Segment Information

12 Months Ended

Apr. 25, 2015

Segment Information

Segment Information

Note 16: Segment Information

Our reportable operating segments are the Upholstery segment, the Casegoods segment and the Retail segment.

Upholstery Segment.    The Upholstery segment mainly consists of two operating units: La-Z-Boy and England. This segment manufactures, imports, and exports upholstered furniture. Upholstered furniture includes recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas. The Upholstery segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of Comfort Studio® and England Custom Comfort Center locations, major dealers and other independent retailers.

Casegoods Segment.    The Casegoods segment consists of three brands: American Drew, Hammary, and Kincaid. This segment sells imported wood furniture to furniture retailers. Casegoods product includes bedroom, dining room, entertainment centers, occasional pieces and some manufactured coordinated upholstered furniture. The Casegoods segment sells to major dealers, as well as La-Z-Boy Furniture Galleries® stores, along with a wide cross-section of other independent retailers.

Retail Segment.    The Retail segment consists of 110 company-owned La-Z-Boy Furniture Galleries® stores. During fiscal 2015, we acquired one La-Z-Boy Furniture Galleries® store in northern Indiana and four La-Z-Boy Furniture Galleries® stores in the Southern California market. During fiscal 2014, we acquired three La-Z-Boy Furniture Galleries® stores in the Las Vegas market and two La-Z-Boy Furniture Galleries® stores in northeast Ohio. During fiscal 2013, we acquired nine La-Z-Boy Furniture Galleries® stores in southern Ohio. All of these acquired stores were previously independently owned and operated. The Retail segment sells upholstered furniture, and some casegoods and other accessories, to end consumers through the retail network.

Restructuring.    During fiscal 2014, we committed to a restructuring of our casegoods business to transition to an all-import model for our wood furniture. In fiscal 2015 and fiscal 2014, we recorded restructuring income of $0.4 million and restructuring charges of $4.8 million, respectively, in continuing operations (see Note 2 for additional information). During fiscal 2013, we recorded a restructuring charge of $2.6 million in continuing operations, mainly related to fixed asset and inventory write-downs related to the closure of our lumber processing operation in our Casegoods segment. See Note 2 for further details of this restructuring. We do not include restructuring costs in the results of our reportable segments.

We did not have any single customer whose purchases amounted to more than 2% of our consolidated or Upholstery segment sales in fiscal 2015.

The accounting policies of the operating segments are the same as those described in Note 1. We account for intersegment revenue transactions between our segments consistent with independent third party transactions, that is, at current market prices. As a result, the manufacturing profit related to sales to our Retail segment is included within the appropriate Upholstery or Casegoods segment. Operating income realized on intersegment revenue transactions is therefore generally consistent with the operating income realized on our revenue from independent third party transactions. Segment operating income is based on profit or loss from operations before interest expense, interest income, income from continued dumping and subsidy offset act, other income (expense) and income taxes. Identifiable assets are cash and equivalents, notes and accounts receivable, net inventories, net property, plant and equipment, goodwill and other intangible assets. Our unallocated assets include deferred income taxes, corporate assets (including a portion of cash and equivalents), business held for sale, and various other assets. Sales are attributed to countries on the basis of the customer's location.

(Amounts in thousands)	4/25/2015			4/26/2014			4/27/2013
Sales
Upholstery segment:
Sales to external customers	$	990,237		$	959,118		$	902,454
Intersegment sales		161,565			139,932			127,311
Upholstery segment sales		1,151,802			1,099,050			1,029,765
Casegoods segment:
Sales to external customers		98,886			97,095			104,387
Intersegment sales		10,827			9,657			8,140
Casegoods segment sales		109,713			106,752			112,527
Retail segment sales		333,978			298,642			264,723
Corporate and Other		2,294			2,463			2,313
Eliminations		(172,392	)		(149,589	)		(135,451	)
Consolidated sales	$	1,425,395		$	1,357,318		$	1,273,877
Operating Income (Loss)
Upholstery segment	$	121,403		$	117,688		$	95,571
Casegoods segment		6,408			3,397			3,703
Retail segment		11,466			11,128			4,099
Restructuring		371			(4,839	)		(2,631	)
Corporate and Other		(36,483	)		(38,078	)		(33,139	)
Consolidated operating income		103,165			89,296			67,603
Interest expense		523			548			746
Interest income		1,030			761			620
Income from Continued Dumping and Subsidy Offset Act, net		1,212			—			—
Other income, net		744			2,050			3,208
Income from continuing operations before income taxes	$	105,628		$	91,559		$	70,685
Depreciation and Amortization
Upholstery segment	$	12,669		$	13,778		$	14,275
Casegoods segment		813			1,171			1,338
Retail segment		2,910			2,520			2,676
Corporate and Other		5,891			5,566			4,674
Consolidated depreciation and amortization	$	22,283		$	23,035		$	22,963
Capital Expenditures
Upholstery segment	$	14,979		$	6,579		$	9,857
Casegoods segment		1,149			149			1,058
Retail segment		2,993			4,379			4,251
Corporate and Other		51,198			22,623			10,218
Consolidated capital expenditures	$	70,319		$	33,730		$	25,384
Assets
Upholstery segment	$	317,102		$	305,814		$	296,108
Casegoods segment		48,403			53,299			70,147
Retail segment		126,189			119,816			73,496
Unallocated assets		282,910			292,366			280,620
Consolidated assets	$	774,604		$	771,295		$	720,371
Long-Lived Assets by Geographic Location
Domestic	$	187,224		$	147,538		$	133,208
International		8,359			6,805			8,168
Consolidated long-lived assets	$	195,583		$	154,343		$	141,376
Sales by Country
United States		87	%		86	%		86	%
Canada		7	%		8	%		9	%
Other		6	%		6	%		5	%
Total		100	%		100	%		100	%