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La-Z-Boy Management Discusses Q4 2012 Results - Earnings Call Transcript

All in all, a good year. Clearly, the strategic initiatives and changes implemented throughout the past 5-plus years have gained traction and are increasingly evident in our results. Moving forward, with our brand strength, quest for operational excellence and vast network of proprietary distribution, we remain focused on 3 key objectives: sales growth, making our Retail segment profitable and positive conversion on that volume growth.

Now let me turn to a discussion of the fourth quarter. Our results for the period were impacted by a number of issues: The 13 versus 14-week comparison; a change in our effective tax rate; and $4.2 million in additional incentive compensation, which included a $1.6 million bonus to those employees who do not participate in the company's annual incentive program. We also had $2.6 million increase related to other incentive compensation, including both short-term and long-term stock compensation.

As a reminder, last year's fourth quarter included a minimal level of compensation overall, and this year, because our results improved significantly, we felt it important to reward each employee throughout the organization as our performance is a credit to every one of them.

Now on the wholesale side. Sales for the Upholstery segment increased 0.8% or about 8.5% on a comparable 13-week period. Mike will discuss the 53-week comparable year and the 14-week comparable quarter in a few minutes to help clarify any confusion that may exist with respect to the additional week in fiscal 2011. The operating margin for the period was 10.1%, demonstrating the efficiency of our operating structure across all 3 of our upholstery companies. As I mentioned a moment ago, our Mexican-based cut-and-sew facility is fully up to speed and is delivering the cost savings we anticipated.

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