.28
per share
Diluted weighted average shares outstanding                53,401     52,379
Diluted net income attributable to La-Z-Boy Incorporated   $0.32      $0.28
per share
Dividends declared per share                               $0.04      —



LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
                                                            Nine Months Ended
(Unaudited, amounts in thousands, except per share data)    1/26/13   1/28/12
Sales                                                       $972,990  $904,288
Cost of sales                                               669,620   627,786
 Gross profit                                             303,370   276,502
Selling, general and administrative expense                 261,903   243,761
Operating income                                            41,467    32,741
Interest expense                                            512       1,087
Interest income                                             435       487
Income from Continued Dumping and Subsidy Offset Act        —         1,737
Other income, net                                           2,495     176
Income before income taxes                                  43,885    34,054
Income tax expense (benefit)                                15,195    (34,820)
Net income                                                  28,690    68,874
Net income attributable to noncontrolling interests         (609)     (510)
Net income attributable to La-Z-Boy Incorporated            $28,081   $68,364
Basic average shares                                        52,327    51,928
Basic net income attributable to La-Z-Boy Incorporated per  $0.53     $1.29
share
Diluted average shares                                      53,201    52,440
Diluted net income attributable to La-Z-Boy Incorporated    $0.52     $1.28
per share
Dividends declared per share                                $0.04     —



LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Unaudited, amounts in thousands)                           1/26/13   4/28/12
Current assets
Cash and equivalents                                        $111,981  $152,370
Restricted cash                                             9,798     2,861
Receivables, net of allowance of $23,365 at 1/26/13 and     163,224   167,232
$22,705 at 4/28/12
Inventories, net                                            159,060   143,787
Deferred income tax assets – current                        22,596    19,081
Other current assets                                        27,901    14,669
Total current assets                                        494,560   500,000
Property, plant and equipment, net                          120,222   114,366
Goodwill                                                    12,837    —
Other intangible assets                                     5,173     3,028
Deferred income tax assets – long-term                      29,926    33,649
Other long-term assets, net                                 49,493    34,696
Total assets                                                $712,211  $685,739
Current liabilities
Current portion of long-term debt                           $327      $1,829
Accounts payable                                            50,369    56,630
Accrued expenses and other current liabilities              96,113    91,300
Total current liabilities                                   146,809   149,759
Long-term debt                                              7,302     7,931
Other long-term liabilities                                 79,287    80,234
Contingencies and commitments                               —         —
Shareholders' equity
Preferred shares – 5,000 authorized; none issued            —         —
Common shares, $1 par value – 150,000 authorized; 52,390
outstanding                                                 52,390    52,244

 at 1/26/13 and 52,244 outstanding at 4/28/12
Capital in excess of par value                              237,182   231,332
Retained earnings                                           213,596   189,609
Accumulated other comprehensive loss                        (31,156)  (31,281)
Total La-Z-Boy Incorporated shareholders' equity            472,012   441,904
Noncontrolling interests                                    6,801     5,911
Total equity                                                478,813   447,815
Total liabilities and equity                                $712,211  $685,739



LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
                                                         Nine Months Ended
(Unaudited, amounts in thousands)                        1/26/13   1/28/12
Cash flows from operating activities
Net income                                               $28,690   $68,874
Adjustments to reconcile net income to cash provided by

 (used for) operating activities
Loss (gain) on disposal of assets                        (36)      119
Gain on sale of investments                              (2,866)   (315)
Gain on deconsolidation of VIE                           —         (1,125)
Deferred income tax benefit                              (745)     (48,042)
Restructuring                                            2,716     222
Provision for doubtful accounts                          1,009     3,115
Depreciation and amortization                            17,111    18,054
Stock-based compensation expense                         8,198     4,295
Pension plan contributions                               (3,480)   (2,790)
Change in receivables                                    2,457     2,548
Change in inventories                                    (12,355)  2,203
Change in other assets                                   (5,396)   1,972
Change in payables                                       (6,261)   (785)
Change in other liabilities                              4,410     7,511
 Net cash provided by operating activities           33,452    55,856
Cash flows from investing activities
Proceeds from disposal of assets                         1,484     257
Capital expenditures                                     (21,792)  (11,518)
Purchases of investments                                 (36,353)  (6,462)
Proceeds from sales of investments                       12,658    6,429
Cash effects on deconsolidation of VIE                   —         (971)
Acquisitions, net of cash acquired                       (15,832)  —
Change in restricted cash                                (6,937)   —
Other                                                    —         (685)
Net cash used for investing activities                   (66,772)  (12,950)
Cash flows from financing activities
Payments on debt                                         (2,372)   (5,708)
Payments for debt issuance costs                         —         (568)
Stock issued for stock and employee benefit plans        1,528     718
Excess tax benefit on stock option exercises             1,117     —
Purchases of common stock                                (5,217)   (4,517)
Dividends paid                                           (2,119)   —
Net cash used for financing activities                   (7,063)   (10,075)
Effect of exchange rate changes on cash and equivalents  (6)       (19)
Change in cash and equivalents                           (40,389)  32,812
Cash and equivalents at beginning of period              152,370   115,262
Cash and equivalents at end of period                    $111,981  $148,074



LA-Z-BOY INCORPORATED
SEGMENT INFORMATION
                                      Third Quarter Ended  Nine Months Ended
(Unaudited, amounts in thousands)     1/26/13    1/28/12   1/26/13   1/28/12
Sales
Upholstery segment:
 Sales to external           $245,365   $222,265  $684,214  $633,479
customers
 Intersegment sales          34,622     27,083    93,402    74,731
Upholstery segment sales              279,987    249,348   777,616   708,210
Casegoods segment:
 Sales to external           30,496     32,735    95,841     100,255
customers
 Intersegment sales          2,115      1,493     5,907      4,047
Casegoods segment sales               32,611     34,228    101,748    104,302
Retail segment sales                  72,772     58,387    191,089    159,912
VIEs, net of intercompany sales       —          2,737     —          8,840
eliminations
Corporate and Other                   515        391       1,845      1,802
Eliminations                          (36,737)   (28,576)  (99,308)   (78,778)
 Consolidated sales                $349,148   $316,515  $972,990   $904,288
Operating Income (Loss)
Upholstery segment                    $28,375    $22,603   $65,743    $54,721
Casegoods segment                     200        1,840     2,381      4,359
Retail segment                        2,668      (646)     105        (6,707)
VIEs                                  —          596       —          959
Restructuring                         (30)       (56)      (2,716)    (222)
Corporate and Other                   (7,935)    (7,317)   (24,046)   (20,369)
 Consolidated operating income     $23,278    $17,020   $41,467    $32,741



SOURCE La-Z-Boy Incorporated

Website: http://www.la-z-boy.com
Contact: Kathy Liebmann, +1-734-241-2438, kathy.liebmann@la-z-boy.com