##### 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 the quarterly period endedOctober 25, 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
  o Large accelerated filer
    
    þ Accelerated filer
    
    o Non-accelerated filer* (*Do not check if a smaller reporting company)
    
    o Smaller reporting company
  o þ




---



##### 



LA-Z-BOY INCORPORATED
FORM 10-Q SECOND QUARTER OF FISCAL 2009
  PageNumber(s)PART I Financial Information (Unaudited)Item 1. Financial StatementsConsolidated Statement of Operations
    
    
    3-4Consolidated Balance Sheet
    
    
    5Consolidated Statement of Cash Flows
    
    
    6Consolidated Statement of Changes in Shareholders Equity
    
    
    7Notes to Consolidated Financial StatementsNote 1. Basis of Presentation
    
    
    8Note 2. Interim Results
    
    
    8Note 3. Reclassification
    
    
    8Note 4. Inventories
    
    
    8Note 5. Goodwill and Other Intangible Assets
    
    
    8-9Note 6. Investments
    
    
    9Note 7. Pension Plans
    
    
    10Note 8. Financial Guarantees and Product Warranties
    
    
    10Note 9. Stock-Based Compensation
    
    
    10Note 10. Segment Information
    
    
    11Note 11. Restructuring
    
    
    11-13Note 12. Income Taxes
    
    
    13Note 13. Variable Interest Entities
    
    
    14Note 14. Discontinued Operations
    
    
    14-15Note 15. Earnings per Share
    
    
    15Note 16. Fair Value Measurements
    
    
    15-16Note 17. Hedging Activities
    
    
    17Note 18. Recent Accounting Pronouncements
    
    
    17-18Note 19. Subsequent Event
    
    
    19Item 2. Managements Discussion and Analysis of Financial
Condition and Results of OperationsCautionary Statement Concerning Forward-Looking Statements
    
    
    20Introduction
    
    
    20-23Results of Operations
    
    
    24-33Liquidity and Capital Resources
    
    
    33-35Critical Accounting Policies
    
    
    35Regulatory Developments
    
    
    35-36Recent Accounting Pronouncements
    
    
    36Business Outlook
    
    
    36Item 3.  Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4.  Controls and Procedures
    
    
    37PART II Other InformationItem 1A. Risk Factors
    
    
    38Item 4. Submission of Matters to a Vote of Security Holders
    
    
    38-39Item 6. Exhibits
    
    
    40Signature Page
    
    
    41EX-3.3EX-10.1EX-31.1EX-31.2EX-32EX-99.1




---



##### Table of Contents



Item 1. Financial Statements
 LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
 Second Quarter Ended(Unaudited, amounts in thousands, except per share data)
    
    10/25/08
    
    
    10/27/07Sales
    
    $
    331,948
    
    
    $
    365,434Cost of salesCost of goods sold
    
    
    242,681
    
    
    
    266,658Restructuring
    
    
    2,236
    
    
    
    518Total cost of sales
    
    
    244,917
    
    
    
    267,176Gross profit
    
    
    87,031
    
    
    
    98,258Selling, general and administrative
    
    
    101,942
    
    
    
    98,098Write-down of intangibles
    
    
    408
    
    
    
    5,809Restructuring
    
    
    687
    
    
    
    449Operating loss
    
    
    (16,006
    )
    
    
    (6,098
    )Interest expense
    
    
    1,651
    
    
    
    2,120Interest income
    
    
    630
    
    
    
    1,543Other expense, net
    
    
    685
    
    
    
    169Loss from continuing operations before income taxes
    
    
    (17,712
    )
    
    
    (6,844
    )Income tax expense/(benefit)
    
    
    36,032
    
    
    
    (3,192
    )Loss from continuing operations
    
    
    (53,744
    )
    
    
    (3,652
    )Loss from discontinued operations (net of tax)
    
    
    
    
    
    
    (6,282
    )Net loss
    
    $
    (53,744
    )
    
    $
    (9,934
    )Basic average shares
    
    
    51,458
    
    
    
    51,410Basic loss from continuing operations per share
    
    $
    (1.04
    )
    
    $
    (0.07
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    (0.12
    )Basic net loss per share
    
    $
    (1.04
    )
    
    $
    (0.19
    )Diluted average shares
    
    
    51,458
    
    
    
    51,410Diluted loss from continuing operations per share
    
    $
    (1.04
    )
    
    $
    (0.07
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    (0.12
    )Diluted net loss per share
    
    $
    (1.04
    )
    
    $
    (0.19
    )Dividends paid per share
    
    $
    0.04
    
    
    $
    0.12
  3




---



##### Table of Contents



LA-Z-BOY
INCORPORATED
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 Six Months Ended(Unaudited, amounts in thousands, except per share data)
    
    10/25/08
    
    
    10/27/07Sales
    
    $
    653,600
    
    
    $
    709,830Cost of salesCost of goods sold
    
    
    477,795
    
    
    
    525,801Restructuring
    
    
    8,032
    
    
    
    3,079Total cost of sales
    
    
    485,827
    
    
    
    528,880Gross profit
    
    
    167,773
    
    
    
    180,950Selling, general and administrative
    
    
    193,781
    
    
    
    192,606Write-down of intangibles
    
    
    1,700
    
    
    
    5,809Restructuring
    
    
    1,467
    
    
    
    1,569Operating loss
    
    
    (29,175
    )
    
    
    (19,034
    )Interest expense
    
    
    3,146
    
    
    
    4,217Interest income
    
    
    1,562
    
    
    
    2,936Other expense, net
    
    
    541
    
    
    
    114Loss from continuing operations before income taxes
    
    
    (31,300
    )
    
    
    (20,429
    )Income tax expense/(benefit)
    
    
    30,988
    
    
    
    (8,235
    )Loss from continuing operations
    
    
    (62,288
    )
    
    
    (12,194
    )Loss from discontinued operations (net of tax)
    
    
    
    
    
    
    (6,434
    )Net loss
    
    $
    (62,288
    )
    
    $
    (18,628
    )Basic average shares
    
    
    51,443
    
    
    
    51,395Basic loss from continuing operations per share
    
    $
    (1.21
    )
    
    $
    (0.24
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    (0.12
    )Basic net loss per share
    
    $
    (1.21
    )
    
    $
    (0.36
    )Diluted average shares
    
    
    51,443
    
    
    
    51,395Diluted loss from continuing operations per share
    
    $
    (1.21
    )
    
    $
    (0.24
    )Discontinued operations per share (net of tax)
    
    
    
    
    
    
    (0.12
    )Diluted net loss per share
    
    $
    (1.21
    )
    
    $
    (0.36
    )Dividends paid per share
    
    $
    0.08
    
    
    $
    0.24
  4




---



##### Table of Contents



LA-Z-BOY INCORPORATED
 
 CONSOLIDATED BALANCE SHEET
 (Unaudited, amounts in thousands)
    
    10/25/08
    
    
    4/26/08Current assetsCash and equivalents
    
    $
    14,485
    
    
    $
    14,982Receivables, net
    
    
    196,804
    
    
    
    200,422Inventories, net
    
    
    167,113
    
    
    
    178,361Deferred income taxescurrent
    
    
    2,077
    
    
    
    12,398Other current assets
    
    
    28,045
    
    
    
    21,325Total current assets
    
    
    408,524
    
    
    
    427,488Property, plant and equipment, net
    
    
    164,244
    
    
    
    171,001Deferred income taxeslong term
    
    
    810
    
    
    
    26,922Goodwill
    
    
    45,533
    
    
    
    47,233Trade names
    
    
    9,006
    
    
    
    9,006Other long-term assets, net
    
    
    74,845
    
    
    
    87,220Total assets
    
    $
    702,962
    
    
    $
    768,870Current liabilitiesShort-term borrowings
    
    $
    7,000
    
    
    $
    Current portion of long-term debt
    
    
    10,164
    
    
    
    4,792Accounts payable
    
    
    58,348
    
    
    
    56,421Accrued expenses and other current liabilities
    
    
    88,964
    
    
    
    102,700Total current liabilities
    
    
    164,476
    
    
    
    163,913Long-term debt
    
    
    99,819
    
    
    
    99,578Deferred income taxeslong term
    
    
    6,406
    
    
    
    Other long-term liabilities
    
    
    51,462
    
    
    
    54,783Contingencies and commitments
    
    
    
    
    
    
    Shareholders equityCommon shares, $1 par value
    
    
    51,469
    
    
    
    51,428Capital in excess of par value
    
    
    203,489
    
    
    
    209,388Retained earnings
    
    
    131,371
    
    
    
    190,215Accumulated other comprehensive loss
    
    
    (5,530
    )
    
    
    (435
    )Total shareholders equity
    
    
    380,799
    
    
    
    450,596Total liabilities and shareholders equity
    
    $
    702,962
    
    
    $
    768,870
  5




---



##### Table of Contents



LA-Z-BOY INCORPORATED
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 Second Quarter Ended
    
    
    Six Months Ended(Unaudited, amounts in thousands)
    
    10/25/08
    
    
    10/27/07
    
    
    10/25/08
    
    
    10/27/07Cash flows from operating activitiesNet loss
    
    $
    (53,744
    )
    
    $
    (9,934
    )
    
    $
    (62,288
    )
    
    $
    (18,628
    )Adjustments to reconcile net loss to
cash provided by (used for) operating
activities(Gain)/loss on sale of assets
    
    
    (604
    )
    
    
    (36
    )
    
    
    (2,670
    )
    
    
    16Loss on the sale of discontinued
operations (net
of tax)
    
    
    
    
    
    
    3,990
    
    
    
    
    
    
    
    3,990Write-down of businesses held for sale
(net of
tax)
    
    
    
    
    
    
    2,159
    
    
    
    
    
    
    
    2,159Write-down of intangibles
    
    
    408
    
    
    
    5,809
    
    
    
    1,700
    
    
    
    5,809Restructuring
    
    
    2,923
    
    
    
    967
    
    
    
    9,499
    
    
    
    4,648Provision for doubtful accounts
    
    
    4,797
    
    
    
    1,505
    
    
    
    9,000
    
    
    
    3,619Depreciation and amortization
    
    
    5,989
    
    
    
    6,093
    
    
    
    11,943
    
    
    
    12,313Stock-based compensation expense
    
    
    986
    
    
    
    1,001
    
    
    
    1,855
    
    
    
    1,862Change in receivables
    
    
    (22,261
    )
    
    
    (13,409
    )
    
    
    (8,091
    )
    
    
    9,188Change in inventories
    
    
    (63
    )
    
    
    15,323
    
    
    
    10,843
    
    
    
    9,252Change in payables
    
    
    8,375
    
    
    
    1,205
    
    
    
    1,927
    
    
    
    (14,268
    )Change in other assets and liabilities
    
    
    (2,893
    )
    
    
    4,484
    
    
    
    (26,525
    )
    
    
    (18,814
    )Change in deferred taxes
    
    
    41,677
    
    
    
    (4,671
    )
    
    
    42,838
    
    
    
    (6,146
    )Total adjustments
    
    
    39,334
    
    
    
    24,420
    
    
    
    52,319
    
    
    
    13,628Net cash provided by (used for) operating
activities
    
    
    (14,410
    )
    
    
    14,486
    
    
    
    (9,969
    )
    
    
    (5,000
    )Cash flows from investing activitiesProceeds from disposals of assets
    
    
    2,805
    
    
    
    867
    
    
    
    7,786
    
    
    
    7,282Proceeds from sale of discontinued
operations
    
    
    
    
    
    
    4,019
    
    
    
    
    
    
    
    4,019Capital expenditures
    
    
    (2,618
    )
    
    
    (5,970
    )
    
    
    (9,990
    )
    
    
    (15,599
    )Purchases of investments
    
    
    (3,516
    )
    
    
    (6,648
    )
    
    
    (8,965
    )
    
    
    (13,270
    )Proceeds from sales of investments
    
    
    5,233
    
    
    
    7,801
    
    
    
    11,027
    
    
    
    14,593Change in other long-term assets
    
    
    158
    
    
    
    365
    
    
    
    229
    
    
    
    385Net cash provided by (used for)
investing activities
    
    
    2,062
    
    
    
    434
    
    
    
    87
    
    
    
    (2,590
    )Cash flows from financing activitiesProceeds from debt
    
    
    24,831
    
    
    
    112
    
    
    
    39,466
    
    
    
    817Payments on debt
    
    
    (6,430
    )
    
    
    (338
    )
    
    
    (25,287
    )
    
    
    (1,238
    )Stock issued/canceled for stock and
employee benefit plans
    
    
    2
    
    
    
    (94
    )
    
    
    
    
    
    
    (116
    )Dividends paid
    
    
    (2,076
    )
    
    
    (6,232
    )
    
    
    (4,151
    )
    
    
    (12,441
    )Net cash provided by (used for)
financing activities
    
    
    16,327
    
    
    
    (6,552
    )
    
    
    10,028
    
    
    
    (12,978
    )Effect of exchange rate changes on cash
and equivalents
    
    
    (604
    )
    
    
    538
    
    
    
    (643
    )
    
    
    1,539Change in cash and equivalents
    
    
    3,375
    
    
    
    8,906
    
    
    
    (497
    )
    
    
    (19,029
    )Cash and equivalents at beginning of period
    
    
    11,110
    
    
    
    23,786
    
    
    
    14,982
    
    
    
    51,721Cash and equivalents at end of period
    
    $
    14,485
    
    
    $
    32,692
    
    
    $
    14,485
    
    
    $
    32,692Cash paid (net of refunds) during period 
income taxes
    
    $
    (719
    )
    
    $
    758
    
    
    $
    204
    
    
    $
    3,893Cash paid during period  interest
    
    $
    1,287
    
    
    $
    1,495
    
    
    $
    2,413
    
    
    $
    3,405
  6




---



##### Table of Contents



LA-Z-BOY INCORPORATED
 
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedCapital in
    
    
    
    
    
    
    Other Compre-Common
    
    
    Excess of
    
    
    Retained
    
    
    hensive(Unaudited, amounts in thousands)
    
    Shares
    
    
    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 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
    
    
    41
    
    
    
    (7,754
    )
    
    
    7,595
    
    
    
    
    
    
    
    (118
    )Stock option, performance-based and restricted
stock expense
    
    
    
    
    
    
    1,855
    
    
    
    
    
    
    
    
    
    
    
    1,855Dividends paid
    
    
    
    
    
    
    
    
    
    
    (4,151
    )
    
    
    
    
    
    
    (4,151
    )Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    (62,288
    )Unrealized loss on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,752
    )Realization of losses on marketable securities
(net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )Change in fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (224
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67,383
    )At October 25, 2008
    
    $
    51,469
    
    
    $
    203,489
    
    
    $
    131,371
    
    
    $
    (5,530
    )
    
    $
    380,799
  7




---



##### 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)
    
    10/25/08
    
    
    4/26/08Raw materials
    
    $
    60,205
    
    
    $
    71,346Work in process
    
    
    13,778
    
    
    
    14,624Finished goods
    
    
    120,972
    
    
    
    119,270FIFO inventories
    
    
    194,955
    
    
    
    205,240Excess of FIFO over LIFO
    
    
    (27,842
    )
    
    
    (26,879
    )Inventories, net
    
    $
    167,113
    
    
    $
    178,361
 
 Note 5: Goodwill and Other Intangible Assets
  8




---



##### Table of Contents



Acquisitions,Balance as
    
    
    Dispositions
    
    
    Balance as(Unaudited, amounts in thousands)
    
    of 4/26/08
    
    
    and Other
    
    
    of 10/25/08GoodwillUpholstery Group
    
    $
    19,632
    
    
    $
    (1,292
    )
    
    $
    18,340Retail Group
    
    
    22,096
    
    
    
    
    
    
    
    22,096Corporate and Other*
    
    
    5,505
    
    
    
    (408
    )
    
    
    5,097Consolidated
    
    $
    47,233
    
    
    $
    (1,700
    )
    
    $
    45,533TradenamesCasegoods Group
    
    $
    9,006
    
    
    $
    
    
    
    $
    9,006
 
 *
    
    Corporate and Other includes goodwill from our VIEs. 
 Note 6: Investments
  9




---



##### Table of Contents



Note 7: Pension Plans
  Second Quarter Ended
    
    
    Six Months Ended(Unaudited, amounts in thousands)
    
    10/25/08
    
    
    10/27/07
    
    
    10/25/08
    
    
    10/27/07Service cost
    
    $
    328
    
    
    $
    441
    
    
    $
    656
    
    
    $
    882Interest cost
    
    
    1,359
    
    
    
    1,346
    
    
    
    2,718
    
    
    
    2,692Expected return on plan assets
    
    
    (1,728
    )
    
    
    (1,839
    )
    
    
    (3,456
    )
    
    
    (3,678
    )Net periodic pension cost
(benefit)
    
    $
    (41
    )
    
    $
    (52
    )
    
    $
    (82
    )
    
    $
    (104
    )
  
 Note 8: Financial Guarantees and Product Warranties
      Second Quarter Ended
    
    
    Six Months Ended(Unaudited, amounts in thousands)
    
    10/25/08
    
    
    10/27/07
    
    
    10/25/08
    
    
    10/27/07Balance as of the beginning of the period
    
    $
    14,645
    
    
    $
    14,267
    
    
    $
    14,334
    
    
    $
    14,283Accruals during the period
    
    
    3,993
    
    
    
    4,189
    
    
    
    8,097
    
    
    
    8,379Settlements during the period
    
    
    (4,201
    )
    
    
    (4,198
    )
    
    
    (7,994
    )
    
    
    (8,404
    )Balance as of the end of the period
    
    $
    14,437
    
    
    $
    14,258
    
    
    $
    14,437
    
    
    $
    14,258
 
 Note 9:  Stock-Based Compensation
  10




---



##### Table of Contents



Note 10: Segment Information
  Upholstery Group
 Casegoods Group
 Retail Group
 Second Quarter Ended
    
    
    Six Months Ended10/25/08
    
    
    10/27/07
    
    
    10/25/08
    
    
    10/27/07(Unaudited, amounts in thousands)
    
    (13 weeks)
    
    
    (13 weeks)
    
    
    (26 weeks)
    
    
    (26 weeks)SalesUpholstery Group
    
    $
    247,934
    
    
    $
    269,749
    
    
    $
    485,052
    
    
    $
    524,506Casegoods Group
    
    
    48,473
    
    
    
    58,892
    
    
    
    96,594
    
    
    
    112,466Retail Group
    
    
    39,484
    
    
    
    46,163
    
    
    
    81,911
    
    
    
    91,394VIEs/Eliminations
    
    
    (3,943
    )
    
    
    (9,370
    )
    
    
    (9,957
    )
    
    
    (18,536
    )Consolidated
    
    $
    331,948
    
    
    $
    365,434
    
    
    $
    653,600
    
    
    $
    709,830Operating income (loss)Upholstery Group
    
    $
    8,118
    
    
    $
    19,036
    
    
    $
    17,975
    
    
    $
    27,903Casegoods Group
    
    
    755
    
    
    
    3,577
    
    
    
    2,132
    
    
    
    6,177Retail Group
    
    
    (10,391
    )
    
    
    (9,119
    )
    
    
    (20,401
    )
    
    
    (19,193
    )Corporate and Other*
    
    
    (11,157
    )
    
    
    (12,816
    )
    
    
    (17,682
    )
    
    
    (23,464
    )Intangible write-down
    
    
    (408
    )
    
    
    (5,809
    )
    
    
    (1,700
    )
    
    
    (5,809
    )Restructuring
    
    
    (2,923
    )
    
    
    (967
    )
    
    
    (9,499
    )
    
    
    (4,648
    )$
    (16,006
    )
    
    $
    (6,098
    )
    
    $
    (29,175
    )
    
    $
    (19,034
    )
 
 *
    
    Variable Interest Entities (VIEs) are included in corporate and other. 
 Note 11: Restructuring
 Accounting for the Impairment or Disposal
of Long-Lived Assets.
 11




---



##### Table of Contents



Accounting for Costs Associated with
Exit or Disposal Activities
      12




---



##### Table of Contents



Fiscal 2009CashPayments4/26/08
    
    Charges to
    
    or Asset
    
    10/25/08(Unaudited, amounts in thousands)
    
    Balance
    
    Expense
    
    Write-Offs
    
    BalanceSeverance and benefit-related costs
    
    $
    2,842
    
    
    $
    2,909
    
    
    $
    (2,730
    )
    
    $
    3,021Fixed asset write-downs, net of gains
    
    
    
    
    
    
    49
    
    
    
    (49
    )
    
    
    Contract termination costs
    
    
    939
    
    
    
    790
    
    
    
    (987
    )
    
    
    742Other
    
    
    
    
    
    
    5,751
    
    
    
    (5,751
    )
    
    
    Total restructuring
    
    $
    3,781
    
    
    $
    9,499
    
    
    $
    (9,517
    )
    
    $
    3,763
 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 12: Income Taxes
 Accounting for
Income Taxes
 Accounting
for Uncertainty in Income Taxes
  13




---



##### Table of Contents



Note 13: Variable Interest Entities
 Consolidation of Variable Interest
Entities
     
 Note 14: Discontinued Operations
  14




---



##### Table of Contents



Second Quarter
    
    Six MonthsEnded
    
    Ended(Unaudited, amounts in thousands)
    
    10/27/07
    
    10/27/07Net sales
    
    $
    10,323
    
    
    $
    21,058Loss from discontinued operations, net of tax
    
    $
    (2,292
    )
    
    $
    (2,444
    )Loss on the sale of discontinued operations, net of tax
    
    $
    (3,990
    )
    
    $
    (3,990
    )
  
 Note 15: Earnings per Share
  Second Quarter Ended
    
    
    Six Months Ended(Unaudited, amounts in thousands)
    
    10/25/08
    
    
    10/27/07
    
    
    10/25/08
    
    
    10/27/07Weighted average common shares outstanding (basic)
    
    
    51,458
    
    
    
    51,410
    
    
    
    51,443
    
    
    
    51,395Effect of options and unvested restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average common shares outstanding
(diluted)
    
    
    51,458
    
    
    
    51,410
    
    
    
    51,443
    
    
    
    51,395
   
 Note 16: 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
 15




---



##### Table of Contents




    
    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.
   Fair Value Measurements(Unaudited, amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3AssetsAvailable-for-sale securities
    
    $
    9,541
    
    
    $
    16,726
    
    
    $
    Interest rate swap
    
    
    
    
    
    
    (224
    )
    
    
    Total
    
    $
    9,541
    
    
    $
    16,502
    
    
    $
    
   16




---



##### Table of Contents



Note 17: Hedging Activities
  
 Note 18: Recent Accounting Pronouncements
 FASB Statement of Financial Accounting Standards No. 159
 The Fair Value Option for
Financial Assets and Financial Liabilities
  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,
 17




---



##### Table of Contents



FASB Statement of Financial Accounting Standards No. 161
 Disclosures about Derivative
Instruments and Hedging Activities,
  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
  18




---



##### Table of Contents



Note 19: Subsequent Event
  19




---



##### 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
  20




---



##### Table of Contents



Upholstery Group
 Casegoods Group
 Retail
Group
  
 21




---



##### Table of Contents



Impact of Current Market Conditions
  
    
    We are reducing headcount by 10% or approximately 850 employees across all levels of the
company by the end of the calendar year.
    
    Due to the overall tightening of the financial markets, and our decision to withdraw
credit support to certain independent dealers, we anticipate the closure of 15 to 20,
primarily dealer owned, La-Z-Boy Furniture Galleries® stores, over the next 90 to 120 days.
    
    We will significantly reduce our planned fiscal 2009 capital expenditures from
approximately $27 million to approximately $18 million to $20 million.
    22




---



##### Table of Contents



23




---



##### Table of Contents



Results of Operations
Analysis of Operations: Quarter Ended October 25, 2008
(Second Quarter 2009 compared with 2008)
 Quarter Ended
    
    Percent(Amounts in thousands, except per share amounts and percentages)
    
    10/25/08
    
    10/27/07
    
    changeUpholstery sales
    
    $
    247,934
    
    
    $
    269,749
    
    
    
    (8.1
    )%Casegoods sales
    
    
    48,473
    
    
    
    58,892
    
    
    
    (17.7
    )%Retail sales
    
    
    39,484
    
    
    
    46,163
    
    
    
    (14.5
    )%Other/eliminations*
    
    
    (3,943
    )
    
    
    (9,370
    )
    
    
    57.9
    %Consolidated sales
    
    $
    331,948
    
    
    $
    365,434
    
    
    
    (9.2
    )%Consolidated gross profit
    
    $
    87,031
    
    
    $
    98,258
    
    
    
    (11.4
    )%Consolidated gross margin
    
    
    26.2
    %
    
    
    26.9
    %Consolidated S,G&A
    
    $
    101,942
    
    
    $
    98,098
    
    
    
    3.9
    %S,G&A as a percent of sales
    
    
    30.7
    %
    
    
    26.8
    %Upholstery operating income
    
    $
    8,118
    
    
    $
    19,036
    
    
    
    (57.4
    )%Casegoods operating income
    
    
    755
    
    
    
    3,577
    
    
    
    (78.9
    )%Retail operating loss
    
    
    (10,391
    )
    
    
    (9,119
    )
    
    
    (13.9
    )%Corporate and other
    
    
    (11,157
    )
    
    
    (12,816
    )
    
    
    12.9
    %Intangible write-down
    
    
    (408
    )
    
    
    (5,809
    )
    
    
    93.0
    %Restructuring
    
    
    (2,923
    )
    
    
    (967
    )
    
    
    (202.3
    )%Consolidated operating loss
    
    $
    (16,006
    )
    
    $
    (6,098
    )
    
    
    (162.5
    )%Upholstery operating margin
    
    
    3.3
    %
    
    
    7.1
    %Casegoods operating margin
    
    
    1.6
    %
    
    
    6.1
    %Retail operating margin
    
    
    (26.3
    )%
    
    
    (19.8
    )%Consolidated operating margin
    
    
    (4.8
    )%
    
    
    (1.7
    )%Loss from continuing operations
    
    $
    (53,744
    )
    
    $
    (3,652
    )Loss from discontinued operations
    
    $
    
    
    
    $
    (6,282
    )Diluted loss per share from continuing operations
    
    $
    (1.04
    )
    
    $
    (0.07
    )Diluted loss per share from discontinued operations
    
    $
    
    
    
    $
    (0.12
    )
 
 *
    
    Includes sales from our VIEs. 24




---



##### Table of Contents



Sales
 Consolidated
 Upholstery Group
 Casegoods Group
 Retail Group
  Gross Margin
  
    
    Selling price increases, net of discounts, mainly for our La-Z-Boy branded product,
increased our gross margin by 1.4 percentage points.
    
    The completion of our cellular conversion and the closure of the Tremonton plant
increased the overall efficiency in our La-Z-Boy branded manufacturing, which increased our
gross margin by 1.4 percentage points.
    
    A 0.6 percentage point increase due to the national advertising campaign with La-Z-Boy
Furniture Galleries® stores from which we receive a partial reimbursement that was not
included in revenue in the second quarter of fiscal 2008.
  
    
    Restructuring charges increased 0.6 percentage points in the second quarter of fiscal
2009 as compared to the second quarter of fiscal 2008.
    
    A 3.1 percentage point decrease due to steel, polyurethane foam, plywood, fabric and
leather cost increases.
 25




---



##### Table of Contents




    
    Charges associated with the transition of our cutting and sewing operations to Ramos
Arizpe, Mexico, in the state of Coahuila which we did not have in the second quarter of
fiscal 2008 decreased our gross margin by 0.5 percentage points.
 Selling, General and Administrative Expenses
  Restructuring
  Intangible Write-down
  Operating Margin
  26




---



##### Table of Contents



Upholstery Group
 Casegoods Group
 Retail Group
 Corporate and Other
 Interest Expense
  Income Taxes
   27




---



##### Table of Contents



Discontinued Operations
  28




---



##### Table of Contents



Results of Operations
Analysis of Operations: Six Months Ended October 25, 2008
(First Six Months of 2009 compared with 2008)
 Six Months Ended
    
    
    Percent(Amounts in thousands, except per share amounts and percentages)
    
    10/25/08
    
    
    10/27/07
    
    
    changeUpholstery sales
    
    $
    485,052
    
    
    $
    524,506
    
    
    
    (7.5
    )%Casegoods sales
    
    
    96,594
    
    
    
    112,466
    
    
    
    (14.1
    )%Retail sales
    
    
    81,911
    
    
    
    91,394
    
    
    
    (10.4
    )%Other/eliminations*
    
    
    (9,957
    )
    
    
    (18,536
    )
    
    
    46.3
    %Consolidated sales
    
    $
    653,600
    
    
    $
    709,830
    
    
    
    (7.9
    )%Consolidated gross profit
    
    $
    167,773
    
    
    $
    180,950
    
    
    
    (7.3
    )%Consolidated gross margin
    
    
    25.7
    %
    
    
    25.5
    %Consolidated S,G&A
    
    $
    193,781
    
    
    $
    192,606
    
    
    
    0.6
    %S,G&A as a percent of sales
    
    
    29.6
    %
    
    
    27.1
    %Upholstery operating income
    
    $
    17,975
    
    
    $
    27,903
    
    
    
    (35.6
    )%Casegoods operating income
    
    
    2,132
    
    
    
    6,177
    
    
    
    (65.5
    )%Retail operating loss
    
    
    (20,401
    )
    
    
    (19,193
    )
    
    
    (6.3
    )%Corporate and other
    
    
    (17,682
    )
    
    
    (23,464
    )
    
    
    24.6
    %Intangible write-down
    
    
    (1,700
    )
    
    
    (5,809
    )
    
    
    70.7
    %Restructuring
    
    
    (9,499
    )
    
    
    (4,648
    )
    
    
    (104.4
    )%Consolidated operating loss
    
    $
    (29,175
    )
    
    $
    (19,034
    )
    
    
    (53.3
    )%Upholstery operating margin
    
    
    3.7
    %
    
    
    5.3
    %Casegoods operating margin
    
    
    2.2
    %
    
    
    5.5
    %Retail operating margin
    
    
    (24.9
    )%
    
    
    (21.0
    )%Consolidated operating margin
    
    
    (4.5
    )%
    
    
    (2.7
    )%Loss from continuing operations
    
    $
    (62,288
    )
    
    $
    (12,194
    )Loss from discontinued operations
    
    $
    
    
    
    $
    (6,434
    )Diluted loss per share from continuing operations
    
    $
    (1.21
    )
    
    $
    (0.24
    )Diluted loss per share from discontinued operations
    
    $
    
    
    
    $
    (0.12
    )
 
 *
    
    Includes sales from our VIEs. 29




---



##### Table of Contents



Sales
 Consolidated
 Upholstery Group
 Casegoods Group
 Retail Group
 .
 Gross Margin
  
    
    The increased efficiencies gained from the completion of our cellular conversion and the
closure of the Tremonton plant in our La-Z-Boy branded manufacturing which resulted in a
1.4 percentage point increase to our gross margin.
    
    Selling price increases, net of discounts, mainly for our La-Z-Boy branded product,
increased our gross margin by 1.2 percentage points.
    
    A 0.6 percentage point increase due to the national advertising campaign with La-Z-Boy
Furniture Galleries® stores from which we receive a partial reimbursement that was not
included in revenue in the first half of fiscal 2008.
 30




---



##### Table of Contents




    
    A 2.0 percentage point decrease due to steel, polyurethane foam, plywood, fabric and
leather cost increases.
    
    Charges associated with the transition of our cutting and sewing operations to Ramos
Arizpe, Mexico, in the state of Coahuila which we did not have in the first half of fiscal
2008 decreased our gross margin by 0.3 percentage points.
    
    Restructuring charges increased 0.8 percentage points in the first six months of fiscal
2009 as compared to the same period a year ago.
 Selling, General and Administrative Expenses
  Restructuring
  Intangible Write-down
  31




---



##### Table of Contents



Operating Margin
  Upholstery Group
 Casegoods Group
 Retail Group
 Corporate and Other
 Interest Expense
  Income Taxes
   32




---



##### Table of Contents



Discontinued Operations
  
 Liquidity and Capital Resources
      33




---



##### Table of Contents



Cash Flows Provided By (Used For)
    
    Six Months Ended(Unaudited, amounts in thousands)
    
    10/25/08
    
    
    10/27/07Operating activitiesNet loss, depreciation, stock expense and deferred taxes
    
    $
    (5,652
    )
    
    $
    (10,599
    )Restructuring
    
    
    9,499
    
    
    
    4,648Working capital and other
    
    
    (13,816
    )
    
    
    951Cash used for operating activities
    
    
    (9,969
    )
    
    
    (5,000
    )Investing activities
    
    
    87
    
    
    
    (2,590
    )Financing activitiesNet increase in debt
    
    
    14,179
    
    
    
    (421
    )Other financing activities
    
    
    (4,151
    )
    
    
    (12,557
    )Cash provided by (used for) financing activities
    
    
    10,028
    
    
    
    (12,978
    )Exchange rate changes
    
    
    (643
    )
    
    
    1,539Net decrease in cash and equivalents
    
    $
    (497
    )
    
    $
    (19,029
    )
 Operating Activities
  Investing Activities
  34




---



##### Table of Contents



Financing Activities
       
 Critical Accounting Policies
  
 Regulatory Developments
  35




---



##### Table of Contents



Recent Accounting Pronouncements
  
 Business Outlook
  36




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   37




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Shares
    
    PercentVoted
    
    Shares
    
    SharesIn Favor
    
    In Favor
    
    WithheldProposal
Election of Directors for terms expiring
in 2011:Kurt L. Darrow
    
    
    42,110,679
    
    
    
    94.9
    %
    
    
    2,257,492James W. Johnston
    
    
    41,244,880
    
    
    
    93.0
    %
    
    
    3,123,291H. George Levy, M.D.
    
    
    40,488,769
    
    
    
    91.3
    %
    
    
    3,879,402W. Alan McCollough
    
    
    42,037,784
    
    
    
    94.8
    %
    
    
    2,330,387Directors whose term in office
continued after the annual
meeting:John H. FossRichard M. GabrysDavid K. HehlRocque E. LipfordJack L. ThompsonNido R. Quebin
 38




---



##### Table of Contents



Shares
    
    
    Shares
    
    
    
    
    
    
    BrokerVoted
    
    
    Voted
    
    
    Shares
    
    
    Non-Proposal
    
    In Favor
    
    
    Against
    
    
    Abstained
    
    
    VotesRatify the
selection of the
independent
registered public
accounting firm for
FYE 2009 (1)
    
    
    42,531,138
    
    
    
    228,332
    
    
    
    1,608,701
    
    
    
    Amend the La-Z-Boy
Incorporated
articles of
incorporation and
bylaws reducing the
vote required for
shareholders to
amend the bylaws
from 67% to a
majority (2)
    
    
    33,152,379
    
    
    
    5,327,876
    
    
    
    1,663,398
    
    
    
    4,224,518Amend the La-Z-Boy
Incorporated
articles of
incorporation
eliminating the
high vote
requirement for
certain mergers and
other transactions (3)
    
    
    36,697,230
    
    
    
    1,748,692
    
    
    
    1,697,731
    
    
    
    4,224,518Amend the La-Z-Boy
Incorporated bylaws
to reorganize the
Board of Directors
into one class,
with each director
serving a term of
one year (2)
    
    
    23,106,932
    
    
    
    15,286,919
    
    
    
    1,749,802
    
    
    
    4,224,518
 
 (1)
    
    Approval required affirmative votes of majority of shares voted on proposal.(2)
    
    Approval required affirmative votes of at least 34,484,278 shares (67% of shares outstanding).(3)
    
    Approval required affirmative votes of at least 25,734,536 shares (majority of shares outstanding). 
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description(3.1)
    
    La-Z-Boy Incorporated Restated Articles of Incorporation (Incorporated by
reference to an exhibit to Form 10-Q for the quarter ended October 26,
1996)(3.2)
    
    Amendment to Restated Articles of Incorporation effective August 21, 1998
(Incorporated by reference to an exhibit to Form 10-K/A filed September
27, 1999)(3.3)
    
    Amendment to Restated Articles of Incorporation effective August 22, 2008(10.1)*
    
    La-Z-Boy Incorporated Deferred Stock Unit Plan for Non-employee Directors(10.2)*
    
    Form of Change in Control Agreement (Incorporated by reference to an
exhibit to Form 8-K dated February 6, 1995). In effect for: Mark S.
Bacon, Sr., Kurt L. Darrow, Steven M. Kincaid, Louis M. Riccio, Jr., and
Otis Sawyer(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 November 18, 2008
 
 *
    
    Indicates a management contract or compensatory plan or arrangement under
which a director or executive officer may receive benefits. 39




---



##### Table of Contents



SIGNATURE
  LA-Z-BOY INCORPORATED
(Registrant)Date: November 18, 2008BY:  /s/ Margaret L. MuellerMargaret L. MuellerCorporate Controller
On behalf of the registrant and as
Chief Accounting Officer 40