Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jul. 27, 2019 | Aug. 13, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 27, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-9656 | |
Entity Registrant Name | LA-Z-BOY INCORPORATED | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 38-0751137 | |
Entity Address, Address Line One | One La-Z-Boy Drive | |
Entity Address, City or Town | Monroe | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48162-5138 | |
City Area Code | 734 | |
Local Phone Number | 242-1444 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $1.00 Par Value | |
Entity Common Stock, Shares Outstanding | 46,632,617 | |
Entity Central Index Key | 0000057131 | |
Current Fiscal Year End Date | --04-27 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Trading Symbol | LZB | |
Security Exchange Name | NYSE |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
CONSOLIDATED STATEMENT OF INCOME | ||
Sales | $ 413,633 | $ 384,695 |
Cost of sales | 245,921 | 236,173 |
Gross profit | 167,712 | 148,522 |
Selling, general and administrative expense | 144,290 | 125,362 |
Operating income | 23,422 | 23,160 |
Interest expense | (318) | (104) |
Interest income | 727 | 602 |
Other income (expense), net | (760) | 892 |
Income before income taxes | 23,071 | 24,550 |
Income tax expense | 5,083 | 5,599 |
Net income | 17,988 | 18,951 |
Net (income) loss attributable to noncontrolling interests | 81 | (648) |
Net income attributable to La-Z-Boy Incorporated | $ 18,069 | $ 18,303 |
Basic weighted average common shares (in shares) | 46,820 | 46,716 |
Basic net income attributable to La-Z-Boy Incorporated per share (in dollars per share) | $ 0.39 | $ 0.39 |
Diluted weighted average common shares (in shares) | 47,125 | 47,161 |
Diluted net income attributable to La-Z-Boy Incorporated per share (in dollars per share) | $ 0.38 | $ 0.39 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||
Net income | $ 17,988 | $ 18,951 |
Other comprehensive income (loss) | ||
Currency translation adjustment | 614 | (4,189) |
Change in fair value of cash flow hedges, net of tax | 4 | (333) |
Net unrealized gain on marketable securities, net of tax | 108 | 41 |
Net pension amortization, net of tax | 41 | 516 |
Total other comprehensive income (loss) | 767 | (3,965) |
Total comprehensive income before allocation to noncontrolling interests | 18,755 | 14,986 |
Comprehensive (income) loss attributable to noncontrolling interests | (405) | 580 |
Comprehensive income attributable to La-Z-Boy Incorporated | $ 18,350 | $ 15,566 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Current assets | ||
Cash and equivalents | $ 111,622 | $ 129,819 |
Restricted cash | 1,970 | 1,968 |
Receivables, net of allowance of $2,177 at 7/27/19 and $2,180 at 4/27/19 | 134,379 | 143,288 |
Inventories, net | 197,701 | 196,899 |
Other current assets | 85,631 | 69,144 |
Total current assets | 531,303 | 541,118 |
Property, plant and equipment, net | 204,789 | 200,523 |
Goodwill | 184,675 | 185,867 |
Other intangible assets, net | 29,595 | 29,907 |
Deferred income taxes - long-term | 21,906 | 20,670 |
Right of use lease asset | 312,433 | |
Other long-term assets, net | 77,449 | 81,705 |
Total assets | 1,362,150 | 1,059,790 |
Current liabilities | ||
Current portion of long-term debt | 180 | |
Accounts payable | 62,935 | 65,365 |
Lease liability, short-term | 64,158 | |
Accrued expenses and other current liabilities | 168,757 | 173,091 |
Total current liabilities | 295,850 | 238,636 |
Long-term debt | 19 | |
Lease liability, long-term | 262,264 | |
Other long-term liabilities | 105,898 | 124,159 |
Shareholders' equity | ||
Preferred shares - 5,000 authorized; none issued | ||
Common shares, $1 par value - 150,000 authorized; 46,690 outstanding at 7/27/19 and 46,955 outstanding at 4/27/19 | 46,690 | 46,955 |
Capital in excess of par value | 311,207 | 313,168 |
Retained earnings | 329,096 | 325,847 |
Accumulated other comprehensive loss | (3,728) | (3,462) |
Total La-Z-Boy Incorporated shareholders' equity | 683,265 | 682,508 |
Noncontrolling interests | 14,873 | 14,468 |
Total equity | 698,138 | 696,976 |
Total liabilities and equity | $ 1,362,150 | $ 1,059,790 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Current assets | ||
Receivables, allowance (in dollars) | $ 2,177 | $ 2,180 |
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) | 46,690 | 46,955 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Cash flows from operating activities | ||
Net income | $ 17,988 | $ 18,951 |
Adjustments to reconcile net income to cash provided by (used for) operating activities | ||
Gain on disposal of assets | (536) | |
Change in deferred taxes | (677) | (183) |
Provision for doubtful accounts | 116 | 279 |
Depreciation and amortization | 7,298 | 7,541 |
Equity-based compensation expense | 1,675 | 2,040 |
Change in receivables | 8,535 | 14,236 |
Change in inventories | (527) | (11,092) |
Change in other assets | 7,305 | 463 |
Change in payables | (1,391) | 2,491 |
Change in other liabilities | (20,446) | (2,572) |
Net cash provided by operating activities | 19,340 | 32,154 |
Cash flows from investing activities | ||
Proceeds from disposals of assets | 22 | 61 |
Proceeds from insurance | 642 | 58 |
Capital expenditures | (12,299) | (15,873) |
Purchases of investments | (5,288) | (4,190) |
Proceeds from sales of investments | 4,060 | 4,762 |
Acquisitions | (5,438) | |
Net cash used for investing activities | (18,301) | (15,182) |
Cash flows from financing activities | ||
Payments on debt and finance lease liabilities | (47) | (59) |
Stock issued for stock and employee benefit plans, net of shares withheld for taxes | (1,417) | (2,009) |
Purchases of common stock | (12,313) | (7,944) |
Dividends paid | (6,112) | (5,625) |
Net cash used for financing activities | (19,889) | (15,637) |
Effect of exchange rate changes on cash and equivalents | 655 | (1,601) |
Change in cash, cash equivalents and restricted cash | (18,195) | (266) |
Cash, cash equivalents and restricted cash at beginning of period | 131,787 | 136,871 |
Cash, cash equivalents and restricted cash at end of period | 113,592 | 136,605 |
Supplemental disclosure of non-cash investing activities | ||
Capital expenditures included in payables | $ 2,416 | $ 4,122 |
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 Loss | Non-Controlling Interests | Total |
Balance at Apr. 28, 2018 | $ 46,788 | $ 298,948 | $ 291,644 | $ (25,199) | $ 13,035 | $ 625,216 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 18,303 | 648 | 18,951 | |||
Other comprehensive loss | (2,737) | (1,228) | (3,965) | |||
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax | 160 | (42) | (2,127) | (2,009) | ||
Purchases of 257 shares and 391 shares of common stock | (257) | (176) | (7,511) | (7,944) | ||
Stock option and restricted stock expense | 2,040 | 2,040 | ||||
Cumulative effect adjustment for leases, net of tax (1) | (1,637) | |||||
Cumulative effect adjustment for investments, net of tax | ASU 2016-01 - Investments | 1,637 | (1,637) | ||||
Dividends declared and paid | (5,625) | (5,625) | ||||
Balance at Jul. 28, 2018 | 46,691 | 300,770 | 296,321 | (29,573) | 12,455 | 626,664 |
Balance at Apr. 27, 2019 | 46,955 | 313,168 | 325,847 | (3,462) | 14,468 | 696,976 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 18,069 | (81) | 17,988 | |||
Other comprehensive loss | 281 | 486 | 767 | |||
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax | 126 | 126 | (1,669) | (1,417) | ||
Purchases of 257 shares and 391 shares of common stock | (391) | (3,762) | (8,160) | (12,313) | ||
Stock option and restricted stock expense | 1,675 | 1,675 | ||||
Cumulative effect adjustment for leases, net of tax (1) | ASU 2016-02 - Lease | 574 | 574 | ||||
Cumulative effect adjustment for leases, net of tax (1) | (547) | |||||
Reclassification of certain income tax effects (2) | ASU 2018-02 | 547 | (547) | ||||
Dividends declared and paid | (6,112) | (6,112) | ||||
Balance at Jul. 27, 2019 | $ 46,690 | $ 311,207 | $ 329,096 | $ (3,728) | $ 14,873 | $ 698,138 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - shares | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Common Shares | ||
Shares purchased | 391 | 257 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Jul. 27, 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 27, 2019, 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 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), 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 25, 2020. To further strengthen our supply chain footprint, on August 8, 2019, we announced our plan to close our Redlands, California upholstered furniture manufacturing facility and move production to available capacity at our other North American facilities. In addition, we will transition the leather cut-and-sew operation from the Newton, Mississippi upholstered furniture manufacturing plant to another North American-based cut-and-sew facility. The company’s Redlands upholstered furniture plant currently employs about 350 people, accounts for approximately 10 % of the La-Z-Boy branded business total upholstery production and manufactures recliners, motion sofas and classics (high-leg recliners). We plan to cease production at the Redlands plant in October 2019. The move of the Newton leather cut-and-sew operation is expected to fully transition by the end of calendar 2019 and will impact about 105 of the 525 employees at that location. The Redlands facility, which is approximately 200,000 square feet, will be idled after operations cease and marketed for sale. As a part of our supply chain optimization initiative, we may incur expenses that qualify as exit and disposal costs under ASC 420, Exit or Disposal Cost Obligations. Other expenses that are an integral component of, and directly attributable to, restructuring activities do not qualify as exit and disposal costs, such as accelerated depreciation, asset impairments and other incremental costs. In the first quarter of fiscal 2020, we recognized a severance liability of $1.5 million within cost of sales that was probable and estimable at the end of the reporting period. These costs do not qualify as exit and disposal costs under ASC 420. At July 27, 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 2020 Each accounting standards updates (“ASUs”) adopted below had a significant impact on our accounting policies and/or our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02 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. We have adopted this standard in the first quarter of fiscal 2020 using the modified retrospective approach. The following table summarizes additional ASUs which were adopted in fiscal 2020, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures. ASU Description ASU 2017-06 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force) ASU 2017-12 Targeted Improvements to Accounting for Hedging Activities ASU 2018-02 Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2018-07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ASU 2018-16 Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes Accounting pronouncements not yet adopted The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures. ASU Description Adoption Date ASU 2016-13 Financial Instruments – Credit losses Fiscal 2021 ASU 2018-13 Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements Fiscal 2021 ASU 2018-14 Compensation – Retirement benefits – Defined Benefit Plans – General – Changes to the Disclosure Requirements for Defined Benefit Plans Fiscal 2022 |
Acquisitions
Acquisitions | 3 Months Ended |
Jul. 27, 2019 | |
Acquisitions | |
Acquisitions | Note 2: Acquisitions We did not complete any acquisitions during the quarter ended July 27, 2019. Information regarding our fiscal 2019 acquisition below reflects revised estimates based on updated information obtained during the first quarter of fiscal 2020. 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. We received the working capital adjustment during the third quarter of fiscal 2019 from amounts placed in escrow at the time of the closing of the transaction. We acquired Joybird to better position ourselves 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 (net of the working capital adjustment), $7.5 million in prepaid compensation, and the assumption of $5.0 million of liabilities that will be paid within two years following the acquisition.The remaining $25 million will be paid in five annual installments of $5 million on the anniversary date of the acquisition, the first of which was paid in the first quarter of fiscal 2020. 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 resigns 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 on the date of acquisition of $7.5 million, which reflects the provisional fair value of the earn-out opportunities as of the date of acquisition. We also recorded a finite-lived intangible asset of $6.4 million reflecting the provisional fair value of the acquired Joybird ® We recorded $78.8 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, we based the purchase price allocations on provisional fair values at the date of acquisition. During the first quarter of fiscal 2020, we obtained additional data and have revised certain of our estimates, resulting in the purchase price allocations shown below: Second quarter fiscal 2019 Corporate and Other (Amounts in thousands) acquisitions Fair value of consideration: Cash (paid at closing) $ 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 3,733 Property, plant and equipment 2,057 Finite-lived tradename 6,400 Other long-term assets 3,647 Accounts payable (8,222) Customer deposits (13,904) Other current liabilities (7,681) Other long-term liabilities (150) Total identifiable net liabilities acquired (8,862) Goodwill $ 78,847 We included the Joybird operating segment in our other business activities which we report as Corporate and Other results upon acquisition. The above acquisition was not 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 amounts used in measuring goodwill. As we are beyond the provisional period, all of the purchase accounting shown above is final. |
Restricted Cash
Restricted Cash | 3 Months Ended |
Jul. 27, 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) 7/27/19 7/28/18 Cash and cash equivalents $ 111,622 $ 134,247 Restricted cash 1,970 2,358 Total cash, cash equivalents and restricted cash $ 113,592 $ 136,605 |
Inventories
Inventories | 3 Months Ended |
Jul. 27, 2019 | |
Inventories | |
Inventories | Note 4: Inventories A summary of inventories is as follows: (Unaudited, amounts in thousands) 7/27/19 4/27/19 Raw materials $ 94,384 $ 90,359 Work in process 13,514 13,728 Finished goods 111,469 114,478 FIFO inventories 219,367 218,565 Excess of FIFO over LIFO (21,666) (21,666) Total inventories $ 197,701 $ 196,899 |
Leases
Leases | 3 Months Ended |
Jul. 27, 2019 | |
Leases | |
Leases | Note 5: Leases During the first quarter of fiscal 2020, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. The guidance requires lessees to recognize substantially all leases on their balance sheet as a right-of-use (“ROU”) asset and a lease liability. The Company leases real estate for retail stores, distribution centers, warehouses, plants, showrooms and office space. We also have equipment leases for tractors/trailers, IT and office equipment and vehicles. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Most of our real estate leases include options to renew or terminate early. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet this criteria are included in the lease term at lease commencement. Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S. Treasury borrowing rates. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. Some of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability. The Company has elected to apply the practical expedients permitted under transition guidance to forgo the restatement of comparative periods and to not reassess leases entered into prior to adoption. In addition, we have elected the practical expedient to not separate lease and non-lease components when determining the ROU asset and lease liability. We have also made an accounting policy election to not recognize an ROU asset and lease liability on the balance sheet for those leases with an initial term of one year or less and instead such liabilities will be expensed on a straight-line basis over the lease term. Supplemental balance sheet information (in thousands) related to leases as of July 27, 2019: Operating leases ROU assets $ 312,312 Lease liabilities, short-term 64,031 Lease liabilities, long-term 262,264 Finance leases ROU assets $ 121 Lease liabilities, short-term 127 Lease liabilities, long-term — The ROU assets by segment are as follows (in thousands) as of July 27, 2019: Upholstery $ 55,057 Casegoods 2,205 Retail 248,338 Corporate & Other 6,833 Total ROU assets $ 312,433 The components of lease cost are as follows (in thousands) for the quarter ended July 27, 2019: Operating lease cost $ 19,018 Financing lease cost 49 Short-term lease cost 25 Variable lease cost 40 Less: Sublease income (628) Total lease cost $ 18,504 The following table presents supplemental lease disclosures for the quarter ended July 27, 2019: (Dollars in thousands) Operating Financing Cash paid for amounts included in the measurement of lease liabilities $ 19,303 $ 49 Lease liabilities arising from new ROU assets 14,353 — Weighted-average remaining lease term (years) 6.6 0.8 Weighted-average discount rate 3.9 % 3.9 % The following table presents our undiscounted cash flows as of July 27, 2019 and our minimum contractual obligations on our leases as of April 27, 2019: 7/27/19 4/27/19 (Amounts in thousands) Operating Leases Financing Leases Operating Leases Financing Leases Within one year $ 75,357 $ 129 $ 76,508 $ 180 After one year and within two years 68,610 — 71,544 19 After two years and within three years 55,219 — 58,763 — After three years and within four years 43,029 — 46,541 — After four years and within five years 34,193 — 36,082 — After five years 93,658 — 102,782 — Total lease payments 370,066 129 $ 392,220 $ 199 Less: Interest 43,771 2 Total lease obligations $ 326,295 $ 127 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Jul. 27, 2019 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 6: Goodwill and Other Intangible Assets We have goodwill on our consolidated balance sheet as follows: Reportable Segment/Unit Related Acquisition Upholstery segment Acquisition of the wholesale business in the United Kingdom and Ireland Retail segment Acquisitions of La-Z-Boy Furniture Galleries ® Corporate & Other Acquisition of Joybird The following is a roll-forward of goodwill for the quarter ended July 27, 2019: Upholstery Retail Corporate Total (Unaudited, amounts in thousands) Segment Segment and Other Goodwill Balance at April 27, 2019 $ 12,148 $ 94,103 $ 79,616 $ 185,867 Acquisition adjustment — — (769) (769) Translation adjustment (500) 77 — (423) Balance at July 27, 2019 $ 11,648 $ 94,180 $ 78,847 $ 184,675 We have intangible assets on our consolidated balance sheet as follows: Reportable Segment/Unit Intangible Asset Useful Life Upholstery segment Primarily acquired customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland Amortizable over useful lives that do not exceed 15 years Casegoods segment American Drew ® Indefinite-lived Retail segment Reacquired rights to own and operate La-Z-Boy Furniture Galleries ® Indefinite-lived Corporate & Other Joybird ® Amortizable over eight-year useful life The following is a roll-forward of our other intangible assets for the quarter ended July 27, 2019: Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Amounts in thousands) Names Names Rights Assets Assets Balance at April 27, 2019 $ 1,155 $ 5,801 $ 20,117 $ 2,834 $ 29,907 Amortization — (200) — (55) (255) Translation adjustment — — 58 (115) (57) Balance at July 27, 2019 $ 1,155 $ 5,601 $ 20,175 $ 2,664 $ 29,595 |
Investments
Investments | 3 Months Ended |
Jul. 27, 2019 | |
Investments | |
Investments | Note 7: 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 The following summarizes our investments at July 27, 2019, and April 27, 2019: (Unaudited, amounts in thousands) 7/27/19 4/27/19 Short-term investments: Marketable securities $ 26,002 $ 18,016 Held-to-maturity investments 3,454 3,341 Total short-term investments 29,456 21,357 Long-term investments: Marketable securities 21,023 24,085 Cost basis investments 11,979 11,979 Total long-term investments 33,002 36,064 Total investments $ 62,458 $ 57,421 Investments to enhance returns on cash $ 32,884 $ 31,470 Investments to fund compensation/retirement plans $ 17,595 $ 13,972 Other investments $ 11,979 $ 11,979 The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type at July 27, 2019, and April 27, 2019: At July 27, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 2,066 $ — $ 23,268 Fixed income 155 (47) 34,382 Other 324 (16) 4,808 Total securities $ 2,545 $ (63) $ 62,458 At April 27, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 1,841 $ — $ 19,535 Fixed income 75 (111) 33,217 Other 258 (13) 4,669 Total securities $ 2,174 $ (124) $ 57,421 The following table summarizes sales of marketable securities: Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Proceeds from sales $ 4,060 $ 4,762 Gross realized gains 6 75 Gross realized losses (2) (55) At July 27, 2019, the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity was $22.6 million within one year, $9.4 million within two to five years, $1.6 million within six to ten years, and $0.8 million thereafter. |
Employee Benefits
Employee Benefits | 3 Months Ended |
Jul. 27, 2019 | |
Employee Benefits | |
Employee Benefits | Note 8: Employee Benefits Pension During the fourth quarter of fiscal 2019, we terminated our defined benefit pension plan for eligible factory hourly employees in our La-Z-Boy operating unit. In connection with the plan termination, we settled all future obligations under the plan through a combination of lump-sum payments to eligible participants who elected to receive them, and transferred any remaining benefit obligations under the plan to a highly rated insurance company. There were no net periodic pension costs associated with the terminated pension plan in the quarter ended July 27, 2019. For the quarter ended July 28, 2018, net periodic pension costs were as follows: Quarter Ended (Unaudited, amounts in thousands) 7/28/18 Service cost $ 323 Interest cost 1,116 Expected return on plan assets (1,136) Net amortization 639 Net periodic pension cost $ 942 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. 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. |
Product Warranties
Product Warranties | 3 Months Ended |
Jul. 27, 2019 | |
Product Warranties | |
Product Warranties | Note 9: 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 90% of our warranty liability relates to our Upholstery 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, which is 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 (Unaudited, amounts in thousands) 7/27/19 7/28/18 Balance as of the beginning of the period $ 22,736 $ 21,205 Accruals during the period 5,657 5,121 Settlements during the period (5,557) (5,233) Balance as of the end of the period $ 22,836 $ 21,093 As of July 27, 2019, and April 27, 2019, we included $13.9 million 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. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Jul. 27, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 10: 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 (Unaudited, amounts in thousands) 7/27/19 7/28/18 Equity-based awards expense $ 1,675 $ 2,040 Liability-based awards expense (60) 166 Total stock-based compensation expense $ 1,615 $ 2,206 Stock Options. We calculated the fair value of stock options granted during the first quarter of fiscal 2020 using the following assumptions: Fiscal 2020 (Unaudited) grant Risk-free interest rate 2.19 % Dividend rate 1.72 % Expected life in years 5.0 Stock price volatility 34.27 % Fair value per share $ 7.94 Stock Appreciation Rights (“SARs”). 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 July 27, 2019, we had 7,149 and 14,580 SARs outstanding for the fiscal 2013 and fiscal 2014 awards, respectively. These awards have exceeded their expected life and will be 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 July 27, 2019, the intrinsic value per share of the fiscal 2013 and fiscal 2014 awards were $19.71 and Restricted Stock Performance Shares. 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 2020 that vest based on attaining performance goals was $28.68, 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. For shares that vest based on market conditions, 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 2020 grant of shares that vest based on market conditions was $38.75. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Jul. 27, 2019 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | Note 11: Accumulated Other Comprehensive Loss The activity in accumulated other comprehensive loss for the quarters ended July 27, 2019, and July 28, 2018, is as follows: Unrealized Change in gain 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 27, 2019 $ 50 $ 87 $ 6 $ (3,605) $ (3,462) Changes before reclassifications 128 — 143 — 271 Reclassification of certain income tax effects (1) — (97) 258 (708) (547) Amounts reclassified to net income — 5 — 55 60 Tax effect — (1) (35) (14) (50) Other comprehensive income (loss) attributable to La-Z-Boy Incorporated 128 (93) 366 (667) (266) Balance at July 27, 2019 $ 178 $ (6) $ 372 $ (4,272) $ (3,728) (1) Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to adoption of ASU 2018-02. 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 28, 2018 $ 2,388 $ 154 $ 1,376 $ (29,117) $ (25,199) Changes before reclassifications (2,961) (509) 73 — (3,397) Cumulative effect adjustment for investments (1) — — (1,637) — (1,637) Amounts reclassified to net income — 67 (19) 686 734 Tax effect — 109 (13) (170) (74) Other comprehensive income attributable to La-Z-Boy Incorporated (2,961) (333) (1,596) 516 (4,374) Balance at July 28, 2018 $ (573) $ (179) $ (220) $ (28,601) $ (29,573) (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). 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 quarters ended July 27, 2019, and July 28, 2018, were as follows: Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Balance as of the beginning of the period $ 14,468 $ 13,035 Net income (81) 648 Other comprehensive income 486 (1,228) Balance as of the end of the period $ 14,873 $ 12,455 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Jul. 27, 2019 | |
Revenue Recognition | |
Revenue Recognition | Note 12: Revenue Recognition 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 or unit for the quarter ended July 27, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 179,522 $ — $ 85,184 $ — $ 264,706 Stationary Upholstery Furniture 87,509 4,144 29,153 22,952 143,758 Bedroom Furniture — 8,193 1,447 1,182 10,822 Dining Room Furniture — 5,405 2,599 394 8,398 Occasional Furniture 312 10,823 5,125 361 16,621 Other (1) 26,073 (1,430) 19,488 (4,337) 39,794 Total $ 293,416 $ 27,135 $ 142,996 $ 20,552 484,099 Eliminations (70,466) Consolidated Net Sales $ 413,633 (1) 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 quarter ended July 28, 2018: (Unaudited, amounts in thousands) Upholstery Casegoods Retail Total Motion Upholstery Furniture $ 187,659 $ — $ 74,957 $ 262,616 Stationary Upholstery Furniture 85,290 3,942 23,164 112,396 Bedroom Furniture — 8,364 855 9,219 Dining Room Furniture — 5,929 1,583 7,512 Occasional Furniture 393 11,988 3,974 16,355 Other (1) 20,056 (1,837) 14,695 32,914 Total $ 293,398 $ 28,386 $ 119,228 441,012 Corporate and Other (2) 3,865 Eliminations (60,182) Consolidated Net Sales $ 384,695 (1) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, discounts & allowances, rebates and other sales incentives (2) Primarily includes revenue for royalties and intercompany commissions 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 ® ® Stationary Upholstery Furniture ® ® Bedroom Furniture ® Dining Room Furniture ® Occasional Furniture ® Our consolidated balance sheet includes current assets of $18.9 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 2020, we had 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 July 27, 2019, we included $48.8 million of customer deposits and $18.9 million of deferred revenues in accrued expenses and other current liabilities on our consolidated balance sheet. At the beginning of fiscal 2020, we had $42.8 million of customer deposits and $17.0 million of deferred revenues. During the quarter ended July 27, 2019, we recognized revenue of $52.4 million related to our contract liabilities. 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 | 3 Months Ended |
Jul. 27, 2019 | |
Segment Information | |
Segment Information | Note 13: Segment Information Our reportable operating segments are the Upholstery segment, the Casegoods segment and the Retail segment. Upholstery Segment ® ® Casegoods Segment ® ® ® ® Retail Segment ® Corporate & Other ® Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Sales Upholstery segment: Sales to external customers $ 230,767 $ 240,054 Intersegment sales 62,649 53,344 Upholstery segment sales 293,416 293,398 Casegoods segment: Sales to external customers 22,006 24,403 Intersegment sales 5,129 3,983 Casegoods segment sales 27,135 28,386 Retail segment sales 142,996 119,228 Corporate and Other: Sales to external customers 17,864 1,010 Intersegment sales 2,688 2,855 Corporate and Other sales 20,552 3,865 Eliminations (70,466) (60,182) Consolidated sales $ 413,633 $ 384,695 Operating Income (Loss) Upholstery segment $ 26,267 $ 23,884 Casegoods segment 2,597 3,080 Retail segment 8,477 4,458 Corporate and Other (13,919) (8,262) Consolidated operating income 23,422 23,160 Interest expense (318) (104) Interest income 727 602 Other income (expense), net (760) 892 Income before income taxes $ 23,071 $ 24,550 |
Income Taxes
Income Taxes | 3 Months Ended |
Jul. 27, 2019 | |
Income Taxes | |
Income Taxes | Note 14: Income Taxes Our effective tax rate was 22.0% for the first quarter of fiscal 2020, as compared with 22.8% in the first quarter of fiscal 2019. 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 first quarter of fiscal 2020 would have been 25.2%. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Jul. 27, 2019 | |
Earnings per Share | |
Earnings per Share | Note 15: 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 and fiscal 2020 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 and fiscal 2020 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 (Unaudited, amounts in thousands) 7/27/19 7/28/18 Numerator (basic and diluted): Net income attributable to La-Z-Boy Incorporated $ 18,069 $ 18,303 Income allocated to participating securities (39) (76) Net income available to common Shareholders $ 18,030 $ 18,227 Denominator: Basic weighted average common shares outstanding 46,820 46,716 Add: Contingent common shares 130 66 Stock option dilution 175 379 Diluted weighted average common shares outstanding 47,125 47,161 Earnings per Share: Basic $ 0.39 $ 0.39 Diluted $ 0.38 $ 0.39 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 ended July 27, 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. Similarly, we excluded options to purchase 0.4 million shares from the diluted share calculation for the quarter ended July 28, 2018. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jul. 27, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 16: 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 July 27, 2019, and April 27, 2019. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented. At July 27, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 10 $ 35,627 $ — Held-to-maturity investments 3,454 — — Cost basis investments — — 11,979 Total assets $ 3,464 $ 35,627 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,900 At April 27, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 5 $ 34,390 $ — Held-to-maturity investments 3,341 — — Cost basis investment — — 11,979 Total assets $ 3,346 $ 34,390 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,900 At July 27, 2019 and April 27, 2019, 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 July 27, 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 $7.9 million contingent consideration liability for the acquisition of Joybird. 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 There were no changes to the fair value of our Level 3 assets and liabilities during the first quarter of fiscal 2020. 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 7). The fair value of the investments measured using net asset value at July 27, 2019, and April 27, 2019, was $11.4 million and $7.7 million, respectively. |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Joybird | |
Summary of fair values at the dates of acquisition | Second quarter fiscal 2019 Corporate and Other (Amounts in thousands) acquisitions Fair value of consideration: Cash (paid at closing) $ 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 3,733 Property, plant and equipment 2,057 Finite-lived tradename 6,400 Other long-term assets 3,647 Accounts payable (8,222) Customer deposits (13,904) Other current liabilities (7,681) Other long-term liabilities (150) Total identifiable net liabilities acquired (8,862) Goodwill $ 78,847 |
Restricted Cash (Tables)
Restricted Cash (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Restricted Cash | |
Schedule of cash, cash equivalents and restricted cash | (Unaudited, amounts in thousands) 7/27/19 7/28/18 Cash and cash equivalents $ 111,622 $ 134,247 Restricted cash 1,970 2,358 Total cash, cash equivalents and restricted cash $ 113,592 $ 136,605 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Inventories | |
Summary of inventories | (Unaudited, amounts in thousands) 7/27/19 4/27/19 Raw materials $ 94,384 $ 90,359 Work in process 13,514 13,728 Finished goods 111,469 114,478 FIFO inventories 219,367 218,565 Excess of FIFO over LIFO (21,666) (21,666) Total inventories $ 197,701 $ 196,899 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Leases | |
Schedule of supplemental balance sheet information | Supplemental balance sheet information (in thousands) related to leases as of July 27, 2019: Operating leases ROU assets $ 312,312 Lease liabilities, short-term 64,031 Lease liabilities, long-term 262,264 Finance leases ROU assets $ 121 Lease liabilities, short-term 127 Lease liabilities, long-term — |
Schedule of ROU assets by segment | The ROU assets by segment are as follows (in thousands) as of July 27, 2019: Upholstery $ 55,057 Casegoods 2,205 Retail 248,338 Corporate & Other 6,833 Total ROU assets $ 312,433 |
Schedule of components of lease cost | The components of lease cost are as follows (in thousands) for the quarter ended July 27, 2019: Operating lease cost $ 19,018 Financing lease cost 49 Short-term lease cost 25 Variable lease cost 40 Less: Sublease income (628) Total lease cost $ 18,504 |
Schedule of supplemental lease disclosures | The following table presents supplemental lease disclosures for the quarter ended July 27, 2019: (Dollars in thousands) Operating Financing Cash paid for amounts included in the measurement of lease liabilities $ 19,303 $ 49 Lease liabilities arising from new ROU assets 14,353 — Weighted-average remaining lease term (years) 6.6 0.8 Weighted-average discount rate 3.9 % 3.9 % |
Schedule of undiscounted cash flows and minimum contractual obligations | The following table presents our undiscounted cash flows as of July 27, 2019 and our minimum contractual obligations on our leases as of April 27, 2019: 7/27/19 4/27/19 (Amounts in thousands) Operating Leases Financing Leases Operating Leases Financing Leases Within one year $ 75,357 $ 129 $ 76,508 $ 180 After one year and within two years 68,610 — 71,544 19 After two years and within three years 55,219 — 58,763 — After three years and within four years 43,029 — 46,541 — After four years and within five years 34,193 — 36,082 — After five years 93,658 — 102,782 — Total lease payments 370,066 129 $ 392,220 $ 199 Less: Interest 43,771 2 Total lease obligations $ 326,295 $ 127 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Jul. 27, 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 27, 2019 $ 12,148 $ 94,103 $ 79,616 $ 185,867 Acquisition adjustment — — (769) (769) Translation adjustment (500) 77 — (423) Balance at July 27, 2019 $ 11,648 $ 94,180 $ 78,847 $ 184,675 |
Roll-forward of other intangible assets - Indefinite-lived | Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Amounts in thousands) Names Names Rights Assets Assets Balance at April 27, 2019 $ 1,155 $ 5,801 $ 20,117 $ 2,834 $ 29,907 Amortization — (200) — (55) (255) Translation adjustment — — 58 (115) (57) Balance at July 27, 2019 $ 1,155 $ 5,601 $ 20,175 $ 2,664 $ 29,595 |
Roll-forward of other intangible assets - Amortizable | Indefinite- Finite- Indefinite- Total Lived Lived Lived Other Other Trade Trade Reacquired Intangible Intangible (Amounts in thousands) Names Names Rights Assets Assets Balance at April 27, 2019 $ 1,155 $ 5,801 $ 20,117 $ 2,834 $ 29,907 Amortization — (200) — (55) (255) Translation adjustment — — 58 (115) (57) Balance at July 27, 2019 $ 1,155 $ 5,601 $ 20,175 $ 2,664 $ 29,595 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Investments | |
Summary of investments | (Unaudited, amounts in thousands) 7/27/19 4/27/19 Short-term investments: Marketable securities $ 26,002 $ 18,016 Held-to-maturity investments 3,454 3,341 Total short-term investments 29,456 21,357 Long-term investments: Marketable securities 21,023 24,085 Cost basis investments 11,979 11,979 Total long-term investments 33,002 36,064 Total investments $ 62,458 $ 57,421 Investments to enhance returns on cash $ 32,884 $ 31,470 Investments to fund compensation/retirement plans $ 17,595 $ 13,972 Other investments $ 11,979 $ 11,979 |
Summary of unrealized gains, unrealized losses, and fair value by investment type | At July 27, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 2,066 $ — $ 23,268 Fixed income 155 (47) 34,382 Other 324 (16) 4,808 Total securities $ 2,545 $ (63) $ 62,458 At April 27, 2019 Gross Gross (Unaudited, amounts in thousands) Unrealized Gains Unrealized Losses Fair Value Equity securities $ 1,841 $ — $ 19,535 Fixed income 75 (111) 33,217 Other 258 (13) 4,669 Total securities $ 2,174 $ (124) $ 57,421 |
Summary of sales of marketable securities | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Proceeds from sales $ 4,060 $ 4,762 Gross realized gains 6 75 Gross realized losses (2) (55) |
Employee Benefits (Tables)
Employee Benefits (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Employee Benefits | |
Schedule of net periodic pension costs | Quarter Ended (Unaudited, amounts in thousands) 7/28/18 Service cost $ 323 Interest cost 1,116 Expected return on plan assets (1,136) Net amortization 639 Net periodic pension cost $ 942 |
Product Warranties (Tables)
Product Warranties (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Product Warranties | |
Reconciliation of changes in product warranty liability | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Balance as of the beginning of the period $ 22,736 $ 21,205 Accruals during the period 5,657 5,121 Settlements during the period (5,557) (5,233) Balance as of the end of the period $ 22,836 $ 21,093 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Stock-Based Compensation | |
Summary of total stock-based compensation expense | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Equity-based awards expense $ 1,675 $ 2,040 Liability-based awards expense (60) 166 Total stock-based compensation expense $ 1,615 $ 2,206 |
Fair value assumptions for stock options | Fiscal 2020 (Unaudited) grant Risk-free interest rate 2.19 % Dividend rate 1.72 % Expected life in years 5.0 Stock price volatility 34.27 % Fair value per share $ 7.94 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Accumulated Other Comprehensive Loss | |
Activity in accumulated other comprehensive loss | The activity in accumulated other comprehensive loss for the quarters ended July 27, 2019, and July 28, 2018, is as follows: Unrealized Change in gain 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 27, 2019 $ 50 $ 87 $ 6 $ (3,605) $ (3,462) Changes before reclassifications 128 — 143 — 271 Reclassification of certain income tax effects (1) — (97) 258 (708) (547) Amounts reclassified to net income — 5 — 55 60 Tax effect — (1) (35) (14) (50) Other comprehensive income (loss) attributable to La-Z-Boy Incorporated 128 (93) 366 (667) (266) Balance at July 27, 2019 $ 178 $ (6) $ 372 $ (4,272) $ (3,728) (1) Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to adoption of ASU 2018-02. 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 28, 2018 $ 2,388 $ 154 $ 1,376 $ (29,117) $ (25,199) Changes before reclassifications (2,961) (509) 73 — (3,397) Cumulative effect adjustment for investments (1) — — (1,637) — (1,637) Amounts reclassified to net income — 67 (19) 686 734 Tax effect — 109 (13) (170) (74) Other comprehensive income attributable to La-Z-Boy Incorporated (2,961) (333) (1,596) 516 (4,374) Balance at July 28, 2018 $ (573) $ (179) $ (220) $ (28,601) $ (29,573) (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). |
Components of non-controlling interest | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Balance as of the beginning of the period $ 14,468 $ 13,035 Net income (81) 648 Other comprehensive income 486 (1,228) Balance as of the end of the period $ 14,873 $ 12,455 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Revenue Recognition | |
Schedule of disaggregation of revenue by product category by segment or unit | The following table disaggregates our revenue by product category by segment or unit for the quarter ended July 27, 2019: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 179,522 $ — $ 85,184 $ — $ 264,706 Stationary Upholstery Furniture 87,509 4,144 29,153 22,952 143,758 Bedroom Furniture — 8,193 1,447 1,182 10,822 Dining Room Furniture — 5,405 2,599 394 8,398 Occasional Furniture 312 10,823 5,125 361 16,621 Other (1) 26,073 (1,430) 19,488 (4,337) 39,794 Total $ 293,416 $ 27,135 $ 142,996 $ 20,552 484,099 Eliminations (70,466) Consolidated Net Sales $ 413,633 (1) 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 quarter ended July 28, 2018: (Unaudited, amounts in thousands) Upholstery Casegoods Retail Total Motion Upholstery Furniture $ 187,659 $ — $ 74,957 $ 262,616 Stationary Upholstery Furniture 85,290 3,942 23,164 112,396 Bedroom Furniture — 8,364 855 9,219 Dining Room Furniture — 5,929 1,583 7,512 Occasional Furniture 393 11,988 3,974 16,355 Other (1) 20,056 (1,837) 14,695 32,914 Total $ 293,398 $ 28,386 $ 119,228 441,012 Corporate and Other (2) 3,865 Eliminations (60,182) Consolidated Net Sales $ 384,695 (1) Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, discounts & allowances, rebates and other sales incentives (2) Primarily includes revenue for royalties and intercompany commissions |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Segment Information | |
Schedule of segment information | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Sales Upholstery segment: Sales to external customers $ 230,767 $ 240,054 Intersegment sales 62,649 53,344 Upholstery segment sales 293,416 293,398 Casegoods segment: Sales to external customers 22,006 24,403 Intersegment sales 5,129 3,983 Casegoods segment sales 27,135 28,386 Retail segment sales 142,996 119,228 Corporate and Other: Sales to external customers 17,864 1,010 Intersegment sales 2,688 2,855 Corporate and Other sales 20,552 3,865 Eliminations (70,466) (60,182) Consolidated sales $ 413,633 $ 384,695 Operating Income (Loss) Upholstery segment $ 26,267 $ 23,884 Casegoods segment 2,597 3,080 Retail segment 8,477 4,458 Corporate and Other (13,919) (8,262) Consolidated operating income 23,422 23,160 Interest expense (318) (104) Interest income 727 602 Other income (expense), net (760) 892 Income before income taxes $ 23,071 $ 24,550 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Earnings per Share | |
Reconciliation of numerators and denominators used in the computation of basic and diluted earnings per share | Quarter Ended (Unaudited, amounts in thousands) 7/27/19 7/28/18 Numerator (basic and diluted): Net income attributable to La-Z-Boy Incorporated $ 18,069 $ 18,303 Income allocated to participating securities (39) (76) Net income available to common Shareholders $ 18,030 $ 18,227 Denominator: Basic weighted average common shares outstanding 46,820 46,716 Add: Contingent common shares 130 66 Stock option dilution 175 379 Diluted weighted average common shares outstanding 47,125 47,161 Earnings per Share: Basic $ 0.39 $ 0.39 Diluted $ 0.38 $ 0.39 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jul. 27, 2019 | |
Fair Value Measurements | |
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | At July 27, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 10 $ 35,627 $ — Held-to-maturity investments 3,454 — — Cost basis investments — — 11,979 Total assets $ 3,464 $ 35,627 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,900 At April 27, 2019 Fair Value Measurements (Unaudited, amounts in thousands) Level 1 Level 2 Level 3 Assets Marketable securities $ 5 $ 34,390 $ — Held-to-maturity investments 3,341 — — Cost basis investment — — 11,979 Total assets $ 3,346 $ 34,390 $ 11,979 Liabilities Contingent consideration liability $ — $ — $ 7,900 |
Basis of Presentation - Plant C
Basis of Presentation - Plant Closing (Details) $ in Millions | Aug. 08, 2019ft²employee | Jul. 27, 2019USD ($) |
Cost of sales | ||
Plant Closing | ||
Severance costs | $ | $ 1.5 | |
Redlands, California | ||
Plant Closing | ||
Number of employees | 350 | |
Area of land | ft² | 200,000 | |
Redlands, California | Product Concentration Risk | La-Z-Boy branded business total upholstery production and manufactures recliners, motion sofas and classics (high-leg recliners) | ||
Plant Closing | ||
Percentage of production | 10.00% | |
Newton, Mississippi | ||
Plant Closing | ||
Number of employees | 525 | |
Number of employees impacted by transition of Newton Leather Cut-and-sew operation | 105 |
Basis of Presentation - VIE (De
Basis of Presentation - VIE (Details) - Variable interest entities, not primary beneficiary | Jul. 27, 2019company |
Investments | |
Preferred share investments, number of privately-held companies | 2 |
Preferred share investments with common share warrant, number of privately-held companies | 1 |
Acquisitions - Corporate and Ot
Acquisitions - Corporate and Other (Details) $ in Thousands | Jul. 30, 2018USD ($)installmentpersonitem | Jul. 27, 2019USD ($) | Apr. 27, 2019USD ($) |
Amounts recognized for identifiable assets acquired and liabilities assumed: | |||
Goodwill | $ 184,675 | $ 185,867 | |
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 | ||
Number of annual installments | installment | 5 | ||
Annual installments of remaining guaranteed payments | $ 5,000 | ||
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 (paid at closing) | 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 | 3,733 | ||
Property, plant and equipment | 2,057 | ||
Finite-lived tradename | 6,400 | ||
Other long-term assets | 3,647 | ||
Accounts payable | (8,222) | ||
Customer deposits | (13,904) | ||
Other current liabilities | (7,681) | ||
Other long-term liabilities | (150) | ||
Total identifiable net assets acquired | (8,862) | ||
Goodwill | $ 78,847 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 | Jul. 28, 2018 | Apr. 28, 2018 |
Restricted Cash | ||||
Cash and cash equivalents | $ 111,622 | $ 129,819 | $ 134,247 | |
Restricted cash | 1,970 | 1,968 | 2,358 | |
Total cash, cash equivalents and restricted cash | $ 113,592 | $ 131,787 | $ 136,605 | $ 136,871 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Inventories | ||
Raw materials | $ 94,384 | $ 90,359 |
Work in process | 13,514 | 13,728 |
Finished goods | 111,469 | 114,478 |
FIFO inventories | 219,367 | 218,565 |
Excess of FIFO over LIFO | (21,666) | (21,666) |
Total inventories | $ 197,701 | $ 196,899 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) $ in Thousands | Jul. 27, 2019USD ($) |
Leases | |
Operating leases, ROU assets, net | $ 312,312 |
Operating lease liabilities, short-term | 64,031 |
Operating lease liabilities, long-term | 262,264 |
Finance lease, ROU assets, net | 121 |
Finance lease liabilities, short-term | $ 127 |
Leases - ROU Assets by Segment
Leases - ROU Assets by Segment (Details) $ in Thousands | Jul. 27, 2019USD ($) |
Leases | |
Total ROU assets | $ 312,433 |
Upholstery Segment | |
Leases | |
Total ROU assets | 55,057 |
Casegoods Segment | |
Leases | |
Total ROU assets | 2,205 |
Retail Segment | |
Leases | |
Total ROU assets | 248,338 |
Corporate and Other, non-segment | |
Leases | |
Total ROU assets | $ 6,833 |
Leases - Lease cost (Details)
Leases - Lease cost (Details) $ in Thousands | 3 Months Ended |
Jul. 27, 2019USD ($) | |
Lease cost | |
Operating lease cost | $ 19,018 |
Financing lease cost | 49 |
Short-term lease cost | 25 |
Variable lease cost | 40 |
Less: Sublease income | (628) |
Total lease cost | $ 18,504 |
Leases - Supplemental Lease Dis
Leases - Supplemental Lease Disclosures (Details) $ in Thousands | 3 Months Ended |
Jul. 27, 2019USD ($) | |
Leases | |
Cash paid for amounts included in the measurement of lease liabilities, operating | $ 19,303 |
Cash paid for amounts included in the measurement of lease liabilities, financing | 49 |
Lease liabilities arising from new ROU assets, operating | $ 14,353 |
Lease term and discount rate | |
Operating lease, Weighted-average remaining lease term (years) | 6 years 7 months 6 days |
Finance lease, Weighted-average remaining lease term (years) | 9 months 18 days |
Operating Lease, Weighted-average discount rate | 3.90% |
Finance lease, Weighted-average discount rate | 3.90% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Operating Leases | ||
Within one year | $ 75,357 | |
After one year and within two years | 68,610 | |
After two years and within three years | 55,219 | |
After three years and within four years | 43,029 | |
After four years and within five years | 34,193 | |
After five years | 93,658 | |
Total lease payments | 370,066 | |
Less: Interest | 43,771 | |
Total lease obligations | 326,295 | |
Within one year | $ 76,508 | |
After one year and within two years | 71,544 | |
After two years and within three years | 58,763 | |
After three years and within four years | 46,541 | |
After four years and within five years | 36,082 | |
After five years | 102,782 | |
Total lease payments | 392,220 | |
Financing Leases | ||
Within one year | 129 | |
Total lease payments | 129 | |
Less: Interest | 2 | |
Total lease obligations | $ 127 | |
Within one year | 180 | |
After one year and within two years | 19 | |
Total lease payments | $ 199 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill Roll-forward II (Details) $ in Thousands | 3 Months Ended |
Jul. 27, 2019USD ($) | |
Roll-forward of goodwill | |
Balance at beginning of period | $ 185,867 |
Acquisition adjustment | (769) |
Translation adjustment | (423) |
Balance at end of period | 184,675 |
Upholstery Segment | |
Roll-forward of goodwill | |
Balance at beginning of period | 12,148 |
Translation adjustment | (500) |
Balance at end of period | 11,648 |
Retail Segment | |
Roll-forward of goodwill | |
Balance at beginning of period | 94,103 |
Translation adjustment | 77 |
Balance at end of period | 94,180 |
Corporate and Other | |
Roll-forward of goodwill | |
Balance at beginning of period | 79,616 |
Acquisition adjustment | (769) |
Balance at end of period | $ 78,847 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) $ in Thousands | 3 Months Ended |
Jul. 27, 2019USD ($) | |
Roll-forward of other intangible assets | |
Balance at beginning of period | $ 29,907 |
Amortization | (255) |
Translation adjustment | (57) |
Balance at end of period | 29,595 |
Trade Names | |
Roll-forward of other intangible assets | |
Balance at beginning of period | 5,801 |
Amortization | (200) |
Balance at end of period | 5,601 |
Other Intangible Assets | |
Roll-forward of other intangible assets | |
Balance at beginning of period | 2,834 |
Amortization | (55) |
Translation adjustment | (115) |
Balance at end of period | 2,664 |
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 | 20,117 |
Translation adjustment | 58 |
Balance at end of period | $ 20,175 |
Upholstery Segment | Maximum | |
Other intangible assets | |
Useful life | 15 years |
Corporate and Other | |
Other intangible assets | |
Useful life | 8 years |
Investments - Other Investments
Investments - Other Investments (Details) | Jul. 27, 2019company |
Cost-basis investments | |
Investments | |
Preferred share investments, number of privately-held companies | 2 |
Investments - Components (Detai
Investments - Components (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Investments | ||
Total investments | $ 62,458 | $ 57,421 |
Investments to enhance returns on cash | ||
Investments | ||
Total investments | 32,884 | 31,470 |
Investments to fund compensation/retirement plans | ||
Investments | ||
Total investments | 17,595 | 13,972 |
Other investments | ||
Investments | ||
Total investments | 11,979 | 11,979 |
Other current assets | ||
Investments | ||
Marketable securities | 26,002 | 18,016 |
Held-to-maturity investments | 3,454 | 3,341 |
Total investments | 29,456 | 21,357 |
Other long-term assets | ||
Investments | ||
Marketable securities | 21,023 | 24,085 |
Cost basis investments | 11,979 | 11,979 |
Total investments | $ 33,002 | $ 36,064 |
Investments - Unrealized Gains
Investments - Unrealized Gains and Losses and Fair Value (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Apr. 27, 2019 |
Summary of investments | ||
Gross Unrealized Gains | $ 2,545 | $ 2,174 |
Gross Unrealized Losses | (63) | (124) |
Fair Value | 62,458 | 57,421 |
Equity securities | ||
Summary of investments | ||
Gross Unrealized Gains | 2,066 | 1,841 |
Fair Value | 23,268 | 19,535 |
Fixed income | ||
Summary of investments | ||
Gross Unrealized Gains | 155 | 75 |
Gross Unrealized Losses | (47) | (111) |
Fair Value | 34,382 | 33,217 |
Other | ||
Summary of investments | ||
Gross Unrealized Gains | 324 | 258 |
Gross Unrealized Losses | (16) | (13) |
Fair Value | $ 4,808 | $ 4,669 |
Investments - Sales and Maturit
Investments - Sales and Maturities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Sales of marketable securities | ||
Proceeds from sales | $ 4,060 | $ 4,762 |
Gross realized gains | 6 | 75 |
Gross realized losses | (2) | $ (55) |
Fair value of available-for-sale securities by contractual maturity | ||
Fair value, available-for-sale securities with contractual maturity within one year | 22,600 | |
Fair value, available-for-sale securities with contractual maturity within two to five years | 9,400 | |
Fair value, available-for-sale securities with contractual maturity within six to ten years | 1,600 | |
Fair value, available-for-sale securities with contractual maturity after ten years | $ 800 |
Employee Benefits - Pension (De
Employee Benefits - Pension (Details) $ in Thousands | 3 Months Ended |
Jul. 28, 2018USD ($) | |
Net periodic pension costs | |
Service cost | $ 323 |
Interest cost | 1,116 |
Expected return on plan assets | (1,136) |
Net amortization | 639 |
Net periodic pension cost | $ 942 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jul. 27, 2019 | Jul. 28, 2018 | Apr. 27, 2019 | |
Reconciliation of changes in product warranty liability | |||
Balance as of the beginning of the period | $ 22,736 | $ 21,205 | |
Accruals during the period | 5,657 | 5,121 | |
Settlements during the period | (5,557) | (5,233) | |
Balance as of the end of the period | 22,836 | $ 21,093 | |
Product warranty liability included in accrued expenses and other current liabilities | $ 13,900 | $ 13,900 | |
Minimum | Upholstery Segment | |||
Product Warranties | |||
Percentage of warranty liability relating to the segment | 90.00% | ||
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 | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Stock-based compensation expense recognized for outstanding grants | ||
Equity-based awards expense | $ 1,675 | $ 2,040 |
Liability-based awards expense | (60) | 166 |
Total stock-based compensation expense | $ 1,615 | $ 2,206 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - Stock Options | 3 Months Ended |
Jul. 27, 2019$ / sharesshares | |
Stock-Based Compensation | |
Shares granted (in shares) | shares | 248,662 |
Fair value assumptions | |
Risk-free interest rate (as a percent) | 2.19% |
Dividend rate (as a percent) | 1.72% |
Expected life in years | 5 years |
Stock price volatility (as a percent) | 34.27% |
Fair value per share (in dollars per share) | $ / shares | $ 7.94 |
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 | 3 Months Ended |
Jul. 27, 2019$ / sharesshares | |
Stock-Based Compensation | |
Term of award | 10 years |
Fiscal 2013 Grant | |
Stock-Based Compensation | |
Number of awards outstanding (in shares) | shares | 7,149 |
Fair value per share (in dollars per share) | $ / shares | $ 19.71 |
Fiscal 2014 Grant | |
Stock-Based Compensation | |
Number of awards outstanding (in shares) | shares | 14,580 |
Fair value per share (in dollars per share) | $ / shares | $ 12.62 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock (Details) - Restricted Stock | 3 Months Ended |
Jul. 27, 2019$ / sharesshares | |
Stock-Based Compensation | |
Number of shares or units granted | shares | 166,399 |
Fair value per share (in dollars per share) | $ / shares | $ 30.24 |
Percentage vesting each year from date of grant | 25.00% |
Period from grant date for first vesting | 1 year |
Vesting period | 4 years |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Awards (Details) | 3 Months Ended |
Jul. 27, 2019$ / sharesshares | |
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 | shares | 155,605 |
Performance-Based Shares, vesting based on performance goals | Fiscal 2019 Grant | |
Stock-Based Compensation | |
Granted (in dollars per share) | $ 28.68 |
Performance Based Shares, vesting based on market conditions | Fiscal 2019 Grant | |
Stock-Based Compensation | |
Granted (in dollars per share) | $ 38.75 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Activity in accumulated other comprehensive loss | ||
Balance | $ 682,508 | |
Balance | 683,265 | |
Components of non-controlling interest | ||
Balance as of the beginning of the period | 14,468 | $ 13,035 |
Net income | (81) | 648 |
Other comprehensive income (loss) | 486 | (1,228) |
Balance as of the end of the period | 14,873 | 12,455 |
Accumulated Other Comprehensive Loss | ||
Activity in accumulated other comprehensive loss | ||
Balance | (3,462) | (25,199) |
Changes before reclassifications | 271 | (3,397) |
Reclassification of certain income tax effects (1) | (547) | (1,637) |
Amounts reclassified to net income | 60 | 734 |
Tax effect | (50) | (74) |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | (266) | (4,374) |
Balance | (3,728) | (29,573) |
Accumulated Other Comprehensive Loss | ASU 2018-02 | ||
Activity in accumulated other comprehensive loss | ||
Cumulative effect adjustment - tax expense | (547) | |
Translation adjustment | ||
Activity in accumulated other comprehensive loss | ||
Balance | 50 | 2,388 |
Changes before reclassifications | 128 | (2,961) |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 128 | (2,961) |
Balance | 178 | (573) |
Change in fair value of cash flow hedge | ||
Activity in accumulated other comprehensive loss | ||
Balance | 87 | 154 |
Changes before reclassifications | (509) | |
Reclassification of certain income tax effects (1) | (97) | |
Amounts reclassified to net income | 5 | 67 |
Tax effect | (1) | 109 |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | (93) | (333) |
Balance | (6) | (179) |
Unrealized gain on marketable securities | ||
Activity in accumulated other comprehensive loss | ||
Balance | 6 | 1,376 |
Changes before reclassifications | 143 | 73 |
Reclassification of certain income tax effects (1) | 258 | (1,637) |
Amounts reclassified to net income | (19) | |
Tax effect | (35) | (13) |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | 366 | (1,596) |
Balance | 372 | (220) |
Unrealized gain on marketable securities | ASU 2016-01 - Investments | ||
Activity in accumulated other comprehensive loss | ||
Reclassification of certain income tax effects (1) | 1,600 | |
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 | (3,605) | (29,117) |
Reclassification of certain income tax effects (1) | (708) | |
Amounts reclassified to net income | 55 | 686 |
Tax effect | (14) | (170) |
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated | (667) | 516 |
Balance | $ (4,272) | $ (28,601) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Revenue Recognition | ||
Consolidated Net Sales | $ 413,633 | $ 384,695 |
Operating Segments | ||
Revenue Recognition | ||
Consolidated Net Sales | 484,099 | 441,012 |
Operating Segments | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 264,706 | 262,616 |
Operating Segments | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 143,758 | 112,396 |
Operating Segments | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 10,822 | 9,219 |
Operating Segments | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 8,398 | 7,512 |
Operating Segments | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 16,621 | 16,355 |
Operating Segments | Other (1) | ||
Revenue Recognition | ||
Consolidated Net Sales | 39,794 | 32,914 |
Operating Segments | Upholstery Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 293,416 | 293,398 |
Operating Segments | Upholstery Segment | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 179,522 | 187,659 |
Operating Segments | Upholstery Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 87,509 | 85,290 |
Operating Segments | Upholstery Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 312 | 393 |
Operating Segments | Upholstery Segment | Other (1) | ||
Revenue Recognition | ||
Consolidated Net Sales | 26,073 | 20,056 |
Operating Segments | Casegoods Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 27,135 | 28,386 |
Operating Segments | Casegoods Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 4,144 | 3,942 |
Operating Segments | Casegoods Segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 8,193 | 8,364 |
Operating Segments | Casegoods Segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 5,405 | 5,929 |
Operating Segments | Casegoods Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 10,823 | 11,988 |
Operating Segments | Casegoods Segment | Other (1) | ||
Revenue Recognition | ||
Consolidated Net Sales | (1,430) | (1,837) |
Operating Segments | Retail Segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 142,996 | 119,228 |
Operating Segments | Retail Segment | Motion Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 85,184 | 74,957 |
Operating Segments | Retail Segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 29,153 | 23,164 |
Operating Segments | Retail Segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 1,447 | 855 |
Operating Segments | Retail Segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 2,599 | 1,583 |
Operating Segments | Retail Segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 5,125 | 3,974 |
Operating Segments | Retail Segment | Other (1) | ||
Revenue Recognition | ||
Consolidated Net Sales | 19,488 | 14,695 |
Corporate and Other | ||
Revenue Recognition | ||
Consolidated Net Sales | 3,865 | |
Corporate and Other | Corporate and Other, non-segment | ||
Revenue Recognition | ||
Consolidated Net Sales | 20,552 | |
Corporate and Other | Corporate and Other, non-segment | Stationary Upholstery Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 22,952 | |
Corporate and Other | Corporate and Other, non-segment | Bedroom Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 1,182 | |
Corporate and Other | Corporate and Other, non-segment | Dining Room Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 394 | |
Corporate and Other | Corporate and Other, non-segment | Occasional Furniture | ||
Revenue Recognition | ||
Consolidated Net Sales | 361 | |
Corporate and Other | Corporate and Other, non-segment | Other (1) | ||
Revenue Recognition | ||
Consolidated Net Sales | (4,337) | |
Eliminations | ||
Revenue Recognition | ||
Consolidated Net Sales | $ (70,466) | $ (60,182) |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jul. 27, 2019 | Apr. 29, 2018 | |
Revenue Recognition | ||
Other receivables, included in other current assets | $ 18.9 | $ 17 |
Customer deposits, included in accrued expenses and other current liabilities | 48.8 | 42.8 |
Deferred revenues, included in accrued expenses and other current liabilities | 18.9 | $ 17 |
Revenue recognized related to contract liabilities | $ 52.4 | |
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) | 3 Months Ended |
Jul. 27, 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 | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Segment Information | ||
Sales | $ 413,633 | $ 384,695 |
Operating Income (Loss) | 23,422 | 23,160 |
Interest expense | (318) | (104) |
Interest income | 727 | 602 |
Other income (expense), net | (760) | 892 |
Income before income taxes | 23,071 | 24,550 |
Upholstery Segment | ||
Segment Information | ||
Sales | 230,767 | 240,054 |
Casegoods Segment | ||
Segment Information | ||
Sales | 22,006 | 24,403 |
Retail Segment | ||
Segment Information | ||
Sales | 142,996 | 119,228 |
Corporate and Other, non-segment | ||
Segment Information | ||
Sales | 17,864 | 1,010 |
Operating Segments | Upholstery Segment | ||
Segment Information | ||
Sales | 293,416 | 293,398 |
Operating Income (Loss) | 26,267 | 23,884 |
Operating Segments | Casegoods Segment | ||
Segment Information | ||
Sales | 27,135 | 28,386 |
Operating Income (Loss) | 2,597 | 3,080 |
Operating Segments | Retail Segment | ||
Segment Information | ||
Operating Income (Loss) | 8,477 | 4,458 |
Corporate and Other | ||
Segment Information | ||
Operating Income (Loss) | (13,919) | (8,262) |
Corporate and Other | Corporate and Other, non-segment | ||
Segment Information | ||
Sales | 20,552 | 3,865 |
Eliminations | ||
Segment Information | ||
Sales | (70,466) | (60,182) |
Eliminations | Upholstery Segment | ||
Segment Information | ||
Sales | (62,649) | (53,344) |
Eliminations | Casegoods Segment | ||
Segment Information | ||
Sales | (5,129) | (3,983) |
Eliminations | Corporate and Other, non-segment | ||
Segment Information | ||
Sales | $ (2,688) | $ (2,855) |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Income Taxes | ||
Effective tax rate (as a percent) | 22.00% | 22.80% |
Statutory tax rate (as a percent) | 21.00% | |
Effective tax rate absent discrete adjustments (as a percent) | 25.20% |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Numerator (basic and diluted): | ||
Net income attributable to La-Z-Boy Incorporated | $ 18,069 | $ 18,303 |
Income allocated to participating securities, basic | (39) | (76) |
Net income available to common Shareholders, basic | $ 18,030 | $ 18,227 |
Denominator: | ||
Basic weighted average common shares outstanding (in shares) | 46,820 | 46,716 |
Add: | ||
Contingent common shares (in shares) | 130 | 66 |
Stock option dilution (in shares) | 175 | 379 |
Diluted weighted average common shares outstanding (in shares) | 47,125 | 47,161 |
Basic | $ 0.39 | $ 0.39 |
Diluted | $ 0.38 | $ 0.39 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities (Details) - $ / shares shares in Millions | 3 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Anti-dilutive options | ||
Weighted average exercise price of options excluded from diluted share calculation (in dollars per share) | $ 400,000 | |
Outstanding options | ||
Anti-dilutive options | ||
Outstanding options excluded from diluted share calculation (in shares) | 0.4 | |
Weighted average exercise price of options excluded from diluted share calculation (in dollars per share) | $ 33.15 |
Fair Value Measurements - Hiera
Fair Value Measurements - Hierarchy and Transfers (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Jul. 27, 2019 | Apr. 27, 2019 | |
Assets | ||
Total assets | $ 62,458 | $ 57,421 |
Liabilities | ||
Contingent consideration liability | 7,900 | |
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 | 10 | 5 |
Held-to-maturity investments | 3,454 | 3,341 |
Total assets | 3,464 | 3,346 |
Recurring basis | Level 2 | ||
Assets | ||
Marketable securities | 35,627 | 34,390 |
Total assets | 35,627 | 34,390 |
Recurring basis | Level 3 | ||
Assets | ||
Cost basis investments | 11,979 | 11,979 |
Total assets | 11,979 | 11,979 |
Liabilities | ||
Contingent consideration liability | $ 7,900 | $ 7,900 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Investments (Details) - Level 3 | 3 Months Ended |
Jul. 27, 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 | 4.20% |
Discount rate for fiscal 2023 milestone contingent consideration | 4.70% |
Fair Value Measurements - Net A
Fair Value Measurements - Net Asset Value (Details) - USD ($) $ in Millions | Jul. 27, 2019 | Apr. 27, 2019 |
Fair Value Measured Using Net Asset Value | ||
Assets | ||
Marketable securities | $ 11.4 | $ 7.7 |