La-Z-Boy Inc (LZB) 2004 Q3 法說會逐字稿

Good morning. My name is My name is Latrisha and I will be your conference facilitator today. At this time I would like to welcome everyone to the La-Z-Boy's third quarter operating results conference call. [Operator Instructions] Thank you.

I will now turn the conference over to Mr. Mark Stegeman, Treasurer of La-Z-Boy Inc. Sir, you may begin.

Thank you, Latrisha.

Good morning, I'm Mark Stegeman, Treasurer of La-Z-Boy Inc. Thank you for joining our fiscal 2004 third quarter conference call. With us on today's call as usual are Kurt Darrow, La-Z-Boy's President and CEO, and David Risley, our Chief Financial Officer. Pat Norton, our Chairman is also here with us today.

Today's subject is La-Z-Boy's January third quarter operating results. As usual, Kurt and Dave will begin with some prepared remarks. We'd like to try and end the call by noon, but will be happy to extend beyond that if you still have unanswered questions.

This call is being webcast live and a replay will be available on our website this afternoon. A telephone replay of the call will also be available for a week, beginning early this afternoon.

These regular quarterly investor conference calls are one of La-Z-Boy's primary vehicles providing guidance to and communicating with investors in the investment community about the company's current operations and future prospects. We will begin making -- by making some forward-looking statements during this call, so I will repeat our usual caveat.

While these statements reflect the best judgment of management at the present time, they are subject to numerous future risks and uncertainties, as detailed in our regular filings with the SEC, and they may differ materially from actual results due to a wide range of factors. We undertake no obligation to update any forward-looking statements made during this call.

And with that, let me introduce La-Z-Boy's President and Chief Executive Officer, Kurt Darrow.

Thanks, Mark and good morning. We sincerely appreciate you joining us today for our third quarter conference call.

Our third quarter operating results came in at the upper end of the guidance we provided in mid November. These results, however, remain far short of where we'd like them to be and where we know they can and will be. We continue the process of laying the groundwork that will enable us to achieve higher levels of sales growth and profitability. We believe these changes, together with the existing strengths of our company, position us to take advantage of what looks to be an improving furniture environment.

For the third quarter sales were off 3.6% from last year's quarter and earnings per share came in at 29 cents, at the upper end of our 26 cent to 30 cent guidance range. Third quarter sales in our upholstery segment were basically flat, resulting from strengthening sales trends throughout the quarter and stopping a four-quarter stretch of lower year-over-year comparisons.

Case goods sales dollars for the quarter were down 14%, with 64% of this decline being accounted for by weakness in our hospitality business. The hospitality industry has continued to suffer from below normal occupancy rates and depressed revenues per room ever since 9/11. Without this impact, our case good sales would have been down mid-single digits.

During the quarter, we were encouraged by the improved trend of incoming orders. In spite of the negative impact of bad weather in much of the northeast and midwest in January, the final month of our third quarter. Upholstery orders rose about 6% for the quarter, while case good orders were off only about 3%, excluding the hospitality business. These order trends resulted in backlog increases for both segments of our business, which bodes well for our final quarter. The backlog gain was larger in upholstery than in case goods, but we did see a low double digit gain for the quarter in our case good backlog nonetheless. The bottom line is that we are seeing demonstrative improvement in demand in both our upholstery and case good segments.

Now, a few comments on our operating margins. Our overall operating margin for the quarter was 5.3%, down from the 7.7% a year earlier. This decrease was caused by a combination of factors, including continued price competition and discounting pressures, plant down time taken in the case good segment and at selected La-Z-Boy upholstery businesses, and by certain specific one-time product related issues, which I'll discuss in a few moments.

Additionally, we continue to feel the effects from the significant case good plant closures we have taken over the past couple of years. Quantifying the short-term cost of these disruptions, these discontinuations and uncertainties is hard to estimate. However, we believe in spite of this pain these changes are enabling us to build a more solid business for the future. As I have outlined in recent investor presentations, we are down to five case good plants for our five case good businesses.

With the uncertainty surrounding the anti-dumping petition on Chinese bedroom furniture, we will delay any further plant rationalization until the result of the anti-dumping action is fully known. We will continue, however, to manage the case good business very aggressively from a cost control perspective. For instance, just this past week our Kincaid Division reduced their work force by 120 employees, and consolidated one of their finishing lines, in a continuing effort to right size that business. While we were disappointed that we had to disrupt the lives of many loyal Kincaid employees, we felt it was necessary to make this change to keep this business competitive.

As I mentioned last quarter, one of the three key focus areas of the organization is accelerating and globalizing our supply chain network. A key part of that is better integrating imports into our system. We are currently importing approximately 40% of our case good products and about 8% of our upholstery products, primarily in cut and sewn kits for leather and selected high-volume fabrics. Currently imported cut and sew kits account for about half of our total leather upholstery volume, which enable us to provide more cost-competitive products to our dealers and to our consumers. We are continuing our global sourcing efforts and identifying all possible areas where we can create a more cost competitive and globally integrated supply chain.

Now I'd like to spend a few minutes on the hospitality industry. As we noted in our 10-Q discussion, this segment of our business has been negatively impacted by the combination of a weak overall hospitality market and increased import competition. Our competitive posture with the depressed hospitality market remains strong and as that business recovers, we feel we are well positioned to reap significant benefits.

Encouragingly, both of the major hospitality industry consulting guru's, PricewaterhouseCoopers and Smith Travel Research, are anticipating a good rebound in 2004 with total room demand, occupancy rates, average daily room rates and RevPAR all forecasted to show decent gains for the first time since 2000. While occupancy rates will still be about 2 percentage points shy of 2000's 63.3% level, Smith travel is expecting a 1.5% gain this year over 2003 and Pricewaterhouse is looking for nearly a 2 full point gain in occupancy.

And in terms of RevPAR, Smith travel and PWC are projecting increases of 4.5% and 5.2%, respectively, compared to 2003. 2004 promises to be a much improved year for the beleaguered hospitality industry. Now let me talk briefly about some of the product related issues which impacted our third quarter results.

Our Pennsylvania House brand experienced manufacturing defects on the Steve Tyrell New Standards Collection, which was caught immediately after the first cutting arrived from offshore. The defects affected the dining room tables and chairs in the collection and a few other pieces. The balance of the collection is at specification.

Essentially the collection has about 90 SKUs and we're having problems with 10 of those 90 items. Our dealer base has confirmed that they will bring the New Standards dining room back on their floors as soon as Pennsylvania House receives the corrected product. And in fact, some of them have decided to keep the floor samples on their floor so they can take orders against the anticipation of the corrected product. We were told by all our dealers that they appreciated our proactive stance to stop shipment so the below specification product did not make it into the consumer's home. Pennsylvania House will show the properly re-engineered dining room to our New Standard retailers at the April 2004 market and we plan to ship the new samples by late April or early March 2004, early May 2004, excuse me.

Another product related issue we faced this quarter was an inventory issue related to re-merchandising at one of our upholstery companies. We have a new president in place who is doing some exciting things to revigorate that company and we, unfortunately, took a short-term hit to reposition that particular product line. I am confident that going forward these two issues, and the steps we have taken to address them, will contribute to our long-term success.

So where are we going?

As you know, La-Z-Boy is extremely well positioned to capitalize on what many, including ourselves, view as a large pentup demand for residential furniture. First, two key drivers of underlying furniture demand, consumer confidence and housing starts, have shown significant improvement over the past few months.

Second, we are primarily focused on the upholstery segment of the business, which accounted for nearly 77% of our total sales through this year's first nine months. The upholstery segment of the industry has for a variety of reasons grown consistently faster than the case goods segment in recent years and has become a higher percentage of the overall residential furniture market.

And third, we believe we are in the sweet spot of the upholstery business, the mid-price segment. In addition, as we have pointed out before, we have an unparalleled consumer brand name and an extremely strong dedicated distribution system, two major advantages in this highly fragmented industry. It is our intention to leverage and grow both of these advantages over the coming quarters and years. On the brand side, we continue to support our successful new look of comfort advertising campaign, which is designed to get women and a younger audience to look at La-Z-Boy in a different way.

As I mentioned last quarter, to supplement this campaign, we have partnered with Todd Oldham to develop a very exciting collection of furniture called Todd Oldham by La-Z-Boy. This line has been tremendously well received by the consumer press with over 100 million impressions already. We are very pleased that it began shipping on schedule in late January.

In addition to our brand enhancement efforts, we are also committed to engage our dealers in supporting the La-Z-Boy brand in their local marketing. On this note, our La-Z-Boy great rebate event, which is active in the market currently, was supported by dealers representing over 92% of our La-Z-Boy sales volume, with a vast majority of those dealers committing to significant local marketing driven by several La-Z-Boy incentives. This promotion provides a rebate to the consumer which is shared 50/50 between the dealer and La-Z-Boy. Initial feedback from the event has been very positive and we intend to continue to create events such as this, which create both national and local excitement and brand visibility.

One of the other top three focus areas that I mentioned the last quarter's call was our proprietary distribution system. We plan to aggressively expand La-Z-Boy's mostly independently owned furniture gallery store system and accelerate the pace at which our old format stores are converted to the more productive New Generation format. This entails opening as many as 20 plus new stores per year and relocating or remodeling another 20 plus stores annually for the next four to five years. During this past quarter, we opened four New Generation stores and remodeled two others, bringing our store count to 322 at quarter end, including 65 of the new format.

Ideally, we want the owners of these stores to be good merchants, strong supporters of the La-Z-Boy brand and highly focused on maximizing the potential of their store locations and their individual markets. However, when this is not happening, we will take the steps necessary to ensure that our potential is maximized at the retail level, which is in the best interest of our shareholders and our consumers.

On that note, we had ownership changes this past quarter in two North America furnishing markets which have been very underserved from a La-Z-Boy penetration perspective, Cleveland and Toronto. These two markets involve a total of nine stores. In both cases the owners had multiple business interests in addition to their furniture gallery stores and we reached a mutual agreement that a change in ownership would be beneficial to both parties. Both former owners will continue to be important La-Z-Boy customers in their core businesses. We are confident that the new furniture gallery owners will accelerate our penetration of these significant furniture markets and enable us to deliver a positive and consistent brand experience to all of the consumers in those markets.

We are also willing to take on store ownership ourselves, where necessary, to achieve our market penetration targets in major metropolitan areas. In this regard, subsequent to quarter end, we reached an agreement in principle with our independent licensee in the Baltimore, Maryland area, to acquire his four La-Z-Boy furniture gallery stores, bringing the total number of La-Z-Boy company-owned stores to 35. The Washington-Baltimore corridor represents the second largest home furnishings market in the country and is also one of the most underserved major metropolitan areas in terms of retail furnishings outlets.

This strategic acquisition complements our existing infrastructure in Washington, D.C., and we expect it to be accretive our earnings. With this acquisition, La-Z-Boy will have a total of 13 company-owned stores in the Washington-Baltimore market with five of the stores currently featuring the New Generation format.

In order to quickly maximize our store productivity within this existing market, we are planning to upgrade or relocate a substantial number of the remaining stores. In this market, we also have another New Generation store scheduled to open next week in Columbia, Maryland.

There are a number of markets where we are involved in active conversations with La-Z-Boy dealers interested in transitioning ownership and we are moving forward with our plans to strengthen our position in the top metropolitan areas in North America.

In summary, while consumer furniture demand remains somewhat irregular the tone of business is unquestionably improved in recent months. If the economy can continue to generate successive months of jobs growth improvement on top of January's gain, and consumer confidence continues to improve, we are confident that the furniture business will become an increasingly more enjoyable place to be than it has been over the past several years. Regardless of the industry outlook, we believe the steps we are taking will enable us to drive significant growth in both sales and profitability and to provide a very good return for our shareholders. As a result of this confidence in the underlying value of our shares, our Board of Directors, yesterday, authorized the repurchase of an additional 6 million shares bringing the total to 7.4 million shares available under our current stock repurchase program. This increase reflects the continued belief that the company will generate significant positive cash flows in the future and that over the long-term our operating margins will strengthen. We will continue to target a debt to capital ratio in the mid 20s.

With that, I would like to turn things over to Dave Risley, our Chief Financial Officer to provide additional comments on our third quarter. David.

Thank you, Kurt.

I'm only going to add a few comments, since Kurt has already covered some of the numbers and with our expanded MD&A in our 10-Q, you have most of the explanations for the remainder of the numbers. I think accordingly, the P&L is basically already covered.

Cash flow from operations for the quarter was a strong $43 million, with reductions in accounts receivable and inventory. Historically our second fiscal quarter is our largest sales quarter and therefore accounts receivable normally do provide a source of cash in the third fiscal quarter. Our efforts to reduce inventories has been positive and our turn rate is improving.

Cash flow from operations for the year to date nine months is almost $115 million, an increase of $37 million. Cap Ex was a modest $6.4 million for the quarter and $21 million year-to-date. We don't expect to see over $30 million for the year.

In terms of cash out flows, we reduced our debt $13 million this quarter and $30 million year-to-date. Our total debt to total cap ratio now stands at essentially 25%, right in line with our stated objectives for leverage.

Stock repurchasing activity continued, but at a reduced rate from last year. We repurchased 840,000 shares this quarter for just over $17 million and almost $2.8 million shares year-to-date for a total of $59.4 million. Since we started our repurchase program in the fiscal -- in the fiscal quarter, second quarter of '02, we have purchased 9.9 million shares. As already noted, the Board approved increasing our repurchase authorization by 6 million shares, for a total authorization outstanding of about 7.4 million shares.

While we have been using the repurchase program to maintain our debt to total cap ratio, I would remind everybody that we are not obligated to do so and the program may be discontinued at any time.

On another note, for those of you keeping models, we will continue to expect to use a 38% tax rate for the balance of this year.

As the fourth quarter outlook, Kurt has already mentioned the positive trend for orders and backlog that play into our fourth quarter projections. Accordingly, we expect to see sales to be up in the low single digit range, with upholstery offsetting a single digit decline in case goods, which however is an improvement over our double digit decline in the past for case goods. We expect the margin improvement will principally come from gross margin, i.e., a reduced cost of goods sold.

EPS an expected to be in the 40 cents to 45 cents per share range, versus 45 cents per share last year. With that, we'll turn it back to Mark for the Q and A session.

Great. Thank you, David.

Latrisha, would you go ahead and remind everybody on how to ask questions.

[Operator Instructions]

We'll pause for just a moment to compile the Q and A roster. Your first question comes from Margaret Whelan.

Good morning, guys.

Good morning.

Nice quarter. And a couple of things. The first one is house keeping. Can we, either David or Kurt, can we just go back over the Pennsylvania House issue and specifically, was there an impact then on your balance sheet and on the income statement because of this in terms of reserve or anything?

Yes, we did take a -- we don't know the full impact of the repair situation or the recall that we made on the portion of the New Standard program, so there was some reserves taken for potential write downs that we might have, and frankly, we don't know the responsibility of our partner overseas and what's going to be happening there, so we did -- we did accrue for the problems that were created by this misstep going forward.

How much was that? In the quarter?

It's not big enough to disclose but it's --

It's not significant?

It's not overly significant.

Okay. And I just want to clear that up.

And the second thing is, I think David, you said in terms of share repurchasing, it's not going to be something that's going to happen very quickly, you think?

It's not what?

It's not going to happen that quickly. Or I guess, what is your appetite for repurchasing the stock here, in the low 20s?

We have continuously said, Margaret, that we want to keep our leverage in the mid 20s and we use our repurchase program to keep it there. So the volume will change with our cash generation, as well as our profitability, Cap Ex requirements, acquisitions, et cetera.

Okay. And, so the timing is just unclear, basically.

Can you talk a little bit about the tone of the business? I think when you reported the November quarter, you said that your orders were down about 9% or 10%. What does does the backlog look like right now?

Well our backlog, as I mentioned, are on the plus side in both upholstery and case goods, in the high single digits for upholstery, as far as its backlog compared to this time last year.

Okay.

And we have seen -- we have seen some very positive trends over the last 90 days in our order velocity.

Okay. So you think this 5% growth year-over-year for the April quarter is about a 15% pickup sequentially, you think that's realistic or conservative?

Oh, I think it's -- I think it's realistic. I'm not quite -- you mean from our second quarter performance?

Uh-huh, from the January quarter, if you -- you know, if you look at like a $560 (million), $570 million sales number for April versus January, that's about 15%.

Well, it's hard to compare that Margaret because in the third quarter we always have the holidays and we have more down days and so to look at one over the other, you really got to take away a week and a half or so of run, because that's what our facilities are down during that period.

When you are always 5 or 6

You are a little high, Margaret, on your 15%.

You think that's too much?

Yes.

Okay.

We said low single digits year over year.

Okay, well I'm just using 5% to be conservative. If the backlogs are up, and giving what we're hearing, are sales in terms of retail [inaudible], it sounds like it's better than that. I'm just wondering if you're being conservative or if there's anything else in there.

Well, what we said is low single digits with upholstery doing better than case goods and case goods still be being down on a year-to-year basis.

Yeah, are you losing any sales as you open stores with existing retailers?

Well, Margaret, first of all, you know, the store program for us is not a new phenomena. We've been at this for over 20 years and it's not a new strategy for our company. We just see it growing in importance and are trying to accelerate what we are doing in that regard.

But in terms of the La-Z-Boy brand and the -- the way we've setup our distribution for many years, we have both general dealers and La-Z-Boy stores in the same markets and we don't have a lot of replacements going on of dealers as we open more and more stores. The size towns that we're talking about, the major metropolitan regions of the country, we believe were under distributed, so we don't anticipate a lot of disruption in our dealer base as we continue to open stores.

Okay. And -- but you're not actually losing any sales? It just seems the sales number is very conservative give the velocity of the order pickup. Is there anything else that I'm missing?

Well our back -- you know, our backlog is not 90 or 120 days out and we don't know what's going to happen in the February/March period for orders, which would reflect in our fourth quarter, so this is our best judgment at this time.

Okay. And just lastly, house keeping for David, what's that other income, the $1.3 million?

Mostly interest income.

Okay. Thank you, guys.

Thanks, Margaret.

Your next question comes from Todd Schwartzman.

Hi, good morning, guys. Want to talk to you about American and Martinsville for just a second. I was under the impression that the hospitality business, and AOM overall, had deteriorated pretty readily over the past -- the better part of the past three years to very low level of sales. I'm just wondering if you could quantify the sales numbers for the quarter and for the year ago level and also just give us some idea of the rate of deceleration in that business?

Well, we don't, Todd, we don't give out our individual company performances and we've given more color on the hospitality business than we previously have. Your initial -- your initial statements were fairly accurate. It has been devastated and has been on a steep decline, but we don't -- we don't want to add anymore clarity to that than we have already in our press release.

Okay. Also I wanted to ask but an update on licensing opportunities, you talked about I guess, a couple of quarters ago, Q2 call really was nothing mentioned, but anymore color on specific non-traditional categories of consumer products?

Well, we're evaluating that and we have had a couple of things brought to us but I -- to be candid, we are very protective of our name, and we want to make sure whoever we partner with is of the same mind set of the quality, reputation and the product, the reliability that we have with La-Z-Boy, so we haven't -- we're not prepared to announce anything at this point, but we're much more interested in the quality of our partner and getting that name expanded than we are in rapidly making a deal on something that might have long-term harm to our brand.

And just to turn that around for a minute, what about partnering with someone where La-Z-Boy is the advertiser or sponsor of a sporting event, for example, or maybe naming rights to a sporting arena, is that something that you guys have thrown around in the past or would consider?

Well, not in particular. You know, we have -- we have determined that actually men watch a lot of sporting events, but women make the decision about who buys furniture and where it goes in the home and our concentration on where we are marketing is more towards the woman than it is the man and with what's happened at the Super Bowl and everything else, we're kind of glad we're not on any sporting events right now.

Right.

Laughing

Okay. Thanks.

You're welcome.

Your next question comes from Joel Havard.

Good morning, guys.

Good morning, Joel.

Oh, let's see here, if -- first of all, great additional disclosure in the Q, that's helpful. Of course, it only begs a couple more questions. Mark, you've got some comments in there about the swaps expiring at year end.

Right.

Helping. What impact does that have on the effective interest rate and I guess is that all on the revolver I thought it's the one that had a--

Joel, we had a $70 million swap on our revolver and that expired so that debt goes to floating and --

At what rate, Mark, is that --

Well, it's -- it's going to vary because we schedule out by terms, but it's less than 2%, Joel. I mean, I think if you used, you know, 1.75%, something like that, that's probably pretty accurate.

Okay well that's -- and it was significantly higher than that under the swap?

It was -- effective rate is about 6.5%.

Yeah, yeah, okay.

6.47%, so

That, that does clarify the discrepancy we had from an interest cost standpoint. It looks like you all paid the revolver down a little bit further.

Yeah

During Q3, is that right?

That is correct.

Okay. So there's that variance, and with the comment that you've got $350 available, how much more is available on the revolver and what other -- I know you've got some LOCs and stuff that are open.

A lot more than we need.

Yeah.

Okay. So there's probably $300 or so available on the revolver

Yeah, there -- not -- the revolver and credit lines there's about $300 million in availability.

So you all could buy a lot of stock or buy a lot of stores. The stock part we understand. Let's talk about the stores for just a minute.

Financial flexibility, Joel.

322 total, you all own 35, Kurt when you're --

We'll own 35, Joel, when we complete the deal.

Okay, all right, understood, thanks for the clarification. When you're talking about adding 20 or so of the new format stores, is that a net 20 or are we closing an equivalent number of old, in other words, what is the net unit increase in the store base that we could look at over this three-year horizon?

That's an average of what we think -- what we've been doing the last couple of years and what we think we can be doing going forward. Some years there's more closings than others. There is some more details on that in our 10-Q but that is -- that number we've given is opening, that's not net of closing. But I don't think we're going to be moving a lot more stores than we are outright closing, so I think the number of stores that we would close and not replace this year or going forward with be probably in the mid-single digits.

The net gain?

No, no, the overall closings.

Oh, I see, okay. Because I assume that the 20 or so you're talking about an equivalent number that you would remodel. I assume those are replace, move, or remodel.

Correct.

There's -- maybe most of those 20 or so new stores are net new.

Exactly.

Okay. All right. We've got that right. Now, that said, what do you all think the year will finish on a percent of either total sales, or just within the La-Z-Boy label, going through the proprietary network, particularly the La-Z-Boy furniture galleries?

Well, we've said publicly that our store sales on the La-Z-Boy brand are about 50% of that division's business and about 25% of the company's overall retail business. And, you know, candidly, I would like us to get 400 stores and those ratios not change. So we are -- we are not trading out one for another, but we do have a determination to get that number of stores and we want to keep as much of our other business as humanly possible, so this is not an apples to apples deal. This is trying to get deeper penetration in some of the big markets where we're way under stored.

Okay. Coming back to the first part of this, as it related to the balance sheet, Kurt you're probably the guy to answer this. Some ownership changes during the quarter, do you think it's fair for us to start to think about a more aggressive ownership stance on the part of the stands within the Gallery's program?

Well, I would would say that we have -- we have stated that we will participate in owning stores to the degree we have to get our targeted numbers of the stores and we are in active discussions with a few people today that have talked to us about an ownership transition and, if we can structure the right deal for them and for us, we have an appetite for more stores.

Last question relates to that same thing. Historically I seem to recall that you all sort of taking them in and sold them back out to independent dealers. Is that still the preferred strategy or does the company now have a more favorable outlook as far as owning these for the longer term.

That is still the preferred strategy and we want the majority of our system to be independently owned and believe it will stay there, but not at the loss of performance. The only caveat there, Joel, would be that I am unaware of very many people in markets where there's 10, 15, 20 stores that want to buy them back.

Yeah.

If you know of a few people, we'd appreciate you sending them our way.

I'll work on that. Guys, thanks for your time. Good luck.

Thanks Joel.

Your next question comes from Howard Kelly.

Good morning. First question relates to upholstery revenues. How much of upholstery revenues are represented by the general dealers compared to the branded La-Z-Boy stores?

Well, that repeats the question I was asked before, about half of our business from the La-Z-Boy brand is done by general dealers. The other half is done through the stores.

Thank you. It sounds like you've -- company owned stores are certainly becoming a larger part of the mix. And you did touch on this earlier. Are we getting to the point where you plan to break out the retail revenues for these stores going forward?

When it gets to the point where it's significant and where it's up to a level of where we think it's important to report it separately, we'll do that.

Okay. Great. Thank you.

Your final question comes from Greg Holter.

Good morning, guys. I have two questions for you. One on the store acquisition, if and when you do them. Where would those show up on your cash flow statement, either in capital expenditures or acquisitions net of cash line?

Acquisitions.

Okay. And secondly, on the other income line, $1.3 million, you explained it was interest income, but if I do the math on a $25 million average cash holding, that's about a 21% return.

Most of that comes --

Behind that $1.3 million.

Most of that comes from receivables.

And we do have fluctuations in cash, Greg, throughout the quarter.

Okay. Thank you.

Thank you, Greg.

Thank you for participating in today's La-Z-Boy third quarter operating results conference call. This call will be available for replay beginning at 2:00 p.m. eastern standard time, through 11:59 p.m. eastern standard time on Wednesday, February 18th, 2004. The conference ID number for the replay is 5050375. Again, the conference ID number for the replay is 5050375. The number to dial in for the replay is 1-800-642-1687 or 706-645-9291. Thank you for participating in today's conference call. You may now disconnect.