What changed in this filing

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Item 1. Financial Statements

2022-11-30 compared with 2022-08-23 · 124 added, 46 removed, 485 unchanged (26% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENT OF INCOME

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except per share data) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

19 unchanged sentences

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

2 unchanged sentences

Currency translation adjustment ( 3,353 ) ( 9 ) ( 5,513 ) ( 1,251 )

Net unrealized gain on marketable securities, net of tax 86 448

Net unrealized loss on marketable securities, net of tax ( 289 ) ( 498 ) ( 203 ) ( 50 )

Net pension amortization, net of tax 37 57 73 119

44 unchanged sentences

CONSOLIDATED STATEMENT OF CASH FLOWS

Quarter Ended

Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021

25 unchanged sentences

Payments on debt and finance lease liabilities ( 61 ) ( 60 )

Holdback payments for acquisition purchases ( 5,000 ) ( 13,500 )

Stock issued for stock and employee benefit plans, net of shares withheld for taxes ( 1,711 ) ( 1,870 )

1 unchanged sentence

Dividends paid to shareholders ( 14,161 ) ( 13,398 )

Dividends paid to minority interest joint venture partners (1)

Net cash used for financing activities ( 25,937 ) ( 80,728 )

5 unchanged sentences

Capital expenditures included in payables $ 4,251 $ 7,900

(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.

20 unchanged sentences

At July 30, 2022 $ 43,036 $ 343,475 $ 456,067 $ ( 7,316 ) $ 8,830 $ 844,092

Net income — — 46,077 — 702 46,779

Other comprehensive loss — — — ( 3,201 ) ( 404 ) ( 3,605 )

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 100 ( 101 ) ( 7 ) — — ( 8 )

Stock option and restricted stock expense — 3,662 — — — 3,662

Dividends declared and paid ($ 0.165 /share)

— — ( 7,064 ) — — ( 7,064 )

Dividends declared not paid ($ 0.165 /share)

— — ( 70 ) — — ( 70 )

At October 29, 2022 $ 43,136 $ 347,036 $ 495,003 $ ( 10,517 ) $ 9,128 $ 883,786

(Unaudited, amounts in thousands) Common

17 unchanged sentences

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 income — — — ( 330 ) ( 120 ) ( 450 )

Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 11 353 ( 6 ) — — 358

Purchases 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.

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

7 unchanged sentences

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 29, 2023.

At July 30, 2022, we owned investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes.

At October 29, 2022, we owned investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes.

Each of these companies is a variable interest entity and 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.

6 unchanged sentences

Accounting for Contract Assets and Contract Liabilities From Contracts With Customers Fiscal 2024

The acquisition noted below 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 following the acquisition as we gain additional data.

None of the below acquisitions were significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented.

All of our provisional purchase accounting estimates for the acquisitions completed in fiscal 2023 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 following the acquisition as we gain additional data.

Each of the following Retail acquisitions completed in fiscal 2023 and 2022 reflect a core component 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) in suitable geographic markets, alongside the existing La-Z-Boy Furniture Galleries ® network.

Spokane, Washington acquisition

On September 26, 2022, we completed our acquisition of the Spokane, Washington business that operates one independently owned La-Z-Boy Furniture Galleries ® store and one distribution center for $ 4.7 million, subject to customary adjustments.

We paid total cash of $ 4.0 million during the second quarter of fiscal 2023 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

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 Spokane, 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 $ 1.2 million related to these reacquired rights.

We also recognized $ 3.0 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store 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.

Denver, Colorado acquisition

On July 18, 2022, we completed our acquisition of the Denver, Colorado business that operates five independently owned La-Z-Boy Furniture Galleries ® stores and one distribution center for $ 10.1 million, subject to customary adjustments.

We paid $ 7.2 million of cash during the first quarter of fiscal 2023 and the remaining consideration includes forgiveness of accounts receivable and future payments based on final working capital adjustments.

This acquisition reflects a core component 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) in suitable geographic markets, alongside the existing La-Z-Boy Furniture Galleries ® network.

We paid total cash of $ 7.7 million in the first and second quarters of fiscal 2023 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

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 Denver, Colorado market, and we reacquired these rights when we consummated the transaction.

2 unchanged sentences

We recorded an indefinite-lived intangible asset of $ 4.3 million related to these reacquired rights.

We also recognized $ 7.7 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

We also recognized $ 7.6 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.

Prior Year Acquisitions

On August 16, 2021, we completed our 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.

We paid $ 4.4 million of cash during the second quarter of fiscal 2022 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

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.

Cash and Restricted Cash

29 unchanged sentences

Translation adjustment ( 1,540 ) ( 203 ) — ( 1,743 )

Balance at July 30, 2022 (1)

Balance at October 29, 2022 (1)

$ 18,667 $ 129,346 $ 55,446 $ 203,459

17 unchanged sentences

Translation adjustment — — ( 152 ) ( 157 ) ( 309 )

Balance at July 30, 2022 $ 1,155 $ 3,192 $ 31,594 $ 1,988 $ 37,929

Balance at October 29, 2022 $ 1,155 $ 2,993 $ 32,647 $ 1,845 $ 38,640

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.

28 unchanged sentences

The following table summarizes sales of marketable securities:

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

17 unchanged sentences

Accrued expenses and other current liabilities $ 367,008 $ 496,393

The decrease in customer deposits and deferred revenue during the first six months of fiscal 2023 was primarily a result of working down the significant backlog built up in prior periods back to pre-pandemic levels.

Product Warranties

8 unchanged sentences

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

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022

10/23/2021 10/29/2022 (1) 10/23/2021

Balance as of the beginning of the period $ 27,516 $ 24,433 $ 27,036 $ 23,636

2 unchanged sentences

Balance as of the end of the period $ 28,357 $ 25,068 $ 28,357 $ 25,068

(1) $ 17.1 million and $ 16.4 million is recorded in accrued expenses and other current liabilities as of July 30, 2022, and April 30, 2022, respectively, while the remainder is included in other long-term liabilities.

(1) $ 17.8 million and $ 16.4 million is recorded in accrued expenses and other current liabilities as of October 29, 2022, and April 30, 2022, 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.

1 unchanged sentence

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

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

1 unchanged sentence

Liability-based awards expense (1)

18 61 146 ( 623 )

Total stock-based compensation expense $ 3,680 $ 3,955 $ 5,225 $ 5,731

4 unchanged sentences

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 the Compensation and Talent Oversight Committee of our Board approved the awards.

We recognize compensation expense for stock options over the vesting period equal to the fair value on the date the Compensation and Talent Oversight Committee of our board of directors 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.

The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date.

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.

12 unchanged sentences

We issue restricted stock at no cost to employees and account for restricted stock awards as equity-based awards because when they vest, they will be settled in common shares.

We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the date the Compensation and Talent Oversight Committee of our Board approved the awards.

Restricted stock awards generally vest at 25 % per year, beginning one year from the grant date over a term of four years , with continued vesting upon retirement with

respect to the fiscal 2023 grants.

We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the date the Compensation and Talent Oversight Committee of our board of directors approved the awards.

Restricted stock awards generally vest at 25 % per year, beginning one year from the grant date over a term of four years , with continued vesting upon retirement with respect to the fiscal 2023 grants.

The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date.

1 unchanged sentence

We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur.

The weighted-average fair value of the restricted stock that was awarded in the first quarter of fiscal 2023 was $ 24.44 per share, the market value of our common shares on the dates of grant.

The weighted-average fair value of the restricted stock that was awarded in the first six months of fiscal 2023 was $ 24.44 per share, the market value of our common shares on the dates of grant.

Restricted Stock Units Issued to Directors.

Restricted stock units granted to our non-employee directors are offered at no cost to the directors and vest the earlier of the date a director leaves the board or one year from the grant date.

During the second quarter of fiscal 2023, we granted 36,656 restricted stock units to our non-employee directors.

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 grant, which was $ 26.19 .

Performance Shares.

11 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the quarters ended July 30, 2022, and July 24, 2021, is as follows:

The activity in accumulated other comprehensive income (loss) for the quarters ended October 29, 2022, and October 23, 2021, 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 30, 2022 $ ( 1,961 ) $ ( 298 ) $ ( 3,538 ) $ ( 5,797 )

Balance at July 30, 2022 $ ( 3,602 ) $ ( 212 ) $ ( 3,502 ) $ ( 7,316 )

Changes before reclassifications ( 2,949 ) ( 445 ) — ( 3,394 )

2 unchanged sentences

Other comprehensive income (loss) attributable to La-Z-Boy Incorporated ( 2,949 ) ( 289 ) 37 ( 3,201 )

Balance at October 29, 2022 $ ( 6,551 ) $ ( 501 ) $ ( 3,465 ) $ ( 10,517 )

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 )

The activity in accumulated other comprehensive income (loss) for the six months ended October 29, 2022 and October 23, 2021, 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 30, 2022 $ ( 1,961 ) $ ( 298 ) $ ( 3,538 ) $ ( 5,797 )

3 unchanged sentences

Other comprehensive income (loss) attributable to La-Z-Boy Incorporated ( 4,590 ) ( 203 ) 73 ( 4,720 )

Balance at July 24, 2021 $ 2,229 $ 818 $ ( 4,870 ) $ ( 1,823 )

Balance at October 29, 2022 $ ( 6,551 ) $ ( 501 ) $ ( 3,465 ) $ ( 10,517 )

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 )

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

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

2 unchanged sentences

Other comprehensive loss ( 404 ) ( 120 ) ( 923 ) ( 550 )

Dividends distributed to joint venture minority partners — ( 1,260 ) — ( 1,260 )

Balance as of the end of the period $ 9,128 $ 8,380 $ 9,128 $ 8,380

11 unchanged sentences

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

Quarter Ended July 30, 2022 Quarter Ended July 24, 2021

Quarter Ended October 29, 2022 Quarter Ended October 23, 2021

(Unaudited, amounts in thousands) Wholesale Retail Corporate

11 unchanged sentences

Consolidated Net Sales $ 611,332 $ 575,889

Six Months Ended October 29, 2022 Six Months Ended October 23, 2021

(Unaudited, amounts in thousands) Wholesale Retail Corporate

and Other Total Wholesale Retail Corporate

and Other Total

Motion Upholstery Furniture $ 459,083 $ 290,916 $ 59 $ 750,058 $ 461,314 $ 212,484 $ 250 $ 674,048

Stationary Upholstery Furniture 209,392 109,955 97,621 416,968 190,102 86,511 97,619 374,232

Bedroom Furniture 20,292 4,401 9,240 33,933 23,307 3,788 6,850 33,945

Dining Room Furniture 14,852 6,043 2,839 23,734 15,379 6,660 2,207 24,246

Occasional Furniture 23,407 15,733 2,190 41,330 24,350 12,987 1,813 39,150

Delivery 112,775 13,846 4,003 130,624 83,150 13,665 3,532 100,347

Other (1) 48,248 47,279 ( 23,585 ) 71,942 34,989 38,172 ( 23,624 ) 49,537

Total $ 888,049 $ 488,173 $ 92,367 $ 1,468,589 $ 832,591 $ 374,267 $ 88,647 $ 1,295,505

Eliminations ( 253,166 ) ( 194,833 )

Consolidated Net Sales $ 1,215,423 $ 1,100,672

(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.

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.

16 unchanged sentences

$ 209,744 $ 322,239

(1) During the quarter ended July 30, 2022, we recognized revenue of $ 192.4 million related to our contract liability balance at April 30, 2022.

(1) During the six months ended October 29, 2022, we recognized revenue of $ 274.3 million related to our contract liability balance at April 30, 2022.

Segment Information

13 unchanged sentences

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.

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.

1 unchanged sentence

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

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

19 unchanged sentences

Income before income taxes $ 63,085 $ 55,008 $ 116,088 $ 89,092

Our effective tax rate was 26.5 % for the first quarter ended July 30, 2022, compared with 25.9 % for the first quarter ended July 24, 2021.

Our effective tax rate was 25.8 % and 26.2 % for the second quarter and six months ended October 29, 2022, respectively, compared with 26.6 % and 26.3 % for the second quarter and six months ended October 23, 2021, respectively.

Our effective tax rate varies from the 21 % federal statutory rate primarily due to state taxes.

1 unchanged sentence

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

Quarter Ended

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except per share data) 10/29/2022 10/23/2021 10/29/2022 10/23/2021

13 unchanged sentences

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 quarter ended July 30, 2022, we excluded options to purchase 1.5 million shares from the diluted share calculation.

For the first quarter ended July 24, 2021, all outstanding options were included in the diluted share calculation.

For the second quarter and six months ended October 29, 2022, we excluded options to purchase 1.5 million shares from the diluted share calculation.

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.

Fair Value Measurements

8 unchanged sentences

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 July 30, 2022 and April 30, 2022.

The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at October 29, 2022 and April 30, 2022.

There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.

At July 30, 2022

At October 29, 2022

Fair Value Measurements

4 unchanged sentences

Total assets $ 1,213 $ 24,634 $ 10,079 $ 6,268 $ 42,194

Contingent consideration liability $ — $ — $ 800 $ — $ 800

At April 30, 2022

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

At July 30, 2022 and April 30, 2022, we held marketable securities intended to enhance returns on our cash and to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan and our performance compensation retirement plan.

At October 29, 2022 and April 30, 2022, we held marketable securities intended to enhance returns on our cash and 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 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 July 30, 2022 and April 30, 2022, our Level 3 assets included investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes.

The fair value of these equity investments (preferred shares and warrants) is not readily determinable and therefore, 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.

At October 29, 2022 and April 30, 2022, our Level 3 assets included investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes.

The fair value of these equity investments (preferred shares and warrants) is not readily determinable and therefore, we estimate the fair value as cost 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.

The convertible notes are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income, consistent with our other available-for-sale debt securities.

There were no changes to the fair value of our Level 3 assets during the quarter ended July 30, 2022.

There were no changes to the fair value of our Level 3 assets during the six months ended October 29, 2022.

Our Level 3 liability includes our contingent consideration liability resulting from the Joybird acquisition.

The fair value of our contingent consideration liability as of July 30, 2022 reflects our expectation that consideration will be owed under the terms of the earnout 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 6.8 %.

There were no changes to the fair value of our Level 3 liabilities during the quarter ended July 30, 2022.

The fair value of our contingent consideration liability as of October 29, 2022 reflects our expectation that no additional consideration will be owed based on our most recent financial projections and the terms of the earnout agreement.

As a result, during the second quarter of fiscal 2023, we reduced the fair value of the contingent consideration liability by its full carrying value of $ 0.8 million which was recorded as a favorable impact to selling, general and administrative expense in the consolidated statement of income.

There were no other changes to the fair value of our Level 3 liabilities during the six months ended October 29, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements