LA-Z-BOY INC 10-K

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Dividend Information On March 29, 2020, we announced our action plan in response to the COVID-19 pandemic and resulting economic uncertainties. Included in that plan was the elimination of the June quarterly dividend to prioritize near-term financial flexibility. Although we expect to continue to pay quarterly dividends in the future, the payment of future cash dividends is within the discretion of our board of directors and will depend on our earnings, capital requirements and operating and financial condition, as well as excess availability under the credit agreement, among other factors. Shareholders Our common stock trades on the New York Stock Exchange under the trading symbol "LZB". We had approximately 1,919 registered holders of record of La-Z-Boy's common stock as of June 16, 2020 . A substantially greater number of holders of La-Z-Boy common stock are "street name" or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. Performance Graph The graph below shows the cumulative total return for our last five fiscal years that would have been realized (assuming reinvestment of dividends) by an investor who invested $100 on April 25, 2015 , in our shares of common stock, in the S&P 500 Composite Index, and in the Dow Jones U.S. Furnishings Index. Company/Index/Market 4/25/2015 4/30/2016 4/29/2017 4/28/2018 4/27/2019 4/25/2020 La-Z-Boy Incorporated $ 100 $ 95.40 $ 104.47 $ 111.50 $ 125.52 $ 82.95 S&P 500 Composite Index $ 100 $ 99.69 $ 117.55 $ 134.24 $ 150.80 $ 148.44 Dow Jones U.S. Furnishings Index $ 100 $ 105.81 $ 118.56 $ 105.13 $ 88.29 $ 58.08 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Our board of directors has authorized the repurchase of the Company's common stock. As of April 25, 2020 , 4.5 million shares remained available for purchase pursuant to this authorization. We spent $43.4 million in fiscal 2020 to purchase 1.4 million shares. Effective March 16, 2020, to prioritize near-term financial flexibility in response to the impact of COVID-19, we temporarily halted share repurchases under the board’s prior authorization. 19 Table of Contents The following table summarizes our purchases of company stock during the fourth quarter of fiscal 2020 : (Amounts in thousands, except per share data) Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plan (2) Maximum number of shares that may yet be purchased under the plan Fiscal February (January 26 - February 29, 2020) 79 $ 31.90 79 4,751 Fiscal March (March 1 - March 28, 2020) 227 $ 24.28 227 4,524 Fiscal April (March 29 - April 25, 2020) 1 $ 22.35 — 4,524 Fiscal Fourth Quarter of 2020 307 $ 26.23 306 4,524 (1) In addition to the 305,500 shares purchased during the quarter as part of our publicly announced director authorization described above, this column includes 1,146 shares purchased from employees to satisfy their withholding tax obligations upon vesting of restricted shares and performance-based shares. (2) On October 28, 1987, our board of directors announced the authorization of the plan to repurchase company stock. The plan originally authorized 1.0 million shares, and since October 1987, 27.0 million shares were added to the plan for repurchase. The authorization has no expiration date. Recent Sales of Unregistered Securities There were no sales of unregistered securities during fiscal year 2020 . ITEM 6. SELECTED FINANCIAL DATA. The following table presents our selected financial data. The table should be read in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , and Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. This information is derived from our audited financial statements and should be read in conjunction with those statements, including the related notes. Consolidated Five-Year Summary of Financial Data Fiscal Year Ended (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (Amounts in thousands) 4/25/2020 4/27/2019 4/28/2018 4/29/2017 4/30/2016 Sales $ 1,703,982 $ 1,745,401 $ 1,583,947 $ 1,520,060 $ 1,525,398 Cost of sales 982,537 1,042,831 961,200 910,757 940,420 Gross profit 721,445 702,570 622,747 609,303 584,978 Selling, general and administrative expense 575,821 572,896 493,378 475,961 459,647 Goodwill impairment 26,862 — — — — Operating income 118,762 129,674 129,369 133,342 125,331 Interest expense (1,291 ) (1,542 ) (538 ) (1,073 ) (486 ) Interest income 2,785 2,103 1,709 981 827 Pension termination refund (charge) 1,900 (32,671 ) — — — Other expense, net (6,983 ) (2,237 ) (1,650 ) (2,510 ) (629 ) Income before income taxes 115,173 95,327 128,890 130,740 125,043 Income tax expense 36,189 25,186 47,295 43,756 44,080 Net income 78,984 70,141 81,595 86,984 80,963 Net income attributable to noncontrolling interests (1,515 ) (1,567 ) (729 ) (1,062 ) (1,711 ) Net income attributable to La-Z-Boy Incorporated $ 77,469 $ 68,574 $ 80,866 $ 85,922 $ 79,252 20 Table of Contents Consolidated Five-Year Summary of Financial Data (Continued) Fiscal Year Ended (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (Amounts in thousands, except per share data) 4/25/2020 4/27/2019 4/28/2018 4/29/2017 4/30/2016 Basic weighted average shares 46,399 46,828 47,621 48,963 50,194 Basic net income attributable to La-Z-Boy Incorporated per share $ 1.67 $ 1.46 $ 1.69 $ 1.75 $ 1.57 Diluted weighted average shares 46,736 47,333 48,135 49,470 50,765 Diluted net income attributable to La-Z-Boy Incorporated per share $ 1.66 $ 1.44 $ 1.67 $ 1.73 $ 1.55 Dividends declared per share $ 0.54 $ 0.50 $ 0.46 $ 0.42 $ 0.36 Book value of year-end shares outstanding (1) $ 15.28 $ 14.53 $ 13.08 $ 12.17 $ 11.09 (1) Equal to total La-Z-Boy Incorporated shareholders' equity divided by the number of outstanding shares on the last day of the fiscal year. Consolidated Five-Year Summary of Financial Data (Continued) Fiscal Year Ended (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (Dollars in thousands) 4/25/2020 4/27/2019 4/28/2018 4/29/2017 4/30/2016 Return on average total equity (1) 11.2 % 10.6 % 13.3 % 15.0 % 14.9 % Gross profit as a percent of sales 42.3 % 40.3 % 39.3 % 40.1 % 38.3 % Operating income as a percent of sales 7.0 % 7.4 % 8.2 % 8.8 % 8.2 % Effective tax rate (2) 31.4 % 26.4 % 36.7 % 33.5 % 35.3 % Return on sales (2) 4.6 % 4.0 % 5.2 % 5.7 % 5.3 % Depreciation and amortization $ 31,192 $ 31,147 $ 31,767 $ 29,131 $ 26,517 Cash provided by operating activities $ 164,242 $ 150,745 $ 115,750 $ 147,990 $ 114,509 Capital expenditures $ 46,035 $ 48,433 $ 36,337 $ 20,304 $ 24,684 Cash used for acquisitions $ 6,850 $ 76,505 $ 16,495 $ 35,878 $ 23,311 Cash used for share repurchases $ 43,369 $ 22,957 $ 56,730 $ 35,957 $ 44,082 Cash used for dividends $ 25,091 $ 23,508 $ 22,009 $ 20,655 $ 18,141 Property, plant and equipment, net $ 214,767 $ 200,523 $ 180,882 $ 169,132 $ 171,590 Working capital $ 276,157 $ 302,482 $ 336,871 $ 318,746 $ 324,545 Current ratio (3) 1.8 to 1 2.3 to 1 2.9 to 1 2.6 to 1 3.1 to 1 Total assets $ 1,434,889 $ 1,059,790 $ 892,967 $ 888,855 $ 800,029 Long-term debt, excluding current portion $ — $ 19 $ 199 $ 296 $ 513 Total debt $ 75,000 $ 199 $ 422 $ 515 $ 803 Total equity $ 716,306 $ 696,976 $ 625,216 $ 601,105 $ 557,212 Debt to equity ratio (4) 10.5 % — 0.1 % 0.1 % 0.1 % Debt to capitalization ratio (5) 9.5 % — 0.1 % 0.1 % 0.1 % (1) Equal to income from continuing operations divided by average two year equity. (2) Based on income from continuing operations. (3) Equal to total current assets divided by total current liabilities. (4) Equal to total debt divided by total equity. (5) Equal to total debt divided by total debt plus total equity. 21 Table of Contents Unaudited Quarterly Financial Information Fiscal 2020 Fiscal Quarter Ended (13 weeks) (13 weeks) (13 weeks) (13 weeks) (Amounts in thousands, except per share data) 7/27/2019 10/26/2019 1/25/2020 4/25/2020 Sales $ 413,633 $ 447,212 $ 475,856 $ 367,281 Cost of sales 245,921 264,823 276,218 195,575 Gross profit 167,712 182,389 199,638 171,706 Selling, general and administrative expense 144,290 152,788 147,325 131,418 Goodwill impairment — — — 26,862 Operating income 23,422 29,601 52,313 13,426 Interest expense (318 ) (308 ) (265 ) (400 ) Interest income 727 522 844 692 Pension termination refund — 1,900 — — Other income (expense), net (760 ) (532 ) (5,998 ) 307 Income before income taxes 23,071 31,183 46,894 14,025 Income tax expense 5,083 8,279 12,178 10,649 Net income 17,988 22,904 34,716 3,376 Net income attributable to noncontrolling interests 81 (311 ) (204 ) (1,081 ) Net income attributable to La-Z-Boy Incorporated $ 18,069 $ 22,593 $ 34,512 $ 2,295 Diluted weighted average common shares 47,125 46,879 46,584 46,157 Diluted net income attributable to La-Z-Boy Incorporated per share $ 0.38 $ 0.48 $ 0.74 $ 0.05 Unaudited Quarterly Financial Information Fiscal 2019 Fiscal Quarter Ended (13 weeks) (13 weeks) (13 weeks) (13 weeks) (Amounts in thousands, except per share data) 7/28/2018 10/27/2018 1/26/2019 4/27/2019 Sales $ 384,695 $ 439,333 $ 467,582 $ 453,791 Cost of sales 236,173 264,928 277,712 264,018 Gross profit 148,522 174,405 189,870 189,773 Selling, general and administrative expense 125,362 145,905 149,027 152,602 Operating income 23,160 28,500 40,843 37,171 Interest expense (104 ) (501 ) (538 ) (399 ) Interest income 602 392 540 569 Pension termination charge — — — (32,671 ) Other income (expense), net 892 (1,997 ) (941 ) (191 ) Income before income taxes 24,550 26,394 39,904 4,479 Income tax expense 5,599 6,045 10,730 2,812 Net income 18,951 20,349 29,174 1,667 Net income attributable to noncontrolling interests (648 ) (337 ) (443 ) (139 ) Net income attributable to La-Z-Boy Incorporated $ 18,303 $ 20,012 $ 28,731 $ 1,528 Diluted weighted average common shares 47,161 47,259 47,091 47,369 Diluted net income attributable to La-Z-Boy Incorporated per share $ 0.39 $ 0.42 $ 0.61 $ 0.03 22 Table of Contents