SEC Filing | La-Z-Boy Incorporated

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lzb-20210724

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 24, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

COMMISSION FILE NUMBER 1-9656

LA-Z-BOY INCORPORATED

(Exact name of registrant as specified in its charter)


Michigan						38-0751137
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One La-Z-Boy Drive,

Monroe,

Michigan

48162-5138

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code (734) 242-1444

None

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value

LZB

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding at August 10, 2021
Common Stock, $1.00 Par Value						44,323,181

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LA-Z-BOY INCORPORATED

FORM 10-Q FIRST QUARTER OF FISCAL 2022

TABLE OF CONTENTS


		Page Number
PART I Financial Information (Unaudited)		3
Item 1.	Financial Statements	3
	Consolidated Statement of Income	3
	Consolidated Statement of Comprehensive Income	4
	Consolidated Balance Sheet	5
	Consolidated Statement of Cash Flows	6
	Consolidated Statement of Changes in Equity	7
	Notes to Consolidated Financial Statements	8
	Note 1. Basis of Presentation	8

	Note 2 . Cash and Restricted Cash	8
	Note 3 . Inventories	8
	Note 4 . Goodwill and Other Intangible Assets	9
	Note 5 . Investments	9
	Note 6 . Accrued Expenses	11
	Note 7 . Product Warranties	11
	Note 8 . Stock-Based Compensation	11
	Note 9 . Accumulated Other Comprehensive Loss	12
	Note 1 0 . Revenue Recognition	13
	Note 1 1 . Segment Information	15
	Note 1 2 . Income Taxes	16
	Note 1 3 . Earnings per Share	16
	Note 1 4 . Fair Value Measurements	17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Cautionary Note Regarding Forward-Looking Statements	19
	Introduction	19
	Results of Operations	21
	Liquidity and Capital Resources	25
	Critical Accounting Policies	26
	Recent Accounting Pronouncements	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II Other Information		28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 5 .	Other Information	28
Item 6.	Exhibits	29

Signature Page		30

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PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME


	Quarter Ended
(Unaudited, amounts in thousands, except per share data)	7/24/2021		7/25/2020
Sales	$	524,783	$	285,458
Cost of sales	322,701		169,095
Gross profit	202,082		116,363
Selling, general and administrative expense	167,711		112,038
Operating income	34,371		4,325
Interest expense	(311)		(459)
Interest income	117		494


Other income (expense), net	(93)		1,474
Income before income taxes	34,084		5,834
Income tax expense	8,818		1,155
Net income	25,266		4,679
Net (income) loss attributable to noncontrolling interests	(700)		119
Net income attributable to La-Z-Boy Incorporated	$	24,566	$	4,798

Basic weighted average common shares	45,072		45,909
Basic net income attributable to La-Z-Boy Incorporated per share	$	0.54	$	0.10

Diluted weighted average common shares	45,404		45,965
Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.54	$	0.10

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Net income	$	25,266	$	4,679
Other comprehensive income (loss)
Currency translation adjustment	(1,242)		2,111

Net unrealized gain on marketable securities, net of tax	448		42
Net pension amortization, net of tax	62		65
Total other comprehensive income (loss)	(732)		2,218
Total comprehensive income before allocation to noncontrolling interests	24,534		6,897
Comprehensive income attributable to noncontrolling interests	(270)		(379)
Comprehensive income attributable to La-Z-Boy Incorporated	$	24,264	$	6,518

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET


(Unaudited, amounts in thousands, except par value)	7/24/2021		4/24/2021
Current assets
Cash and equivalents	$	332,960	$	391,213
Restricted cash	3,266		3,490
Receivables, net of allowance of $3,367 at 7/24/2021 and $4,011 at 4/24/2021	141,597		139,341
Inventories, net	264,454		226,137
Other current assets	194,978		165,979
Total current assets	937,255		926,160
Property, plant and equipment, net	229,343		219,194
Goodwill	175,671		175,814
Other intangible assets, net	30,129		30,431
Deferred income taxes – long-term	11,477		11,915
Right of use lease assets	342,335		343,800
Other long-term assets, net	83,297		79,008
Total assets	$	1,809,507	$	1,786,322

Current liabilities
Accounts payable	$	118,120	$	94,152


Lease liabilities, current	67,408		67,614
Accrued expenses and other current liabilities	466,809		449,904
Total current liabilities	652,337		611,670

Lease liabilities, long-term	294,369		295,023
Other long-term liabilities	98,352		97,483
Shareholders' equity
Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 44,623 outstanding at 7/24/21 and 45,361 outstanding at 4/24/21	44,623		45,361
Capital in excess of par value	332,869		330,648
Retained earnings	379,862		399,010
Accumulated other comprehensive loss	(1,823)		(1,521)
Total La-Z-Boy Incorporated shareholders' equity	755,531		773,498
Noncontrolling interests	8,918		8,648
Total equity	764,449		782,146
Total liabilities and equity	$	1,809,507	$	1,786,322

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Cash flows from operating activities
Net income	$	25,266	$	4,679
Adjustments to reconcile net income to cash provided by operating activities
Loss on disposal of assets	44		14
Gain on sale of investments	(256)		(108)
Provision for doubtful accounts	(611)		(1,575)
Depreciation and amortization	8,553		8,119
Amortization of right-of-use lease assets	17,245		16,469
Equity-based compensation expense	2,460		2,047
Change in deferred taxes	370		785


Change in receivables	(1,783)		3,745
Change in inventories	(38,921)		1,686
Change in other assets	(10,380)		4,031
Change in payables	24,767		8,864
Change in lease liabilities	(17,263)		(15,857)
Change in other liabilities	(3,328)		73,401
Net cash provided by operating activities	6,163		106,300

Cash flows from investing activities
Proceeds from disposals of assets	8		10

Capital expenditures	(19,343)		(9,810)
Purchases of investments	(9,900)		(3,623)
Proceeds from sales of investments	9,716		14,671

Net cash provided by (used for) investing activities	(19,519)		1,248

Cash flows from financing activities

Payments on debt and finance lease liabilities	(30)		(25,013)
Holdback payments for acquisition purchases	—		(437)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes	(2,228)		(1,749)
Repurchases of common stock	(35,640)		—
Dividends paid to shareholders	(6,777)		—
Dividends paid to minority interest joint venture partners (1)	—		(8,507)
Net cash used for financing activities	(44,675)		(35,706)

Effect of exchange rate changes on cash and equivalents	(446)		1,310
Change in cash, cash equivalents and restricted cash	(58,477)		73,152
Cash, cash equivalents and restricted cash at beginning of period	394,703		263,528
Cash, cash equivalents and restricted cash at end of period	$	336,226	$	336,680

Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables	$	3,957	$	881

(1)Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


(Unaudited, amounts in thousands)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interests		Total
At April 24, 2021	$	45,361	$	330,648	$	399,010	$	(1,521)	$	8,648	$	782,146
Net income	—		—		24,566		—		700		25,266
Other comprehensive loss	—		—		—		(302)		(430)		(732)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	181		291		(2,700)		—		—		(2,228)
Repurchases of 919 shares of common stock	(919)		(530)		(34,191)		—		—		(35,640)
Stock option and restricted stock expense	—		2,460		—		—		—		2,460
Dividends declared and paid ($0.15/share)	—		—		(6,777)		—		—		(6,777)
Dividends declared not paid ($0.15/share)	—		—		(46)		—		—		(46)
At July 24, 2021	$	44,623	$	332,869	$	379,862	$	(1,823)	$	8,918	$	764,449


(Unaudited, amounts in thousands)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests		Total
At April 25, 2020	$	45,857	$	318,215	$	343,633	$	(6,952)	$	15,553	$	716,306
Net income (loss)	—		—		4,798		—		(119)		4,679
Other comprehensive income	—		—		—		1,720		498		2,218
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	132		(195)		(1,686)		—		—		(1,749)

Stock option and restricted stock expense	—		2,047		—		—		—		2,047
Dividends declared and paid (1)	—		—		5		—		(8,507)		(8,502)

At July 25, 2020	$	45,989	$	320,067	$	346,750	$	(5,232)	$	7,425	$	714,999

(1)No dividends to shareholders were declared or paid during the first quarter of fiscal 2021; amount includes dividends forfeited from restricted stock awards previously granted. Non-controlling interests include dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries (collectively, the "Company"). We derived the April 24, 2021 balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles, which we applied on a basis consistent with those reflected in our fiscal 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), but the information does not include all of the disclosures required by generally accepted accounting principles. In management’s opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April 30, 2022.

At July 24, 2021, we owned preferred shares and warrants to purchase common shares of two privately-held companies, both of which are variable interest entities. We have not consolidated their results in our financial statements because we do not have the power to direct those activities that most significantly impact their economic performance and, therefore, are not the primary beneficiary.

Accounting pronouncements adopted in fiscal 2022

The following table summarizes Accounting Standards Updates ("ASUs") which were adopted in fiscal 2022, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.


ASU						Description
ASU 2018-14						Compensation – Retirement benefits – Defined Benefit Plans – General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans
ASU 2019-12						Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
ASU 2020-01						Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

Note 2: Cash and Restricted Cash

We have restricted cash on deposit with a bank as collateral for certain letters of credit. All our letters of credit have maturity dates within the next twelve months, but we expect to renew some of these letters of credit when they mature.


(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Cash and cash equivalents	$	332,960	$	334,204
Restricted cash	3,266		2,476
Total cash, cash equivalents and restricted cash	$	336,226	$	336,680

Note 3: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	7/24/21		4/24/21
Raw materials	$	141,508	$	112,371
Work in process	30,720		24,791
Finished goods	130,269		121,182
FIFO inventories	302,497		258,344
Excess of FIFO over LIFO	(38,043)		(32,207)
Total inventories	$	264,454	$	226,137

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Note 4: Goodwill and Other Intangible Assets

We have goodwill on our consolidated balance sheet as follows:

Reportable Segment/Unit

Reporting Unit

Related Acquisition

Wholesale Segment

La-Z-Boy United Kingdom

Wholesale business in the United Kingdom and Ireland

Retail Segment

Retail

La-Z-Boy Furniture Galleries® stores

Corporate & Other

Joybird

The following table summarizes changes in the carrying amount of our goodwill by reportable segment:


(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill
Balance at April 24, 2021	$	13,052	$	107,316	$	55,446	$	175,814

Translation adjustment	(116)		(27)		—		(143)
Balance at July 24, 2021	$	12,936	$	107,289	$	55,446	$	175,671

We have intangible assets on our consolidated balance sheet as follows:

Reportable Segment/Unit

Intangible Asset

Useful Life

Wholesale Segment

Primarily acquired customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland

Amortizable over useful lives that do not exceed 15 years

Wholesale Segment

American Drew® trade name

Indefinite-lived

Retail Segment

Reacquired rights to own and operate La-Z-Boy Furniture Galleries® stores

Indefinite-lived

Corporate & Other

Joybird® trade name

Amortizable over eight-year useful life

The following summarizes changes in our intangible assets:


(Unaudited, amounts in thousands)	Indefinite- Lived Trade Names		Finite- Lived Trade Name		Indefinite- Lived Reacquired Rights		Other Intangible Assets		Total Other Intangible Assets
Balance at April 24, 2021	$	1,155	$	4,205	$	22,507	$	2,564	$	30,431

Amortization	—		(200)		—		(61)		(261)
Translation adjustment	—		—		(20)		(21)		(41)
Balance at July 24, 2021	$	1,155	$	4,005	$	22,487	$	2,482	$	30,129

We test indefinite-lived intangibles and goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that an asset might be impaired. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired.

Note 5: Investments

We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan. We also hold other investments consisting of cost-basis preferred shares of two privately-held start-up companies (refer to Note 14, Fair Value Measurements). Our short-term investments are included in other current assets and our long-term investments are included in other long-term assets on our consolidated balance sheet.

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The following summarizes our investments:


(Unaudited, amounts in thousands)	7/24/2021		4/24/2021
Short-term investments:
Marketable securities	$	17,602	$	18,037
Held-to-maturity investments	2,414		2,532
Total short-term investments	20,016		20,569
Long-term investments:
Marketable securities	28,055		27,256
Cost basis investments	7,579		7,579
Total long-term investments	35,634		34,835
Total investments	$	55,650	$	55,404

Investments to enhance returns on cash	$	32,519	$	32,475
Investments to fund compensation/retirement plans	15,552		15,350
Other investments	7,579		7,579
Total investments	$	55,650	$	55,404

The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type:


	7/24/2021						4/24/2021
(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	$	2,981	$	(5)	$	15,025	$	2,798	$	(5)	$	14,954
Fixed income	175		(24)		35,867		136		(29)		35,631
Other	552		—		4,758		559		—		4,819
Total securities	$	3,708	$	(29)	$	55,650	$	3,493	$	(34)	$	55,404

The following table summarizes sales of marketable securities:


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Proceeds from sales	$	9,715	$	13,725
Gross realized gains	267		126
Gross realized losses	(11)		(18)

The following is a summary of the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity:


(Unaudited, amounts in thousands)	7/24/2021
Within one year	$	17,506
Within two to five years	15,351
Within six to ten years	1,316
Thereafter	1,694
Total	$	35,867

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Note 6: Accrued Expenses and Other Current Liabilities


(Unaudited, amounts in thousands)	7/24/2021		4/24/2021
Payroll and other compensation	$	43,397	$	62,546
Accrued product warranty, current portion	14,790		14,447
Customer deposits	183,434		180,766
Deferred revenue	129,723		108,460
Other current liabilities	95,465		83,685
Accrued expenses and other current liabilities	$	466,809	$	449,904

Note 7: Product Warranties

We accrue an estimated liability for product warranties when we recognize revenue on the sale of warrantied products. We estimate future warranty claims on product sales based on our historical claims experience and periodically adjust the provision to reflect changes in actual experience. We incorporate repair costs into our liability estimates, including materials, labor and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product to our customers. Over 90% of our warranty liability relates to our Wholesale reportable segment as we generally warrant our products against defects for one year on fabric and leather, from one to ten years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames. Our Wholesale segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty against defects on a majority of Joybird products, which are a part of our Corporate and Other results. For all our manufacturer warranties, the warranty period begins when the consumer receives our product. We use considerable judgment in making our estimates, and we record differences between our actual and estimated costs when the differences are known.

A reconciliation of the changes in our product warranty liability is as follows:


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021 (1)		7/25/2020
Balance as of the beginning of the period	$	23,636	$	23,255

Accruals during the period	7,214		3,828
Settlements during the period	(6,417)		(3,960)
Balance as of the end of the period	$	24,433	$	23,123

(1)$14.8 million and $14.4 million is recorded in accrued expenses and other current liabilities as of July 24, 2021 and April 24, 2021, respectively, while the remainder is included in other long-term liabilities.

We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties issued during the respective periods.

Note 8: Stock-Based Compensation

The table below summarizes the total stock-based compensation expense we recognized for all outstanding grants in our consolidated statement of income:


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Equity-based awards expense	$	2,460	$	2,047
Liability-based awards expense (1)	(684)		584
Total stock-based compensation expense	$	1,776	$	2,631

(1)Liability-based awards are comprised primarily of deferred stock units granted to non-employee directors. Compensation expense for these awards is based on the market price of our common stock on the grant date and is remeasured each reporting period based on the market value of our common shares on the last day of the reported period.

Stock Options. We granted 252,996 stock options to employees during the first quarter of fiscal 2022 and we have stock options outstanding from previous grants. We account for stock options as equity-based awards because when they are exercised, they will be settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value on the date our Compensation Committee approved the awards. The vesting period for our stock options ranges from

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one to four years, with accelerated vesting upon retirement. The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or the end of the fiscal year in which the grant was made. We accelerate the expense for options granted to retirement-eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur.

We estimate the fair value of the employee stock options at the date of grant using the Black-Scholes option-pricing model, which requires management to make certain assumptions. The fair value of stock options granted during the first quarter of fiscal 2022 was calculated using the following assumptions:

(Unaudited)

Fiscal 2022 grant

Assumption

Risk-free interest rate

0.82

U.S. Treasury issues with term equal to expected life at grant date

Dividend rate

1.58

Estimated future dividend rate and common share price at grant date

Expected life

5.0 years

Contractual term of stock option and expected employee exercise trends

Stock price volatility

42.16

Historical volatility of our common shares

Fair value per share

12.29

Restricted Stock. We granted 112,713 shares of restricted stock to employees during the first quarter of fiscal 2022. We issue restricted stock at no cost to the employees, and the shares are held in an escrow account until the vesting period ends. If a recipient's employment ends during the escrow period (other than through death or disability), the shares are returned at no cost to the Company. We account for restricted stock awards as equity-based awards because when they vest, they will be settled in common shares. The weighted-average fair value of the restricted stock that was awarded in the first quarter of fiscal 2022 was $38.52 per share, the market value of our common shares on the date of grant. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the date our compensation committee approved the awards. Restricted stock awards vest at 25% per year, beginning one year from the grant date over a term of four years.

Performance Shares. During the first quarter of fiscal 2022, we granted 125,021 performance-based shares. We also have performance-based share awards outstanding from previous grants. Payout of the fiscal 2022 grant depends on our financial performance (50%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other public companies (50%). The performance share opportunity ranges from 50% of the employee’s target award if minimum performance requirements are met to a maximum of 200% of the target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which is generally three fiscal years. Grants of performance-based shares during fiscal 2021 were weighted the same as those granted during fiscal 2022 while grants of performance-based shares during fiscal 2020 were weighted (80%) on financial performance and (20%) on market-based conditions.

We account for performance-based shares as equity-based awards because when they vest, they will be settled in common shares. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. For shares that vest based on our results relative to the performance goals, we expense as compensation cost the fair value of the shares as of the day we granted the awards recognized over the performance period, taking into account the probability that we will satisfy the performance goals. The fair value of each share of the awards we granted in fiscal 2022 that vest based on attaining performance goals was $36.13, the market value of our common shares on the date we granted the awards less the dividends we expect to pay before the shares vest. For shares that vest based on market conditions, we use a Monte Carlo valuation model to estimate each share’s fair value as of the date of grant. The Monte Carlo valuation model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine our expected performance ranking relative to our peer group. For shares that vest based on market conditions, we expense compensation cost over the vesting period regardless of whether the market condition is ultimately satisfied. Based on the Monte Carlo model, the fair value as of the grant date of the fiscal 2022 grant of shares that vest based on market conditions was $51.85.

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Note 9: Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the quarters ended July 24, 2021, and July 25, 2020, is as follows:


(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)
Balance at April 24, 2021	$	3,041	$	370	$	(4,932)	$	(1,521)
Changes before reclassifications	(812)		591		—		(221)


Amounts reclassified to net income	—		4		75		79
Tax effect	—		(147)		(13)		(160)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(812)		448		62		(302)
Balance at July 24, 2021	$	2,229	$	818	$	(4,870)	$	(1,823)

Balance at April 25, 2020	$	(1,891)	$	449	$	(5,510)	$	(6,952)
Changes before reclassifications	1,613		77		—		1,690


Amounts reclassified to net income	—		(22)		87		65
Tax effect	—		(13)		(22)		(35)
Other comprehensive income attributable to La-Z-Boy Incorporated	1,613		42		65		1,720
Balance at July 25, 2020	$	(278)	$	491	$	(5,445)	$	(5,232)

We reclassified the unrealized gain (loss) on marketable securities from accumulated other comprehensive loss to net income through other income (expense), net, and reclassified the net pension amortization to net income through other income (expense), net.

The components of non-controlling interest were as follows:


	Quarter Ended
(Unaudited, amounts in thousands)	7/24/2021		7/25/2020
Balance as of the beginning of the period	$	8,648	$	15,553
Net income (loss)	700		(119)
Other comprehensive income (loss)	(430)		498
Dividends distributed to joint venture minority partners	—		(8,507)
Balance as of the end of the period	$	8,918	$	7,425

Note 10: Revenue Recognition

Our revenue is primarily derived from product sales. We report product sales net of discounts and recognize them when control (rights and obligations associated with the product) passes to the customer. For sales to furniture retailers or distributors, control typically transfers when we ship the product. In cases where we sell directly to the end consumer, control of the product is generally transferred upon delivery.

For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time we recognize revenue in accordance with this election.

For sales tax, we have elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes.

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We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration.

The following table presents our revenue disaggregated by product category and by segment or unit:


	Quarter Ended July 24, 2021
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	226,612	$	102,504	$	154	$	329,270
Stationary Upholstery Furniture	91,409		42,365		47,347		181,121
Bedroom Furniture	11,925		1,985		3,248		17,158
Dining Room Furniture	6,986		3,249		1,100		11,335
Occasional Furniture	12,599		6,022		995		19,616
Other (1)	43,968		25,722		(9,210)		60,480
Total	$	393,499	$	181,847	$	43,634	$	618,980

Eliminations							(94,197)
Consolidated Net Sales							$	524,783

	Quarter Ended July 25, 2020
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	132,264	$	53,447	$	61	$	185,772
Stationary Upholstery Furniture	58,314		17,655		16,073		92,042
Bedroom Furniture	7,112		1,095		1,231		9,438
Dining Room Furniture	4,547		1,818		657		7,022
Occasional Furniture	8,110		3,410		729		12,249
Other (1)	13,226		13,712		(2,010)		24,928
Total	$	223,573	$	91,137	$	16,741	$	331,451

Eliminations							(45,993)
Consolidated Net Sales							$	285,458

(1)Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, surcharges, discounts and allowances, rebates and other sales incentives.

Motion Upholstery Furniture - Includes gross revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals, and modulars that have a mechanism that allows the back of the product to recline or the product's footrest to extend. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer.

Stationary Upholstery Furniture - Includes gross revenue for upholstered furniture, such as sofas, loveseats, chairs, sectionals, modulars, and ottomans that do not have a mechanism. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer.

Bedroom Furniture - Includes gross revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers, nightstands and benches. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent retailers, and the end consumer.

Dining Room Furniture - Includes gross revenue for casegoods furniture typically found in a dining room, such as dining tables, dining chairs, storage units and stools. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent retailers, and the end consumer.

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Occasional Furniture - Includes gross revenue for casegoods furniture found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment centers. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent retailers, and the end consumer.

We receive customer deposits from end consumers before we recognize revenue and in some cases we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance obligation, resulting in a contract asset and a corresponding deferred revenue liability. In our consolidated balance sheet, customer deposits and deferred revenue (collectively, the "contract liabilities") are reported in accrued expenses and other current liabilities while contract assets are reported as other current assets. The following presents our contract assets and liabilities:


(Unaudited, amounts in thousands)	7/24/2021		4/24/2021
Contract assets	$	129,723	$	108,460

Customer deposits	$	183,434	$	180,766
Deferred revenue	129,723		108,460
Total contract liabilities (1)	$	313,157	$	289,226

(1)