LA-Z-BOY INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries (collectively, the "Company"). We derived the April 26, 2025 balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles ("US GAAP"), which we applied on a basis consistent with those reflected in our fiscal 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), but the information does not include all of the disclosures required by US GAAP. In management’s opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April 25, 2026.

Accounting Pronouncements Adopted in Fiscal 2026

The following table summarizes Accounting Standards Updates ("ASUs"), which were adopted in fiscal 2026, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

Accounting Pronouncements not yet Adopted

The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

Note 2: Acquisitions

We did not complete any acquisitions during the first six months of fiscal 2026.

Prior Year Acquisitions

Each of the following Retail acquisitions completed in fiscal 2025 reflects a core component of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) in suitable geographic markets, alongside the existing La-Z-Boy Store network.

Prior to each Retail acquisition completed in fiscal 2025, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Stores (and to use the associated trademarks and trade name) in each of their respective markets, and we reacquired these rights when we consummated the transaction. These reacquired rights are indefinite-lived because our retailer agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement date of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. For federal income tax purposes, we amortize and deduct the indefinite-lived intangible assets and goodwill over 15 years.

The acquisitions below were not significant to our consolidated financial statements, and therefore, pro-forma financial information is not presented.

Melbourne and Cocoa, Florida Acquisition

On September 10, 2024, we completed our acquisition of the Melbourne and Cocoa, Florida businesses that operatetwo independently owned La-Z-Boy Stores andone distribution center for $11.4 million, inclusive of customary adjustments. The acquisition also included the purchase of buildings and land for both stores and the distribution center. We paid total cash of $11.3 million during the second and third quarters of fiscal 2025 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $0.9 million related to the reacquired rights described above. We also recognized $1.7 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies.

Davenport, Iowa Acquisition

On July 22, 2024, we completed our acquisition of the Davenport, Iowa business that operatesone independently owned La-Z-Boy Store for $7.4 million, inclusive of customary adjustments. We paid total cash of $6.9 million during the first and second quarters of fiscal 2025 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $1.7 million related to the reacquired rights described above. We also recognized $5.1 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies.

Note 3: Inventories

A summary of inventories is as follows:

Note 4: Assets Held for Sale

During the second quarter of fiscal 2026, the Company committed to a plan to dispose a portion of our Casegoods wholesale business (the “disposal group”) within the next 6 months. Assets and liabilities are classified as held for sale when management commits to a plan to sell a disposal group and concludes that it meets all other relevant criteria in accordance with U.S. GAAP. As of October 25, 2025, we met the criteria to classify the following assets as held for sale:

Assets held for sale are measured at the lower of their carrying value or fair value less costs to sell and are no longer depreciated or amortized. Any loss resulting from the measurement is recognized in the period the held for sale criteria are met while gains are not recognized until the date of sale. Upon classifying these assets as held for sale, we concluded that the total carrying value of the disposal group did not exceed its fair value and no impairment was recorded.

The disposal group does not meet the requirements to be classified as discontinued operations as the disposition of a portion of the Casegoods business does not represent a strategic shift that will have a material effect on the Company’s operations and financial results. The Casegoods business currently operates within the Wholesale segment.

Note 5: Goodwill and Other Intangible Assets

We have goodwill on our consolidated balance sheet as follows:

The following table summarizes changes in the carrying amount of our goodwill by reportable segment:

(1)Includes $26.9 million and $20.6 million of accumulated impairment losses in Corporate and Other and the Wholesale segment, respectively.

We have intangible assets on our consolidated balance sheet as follows:

(1)Reclassified to assets held for sale during the second quarter of fiscal 2026. Refer to Note 4, Assets Held for Sale, for further information.

The following summarizes changes in our intangible assets:

We test indefinite-lived intangibles and goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that an asset might be impaired. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired.