La-Z-Boy Reclines: Fool by Numbers

On June 19, Income Investor recommendation La-Z-Boy (NYSE: LZB  ) released fourth-quarter earnings for the period ended April 28.

• The overall sluggish furniture industry contributed to the company's 9.4% drop in sales. Upholstery, casegoods, and retail segments were the poorest performers.
• Despite the decline in both sales and earnings, overall costs improved significantly, increasing margins across the board.
• Management effectively managed the balance sheet in response to the weakening sales by reducing both debt and inventory and increasing cash reserves.
• Because of the difficult external environment, the company is currently operating in, management is offering yearly guidance and anticipates sales to be down 5%-10% with fiscal earnings in the range of $0.45 to $0.60.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q4 2007	Q4 2006	Change
Sales	$406.9	$449.4	(9.4%)
Profit*	$8.5	($12.4)	N/A
	$0.16	($0.24)	N/A
Diluted Shares	51.5	51.7	(0.4%)

*Income from continuous operations

Get back to basics with the income statement.

Margin Checkup

	Q4 2007	Q4 2006	Change*
	26.5%	26.1%	0.3
	3.1%	(0.8%)	3.9
	2.1%	(2.8%)	4.8

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q4 2007	Q4 2006	Change
Cash + ST Invest.	$51.7	$24.1	114.7%
Accounts Rec.	$230.4	$270.6	(14.8%)
Inventory	$197.8	$238.8	(17.2%)

Liabilities	Q4 2007	Q4 2006	Change
Accounts Payable	$68.1	$85.6	(20.4%)
Long-Term Debt	$111.7	$173.4	(35.6%)

The balance sheet reflects the company's health.

Cash Flow Highlights

	YTD 2007	YTD 2006	Change
Cash From Ops.	$31.8	$37.9	(16.0%)
Capital Expenditures	$4.8	$7.5	(35.9%)
Free Cash Flow	$27.0	$30.4	(11.1%)

Free cash flow is a Fool's best friend.

Related Foolishness:

• Foolish Forecast: Lifesaving La-Z-Boy?
• Foolish Forecast: Overachieving La-Z-Boy
• Bassett Bays
• How YOU Doin', Natuzzi?

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