Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jan. 26, 2019 | Feb. 12, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | LA-Z-BOY INC | |
Entity Central Index Key | 57,131 | |
Current Fiscal Year End Date | --04-27 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 46,659,480 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 26, 2019 |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
CONSOLIDATED STATEMENT OF INCOME | ||||
Sales | $ 467,582 | $ 413,638 | $ 1,291,610 | $ 1,163,922 |
Cost of sales | 277,712 | 251,140 | 778,813 | 707,369 |
Gross profit | 189,870 | 162,498 | 512,797 | 456,553 |
Selling, general and administrative expense | 149,027 | 129,403 | 420,294 | 372,891 |
Operating income | 40,843 | 33,095 | 92,503 | 83,662 |
Interest expense | (538) | (113) | (1,143) | (430) |
Interest income | 540 | 444 | 1,534 | 1,163 |
Other income (expense), net | (941) | (1,094) | (2,046) | (271) |
Income before income taxes | 39,904 | 32,332 | 90,848 | 84,124 |
Income tax expense | 10,730 | 20,047 | 22,374 | 36,889 |
Net income | 29,174 | 12,285 | 68,474 | 47,235 |
Net income attributable to noncontrolling interests | (443) | (176) | (1,428) | (579) |
Net income attributable to La-Z-Boy Incorporated | $ 28,731 | $ 12,109 | $ 67,046 | $ 46,656 |
Basic weighted average common shares (in shares) | 46,820 | 47,234 | 46,808 | 47,852 |
Basic net income attributable to La-Z-Boy Incorporated per share (in dollars per share) | $ 0.61 | $ 0.26 | $ 1.43 | $ 0.97 |
Diluted weighted average common shares (in shares) | 47,091 | 47,757 | 47,212 | 48,325 |
Diluted net income attributable to La-Z-Boy Incorporated per share (in dollars per share) | $ 0.61 | $ 0.25 | $ 1.42 | $ 0.96 |
Dividends declared per share (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.37 | $ 0.34 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
Net income | $ 29,174 | $ 12,285 | $ 68,474 | $ 47,235 |
Other comprehensive income (loss) | ||||
Currency translation adjustment | 1,469 | 3,585 | (1,552) | 5,754 |
Change in fair value of cash flow hedges, net of tax | 70 | 445 | (108) | 182 |
Net unrealized gain on marketable securities, net of tax | 90 | 109 | 154 | 46 |
Net pension amortization, net of tax | 515 | 552 | 1,548 | 1,586 |
Total other comprehensive income | 2,144 | 4,691 | 42 | 7,568 |
Total comprehensive income before allocation to noncontrolling interests | 31,318 | 16,976 | 68,516 | 54,803 |
Comprehensive income attributable to noncontrolling interests | (1,112) | (865) | (1,488) | (1,773) |
Comprehensive income attributable to La-Z-Boy Incorporated | $ 30,206 | $ 16,111 | $ 67,028 | $ 53,030 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 |
Current assets | ||
Cash and equivalents | $ 101,579 | $ 134,515 |
Restricted cash | 2,003 | 2,356 |
Receivables, net of allowance of $2,762 at 1/26/19 and $1,956 at 4/28/18 | 149,526 | 154,055 |
Inventories, net | 219,211 | 184,841 |
Other current assets | 75,086 | 42,451 |
Total current assets | 547,405 | 518,218 |
Property, plant and equipment, net | 195,680 | 180,882 |
Goodwill | 184,717 | 75,254 |
Other intangible assets, net | 30,274 | 18,190 |
Deferred income taxes - long-term | 21,231 | 21,265 |
Other long-term assets, net | 82,149 | 79,158 |
Total assets | 1,061,456 | 892,967 |
Current liabilities | ||
Short-term borrowings | 20,000 | |
Current portion of long-term debt | 205 | 223 |
Accounts payable | 72,421 | 62,403 |
Accrued expenses and other current liabilities | 176,277 | 118,721 |
Total current liabilities | 268,903 | 181,347 |
Long-term debt | 47 | 199 |
Other long-term liabilities | 120,720 | 86,205 |
Contingencies and commitments | ||
Shareholders' equity | ||
Preferred shares - 5,000 authorized; none issued | ||
Common shares, $1 par value - 150,000 authorized; 46,730 outstanding at 1/26/19 and 46,788 outstanding at 4/28/18 | 46,730 | 46,788 |
Capital in excess of par value | 306,896 | 298,948 |
Retained earnings | 330,491 | 291,644 |
Accumulated other comprehensive loss | (26,854) | (25,199) |
Total La-Z-Boy Incorporated shareholders' equity | 657,263 | 612,181 |
Noncontrolling interests | 14,523 | 13,035 |
Total equity | 671,786 | 625,216 |
Total liabilities and equity | $ 1,061,456 | $ 892,967 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 |
Current assets | ||
Receivables, allowance (in dollars) | $ 2,762 | $ 1,956 |
Shareholders' equity | ||
Preferred shares, authorized (in shares) | 5,000 | 5,000 |
Preferred shares, issued (in shares) | 0 | 0 |
Common shares, par value (in dollars per share) | $ 1 | $ 1 |
Common shares, authorized (in shares) | 150,000 | 150,000 |
Common shares, outstanding (in shares) | 46,730 | 46,788 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Jan. 26, 2019 | Jan. 27, 2018 | |
Cash flows from operating activities | ||
Net income | $ 68,474 | $ 47,235 |
Adjustments to reconcile net income to cash provided by (used for) operating activities | ||
(Gain)/ Loss on disposal of assets | 41 | (1,849) |
Gain on conversion of investment | (2,204) | |
Change in deferred taxes | 2,538 | 10,543 |
Provision for doubtful accounts | 477 | 198 |
Depreciation and amortization | 23,182 | 23,671 |
Equity-based compensation expense | 8,174 | 7,929 |
Pension plan contributions | (7,000) | (2,000) |
Change in receivables | 1,152 | 5,057 |
Change in inventories | (18,950) | (9,142) |
Change in other assets | (10,103) | (3,304) |
Change in payables | 4,954 | 12,529 |
Change in other liabilities | 18,509 | 2,537 |
Net cash provided by operating activities | 91,448 | 91,200 |
Cash flows from investing activities | ||
Proceeds from disposals of assets | 447 | 620 |
Proceeds from property insurance | 154 | 1,807 |
Capital expenditures | (35,766) | (24,138) |
Purchases of investments | (14,956) | (24,124) |
Proceeds from sales of investments | 14,304 | 17,109 |
Acquisitions, net of cash acquired | (78,582) | (16,495) |
Net cash used for investing activities | (114,399) | (45,221) |
Cash flows from financing activities | ||
Net proceeds from credit facility | 20,000 | |
Payments on debt | (169) | (203) |
Payments for debt issuance costs | (220) | |
Stock issued for stock and employee benefit plans, net of shares withheld for taxes | 4,012 | 1,418 |
Purchases of common stock | (16,726) | (46,074) |
Dividends paid | (17,381) | (16,343) |
Net cash used for financing activities | (10,264) | (61,422) |
Effect of exchange rate changes on cash and equivalents | (74) | 2,204 |
Change in cash, cash equivalents and restricted cash | (33,289) | (13,239) |
Cash, cash equivalents and restricted cash at beginning of period | 136,871 | 150,859 |
Cash, cash equivalents and restricted cash at end of period | 103,582 | 137,620 |
Supplemental disclosure of non-cash investing activities | ||
Capital expenditures included in payables | $ 2,827 | $ 3,926 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands | Common Shares | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interests | Total |
Balance at Apr. 29, 2017 | $ 48,472 | $ 289,632 | $ 284,698 | $ (32,883) | $ 11,186 | $ 601,105 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 80,866 | 729 | 81,595 | |||
Other comprehensive income (loss) | 7,684 | 1,120 | 8,804 | |||
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax | 311 | 4,046 | (1,380) | 2,977 | ||
Purchase of 1,995 shares and 555 shares of common stock for the year ended April 28, 2018 and nine months ended January 26, 2019 respectively | (1,995) | (4,204) | (50,531) | (56,730) | ||
Stock option and restricted stock expense | 9,474 | 9,474 | ||||
Dividends paid | (22,009) | (22,009) | ||||
Balance at Apr. 28, 2018 | 46,788 | 298,948 | 291,644 | (25,199) | 13,035 | 625,216 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 67,046 | 1,428 | 68,474 | |||
Other comprehensive income (loss) | (18) | 60 | 42 | |||
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax | 497 | 5,701 | (2,186) | 4,012 | ||
Purchase of 1,995 shares and 555 shares of common stock for the year ended April 28, 2018 and nine months ended January 26, 2019 respectively | (555) | (5,927) | (10,244) | (16,726) | ||
Stock option and restricted stock expense | 8,174 | 8,174 | ||||
Cumulative effect adjustment for investments, net of tax | ASU 2016-01 - Investments | 1,637 | (1,637) | ||||
Dividends paid | (17,381) | (17,381) | ||||
Dividends declared not paid | (25) | (25) | ||||
Balance at Jan. 26, 2019 | $ 46,730 | $ 306,896 | $ 330,491 | $ (26,854) | $ 14,523 | $ 671,786 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - shares | 9 Months Ended | 12 Months Ended |
Jan. 26, 2019 | Apr. 28, 2018 | |
Common Shares | ||
Shares purchased | 555 | 1,995 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jan. 26, 2019 | |
Basis of Presentation | |
Basis of Presentation | Note 1: Basis of Presentation The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries. We derived the April 28, 2018, balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles, which we applied on a basis consistent with those reflected in our fiscal 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission, but the information does not include all of the disclosures required by generally accepted accounting principles. In management’s opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April 27, 2019. At January 26, 2019, we owned preferred shares of two privately-held companies, both of which are variable interest entities. We also hold a warrant to purchase common shares of one of these companies. We have not consolidated the results of either of these companies in our financial statements because we do not have the power to direct those activities that most significantly impact the economic performance of either of these companies and, therefore, are not the primary beneficiary. Accounting pronouncements adopted in fiscal 2019 In May 2014, the Financial Accounting Standards Board ("FASB") issued a new accounting standard that requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard supersedes virtually all existing authoritative accounting guidance on revenue recognition and requires additional disclosures and greater use of estimates and judgments. During July 2015, the FASB deferred the effective date of the revenue recognition standard by one year, thus making the new accounting standard effective beginning with our fiscal 2019. We adopted the new standard in the first quarter of fiscal 2019 with modified retrospective application. We reviewed substantially all of our contracts and other revenue streams and determined that while the application of the new standard did not have a material change in the amount of or timing for recognizing revenue, it did have a significant impact on our financial statement disclosures related to disaggregated revenue, customer deposits, other receivables and contract liabilities, as well as the presentation of other receivables and deferred revenues (contract liabilities) on our consolidated balance sheet. See Note 11 for information on these disclosures. In January 2016, the FASB issued a new accounting standard that requires equity investments to be measured at fair value with the fair value changes to be recognized through net income. This standard does not apply to investments that are accounted for using the equity method of accounting or that result in consolidation of the invested entity. As of April 28, 2018, we held equity investments subject to this new standard and recognized changes in the fair value of these equity investments through other comprehensive income (loss) as unrealized gains (losses). We adopted the new standard in the first quarter of fiscal 2019 and consequently reclassified $2.1 million of net unrealized gains from accumulated other comprehensive income to retained earnings as a cumulative-effect adjustment during the first quarter of fiscal 2019. We also reclassified $0.5 million of tax expense related to these investments from accumulated other comprehensive loss to retained earnings. We will recognize the tax impact for these investments in the consolidated statement of income as the unrealized gains (losses) become realized. See Note 6 for additional information on our current investments. In October 2016, the FASB issued a new accounting standard that requires entities to recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. We adopted this standard in the first quarter of fiscal 2019. Adoption of this standard did not impact our current practices because intra-entity transfers, as the standard defines them, did not occur in the first nine months of fiscal 2019. In January 2017, the FASB issued a new accounting standard clarifying the definition of a business with the objective of adding guidance to entities evaluating whether a transaction should be accounted for as an acquisition. We adopted this standard in the first quarter of fiscal 2019. Adoption of this standard did not change the accounting treatment of acquisitions completed during fiscal 2019. In January 2017, the FASB issued a new accounting standard simplifying the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should now perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. We are required to adopt this standard by our fiscal 2021, but the standard permits us to adopt it early. We have elected to adopt this standard in fiscal 2019, and we will perform our goodwill impairment test in the fourth quarter of fiscal 2019. We do not believe that adoption of this standard will have a material impact on our consolidated financial statements or disclosures. In August 2018, the FASB issued a new accounting standard that aligns the accounting for implementation costs in hosting arrangements that are service contracts with accounting for implementation costs on internal-use software. The standard allows certain implementation costs in specified phases of the project to be capitalized and expensed over the term of the hosting arrangement. We are required to adopt this standard by our fiscal 2021, but the standard permits early adoption in any interim period. We elected to adopt this standard beginning with our second quarter of fiscal 2019. We have not capitalized any costs to date related to the implementation of hosting arrangements, but we anticipate capitalizing costs in the future. We do not expect the capitalization of these costs to have a material impact on our consolidated financial statements and related disclosures. Accounting pronouncements not yet adopted In February 2016, the FASB issued a new accounting standard requiring lessees to record all operating leases on their balance sheet. Under this standard, the lessee is required to record an asset for the right to use the underlying asset for the lease term and a corresponding liability for the contractual lease payments. This standard will be effective beginning with our fiscal 2020. We are currently reviewing our leases and gathering the necessary information to adopt this standard when it becomes effective. We anticipate that adopting this standard will have a material impact on our consolidated balance sheet as we have a significant number of operating leases. In June 2016, the FASB issued a new accounting standard that amends current guidance on other-than-temporary impairments of available-for-sale debt securities. This new standard requires the use of an allowance to record estimated credit losses on these assets when the fair value is below the amortized cost of the asset. This standard also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. We are required to adopt this standard for our fiscal 2021 and apply it through a cumulative-effect adjustment to retained earnings. We do not believe that adoption of this standard will have a material impact on our consolidated financial statements based on the volume of available-for-sale debt securities that we currently hold. In August 2017, the FASB issued a new accounting standard designed to improve and simplify the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. This standard is intended to better align the recognition and presentation of the effects of hedging instruments with the hedged item in the financial statements, and requires additional disclosures on hedging instruments. This standard will be effective for our fiscal 2020. As of January 26, 2019, we do not have any outstanding hedging relationships or instruments that would be affected by this standard. The Tax Cut and Jobs Act of 2017 (the “Tax Act”) required corporations to adjust deferred taxes to reflect the reduction of the corporate income tax rate, leaving items within accumulated other comprehensive income stranded at the historical tax rate. In February 2018, the FASB issued a new accounting standard that allows corporations in their consolidated financial statements to reclassify these stranded income tax effects from accumulated other comprehensive income to retained earnings. This standard will be effective for our fiscal 2020, and companies are permitted to adopt it in any interim period. Companies are to apply the standard either in the period they adopt or retrospectively to each period that was affected by the Tax Act’s change in the federal corporate tax rate. We are still assessing the impact this standard will have on our consolidated financial statements and related disclosures. In August 2018, the FASB issued a new accounting standard that modifies the disclosure requirements for fair value measurements. The standard removes certain disclosures for transfers between levels in the fair value hierarchy and the valuation processes for Level 3 measurements. The standard adds disclosure requirements for unrealized gains/losses included in other comprehensive income related to Level 3 fair value measurements, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This standard will be effective for our fiscal 2021, with early adoption permitted. We do not believe these changes will have a significant impact on our financial statement disclosures. In August 2018, the FASB issued a new accounting standard that modifies the disclosure requirements for defined benefit pension or other postretirement obligations. The standard removes certain disclosures that are no longer considered cost beneficial, clarifies the requirements of certain other disclosures, and adds new disclosure requirements. This standard will be effective for our fiscal 2022, with early adoption permitted. We maintain a defined benefit pension plan for eligible factory hourly employees at our La-Z-Boy operating unit. This plan is closed to new participants, and as of December 31, 2018, active participants no longer continue to earn service credit. We intend to terminate this defined benefit pension plan in the fourth quarter of fiscal 2019 through a combination of lump-sum payments to eligible participants who elect to receive them, and through the purchase of annuity contracts from one or more yet-to-be-identified highly rated insurance companies, as discussed in Note 7. Due to the planned termination of our defined benefit pension plan, we do not believe these accounting standard changes will have a significant impact on our financial statement disclosures, especially given the termination of our defined benefit pension plan which is a large portion of our postretirement disclosures. |
Acquisitions
Acquisitions | 9 Months Ended |
Jan. 26, 2019 | |
Acquisitions | |
Acquisitions | Note 2: Acquisitions Retail segment acquisitions On August 15, 2018 and September 30, 2018, respectively, we acquired the assets of two independent operators of La-Z-Boy Furniture Galleries ® stores: one that operated nine stores and two warehouses in Arizona and one that operated one store in Massachusetts, for an aggregate $42.8 million, including $38.9 million of cash, $2.6 million of forgiveness of accounts receivable, and $1.3 million of guaranteed future payments. We will pay the guaranteed future payments as they are due, with the last payment being completed in the second quarter of fiscal 2022. These acquisitions are an integral part of our ongoing strategy to grow our company-owned retail business and leverage our integrated retail model where we earn a combined profit on both the wholesale and retail sides of the business. Prior to our retail acquisitions, we licensed the exclusive right to own and operate La-Z-Boy Furniture Galleries ® stores (and to use the associated trademarks and trade name) in those markets to the dealers whose assets we acquired, and we reacquired these rights when we purchased the dealers' other assets. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. A Retailer Agreement remains in effect as long as the independent retailer is not in default under the terms of the agreement. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $6.6 million related to these reacquired rights. We also recognized $32.0 million of goodwill in fiscal 2019 related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years. We based the purchase price allocations on fair values at the dates of acquisition, and summarize them in the following table: Second quarter fiscal 2019 (Unaudited, amounts in thousands) acquisitions Fair value of consideration: Cash $ 38,904 Forgiveness of accounts receivable 2,610 Guaranteed future payments 1,300 Total fair value of consideration 42,814 Amounts recognized for identifiable assets acquired and liabilities assumed: Inventory 10,491 Other current assets 4,194 Property, plant and equipment 929 Indefinite-lived reacquired rights 6,600 Other long-term assets 183 Customer deposits (6,515) Other current liabilities (5,055) Total identifiable net assets acquired 10,827 Goodwill $ 31,987 All acquired stores were included in our Retail segment results upon acquisition. Corporate and Other acquisitions On July 30, 2018, we completed our acquisition of Stitch Industries, Inc. ("Joybird"), an e-commerce retailer and manufacturer of upholstered furniture, for guaranteed cash payments of $75 million, which was subject to a working capital adjustment of $2.5 million which we received during the third quarter of fiscal 2019 from amounts placed in escrow at the time of the closing of the transaction. We acquired Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture, to better position us for growth in the online selling environment and increase our visibility with millennial and Gen X consumers, while simultaneously leveraging our supply chain assets. The guaranteed payments include a closing date cash payment of $37.5 million in purchase price consideration, $7.5 million in prepaid compensation, and the assumption of $5.0 million of liabilities that will be paid over the next two years. The remaining $25 million will be paid in annual installments of $5 million over the next five years. The merger agreement also includes two future earn-out opportunities based on Joybird’s financial performance in fiscal 2021 and fiscal 2023. The $7.5 million of prepaid compensation relates to the retention of the four Joybird founders, now our employees, each of whom will forfeit proportional amounts if one or more of them resign in the two years following the acquisition. We are amortizing the $7.5 million to selling, general & administrative expense over the two-year retention period on a straight-line basis. In addition to the guaranteed cash payments of $75 million, we recorded a contingent consideration liability of $7.5 million, which reflects the provisional fair value of the earn-out opportunities as of the date of acquisition, and a finite-lived intangible asset of $6.4 million, which reflects the provisional fair value of the acquired Joybird ® trade name, which we are amortizing to selling, general & administrative expense over its useful life of eight years on a straight-line basis. The undiscounted range of the contingent consideration is zero to $65 million based on sales and profitability of Joybird in fiscal 2021 and fiscal 2023. Subsequent adjustments to the fair value of the contingent consideration will impact selling, general & administrative expense in our consolidated statement of income. We recorded $78.1 million of goodwill related to the Joybird acquisition, related primarily to synergies we expect from the integration of the acquisition and the anticipated future benefits of these synergies. The finite-lived intangible asset and goodwill asset for Joybird are not deductible for federal income tax purposes. When we acquired Joybird during the second quarter of fiscal 2019, we based the purchase price allocations on provisional fair values at the date of acquisition . During the third quarter of fiscal 2019, we obtained additional data and have revised certain of our estimates, resulting in the purchase price allocations shown below: Second quarter fiscal 2019 (Unaudited, amounts in thousands) acquisitions Fair value of consideration: Cash $ 37,482 Guaranteed payment 22,489 Acquisition earn-out 7,500 Assumption of liability 5,000 Working capital adjustment (2,486) Total fair value of consideration 69,985 Amounts recognized for assets acquired and liabilities assumed: Inventory 5,258 Other current assets 3,258 Property, plant and equipment 2,057 Finite-lived tradename 6,400 Other long-term assets 3,175 Accounts payable (8,222) Customer deposits (9,619) Other current liabilities (10,306) Other long-term liabilities (150) Total identifiable net liabilities acquired (8,149) Goodwill $ 78,134 We included the Joybird acquisition in our other business activities which we report as Corporate and Other results upon acquisition. None of the above acquisitions were material to our financial position or our results of operations, and, therefore, pro-forma financial information is not presented. In accordance with Accounting Standard Codification Topic 805-10-25-15, the acquirer has a period of time, referred to as the measurement period, to finalize the accounting for a business combination. The measurement period provides companies with a reasonable period of time to determine, among other things, the identifiable assets acquired, liabilities assumed and consideration transferred for the acquisition, or other amount used in measuring goodwill. All of our provisional purchase accounting estimates shown above for both our Retail acquisitions and our acquisition of Joybird are based on the information and data available to us as of the time of the issuance of these financial statements, and are subject to change within the first 12 months of acquisition as we have access to additional data. |
Restricted Cash
Restricted Cash | 9 Months Ended |
Jan. 26, 2019 | |
Restricted Cash | |
Restricted Cash | Note 3: Restricted Cash We have restricted cash on deposit with a bank as collateral for certain letters of credit. All of our letters of credit have maturity dates within the next twelve months, but we expect to renew some of these letters of credit when they mature. (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 Cash and cash equivalents $ 101,579 $ 135,266 Restricted cash 2,003 2,354 Total cash, cash equivalents and restricted cash $ 103,582 $ 137,620 |
Inventories
Inventories | 9 Months Ended |
Jan. 26, 2019 | |
Inventories | |
Inventories | Note 4: Inventories A summary of inventories is as follows: (Unaudited, amounts in thousands) 1/26/2019 4/28/2018 Raw materials $ 101,949 $ 86,214 Work in process 14,341 12,254 Finished goods 125,731 109,183 FIFO inventories 242,021 207,651 Excess of FIFO over LIFO (22,810) (22,810) Total inventories $ 219,211 $ 184,841 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Jan. 26, 2019 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 5: Goodwill and Other Intangible Assets We have goodwill in our Retail Segment related to our acquisitions of La-Z-Boy Furniture Galleries ® stores. We also have goodwill in our Corporate and Other results related to our acquisition of Joybird. The remainder of our goodwill is related to our previous acquisition of the La-Z-Boy wholesale business in the United Kingdom and Ireland, which we recorded in our Upholstery reportable segment. The following is a roll-forward of goodwill for the nine months ended January 26, 2019: Upholstery Retail Corporate Total (Unaudited, amounts in thousands) Segment Segment and Other Goodwill Balance at April 28, 2018 $ 12,967 $ 62,287 $ — $ 75,254 Acquisitions — 31,987 78,134 110,121 Translation adjustment (549) (109) — (658) Balance at January 26, 2019 $ 12,418 $ 94,165 $ 78,134 $ 184,717 Our intangible assets include the indefinite-lived trade name for American Drew ® , a brand in our Casegoods segment, and the finite-lived trade name for Joybird ® , a brand within Corporate and Other. Indefinite-lived reacquired rights relate to our acquisition of La-Z-Boy Furniture Galleries ® stores, and are recorded in our Retail segment. Other intangible assets are primarily acquired customer relationships from our acquisition of the La-Z-Boy wholesale business in the United Kingdom and Ireland, and are recorded in our Upholstery reportable segment. The following is a roll-forward of our intangible assets for the nine months ended January 26, 2019: Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Unaudited, amounts in thousands) Names Names Rights Assets Assets Balance at April 28, 2018 $ 1,155 $ — $ 13,645 $ 3,390 $ 18,190 Acquisitions — 6,400 6,600 — 13,000 Amortization — (399) — (289) (688) Translation adjustment — — (81) (147) (228) Balance at January 26, 2019 $ 1,155 $ 6,001 $ 20,164 $ 2,954 $ 30,274 |
Investments
Investments | 9 Months Ended |
Jan. 26, 2019 | |
Investments | |
Investments | Note 6: Investments We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan. We also hold other investments consisting of cost-basis preferred shares of two privately-held companies. Our short-term investments are included in other current assets and our long-term investments are included in other long-term assets on our consolidated balance sheet. The following summarizes our investments at January 26, 2019, and April 28, 2018: (Unaudited, amounts in thousands) 1/26/2019 4/28/2018 Short-term investments: Marketable securities $ 14,580 $ 12,926 Held-to-maturity investments 3,384 3,340 Total short-term investments 17,964 16,266 Long-term investments: Marketable securities 27,726 32,134 Cost basis investments 11,979 10,954 Total long-term investments 39,705 43,088 Total investments $ 57,669 $ 59,354 Investments to enhance returns on cash $ 32,229 $ 34,359 Investments to fund compensation/retirement plans $ 13,461 $ 14,041 Other investments $ 11,979 $ 10,954 The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type at January 26, 2019, and April 28, 2018: At January 26, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 1,358 $ (27) $ 18,314 Fixed income 44 (231) 33,702 Other 259 (13) 5,653 Total securities $ 1,661 $ (271) $ 57,669 At April 28, 2018 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 2,142 $ (39) $ 18,765 Fixed income 29 (418) 36,312 Other 72 — 4,277 Total securities $ 2,243 $ (457) $ 59,354 The following table summarizes sales of marketable securities: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Proceeds from sales $ 6,550 $ 5,580 $ 14,304 $ 17,109 Gross realized gains 726 870 811 1,288 Gross realized losses (261) (284) (327) (512) At January 26, 2019, the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity was $14.6 million within one year, $16.9 million within two to five years, $1.4 million within six to ten years, and $0.8 million thereafter. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Jan. 26, 2019 | |
Employee Benefits | |
Employee Benefits | Note 7: Employee Benefits Pension We maintain a defined benefit pension plan for eligible factory hourly employees at our La-Z-Boy operating units. We also maintain a non-qualified defined benefit retirement plan for certain former salaried employees. Net periodic pension costs for these plans were as follows: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Service cost $ 223 $ 328 $ 869 $ 986 Interest cost 1,116 1,147 3,348 3,441 Expected return on plan assets (1,136) (1,204) (3,408) (3,612) Net amortization 639 780 1,917 2,340 Net periodic pension cost $ 842 $ 1,051 $ 2,726 $ 3,155 The components of net periodic pension cost other than the service cost are included in other income (expense), net in our consolidated statement of income. Service cost is recorded in cost of sales in our consolidated statement of income. We intend to terminate our defined benefit pension plan for eligible factory hourly employees in our La-Z-Boy operating unit in the fourth quarter of fiscal 2019. The plan was previously closed to new participants, and as of December 31, 2018, active participants no longer continue to earn service credit. In connection with the termination, we anticipate making $9 - $11 million in additional contributions to the plan using operating cash on-hand. We expect to settle any future obligations under the plan through a combination of lump-sum payments to eligible participants who elect to receive them, and through the purchase of annuity contracts from one or more yet-to-be-identified highly rated insurance companies in the fourth quarter of fiscal 2019. We estimate that we will record an approximate $33 - $38 million total non-cash charge, net of tax, associated with the plan termination during the fourth quarter of fiscal 2019. Employee Vacation Policy Changes We enacted changes to our employee vacation policies that became effective on January 1, 2019. Our new vacation policies enhanced the amount of vacation time earned by our employees. Additionally, under these vacation policies, our salary and office hourly employees now accrue vacation in the current calendar year for use in the current calendar year, and any vacation time earned but not used will be forfeited at the end of each calendar year. These changes reduced our salary and office hourly vacation liability and resulted in a one-time non-cash gain of $5.1 million in our consolidated statement of income in the third quarter of fiscal 2019. Of the total $5.1 million gain recorded, $1.3 million was recorded in cost of sales with the remainder recorded in selling, general, and administrative expense. Our factory hourly vacation policies were only changed to enhance the amount of vacation time earned by our employees, with no change to accrual methodologies, and resulted in $0.3 million incremental expense in the third quarter of fiscal 2019, recorded in cost of sales. |
Product Warranties
Product Warranties | 9 Months Ended |
Jan. 26, 2019 | |
Product Warranties | |
Product Warranties | Note 8: Product Warranties We accrue an estimated liability for product warranties when we recognize revenue on the sale of warranted products. We estimate future warranty claims on new sales based on our historical claims experience and also provide for any additional anticipated future costs on previously sold products. We incorporate repair costs into our liability estimates, including materials, labor and overhead amounts necessary to perform repairs and any costs associated with delivering repaired product to our customers. Over 80% of our warranty liability relates to our Upholstery reportable segment as we generally warrant our products against defects for one year on fabric and leather, from one to ten years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames. Our Upholstery segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty against defects on a majority of the products sold by Joybird, part of our Corporate and Other results. For all our manufacturer warranties, the warranty period begins when the consumer receives our product. We use considerable judgment in making our estimates, and we record differences between our actual and estimated costs when the differences are known. A reconciliation of the changes in our product warranty liability is as follows: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Balance as of the beginning of the period $ 25,197 $ 21,606 $ 21,205 $ 21,870 Acquisitions — — 4,100 — Accruals during the period 5,660 4,654 16,270 14,155 Settlements during the period (5,560) (4,954) (16,278) (14,719) Balance as of the end of the period $ 25,297 $ 21,306 $ 25,297 $ 21,306 As of January 26, 2019, and April 28, 2018, we included $16.7 million and $12.7 million, respectively, of our product warranty liability in accrued expenses and other current liabilities on our consolidated balance sheet, and included the remainder in other long-term liabilities. We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties issued during the respective periods. The acquired warranty liability reflects our provisional estimate of the acquired warranty liabilities of Joybird on the acquisition date. See Note 2 for further information on our acquisition of Joybird. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Jan. 26, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 9: Stock-Based Compensation The table below summarizes the total stock-based compensation expense we recognized for all outstanding grants in our consolidated statement of income: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Equity-based awards expense $ 2,495 $ 1,519 $ 8,174 $ 7,929 Liability-based awards expense 144 386 10 694 Total stock-based compensation expense $ 2,639 $ 1,905 $ 8,184 $ 8,623 Stock Options. We granted 423,273 stock options to employees during the first quarter of fiscal 2019, and we have stock options outstanding from previous grants. We account for stock options as equity-based awards because when they are exercised, they will be settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value on the date our compensation committee approved the awards. The vesting period for our stock options ranges from one to four years, with accelerated vesting upon retirement. The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or the end of the fiscal year in which the grant was made. We accelerate the expense for options granted to retirement-eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We estimate forfeiture rates based on our employees’ forfeiture history and believe they will approximate future results. We estimate the fair value of the employee stock options at the date of grant using the Black-Scholes option-pricing model, which requires management to make certain assumptions. We estimate expected volatility based on the historical volatility of our common shares. We base the average expected life on the contractual term of the stock option and expected employee exercise trends. We base the risk-free rate on U.S. Treasury issues with a term equal to the expected life assumed at the date of the grant. We calculated the fair value of stock options granted during the first quarter of fiscal 2019 using the following assumptions: Fiscal 2019 (Unaudited) grant Risk-free interest rate 2.82 % Dividend rate 1.45 % Expected life in years 5.00 Stock price volatility 33.07 % Fair value per share $ 9.65 Stock Appreciation Rights (“SARs”). We have not granted any SARs to employees since fiscal 2014, but we have SARs outstanding from the fiscal 2013 and fiscal 2014 grants. All outstanding SARs are fully vested and have a term of ten years. SARs will be paid in cash upon exercise and, accordingly, we account for SARs as liability-based awards that we re-measure to fair value at the end of each reporting period. In fiscal 2013 and fiscal 2014, we granted SARs as described in our Annual Report on Form 10-K for the fiscal year ended April 27, 2013, and April 26, 2014, respectively. As of January 26, 2019, we had 7,149 and 17,918 SARs outstanding for the fiscal 2013 and fiscal 2014 awards, respectively. These awards have exceeded their expected life and are being re-measured to fair value based on their intrinsic value, which is the market value of our common stock on the last day of the reporting period less the exercise price, until the earlier of the exercise date or the contractual term date. At January 26, 2019, the intrinsic value per share of the fiscal 2013 and fiscal 2014 awards were $17.03 and $9.94, respectively. Restricted Stock . We granted 109,426 shares of restricted stock to employees during the first nine months of fiscal 2019. We also have shares of restricted stock outstanding from previous grants. We issue restricted stock at no cost to the employees, and the shares are held in an escrow account until the vesting period ends. If a recipient’s employment ends during the escrow period (other than through death or disability), the shares are returned at no cost to the company. We account for restricted stock awards as equity-based awards because when they vest, they will be settled in common shares. The weighted-average fair value of the restricted stock awarded in the first nine months of fiscal 2019 was $32.78 per share, the market value of our common shares on the date of grant. We estimate forfeiture rates based on our employees' forfeiture history and believe they will approximate future results. We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the grant date of the award. Restricted stock awards vest at 25% per year, beginning one year from the grant date over a term of four years. Restricted Stock Units . During the second quarter of fiscal 2019, we granted 21,240 restricted stock units to our non-employee directors. Each director’s restricted stock units vest when he or she leaves the board. We account for these restricted stock units as equity-based awards because when they vest, they will be settled in shares of our common stock. We measure and recognize compensation expense for these awards based on the market price of our common shares on the date of grant, which was $33.15. Performance Shares. During the first quarter of fiscal 2019, we granted 146,107 performance-based shares. We also have performance-based share awards outstanding from previous grants. Payout of these grants depends on our financial performance (80%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other public companies (20%). The performance share opportunity ranges from 50% of the employee’s target award if minimum performance requirements are met to a maximum of 200% of the target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which is generally three fiscal years. We account for performance-based shares as equity-based awards because when they vest, they will be settled in common shares. We estimate forfeiture rates based on our employees' forfeiture history and believe they will approximate future results. For shares that vest based on our results relative to the performance goals, we expense as compensation cost the fair value of the shares as of the day we granted the awards recognized over the performance period, taking into account the probability that we will satisfy the performance goals. The fair value of each share of the awards we granted in fiscal 2019 that vest based on attaining performance goals was $31.71, the market value of our common shares on the date we granted the awards less the dividends we expect to pay before the shares vest. For shares that vest based on market conditions, we use a Monte Carlo valuation model to estimate each share’s fair value as of the date of grant. The Monte Carlo valuation model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine our expected performance ranking relative to our peer group. Similar to the way in which we expense awards of stock options, we expense compensation cost, net of estimated forfeitures, over the vesting period regardless of whether the market condition is ultimately satisfied. Based on the Monte Carlo model, the fair value as of the grant date of the fiscal 2019 grant of shares that vest based on market conditions was $46.39. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Jan. 26, 2019 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | Note 10: Accumulated Other Comprehensive Loss The activity in accumulated other comprehensive loss for the quarter ended January 26, 2019, and January 27, 2018, is as follows: Change in fair value Unrealized Net pension Accumulated of cash gain on amortization other Translation flow marketable and net comprehensive (Unaudited, amounts in thousands) adjustment hedge securities actuarial loss loss Balance at October 27, 2018 $ (24) $ (24) $ (197) $ (28,084) $ (28,329) Changes before reclassifications — 72 — 1,385 Amounts reclassified to net income — 93 48 687 315 Tax effect — (23) (30) (172) (225) Other comprehensive income attributable to La-Z- Boy Incorporated 800 70 90 515 1,475 Balance at January 26, 2019 $ 776 $ 46 $ (107) $ (27,569) $ (26,854) Change in fair value Unrealized Net pension Accumulated of cash gain on amortization other Translation flow marketable and net comprehensive (Unaudited, amounts in thousands) adjustment hedge securities actuarial loss loss Balance at October 28, 2017 $ 737 $ (189) $ 1,689 $ (32,748) $ (30,511) Changes before reclassifications 2,896 495 671 — 4,062 Amounts reclassified to net income — 22 (585) 835 272 Tax effect — (72) 23 (283) (332) Other comprehensive income attributable to La-Z- Boy Incorporated 2,896 445 109 552 4,002 Balance at January 27, 2018 $ 3,633 $ 256 $ 1,798 $ (32,196) $ (26,509) The activity in accumulated other comprehensive loss for the nine months ended January 26, 2019, and January 27, 2018, is as follows: Unrealized Change in gain (loss) Net pension Accumulated fair value on amortization other Translation of cash marketable and net comprehensive (Unaudited, amounts in thousands) adjustment flow hedge securities actuarial loss loss Balance at April 28, 2018 $ 2,388 $ 154 $ 1,376 $ (29,117) $ (25,199) Changes before reclassifications (1,612) (369) 175 — (1,293) Cumulative effect adjustment for investments (1) — — (1,637) — (1,637) Amounts reclassified to net income — 225 29 2,059 1,800 Tax effect — 36 (50) (511) (525) Other comprehensive income (loss) attributable to La-Z-Boy Incorporated (1,612) (108) (1,483) 1,548 (1,655) Balance at January 26, 2019 $ 776 $ 46 $ (107) $ (27,569) $ (26,854) (1) The cumulative effect adjustment for investments is composed of $2.1 million of unrealized gains on equity investments offset by $0.5 million of tax expense. We reclassified the net $1.6 million of cumulative effect adjustment from accumulated other comprehensive loss to retained earnings as a result of adopting Accounting Standards Update 2016-01 (see Note 1 for further information). Change in Net pension fair value Unrealized amortization Accumulated of cash gain on and net other Translation flow marketable actuarial comprehensive (Unaudited, amounts in thousands) adjustment hedge securities loss loss Balance at April 29, 2017 $ (927) $ 74 $ 1,752 $ (33,782) $ (32,883) Changes before reclassifications 4,560 256 1,409 — 6,225 Amounts reclassified to net income — (164) (1,425) 2,506 917 Tax effect — 90 62 (920) (768) Other comprehensive income attributable to La-Z-Boy Incorporated 4,560 182 46 1,586 6,374 Balance at January 27, 2018 $ 3,633 $ 256 $ 1,798 $ (32,196) $ (26,509) We reclassified the unrealized gain/(loss) on marketable securities from accumulated other comprehensive loss to net income through other income (expense), net in our consolidated statement of income, reclassified the change in fair value of cash flow hedges to net income through cost of sales, and reclassified the net pension amortization to net income through other income (expense), net. The components of non-controlling interest for the quarter and nine months ended January 26, 2019, and January 27, 2018, were as follows: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Balance as of the beginning of the period $ 13,411 $ 12,094 $ 13,035 $ 11,186 Net income 443 176 1,428 579 Other comprehensive income 669 689 60 1,194 Balance as of the end of the period $ 14,523 $ 12,959 $ 14,523 $ 12,959 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Jan. 26, 2019 | |
Revenue Recognition | |
Revenue Recognition | Note 11: Revenue Recognition We implemented Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606, “ASC 606”), in the first quarter of fiscal 2019 using the modified-retrospective approach, which required us to apply the new guidance retrospectively to revenue transactions completed on or after the effective date. Adopting this new standard did not have a material impact on our consolidated financial statements except for our enhanced presentation and disclosures. As of the beginning of our fiscal 2019, we had identified and implemented all changes required by the new standard, including those related to our accounting policies, controls, and disclosures. Our revenue is primarily derived from product sales. We report product sales net of discounts and recognize them when control (rights and obligations associated with the product) passes to the customer. For sales to furniture retailers or distributors, control typically transfers when we ship product. In cases where we sell directly to the end consumer, control of the product is generally transferred upon delivery. For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time we recognize revenue in accordance with this election. For sales tax, we elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes. The following table disaggregates our revenue by product category by segment for the quarter ended January 26, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 212,631 $ — $ 100,232 $ — $ 312,863 Stationary Upholstery Furniture 94,551 3,844 27,652 24,096 150,143 Bedroom Furniture — 7,447 1,586 1,296 10,329 Dining Room Furniture — 5,733 3,097 610 9,440 Occasional Furniture 391 12,292 5,959 338 18,980 Other (a) 26,875 (1,251) 20,891 (3,491) 43,024 Total $ 334,448 $ 28,065 $ 159,417 $ 22,849 544,779 Eliminations (77,197) Consolidated Net Sales $ 467,582 (a) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, tariff surcharges, discounts & allowances, rebates and other sales incentives The following table disaggregates our revenue by product category by segment for the nine months ended January 26, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 602,458 $ — $ 260,924 $ — $ 863,382 Stationary Upholstery Furniture 272,087 12,215 76,517 47,791 408,610 Bedroom Furniture — 24,045 3,891 3,756 31,692 Dining Room Furniture — 18,068 7,293 1,429 26,790 Occasional Furniture 1,202 38,003 15,000 828 55,033 Other (b) 69,192 (4,503) 54,706 (4,712) 114,683 Total $ 944,939 $ 87,828 $ 418,331 $ 49,092 1,500,190 Eliminations (208,580) Consolidated Net Sales $ 1,291,610 (b) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, tariff surcharges, discounts & allowances, rebates and other sales incentives Motion Upholstery Furniture - Includes gross revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals and modulars that have a mechanism that allows the back of the product to recline or the product's footrest to extend. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio ® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer. Stationary Upholstery Furniture - Includes gross revenue for upholstered furniture, such as sofas, loveseats, chairs, sectionals, modulars, and ottomans that do not have a mechanism. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio ® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer. Bedroom Furniture - Includes gross revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers, nightstands and benches. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Dining Room Furniture - Includes gross revenue for casegoods furniture typically found in a dining room, such as dining tables, dining chairs, storage units and stools. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Occasional Furniture - Includes gross revenue for casegoods furniture found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment centers. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Our consolidated balance sheet includes current assets of $19.5 million that we reported as other receivables. These other receivables represent the remaining consideration to which we are entitled prior to fulfilling our performance obligation. At the beginning of fiscal 2019, we had $12.1 million of other receivables. We receive deposits from end consumers before we recognize revenue, resulting in customer deposits, and in some cases we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance obligation, resulting in deferred revenue (collectively, the “contract liabilities”). At the beginning of fiscal 2019, we had $31.3 million of customer deposits and $12.1 million of deferred revenues. At January 26, 2019, we included $47.2 million of customer deposits and $19.5 million of deferred revenues in accrued expenses and other current liabilities on our consolidated balance sheet. During the nine months ended January 26, 2019, we recognized $41.5 million of revenue that was recorded as a contract liability at the beginning of fiscal 2019. There was no revenue recognized for the quarter ended January 26, 2019, related to the contract liability at the beginning of fiscal 2019 because virtually all open orders from this period had been delivered prior to the third quarter of fiscal 2019. We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration. |
Segment Information
Segment Information | 9 Months Ended |
Jan. 26, 2019 | |
Segment Information | |
Segment Information | Note 12: Segment Information Our reportable operating segments are the Upholstery segment, the Casegoods segment and the Retail segment. Upholstery Segment . Our Upholstery reportable segment is our largest business segment and consists primarily of two operating segments: La-Z-Boy, our largest operating segment, and the operating segment for our England subsidiary. The Upholstery segment also includes our international wholesale businesses. We aggregate these operating segments into one reportable segment because they are economically similar and because they meet the other aggregation criteria for determining reportable segments. Our Upholstery segment manufactures and imports upholstered furniture such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas. The Upholstery segment sells directly to La-Z-Boy Furniture Galleries ® stores, operators of La-Z-Boy Comfort Studio ® locations and England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers. Casegoods Segment . Our Casegoods segment consists of one operating segment that sells furniture under three brands: American Drew ® , Hammary ® , and Kincaid ® . The Casegoods segment is an importer, marketer, and distributor of casegoods (wood) furniture such as bedroom sets, dining room sets, entertainment centers and occasional pieces, and also manufactures some coordinated upholstered furniture. The Casegoods segment sells directly to major dealers, as well as La-Z-Boy Furniture Galleries ® stores, and a wide cross-section of other independent retailers. Retail Segment . Our Retail segment consists of one operating segment comprised of our 155 company-owned La-Z-Boy Furniture Galleries ® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other accessories, to end consumers through these stores. Corporate & Other . Corporate & Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture such as occasional tables and other accessories. Joybird sells to the end consumer exclusively online through its website, www.joybird.com. None of the operating segments included in Corporate & Other meet the requirements of reportable segments. Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Sales Upholstery segment: Sales to external customers $ 265,487 $ 262,874 $ 759,569 $ 739,429 Intersegment sales 68,961 58,084 185,370 160,697 Upholstery segment sales 334,448 320,958 944,939 900,126 Casegoods segment: Sales to external customers 23,129 23,887 73,774 68,821 Intersegment sales 4,936 3,328 14,054 11,969 Casegoods segment sales 28,065 27,215 87,828 80,790 Retail segment sales 159,417 125,815 418,331 353,068 Corporate and Other: Sales to external customers 19,549 1,062 39,936 2,604 Intersegment sales 3,300 2,818 9,156 6,839 Corporate and Other sales 22,849 3,880 49,092 9,443 Eliminations (77,197) (64,230) (208,580) (179,505) Consolidated sales $ 467,582 $ 413,638 $ 1,291,610 $ 1,163,922 Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Operating Income (Loss) Upholstery segment $ 34,566 $ 31,699 $ 90,602 $ 88,422 Casegoods segment 3,332 2,792 10,173 8,833 Retail segment 14,158 7,076 25,179 12,746 Corporate and Other (11,213) (8,472) (33,451) (26,339) Consolidated operating income 40,843 33,095 92,503 83,662 Interest expense (538) (113) (1,143) (430) Interest income 540 444 1,534 1,163 Other income (expense), net (941) (1,094) (2,046) (271) Income before income taxes $ 39,904 $ 32,332 $ 90,848 $ 84,124 |
Income Taxes
Income Taxes | 9 Months Ended |
Jan. 26, 2019 | |
Income Taxes | |
Income Taxes | Note 13: Income Taxes Our effective tax rate was 26.9% for the third quarter and 24.6% for the first nine months of fiscal 2019, as compared with 62.0% and 43.9% in the third quarter and first nine months of fiscal 2018, respectively. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes. Absent discrete adjustments, our effective tax rate in the third quarter and first nine months of fiscal 2019 would have been 26.7% and 25.6%, respectively. Our fiscal 2018 effective tax rate was higher primarily due to the phasing in of the lower corporate income tax rate resulting in a blended federal rate of 30.4%, as compared to 21% for fiscal 2019, and the revaluation of deferred taxes at the lower corporate income tax rate in fiscal 2018. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. Most of its provisions are effective for tax years beginning on or after January 1, 2018. Because we are a fiscal year U.S. taxpayer, the majority of the provisions, such as elimination of the domestic manufacturing deduction, new taxes on certain foreign-sourced income and new limitations on certain business deductions, began applying to us in fiscal 2019. In December of 2017, the SEC staff issued SAB 118, which provides that companies that have not completed their accounting for the effects of the Tax Act but can determine a reasonable estimate of those effects should include in their financial statements a provisional amount based on their reasonable estimate. The guidance in SAB 118 also allows companies to adjust the provisional amounts during a one year measurement period similar to the measurement period used when accounting for business combinations. During the third quarter of fiscal 2019, we finalized the provisional estimates of $0.2 million we previously recorded as of the prior year end related to the transition tax, with no material change. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Jan. 26, 2019 | |
Earnings per Share | |
Earnings per Share | Note 14: Earnings per Share Certain share-based compensation awards that entitle their holders to receive non-forfeitable dividends prior to vesting are considered participating securities. Prior to fiscal 2019, we granted restricted stock awards that contained non-forfeitable rights to dividends on unvested shares, and we are required to include these participating securities in calculating our basic earnings per common share, using the two-class method. The restricted stock awards we granted in fiscal 2019 do not have non-forfeitable rights to dividends and therefore are not considered participating securities. The dividends on the restricted stock awards granted in fiscal 2019 are and will continue to be held in escrow until the stock awards vest at which time we will pay any accumulated dividends. The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings per share: Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Numerator (basic and diluted): Net income attributable to La-Z-Boy Incorporated $ 28,731 $ 12,109 $ 67,046 $ 46,656 Income allocated to participating securities (92) (62) (231) (234) Net income available to common shareholders $ 28,639 $ 12,047 $ 66,815 $ 46,422 Denominator: Basic weighted average common shares outstanding 46,820 47,234 46,808 47,852 Add: Contingent common shares 131 178 135 176 Stock option dilution 140 345 269 297 Diluted weighted average common shares outstanding 47,091 47,757 47,212 48,325 The values for contingent common shares set forth above reflect the dilutive effect of common shares that we would have issued to employees under the terms of performance-based share awards if the relevant performance period for the award had been the reporting period. We had outstanding options to purchase 0.4 million shares for the quarter and nine months ended January 26, 2019, with a weighted average exercise price of $33.15. We excluded the effect of these options from our diluted share calculation since the weighted average exercise price of the options was higher than the average market price and including the options’ effect would have been anti-dilutive. We did not exclude any outstanding options from the diluted share calculation for the quarter and nine months ended January 27, 2018. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jan. 26, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 15: Fair Value Measurements Accounting standards require that we put financial assets and liabilities into one of three categories based on the inputs we use to value them: · Level 1 — Financial assets and liabilities the values of which are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access. · Level 2 — Financial assets and liabilities the values of which are based on quoted prices in markets that are not active or on model inputs that are observable for substantially the full term of the asset or liability. · Level 3 — Financial assets and liabilities the values of which are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Accounting standards require that in making fair value measurements, we use observable market data when available. When inputs used to measure fair value fall within different levels of the hierarchy, we categorize the fair value measurement as being in the lowest level that is significant to the measurement. We recognize transfers between levels of the fair value hierarchy at the end of the reporting period in which they occur. In addition to assets and liabilities that we record at fair value on a recurring basis, we are required to record assets and liabilities at fair value on a non-recurring basis. We measure non-financial assets such as other intangible assets, goodwill, and other long-lived assets at fair value when there is an indicator of impairment, and we record them at fair value only when we recognize an impairment loss. The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at January 26, 2019, and April 28, 2018. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented. At January 26, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 163 $ 34,852 $ — Held-to-maturity investments 3,384 — — Cost basis investments — — 11,979 Total assets $ 3,547 $ 34,852 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,500 At April 28, 2018 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 1,141 $ 37,173 $ — Held-to-maturity investments 3,340 — — Cost basis investment — — 10,954 Total assets $ 4,481 $ 37,173 $ 10,954 Liabilities Contingent consideration liability $ — $ — $ 344 At January 26, 2019, and April 28, 2018, we held marketable securities intended to enhance returns on our cash and to fund future obligations of our non-qualified defined benefit retirement plan, as well as marketable securities to fund future obligations of our executive deferred compensation plan and our performance compensation retirement plan. We also held other fixed income and cost basis investments. The fair value measurements for our Level 1 and Level 2 securities are based on quoted prices in active markets, as well as through broker quotes and independent valuation providers, multiplied by the number of shares owned exclusive of any transaction costs. At January 26, 2019, our Level 3 investments included preferred shares of two privately-held companies, and a warrant to purchase common shares of one of these privately-held companies. The fair value for our Level 3 investments is not readily available so we estimate the fair value as costs minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments with the same issuer. Our Level 3 liability includes our contingent consideration liabilities on recent acquisitions. We estimated the provisional fair value of the $7.5 million contingent consideration liability for the acquisition of Joybird (see Note 2 for more information). The fair value of contingent consideration is based on future revenues and earnings in fiscal 2021 and fiscal 2023. The fair value was determined using a variation of the income approach, known as the real options method, whereby revenue and earnings were simulated over the earn-out periods in a risk-neutral framework using Geometric Brownian Motion. For each simulation path, the potential earn-out payments were calculated based on management’s probability estimates for achievement of the revenue and earnings milestones and then were discounted to the valuation date using a discount rate of 4.7% for the fiscal 2021 milestone and 5.1% for the fiscal 2023 milestone. We estimated the fair value of the remainder of our Level 3 contingent consideration liabilities using the present value of the probability-weighted future cash flows. The following table is a reconciliation of our Level 3 assets and liabilities recorded at fair value using significant unobservable inputs: (Unaudited, amounts in thousands) Level 3 Assets Balance at April 28, 2018 $ 10,954 Purchases 1,025 Balance at January 26, 2019 $ 11,979 Liabilities Balance at April 28, 2018 $ 344 Acquisitions 7,500 Write-off (326) Translation adjustment (18) Balance at January 26, 2019 $ 7,500 Our asset leveling presented above does not include certain marketable securities investments that are measured at fair value using net asset value per share under the practical expedient methodology. These investments are still included in the total fair value column of the table in our investment footnote (see Note 6). The fair value of the investments measured using net asset value at January 26, 2019, and April 28, 2018, was $7.3 million and $6.7 million, respectively. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Independent dealer assets acquired in fiscal 2019 | |
Summary of fair values at the dates of acquisition | Second quarter fiscal 2019 (Unaudited, amounts in thousands) acquisitions Fair value of consideration: Cash $ 38,904 Forgiveness of accounts receivable 2,610 Guaranteed future payments 1,300 Total fair value of consideration 42,814 Amounts recognized for identifiable assets acquired and liabilities assumed: Inventory 10,491 Other current assets 4,194 Property, plant and equipment 929 Indefinite-lived reacquired rights 6,600 Other long-term assets 183 Customer deposits (6,515) Other current liabilities (5,055) Total identifiable net assets acquired 10,827 Goodwill $ 31,987 |
Joybird | |
Summary of fair values at the dates of acquisition | Second quarter fiscal 2019 (Unaudited, amounts in thousands) acquisitions Fair value of consideration: Cash $ 37,482 Guaranteed payment 22,489 Acquisition earn-out 7,500 Assumption of liability 5,000 Working capital adjustment (2,486) Total fair value of consideration 69,985 Amounts recognized for assets acquired and liabilities assumed: Inventory 5,258 Other current assets 3,258 Property, plant and equipment 2,057 Finite-lived tradename 6,400 Other long-term assets 3,175 Accounts payable (8,222) Customer deposits (9,619) Other current liabilities (10,306) Other long-term liabilities (150) Total identifiable net liabilities acquired (8,149) Goodwill $ 78,134 |
Restricted Cash (Tables)
Restricted Cash (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Restricted Cash | |
Schedule of cash, cash equivalents and restricted cash | (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 Cash and cash equivalents $ 101,579 $ 135,266 Restricted cash 2,003 2,354 Total cash, cash equivalents and restricted cash $ 103,582 $ 137,620 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Inventories | |
Summary of inventories | (Unaudited, amounts in thousands) 1/26/2019 4/28/2018 Raw materials $ 101,949 $ 86,214 Work in process 14,341 12,254 Finished goods 125,731 109,183 FIFO inventories 242,021 207,651 Excess of FIFO over LIFO (22,810) (22,810) Total inventories $ 219,211 $ 184,841 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Goodwill and Other Intangible Assets | |
Roll-forward of goodwill | Upholstery Retail Corporate Total (Unaudited, amounts in thousands) Segment Segment and Other Goodwill Balance at April 28, 2018 $ 12,967 $ 62,287 $ — $ 75,254 Acquisitions — 31,987 78,134 110,121 Translation adjustment (549) (109) — (658) Balance at January 26, 2019 $ 12,418 $ 94,165 $ 78,134 $ 184,717 |
Roll-forward of other intangible assets - Indefinite-lived | Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Unaudited, amounts in thousands) Names Names Rights Assets Assets Balance at April 28, 2018 $ 1,155 $ — $ 13,645 $ 3,390 $ 18,190 Acquisitions — 6,400 6,600 — 13,000 Amortization — (399) — (289) (688) Translation adjustment — — (81) (147) (228) Balance at January 26, 2019 $ 1,155 $ 6,001 $ 20,164 $ 2,954 $ 30,274 |
Roll-forward of other intangible assets - Amortizable | Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Unaudited, amounts in thousands) Names Names Rights Assets Assets Balance at April 28, 2018 $ 1,155 $ — $ 13,645 $ 3,390 $ 18,190 Acquisitions — 6,400 6,600 — 13,000 Amortization — (399) — (289) (688) Translation adjustment — — (81) (147) (228) Balance at January 26, 2019 $ 1,155 $ 6,001 $ 20,164 $ 2,954 $ 30,274 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Investments | |
Summary of investments | (Unaudited, amounts in thousands) 1/26/2019 4/28/2018 Short-term investments: Marketable securities $ 14,580 $ 12,926 Held-to-maturity investments 3,384 3,340 Total short-term investments 17,964 16,266 Long-term investments: Marketable securities 27,726 32,134 Cost basis investments 11,979 10,954 Total long-term investments 39,705 43,088 Total investments $ 57,669 $ 59,354 Investments to enhance returns on cash $ 32,229 $ 34,359 Investments to fund compensation/retirement plans $ 13,461 $ 14,041 Other investments $ 11,979 $ 10,954 |
Summary of unrealized gains, unrealized losses, and fair value by investment type | At January 26, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 1,358 $ (27) $ 18,314 Fixed income 44 (231) 33,702 Other 259 (13) 5,653 Total securities $ 1,661 $ (271) $ 57,669 At April 28, 2018 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 2,142 $ (39) $ 18,765 Fixed income 29 (418) 36,312 Other 72 — 4,277 Total securities $ 2,243 $ (457) $ 59,354 |
Summary of sales of marketable securities | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Proceeds from sales $ 6,550 $ 5,580 $ 14,304 $ 17,109 Gross realized gains 726 870 811 1,288 Gross realized losses (261) (284) (327) (512) |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Employee Benefits | |
Schedule of net periodic pension costs | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Service cost $ 223 $ 328 $ 869 $ 986 Interest cost 1,116 1,147 3,348 3,441 Expected return on plan assets (1,136) (1,204) (3,408) (3,612) Net amortization 639 780 1,917 2,340 Net periodic pension cost $ 842 $ 1,051 $ 2,726 $ 3,155 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Product Warranties | |
Reconciliation of changes in product warranty liability | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Balance as of the beginning of the period $ 25,197 $ 21,606 $ 21,205 $ 21,870 Acquisitions — — 4,100 — Accruals during the period 5,660 4,654 16,270 14,155 Settlements during the period (5,560) (4,954) (16,278) (14,719) Balance as of the end of the period $ 25,297 $ 21,306 $ 25,297 $ 21,306 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Stock-Based Compensation | |
Summary of total stock-based compensation expense | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Equity-based awards expense $ 2,495 $ 1,519 $ 8,174 $ 7,929 Liability-based awards expense 144 386 10 694 Total stock-based compensation expense $ 2,639 $ 1,905 $ 8,184 $ 8,623 |
Fair value assumptions for stock options | Fiscal 2019 (Unaudited) grant Risk-free interest rate 2.82 % Dividend rate 1.45 % Expected life in years 5.00 Stock price volatility 33.07 % Fair value per share $ 9.65 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Accumulated Other Comprehensive Loss | |
Activity in accumulated other comprehensive loss | The activity in accumulated other comprehensive loss for the quarter ended January 26, 2019, and January 27, 2018, is as follows: Change in fair value Unrealized Net pension Accumulated of cash gain on amortization other Translation flow marketable and net comprehensive (Unaudited, amounts in thousands) adjustment hedge securities actuarial loss loss Balance at October 27, 2018 $ (24) $ (24) $ (197) $ (28,084) $ (28,329) Changes before reclassifications — 72 — 1,385 Amounts reclassified to net income — 93 48 687 315 Tax effect — (23) (30) (172) (225) Other comprehensive income attributable to La-Z- Boy Incorporated 800 70 90 515 1,475 Balance at January 26, 2019 $ 776 $ 46 $ (107) $ (27,569) $ (26,854) Change in fair value Unrealized Net pension Accumulated of cash gain on amortization other Translation flow marketable and net comprehensive (Unaudited, amounts in thousands) adjustment hedge securities actuarial loss loss Balance at October 28, 2017 $ 737 $ (189) $ 1,689 $ (32,748) $ (30,511) Changes before reclassifications 2,896 495 671 — 4,062 Amounts reclassified to net income — 22 (585) 835 272 Tax effect — (72) 23 (283) (332) Other comprehensive income attributable to La-Z- Boy Incorporated 2,896 445 109 552 4,002 Balance at January 27, 2018 $ 3,633 $ 256 $ 1,798 $ (32,196) $ (26,509) The activity in accumulated other comprehensive loss for the nine months ended January 26, 2019, and January 27, 2018, is as follows: Unrealized Change in gain (loss) Net pension Accumulated fair value on amortization other Translation of cash marketable and net comprehensive (Unaudited, amounts in thousands) adjustment flow hedge securities actuarial loss loss Balance at April 28, 2018 $ 2,388 $ 154 $ 1,376 $ (29,117) $ (25,199) Changes before reclassifications (1,612) (369) 175 — (1,293) Cumulative effect adjustment for investments (1) — — (1,637) — (1,637) Amounts reclassified to net income — 225 29 2,059 1,800 Tax effect — 36 (50) (511) (525) Other comprehensive income (loss) attributable to La-Z-Boy Incorporated (1,612) (108) (1,483) 1,548 (1,655) Balance at January 26, 2019 $ 776 $ 46 $ (107) $ (27,569) $ (26,854) (1) The cumulative effect adjustment for investments is composed of $2.1 million of unrealized gains on equity investments offset by $0.5 million of tax expense. We reclassified the net $1.6 million of cumulative effect adjustment from accumulated other comprehensive loss to retained earnings as a result of adopting Accounting Standards Update 2016-01 (see Note 1 for further information). Change in Net pension fair value Unrealized amortization Accumulated of cash gain on and net other Translation flow marketable actuarial comprehensive (Unaudited, amounts in thousands) adjustment hedge securities loss loss Balance at April 29, 2017 $ (927) $ 74 $ 1,752 $ (33,782) $ (32,883) Changes before reclassifications 4,560 256 1,409 — 6,225 Amounts reclassified to net income — (164) (1,425) 2,506 917 Tax effect — 90 62 (920) (768) Other comprehensive income attributable to La-Z-Boy Incorporated 4,560 182 46 1,586 6,374 Balance at January 27, 2018 $ 3,633 $ 256 $ 1,798 $ (32,196) $ (26,509) |
Components of non-controlling interest | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Balance as of the beginning of the period $ 13,411 $ 12,094 $ 13,035 $ 11,186 Net income 443 176 1,428 579 Other comprehensive income 669 689 60 1,194 Balance as of the end of the period $ 14,523 $ 12,959 $ 14,523 $ 12,959 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Revenue Recognition | |
Schedule of disaggregation of revenue by product category by segment | The following table disaggregates our revenue by product category by segment for the quarter ended January 26, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 212,631 $ — $ 100,232 $ — $ 312,863 Stationary Upholstery Furniture 94,551 3,844 27,652 24,096 150,143 Bedroom Furniture — 7,447 1,586 1,296 10,329 Dining Room Furniture — 5,733 3,097 610 9,440 Occasional Furniture 391 12,292 5,959 338 18,980 Other (a) 26,875 (1,251) 20,891 (3,491) 43,024 Total $ 334,448 $ 28,065 $ 159,417 $ 22,849 544,779 Eliminations (77,197) Consolidated Net Sales $ 467,582 (a) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, tariff surcharges, discounts & allowances, rebates and other sales incentives The following table disaggregates our revenue by product category by segment for the nine months ended January 26, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 602,458 $ — $ 260,924 $ — $ 863,382 Stationary Upholstery Furniture 272,087 12,215 76,517 47,791 408,610 Bedroom Furniture — 24,045 3,891 3,756 31,692 Dining Room Furniture — 18,068 7,293 1,429 26,790 Occasional Furniture 1,202 38,003 15,000 828 55,033 Other (b) 69,192 (4,503) 54,706 (4,712) 114,683 Total $ 944,939 $ 87,828 $ 418,331 $ 49,092 1,500,190 Eliminations (208,580) Consolidated Net Sales $ 1,291,610 (b) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, tariff surcharges, discounts & allowances, rebates and other sales incentives |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Segment Information | |
Schedule of segment information | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Sales Upholstery segment: Sales to external customers $ 265,487 $ 262,874 $ 759,569 $ 739,429 Intersegment sales 68,961 58,084 185,370 160,697 Upholstery segment sales 334,448 320,958 944,939 900,126 Casegoods segment: Sales to external customers 23,129 23,887 73,774 68,821 Intersegment sales 4,936 3,328 14,054 11,969 Casegoods segment sales 28,065 27,215 87,828 80,790 Retail segment sales 159,417 125,815 418,331 353,068 Corporate and Other: Sales to external customers 19,549 1,062 39,936 2,604 Intersegment sales 3,300 2,818 9,156 6,839 Corporate and Other sales 22,849 3,880 49,092 9,443 Eliminations (77,197) (64,230) (208,580) (179,505) Consolidated sales $ 467,582 $ 413,638 $ 1,291,610 $ 1,163,922 Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Operating Income (Loss) Upholstery segment $ 34,566 $ 31,699 $ 90,602 $ 88,422 Casegoods segment 3,332 2,792 10,173 8,833 Retail segment 14,158 7,076 25,179 12,746 Corporate and Other (11,213) (8,472) (33,451) (26,339) Consolidated operating income 40,843 33,095 92,503 83,662 Interest expense (538) (113) (1,143) (430) Interest income 540 444 1,534 1,163 Other income (expense), net (941) (1,094) (2,046) (271) Income before income taxes $ 39,904 $ 32,332 $ 90,848 $ 84,124 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Earnings per Share | |
Reconciliation of numerators and denominators used in the computation of basic and diluted earnings per share | Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/26/2019 1/27/2018 1/26/2019 1/27/2018 Numerator (basic and diluted): Net income attributable to La-Z-Boy Incorporated $ 28,731 $ 12,109 $ 67,046 $ 46,656 Income allocated to participating securities (92) (62) (231) (234) Net income available to common shareholders $ 28,639 $ 12,047 $ 66,815 $ 46,422 Denominator: Basic weighted average common shares outstanding 46,820 47,234 46,808 47,852 Add: Contingent common shares 131 178 135 176 Stock option dilution 140 345 269 297 Diluted weighted average common shares outstanding 47,091 47,757 47,212 48,325 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jan. 26, 2019 | |
Fair Value Measurements | |
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | At January 26, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 163 $ 34,852 $ — Held-to-maturity investments 3,384 — — Cost basis investments — — 11,979 Total assets $ 3,547 $ 34,852 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,500 At April 28, 2018 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 1,141 $ 37,173 $ — Held-to-maturity investments 3,340 — — Cost basis investment — — 10,954 Total assets $ 4,481 $ 37,173 $ 10,954 Liabilities Contingent consideration liability $ — $ — $ 344 |
Reconciliation of Level 3 assets recorded at fair value using significant unobservable inputs | (Unaudited, amounts in thousands) Level 3 Assets Balance at April 28, 2018 $ 10,954 Purchases 1,025 Balance at January 26, 2019 $ 11,979 |
Reconciliation of Level 3 liabilities recorded at fair value using significant unobservable inputs | Liabilities Balance at April 28, 2018 $ 344 Acquisitions 7,500 Write-off (326) Translation adjustment (18) Balance at January 26, 2019 $ 7,500 |
Basis of Presentation - Variabl
Basis of Presentation - Variable Interest Entities (Details) - Variable interest entities, not primary beneficiary | Jan. 26, 2019company |
Investments | |
Preferred share investments, number of privately-held companies | 2 |
Preferred share investments with common share warrant, number of privately-held companies | 1 |
Basis of Presentation - Account
Basis of Presentation - Accounting Pronouncements Adopted (Details) - ASU 2016-01 - Investments $ in Millions | 3 Months Ended |
Jul. 28, 2018USD ($) | |
Retained Earnings | |
Accounting pronouncements adopted in fiscal 2019 | |
Reclassification of net unrealized gains, before tax | $ 2.1 |
Reclassification of tax expense | 0.5 |
Accumulated Other Comprehensive Income (Loss) | |
Accounting pronouncements adopted in fiscal 2019 | |
Reclassification of net unrealized gains, before tax | (2.1) |
Reclassification of tax expense | $ (0.5) |
Acquisitions - Retail Segment (
Acquisitions - Retail Segment (Details) $ in Thousands | Sep. 30, 2018USD ($)storeCounterparty | Aug. 15, 2018storeCounterpartywarehouse | Sep. 30, 2018USD ($)storeCounterparty | Jan. 26, 2019USD ($) | Apr. 28, 2018USD ($) |
Amounts recognized for identifiable assets acquired and liabilities assumed: | |||||
Goodwill | $ 184,717 | $ 75,254 | |||
Independent dealer assets acquired in fiscal 2019 | |||||
Acquisitions | |||||
Number of dealers whose assets were acquired | Counterparty | 2 | ||||
Settlement gain or loss | $ 0 | ||||
Fair value of consideration: | |||||
Cash | 38,904 | ||||
Forgiveness of accounts receivable | 2,610 | ||||
Guaranteed future payments | 1,300 | ||||
Total fair value of consideration | 42,814 | ||||
Amounts recognized for identifiable assets acquired and liabilities assumed: | |||||
Inventory | $ 10,491 | 10,491 | |||
Other current assets | 4,194 | 4,194 | |||
Property, plant and equipment | 929 | 929 | |||
Indefinite-lived reacquired rights | 6,600 | 6,600 | |||
Other long-term assets | 183 | 183 | |||
Customer deposits | (6,515) | (6,515) | |||
Other current liabilities | (5,055) | (5,055) | |||
Total identifiable net assets (liabilities) acquired | 10,827 | 10,827 | |||
Goodwill | $ 31,987 | $ 31,987 | |||
Independent dealer assets acquired in fiscal 2019 | Arizona | |||||
Acquisitions | |||||
Number of dealers whose assets were acquired | Counterparty | 1 | ||||
Number of stores included in acquisition | store | 9 | ||||
Number of warehouses included in acquisition | warehouse | 2 | ||||
Independent dealer assets acquired in fiscal 2019 | Massachusetts | |||||
Acquisitions | |||||
Number of dealers whose assets were acquired | Counterparty | 1 | ||||
Number of stores included in acquisition | store | 1 | 1 |
Acquisitions - Corporate and Ot
Acquisitions - Corporate and Other (Details) $ in Thousands | Jul. 30, 2018USD ($)personitem | Jan. 26, 2019USD ($) | Apr. 28, 2018USD ($) |
Amounts recognized for identifiable assets acquired and liabilities assumed: | |||
Goodwill | $ 184,717 | $ 75,254 | |
Joybird | |||
Acquisitions | |||
Total guaranteed payments | $ 75,000 | ||
Receivable for working capital adjustment | 2,500 | ||
Prepaid compensation included in guaranteed payments | $ 7,500 | ||
Period for payment of liabilities assumed as consideration | 2 years | ||
Remaining guaranteed payments | $ 25,000 | ||
Annual installments of remaining guaranteed payments | $ 5,000 | ||
Period for annual installments of remaining guaranteed payments | 5 years | ||
Number of future earnout opportunities | item | 2 | ||
Number of co-founders covered by forfeitable initial payment | person | 4 | ||
Period for amortization of prepaid compensation | 2 years | ||
Finite-lived intangible asset, useful life | 8 years | ||
Contingent consideration, low end of range | $ 0 | ||
Contingent consideration, high end of range | 65,000 | ||
Fair value of consideration: | |||
Cash | 37,482 | ||
Guaranteed payment | 22,489 | ||
Acquisition earn-out | 7,500 | ||
Assumption of liability | 5,000 | ||
Working capital adjustment | (2,486) | ||
Total fair value of consideration | 69,985 | ||
Amounts recognized for identifiable assets acquired and liabilities assumed: | |||
Inventory | 5,258 | ||
Other current assets | 3,258 | ||
Property, plant and equipment | 2,057 | ||
Finite-lived tradename | 6,400 | ||
Other long-term assets | 3,175 | ||
Accounts payable | (8,222) | ||
Customer deposits | (9,619) | ||
Other current liabilities | (10,306) | ||
Other long-term liabilities | (150) | ||
Total identifiable net assets (liabilities) acquired | (8,149) | ||
Goodwill | $ 78,134 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 | Jan. 27, 2018 | Apr. 29, 2017 |
Restricted Cash | ||||
Cash and cash equivalents | $ 101,579 | $ 134,515 | $ 135,266 | |
Restricted cash | 2,003 | 2,356 | 2,354 | |
Total cash, cash equivalents and restricted cash | $ 103,582 | $ 136,871 | $ 137,620 | $ 150,859 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 |
Inventories | ||
Raw materials | $ 101,949 | $ 86,214 |
Work in process | 14,341 | 12,254 |
Finished goods | 125,731 | 109,183 |
FIFO inventories | 242,021 | 207,651 |
Excess of FIFO over LIFO | (22,810) | (22,810) |
Total inventories | $ 219,211 | $ 184,841 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill Roll-forward (Details) $ in Thousands | 9 Months Ended |
Jan. 26, 2019USD ($) | |
Roll-forward of goodwill | |
Balance at beginning of period | $ 75,254 |
Acquisitions | 110,121 |
Translation adjustment | (658) |
Balance at end of period | 184,717 |
Upholstery Segment | |
Roll-forward of goodwill | |
Balance at beginning of period | 12,967 |
Translation adjustment | (549) |
Balance at end of period | 12,418 |
Retail Segment | |
Roll-forward of goodwill | |
Balance at beginning of period | 62,287 |
Acquisitions | 31,987 |
Translation adjustment | (109) |
Balance at end of period | 94,165 |
Corporate and Other | |
Roll-forward of goodwill | |
Acquisitions | 78,134 |
Balance at end of period | $ 78,134 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Jan. 26, 2019USD ($) | |
Roll-forward of other intangible assets | |
Balance at beginning of period | $ 18,190 |
Acquisitions | 13,000 |
Amortization | (688) |
Translation adjustment | (228) |
Balance at end of period | 30,274 |
Trade Names | |
Roll-forward of other intangible assets | |
Acquisitions | 6,400 |
Amortization | (399) |
Balance at end of period | 6,001 |
Other Intangible Assets | |
Roll-forward of other intangible assets | |
Balance at beginning of period | 3,390 |
Amortization | (289) |
Translation adjustment | (147) |
Balance at end of period | 2,954 |
Trade Names | |
Roll-forward of other intangible assets | |
Balance at beginning of period | 1,155 |
Balance at end of period | 1,155 |
Reacquired Rights | |
Roll-forward of other intangible assets | |
Balance at beginning of period | 13,645 |
Acquisitions | 6,600 |
Translation adjustment | (81) |
Balance at end of period | $ 20,164 |
Investments - Other Investments
Investments - Other Investments (Details) | Jan. 26, 2019company |
Cost-basis investments | |
Investments | |
Preferred share investments, number of privately-held companies | 2 |
Investments - Components (Detai
Investments - Components (Details) - USD ($) $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 |
Investments | ||
Total investments | $ 57,669 | $ 59,354 |
Investments to enhance returns on cash | ||
Investments | ||
Total investments | 32,229 | 34,359 |
Investments to fund compensation/retirement plans | ||
Investments | ||
Total investments | 13,461 | 14,041 |
Other investments | ||
Investments | ||
Total investments | 11,979 | 10,954 |
Other current assets | ||
Investments | ||
Marketable securities | 14,580 | 12,926 |
Held-to-maturity investments | 3,384 | 3,340 |
Total investments | 17,964 | 16,266 |
Other long-term assets | ||
Investments | ||
Marketable securities | 27,726 | 32,134 |
Cost basis investments | 11,979 | 10,954 |
Total investments | $ 39,705 | $ 43,088 |
Investments - Unrealized Gains
Investments - Unrealized Gains and Losses and Fair Value (Details) - USD ($) $ in Thousands | Jan. 26, 2019 | Apr. 28, 2018 |
Summary of investments | ||
Gross Unrealized Gains | $ 1,661 | $ 2,243 |
Gross Unrealized Losses | (271) | (457) |
Fair Value | 57,669 | 59,354 |
Equity securities | ||
Summary of investments | ||
Gross Unrealized Gains | 1,358 | 2,142 |
Gross Unrealized Losses | (27) | (39) |
Fair Value | 18,314 | 18,765 |
Fixed income | ||
Summary of investments | ||
Gross Unrealized Gains | 44 | 29 |
Gross Unrealized Losses | (231) | (418) |
Fair Value | 33,702 | 36,312 |
Other | ||
Summary of investments | ||
Gross Unrealized Gains | 259 | 72 |
Gross Unrealized Losses | (13) | |
Fair Value | $ 5,653 | $ 4,277 |
Investments - Sales and Maturit
Investments - Sales and Maturities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Sales of available-for-sale securities | ||||
Proceeds from sales | $ 6,550 | $ 5,580 | $ 14,304 | $ 17,109 |
Gross realized gains | 726 | 870 | 811 | 1,288 |
Gross realized losses | (261) | $ (284) | (327) | $ (512) |
Fair value of available-for-sale securities by contractual maturity | ||||
Fair value, available-for-sale securities with contractual maturity within one year | 14,600 | 14,600 | ||
Fair value, available-for-sale securities with contractual maturity within two to five years | 16,900 | 16,900 | ||
Fair value, available-for-sale securities with contractual maturity within six to ten years | 1,400 | 1,400 | ||
Fair value, available-for-sale securities with contractual maturity after ten years | $ 800 | $ 800 |
Employee Benefits - Pension (De
Employee Benefits - Pension (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Apr. 27, 2019 | Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Net periodic pension costs | |||||
Service cost | $ 223 | $ 328 | $ 869 | $ 986 | |
Interest cost | 1,116 | 1,147 | 3,348 | 3,441 | |
Expected return on plan assets | (1,136) | (1,204) | (3,408) | (3,612) | |
Net amortization | 639 | 780 | 1,917 | 2,340 | |
Net periodic pension cost | 842 | $ 1,051 | 2,726 | $ 3,155 | |
Minimum | |||||
Net periodic pension costs | |||||
Anticipated additional contributions to the plan | 9,000 | 9,000 | |||
Minimum | Forecast | |||||
Net periodic pension costs | |||||
Expected non-cash charge, net of tax | $ 33,000 | ||||
Maximum | |||||
Net periodic pension costs | |||||
Anticipated additional contributions to the plan | $ 11,000 | $ 11,000 | |||
Maximum | Forecast | |||||
Net periodic pension costs | |||||
Expected non-cash charge, net of tax | $ 38,000 |
Employee Benefits - Employee Va
Employee Benefits - Employee Vacation Policy Changes (Details) $ in Millions | 3 Months Ended |
Jan. 26, 2019USD ($) | |
Employee Vacation Policy Changes | |
Non-cash gain due to change in employee vacation policy | $ 5.1 |
Cost of Sales | |
Employee Vacation Policy Changes | |
Non-cash gain due to change in employee vacation policy | 1.3 |
Incremental expense due to change in employee vacation policy | $ 0.3 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | Apr. 28, 2018 | |
Reconciliation of changes in product warranty liability | |||||
Balance as of the beginning of the period | $ 25,197 | $ 21,606 | $ 21,205 | $ 21,870 | |
Acquisitions | 4,100 | ||||
Accruals during the period | 5,660 | 4,654 | 16,270 | 14,155 | |
Settlements during the period | (5,560) | (4,954) | (16,278) | (14,719) | |
Balance as of the end of the period | 25,297 | $ 21,306 | 25,297 | $ 21,306 | |
Product warranty liability included in accrued expenses and other current liabilities | $ 16,700 | $ 16,700 | $ 12,700 | ||
Minimum | Upholstery Segment | |||||
Product Warranties | |||||
Percentage of warranty liability relating to the segment | 80.00% | ||||
Fabric and leather | Upholstery Segment | |||||
Product Warranties | |||||
Warranty term | 1 year | ||||
Cushions and padding | Minimum | Upholstery Segment | |||||
Product Warranties | |||||
Warranty term | 1 year | ||||
Cushions and padding | Maximum | Upholstery Segment | |||||
Product Warranties | |||||
Warranty term | 10 years | ||||
Labor costs relating to parts | Upholstery Segment | |||||
Product Warranties | |||||
Warranty term | 1 year |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Stock-based compensation expense recognized for outstanding grants | ||||
Equity-based awards expense | $ 2,495 | $ 1,519 | $ 8,174 | $ 7,929 |
Liability-based awards expense | 144 | 386 | 10 | 694 |
Total stock-based compensation expense | $ 2,639 | $ 1,905 | $ 8,184 | $ 8,623 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - Stock Options - $ / shares | 3 Months Ended | 9 Months Ended |
Jul. 28, 2018 | Jan. 26, 2019 | |
Stock-Based Compensation | ||
Shares granted (in shares) | 423,273 | |
Fair value assumptions | ||
Risk-free interest rate (as a percent) | 2.82% | |
Dividend rate (as a percent) | 1.45% | |
Expected life in years | 5 years | |
Stock price volatility (as a percent) | 33.07% | |
Fair value per share (in dollars per share) | $ 9.65 | |
Minimum | ||
Stock-Based Compensation | ||
Vesting period | 1 year | |
Period of recognition of expenses for retirement-eligible employees from the grant date | 10 months | |
Maximum | ||
Stock-Based Compensation | ||
Vesting period | 4 years |
Stock-Based Compensation - SARs
Stock-Based Compensation - SARs (Details) - Stock Appreciation Rights | 9 Months Ended |
Jan. 26, 2019$ / sharesshares | |
Stock-Based Compensation | |
Term of award | 10 years |
Fiscal 2014 Grant | |
Stock-Based Compensation | |
Number of awards outstanding (in shares) | shares | 17,918 |
Fair value per share (in dollars per share) | $ / shares | $ 9.94 |
Fiscal 2013 Grant | |
Stock-Based Compensation | |
Number of awards outstanding (in shares) | shares | 7,149 |
Fair value per share (in dollars per share) | $ / shares | $ 17.03 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Oct. 27, 2018 | Jan. 26, 2019 | |
Restricted Stock | ||
Stock-Based Compensation | ||
Percentage vesting each year from date of grant | 25.00% | |
Period from grant date for first vesting | 1 year | |
Vesting period | 4 years | |
Number of shares or units granted | 109,426 | |
Fair value per share (in dollars per share) | $ 32.78 | |
Restricted Stock Units | ||
Stock-Based Compensation | ||
Number of shares or units granted | 21,240 | |
Fair value per share (in dollars per share) | $ 33.15 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Awards (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Jul. 28, 2018 | Jan. 26, 2019 | |
Performance Awards | ||
Stock-Based Compensation | ||
Percentage of payout dependent on financial performance | 80.00% | |
Percentage of payout dependent on total shareholder return | 20.00% | |
Performance awards, performance period | 3 years | |
Performance Awards | Minimum | ||
Stock-Based Compensation | ||
Performance award opportunity as a percentage of target award | 50.00% | |
Performance Awards | Maximum | ||
Stock-Based Compensation | ||
Performance award opportunity as a percentage of target award | 200.00% | |
Performance-Based Shares | ||
Stock-Based Compensation | ||
Number of shares or units granted | 146,107 | |
Performance-Based Shares, vesting based on performance goals | Fiscal 2019 Grant | ||
Stock-Based Compensation | ||
Fair value on date of grant (in dollars per share) | $ 31.71 | |
Performance Based Shares, vesting based on market conditions | Fiscal 2019 Grant | ||
Stock-Based Compensation | ||
Fair value on date of grant (in dollars per share) | $ 46.39 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jan. 26, 2019 | Jul. 28, 2018 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Activity in accumulated other comprehensive loss | |||||
Balance | $ 612,181 | $ 612,181 | |||
Balance | $ 657,263 | 657,263 | |||
Components of non-controlling interest | |||||
Balance as of the beginning of the period | 13,411 | 13,035 | $ 12,094 | 13,035 | $ 11,186 |
Net income | 443 | 176 | 1,428 | 579 | |
Other comprehensive income | 669 | 689 | 60 | 1,194 | |
Balance as of the end of the period | 14,523 | 12,959 | 14,523 | 12,959 | |
Accumulated Other Comprehensive Income (Loss) | |||||
Activity in accumulated other comprehensive loss | |||||
Balance | (28,329) | (25,199) | (30,511) | (25,199) | (32,883) |
Changes before reclassifications | 1,385 | 4,062 | (1,293) | 6,225 | |
Amounts reclassified to net income | 315 | 272 | 1,800 | 917 | |
Tax effect | (225) | (332) | (525) | (768) | |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 1,475 | 4,002 | (1,655) | 6,374 | |
Balance | (26,854) | (26,509) | (26,854) | (26,509) | |
Accumulated Other Comprehensive Income (Loss) | ASU 2016-01 - Investments | |||||
Activity in accumulated other comprehensive loss | |||||
Cumulative effect adjustment | (1,637) | ||||
Cumulative effect adjustment - unrealized gains on equity investments | (2,100) | ||||
Cumulative effect adjustment - tax expense | (500) | ||||
Translation Adjustment | |||||
Activity in accumulated other comprehensive loss | |||||
Balance | (24) | 2,388 | 737 | 2,388 | (927) |
Changes before reclassifications | 800 | 2,896 | (1,612) | 4,560 | |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 800 | 2,896 | (1,612) | 4,560 | |
Balance | 776 | 3,633 | 776 | 3,633 | |
Change in Fair Value of Cash Flow Hedge | |||||
Activity in accumulated other comprehensive loss | |||||
Balance | (24) | 154 | (189) | 154 | 74 |
Changes before reclassifications | 495 | (369) | 256 | ||
Amounts reclassified to net income | 93 | 22 | 225 | (164) | |
Tax effect | (23) | (72) | 36 | 90 | |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 70 | 445 | (108) | 182 | |
Balance | 46 | 256 | 46 | 256 | |
Unrealized Gain (Loss) on Marketable Securities | |||||
Activity in accumulated other comprehensive loss | |||||
Balance | (197) | 1,376 | 1,689 | 1,376 | 1,752 |
Changes before reclassifications | 72 | 671 | 175 | 1,409 | |
Amounts reclassified to net income | 48 | (585) | 29 | (1,425) | |
Tax effect | (30) | 23 | (50) | 62 | |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 90 | 109 | (1,483) | 46 | |
Balance | (107) | 1,798 | (107) | 1,798 | |
Unrealized Gain (Loss) on Marketable Securities | ASU 2016-01 - Investments | |||||
Activity in accumulated other comprehensive loss | |||||
Cumulative effect adjustment | (1,637) | ||||
Cumulative effect adjustment - unrealized gains on equity investments | (2,100) | ||||
Cumulative effect adjustment - tax expense | (500) | ||||
Net Pension Amortization and Net Actuarial Loss | |||||
Activity in accumulated other comprehensive loss | |||||
Balance | (28,084) | $ (29,117) | (32,748) | (29,117) | (33,782) |
Amounts reclassified to net income | 687 | 835 | 2,059 | 2,506 | |
Tax effect | (172) | (283) | (511) | (920) | |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 515 | 552 | 1,548 | 1,586 | |
Balance | $ (27,569) | $ (32,196) | $ (27,569) | $ (32,196) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jan. 26, 2019 | Jan. 26, 2019 | |
Revenue Recognition | ||
Consolidated Net Sales | $ 467,582 | $ 1,291,610 |
Operating Segments | ||
Revenue Recognition | ||
Consolidated Net Sales | 544,779 | 1,500,190 |
Operating Segments | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 312,863 | 863,382 |
Operating Segments | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 150,143 | 408,610 |
Operating Segments | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 10,329 | 31,692 |
Operating Segments | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 9,440 | 26,790 |
Operating Segments | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 18,980 | 55,033 |
Operating Segments | Other | ||
Revenue Recognition | ||
Consolidated Net Sales | 43,024 | 114,683 |
Operating Segments | Upholstery Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 334,448 | 944,939 |
Operating Segments | Upholstery Segment | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 212,631 | 602,458 |
Operating Segments | Upholstery Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 94,551 | 272,087 |
Operating Segments | Upholstery Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 391 | 1,202 |
Operating Segments | Upholstery Segment | Other | ||
Revenue Recognition | ||
Consolidated Net Sales | 26,875 | 69,192 |
Operating Segments | Casegoods Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 28,065 | 87,828 |
Operating Segments | Casegoods Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 3,844 | 12,215 |
Operating Segments | Casegoods Segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 7,447 | 24,045 |
Operating Segments | Casegoods Segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 5,733 | 18,068 |
Operating Segments | Casegoods Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 12,292 | 38,003 |
Operating Segments | Casegoods Segment | Other | ||
Revenue Recognition | ||
Consolidated Net Sales | (1,251) | (4,503) |
Operating Segments | Retail Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 159,417 | 418,331 |
Operating Segments | Retail Segment | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 100,232 | 260,924 |
Operating Segments | Retail Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 27,652 | 76,517 |
Operating Segments | Retail Segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 1,586 | 3,891 |
Operating Segments | Retail Segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 3,097 | 7,293 |
Operating Segments | Retail Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 5,959 | 15,000 |
Operating Segments | Retail Segment | Other | ||
Revenue Recognition | ||
Consolidated Net Sales | 20,891 | 54,706 |
Corporate and Other | Corporate and Other, non-segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 22,849 | 49,092 |
Corporate and Other | Corporate and Other, non-segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 24,096 | 47,791 |
Corporate and Other | Corporate and Other, non-segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 1,296 | 3,756 |
Corporate and Other | Corporate and Other, non-segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 610 | 1,429 |
Corporate and Other | Corporate and Other, non-segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 338 | 828 |
Corporate and Other | Corporate and Other, non-segment | Other | ||
Revenue Recognition | ||
Consolidated Net Sales | (3,491) | (4,712) |
Eliminations | ||
Revenue Recognition | ||
Consolidated Net Sales | $ (77,197) | $ (208,580) |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Jan. 26, 2019 | Jan. 26, 2019 | Apr. 29, 2018 | |
Revenue Recognition | |||
Other receivables, included in other current assets | $ 19.5 | $ 19.5 | $ 12.1 |
Customer deposits, included in accrued expenses and other current liabilities | 47.2 | 47.2 | 31.3 |
Deferred revenues, included in accrued expenses and other current liabilities | 19.5 | 19.5 | $ 12.1 |
Revenue recognized related to contract liabilities | $ 0 | $ 41.5 | |
Revenue, practical expedient elected for financing components of contracts with one year or less duration | true |
Segment Information - Reportabl
Segment Information - Reportable and Operating Segments (Details) | 9 Months Ended |
Jan. 26, 2019storesegmentitem | |
Upholstery Segment | |
Segment Information | |
Number of operating segments | 2 |
Number of reportable segments | 1 |
Casegoods Segment | |
Segment Information | |
Number of operating segments | 1 |
Number of brands | item | 3 |
Retail Segment | |
Segment Information | |
Number of operating segments | 1 |
Number of stores | store | 155 |
Segment Information - Income St
Segment Information - Income Statement Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Segment Information | ||||
Sales | $ 467,582 | $ 413,638 | $ 1,291,610 | $ 1,163,922 |
Operating Income (Loss) | 40,843 | 33,095 | 92,503 | 83,662 |
Interest expense | (538) | (113) | (1,143) | (430) |
Interest income | 540 | 444 | 1,534 | 1,163 |
Other income (expense), net | (941) | (1,094) | (2,046) | (271) |
Income before income taxes | 39,904 | 32,332 | 90,848 | 84,124 |
Upholstery Segment | ||||
Segment Information | ||||
Sales | 265,487 | 262,874 | 759,569 | 739,429 |
Casegoods Segment | ||||
Segment Information | ||||
Sales | 23,129 | 23,887 | 73,774 | 68,821 |
Retail Segment | ||||
Segment Information | ||||
Sales | 159,417 | 125,815 | 418,331 | 353,068 |
Corporate and Other, non-segment | ||||
Segment Information | ||||
Sales | 19,549 | 1,062 | 39,936 | 2,604 |
Operating Segments | Upholstery Segment | ||||
Segment Information | ||||
Sales | 334,448 | 320,958 | 944,939 | 900,126 |
Operating Income (Loss) | 34,566 | 31,699 | 90,602 | 88,422 |
Operating Segments | Casegoods Segment | ||||
Segment Information | ||||
Sales | 28,065 | 27,215 | 87,828 | 80,790 |
Operating Income (Loss) | 3,332 | 2,792 | 10,173 | 8,833 |
Operating Segments | Retail Segment | ||||
Segment Information | ||||
Operating Income (Loss) | 14,158 | 7,076 | 25,179 | 12,746 |
Corporate and Other | ||||
Segment Information | ||||
Operating Income (Loss) | (11,213) | (8,472) | (33,451) | (26,339) |
Corporate and Other | Corporate and Other, non-segment | ||||
Segment Information | ||||
Sales | 22,849 | 3,880 | 49,092 | 9,443 |
Eliminations | ||||
Segment Information | ||||
Sales | (77,197) | (64,230) | (208,580) | (179,505) |
Eliminations | Upholstery Segment | ||||
Segment Information | ||||
Sales | (68,961) | (58,084) | (185,370) | (160,697) |
Eliminations | Casegoods Segment | ||||
Segment Information | ||||
Sales | (4,936) | (3,328) | (14,054) | (11,969) |
Eliminations | Corporate and Other, non-segment | ||||
Segment Information | ||||
Sales | $ (3,300) | $ (2,818) | $ (9,156) | $ (6,839) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | Apr. 28, 2018 | |
Income Taxes | |||||
Effective tax rate (as a percent) | 26.90% | 62.00% | 24.60% | 43.90% | |
Statutory tax rate (as a percent) | 21.00% | 30.40% | |||
Effective tax rate absent discrete adjustments (as a percent) | 26.70% | 25.60% | |||
Estimated effects of the transition tax | $ 0.2 |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jan. 26, 2019 | Jan. 27, 2018 | Jan. 26, 2019 | Jan. 27, 2018 | |
Numerator (basic and diluted): | ||||
Net income attributable to La-Z-Boy Incorporated | $ 28,731 | $ 12,109 | $ 67,046 | $ 46,656 |
Income allocated to participating securities, basic | (92) | (62) | (231) | (234) |
Income allocated to participating securities, diluted | (92) | (62) | (231) | (234) |
Net income available to common shareholders, basic | 28,639 | 12,047 | 66,815 | 46,422 |
Net income available to common shareholders, diluted | $ 28,639 | $ 12,047 | $ 66,815 | $ 46,422 |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 46,820 | 47,234 | 46,808 | 47,852 |
Add: | ||||
Contingent common shares (in shares) | 131 | 178 | 135 | 176 |
Stock option dilution (in shares) | 140 | 345 | 269 | 297 |
Diluted weighted average common shares outstanding (in shares) | 47,091 | 47,757 | 47,212 | 48,325 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities (Details) - Outstanding options shares in Millions | 9 Months Ended |
Jan. 26, 2019$ / sharesshares | |
Anti-dilutive options | |
Outstanding options excluded from diluted share calculation (in shares) | shares | 0.4 |
Weighted average exercise price of options excluded from diluted share calculation (in dollars per share) | $ / shares | $ 33.15 |
Fair Value Measurements - Hiera
Fair Value Measurements - Hierarchy and Transfers (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Jan. 26, 2019 | Apr. 28, 2018 | |
Assets | ||
Total assets | $ 57,669 | $ 59,354 |
Recurring basis | ||
Liabilities | ||
Transfers from Level 1 to Level 2 assets | 0 | 0 |
Transfers from Level 2 to Level 1 assets | 0 | 0 |
Transfers from Level 1 to Level 2 liabilities | 0 | 0 |
Transfers from Level 2 to Level 1 liabilities | 0 | 0 |
Transfers into Level 3 assets | 0 | 0 |
Transfers out of Level 3 assets | 0 | 0 |
Transfers into Level 3 liabilities | 0 | 0 |
Transfers out of Level 3 liabilities | 0 | 0 |
Recurring basis | Level 1 | ||
Assets | ||
Marketable securities | 163 | 1,141 |
Held-to-maturity investments | 3,384 | 3,340 |
Total assets | 3,547 | 4,481 |
Recurring basis | Level 2 | ||
Assets | ||
Marketable securities | 34,852 | 37,173 |
Total assets | 34,852 | 37,173 |
Recurring basis | Level 3 | ||
Assets | ||
Cost basis investments | 11,979 | 10,954 |
Total assets | 11,979 | 10,954 |
Liabilities | ||
Contingent consideration liability | $ 7,500 | $ 344 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Investments (Details) - Level 3 | 9 Months Ended |
Jan. 26, 2019company | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Preferred share investments, number of privately-held companies | 2 |
Preferred share investments with common share warrant, number of privately-held companies | 1 |
Joybird | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Discount rate for fiscal 2021 milestone contingent consideration | 4.70% |
Discount rate for fiscal 2023 milestone contingent consideration | 5.10% |
Fair Value Measurements - Lev_2
Fair Value Measurements - Level 3 Reconciliation (Details) $ in Thousands | 9 Months Ended |
Jan. 26, 2019USD ($) | |
Reconciliation of Level 3 assets recorded at fair value using significant unobservable inputs | |
Balance at beginning of the year | $ 10,954 |
Purchases | 1,025 |
Balance at end of the year | 11,979 |
Reconciliation of Level 3 liabilities recorded at fair value using significant unobservable inputs | |
Balance at beginning of the year | 344 |
Acquisitions | 7,500 |
Write-off | (326) |
Translation adjustment | (18) |
Balance at end of the year | $ 7,500 |
Fair Value Measurements - Net A
Fair Value Measurements - Net Asset Value (Details) - USD ($) $ in Millions | Jan. 26, 2019 | Apr. 28, 2018 |
Fair Value Measured Using Net Asset Value | ||
Assets | ||
Marketable securities | $ 7.3 | $ 6.7 |