La-Z-Boy (LZB) Settles with Megdal Associates for $13.5M
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La-Z-Boy (NYSE: LZB) disclosed that on On December 21, 2017, it entered into a settlement agreement and release with Megdal Associates, LLC, a Pennsylvania limited liability company; Terry Megdal, an individual; Janice Faller, an individual; Dr. William Megdal, individually and as Custodian and/or Power of Attorney for Rachel Rose Megdal, Lydia Camille Megdal, and Miriam Iris Megdal; and Leland Schermer, an individual, with respect to the civil lawsuit filed against us over a contract Megdal claimed required us to make payments in respect of certain power units.
Under the terms of the Settlement Agreement, the parties settled the legal dispute with no admission of liability, wrongdoing or responsibility by any of the parties, released each other from all future and past claims under the contract, including resolving all associated future royalty obligations, and agreed to dismiss all claims with prejudice, and we have agreed to pay Megdal the aggregate sum of $13.5 million which we will pay during the third quarter of fiscal 2018.
The settlement follows a verdict returned against us in fiscal 2016 with respect to the Contract, at which time we recognized an expense of $5.5 million in our consolidated statement of income. Subsequent to the verdict we have accrued an additional $3.9 million of expense related to royalties and interest related to this matter. With the announced settlement, we will recognize an additional charge of $4.1 million in the third quarter of fiscal 2018.
A copy of the Settlement Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The description of the Settlement Agreement in this Item 1.01 does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Settlement Agreement.
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