0000057131-21-000148 | 10-Q | XBRL Viewer

4,679

4,798

(119)

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax

2,218

1,720

498

(1,749)

132

(195)

(1,686)

2,047

Ending balance at Jul. 25, 2020

^[1]

(8,502)

(8,507)

714,999

45,989

320,067

346,750

(5,232)

7,425

Beginning balance at Apr. 25, 2020

716,306

45,857

318,215

343,633

(6,952)

15,553

39,983

250

Ending balance at Oct. 24, 2020

3,572

577

754,649

46,113

326,182

378,438

(3,957)

7,873

Beginning balance at Jul. 25, 2020

714,999

45,989

320,067

346,750

(5,232)

7,425

35,304

34,935

369

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax

1,354

1,275

2,113

124

1,995

(6)

4,120

Dividends declared not paid

(3,221)

(20)

Ending balance at Oct. 24, 2020

754,649

46,113

326,182

378,438

(3,957)

7,873

Beginning balance at Apr. 24, 2021

782,146

45,361

330,648

399,010

(1,521)

8,648

25,266

24,566

700

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax

(732)

(302)

(430)

(2,228)

$ 181

291

(2,700)

Shares purchased (in shares)

(919)

Repurchases of shares of common stock

(35,640)

$ (919)

(530)

(34,191)

2,460

Dividends declared not paid

(6,777)

(46)

Ending balance at Jul. 24, 2021

764,449

44,623

332,869

379,862

(1,823)

8,918

Beginning balance at Apr. 24, 2021

782,146

45,361

330,648

399,010

(1,521)

8,648

65,624

1,542

Ending balance at Oct. 23, 2021

(1,182)

(550)

785,682

44,200

336,920

398,335

(2,153)

8,380

Beginning balance at Jul. 24, 2021

764,449

44,623

332,869

379,862

(1,823)

8,918

40,358

39,516

842

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax

(450)

(330)

(120)

358

$ 11

353

(6)

Shares purchased (in shares)

(434)

Repurchases of shares of common stock

(15,000)

$ (434)

(196)

(14,370)

3,894

Dividends declared not paid

^[1]

(7,881)

(6,621)

(1,260)

(46)

Ending balance at Oct. 23, 2021

$ 785,682

$ 44,200

$ 336,920

$ 398,335

$ (2,153)

$ 8,380

[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.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - $ / shares shares in Thousands	3 Months Ended			6 Months Ended
	Oct. 23, 2021	Jul. 24, 2021	Oct. 24, 2020	Oct. 24, 2020
Dividends paid (in dollars per share)	$ 0.15	$ 0.15	$ 0.07	$ 0
Dividends declared (in dollars per share)	$ 0.15	$ 0.15	$ 0.07	$ 0
Common Shares
Shares purchased (in shares)	434	919

Basis of Presentation

6 Months Ended

Oct. 23, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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

Acquisitions	6 Months Ended
Acquisitions	Oct. 23, 2021
Business Combination and Asset Acquisition [Abstract]
Acquisitions	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 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.

Cash and Restricted Cash

6 Months Ended

Oct. 23, 2021

Cash and Cash Equivalents [Abstract]

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

Inventories

6 Months Ended

Oct. 23, 2021

Inventory Disclosure [Abstract]

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

Goodwill and Other Intangible Assets

6 Months Ended

Oct. 23, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

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

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.

Investments

6 Months Ended

Oct. 23, 2021

Investments, Debt and Equity Securities [Abstract]

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)

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

Accrued Expenses and Other Current Liabilities

6 Months Ended

Oct. 23, 2021

Payables and Accruals [Abstract]

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

Product Warranties

6 Months Ended

Oct. 23, 2021

Product Warranties Disclosures [Abstract]

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		13,887		9,134
Settlements during the period	(6,038)		(5,491)		(12,455)		(9,451)
Balance as of the end of the period	$	25,068	$	22,938	$	25,068	$	22,938

(1)$15.1 million and $14.4 million is recorded in accrued expenses and other current liabilities as of October 23, 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.

Debt	6 Months Ended
Debt	Oct. 23, 2021
Debt Disclosure [Abstract]
Debt	DebtOn October 15, 2021, we entered into a new five-year $200.0 million unsecured revolving credit facility (the “Credit Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes and working capital. We may increase the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of each lender to participate in such increase, up to an additional amount of $100.0 million. The Credit Facility will mature on October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to customary conditions. As of October 23, 2021, we have no borrowings outstanding under the Credit Facility. The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of assets. As of October 23, 2021, we were in compliance with our financial covenants under the Credit Facility. The Credit Facility replaces our previous $150.0 million revolving credit facility, which had been secured primarily by all of our accounts receivable, inventory, cash deposits, and securities accounts. The previous revolving credit facility was terminated on October 15, 2021, and is no longer in effect.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

6 Months Ended

Oct. 23, 2021

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				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Equity-based awards expense	$	3,894	$	4,120	$	6,354	$	6,167
Liability-based awards expense (1)	61		754		(623)		1,338
Total stock-based compensation expense	$	3,955	$	4,874	$	5,731	$	7,505

(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 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 option

12.29

Restricted Stock. We granted 114,963 shares of restricted stock to employees during the first six months 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 six months of fiscal 2022 was $38.43 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.

Restricted Stock Units. During the second quarter of fiscal 2022, we granted 29,910 restricted stock units to our non-employee directors. These restricted stock units vest when the director leaves the board. We account for these restricted stock units as equity-based awards because when they vest, they will be settled in shares of our common stock. We measure and recognize compensation expense for these awards based on the market price of our common shares on the date of the grant, which was $35.11.

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.

Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Oct. 23, 2021

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)The activity in accumulated other comprehensive income (loss) for the quarters ended October 23, 2021, and October 24, 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 July 24, 2021	$	2,229	$	818	$	(4,870)	$	(1,823)
Changes before reclassifications	111		(660)		—		(549)


Amounts reclassified to net income	—		(2)		75		73
Tax effect	—		164		(18)		146
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	111		(498)		57		(330)
Balance at October 23, 2021	$	2,340	$	320	$	(4,813)	$	(2,153)

Balance at July 25, 2020	$	(278)	$	491	$	(5,445)	$	(5,232)
Changes before reclassifications	1,275		(61)		—		1,214


Amounts reclassified to net income	—		(25)		86		61
Tax effect	—		21		(21)		—
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	1,275		(65)		65		1,275
Balance at October 24, 2020	$	997	$	426	$	(5,380)	$	(3,957)

The activity in accumulated other comprehensive income (loss) for the six months ended October 23, 2021 and October 24, 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	(701)		(69)		—		(770)


Amounts reclassified to net income	—		2		150		152
Tax effect	—		17		(31)		(14)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(701)		(50)		119		(632)
Balance at October 23, 2021	$	2,340	$	320	$	(4,813)	$	(2,153)

Balance at April 25, 2020	$	(1,891)	$	449	$	(5,510)	$	(6,952)
Changes before reclassifications	2,888		16		—		2,904


Amounts reclassified to net income	—		(47)		173		126
Tax effect	—		8		(43)		(35)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	2,888		(23)		130		2,995
Balance at October 24, 2020	$	997	$	426	$	(5,380)	$	(3,957)

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

The components of non-controlling interest were as follows:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Balance as of the beginning of the period	$	8,918	$	7,425	$	8,648	$	15,553
Net income	842		369		1,542		250
Other comprehensive income (loss)	(120)		79		(550)		577
Dividends distributed to joint venture minority partners	(1,260)		—		(1,260)		(8,507)
Balance as of the end of the period	$	8,380	$	7,873	$	8,380	$	7,873

Revenue Recognition

6 Months Ended

Oct. 23, 2021

Revenue from Contract with Customer [Abstract]

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.

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 October 23, 2021								Quarter Ended October 24, 2020
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	234,702	$	109,980	$	96	$	344,778	$	200,448	$	99,462	$	162	$	300,072
Stationary Upholstery Furniture	98,693		44,146		50,272		193,111		92,679		30,980		36,424		160,083
Bedroom Furniture	11,382		1,803		3,602		16,787		8,437		1,323		2,296		12,056
Dining Room Furniture	8,393		3,411		1,107		12,911		6,874		2,799		844		10,517
Occasional Furniture	11,751		6,965		818		19,534		12,541		5,351		806		18,698
Delivery	44,321		6,825		1,765		52,911		31,039		6,135		1,396		38,570
Other (1)	29,850		19,290		(12,647)		36,493		(9,002)		16,225		(8,211)		(988)
Total	$	439,092	$	192,420	$	45,013	$	676,525	$	343,016	$	162,275	$	33,717	$	539,008

Eliminations							(100,636)								(79,888)
Consolidated Net Sales							$	575,889							$	459,120

	Six Months Ended October 23, 2021								Six Months Ended October 24, 2020
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	461,314	$	212,484	$	250	$	674,048	$	332,712	$	152,909	$	223	$	485,844
Stationary Upholstery Furniture	190,102		86,511		97,619		374,232		150,993		48,635		52,497		252,125
Bedroom Furniture	23,307		3,788		6,850		33,945		15,549		2,418		3,527		21,494
Dining Room Furniture	15,379		6,660		2,207		24,246		11,421		4,617		1,501		17,539
Occasional Furniture	24,350		12,987		1,813		39,150		20,651		8,761		1,535		30,947
Delivery	83,150		13,665		3,532		100,347		50,575		9,035		2,104		61,714
Other (1)	34,989		38,172		(23,624)		49,537		(15,312)		27,037		(10,929)		796
Total	$	832,591	$	374,267	$	88,647	$	1,295,505	$	566,589	$	253,412	$	50,458	$	870,459

Eliminations							(194,833)								(125,881)
Consolidated Net Sales							$	1,100,672							$	744,578

(1)Primarily includes revenue for 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.

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.

Contract Assets and Liabilities. 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 table presents our contract assets and liabilities:


(Unaudited, amounts in thousands)	10/23/2021		4/24/2021
Contract assets	$	135,542	$	108,460

Customer deposits	$	194,015	$	180,766
Deferred revenue	135,542		108,460
Total contract liabilities (1)	$	329,557	$	289,226

(1)During the six months ended October 23, 2021, we recognized revenue of $244.0 million related to our contract liability balance at April 24, 2021.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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Segment Information

6 Months Ended

Oct. 23, 2021

Segment Reporting [Abstract]

Segment Information

Our reportable operating segments include the Wholesale segment and the Retail segment.

Wholesale Segment. Our Wholesale segment consists primarily of three operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, and our casegoods operating segment that sells furniture under three brands: American Drew®, Hammary® and Kincaid®. The Wholesale segment also includes our international wholesale businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood) furniture such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

Retail Segment. Our Retail segment consists of one operating segment comprised of our 159 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other accessories, to end consumers through these stores.

Corporate & Other. Corporate & Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website, www.joybird.com. None of the operating segments included in Corporate & Other meet the requirements of reportable segments.

The following table presents sales and operating income (loss) by segment:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/23/2021		10/24/2020		10/23/2021		10/24/2020
Sales
Wholesale segment:
Sales to external customers	$	341,823	$	266,189	$	645,440	$	445,944
Intersegment sales	97,269		76,827		187,151		120,645
Wholesale segment sales	439,092		343,016		832,591		566,589

Retail segment sales	192,420		162,275		374,267		253,412

Corporate and Other:
Sales to external customers	41,646		30,656		80,965		45,222
Intersegment sales	3,367		3,061		7,682		5,236
Corporate and Other sales	45,013		33,717		88,647		50,458

Eliminations	(100,636)		(79,888)		(194,833)		(125,881)
Consolidated sales	$	575,889	$	459,120	$	1,100,672	$	744,578

Operating Income (Loss)
Wholesale segment	$	43,128	$	41,683	$	61,459	$	59,623
Retail segment	23,962		15,093		44,400		8,466
Corporate and Other	(12,977)		(8,837)		(17,375)		(15,825)
Consolidated 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

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Income Taxes	6 Months Ended
Income Taxes	Oct. 23, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesOur effective tax rate was 26.6% and 26.3% for the second quarter and six months ended October 23, 2021, respectively, compared with 26.0% and 25.3% for the second quarter and six months ended October 24, 2020, respectively. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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Earnings per Share

6 Months Ended

Oct. 23, 2021

Earnings Per Share [Abstract]

Earnings per Share

Earnings per ShareCertain share-based compensation awards that entitle their holders to receive non-forfeitable dividends prior to vesting are considered participating securities. Prior to fiscal 2019, we granted restricted stock awards that contained non-forfeitable rights to dividends on unvested shares, and we are required to include these participating securities in calculating our basic earnings per common share, using the two-class method. Beginning in fiscal 2019 and going forward, the restricted stock awards we granted do not have non-forfeitable rights to dividends and therefore are not considered participating securities. The dividends on these restricted stock awards are, and will continue to be, held in escrow until the stock awards vest at which time we will pay any accumulated dividends.

The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings per share:


	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
Numerator (basic and diluted):
Net income attributable to La-Z-Boy Incorporated	$	39,516	$	34,935	$	64,082	$	39,733
Income allocated to participating securities	—		(11)		(6)		(22)
Net income available to common Shareholders	$	39,516	$	34,924	$	64,076	$	39,711

Denominator:
Basic weighted average common shares outstanding	44,251		46,023		44,662		45,966
Contingent common shares	—		148		—		127
Stock option dilution	172		152		253		74
Diluted weighted average common shares outstanding	44,423		46,323		44,915		46,167

Earnings per Share:
Basic	$	0.89	$	0.76	$	1.43	$	0.86
Diluted	$	0.89	$	0.75	$	1.43	$	0.86

The values for contingent common shares set forth above reflect the dilutive effect of common shares that we would have issued to employees under the terms of performance-based share awards if the relevant performance period for the award had been the reporting period.

We exclude the effect of options from our diluted share calculation when the weighted average exercise price of the options is higher than the average market price, since including the options' effect would be anti-dilutive. For the second quarter and six months ended October 23, 2021, we excluded options to purchase 0.3 million shares from the diluted share calculation. For the second quarter and six months ended October 24, 2020, we excluded 0.3 million and 0.6 million shares, respectively, from the diluted share calculation.

Fair Value Measurements

6 Months Ended

Oct. 23, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Accounting standards require that we put financial assets and liabilities into one of three categories based on the inputs we use to value them:

•Level 1 — Financial assets and liabilities, the values of which are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

•Level 2 — Financial assets and liabilities, the values of which are based on quoted prices in markets that are not active or on model inputs that are observable for substantially the full term of the asset or liability.

•Level 3 — Financial assets and liabilities, the values of which are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Accounting standards require that in making fair value measurements, we use observable market data when available. When inputs used to measure fair value fall within different levels of the hierarchy, we categorize the fair value measurement as being in the lowest level that is significant to the measurement. We recognize transfers between levels of the fair value hierarchy at the end of the reporting period in which they occur.

In addition to assets and liabilities that we record at fair value on a recurring basis, we are required to record assets and liabilities at fair value on a non-recurring basis. We measure non-financial assets such as other intangible assets, goodwill, and other long-lived assets at fair value when there is an indicator of impairment, and we record them at fair value only when we recognize an impairment loss.

The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at October 23, 2021 and April 24, 2021. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.


At October 23, 2021
	Fair Value Measurements
(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets
Marketable securities	$	—	$	37,580	$	—	$	8,011	$	45,591
Held-to-maturity investments	1,371		—		—		—		1,371
Cost basis investments	—		—		7,579		—		7,579
Total assets	$	1,371	$	37,580	$	7,579	$	8,011	$	54,541

Liabilities
Contingent consideration liability	$	—	$	—	$	4,600	$	—	$	4,600


At April 24, 2021
	Fair Value Measurements
(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets
Marketable securities	$	119	$	37,572	$	—	$	7,602	$	45,293
Held-to-maturity investments	2,532		—		—		—		2,532
Cost basis investment	—		—		7,579		—		7,579
Total assets	$	2,651	$	37,572	$	7,579	$	7,602	$	55,404

Liabilities
Contingent consideration liability	$	—	$	—	$	14,100	$	—	$	14,100

(1)Certain marketable securities investments are measured at fair value using net asset value per share under the practical expedient methodology.

At October 23, 2021 and April 24, 2021, we held marketable securities intended to enhance returns on our cash and to fund future obligations of our non-qualified defined benefit retirement plan, as well as marketable securities to fund future obligations of our executive deferred compensation plan and our performance compensation retirement plan. We also held other fixed income and cost basis investments.

The fair value measurements for our Level 1 and Level 2 securities are based on quoted prices in active markets, as well as through broker quotes and independent valuation providers, multiplied by the number of shares owned exclusive of any transaction costs.

At October 23, 2021, our Level 3 assets included non-marketable preferred shares and warrants to purchase common shares of two privately held start-up companies. The fair value for our Level 3 investments is not readily determinable so we estimate the fair value as costs minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments with the same issuer. There were no changes to the fair value of our Level 3 assets during the six months ended October 23, 2021.

Our Level 3 liability includes our contingent consideration liability resulting from the Joybird acquisition. Based on the achievement of fiscal 2021 performance metrics, we paid $10.0 million of contingent consideration during the

second quarter of fiscal 2022. The fair value of our contingent consideration liability as of October 23, 2021, reflects our expectation that consideration will be owed under the terms of the earn out agreement based on fiscal 2023 projections of Joybird revenue and earnings. The fair value is determined using a variation of the income approach, known as the real options method, whereby revenue and earnings are simulated over the earnout periods in a risk-neutral framework using Geometric Brownian Motion. For each simulation path, the potential earnout payments were calculated based on management’s probability estimates for achievement of the revenue and earnings milestones and then were discounted to the valuation date using a discount rate of 1.8%. During the second quarter of fiscal 2022, we recognized an increase in the fair value of our contingent consideration liability of $0.5 million based on an updated valuation reflecting our most recent financial projections. There were no other changes to the fair value of our Level 3 liabilities during the six months ended October 23, 2021.