Quarter Ended

(Unaudited, amounts in thousands, except per share data)

10/27/18

10/28/17

Sales

$

439,333

$

393,205

Cost of sales

264,928

238,253

Gross profit

174,405

154,952

Selling, general and administrative expense

145,905

120,683

Operating income

28,500

34,269

Interest expense

(501

)

(160

)

Interest income

392

376

Other expense, net

(1,997

)

(926

)

Income before income taxes

26,394

33,559

Income tax expense

6,045

10,353

Net income

20,349

23,206

Net income attributable to noncontrolling interests

(337

)

(310

)

Net income attributable to La-Z-Boy Incorporated

$

20,012

$

22,896

Basic weighted average common shares

46,888

47,964

Basic net income attributable to La-Z-Boy Incorporated per share

$

0.43

$

0.47

Diluted weighted average common shares

47,259

48,297

Diluted net income attributable to La-Z-Boy Incorporated per share

$

0.42

$

0.47

Dividends declared per share

$

0.12

$

0.11

Six Months Ended

(Unaudited, amounts in thousands, except per share data)

10/27/18

10/28/17

Sales

$

824,028

$

750,284

Cost of sales

501,101

456,229

Gross profit

322,927

294,055

Selling, general and administrative expense

271,267

243,488

Operating income

51,660

50,567

Interest expense

(605

)

(317

)

Interest income

994

719

Other income (expense), net

(1,105

)

823

Income before income taxes

50,944

51,792

Income tax expense

11,644

16,842

Net income

39,300

34,950

Net income attributable to noncontrolling interests

(985

)

(403

)

Net income attributable to La-Z-Boy Incorporated

$

38,315

$

34,547

Basic weighted average common shares

46,802

48,160

Basic net income attributable to La-Z-Boy Incorporated per share

$

0.82

$

0.71

Diluted weighted average common shares

47,219

48,537

Diluted net income attributable to La-Z-Boy Incorporated per share

$

0.81

$

0.71

Dividends declared per share

$

0.24

$

0.22

(Unaudited, amounts in thousands, except par value)

10/27/18

4/28/18

Current assets

Cash and equivalents

$

93,867

$

134,515

Restricted cash

2,001

2,356

Receivables, net of allowance of $2,647 at 10/27/18 and $1,956 at 4/28/18

150,507

154,055

Inventories, net

214,948

184,841

Other current assets

76,093

42,451

Total current assets

537,416

518,218

Property, plant and equipment, net

195,327

180,882

Goodwill

182,116

75,254

Other intangible assets, net

30,500

18,190

Deferred income taxes — long-term

23,227

21,265

Other long-term assets, net

83,549

79,158

Total assets

$

1,052,135

$

892,967

Current liabilities

Short-term borrowings

$

35,000

$

—

Current portion of long-term debt

217

223

Accounts payable

75,090

62,403

Accrued expenses and other current liabilities

176,075

118,721

Total current liabilities

286,382

181,347

Long-term debt

89

199

Other long-term liabilities

116,433

86,205

Contingencies and commitments

Shareholders’ equity

Preferred shares — 5,000 authorized; none issued

—

—

Common shares, $1 par value — 150,000 authorized; 46,905 outstanding at 10/27/18 and 46,788 outstanding at 4/28/18

46,905

46,788

Capital in excess of par value

307,701

298,948

Retained earnings

309,543

291,644

Accumulated other comprehensive loss

(28,329

)

(25,199

)

Total La-Z-Boy Incorporated shareholders’ equity

635,820

612,181

Noncontrolling interests

13,411

13,035

Total equity

649,231

625,216

Total liabilities and equity

$

1,052,135

$

892,967

Six Months Ended

(Unaudited, amounts in thousands)

10/27/18

10/28/17

Cash flows from operating activities

Net income

$

39,300

$

34,950

Adjustments to reconcile net income to cash provided by (used for) operating activities

Gain on disposal of assets

(72

)

(1,884

)

Gain on conversion of investment

—

(2,204

)

Change in deferred taxes

1,572

(403

)

Provision for doubtful accounts

315

74

Depreciation and amortization

15,541

15,869

Equity-based compensation expense

5,679

6,410

Pension plan contributions

(7,000

)

(2,000

)

Change in receivables

122

6,165

Change in inventories

(15,037

)

(4,096

)

Change in other assets

(15,781

)

(7,935

)

Change in payables

6,034

2,136

Change in other liabilities

15,411

4,142

Net cash provided by operating activities

46,084

51,224

Cash flows from investing activities

Proceeds from disposals of assets

256

608

Proceeds from property insurance

114

1,485

Capital expenditures

(26,926

)

(16,372

)

Purchases of investments

(5,193

)

(18,507

)

Proceeds from sales of investments

7,754

11,529

Acquisitions, net of cash acquired

(78,145

)

(15,879

)

Net cash used for investing activities

(102,140

)

(37,136

)

Cash flows from financing activities

Net proceeds from credit facility

35,000

—

Payments on debt

(116

)

(131

)

Stock issued for stock and employee benefit plans, net of shares withheld for taxes

4,039

356

Purchases of common stock

(11,610

)

(30,692

)

Dividends paid

(11,278

)

(10,648

)

Net cash provided by (used for) financing activities

16,035

(41,115

)

Effect of exchange rate changes on cash and equivalents

(982

)

865

Change in cash, cash equivalents and restricted cash

(41,003

)

(26,162

)

Cash, cash equivalents and restricted cash at beginning of period

136,871

150,859

Cash, cash equivalents and restricted cash at end of period

$

95,868

$

124,697

Supplemental disclosure of non-cash investing activities capital expenditures included in payables

$

4,442

$

1,631

Quarter Ended

Six Months Ended

(Unaudited, amounts in thousands)

10/27/18

10/28/17

10/27/18

10/28/17

Sales

Upholstery segment:

Sales to external customers

$

254,028

$

251,741

$

494,082

$

476,555

Intersegment sales

63,065

53,020

116,409

102,613

Upholstery segment sales

317,093

304,761

610,491

579,168

Casegoods segment:

Sales to external customers

26,242

23,915

50,645

44,934

Intersegment sales

5,135

4,150

9,118

8,641

Casegoods segment sales

31,377

28,065

59,763

53,575

Retail segment sales

139,686

116,737

258,914

227,253

Corporate and Other:

Sales to external customers

19,377

812

20,387

1,542

Intersegment sales

3,001

2,091

5,856

4,021

Corporate and Other sales

22,378

2,903

26,243

5,563

Eliminations

(71,201

)

(59,261

)

(131,383

)

(115,275

)

Consolidated sales

$

439,333

$

393,205

$

824,028

$

750,284

Operating Income (Loss)

Upholstery segment

$

32,152

$

33,424

$

56,036

$

56,723

Casegoods segment

3,761

3,302

6,841

6,041

Retail segment

6,563

3,903

11,021

5,670

Corporate and Other

(13,976

)

(6,360

)

(22,238

)

(17,867

)

Consolidated operating income

$

28,500

$

34,269

$

51,660

$

50,567

Quarter Ended

Six Months Ended

(Unaudited, amounts in thousands, except per share data)

10/27/18

10/28/17

10/27/18

10/28/17

GAAP gross profit

$

174,405

$

154,952

$

322,927

$

294,055

Add back: Purchase accounting charges — incremental expense upon the sale of inventory acquired at fair value

2,448

127

2,491

261

Non-GAAP gross profit

$

176,853

$

155,079

$

325,418

$

294,316

GAAP SG&A

$

145,905

$

120,683

$

271,267

$

243,488

Less: Purchase accounting charges — amortization of intangible assets and retention agreements

(1,238

)

(595

)

(1,341

)

(956

)

Non-GAAP SG&A

$

144,667

$

120,088

$

269,926

$

242,532

GAAP operating income

$

28,500

$

34,269

$

51,660

$

50,567

Add back: Purchase accounting charges

3,686

722

3,832

1,217

Non-GAAP operating income

$

32,186

$

34,991

$

55,492

$

51,784

GAAP income before income taxes

$

26,394

$

33,559

$

50,944

$

51,792

Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense

3,875

722

4,020

1,217

Non-GAAP income before income taxes

$

30,269

$

34,281

$

54,964

$

53,009

GAAP net income attributable to La-Z-Boy Incorporated

$

20,012

$

22,896

$

38,315

$

34,547

Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense

3,875

722

4,020

1,217

Less: Tax effect of purchase accounting charges

(887

)

(222

)

(921

)

(396

)

Non-GAAP net income attributable to La-Z-Boy Incorporated

$

23,000

$

23,396

$

41,414

$

35,368

GAAP net income attributable to La-Z-Boy Incorporated per diluted share

$

0.42

$

0.47

$

0.81

$

0.71

Add back: Purchase accounting charges, net of tax, per share

0.06

0.01

0.07

0.02

Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share

$

0.48

$

0.48

$

0.88

$

0.73

Quarter Ended

(Unaudited, amounts in thousands)

10/27/18

% of sales

10/28/17

% of sales

GAAP operating income (loss)

Upholstery segment

$

32,152

10.1

%

$

33,424

11.0

%

Casegoods segment

3,761

12.0

%

3,302

11.8

%

Retail segment

6,563

4.7

%

3,903

3.3

%

Corporate and Other

(13,976

)

N/M

(6,360

)

N/M

GAAP Consolidated operating income

$

28,500

6.5

%

$

34,269

8.7

%

Purchase accounting charges affecting operating income

Upholstery segment

$

101

$

369

Casegoods segment

—

—

Retail segment

1,045

353

Corporate and Other

2,540

—

Consolidated purchase accounting charges affecting operating income

$

3,686

$

722

Non-GAAP operating income (loss)

Upholstery segment

$

32,253

10.2

%

$

33,793

11.1

%

Casegoods segment

3,761

12.0

%

3,302

11.8

%

Retail segment

7,608

5.4

%

4,256

3.6

%

Corporate and Other

(11,436

)

N/M

(6,360

)

N/M

Non-GAAP Consolidated operating income

$

32,186

7.3

%

$

34,991

8.9

%

Six Months Ended

(Unaudited, amounts in thousands)

10/27/18

% of sales

10/28/17

% of sales

GAAP operating income (loss)

Upholstery segment

$

56,036

9.2

%

$

56,723

9.8

%

Casegoods segment

6,841

11.4

%

6,041

11.3

%

Retail segment

11,021

4.3

%

5,670

2.5

%

Corporate and Other

(22,238

)

N/M

(17,867

)

N/M

GAAP Consolidated operating income

$

51,660

6.3

%

$

50,567

6.7

%

Purchase accounting charges affecting operating income

Upholstery segment

$

204

$

730

Casegoods segment

—

—

Retail segment

1,088

487

Corporate and Other

2,540

—

Consolidated purchase accounting charges affecting operating income

$

3,832

$

1,217

Non-GAAP operating income (loss)

Upholstery segment

$

56,240

9.2

%

$

57,453

9.9

%

Casegoods segment

6,841

11.4

%

6,041

11.3

%

Retail segment

12,109

4.7

%

6,157

2.7

%

Corporate and Other

(19,698

)

N/M

(17,867

)

N/M

Non-GAAP Consolidated operating income

$

55,492

6.7

%

$

51,784

6.9

%