During fiscal 2005 and 2004, we repatriated earnings of a Canadian subsidiary. However, due to current year losses resulting from the closure of its manufacturing operations, there are no undistributed earnings for which a deferred tax liability is required. For our other foreign subsidiaries, we continue to assert that their earnings are permanently reinvested; consequently, no deferred tax was recorded for their undistributed earnings. An estimate of these permanently reinvested earnings is $5.0 million at April 29, 2006. The potential deferred tax attributable to these earnings is not currently estimable.

Note 16: Earnings Per Share

Basic net income per share is computed using the weighted average number of shares outstanding during the period.

Diluted net income per share uses the weighted average number of shares outstanding during the period plus the additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Our dilutive potential common shares are for employee stock-related plans described in Note 11. Outstanding share information is as follows (for the fiscal years ended):

The weighted average common shares outstanding (diluted) at April 29, 2006, excludes outstanding stock options of 0.2 million because the net loss in the fiscal year would cause the effect of options to be antidilutive.

The effect of options to purchase 1.7 million, 1.9 million and 0.9 million shares for the fiscal years ended April 29, 2006, April 30, 2005, and April 24, 2004, with a weighted average exercise price of $20.11, $20.10 and $22.98, respectively, were excluded from the diluted share calculation because the exercise prices of these options were higher than the weighted average share price for the fiscal years and would have been antidilutive.

Note 17: Segments

Our reportable operating segments are the Upholstery Group, the Casegoods Group and the Retail Group. We acquired 21 La-Z-Boy Furniture Galleries® stores in the fourth quarter of fiscal 2005. Combining these acquisitions with existing company-owned stores, the retail operations became a significant part of our business. Management determined, based on the significance of the retail operations and the criteria of segment reporting as outlined in SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, that retail would be reported in its own segment. We changed our internal reporting structure to the following three segments: Upholstery, Casegoods and Retail. All segment data was restated to reflect this change.