##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549-1004
 FORM 10-Q
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR QUARTERLY PERIOD ENDED JULY 26, 2008
COMMISSION FILE NUMBER 1-9656
 
 LA-Z-BOY INCORPORATED
  MICHIGAN
    
    38-0751137(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1284 North Telegraph Road, Monroe, Michigan
    
    48162-3390(Address of principal executive offices)
    
    (Zip Code)
  
  þ o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o  o þ
  Class
    
    Outstanding at July 26, 2008Common Shares, $1.00 par value
    
    51,428,120




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##### 



PageNumber(s)PART I Financial Information (Unaudited)Item 1.
    
    Financial StatementsConsolidated Statement of Operations
    
    
    3Consolidated Balance Sheet
    
    
    4Consolidated Statement of Cash Flows
    
    
    5Consolidated Statement of Changes in Shareholders Equity
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Note 1. Basis of Presentation
    
    
    7Note 2. Interim Results
    
    
    7Note 3. Reclassification
    
    
    7Note 4. Inventories
    
    
    7Note 5. Goodwill and Other Intangible Assets
    
    
    7Note 6. Pension Plans
    
    
    8Note 7. Financial Guarantees and Product Warranties
    
    
    8Note 8. Stock-Based Compensation
    
    
    9Note 9. Segment Information
    
    
    9Note 10. Restructuring
    
    
    10Note 11. Uncertain Tax Positions
    
    
    12Note 12. Variable Interest Entities
    
    
    12Note 13. Discontinued Operations
    
    
    13Note 14. Earnings per Share
    
    
    13Note 15. Fair Value Measurements
    
    
    14Note 16. Hedging Activities
    
    
    15Note 17. Recent Accounting Pronouncements
    
    
    15Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    18Cautionary Statement Concerning Forward-Looking Statements
    
    
    18Introduction
    
    
    18Results of Operations
    
    
    20Liquidity and Capital Resources
    
    
    23Critical Accounting Policies
    
    
    25Regulatory Developments
    
    
    25Recent Accounting Pronouncements
    
    
    25Business Outlook
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    26PART II Other Information
    
    
    27Item 1A.
    
    Risk Factors
    
    
    27Item 6.
    
    Exhibits
    
    
    27Signature Page
    
    
    28Certifications of Chief Executive OfficerCertifications of Chief Financial OfficerSection 1350 CertificationsPress Release




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##### Table of Contents



Item 1. Financial Statements
 
 LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
 First Quarter Ended(Unaudited, amounts in thousands, except per share data)
    
    7/26/08
    
    
    7/28/07Sales
    
    $
    321,652
    
    
    $
    344,396Cost of salesCost of goods sold
    
    
    235,115
    
    
    
    259,143Restructuring
    
    
    5,795
    
    
    
    2,561Total cost of sales
    
    
    240,910
    
    
    
    261,704Gross profit
    
    
    80,742
    
    
    
    82,692Selling, general and
administrative
    
    
    91,837
    
    
    
    94,508Write-down of intangibles
    
    
    1,292
    
    
    
    Restructuring
    
    
    781
    
    
    
    1,120Operating loss
    
    
    (13,168
    )
    
    
    (12,936
    )Interest expense
    
    
    1,495
    
    
    
    2,097Interest income
    
    
    932
    
    
    
    882Other income, net
    
    
    143
    
    
    
    566Loss from continuing operations before income taxes
    
    
    (13,588
    )
    
    
    (13,585
    )Income tax benefit
    
    
    (5,044
    )
    
    
    (5,043
    )Loss from continuing operations
    
    
    (8,544
    )
    
    
    (8,542
    )Loss from discontinued operations (net of tax)
    
    
    
    
    
    
    (152
    )Net loss
    
    $
    (8,544
    )
    
    $
    (8,694
    )Basic average shares
    
    
    51,428
    
    
    
    51,380Basic loss from
continuing operations per share
    
    $
    (0.17
    )
    
    $
    (0.17
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    Basic net loss per share
    
    $
    (0.17
    )
    
    $
    (0.17
    )Diluted average shares
    
    
    51,428
    
    
    
    51,380Diluted loss from continuing operations per share
    
    $
    (0.17
    )
    
    $
    (0.17
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    Diluted net loss per share
    
    $
    (0.17
    )
    
    $
    (0.17
    )Dividends paid per share
    
    $
    0.04
    
    
    $
    0.12
  3




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LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
 (Unaudited, amounts in thousands)
    
    7/26/08
    
    
    4/26/08Current assetsCash and equivalents
    
    $
    11,110
    
    
    $
    14,982Receivables, net
    
    
    180,311
    
    
    
    200,422Inventories, net
    
    
    167,455
    
    
    
    178,361Deferred income taxescurrent
    
    
    12,306
    
    
    
    12,398Other current assets
    
    
    25,907
    
    
    
    21,325Total current assets
    
    
    397,089
    
    
    
    427,488Property, plant and equipment, net
    
    
    170,235
    
    
    
    171,001Deferred income taxeslong term
    
    
    25,853
    
    
    
    26,922Goodwill
    
    
    45,941
    
    
    
    47,233Trade names
    
    
    9,006
    
    
    
    9,006Other long-term assets, net
    
    
    84,805
    
    
    
    87,220Total assets
    
    $
    732,929
    
    
    $
    768,870Current liabilitiesCurrent portion of long-term debt
    
    $
    9,086
    
    
    $
    4,792Accounts payable
    
    
    49,973
    
    
    
    56,421Accrued expenses and other current liabilities
    
    
    88,655
    
    
    
    102,700Total current liabilities
    
    
    147,714
    
    
    
    163,913Long-term debt
    
    
    90,618
    
    
    
    99,578Other long-term liabilities
    
    
    54,553
    
    
    
    54,783Contingencies and commitments
    
    
    
    
    
    
    Shareholders equityCommon shares, $1 par value
    
    
    51,428
    
    
    
    51,428Capital in excess of par value
    
    
    202,562
    
    
    
    209,388Retained earnings
    
    
    187,289
    
    
    
    190,215Accumulated other comprehensive income
    
    
    (1,235
    )
    
    
    (435
    )Total shareholders equity
    
    
    440,044
    
    
    
    450,596Total liabilities and shareholders equity
    
    $
    732,929
    
    
    $
    768,870
  4




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LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
 First Quarter Ended(Unaudited, amounts in thousands)
    
    7/26/08
    
    
    7/28/07Cash flows from operating activitiesNet loss
    
    $
    (8,544
    )
    
    $
    (8,694
    )Adjustments
to reconcile net loss to
cash provided by (used for) operating activities(Gain)/loss on sale of assets
    
    
    (2,066
    )
    
    
    52Write-down of intangibles
    
    
    1,292
    
    
    
    Restructuring
    
    
    6,576
    
    
    
    3,681Provision for doubtful accounts
    
    
    4,203
    
    
    
    2,114Depreciation and amortization
    
    
    5,954
    
    
    
    6,220Stock-based compensation expense
    
    
    869
    
    
    
    861Change in receivables
    
    
    14,170
    
    
    
    22,597Change in inventories
    
    
    10,906
    
    
    
    (6,071
    )Change in payables
    
    
    (6,448
    )
    
    
    (15,473
    )Change in other assets and liabilities
    
    
    (23,632
    )
    
    
    (23,298
    )Change in deferred taxes
    
    
    1,161
    
    
    
    (1,475
    )Total adjustments
    
    
    12,985
    
    
    
    (10,792
    )Net cash provided by (used for) operating activities
    
    
    4,441
    
    
    
    (19,486
    )Cash flows from investing activitiesProceeds from disposals of assets
    
    
    4,981
    
    
    
    6,415Capital expenditures
    
    
    (7,372
    )
    
    
    (9,629
    )Purchases of investments
    
    
    (5,449
    )
    
    
    (6,622
    )Proceeds from sales of investments
    
    
    5,794
    
    
    
    6,792Change in other long-term assets
    
    
    71
    
    
    
    20Net cash used for investing activities
    
    
    (1,975
    )
    
    
    (3,024
    )Cash flows from financing activitiesProceeds from debt
    
    
    14,635
    
    
    
    705Payments on debt
    
    
    (18,857
    )
    
    
    (900
    )Stock issued for stock and employee benefit plans
    
    
    (2
    )
    
    
    (22
    )Dividends paid
    
    
    (2,075
    )
    
    
    (6,209
    )Net cash used for financing activities
    
    
    (6,299
    )
    
    
    (6,426
    )Effect of exchange rate changes on cash and
equivalents
    
    
    (39
    )
    
    
    1,001Change in cash and equivalents
    
    
    (3,872
    )
    
    
    (27,935
    )Cash and equivalents at beginning of period
    
    
    14,982
    
    
    
    51,721Cash and equivalents at end of period
    
    $
    11,110
    
    
    $
    23,786Cash paid (net of refunds) during period  income
taxes
    
    $
    923
    
    
    $
    3,135Cash paid during period  interest
    
    $
    1,126
    
    
    $
    1,910
  5




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LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 Accumulated OtherCommon
    
    
    Capital in Excess
    
    
    Retained
    
    
    Comprehensive(Unaudited, amounts in thousands)
    
    Shares
    
    
    of Par Value
    
    
    Earnings
    
    
    Income(Loss)
    
    
    TotalAt April 28, 2007
    
    $
    51,377
    
    
    $
    208,283
    
    
    $
    223,896
    
    
    $
    1,792
    
    
    $
    485,348Stock issued for stock and employee benefit
plans, net of cancellations
    
    
    51
    
    
    
    (3,422
    )
    
    
    3,102
    
    
    
    
    
    
    
    (269
    )Stock option, performance-based and restricted
stock expense
    
    
    
    
    
    
    4,527
    
    
    
    
    
    
    
    
    
    
    
    4,527Dividends paid
    
    
    
    
    
    
    
    
    
    
    (20,746
    )
    
    
    
    
    
    
    (20,746
    )Comprehensive income (loss)Net loss
    
    
    
    
    
    
    
    
    
    
    (13,537
    )Unrealized loss on marketable securities (net
of tax of $0.1 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222
    )Realized gain on marketable securities (net of
tax of $1.4 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,420
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )Net actuarial gain (net of tax of $0.2 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    532Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,764
    )Impact of adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )At April 26, 2008
    
    $
    51,428
    
    
    $
    209,388
    
    
    $
    190,215
    
    
    $
    (435
    )
    
    $
    450,596Stock issued for stock and employee benefit
plans, net of cancellations
    
    
    
    
    
    
    (7,695
    )
    
    
    7,693
    
    
    
    
    
    
    
    (2
    )Stock option, performance-based and restricted
stock expense
    
    
    
    
    
    
    869
    
    
    
    
    
    
    
    
    
    
    
    869Dividends paid
    
    
    
    
    
    
    
    
    
    
    (2,075
    )
    
    
    
    
    
    
    (2,075
    )Comprehensive income (loss)Net loss
    
    
    
    
    
    
    
    
    
    
    (8,544
    )Unrealized loss on marketable securities (net
of tax of $0.4 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (754
    )Realization of losses on marketable securities
(net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332
    )Change in fair value of cash flow hedges (net
of tax of $0.1 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,344
    )At July 26, 2008
    
    $
    51,428
    
    
    $
    202,562
    
    
    $
    187,289
    
    
    $
    (1,235
    )
    
    $
    440,044
  6




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 Note 1: Basis of Presentation
   
 Note 2: Interim Results
  
 Note 3: Reclassification
  
 Note 4: Inventories
  (Unaudited, amounts in thousands)
    
    7/26/08
    
    
    4/26/08Raw materials
    
    $
    65,002
    
    
    $
    71,346Work in process
    
    
    13,780
    
    
    
    14,624Finished goods
    
    
    115,552
    
    
    
    119,270FIFO inventories
    
    
    194,334
    
    
    
    205,240Excess of FIFO over LIFO
    
    
    (26,879
    )
    
    
    (26,879
    )Inventories, net
    
    $
    167,455
    
    
    $
    178,361
 
 Note 5: Goodwill and Other Intangible Assets
  7




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Acquisitions,Balance as of
    
    
    Dispositions and
    
    
    Balance as of(Unaudited, amounts in thousands)
    
    4/26/08
    
    
    Other
    
    
    7/26/08GoodwillUpholstery Group
    
    $
    19,632
    
    
    $
    (1,292
    )
    
    $
    18,340Retail Group
    
    
    22,096
    
    
    
    
    
    
    
    22,096Corporate and Other
    
    
    5,505
    
    
    
    
    
    
    
    5,505Consolidated
    
    $
    47,233
    
    
    $
    (1,292
    )
    
    $
    45,941TradenamesCasegoods Group
    
    $
    9,006
    
    
    $
    
    
    
    $
    9,006
 
 Note 6: Pension Plans
  First Quarter Ended(Unaudited, amounts in thousands)
    
    7/26/08
    
    
    7/28/07Service cost
    
    $
    328
    
    
    $
    441Interest cost
    
    
    1,359
    
    
    
    1,346Expected return on plan assets
    
    
    (1,728
    )
    
    
    (1,839
    )Net periodic pension cost (benefit)
    
    $
    (41
    )
    
    $
    (52
    )
  
 Note 7: Financial Guarantees and Product Warranties
   8




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First Quarter Ended(Unaudited, amounts in thousands)
    
    7/26/08
    
    
    7/28/07Balance as of the beginning of the period
    
    $
    14,334
    
    
    $
    14,283Accruals during the period
    
    
    4,104
    
    
    
    4,190Settlements during the period
    
    
    (3,793
    )
    
    
    (4,206
    )Balance as of the end of the period
    
    $
    14,645
    
    
    $
    14,267
 
 Note 8: Stock-Based Compensation
    
 Note 9: Segment Information
  Upholstery Group
 Casegoods Group
 Retail Group
 9




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First Quarter Ended7/26/08
    
    
    7/28/07(Unaudited amounts in thousands)
    
    (13 weeks)
    
    
    (13 weeks)SalesUpholstery Group
    
    $
    237,118
    
    
    $
    254,757Casegoods Group
    
    
    48,121
    
    
    
    53,574Retail Group
    
    
    42,427
    
    
    
    45,231VIEs/Eliminations
    
    
    (6,014
    )
    
    
    (9,166
    )Consolidated
    
    $
    321,652
    
    
    $
    344,396Operating income (loss)Upholstery Group
    
    $
    9,857
    
    
    $
    8,867Casegoods Group
    
    
    1,377
    
    
    
    2,600Retail Group
    
    
    (10,010
    )
    
    
    (10,074
    )Corporate and Other*
    
    
    (6,524
    )
    
    
    (10,648
    )Restructuring
    
    
    (6,576
    )
    
    
    (3,681
    )Intangible Write-down
    
    
    (1,292
    )
    
    
    $
    (13,168
    )
    
    $
    (12,936
    )
 
 *
    
    Variable Interest Entities (VIEs) are included in corporate and other. 
 Note 10: Restructuring
 Accounting for the Impairment or Disposal
of Long-Lived Assets. Accounting for Costs Associated with Exit or Disposal Activities.
  10




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11




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##### Table of Contents



Fiscal 2009CashPayments4/26/08
    
    Charges to
    
    or Asset
    
    7/26/08(Unaudited, amounts in thousands)
    
    Balance
    
    Expense
    
    Write-Offs
    
    BalanceSeverance and benefit-related costs
    
    $
    2,842
    
    
    $
    2,712
    
    
    $
    (1,681
    )
    
    $
    3,873Fixed asset write-downs, net of gains
    
    
    
    
    
    
    29
    
    
    
    (29
    )
    
    
    Contract termination costs
    
    
    939
    
    
    
    313
    
    
    
    (410
    )
    
    
    842Other
    
    
    
    
    
    
    3,522
    
    
    
    (3,522
    )
    
    
    Total restructuring
    
    $
    3,781
    
    
    $
    6,576
    
    
    $
    (5,642
    )
    
    $
    4,715
 Fiscal 2008CashPayments4/28/07
    
    Charges to
    
    or Asset
    
    4/26/08(Unaudited, amounts in thousands)
    
    Balance
    
    Expense
    
    Write-Offs
    
    BalanceSeverance and benefit-related costs
    
    $
    2,177
    
    
    $
    3,253
    
    
    $
    (2,588
    )
    
    $
    2,842Fixed asset write-downs, net of gains
    
    
    
    
    
    
    364
    
    
    
    (364
    )
    
    
    Contract termination costs
    
    
    1,257
    
    
    
    2,019
    
    
    
    (2,337
    )
    
    
    939Other
    
    
    
    
    
    
    2,499
    
    
    
    (2,499
    )
    
    
    Total restructuring
    
    $
    3,434
    
    
    $
    8,135
    
    
    $
    (7,788
    )
    
    $
    3,781
 
 Note 11: Uncertain Tax Positions
   
 Note 12: Variable Interest Entities
 Consolidation of Variable Interest
Entities
 12




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Note 13: Discontinued Operations
   FirstQuarterEnded(Unaudited, amounts in thousands)
    
    7/28/07Net sales
    
    $
    10,735Loss from discontinued operations, net of tax
    
    $
    (152
    )
  
 Note 14: Earnings per Share
  13




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First Quarter Ended(Unaudited, amounts in thousands)
    
    7/26/08
    
    7/28/07Weighted average common shares outstanding (basic)
    
    
    51,428
    
    
    
    51,380Effect of options and unvested restricted stock
    
    
    
    
    
    
    Weighted average common shares outstanding
(diluted)
    
    
    51,428
    
    
    
    51,380
   
 Note 15: Fair Value Measurements
 Fair Value
Measurements
 Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13 Accounting for Leases Effective Date of FASB Statement No. 157
  
    
    Level 1  Financial assets and liabilities whose values are based on unadjusted quoted
market prices for identical assets and liabilities in an active market that the Company has
the ability to access.
    
    Level 2  Financial assets and liabilities whose values are based on quoted prices in
markets that are not active or model inputs that are observable for substantially the full
term of the asset or liability.
    
    Level 3  Financial assets and liabilities whose values are based on prices or
valuation techniques that require inputs that are both unobservable and significant to the
overall fair value measurement.
 14




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##### Table of Contents



Fair Value Measurements(Unaudited, amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3AssetsAvailable-for-sale securities
    
    $
    14,091
    
    
    $
    17,998
    
    
    $
    Interest rate swap
    
    
    
    
    
    
    267
    
    
    
    Total
    
    $
    14,091
    
    
    $
    18,265
    
    
    $
    
   
 Note 16: Hedging Activities
  
 Note 17: Recent Accounting Pronouncements
 FASB Statement of Financial Accounting Standards No. 159
 The Fair Value Option for
Financial Assets and Financial Liabilities
 15




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FASB Statement of Financial Accounting Standards No. 160
 Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51
  FASB Statement of Financial Accounting Standards No. 141(R)
 Business
Combinations,
  FASB Statement of Financial Accounting Standards No. 161
 Disclosures about Derivative
Instruments and Hedging Activities,
  16




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FASB Statement of Financial Accounting Standards No. 163
 Accounting for Financial
Guarantee Insurance Contracts  an interpretation of Statement No. 60
  FASB Staff Position EITF 03-6-1 : Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities
 Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities
  17




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 . Managements Discussion and Analysis
 
 Cautionary Statement Concerning Forward-Looking Statements
  future income, margins and cash flows
    
    future economic performancefuture growth
    
    industry and importing trendsadequacy and cost of financial resources
    
    management plans
   
 Introduction
  18




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Upholstery Group
 Casegoods Group
 Retail Group
  
 19




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Results of Operations
Analysis of Operations: Quarter Ended July 26, 2008
(First Quarter 2009 compared with 2008)
 Quarter Ended
    
    Percent(Amounts in thousands, except per share amounts and percentages)
    
    7/26/08
    
    7/28/07
    
    changeUpholstery sales
    
    $
    237,118
    
    
    $
    254,757
    
    
    
    (6.9
    )%Casegoods sales
    
    
    48,121
    
    
    
    53,574
    
    
    
    (10.2
    )%Retail sales
    
    
    42,427
    
    
    
    45,231
    
    
    
    (6.2
    )%Other/eliminations*
    
    
    (6,014
    )
    
    
    (9,166
    )
    
    
    34.4
    %Consolidated sales
    
    $
    321,652
    
    
    $
    344,396
    
    
    
    (6.6
    )%Consolidated gross profit
    
    $
    80,742
    
    
    $
    82,692
    
    
    
    (2.4
    )%Consolidated gross margin
    
    
    25.1
    %
    
    
    24.0
    %Consolidated S,G&A
    
    $
    91,837
    
    
    $
    94,508
    
    
    
    (2.8
    )%S,G&A as a percent of sales
    
    
    28.6
    %
    
    
    27.4
    %Upholstery operating income
    
    $
    9,857
    
    
    $
    8,867
    
    
    
    11.2
    %Casegoods operating income
    
    
    1,377
    
    
    
    2,600
    
    
    
    (47.0
    )%Retail operating loss
    
    
    (10,010
    )
    
    
    (10,074
    )
    
    
    0.6
    %Corporate and other
    
    
    (6,524
    )
    
    
    (10,648
    )
    
    
    38.7
    %Intangible write-down
    
    
    (1,292
    )
    
    
    
    
    
    
    Restructuring
    
    
    (6,576
    )
    
    
    (3,681
    )
    
    
    (78.6
    )%Consolidated operating loss
    
    $
    (13,168
    )
    
    $
    (12,936
    )
    
    
    (1.8
    )%Upholstery operating margin
    
    
    4.2
    %
    
    
    3.5
    %Casegoods operating margin
    
    
    2.9
    %
    
    
    4.9
    %Retail operating margin
    
    
    (23.6
    )%
    
    
    (22.3
    )%Consolidated operating margin
    
    
    (4.1
    )%
    
    
    (3.8
    )%Loss from continuing operations
    
    $
    (8,544
    )
    
    $
    (8,542
    )
    
    
    Diluted loss per share from continuing operations
    
    $
    (0.17
    )
    
    $
    (0.17
    )
    
    
    
 
 *
    
    Includes sales from our VIEs. 20




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Sales
 Consolidated sales
 Upholstery Group
 Casegoods Group
 Retail Group
  Gross Margin
  Selling, General and Administrative Expenses
  21




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##### Table of Contents



Restructuring
  Operating Margin
  Upholstery Group
 Casegoods Group
 Retail Group
 Corporate and Other
 Interest Expense
  22




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##### Table of Contents



Income Taxes
  Discontinued Operations
  
 Liquidity and Capital Resources
    23




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Cash Flows Provided By (Used For)
    
    Quarter Ended(Amounts in thousands)
    
    7/26/08
    
    
    7/28/07Operating activitiesNet loss, depreciation and deferred taxes
    
    $
    (1,429
    )
    
    $
    (3,949
    )Restructuring
    
    
    6,576
    
    
    
    3,681Working capital and other
    
    
    (706
    )
    
    
    (19,218
    )Cash provided by (used for) operating activities
    
    
    4,441
    
    
    
    (19,486
    )Investing activities
    
    
    (1,975
    )
    
    
    (3,024
    )Financing activitiesNet decrease in debt
    
    
    (4,222
    )
    
    
    (195
    )Other financing activities
    
    
    (2,077
    )
    
    
    (6,231
    )Cash used for financing activities
    
    
    (6,299
    )
    
    
    (6,426
    )Exchange rate changes
    
    
    (39
    )
    
    
    1,001Net decrease in cash and equivalents
    
    $
    (3,872
    )
    
    $
    (27,935
    )
 Operating Activities
  Investing Activities
  Financing Activities
   24




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Critical Accounting Policies
  
 Regulatory Developments
   
 Recent Accounting Pronouncements
  
 Business Outlook
  25




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   26




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PART II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description(31.1)
    
    Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)(31.2)
    
    Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)(32)
    
    Certifications of Executive Officers pursuant to 18 U.S.C. Section 1350(b)(99.1)
    
    Press Release dated August 19, 2008
 27




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##### Table of Contents



SIGNATURE
  LA-Z-BOY INCORPORATED(Registrant)  BY:
    /s/ Margaret L. MuellerMargaret L. MuellerCorporate Controller
On behalf of the registrant and as
Chief Accounting Officer 28