SEC Filing | La-Z-Boy Incorporated

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lzb-20211023

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 October 23, 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 November 9, 2021
Common Stock, $1.00 Par Value						43,905,858

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LA-Z-BOY INCORPORATED

FORM 10-Q SECOND 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. Acquisitions	8
	Note 3 . Cash and Restricted Cash	9
	Note 4 . Inventories	10
	Note 5 . Goodwill and Other Intangible Assets	10
	Note 6 . Investments	11
	Note 7 . Accrued Expenses	12
	Note 8 . Product Warranties	12
	Note 9. Debt	12
	Note 10 . Stock-Based Compensation	13
	Note 1 1 . Accumulated Other Comprehensive Loss	14
	Note 1 2 . Revenue Recognition	15
	Note 1 3 . Segment Information	17
	Note 1 4 . Income Taxes	18
	Note 1 5 . Earnings per Share	18
	Note 1 6 . Fair Value Measurements	19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Cautionary Note Regarding Forward-Looking Statements	21
	Introduction	21
	Results of Operations	23
	Liquidity and Capital Resources	27
	Critical Accounting Policies	29
	Recent Accounting Pronouncements	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II Other Information		31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31

Signature Page		32

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PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands, except per share data)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Sales	$	575,889	$	459,120	$	1,100,672	$	744,578
Cost of sales	352,594		258,565		675,295		427,660
Gross profit	223,295		200,555		425,377		316,918
Selling, general and administrative expense	169,182		152,616		336,893		264,654
Operating income	54,113		47,939		88,484		52,264
Interest expense	(242)		(346)		(553)		(805)
Interest income	106		123		223		617


Other income (expense), net	1,031		(11)		938		1,463
Income before income taxes	55,008		47,705		89,092		53,539
Income tax expense	14,650		12,401		23,468		13,556
Net income	40,358		35,304		65,624		39,983
Net income attributable to noncontrolling interests	(842)		(369)		(1,542)		(250)
Net income attributable to La-Z-Boy Incorporated	$	39,516	$	34,935	$	64,082	$	39,733

Basic weighted average common shares	44,251		46,023		44,662		45,966
Basic net income attributable to La-Z-Boy Incorporated per share	$	0.89	$	0.76	$	1.43	$	0.86

Diluted weighted average common shares	44,423		46,323		44,915		46,167
Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.89	$	0.75	$	1.43	$	0.86

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				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Net income	$	40,358	$	35,304	$	65,624	$	39,983
Other comprehensive income (loss)
Currency translation adjustment	(9)		1,354		(1,251)		3,465

Net unrealized gain (loss) on marketable securities, net of tax	(498)		(65)		(50)		(23)
Net pension amortization, net of tax	57		65		119		130
Total other comprehensive income (loss)	(450)		1,354		(1,182)		3,572
Total comprehensive income before allocation to noncontrolling interests	39,908		36,658		64,442		43,555
Comprehensive income attributable to noncontrolling interests	(722)		(448)		(992)		(827)
Comprehensive income attributable to La-Z-Boy Incorporated	$	39,186	$	36,210	$	63,450	$	42,728

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)	10/23/2021		4/24/2021
Current assets
Cash and equivalents	$	293,341	$	391,213
Restricted cash	3,266		3,490
Receivables, net of allowance of $3,016 at 10/23/2021 and $4,011 at 4/24/2021	173,998		139,341
Inventories, net	285,770		226,137
Other current assets	208,793		165,979
Total current assets	965,168		926,160
Property, plant and equipment, net	237,518		219,194
Goodwill	180,108		175,814
Other intangible assets, net	30,738		30,431
Deferred income taxes – long-term	11,727		11,915
Right of use lease assets	341,363		343,800
Other long-term assets, net	85,472		79,008
Total assets	$	1,852,094	$	1,786,322

Current liabilities
Accounts payable	$	119,971	$	94,152


Lease liabilities, current	67,859		67,614
Accrued expenses and other current liabilities	492,710		449,904
Total current liabilities	680,540		611,670

Lease liabilities, long-term	294,252		295,023
Other long-term liabilities	91,620		97,483
Shareholders' equity
Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 44,200 outstanding at 10/23/21 and 45,361 outstanding at 4/24/21	44,200		45,361
Capital in excess of par value	336,920		330,648
Retained earnings	398,335		399,010
Accumulated other comprehensive loss	(2,153)		(1,521)
Total La-Z-Boy Incorporated shareholders' equity	777,302		773,498
Noncontrolling interests	8,380		8,648
Total equity	785,682		782,146
Total liabilities and equity	$	1,852,094	$	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


	Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020
Cash flows from operating activities
Net income	$	65,624	$	39,983
Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal of assets	(3,151)		140
Gain on sale of investments	(218)		(284)
Provision for doubtful accounts	(944)		(1,568)
Depreciation and amortization	17,785		16,351
Amortization of right-of-use lease assets	34,368		35,137
Equity-based compensation expense	6,354		6,167
Change in deferred taxes	170		1,849


Change in receivables	(33,937)		(28,949)
Change in inventories	(59,336)		(3,511)
Change in other assets	(20,666)		(1,926)
Change in payables	22,683		33,236
Change in lease liabilities	(34,598)		(32,422)
Change in other liabilities	21,300		131,507
Net cash provided by operating activities	15,434		195,710

Cash flows from investing activities
Proceeds from disposals of assets	3,998		21

Capital expenditures	(33,314)		(15,442)
Purchases of investments	(21,426)		(17,649)
Proceeds from sales of investments	22,666		19,470
Acquisitions	(4,396)		(2,000)
Net cash used for investing activities	(32,472)		(15,600)

Cash flows from financing activities

Payments on debt and finance lease liabilities	(60)		(75,013)
Holdback payments for acquisition purchases	(13,500)		(5,783)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes	(1,870)		364
Repurchases of common stock	(50,640)		—
Dividends paid to shareholders	(13,398)		(3,216)
Dividends paid to minority interest joint venture partners (1)	(1,260)		(8,507)
Net cash used for financing activities	(80,728)		(92,155)

Effect of exchange rate changes on cash and equivalents	(330)		1,944
Change in cash, cash equivalents and restricted cash	(98,096)		89,899
Cash, cash equivalents and restricted cash at beginning of period	394,703		263,528
Cash, cash equivalents and restricted cash at end of period	$	296,607	$	353,427

Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables	$	7,900	$	3,769

(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
Net income	—		—		39,516		—		842		40,358
Other comprehensive loss	—		—		—		(330)		(120)		(450)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	11		353		(6)		—		—		358
Repurchases of 434 shares of common stock	(434)		(196)		(14,370)		—		—		(15,000)
Stock option and restricted stock expense	—		3,894		—		—		—		3,894


Dividends declared and paid ($0.15/share) (1)	—		—		(6,621)		—		(1,260)		(7,881)
Dividends declared not paid ($0.15/share)	—		—		(46)		—		—		(46)
At October 23, 2021	$	44,200	$	336,920	$	398,335	$	(2,153)	$	8,380	$	785,682

(1)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.


(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
Net income	—		—		34,935		—		369		35,304
Other comprehensive income	—		—		—		1,275		79		1,354
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	124		1,995		(6)		—		—		2,113

Stock option and restricted stock expense	—		4,120		—		—		—		4,120

Dividends declared and paid ($0.07/share)	—		—		(3,221)		—		—		(3,221)
Dividends declared not paid ($0.07/share)	—		—		(20)		—		—		(20)
At October 24, 2020	$	46,113	$	326,182	$	378,438	$	(3,957)	$	7,873	$	754,649

(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 October 23, 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

Accounting pronouncements not yet adopted

The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASU

Description

Adoption Date

ASU 2021-08

Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities From Contracts With Customers

Fiscal 2024

Note 2: Acquisitions

On August 16, 2021, we completed our asset acquisition of the Long Island, New York business that operates three independently owned La-Z-Boy Furniture Galleries® stores for $4.5 million, subject to customary adjustments. In the second quarter of fiscal 2022, we paid $4.4 million of cash for the purchase of the Long Island, New York stores and assets. This acquisition is a core part of one of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) where the model makes sense geographically, alongside of the La-Z-Boy Furniture Galleries® network.

Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in the Long Island, New York market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $0.8 million related to these reacquired rights. We also recognized $4.4 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these

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synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

The acquisition of the Long Island, New York business was not significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented. All of our provisional purchase accounting estimates for this acquisition are based on the information and data available to us as of the time of the issuance of these financial statements, and in accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within the first 12 months of acquisition as we gain additional data.

Prior Year Acquisitions

On September 14, 2020, we completed our asset acquisition of the Seattle, Washington business that operates six independently owned La-Z-Boy Furniture Galleries® stores and one warehouse for $13.5 million, subject to customary adjustments. In the second quarter of fiscal 2021, a $2.0 million cash payment was made for the purchase with future guaranteed payments of $9.4 million to be paid over 36 months or fewer, with timing of payments dependent upon the achievement of sales thresholds defined in the purchase agreement. This acquisition is a core part of one of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) where the model makes sense geographically, alongside of the La-Z-Boy Furniture Galleries® network.

Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in the Seattle, Washington market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $2.2 million related to these reacquired rights. We also recognized $12.9 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

The acquisition of the Seattle, Washington business was not significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented.

Post-Quarter End Acquisition

On October 25, 2021 we completed the acquisition of Furnico Furniture Ltd ("Furnico"), an upholstery manufacturing business in the U.K for approximately $11.5 million. Furnico also operates a wholesale business, selling white label products to key U.K. retailers. With this acquisition, we expect to realize production synergies, cost savings through materials procurement, and increases in production capacity for the La-Z-Boy product.

Comparability

During fiscal 2021, we determined that holdback payments for acquisition purchases of $5.8 million included in net cash used by investing activities should have been included in net cash used by financing activities for the first six months of fiscal 2021. Although the amount impacting payments for acquisitions was not material to the fiscal 2021 consolidated financial statements, the classification of these amounts has been corrected by revising the consolidated statements of cash flows for the six months ended October 24, 2020.

Note 3: 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)	10/23/2021		10/24/2020
Cash and cash equivalents	$	293,341	$	350,949
Restricted cash	3,266		2,478
Total cash, cash equivalents and restricted cash	$	296,607	$	353,427

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Note 4: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	10/23/2021		4/24/2021
Raw materials	$	159,079	$	112,371
Work in process	34,665		24,791
Finished goods	133,471		121,182
FIFO inventories	327,215		258,344
Excess of FIFO over LIFO	(41,445)		(32,207)
Total inventories	$	285,770	$	226,137

Note 5: 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
Acquisitions	—		4,374		—		4,374
Translation adjustment	(114)		34		—		(80)
Balance at October 23, 2021	$	12,938	$	111,724	$	55,446	$	180,108

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
Acquisitions	—		—		822		—		822
Amortization	—		(399)		—		(120)		(519)
Translation adjustment	—		—		25		(21)		4
Balance at October 23, 2021	$	1,155	$	3,806	$	23,354	$	2,423	$	30,738

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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 6: 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 16, 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.

The following summarizes our investments:


(Unaudited, amounts in thousands)	10/23/2021		4/24/2021
Short-term investments:
Marketable securities	$	16,512	$	18,037
Held-to-maturity investments	1,371		2,532
Total short-term investments	17,883		20,569
Long-term investments:
Marketable securities	29,079		27,256
Cost basis investments	7,579		7,579
Total long-term investments	36,658		34,835
Total investments	$	54,541	$	55,404

Investments to enhance returns on cash	$	31,029	$	32,475
Investments to fund compensation/retirement plans	15,933		15,350
Other investments	7,579		7,579
Total investments	$	54,541	$	55,404

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


	10/23/2021						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	$	3,096	$	(1)	$	15,094	$	2,798	$	(5)	$	14,954
Fixed income	124		(83)		35,057		136		(29)		35,631
Other	1,180		—		4,390		559		—		4,819
Total securities	$	4,400	$	(84)	$	54,541	$	3,493	$	(34)	$	55,404

The following table summarizes sales of marketable securities:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Proceeds from sales	$	11,938	$	3,292	$	21,653	$	17,017
Gross realized gains	287		184		554		310
Gross realized losses	(325)		(8)		(336)		(26)

Table of Contents

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)	10/23/2021
Within one year	$	16,777
Within two to five years	15,668
Within six to ten years	975
Thereafter	1,637
Total	$	35,057

Note 7: Accrued Expenses and Other Current Liabilities


(Unaudited, amounts in thousands)	10/23/2021		4/24/2021
Payroll and other compensation	$	53,696	$	62,546
Accrued product warranty, current portion	15,139		14,447
Customer deposits	194,015		180,766
Deferred revenue	135,542		108,460
Other current liabilities	94,318		83,685
Accrued expenses and other current liabilities	$	492,710	$	449,904

Note 8: 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				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021 (1)		10/24/2020
Balance as of the beginning of the period	$	24,433	$	23,123	$	23,636	$	23,255

Accruals during the period	6,673		5,306