LA-Z-BOY INCLZB

LA-Z-BOY INC Income Taxes Disclosure

10-KFiled Jun 16, 20265 min read
Note 18: Income Taxes

Income before income taxes consists of the following:
Fiscal Year Ended
(52 weeks)(52 weeks)(52 weeks)
(Amounts in thousands)4/25/20264/26/20254/27/2024
United States$136,363 $160,472 $145,854 
Foreign2,442 (13,338)19,898 
Total$138,805 $147,134 $165,752 
Income tax expense (benefit) consists of the following components:
Fiscal Year Ended
(52 weeks)(52 weeks)(52 weeks)
(Amounts in thousands)4/25/20264/26/20254/27/2024
Federal
Current $7,844 $28,002 $29,637 
Deferred16,712 2,197 (1,529)
State
Current 5,803 8,807 9,823 
Deferred1,798 578 (318)
Foreign
Current 3,930 4,280 4,534 
Deferred(193)2,318 (1,031)
Total income tax expense$35,894 $46,182 $41,116 

Our effective tax rate differs from the U.S. federal income tax rate for the following reasons:

Fiscal Year Ended
(52 weeks)
4/25/2026
(Amounts in thousands)AmountPercentage
US Federal Statutory Tax Rate$29,086 21.0 %
Domestic State and Local Income Taxes, net of Federal Benefit (1)
6,035 4.3 %
Foreign Tax Effects
United Kingdom
Nondeductible operating losses2,752 2.0 %
Other(272)(0.2)%
Other foreign jurisdictions1,081 0.8 %
Effects of Cross-Border Transactions(1,095)(0.8)%
Tax Credits(726)(0.5)%
Nontaxable or Nondeductible Items
Nondeductible asset impairment4,193 3.0 %
Nondeductible executive compensation1,611 1.2 %
Other(307)(0.2)%
Changes in Unrecognized Tax Benefits167 0.1 %
Other Adjustments
US federal tax effects of United Kingdom plant closure(5,851)(4.2)%
Other(780)(0.6)%
Effective Tax Rate$35,894 25.9 %
(1)The domestic state jurisdictions that make up greater than 50% of the total effect of this category include CA, PA, IL, MI, MD, VA, WI, and NY.
Fiscal Year Ended
(52 weeks)(52 weeks)
(% of income before income taxes)4/26/20254/27/2024
Statutory tax rate21.0 %21.0 %
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit5.1 %4.3 %
Change in valuation allowance1.8 %— %
Non-deductible asset impairment3.5 %— %
Foreign rate differences1.2 %(0.2)%
Miscellaneous items(1.2)%(0.3)%
Effective tax rate31.4 %24.8 %

For our Canada and Mexico foreign operating units, we permanently reinvest the earnings and consequently do not record a deferred tax liability relative to the undistributed earnings. The Company is not permanently reinvested on undistributed earnings for its Thailand and United Kingdom foreign operating units and has provided for deferred tax attributable to those earnings of approximately $1.4 million as of the end of fiscal 2026.

The primary components of our deferred tax assets and (liabilities) were as follows:

(Amounts in thousands)4/25/20264/26/2025
Assets
Leases$142,209 $123,764 
Deferred and other compensation14,570 15,533 
State income tax—net operating losses, credits and other6,537 4,718 
Warranty5,890 7,247 
Workers' compensation1,982 1,962 
Bad debt1,535 1,516 
Employee benefits2,202 2,611 
Federal and foreign net operating losses, credits947 2,613 
Other— 1,999 
Valuation allowance(2,388)(4,055)
Total deferred tax assets173,484 157,908 
Liabilities
Right of use lease assets(132,402)(114,705)
Property, plant and equipment(26,973)(14,795)
Inventory(2,597)(2,899)
Goodwill and other intangibles(23,757)(19,986)
Tax on undistributed foreign earnings(1,425)(1,194)
Other(309)— 
Net deferred tax assets (liabilities)$(13,979)$4,329 

The deferred tax assets associated with loss carry forwards and the related expiration dates are as follows:

(Amounts in thousands)AmountExpiration
Various U.S. state net operating losses (excluding federal tax effect)$2,162 Fiscal 2027-2041
Foreign capital losses17 Indefinite
Foreign net operating losses930 Indefinite
We evaluate our deferred taxes to determine if a valuation allowance is required. Accounting standards require that we assess whether a valuation allowance should be established based on the consideration of all available evidence using a "more likely than not" standard with significant weight being given to evidence that can be objectively verified.

The evaluation of the amount of net deferred tax assets expected to be realized necessarily involves forecasting the amount of taxable income that will be generated in future years. We have forecasted future results using estimates management believes to be reasonable. We based these estimates on objective evidence such as expected trends resulting from certain leading economic indicators. The realization of deferred income tax assets is dependent on future events and actual results may vary from management's forecasts due to economic volatility and uncertainty along with unpredictable complexities in the global supply chain. Such variances could result in adjustments to the valuation allowance on deferred tax assets in future periods, and such adjustments could be material to the financial statements.

A summary of the valuation allowance by jurisdiction is as follows:

(Amounts in thousands)4/25/20264/26/2025Change
U.S. State$1,621 $1,449 $172 
Foreign767 2,606 (1,839)
Total$2,388 $4,055 $(1,667)

The remaining valuation allowance of $2.4 million is related to certain U.S. state and foreign deferred tax assets. The U.S. state deferred taxes are primarily related to state net operating losses and state tax credits. The foreign deferred taxes are primarily related to net operating losses.

As of April 25, 2026, we had a gross unrecognized tax benefit of $1.2 million related to uncertain tax positions in various jurisdictions. A reconciliation of the beginning and ending balance of these unrecognized tax benefits is as follows:

Fiscal Year Ended
(52 weeks)(52 weeks)(52 weeks)
(Amounts in thousands)4/25/20264/26/20254/27/2024
Balance at the beginning of the period$1,062 $1,175 $1,084 
Additions:
Positions taken during the current year273 100 168 
Positions taken during the prior year27 — 50 
Reductions:
Positions taken during the prior year— (56)— 
Reductions resulting from the lapse of the statute of limitations(148)(157)(127)
Balance at the end of the period$1,214 $1,062 $1,175 

We recognize interest and penalties associated with uncertain tax positions in income tax expense. We had approximately $0.5 million accrued for interest and penalties as of April 25, 2026 and April 26, 2025.

If recognized, $1.0 million of the total $1.2 million of unrecognized tax benefits would decrease our effective tax rate. The remaining balance will be settled or released as tax audits are effectively settled, statutes of limitation expire, or other new information becomes available.

Our U.S. federal income tax returns for fiscal years 2023 and subsequent years are still subject to audit. In addition, we conduct business in various states. The major states in which we conduct business are subject to audit for fiscal years 2022 and subsequent years. Our foreign operations are subject to audit for fiscal years 2016 and subsequent years.
Cash paid for taxes (net of refunds received) during fiscal year ended April 25, 2026 were as follows:
Fiscal Year Ended
(52 weeks)
(Amounts in thousands)4/25/2026
U.S Federal$21,424 
U.S. State6,365 
Mexico2,301 
Other Foreign328 
Total cash paid for taxes (net of refunds received)$30,418 
Cash paid for taxes (net of refunds received) during the fiscal years ended April 26, 2025, and April 27, 2024, was $43.8 million, and $34.2 million, respectively.
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Historical Timeline

Fiscal YearFiled
2026Jun 16, 2026Showing above
2025Jun 17, 2025
2024Jun 17, 2024
2023Jun 20, 2023
2022Jun 21, 2022
2021Jun 15, 2021
2020Jun 23, 2020
2019Jun 18, 2019
2018Jun 19, 2018
2017Jun 20, 2017
2016Jun 21, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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