LaZBoy Inc. (NYSE:LZB) filed Quarterly Report for the period ended 2009-01-24.
La-Z-Boy is the third largest furniture maker in the U.S. the largestreclining-chair manufacturer in the world and America's largest manufacturer of upholstered furniture. LaZBoy Inc. has a market cap of $47.35 million; its shares were traded at around $0.95 with and P/S ratio of 0.03. The dividend yield of LaZBoy Inc. stocks is 8.7%.
Highlight of Business Operations:In addition to these initiatives we plan to aggressively reduce overall operating expenses and inventories to be in alignment with today s volumes. We believe the reduction in employment alone will result in savings of $25 million to $30 million annually. We continue to focus on cash flow and liquidity to ensure that our balance sheet remains strong enough to withstand this current recession. We plan to reduce our inventory balances by 10% during the fourth quarter as we have significantly reduced our overseas purchases.
As a result of our fiscal 2009 losses, the impact of the restructuring actions we have taken over the past two years, the significant decline in current and projected demand for consumer domestic furniture purchases and resulting uncertainty in the economic climate, we reassessed the likelihood that we will be able to realize the benefit of our deferred tax assets. As a result, we recorded a valuation allowance of $38.2 million against the deferred tax assets, or $0.74 per share in the 2009 fiscal second quarter. In the third quarter of fiscal 2009, a valuation allowance of $14.6 million was recorded against the current quarter s tax benefit due to the pre-tax losses incurred.
Included in Other/eliminations are the sales by our VIEs and the elimination of sales from our Upholstery and Casegoods Groups to our Retail Group. Due to the previously mentioned change in reporting of the Retail distribution centers, this elimination was adjusted by $12.1 million during the quarter, which decreased the eliminations for this quarter. In addition, the decrease in the sales between our Upholstery Group and Retail Group reduced our elimination of sales by $7.3 million. The addition of the three stores in our Toronto market did not occur until the end of the third quarter of fiscal 2009 and therefore did not have an impact on the third quarter sales.
Selling, general and administrative expenses (S,G&A) decreased $10.6 million when compared to the prior year s third quarter, but increased as a percent of sales by 4.5 percentage points due to the decline in our overall sales volume. During fiscal 2009, the Florida, Michigan, and the West Coast markets were impacted to a greater extent by the weak retail environment than other markets. Accordingly we revised our estimates of amounts expected to be collected on past due accounts and increased our allowance for bad debts by $6.7 million when compared with the third quarter of fiscal 2008. Our reserve balance against accounts receivable as of January 24, 2009 was $35.8 million.
During the third quarter of fiscal 2009, we evaluated the goodwill of our Upholstery and Retail operating segments and the trade names of our Casegoods segment. Due to the steep decline in our stock price and its negative impact on our market capitalization, we recognized a $40.4 million non-cash impairment charge relating to the goodwill in our Retail and Upholstery segments and a $5.5 million non-cash impairment charge relating to the trade names in our Casegoods segment.
Corporate and Other operating loss decreased $6.3 million during the third quarter of fiscal 2009 in comparison to the third quarter of fiscal 2008. Our VIEs losses for the third quarter of fiscal 2009 were $0.1 million more than the same quarter the prior year. The previously mentioned reporting change for the retail warehouse operations resulted in a $3.3 million increase in inter-company operating income eliminations.
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