La-Z-Boy announces plant closures and consolidations

La-Z-Boy Incorporated on March 8 announced a restructuring plan which will include the closures of its Lincolnton, N.C., and Iuka, Miss., upholstery manufacturing facilities, the closure of its rough mill lumber operation in North Wilkesboro, N.C., the consolidation of three operations into one at Kincaid's Taylorsville, N.C., upholstery operation and the elimination of a number of positions throughout the remainder of the organization.

The company's Lincolnton facility employs 250 people, accounts for approximately 5 percent of the La-Z-Boy branded business total upholstery manufacturing capacity, and produces high-leg recliners and occasional chairs. La-Z-Boy will cease operations at the Lincolnton plant in July 2007, with production shifting to the company's Newton, Miss.; Siloam Springs, Ark.; and Dayton, Tenn., facilities. The Iuka facility produces sofas, love seats and upholstered chairs for the company's Bauhaus division and has about 150 employees. The Iuka facility is scheduled to close in early May 2007 and its production will move to Bauhaus's Saltillo and Sherman facilities in Mississippi. The consolidation of the company's North Wilkesboro rough mill lumber operation into its Hudson, N.C., facility and the consolidation of the Taylorsville facilities, combined with the change in La- Z-Boy's corporate structure, will eliminate approximately 100 positions.

Kurt L. Darrow, president and chief executive officer of La-Z-Boy, said, "After careful analysis and much consideration, we made the difficult, but correct decision to close several facilities and reduce our corporate workforce to align our company with the current business environment and strengthen our positioning going forward. We regret the impact these actions will have on the families and lives of those employees affected and greatly appreciate the contribution of each employee and thank them for their years of dedicated service. However, these moves are necessary for our company to remain competitive and we will provide outplacement assistance to these employees during this transition period. Collectively, these actions are expected to save the company $11 million per year when they are fully implemented, and, when coupled with our ongoing process improvement initiatives, will result in increased efficiencies in our remaining manufacturing facilities. Additionally, the overall workforce reduction is a direct result of the strategic moves announced recently to realign our portfolio of companies.

"We remain firmly committed to ensuring our dealers and their customers continue to receive excellent service with quick and on-time deliveries as we move production to our other facilities. Importantly, with more than 5.6 million square feet of upholstery manufacturing space in North America and 8,000 employees in those facilities, we have substantial manufacturing capacity to service both our existing business and the capacity necessary to fuel our long-term growth plans."

The Lincolnton facility, which is approximately 370,000 square feet, and the two facilities at Taylorsville, will be idled after operations cease and will be marketed for sale along with the equipment at the North Wilkesboro rough mill operation. The North Wilkesboro casegoods plant will continue to produce bedroom furniture with approximately 300 employees. The Iuka property is a leased facility.

As a result of these actions, La-Z-Boy will take a pre-tax charge of approximately $9 million to $10 million, or $0.11 to $0.12 per share. This charge will be principally for severance and other benefit costs and will also include the write-down of certain fixed assets and other associated costs. The majority of these charges will be incurred in the fourth quarter of the company's 2007 fiscal year with the majority of the balance of the charge taken in the first fiscal quarter of 2008.