SEC Filing | La-Z-Boy Incorporated

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lzb-20221029

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 29, 2022

☐ 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 23, 2022
Common Stock, $1.00 Par Value						43,136,048

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LA-Z-BOY INCORPORATED

FORM 10-Q SECOND QUARTER OF FISCAL 2023

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. Stock-Based Compensation	13
	Note 10. Accumulated Other Comprehensive Loss	14
	Note 11. Revenue Recognition	15
	Note 12. Segment Information	17
	Note 13. Income Taxes	18
	Note 14. Earnings per Share	19
	Note 15. 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	28
	Recent Accounting Pronouncements	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29

PART II Other Information		30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	30

Signature Page		31

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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)	10/29/2022		10/23/2021		10/29/2022		10/23/2021
Sales	$	611,332	$	575,889	$	1,215,423	$	1,100,672
Cost of sales	350,596		352,594		713,227		675,295
Gross profit	260,736		223,295		502,196		425,377
Selling, general and administrative expense	198,853		169,182		387,670		336,893
Operating income	61,883		54,113		114,526		88,484
Interest expense	(119)		(242)		(278)		(553)
Interest income	1,138		106		1,612		223


Other income (expense), net	183		1,031		228		938
Income before income taxes	63,085		55,008		116,088		89,092
Income tax expense	16,306		14,650		30,369		23,468
Net income	46,779		40,358		85,719		65,624
Net income attributable to noncontrolling interests	(702)		(842)		(1,154)		(1,542)
Net income attributable to La-Z-Boy Incorporated	$	46,077	$	39,516	$	84,565	$	64,082

Basic weighted average common shares	43,104		44,251		43,098		44,662
Basic net income attributable to La-Z-Boy Incorporated per share	$	1.07	$	0.89	$	1.96	$	1.43

Diluted weighted average common shares	43,182		44,423		43,174		44,915
Diluted net income attributable to La-Z-Boy Incorporated per share	$	1.07	$	0.89	$	1.96	$	1.43

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)	10/29/2022		10/23/2021		10/29/2022		10/23/2021
Net income	$	46,779	$	40,358	$	85,719	$	65,624
Other comprehensive income (loss)
Currency translation adjustment	(3,353)		(9)		(5,513)		(1,251)

Net unrealized loss on marketable securities, net of tax	(289)		(498)		(203)		(50)
Net pension amortization, net of tax	37		57		73		119
Total other comprehensive income (loss)	(3,605)		(450)		(5,643)		(1,182)
Total comprehensive income before noncontrolling interests	43,174		39,908		80,076		64,442
Comprehensive (income) loss attributable to noncontrolling interests	(298)		(722)		(231)		(992)
Comprehensive income attributable to La-Z-Boy Incorporated	$	42,876	$	39,186	$	79,845	$	63,450

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)	10/29/2022		4/30/2022
Current assets
Cash and equivalents	$	204,626	$	245,589
Restricted cash	3,268		3,267
Receivables, net of allowance of $3,946 at 10/29/2022 and $3,406 at 4/30/2022	160,035		183,747
Inventories, net	342,728		303,191
Other current assets	146,656		215,982
Total current assets	857,313		951,776
Property, plant and equipment, net	269,240		253,144
Goodwill	203,459		194,604
Other intangible assets, net	38,640		33,971
Deferred income taxes – long-term	10,633		10,632
Right of use lease assets	404,495		405,755
Other long-term assets, net	73,760		82,207
Total assets	$	1,857,540	$	1,932,089

Current liabilities
Accounts payable	$	106,614	$	104,025


Lease liabilities, short-term	77,100		75,271
Accrued expenses and other current liabilities	367,008		496,393
Total current liabilities	550,722		675,689

Lease liabilities, long-term	353,444		354,843
Other long-term liabilities	69,588		81,935
Shareholders' equity
Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 43,136 outstanding at 10/29/22 and 43,089 outstanding at 4/30/22	43,136		43,089
Capital in excess of par value	347,036		342,252
Retained earnings	495,003		431,181
Accumulated other comprehensive loss	(10,517)		(5,797)
Total La-Z-Boy Incorporated shareholders' equity	874,658		810,725
Noncontrolling interests	9,128		8,897
Total equity	883,786		819,622
Total liabilities and equity	$	1,857,540	$	1,932,089

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)	10/29/2022		10/23/2021
Cash flows from operating activities
Net income	$	85,719	$	65,624
Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal of assets	1		(3,151)
(Gain)/loss on sale of investments	77		(218)
Provision for doubtful accounts	694		(944)
Depreciation and amortization	19,258		17,785
Amortization of right-of-use lease assets	38,580		34,368
Equity-based compensation expense	5,079		6,354
Change in deferred taxes	27		170


Change in receivables	19,550		(33,937)
Change in inventories	(36,771)		(59,336)
Change in other assets	4,890		(20,666)
Change in payables	8,027		22,683
Change in lease liabilities	(39,380)		(34,598)
Change in other liabilities	(74,797)		21,300
Net cash provided by operating activities	30,954		15,434

Cash flows from investing activities
Proceeds from disposals of assets	63		3,998

Capital expenditures	(40,442)		(33,314)
Purchases of investments	(4,714)		(21,426)
Proceeds from sales of investments	12,660		22,666
Acquisitions	(11,705)		(4,396)
Net cash used for investing activities	(44,138)		(32,472)

Cash flows from financing activities

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)
Repurchases of common stock	(5,004)		(50,640)
Dividends paid to shareholders	(14,161)		(13,398)
Dividends paid to minority interest joint venture partners (1)	—		(1,260)
Net cash used for financing activities	(25,937)		(80,728)

Effect of exchange rate changes on cash and equivalents	(1,841)		(330)
Change in cash, cash equivalents and restricted cash	(40,962)		(98,096)
Cash, cash equivalents and restricted cash at beginning of period	248,856		394,703
Cash, cash equivalents and restricted cash at end of period	$	207,894	$	296,607

Supplemental disclosure of non-cash investing activities
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.

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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 30, 2022	$	43,089	$	342,252	$	431,181	$	(5,797)	$	8,897	$	819,622
Net income	—		—		38,488		—		452		38,940
Other comprehensive loss	—		—		—		(1,519)		(519)		(2,038)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	151		(194)		(1,660)		—		—		(1,703)
Repurchases of 204 shares of common stock	(204)		—		(4,800)		—		—		(5,004)
Stock option and restricted stock expense	—		1,417		—		—		—		1,417
Dividends declared and paid ($0.165/share)	—		—		(7,097)		—		—		(7,097)
Dividends declared not paid ($0.165/share)	—		—		(45)		—		—		(45)
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 Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (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 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.

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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 30, 2022 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 2022 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 29, 2023.

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.

Accounting pronouncements adopted in fiscal 2023

We did not adopt any Accounting Standards Updates ("ASUs") in fiscal 2023.

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

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.

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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 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. 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 $4.3 million related to these reacquired rights. 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.

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)	10/29/2022		10/23/2021
Cash and cash equivalents	$	204,626	$	293,341
Restricted cash	3,268		3,266
Total cash, cash equivalents and restricted cash	$	207,894	$	296,607

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Note 4: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	10/29/2022		4/30/2022
Raw materials	$	149,788	$	146,896
Work in process	28,550		36,834
Finished goods	223,215		185,870
FIFO inventories	401,553		369,600
Excess of FIFO over LIFO	(58,825)		(66,409)
Total inventories	$	342,728	$	303,191

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

Wholesale Segment

La-Z-Boy United Kingdom Manufacturing

La-Z-Boy United Kingdom Manufacturing (Furnico)

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 30, 2022 (1)	$	20,207	$	118,951	$	55,446	$	194,604
Acquisitions	—		10,598		—		10,598
Translation adjustment	(1,540)		(203)		—		(1,743)
Balance at October 29, 2022 (1)	$	18,667	$	129,346	$	55,446	$	203,459

(1)Includes $26.9 million of accumulated impairment losses in Corporate and Other.

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

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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 Intangible Assets
Balance at April 30, 2022	$	1,155	$	3,392	$	27,319	$	2,105	$	33,971
Acquisitions	—		—		5,480		—		5,480
Amortization	—		(399)		—		(103)		(502)
Translation adjustment	—		—		(152)		(157)		(309)
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. 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 investments of two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes (refer to Note 15, 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)	10/29/2022		4/30/2022
Short-term investments:
Marketable securities	$	10,740	$	16,022
Held-to-maturity investments	1,213		1,337
Total short-term investments	11,953		17,359
Long-term investments:
Marketable securities	22,662		26,599
Cost basis investments	7,579		7,579
Total long-term investments	30,241		34,178
Total investments	$	42,194	$	51,537

Investments to enhance returns on cash	$	18,997	$	27,239
Investments to fund compensation/retirement plans	13,118		14,219
Other investments	10,079		10,079
Total investments	$	42,194	$	51,537

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


	10/29/2022						4/30/2022
(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	$	1,105	$	(94)	$	13,669	$	1,448	$	(86)	$	13,905
Fixed income	22		(1,072)		24,584		28		(809)		33,521
Other	1,210		—		3,941		1,250		—		4,111
Total securities	$	2,337	$	(1,166)	$	42,194	$	2,726	$	(895)	$	51,537

Table of Contents

The following table summarizes sales of marketable securities:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/29/2022		10/23/2021		10/29/2022		10/23/2021
Proceeds from sales	$	8,418	$	11,938	$	12,664	$	21,653
Gross realized gains	22		287		49		554
Gross realized losses	(70)		(325)		(126)		(336)

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)	10/29/2022
Within one year	$	10,736
Within two to five years	11,336
Within six to ten years	586
Thereafter	1,926
Total	$	24,584

Note 7: Accrued Expenses and Other Current Liabilities


(Unaudited, amounts in thousands)	10/29/2022		4/30/2022
Payroll and other compensation	$	50,793	$	62,373
Accrued product warranty, current portion	17,814		16,436
Customer deposits	137,157		183,233
Deferred revenue	72,587		139,006
Other current liabilities	88,657		95,345
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.

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 to three years on fabric and leather, from one to ten years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames, unless otherwise noted in the warranty. Additionally, 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)

10/29/2022

10/23/2021

10/29/2022 (1)

10/23/2021

Balance as of the beginning of the period

27,516